[EXECUTION COPY]
ASSET PURCHASE AGREEMENT
DATED AS OF NOVEMBER 17, 1998
BY AND AMONG
CERIDIAN CORPORATION,
CERIDIAN PERFORMANCE PARTNERS LTD.,
LETTERALLIED LIMITED,
WORK/FAMILY DIRECTIONS, INC.,
CANADIAN WORK/FAMILY DIRECTIONS CO.,
WFD,
XXXXXXXX X. XXXXXXX,
XXXXXXX X. XXXXXXX
AND
THE OTHER SHAREHOLDERS
PARTY HERETO
TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. "Affiliate". . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. "Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. "Assumed Liabilities". . . . . . . . . . . . . . . . . . . . . . . 2
1.4. "Best Knowledge of Sellers" or "Sellers' Best Knowledge" . . . . . 2
1.5. "Business Condition" . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. "Business Days". . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. "Buyer's Report" . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8. "Canadian Purchased Assets". . . . . . . . . . . . . . . . . . . . 3
1.9. "Ceridian Performance Partners". . . . . . . . . . . . . . . . . . 3
1.10. "Closing".. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11. "Closing Balance Sheet" . . . . . . . . . . . . . . . . . . . . . 3
1.12. "Closing Book Value". . . . . . . . . . . . . . . . . . . . . . . 3
1.13. "Closing Date". . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14. "Closing Payment" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15. "COBRA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16. "Code". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17. "Company Purchased Assets". . . . . . . . . . . . . . . . . . . . 3
1.18. "Company Facility". . . . . . . . . . . . . . . . . . . . . . . . 3
1.19. "Company Products". . . . . . . . . . . . . . . . . . . . . . . . 3
1.20. "Company Software Products" . . . . . . . . . . . . . . . . . . . 3
1.21. "Company Tax Returns" . . . . . . . . . . . . . . . . . . . . . . 3
1.22. "Company Tax" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23. "Consulting/Community Development Business" . . . . . . . . . . . 4
1.24. "Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.25. "Corporate Sellers" . . . . . . . . . . . . . . . . . . . . . . . 4
1.26. "Customer Contracts". . . . . . . . . . . . . . . . . . . . . . . 4
1.27. "Deciding Accounting Firm". . . . . . . . . . . . . . . . . . . . 4
1.28. "Dispute Resolution". . . . . . . . . . . . . . . . . . . . . . . 4
1.29. "Disposal Site" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.30. "Effective Time". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.31. "Encumbrance" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32. "Environmental Laws". . . . . . . . . . . . . . . . . . . . . . . 4
1.33. "Environmental Permit". . . . . . . . . . . . . . . . . . . . . . 4
1.34. "Equipment Leases". . . . . . . . . . . . . . . . . . . . . . . . 4
1.35. "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.36. "ERISA Benefit Plan". . . . . . . . . . . . . . . . . . . . . . . 5
1.37. "Escrow Agent". . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.38. "Escrow Agreement". . . . . . . . . . . . . . . . . . . . . . . . 5
1.39. "Excluded Assets" . . . . . . . . . . . . . . . . . . . . . . . . 5
1.40. "Excluded Liabilities". . . . . . . . . . . . . . . . . . . . . . 5
1.41. "First Measurement Date". . . . . . . . . . . . . . . . . . . . . 6
1.42. "GAAP". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.43. "Governmental Entity" . . . . . . . . . . . . . . . . . . . . . . 6
1.44. "Hazardous Material". . . . . . . . . . . . . . . . . . . . . . . 6
1.45. "Hazardous Materials Activity". . . . . . . . . . . . . . . . . . 6
1.46. "Intellectual Property Rights". . . . . . . . . . . . . . . . . . 6
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1.47. "Law(s)". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.48. "Leased Real Property". . . . . . . . . . . . . . . . . . . . . . 7
1.49. "Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.50. "Losses". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.54. "Office Leases" . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.55. "Ordinary Course" . . . . . . . . . . . . . . . . . . . . . . . . 7
1.56. "Other Agreements". . . . . . . . . . . . . . . . . . . . . . . . 8
1.57. "Owned Real Property" . . . . . . . . . . . . . . . . . . . . . . 8
1.58. "Permitted Encumbrances". . . . . . . . . . . . . . . . . . . . . 8
1.59. "Person". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.60. "Personal Property" . . . . . . . . . . . . . . . . . . . . . . . 8
1.61. "Purchase Price". . . . . . . . . . . . . . . . . . . . . . . . . 8
1.62. "Purchased Assets". . . . . . . . . . . . . . . . . . . . . . . . 8
1.63. "Records" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.64. "Related Party" . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.65. "Second Measurement Date" . . . . . . . . . . . . . . . . . . . . 9
1.66. "Seller's Report" . . . . . . . . . . . . . . . . . . . . . . . . 9
1.67. "Software". . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.68. "Subsidiary". . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.69. "Tax" or "Taxes". . . . . . . . . . . . . . . . . . . . . . . . .10
1.70. "Tax Agreement" . . . . . . . . . . . . . . . . . . . . . . . . .10
1.71. "Tax Return". . . . . . . . . . . . . . . . . . . . . . . . . . .10
1.72. "Third Party Software". . . . . . . . . . . . . . . . . . . . . .10
1.73. "Top Twenty Customers". . . . . . . . . . . . . . . . . . . . . .10
1.74. "Transactions". . . . . . . . . . . . . . . . . . . . . . . . . .10
1.76. "U.K. Purchased Assets" . . . . . . . . . . . . . . . . . . . . .10
1.77. "Work/Family Business". . . . . . . . . . . . . . . . . . . . . .10
2. THE TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.1. The Transactions.. . . . . . . . . . . . . . . . . . . . . . . . .11
2.2. The Purchase Price.. . . . . . . . . . . . . . . . . . . . . . . .11
2.3. Adjustments to Purchase Price. . . . . . . . . . . . . . . . . . .14
2.4. Assignment of Customer Contracts.. . . . . . . . . . . . . . . . .16
2.5. Assignment of Office Leases. . . . . . . . . . . . . . . . . . . .16
2.6. Assignment of Equipment Leases.. . . . . . . . . . . . . . . . . .16
2.7. Assignment of Intellectual Property Rights.. . . . . . . . . . . .16
2.8. Assignment of Licenses, Permits, and Other Governmental
Authorizations.. . . . . . . . . . . . . . . . . . . . . . . . . .16
2.9. Transfer of Assets.. . . . . . . . . . . . . . . . . . . . . . . .16
2.10. Assumption of Liabilities.. . . . . . . . . . . . . . . . . . . .17
3. CERTAIN TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.1. Responsibility for Taxes.. . . . . . . . . . . . . . . . . . . . .17
3.2. Allocation of Purchase Price; Other Tax Matters. . . . . . . . . .17
4. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . .19
4.1. Authority, Validity of Agreement.. . . . . . . . . . . . . . . . .19
4.2. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . .19
4.3. Consents and Approvals of Governmental Authorities.. . . . . . . .19
4.4. Other Consents.. . . . . . . . . . . . . . . . . . . . . . . . . .20
4.5. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . .20
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4.6. Financial Statements.. . . . . . . . . . . . . . . . . . . . . . .20
4.7. Absence of Undisclosed Liabilities.. . . . . . . . . . . . . . . .21
4.8. Purchased Assets.. . . . . . . . . . . . . . . . . . . . . . . . .21
4.9. Plant, Property, and Equipment.. . . . . . . . . . . . . . . . . .21
4.10. Orders, Commitments and Returns.. . . . . . . . . . . . . . . . .22
4.11. Defects in Products, Warranties.. . . . . . . . . . . . . . . . .22
4.12. Real Property.. . . . . . . . . . . . . . . . . . . . . . . . . .22
4.13. Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.14. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.15. Compliance with Laws; Licenses. . . . . . . . . . . . . . . . . .25
4.16. Computer Software and Intellectual Property.. . . . . . . . . . .26
4.17. Environmental Matters.. . . . . . . . . . . . . . . . . . . . . .28
4.18. Employee Plans and Arrangements.. . . . . . . . . . . . . . . . .29
4.19. Employees.. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
4.20. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . .32
4.21. All Compensation and Benefit Data.. . . . . . . . . . . . . . . .32
4.22. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
4.23. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
4.24. Insider Transactions. . . . . . . . . . . . . . . . . . . . . . .33
4.25. Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . .33
4.26. No Brokerage or Other Fees. . . . . . . . . . . . . . . . . . . .33
4.27. Business Generally. . . . . . . . . . . . . . . . . . . . . . . .33
4.28. Inventories.. . . . . . . . . . . . . . . . . . . . . . . . . . .34
4.29. Year 2000.. . . . . . . . . . . . . . . . . . . . . . . . . . . .34
4.30. Receivables and Payables. . . . . . . . . . . . . . . . . . . . .34
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . .35
5.1. Organization and Good Standing of Ceridian Entities. . . . . . . .35
5.2. Authority, Validity of Agreement.. . . . . . . . . . . . . . . . .35
5.3. No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . .35
5.4. Consents and Approvals of Governmental Authorities.. . . . . . . .36
5.5. Other Consents.. . . . . . . . . . . . . . . . . . . . . . . . . .36
5.6. Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
5.7. No Brokerage Fees. . . . . . . . . . . . . . . . . . . . . . . . .36
6. CERTAIN AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .36
6.1. Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . .36
6.2. Personnel Matters for U.S. Employees.. . . . . . . . . . . . . . .36
6.3. Escrow Agreement.. . . . . . . . . . . . . . . . . . . . . . . . .37
6.4. Assignments of Office Lease. . . . . . . . . . . . . . . . . . . .37
6.5. [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . .37
6.6. Assignment and Assumption Agreement. . . . . . . . . . . . . . . .37
6.7. Bills of Sale. . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.8. Trademark Assignment.. . . . . . . . . . . . . . . . . . . . . . .37
6.9. Copyright Assignments. . . . . . . . . . . . . . . . . . . . . . .37
6.10. Transitional Services Agreement.. . . . . . . . . . . . . . . . .38
6.11. X. Xxxxxxx Consulting Agreement.. . . . . . . . . . . . . . . . .38
6.12. Xxxxxxx Xxxx Consulting Agreement.. . . . . . . . . . . . . . . .38
6.13. Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
6.14. U.K. Employees. . . . . . . . . . . . . . . . . . . . . . . . . .38
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6.15. Canadian Pension and Benefit Plans. . . . . . . . . . . . . . . .38
6.16. U.K. Lease Assignment.. . . . . . . . . . . . . . . . . . . . . .39
6.17. Canadian Seller Employees.. . . . . . . . . . . . . . . . . . . .39
6.18. Trademark License Agreement.. . . . . . . . . . . . . . . . . . .39
6.19. Purchase of Ceridian Community Resource Development Business. . .39
6.20. Accounts Receivable Guaranty. . . . . . . . . . . . . . . . . . .40
7. THE CLOSING
7.1. Time and Place.. . . . . . . . . . . . . . . . . . . . . . . . . .40
7.2. Sellers' Obligations at Closing. . . . . . . . . . . . . . . . . .40
7.3. Buyer's Obligations at Closing.. . . . . . . . . . . . . . . . . .41
7.4. Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
8. OBLIGATIONS AFTER CLOSING . . . . . . . . . . . . . . . . . . . . . . .42
8.1. Further Assurances.. . . . . . . . . . . . . . . . . . . . . . . .42
8.2. Notices and Consents.. . . . . . . . . . . . . . . . . . . . . . .42
8.3. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . .43
8.4. Access to Properties and Records.. . . . . . . . . . . . . . . . .43
8.5. Post-Closing Confidentiality.. . . . . . . . . . . . . . . . . . .43
8.6. Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . .43
8.7. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . . .43
8.8. Covenant Not to Compete. . . . . . . . . . . . . . . . . . . . . .44
8.9. Use of Work/Family Directions Name.. . . . . . . . . . . . . . . .45
8.10. Wire of Cash included in Purchased Assets.. . . . . . . . . . . .46
8.11. CRD Materials.. . . . . . . . . . . . . . . . . . . . . . . . . .46
9. SURVIVAL OF REPRESENTATIONS, WARRANTS AND COVENANTS . . . . . . . . . .46
9.1. Survival.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
10.1. Indemnification by Sellers. . . . . . . . . . . . . . . . . . . .47
10.2. Indemnification by Buyer. . . . . . . . . . . . . . . . . . . . .47
10.3. Limitation on Indemnification.. . . . . . . . . . . . . . . . . .47
10.4. Defense Against Asserted Claims.. . . . . . . . . . . . . . . . .48
10.5. Other.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
11. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .49
11.1. No Publicity, Advertisement Without Prior Consultation. . . . . .49
11.2. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . .49
11.3. Article and Section Headings, Schedules and Exhibits. . . . . . .49
11.4. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .49
11.5. Gender and Number.. . . . . . . . . . . . . . . . . . . . . . . .49
11.6. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
11.7. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
11.8. No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . .50
11.9. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . .51
11.10. Modifications, Amendments or Waivers.. . . . . . . . . . . . . .51
11.11. Remedies Exclusive.. . . . . . . . . . . . . . . . . . . . . . .51
11.12. Assignment, Successors and Assigns.. . . . . . . . . . . . . . .51
11.13. Equitable Remedies.. . . . . . . . . . . . . . . . . . . . . . .51
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11.14. Joint Preparation. . . . . . . . . . . . . . . . . . . . . . . .51
11.15. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . .51
11.16. Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . .51
11.17. Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
11.18. Stamp Duty.. . . . . . . . . . . . . . . . . . . . . . . . . . .52
v
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into as
of this 17th day of November, 1998, by and among Ceridian Corporation, a
Delaware corporation ("Ceridian"), Ceridian Performance Partners Ltd., a
corporation incorporated under the laws of Canada ("Canadian Buyer"), LETTER
ALLIED Limited, a private limited company which is to be renamed Ceridian
Performance Partners Limited and which is registered in England and Wales as
company number 3658400 and having its registered office at 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxx XX0X 0XX ("U.K. Buyer") (Ceridian, Canadian Buyer and U.K. Buyer
are collectively referred to herein as "Buyer" and each of Ceridian, Canadian
Buyer and U.K. Buyer being sometimes referred to as a "Ceridian Entity"),
Work/Family Directions, Inc. a Massachusetts corporation (the "Company"),
Canadian Work/Family Directions Co., a Nova Scotia unlimited liability company
("Canadian Seller"), WFD, an unlimited private company registered in England and
Wales under number 3265909 and having its registered office at Barrington House
00-00 Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX ("U.K. Seller"), Xxxxxxxx X. Xxxxxxx ("X.
Xxxxxxx"), Xxxxxxx X. Xxxxxxx ("X. Xxxxxxx") and the other shareholders of the
Company listed on Schedule A hereto (the "Other Shareholders") (the Company,
Canadian Seller, U.K. Seller, X. Xxxxxxx, X. Xxxxxxx and the Other Shareholders
are also individually referred to herein as a "Seller" and collectively referred
to herein as "Sellers").
INTRODUCTION
RECITALS
A. The Canadian Buyer and U.K. Buyer are wholly-owned direct or
indirect subsidiaries of Ceridian. The Canadian Seller and U.K. Seller are
Affiliates (as hereinafter defined) of the Company.
B. Buyer wishes to purchase the Work/Family Business (as hereinafter
defined) and Sellers wish to retain the Consulting/Community Development
Business (as hereinafter defined). The Work/Family Business and the
Consulting/Community Development Business is conducted: in the United States
through the Company; in Canada through the Canadian Seller; and in the United
Kingdom through the U.K. Seller.
C. To implement the foregoing, the Company will sell the Company
Purchased Assets (as hereinafter defined) to Ceridian; the Canadian Seller will
sell the Canadian Purchased Assets (as hereinafter defined) to the Canadian
Buyer; and the U.K. Seller will sell the U.K. Purchased Assets (as hereinafter
defined) to the U.K. Buyer. In addition, (i) Ceridian will assume the Assumed
Liabilities to the extent associated with the Company Purchased Assets, (ii) the
Canadian Buyer will assume the Assumed Liabilities to the extent associated with
the Canadian Purchased Assets, and (iii) the U.K. Buyer will assume the Assumed
Liabilities to the extent associated with the U.K. Purchased Assets.
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X. X. Xxxxxxx and X. Xxxxxxx, as the holders, collectively, of a
majority of the outstanding capital stock of the Company, will benefit from the
transactions contemplated by this Agreement.
E. The parties hereto wish to make certain representations,
warranties, covenants and agreements in connection herewith and also to
prescribe various conditions to such transaction.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
ARTICLE
1.
DEFINITIONS
The following terms have the following meanings when used in this
Agreement, unless otherwise specified in the context:
1.1. "AFFILIATE" shall have the meaning assigned to such term in Rule
405, as presently promulgated under the Securities Act of 1933, as amended.
1.2. "ASSETS" means all properties and assets (real, personal or mixed,
tangible or intangible).
1.3. "ASSUMED LIABILITIES" means only (a) liabilities arising under the
Customer Contracts with respect to performance due after the Effective Time;
(b) liabilities arising under licenses to Third-Party Software with respect to
performance due after the Effective Time; (c) liabilities arising under the
Office Leases with respect to performance due after the Effective Time; (d)
liabilities arising under the Equipment Leases with respect to performance due
after the Effective Time; (e) liabilities described in Schedule 1.3; and (f)
liabilities incurred in the Ordinary Course and accrued on the Closing Balance
Sheet, including trade accounts payable, rent, salaries and wages (other than
bonuses), deferred revenue and other accrued expenses, PROVIDED, that the
aggregate liabilities assumed pursuant to clause (f) of this Subsection 1.3
shall not exceed the amount that is accrued therefor on the Closing Balance
Sheet, as defined in Section 2.3(b).
1.4. "BEST KNOWLEDGE OF SELLERS" OR "SELLERS' BEST KNOWLEDGE" means
actual knowledge of any individual listed on SCHEDULE 1.4;
1.5. "BUSINESS CONDITION" means, with respect to any corporation,
association or other business entity (and treating the Work/Family Business as a
separate business entity), the business, financial condition, operations, assets
and liabilities of such entity and its Subsidiaries taken as a whole.
1.6. "BUSINESS DAYS" means any day other than a Saturday, Sunday or a
Massachusetts or Federal holiday or a day when banks are generally closed in
Massachusetts.
1.7. "BUYER'S REPORT" shall have the meaning ascribed thereto in
Section 2.3.
2
1.8. "CANADIAN PURCHASED ASSETS" means all Assets of the Canadian
Seller (including without limitation the Purchased Assets of the Canadian
Seller) other than the Excluded Assets.
1.9. "CERIDIAN PERFORMANCE PARTNERS" means any division, Affiliate or
subsidiary of Ceridian conducting the Work/Family Business.
1.10. "CLOSING" means the completion of the delivery on the Closing Date
of all of the documents described or referred to in Article 7 of this Agreement
and performance of all of the actions described in Article 7 of this Agreement.
1.11. "CLOSING BALANCE SHEET" shall have the meaning ascribed thereto in
Section 2.3(b).
1.12. "CLOSING BOOK VALUE" means the amount by which the Net Book Value
of the Purchased Assets included on the Closing Balance Sheet exceeds the
Assumed Liabilities.
1.13. "CLOSING DATE" means the date and time as of which the Closing
takes place.
1.14. "CLOSING PAYMENT" means the amounts payable pursuant to Section
2.2(a), as adjusted pursuant to Section 2.3(a).
1.15. "COBRA" means Section 4980B of the Code and Part 6 of Subtitle B
of Title I of ERISA.
1.16. "CODE" means the Internal Revenue Code of 1986, as amended.
1.17. "COMPANY PURCHASED ASSETS" means all Assets of the Company other
than the Excluded Assets.
1.18. "COMPANY FACILITY" means the leased premises scheduled on Schedule
4.12(b).
1.19. "COMPANY PRODUCTS" means all products, software, services and
technology of the Work/Family Business as presently conducted.
1.20. "COMPANY SOFTWARE PRODUCTS" means all Software that is used
internally or has been offered or provided, or is contemplated to be offered or
provided, by the Work/Family Business under license for use by Work/Family
Business's customers. Company Software Products does not include Third Party
Software.
1.21. "COMPANY TAX RETURNS" means all Tax Returns filed or required to
be filed by Sellers or their Affiliates with respect to the Work/Family Business
(including any consolidated, combined or unitary Tax Returns to the extent they
relate thereto).
1.22. "COMPANY TAX" means all liability (including, without limitation,
any contingent liability) for any Tax imposed on, relating or attributable to,
or otherwise payable by or with respect to the Work/Family Business or its
Assets in respect of the period prior to the Closing.
1.23. "CONSULTING/COMMUNITY DEVELOPMENT BUSINESS" means all
workplace-related consulting and/or community investment strategy services,
worldwide, which are provided to businesses on a limited, one-time, or
specified-term basis, rather than on a continuing basis, including, without
limitation, (i) workplace diagnostics and assessments, multi-company research
and pilot program
3
development, business measurement and analysis, custom designed manager and
employee interventions in respect of specified issues, consultation, and
implementation services concerning the foregoing, (ii) executive and/or manager
briefings and education, (iii) training services to business executives and/or
managers, (iv) training services to employees, and (v) community investment
strategies and the implementation thereof.
1.24. "CONTRACTS" means, except as otherwise provided to the contrary in
this Agreement, all contracts and agreements (written or oral), contract
rights, license agreements, purchase and sales orders, and other executory
commitments.
1.25. "CORPORATE SELLERS" means the Company, the Canadian Seller and the
U.K. Seller.
1.26. "CUSTOMER CONTRACTS" means, except as otherwise provided to the
contrary in this Agreement, all customer Contracts of the Work/Family Business.
1.27. "DECIDING ACCOUNTING FIRM" means PriceWaterhouseCoopers LLC.
1.28. "DISPUTE RESOLUTION" means the following process: if Sellers and
Buyer are unable to resolve any dispute relating to the information contained
in the Buyer's Report, Sellers and Buyer shall submit any disputed items to the
Deciding Accounting Firm, which shall then make a determination as soon as
practicable with respect to the issue or issues so submitted and shall furnish a
written copy of such determination to each of Sellers and Buyer, which
determination shall be binding on Sellers and Buyer.
1.29. "DISPOSAL SITE" means a landfill, disposal agent, waste hauler, or
recycler of Hazardous Materials.
1.30. "EFFECTIVE TIME" means 11:59 P.M. (Eastern Standard Time) on
November 15, 1998.
1.31. "ENCUMBRANCE" means any security interest, mortgage, lien, charge,
assessment, adverse claim, restriction, easement or other encumbrance of any
kind, including, but not limited to, with respect to real property, any
exceptions to title, recorded and unrecorded.
1.32. "ENVIRONMENTAL LAWS" means all laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any Governmental Entity which
prohibits, regulates or controls any Hazardous Material or any Hazardous
Materials Activity, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Resource
Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act,
the Clean Air Act, comparable laws, rules, regulations, orders, treaties,
statutes and codes of other Governmental Entities, and the regulations and
publications promulgated pursuant to any of the foregoing, and all amendments
and modifications of any of the foregoing now or hereafter enacted.
1.33. "ENVIRONMENTAL PERMIT" means any approval, permit, license,
clearance or consent required to be obtained from any Governmental Entity with
respect to a Hazardous Materials Activity which is or was conducted by Sellers
or any of their Subsidiaries, or any of their respective predecessors, or
otherwise with respect to the Work/Family Business.
1.34. "EQUIPMENT LEASES" means the equipment leases of the Work/Family
Business listed in Schedule 4.13(b).
4
1.35. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.36. "ERISA BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA, that is subject to any provision of ERISA.
1.37. "ESCROW AGENT" means National City Bank of Minneapolis, Minnesota,
or other such other National banking association as may be designated by
agreement of Sellers and Buyer.
1.38. "ESCROW AGREEMENT" means the Escrow Agreement substantially in the
form attached hereto AS SCHEDULE 1.38.
1.39. "EXCLUDED ASSETS" means cash in excess of Two Million Five Hundred
Forty-seven Thousand Nine Hundred Eighty-two Dollars ($2,547,982), the names
"Work/Family Directions", "WFD" and their derivatives, and those items listed on
SCHEDULE 1.39.
1.40. "EXCLUDED LIABILITIES" means all Liabilities, other than the
Assumed Liabilities, including, without limitation, the following:
(a) Any debts, obligations or liabilities of Sellers or their
Affiliates, whether absolute, accrued, contingent or
otherwise, for (i) Taxes arising with respect to the
operation of the Work/Family Business and/or the
Consulting/Community Development Business on or prior to
the Effective Time other than non-delinquent accrued
payroll Taxes or (ii) Taxes in respect of goods and
services taxes ("GST') in Canada or VAT in the United
Kingdom, as a result of the transactions contemplated by
this Agreement or sales taxes in the United States, Canada
or the United Kingdom as a result of the transactions
contemplated by this Agreement or (iii) the costs of
providing a surety or other guaranty in respect of any
Encumbrance imposed by a Governmental Entity upon any of
the Purchased Assets as a result of Sellers' failure to pay
any Taxes referred to in clause (a)(i) above;
(b) Any Liabilities of Sellers or their Affiliates with respect
to litigation which is, as of the Closing, pending, or
which relates to any act, omission, or event arising prior
to Closing;
(c) Any Liabilities of Sellers or their Affiliates of any kind
or nature, whether absolute, accrued, contingent or
otherwise, which, directly or indirectly, arises under or
relates to any Company ERISA Benefit Plan, Company
Non-ERISA Benefit Arrangement or Employee Agreement (other
than any Employee Agreement listed on Schedule 1.40(c)),
as such terms are defined in Section 4.18, including,
without limitation, any liabilities of Sellers or their
Affiliates of any kind or nature, whether absolute,
accrued, contingent or otherwise, which directly or
indirectly relate to the Work/Family Directions, Inc.
Performance Shares Plan adopted and effective
January 1, 1995;
(d) Any Liabilities of Sellers or their Affiliates of any kind
or nature, whether absolute, accrued, contingent or
otherwise, relating to the environment, including, without
limitation, Liabilities arising under Environmental Laws or
arising from any Hazardous Materials Activity;
5
(e) Any Liabilities of Sellers or their Affiliates of any kind
or nature related to any debt to any bank or other
financial institution;
(f) Any Liabilities of Sellers or their Affiliates in respect
of notes payable or accrued earnings interest;
(g) Any Liabilities of Sellers or their Affiliates to any
broker, finder, accountant, or attorney for fees due
arising from, or with respect to work performed in
connection with, this Agreement or the Transaction; and
(h) Any Liability not previously paid, satisfied or discharged
related to the provision of services by CSC Consulting
Corp. to Sellers.
1.41. "FIRST MEASUREMENT DATE" shall mean the date which is eighteen
(18) months from the Closing Date.
1.42. "GAAP" means generally accepted accounting principles in effect in
the United States at the time when and for the period as to which such
accounting principles are to be applied.
1.43. "GOVERNMENTAL ENTITY" means any local, state, provincial, federal,
foreign or international governmental authority, agency or other entity,
including, but not limited to, any court, tribunal or panel.
1.44. "HAZARDOUS MATERIAL" means any material or substance (except for
materials or substances commonly used or managed in connection with an office
building and in compliance with Environmental Laws) that is prohibited or
regulated by any Environmental Law or that has been designated by any
Governmental Entity with competent jurisdiction to be radioactive, toxic,
hazardous, a pollutant or otherwise a danger to health, reproduction or the
environment.
1.45. "HAZARDOUS MATERIALS ACTIVITY" means the possession,
transportation, transfer, recycling, storage, use, treatment, manufacture,
investigation, removal, remediation, release, exposure of others to, sale, or
distribution of, any Hazardous Material or any product containing a Hazardous
Material.
1.46. "INTELLECTUAL PROPERTY RIGHTS" means all of the Corporate Sellers'
rights, title and interest in and to all: (a) United States and foreign patents
and patent applications related to the Work/Family Business; (b) copyrights in
computer programs, databases and other works of authorship related to the
Work/Family Business; (c) trade secrets and proprietary or confidential business
and technical information related to the Work/Family Business; (d) proprietary
"know-how," whether or not protectable by patent, copyright or trade secret
right related to the Work/Family Business; (e) United States and foreign
trademarks, service marks, trade names and associated goodwill, and
registrations or applications for registration of any such marks or names
related to the Work/Family Business; (f) Company Software Products related to
the Work/Family Business; and (g) Third-Party Software related to the
Work/Family Business.
1.47. "LAW(s)" means all applicable laws, statutes, ordinances, rules,
regulations, judgments, administrative requirements, injunctions, stipulations,
decrees and orders of any Governmental Entity.
6
1.48. "LEASED REAL PROPERTY" means all real property (other than Owned
Real Property) leased, occupied, operated or controlled by the Corporate Sellers
or their Affiliates and used in connection with the Work/Family Business.
1.49. "LIABILITIES" means any and all claims, assessments, charges,
indebtedness or obligations of any nature whatsoever, whether absolute, accrued,
contingent or otherwise, and whether due or to become due.
1.50. "LOSSES" means all Liabilities, losses, damages (but expressly
excluding incidental, consequential and special damages), costs and expenses
(including, without limitation, reasonable attorneys' and accountants' fees and
expenses) incurred in connection with the investigation, evaluation, settlement,
defense or prosecution of Liabilities, and shall specifically include any and
all claims, costs, damages, fines, penalties, or liabilities which arise from or
in connection with any Environmental Law. If and to the extent a claim for
indemnification under this Agreement is based upon payments to a third party,
Losses shall also include interest thereon from the date the payments were made
until the same have been reimbursed. Interest as described in this section shall
be the publicly announced prime rate (or reference rate) of interest charged by
the principal banker to the party to whom the interest is to be paid, as in
effect from time to time during the period for which interest is payable.
1.51. "MATERIAL ADVERSE EFFECT" means an event, circumstance, fact, or
condition which individually or in the aggregate, would result in a Liability or
Loss as it relates to the Work/Family Business of One Hundred Fifty Thousand
Dollars ($150,000).
1.52. "NET BOOK VALUE" shall mean (a) the gross book value of the
Purchased Assets (except for those Purchased Assets classified as intangible
assets), less (b) reserves for depreciation, shrinkage and obsolence.
1.53. "NON-ERISA BENEFIT ARRANGEMENTS" means any policy, practice,
program, arrangement, agreement, plan, trust or other method of contribution or
compensation that (a) provides benefits, perquisites or remuneration, other than
current cash compensation, to an employee, former employee or other individual
who provides or provided personal services other than as an employee or to the
dependent or beneficiary of such an employee, former employee or other
individual and (b) is not an ERISA Benefit Plan. Non-ERISA Benefit Arrangement
includes, without limitation, any policy, practice, program, arrangement,
agreement, plan, trust or other method of contribution or compensation providing
for the grant award or sale of stock, stock options, phantom stock or stock
appreciation or depreciation rights; direct or indirect extensions of credit;
health, life or disability benefits; retirement, profit sharing or deferred
compensation benefits; severance and separation benefits; workers' compensation;
vacation and other paid time off; cafeteria and flexible benefits; and incentive
and fringe benefits.
1.54. "OFFICE LEASES" means the current leases scheduled on Schedule
4.12(b).
1.55. "ORDINARY COURSE" means the ordinary course of business of the
respective Corporate Sellers as it relates to the Work/Family Business,
consistent with past practice.
1.56. "OTHER AGREEMENTS" means (a) the Escrow Agreement described in
Section 6.3; (b) the Assignments of Office Leases described in Section 6.4; (c)
the Assignment and Assumption Agreement described in Section 6.6; (d) the Bills
of Sale described in Section 6.7; (e) the Trademark Assignments described in
Section 6.8; (f) the Copyright Assignments described in Section 6.9; (g) the
Transitional Services Agreement described in Section 6.10; (h) the X. Xxxxxxx
Consulting Agreement described in Section 6.11; (i) the Xxxxxxx Xxxx Consulting
Agreement described in Section 6.12; (j) the U.K. Lease
7
Assignment described in Section 6.16; (k) the Assignment of intellectual
property rights in the U.K. database and the U.K. pamphlets; and (l) the
Trademark License Agreement referred to in Section 6.18.
1.57. "OWNED REAL PROPERTY" means all real property in which the Company
or its Affiliates has any fee or other direct or indirect ownership interest and
which is used in connection with the Work/Family Business.
1.58. "PERMITTED ENCUMBRANCES" means:
(a) Encumbrances in favor of the Buyer or any of its
Affiliates;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in SCHEDULE 1.58(b) hereto;
(c) Encumbrances for Taxes, to the extent that payment of the
same may be postponed or is not required to be paid prior
to the Effective Time in accordance with the provisions of
the Agreement (provided, however, this clause Section
l.58(c) shall not be construed to limit Sellers'
obligations with respect to Sections l.40(a) and 10.1 (b));
(d) landlords' and lessors' liens in respect to rent not in
default or Encumbrances in respect of pledges or deposits
under workmen's compensation, unemployment insurance,
social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds
incidental to litigation; mechanics', laborers' and
materialmen's and similar Encumbrances, if the obligations
secured by such Encumbrances are not then delinquent; liens
securing the performance of bids, tenders, or contracts
(other than for the payment of money); and statutory
obligations incidental to the conduct of its business and
that do not in the aggregate materially detract from the
value of its property or materially impair the use thereof
in the operation of its business;
(e) rights of lessors under capital leases; and
(f) easements, rights of way, restrictions or Encumbrances
relating to real property and not interfering in a material
way with the Ordinary Course.
1.59. "PERSON" means any natural person, firm, unlimited liability
company, limited liability company, limited liability partnership, corporation,
company (as defined by Companies Act 1985), partnership, association, trust, or
governmental body.
1.60. "PERSONAL PROPERTY" means all inventory, machinery, parts,
equipment, supplies, furniture, computer hardware, automobiles and vehicles and
other tangible personal property.
1.61. "PURCHASE PRICE" means the total amount of money to be paid by
Buyer for the Purchased Assets in accordance with Section 2.2 of this Agreement.
1.62. "PURCHASED ASSETS" means all Assets of the Corporate Sellers,
including, without limitation, the following:
8
(a) All of the Corporate Sellers' rights under the Contracts
associated with the Work/Family Business, Office Leases and
Equipment Leases arising after the Effective Time;
(b) All of the Corporate Sellers' rights in the Intellectual
Property Rights;
(c) All of the Corporate Sellers' owned Personal Property,
including, without limitation, the tangible personal
property listed on Schedule 4.9;
(d) All of the Corporate Sellers' licenses, permits, and other
governmental authorizations related to the Work/Family
Business, to the extent assignable;
(e) Goodwill of the Work/Family Business;
(f) All Records; and
(g) All accounts receivable with respect to the Work/Family
Business.
provided, however, in no event shall the Purchased Assets include any of the
Excluded Assets.
1.63. "RECORDS" means originals or duplicate copies of all documents,
records, and files, in whatever form, related to the Purchased Assets, or to
employees of the Work/Family Business whose employment transfers to Buyer.
1.64. "RELATED PARTY" means any company (whether or not incorporated)
which is considered a single employer with the Company under Section 414(b),
(c), (m) or (o) of the Code or Title I or IV of ERISA.
1.65. "SECOND MEASUREMENT DATE" shall mean the date which is
twenty-seven (27) months from the Closing Date.
1.66. "SELLER'S REPORT" shall have the meaning ascribed thereto in
Section 2.3.
1.67. "SOFTWARE" means computer programs and databases in any form
(including source code and binary code), and in any stage of development, test
and release, together with all related technical documentation, user manuals,
data files, databases and other works of authorship, and all information and
materials necessary or required for the effective installation, maintenance, use
and support of such computer programs.
1.68. "SUBSIDIARY" of a designated entity means any corporation or other
entity of which securities (or other ownership interests) having ordinary voting
power to elect a majority of the board of directors (or other persons performing
similar functions) are at the time directly or indirectly owned by the
designated entity.
1.69. "TAX" OR "TAXES" means any tax or other levy, assessment, tariff,
duty or deficiency imposed or collected by any Governmental Entity, including,
without limitation, all federal, state, provincial, county, local, and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
occupation, property, excise, value added, goods and services and other taxes,
duties or assessments (including the recapture of any tax items such as
investment tax credits), together with any related interest, penalties and
additions and shall include any transferee or secondary liability for a Tax
9
and any Tax liability arising as a result of being (or ceasing to be) a member
of any affiliated, consolidated, combined, or unitary group or being included
(or required to be included) in any Tax Return relating thereto.
1.70. "TAX AGREEMENT" means any sharing, allocation, indemnity or other
agreement or arrangement (written or unwritten) with any Affiliate relating to
Taxes (other than this Agreement).
1.71. "TAX RETURN" means any return, report, information return or other
documents (including any related or supporting schedules, statements or
information) filed or required to be filed with any Tax authority or
Governmental Entity in connection with the determination, assessment or
collection of any Taxes of any Person or the administration or any Laws relating
to any Taxes.
1.72. "THIRD PARTY SOFTWARE" means all Software licensed, leased or
loaned by third party vendors or contractors for use by any Seller in connection
with the internal business operations of the Work/Family Business, or for
distribution by the Work/Family Business under sublicense for use by customers,
either on a stand-alone basis or in combination with Company Software Products.
1.73. "TOP TWENTY CUSTOMERS" shall mean the customers of the Work/Family
Business listed on SCHEDULE 1.73 hereto, comprising the twenty (20) largest
customers of the Work/Family Business under written Contract with the Company as
of the Closing Date, based on annualized revenues from January 1, 1998 through
the Closing Date (or such portion of that period during which such customer was
under Contract with the Company).
1.74. "TRANSACTIONS" means the transactions contemplated by this
Agreement.
1.75. "U.K. LEASE" means a lease of the premises at 0xx Xxxxx, Xxxxxx
Xxxxx, 000- 000 Xxxx Xxxxxxx, Xxxxxx XX0X 0XX and made between Kingsway Group
Plc, WFD and Work/Family Directions, Inc.
1.76. "U.K. PURCHASED ASSETS" means all Assets of the U.K. Seller
(including without limitation the Purchased Assets of the U.K. Seller) other
than the Excluded Assets.
1.77. "WORK/FAMILY BUSINESS" means:
(a) All services, worldwide, which support broad groups of
employees and managers in respect of work/life issues and
which are delivered, as part of a generally available
assistance or managerial coaching program, to employees in
person or via mail, audio tape, video tape, e-mail,
intranet, internet, or through a program of education
seminars; such services include, without limitation,
referrals to care or other professional resources,
non-clinical consultations, employee assistance programs,
general managerial coaching, information on life
transitions, and personal concierge services; and
(b) the Consulting/Community Development Business conducted in
Canada and in the United Kingdom.
10
ARTICLE
2.
THE TRANSACTIONS
2.1. THE TRANSACTIONS. Subject to the terms and conditions herein, as
of the Effective Time, (i) the Corporate Sellers shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase and acquire from the
Corporate Sellers, all of the Purchased Assets free and clear of all
Encumbrances other than Permitted Encumbrances and (ii) Buyer shall assume from
the Corporate Sellers all of the Assumed Liabilities. In furtherance of the
foregoing: (i) the Company shall sell, transfer, assign, convey and deliver to
Ceridian the Company Purchased Assets free and clear of all Encumbrances other
than Permitted Encumbrances, and Ceridian shall purchase and acquire from the
Company all of the Company Purchased Assets free and clear of all Encumbrances
other than Permitted Encumbrances; (ii) the Canadian Seller shall sell,
transfer, assign, convey and deliver to the Canadian Buyer the Canadian
Purchased Assets free and clear of all Encumbrances other than Permitted
Encumbrances, and the Canadian Buyer shall purchase and acquire from the
Canadian Seller all of the Canadian Purchased Assets free and clear of all
Encumbrances other than Permitted Encumbrances; and (iii) the U.K. Seller shall
sell, transfer, assign, convey and deliver to the U.K. Buyer the U.K. Purchased
Assets with full title guarantee (including, without limitation, free and clear
of all Encumbrances, except Permitted Encumbrances), the U.K. Buyer shall
purchase and acquire from the U.K. Seller all of the U.K. Purchased Assets and
the U.K. Buyer will acquire the Work/Family Business in the United Kingdom as a
going concern and will carry it on in succession to the U.K. Seller.
2.2. THE PURCHASE PRICE.
(a) GENERAL. Subject to the adjustment described in Section
2.3, the Purchase Price for the Transactions shall be the
sum of the following:
(i) In respect of the Company:
(A) Seventy-nine Million Six Hundred
Twenty-five Thousand Dollars
($79,625,000), Seventy-eight Million
Six Hundred Twenty-five Thousand
Dollars ($78,625,000) of which shall
be paid in cash or immediately
available funds to the Company and One
Million Dollars ($1,000,000) of which
shall be paid in cash or immediately
available United States funds to the
Escrow Agent, in each case by
Ceridian; and
(B) The contingent payments described in
Section 2.2(b)
(ii) In respect of the Canadian Seller, Forty-six
Thousand Canadian Dollars (C$46,000) payable
by the Canadian Buyer to the Canadian Seller
via check; and
(iii) In respect of the U.K. Seller, Two Hundred
Three Thousand British Pound Sterling
(L203,000) payable by the U.K. Buyer to the
U.K. Seller in cash or immediately available
British funds;
11
(b) Contingent Payments.
(i) FIRST MEASUREMENT PAYMENT. On the first
business day of the first calendar month
following the First Measurement Date,
Ceridian shall make a payment (the "First
Contingent Payment") to the Company in cash
or immediately available United States funds,
determined as follows: if at least the
respective number set forth below of the Top
Twenty Customers remain as customers of
Ceridian Performance Partners as of the First
Measurement Date, then the amount of the
First Contingent Payment shall be as set
forth below:
First Contingent
Number of Top Twenty Customers Payment Amount
------------------------------ ----------------
At least 19 $3,000,000
At least 18 $2,250,000
At least 17 $1,500,000
At least 16 $750,000
Fewer than 16 $0
So, by way of example, if the number of Top
Twenty Customers remaining as of the First
Measurement Date is 18, the amount of the
First Contingent Payment would be Two Million
Two Hundred Fifty Thousand Dollars
($2,250,000). Notwithstanding the foregoing,
for the purposes of this subsection
2.2(b)(i), any Top Twenty Customer who,
following the Closing and prior to the First
Measurement Date, terminates its relationship
with Ceridian Performance Partners primarily
as a result of Ceridian Performance Partners'
failure to perform its obligations to such
customer pursuant to applicable Contracts,
shall be deemed to have remained as a
customer of Ceridian Performance Partners as
of the First Measurement Date; and, PROVIDED
FURTHER, that if any two or more Top Twenty
Customers merge or consolidate with one
another and Ceridian Performance Partners
continues to service the employees of the
combined entity, then the number of such Top
Twenty Customers shall not be deemed reduced
as a result of such merger or consolidation,
and, PROVIDED FURTHER, that if a Contract
with a Top Twenty Customer is renewed or
rewritten in the name of Ceridian Performance
Partners, such Top Twenty Customer shall
continue to be deemed a Top Twenty Customer
for purposes of this Section 2.2(b); and
PROVIDED FURTHER, HOWEVER, that in the event
that, following the Closing and prior to the
First Measurement Date, all or substantially
all of the assets or more than fifty percent
(50%) of the equity of any Top Twenty
Customers is acquired by a third party and,
as a result, the business of such Top Twenty
12
Customer no longer remains with Ceridian
Performance Partners (each such customer, an
"Acquired Customer"), then (i) if, following
the Closing and prior to the First
Measurement Date, Ceridian Performance
Partners obtains a new customer or customers
principally as a result of the efforts of X.
Xxxxxxx, and (ii) such customer or customers
enter into a Contract (or Contracts) with
Ceridian Performance Partners pursuant to
which Ceridian Performance Partners'
projected aggregate annual revenues for the
twelve (12) months following such Contract
(or Contracts) can reasonably be expected to
be in excess of the annualized revenues
generated by the Acquired Customer (or
Acquired Customers, as the case may be)
during the period from January 1, 1998
through the Closing Date (or for such portion
thereof during which such Acquired Customer
was under Contract with the Company), then
such newly obtained customer, or such newly
obtained customers in the aggregate, as the
case may be, shall be deemed to have been a
Top Twenty Customer as of the Closing for
purposes of this subsection 2.2(b)(i).
(ii) SECOND MEASUREMENT PAYMENT. On the first
business day of the first calendar month
following the Second Measurement Date,
Ceridian shall make a payment (the "Second
Contingent Payment") to the Company in cash
or immediately available United States funds,
determined as follows: if at least the
respective number set forth below of the Top
Twenty Customers remain as customers of
Ceridian Performance Partners as of the
Second Measurement Date, then the amount of
the Second Contingent Payment shall be as set
forth below:
Second Contingent
Number of Top Twenty Customers Payment Amount
------------------------------ ------------------
At least 19 $2,000,000
At least 18 $1,000,000
At least 17 $500,000
Fewer than 17 $0
So, by way of example, if the number of Top
Twenty Customers remaining as of the Second
Measurement Date is 18, the amount of the
Second Contingent Payment would be One
Million Dollars ($1,000,000). Notwithstanding
the foregoing, for the purposes of this
subsection 2.2(b)(ii), any Top Twenty
Customer who, following the Closing and prior
to the Second Measurement Date, terminates
its relationship with Ceridian Performance
Partners primarily as a result of Ceridian
Performance Partners' failure to perform its
obligations to such customer pursuant to
applicable
13
Contracts, shall be deemed to have remained
as a customer of Ceridian Performance
Partners as of the Second Measurement Date;
and, PROVIDED FURTHER, that if any two or
more Top Twenty Customers merge or
consolidate with one another and Ceridian
Performance Partners continues to service the
employees of the combined entity, then the
number of such Top Twenty Customers shall not
be deemed reduced as a result of such merger
or consolidation, and, PROVIDED FURTHER, that
if a Contract with a Top Twenty Customer is
renewed or rewritten in the name of Ceridian
Performance Partners, such Top Twenty
Customer shall continue to be deemed a Top
Twenty Customer for purposes of this Section
2.2(b); and PROVIDED FURTHER, HOWEVER, that
in the event that following the Closing and
prior to the Second Measurement Date, all or
substantially all of the assets or more than
fifty percent (50%) of the equity of any Top
Twenty Customers is acquired by a third party
and, as a result, the business of such Top
Twenty Customer no longer remains with
Ceridian Performance Partners (each such
customer, a "Second Measurement Acquired
Customer"), then (i) if, following the
Closing and prior to the Second Measurement
Date, Ceridian Performance Partners obtains a
new customer or customers principally as a
result of the efforts of X. Xxxxxxx, and (ii)
such customer or customers enter into a
Contract (or Contracts) with Ceridian
Performance Partners pursuant to which
Ceridian Performance Partners' projected
aggregate annual revenues for the twelve (12)
months following such Contract (or Contracts)
can reasonably be expected to be at least one
hundred fifteen percent (115%) of the
annualized revenues generated by the Second
Measurement Acquired Customer (or Second
Measurement Acquired Customers, as the case
may be) during the period from January 1,
1998 through the Closing Date (or for such
portion thereof during which such Second
Measurement Acquired Customer was under
Contract with the Company), then such newly
obtained customer, or such newly obtained
customers in the aggregate, as the case may
be, shall be deemed to have been a Top Twenty
Customer as of the Closing for purposes of
this subsection 2.2(b)(ii).
2.3. ADJUSTMENTS TO PURCHASE PRICE.
(a) Not later than two business days prior to the Closing Date,
Sellers shall deliver to Buyer their good faith estimate of
the Closing Book Value. If the estimated Closing Book Value
is less than Six Million Dollars ($6,000,000), the Closing
Date Payment shall be reduced by an amount (the "Closing
Adjustment") equal to (a) Six Million Dollars ($6,000,000)
less (b) the estimated Closing Book Value.
14
(b) Within 120 days following the Closing Date, Buyer
will prepare and deliver to Sellers a consolidated
balance sheet (the "Closing Balance Sheet") of the
Work/Family Business, prepared in accordance with
GAAP as utilized by the Corporate Sellers on a
consolidated basis prior to Closing, consistently
applied with the pro forma balance sheet attached as
Schedule 2.3(b), showing, except as noted below, the
Purchased Assets and assumed Liabilities as of the
Effective Time, together with a calculation of the
"Closing Book Value" reflected on the Closing
Balance Sheet ("Buyer's Report"); provided, however,
that for purposes of this subsection 2.3(b) the
Closing Balance Sheet will not include (i) any
Purchased Asset which comprises an intangible asset,
(ii) any Excluded Asset or (iii) any Liability which
is not an Assumed Liability. Notwithstanding the
foregoing or anything else in this Agreement to the
contrary, the Closing Balance Sheet shall be
prepared using the same exchange rates (One Pound
Sterling equals $1.70 U.S. Dollar and One Canadian
Dollar equals $.65 U.S. Dollar). In addition,
notwithstanding anything to the contrary in this
Agreement, for all purposes including tax and
accounting, the profits or losses of the Work/Family
Business from and after the Effective Time shall
accrue for the benefit of, or be to the detriment
of, as the case may be, the Buyer.
(c) Sellers shall have the right to have auditors or
other representatives of their choosing audit the
Buyer's Report and the Buyer shall cooperate with
such audit. Within 60 days after delivery to Sellers
of the Buyer's Report Sellers shall have the right
to object to the information contained in the
Buyer's Report and in such event:
(i) Sellers shall provide Buyer with a written
statement (the "Sellers' Report"), setting
forth an itemized list of Sellers'
objections;
(ii) Sellers and Buyers and their respective
independent accountants, shall attempt to
resolve any dispute as to the information
contained in the Buyer's Report; and
(iii) if the parties and their independent
accountants are unable to reach agreement
within 30 days following delivery of the
Sellers' Report, the parties shall submit to
Dispute Resolution. The fees, costs and
expenses of the Deciding Accounting Firm
shall be paid by the party or parties who do
not prevail in the Dispute Resolution (as
determined by the Deciding Accounting Firm).
(d) Within ten (10) Business Days following the
resolution by the parties of any dispute with
respect to the Buyer's Report or the date on which
Buyer actually receives written determination of the
Deciding Accounting Firm with respect to any such
dispute, as the case may be:
(i) if the Closing Book Value is less than the
remainder of (a) Six Million Dollars
($6,000,000) minus (b) the Closing Adjustment
(if any), then' the Sellers shall make, or
cause the Corporate Sellers to make, a cash
payment to Buyer in an amount equal to such
shortfall; or
(ii) if the Closing Book Value is greater than the
remainder of (a) Six Million Dollars
($6,000,000) minus (b) the Closing Adjustment
(if any),
15
then Buyer shall make a cash payment to the
Company in an amount equal to such overage.
2.4. ASSIGNMENT OF CUSTOMER CONTRACTS. At the Closing, with respect to
all Customer Contracts: (a) each of the Corporate Sellers shall assign all of
its right, title and interest in and to these Customer Contracts (to which it is
a party) (apart from Customer Contracts which relate to the Work/Family Business
in the UK (the "UK Customer Contracts")) to Buyer notwithstanding any provision
in such Customer Contract purporting to prohibit or limit such assignment
without consent or to require the satisfaction of any conditions in order to
effect such assignment (other than conditions relating to the Corporate Sellers'
obligations under such Customer Contracts relating to any matters other than
assignment of such Customer Contracts) and the U.K. Customer Contracts which are
capable of assignment or in relation to which the party to such Customer
Contract other than the U.K. Seller agrees to such assignment shall be assigned
by the U.K. Seller to the U.K. Buyer and for the avoidance of doubt this
Agreement shall constitute an assignment of such Customer Contracts to the U.K.
Buyer; (b) the parties shall jointly communicate with the customers concerning
such assignment; (c) in the event any such customer objects to such assignment
and insists that the Customer Contract continue to be performed by a Corporate
Seller, until the end of the minimum remaining term of such agreement, Sellers
shall at Buyer's expense (with respect to Sellers' out-of-pocket expense,
including reasonable attorneys' fees) provide their full cooperation and
assistance in the resolution of such situation, including by way of causing such
work to be performed by Buyer on a subcontract basis, and in such event, Buyer
shall insure that continued service is provided to the customer under such
contract and any services so provided shall be performed at Buyers cost and for
its benefit; and (d) to the extent that any U.K. Customer Contracts are not
assigned to the U.K. Buyer at Closing, the U.K. Seller will use all reasonable
endeavors to ensure that the benefits of any such contracts be assigned to the
U.K. Buyer as soon as possible after the Closing provided that the Buyer shall
fully indemnify the U.K. Seller in respect of any costs, liabilities or expenses
arising in connection with the assignment of such Customer contracts and which
are incurred by the U.K. Seller and shall cooperate fully with the U.K. Seller
in obtaining such assignments; and (e) for the avoidance of doubt, the U.K.
Seller shall incur no liability in connection with any failure to obtain consent
to the assignment of a U.K. Customer Contract and shall be fully indemnified by
the Buyer in connection with any liabilities arising in connection therewith.
2.5. ASSIGNMENT OF OFFICE LEASES. At the Closing, the Corporate
Sellers shall assign to Ceridian, the Canadian Buyer or the U.K. Buyer, as the
case may be, all rights in the Office Leases (other than with respect to leased
property in the United Kingdom).
2.6. ASSIGNMENT OF EQUIPMENT LEASES. At the Closing, the Corporate
Sellers shall assign to Ceridian, the Canadian Buyer or the U.K. Buyer, as the
case may be, all rights in the Equipment Leases.
2.7. ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS. At the Closing, the
Corporate Sellers shall, to the extent assignable, assign to Ceridian, the
Canadian Buyer or the U.K. Buyer, as the case may be, all rights in the
Intellectual Property Rights (other than any Intellectual Property Rights which
comprise Excluded Assets).
2.8. ASSIGNMENT OF LICENSES, PERMITS, AND OTHER GOVERNMENTAL
AUTHORIZATIONS. At the Closing, the Corporate Sellers shall, to the extent
assignable, assign to Ceridian, the Canadian Buyer or the U.K. Buyer, as the
case may be, the licenses, permits, and other authorizations related to the
Work/Family Business, including those listed in Schedule 4.15(b).
2.9. TRANSFER OF ASSETS.
16
(a) At the Closing, the Corporate Sellers shall deliver
possession of the tangible Purchased Assets to Ceridian,
the Canadian Buyer or the U.K. Buyer, as the case may be,
such delivery to take place at the locations where such
assets have been located in the Ordinary Course prior to
the Closing.
(b) To the extent that any of the rights assigned to Buyer
hereunder are governed by Contracts that also govern
comparable rights of the Corporate Sellers relating to
assets or operations of the Corporate Sellers not included
in the Purchased Assets or the Work/Family Business, Buyer
shall, upon written request of the Corporate Sellers, use
reasonable commercial efforts to enforce each such Contract
against any other parties to such Contract for the benefit
of the Corporate Sellers as a third party beneficiary, to
the extent such Contract affects or applies to assets or
operations of the Corporate Sellers other than the
Work/Family Business or the Purchased Assets.
2.10. ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume and
agree to pay, perform and discharge when due, all of the Assumed Liabilities. In
no event shall Buyer have any obligation to pay, perform and discharge the
Excluded Liabilities. In furtherance of the foregoing; (i) Ceridian shall assume
the Assumed Liabilities associated with the Company Purchased Assets; (ii) the
Canadian Buyer shall assume the Assumed Liabilities associated with the Canadian
Purchased Assets; and (iii) the U.K. Buyer shall assume the Assumed Liabilities
associated with the U.K. Purchased Assets.
ARTICLE
3.
CERTAIN TAX MATTERS
3.1. RESPONSIBILITY FOR TAXES. The Corporate Sellers shall be
responsible for all sales, transfer, and similar taxes or duties, imposed on, or
resulting from, the sale or transfer of the Purchased Assets pursuant to this
Agreement.
3.2. ALLOCATION OF PURCHASE PRICE; OTHER TAX MATTERS.
(a) At or prior to Closing, the Company, Sellers and Buyer
shall allocate the Purchase Price (and all other
capitalized costs) among the Company Purchased Assets as
set forth on SCHEDULE 3.2(a). Such allocation shall be made
as provided in Section 1060 of the Code. Buyer and Sellers
shall report or cause the Company to report (including the
filing of Form 8594 to the Internal Revenue Service) the
sale and purchase of the Purchased Assets for all Tax
purposes in a manner consistent with such allocation.
Schedule 3.2(a) also includes the aggregate fair market
value of each class of assets described in the regulations
promulgated pursuant to Section 1060 of the Code. Buyer and
the Company shall file on a timely basis any amendments
required to Form 8594 as a result of a subsequent increase
or decrease-of the Purchase Price. The Company's United
States Federal Employee Identification Number is
00-0000000. Ceridian's United States Federal Employee
Identification Number is 00-0000000.
(b) The Purchase Price for the Canadian Purchased Assets shall
be allocated in accordance with Schedule 3.2(b). The
Canadian Buyer and Canadian Seller shall follow the agreed
allocation in Schedule 3.2(b) in determining and reporting
17
their liabilities for any Taxes and, without
limitation, shall file their respective Canadian tax
returns prepared in accordance with such
allocations. The Canadian Buyer and Canadian Seller
shall execute jointly an election in the prescribed
form under Section 22 of the INCOME TAX ACT (Canada)
in respect of the accounts receivable of the
Canadian Seller and shall file such election with
their respective Canadian tax returns for their
respective taxation years that include the Effective
Time. The Canadian Buyer and Canadian Seller shall
execute jointly an election in the prescribed manner
under subsection 20(24) of the INCOME TAX ACT
(Canada) in respect of all deposits and other
prepayments received by the Canadian Seller from
customers of its Work/Family Business. At the
Closing, the Canadian Seller and Canadian Buyer
shall execute jointly an election under Section 167
of the EXCISE TAX ACT (Canada) to have the sale of
the Canadian Purchased Assets take place on a GST-free
basis under Part IX of the EXCISE TAX ACT
(Canada) and the Canadian Buyer shall file such
election with its GST return for the reporting
period in which the sale of the Canadian Purchased
Assets takes place.
(c) The Purchase Price for the U.K. Purchased Assets shall be
allocated in accordance with Schedule 3.2(c). The U.K.
Seller and U.K. Buyer shall follow the agreed allocation in
Schedule 3.2(c) in determining and reporting their
liabilities for any Taxes and, without limitation, shall
file their respective United Kingdom tax returns prepared
in accordance with such allocations. The Sellers and the
Buyer intend that, and shall use all reasonable efforts to
ensure that, the sale and transfer of the UK Purchased
Assets pursuant to this Agreement shall be treated as
neither a supply of goods nor a supply of services for the
purposes of the UK Value Added Tax and accordingly the U.K.
Seller and the U.K. Buyer shall when required to do so give
notice of such sale and transfer to H.M. Customs and Excise
pursuant to paragraph 11 of Schedule 1 to the Value Added
Tax Xxx 0000 ("VATA") or regulation 6 of the Value Added
Tax Regulations 1995 or as otherwise required by law and
the U.K. Seller shall apply (before or as soon as
reasonably practicable after Closing) to H.M. Customs and
Excise and obtain a direction that all records referred to
in Section 49 VATA may be retained by it and the U.K.
Seller undertakes to preserve those records in such a
manner and for such periods as may be required by law and
during such period to give to the U.K. Buyer (on reasonable
prior notice) reasonable access during normal business
hours to such records. If and to the extent that VAT is
determined by H.M. Customs and Excise to be payable on the
sale, such VAT shall be for the account of the U.K. Seller
and (for the avoidance of doubt) any amounts expressed in
this Agreement to be payable by Buyer shall be inclusive of
VAT. The U.K. Buyer warrants that it is or will at Closing
be a taxable person for VAT purposes and that it intends to
use the U.K. Purchased Assets after Closing in carrying on
the same kind of business as that carried on by the U.K.
Seller.
18
ARTICLE
4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter into this Agreement and consummate the
Transactions, Sellers hereby jointly and severally make to Buyer the
representations and warranties contained in this Article 4.
4.1. AUTHORITY, VALIDITY OF AGREEMENT. Each of the Corporate Sellers
has full power and authority to carry on the Work/Family Business as currently
conducted. Each Seller has all requisite corporate power and authority to enter
into this Agreement and the Other Agreements (to the extent such Seller is a
party thereto) and to perform the obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and the Other
Agreements (to the extent such Seller is a party thereto). The execution and
delivery by each Seller of this Agreement and the Other Agreements (to the
extent Seller is a party thereto) and the consummation of the Transactions have
been duly authorized by all necessary action on the part of each Seller and no
other corporate approval is required for the performance by any Seller of his,
her or its obligations hereunder or thereunder. This Agreement has been, and
when executed and delivered on or prior to the Closing each of the Other
Agreements (to the extent such Seller is a party to any Other Agreement) will
have been, duly executed and delivered by each Seller. This Agreement
constitutes, and when executed and delivered at or prior to the Closing each of
the Other Agreements (to the extent such a Seller is a party to the Other
Agreements) will constitute, assuming due authorization, execution and delivery
by Buyer, a valid and binding obligation of each Seller, enforceable in
accordance with its terms (subject to the effect of applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights and to general principles of equity).
4.2. NO VIOLATIONS. Except as set forth on Schedule 4.2, neither (i)
the execution and delivery of this Agreement and, to the extent any Seller is a
party to the Other Agreements, such Other Agreements, by each such Seller nor
(ii) the consummation of the Transactions will: (a) violate any provisions of
the Restated Articles of Organization or Bylaws of the Company, the articles of
association and the memorandum of association of the U.K. Seller, or the
memorandum and articles of association of the Canadian Seller; (b) violate, or
be in conflict with, or constitute a default (or an event which, with or without
due notice or lapse of time, or both, would constitute a default) under, or
cause or permit the acceleration of the maturity of or give rise to any right of
termination, cancellation, imposition of fees or penalties under, any note,
debt, debt instrument, indenture, security agreement, option to purchase, lease,
deed of trust or license, or any other Contract to which any Seller or any of
their Affiliates is a party or by which any of them or any of their Assets is or
may be bound; (c) result in the creation of imposition of any Encumbrance (other
than a Permitted Encumbrance) of any kind upon any of the Purchased Assets under
any debt, obligation, or Contract to which any Seller is a party or by which it
or its Assets is or may be bound; or (d) violate any Laws to which any Seller
may be subject.
4.3. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), no consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required with respect to any Seller in connection with the execution, delivery
and performance of this Agreement and the Other Agreements by any Seller (which
is a party thereto) or the consummation by any Seller of the Transactions.
19
4.4. OTHER CONSENTS. Except as set forth on Schedule 4.4. no consent,
waiver or approval of, or notice to, any third party is required or necessary to
be obtained by any Seller in connection with the execution and delivery of this
Agreement or any Other Agreements to which such Seller is a party and the
performance of Sellers' respective obligations hereunder and thereunder.
4.5. ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 4.5,
since January 1, 1998, neither any of the Corporate Sellers nor their Affiliates
to the extent it affects the Work/Family Business, has:
(a) Suffered any change or changes which, individually or in
the aggregate, have had or may reasonably be expected to
have, a Material Adverse Effect on the Business Condition
of the Work/Family Business;
(b) Granted any increase in the compensation of officers or
employees (other than normal increases to non-officer
employees in the Ordinary Course);
(c) Entered into any other transaction, Contract, commitment or
arrangement other than in the Ordinary Course;
(d) Permitted or allowed any of the Purchased Assets to be
subjected to any Encumbrance other than a Permitted
Encumbrance which remains in effect at the date hereof;
(e) Sold, leased or otherwise disposed of any of its Assets,
except in the Ordinary Course;
(f) Licensed, sold, transferred, pledged, modified, disposed of
or permitted to lapse any Intellectual Property Right; or
(g) Agreed, whether in writing or otherwise, to take any action
described in paragraphs (a) through (f) above.
4.6. FINANCIAL STATEMENTS.
(a) Attached as SCHEDULE 4.6 are complete copies of the
following financial statements of the Corporate Sellers or
the Work/Family Business, as the case may be (collectively,
the "Financial Statements"): (i) audited consolidated
financial statements as of December 31, 1995, December 31,
1996 and December 31, 1997 and an unaudited product line
profit and loss statement for the Work/Family Business for
the year ended December 31, 1997; (ii) unaudited
consolidated balance sheets and income statements of the
Corporate Sellers as of March 31, 1998, June 30, 1998,
September 30, 1998 and October 31, 1998; and (iii)
unaudited product line profit and loss statements of the
Work/Family Business as of March 31, 1998, June 30, 1998,
September 30, 1998 and October 31, 1998, an accrued expense
reconciliation as of October 31, 1998 and an unaudited
balance sheet of the Work/Family Business as of October 31,
1998 (the "October 31, 1998 Balance Sheet") (collectively,
the "Unaudited Financial Statements").
20
(b) Except as disclosed in the Financial Statements, the
Financial Statements (i) have been prepared in accordance
with GAAP consistently applied for all periods (except,
with respect to the Unaudited Financial Statements, for
normal recurring year-end adjustments (the effect of which
will not be materially adverse) and the absence of notes
which, if presented, would not differ materially from those
included in the December 31, 1997 audited financial
statements included in the Financial Statements) and fairly
present in all material respects the consolidated financial
position of the Corporate Sellers and the Work/Family
Business, as the case may be, as of the respective dates
thereof, and the results of operations (or income or loss)
for the Corporate Sellers and the Work/Family Business, as
the case may be, and, in the case of the audited Financial
Statements only, changes in shareholders' equity and
changes in cash flow (or financial position) for the
periods then ended.
(c) The general ledger, accounts receivable, accounts payable,
bank reconciliations and payroll records of the Corporate
Sellers have been maintained in the Ordinary Course.
4.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 4.7, the Corporate Sellers have no Liabilities (apart from obligations
for future performance under the Customer Contracts, the Office Leases, and the
Equipment Leases or any Contract set forth on any schedule delivered pursuant to
Section 4.13) which could adversely affect the Business Condition of the
Work/Family Business, except:
(a) Liabilities that are fully accrued or reserved against in
the October 31, 1998 Balance Sheet which have not been paid
or discharged since the date thereof; and
(b) Liabilities incurred since the date of the October 31, 1998
Balance Sheet in the Ordinary Course.
4.8. PURCHASED ASSETS.
(a) TITLE. The Corporate Sellers have good and marketable title
to all of the Purchased Assets. None of such Purchased
Assets is subject to any Encumbrance except for Permitted
Encumbrances.
(b) GENERAL. The Purchased Assets together with the Excluded
Assets constitute all of the property and assets, real,
personal and mixed, tangible and intangible, presently used
to carry on the Work/Family Business, and the Purchased
Assets are adequate to carry on the Work/Family Business as
presently conducted.
4.9. PLANT, PROPERTY, AND EQUIPMENT. Schedule 4.9 contains a true and
correct list of all of the tangible Purchased Assets, except for items with an
initial acquisition value of Seven Hundred Fifty Dollars ($750) or less. The
Leased Real Property, and other plant, property, equipment, leasehold
improvements, and other tangible Assets of the Work/Family Business conform in
all respects with all Laws, are, except as set forth in Schedule 4.9, in good
operating condition and repair (ordinary wear and tear excepted) and are
adequate in all respects for the purposes for which they are being used.
21
4.10. ORDERS, COMMITMENTS AND RETURNS. All accepted and unfulfilled
orders for the sale of Company Products were made in the Ordinary Course. There
are no written claims pending and unresolved against the Company or its
Affiliates with respect to the Work/Family Business relating to unsatisfactory
performance of services by the Corporate Sellers.
4.11. DEFECTS IN PRODUCTS, WARRANTIES. There are no defects in the
Company Products sold by the Corporate Sellers or their Affiliates which would
adversely affect the performance and quality of such products or services. There
are no express or implied warranties outstanding with respect to the Company
Products except as set forth in SCHEDULE 4.11 hereof.
4.12. REAL PROPERTY.
(a) OWNED REAL PROPERTY. Sellers do not own and have not in
the past owned any Owned Real Property used in connection
with the operation of the Work/Family Business.
(b) LEASED REAL PROPERTY AGREEMENTS. SCHEDULE 4.12(b) sets
forth a true and complete list of all Leased Real Property
and a copy of all of the Office Leases relating thereto.
All the Office Leases are in full force and have not been
further modified, amended, or altered, in writing or
otherwise. Except as expressly set forth in the Office
Leases, none of the leasehold interests of the Corporate
Sellers or their Affiliates in the Leased Real Property is
subject to subordination, foreclosure, termination,
cancellation or extinguishment, whether with notice, by way
of operation of law or otherwise, absent a default under
the lease by the tenant. None of the Office Leases (except
as contemplated by the Transactions) is in default in any
respect by any of the Corporate Sellers or, to Sellers'
Best Knowledge, by other third parties thereto, and no
circumstance exists (other than the need to obtain landlord
consents to the Transactions), which, with notice, the
passage of time or both would (i) constitute a default
under the Office Leases, (ii) provide a basis for
termination under such Office Leases prior to their normal
expiration dates, or (iii) (except as contemplated by the
Transactions) grant to a third party the right to occupy
the premises subject to such Office Leases. There are no
other Contracts to which any Seller is a party that concern
right, title or interest in and to the Leased Real Property
or grant to a third party the right to occupy the premises
used in the Work/Family Business.
(c) LEGAL PROCEEDINGS AFFECTING PROPERTY. Except as disclosed
on Schedule 4.12(c), to the Best Knowledge of the Sellers,
with respect to the Work/Family Business there is not: (i)
any planned public improvement which will result in any
charge being levied or assessed against any Leased Real
Property or which would create any Encumbrance upon such
property; (ii) any condemnation proceeding pending with
respect to any Leased Real Property; (iii) any proposal (of
which Sellers have Best Knowledge) by a Tax authority to
change materially the assessed value or assessment rates of
any Leased Real Property; or (iv) any other pending claim,
suit, proceeding, order or demand of any Governmental
Entity or any Persons which could have an adverse impact on
the value, use or condition of any Leased Real Property.
22
(d) UTILITIES. All utilities necessary for the normal use and
operation of the Leased Real Property for the purposes for
which they are used by the Work/Family Business in the
Ordinary Course are available at such property.
(e) DISPUTES. No Seller has received from any third party any
notice of any claim, dispute or controversy with respect to
any of the Contracts of the Corporate Sellers or their
Affiliates relating to the Work/Family Business which is
required to be listed in any of the Schedules to this
Section 4.12.
4.13. CONTRACTS.
(a) SCHEDULE 4.13(a)(i) contains a complete list of certain
executory Contracts of the Corporate Sellers' with
customers which Contracts, in the aggregate, comprise at
least seventy percent (70%) of projected fiscal year 1998
annual revenue with respect to the Work/Family Business and
a list of all customers of the Work/Family Business. For
purposes of the preceding sentence a "customer" is a Person
who has purchased goods or services from any of the
Corporate Sellers pursuant to a Contract in connection with
the Work/Family Business since January 1, 1998 or has
committed to purchase goods or services after the date
hereof. SCHEDULE 4.13(a)(ii) contains a list of all written
proposals to customers or potential customers of the
Work/Family Business currently outstanding but unaccepted.
To the Best Knowledge of Sellers, SCHEDULE 4.13(a)(iii)
contains a description of all material oral proposals to
customers or potential customers of the Work/Family
Business currently outstanding but unaccepted. Except as
set forth in SCHEDULE 4.13(a)(iv), since October 1, 1998,
no customers of the Work/Family Business have canceled,
terminated or failed to renew such Contracts, or notified
the Company in writing of their intent to cancel or
terminate or not to renew their Contracts, or, to Sellers'
Best Knowledge, orally notified the Sellers of such
intention, or, to Seller's Best Knowledge, put the services
subject to such Contract out for bid.
(b) SCHEDULE 4.13(b) contains a complete list of Equipment
Leases.
(c) SCHEDULE 4.13(c) contains a complete list of all suppliers
of the Work/Family Business who, since January 1, 1998,
have invoiced any Seller or their Affiliates with respect
to the Work/Family Business for Twenty-five Thousand
Dollars ($25,000) or more, including the types of products
and/or services provided by each such supplier.
(d) SCHEDULE 4.13(d) sets forth a true and complete list of all
Contracts of the types listed below to which any of the
Corporate Sellers is bound (which have not expired or been
terminated), or by which it or any of its Assets is in any
respect bound in connection with the Work/Family Business:
(i) Employment agreements and any written offers
of employment outstanding.
(ii) Royalty agreements.
23
(iii) Consulting agreements for the provisions of
consulting services to any of the Corporate
Sellers.
(iv) Joint venture or partnership agreements with
any other entity.
(v) [INTENTIONALLY OMITTED]
(vi) Non-competition or similar agreements which
prevent any of the Corporate Sellers (to the
extent it relates to the Work/Family
Business) from competing with any Person or
confidentiality or employee non-solicitation
agreements with any other Person.
(vii) Capitalized leases.
(viii) Any Contract (other than a Contract with a
"customer"' as defined in the second sentence
of Section 4.13(a)), not listed in a Schedule
to this Agreement, requiring the performance
by any of the Corporate Sellers (with respect
to the Work/Family Business) of any
obligation for a period of time extending
more than ninety days from and after the date
of this Agreement or requiring (with respect
to the Work/Family Business) any of the
Corporate Sellers after the date hereof to
pay a consideration or incur costs of more
than Twenty-five Thousand Dollars ($25,000).
SCHEDULE 4.13(d) is organized by the relevant subcategory
described above and sets forth, with respect to each Contract, the
names of the parties thereto, the date of the Contract, and all
amendments or modifications thereto.
(e) The Corporate Sellers (i) have in all respects performed,
and are now performing, the obligations of the Corporate
Sellers under any Contract referred to in the Schedules
delivered pursuant to this Section 4.13, and (ii) are not
in default (or would by the lapse of time or the giving of
notice or both be in default) in respect of any Contract
referred to in the Schedules delivered pursuant to this
Section 4.13. Each of the Contracts shown on the Schedules
delivered pursuant to this Section 4.13 is in full force
and effect and is a valid and enforceable obligation
against the Corporate Sellers (to the extent a Corporate
Seller is a party thereto), and, to the Best Knowledge of
Sellers, against the other party thereto in accordance with
its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws
affecting creditors' rights, and to general principles of
equity). Except as set forth in Schedule 4.13(e), to the
Best Knowledge of Sellers, no other parties to such
Contracts is in default in any respect (or would by the
lapse of time or the giving of notice or both be in default
in any respect) thereunder or has breached in any respect
any terms or provisions thereof.
(f) No Seller has received from any third party any notice of
any claim, dispute or controversy with respect to any of
the Contracts relating to the Work/Family Business, which
is required to be listed in any of the Schedules delivered
pursuant to this Section 4.13, nor has any Seller or any of
their Affiliates
24
received notice or warning of alleged nonperformance, delay
in delivery or other noncompliance with respect to its
obligations under any such Contracts.
(g) True and complete copies of all of the original Contracts
(and any current renewal letters relating thereto) referred
to in the Schedules delivered pursuant to this Section 4.13
have been delivered to Buyer (or, in the case of Contracts
with provider Affiliates of the Work/Family Business, true
and complete copies of original Contracts or standard form
contracts and a listing of material deviations therefrom).
4.14. LITIGATION. Except as described on Schedule 4.14, there are no
suits, claims, actions, arbitrations, litigations, legal, administrative or
other proceedings (including without limitation permit revocations, permit
amendments, or administrative complaints of discrimination) or governmental
investigations, pending, or to Sellers' Best Knowledge, threatened against or
adversely affecting the Purchased Assets, or involving any Seller regarding the
Work/Family Business or any of the Corporate Sellers. There are no judicial or
administrative actions, proceedings or investigations pending or, to Sellers'
Best Knowledge, threatened (or any reasonable basis therefor) that question the
validity of this Agreement or the Other Agreements or any action taken or to be
taken by any Seller in connection with this Agreement or the Other Agreements.
4.15. COMPLIANCE WITH LAWS; LICENSES.
(a) The operations and business of the Work/Family Business has
been conducted, and is being conducted, in all respects in
compliance with all Laws and, with respect to the
Work/Family Business, no Seller nor any of its Affiliates
has received any notification that the Work/Family
Business, or any of the Corporate Sellers or any of their
Affiliates, is in violation of any Laws.
(b) SCHEDULE 4.15(b) hereto sets forth a true and complete list
of all governmental approvals, permits, licenses,
certifications or other authorizations required to conduct
the Work/Family Business as presently conducted. All
approvals, permits, licenses, certifications or other
authorizations necessary to conduct the Work/Family
Business as presently conducted have been obtained and are
in full force and effect, and are being complied with in
all respects.
(c) Except as set forth in SCHEDULE 4.15(c) there are no
judgments, orders, injunctions, decrees, stipulations,
awards (whether rendered by a Governmental Entity or by
arbitration) or private settlement agreements presently in
effect involving any Seller or their Affiliates with
respect to the Work/Family Business or against any of their
respective Assets related to the Work/Family Business. All
of the foregoing set forth in Schedule 4.15(c) are being
complied with in all respects.
(d) With respect to the Work/Family Business, no Seller nor any
Affiliates of any Seller nor any director, officer,
employee or agent of any of them acting on their behalf, or
any other Person acting on their behalf has, directly or
indirectly, given or agreed to give any gift or similar
benefit to any customer, supplier, competitor or
governmental employee or official which would subject
any of the
25
Purchased Assets or the Work/Family Business, to any
damage or penalty under any Law in any civil, criminal
or governmental litigation or proceeding.
4.16. COMPUTER SOFTWARE AND INTELLECTUAL PROPERTY.
(a) COMPANY SOFTWARE PRODUCTS. SCHEDULE 4.16(a) contains a
complete list of all Company Software Products which
support the Work/Family Business, including proprietary
databases.
(b) THIRD PARTY SOFTWARE. SCHEDULE 4.16(b) contains a complete
list of all Third Party Software, and all corresponding
license agreements (including title of agreement, effective
date, and names of all parties thereto) under which any
rights to use or distribute Third Party Software have been
granted to any of the Corporate Sellers in respect of the
Work/Family Business, other than license agreements
included in shrink-wrapped software packages. Sellers have
delivered to Buyer complete, true and correct copies of all
such license agreements.
(c) SOURCE CODE ESCROW. Schedule 4.16(c) contains a list of
all agreements (including title of agreement, effective
date, and names of all parties thereto) under which any of
the Corporate Sellers has delivered source code for any
Company Software Product to be held in escrow and released
upon the occurrence of certain events or conditions. The
Corporate Sellers have delivered to Buyer complete, true
and correct copies of all such source code escrow
agreements.
(d) CERTAIN INTELLECTUAL PROPERTY RIGHTS. Schedule 4.16(d)
contains a complete list of the following items included in
the Intellectual Property Rights: (i) United States and
foreign patents and patent applications; (ii) copyrights in
computer programs and other works of authorship which are
registered with any Governmental Entity, or for which
registration applications have been filed; (iii) United
States and foreign trademarks, service marks and trade
names, and all registrations or applications for
registration of any such marks or names; and (iv) URL
sites.
(e) DISCLOSURES.
(i) The Corporate Sellers have the following rights in
the Intellectual Property Rights:
(aa) SCHEDULE 4.16(e)(i)(aa) contains a list of all
Intellectual Property Rights in which any of the
Corporate Sellers has the exclusive and unrestricted
right to possess, use, modify and prepare derivative
works based on, manufacture, reproduce, license,
sell, distribute and dispose, free and clear of all
Encumbrances and rights of third parties; has valid
and enforceable rights free and clear of all
Encumbrances; and has received no claim that any
Intellectual Property Right is in whole or in part
invalid, unenforceable, ineffective or in violation
of the rights of others.
26
(bb) SCHEDULE 4.16(e)(i)(bb) contains a list of
all Intellectual Property Rights in which any of the
Corporate Sellers has the right to possess, use,
modify and prepare derivative works based on,
manufacture, reproduce, license, sell, distribute
and dispose, subject to restrictions as stated
therein; and has received no claim that any
Intellectual Property Right is in whole or in part
invalid, unenforceable, ineffective or in violation
of the rights of others. Other than any Intellectual
Property Rights specifically scheduled as Excluded
Assets, the Intellectual Property Rights described
on Schedule 4.16(e)(i)(aa), Schedule 4.16(e)(i)(bb)
and Schedule 4.16(e)(i)(cc) constitute all of the
Intellectual Property Rights used in the Work/Family
Business.
(cc) SCHEDULE 4.16(e)(i)(cc) contains a list of
all Intellectual Property Rights in works of
authorship developed by the Consulting/Community
Development Business and heretofore distributed by
the Work/Family Business, in which any of the
Corporate Sellers has the right to possess, use,
modify and prepare derivative works based on,
manufacture, reproduce, license, sell, distribute
and/or dispose, subject to the restrictions as
stated therein; and no Seller has received any claim
that any such Intellectual Property Rights are in
whole or in part invalid, unenforceable, ineffective
or in violation of the rights of others.
(ii) There is no pending claim or litigation and, to each
Seller's Best Knowledge, there is no threatened
claim or litigation, contesting the right to use,
sell, license or dispose of any Company Software
Product or Intellectual Property Right, nor is there
any fact or alleged fact which would reasonably
serve as a basis for any such claim that could limit
the protection afforded by the Intellectual Property
Rights to the use, sale, license, or disposition of
the Company Software Products.
(iii) Each Person who participated in the creation of the
Work/Family Business's Company Software Products
either has executed an assignment of rights of
ownership to a Corporate Seller, as the case may be,
or was an employee of a Corporate Seller acting
within the scope of his or her employment at the
time of such creation.
(iv) Each of the Corporate Sellers is in compliance with
the terms and conditions of all license agreements
governing the use of Third Party Software.
(v) All Third Party Software used by any of the
Corporate Sellers for its internal business
operations (including product development and
testing) is licensed for use only on computer
equipment located at the Corporate Sellers' sites or
on computers under control of the Corporate Sellers'
employees.
27
(vi) Each of the Corporate Sellers has taken all
reasonable steps to safeguard and maintain the
secrecy and confidentiality of all trade secrets and
proprietary or confidential business and technical
information included in the Intellectual Property
Rights, including, without limitation, entering into
appropriate confidentiality or disclosure agreements
with all employees, officers, directors,
consultants, independent contractors and licensees
that serve the Corporate Sellers, true and correct
forms of which have been delivered to Buyer.
(vii) All documents and materials containing trade secrets
or proprietary or confidential business or technical
information of the Corporate Sellers (including
without limitation unpublished source code for the
Company Software Products) are presently and as of
the Effective Time will be located at one of the
premises identified as Leased Real Property in
SCHEDULE 4.12(b), and as applicable, at any escrow
agents' sites listed on SCHEDULE 4.16(c), and to
each Seller's Best Knowledge have not been used,
divulged, or appropriated for the benefit of any
Person other than the Corporate Sellers, or to the
detriment of any of the Corporate Sellers.
(viii) To the Sellers' Best Knowledge, no third party is
infringing on any Intellectual Property Right in a
manner that could limit the protection afforded by
the Intellectual Property Rights to the use, sale,
license or disposition of the Company Software
Products.
(ix) The execution, delivery and performance of this
Agreement and the consummation of the Transactions
will not breach, violate or conflict with any
instrument or material agreement governing any
Intellectual Property Right, will not cause the
forfeiture or termination or give rise to a right of
forfeiture or termination of any Intellectual
Property Right or in any way impair the right of
Buyer to use, sell, license or dispose of or bring
any action for the infringement of, any Intellectual
Property Right or any Company Software Product.
(f) OTHER. The Intellectual Property Rights constitute all of
the intellectual property used in the Work/Family Business.
4.17. ENVIRONMENTAL MATTERS.
(a) There are no underground storage tanks present on any
Company Facility.
(b) Neither the Company nor its Affiliates holds or is required
to hold any Environmental Permits necessary for the
continued conduct of any Hazardous Material Activity of the
Work/Family Business as such activities are currently being
conducted.
(c) No Corporate Seller has transferred (other than through
permitted means in accordance with Laws) or released
Hazardous Materials.
(d) The Corporate Sellers have delivered to Buyer all records
concerning any Hazardous Materials Activities of the
Work/Family Business and all environmental audits and
environmental assessments of any Company Facility
28
conducted at the request of, or otherwise in the
possession of, the Corporate Sellers or any of their
Affiliates.
(e) No Hazardous Material is present on any Company Facility in
a manner which would have a Material Adverse Effect and, no
reasonable likelihood exists that any Hazardous Material
present on other property will come to be present on a
Company Facility.
(f) Neither any Corporate Seller nor any of their Affiliates
with respect to the Work/Family Business has ever conducted
any Hazardous Material Activity in violation of any
applicable Environmental Law. Except as set forth in
Schedule 4.17, no Corporate Seller is engaged in any
Hazardous Materials Activity with respect to the
Work/Family Business which has at any time caused or
resulted in the exposure of any Person to a Hazardous
Material in a manner which has caused or will cause an
adverse health effect to said Person.
(g) Neither Seller nor any of their Affiliates with respect to
the Work/Family Business is liable for any remediation or
removal of Hazardous Materials from any Disposal Site,
including the Company's Facilities, or with respect to
investigation thereof.
(h) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to
Sellers' Best Knowledge threatened, concerning or relating
to any Company Facility, any Environmental Permit or any
Hazardous Materials Activity of the Work/Family Business.
No facts or circumstances exist which could with notice,
the passage of time, or both, result in such an action,
proceeding or claim.
4.18. EMPLOYEE PLANS AND ARRANGEMENTS.
(a) Neither Sellers nor any Related Party sponsors, maintains,
administers, contributes to or has or could reasonably be
expected to have any Liability with respect to any ERISA
Benefit Plan other than an ERISA Benefit Plan specifically
listed on SCHEDULE 4.18(a) (a "Company ERISA Benefit
Plan"). No Company ERISA Benefit Plan is subject to Code
Section 412 or Part 3 of Subtitle B of Title I of ERISA or
Title IV of ERISA. Schedule 4.18(a) also lists the
outstanding balances as of the Effective Time of any loans
under the Company's 40 1 (k) Plan.
(b) No Corporate Seller nor any Related Party sponsors,
maintains, administers, contributes to, is a party to or
has or could reasonably be expected to have any Liability
with respect to (i) any Non-ERISA Benefit Arrangement other
than a Non-ERISA Benefit Arrangement specifically listed on
SCHEDULE 4.18(b) (a "Company Non-ERISA Benefit
Arrangement"), or (ii) employment agreement, collective
bargaining agreement, consulting agreement, confidentiality
agreement, agreement not to compete or other labor
agreement between Seller or a Related Party and any
individual who provides or provided personal services to
either Seller or a Related Party as an employee or
otherwise or such individual's employer or agent (an
"Employee Agreement") other than an Employee Agreement
specifically listed on Schedule 4.18(b).
29
(c) True and complete copies of each of the following documents
have been delivered to Buyer: (i) each Non-ERISA Benefit
Arrangement operated by any of the Corporate Sellers or, a
complete description of any Non-ERISA Benefit Arrangement
that is not in writing and a complete and accurate
description of the individuals covered by each such
arrangement; (ii) all written documents of any nature
establishing the terms and conditions of each Employee
Agreement or a complete description of any Employee
Agreement that is not in writing; (iii) all written
documents of any nature establishing the terms and
conditions of each Company ERISA Benefit plan and related
trust or insurance agreements or contracts evidencing any
funding vehicle with respect thereto; (iv) the three most
recent annual reports on Treasury Form 5500, including all
schedules and attachments, with respect to any plan for
which such a report is required; (v) the form of summary
plan description, including any summary of material
modifications thereto or other modifications communicated
to participants; and (vi) the most recent determination
letter with respect to each Company ERISA Benefit Plan
intended to qualify under Section 401(a) of the Code and
the full and complete application therefor submitted to the
Internal Revenue Service.
(d) There are no facts or circumstances relating to any Company
ERISA Benefit Plan that could, directly or indirectly,
subject Company or any Related Party to any liability
pursuant to COBRA.
(e) There are no facts or circumstances relating to any Company
ERISA Benefit Plan, Non-ERISA Benefit Arrangement operated
by any of the Corporate Sellers or Employee Agreement that
could, directly or indirectly, subject the Buyer or any of
its Affiliates to any Liability.
(f) [INTENTIONALLY OMITTED]
(g) Neither the Canadian Seller, nor any related party
sponsors, maintains, administers or contributes to or has
or could reasonably be expected to have any Liability with
respect to any "registered pension plan" as that term is
defined in subsection 248(l) of the INCOME TAX ACT (Canada)
or with respect to any plans, arrangements, agreements,
programs, policies or practices, whether oral or written,
formal or informal, funded or unfunded, relating to
retirement savings or pensions, including, without
limitation, any group registered retirement savings plan,
or supplemental pension or retirement plan; any bonus,
profit sharing, deferred compensation, incentive
compensation, hospitalization, health, dental, disability,
unemployment insurance, vacation pay, severance pay or
other benefit plan with respect to any of the employees
situated in Canada who are to become employees of the
Canadian Buyer (the "Canadian Transferred Employees"),
other than: (i) all statutory plans which the Canadian
Seller or any related party is required to comply with,
including, without limitation, the Canada Pension Plan and
plans administered pursuant to applicable provincial health
tax, workers' compensation and unemployment insurance
legislation; and (ii) those plans, policies and
arrangements set out in Schedule 4.18(g) (the "Canadian
Employee Benefit Plans").
(h) With respect to the Canadian Employee Benefit Plans, (i)
each of the Canadian Employee Benefit Plans are, and have
been, established, registered, qualified,
30
administered, contributed to and invested, in compliance
with the terms thereof, and all Laws; (ii) all obligations
under the Canadian Employee Benefit Plans (whether pursuant
to the terms thereof or Laws) have been satisfied;
(iii) all contributions or premiums required to be. paid
to or in respect of each of the Canadian Employee Benefit
Plans have been paid in a timely fashion in accordance with
the terms thereof and all Laws; (iv) no Taxes, penalties or
fees are owing or eligible under any Canadian Employee
Benefit Plan; and (v) there is no proceeding, action, suit
or claim (other than routine claims for benefits) pending
or to Canadian Seller's knowledge, threatened involving any
Canadian Employee Benefit Plan or its assets, and to
Canadian Seller's knowledge, no facts exist which could
reasonably be expected to give rise to any such proceeding,
action, suit or claim (other than routine claims for
benefits).
4.19. EMPLOYEES.
(a) With respect to the Work/Family Business, no Corporate
Seller nor any of their Affiliates (i) is a member of any
multi-employer bargaining group, (ii) has withdrawn from
any multi-employer bargaining group within the past five
years, or (iii) within the past three years has defeated
any collective bargaining representation petition or
application for certification, removed any existing
collective bargaining authority, or defeated any
multi-employer bargaining group or other third party
with respect to employees of the Work/Family Business.
(b) The Corporate Sellers have complied in all respects with
all Laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours
with respect to employees of the Work/Family Business.
(c) There is no strike, labor dispute, work slowdown or work
stoppage actually pending or, to the Sellers' Best
Knowledge, threatened, against any of the Corporate
Sellers. No collective bargaining representation petition
or application for certification or collective bargaining
agreement grievance is pending or, to the Sellers' Best
Knowledge, threatened against any of the Corporate Sellers
or any of their Affiliates with respect to the Work/Family
Business.
(d) As of the Effective Time, the Corporate Sellers will have
paid or reserved on their books any and all obligations for
vacation pay, severance pay, layoff or termination, or
other amounts that may be due any Person including, but not
limited to, by reason of any action taken under this
Agreement. For each employee of the Work/Family Business
employed immediately prior to the Effective Time, Schedule
4.19(d) lists, as of October 31, 1998, the employee's
accrued and unused vacation and sick time and sick leave
bank time.
(e) None of the Corporate Sellers nor any of their Affiliates
with respect to the Work/Family Business is a joint
employer with any other legal entity and does not control
labor relations or operations of any other legal entity.
(f) No Corporate Seller employs or otherwise obtains the
services of any "leased employee" (as such term is defined
in the Code).
31
(g) All employees of the Work/Family Business are employees of
one of the Corporate Sellers.
(h) SCHEDULE 4.19(h) lists the names, titles, date of
employment and re-employment, and current base compensation
rates for each employee of the Work/Family Business as of a
recent date, and the amount of bonuses paid during the most
recent full fiscal year to each employee.
(i) SCHEDULE 4.19(i) lists each Inactive Employee, within the
meaning of Section 6.2, as of the Effective Time, the date
on which his or her absence commenced and the reason for
the absence.
4.20. COMPENSATION. Except as set forth in SCHEDULE 4.20, none of the
Corporate Sellers nor any of their Affiliates with respect to the Work/Family
Business is a party, or is subject, to any plan, Contract or understanding
providing for any incentive compensation, bonuses, commissions, or similar
obligations of any kind, including any incentive compensation, bonus, retention
bonus, sale bonus, or similar obligations relating to the Transaction, and
copies of all such plans, contracts, and understandings have been provided to
Buyer.
4.21. ALL COMPENSATION AND BENEFIT DATA. All data furnished by any
Seller to Buyer with respect to any Employee Agreements which is an Assumed
Liability is accurate and complete in all respects.
4.22. INSURANCE. There has been, and there is now, insurance maintained
for the benefit of the Work/Family Business with reputable and responsible
insurance companies or associations, in such amounts and covering such risk as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general area in which the Work/Family Business operates.
Except for the deductible amount, to the Sellers' Best Knowledge such insurance
is adequate to cover the replacement cost of the tangible Personal Property and
real property improvements of the Work/Family Business. Schedule 4.22 contains
an accurate and complete description of all policies of general liability,
theft, fire, flood, windstorm, earthquake, workers' compensation, life, health,
dental, disability, business travel accident, directors and officers, and other
forms of insurance owned or held by the Corporate Sellers or their Affiliates
for the benefit of the Work/Family Business, specifying the insurer, amount of
coverage, dates of coverage, type of insurance, policy number, any pending
claims thereunder, and a description of whether such policies cover occurrences
which took place prior to the Effective Time, regardless of whether claims
therefor are made after the Effective Time. All available claims under such
insurance have been properly filed by the Corporate Sellers or their Affiliates.
All such policies are (i) in full force and effect and all premiums due with
respect thereto are currently paid; (ii) are sufficient for compliance with all
requirements of Law and of all agreements to which any of the Corporate Sellers
or any of their Affiliates is a party; (iii) are valid, outstanding and
enforceable policies; and (iv) provide in the reasonable judgment of the
Corporate Sellers adequate insurance coverage for the assets and operations of
the Work/Family Business as presently conducted. None of the Corporate Sellers
nor any of their Affiliates has, during the last three fiscal years, been denied
or had revoked or rescinded any policy of insurance except as set forth in
Schedule 4.22. Listed on Schedule 4.22 are all outstanding bonds required by
any customer.
4.23. TAXES.
32
(a) Neither Buyer nor the Purchased Assets will suffer or be
adversely affected by any Losses or Liabilities arising
from or related to any Taxes by reason of any action taken
or not taken or arising from or related to the activities
of the Work/Family Business, the Sellers, or their
Affiliates for the period prior to the Effective Time.
(b) To the extent requested in writing by Buyer, there have
been delivered to Buyer true and complete copies of all
Company Tax Returns and Tax workpapers and all Revenue
agent (or other) reports, findings, proposed assessments,
deficiency (or other) notices, opinions, letters,
agreements (including any Tax Agreement), elections, claims
or demands and all other items relating to Taxes.
(c) The Canadian Seller is not a non-resident of Canada for the
purposes of the Income Tax Act (Canada).
(d) The Canadian Seller is a "registrant' under Part IX of the
Excise Tax Act (Canada). The Canadian Seller's GST
registration number is 886404797RT.
(e) None of the U.K. Purchased Assets is a capital item for
purposes of Part XV of the U.K. Value Added Tax Regulations
1995.
4.24. INSIDER TRANSACTIONS. No Person related to any Seller has any
interest in (a) any Purchased Asset, or (b) any creditor, supplier, customer,
manufacturer, distributor or reseller of products of the Work/Family Business;
PROVIDED, HOWEVER, that (1) no such other Person shall be deemed to have such an
interest solely by virtue of the ownership of less than 1% of the outstanding
voting stock or debt securities of any publicly held company, the stock or debt
securities of which are traded on a recognized stock exchange or quoted on the
National Association of Securities Dealers Automation Quotation System, and (2)
no other Person shall be deemed to have such an interest solely by virtue of the
ownership by a partnership in which he is a partner of less than 5% of the
outstanding voting stock or debt securities of any privately held company.
4.25. POWERS OF ATTORNEY. None of the Corporate Sellers nor their
Affiliates has granted, and there are not outstanding, any general or special
powers of attorney or comparable delegations of authority, which would be
binding upon Buyer, the Work/Family Business or any of their respective Assets,
after the Closing.
4.26. NO BROKERAGE OR OTHER FEES. Except as set forth on SCHEDULE 4.26,
no broker or finder has acted for any Seller in connection with this Agreement
or the Transactions. No Person is entitled to any brokerage or finder fee or
commission from Buyer as a result of any Seller's actions in respect to this
Agreement or any such transaction.
4.27. BUSINESS GENERALLY. Other than as specifically disclosed in any
schedule called for by this Article 4, there has been no event, transaction or
information which has come to the attention of the Sellers which, as it relates
to the Work/Family Business, would individually, or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Business Condition of the
Corporate Sellers. To the Sellers' Best Knowledge, the Corporate Sellers have a
good commercial working relationship with their respective customers, dealers
and suppliers. The Work/Family Business is conducted in Canada in all material
respects exclusively through the Canadian Seller and in the United Kingdom in
all material respects exclusively through the U.K. Seller.
33
4.28. INVENTORIES. All inventory of the Work/Family Business, whether
reflected in the Financial Statements or otherwise, consists of a quality and
quantity usable and saleable in the Ordinary Course, and the present quantities
of all inventory of the Work/Family Business are reasonable in the present
circumstances of the Work/Family Business as currently conducted.
4.29. YEAR 2000. Sellers have reviewed the areas within its businesses
and operations which it reasonably believes could be adversely affected by, and
has developed a program it reasonably believes will address and remediate on a
timely basis, the so-called "Year 2000 Problem" (i.e., the risk that
applications used by Sellers or its suppliers and/or providers may be unable to
recognize and properly perform date-sensitive functions involving certain dates
prior to and any date after December 31, 1999) with respect to the operations of
the Work/Family Business. Sellers have attached hereto as Schedule 4.29 its good
faith estimate as to what it would cost Sellers to remediate the Year 2000
Problem. Sellers make no other Year 2000 compliance representations or
warranties, express or implied, as to any kind of costs with respect to, or
affect, adverse or otherwise, upon any of Corporate Sellers' software, hardware,
databases or embedded control systems (microprocessor controlled or controlled
by any robotic or other device) or upon any of the Purchased Assets or Assumed
Liabilities, with respect to being able to accurately process date data,
including, but not limited to calculating, comparing and sequencing from, into
and between the twentieth century (through year 1999), the Year 2000 and the
twenty-first century, including leap year calculations.
4.30. RECEIVABLES AND PAYABLES.
(a) Except as set forth on Schedule 4.30, (i) each of the
Corporate Sellers, as the case may be, has good right,
title and interest in and to all its accounts and notes
receivable and trade notes and trade accounts constituting
Purchased Assets; (ii) none of such accounts and notes
receivable and trade notes and trade accounts is subject to
any Encumbrance; (iii) each such account and note
receivable and trade note and trade account arose from a
bona fide transaction in the Ordinary Course; (iv) as of
October 31, 1998 no account or note debtor whose account or
note balance exceeds the amount set forth in SCHEDULE 4.30
at the date set forth therein was delinquent in payment by
more than ninety (90) days; and (v) as of September 30,
1998, the aging schedule of the accounts and notes
receivable and trade notes and trade accounts of the
Corporate Sellers previously furnished to Buyer was
complete and accurate.
(b) All accounts payable included in the Assumed Liabilities
arose in bona fide transactions in the Ordinary Course and
no such account payable is delinquent.
Notwithstanding anything contained in this Agreement to the contrary, except as
expressly set forth in Schedule 7.2(o), Buyer acknowledges and consents to the
fact that Sellers have not obtained any consents to assign any Customer
Contracts or Office Leases or other Contracts to which any Corporate Seller is a
party relating to the Work/Family Business or, with respect to the 926 Office
Lease (as hereinafter defined), to sublet a portion of the premises subject to
such Office Lease, from the other parties thereto or satisfied any conditions
(other than conditions relating to the Corporate Sellers' obligations under such
Customer Contracts or Office Leases or other Contracts to which any Corporate
Seller is a party relating to the Work/Family Business relating to any matters
other than the assignment of such Customer Contracts or Office Leases or other
Contracts to which any Corporate Seller is a party relating to the Work/Family
Business) with respect to the assignment of any such Customer Contract, Office
Lease or other Contract or, with respect to the 926 Office Lease, to sublet a
portion of the premises subject to such Office Lease, included in the Purchased
Assets or Assumed Liabilities; provided, however, in the event a
34
Top Twenty Customer terminates, cancels or fails to renew a Contract as a
result of such failure to obtain a consent or to satisfy such conditions,
such customer shall be considered a lost Top Twenty Customer for purposes of
Section 2.2(b).
ARTICLE
5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers that the following statements,
each of which are acknowledged to be material and relied upon by Sellers, are
true and correct.
5.1. ORGANIZATION AND GOOD STANDING OF CERIDIAN ENTITIES. Ceridian is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Canadian Buyer is a corporation duly incorporated
and validly existing under the laws of Canada. Each of Ceridian and Canadian
Buyer is qualified to do business and in good standing in each state, province
and jurisdiction where such qualification is required and where the failure to
be so qualified would have a Material Adverse Effect on Buyer. U.K. Buyer is
validly incorporated as a private limited company in England and Wales.
5.2. AUTHORITY, VALIDITY OF AGREEMENT. Each of Ceridian, the Canadian
Buyer and the U.K. Buyer has all requisite corporate power and authority to
enter into this Agreement and the Other Agreements (to the extent such entitles
are a party thereto) and to perform the obligations hereunder and thereunder and
to consummate the transactions contemplated by this Agreement and the Other
Agreements (to the extent such entitles are a party thereto). The execution and
delivery of this Agreement and the Other Agreements (to the extent Ceridian, the
Canadian Buyer or the UK Buyer is a party thereto), and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of Ceridian, the Canadian Buyer or the U.K. Buyer,
as the case may be, and no other corporate approval is required for the
performance by Ceridian, the Canadian Buyer or the U.K. Buyer, as the case may
be, of its obligations hereunder and thereunder. This Agreement the Other
Agreements (to the extent Ceridian, the Canadian Buyer or the U.K. Buyer is a
party thereto) have been, duly executed and delivered by Ceridian, the Canadian
Buyer or the U.K. Buyer, as the case may be. This Agreement constitutes, and
when executed and delivered at or prior to the Closing each of the Other
Agreements (to the extent Ceridian, the Canadian Buyer or the U.K. Buyer is a
party thereto) will constitute, assuming due authorization, execution and
delivery by Sellers, a valid and binding obligation of Ceridian, the Canadian
Buyer or the U.K. Buyer, as the case may be, enforceable in accordance with its
terms (subject to the effect of applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights and to
general principles of equity).
5.3. NO VIOLATIONS. Neither the execution and delivery of this
Agreement and the Other Agreements by Ceridian, the Canadian Buyer or the U.K.
Buyer, as the case may be, nor the consummation of the transactions contemplated
hereby or thereby will (a) violate any provisions of the Certificate of
Incorporation or bylaws of Ceridian, the articles of incorporation or bylaws of
the Canadian Buyer or the articles of association of the U.K. Buyer, or (b)
violate, or be in conflict with, or constitute a default (or an event which,
with or without due notice or lapse of time, or both, would constitute a
default) under, or cause or permit the acceleration of the maturity of or give
rise to any right of termination, cancellation, imposition of fees or penalties
under, any note, debt, debt instrument, indenture, security agreement, option to
purchase, lease, deed of trust or license, or any other Contract to which
Ceridian, the Canadian Buyer or the U.K. Buyer or any of their Affiliates is a
party or by which
35
any of them or any of their Assets is or may be bound, or (c) violate any
Laws to which Ceridian, the Canadian Buyer or the U.K. Buyer may be subject.
5.4. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except for
applicable requirements of the HSR Act, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required with respect to Ceridian, the Canadian Buyer or the U.K.
Buyer in connection with the execution delivery and performance of this
Agreement and the Other Agreements (to the extent Ceridian, the Canadian Buyer
or the U.K. Buyer is a party thereto) by Ceridian, the Canadian Buyer or the
U.K. Buyer, as the case may be, or the consummation by Ceridian, the Canadian
Buyer or the U.K. Buyer, as the case may be, of the transactions contemplated
hereby and thereby.
5.5. OTHER CONSENTS. No consent, waiver or approval of, or notice to,
any third party is required or necessary to be obtained solely by Ceridian, the
Canadian Buyer or the U.K. Buyer, as the case may be, in connection with the
execution and delivery of this Agreement or any Other Agreement (to the extent
Ceridian, the Canadian Buyer or the U.K. Buyer is a party thereto) and the
performance of Ceridian's, the Canadian Buyer's or the U.K. Buyer's, obligations
hereunder and thereunder (other than any consent requirements contained in any
Contract included in the Purchased Assets with respect to the assignability
thereof).
5.6. LITIGATION. There is no litigation or governmental proceeding
pending or, to the Buyer's best knowledge, threatened against Ceridian, the
Canadian Buyer or the U.K. Buyer which would prevent or hinder Buyer from
consummating the Transactions.
5.7. NO BROKERAGE FEES. No broker or finder has acted for Ceridian,
the Canadian Buyer or the U.K. Buyer in connection with this Agreement or the
transactions contemplated hereby, and no Person is entitled to any brokerage or
finder fee or commission from Sellers as a result of Buyer's actions in respect
to this Agreement or any such transaction.
ARTICLE
6.
CERTAIN AGREEMENTS
The parties further agree as set forth below in this Article 6.
6.1. EMPLOYEE BENEFIT PLANS. The Company shall retain all Company
ERISA Benefit Plans, Company Non-ERISA Benefit Arrangements and Employee
Agreements and all Liabilities, rights, duties and obligations of any nature
which, directly or indirectly, arise under or relate to any Company ERISA
Benefit Plan, Company Non-ERISA Benefit Arrangement or Employee Agreement,
including, without limitation, any such Liabilities, rights, duties and
obligations arising under COBRA.
6.2. PERSONNEL MATTERS FOR U.S. EMPLOYEES. As of the Effective Time,
Ceridian will be deemed to have offered the employees of the Company listed on
Schedule 6.2 employment with Ceridian at salaries or wages which are not less
than those provided by the Company as of the date of this Agreement. Nothing
herein shall limit the discretion of Ceridian to change the terms of, terminate
or eliminate such employment at any time subsequent to Closing. For each
employee of the Company who becomes an employee of Ceridian effective
immediately after the Effective Time, Ceridian will recognize the employee's
service with the Company for purposes of eligibility to participate and vesting
(but not for purposes of benefit accruals) in ERISA Benefit Plans and Non-ERISA
Benefit Arrangements sponsored or maintained by Ceridian. Ceridian shall allow
such employees to participate in the same
36
ERISA Benefit Plans and Non-ERISA Benefit Arrangements sponsored or
maintained by Ceridian in which similarly situated employees of Ceridian
participate (except for the Ceridian Corporation Retirement Plan and the
Ceridian Corporation Benefit Equalization Plan). Any group medical plan
provided by Ceridian to the employees of the Company shall not contain any
pre-existing condition limitation or exclusion applicable to their
participation therein. Ceridian is not obligated to offer employment to any
employee of the Company who, immediately prior to the Effective Time, is
absent from active employment due to a paid or unpaid leave of absence
(including personal leave of absence), short-term or long-term disability or
occupational illness or injury (an "Inactive Employee"). If an Inactive
Employee, other than an Inactive Employee on a personal leave of absence,
returns to work within 12 months after the Effective Time, Ceridian will
either (a) offer the Inactive Employee immediate employment in a job suitable
to his or her abilities and limitations, if any, with salary or wages at a
rate that is not less than the rate in effect immediately before the
commencement of the absence and with recognition of such employee's service
with the Company for purposes of eligibility to participate and vesting (but
not for purposes of benefit accruals) or (b) reimburse Seller for the full
amount of any severance benefits paid by Seller to the Inactive Employee
under the Seller's generally applicable severance policy in effect at that
time. The Company will cause its 401(k) Plan (the "Company 401(k) Plan") to
provide that loans do not become due and will not be deemed to be in default
until sixty (60) days after the Effective Time. Within sixty (60) days after
the Effective Time, Ceridian will loan to each Company employee who (i)
becomes an employee of Ceridian immediately after the Effective Time and
remains an employee of Ceridian on the date of the loan and (ii) signs and
delivers to Ceridian a promissory note in form specified by Ceridian in the
amount of the employee's outstanding loan balance in the Company's 401(k)
Plan in order to allow the employee to repay that loan prior to taking a
distribution from the Company 401(k) Plan to Ceridian's 401(k) Plan.
6.3. ESCROW AGREEMENT. At Closing, Company, X. Xxxxxxx, X. Xxxxxxx and
Ceridian shall execute the Escrow Agreement in substantially the form attached
hereto as Schedule 1.36, and shall arrange for its execution by the Escrow
Agent.
6.4. ASSIGNMENTS OF OFFICE LEASE. At Closing, the Corporate Sellers
(other than the U.K. Seller) and Buyer (other than the U.K. Buyer) shall execute
the Assignments of Office Lease in substantially the forms attached hereto as
Schedule 6.4.
6.5. [INTENTIONALLY OMITTED]
6.6. ASSIGNMENT AND ASSUMPTION AGREEMENT. At Closing, Buyer (other
than the U.K. Buyer) and the Corporate Sellers (other than the U.K. Seller)
shall enter into the Assignment and Assumption Agreement substantially in the
form attached hereto as Schedule 6.6.
6.7. BILLS OF SALE. At Closing, each of the Corporate Sellers (other
than the U.K. Seller) shall execute and deliver the Xxxx of Sale substantially
in the form attached hereto as Schedule 6.7.
6.8. TRADEMARK ASSIGNMENT. At Closing, the Corporate Sellers to the
extent they have any interest in a trademark shall execute and deliver the
Trademark Assignment substantially in the form attached hereto as Schedule 6.8.
6.9. COPYRIGHT ASSIGNMENTS. At Closing, the Corporate Sellers to the
extent they have any interest in a copyright shall deliver the Copyright
Assignments substantially in the forms attached hereto as Schedule 6.9.
37
6.10. TRANSITIONAL SERVICES AGREEMENT. At Closing, Buyer and the
Corporate Sellers shall enter into the Transitional Services Agreement
substantially in the, form attached hereto as Schedule 6.10.
6.11. X. XXXXXXX CONSULTING AGREEMENT. At Closing, Ceridian and X.
Xxxxxxx shall enter into the Consulting Agreement in the form of attached hereto
as Schedule 6.11.
6.12. XXXXXXX XXXX CONSULTING AGREEMENT. At Closing, Ceridian and
Xxxxxxx Xxxx shall enter into the Consulting Agreement in the form attached
hereto as Schedule 6.12.
6.13. BULK SALES. Each of Ceridian, the Canadian Buyer and the U.K.
Buyer hereby waives compliance by any of the Corporate Sellers with any bulk
sales notice requirements of any Laws, and the Sellers shall jointly and
severally indemnify and hold the Buyer harmless from any Tax or other Liability
which may be incurred by Ceridian, the Canadian Buyer or the U.K. Buyer for the
failure to comply with such requirements, except to the extent that such
liability is an Assumed Liability.
6.14. U.K. EMPLOYEES. The Sellers and the Buyer agree and acknowledge
that the Transfer of Undertakings (Protection of Employment Regulations) 1981
("Transfer Regulations") shall at Closing be applicable in relation to the UK
Employees identified on Schedule 6.14 (the "UK Employees"). 'Me Sellers shall be
responsible for and shall fully indemnify and keep indemnified the Buyer from
and against all and any costs, claims, expenses, damages, demands, actions and
liabilities suffered by any Ceridian Entity: arising, directly or indirectly,
from any action omission obligation or liability of the UK Seller in relation to
the UK Employees prior to the Closing including any act omission or liability
which is deemed by virtue of the Transfer Regulations to be the responsibility
of the UK Buyer after Closing; arising from any claim in respect of any person
who is not a UK Employee, (including, without limitation, the dismissal of such
person or employee by UK Buyer or a change in his terms of employment) which
arises or is alleged to arise by reason of the operation of the Transfer
Regulations; arising out of any claim made by any recognized trade union or
elected representative or individual employee under Section 189 of the Trade
Union and Labour Relations (Consolidation) Xxx 0000 (as amended) or under
Regulation 11 of the Transfer Regulations for protective awards which may have
arisen by virtue of the failure to and/or consult on the part of the UK Seller
in respect of collective redundancies or business transfers other than pursuant
to this Agreement. The Buyer shall be responsible for and shall indemnify and
keep indemnified the U.K. Seller from and against all and any costs, claims,
expenses, damages and liabilities suffered by the U.K. Seller: arising in
respect of the U.K. Employees on or after the Closing which arise out of or are
connected with any act or omission by the U.K. Buyer or any event, matter or any
other occurrence having its origin on or after the Closing and which the U.K.
Seller incurs in relation to any contract of employment of or collective
agreement relating to one or more of the U.K. Employees pursuant to the Transfer
Regulations; arising out of any act or omission by the U.K. Buyer prior to the
Closing which the U.K. Seller incurs by virtue of Regulation 5(5) of the Transer
Regulations and/or Article 4(2) of Council Directive 77/187 EEC, arising out of
the U.K. Buyer's failure to comply with Regulation 10(2)(d) of the Transfer
Regulations. For the avoidance of doubt, the Buyer will be responsible for and
will indemnify and keep the U.K. Seller indemnified against all accrued holiday
pay entitlements and accrued holiday pay entitlements of the U.K. Employees
prior to Closing.
6.15. CANADIAN PENSION AND BENEFIT PLANS.
(a) Effective as of the Effective Time, the Canadian
Transferred Employees shall cease to participate in, and
accrue benefits under the Canadian Employee Benefit Plans
and shall commence participation in benefit plans
established or provided by the Canadian Buyer which shall
provide benefits on the same terms and
38
conditions, or otherwise on a basis which is substantially
similar in the aggregate, as those provided to the Canadian
Transferred Employees under the Canadian Employee Benefit
Plans immediately prior to the date hereof Canadian
Transferred Employees who are not participants in the
Canadian Employee Benefit Plans as at the Closing Date
shall become participants in the benefits plans established
or provided by the Canadian Buyer in accordance with, and
subject to, the membership eligibility and coverage
requirements thereof but their service with the Canadian
Seller prior to the Effective Time will be credited by the
Canadian Buyer for purposes of such eligibility and
coverage requirements.
(b) The Canadian Seller shall retain responsibility under the
Canadian Employee Benefit Plans for all amounts payable by
reason of or in connection with any and all reported and
unreported claims incurred and filed by the Canadian
Transferred Employees on or prior to the Closing Date. The
Canadian Buyer shall be responsible under its benefit plans
for any and all claims of the Canadian Transferred
Employees which relate to claims that are incurred with
respect to events after the Closing Date.
(c) Notwithstanding Paragraphs (a) and (b) of this Section
6.15, the Canadian Buyer and the Canadian Seller agree that
the Canadian Transferred Employees shall continue
participation in the Canadian Employee Benefit Plans until
such time as the Canadian Buyer can provide its own benefit
plans for the Transferred Employees (the "Interim Period").
The Canadian Seller agrees to take such action and to make
any contribution and to pay any claims on behalf of the
Canadian Transferred Employees as is necessary to ensure
the continued participation of the Canadian Transferred
Employees in the Canadian Employee Benefit Plans during the
Interim Period. The Canadian Buyer agrees to reimburse the
Canadian Seller for any and all administrative costs to the
Canadian Seller relating to the continued participation of
the Canadian Transferred Employees in the Canadian Employee
Benefit Plans during the Interim Period.
6.16. U.K. LEASE ASSIGNMENT. At Closing, U.K. Seller and U.K. Buyer
shall execute and complete in duplicate the U.K. Lease Assignment in
substantially the form attached hereto as Schedule 6.16.
6.17. CANADIAN SELLER EMPLOYEES. As of or prior to the Closing Date and
effective immediately after the Effective Time, the Canadian Buyer will offer
employment to each employee of the Canadian Seller on terms no less favorable in
the aggregate than those in effect for such employee with the Canadian Seller on
the date hereof. The Canadian Seller will be responsible for severance
obligations with respect to employees of the Canadian Seller who do not accept
the Canadian Buyer's offer of employment. The Canadian Seller and the Canadian
Buyer will provide all reasonable assistance to encourage the Canadian Seller's
employees to accept an offer of employment with the Canadian Buyer.
6.18. TRADEMARK LICENSE AGREEMENT. At Closing, the Company and Ceridian
shall enter into the Trademark License Agreement in substantially the form
attached hereto on Schedule 6.18.
6.19. PURCHASE OF CERIDIAN COMMUNITY RESOURCE DEVELOPMENT BUSINESS.
Ceridian and Company agree to negotiate in good faith for a period of sixty (60)
days following the Closing Date to
39
reach a definitive agreement whereby the Company will purchase Ceridian's
Community Resource Development business on commercially reasonable terms. If
Ceridian and the Company are unable to reach a written agreement on such
proposed transaction prior to the end of such sixty (60) day period, the
Company and Ceridian will have no further obligations to each other under
this Section whatsoever.
6.20. ACCOUNTS RECEIVABLE GUARANTY. Ceridian shall use commercially
reasonable efforts (consistent with such efforts previously used by Corporate
Sellers) to collect all accounts receivable listed on SCHEDULE 4.24 hereto to
the extent not collected by the Closing Date (the "Guaranteed Accounts
Receivable"), but such efforts shall not include litigation or the use of
collection agencies. All amounts collected after the Effective Date with
respect to such Guaranteed Accounts Receivable shall be applied as directed
by the account debtor and if no direction is so given, then first to the
oldest Guaranteed Account Receivable from such account debtor. In the event
that any such Guaranteed Accounts Receivable remain uncollected one hundred
twenty (120) days after the Effective Date, Ceridian shall promptly notify
Sellers within fifteen (15) Business Days after the expiation of such one
hundred twenty (120)-day period and within five (5) Business Days thereafter
assign to the Company such of those uncollected Guaranteed Accounts
Receivable (without recourse or warranty) as Ceridian shall elect against
payment of the purchase price therefor as described in the next sentence.
The Company shall purchase from Ceridian all uncollected Guaranteed Accounts
Receivable which Ceridian assigns to Seller pursuant to this Section 6.20,
for a purchase price, in cash, equal to the aggregate amount of such assigned
Guaranteed Accounts Receivable (less reserves accrued on the Closing Balance
Sheet). Following payment therefor as provided herein, such uncollected
Guaranteed Accounts Receivable shall be the Company's property and thereafter
the Company shall be free to collect such Guaranteed Accounts Receivable in
its sole and absolute discretion. Neither the Company nor any Seller shall
have any further obligations under this Section 6.20 with respect to any
uncollected Guaranteed Accounts Receivable to the extent not so assigned to
the Company.
ARTICLE
7.
THE CLOSING
7.1. TIME AND PLACE. The Closing shall take place on November 17,
1998, at the offices of Sellers' Counsel, or such other date or place as the
parties may agree. All actions taken at the Closing shall be deemed to occur
simultaneously.
7.2. SELLERS' OBLIGATIONS AT CLOSING. At the Closing, Sellers shall
execute and/or deliver to Buyer, against execution and/or delivery by Buyer of
the items specified in Section 7.3:
(a) A certificate by each Seller certifying that the
representations and warranties of Sellers are true and
correct as of the Closing and that Seller has performed the
obligations required to be performed by it at or prior to
the Closing;
(b) The Escrow Agreement described in Section 6.3;
(c) The Assignments of Office Leases described in Section 6.4;
(d) The Assignments and Assumption Agreements described in
Section 6.6;
(e) The Bills of Sale described in Section 6.7;
(f) The Trademark Assignments described in Section 6.8;
40
(g) The Copyright Assignments described in Section 6.9;
(h) The Transitional Services Agreement described in Section
6.10
(i) The X. Xxxxxxx Consulting Agreement described in Section
6.11;
(j) The Xxxxxxx Xxxx Consulting Agreement described in Section
6.12;
(k) The U.K. Lease Assignment described in Section 6.16
(executed in duplicate);
(l) A certified copy of the Resolution of the Company's Board
of Directors or an authorized committee thereof approving
the Transaction;
(m) A certified copy of the Resolution of the Company's and
Canadian Seller's shareholders approving the Transaction;
(n) The legal opinion of Xxxxxxx, Procter & Xxxx LLP, counsel
to Seller, in substantially the form attached hereto as
Schedule 7.2(n);
(o) The consents, approvals or waivers listed on
Schedule 7.2(o).
(p) A certified copy of board meeting minutes of U.K. Seller
approving the sale of the U.K. Purchased Assets; and
(q) Assignment of intellectual property rights in the U.K.
database and U.K. pamphlets.
(r) The Trademark License Agreement described in Section 6.18.
(s) Original versions of the license, Underlet of the leasehold
Premises made between Pensions Management (WF Scottish
Widow Fund) Limited, Kingsway Group Plc, WFD and
Work/Family Directions, Inc., the Agreement for lease for
the leasehold Premises made between Kingsway Group Plc, WFD
and Work/Family Directions, Inc. and the U.K. lease and
License to Alter made between Kingsway Group Plc, WFD and
Work/Family Directions.
(t) All other certificates, Schedules, Exhibits, and
attachments, in completed form, which are required by the
provisions of this Agreement.
7.3. BUYER'S OBLIGATIONS AT CLOSING. At the Closing, Buyer shall
execute and/or deliver to Sellers, against execution and/or delivery by Seller
of the items specified in Schedule 7.2:
(a) A certificate by Buyer certifying that the representations
and warranties of Buyer are true and correct as of the
Closing and that Buyer has performed the obligations
required to be performed by it at or prior to the Closing;
(b) The Escrow Agreement described in Section 6.3;
(c) The Assignments of Office Leases described in Section 6.4;
(d) The Assignment and Assumption Agreements described in
Section 6.6;
41
(e) The Transitional Services Agreement described in
Section 6.7;
(f) The X. Xxxxxxx Consulting Agreement described in
Section 6.12;
(g) The Xxxxxxx Xxxx Consulting Agreement described in
Section 6.12;
(h) A certified copy of the Resolution of Ceridian's and
Canadian Buyer's Board of Directors or an authorized
committee thereof approving the Transaction;
(i) The Closing Payment, One Million Dollars ($1,000,000) of
which shall be delivered to the Escrow Agent;
(j) The legal opinion of the General Counsel of Ceridian,
counsel to Buyer, in substantially the form attached hereto
as Schedule 7.30);
(k) a certified copy of board meeting minutes of the U.K. Buyer
approving the purchase of the U.K. Purchased Assets;
(l) All other certificates, Schedules, Exhibits, and
attachments, in completed form, which are required by the
provisions of this Agreement; and
(m) The U.K. Lease Assignment described in Section 6.16
(executed in duplicate).
7.4. INSTRUMENTS. All instruments delivered at Closing shall be dated
as of November 17, 1998 and shall be reasonably satisfactory to the party
receiving the benefit thereof.
ARTICLE
8.
OBLIGATIONS AFTER CLOSING
8.1. FURTHER ASSURANCES. At or after the Closing Date, Sellers and
Buyer shall prepare, execute and deliver, with each to bear its own expenses
thereof, such further instruments of conveyance, sale, assignment or transfer,
and shall take or cause to be taken such other or further action, as Sellers and
Buyer shall reasonably request at any time or from time to time in order to
perfect, confirm or evidence the Transactions or to give effect to the
provisions of this Agreement. Each Seller and Buyer further agree that after the
Closing they will hold and will promptly transfer and deliver to the other (at
such intervals as are mutually agreed between the parties), any cash, checks
with appropriate endorsements (using their commercially reasonable efforts not
to convert such checks into cash) or other property that it may receive on or
after the Closing which properly belongs to the other party, and will account to
the other for all such receipts. Further, Buyer shall, to the extent possible,
work with Seller to facilitate the use by Seller of any phone numbers used by
Seller prior to the Effective Time in the Consulting/Community Development
Business.
8.2. NOTICES AND CONSENTS. Following the Closing and notwithstanding
any provision in this Agreement to the contrary, the Sellers shall cooperate
with and assist Buyer at Buyer's expense (with respect to Seller's out-of-pocket
expenses) in obtaining any consents, notices, novations or waivers that are
necessary or helpful in connection with the transfer and assignment of the
Purchased Assets to Buyer. For the avoidance of doubt, and in relation only to
the U.K. Lease, in providing such assistance the Sellers should not be obliged
to pay any costs or suffer any guarantees (financial or otherwise); however,
they shall pursue appropriate Court proceedings in assisting the U.K. Buyer to
obtain consent to the
42
assignment of the U.K. Lease, such costs reasonably and properly incurred by
the Sellers to be borne by the U.K. Buyer.
8.3. TAX RETURNS. Sellers shall, with respect to the Work/Family
Business, continue to timely file all income Tax Returns which are required to
be filed covering the pre-Closing Period, and shall pay all such income Taxes
when due. Buyer shall cause its employees to cooperate in any manner reasonably
requested by Sellers in the preparation of such Tax Returns or with respect to
any subsequent audit thereof.
8.4. ACCESS TO PROPERTIES AND RECORDS. Subject to consummation of the
Closing, for a period of one year after the Closing Date, upon reasonable prior
notice and during normal business hours as requested by any Seller, Buyer will
afford to such Seller access to such records of the Work/Family Business as
Buyer has and such cooperation of employees of the Work/Family Business and/or
Buyer as is reasonably necessary to enable the Company to prepare timely audited
financial statements and federal, state and local Tax Returns and similar
matters. In addition during the period commencing one year after the Closing
Date and ending on the date twenty-seven (27) months after the Closing Date,
upon reasonable prior notice and during normal business hours as requested by
Sellers, Buyer will afford to a certified public accountant retained by Sellers
and approved by Buyer (which approval shall not be unreasonably withheld) access
to customer Contracts and customer records of the Work/Family Business as is
reasonably necessary to enable such accountant to determine whether the First
Contingent Payment or Second Contingent Payment is due and owing, subject to
such accountant agreeing in a writing reasonably acceptable to Buyer to disclose
to Sellers only whether the First Contingent Payment or Second Contingent is due
and owing, and if so the amount so owing.
8.5. POST-CLOSING CONFIDENTIALITY. After the Closing, Sellers will not
use or disclose to third parties any confidential information relating to the
Work/Family Business, and Buyer will not use or disclose to third parties any
confidential information of Sellers that is not related to the Work/Family
Business, provided that, in either case (a) either party may use or disclose any
such information which has been publicly disclosed (other than by such party
after the date hereof) and (b) to the extent that the party may become legally
compelled to disclose any of such information, the party may disclose such
information if such party shall have afforded the other party the opportunity to
obtain an appropriate protective order, or other satisfactory assurance of
confidential treatment, for the information required to be so disclosed.
8.6. POWER OF ATTORNEY. Effective as of the Closing, each of the
Corporate Sellers appoints the Buyer and its successors and assigns, the true
and lawful attorney or attorneys of the Corporate Sellers, with full power of
substitution, in the name of the Corporate Sellers but on behalf and for the
benefit of and at the expense of Buyer solely to the extent required: (A) to
collect in the name of the Corporate Sellers for the account of Buyer all
receivables and other items to be sold and transferred to Buyer as provided
herein; (B) to institute and prosecute, in the name of each of the Corporate
Sellers or otherwise, all proceedings which Buyer may deem necessary or
desirable in order to collect, assert or enforce any claim, right or title of
any kind in or to the Purchased Assets; and (C) to do all such acts and things
in relation thereto as Buyer may deem advisable. The foregoing power is coupled
with an interest and shall be irrevocable by each of the Corporate Sellers or by
their dissolution in any manner or for any reason. Buyer shall retain for its
own account any amounts collected pursuant to the foregoing power, including any
sums payable as interest in respect thereof, and each of the Corporate Sellers
shall pay to Buyer, when received, any amounts which shall be received by each
of the Corporate Sellers in respect of any receivables or other assets or
properties related to the Purchased Assets.
8.7. [INTENTIONALLY OMITTED]
43
8.8. COVENANT NOT TO COMPETE.
(a) In order to induce Buyer to enter into and consummate this
Agreement, and in further consideration thereof, the
Sellers are willing to provide to Buyer certain
noncompetition covenants for the benefit of Buyer upon the
terms and conditions of this Section.
(b) Each Seller severally agrees that for the Restricted Period
(as hereinafter defined), such Seller shall not compete in
any manner, directly or indirectly (whether through an
Affiliate or otherwise), with Buyer, or any Affiliate of
Buyer, in any business activities in any city, county, or
other governmental jurisdiction in North America or Europe
which are in competition with the Work/Family Business,
whether alone or as a partner, officer, director,
shareholder, creditor or employee of any firm or entity
(other than Buyer). For purposes of this section,
"shareholder" shall not include the beneficial ownership of
less than five percent (5%) of the combined voting power of
all issued and outstanding voting securities of a publicly
held corporation whose stock is traded on a major stock
exchange. For purposes of this Agreement, the term
"Restricted Period" means the five (5) year period after
the Closing Date.
(c) Each Seller further severally agrees that, for the
Restricted Period, such Seller will not, directly or
indirectly, solicit for hire as an employee or independent
contractor, any person currently employed by any of the
Corporate Sellers who has become and remains an employee of
Buyer; provided, however, that this provision shall not
prevent the Sellers from hiring any such person who
responds to an advertisement or to a nondirected executive
search inquiry or who makes an unsolicited contact for
employment with Seller.
(d) This Section 8.8 shall not apply to, and it is agreed that
the following activities shall not be deemed to be in
violation of this Section 8.8(b):
(i) Consulting/Community Development Business conducted
in Canada and the United Kingdom;
(ii) any activity engaged in by Sellers to fulfill their
obligations contained in the Transitional Services
Agreement or any written Contract with Buyer
(including, without limitation, X. Xxxxxxx'
Consulting Agreement); or
(iii) Any of the following workplace-related consulting
and/or community investment strategies:
(aa) workplace diagnostics and assessments,
multi-company research and pilot program
development, business measurement and analysis,
custom designed manager and employee interventions
in respect of specified issues, consultation, and
implementation services concerning the foregoing;
(bb) executive and/or manager briefings and
education;
44
(cc) training services to business executives
and/or managers;
(dd) training services to employees relating to
workplace flexibility or women's advancement; or
(ee) community investment strategies and the
implementation thereof.
(e) If any of the restrictions set forth in this Section
should, for any reason whatsoever, be declared invalid by a
court of competent jurisdiction, the validity or
enforcement of the remainder of such restrictions and
covenants shall not thereby be adversely affected. Each of
Sellers and Buyer agree that, if any provision of this
Section should be adjudicated to be invalid or
unenforceable, such provision shall be deemed deleted
herefrom with respect and only with respect to the
operation of such provision in the particular jurisdiction
in which such adjudication was made; provided, however,
that to the extent any such provision may be made valid and
enforceable in such jurisdiction by limitations on the
scope of the activities, geographical area or time period
covered, each of Sellers and Buyer agrees that such
provision instead shall be deemed limited to the extent,
and only to the extent, necessary to make such provision
enforceable to the fullest extent permissible under the
laws and public policies applied in such jurisdiction.
(f) Sellers hereby acknowledge that in the event of their
breach of the provisions of this Section, money damages
would be an inadequate remedy. Accordingly, without
prejudice to the rights of Buyer also to seek such damages
or other remedies by it, Buyer may seek, and Sellers
acknowledge and covenant that they will not contest the
availability of, injunctive or other equitable relief in
any proceeding which Buyer may bring to enforce the
provisions of this Section on their respective express and
explicit terms. No waiver of any breach of the foregoing
covenants shall be implied from any forbearance or failure
of Buyer to take action thereon.
8.9. USE OF WORK/FAMILY DIRECTIONS NAME. Except as specifically set
forth below, the Sellers shall make no further use of the WORK/FAMILY DIRECTIONS
xxxx or the Work/Family Directions trade name or any confusingly similar
trademark or trade name (it being expressly agreed, however, that the name "WFD"
is not in violation of the foregoing provisions). Notwithstanding the
foregoing, the Company may retain the trade name Work/Family Directions, Inc.
(the "Trade Name"), provided it uses the Trade Name: (i) only when it is
required to identify itself by its corporate name in connection with the
execution of corporate contracts or other legal documents, or as a party to
litigation; or (ii) to deplete existing quantities of any Excluded Assets which
contain the Trade Name. Buyer may only use the WORK/FAMILY DIRECTIONS xxxx or
the Trade Name to deplete any Purchased Assets which contain such xxxx or Trade
Name. Under no circumstances may Sellers or Buyer use or display such xxxx or
Trade Name on or in connection with any products or services, or in any
advertising or other promotional materials, or for any other commercial purpose
except as specifically permitted by this Section 8.9.
45
8.10. WIRE OF CASH INCLUDED IN PURCHASED ASSETS. On the Closing
Date, the Company shall wire to Ceridian immediately available United States
funds in the amount of Two Million Five Hundred Forty-seven Thousand Nine
Hundred Eighty-two dollars ($2,547,982).
8.11. CRD MATERIALS. Sellers and Buyer acknowledge that certain
materials owned by the Corporate Sellers and identified on Schedule
4.16(e)(i)(cc) hereto (the "Retained Materials") which are used in the
Work/Family Business are not being transferred to Buyer hereunder.
Notwithstanding the foregoing, the Corporate Sellers hereby grant to Buyer a
perpetual royalty free license to use, sell and distribute the Retained
Materials throughout the world. Further, the Corporate Sellers agree not to
sell or distribute the Retained Materials, or grant any license, or other
right in the Retained Materials, to any competitor of the Work/Family
Business.
ARTICLE
9.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1. SURVIVAL. The representations and warranties of the parties
contained in Articles 4 and 5 of this Agreement shall survive the Closing;
provided, however, that:
(a) subject to Sections 9.1(b) and 9.1(c) below, no claim may
be made based upon a breach or other inaccuracy,
incompleteness or untruth of such representations or
warranties unless the Indemnified Party (as hereinafter
defined) gives written notice thereof (describing the
specific claim in reasonable detail) to the Indemnifying
Party (as hereinafter defined) on or prior to May 31, 2000;
(b) no claim may be made based upon a breach of or other
inaccuracy, incompleteness or untruth of such
representations and warranties to the extent relating to
employee benefit matters, Taxes, and environmental matters
unless the Indemnified Party gives written notice thereof
(describing the specific claim in reasonable detail) to the
Indemnifying Party prior to sixty (60) days after the
expiration of the applicable statute of limitation; and
(c) claims for violations of representations and warranties
concerning title to Assets will survive without limitation.
The covenants and agreements contained herein shall survive the
Closing forever unless the covenant or agreement specifies a term
in which case such covenant or agreement shall survive for the
term specified. Notwithstanding anything in this Agreement to the
contrary, the applicable representations, warranties, covenants
and agreements shall survive and be deemed extended until final
resolution of the claim relating thereto pursuant to Article 10
hereof (but such representations, warranties, covenants and
agreements shall not be extended with respect to any claim
discovered during such extension with respect to matters other
than employee benefit matters, Taxes or environmental matters, as
the case may be), the notice of which was given on or before the
relevant Expiration Date (as hereinafter defined) and the
covenants and indemnification obligations relating to Assumed
Liabilities or Excluded Liabilities shall survive forever. The
respective expiration dates for the survival of the
representations and warranties and the covenants shall be referred
to herein as the relevant "Expiration Date."
46
ARTICLE
10.
INDEMNIFICATION
10.1. INDEMNIFICATION BY SELLERS. Sellers, jointly and severally, shall
and hereby agree to indemnify and hold Buyer (and its Affiliates and the
directors, officers, employees, agents, attorneys and shareholders of Buyer and
its Affiliates) harmless at all times against and in respect of any Liabilities
and Losses arising out of, relating to, or resulting from: (a) any breach by any
Seller of any representation, warranty, covenant or agreement made by any Seller
in this Agreement; (b) the Excluded Liabilities; or (c) the nonperformance of
any obligations to be performed on the part of any Seller under any agreement
executed pursuant hereto or in conjunction herewith.
10.2. INDEMNIFICATION BY BUYER. Buyer shall and hereby agrees to
indemnify and hold Sellers harmless at all times against and in respect of any
Liabilities and Losses arising out of, relating to, or resulting from (a) any
breach by Buyer of any representation, warranty, covenant or agreement made by
Buyer in this Agreement; (b) the Assumed Liabilities; or (c) the nonperformance
of any obligations to be performed on the part of Buyer under this Agreement or
any agreement executed pursuant hereto or in conjunction herewith. In addition,
Buyer shall and hereby agrees to indemnify and hold Sellers harmless at all
times against any Liabilities and Losses (other than any Losses attributable to
such customer being a lost customer for purposes of Section 2.2(b) hereof) to
the extent such Liabilities and Losses arise out of (1) the failure of any
Corporate Seller to obtain any consent to assign any Customer Contract or Office
Lease (except as set forth on Schedule 4.4) or any other Contract to which any
Corporate Seller is a party relating to the Work/Family Business, or, with
respect to the Office Lease relating to 926-928 Commonwealth Avenue in
Brookline, Massachusetts (the "926 Office Lease"), to sublet a portion of the
premises subject to such Office Lease or (2) the failure of any Corporate Seller
to satisfy any conditions with respect to the assignment of any such Customer
Contract, Office Lease or other Contract (other than conditions relating to the
Corporate Sellers' obligations under any such Customer Contract, Office Lease or
other Contract relating to any matters other than the assignment thereof) or,
with respect to the 926 Office Lease, to sublet a portion of the premises
subject to such Office Lease. Notwithstanding anything in this Agreement to the
contrary (but subject to the provisions of Section 2.2(b)), Buyer expressly
covenants and agrees that it shall not be entitled to any indemnification under
Section 10.1 to the extent that any Losses or Liabilities arise out of any
termination of or other loss of benefits under or pursuant to, any Customer
Contract or Office Lease (except as set forth on Schedule 4.4) or other Contract
to which any Corporate Seller is a party to the extent arising out of (1) the
failure of any Corporate Seller to obtain any consent to assign any such
Customer Contract, Office Lease or other Contract, or, with respect to the 926
Office Lease, to sublet a portion of the premises subject to such Office Lease
or (2) the failure of any Corporate Seller to satisfy any conditions with
respect to the assignment of any such Customer Contract, Office Lease or other
Contract (other than conditions relating to the Corporate Sellers' obligations
under any such Customer Contract, Office Lease or other Contract relating to any
matters other than the assignment thereof) or, with respect to the 926 Office
Lease, to sublet a portion of the premises subject to such Office Lease.
10.3. LIMITATION ON INDEMNIFICATION.
(a) BASKET. In the event of any claim for indemnity under
Section 10.1(a) or 10.2(a), the Indemnified Party (as
hereinafter defined) shall not be entitled to
indemnification therefor unless the Indemnified Party has
sustained Losses or Liabilities in excess of Three Hundred
Thousand Dollars ($300,000) in the aggregate (the "BASKET
AMOUNT"), in which event the Indemnified Party shall be
47
entitled to indemnification for the full amount of all
Losses or Liabilities suffered or incurred in excess of the
Basket Amount.
(b) CAP. In no event shall the aggregate liability of Sellers
or Buyer, as the case may be under Sections 10.1(a),
10.1(c), 10.2(a) or 10.2(c) (except with respect to the
payment of the Purchase Price) exceed Forty Million Dollars
($40,000,000).
(C) NO SET-OFF. In no event shall Buyer be permitted to
set-off against any payments due Sellers except as
provided in the Escrow Agreement.
10.4. DEFENSE AGAINST ASSERTED CLAIMS. If any claim or assertion of
liability is made or asserted by a third party against a party indemnified
pursuant to this Article 10 ("Indemnified Party") which might give rise to a
right to indemnification under this Agreement, the Indemnified Party shall, with
reasonable promptness, give to the other party ("Indemnifying Party") written
notice of the claim or assertion of liability and request of the Indemnifying
Party to defend the same, provided that any delay or failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
the Indemnified Party except to the extent of any prejudice resulting directly
from such delay or failure. The Indemnifying Party shall, at the Indemnifying
Party's expense, assume the defense of such claim or assertion with counsel
chosen by the Indemnifying Party and reasonably satisfactory to the Indemnified
Party. The Indemnified Party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(a) the employment thereof has been specifically authorized by the Indemnifying
Party in writing, or (b) the Indemnifying Party has failed to assume the defense
of such action, or (c) if the named parties to the action or proceeding include
both the Indemnifying and the Indemnified Party and the Indemnified Party is
advised in an opinion of its counsel that representation of both parties by the
same counsel would be inappropriate under the applicable standards of
professional conduct. The Indemnifying Party shall not be permitted to enter
into any settlement or compromise involving affirmative action or forbearance by
the Indemnified Party unless the Indemnified Party shall have been notified in
writing of the proposed settlement or compromise and shall have consented in
writing thereto, which consent shall not be unreasonably withheld. The parties
will cooperate with each other in the. defense of any such action and the
relevant records and personnel of each shall be available to the other with
respect to such defense. If the Indemnifying Party assumes the defense of a
third party claim, (a) no compromise or settlement thereof may be effected by
the Indemnifying Party without the Indemnifying Party's consent unless (i) there
is no finding or admission of an' violation of Law or any violation of the
rights of any Person and no effect on any other claim that may be made against
the Indemnified Party, (ii) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party and (iii) the compromise or
settlement includes, as an unconditional ten-n thereof, the giving by the
claimant or the plaintiff to the Indemnified Party of a release, in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
in respect of such third party claim, and (b) the Indemnified Party shall have
no liability with respect to any compromise or settlement thereof effected
without its consent.
10.5. OTHER. The right to indemnification or any other remedy based on
representations, warranties, covenants and obligations in this Agreement will
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
48
indemnification or any other remedy based on such representations, warranties,
covenants and obligations.
ARTICLE
11.
GENERAL PROVISIONS
11.1. NO PUBLICITY, ADVERTISEMENT WITHOUT PRIOR CONSULTATION. Neither
Sellers nor Buyer shall, and each of the parties shall cause its officers,
directors, employees, agents or advisors not to publicize, advertise, announce
or describe to any Governmental Entity or other third person, the terms of this
Agreement, the parties hereto or the transactions contemplated hereby, except as
required by Law, the rules of any stock exchange or court order.
11.2. SEVERABILITY. Any portion or provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the extent permitted by law,
rendering that or any other portion or provision hereof invalid, illegal or
unenforceable in any other jurisdiction.
11.3. ARTICLE AND SECTION HEADINGS, SCHEDULES AND EXHIBITS. The Article
and Section headings included in this Agreement are for the convenience of the
parties only and shall not affect the construction or interpretation of this
Agreement. Schedules and Exhibits referred to in this Agreement are an integral
part of this Agreement.
11.4. COUNTERPARTS. This Agreement and any documents executed pursuant
hereto may be executed in any number of counterparts, each one of which shall be
an original and all of which shall constitute one and the same document.
11.5. GENDER AND NUMBER. In this Agreement (unless the context requires
otherwise), the masculine, feminine and neuter genders and the singular and the
plural include one another.
11.6. EXPENSES. Sellers and Buyer shall each bear their own fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, all fees and expenses of
investment advisors, accountants, and counsel).
11.7. NOTICES. All notices given pursuant to this Agreement shall be in
writing and be personally delivered or mailed with postage prepaid, by
registered or certified mail, return receipt requested to the address set forth
below or such other address as a party may from time to time specify in writing
to the other party. If so mailed and also sent by telegram or facsimile machine,
the notice will conclusively be deemed to have been received on the business day
next occurring 24 hours after the latest to occur of such mailing and
telegraphic or facsimile communication; otherwise, no notice shall be deemed
given until it actually arrives at the address in question. The addressees to
which notice are initially to be sent are as follows:
(a) If to Buyer to:
Ceridian Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
49
Attention: President/Ceridian Performance Partners
Facsimile No.: (000) 000-0000
with a copy to:
Ceridian Corporation
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Office of General Counsel
Facsimile No: (000) 000-0000
(b) If to any of the Corporate Sellers, to:
Work/Family Directions, Inc.
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: X. Xxxxxx Lovely, Jr., P.C.
Facsimile No.: (000) 000-0000
(c) If to X. Xxxxxxx and X. Xxxxxxx, to:
00 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
with copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: X. Xxxxxx Lovely, Jr., P.C.
Facsimile No.: (000) 000-0000
11.8. NO THIRD PARTY BENEFICIARIES. No employee of the Work/Family
Business or former employee thereof (or his/her spouse or beneficiary, other
than employees or former employees who are parties to this Agreement), or any
other Person not a party to this Agreement, shall be entitled to assert any
claim hereunder. In no event shall this Agreement constitute a third party
beneficiary Contract.
50
11.9. GOVERNING LAW. This Agreement is governed by and is to be
construed and interpreted in accordance with the laws of The Commonwealth of
Massachusetts, without giving effect to the conflict of law principles thereof,
as to all matters, including without limitation matters of validity,
construction, effect, performance and remedies, unless otherwise required by
mandatory provisions of the laws of England or Canada.
11.10. MODIFICATIONS, AMENDMENTS OR WAIVERS. Except as otherwise
provided herein, provisions of this Agreement may be modified, amended or waived
only by a written document specifically identifying this Agreement and signed by
a duly authorized executive officer of each of the parties.
11.11. REMEDIES EXCLUSIVE. Except for remedies based on fraud, equitable
remedies (including, but not limited to, specific performance) and the remedies
provided for in Article 2 of this Agreement, the remedies provided in Article 10
and in the Escrow Agreement constitute the sole and exclusive remedies for
recovery against the Sellers based upon the inaccuracy, untruth, incompleteness
or breach of any representation or warranty of any Seller contained in this
Agreement or in any certificate, schedule or exhibit furnished by any Seller
hereunder or in any Contract or instrument delivered in connection with the
Transactions, or based upon the failure of any Seller to perform any covenant,
agreement or undertaking required by the terms hereof or by any of the
certificates, schedules, exhibits, Contracts or instruments referred to above to
be performed by any Seller.
11.12. ASSIGNMENT, SUCCESSORS AND ASSIGNS. Without the other party's
written consent, this Agreement and the rights and obligations hereunder, shall
not be assignable by any party hereto, except that no such consent shall be
required for such assignment by Buyer of all or any portion of its rights and
obligations under this Agreement to any direct or indirect subsidiary of
Ceridian, or to the purchaser of all or substantially all of the assets of the
Work/Family Business or all or substantially all of the assets of the Ceridian
Performance Partners division provided that Ceridian continues to guaranty all
obligations of Buyer hereunder and no such assignment shall adversely affect
Sellers' rights hereunder. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors and permitted assigns of the parties
hereto.
11.13. EQUITABLE REMEDIES. The obligations of Buyer and Sellers under
this Agreement are unique. The parties acknowledge that it would be extremely
impracticable to measure damages resulting from any default under this
Agreement. Accordingly, it is agreed that a party not in default under this
Agreement may xxx in equity for specific performance or injunctive relief.
11.14. JOINT PREPARATION. This Agreement has been jointly prepared by
the parties and the provisions of this Agreement shall not be construed more
strictly against any party hereto as a result of its participation in such
preparation.
11.15. ATTORNEYS' FEES. If any party to this Agreement initiates any
legal action against any other party relating to this Agreement or any agreement
executed pursuant hereto, the prevailing party in such action shall be entitled
to receive reimbursement from the other party for all reasonable attorneys'
fees, expert fees and other costs and expenses incurred by the prevailing party
in respect of such proceeding.
11.16. ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes all
51
prior written or oral and all contemporaneous oral agreements, understandings
and negotiations between the parties with respect to the subject matter
hereof.
11.17. DOLLARS. Unless otherwise specified, "Dollars" shall mean United
States Dollars.
11.18. STAMP DUTY. The parties to this Agreement:
(a) hereby certify that the Transactions effected by this
Agreement do not form part of a larger transaction or
series of transactions and that the correct amount of UK
stamp duty will be applied when the amount or value, or
aggregate amount or value, of the consideration for the
purposes of UK stamp duty (which is ascertainable but not
yet ascertained at the date hereof) is determined;
(b) shall execute this Agreement and all transfers, assignments
and other documents to be entered into pursuant to this
Agreement (together the "Transfer Documents") and retain
the same outside the United Kingdom; and
(c) agree that they shall not at any time cause or knowingly
permit any signed or executed original or counterpart of
any Transfer Document to be brought into the United Kingdom
unless (A) the parties to this Agreement so agree in
writing or (B) it is necessary (i) to produce the same in
any judicial, arbitration or administrative proceedings in
which a certified copy thereof is not accepted in evidence,
(ii) for the purpose of registering title to any Asset or
(iii) to comply with any legal requirement or the
requirement or request of any Governmental Entity in the
United Kingdom, provided that each party to this Agreement
shall first have used reasonable endeavors to avoid any
such necessity and shall have consulted with the other
parties as to the possibility of not bringing any such
Transfer Document into the United Kingdom, and provided
further that any party hereto permitted to bring a Transfer
Document into the United Kingdom pursuant to this Section
11.18(c) shall notify the other parties to this Agreement
at least fifteen (15) Business Days in advance of so doing.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument on behalf of each of the parties hereto as of the day and year first
above written.
CERIDIAN CORPORATION CANADIAN WORK/FAMILY
DIRECTIONS CO.
By: /s/ A. Xxxx Xxxx By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------- ----------------------------------
Name: Name:
--------------------------------- --------------------------------
Its: Its:
---------------------------------- ---------------------------------
WORK/FAMILY DIRECTIONS, INC. WFD
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------- ----------------------------------
Name: Name:
--------------------------------- --------------------------------
Its: Its:
---------------------------------- ---------------------------------
/s/ Xxxxxxxx X. Xxxxxxx
-------------------------------------- CERIDIAN PERFORMANCE
Xxxxxxxx X. Xxxxxxx PARTNERS LTD.
52
By: /s/ A. Xxxx Xxxx
----------------------------------
Name:
--------------------------------
/s/ Xxxxxxx X. Xxxxxxx Its:
-------------------------------------- ---------------------------------
Xxxxxxx X. Xxxxxxx
THE XXXXXXX FAMILY IRREVOCABLE LETTERALLIED LIMITED
TRUST OF 1998
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ A. Xxxx Xxxx
----------------------------------- ----------------------------------
Solely in his/her capacity as Name:
Trustee of said Trust, and not --------------------------------
Individually Its:
---------------------------------
By: /s/ Xxxxxxx X. X'Xxxxx, Trustee
-----------------------------------
Solely in his/her capacity as
Trustee of said Trust, and not
Individually
XXXXXXXX X. XXXXXXX 1998 RETAINED
ANNUITY TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Solely in his/her capacity as
Trustee of said Trust, and not
Individually
By: /s/ Xxxxxxx X. X'Xxxxx, Trustee
-----------------------------------
Solely in his/her capacity as
Trustee of said Trust, and not
Individually
53
