<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 of 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
Commission File Number 1-1969
CERIDIAN CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 52-0278528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8100 34th Avenue South
Minneapolis, Minnesota 55425
(Address of principal executive offices)
Telephone No.: (612) 853-8100
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which
registered:
Common Stock, par value $.50 New York Stock Exchange,
Inc.; The Chicago Stock
Exchange; and Pacific Stock
Exchange
Depositary Shares, each representing
a One One-Hundredth Interest in a
Share of 5-1/2% Cumulative Convertible
Exchangeable Preferred Stock,
Par Value $100........................ New York Stock Exchange, Inc.
5-1/2% Cumulative Convertible
Exchangeable Preferred Stock,
Par Value $100........................ None
5-1/2% Convertible Subordinated
Debentures Due 2008................... None
Has the Registrant (1) filed all reports required by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months and (2)
been subject to such filing requirements for the past 90 days.
Yes (X) No ( ).
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of February 29, 1996 was $2,844,268,970.
The shares of Common Stock outstanding as of February 29, 1996 were
67,912,402.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1995 Annual Report to Stockholders of Registrant: Parts I & II
Portions of the Proxy Statement for Annual Meeting of Stockholders, May 8,
1996: Parts III and IV
<PAGE>
CERIDIAN CORPORATION
PART I
The information contained in this Report includes forward-looking
statements, based on current expectations, that involve risks and
uncertainties which could cause actual results to differ materially from
those expressed in the forward-looking statements. Various important
factors known to Ceridian Corporation that could cause such material
differences are identified in the "Management's Discussion and Analysis of
Results of Operations and Financial Condition" on page 28 of the Company's
1995 Annual Report to Stockholders, which is incorporated by reference into
Part II, Item 7 of this Report.
Item 1. Business.
Ceridian Corporation ("Ceridian" or the "Company"), known as Control
Data Corporation until June 1992, was founded in 1957 and is incorporated
in Delaware. The principal executive office of Ceridian is located at 8100
34th Avenue South, Minneapolis, Minnesota 55425, telephone (612) 853-8100.
Ceridian is comprised of two business segments: Information Services and
Defense Electronics.
Information Services Segment
The Information Services segment, which consists of the Human
Resources Group ("HRG"), Comdata Holdings Corporation and Arbitron,
provides products and services to customers in the human resources,
trucking, gaming and electronic media markets. The Information Services
businesses collect, manage and analyze data and process transactions on
behalf of customers, report information resulting from such activities to
customers, and provide customers with related software applications and
services. The products and services provided by the Information Services
businesses address specific information management and transaction
processing needs of other businesses to enable them to operate more
efficiently. The technology-based products and services of the Information
Services businesses are typically provided through long-term customer
relationships that result in a high level of recurring revenue.
Information regarding Information Services' revenue, operating profit or
loss and identifiable assets for the years 1993-1995 is in Note K, Segment
Data, on page 47 of the Company's 1995 Annual Report to Stockholders, which
is incorporated herein by reference.
Human Resources Group.
The businesses comprising the HRG offer a broad range of products and
services designed to help employers more effectively manage their work
forces and information that is integral to human resource processes. HRG's
revenue for the years 1993, 1994 and 1995 was $244.0 million, $321.5
million and $412.2 million, respectively. The products and services of the
HRG include payroll processing and payroll tax filing services, and human
resources management software and services provided through the Ceridian
Employer Services business (which includes Ceridian's Centre-file Limited
subsidiary ("Centre-file") in the United Kingdom); payroll processing,
benefits administration and human resources management software provided
through Ceridian's Tesseract Corporation subsidiary ("Tesseract"); skills
management software and services provided through Ceridian's Resumix, Inc.
subsidiary ("Resumix"); training services provided through Ceridian's
User Technology, Inc. subsidiary ("UserTech"); employee assistance
programs through the Employee Advisory Resource business; payroll
processing services to customers with fewer than 100 employees in the mid-
Atlantic states through Ceridian's Minidata Services, Inc. subsidiary
("Minidata"); and automated time and attendance software through
Ceridian's EAS Technologies, Inc. subsidiary ("EAS") acquired in February
1996.
2
<PAGE>
Markets. The human resource services market covers a comprehensive
range of information management services and software and employer/employee
assistance services. These products and services include transaction-
oriented information management services such as payroll, tax filing and
benefits administration services; management support software and services
such as human resource information, skills management, time and attendance
and applicant tracking systems; employee-focused services such as employee
assistance programs; and other services such as compensation and benefits
consulting and systems training. The market for these products and
services is expected to continue to grow as companies continue to outsource
administrative services, seek to further automate internal processes, and
avail themselves of external expertise to foster high performance
workplaces. The factors driving the movement toward outsourcing include
the increasing scope and complexity of legislation regulating businesses
and their employees, the rising costs of providing payroll and other human
resource services in-house and the introduction of new types of human
resource services.
Traditionally, the human resource services market consisted of payroll
processing, payroll tax filing and other services that were transaction-
based, generally routinized and technology-oriented. Although these types
of services continue to account for a significant portion of the human
resource services market and demand for them continues to grow, the human
resource services market is expanding into other value-added services that
address other aspects of the employment relationship, such as human
resource management, benefits administration, compensation, staffing,
training development and employee relations. HRG believes that the ability
to provide a number of these other services and to integrate payroll and
human resource information databases can be an important factor in customer
retention because it provides customers with a stronger connection to their
provider of transaction-based services, and offers that provider a means to
distinguish its services from others provided in the market. Accordingly,
it is increasingly important for companies in the human resource services
market, particularly for those targeting medium and large employers, to
offer a wide range of services that are designed to address a broad
spectrum of human resource services needs.
The Company segments the human resource services market by classifying
employers into three categories: small (fewer than 75 employees), medium
(75 to 5,000 employees) and large (over 5,000 employees). Small employers
in the payroll services market are relatively price sensitive, tend to
focus more narrowly on payroll services and payroll tax filing and have low
costs in switching from one provider to another. Medium and large
employers generally require more complex, customized payroll services, have
a greater need for additional services and integrated databases and have
higher costs in switching from one provider to another.
Services. During 1995, payroll processing and payroll tax filing
services provided by Employer Services accounted for 78% of HRG's total
revenue. Payroll processing consists primarily of preparing and furnishing
employee payroll checks, direct deposit advices and supporting journals,
summaries and other reports, but does not involve the handling or
transmission of customer payroll funds. Payroll tax filing consists
primarily of collecting funds for federal, state and local employment taxes
from customers based on payroll information provided, remitting funds
collected to the appropriate taxing authorities, filing applicable returns,
and handling regulatory correspondence and amendments. These payroll-
related services are typically priced on a fee-per-item-processed basis,
and quarterly revenue consequently fluctuates with the volume of items
processed.
Revenue from payroll tax filing services also includes investment
income Employer Services receives from tax filing deposits temporarily held
pending remittance on behalf of customers to taxing authorities. These
funds are held in a tax filing trust established by Ceridian to more
clearly evidence the fiduciary capacity in which such funds are held. The
trust invests primarily in high quality collateralized short-term
investments or top tier commercial paper. The trust also invests in U.S.
Treasury and Agency securities, AAA rated asset-backed securities and
3
<PAGE>
corporate securities rated A3/A- or better. The trust may not use leverage
for investment purposes or purchase highly structured securities of any
kind. The duration of investments is carefully managed to meet the
liquidity needs of the trust. About two-thirds of Employer Services' 1995
payroll tax filing revenue and about 15% of HRG's 1995 revenue was
attributable to such investment income. Because of the significance of
this investment income, Employer Services' quarterly revenue and
profitability vary as a result of changes in interest rates and in the
amount of tax filing deposits held.
Payroll processing is currently conducted by Employer Services at 31
district offices located throughout the United States, all of which are
linked in a nationwide network. Employer Services' payroll system allows
customers to input their own payroll data via personal computers, transmit
the data on-line to Employer Services for processing, retrieve reports and
data files from Employer Services and print reports and, in certain
instances, payroll checks or direct deposit advices on site. Customers can
also input payroll data by telephone or batch transmittal, with payroll
checks and related reports prepared by Employer Services at one of its
district processing centers. Employer Services' payroll system also
interfaces with both customer and third-party transaction processing
systems to facilitate services such as direct deposit of payroll checks.
Because Employer Services' existing payroll processing system
incorporates older technology, particularly the payroll processing software
utilized, the system requires a significant amount of manual intervention
by Employer Services and is relatively labor intensive to install, maintain
and customize. As a result, the Company is in the process of upgrading
that software in order to create an enhanced payroll processing system that
is more highly automated, easier and less costly to install and maintain
and provides greatly increased functionality and flexibility to customers
in terms of product and service features and options. The Company
anticipates that a substantial majority of the existing payroll processing
customers will elect to eventually upgrade to this software, referred to as
"CII." To achieve these goals, the Company acquired Tesseract in June
1994, and has been conducting an internal development effort to adapt
Tesseract's proprietary payroll processing software to run in Employer
Services' multi-customer data center environment.
In connection with the decision to upgrade its payroll processing
software, Employer Services also decided to phase out payroll data
processing in certain of its district offices and to consolidate processing
utilizing the upgraded software in centralized facilities operated by
Integrated Systems Solutions Corporation ("ISSC") pursuant to a ten-year
technology services agreement that commenced in January 1995. The time
when the consolidation of payroll processing can begin is principally a
function of the timing of the Company's introduction of its CII software
and the availability of resources required to transition the existing
customer base to that software. During the second half of 1996, the
Company expects that existing customers who participate in the testing of
the "production" version of the CII software will begin utilizing that
software exclusively, and that the installation of certain large new
customers on the enhanced payroll processing system using the CII software
will be in process. The installation of all new customers on the enhanced
system and the general transition of existing customers to that system are
expected to begin during 1997. Employer Services will continue, for the
foreseeable future, to make payroll processing utilizing its existing
software available to customers who do not wish to upgrade.
The transition of existing payroll customers to centralized processing
on the CII software in the ISSC center and the phased reduction of
processing capabilities in the district offices is expected to occur over a
30 to 36 month period, largely because of the system conversion and
customer training efforts required of Employer Services to assure a
satisfactory transition process for customers electing the software
upgrade. The Company expects that the transition process will entail
significant incremental costs that principally reflect the cost of systems
4
<PAGE>
and data conversion, maintaining duplicate processing systems during the
transition period, and providing necessary training. The impact of these
costs is discussed in Part II, Item 7 of this Report.
During 1995, Employer Services completed a project to consolidate most
aspects of telephonic customer support from its district offices into a
single national telephone customer support center. By creating such a
national center, Employer Services believes that it can improve customer
service by creating a single point of contact for most customer inquiries
involving payroll processing or tax filing. Employer Services has,
however, retained the capability in the district offices to address certain
customer support needs.
Employer Services' payroll tax filing services are provided by its
Systems Tax Service ("STS" ) division located in Fountain Valley,
California. STS was acquired by the Company in 1993, and payroll tax
filing processing for all of Employer Services' tax filing customers was
consolidated on STS' system beginning in 1994. The STS acquisition also
expanded Employer Services' tax filing customer base beyond employers who
utilize Employer Services' payroll processing service to include local and
regional payroll processors who utilize STS' tax filing service for their
customers.
Employer Services' human resource information service provides
application software to customers that enables them to combine their
payroll and human resource information databases and can serve as a
"front-end" to Employer Services' payroll processing system. This
enables the customer to create a single database of employee information
for on-line inquiry, updating and reporting in areas important to human
resource administration and management. Employer Services began offering
during 1995 an integrated human resource/payroll information management
software to run in a Windows* environment in conjunction with its existing
payroll processing software, and has developed comparable Windows-based
software to be used in conjunction with the CII software. Employer
Services is also developing a client/server version of this human
resource/payroll information management software for use in connection with
the CII software. Employer Services also provides related human resources
information management consulting services.
In addition to providing the Company with the payroll processing
software that will be the core of the CII software, the Tesseract
acquisition provided Ceridian with payroll processing, benefits
administration and human resources management software offerings for large
customers with complex information management needs that prefer to handle
such tasks in-house. Although Tesseract's product offerings have
historically been mainframe-based, it is developing client/server versions
of these offerings.
Resumix, which was acquired by the Company in August 1995, provides
skills management software (and related hardware) that employs image
processing, knowledge base and database technologies to improve an
organization's staffing and skills management processes. Organizations use
the Resumix software to manage large volumes of incoming resume data to
identify qualified candidates for hire and match them with available
staffing needs, and to manage the skills of an existing work force by
placing current employees in new jobs or projects. Resumix also offers its
software on a service bureau basis to support smaller and medium-sized
organizations.
In October 1995, the Company purchased the assets of the Personnel and
Payroll Services business conducted by NatWest Group's Centre-file subsidiary.
Centre-file provides payroll processing services and human resource management
software, and is the largest outsourced payroll processing business in the
United Kingdom in terms of revenue.
.
* "Windows" is a trademark of Microsoft Corporation
5
<PAGE>
HRG's Employee Advisory Resource ("EAR") provides confidential,
around-the-clock assessment and referral services to customers' employees
to help them address legal and financial problems, substance abuse, child
care, eldercare and other personal problems. EAR maintains a network of
professional counselors who are available to work with employees to solve
problems and to provide referrals to specialists if such referrals are
warranted by the circumstances.
UserTech, purchased by the Company in 1994, provides custom user
training, reference documentation and on-line employee communications
systems to facilitate customers' implementation and utilization of human
resources and other business information management systems. In January
1996, the Company purchased the business and assets of Information Learning
Inc., including the Information Learning Systems trademark, and made this
business part of UserTech. Information Learning, which had 1995 revenue of
$2.5 million, provides expert systems that enable employers to address
employee and retiree questions about benefits, payroll and other human
resources policies and programs.
In February 1996, the Company acquired EAS, which had 1995 revenue of
$3.5 million. EAS provides time and attendance software for medium to
large-sized companies.
Sales and Marketing. Employer Services markets its products and
services through a direct sales force operating through about three dozen
offices located throughout the U.S. Employer Services also has established
marketing relationships with banks, accounting firms and insurance
companies, pursuant to which Employer Services offers its services to the
business clients of these entities. Employer Services' most significant
source of customer leads are referrals from existing customers and from the
marketing relationships previously noted. Employer Services' large and
diverse customer base covers a wide range of industries and markets, with
no single customer currently representing more than 1% of HRG's 1995
revenue. In January 1996, Employer Services entered into a three year
contract with Kmart Corporation to provide payroll processing and tax
filing services. Under this contract, the annual revenue from which is
ultimately expected to exceed 1% of HRG's annual revenue, the Company
assumed operation of Kmart's payroll system and the employees of its
payroll department effective March 1, 1996, and will begin to install Kmart
on Employer Services' payroll and tax filing system during 1996.
The other HRG businesses also utilize their own direct sales forces.
Customer leads for the products and services of these businesses are
generally obtained through referrals, trade shows, product demonstration
seminars and direct sales efforts.
The HRG businesses have utilized cooperative marketing relationships
with other companies offering products or services that complement those of
the HRG businesses. The Company has entered into a marketing arrangement
with ISSC under which ISSC will remarket Employer Services' payroll and tax
filing services and Tesseract software where such services and software are
required as part of a larger information technology outsourcing project.
The Company has also agreed with PeopleSoft, Inc. to develop an interface
to link Employer Services' payroll processing system with PeopleSoft's
human resource management software to facilitate the use of such payroll
processing services by PeopleSoft customers. HRG businesses have also
utilized informal marketing alliances with human resource consulting firms,
and is exploring similar cooperative arrangements with other software and
human resource services providers.
HRG believes that increasing the integration of the sales and
marketing efforts of its businesses will be an important factor in
achieving its profitability and growth objectives. HRG is increasingly
orienting sales and marketing efforts toward medium and large employers,
which tend to purchase a greater variety of services, require more
flexibility and customization in service offerings and have higher costs
associated with changing providers. At the same time, efforts to upgrade
technology and expand and integrate product and service offerings should
also increase sales effectiveness by building greater variety and
flexibility into service offerings, differentiating Ceridian from other
6
<PAGE>
service providers and providing customers with a stronger connection to
Ceridian. HRG's goal is to identify the overall human resource information
management needs arising out of the employment relationship, and address
those needs through a broad range of integrated customer-driven solutions,
such as outsourcing services, software applications and consulting
services.
Competition. The human resource services industry is characterized by
intense competition in the small, medium and large employer segments of the
market. Competition in this market comes from national, regional and local
third party transaction processors, including banks, as well as from
software companies, consulting firms and internally developed and operated
systems and software.
A substantial portion of the overall payroll processing and tax filing
market is supported in-house with the remainder supported by third party
providers. Automatic Data Processing, Inc. ("ADP") is the dominant third
party provider in this market, with Employer Services and Paychex, Inc.
("Paychex") comprising the other two large, national providers. ADP serves
all segments of this market, while Paychex focuses on the small employer
segment of the market. The remainder of the third party payroll market is
highly fragmented and is represented by smaller regional and local
competitors. Consolidation within this industry continues as the larger
national providers acquire smaller regional and local providers and as
banks sell their payroll service operations. In addition, software
companies, including Tesseract, market software products to companies that
allow these companies to support their payroll services in-house. The
market for the non-payroll portion of the human resource services industry
is evolving and is not dominated by a small number of competitors.
Currently, the principal competitive factors in the human resource
services market are performance, price, reliability, functionality, ease of
use, customer support and compatibility with industry standards. HRG
believes that its businesses are able to compete effectively in the overall
human resource services market with respect to all of these competitive
factors. In addition, HRG believes that offering a broad range of
information management products and services applicable to the employment
relationship will become an increasingly important competitive factor,
particularly with respect to medium and large employers. For example, by
being able to address large companies' payroll processing preferences with
both outsourcing (through Employer Services) and in-house processing
(through Tesseract) options, the Company believes it will be in a better
position to attract large employers for its payroll processing and related
products and services.
The ability of the HRG businesses to continue to compete effectively
in the human resource services market will depend in large measure on their
ability to implement and effectively use new technology, offer additional
products and services, such as software applications utilizing client
server architecture, and increase their market penetration. HRG intends to
seek additional strategic acquisition and partnering opportunities that
would better enable it to achieve these objectives.
Comdata.
Comdata Holdings Corporation ("Comdata Holdings ") is the parent
corporation of Comdata Network, Inc. ("Network"), and Comdata Holding's
investment in Network and Network's subsidiaries represents Comdata
Holding's only material asset. In this report, the term "Comdata" refers
to Comdata Holdings, Network and its subsidiaries. Comdata's revenue for
the years 1993, 1994 and 1995 was $212.3 million, $243.3 million and
$274.1 million, respectively.
Comdata is a leading provider of transaction processing services to
the trucking and gaming industries. For the trucking industry, Comdata
provides funds transfer and regulatory permit services, as well as
7
<PAGE>
telephone services and backhaul information, all of which make use of the
information processing or telecommunications capabilities of Comdata's
proprietary computerized telecommunications network. Comdata also
provides cash advance services to the gaming industry using credit cards
and debit services employing automated teller machines and similar
devices. Comdata uses its network to provide a system by which
individuals may use MasterCard, Visa and Discover credit cards or their
bank automatic teller machine card to obtain cash in casinos, racetracks
and other gaming locations.
In addition to expanding its operations by using its network to
develop new services for its customer base, Comdata has, over a period of
years, acquired other companies engaged in similar activities. Since
September 1987, Comdata has acquired ten different businesses, ranging in
size from $0.8 million to $57.6 million in annual revenue at the time of
acquisition.
Markets. Trucking Industry. The trucking industry encompasses both
long haul fleets and local fleets. Private fleets, which are part of
larger companies that have significant shipping needs, predominate in the
local fleet segment, but play a lesser role in the long haul fleet
segment. Common carriers, which provide trucking services to companies
that do not have fleets of their own, predominate in the long haul fleet
segment, which is comprised of less-than-truckload and truckload
components. The less-than-truckload component, which involves trucks that
make multiple stops to load and unload, is characterized by large capital
requirements and a relatively high degree of consolidation. The truckload
component, which involves the transportation of full loads directly from
shipper to final destination without going through any sorting terminals,
is highly fragmented and, Comdata believes, is growing at the expense of
private fleets and the less-than-truckload component.
The majority of Comdata's trucking company customers are common
carriers serving the truckload component of the long haul segment. Many
of these carriers do not employ their drivers, but instead contract with
individual owner-operators. Such owner-operators usually settle their
expenses with the common carrier after the completion of each trip.
Drivers for truckload carriers often spend weeks on the road at a time,
creating a number of unique conditions and business opportunities.
Truckload carriers are challenged to monitor and control fuel purchases,
provide driver services to improve retention, obtain necessary licenses
and permits, and effectively manage the logistics of such long-distance
trips.
A variety of trends has affected the trucking industry in recent
years and is expected to have an ongoing impact. Outsourcing of fleets
has occurred and is expected to continue since the costs of common
carriers are generally less than the costs of operating a private fleet.
Demand for the services of truckload carriers is expected to increase at
the expense of the more capital intensive less-than-truckload carriers.
Consolidation of carriers is expected to continue, reflecting economies of
scale and competitive pressures. Increased driver retention is expected
to continue to be a significant industry focus. The challenges and
expense of complying with environmental regulations governing fuel storage
tanks is expected to result in a shift from private terminal fueling to
truck stop fueling. Demand for legalization services is expected to
decline as a result of industry deregulation and increased permit and
license reciprocity among states.
Gaming Industry. In recent years, the gaming industry has
experienced a high rate of growth, particularly with an increasing number
of states having acted to permit casino gaming and other forms of
wagering, often on Native American reservations and in non-traditional
locations such as riverboats. It is estimated that some form of legalized
gaming is now available within a one-half day drive of most Americans.
Gaming facilities are tending to become more integrated with the rest of
the entertainment industry as they expand geographically and are included
in larger entertainment complexes. Demand for cash advance services in
gaming locations, which can be provided in a variety of ways, has grown
commensurately with growth in overall wagering.
8
<PAGE>
Services. Trucking Industry. Revenue from Comdata's services to the
trucking industry represented 57.0% of total revenue in 1995. Comdata's
results of operations are, therefore, highly dependent on competitive
conditions in the trucking industry and upon the level of activity in that
industry, which is itself affected to a large degree by general economic
conditions. Comdata's services to the trucking industry include fuel
purchase services, driver services, legalization services and logistics
services.
Fuel Purchase Services. Comdata uses its proprietary network to
provide a service that allows customers to purchase fuel through the use
of an instrument known as a ComchekR draft, which is a draft payable
through a Comdata bank account. Comdata funds the fueling transaction
when the truck stop negotiates the draft by depositing it in its bank
account. Comdata then bills the trucking company for the amount of the
draft plus the service fee, and the trucking company remits payment of
this amount to Comdata by wire transfer or check, typically within six
days. The vast majority of these fuel purchase transactions are initiated
through the use of Comdata's proprietary Comchek card in a manner similar
to an ordinary credit card transaction. Use of the Comchek card allows
the trucking company customer greater control over its expenses by setting
limits on the use of the cards such as by designating locations where the
cards may be used and the frequency with which they may be used. Use of a
Comchek card also enables Comdata to capture and provide to trucking
company customers transaction and trip-related information that greatly
enhances a customer's ability to track and plan fuel purchases and settle
with drivers. Comdata provides similar information gathering and
processing services in connection with fueling transactions which Comdata
does not fund, but instead are billed directly by the truck stop to the
trucking company. Fees for these "direct bill" transactions are
substantially lower. Some trucking companies also have access to such
information on Comdata's computer system and may therefore promptly obtain
information on recent transactions by their independent owner-operators or
employees. Comdata also provides fuel price tracking reports and
management within a network of truck stops, including cost/plus fuel
purchase programs.
Driver Services. Comdata provides a variety of services designed to
address the specific needs of long haul drivers who spend significant
periods of time on the road, including cash advance and funds transfer
services, direct deposit of paychecks or settlements (for non-employee
owner-operators), ATM and point of sale debit card services using the
Comchek card, long distance telephone services using the Comchek card and
driver relations services such as a monthly audio magazine for drivers.
Comdata's funds transfer system is designed to enable truck drivers
to obtain funding for purchases (in addition to fuel) at truck stops and
other locations en route to their destination, and to enable trucking
companies to maintain control over expenditures made by either their
independent owner-operators or their employees. In connection with these
services, Comdata is typically able to provide an accounting to the
trucking company of trip expenses (including fuel purchases) within 24
hours after the completion of a given trip. In 1995, Comdata processed
approximately 40 million funds transfer transactions for the trucking
industry (including fuel purchase programs), and as part of such
transactions transferred approximately $6.1 billion over its network.
Comdata maintains a national network of 24-hour independent truck
stop service centers which have point-of-sale devices and other computer
equipment to facilitate communication with Comdata's database and
operations centers. The service centers act as Comdata's agents pursuant
to a service center agreement, and typically also offer the funds transfer
services of other companies. When a truck driver makes a request at a
service center for a funds transfer, Comdata verifies that the driver's
company has established sufficient credit. Upon presentation of valid
identification, the service center obtains an authorization number from
Comdata and issues a Comchek draft, which is handled in the manner
described earlier in connection with fuel purchase transactions.
9
<PAGE>
Approximately 90% of the basic funds transfer system (including funded
fuel purchases) has been automated to utilize the Comchek card, which has
significantly enhanced efficiency by eliminating the need for operator
involvement and by reducing the amount of time necessary to complete
transactions. In addition, Comdata maintains a 24-hour call center in its
Brentwood, Tennessee offices to handle transactions that require operator
assistance. Redundancy for the functions performed by the Brentwood call
center are provided by alternate sites in LaVergne, Tennessee, Newberry,
South Carolina and, beginning in 1996, Birmingham, Alabama.
The long distance telephone services available to drivers through the
Comchek card enable Comdata's trucking company customers to maintain
greater control over the billable telephone use by their drivers by
allowing the trucking company to determine which locations the driver may
call and to preprogram those numbers into Comdata's voice response unit.
The trucking company can also limit the availability of the service to an
independent driver by dollar amount or number of calls.
Legalization Services. Comdata, through its TransceiverR division,
can determine the permits needed for a designated trip, truck, and load,
purchase those permits on behalf of the customer and deliver them by
facsimile machine to a truck stop where they can be picked up by the
driver. In many instances, a trucking company customer will order permits
directly from the issuing authority and Comdata will deliver these permits
by facsimile machine to their designated location. In addition to
charging its customers for the costs imposed by the state authority,
Comdata receives a fee for each permit delivered. In addition to
providing permits to trucking companies, Comdata also provides certain
regulatory compliance services, such as processing and auditing of driver
trip logs, reporting of fuel taxes, annual licensing and motor vehicle
registration verification.
Logistics and Other Services. Comdata designed and operates a
computerized shipment interchange system to help trucking companies find
loads for their return trips, thereby reducing empty backhauls. By making
specific shipment information available to customers on a subscription
basis, available shipments can be matched with available cargo space on a
nationwide basis. As a result of the 1994 purchase of the assets of
RoTec, Comdata also develops and markets software designed to assist in
routing, scheduling and other services for companies with private and for-
hire delivery fleets. Comdata offers to its trucking company customers
long distance telecommunications services provided by Worldcom, Inc.
("Worldcom") and by AT&T. As a result of agreements with these
providers, Comdata is able to make available volume discounts to its
customers who would not otherwise qualify for such rates. As a result of
the March 1995 purchase of Trendar Corporation, Comdata provides fueling
service centers with fuel purchase desk systems which automate the various
transactions that occur at a fuel purchase desk and accept all fuel
purchase cards currently used by drivers.
Comdata is also developing for trucking customers a Windows-based
software application for fuel purchase and other management services.
This application will enable trucking companies to access real-time data
on fuel purchases and facilitate pre- and post-trip planning functions.
Future modules of this application are expected to provide ready access to
other Comdata product and service offerings such as legalization services.
Comdata is developing a service to expedite the transfer of bills of
lading and freight bills utilizing its imaging storage and retrieval
capabilities.
Gaming Industry. Comdata processed approximately 8 million funds
transfer transactions aggregating approximately $3.0 billion for the
gaming industry during 1995. These services accounted for 42.7% of
Comdata's total 1995 revenue.
10
<PAGE>
Comdata's network enables individuals to use MasterCard, Visa or
Discover credit cards to obtain cash through Comchek terminals primarily
located in gaming locations. These cash advances differ from standard
credit card cash advances in that no personal identification number is
required, and differ from ATM withdrawals in that there is no pre-set
daily withdrawal limit. Instead, after a gaming patron runs his or her
credit card through a Comchek terminal and the transaction is authorized,
a Comchek draft drawn on a Comdata bank in the amount requested by the
patron at the terminal is generated at the gaming establishment's cashier
cage. The gaming patron immediately negotiates the draft for cash or
chips, and the gaming establishment presents the draft for payment.
Concurrently, the amount of the Comchek draft, along with Comdata's
service fee, is charged to the individual's MasterCard, Visa or Discover
account. Comdata pays an agent commission to the gaming establishment in
connection with cash advance transactions. Comdata's cash advance
services are currently available in a majority of casinos in Las Vegas,
Reno and Lake Tahoe, Nevada; and Atlantic City, New Jersey, and many other
gaming locations, including riverboat casinos and casinos on Native
American reservations and in Canada and the Caribbean.
Comdata's cash advance services are subject to policies and
regulations adopted from time to time by the major credit card
associations, including policies which currently preclude Comdata from
expanding its cash advance services to nongaming locations and prescribe
the applicable merchant discount to which such transactions are subject.
These policies are subject to change from time to time, and Comdata must
comply with changes to these policies and regulations, some of which could
have an adverse effect on Comdata.
In addition to credit card cash advances, Comdata also provides check
acceptance services and electronic funds transfers through Comdata's
automatic teller machines and other point of sale devices located in
gaming establishments. Because of the lower risk associated with these
transactions, the fees are much lower than fees for credit card cash
advances. In April 1994, Comdata acquired the casino cash advance
business of Western Union Financial Services, Inc. and became the
exclusive agent for Western Union's money transfer service to the gaming
industry in the United States. Comdata also provides market information
to gaming establishments to assist in marketing and promotional
activities. Comdata is developing a cashier operations and information
system for gaming establishments that is expected to integrate various
funds transfer and information gathering devices into a common platform.
Sales and Marketing. Trucking Industry. Comdata markets its
services to the trucking industry through a direct sales force operating
in various cities throughout the U.S., and through a tele-sales operation
in Comdata's Brentwood, Tennessee headquarters. Comdata has contracts
with approximately 16,000 long haul trucking companies, ranging in size
from those with several thousand trucks to those with fewer than five
trucks. Approximately 11,000 of these trucking companies use Comdata's
funds transfer services. Comdata also has relationships with
approximately 8,000 fueling locations. Contracts with trucking companies
generally range up to three years in duration, while contracts with
service centers are typically one or two years in duration. No single
customer represented more than 2% of Comdata's 1995 revenue from services
to the trucking industry.
Gaming Industry. Comdata markets its services to the gaming industry
through a direct sales force operating in Reno and Las Vegas, Nevada,
Atlantic City, New Jersey, Brentwood, Tennessee and in certain other
cities in the U.S. Comdata has relationships with approximately 1,000
gaming establishments.
Competition. The principal competitive factors relevant to funds
transfers in both the trucking and gaming industries are marketing
efforts, pricing, sophistication and reliability of computer and
communications systems, the provision of new techniques in basic funds
transfer services, reduction of the time required to effect transactions
11
<PAGE>
and payment and security terms of customer agreements. The major credit
card companies and vendors of traveler's checks are competitors of Comdata
in that they make cash available to holders of their cards and checks on a
nationwide basis. Comdata also faces increasing competition from lower
fee automated teller machines that participate in national networks.
In the trucking industry, at least six other companies offer similar
funds transfer services. These competitors are smaller than Comdata,
although at least two are owned by companies significantly larger than
Comdata. One of Comdata's competitors, EDS Fleet Services, was acquired
by Electronic Data Systems, Inc. in 1992. In addition,
truckstops may negotiate directly with trucking companies for a direct
billing relationship. Comdata also competes with several credit and debit
card services with respect to its fuel purchase program, some of which are
larger and have greater resources than Comdata. Certain of Comdata's
competitors also operate or franchise nationwide truckstop chains. In
addition, Comdata competes with some of its service centers (such as
truckstops) that offer similar products and services. In the business of
transmitting special regulatory permits, there is at least one other
nationwide company and several regional companies providing permit
services similar to those provided by Comdata. Moreover, the majority of
permitting and legalization services continue to be performed in-house.
Competition in this market is influenced by price, the expertise of
personnel and the ease with which permits may be ordered and received.
In the gaming industry, Comdata competes with numerous sources and
potential sources of cash, including at least three providers of credit
card cash advance services, certain smaller regional competitors and the
large gaming establishments themselves. Competition in this market is
also influenced by the pricing of agent commissions and the increasing
sophistication of ATM networks and other funds delivery mechanisms.
Comdata believes that it is a leading provider of funds transfer
services and outsourced permitting services to the trucking industry, and
of credit card cash advances to the gaming industry. Comdata believes
that its competitive strengths include (i) its ability to provide services
at a large number of locations in the continental United States and
Canada, (ii) its ability to offer a variety of services, frequently
tailored to an individual customer's needs, (iii) its large proprietary
databases regarding funds transfers and fuel purchases, and (iv) its long-
term experience and concomitant relationships in the trucking and gaming
industries.
Network and Data Processing Operations. Comdata's principal
communications center for its funds transfer business is located in its
corporate headquarters in Brentwood, Tennessee with secondary centers
located in Dallas, Texas and Newberry, South Carolina. Worldcom is the
primary supplier of telecommunications services to Comdata pursuant to an
agreement whose term expires in January 2003. Under this agreement,
Comdata is to purchase at least 80% of its internal and external resale
telecommunications requirements from Worldcom. Substantially all of
Comdata's internal data processing functions, including its payment
processing systems, are provided by ISSC pursuant to an agreement for
systems operations services whose term expires in April 2005. The
processing center is connected to Comdata-owned and customer-owned
computers installed in customer locations and to terminals and computers
located in Comdata's headquarters.
Customer Credit Comdata's general policy is that trucking companies
and other money transfer customers must establish credit before they may
use Comdata's services. Comdata may require letters of credit, surety
bonds or prepayment for funds transfer services, and generally will not
authorize services if the aggregate service cost exceeds the amount of the
security or internally established credit limits.
Regulation. Many of the states in which Comdata operates require
persons engaged in the business of selling or issuing payment instruments
12
<PAGE>
(such as the Comchek draft) or in the business of transmitting funds to
obtain a license from the appropriate state agency. In certain states,
Comdata is required to post bonds or other collateral to secure its
obligations to its customers in those states. Some state agencies have
the authority to deny licenses to, or revoke the license of, financially
weak companies. For its cash advance services in Atlantic City, New
Jersey casinos, Comdata is required to hold a Casino Service Industry
License issued by the State of New Jersey Casino Control Commission.
Comdata believes that it is currently in compliance in all material
respects with the regulatory requirements applicable to its business. The
failure to comply with the requirements of any particular state could have
a material adverse effect on Comdata's business in that state.
Arbitron.
Arbitron is the leading provider of radio audience measurement
information in terms of revenue, and also provides electronic media and
marketing information to radio and television broadcasters, cable
operators, advertising agencies and advertisers. Arbitron's proprietary
data regarding radio audience size and demographics is provided to
customers through multi-year license agreements. In addition, through
acquisitions, joint ventures and the introduction of new products, Arbitron
has obtained access to or developed services that provide data regarding
product purchasing decisions. Arbitron's revenue for the years 1993, 1994
and 1995 was $172.2 million, $121.3 million and $137.2 million,
respectively. The greatest portion of the revenue decrease from 1993 to
1994 was due to the discontinuance of Arbitron's syndicated television
ratings service, effective at the end of 1993.
Markets. Consolidation of radio station ownership has been a
continuing trend in recent years, due largely to industry economics and the
relaxation of governmental restrictions on station ownership. With federal
telecommunications legislation enacted in late 1995 permitting greater
concentration of ownership, this trend is expected to continue. This
consolidation has tended to intensify competition within the radio
industry, and to intensify competition between radio and other forms of
media for advertising dollars. Because of the significant amounts spent by
advertisers, radio broadcasters, advertising agencies and advertisers all
have a strong interest in information regarding the size and composition of
audiences for radio broadcasts. However, as advertisers increasingly seek
to tailor advertising strategies to target specific demographic groups
through specific media, and as audiences become more fragmented with
increased programming choices, the audience information needs of radio
broadcasters, advertising agencies and advertisers become more complex.
Increasingly, more detailed information regarding the demographics and
buying behavior of audiences is required, as well as more sophisticated
means to analyze such information.
These trends are not confined to the radio broadcast industry, but
also affect other media. As the importance of reaching niche audiences
with targeted marketing strategies increases, broadcasters, publishers,
advertising agencies and advertisers increasingly require that information
regarding exposure to advertising be provided on an individualized rather
than a household basis and that such information be coupled with
information regarding shopping patterns and purchaser behavior. The need
for such qualitative information may create opportunities for innovative
approaches to satisfy these information needs, particularly as
technological advances increase the alternatives available to advertisers
for reaching potential customers, including the possibilities of
interactive communication.
Services. Arbitron estimates audience size and demographics in the
U.S. for local radio stations, and reports this and related data to its
customers. This information is used by radio stations to price and sell
advertising time and by advertising agencies and large corporate
advertisers in purchasing advertising time. Arbitron uses listener diaries
to gather radio listener data from sample households in the 263 local
markets for which it currently provides radio ratings. Respondents mail
13
<PAGE>
the diaries to Arbitron's processing center in Columbia, Maryland, where
Arbitron compiles periodic audience measurement estimates. Arbitron also
provides software applications that give customers flexible and unlimited
access to Arbitron's database, and enable them to more effectively analyze
and understand that information and develop sales strategies for maximum
effectiveness. Arbitron is also developing applications that will enable
customers to link information provided by Arbitron's database with
information from other databases (such as product purchasing behavior) so
as to enable customers to further refine sales strategies and compete more
effectively for advertising dollars. The radio audience measurement
service represented about 85% of Arbitron's revenue during 1995.
Arbitron is also exploring opportunities to expand its information
service offerings to the radio industry in the areas of marketing and
promotion systems and systems to provide perceptual data for programmers.
In that regard, Arbitron acquired Media Marketing Technologies to obtain a
proprietary marketing analysis system that creates block group-coded data
bases of radio listeners and provides segmentation analyses and map
displays of key listener segments.
Arbitron believes it will become increasingly important to address the
more comprehensive information needs of the broadcast and cable industries
by providing customers with services and technology that link audience
measurement data with product purchasing data to enable customers to make
more productive marketing decisions. Through the Scarborough Research
Partnership, Arbitron has the exclusive right to market the Scarborough
Report to radio broadcasters and cable systems. The Scarborough Report
provides qualitative information regarding product/service usage and media
usage in 59 major U.S. markets, and measures products purchased based on a
sample of consumers in the relevant markets. Arbitron has also developed
and introduced in smaller markets its RetailDirect service, which is a
locally oriented, qualitative audience research service. The service,
which utilizes diaries and telephone surveys, provides a profile of the
broadcast audience in terms of local media, retail and consumer preferences
so that local radio and television broadcasters and cable systems will have
information that helps them develop targeted sales and programming
strategies.
Arbitron intends to further develop its capabilities and technologies
through acquisitions, alliances and licensing arrangements that will enable
it to provide the comprehensive information management services that
broadcasters, cable systems, telecommunications companies, advertising
agencies and advertisers will require to market their products and services
more effectively. Arbitron holds a minority equity interest in ADcom
Information Services, Inc., which has developed hardware and software
technology to provide cost-effective, electronic audience measurement
systems to the cable industry. Arbitron is also involved in cooperative
efforts to develop a passive, personalized electronic measurement device to
record broadcast listening or viewing, and to develop measurement products
for the Internet and interactive television.
Sales and Marketing. Arbitron provides its radio audience measurement
and related services to approximately 2,300 radio stations and about 2,400
advertising agencies nationwide. Contracts with customers vary in length
from one to seven years, and no single customer represented more than 3% of
Arbitron's 1995 revenue. Arbitron markets its products and services
through a direct sales force operating through offices in six cities around
the U.S.
Competition. Arbitron competes with other providers of applications
software, qualitative data and proprietary qualitative studies used by
broadcasters, cable systems, advertising agencies and advertisers,
including one other national provider of radio audience measurement
services.
14
<PAGE>
Defense Electronics Segment - Computing Devices International
The Defense Electronics segment, consisting of Computing Devices
International ("Computing Devices"), develops, manufactures and markets
electronic systems, subsystems and components, and provides systems
integration and other services, primarily to government defense agencies.
In addition, its Business Information Services division runs custom data
processing applications for customers (primarily the U.S. government) and
delivers them via a timesharing network. Computing Devices' revenue for
the years 1993, 1994 and 1995 was $461.3 million, $486.3 million and $509.5
million, respectively. Information regarding Computing Devices' operating
profit and identifiable assets for the years 1993-1995 is in Note K,
Segment Data, on page 47 of the Company's 1995 Annual Report to
Stockholders, which is incorporated herein by reference.
Markets. The defense contracting market has undergone dramatic change
in recent years. With changing geo-political conditions and government
budgetary constraints, defense spending has declined and the number of
companies serving the defense industry has decreased. At the same time,
the defense market focus has shifted from strategic defense (nuclear) to
tactical defense (non-nuclear), as the threat of military conflicts shifts
toward regional and ethnic conflicts.
The reduction in overall defense spending and the shift in focus
toward tactical defense needs, coupled with advances in commercially-
available technologies, is also shifting the focus of defense spending.
Computing Devices believes that customers will increasingly emphasize, and
that therefore the most attractive business opportunities in the defense
contracting market will exist in, areas such as (i) weapons sophistication,
electronics, surveillance and intelligence; (ii) extending the service life
of existing military equipment by upgrading, enhancing and retrofitting
such equipment, including the insertion of new technology, in order to
reduce the costs (including substantial training costs) associated with the
development and production of new equipment; and (iii) incorporating lower
cost commercial off-the-shelf technology and components into military
equipment.
Products and Services. Computing Devices' products and services
feature its capabilities in signal processing, digital image manipulation,
"ruggedized" subsystems for harsh environments and real-time software
systems. These products and services are produced primarily through its
operations in the U.S. and Canada, with only a small portion produced in
the United Kingdom ("U.K."). A majority of Computing Devices' revenue is
attributable to products and services relating to avionics systems,
including the AN/AYK-14 standard Navy airborne mission computer systems;
communications systems, including the Iris contract described below; and
intelligence and surveillance systems, including advanced parallel
processing, reconnaissance systems and imaging software. The remainder of
Computing Devices' revenue is primarily attributable to products and
services relating to shipboard subsystems, anti-submarine warfare
subsystems, ground subsystems, space processing, display subsystems and
tactical reconnaissance systems. Computing Devices employs technology
developed through internal research and development, contract research and
development and customer funded development programs.
During 1991, Computing Devices secured, through its Canadian
subsidiary, a contract to modernize the tactical command, control and
communications system used by the Canadian Department of National Defence.
This system, called Iris, incorporates a broad range of technologies,
including satellite, fiber optic and microwave communication. During 1994
and 1995, Computing Devices recorded revenue from this contract of $153.8
million and $163.9 million, respectively, representing 31.6% and 32.2%,
respectively, of Computing Devices' revenue in those years. This contract
has a remaining term of approximately five years and estimated total
remaining revenue of $557 million over the life of the contract. Although
Computing Devices' Canadian subsidiary is the prime contractor under this
contract, a significant portion of the contract has been subcontracted to
other communications technology companies.
15
<PAGE>
Computing Devices is also seeking to expand the scope of its product
offerings and the markets its serves, including the application of existing
products and technologies to business opportunities in other worldwide
defense markets and in civilian and civil government markets. In so doing,
Computing Devices may, from time to time, establish cooperative
arrangements with other entities where their expertise or familiarity with
other markets, products or technologies would prove beneficial. For
example, in January 1995, the Company obtained a minority equity investment
in Key Idea Development, LLC, which has developed a lightweight, voice-
activated wearable computer. In connection therewith, the Company obtained
an exclusive license to sell and develop applications for this computer in
the military and airline maintenance markets. In August 1995, the Company
entered into the DigitalXpress partnership formed to operate a satellite-
based data distribution system to provide point to multi-point distribution
of multimedia data for military and large commercial customers.
Sales and Marketing. Computing Devices markets its products and
services through a direct sales force operating in the U.S., Canada, the
U.K., France and Malaysia. Sales of products and services are made
principally through competitive proposals in response to requests for bids
from government agencies and prime contractors. In addition, Computing
Devices has independent sales agents who represent Computing Devices'
products and services in a number of European and Asian markets.
Competition. Computing Devices faces intense competition with respect
to all of its products and services. Competition has increased in recent
years, largely reflecting factors such as reduced defense spending,
consolidation among defense contractors, increasing vertical integration
(and a corresponding decrease in subcontracting) on the part of larger
defense contractors, and procurement reform efforts (such as an increasing
emphasis on the use of commercial off-the-shelf technology). Although many
of Computing Devices' competitors are companies (or divisions or
subsidiaries of companies) that are larger and have substantially greater
financial resources, Computing Devices believes that smaller companies
within the defense contracting industry may at times be able to adjust more
quickly to changes in the defense contracting environment.
The principal competitive factors include price, compliance with
technical specifications, service and ability to perform in accordance with
the established schedule. Due to the diversity and specialized nature of
the products and services provided and the governmental security
restrictions applicable to certain of Computing Devices' activities, it is
difficult to generalize as to Computing Devices' market position in certain
segments of its business. Computing Devices does believe, however, that it
is able to compete effectively in each of its market segments with respect
to these competitive factors. In particular, Computing Devices believes
that its high rate of schedule adherence is one of its principal
competitive advantages. The demonstrated ability to complete a project
within the required time schedule is an important factor to governments and
prime contractors in selecting companies for new projects. Computing
Devices currently has preferred supplier status with two prime contractors.
In light of market conditions such as decreases in defense spending,
increasing price sensitivity from government customers, and over-capacity
and consolidation among defense contractors, Computing Devices believes
that the ability to become a low cost provider of products and services
will be an increasingly important competitive factor.
Government Contracts. Approximately 96% and 94% of Computing Devices'
revenue for 1994 and 1995, respectively, was derived from contracts with
governmental entities or with prime contractors to governmental entities
which typically pass through government contracting requirements to their
subcontractors. Companies which do business with governments are subject
to certain unique business risks. Among these are dependence on annual
16
<PAGE>
government appropriations, changing procurement policies and regulations,
complexity of design and possible cost overruns. In addition, government
efforts to detect and eliminate irregularities in defense procurement
programs have increased the complexity and cost of doing business for
government contractors. Moreover, any government contractor determined to
be in noncompliance with applicable laws and regulations may be subject to
penalties and debarment or suspension from receiving additional U.S.
Government contracts. Any government contract may also be terminated by
the government at any time it believes that such termination would be in
its best interests. In such event, Computing Devices would generally be
entitled to receive payments for its allowable costs and, in general, a
proportionate share of its fee or profit for the work actually performed.
Approximately 90% of Computing Devices' 1995 revenue came from
government contracts that were fixed price contracts, including the Iris
contract. Under this type of contract, the price paid to Computing Devices
is not subject to adjustment by reason of the costs incurred by the Company
in the performance of the contract, except for costs incurred due to
contract changes ordered by the government. Thus, under fixed price
contracts, the Company bears the risk of cost overruns, which may result
from factors such as the need to bid on programs in advance of design
completion, unforeseen technological difficulties, design complexity and
uncertain cost factors, particularly in connection with multi-year
contracts. Multi-year fixed price contracts in Canada and the U.K. do,
however, normally allow for price revision based on government price
indices.
Computing Devices is usually entitled to invoice governments monthly
on fixed price and cost reimbursable contracts. Computing Devices does not
normally acquire inventory in advance of contract award, and does not
maintain significant stocks of finished products for sale. Moreover,
Computing Devices obtains advance funding from customers in connection with
certain of its contracts. The amount of progress payments and customer
advances and the amount of the holdback from such payments and advances
affect the amount of working capital necessary for Computing Devices to
finance work-in-process costs in the performance of these contracts.
Governments typically do not recognize interest or other costs associated
with the use of capital and, therefore, the timing of payments may affect
Computing Devices' profitability either positively or negatively.
Computing Devices also performs work under cost reimbursable and
incentive type contracts. Cost reimbursable contracts provide for
reimbursement of costs incurred, to the extent such costs are allowable
under applicable government regulations, plus a fee. Under incentive type
contracts, the amount of profit or fee realized varies with the attainment
of incentive goals such as costs incurred, delivery schedule, quality and
other criteria. Fixed price contracts normally carry a higher profit rate
than cost reimbursable and incentive type contracts to compensate for
higher business risk. In addition, laws and regulations applicable to
government contracting provide that certain types of costs may not be
included in either the directly-billed cost or the indirect overheads for
which the government is responsible. Many of these so-called "unallowable"
costs include ordinary costs of doing business in a commercial context.
These costs must be borne out of the pretax profit of the Company and,
thus, tend to reduce margins on government work.
Recognition of profits is based upon estimates of final performance,
which may change as contracts progress. Work may be performed prior to
formal authorization or adjustment of contract price for increased work
scope, change orders and other funding adjustments. Because of the
complexity of government contracts and applicable regulations, contract
disputes may occur. The resolution of such disputes may affect the
profitability of Computing Devices in performing these contracts. The
Company believes that adequate provision has been made in its financial
statements for these and other normal uncertainties incident to its
Computing Devices business.
17
<PAGE>
International Sales. International sales of Computing Devices'
products and services totaled approximately $258 million and $287 million,
respectively, or 53% and 56%, respectively, of Computing Devices' total
revenue in 1994 and in 1995. About 81% of these products and services were
produced by the Company's Canadian or U.K. subsidiaries for customers in
those countries. Because most of Computing Devices' sales involve
technologically advanced products, services and expertise, export control
regulations can limit the type of products and services that may be offered
and the countries and governments to which sales may be made. Computing
Devices' international sales are subject to risks inherent in foreign
commerce, including currency fluctuations and devaluations, changes in
foreign governments and their policies, differences in foreign laws and
difficulties in negotiating and litigating with foreign governments.
Computing Devices believes that the location of its international
operations tends to minimize certain of these risks, and that it has
mitigated other of these risks by obtaining letters of credit and advance
payments, by contractual protections on currency fluctuations and by
denominating contracts in U.S. dollars where possible.
Divestitures
In February 1995, Comdata sold the net assets of its retail services
division, which had provided check authorization, guarantee and collection
services primarily to supermarkets and other multi-lane retailers in the
metropolitan areas of Atlanta, Georgia, St. Louis, Missouri, throughout
California, and to a limited degree, in other parts of the United States.
Additional Information
Patents and Trademarks. The Company owns or is licensed under a
number of patents which relate to its products and are of importance to its
business. Certain of the Company's products and services are marketed
under federally registered trademarks which are helpful in creating
recognition in the marketplace. However, the Company believes that none of
its businesses is materially dependent upon any particular patent, license
or trademark, or any particular group of patents, licenses or trademarks.
Instead, the Company believes that its success and growth are far more
dependent, among other things, on the quality of its services and products
and its reputation with its customers.
Backlog. The Company's backlog is attributable to the Defense
Electronics segment, since no backlog amount is determinable for revenue
from the Company's Information Services businesses. Backlog does not
include those portions of government contracts for which funding has not
yet been approved, but does include the remaining value of the Iris
contract.
As of December 31, 1995, the backlog of the Company's orders was
$1,004 million, of which $557 million relates to the Iris contract and $447
million relates to other contracts and programs. At December 31, 1994, the
comparable total backlog was $1,209 million, of which Iris represented $751
million and other contracts and programs represented $458 million. The
portion of the backlog at the end of 1995 expected to be reflected in 1996
revenue is $394 million (39%), of which Iris represents $166 million and
other contracts and programs represent $228 million.
The portion of the total backlog under government prime contracts and
subcontracts was 88% at December 31, 1995 and 95% at December 31, 1994,
while the portion of government contract backlog under fixed-price
contracts was 97% and 95% at December 31, 1995 and 1994, respectively. In
each case, these percentages include the Iris contract, which is a fixed-
price contract with the Canadian government.
18
<PAGE>
Research and Development. The table below sets forth the amount of
the Company's research and development expenses for the periods indicated.
Year ended December 31,
1995 1994 1993
(Dollars in millions)
Research and development $54.5 $40.5 $37.1
Percent of revenues 4.1% 3.4% 3.3%
Customer sponsored research $71.7 $78.2 $77.4
and development
The Company's research and development efforts, including those
sponsored cooperatively by the Company and other participants, are
generally described earlier in this Item in the descriptions of the
Company's business segments, and in Part II, Item 7 of this report. The
amounts shown above as customer sponsored research and development
primarily represent government funded product development efforts.
Geographic Segment Data. For financial information regarding the
Company's U.S. and international operations, see Note K, Segment Data, on
page 47 of the Company's 1995 Annual Report to Stockholders, which is
incorporated herein by reference.
Employees. As of December 31, 1995, the Company and its subsidiaries
employed approximately 10,200 people on a full- or part-time basis. None
of the Company's U.S. employees are covered by a collective bargaining
agreement, but certain employees in Canadian and United Kingdom
subsidiaries are unionized.
19
<PAGE>
Item 2. Properties.
At December 31, 1995, the Company's principal production and office
facilities were located in the metropolitan areas of Minneapolis,
Minnesota; Brentwood, Tennessee; Atlanta, Georgia; Columbia, Maryland; New
York, New York; Fountain Valley and San Francisco, California; St. Louis,
Missouri; Ottawa and Calgary, Canada; and London and Hastings, England.
The following table summarizes the usage and location of the Company's
facilities as of February 29, 1996.
FACILITIES
(In thousands of square feet)
Type of Property
Interest U.S. Non-U.S. Worldwide
Owned 306 405 711
Leased 3,337 235 3,572
Total Square Feet 3,643 640 4,283
Utilization
Manufacturing & 294 449 743
Warehousing
Office, Computer Center 2,128 191 2,319
& Other
Vacant/Idle 419 -- 419
Leased or Subleased to 802 -- 802
Others
Total Square Feet 3,643 640 4,283
The 4.3 million square feet of aggregate space is essentially
unchanged from February 28, 1995, reflecting an increase in office and
computer center space as a result of acquisitions during 1995 that was
offset by a decrease in space leased or subleased to others. Space subject
to assigned leases is not included in the table above, and the Company
remains secondarily liable under all such leases. As of December 31, 1995,
these assigned leases involve 1.5 million square feet of space and future
rental obligations totaling $31.2 million. The principal elements of these
amounts are 0.4 million square feet and $5.5 million related to the spin-
off of Control Data Systems, Inc. and 1.1 million square feet and $25.7
million related to the 1989 sale of Imprimis Technology Incorporated to
Seagate Technology, Inc. The Company does not anticipate any material
nonperformance by the assignees of these leases.
Except for one building utilized by Computing Devices' Canadian
subsidiary (which is subject to a mortgage securing $6.0 million in debt
obligations), no facilities owned by the Company or its subsidiaries are
subject to any major encumbrances.
The Company believes that all of the facilities it currently utilizes
in its continuing operations are adequate for their intended purposes and
are adequately maintained. Utilization of those facilities varies among
the Company's operations. Generally, most of the facilities relating to
the Company's Information Services segment are reasonably necessary for
current and anticipated output levels of those businesses, although some
excess space is expected to develop in Employer Services' district offices
as payroll data processing is consolidated. Employer Services has
established restructuring reserves for the expected cost of such facilities
in excess of continuing requirements. There is also excess production
capacity in the Defense Electronics segment. Efforts are ongoing to
identify operations and facilities that can be consolidated and to dispose
of excess or idle space.
20
<PAGE>
Item 3. Legal Proceedings.
Information regarding legal proceedings involving the Company and its
subsidiaries is contained in Note N, Legal Matters, on page 50 of the
Company's 1995 Annual Report to Stockholders, which is incorporated herein
by reference.
Item 4. Submission of Matters to a Vote of Security Holders.
A special meeting of the Company's stockholders was held on December
12, 1995 to approve the issuance of shares of Ceridian common stock to
effect the acquisition of Comdata Holdings pursuant to the Agreement and
Plan of Merger dated as of August 23, 1995 by and among Ceridian, Comdata
Holdings and a newly formed subsidiary of Ceridian. The Company's
stockholders voted to approve the issuance of shares, with 33,699,834
shares voted for the issuance, 1,300,386 shares voted against the issuance
and 110,853 shares specifically abstained from voting on the matter.
In addition, 44,102 shares present at the meeting were the subject of
broker non-votes on the matter.
21
<PAGE>
Executive Officers of the Registrant
The executive officers of Ceridian as of March 1, 1996, are as
follows:
Executive
Name (Age) Position Officer Since
Lawrence Perlman Chairman, President and 1980
(57) Chief Executive Officer
John R. Eickhoff Executive Vice President 1989
(55) and Chief Financial Officer
Loren D. Gross (50) Vice President and 1993
Corporate Controller
Linda J. Jadwin (52) Vice President, Corporate 1990
Relations and Communications
Ronald James (45) Executive Vice President, 1996
and President and Chief Executive
Officer of the Human Resources Group
George J. Klauser Vice President, and 1995
(41) President of Ceridian Employer Services
Michael E. Kotten Vice President, 1995
(48) Organization Resources
George L. McTavish Executive Vice President, 1995
(54) and Chairman and Chief Executive
Officer of Comdata Holdings
James D. Miller (47) Vice President, Strategic 1993
Initiatives
Stephen B. Morris Executive Vice President, 1992
(52) and President and Chief Executive
Officer of Arbitron
Steven J. Olson (55) Vice President and General 1994
Counsel
Ronald L. Turner Executive Vice President, 1993
(49) and President and Chief Executive
Officer of Computing Devices
International
Linda Hall Whitman Vice President, Business 1995
(47) Integration
The executive officers of the Company are elected by the Board of
Directors and serve at the pleasure of the Board of Directors and the Chief
Executive Officer. They are customarily elected each year at the meeting
of the Board of Directors held in conjunction with the annual meeting of
stockholders.
Lawrence Perlman has been President and Chief Executive Officer of the
Company since January 1990, and was appointed Chairman in November 1992.
He is a director of Seagate Technology, Inc.; The Valspar Corporation;
Computer Network Technology; Kmart Corporation and Bio-Vascular, Inc.
Mr. Perlman has been a director of the Company since 1985.
22
<PAGE>
John R. Eickhoff has been Executive Vice President and Chief Financial
Officer of the Company since May 1995, and was Vice President and Chief
Financial Officer of the Company from June 1993 to May 1995. Mr. Eickhoff
was Vice President and Corporate Controller of the Company from July 1989
to June 1993.
Loren D. Gross has been Vice President and Corporate Controller of the
Company since July 1993. Mr. Gross was Assistant Corporate Controller of
the Company from March 1987 to July 1993.
Linda J. Jadwin has been Vice President, Corporate Relations and
Communications of the Company since May 1994, and was Vice President,
Corporate Communications of the Company from March 1990 to May 1994.
Ronald James has been Executive Vice President of the Company and
President and Chief Executive Officer of its Human Resources Group since
January 1996. He was Vice President-Minnesota of US WEST Communications,
Inc. from January 1990 to December 1995. Mr. James was a director of the
Company from May 1991 through December 1995, and is a director of St. Paul
Companies, Inc. and Great Hall Investment Funds, Inc.
George J. Klauser has been Vice President of the Company and President
of its Ceridian Employer Services division since October 1995. Mr. Klauser
was Vice President of Sales for Ceridian Employer Services from January
1993 to October 1995, and Regional Vice President of Sales for Ceridian
Employer Services from October 1990 to December 1992.
Michael E. Kotten has been Vice President, Organization Resources of
the Company since July 1995. Mr. Kotten was Vice President, Human Resource
Services of the Company from September 1994 to July 1995, and Vice
President, Compensation and Benefits of the Company from August 1991 to
August 1994.
George L. McTavish has been Executive Vice President of the Company
and Chairman and Chief Executive Officer of its Comdata Holdings subsidiary
since it was acquired by the Company in December 1995. Mr. McTavish was
Chairman and Chief Executive Officer of Comdata Holdings from March 1992 to
December 1995, and was President and Chief Executive Officer of Comdata
Holdings from November 1987 to March 1992. Mr. McTavish is a director of
Broadway & Seymour, Inc. and Seer Technology Corporation.
James D. Miller has been Vice President, Strategic Initiatives of the
Company since January 1993. From February 1989 to January 1993, Mr. Miller
was Vice President and Associate General Counsel for the Company.
Stephen B. Morris has been Executive Vice President of the Company and
President and Chief Executive Officer of its Arbitron division since
January 1996. Mr. Morris was Vice President of the Company and President
of Arbitron from December 1992 to January 1996. He was President and Chief
Executive Officer of Vidcode, Inc., which electronically monitors, verifies
and reports the broadcast of television commercials, from August 1990 to
December 1992; and Director and co-founder of Spectra Marketing Systems, a
micro-marketing firm, from March 1987 to March 1992. Prior to that time,
he spent seventeen years at General Foods Corporation, the last three as
General Manager/President of the Maxwell House Division.
Steven J. Olson has been Vice President and General Counsel of the
Company since October 1994. From October 1984 to October 1994, Mr. Olson
was Vice President and Associate General Counsel for the Company.
23
<PAGE>
Ronald L. Turner has been Executive Vice President of the Company and
President and Chief Executive Officer of its Computing Devices
International division since January 1996. Mr. Turner was Vice President
of the Company and President of Computing Devices International from
January 1993 to January 1996. Mr. Turner was President and Chief Executive
Officer, GEC-Marconi Electronics Systems Corporation, a defense electronics
company, from March 1987 to January 1993. Mr. Turner is a director of
Advanced Technology Services, Inc., FLIR Systems, Inc. and BTG, Inc.
Linda Hall Whitman has been Vice President, Business Integration of
the Company since October 1995. Ms. Whitman was Vice President, Consumer
Business Group of Honeywell, Inc. from September 1993 to September 1995,
and Director, Home Systems of Honeywell, Inc. from January 1991 to
September 1993. Ms. Whitman is a director of MTS Systems Corporation.
24
<PAGE>
PART II
All information incorporated by reference into Items 5 through 8 below
is contained in the financial portion of the Company's 1995 Annual Report
to Stockholders, which is filed with this Report as Exhibit 13.
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Company's common stock, par value $.50 per share ("Common Stock"),
is listed and trades on the New York Stock Exchange as well as on the
Chicago and Pacific Stock Exchanges. The following table sets forth the
high and low sales prices for a share of Common Stock on the New York Stock
Exchange.
____________1995___________ ______________1994____________
High Low High Low
1st Quarter 34 1/2 26 1/8 24 3/4 18 1/2
2nd Quarter 37 5/8 31 5/8 25 5/8 21 1/2
3rd Quarter 46 7/8 36 3/4 27 1/2 24
4th Quarter 47 1/2 36 5/8 27 1/8 23 1/2
The number of holders of record of Common Stock on March 19, 1995 was
17,382. No dividends have been declared or paid on the Common Stock since
1985. Although the Company is not contractually precluded from paying
dividends on its Common Stock, it has no present intention of paying such
dividends.
Item 6. Selected Financial Data.
See "Selected Five-Year Data" on page 1, which is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 16 through 29, which is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
The financial statements described in Item 14(a)1 of this Report are
incorporated herein by reference. See "Supplementary Quarterly Data
(Unaudited)" on page 52, which is incorporated herein by reference.
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
25
<PAGE>
Item 10. Directors and Executive Officers of the Registrant.
See information regarding the directors and nominees for director of
Ceridian under the heading "Nominees for Director" on pages 4 and 5 of the
Proxy Statement for the Annual Meeting of Stockholders, May 8, 1996 (the
"Proxy Statement"), which is incorporated herein by reference.
See the information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934 under the heading "Compliance With Section
16(a) of the Securities Exchange Act" on page 32 of the Proxy Statement,
which is incorporated herein by reference.
Information regarding the executive officers of Ceridian is on pages
22 through 24 of this Report, and is incorporated herein by reference.
Item 11. Executive Compensation.
See information under the headings "Directors' Compensation" on pages
6 and 7 of the Proxy Statement and "Executive Compensation" on pages 24
through 29 of the Proxy Statement, all of which is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
See information under the heading "Share Ownership Information" on
pages 30 and 31 of the Proxy Statement, which is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
See information under the heading "Compensation Committee Interlocks
and Insider Participation" on page 8 of the Proxy Statement, which is
incorporated herein by reference.
26
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements of Registrant
Incorporated by reference from the
pages indicated in the Company's
1995 Annual Report to Stockholders
into Part II, Item 8, of this Report: Page
Report of Management...........................................30
Independent Auditors' Report...................................31
Consolidated Statements of
Operations for the years ended
December 31, 1995, 1994 and 1993...............................32
Consolidated Balance Sheets as of
December 31, 1995 and 1994.....................................33
Consolidated Statements of Cash Flows
for the years ended
December 31, 1995, 1994 and 1993...............................34
Notes to Consolidated Financial Statements for
the three years ended December 31, 1995.......................35-51
(a) 2. Financial Statement Schedules of Registrant
Included in Part IV of this Report: Page
Independent Auditors' Report on financial
statement schedule.............................................32
Schedule II - Valuation and qualifying accounts...............33-34
All other financial statement schedules are omitted as the required
information is inapplicable or the information is presented in the
consolidated financial statements or related notes.
27
<PAGE>
(a) 3. Exhibits
The following is a complete list of Exhibits filed or
incorporated by reference as part of this report.
Exhibit Description
2.01 Agreement and Plan of Merger dated as of August 23, 1995
by and among Ceridian Corporation, Convoy Acquisition
Corp. and Comdata Holdings Corporation (incorporated by
reference to Appendix A to the Prospectus contained in the
Company's Registration Statement on Form S-4 (File No. 33-
64089))
2.02 Agreement and Plan of Reorganization, dated as of May 25,
1994, among Tesseract Corporation, Braemar Acquisition
Corp. and Ceridian Corporation (incorporated by reference
to Exhibit 2 to the Company's Current Report on Form 8-K
dated June 24, 1994, as amended (File No. 1-1969))
3.01 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.01 to the
Company's Registration Statement on Form S-8 (File No. 33-
54379))
3.02 Bylaws of the Company, as amended (incorporated by
reference to Exhibit 3.01 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1993 (File No. 1-1969))
4.01 Form of Deposit Agreement, dated as of December 23, 1993,
between The Bank of New York and Ceridian Corporation
(incorporated by reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-3 (File No. 33-50959))
4.02 Form of Indenture, with respect to the 5 1/2% Convertible
Subordinated Debentures Due 2008, dated as of December 23,
1993, between The Bank of New York and Ceridian
Corporation (incorporated by reference to Exhibit 4.7 to
the Company's Registration Statement on Form S-3 (File No.
33-50959))
10.01* Executive Employment Agreement between
Ceridian Corporation and Lawrence Perlman, dated February
1, 1994 (incorporated by reference to Exhibit 10.01 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993 (File No. 1-1969))
10.02* Executive Employment Agreement between Ceridian
Corporation and Ronald L. Turner, dated February 3, 1995
(incorporated by reference to Exhibit 10.02 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
10.03* Executive Employment Agreement between Ceridian
Corporation and Stephen B. Morris, dated February 3, 1995
(incorporated by reference to Exhibit 10.02 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
*Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this Report.
28
<PAGE>
10.04* Executive Employment Agreement between Ceridian
Corporation and John R. Eickhoff, dated February 3, 1995
(incorporated by reference to Exhibit 10.02 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1069))
10.05* Severance Compensation Agreement, dated as of November 29,
1994, between Comdata Holdings Corporation and George L.
McTavish
10.06* Amendment No. 1 to Severance Compensation Agreement, dated
as of January 31, 1996, among Ceridian Corporation,
Comdata Holdings Corporation and George L. McTavish
10.07* Ceridian Corporation Directors Deferred Compensation Plan
- 1993 Restatement (as amended through December 13, 1993)
(incorporated by reference to Exhibit 10.05 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993 (File No. 1-1969))
10.08* Ceridian Corporation Directors' Benefit Protection Trust
Agreement, dated as of December 1, 1994, between Ceridian
Corporation and First Trust National Association
(incorporated by reference to Exhibit 10.09 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
10.09* Ceridian Corporation 1993 Non-Employee Director Stock Plan
(incorporated by reference to Exhibit 2 to the Company's
Proxy Statement for Annual Meeting of Stockholders, May
12, 1993 (File No. 1-1969))
10.10* Ceridian Corporation Amended and Restated 1993 Long-Term
Incentive Plan (as amended through July 26, 1995)
10.11* Ceridian Corporation 1990 Long-Term Incentive Plan (1992
Restatement) (as amended through October 21, 1994)
(incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
10.12* Description of the Ceridian Corporation Annual Executive
Incentive Plan
10.13* Ceridian Corporation Benefit Equalization Plan, as amended
(effective generally as of January 1, 1994) (incorporated
by reference to Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994
(File No. 1-1969))
10.14* Ceridian Corporation Employees' Benefit Protection Trust
Agreement, dated as of December 1, 1994, between Ceridian
Corporation and First Trust National Association
(incorporated by reference to Exhibit 10.15 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
10.15* Ceridian Corporation Deferred Compensation Plan
(incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
*Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this Report.
29
<PAGE>
10.16* Comdata Holdings Corporation Stock Option and Restricted
Stock Purchase Plan, as amended October 25, 1993
(incorporated by reference to Exhibit 10.36 to Comdata
Holdings Corporation's Annual Report on Form 10-K for the
year ended December 31, 1993 (File No. 0-16151))
10.17* Comdata Holdings Corporation Unfunded Deferred Compensation Plan,
as amended
10.18* Form of Indemnification Agreement between Ceridian
Corporation and its Directors (incorporated by reference
to Exhibit 10.11 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991 (File No. 1-
1969))
10.19 Agreement for Information Technology Services, dated as of
January 10, 1995, between Ceridian Corporation and
Integrated Systems Solutions Corporation (incorporated by
reference to Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994 (File
No. 1-1969))
10.20 Amended and Restated Agreement for Systems Operations Services,
dated May 1, 1995, between Comdata Network, Inc. and Integrated
Systems Solutions Corporation
10.21 Telecommunications Service Agreement, dated as of
December 1, 1994, among Worldcom, Inc., Comdata Network,
Inc. and Comdata Telecommunications Services, Inc.
10.22 Credit Agreement, dated as of December 12, 1995, among
Ceridian Corporation, Bank of America National Trust and
Savings Association as Agent, and the Financial
Institutions Parties Thereto
11. Statement regarding computation of earnings (loss) per
share
12. Statements regarding computation of ratio of earnings to
fixed charges
13. 1995 Annual Report to Stockholders of the Company
21. Subsidiaries of the Company
23.01 Consent of Independent Auditors - KPMG Peat Marwick LLP
23.02 Consent of Independent Public Accountants - Arthur
Andersen LLP
24. Power of Attorney
27. Financial Data Schedule
*Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this Report.
If requested, the Company will provide copies of any of the exhibits
listed above upon payment of its reasonable expenses in furnishing such
exhibits. The Company will provide to the Securities and Exchange
Commission, upon request, any schedule to any of the foregoing exhibits
which has not been filed. Securities authorized pursuant to long-term debt
instruments of the Company and its consolidated subsidiaries do not exceed
1% of the total assets of the Company and its consolidated subsidiaries.
The Company will furnish copies of instruments under which such securities
are authorized to the Securities and Exchange Commission upon request.
30
<PAGE>
(b) Reports on Form 8-K
The Company filed one report on Form 8-K during the quarter ended
December 31, 1995. That report, dated December 12, 1995, reported in
"Item 2: Acquisition or Disposition of Assets" the approval by the
stockholders of Ceridian Corporation and Comdata Holdings Corporation of
the acquisition of Comdata by Ceridian and the consummation of that
acquisition. Also reported in "Item 5: Other Events" was the Company's
establishment of a $325 million revolving credit facility with a commercial
bank syndicate, with Bank of America as agent.
Incorporated by reference in Item 7 of that report were (1) Comdata's
consolidated balance sheets as of December 31, 1994 and 1993, the related
consolidated statements of operations, cash flows and stockholders' equity
for years ended December 31, 1994, 1993 and 1992, and the related notes to
such consolidated financial statements as contained in Comdata's Annual
Report on Form 10-K for the year ended December 31, 1994; (2) Comdata's
consolidated balance sheets as of September 30, 1995 and December 31, 1994,
the related consolidated statements of operations and cash flows for the
nine months ended September 30, 1995 and September 30, 1994, respectively,
and the related notes to such unaudited consolidated financial statements
as contained in Comdata's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995; and (3) the unaudited pro forma condensed
combined balance sheet of Ceridian at September 30, 1995, unaudited
condensed combined statements of operations of Ceridian for the years ended
December 31, 1994, 1993 and 1992 and for the nine month periods ended
September 30, 1995 and 1994, and the related notes to unaudited pro forma
condensed combined financial statements as contained in Ceridian's
Registration Statement on Form S-4 (File No. 33-64089).
The Company also filed a Form 8-K/A on January 11, 1996 to amend the
Form 8-K dated December 12, 1995 for the purpose of furnishing an
Independent Auditor's Consent to the incorporation by reference in that
Form 8-K of the Report of Independent Public Accountants related to the
audited financial statements of Comdata described therein.
31
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
THE BOARD OF DIRECTORS AND STOCKHOLDERS
CERIDIAN CORPORATION:
Under date of January 23, 1996, we reported on the consolidated
balance sheets of Ceridian Corporation and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of operations and
cash flows for each of the years in the three-year period ended December
31, 1995, as contained in the 1995 Annual Report to Stockholders. These
consolidated financial statements and our report thereon are incorporated
by reference in the Annual Report on Form 10-K for the year 1995. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedule as listed in the accompanying index (see Item 14.(a)2.). This
financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, based on our audits and the report of other auditors,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/KPMG Peat Marwick
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 23, 1996
32
<PAGE>
<TABLE>
SCHEDULE II
CERIDIAN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
Restructure and Discontinued Operations Reserves
<S> <C> <C> <C> <C> <C> <C>
Employer Computing
Arbitron Arbitron Services Devices
TV ScanAm Consolidation Severance Other Total
Reserve Balance 12/31/92 $ - $ 0.6 $ 6.0 $ 1.1 $ 133.0 $ 140.7
1993 Restructure Loss (1) 57.0 18.9 5.5 0.3 81.7
Cash Payments (4.1) (0.6) (4.0) (6.1) (44.9) (59.7)
Asset Write-Off (26.8) (15.0) (41.8)
Adoption of FAS 112 (2) (12.0) (12.0)
Other Non-cash Items (0.9) (0.9)
Reserve Balance 12/31/93 $ 26.1 $ - $ 20.9 $ 0.5 $ 60.5 $ 108.0
1994 Restructure Loss (1) 15.0 15.0
Sale of TeleMoney (3) 14.1 14.1
Cash Payments (17.4) (8.5) (0.5) (27.3) (53.7)
Other Non-cash Items 2.4 2.5 4.9
Reserve Balance 12/31/94 $ 11.1 $ - $ 12.4 $ - $ 64.8 $ 88.3
Cash Payments (3.9) (0.7) (13.6) (18.2)
Other Non-cash Items 0.3 0.3
Reserve Balance 12/31/95 $ 7.5 $ - $ 11.7 $ - $ 51.2 $ 70.4
(1) Does not include restructure gains of $14.7 in 1993 and $15.0 in 1994.
(2) Represents the reclassification to other liabilities of FAS 112 obligations.
(3) Represents obligations undertaken in connection with the sale of TeleMoney.
</TABLE>
33
<PAGE>
<TABLE>
SCHEDULE II (CONT.)
CERIDIAN CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
<S> <C> <C> <C>
Allowance for Doubtful Accounts Receivable Year Ended December 31
1995 1994 1993
Balance at beginning of year $ 12.2 $ 11.8 $ 10.3
Additions charged to costs and
expenses 6.1 6.3 6.7
Write-offs and other adjustments* (5.9) (5.9) (5.2)
Balance at end of year $ 12.4 $ 12.2 $ 11.8
(*)Other adjustments include balances removed as a result of sales of
businesses.
Investments and Advances Year Ended December 31,
1995 1994 1993
Balance of Seagate note
at beginning of year $ 10.0 $ 10.0 $ 10.0
Principal payment received (10.0)
Balance of Seagate note
at end of year $ --- $ 10.0 $ 10.0
</TABLE>
34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, as of
March 25, 1996.
CERIDIAN CORPORATION
By /s/Lawrence Perlman
Lawrence Perlman
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated as of March 25, 1996.
/s/Lawrence Perlman /s/J. R. Eickhoff
Lawrence Perlman J. R. Eickhoff
Chairman, President and Chief Executive Vice President and Chief
Executive Officer (Principal Financial Officer
Executive Officer) and Director (Principal Financial Officer)
/s/Loren Gross
Loren D. Gross
Vice President and Corporate
Controller (Principal Accounting
Officer) */s/Charles Marshall*
Charles Marshall, Director
*/s/Ruth M. Davis */s/Carole J. Uhrich
Ruth M. Davis, Director Carole J. Uhrich, Director
*/s/Allen W. Dawson */s/Richard W. Vieser*
Allen W. Dawson, Director Richard W. Vieser, Director
*/s/Richard G. Lareau */s/Paul S. Walsh*
Richard G. Lareau, Director Paul S. Walsh, Director
*/s/George R. Lewis /s/John A. Haveman
George R. Lewis, Director *By: John A. Haveman
Attorney-in-fact
35
<PAGE>
EXHIBIT INDEX
Exhibit Description
2.01 Agreement and Plan of Merger dated as of IBR
August 23, 1995 by and among Ceridian Corporation,
Convoy Acquisition Corp. and Comdata Holdings
Corporation (incorporated by reference to Appendix A to the
Prospectus contained in the Company's Registration Statement
on Form S-4 (File No. 33-64089))
2.02 Agreement and Plan of Reorganization, dated as of IBR
May 25, 1994, among Tesseract Corporation, Braemar
Acquisition Corp. and Ceridian Corporation
(incorporated by reference to Exhibit 2 to the Company's
Current Report on Form 8-K dated June 24, 1994,
as amended (File No. 1-1969))
3.01 Restated Certificate of Incorporation of the Company IBR
(incorporated by reference to Exhibit 4.01 to the
Company's Registration Statement on Form S-8
(File No. 33-54379))
3.02 Bylaws of the Company, as amended (incorporated IBR
by reference to Exhibit 3.01 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993 (File No. 1-1969))
IBR
4.01 Form of Deposit Agreement, dated as of
December 23, 1993, between The Bank of New York
and Ceridian Corporation (incorporated by
reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-3
(File No. 33-50959))
4.02 Form of Indenture, with respect to the 5 1/2% IBR
Convertible Subordinated Debentures Due 2008,
dated as of December 23, 1993, between The Bank
of New York and Ceridian Corporation (incorporated
by reference to Exhibit 4.7 to the Company's
Registration Statement on Form S-3 (File No. 33-50959))
10.01* Executive Employment Agreement between Ceridian IBR
Corporation and Lawrence Perlman, dated
February 1, 1994 (incorporated by reference to
Exhibit 10.01 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993
(File No. 1-1969))
10.02* Executive Employment Agreement between Ceridian IBR
Corporation and Ronald L. Turner, dated
February 3, 1995 (incorporated by reference
to Exhibit 10.02 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
10.03* Executive Employment Agreement between Ceridian IBR
Corporation and Stephen B. Morris, dated
February 3, 1995 (incorporated by reference
to Exhibit 10.02 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-1969))
10.04* Executive Employment Agreement between Ceridian IBR
Corporation and John R. Eickhoff, dated
February 3, 1995 (incorporated by reference to
Exhibit 10.02 to the Company's Annual Report
on Form 10-K for the year ended
December 31, 1994 (File No. 1-1069))
10.05* Severance Compensation Agreement, dated as E
of November 29, 1994, between Comdata Holdings
Corporation and George L. McTavish
10.06* Amendment No. 1 to Severance Compensation E
Agreement, dated as of January 31, 1996,
among Ceridian Corporation, Comdata Holdings
Corporation and George L. McTavish
10.07* Ceridian Corporation Directors Deferred IBR
Compensation Plan - 1993 Restatement
(as amended through December 13, 1993)
(incorporated by reference to Exhibit 10.05
to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993
(File No. 1-1969))
10.08* Ceridian Corporation Directors' Benefit IBR
Protection Trust Agreement, dated as of
December 1, 1994, between Ceridian Corporation
and First Trust National Association
(incorporated by reference to Exhibit
10.09 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994
(File No. 1-1969))
10.09* Ceridian Corporation 1993 Non-Employee Director IBR
Stock Plan (incorporated by reference to
Exhibit 2 to the Company's Proxy Statement
for Annual Meeting of Stockholders,
May 12, 1993 (File No. 1-1969))
10.10* Ceridian Corporation Amended and Restated 1993 E
Long-Term Incentive Plan (as amended
through July 26, 1995)
10.11* Ceridian Corporation 1990 Long-Term Incentive IBR
Plan (1992 Restatement) (as amended through
October 21, 1994) (incorporated by reference
to Exhibit 10.12 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994
(File No. 1-1969))
10.12* Description of the Ceridian Corporation Annual E
Executive Incentive Plan
10.13* Ceridian Corporation Benefit Equalization Plan, IBR
as amended (effective generally as of
January 1, 1994) (incorporated by reference
to Exhibit 10.14 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994
(File No. 1-1969))
10.14* Ceridian Corporation Employees' Benefit Protection IBR
Trust Agreement, dated as of December 1, 1994,
between Ceridian Corporation and First Trust
National Association (incorporated by reference
to Exhibit 10.15 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994
(File No. 1-1969))
10.15* Ceridian Corporation Deferred Compensation Plan IBR
(incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1994 (File No. 1-1969))
IBR
10.16* Comdata Holdings Corporation Stock Option and
Restricted Stock Purchase Plan, as amended
October 25, 1993 (incorporated by reference
to Exhibit 10.36 to Comdata Holdings
Corporation's Annual Report on Form 10-K for
the year ended December 31, 1993 (File No. 0-16151))
10.17* Comdata Holdings Corporation Unfunded Deferred E
Compensation Plan, as amended
10.18* Form of Indemnification Agreement between Ceridian IBR
Corporation and its Directors (incorporated by
reference to Exhibit 10.11 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1991 (File No. 1-1969))
10.19 Agreement for Information Technology Services, dated IBR
as of January 10, 1995, between Ceridian Corporation
and Integrated Systems Solutions Corporation
(incorporated by reference to Exhibit 10.18 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 (File No. 1-1969))
10.20 Amended and Restated Agreement for Systems Operations E
Services, dated May 1, 1995, between Comdata Network, Inc.
and Integrated Systems Solutions Corporation
10.21 Telecommunications Service Agreement, dated E
as of December 1, 1994, among Worldcom, Inc.,
Comdata Network, Inc. and Comdata Telecommunications
Services, Inc.
10.22 Credit Agreement, dated as of December 12, 1995, E
among Ceridian Corporation, Bank of America
National Trust and Savings Association as Agent,
and the Financial Institutions Parties Thereto
11. Statement regarding computation of earnings E
(loss) per share
12. Statements regarding computation of ratio of E
earnings to fixed charges
13. 1995 Annual Report to Stockholders of the Company E
21. Subsidiaries of the Company E
23.01 Consent of Independent Auditors - E
KPMG Peat Marwick LLP
23.02 Consent of Independent Public Accountants - E
Arthur Andersen LLP
24. Power of Attorney E
27. Financial Data Schedule E
IBR - Incorporated by reference
E - Electronically filed
<PAGE>
<PAGE>
EXHIBIT 10.05
SEVERANCE COMPENSATION AGREEMENT
This Severance Compensation Agreement, dated as of November
29, 1994, is entered into by and between Comdata Holdings
Corporation, a Delaware corporation (the "Company") and George L.
McTavish (the "Executive").
The Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention
and dedication of certain members of the Company's senior
management, including the Executive, to their assigned duties
without distraction in potentially disturbing circumstances
arising from the possibility of a change in control of the
Company.
This Agreement sets forth the severance compensation which
the Company agrees it will pay to the Executive if the
Executive's employment with the Company terminates under one of
the circumstances described herein following a Change in Control
of the Company (as defined herein).
1. Term. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains
unpaid as of such time, upon the earliest of (i) three years from
the date hereof if a Change in Control of the Company has not
occurred within such three-year period; (ii) the termination of
the Executive's employment with the Company based on death,
Disability (as defined in Section 3(b)), Retirement (as defined
in Section 3(c)) or Cause (as defined in Section 3(d)) or by the
Executive other than for Good Reason (as defined in Section
3(e)); and (iii) eighteen months from the date of a Change in
Control of the Company if the Executive has not terminated his
employment for Good Reason as of such time.
2. Change in Control. No compensation shall be payable
under this Agreement unless and until (a) there shall have been a
Change in Control of the Company, while the Executive is still an
employee of the Company and (b) the Executive's employment by the
Company thereafter shall have been terminated in accordance with
Section 3. For purposes of this Agreement, a Change in Control
means the happening of any of the following:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities and Exchange
Act of 1934, other than the Company, a wholly-owned
subsidiary thereof, any employee benefit plan of the Company
or any of its Subsidiaries or a person or entity that
beneficially owns 5% or more of the Common Stock of the
Company as of the date hereof, becomes the beneficial owner
1
<PAGE>
of the Company's securities having 30% or more of the
combined voting power of the then outstanding securities of
the Company that may be cast for the election of directors
of the Company (other than as a result of an issuance of
securities initiated by the Company in the ordinary course
of business); or
(ii) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions less than a
majority of the combined voting power of the then
outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the
election of the directors of the Company or such other
corporation or entity after such transactions are held in
the aggregate by the holders of the Company's securities
entitled to vote generally in the election of directors of
the Company immediately prior
to such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of
each director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
directors of the Company then still in office who were
directors of the Company at the beginning of any such
period.
3. Termination Following Change in Control. (a) If a
Change in Control of the Company shall have occurred while the
Executive is still an employee of the Company, the Executive
shall be entitled to the compensation provided in Section 4 upon
the subsequent termination of the Executive's employment with the
Company by the Executive or by the Company unless such
termination is as a result of (i) the Executive's death; (ii) the
Executive's Disability (as defined in Section (3)(b) below);
(iii) the Executive's Retirement (as defined in Section 3(c)
below); (iv) the Executive's termination by the Company for Cause
(as defined in Section 3(d) below); or (v) the Executive's
decision to terminate employment other than for Good Reason (as
defined in Section 3(e) below). If the lump sum severance
payment under Section 4, either alone or together with other
payments which the Executive has the right to receive from the
Company, would constitute a "parachute payment" (as define in
Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code")), such lump sum payment shall be "grossed-up" by the
Company so that the Executive is in the same after-tax position
as if he did not have to pay the excise tax imposed by Section
4999 of the Code.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall
2
<PAGE>
have been absent from his duties with the Company on a full-time
basis for six months and within 30 days after written notice of
termination is thereafter given by the Company the Executive
shall not have returned to the full-time performance of the
Executive's duties, the Company may terminate this Agreement for
"Disability."
(c) Retirement. The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive
of the Executive's employment based on the Executive's having
reached age 65 or such other age as shall have been fixed in any
arrangement established with the Executive's consent with respect
to the Executive.
(d) Cause. The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement only, the
Company shall have "Cause" to terminate the Executive's
employment hereunder only on the basis of fraud, misappropriation
or embezzlement on the part of the Executive. Notwithstanding
the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the
membership of the Company's Board of Directors (excluding the
Executive) at a meeting of the Board called and held for the
purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Executive was guilty of conduct
set forth in the second sentence of this Section 3(d) and
specifying the particulars thereof in detail.
(e) Good Reason. The Executive may terminate the
Executive's employment for Good Reason at any time during the
term of this Agreement. For purposes of this Agreement "Good
Reason" shall mean any of the following (without the Executive's
express written consent):
(i) the assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to
a Change in Control of the Company, or a change in the
Executive's titles or offices as in effect immediately prior to a
Change in Control of the Company, or any removal of the Executive
from or any failure to reelect the Executive to any of such
positions, except in connection with the termination of his
employment for Disability, Retirement or Cause or as a result of
the Executive's death or by the Executive other than for Good
Reason;
(ii) a reduction by the Company in the Executive'sbase
salary as in effect on the date hereof or as the same may be
increased from time to time during the term of this Agreement;
3
<PAGE>
(iii) a relocation of the Company's principal executive
offices to a location outside of Nashville (or Brentwood),
Tennessee, or the Executive's relocation to any place other
than the location at which the Executive performed the
Executive's duties prior to a Change in Control of the
Company, except for required travel by the Executive on the
Company's business to an extent substantially consistent
with the Executive's business travel obligations at the time
of a Change in Control of the Company;
(iv) any material breach by the Company of any
provision of this Agreement;
(v) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of
the Company; or
(vi) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 3(f), and for
purposes of this Agreement, no such purported termination shall
be effective.
(f) Notice of Termination. Any termination by the
Company pursuant to Section 3(b), 3(c) or 3(d) shall be
communicated by a Notice of Termination. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice
which shall indicate those specific termination provisions in
this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provisions so
indicated. For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice
of Termination.
(g) Date of Termination. "Date of Termination" shall
mean (a) if this Agreement is terminated by the Company for
Disability, 30 days after the Notice of Termination is given to
the Executive (provided that the Executive shall not have
returned to the performance of the Executive's duties on a full-
time basis during such 30-day period) or (b) if the Executive's
employment is terminated by the Company for any other reason, the
date on which a Notice of Termination is given.
4. Severance Compensation upon Termination of Employment.
(a) If the Company shall terminate the Executive's employment
other than pursuant to Section 3(b), 3(c) or 3(d) or if the
Executive shall terminate his employment for Good Reason, then
the Company shall pay to the Executive as severance pay in a lump
sum, in cash, on the fifth day following the Date of Termination,
an amount equal to the sum of (i) three times the average of the
aggregate annual salary paid to the Executive by the Company
during the three calendar years preceding the Change in Control
4
<PAGE>
of the Company and (ii) three times the highest bonus
compensation paid to the Executive for any of the three calendar
years preceding the Change in Control of the Company.
(b) In addition to the lump sum payment provided in
Section 4(a), if the Company shall terminate the Executive's
employment other than pursuant to Section 3(b), 3(c) or 3(d) or
if the Executive shall terminate his employment for Good Reason,
then the Company (at its expense) shall provide to the Executive
term life insurance and health and disability insurance
equivalent to that provided to the Executive immediately prior to
termination for a period of two years following the Date of
Termination.
(c) In addition to the benefits provided in Sections
4(a) and (b), if the Company shall terminate the Executive's
employment other than pursuant to Section 3(b), 3(c) or 3(d) or
if the Executive shall terminate his employment for Good Reason,
then all of the Executive's stock awards, including, without
limitation, restricted stock and stock options awarded to the
Executive by the Company pursuant to the Company's Stock Option
and Restricted Stock Purchase Plan, shall to the extent not
already vested and exercisable become fully vested and
exercisable. The Executive's stock options shall be exercisable
for a period of one year from the Date of Termination unless a
shorter period is required by applicable law.
5. No Obligation To Mitigate Damages; No Effect on Other
Contractual Rights. (a) The Executive shall not be required to
mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement
be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of
Termination, or otherwise.
(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish the Executive's existing rights,
or rights which would accrue solely as a result of the passage of
time, under any benefit plan, incentive plan or stock option
plan, employment agreement or other contract, plan or
arrangement.
6. Successor to the Company. (a) The Company will require
any successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or
assignment had taken place. Any failure of the Company to obtain
such agreement prior to the effectiveness of any such succession
5
<PAGE>
or assignment shall be a material breach of this Agreement and
shall entitle the Executive to terminate the Executive's
employment for Good Reason. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor
or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section
6 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of the law. If at any
time during the term of this Agreement the Executive is employed
by any corporation a majority of the voting securities of which
is then owned by the Company, "Company" as used in Sections 3, 4
and 11 hereof shall in addition include such employer. In such
event, the Company agrees that it shall pay or shall cause such
employer to pay any amounts owed to the Executive pursuant to
Section 4 hereof.
(b) This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amounts are still payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
7. Notice. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid as follows:
If to the Company:
Comdata Holdings Corporation
5301 Maryland Way
Brentwood, Tennessee 37027
If to the Executive:
George L. McTavish
521 Westview Avenue
Nashville, Tennessee 37205
or such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
8. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by the Executive and
the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
6
<PAGE>
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Tennessee.
9. Validity. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Legal Fees and Expenses. The Company shall pay all
legal fees and expenses which the Executive may incur as a result
of the Company's contesting the validity, enforceability or the
Executive's interpretation of, or determinations under, this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
COMDATA HOLDINGS CORPORATION
By: /s/Dennis R. Hanson
Name: Dennis R. Hanson
Title: Executive Vice President
EXECUTIVE:
/s/George L. McTavish
George L. McTavish
7
<PAGE>
<PAGE>
EXHIBIT 10.06
AMENDMENT NO. 1 TO
SEVERANCE COMPENSATION AGREEMENT
This Amendment No. 1 to the Severance Compensation
Agreement, dated as of January 31, 1996 (the "Amendment"), is
entered into by and among George L. McTavish (the "Executive"),
Comdata Holdings Corporation (the "Company"), and Ceridian
Corporation ("Ceridian").
RECITALS:
WHEREAS, the Company and the Executive are parties to that
certain Severance Compensation Agreement, dated as of November
29, 1994 (the "Agreement"), pursuant to which, among other
things, the Company agreed to provide the Executive with certain
severance benefits in the event of a "change in control"; and
WHEREAS, as a result of the Company's merger (the "Merger")
with Ceridian, a "change in control" as defined in Section 2 of
the Agreement has occurred and Ceridian has agreed to assume and
perform the Agreement;
NOW, THEREFORE, for and in consideration of the premises and
the mutual promises, covenants and conditions set forth in this
Amendment and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company,
the Executive and Ceridian hereby agree as follows:
1. Amendment of Agreement. The Agreement is hereby
amended, modified, and supplemented, effective as of the date
provided in Section 4 hereof, by this Amendment as set forth
below:
(a) Section 1 of the Agreement is hereby amended by
deleting such section from the Agreement in its entirety, and by
substituting in lieu thereof the following new section:
"1. Term. This Agreement shall terminate, except
to the extent that any obligation of the Company
hereunder remains unpaid as of such time, upon the
earlier of (i) the termination of the Executive's
employment with the Company based on death, Disability
(as defined in Section 3(b)), Retirement (as defined in
Section 3(c)), or Cause (as defined in Section 3(d)),
or by the Executive other than for Good Reason (as
defined in Section 3(e)); and (ii) June 12, 1997 if the
Executive has not terminated his employment for Good
Reason as of such time."
1
<PAGE>
(b) Section 3(e) of the Agreement is hereby amended by
deleting such Section 3(e) from the Agreement in its entirety,
and by substituting in lieu thereof the following new Section
3(e):
"(e) Good Reason. The Executive may terminate the
Executive's employment for Good Reason at any time
during the term of this Agreement. For purposes of
this Agreement, "Good Reason" shall mean any of the
following (without the Executive's express written
consent):
(i) the assignment to the Executive by the
Company of duties inconsistent with the
Executive's position, duties and responsibilities
with the Company, as described on Schedule 1
hereto, or a change in the Executive's titles or
offices from those shown on Schedule 1, or any
removal of the Executive from or any failure to
reelect the Executive to any of such positions,
except in connection with the termination of his
employment for Disability, Retirement or Cause or
as a result of the Executive's death or by the
Executive other than for Good Reason;
(ii) a reduction by the Company in the
Executive's base salary as in effect on December
12, 1995 or as the same may be increased from time
to time during the term of this Agreement;
(iii) the Executive's relocation to any
place other than Nashville (or Brentwood), except
for required travel by the Executive on the
Company's business to an extent substantially
consistent with the Executive's business travel
obligations at the time of the Merger, or a change
or replacement of the person to whom the Executive
reports;
(iv) any material breach by the Company of
any provision of this Agreement;
(v) any failure by the Company to obtain the
assumption of this Agreement by any successor or
assign of the Company; or
(vi) any purported termination of the
Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the
requirements of Section 3(f), and for purposes of
2
<PAGE>
this Agreement, no such purported termination
shall be effective."
(c) Section 4(a) of the Agreement is hereby amended by
deleting such Section 4(a) from the Agreement in its entirety,
and by substituting in lieu thereof the following new Section
4(a):
"(a) If the Company shall terminate the
Executive's employment other than pursuant to Section
3(b), 3(c) or 3(d) or if the Executive shall terminate
his employment for Good Reason, then the Company shall
pay to the Executive as severance pay in a lump sum, in
cash, on the fifth day following the Date of
Termination, an amount equal to the sum of (i) three
times the average of the aggregate annual salary paid
to the Executive by the Company during the three
calendar years preceding December 12, 1995 and (ii)
three times the highest bonus compensation paid to the
Executive for any of the three calendar years preceding
December 12, 1995 (the "Lump Sum Payment"). The Lump
Sum Payment shall be reduced by an amount equal to all
salary and bonus paid to the Executive by the Company
after December 12, 1995."
(d) Section 4(b) of the Agreement is hereby amended by
deleting such Section 4(b) from the Agreement in its entirety,
and by substituting in lieu thereof the following new Section
4(b):
"(b) In addition to the lump sum payment provided
in Section 4(a), if the Company shall terminate the
Executive's employment other than pursuant to Sections
3(b), 3(c), or 3(d) or if the Executive shall terminate
his employment for Good Reason, then the Company (at
its expense) shall provide to the Executive term life
insurance and health and disability insurance
equivalent to that provided to the Executive
immediately prior to December 12, 1995 for a period of
two (2) years following the Date of Termination."
(e) Section 4(c) of the Agreement is hereby amended by
deleting such Section 4(c) from the Agreement in its entirety,
and by substituting in lieu thereof the following new Section
4(c):
"(c) In addition to the benefits provided in
Sections 4(a) and 4(b), if the Company shall terminate
the Executive's employment other than pursuant to
Sections 3(b), 3(c) or 3(d) or if the Executive shall
terminate his employment for Good Reason, then all of
3
<PAGE>
the Executive's stock awards, including, without
limitation, restricted stock and stock options awarded
to the Executive by the Company pursuant to the
Company's Stock Option and Restricted Stock Purchase
Plan, but excluding any Ceridian stock awards received
by the Executive after December 12, 1995, shall to the
extent not already vested and exercisable become fully
vested and exercisable. The Executive's stock options
shall be exercisable for a period of one year from the
Date of Termination unless a shorter period is required
by applicable law."
2. Assumption of Agreement by Ceridian. Pursuant to
Section 6 of the Agreement, Ceridian hereby expressly, absolutely
and unconditionally assumes and agrees to perform the Agreement
in the same manner and to the same extent that the Company would
be required to perform the Agreement after the Merger. Ceridian
further acknowledges that the term "Company" as used herein and
in the Agreement, shall include Ceridian, unless such reference
clearly indicates otherwise.
3. Consent to Continued Employment on New Terms. The
Executive hereby consents to his post-Merger positions, duties,
responsibilities and status as described on Schedule 1 hereto,
and agrees that his right to terminate the Agreement for Good
Reason will be determined with respect to the new definition of
"Good Reason" contained in this Amendment.
4. Effectiveness of this Amendment.
This Amendment shall become effective upon the
execution and delivery of this Amendment by the Company, the
Executive and Ceridian.
5. Representations and Warranties of Ceridian and the
Company.
In order to induce the Executive to enter into this
Amendment, the Company and Ceridian hereby make the following
representations and warranties to the Executive:
5.1. Corporate Power and Authorization. Each of the
Company and Ceridian has the requisite corporate power and
authority to execute, deliver and perform its obligations under
this Amendment and the Agreement.
5.2. No Conflict. Neither the execution and delivery
by the Company or Ceridian of this Amendment nor the performance
of the obligations required hereby nor compliance by the Company
or Ceridian with the terms, conditions and provisions hereof will
conflict with or result in a breach of any of the terms,
4
<PAGE>
conditions or provisions of the Certificate of Incorporation or
Bylaws of either the Company or Ceridian or any law, regulation,
order, writ, injunction or decree of any court or governmental
instrumentality or any agreement or instrument to which either
the Company or Ceridian is a party or by which any of its
properties is bound, or constitute a default thereunder or result
in the creation or imposition of any lien.
5.3. Authorization. The execution and delivery by the
Company and Ceridian of this Amendment and the performance of the
obligations contemplated hereby (i) have been duly authorized by
all necessary corporate action on the part of both the Company
and Ceridian and (ii) do not and will not require any
authorization, consent, approval or license from or any
registration, qualification, designation, declaration or filing
with, any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
5.4. Valid and Binding Effect. This Amendment has
been duly and validly executed and delivered by both the Company
and Ceridian and constitutes the legal, valid and binding
obligation of both the Company and Ceridian, enforceable in
accordance with its terms.
5.5. Absence of Default. Both Ceridian and the
Company acknowledge that as of the date of this Amendment,
neither Ceridian nor Comdata has any grounds for not performing
its obligations under the Agreement, and that through the date
hereof any claims or rights to set off that either may have
against the Executive are hereby waived in consideration of the
Executive's agreement to enter into this Amendment. As of the
date of this Amendment, the Executive is not aware of any such
claims.
6. Miscellaneous.
6.1. Amendment to Agreement. The Agreement is hereby,
and shall henceforth be deemed to be, amended, modified and
supplemented in accordance with the provisions hereof, and the
respective rights, duties and obligations under the Agreement
shall hereafter be determined, exercised and enforced under the
Agreement, as amended, subject in all respects to such
amendments, modifications, and supplements and all terms and
conditions of this Amendment. Initially capitalized terms used
in this Amendment shall have the meanings ascribed thereto in the
Agreement, as amended hereby, unless otherwise defined herein.
6.2. Ratification of the Agreement. Except as
expressly set forth in this Amendment, all agreements, covenants,
undertakings, provisions, stipulations, and promises contained in
the Agreement are hereby ratified, readopted, approved, and
5
<PAGE>
confirmed and remain in full force and effect.
6.3. No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly
provided herein, constitute a waiver or modification of any
provision of, or operate as a waiver of any right, power or
remedy of the Executive under, the Agreement or prejudice any
right or remedy that the Executive may have or may have in the
future under or in connection with the Agreement. The
representations and warranties of the Company and Ceridian
contained in this Amendment shall survive the execution and
delivery of this Amendment and the effectiveness hereof.
6.4. Governing Law. This Amendment shall be governed
by, and construed and enforced in accordance with, the laws of
the State of Tennessee.
6.5. Counterparts; Telecopy Execution. This Agreement
may be executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which together shall
constitute one and the same instrument. Delivery of an executed
counterpart of this Amendment by facsimile shall be equally as
effective as delivery of a manually executed counterpart. Any
party delivering an executed counterpart of this Amendment by
facsimile shall also deliver a manually executed counterpart, but
the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of this
Amendment.
IN WITNESS WHEREOF, the undersigned have caused this
Amendment to be executed by their duly authorized officers or in
their individual capacities as of the date first written above.
CERIDIAN: EXECUTIVE:
CERIDIAN CORPORATION /s/G. L. McTavish
/s/Micheal E. Kotten George L. McTavish
By: Micheal E. Kotten
COMPANY:
Its:VP Organization Resources
COMDATA HOLDINGS CORPORATION
/s/John A. Haveman
By: John A. Haveman
Its: VP & Asst Secretary
6
<PAGE>
SCHEDULE I
McTavish Severance Agreement
Post-Merger Position
and Title: Executive Vice President of Ceridian or any
successor-in-interest; President and Chief
Executive Officer of Comdata Network.
Reporting To: Larry Perlman, Ceridian or any successor-in-
interest Chairman, President and Chief
Executive Officer.
Salary and Benefits:Annual salary of $348,140. The Executive is
eligible to participate in the 1996 Ceridian
Executive Incentive Plan with a target annual
payment, based on performance, of 40% of the
Executive's year-end annualized salary. The
maximum payout under the Plan is 60%.
Stock Awards: Non-qualified stock options to purchase
25,000 shares of Ceridian common stock and a
performance restricted stock award of 30,000
shares of common stock under Ceridian's 1993
Long-Term Incentive Plan.
Supplementary Executive
Benefits: The Executive will also be eligible for
supplementary executive benefits of $25,000
per year, payable monthly ($2,083 per month)
in addition to the Executive's base salary.
7
<PAGE>
AS AMENDED THROUGH JULY 26, 1995
CERIDIAN CORPORATION
1993 LONG-TERM INCENTIVE PLAN
(As Amended and Restated as of May 10, 1995)
1. Purpose of Plan.
The purpose of the Ceridian Corporation 1993 Long-Term Incentive
Plan (as amended and restated as of May 10, 1995) (the "Plan") is to
advance the interests of Ceridian Corporation (the "Company") and its
stockholders by enabling the Company and its Subsidiaries to attract
and retain persons of ability to perform services for the Company and
its Subsidiaries by providing an incentive to such individuals through
equity participation in the Company and by rewarding such individuals
who contribute to the achievement by the Company of its economic
objectives.
2. Definitions.
The following terms will have the meanings set forth below, unless
the context clearly otherwise requires:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Broker Exercise Notice" means a written notice pursuant to which
a Participant, upon exercise of an Option, irrevocably instructs a
broker or dealer to sell a sufficient number of shares or loan a
sufficient amount of money to pay all or a portion of the exercise
price of the Option and/or any related withholding tax obligations and
remit such sums to the Company and directs the Company to deliver stock
certificates to be issued upon such exercise directly to such broker or
dealer.
2.3 "Change of Control" means an event described in Section 12.1 of the
Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the group of individuals administering the Plan,
as provided in Section 3 of the Plan.
2.6 "Common Stock" means the common stock of the Company, par value
$0.50 per share, or the number and kind of shares of stock or other
securities into which such Common Stock may be changed in accordance
with Section 4.3 of the Plan.
2.7 "Disability" means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant
to the long-term disability plan of the Company or Subsidiary then
covering the Participant or, if no such plan exists or is applicable to
the Participant, the permanent and total disability of the Participant
within the meaning of Section 22(e)(3) of the Code.
<PAGE>
2.8 "Eligible Recipients" means all employees (including, without
limitation, officers and directors who are also employees) of the
Company or any Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as
2.9 amended.
2.10 "Fair Market Value" means, with respect to the Common Stock, as of
any date (or, if no shares were traded or quoted on such date, as of
the next preceding date on which there was such a trade or quote), the
closing market price per share of the Common Stock as reported on the
New York Stock Exchange Composite Tape on that date.
2.11 "Incentive Award" means an Option, Stock Appreciation Right,
Restricted Stock Award or Performance Unit granted to an Eligible
Recipient pursuant to the Plan.
2.12 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of
Section 422 of the Code.
2.13 "Newly Hired Employee" means a person who has been an Eligible
Recipient for 90 days or less.
2.14 "Non-Statutory Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6 of the
Plan that does not qualify as an Incentive Stock Option.
2.15 "Option" means an Incentive Stock Option or a Non- Statutory Stock
Option.
2.16 "Participant" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
2.17 "Performance Goal" means the absolute or relative measure of one
or more of the following alternatives as specified by the Committee in
writing for any Performance Period, the achievement of which is a
condition precedent to the vesting of a Performance Restricted Stock
Award hereunder: Total Return to Stockholders; fully diluted earnings
per share for the Company; or earnings before interest and taxes,
return on equity or invested capital, or revenue growth for the Company
or a specified Subsidiary or division of the Company. Any such
Performance Goal shall be established by the Committee on or before the
latest date permissible to enable the Performance Restricted Stock
Award to qualify as "performance-based compensation" under
Section 162(m). For purposes of this definition, any relative measure
of Total Return to Stockholders shall utilize the Company's Performance
Ranking Position, and other financial terms shall have the same
meanings as used in the Company's financial statements.
2
<PAGE>
2.18 "Performance Period" means the period of time during which
Performance Goals are measured to determine the vesting of Performance
Restricted Stock Awards.
2.19 "Performance Ranking Position" means the relative placement of the
Company's Total Return to Stockholders as measured against (i) the
Total Return to Stockholders of other companies in a nationally
recognized index such as the S&P 500, or in a peer group of companies
selected by the Committee prior to the commencement of a Performance
Period, or (ii) the performance of such nationally recognized index
itself.
2.20 "Performance Restricted Stock Award" means a Restricted Stock
Award the vesting of which is conditioned upon the satisfaction of one
or more Performance Goals.
2.21 "Performance Unit" means a right granted to an Eligible Recipient
pursuant to Section 9 of the Plan to receive a payment from the
Company, in the form of stock, cash or a combination of both, upon the
achievement of established performance criteria.
2.22 "Previously Acquired Shares" means shares of Common Stock that are
already owned by the Participant.
2.23 "Restricted Stock Award" means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 8 of the Plan that is
subject to the restrictions on transferability and the risk of
forfeiture imposed by the provisions of such Section 8.
2.24 "Retirement" means the termination (other than for "cause" as
defined in Section 10.3(b) of the Plan) of a Participant's employment
or other service on or after the date on which the Participant has
attained the age of 55 and has completed 10 years of continuous service
to the Company or any Subsidiary (determined in accordance with the
retirement/pension plan or practice of the Company or Subsidiary then
covering the Participant, provided that if the Participant is not
covered by any such plan or practice, the Participant will be deemed to
be covered by the Company's plan or practice for purposes of this
determination).
2.25 "Section 162(m)" means Section 162(m) of the Code.
2.26 "Securities Act" means the Securities Act of 1933, as amended.
2.27 "Stock Appreciation Right" means a right granted to an Eligible
Recipient pursuant to Section 7 of the Plan to receive a payment from
the Company, in the form of stock, cash or a combination of both, equal
to the difference between the Fair Market Value of one or more shares
of Common Stock and the exercise price of such shares under the terms
of such Stock Appreciation Right.
2.28 "Subsidiary" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Committee.
3
<PAGE>
2.29 "Tax Date" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive Award.
2.30 "Total Return to Stockholders" with respect to a company means the
total return to a holder of the common stock of that company during a
Performance Period as a result of his or her ownership of that stock
during such Performance Period, such total return to include both the
appreciation (or depreciation) in the per share price of such common
stock during such Performance Period, and the per share fair market
value of all dividends and distributions paid or distributed by such
company with respect to such common stock during such Performance
Period, assuming that all such dividends and distributions are
reinvested in shares of such common stock at their fair market value on
the last trading day of the month in which the dividend or distribution
is paid or distributed.
3. Plan Administration.
3.1 The Committee. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan
will be administered by a committee (the "Committee") consisting solely
of not less than two members of the Board who are "disinterested
persons" within the meaning of Rule 16b-3 under the Exchange Act. To
the extent consistent with corporate law, the Committee may delegate to
any directors or officers of the Company the duties, power and
authority of the Committee under the Plan pursuant to such conditions
or limitations as the Committee may establish; provided, however, that
only the Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16 of the
Exchange Act. Each determination, interpretation or other action made
or taken by the Committee pursuant to the provisions of the Plan will
be conclusive and binding for all purposes and on all persons, and no
member of the Committee will be liable for any action or determination
made in good faith with respect to the Plan or any Incentive Award
granted under the Plan.
3.2 Authority of the Committee.
(a) In accordance with and subject to the provisions of the
Plan, the Committee will have the authority to determine all
provisions of Incentive Awards as the Committee may deem necessary or
desirable and as consistent with the terms of the Plan, including,
without limitation, the following: (i) the Eligible Recipients to be
selected as Participants; (ii) the nature and extent of the Incentive
Awards to be made to each Participant (including the number of shares
of Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become
exercisable and whether Incentive Awards will be granted in tandem
with other Incentive Awards) and the form of written agreement, if
any, evidencing such Incentive Award; (iii) the time or times when
Incentive Awards will be granted; (iv) the duration of each Incentive
Award; and (v) the restrictions and other conditions to which the
payment or vesting of Incentive Awards may be subject. In addition,
4
<PAGE>
the Committee will have the authority under the Plan in its sole
discretion to pay the economic value of any Incentive Award in the
form of cash, Common Stock or any combination of both.
(b) Except as otherwise provided in the remainder of this
Paragraph 3.2(b), the Committee will have the authority under the Plan
to amend or modify the terms and conditions of any outstanding
Incentive Award in any manner, so long as the amended or modified terms
are permitted by the Plan as then in effect (including the requirement
under Section 6.2 that an Option exercise price will never be less than
100% of the Fair Market Value of the Common Stock on the date of
grant), and any Participant adversely affected by such amended or
modified terms has consented to such amendment or modification. No
amendment or modification to an Incentive Award, however, whether
pursuant to this Section 3.2 or any other provisions of the Plan, will
be deemed to be a regrant of such Incentive Award for purposes of this
Plan. The Committee shall not have the authority under the Plan to
accelerate the exercisability or vesting of, or otherwise terminate or
relax any restrictions relating to, any Incentive Award except in the
case of death, Disability or Retirement of a Participant, or except to
the extent that the exercise of such discretion by the Committee does
not affect Incentive Awards involving, in the aggregate over the life
of the Plan, more than 3% of the total number of shares of Common Stock
authorized for issuance under the Plan. The Committee shall not have
the authority under the Plan to authorize the grant of replacement
Option or Stock Appreciation Right awards in substitution for pre-
existing Incentive Awards of those types that have been or are to be
surrendered and canceled at any time when the Fair Market Value of the
Common Stock is less than the exercise price applicable to such
surrendered and canceled Incentive Awards. [As amended through July
26, 1995]
(c) In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering,
extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of assets or a
significant business, (iii) any change in accounting principles or
practices, or (iv) any other similar change, in each case with respect
to the Company (or any Subsidiary or division thereof) or any other
entity whose performance is relevant to the grant or vesting of an
Incentive Award, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the
surviving corporation) may, without the consent of any affected
Participant, amend or modify the grant or vesting criteria of any
outstanding Incentive Award that is based in whole or in part on the
financial performance of the Company (or any Subsidiary or division
thereof) or such other entity so as equitably to reflect such event,
with the desired result that the criteria for evaluating such financial
performance of the Company or such other entity will be substantially
the same (in the sole discretion of the Committee or the board of
directors of the surviving corporation) following such event as prior
5
<PAGE>
to such event; provided, however, that the amended or modified terms
are permitted by the Plan as then in effect.
4. Shares Available for Issuance.
4.1 Maximum Number of Shares Available. Subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of shares of
Common Stock that will be available for issuance under the Plan will be
6,000,000 shares. The shares available for issuance under the Plan
may, at the election of the Committee, be either treasury shares or
shares authorized but unissued, and, if treasury shares are used, all
references in the Plan to the issuance of shares will, for corporate
law purposes, be deemed to mean the transfer of shares from treasury.
4.2 Limitation on Individual Awards in Any Taxable Year. The maximum
number of shares of Common Stock that may be the subject of Incentive
Awards made to any Eligible Recipient in any one taxable year of the
Company shall not exceed 250,000 shares (the "Maximum Annual Grant").
4.3 Accounting for Incentive Awards. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Incentive
Awards will be applied to reduce the maximum number of shares of Common
Stock remaining available for issuance under the Plan. Any shares of
Common Stock that are subject to an Incentive Award that lapses,
expires, is forfeited or for any reason is terminated unexercised or
unvested and any shares of Common Stock that are subject to an
Incentive Award that is settled or paid in cash or any form other than
shares of Common Stock will automatically again become available for
issuance under the Plan.
4.4 Adjustments to Shares and Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares,
rights offering, divestiture or extraordinary dividend (including a
spin-off) or any other change in the corporate structure or shares of
the Company, the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of the
surviving corporation) will make appropriate adjustments (which
determination will be conclusive) as to (i) the number and kind of
securities available for issuance under the Plan, (ii) the Maximum
Annual Grant, and (iii) in order to prevent dilution or enlargement of
the rights of Participants, the number, kind and, where applicable,
exercise price of securities subject to outstanding Incentive Awards.
5. Participation.
Participants in the Plan will be those Eligible Recipients who, in
the judgment of the Committee, have contributed, are contributing or
are expected to contribute to the achievement of economic objectives of
the Company or its Subsidiaries. Eligible Recipients may be granted
from time to time one or more Incentive Awards, singly or in
combination or in tandem with other Incentive Awards, as may be
determined by the Committee in its sole discretion. Incentive Awards
will be deemed to be granted as of the date specified in the grant
6
<PAGE>
resolution of the Committee, which date will be the date of any related
agreement with the Participant.
6. Options.
6.1 Grant. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee may
designate whether an Option is to be considered an Incentive Stock
Option or a Non-Statutory Stock Option.
6.2 Exercise Price. The per share price to be paid by a Participant
upon exercise of an Option will be determined by the Committee in its
discretion at the time of the Option grant but will not be less than
100% of the Fair Market Value of one share of Common Stock on the date
of grant. Unless otherwise determined by the Committee, the per share
exercise price of Options granted under the Plan will be equal to 100%
of the Fair Market Value of one share of Common Stock on the date of
grant.
6.3 Exercisability and Duration. An Option will become exercisable at
such times and in such installments as may be determined by the
Committee in its sole discretion at the time of grant; provided,
however, that no Option may be exercisable prior to six months (other
than Options described in Section 6.6 of the Plan or as provided in
Section 10 of the Plan) or after 10 years from its date of grant.
Unless the Committee determines otherwise, an Option granted under the
Plan will be exercisable for 10 years from its date of grant and will
become exercisable on a cumulative basis with respect to one-third of
the shares subject to such Option on each January 1 occurring at least
six months after its date of grant.
6.4 Payment of Exercise Price. The total purchase price of the shares
to be purchased upon exercise of an Option will be paid entirely in
cash (including check, bank draft or money order); provided, however,
that the Committee, in its sole discretion and upon terms and
conditions established by the Committee, may allow such payments to be
made, in whole or in part, by tender of a Broker Exercise Notice,
Previously Acquired Shares or a combination of such methods.
6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained
in the Plan and in the agreement evidencing such Option, by delivery in
person, by facsimile or electronic transmission or through the mail of
written notice of exercise to the Company, Attention: Corporate
Treasury, at its principal executive office in Minneapolis, Minnesota
and by paying in full the total exercise price for the shares of Common
Stock to be purchased in accordance with Section 6.4 of the Plan.
6.6 Options or Stock in Lieu of Bonus. Without limiting in any way the
authority of the Committee to establish the terms and conditions of
Options or other Incentive Awards, the Committee may allow Eligible
Recipients to elect to receive some or all of their annual cash bonus
7
<PAGE>
in the form of Non-Statutory Stock Options or shares of Common Stock
rather than cash. The Committee will have the sole authority to
determine whether to allow such an election and to establish the terms
and conditions to such an election, which terms and conditions will be
set forth in the agreement evidencing such Options or Incentive Awards.
7. Stock Appreciation Rights.
7.1 Grant. An Eligible Recipient may be granted one or more Stock
Appreciation Rights under the Plan, and such Stock Appreciation Rights
will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its
sole discretion.
7.2 Exercise Price. The exercise price of a Stock Appreciation Right
will be determined by the Committee, in its discretion, at the date of
grant but will not be less than 100% of the Fair Market Value of one
share of Common Stock on the date of grant.
7.3 Exercisability and Duration. A Stock Appreciation Right will
become exercisable at such times and in such installments as may be
determined by the Committee in its sole discretion at the time of
grant; provided, however, that no Stock Appreciation Right may be
exercisable prior to six months (other than as provided in Section 10
of the Plan) or after 10 years from its date of grant. Unless the
Committee determines otherwise, a Stock Appreciation Right granted
under the Plan will be exercisable for 10 years from its date of grant
and will become exercisable on a cumulative basis with respect to
one-third of the shares subject to such Stock Appreciation Right on
each January 1 occurring at least six months after its date of grant.
A Stock Appreciation Right will be exercised by giving notice in the
same manner as for Options, as set forth in Section 6.5 of the Plan.
8. Restricted Stock Awards.
8.1 Grant. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be
subject to such terms and conditions, consistent with the provisions of
the Plan, as may be determined by the Committee in its sole discretion.
The Committee may impose such restrictions or conditions, not
inconsistent with the provisions of the Plan, to the vesting of such
Restricted Stock Awards as it deems appropriate, including, without
limitation, that the Participant remain in the continuous employ or
service of the Company or a Subsidiary for a certain period, that the
Participant or the Company (or any Subsidiary or division thereof)
satisfy certain performance criteria; provided, however, that any
Restricted Stock Award made on or after May 10, 1995 to an Eligible
Recipient other than a Newly Hired Employee must be a Performance
Restricted Stock Award. Other than as provided in Section 10.4 of the
Plan, (i) no Restricted Stock Award may vest prior to six months from
its date of grant, and (ii) any Restricted Stock Award that is not a
Performance Restricted Stock Award may vest only over a period of at
least three years from the date such Award was granted, the rate at
which the shares subject to such Award may vest during such period
8
<PAGE>
shall not be more favorable to the Participant than vesting in equal
annual installments, and the Participant must remain in the continuous
employ or service of the Company or a Subsidiary during such period.
[As amended through July 26, 1995]
8.2 Rights as a Stockholder; Transferability. Except as provided in
Sections 8.1, 8.3 and 13.3 of the Plan, a Participant will have all
voting, dividend, liquidation and other rights with respect to shares
of Common Stock issued to the Participant as a Restricted Stock Award
under this Section 8 upon the Participant becoming the holder of
record of such shares as if such Participant were a holder of record of
shares of unrestricted Common Stock.
8.3 Dividends and Distributions. Unless the Committee determines
otherwise in its sole discretion (either in the agreement evidencing
the Restricted Stock Award at the time of grant or at any time after
the grant of the Restricted Stock Award), any dividends or
distributions (including regular quarterly cash dividends) paid with
respect to shares of Common Stock subject to the unvested portion of a
Restricted Stock Award will not be subject to the same restrictions as
the shares to which such dividends or distributions relate and will be
currently paid to the Participant. In the event the Committee
determines not to pay such dividends or distributions currently, the
Committee will determine in its sole discretion whether any interest
will be paid on such dividends or distributions. In addition, the
Committee, in its sole discretion, may require such dividends and
distributions to be reinvested (and in such case the Participants
consent to such reinvestment) in shares of Common Stock that will be
subject to the same restrictions as the shares to which such dividends
or distributions relate.
8.4 Enforcement of Restrictions. To enforce the restrictions referred
to in this Section 8, the Committee may place a legend on the stock
certificates referring to such restrictions and may require
Participants, until the restrictions have lapsed, to keep the stock
certificates, together with duly endorsed stock powers, in the custody
of the Company or its transfer agent or to maintain evidence of stock
ownership, together with duly endorsed stock powers, in a
certificateless book-entry stock account with the Company's transfer
agent for its Common Stock.
9. Performance Units.
An Eligible Recipient may be granted one or more Performance Units
under the Plan, and such Performance Units will be subject to such
terms and conditions, consistent with the other provisions of the Plan,
as may be determined by the Committee in its sole discretion. The
Committee may impose such restrictions or conditions, not inconsistent
with the provisions of the Plan, to the vesting of such Performance
Units as it deems appropriate, including, without limitation, that the
Participant remain in the continuous employ or service of the Company
or any Subsidiary for a certain period or that the Participant or the
Company (or any Subsidiary or division thereof) satisfy certain
performance criteria. The Committee will have the sole discretion
9
<PAGE>
either to determine the form in which payment of the economic value of
vested Performance Units will be made to the Participant (i.e., cash,
Common Stock or any combination thereof) or to consent to or disapprove
the election by the Participant of the form of such payment.
10. Effect of Termination of Employment or Other Service.
10.1 Termination Due to Death or Disability. In the event a
Participant's employment or other service with the Company and all
Subsidiaries is terminated by reason of death or Disability:
(a) All outstanding Options then held by the Participant
will become immediately exercisable in full and will remain exercisable
for the remainder of their terms;
(b) All Restricted Stock Awards then held by the Participant
that have not vested as of such termination will be terminated and
forfeited; and
(c) All Performance Units and Stock Appreciation Rights then
held by the Participant will vest and/or continue to vest and, with
respect to Stock Appreciation Rights, will remain exercisable in the
manner determined by the Committee and set forth in the agreement
evidencing such Incentive Awards.
10.2 Termination Due to Retirement. Except as otherwise provided in
Section 12 of the Plan, in the event a Participant's employment or
other service with the Company and all Subsidiaries is terminated by
reason of Retirement:
(a) All outstanding Options then held by the Participant
will continue to become exercisable in accordance with their terms;
(b) All Restricted Stock Awards then held by the Participant
that have not vested as of such termination will be terminated and
forfeited; and
(c) All Performance Units and Stock Appreciation Rights then
held by the Participant will vest and/or continue to vest and, with
respect to Stock Appreciation Rights, will remain exercisable in the
manner determined by the Committee and set forth in the agreement
evidencing such Incentive Awards.
10.3 Termination for Reasons Other than Death, Disability or
Retirement.
(a) Except as otherwise provided in Section 12 of the Plan,
in the event a Participant's employment or other service is terminated
with the Company and all Subsidiaries for any reason other than death,
Disability or Retirement, or a Participant is in the employ or service
of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the
Company (unless the Participant continues in the employ or service of
the Company or another Subsidiary), all rights of the Participant under
the Plan and any agreements evidencing an Incentive Award will
10
<PAGE>
immediately terminate without notice of any kind, no Options or Stock
Appreciation Rights then held by the Participant will thereafter be
exercisable and all Restricted Stock Awards then held by the
Participant that have not vested will be terminated and forfeited;
provided, however, that if such termination is due to any reason other
than termination by the Company or any Subsidiary for "cause," all
outstanding Options then held by such Participant will remain
exercisable to the extent exercisable as of such termination for a
period of three months after such termination (but in no event after
the expiration date of any such Option) and all Performance Units and
Stock Appreciation Rights will vest and/or continue to vest and, with
respect to Stock Appreciation Rights, will remain exercisable in the
manner determined by the Committee and set forth in the agreement
evidencing such Incentive Awards.
(b) For purposes of this Section 10.3, "cause" will be as
defined in any employment or other agreement or policy applicable to
the Participant or, if no such agreement or policy exists, will mean
(i) dishonesty, fraud, misrepresentation, embezzlement or material and
deliberate injury or attempted injury, in each case related to the
Company or any Subsidiary, (ii) any unlawful or criminal activity of a
serious nature, (iii) any willful breach of duty, habitual neglect of
duty or unreasonable job performance, or (iv) any material breach of
any employment, service, confidentiality or noncompete agreement
entered into with the Company or any Subsidiary.
10.4 Modification of Rights Upon Termination. Notwithstanding the
other provisions of this Section 10, upon a Participant's termination
of employment or other service with the Company and all Subsidiaries,
the Committee may, in its sole discretion (which may be exercised
before or following such termination) but consistent with the
limitations of Paragraph 3.2(b) of the Plan, cause Options or Stock
Appreciation Rights (or any part thereof) then held by such Participant
to become exercisable and/or remain exercisable following such
termination of employment or service and Restricted Stock Awards and
Performance Units then held by such Participant to vest and/or continue
to vest following such termination of employment or service, in each
case in the manner determined by the Committee. [Amended as of July
26, 1995]
10.5 Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a Participant's
employment or other service will, for purposes of the Plan, be deemed
to have terminated on the date recorded on the personnel or other
records of the Company or the Subsidiary for which the Participant
provides employment or other service, as determined by the Committee in
its sole discretion based upon such records.
11. Payment of Withholding Taxes.
11.1 General Rules. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts which may be
due and owing to the Participant from the Company or a Subsidiary), or make
other arrangements for the collection of, all legally required amounts
11
<PAGE>
necessary to satisfy any and all federal, state and local withholding and
employment- related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or
payment of dividends with respect to, an Incentive Award or a disqualifying
disposition of stock received upon exercise of an Incentive Stock Option,
or (b) require the Participant promptly to remit the amount of such
withholding to the Company before taking any action with respect to an
Incentive Award.
11.2 Special Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 11.1 of the Plan
by electing to tender Previously Acquired Shares, a Broker Exercise
Notice or a combination of such methods.
12. Change of Control.
12.1 Definitions. For purposes of this Section 12, the following
definitions will be applied:
(a) "Change of Control" will mean any of the following events:
(i) a merger or consolidation to which the Company is a
party if the individuals and entities who were stockholders of the
Company immediately prior to the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3 under
the Exchange Act) of less than 50% of the total combined voting power
for election of directors of the surviving corporation following the
effective date of such merger or consolidation;
(ii) the direct or indirect beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act) in the aggregate of securities of
the Company representing 25% or more of the total combined voting power
of the Company's then issued and outstanding securities by any person
or entity, or group of associated person or entities acting in concert;
(iii) the sale of the properties and assets of the Company
substantially as an entirety, to any person or entity which is not a
wholly-owned subsidiary of the Company;
(iv) the stockholders of the Company approve any plan or
proposal for the liquidation of the Company; or
(v) a change in the composition of the Board at any time
during any consecutive 24 month period such that the "Continuity
Directors" cease for any reason to constitute at least a 70% majority
of the Board. For purposes of this clause, "Continuity Directors"
means those members of the Board who either (1) were directors at the
beginning of such consecutive 24 month period, or (2) were elected by,
or on the nomination or recommendation of, at least a two-thirds
majority of the then-existing Board of Directors.
12
<PAGE>
(b) "Change of Control Action" will mean any payment (including
any benefit or transfer of property) in the nature of compensation, to
or for the benefit of a Participant under any arrangement, which is
considered to be contingent on a Change of Control for purposes of
Section 280G of the Code. As used in this definition, the term
"arrangement" includes, without limitation, any agreement between a
Participant and the Company and any and all of the Company's salary,
bonus, incentive, restricted stock, stock option, compensation or
benefit plans, programs or arrangements, and will include this Plan.
(c) "Change of Control Termination" will mean, with respect to a
Participant, any of the following events occurring within two years
after a Change of Control:
(i) Termination of the Participant's employment with the
Company and all of its Subsidiaries by the Company or any Subsidiary
for any reason, with or without cause, except for conduct by the
Participant constituting (1) a felony involving moral turpitude under
either federal law or the law of the state of the Company's
incorporation or (2) the Participant's willful failure to fulfill his
employment duties with the Company or any Subsidiary; provided that for
purposes of this clause (2), an act or failure to act by the
Participant shall not be "willful" unless done, or omitted to be done,
in bad faith and without reasonable belief that the Participant's
action or omission was in the best interests of the Company or a
Subsidiary; or
(ii) Termination of employment with the Company and all of
its Subsidiaries by the Participant for Good Reason. A Change of
Control Termination shall not include a termination of employment by
reason of death, Disability or Retirement.
(d) "Good Reason" will mean a good faith determination by the
Participant, in the Participant's sole and absolute judgment, that any
one or more of the following events has occurred, without the
Participant's express written consent, after a Change of Control:
(i) A change in the Participant's reporting responsibilities,
titles or offices as in effect immediately prior to the Change of
Control, or any removal of the Participant from, or any failure to
re-elect the Participant to, any of such positions, which has the
effect of diminishing the Participant's responsibility or authority; or
(ii) A reduction by the Company or its Subsidiaries in the
Participant's base salary as in effect immediately prior to the Change
of Control or as the same may be increased from time to time
thereafter; or
(iii) The Company or its Subsidiaries requiring the
Participant to be based anywhere other than within twenty-five miles of
the Participant's job location at the time of the Change of Control; or
13
<PAGE>
(iv) Without replacement by a plan, program or arrangement
providing benefits to the Participant equal to or greater than those
discontinued or adversely affected:
(1) the failure by the Company or its Subsidiaries to
continue in effect, within its maximum stated term, any pension, bonus,
incentive, stock ownership, purchase, option, life insurance, health,
accident, disability, or any other employee compensation or benefit
plan, program or arrangement, in which the Participant is participating
immediately prior to a Change of Control; or
(2) the taking of any action by the Company or its
Subsidiaries that would adversely affect the Participant's
participation or materially reduce the Participant's benefits under any
of such plans, programs or arrangements; or
(v) The taking of any action by the Company or its
Subsidiaries that would materially adversely affect the physical
conditions existing at the time of the Change of Control in or under
which the Participant performs his employment duties; or
(vi) If the Participant's primary employment duties are with
a Subsidiary of the Company, the sale, merger, contribution, transfer
or any other transaction as a result of which the Company no longer
directly or indirectly controls or has a significant equity interest in
such Subsidiary; or
(vii) Any material breach by the Company or one of its
Subsidiaries of any employment agreement between the Participant and
the Company or such Subsidiary.
12.2 Acceleration of Vesting. Subject to the "Limitation on Change of
Control Compensation" contained in Section 12.3 of the Plan, in the
event of a Change of Control Termination with respect to a Participant,
and without further action of the Committee:
(a) Each Option granted to such Participant that has been
outstanding at least six months will become immediately exercisable in
full and will remain exercisable until the expiration date of such
Option.
(b) Each Restricted Stock Award (including any Performance
Restricted Stock Award) granted to such Participant that has been
outstanding for at least six months will immediately become fully
vested.
(c) All Performance Units and Stock Appreciation Rights then held
by such Participant will vest and/or continue to vest and, with respect
to Stock Appreciation Rights, will remain exercisable in the manner
determined by the Committee and set forth in the agreement evidencing
such Incentive Awards.
12.3 Limitation on Change of Control Compensation. A Participant will
not be entitled to receive any Change of Control Action which would,
14
<PAGE>
with respect to the Participant, constitute a "parachute payment" for
purposes of Section 280G of the Code. In the event any Change of
Control Action would, with respect to the Participant, constitute a
"parachute payment," the Participant will have the right to designate
those Change of Control Action(s) which would be reduced or eliminated
so that the Participant will not receive a "parachute payment."
12.4 Limitations on Committee's and Board's Actions. Prior to a Change
of Control, the Participant will have no rights under this Section 12,
and the Board will have the power and right, within its sole discretion
to rescind, modify or amend this Section 12 without the consent of any
Participant. In all other cases, and notwithstanding the authority
granted to the Committee or Board to exercise discretion in
interpreting, administering, amending or terminating this Plan, neither
the Committee nor the Board will, following a Change of Control, have
the power to exercise such authority or otherwise take any action that
is inconsistent with the provisions of this Section 12.
13. Rights of Eligible Recipients and Participants Transferability.
13.1 Employment or Service. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to
terminate the employment or service of any Eligible Recipient or
Participant at any time, nor confer upon any Eligible Recipient or
Participant any right to continue in the employ or service of the
Company or any Subsidiary.
13.2 Rights as a Stockholder. As a holder of Incentive Awards (other
than Restricted Stock Awards), a Participant will have no rights as a
stockholder unless and until such Incentive Awards are exercised for,
or paid in the form of, shares of Common Stock and the Participant
becomes the holder of record of such shares. Except as otherwise
provided in the Plan, no adjustment will be made for dividends or
distributions with respect to such Incentive Awards as to which there
is a record date preceding the date the Participant becomes the holder
of record of such shares, except as the Committee may determine in its
discretion.
13.3 Restrictions on Transfer. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly
permitted by the Plan, no right or interest of any Participant in an
Incentive Award prior to the exercise or vesting of such Incentive
Award will be assignable or transferable, or subjected to any lien,
during the lifetime of the Participant, either voluntarily or
involuntarily, directly or indirectly, by operation of law or
otherwise. A Participant will, however, be entitled to designate a
beneficiary to receive an Incentive Award upon such Participant's
death, and in the event of a Participant's death, payment of any
amounts due under the Plan will be made to, and exercise of any Options
and Stock Appreciation Rights (to the extent permitted pursuant to
Section 10 of the Plan) may be made by, the Participant's legal
representatives, heirs and legatees.
15
<PAGE>
13.4 Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation
plans or programs of the Company or create any limitations on the power
or authority of the Board to adopt such additional or other
compensation arrangements as the Board may deem necessary or desirable.
14. Securities Law and Other Restrictions.
Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to
issue any shares of Common Stock under this Plan, and a Participant may
not sell, assign, transfer or otherwise dispose of shares of Common
Stock issued pursuant to Incentive Awards granted under the Plan,
unless (a) there is in effect with respect to such shares a
registration statement under the Securities Act and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws, and (b) there has
been obtained any other consent, approval or permit from any other
regulatory body which the Committee, in its sole discretion, deems
necessary or advisable. The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from
the parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or
other restrictions.
15. Plan Amendment, Modification and Termination.
The Board may suspend or terminate the Plan or any portion thereof
at any time, and may amend the Plan from time to time in such respects
as the Board may deem advisable in order that Incentive Awards under
the Plan will conform to any change in applicable laws or regulations
or in any other respect the Board may deem to be in the best interests
of the Company; provided, however, that no amendments to the Plan will
be effective without approval of the stockholders of the Company if
stockholder approval of the amendment is then required pursuant to
Rule 16b-3 under the Exchange Act, Section 422 of the Code or the rules
of the New York Stock Exchange. No termination, suspension or
amendment of the Plan may adversely affect any outstanding Incentive
Award without the consent of the affected Participant; provided,
however, that this sentence will not impair the right of the Committee
to take whatever action it deems appropriate under Section 4.3 and
Section 12.4 of the Plan.
16. Effective Date and Duration of the Plan.
The Plan is effective as of February 3, 1993, the date it was
adopted by the Board. The Plan will terminate at midnight on
February 3, 1999, and may be terminated prior thereto by Board action,
and no Incentive Award will be granted after such termination.
Incentive Awards outstanding upon termination of the Plan may continue
to vest, or become free of restrictions, in accordance with their
terms.
16
<PAGE>
17. Miscellaneous.
17.1 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and
actions relating to the Plan will be governed by and construed
exclusively in accordance with the laws of the State of Minnesota.
17.2 Successors and Assigns. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and
the Participants.
17
<PAGE>
<PAGE>
Exhibit 10.12
Description of the Ceridian Corporation Annual Executive Incentive Plan
The Company's Annual Executive Incentive Plan provides yearly cash
bonuses to Company executives, although the Board's Compensation and Human
Resources Committee (the "Committee") may, in its discretion, permit
individuals to elect to receive part or all of their annual bonus in the
form of stock options rather than cash. The annual determination of an
individual executive's target bonus, expressed as a percentage of base
salary, is based on a subjective assessment by the Committee of the
responsibilities of the position, competitive practice and the Committee's
desire to give greater weight to performance-based compensation at higher
levels of responsibility within the Company.
For 1995, target bonus percentages for executive officers ranged from
35% to 65% of base salary, with the maximum possible bonus generally one
and one-half times the target amount and the threshold bonus one-half of
the target amount. Of the total potential bonus, 80% consisted of a
financial component, and 20% was based on a subjective assessment of the
executive's individual performance in the areas of quality improvement and
fostering work force diversity. The financial component consisted of a
requirement that the Company achieve a specified level of earnings per
share ("EPS") during 1995 and, for executive officers assigned to operating
units, a requirement that the operating unit achieve specified financial
goals, generally a specified level of pre-tax earnings. With respect to
the financial component, bonus payments at, above or below the target
percentages could be made depending on whether the financial performance of
the Company (and, if applicable, the business unit to which the executive
is assigned) met, exceeded or fell short of the applicable targeted
financial goal. The targeted financial component of the bonus would be
payable if budgeted earnings were achieved, but no bonus would be payable
if an earnings threshold amount were not achieved. The Committee retains
discretion to exclude the financial impact of unusual or extraordinary
events from the calculation of the financial component of annual bonuses,
and in 1995 excluded the impact of fourth quarter charges related to the
Company's acquisition of Comdata. For 1995, payment of the financial and
non-financial components of the annual incentive program ranged from below
target to superior for the executive officers, resulting in bonus payments
for executive officers ranging between 30% and 97.5% of base salary.
The Committee also retains discretion to supplement an executive's
annual incentive bonus if, in its judgment, such an action is warranted in
individual circumstances. In 1995, such supplemental bonuses were paid to
three executive officers.
<PAGE>
EXHIBIT 10.17
COMDATA HOLDINGS CORPORATION
UNFUNDED DEFERRED COMPENSATION PLAN
1. The Purpose of the Plan. The purpose of this Plan is
to provide incentive to certain Key Executives who have
contributed to the success of the Corporation and are expected to
continue to contribute to such success in the future. The Plan
generally provides Key Executives selected by the Committee with
the opportunity to defer a portion of their regular and/or
incentive compensation.
2. Definitions. As used herein, the following words
shall have the meanings indicated unless otherwise defined or
required by the context:
(a) "Account" shall have the meaning set forth in
Section 8 hereof.
(b) "Board" shall mean the Board of Directors of
Comdata Holdings Corporation.
(c) "Committee" shall mean a committee selected by the
Board pursuant to Section 4 hereof to administer the Plan.
(d) "Corporation" shall mean, collectively, Comdata
Holdings Corporation and its subsidiaries.
(e) "Key Executive" shall mean any employee of the
Corporation who qualifies as a management or highly
compensated employee under Section 201(2) of the Employee
Retirement Income Security Act of 1974, as amended.
(f) "Participating Key Executive" shall mean any Key
Executive who participates in the Plan.
(g) "Plan" shall mean the Comdata Holdings Corporation
Unfunded Deferred Compensation Plan.
(h) "Plan Year" shall mean the calendar year, except
that the first Plan Year shall begin on the effective date
1
<PAGE>
of the Plan as set forth in Section 3 below and shall end on
December 31, 1994.
(i) "Trust Agreement" shall mean the trust agreement
attached hereto as Exhibit A and incorporated herein by this
reference.
(j) "Trust Fund" shall mean the amounts deferred by
the Participating Key Executives pursuant to Section 7
hereof and contributed to the Trustee by the Corporation
pursuant to the Trust Agreement, plus all earnings thereon
and less all expenses attributable thereto.
(k) "Trustee" shall mean the party or parties
designated as such under the Trust Agreement.
1. Effective Date. This Plan shall be effective as of
April 1, 1994.
2. Administration of the Plan. The Board shall appoint
not fewer than three directors to serve on the Committee which
shall administer the Plan. The Committee shall administer the
Plan in a nondiscriminatory manner, and its decisions shall be
final as to all interested parties; provided, however, the Board
may review any action of the Committee, and if the Board
determines that any designation or other decision or act of the
Committee is inequitable or contrary to the provisions of this
Plan, it may reverse or modify such designation, decision or act.
3. Selection and Notification of Key Executives. Each
calendar quarter during a Plan Year, the Committee shall select
Key Executives who shall be eligible to participate in the Plan
beginning as of the first day of the next succeeding calendar
quarter. At any time before the first day of such calendar
quarter, the Committee may add to or delete from such selections.
Each Key Executive selected by the Committee hereunder shall be
immediately notified by the Committee and shall be provided a
copy of the Plan.
4. Election to Participate; Other Elections and
Designations. (a) Upon receipt of the notification described in
2
<PAGE>
Section 5 above, each Key Executive who desires to participate in
the Plan shall file with the Committee prior to the first day of
the calendar quarter to which such notification relates a written
election as described in Section 7 below. Failure by the Key
Executive to file the election described in the preceding
sentence shall disqualify such executive from participating in
the Plan until such time as he again receives notification
pursuant to Section 5 above.
(b) The Key Executive also may file, but is not required to
file, in writing with the Committee (i) an irrevocable election,
in accordance with Section 9 below, designating the method of
distribution of the compensation deferred and (ii) a designation
of beneficiary or beneficiaries. If the Key Executive fails to
file the election described in clause (i) of the preceding
sentence, then the Committee, in its sole discretion but within
the limits set forth in Section 10 below, shall determine the
manner of the distribution of his Account. If the Key Executive
fails to file the beneficiary designation described in clause
(ii) of such sentence, or if the beneficiary or beneficiaries
designated by the Key Executive predecease the Key Executive,
then the Key Executive's beneficiary shall be deemed to be his
estate. Any beneficiary designation filed hereunder may be
changed from time to time in the discretion of the Committee.
5. Deferral Election. Each Participating Key Executive
shall file quarterly with the Committee a written election which
shall specify that portion of his basic compensation and/or
incentive compensation to be deferred. Elections hereunder shall
be filed before the first day of each calendar quarter and shall
apply to compensation earned during the calendar quarter next
following the calendar quarter in which they are filed. Only
compensation which on the date of the election has not been
earned by the Participating Key Executive may be deferred
hereunder. The Participating Key Executive's rights to
compensation so deferred shall be nonforfeitable, and termination
3
<PAGE>
of his employment with the Corporation for any reason shall not
in any way diminish the amount of deferred compensation payable
to the Participating Key Executive or alter the method or the
time for payment or the beneficiary or beneficiaries thereof.
The Corporation shall, from time to time but not less often than
quarterly, pay to the Trustee an amount equal to the compensation
deferred by each Participating Key Executive.
6. Trust Fund. The Trustee shall invest and reinvest the
Trust Fund in accordance with the terms of this Plan and the
Trust Agreement. At the option of the Corporation, the
Corporation may pay from its funds, or may direct the Trustee to
pay from the Trust Fund, all expenses of administering the Trust
Fund, including Trustee's fees and expenses, and all taxes and
other expenses attributable to the Trust Fund, all as determined
by the Corporation.
7. Account Maintenance. The Committee shall cause an
account (the "Account") to be kept in the name of each
Participating Key Executive and each beneficiary of a deceased
Participating Key Executive. Each Account shall reflect the
amount of the compensation deferred by the Participating Key
Executive pursuant to Section 7 above and shall be adjusted for
its pro rata share of investment gains and losses and expenses
and taxes paid from the Trust Fund pursuant to Section 8 above.
8. Distribution. Each Participating Key Executive shall
be entitled to receive distribution of his Account upon the
earlier to occur of the following events ("Triggering Events"):
(i) the termination of the Participating Key Executive's
employment with the Corporation for any reason, including without
limitation retirement, resignation, involuntary limitation, death
or disability, or (ii) the date on which the Participating Key
Executive attains age sixty-five (65). At the election of the
Participating Key Executive, payment of such executive's Account
may be made in a lump sum or in monthly installments over not
more than ten years; provided, however, that any such election
4
<PAGE>
must be made prior to when the compensation to which the election
relates is earned. Payment of the lump sum shall be made, and
payment of the monthly installments shall begin, not later than
the fifteenth day of the month next following the occurrence of a
Triggering Event. If the Participating Key Executive's
employment is terminated by reason of death, or if the
Participating Key Executive dies prior to receiving distribution
of his entire Account, such Account or the part thereof that has
not been distributed shall be paid to the Participating Key
Executive's beneficiary or beneficiaries.
9. Ownership of Assets; Relationship with Corporation.
Notwithstanding anything herein to the contrary,
Participating Key Executives shall have no right, title or
interest whatsoever in or to the Accounts or any investments
which the Corporation may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind or a fiduciary
relationship between the Corporation and any Key Executive or any
other person. To the extent that any person acquires a right to
receive payments from the Corporation under this Plan, such right
shall be no greater than the right of an unsecured general
creditor of the Corporation.
10. Nonassignment. Except as provided in Section 10, the
interest of any Participating Key Executive or beneficiary under
this Plan shall not be assignable either by voluntary or
involuntary assignment or by operation of law.
11. Indemnification. No employee, member of the
Committee, or director of the Corporation shall have any
liability for any decision or action if made or done in good
faith, nor for any error or miscalculation unless such error or
miscalculation is the result of his fraud or deliberate disregard
of any provisions of this Plan. The Corporation shall indemnify
each director, member of the Committee, and employee acting in
good faith pursuant to this Plan against any loss or expense
arising therefrom.
5
<PAGE>
12. Termination and Amendment of the Plan. Although the
Corporation intends to continue this Plan indefinitely, it
reserves the right in the Board to amend, suspend, or terminate
this Plan at any time; provided, however, that no such amendment
shall adversely affect rights to receive any amounts to which
Participating Key Executives or their beneficiaries have become
entitled to prior to payment.
13. Governing Law. This Plan shall be construed and
administered in accordance with and governed by the laws of the
State of Tennessee.
IN WITNESS WHEREOF, COMDATA HOLDINGS CORPORATION, for itself
and for its subsidiaries listed on Exhibit A attached hereto, has
caused the Plan to be executed by its duly authorized officer and
adopted as of this 1st day of April, 1994.
COMDATA HOLDINGS CORPORATION, for itself
and for its subsidiaries listed on
Exhibit A attached hereto
/s/Russ Follis
By: Russ Follis
Its: Vice President, Human Resources
and Administration
6
<PAGE>
FIRST AMENDMENT
TO THE
COMDATA HOLDINGS CORPORATION
UNFUNDED DEFERRED COMPENSATION PLAN
WHEREAS, Comdata Holdings Corporation (the "Corporation")
and those subsidiaries listed on Exhibit A attached hereto have
adopted the Comdata Holdings Corporation Unfunded Deferred
Compensation Plan (the "Plan");
WHEREAS, pursuant to Section 14 of the Plan, the Corporation
has the right at any time to modify, alter or amend the Plan in
whole or in part by instrument in writing duly executed by the
Corporation; and
WHEREAS, the Corporation has determined that certain
amendments to the Plan are necessary and desirable and in the
best interests of the Corporation.
NOW, THEREFORE, effective January 1, 1995, Sections 11
through 15 of the Plan shall be amended by redesignating such
sections as Sections 12 through 16, respectively, and by adding
the following new Section 11:
11. Emergency Withdrawals. Emergency withdrawals by a
Participating Key Executive shall be permitted in accordance
with the provisions of this Section. Any such withdrawal
shall be permitted at such time or times, and in such manner
and form, as shall be uniformly and nondiscriminatorily
established by the Committee. Withdrawals shall be permitted
hereunder from a Participating Key Executive's Account in
the event of an unforeseeable emergency; provided, however,
that such withdrawals shall be permitted only to the extent
reasonably needed to satisfy the emergency need. For
purposes hereof, the term "unforeseeable emergency" shall
mean a severe financial hardship to a Participating Key
Executive resulting from a sudden and unexpected illness or
accident to the Participating Key Executive or a dependent
(as defined in Section 152(a) of the Internal Revenue Code
of 1986, as amended) of the Participating Key Executive,
loss of the Participating Key Executive's property due to
casualty, or other similar extraordinary and unforeseeable
circumstance beyond the control of the Participating Key
Executive. Withdrawals may not be made hereunder to the
extent that an emergency may be relieved through
reimbursement or compensation or otherwise, by liquidation
of the Participating Key Executive's assets (to the extent
the liquidation would not itself cause severe financial
hardship), or by the cessation of deferrals under the Plan.
1
<PAGE>
IN WITNESS WHEREOF, the Corporation for itself and those
subsidiaries listed on Exhibit A has executed this First
Amendment as of this 20 day of April, 1995.
COMDATA HOLDINGS CORPORATION:
/s/Peter D. Voysey
By: Peter D. Voysey
Its: Vice President, General Counsel
and Secretary
2
<PAGE>
<PAGE>
This Amended and Restated Agreement for Systems Operations
Services ("Agreement") is by and between Comdata Network, Inc., a
corporation having a place of business at 5301 Maryland Way,
Brentwood, Tennessee 37027 ("Comdata"), and Integrated Systems
Solutions Corporation, {d/b/a ISSC, Inc.,} a wholly owned
subsidiary of International Business Machines Corporation, having
its headquarters at 44 South Broadway, White Plains, New York
10601 ("ISSC"). Comdata and ISSC agree that the Agreement for
Systems Operations Services dated as of September 6, 1991,
including all amendments thereto, is amended and restated in its
entirety to read as follows:
Comdata and ISSC agree that the following terms and conditions
will apply to services provided by ISSC under this Agreement.
Comdata and ISSC may be referred to individually as a "Party" and
collectively as the "Parties."
Table of Contents
Section Title Page
1.0 Background and Objectives
2.0 Definitions, Documents and Term
2.1 General Definitions
2.2 Associated Contract Documents
2.3 Term
2.4 Renewal and Expiration
3.0 Overview
3.1 Transition of Services
3.2 Previously Acquired Assets
3.3 Acquired Assets
3.4 Leased Assets and Contracts
3.5 Software
3.6 Required Consents
3.7 Joint Verification
3.8 Other Obligations
3.9 Comdata Approvals and Notification
4.0 ISSC Responsibilities
4.1 ISSC Personnel
4.2 Standards
4.3 Efficient Use of Resources
4.4 Technological Improvements
4.5 Management and Control
4.6 Machines
4.7 Applications Software
4.8 Data Transmission(Lines/Circuits)
4.9 Software Services
4.10 Operations, Support and Maintenance
4.11 Consolidation and Relocation Services
4.12 Systems Management
4.13 Disaster Recovery
4.14 Production Services
4.15 Projects
4.16 DSM Help Desk
4.17 Audits
5.0 Comdata Responsibilities
5.1 Project Executive
5.2 Applications Software
5.3 Software Services
5.4 Facilities
5.5 Support Services
5.6 Other Responsibilities
5.7 CHC Guaranty
6.0 Charges and Expenses
6.1 Annual Services Charge
6.2 Cost of Living Adjustment
6.3 Services for Newly Acquired Comdata Affiliates
6.4 New Services
6.5 Replacement Services
6.6 Taxes
6.7 Services Transfer Assistance
6.8 Other Expenses and Charges
7.0 Invoicing and Payment
7.1 Annual Services Charge
7.2 COLA Invoicing
7.3 Accountability
7.4 Other Charges
7.5 Invoice
7.6 Proration
7.7 Refundable
7.8 Set-Off
8.0 Intellectual Property Rights
8.1 Ownership of Comdata Product Software
8.2 Other Materials
8.3 Assignment of Personnel and Use of Ideas
9.0 Confidentiality/Data Security
9.1 Confidential Information
9.2 Obligations
9.3 Exclusions
9.4 Protection of Comdata
9.5 Loss of Confidential Information
9.6 Limitation
10.0 Termination
10.1 Termination for Convenience
1
<PAGE>
10.2 Termination upon Acquisition
10.3 Termination for Cause
10.4 Extension of Services
10.5 Other Rights Upon Termination
11.0 Liability
11.1 General Intent
11.2 Damages
11.3 Other Remedies
12.0 Warrant
12.1 Work Standards
12.2 Maintenance
12.3 Compliance with Obligations
12.4 Claims
12.5 Environmental
12.6 Bankruptcy
12.7 Non-Infringement
12.8 Ownership of Comdata Machines
12.9 Disclaimer
13.0 Indemnities
13.1 Indemnity by ISSC
13.2 Indemnity by Comdata
13.3 Cross Indemnity and Contribution
13.4 Indemnification Procedures
13.5 Subrogation
13.6 Exclusive Remedy
14.0 Insurance and Risk of Loss
14.1 Insurance
14.2 Risk of Loss
15.0 Publicity
16.0 Review Committee and Dispute Resolution
16.1 Joint Advisory Committee
16.2 Dispute Resolution
16.3 Continued Performance
17.0 General
17.1 Control of Services
17.2 Right to Perform Services for Others
17.3 Scope of Services
17.4 Amendments and Revisions
17.5 Force Majeure
17.6 Nonperformance
17.7 Remarketing
17.8 Waiver
17.9 Severability
17.10 Time Limitations for Action
17.11 Counterparts
17.12 Governing Law
17.13 Binding Nature and Assignment
17.14 Notices
17.15 No Third Party Beneficiaries
17.16 Other Documents
17.17 Headings
SUPPLEMENT
Annual Services Charge
Termination Charges
Enhancement Baseline
Exhibit 1: Guaranty
TABLE OF SCHEDULES
Schedule Title
Schedule A Applications Software
Schedule B Systems Software
Schedule C Comdata Machines
Schedule E Support Services, Performance
Standards and Operational
Responsibilities
Schedule F Acquired Assets, Leases, Licenses and Contracts
Schedule G Disaster Recovery Services
Schedule H Transition Plan
Schedule I End User Locations
Schedule J ISSC Charges, Measures of Utilization
Schedule K Application Installation Standards
Schedule L Security Procedures
Schedule M DSM Help Desk
Schedule N Projects
Schedule O Affected Employees
Schedule P Maintenance Terms
Schedule Q Claims
Schedule R End User Machines
Subject to Maintenance
Schedule S Bill of Sale
Schedule T DSM Environment
Schedule U ISSC Machines
Subject to Baseline
2
<PAGE>
1.0 Background and Objectives
On September 6, 1991, Comdata and ISSC entered into an Agreement
for Systems Operations Services ("Original Agreement") whereby
ISSC assumed responsibility for Comdata's information system
operations, certain application operations; systems
administration services and systems integration services.
After careful evaluation of ISSC's proposals and other
alternatives, Comdata agrees to amend the Agreement for Systems
Operations Services revising the scope of the Systems Operations
Services being purchased by Comdata from ISSC. This Amended and
Restated Agreement for Systems Operations Services supersedes the
Original Agreement and all amendments thereto in its entirety and
documents the terms and conditions under which Comdata agrees to
purchase and ISSC agrees to provide such Services.
2.0 Definitions, Documents and Term
2.1 General Definitions
As used in this Agreement:
a) "Acquired Assets" means those machines, equipment and
other goods purchased by ISSC from Comdata. Acquired
Assets are listed in Section F-1 of Schedule F.
b) "AD/M Services" means both applications Development and
Applications Maintenance.
c) "Affiliate" means, with respect to a Party, any entity at
a time controlling, controlled by or under common control
with, such Party. The term "Control" as used in this
Agreement shall mean the legal, beneficial or equitable
ownership, directly or indirectly. of more than 50% of the
aggregate of all voting equity interests in such entity.
d) "Amended Commencement Date" means May 1, 1995.
e) "Annual Services Charge" means the fixed charge to Comdata
for ISSC's provision of the Services and includes the
quantity of Resource Units set forth under Baselines in
the Supplement.
f) "Applications Development" means the programming of:
1) any new applications software;
2) regulatory/statutory mandated changes;
3) version upgrades to Applications Software; and
4) changes or enhancements to existing Applications
Software and DSM Applications Software.
Programming effort shall include the pre and post
development analysis, technical education, planning,
design, coding, unit testing, installation, and
programmers' technical documentation.
g) "Applications Maintenance" means:
1) defect identification and fixes; and
2) installation of those fixes and updates provided by
the Software vendor as part of normal maintenance
service for which there is no additional cost to ISSC
for the Software specified in Schedules A and T.
h) "Applications Software" means those programs and
programming, including all supporting documentation and
media, that perform specific user related data processing
and telecommunication tasks. Applications Software is
listed in Schedule A.
i) "Baseline" means the specified quantity of resources for a
resource category included within the Annual Services
Charge, as set forth in the Supplement and Schedule J.
j) "Comdata Data Center" means the Machines and Software
located at 5301 Maryland Way, Brentwood, Tennessee (the
"Brentwood Facility") and 1421 Champion Drive, Carrollton,
Texas {the "Dallas Facility") as of the Amended
Commencement Date and at such other locations as may be
established hereafter.
k) "Comdata Machines" means machines, excluding DSM Machines,
within the Data Center and Data Network that are owned,
leased or rented and retained by Comdata after the Amended
Commencement Date and that are used by ISSC so that ISSC
may provide the Services. Comdata Machines are listed in
Schedule C.
l) "Comdata Network" consists of all machines, lines,
cabling, and associated peripheral equipment used to
connect the Data Center, via leased lines, common carrier
facilities or public-switched networks, to the End User
locations, including. but not limited to, controllers,
channel extenders, multiplexors, lines, circuits and
modems/DSUs, but does not include the ISSC Network
m) "Comdata Product Software" means any software created
solely by Comdata before or after the Amended Commencement
Date or created on or after the Amended Commencement Date
by ISSC or by ISSC and Comdata under this Agreement,
including all supporting documentation, media and related
materials, that, taken together in its substantial
entirety, constitutes a commercial service offered by
Comdata in its business, including but not limited to
Express Cash, LoadMatcher, MOTRS, and any and all
modifications, enhancements, updates, replacements and
other derivative works thereof made pursuant to this
Agreement, other than software, documentation, and other
materials available under other ISSC or non-ISSC
agreements.
n) "Commencement Date" means September 6, 1991.
o) "Contracts" means those written contractual arrangements
under which Comdata received third party services for
which ISSC has undertaken financial and administrative
responsibility as of the Commencement Date. Contracts are
listed in Section F-3 of Schedule F.
p) "Data Center" means both the ISSC Data Center and the
Comdata Data Center. The Data Center does not include the
DSM Environment.
q) The "Data Network" consists of the Comdata Network and the
ISSC Network, but shall not include any software,
equipment, tines, cabling or associated peripheral
equipment relating to the Voice Systems of the voice or
telecommunications network. The Data Network does not
include the DSM Network.
3
<PAGE>
r) "DSM" means Distributed Systems Management.
s) "DSM Applications Software" means those programs and
programming, including all supporting documentation and
media, that perform specific user-related data processing
on DSM Machines. DSM Applications Software is listed in
Schedule T.
t) "DSM Environment" means a combination of DSM machines, DSM
Software, and DSM Network.
u) "DSM Machines" means SUN servers and associated
peripherals, and Novell servers and associated peripherals
that are owned, leased, or rented and retained by Comdata
prior to and after the Amended Commencement Date. DSM
Machines are listed in Schedule T.
v) "DSM Network" means the data network used by End Users to
access DSM Machines.
w) "DSM Software" means DSM Systems Software and DSM
Applications Software. Comdata will continue to have
financial and administrative responsibility for DSM
Software licenses after the Amended Commencement Date. DSM
Software is listed in Schedule T.
x) "DSM Systems Software" means those programs and
programming, including all supporting documentation and
media, that perform tasks basic to the functioning of the
DSM Machines. DSM Systems Software is listed in Schedule
T.
y) "Effective Date" means the date both Parties execute and
deliver this Agreement.
z) "End User Locations" means those locations in which End
User Machines, equipment and associated software are
located, which locations are facilities or floors in
facilities outside the Data Center.
aa) "End Users" means users of Services within Comdata and its
Affiliates.
bb) "End User Machines" means all workstations, terminals, LAN
servers, printers and associated peripheral equipment
located at End User Locations.
cc) "Enhancements" means support, changes, enhancements, or
modifications to Applications Software and DSM Software
requested by Comdata or as otherwise required in
accordance with ISSC's obligations under this Agreement.
dd) "Intellectual Property Rights" means, collectively,
patents, patent applications, copyrights, trade secrets,
mask works, industrial design, rights, rights of priority
and any other similar intangible rights.
ee) "ISSC Data Center" means the Machines and Software located
at 305 TechPark Drive, Suite 113, LaVergne, Tennessee (the
"LaVergne Facility") as of the Amended Commencement Date
and at such other locations as ISSC may establish
hereafter.
ff) "ISSC Machines" means machines within the Data Center and
Data Network which are:
1) Acquired Assets; or
2) provided by ISSC on or after the Amended Commencement
Date in order to meet its obligations under this
Agreement. ISSC Machines which are located at Comdata
facilities are listed in Schedule D.
gg) "ISSC Network" means the IBM Model 37XX communications
controllers, VRUs, Jupiter protocol converters, network
monitoring equipment and associated peripheral equipment,
but does not include the Comdata Network, the DSM Network,
or End User Machines.
hh) "Leased Assets" means those machines, other equipment and
fixed assets leased by Comdata for which ISSC has
undertaken financial and administrative responsibility as
of the Amended Commencement Date. Leased Assets are listed
in Section F-2 of Schedule F.
ii) "Licenses" means those written contractual arrangements
under which Comdata received the right to use and
maintenance for software products for which ISSC has
undertaken financial and administrative responsibility as
of the Amended Commencement Date. Licenses are listed in
Section F-3 of Schedule F.
jj) "Losses" means all losses, liabilities, damages and claims
(including taxes), and all related costs and expenses
(including any and all reasonable attorneys' fees and
reasonable costs of investigation, litigation, settlement,
judgment, interest and penalties).
kk) "Machines" means both Comdata Machines and ISSC Machines.
ll) "Performance Standards" means the service levels and
performance responsibilities under which the Services will
be provided. The Performance Standards are described in
Schedule E and detailed in separate service level
agreements.
mm) "Procedures Manual" means the manual describing the
operating processes and procedures relating to the
performance of the Services.
nn) "Required Consents" means any consents or approvals
required for the licensing or transfer of the right to use
applicable facilities, space, equipment, Software or third
party services to ISSC.
oo) "Software" means Applications Software, Systems Software
and DSM Software.
pp) "Systems Operations Services" ("Services") means those
functions and applications being transferred from Comdata
pursuant to this Agreement, and those additional functions
and applications which ISSC agrees to provide to Comdata
and its Affiliates pursuant to this Agreement. Such
Services are described in Sections 4, 5, 6.4, 6.5 and the
referenced Schedules.
qq) "Systems Software" means those programs and programming,
including all supporting documentation and media, that
perform tasks basic to the functioning of the data
processing and communication equipment and which are
required to operate the Applications Software or otherwise
support the provision of Services by ISSC. Systems
Software specifically excludes DSM Software. Systems
Software is listed in Schedule B.
4
<PAGE>
rr) "Voice Systems" means the telephony switches, VMUs, VRUs,
and associated controllers, multiplexors and modems under
the control and management, as of the Effective Date, of
the ISO organization of Comdata, but does not include the
Data Network, End User Machines, or any lines or devices
comprising a public-switched network.
2.2 Associated Contract Documents
This Agreement also includes:
a) a Supplement ("Supplement") containing the charges, Term,
and certain other necessary information; and
b) Schedules A through U which will be updated by the Parties
as necessary or appropriate during the Term.
2.3 Term
The term of this amended and restated Agreement will begin as of
12:01 a.m. on the Amended Commencement Date and will end as of
12:00 midnight on April 30, 2005 (the "Term"), unless earlier
terminated or extended in accordance with this Agreement.
2.4 Renewal and Expiration
ISSC agrees to notify Comdata whether it desires to renew this
Agreement and of the proposed prices and terms to govern such
renewal not less than 18 months prior to the expiration of the
Term. If ISSC notifies Comdata that it desires to renew this
Agreement, Comdata agrees to inform ISSC in writing whether it
desires to renew not less than 6 months prior to the expiration
of the Term.
If Comdata notifies ISSC that it desires to renew the Agreement,
but the Parties are unable to agree upon renewal prices, terms
and conditions as of six months prior to the expiration of the
Term, this Agreement will be extended for one year in accordance
with the then current terms and conditions. If the Parties are
unable to reach agreement on renewal during such extension
period, this Agreement will expire at the end of such extension
period.
3.0 Overview
3.1 Transition of Services
Transition of Services will be defined in Schedule H.
3.2 Previously Acquired Assets
As of the Commencement Date, ISSC agreed to acquire. at the price
specified in Schedules F-l, the Acquired Assets. Comdata warrants
that it had clear title to Acquired Assets and all associated
attachments, features and accessories and transferred the same to
ISSC, free of all liens and encumbrances. Comdata also warrants
that the Acquired Assets had been maintained in accordance with
the applicable manufacturers' maintenance requirements and were
performing in satisfactory operating condition.
3.3 Acquired Assets
On the Amended Commencement Date, there will not be a transaction
of Acquired Assets. If the Parties mutually agree to a purchase
of Acquired Assets after the Amended Commencement Date, the
Parties agree:
a) ISSC will purchase the Acquired Assets for the price
specified in a Bill of Sale;
b) Comdata will warrant that it has clear title to the
Acquired Assets and all associated attachments, features
and accessories and will transfer the same to ISSC, free
of all liens and encumbrances;
c) Comdata will warrant that all Acquired Assets have been
maintained in accordance with applicable manufacturer's
maintenance requirements and are in good working order as
of the date of the purchase of Acquired Assets; and
d) Comdata will deliver to ISSC, con the date of the purchase
of Acquired Assets, a Bill of Sale transferring title to
the Acquired Assets. The form of the Bill of Sale is set
forth in Schedule S of this Agreement.
e) The Annual Services Charge will be revised based upon the
effect of the purchase of Acquired Assets on ISSC's
original cost assumptions.
3.4 Leased Assets and Contracts
Subject to Comdata obtaining any Required Consents in accordance
with Section 3.6, ISSC shall have financial and administrative
responsibility during the Term for all Leased Assets and
Contracts listed in Sections F-2 and F-3 of Schedule F,
respectively. ISSC shall be responsible for the performance of
all obligations of Comdata under the leases governing the Leased
Assets and the Contracts, including payment of all related
expenses attributable to periods on or after the Commencement
Date, to the extent that such obligations were disclosed to ISSC
on or before the Commencement Date through receipt by ISSC of a
copy of the relevant documents. Comdata warrants that all
obligations with respect to such leases and the Contracts
accruing prior to or attributable to periods prior to the
Commencement Date have been satisfied. Comdata shall, upon the
request of ISSC from time to time, with the agreement of Comdata
and to the extent permitted by the applicable agreement,
terminate any leases or Contracts and ISSC shall reimburse
Comdata for any termination charges or penalties. In the event
Comdata does not agree to such termination of any leases or
contracts, then Comdata shall reimburse ISSC for any increase in
costs or lost savings ISSC would incur as a result of such
action.
3.5 Software
As of the Amended Commencement Date, Comdata will make the
Software available to ISSC for the purpose of providing the
Services.
5
<PAGE>
As of the Amended Commencement Date, ISSC will continue to be
responsible for managing the Applications Software Licenses and
Systems Software Licenses listed in Section F-3 of Schedule F and
for paying all related expenses, including the Applications
Software maintenance fees and Systems Software maintenance fees,
that are attributable to periods on or after the Amended
Commencement Date. Subject to Comdata obtaining any Required
Consents in accordance with Section 3.6 ISSC will comply with all
obligations of Comdata, including those of nondisclosure, under
any such Applications Software License or Systems Software
License to the extent such obligations were disclosed to ISSC on
or before the Amended Commencement Date through receipt by ISSC
of a copy of the relevant documents. Comdata warrants that all of
its obligations with respect to such Software Licenses accruing
prior to the Amended Commencement Date have been satisfied.
As of the Amended Commencement Date, Comdata will continue to be
responsible for managing the DSM Software Licenses listed in
Schedule C and for paying all related expenses, including the DSM
Software maintenance fees, that are attributable to periods on or
after the Amended Commencement Date. Subject to Comdata obtaining
any Required Consents in accordance with Section 3.6, and
excluding Comdata's responsibilities for management and payment
as stated heretofore, ISSC will comply with all obligations of
Comdata, including those of nondisclosure, under any such DSM
Software License to the extent such obligations are disclosed to
ISSC, before the end of the Transition Period as defined in
Schedule H, through receipt by ISSC of a copy of the relevant
documents. Comdata warrants that all obligations with respect to
such Software Licenses have been satisfied.
3.6 Required Consents
Comdata shall be responsible for obtaining all Required Consents
necessary to enable ISSC to use the Software, Leased Assets and
services provided by the Contracts.
Comdata shall bear the costs, if any, of obtaining all Required
Consents. In the event that any Required Consent is not obtained
with respect to the Software Licenses, leases governing the
Leased Assets or Contracts, then, unless and until such Required
Consents are obtained, the Parties shall cooperate with each
other in achieving a reasonable alternative arrangement for
Comdata to continue to process its work with minimum interference
to its business operations.
3.7 Joint Verification
During the 90 day period following the Effective Date, ISSC and
Comdata reserve the right to inventory, validate and update, any
information that is reflected in or omitted from the attached
Supplement or Schedules. If discrepancies are detected during
such period, there shall be an equitable adjustment to the Annual
Services Charge. If either Party disputes the discrepancy then
the Parties will submit the matter to the Joint Advisory
Committee for dispute resolution as specified in Section 16 of
this Agreement.
3.8 Other Obligations
Beginning on the Amended Commencement Date, Comdata will not
enter into any new or amend, extend or terminate any existing
agreements or arrangements, written or oral, affecting or
impacting upon Affected Employees as defined in Schedule Q,
Acquired Assets, leases governing the Leased Assets, Software
Licenses, Contracts or Services as specified in the various
Schedules to this Agreement, without the prior written consent of
ISSC.
3.9 Comdata Approvals and Notification
For those areas of the Services where Comdata:
a) has reserved right-of-approval or consent or agreement;
b) is required to provide notification; and/or
c) is required to perform a responsibility set forth in this
Agreement upon which ISSC's performance is dependent; and
such approval, consent, notification or performance is delayed or
withheld by Comdata without authorization or right beyond the
period provided in this Agreement or the Schedules and such delay
or withholding is not caused by ISSC and affects ISSC's ability
to provide the Services under this Agreement, then Comdata will
relieve ISSC of the responsibility for that portion of the
Services and Comdata will reimburse ISSC for all additional
expenses, if any, incurred during such period as a result
thereof.
For purposes of this Agreement, if a time period is not specified
for any such approval, consent, agreement, notification or
performance, then such time period shall be deemed to be not
greater than five business days.
4.0 ISSC Responsibilities
4.1 ISSC Personnel
ISSC will designate, prior to the Amended Commencement Date, an
ISSC Project Executive to whom all Comdata's communications may
be addressed and who has the authority to act for and bind ISSC
and its subcontractors in connection with all aspects of this
Agreement.
4.2 Standards
Subject to the terms of this Agreement, ISSC agrees that its
performance of the Services will meet or exceed each of the
applicable Performance Standards.
4.3 Efficient Use of Resources
ISSC shall take reasonable action, taking into account economic
circumstances, to efficiently use resources that will be
chargeable to Comdata under this Agreement including, but not
limited to:
a) making schedule adjustments (consistent with Comdata's
priorities and schedules for the Services and ISSC's
obligation to meet the Performance Standards);
6
<PAGE>
b) delaying the performance of noncritical functions within
established limits; and
c) tuning or optimizing the systems used to perform the
Services.
4.4 Technological Improvements
In the event that there is a technological improvement that
provides opportunities for additional savings, the Party
identifying such improvement will request that ISSC perform a
preliminary savings analysis. The Parties will then jointly
review the results of this preliminary analysis and discuss the
impact on each Party's performance hereunder, including any new
hardware and/or software, other capital, one-time charges, or
changes to other resources that may be required to take advantage
of such technological improvements. If the Parties agree to
implement changes in the Services rendered by ISSC hereunder to
take advantage of some or all of such technological improvements,
then the Parties will Jointly prepare a technology implementation
plan that defines such changes and the timing and cost of their
implementation, and such changes will be treated as Replacement
Services, subject to Sections 6.5.a and 6.5.b. All activities
spent by ISSC in performing the foregoing shall be chargeable
against the Enhancement Baseline specified in the Supplement.
Comdata will pay for any implementation costs related to
Comdata's responsibilities as specified in the technology
implementation plan.
Comdata may choose to independently implement such changes
referenced above.
4.5 Management and Control
a) Within 180 days after the Amended Commencement Date, ISSC
shall update the Procedures Manual to include the
operating processes and procedures for the DSM
Environment.
1) ISSC shall periodically update the Procedures Manual
to reflect any changes in the operations or
procedures described therein. Comdata shall have the
right at any time during the term of this Agreement,
upon reasonable notice and during normal business
hours, to inspect the Procedures Manual, and ISSC
will give due consideration to any reasonable
suggestions of Comdata relating thereto.
2) ISSC shall perform the Services in accordance with
the Procedures Manual.
b) Commencing within 180 days after the Amended Commencement
Date, ISSC will provide to Comdata a set of periodic
reports which have been revised to include report data on
the DSM Environment. At a minimum, these reports will
include the following:
1) a monthly performance report documenting ISSC's
performance with respect to the Performance
Standards;
2) a monthly project schedule report;
3) a monthly change report setting forth a record of all
Data Center, Data Network, and DSM Environment
changes performed during the previous month; and
4) a monthly report describing Comdata's utilization of
each resource category.
ISSC will provide Comdata with such documentation and
other information as may be reasonably requested by
Comdata from time to time in order to verify the accuracy
of the reports specified above.
c) The Parties will continue to hold periodic meetings
between representatives of Comdata and ISSC as established
prior to the Amended Commencement Date. At a minimum,
these meetings will include the following:
1) a weekly meeting among operational personnel to
discuss ongoing issues relating generally to daily
performance and planned or anticipated activities and
changes; and
2) a monthly management meeting to review the
performance report, the project, schedule report, the
changes report, and such other matters as
appropriate.
4.6 Machines
ISSC will provide the Services using ISSC Machines, Comdata
Machines, and DSM Machines. The provision of any additional or
replacement Machines, including upgrades, is subject to the
provisions of Sections 6.4 and 6.5. If ISSC determines in good
faith that additional or replacement DSM machines or upgrades
will be reasonably necessary for ISSC to perform the Services in
accordance with the Performance Standards, then ISSC will propose
to Comdata what additional or replacement DSM Machines or
upgrades are needed, explain to Comdata in detail why they are
needed, and determine the effect on ISSC's ability to meet the
Performance Standards if some or all of them are not acquired by
Comdata. Comdata will then either procure the necessary
additional or replacement DSM Machines or upgrades, or the
Parties will agree to appropriate adjustments to the Performance
Standards that may be necessary in the event Comdata elects not
to acquire some or all of the proposed additional or replacement
DSM Machines or upgrades. The affected Performance Standard(s)
will be suspended pending such procurement or adjustment as the
case may be. ISSC retains all right. title and interest in and to
all ISSC Machines, subject to Section 10.5 with respect to
Comdata's rights upon termination or expiration of this
Agreement.
4.7 Applications Software
During the Term of this Agreement, ISSC will operate the
Applications Software listed in Schedules A and T.
In addition, ISSC will:
a) install new versions of, releases of, or modifications to,
Applications Software listed in Schedules A and T, in
accordance with this Agreement, Schedule K and the Change
Control Procedures;
b) provide a level of Enhancements resources per year equal
to the resource category (as defined in Schedule J)
specified in the Supplement to perform AD/M Services as
requested by Comdata or as otherwise required in
accordance with ISSC's obligations under this Agreement
Any resources required beyond this commitment will be
chargeable to Comdata subject to the provisions of
Sections 6.4 and 6.5; and
7
<PAGE>
c) cooperate with Comdata or third parties engaged by Comdata
to develop Applications Software and DSM Software.
4.8 Data Transmission (Lines/Circuits)
The Parties agree that ISSC will act as an advisor to Comdata,
and at Comdata's direction as its agent with respect to common
carriers but will not itself be the subscriber or have financial
responsibility for common carrier services.
4.9 Software Services
ISSC will:
a) operate, maintain and enhance, as necessary to perform in
accordance with the Performance Standards and Sections 6.4
and 6.5, all Systems Software in the Data Center, Data
Network and DSM Environment;
b) apply preventive maintenance and program temporary fixes
to correct defects in (i) the Systems Software running in
the Data Center and Data Network, and (ii) the DSM Systems
Software;
c) provide or obtain new versions and releases, upgrades,
replacements of additional Systems Software as ISSC deems
necessary in order to perform the Services in accordance
with the Performance Standards and Sections 6.4 and 6.5,
subject to the following provisions:
1) ISSC will give Comdata at least thirty (30) days
advance notice before any proposed new release or
versions of Systems Software is to be installed and
will discuss with Comdata the increases, if any, to
the Annual Services Charge that will result from such
new release or version of Systems Software;
2) ISSC will not install any new release or version of
Systems Software until (i) all Applications Software
has been tested to ensure compatibility with such new
release or version of Systems Software, (ii) it has
obtained Comdata's consent after confirming to
Comdata that such testing has been successfully
completed, and (iii) the Parties have agreed to any
increases in the Annual Services Charge that will
result from the use of such new release or version of
Systems Software; and
3) Comdata reserves the right to request at any time
that ISSC return for a reasonable period of time to
use of an immediately preceding version or release of
any Systems Software in rendering the Services to
Comdata hereunder in the event that incompatibilities
or other problems are discovered in operating the
Applications Software under the new release or
version of the Systems Software, even after Comdata
has approved the use of such new version or release.
If ISSC is unable to install any new release or
version of Systems Software due to the foregoing
provisions, then ISSC will be relieved of any
affected Performance Standards.
4.10 Operations, Support and Maintenance
ISSC will, as further defined in Schedule E and other applicable
Schedules, perform the following:
a) operate the Data Center using the Machines and Software;
b) operate the Data Network, using the Machines and Software;
c) operate the DSM Environment;
d) provide maintenance services for ISSC Machines in the Data
Center and Data Network and manage the maintenance
contracts for the DSM Machines and the DSM Applications
Software, which contracts will be paid directly by
Comdata, unless otherwise agreed by the Parties;
e) support the Data Network by operating a command center
which will provide alarm monitoring, first level trouble
analysis, problem recording, place service calls to
vendors to perform corrective maintenance, provide vendor
performance analysis, and manage problems to resolution;
f) provide printable output to the Comdata distribution
system located in the Data Center or transmit electronic
print files to remote sites in accordance with Schedule E;
and
g) store, maintain and provide security for storage media
(tapes and disk packs).
4.11 Consolidation and Relocation Services
ISSC will install, rearrange and relocate equipment within the
Data Center, Data Network, and DSM Environment as ISSC deems
necessary in order to perform in accordance with the Performance
Standards and in such a manner so as to minimize service level
impact to End Users. Installation, rearrangement, and/or
relocation of equipment within the DSM Environment requires prior
approval from Comdata.
4.12 Systems Management
ISSC will:
a) perform capacity planning, performance analysis and tuning
for the (i) Machines and Systems Software in the Data
Center and Data Network, and (ii) DSM Machines and DSM
Systems Software in the DSM Environment;
b) create and maintain an inventory and configuration diagram
of the Data Network and DSM Network;
c) implement controls to effectively manage the Data Center
and Data Network environments, and the DSM Environment,
including change and problem management systems according
to the Procedures Manual;
8
<PAGE>
d) provide back-up and restore capability for data and
programs maintained in the Data Center;
e) provide back-up and restore functions for data and
programs maintained in the DSM Environment;
f) provide for systems access security through the use of
appropriate security products for ISSC machines; and
g) recommend an appropriate system-wide security solution.
4.13 Disaster Recovery
ISSC will provide disaster recovery services in accordance with
Schedule G.
4.14 Production Services
ISSC will:
a) schedule, control and monitor the running of production
jobs to deliver the Services using scheduling and quality
control procedures, as specified in the Procedures Manual;
and
b) follow procedures for scheduling and directing output of
all production work (including workload and performance
balancing), as specified in the Procedures Manual.
4.15 Projects
ISSC will be responsible for the projects described in Schedule N
to include project management, design, testing, documentation,
implementation, training, etc.
4.16 DSM Help Desk
ISSC will provide initial, single point-of-contact support to End
Users to assist them with problem determination, tracking and
resolution in accordance with Schedule M.
4.17 Audits
ISSC will assist Comdata in meeting its audit and regulatory
requirements, including providing access to the Data Center to
enable Comdata and its auditors and examiners to conduct
appropriate audits and examinations of the operations of ISSC
relating to the performance of the Services to verify.
a) the accuracy of ISSC's charges to Comdata;
b) that ISSC is exercising reasonable procedures to control
the resources provided by Comdata to ISSC such as heat,
light and utilities utilized in providing Services to
Comdata; and
c) that Services are being provided in accordance with the
Performance Standards.
Such access will require 24 hour notice to ISSC and will be
provided at reasonable hours, provided that any audit does not
interfere with ISSC's ability to perform the Services in
accordance with the Performance Standards. ISSC will provide
access only to information reasonably necessary to perform the
audit. ISSC shall not allow Comdata, its examiners or auditors
access to other ISSC customers' or ISSC's proprietary data. ISSC
will also assist Comdata's employees or auditors in testing
Comdata's data files and programs, including, without limitation,
installing and running audit software, subject to the provisions
of Section 6.
Subject to Sections 6 4 and 6.5, ISSC agrees to make any changes
and take other actions which are necessary in order to maintain
compliance with applicable laws or regulations. Comdata may
submit additional findings or recommendations to ISSC for its
consideration and ISSC shall consider such findings.
If any audit or examination reveals that ISSC's invoices for the
audited period are not correct for such period, ISSC shall
promptly reimburse Comdata for the amount of any overcharges, or
Comdata shall promptly pay ISSC for the amount of any
undercharges.
5.0 Comdata Responsibilities
5.1 Project Executive
Comdata agrees to designate, prior to the Commencement Date, a
Project Executive to whom all ISSC communications may be
addressed and who has the authority to act for and bind Comdata
and its subcontractors in connection with all aspects of this
agreement.
5.2 Applications Software
During the Term, Comdata will be responsible for selecting, or
defining requirements for, all Applications Software and DSM
Applications Software including all software which executes on
End User Machines. ISSC agrees to use any Applications Software
and DSM Applications Software selected by Comdata, subject to the
provisions of Schedule K Comdata will also retain financial and
administrative responsibility for all DSM Software.
Comdata shall have the right to audit, control and approve all
new Applications Software and DSM Applications Software prior to
its promotion into production.
5.3 Software Services
If ISSC determines in good faith that new versions or releases,
upgrades, replacements or additional DSM Software will be
reasonably necessary for ISSC to perform the Services in
accordance with the Performance Standards, the ISSC will propose
to Comdata what new versions or releases, upgrades, replacements
or additional DSM Software are - needed, explain to Comdata in
detail why they are needed, and determine the effect on ISSC's
ability to meet the Performance Standards if some or all of them
are not acquired by Comdata. Comdata will then either procure the
necessary additional or replacement versions or releases,
upgrades, replacements or additional DSM Software, or the Parties
will agree to appropriate adjustments to the Performance
Standards that may be necessary in the event Comdata elects not
to acquire some or all of the proposed new versions or releases,
upgrades, replacements of additional DSM Software. The effected
Performance Standard(s) will be suspended pending such
procurement or adjustment as the case may be.
9
<PAGE>
5.4 Facilities
To enable ISSC to provide the Services, Comdata agrees:
a) to provide, at no charge to ISSC, the use of the Comdata
Data Center, Data Network, and DSM Environment facilities
and only such additional space as may be reasonably
necessary for the performance of the Services. This
includes reasonable office space, storage space, raised
floor space, telephone capability, office support services
(e.g., janitorial and security), office supplies, copy
center services, and furniture. Comdata shall be
responsible for ensuring such Comdata facilities provide
for a safe working environment, including compliance with
national, state and local codes, ordinances, laws,
authorities having jurisdiction and nationally recognized
standards;
b) to provide, for the Comdata Data Center, Data Network, and
DSM Environment facilities located at premises under
Comdata's management and control during the Term, all
heat, light, power, air conditioning, UPS, and such other
similar utilities as may reasonably be necessary for ISSC
to perform the Services as described in this Agreement;
c) to provide access to Comdata parking and cafeteria (if
any) facilities for ISSC employees;
d) if Comdata decides to relocate its current facility that
houses the Comdata Data Center, Data Network, and DSM
Environment, Comdata will provide comparable space,
facilities and resources in the new location under the
same terms and conditions of this Agreement. Any costs
incurred by ISSC as a result of such relocation will be
paid by Comdata; and
e) following the expiration of termination of this Agreement,
Comdata will allow ISSC the use, at no charge, of those
Comdata facilities then being used to perform the Services
for up to 60 days following the effective date of such
expiration or termination (or from the last day of any
Services Transfer Assistance period) to enable ISSC to
affect an orderly transition of ISSC resources.
It is understood that ISSC's use of the Comdata Data Center, DSM
Environment, and other Comdata facilities does not constitute or
create a leasehold interest, and all such usage will at all times
be subject to and in compliance with Comdata's published security
requirements and other published company procedures provided to
ISSC prior to the Amended Commencement Date. When the Comdata
Data Center and/or the other Comdata facilities are no longer
being utilized by ISSC to perform the Services, Comdata's
obligations set forth in this Section with respect to the Comdata
Data Center and/or the other Comdata facilities will cease.
5.5 Support Services
Comdata agrees to:
a) perform its responsibilities in accordance with the
Procedures Manual and Performance Standards and until such
time as those documents are completed, in whole or in
part, in accordance with Comdata's practices and policies
as of the Amended Commencement Date;
b) provide to ISSC, to the extent not otherwise sold,
assigned or licensed to ISSC, for the purposes of meeting
its obligations under this Agreement, full access to, and
use of, Machines, Software, and DSM Environment on the
terms and conditions set forth in this Agreement; and
c) supply the End User Machines and software being used by
the Affected Employees as of the Amended Commencement
Date. Such machines and software shall remain the property
of Comdata. Any replacement machines or software will be
the responsibility of ISSC and such replacements will be
the property of ISSC.
5.6 Other Responsibilities
Comdata also agrees to:
a) provide data, data entry, and coordinate such activities
with ISSC's systems design and production functions as
described in Schedule E;
b) designate and document application information
requirements, including report design and content,
frequency of reports, and accessibility to information;
c) provide additions, upgrades and replacements for all End
User Machines;
d) maintain and support all End User Machines;
e) be responsible for all moves, adds and changes with
respect to End User Machines;
f) provide support to End Users for questions and problems
related to Applications Software, as referred by the DSM
Help Desk defined in Schedule M;
g) provide personnel and equipment to reasonably ensure the
physical security of Comdata facilities;
h) be responsible for creation and administration of user
access and password management and security programs;
i) provide all preprinted forms;
j) provide all paper forms and supplies required by End
Users;
k) pay all common carrier charges for local, long distance,
and WATS (in and out) telecommunications services incurred
in connection with the performance of Services for
Comdata;
l) be responsible for alt mail, messenger, postage, courier
and print distribution services;
m) be responsible for microfiche/microfilm supplies and
retrieval and storage of any and all output;
n) provide maintenance services for Comdata Machines and DSM
Machines; and
o) be responsible for such other Comdata activities and
functions as are described in this Agreement.
5.7 CHC Guaranty
Upon execution of the Agreement, Comdata shall cause Comdata
Holdings Corporation ("CHC") to provide a guaranty to ISSC of all
Comdata's obligations under this Agreement. Such guaranty shall
be in the form attached as Exhibit 1 to the Supplement as "CHC
Guaranty of Comdata's Obligations" and duly executed by an
authorized representative of CHC.
10
<PAGE>
6.0 Charges and Expenses
6.1 Annual Services Charge
Comdata agrees to pay the Annual Services Charge specified in the
Supplement for each year of the Term together with the other
amounts as described in this Section 6 and set forth in the
Supplement.
6.2 Cost of Living Adjustment
Comdata agrees to pay ISSC a Cost of Living Adjustment ("CPI-U"),
in accordance with Schedule J, beginning in the second January
following the Amended Commencement Date if the actual cumulative
year-to-year inflation increases.
The Parties agree to use the December unadjusted Consumer Price
Index, as published in the "Summary Data from the Consumer Price
Index News Release" by the Bureau of Labor Statistics, U.S.
Department of Labor, For All Urban Consumers, ("CPI-U"), for
purposes of determining actual inflation.
6.3 Services for Newly Acquired Comdata Affiliates
If Comdata acquires any additional Affiliate during the Term of
this Agreement, and desires that ISSC provide Services under this
Agreement to such Affiliate, subject to additional charges if
acceptance of such responsibilities would require New Services as
described in Section 6.4, then:
a) ISSC will provide that Affiliate with Services in
accordance with this Agreement;
b) ISSC may, at its option, and with the consent of such
Affiliate, purchase at a mutually agreed price any
additional owned fixed assets owned by such Affiliate that
are used to perform the functions that will be transferred
to ISSC;
c) ISSC may, upon mutual agreement of the Parties, use
(subject to its undertaking of financial and
administrative responsibility) any additional assets
leased by the Affiliate and other contracts held by the
Affiliate; and
d) if ISSC elects to acquire or use such equipment, ISSC will
operate and maintain such equipment.
6.4 New Services
In the event that Comdata requests ISSC to perform functions
different from, and in addition to, the Services ("New
Services"), the charge to Comdata for ISSC performing such
functions will be determined as follows:
a) If the additional function requires only those resources
within a current Baseline, the additional function will
not be considered a New Service and will be accommodated
under the existing Annual Services Charge.
b) If the additional function requires resources not covered
by an existing Baseline and/or requires additional start-
up expenses, then such additional function will be
considered New Services, and prior to performing such New
Services:
1) ISSC will quote to Comdata the increase in the Annual
Services Charge or other payment method that will be
attributable to such New Services; and
2) Comdata, upon receipt of such quote, may then elect
to have ISSC perform the New Services, and the Annual
Services Charge and the Baselines will be adjusted,
if necessary, to reflect such New Services.
6.5 Replacement Services
In the event that Comdata requests ISSC to replace existing
functions or ISSC recommends to Comdata the replacement of
existing functions (the "Replacement Services"), such Replacement
Services will be evaluated as follows:
a) If the Replacement Services result in a net increased cost
to ISSC, the Replacement Services will be treated as New
Services and associated charges will be assessed and
quoted as described in Section 6.4.b.
b) If the Replacement Services result in a net decreased cost
to ISSC, ISSC will propose a revised Annual Services
Charge based upon the effect of the Replacement Services
on ISSC's original cost assumptions. The revised Annual
Services Charge will reflect the shared (on a 50/50 basis)
net savings resulting from the Replacement Services.
6.6 Taxes
a) The Annual Services Charge (if any) paid by Comdata are
inclusive of any applicable sales, use, personal property
or other taxes attributable to periods on or after the
Commencement Date based upon or measured by ISSC's cost in
acquiring or providing equipment, materials, supplies or
services furnished or used by ISSC in performing or
furnishing the Services, including without limitation, all
personal property and use taxes, if any, due on ISSC
Machines and Systems Software and sales tax, if any, due
on ISSC's purchase of the Acquired Assets from Comdata.
b) In the event that a sales, use, excise or services tax is
assessed on the provision of the Services (or any New
Services) by ISSC to Comdata or on ISSC's charges to
Comdata under this Agreement, however levied or assessed,
Comdata will be responsible for and pay the amount of any
such tax. Comdata will also be responsible for paying all
personal property or use taxes due on of with respect to
Comdata Machines, End User Machines and Applications
Software and for the payment of any excise taxes for Data
Network lines and circuits.
c) Each Party shall bear sole responsibility for all taxes,
assessments and other real property-related levies on its
owned or leased real property.
d) The Parties agree to reasonably cooperate with each other
to more accurately determine each Party's tax liability
and to minimize such liability to the extent legally
permissible.
e) Each Party shall provide and make available to the other
11
<PAGE>
any resale certificates, information regarding out-of-
state sales or use of equipment, materials or services,
and other exemption certificates or information reasonably
requested by either Party. The Parties will also work
together to segregate the Annual Services Charge into
separate payment streams:
1) that for taxable Services;
2) that for nontaxable Services;
3) that for which a sales, use or similar tax has
already been paid by ISSC; and
4) that for which ISSC functions merely as a paying
agent for Comdata in receiving goods, supplies or
services (including leasing and licensing
arrangements) that otherwise are nontaxable or have
previously been subject to tax.
6.7 Services Transfer Assistance
It is the intent of the Parties that at the expiration or
termination of this Agreement, ISSC will cooperate with Comdata
to assist with the orderly transfer of the services, functions
and operations provided by ISSC hereunder to another services
provider or Comdata itself. Prior to expiration or termination of
the Agreement, Comdata may request ISSC to perform and, if so
requested, ISSC shall perform (except in the event of a
termination due to a failure by Comdata to pay any amounts due
and payable under this Agreement when due) services in connection
with migrating the work of Comdata to another services provider
or Comdata itself ("Services Transfer Assistance"). Services
Transfer Assistance shall be provided until the effective date of
expiration or termination with respect to the Services, and for
expiration of termination related services other than those
relating to the Services, for up to six additional months after
the effective date of expiration or termination. Subject to
Section 6.7(d) below, Services Transfer Assistance shall include,
but not be limited to, providing Comdata and its Affiliates and
their agents, contractors and consultants, as necessary, with
services such as the following:
a) Pre-migration Services
1) freezing all noncritical Software changes,
2) notifying all outside vendors of procedures to be
followed during the turnover phase,
3) reviewing all Software libraries (tests and
production) with the new service provider and/or
Comdata,
4) assisting in establishing naming conventions for the
new production site,
5) analyzing space required for the data bases and
Software libraries, and
6) generating a tape and computer listing of the source
code in a form reasonably requested by Comdata.
b) Migration Services
1) unloading the production data bases,
2) delivering tapes of production data bases (with
content listings) to the new operations staff,
3) assisting with the loading of the data bases,
4) assisting with the communications network turnover,
if applicable, and
5) assisting in the execution of a parallel operation
until the effective date of expiration or termination
of this Agreement.
c) Post-migration Services
1) answering questions regarding the Services on an "as
needed" basis, and
2) turning over of any remaining Comdata owned reports
and documentation still in ISSC's possession.
d) ISSC shall provide the Services Transfer Assistance at no
charge; provided, however,
1) if, prior to the expiration of termination of the
Agreement, any Services Transfer Assistance provided
by ISSC reasonably requires the utilization of
additional resources that ISSC should not otherwise
use in the performance of this Agreement, Comdata
will pay ISSC for such usage as a New Service as
defined in Section 6.4,
2) if the Services Transfer Assistance reasonably
requires ISSC to incur expenses in addition to the
expenses that ISSC would otherwise incur in the
performance of this Agreement, net of the reduction
in other expenses caused by providing such
assistance, then Comdata shall reimburse ISSC for
such additional expenses provided ISSC shall have
given Comdata reasonable prior notice, and
3) if Comdata requests other services in addition to the
Services Transfer Assistance after the expiration or
termination date, ISSC will provide such other
services at the then current hourly rate ISSC charges
its customers for skilled engineering assistance for
each person provided.
6.8 Other Expenses and Charges
Comdata will be financially responsible for the following
expenses, which are not included in the Annual Services Charge
and are not subject to COLA:
a) all expenses associated with occupancy of facilities,
including land, real property leases, real property taxes,
utilities and facilities-related services in accordance
with Section 5.4;
b) maintenance charges for End User Machines and additional
Machines in excess of the Machines which ISSC agreed to
maintain under Schedule P of this Agreement;
c) charges by common carriers for local, long-distance, and
WATS (in and out) telecommunications services incurred in
connection with the performance of Services for Comdata;
and
d) telecommunications tariffs.
Comdata will be financially responsible for all costs and
expenses associated with its responsibilities specified in
Section 5.0. Such costs and expenses are not included within the
Annual Services Charge or any other charges payable by Comdata
under this Agreement.
12
<PAGE>
7.0 Invoicing and Payment
7.1 Annual Services Charge Invoices
ISSC will invoice Comdata on a monthly basis the proportional
amount of the Annual Services Charge for that month in advance.
The invoice will state separately applicable taxes owed by
Comdata, if any, by tax jurisdiction.
7.2 COLA Invoicing
ISSC will invoice Comdata for COLA starting in the second January
following the Amended Commencement Date and monthly thereafter in
accordance with Section 6.2.
7.3 Accountability
ISSC shall provide Comdata with such documentation and other
information with respect to each invoice as may be reasonably
requested by Comdata to verify that ISSC's charges to Comdata are
accurate, correct and valid and are in accordance with the
provisions of this Agreement. Whenever an ISSC charge is to be
based on ISSC's cost for pass-through charges provided under this
Agreement, ISSC will provide to Comdata, if so requested,
information and documentation sufficient to substantiate ISSC's
costs with respect to such charge.
7.4 Other Charges
Any amount due under this Agreement for which a time for payment
is not otherwise specified will be due and payable within 30 days
after the date of the invoice.
7.5 Invoice Payment
Comdata will pay each invoice by a method acceptable to ISSC
within the calendar month, provided it receives the invoice on or
before the tenth day of the month; otherwise, such payment shall
be made within 30 days of the date of an invoice. In the event
that any payments are not received by ISSC within five business
days following the due date, a late fee equal to one percent of
the amount of such payment per month shall also be paid to ISSC
by Comdata.
7.6 Proration
All periodic charges under this Agreement are to be computed on a
calendar month basis, and will be prorated for any partial month,
unless specifically stated otherwise in this Agreement.
7.7 Refundable Items
a) Where Comdata has prepaid for a service or function for
which ISSC is undertaking financial responsibility under
this Agreement, ISSC will refund to Comdata, as soon as
the amount is identified, that portion of such prepaid
expense which is attributable to periods on and after the
Commencement Date.
b) If ISSC should receive during the Term any refund, credit
or other rebate in respect of services or functions paid
for by Comdata prior to the Commencement Date, ISSC will
promptly notify Comdata of such refund, credit or rebate
and will promptly pay to Comdata the full amount of such
refund. credit or rebate.
7.8 Set-Off
Except as specifically set forth elsewhere in this Agreement,
with respect to any amount owed to Comdata by ISSC pursuant to
this Agreement, ISSC may, at its option, pay that amount to
Comdata by giving Comdata a credit against the charges otherwise
payable to ISSC hereunder. Similarly, except as specifically set
forth elsewhere in this Agreement, with respect to any amount
owed to Comdata by ISSC pursuant to this Agreement, Comdata may,
at its option, set off that amount as a credit against the
monthly charges payable to ISSC hereunder.
8.0 Intellectual Property Rights
8.1 Ownership of Comdata Product Software
Comdata shall be the sole and exclusive owner of all Comdata
Product Software and, subject to ISSC's rights as set forth in
Section 8.3 below, all copies thereof, and of all Intellectual
Property Rights therein. ISSC hereby assigns and agrees to assign
to Comdata all right and title, and all associated Intellectual
Property Rights, in all Comdata Product Software. Subject to
ISSC's rights as set forth in Section 8.3 below, (i) ISSC shall
immediately return to Comdata all copies thereof upon any
expiration or termination of this agreement and (ii) ISSC shall
utilize the Comdata Product Software solely for the benefit of
Comdata and its customers as provided hereunder, and shall not
use the same, directly or indirectly, for the benefit of any
other party or for any reason. ISSC agrees to assist and
cooperate with Comdata in all reasonable respects and to execute
documents and take such further acts reasonably requested by
Comdata to acquire, transfer, maintain, and perfect its
Intellectual Property Rights in the Comdata Product Software.
8.2 Other Materials
Literary works or other works of authorship other than Comdata
Product Software created under this Agreement and not available
under other ISSC or non-ISSC agreements (hereafter, "Materials")
shall be treated as follows:
a) With respect to such Materials which ISSC has
independently created, ISSC grants to Comdata:
1) an irrevocable, nonexclusive, world-wide, paid-up
license to prepare derivative works based upon the
Materials, and to internally use, execute, reproduce,
display, perform and distribute the Materials and
such derivative works, and
2) the right to sublicense third parties to do any of
the foregoing for the sole benefit of Comdata.
b) With respect to such Materials which Comdata has
independently created, Comdata hereby grants to ISSC:
1) an irrevocable, non-exclusive, world-wide, paid-up
license to prepare derivative works based upon the
Materials, and to internally use, execute, reproduce,
display, perform and distribute the materials and
such derivative works. and
2) The right to sublicense third parties to do any of
13
<PAGE>
the foregoing for the sole purpose of providing the
Services to Comdata.
c) Where any materials are jointly created by the Parties
Comdata and ISSC will jointly have all right, title and
interest, including ownership of copyright, in such
Materials. Each Party may use the Materials internally for
its own business purposes without accounting.
d) The Parties agree to reproduce copyright legends which
appear on any materials.
e) Upon the expiration or termination of this agreement, so
long as Comdata has fully performed all of its obligations
under this Agreement and no material breach of the
Agreement on the part of Comdata has occurred and remains
uncured, ISSC will assign all right, title and interest in
the Materials described in c) above, without additional
charge, to Comdata, in a manner reasonably acceptable to
both Parties, and Comdata shall, simultaneously with such
assignment, grant to ISSC:
1) an irrevocable, non-exclusive, world-wide, paid-up
license to prepare derivative works based upon the
Materials, and to use, reproduce, display, perform
and distribute the Materials and such derivative
works, and
2) the right to sublicense third parties to do any of
the foregoing.
In the event that Comdata has not complied with the
conditions to the assignment described in the preceding
sentence, ISSC shall not be obligated to assign such
Materials and may sell, distribute, market or use such
Materials in any manner it deems appropriate.
8.3 Assignment of Personnel and Use of Ideas
Subject to ISSC's obligations with respect to Comdata's
Confidential Information, as set forth in Section 9, and
applicable copyrights and patents, this Agreement shall not
preclude ISSC from developing materials for or providing services
to other customers who are engaged in businesses competitive to
Comdata. Neither Party shall be liable for any payment to
employees of the other company who conceive, or reduce to
practice, inventions.
Nothing contained in this Agreement shall restrict either Party
from the use of any ideas, concepts, know-how, or techniques
relating to data processing or network management which either
Party, individually or jointly develops or discloses under this
Agreement, subject to the provisions of Section 9.0, and Comdata
hereby grants to ISSC a fully paid-up, irrevocable, non-
exclusive, worldwide license to use, execute, reproduce, display,
distribute internally and externally, create derivative works
based upon, and practice any invention contained in, any portions
of code, supporting documentation or related materials. of
Comdata Product Software that embody any such ideas, concepts,
know-how or techniques relating to data processing or network
management, provided that such portions, both individually and
collectively, are of general application and do not constitute a
product of Comdata in their substantial entirety. Such grant
includes the right and license to sublicense others to do some or
all of the foregoing. However, except for licenses granted
pursuant to this Section 8.0, neither this Agreement nor any
disclosure made thereunder grants any license to either Party
under any patents or copyrights of the other Party.
9.0 Confidentiality/Data Security
9.1 Confidential Information
ISSC and Comdata each acknowledge that the other possesses and
will continue to possess information that has been created,
discovered, or developed by it or provided to it by a third party
and which it considers to be proprietary and confidential and
which has commercial value in its business and is not in the
public domain. Except as otherwise specifically provided by the
Parties, "Confidential Information" shall mean:
a) all information marked confidential, restricted, or
proprietary by either Party; and
b) all electronically stored information, written information
or oral information reduced to writing within a reasonable
period of time and delivered to ISSC that relates to
Comdata's and its Affiliates' customer lists, customer
information, account information, business information
regarding business planning and operations, and
administrative, financial or marketing activities, and
which is not governed by a separate confidentiality
agreement between the Parties.
9.2 Obligations
Except as otherwise specified in Schedule L, Comdata and ISSC
will each use the same care to prevent the disclosure to third
parties of the Confidential Information of the other as it
employs to avoid disclosure, publication or dissemination of its
own information of a similar nature. The Parties may disclose
Confidential Information to their employees on a need to know
basis provided the Parties have. an appropriate written
confidentiality agreement with such employees. Notwithstanding
the foregoing, the Parties may disclose such information to
subcontractors involved in providing Services under this
Agreement, where:
a) such disclosure is necessary to permit the subcontractor
to perform its duties hereunder, and
b) the disclosing Party assumes full responsibility for the
acts of omissions of its subcontractor, no less than if
the acts or omissions were those of the disclosing Party.
Any disclosure to subcontractors shall be under the terms and
conditions as provided herein. Without limiting the generality of
the foregoing, neither Party will publicly disclose the terms of
this Agreement without the prior written consent of the other,
except to the extent permitted by Section 9.3 and 15 hereof.
Furthermore, neither ISSC nor Comdata may:
a) make any use of or disclose the Confidential Information
of the other which has been so identified except as
contemplated by this Agreement;
14
<PAGE>
b) or acquire any right in or assert any lien against the
Confidential Information of the other; or
c) refuse to promptly return, provide a copy of or destroy
such Confidential Information upon the reasonable request
of the other Party;
provided, however, that either Party may, without limitation, use
any ideas, concepts, know-how and techniques related to data
processing or management in the development, manufacturing, and
marketing of products and services, so long as such use does not
infringe any patent rights or copyrights or disclose the identity
of, or any business, financial of personnel information of, the
other Party.
9.3 Exclusions
Notwithstanding the foregoing, no obligation of confidentiality
shall apply to any information which was, at the time of
disclosure to it, in the public domain; after disclosure to it,
is published or otherwise becomes part of the public domain
through no fault of the receiving Party; was rightfully in the
possession of the receiving Party at the time of disclosure to
it; was received after disclosure to it from a third party who
had a lawful right to disclose such information to it; in
response to a valid order of a court or other governmental body
of the United States or any political subdivision thereof;
provided, however, that the Party making the disclosure pursuant
to such order shall give written notice to the other Party
promptly after receipt of such order and, if possible, without
violation of any law, shall not disclose the information for a
period of five days to permit the other party the opportunity to
obtain a protective order preventing or limiting disclosure. It
is understood that the receipt of Confidential Information under
this Agreement will not limit or restrict assignment or
reassignment of employees of ISSC and Comdata within or between
the respective Parties and their Affiliates.
9.4 Protection of Comdata Confidential Information
Any additional responsibilities of ISSC and Comdata with respect
to protection of Comdata Confidential Information will be set
forth in the Procedures Manual.
9.5 Loss of Confidential Information
In the event of any loss of inability to account for Confidential
Information, the receiving Party will promptly notify the
disclosing Party.
9.6 Limitation
ISSC will not be responsible for loss or mistransmission of data
or for the security of data during transmission via public
telecommunications facilities.
10.0 Termination
10.1 Termination for Convenience
Subject to the other provisions of this Agreement, Comdata may
terminate this Agreement upon at least 90 days prior written
notice to ISSC. If Comdata terminates this Agreement prior to the
expiration of the Term, other than as specified in Section 10.3,
Comdata agrees to pay ISSC on the effective date of the
termination, the Termination Charge, as specified in the
Supplement, which the Parties agree is Comdata's sole and
exclusive liability for such termination. Any termination charge
will be prorated according to the following formula:
[{(A-8)/12 months} x C] + B = Prorated Termination Charge.
where:
A = the Termination Charge specified in the Supplement for the
year in which termination is effective;
B = the Termination Charge specified in the Supplement for the
year after the year in which termination is effective; and
C = the number of months remaining during the year in which
termination is effective.
10.2 Termination upon Acquisition
If all or substantially all of the assets of Comdata are acquired
by another entity which is not an Affiliate of Comdata or a
change in control (as defined in the definition of Affiliate)
occurs, and the new owner or owners elect not to continue this
Agreement, Comdata may, within not more than 120 days after such
acquisition, provide written notice of termination to ISSC. In
such event, ISSC will provide Comdata termination assistance in
accordance with Section 6.7, and Comdata will be obligated to pay
the applicable prorated Termination Charge listed in the
Supplement.
10.3 Termination for Cause
Upon written notice, either Party may terminate this Agreement,
without charge to the terminating Party, in the event of a
material breach by the other. However, the Party seeking
termination will provide the other Party with sufficient,
reasonable written prior notice of such material breach and the
opportunity to cure same, as follows:
a) in the event of a failure to pay any amount due and
payable under this Agreement when due, at least ten days,
and
b) in the event of any other material breach, at least 30
days.
If the nature of any nonmonetary breach is such that it would be
unreasonable to expect a cure within a 30 day period, the
breaching Party shall be given an additional 15 days to cure such
breach. In the event the material breach is not cured within the
periods specified above after delivery of the notices the
nonbreaching Party may terminate this Agreement, which
termination shall be in writing, as of a date specified in such
notice of termination. The terminating Party shall have all
rights and remedies generally afforded by law or equity, subject
to the limitations expressed in this Agreement.
15
<PAGE>
10.4 Extension of Services
Except in the case of a termination of this Agreement due to a
material breach by Comdata, Comdata may once request and ISSC
will extend the provision of Services for a period not to exceed
180 days beyond the effective date of termination or expiration.
Such request must be in the form of a written notice received by
ISSC not less than 60 days prior to the effective date of
termination or expiration of the Agreement.
Comdata will reimburse ISSC for all additional expenses, if any,
incurred by ISSC as a result of ISSC's provision of such extended
Services which are not otherwise covered by the Annual Services
Charge or other charging methodology described herein.
10.5 Other Rights Upon Termination
Provided Comdata is not in default of its obligations under this
Agreement:
a) ISSC agrees to sell to Comdata or its designee, upon
Comdata's request, the ISSC Machines then currently being
used by ISSC on a dedicated basis to perform the Services
at fair market value, as determined by a mutually agreed
upon appraisal. Comdata shall be responsible for any taxes
associated with the purchase of such equipment.
b) For Software proprietary to ISSC and not otherwise owned
by or licensed to Comdata in accordance with Section 8 and
not generally commercially available, ISSC will provide a
license to Comdata and its Affiliates to whom ISSC is
providing Services, for their internal use only, upon
terms and prices to be mutually agreed upon by the Parties
or, at Comdata's option. ISSC will recommend a mutually
agreeable commercially available substitute to perform the
same function.
c) With respect to generally commercially available Software,
if ISSC has licensed or purchased and is using any such
Software solely for providing the Services to Comdata at
the date of expiration or termination, Comdata will
reimburse ISSC for initial license or purchase charges for
such Software in an amount equal to the remaining
unamortized cost of such Software, if any, depreciated
over a five year life, and pay any transfer fee or charge
imposed by any applicable vendor.
d) ISSC will transfer or assign to Comdata or its designee,
upon Comdata's request, on mutually acceptable terms and
conditions, subject to the payment by Comdata of any
transfer fee or charge imposed by the applicable vendors,
any contracts applicable solely to services being provided
to Comdata for maintenance, disaster recovery services and
other necessary third party services (other than
subcontractor services) then being used by ISSC to perform
the Services.
e) ISSC will provide Services Transfer Assistance pursuant to
Section 6.7.
11.0 Liability
11.1 General Intent
Each Party's and each of its subcontractor's entire liability to
the other Party and its exclusive remedies are set forth in this
Section and Section 13. Subject to the specific provisions of
this Section, it is the intent of the Parties that each Party
will be liable to the other Party for any damages incurred by the
nonbreaching Party as a result of the breaching Party's failure
to perform its obligations in the manner required by this
Agreement.
11.2 Damages
a) Each Party's and each of its subcontractor's liability for
actual, direct damages resulting from its performance or
nonperformance under this Agreement, regardless of the
form of action, and whether in contract, tort (including,
without limitation, negligence), warranty or other legal
or equitable grounds, will be limited for each event which
is the subject matter of the cause of action, to the
Annual Services Charge during the three month period
immediately preceding each such event. This limitation
will not apply to:
1) any obligation or failure by Comdata to pay any
amounts due or past due and owing to ISSC pursuant to
the terms of this Agreement;
2) Losses by either Party for bodily injury or damage to
real property or tangible personal property, as
described in Section 13.3;
3) Losses incurred by ISSC caused by or arising out of
the inaccuracy or untruthfulness of the
representations and warranties of Comdata contained
in this Agreement; and
4) either Party's obligation to defend and indemnify the
other for intellectual property infringement Losses
and Losses relating to tax liabilities, as provided
in Sections 13.1(a) and (d) and 13.2(a) and (d),
respectively.
b) In no event will either Party have any liability whether
based on contract, tort (including, without limitation,
negligence), warranty or any other legal or equitable
grounds, for any loss of interest, profit or revenue by
the other Party or for any consequential, indirect,
incidental, special, punitive or exemplary damages
suffered by the other Party, arising from or related to
this Agreement, even if such Party has been advised of the
possibility of such losses or damages; provided, however,
that this clause will not prevent either Party from
recovering amounts owed under this Agreement.
c) In no event will ISSC or its subcontractors be liable for
any damages if and to the extent caused by Comdata's
failure to perform its responsibilities, nor shall Comdata
be liable for any damages if and to the extent caused by
any failure to perform by ISSC or its subcontractors.
16
<PAGE>
11.3 Other Remedies
Notwithstanding anything to the contrary contained in this
Section 11, each Party retains all equitable remedies available
under applicable law to enforce its rights in connection with
this Agreement, including rights upon termination or expiration
of this Agreement.
12.0 Warranty
12.1 Work Standards
In addition to the representations and commitments expressly made
by ISSC in this Agreement, ISSC represents and warrants that all
Services rendered hereunder will be performed in a workmanlike
manner using qualified individuals in accordance with industry
standards and practices reasonably applicable to the performance
of such Services.
12.2 Maintenance
ISSC represents and warrants that it will maintain Machines for
which it has maintenance responsibilities hereunder in good
operating condition and will undertake alt repairs and preventive
maintenance in accordance with industry standards and practices.
12.3 Compliance with Obligations
Comdata represents and warrants that its entry into this
Agreement does not violate or constitute a breach of any of its
contractual obligations with third parties.
12.4 Claims
Comdata represents and warrants it has no knowledge or notice of
any actual or threatened material claim s or action by, on behalf
of, or related to, the Affected Employees, including, but not
limited to, claims arising under the Occupational Safety and
Health Administration, Equal Employment Opportunity Commission,
National Labor Relations Board or Fair Labor Standards Act, or
other applicable federal, state or local laws or regulations,
except as such claims or actions are identified in Schedule 0.
12.5 Environmental
Comdata represents and warrants that, to the best of its
knowledge, the Comdata facilities used by ISSC hereunder are in
substantial compliance with all applicable federal, state and
local laws governing the storage, existence, discharge and
handling of Hazardous Materials. "Hazardous Materials' means, at
any time,
a) any "hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended from time to time (42 U.S.C. 9601 et
seq.) and the regulations promulgated thereunder;
b) any asbestos or asbestos-containing materials;
c) petroleum, crude oil or any fraction thereof, natural gas
or synthetic gas used for fuel; and
d) any additional substances or materials which at such time
are classified or considered to be hazardous or toxic
under the laws of the state of Tennessee or Texas, as
applicable.
In the event that Hazardous Materials are discovered at the
Comdata Facilities, and their presence is verified by an
independent testing organization, during the Term of this
Agreement, ISSC may cease the performance of that portion of the
Services affected by such discovery if, in the reasonable
judgement of ISSC, ISSC's ability to perform such portion of the
services safely and properly is adversely impacted by the
presence of such Hazardous Materials. Comdata shall be
responsible for causing any violation of federal, state or local
law with respect to the presence of such Hazardous Materials to
be remedied. It is understood that matters relating to the
investigation, detection, abatement and remediation of any
Hazardous Materials discovered at the Comdata Facilities are not
within the scope of this Agreement and that ISSC shall not be
liable or responsible for any expense incurred by Comdata in this
connection, unless the presence of the Hazardous Material-s was
caused by ISSC or a subcontractor of ISSC. In such event, the
provisions of this paragraph will not apply.
12.6 Bankruptcy
Comdata agrees that the following shall constitute a material
breach of this Agreement: If Comdata or CHC
a) shall be the subject of an order for relief by the
bankruptcy court, or is unable or admits in writing its
inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or
b) shall be the subject of, institutes or consents to any
bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, custodianship,
conservatorship, liquidation, rehabilitation or similar
proceedings relating to it or to all or any part of its
property under the laws of any jurisdiction, and such
proceeding(s) shall continue undismissed or unstayed for
twenty (20) calendar days.
12.7 Non-infringement
The Parties represent and warrant that they will perform their
responsibilities under this Agreement in a manner that does not
infringe, of constitute an infringement of or misappropriation of
any patent, trade secret, copyright, trade mark, service mark,
trade name or other proprietary right of any third party.
12.8 Ownership of Comdata Machines
You represent that you are either the owner of each Comdata
Machine or authorized by its owner to include it under this
Agreement.
12.9 Disclaimer
ISSC shall not be responsible for any inaccuracy of advice,
reports, data or other products produced with or from data and/or
software provided by you when such inaccuracy is caused by
defective or erroneous data or software provided by you.
Additionally, subject to the obligations contained in this
Agreement, ISSC does not assume uninterrupted or error-free
operation of Machines.
17
<PAGE>
THIS IS A SERVICE AGREEMENT. EXCEPT AS PROVIDED IN THIS
AGREEMENT, THERE ARE NO OTHER EXPRESS WARRANTIES, AND THERE ARE
NO IMPLIED WARRANTIES MADE BY EITHER PARTY INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
13.0 Indemnities
13.1 Indemnity by ISSC
ISSC agrees to indemnify, defend and hold harmless Comdata, its
Affiliates and their respective officers, directors, employees,
agents, successors and assigns, in accordance with the procedures
set forth in Section 13.4, from any and all Losses incurred by
any of the foregoing parties arising from or in connection with:
a) any claims of infringement made against Comdata of any
United States letters patent, or any copyright, trademark,
service mark, trade name or similar proprietary rights
conferred by contract or by common law or by any law of
the United States or any state, alleged to have occurred
because of equipment of software manufactured by ISSC or
because of systems, products or other resources or items
provided to Comdata by ISSC; provided that ISSC will not
have any obligation with respect to any claims based upon
1) Comdata's modification of a program or a machine, or
2) Comdata's combination, operation, use or integration
of an ISSC program or machine with machines,
apparatus or programs not furnished by ISSC or its
subcontractors;
b) any and all amounts payable with respect to the Acquired
Assets which are attributable to periods on or after the
Effective Date;
c) any duties or obligations to be performed on or after the
Commencement Date by ISSC pursuant to any Contract;
d) The inaccuracy or untruthfulness of any representative or
warranty made by ISSC under this Agreement, and
e) any amounts, including but not limited to taxes, interest
and penalties, assessed against Comdata which are
obligations of ISSC pursuant to Section 6.6.
13.2 Indemnity by Comdata
Comdata agrees to indemnify, defend and hold harmless ISSC, its
Affiliates and their respective officers, directors, employees.
agents, successors and assigns, from any and all Losses incurred
by any of the foregoing parties and arising from or in connection
with:
a) any claims of infringement made against any of the
foregoing parties of any United States letters patent, or
a trade secret, or any copy right, trademark, service
mark, trade name or similar proprietary rights conferred
by contract or by common law or by any law of the United
States or any state, alleged to have occurred because of
systems, products or other resources of items developed by
Comdata and provided to ISSC hereunder; provided that
Comdata will not have any obligations with respect to any
claim based upon
1) ISSC's modification of a program developed by
Comdata, or
2) ISSC's combination or integration of a program
developed by Comdata with apparatus, machines or
programs not developed by Comdata;
b) any and all amounts payable with respect to the Acquired
Assets which are attributable to periods prior to the
Commencement Date;
c) any duties or obligations to be performed prior to the
Commencement Date by Comdata pursuant to any agreements
regarding the Acquired Assets;
d) the inaccuracy or untruthfulness of any warranty made by
Comdata under this Agreement; and
e) any amounts, including but not limited to taxes, interest
and penalties, assessed against ISSC which are obligations
of Comdata pursuant to Section 6.6.
13.3 Gross Indemnity and Contribution
Each Party agrees to contribute to the amount paid or payable by
the other Party for any and all Losses arising in favor of any
person, corporation or other entity, including the Parties hereto
and their employees, contractors and agents, on account of
personal injuries, death or damage to tangible personal or real
property in any way incident to, or in connection with or arising
out of:
a) this Agreement,
b) the Services provided by ISSC hereunder,
c) the presence of such Party, its employees, contractors or
agents on the premises of the other Party, or
d) the act or omission of such Party, its employees,
contractors or agents, for which such Party is legally
liable and in proportion to such Party's comparative fault
in causing; such Losses.
13.4 Indemnification Procedures
Promptly after receipt by any person entitled to indemnification
under Sections 13 1 through 13.3 (an "Indemnified Party") of
notice of the commencement (or threatened commencement) of any
civil, criminal, administrative or investigative action or
proceeding involving a claim in respect of which the Indemnified
Party will seek indemnification pursuant to any such Section, the
Indemnified Party shall notify the person that is obligated to
provide such indemnification (an "indemnified Party") of such
claim in writing. The Indemnifying Party shall be entitled to
have sole control over the defense and settlement of such claim,
provided that, within a reasonable period of time after receipt
of such written notice, but not fewer than 10 days prior to the
date on which a response to a summons and/or complaint is due,
the Indemnifying Party notifies the Indemnified Party of its
election to so assume full control. In the event the Indemnifying
18
<PAGE>
Party notifies the Indemnified Party of its election so assume
full control, then:
a) the Indemnified Party may employ counsel at its own
expense to participate in the defense of such claim; and
b) the Indemnifying Party shall provide reasonable advance
notice to the indemnified Party before entering into any
settlement of such claim or ceasing to defend against such
claim. If such settlement or cessation would cause
injunctive relief to be imposed against the Indemnified
Party, require the Indemnified Party to pay any monetary
damage or require the Indemnified Party to grant a license
to materials owned by such Party, the Indemnifying Party
must obtain the Indemnified Party's prior written consent.
After notice by the Indemnifying Party to the Indemnified Party
of its election to assume full control of the defense of any such
action, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses incurred thereafter by
such Indemnified Party in connection with the defense of that
claim. If the Indemnifying Party does not assume sole control
over the defense of a claim subject to such defense as provided
in this Section 13.4, the Indemnifying Party may participate in
such defense, at its sole expense, and the Indemnified Party
shall have the right to defend the claim in such manner as it may
deem appropriate, at the expense of the Indemnifying Party.
13.5 Subrogation
In the event that an Indemnifying Party shall be obligated to
indemnify an Indemnified Party pursuant to Sections 13 1 through
13.3, the Indemnifying Party shall, upon payment of such
indemnity in full, be subrogated to all rights of the Indemnified
Party with respect to the claims and defenses to which such
indemnification relates.
13.6 Exclusive Remedy
The indemnification rights of each Indemnified Party pursuant to
Sections 13.1 through 13.3 shall be the exclusive remedy of such
Indemnified Party with respect to the claims to which such
indemnification relates.
14.0 Insurance and Risk of Loss
14.1 Insurance
When this Agreement requires performance by ISSC's or Comdata's
employees of subcontractors on the other Party's premises, the
performing Party shall carry and maintain Worker's Compensation
and Employer's Liability Insurance covering its employees or
subcontractors engaged in such performance in amounts no less
than required by law in the applicable location. The performing
Party shall also carry any other insurance coverage which is
required to insure against losses or damages caused by the
performing Party's negligence, and any other insurance required
by law or considered by the Party to be prudent and consistent
with industry standards and practices.
14.2 Risk of Loss
Comdata is responsible for risk of loss of, or damage to,
Machines owned by Comdata. ISSC is responsible for risk of loss
of, or damage to, Machines owned by ISSC.
15.0 Publicity
Each Party will submit to the other all advertising, written
sales promotion, press releases and other publicity matters
relating to this Agreement in which the other Party's name or
mark is mentioned or language from which the connection of said
name or mark may be inferred or implied, and will not publish or
use such advertising, sales promotion, press releases, or
publicity matters without prior written approval of the other
Party. However, either Party may include the other Party's name
and a factual description of the work performed under this
Agreement on employee bulletin boards, in its list of references
and in the experience section of proposals to third parties, in
internal business planning documents and in its annual report to
stockholders, and whenever required by reason of legal,
accounting or regulatory requirements.
16.0 Review Committee and Dispute Resolution
16.1 Joint Advisory Committee
Within 30 days from the Effective Date, ISSC and Comdata agree to
create a Joint Advisory Committee consisting of four people of
the following titles from each Party:
ISSC:
1) ISSC General Manager
2) ISSC Vice President of Transportation
3) ISSC Transportation Delivery Director
4) ISSC Project Executive
Comdata
1) Chief Executive Officer
2) Chief Operations Officer
3) Chief financial Officer
4) Comdata Project Executive
The Joint Advisory Committee will:
a) annually review the operating and strategic plans prepared
by the Project Executives;
b) review, on an annual basis, performance objectives and
measurements;
c) provide advice and direction on technology changes; and
d) discuss disputes between the Parties.
16.2 Dispute Resolution
a) Any dispute between the Parties either with respect to the
interpretation of any provision of this Agreement or with
respect to the performance by ISSC or by Comdata hereunder
shall be resolved as specified in this Section 16.2.
1) Upon the written request of either Party, each of the
Parties will appoint a designated representative who
does not devote substantially all of his or her time
to performance under this Agreement, whose task it
will be to meet for the purpose of endeavoring to
resolve such dispute.
2) The designated representatives shall meet as often as
19
<PAGE>
necessary to gather and furnish to the other all
information with respect to the matter in issue which
is appropriate and germane in connection with its
resolution.
3) Such representatives shall discuss the problem and
negotiate in good faith in an effort to resolve the
dispute without the necessity of any formal
proceeding relating thereto.
4) During the course of such negotiation, all reasonable
requests made by one Party to the other for
nonprivileged information reasonably related to this
Agreement, will be honored in order that each of the
Parties may be fully advised of the other's position.
5) The specific format for such discussions will be left
to the discretion of the designated representatives
but may include the preparation of agreed upon
statements of fact or written statements of position
furnished to the other Party.
b) If the designated representatives cannot resolve the
dispute, then the dispute shall be escalated to the
President of Comdata and the President of ISSC, for their
review and resolution. If the dispute cannot be resolved
by such officers, then the Parties may initiate formal
proceedings; however, formal proceedings for the judicial
resolution of any such dispute may not be commenced until
the earlier of:
1) the designated representatives concluding in good
faith that amicable resolution through continued
negotiation of the matter in issue does not appear
likely; or
2) 30 days after the initial request to negotiate such
dispute; or
3) 30 days before the statute of limitations governing
any cause of action relating to such dispute would
expire.
c) Notwithstanding the foregoing provisions, neither Party
will have any obligation to follow the dispute resolution
procedures set forth in Sections 16.2.a and 16.2.b in the
event that such Party desires to seek preliminary or
temporary relief of an emergency nature, or in the case of
a breach or threatened breach of the provisions of Section
9 hereof.
16.3 Continued Performance
Except where clearly prevented by the area in dispute, both
Parties agree to continue performing their respective obligations
under this Agreement while the dispute is being resolved unless
and until such obligations are terminated or expire in accordance
with the provisions hereof.
17.0 General
17.1 Control of Services
a) This Agreement shall not be construed as constituting
either Party as partner of the other or to create any
other form of legal association that would impose
liability upon one Party for the act or failure to act of
the other or as providing either Party with the right,
power or authority (express or implied) to create any duty
or obligation of the other Party.
b) Each Party shall be responsible for the management,
direction and control of its employees and such employees
shall not be employees of the other Party.
c) Except where this Agreement expressly provides that ISSC
will perform certain identified Services as agent for
Comdata, the Services will be under the control,
management and supervision of ISSC.
17.2 Right to Perform Services for Others
Each Party recognizes that ISSC personnel providing Services to
Comdata under this Agreement may perform similar services for
others and this Agreement shall not prevent ISSC from using the
personnel and equipment not listed in Schedule U that is provided
to Comdata under this Agreement for such purposes. ISSC may
perform its obligations through its subsidiaries, Affiliates or
through the use of ISSC-selected independent contractors;
provided, however, that ISSC shall not be relieved of its
obligations under this Agreement by use of such subsidiaries,
Affiliates, or subcontractors.
17.3 Scope of Services
The Services provided under this Agreement are for Machines and
facilities located within the United States.
17.4 Amendments and Revisions
No changes or modifications to this Agreement, its Supplement and
Schedules may be made orally, but only by a written amendment or
revision signed by both Parties.
Any terms and conditions varying from this Agreement, its
Supplement and Schedules on any order or written notification
from either Party are void.
17.5 Force Majeure
a) Neither Party shall be liable for any default or delay in
the performance of its obligations hereunder.
1) if and to the extent such default or delay is caused,
directly or indirectly, by fire, flood, earthquake,
elements of nature or acts of God, acts of war,
terrorism, riots, civil disorders, rebellions or
revolutions in the United States, strikes, lockouts,
or labor difficulties, or any other similar cause
beyond the reasonable control of such Party; or
2) provided such default or delay could not have been
prevented by reasonable precautions and cannot
reasonably be circumvented by the nonperforming Party
through the use of alternate sources, work-around
plans or other means, (individually, each being a
"Force Majeure Event").
b) In such event, the nonperforming Party will be excused
20
<PAGE>
from any further performance or observance of the
obligation(s) so affected for as long as such
circumstances prevail and such Party continues to use
commercially reasonable efforts to recommence performance
or observance whenever and to whatever extent possible
without delay. Any Party so delayed in its performance
will immediately notify the other by telephone (to be
confirmed in writing within five days of the inception of
such delay) and describe at a reasonable level of detail
the circumstances causing such delay.
c) This Section 17.5 does not limit or otherwise affect
ISSC's obligation to provide disaster recovery services in
accordance with Schedule G; provided, however, that such
Force Majeure Event does not also prevent ISSC's provision
of the Services from recovery centers. If any Force
Majeure Event substantially prevents, hinders, or delays
performance of the Services necessary for the performance
of Comdata's critical functions for more than 30
consecutive days, then at Comdata's option:
1) Comdata may procure such Services from an alternate
source and ISSC will be liable for payment for such
Services in excess of ISSC's charges under this
Agreement for up to 180 days; or
2) this Agreement will terminate as of a date specified
by Comdata in a written notice of termination to ISSC
and Comdata will pay ISSC any unrecovered start-up
costs, anticipated profit prorated to the date of
termination, and any reasonable out-of-pocket
expenses associated with ramp down transition costs,
all subject to independent audit. In such case
Comdata will not be liable for any Termination
Charges as described in Sections 10.1 or 10.2.
d) Except to the extent a Force Majeure event prevents
Comdata from fulfilling its payment obligations under this
Agreement, this Section 17.5 does not limit or otherwise
relieve Comdata's obligation to pay any monies due ISSC
under the terms of this Agreement.
17.6 Nonperformance
To the extent any nonperformance by either Party of its
nonmonetary obligations under this Agreement results from or is
caused by the other Party's failure to perform its obligations
under this Agreement, such nonperformance shall be excused.
17.7 Remarketing
Comdata may not remarket all of any portion of the Services
provided under this Agreement, or make all or any portion of the
Services available to any party other than Comdata or its
Affiliates without the prior written consent of ISSC. This
section shall not be construed to prohibit Comdata from providing
its services to its customers in the ordinary course of business,
as contemplated by this Agreement.
17.8 Waiver
No waiver of any breach of any provision of this Agreement shall
constitute a waiver of any prior, concurrent or subsequent breach
of the same or any other provisions hereof.
17.9 Severability
If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby, and such provision shall be
deemed to be restated to reflect the original intentions of the
Parties as nearly as possible in accordance with applicable
law(s).
17.10 Time Limitations for Action
Neither Party may bring an actions regardless of form, arising
out of this Agreement more than two years after the cause of
action has arisen or the date such cause of action was of should
have been discovered. ISSC may not bring an action for nonpayment
more than two years after the date the last payment was due.
17.11 Counterparts
This Agreement shall be executed in duplicate counterparts. Each
such counterpart shall be an original and both together shall
constitute but one and the same document.
17.12 Governing Law
This Agreement shall be governed by the laws of the State of New
York as such laws are applied to contracts which are entered into
and performed entirely within the State of New York.
17.13 Binding Nature and Assignment
This Agreement will be binding on the parties hereto and their
respective successors and assigns. For purposes of this
Agreement, a change in control of a party or a sale of all or
substantially all of the assets of a Party shall be deemed an
assignment of this Agreement. Neither Party may, or will have the
power to, assign this Agreement without the prior written consent
of the other, except that each Party may assign its rights and
obligations under this Agreement, without the approval of the
other Party, to
a) an Affiliate which expressly assumes such Party's
obligations and responsibilities here under, or
b) an entity which acquires all or substantially all of the
assets or capital stock of such Party, so long as
1) such entity shall have a net worth, determined in
accordance with generally accepted accounting
principles consistently applied, after giving effect
to such assignment, equal to or greater than such
Party's net worth immediately prior to such
assignment; and
21
<PAGE>
2) such entity shall expressly assume such Party's
obligations and responsibilities hereunder, provided
that in the case of both (a) and (b) the assigning
Party remains fully liable for and shall not be
relieved from the full performance of all of its
obligations under this Agreement.
17.14 Notices
a) Under this Agreement whenever one Party is required or
permitted to give notice to the other, such notice will be
deemed given when delivered in hand, one day after being
given to an express courier with a reliable system for
tracking delivery, or three days after the day of mailing,
when mailed by United States mail, registered of certified
mail, return receipt requested, postage prepaid, or when
sent by facsimile and thereafter delivered by one of the
foregoing methods of delivery.
b) Notifications will be addressed as follows:
1) For termination, breach or default, notify:
In the case of ISSC:
ISSC Project Executive
Integrated Systems Solutions Corporation
305 TechPark Drive, Suite t 13
LaVergne, TN 37086
with a copy to:
ISSC General Counsel
44 South Broadway
White Plains, New York 10601
In the case of Comdata:
Chief Executive Officer
5301 Maryland Way
Brentwood, TN 37027
with a copy to:
Comdata General Counsel
5301 Maryland Way
Brentwood, TN 37027
2) For all other notices:
In the case of ISSC:
ISSC Project Executive
Integrated Systems Solutions Corporation
305 TechPark Drive, Suite 113
LaVergne, TN 37086
In the case of Comdata:
Comdata Project Executive
5301 Maryland Way
Brentwood, TN 37027
Either Party hereto may from time to time change its address for
notification purposes by giving the other prior written notice of
the new address and the date upon which it will become effective.
17.15 No Third Party Beneficiaries
Except as specified in Section 11 with respect to either Party's
contractors or subcontractors, the Parties do not intend, nor
will any clause be interpreted, to create for any third party any
obligations to or benefit from either ISSC or Comdata.
17.16 Other Documents
On or after the Commencement Date and the date(s) of any
amendments or revisions hereto and at the request of the other
Party, each Party shall furnish to the other such certificate of
its Secretary, certified copy of resolutions of its Board of
Directors, or opinion of its counsel as shall evidence that this
Agreement or any amendment or revision hereto has been duly
executed and delivered on behalf of such Party.
a) During the Term and at the reasonable request of the other
Party, each Party shall furnish to the other a certificate
stating that:
1) this Agreement is in full force and effect; and
2) the other Party is not materially in breach hereof at
such time.
The Parties will execute and deliver or cause to be
delivered such further documents as may reasonably be
required for the purposes of assuring and confirming the
rights hereby created or for facilitating the performance
of the terms of the Agreement
b) Comdata hereby appoints ISSC and its agents as its
attorney-in-fact, with the full authority to act in its
name and stead, for the limited purpose of executing,
delivering and filing, in its name and on its behalf,
financing statements and related filings (including,
without limitation, UCC-1 statements) in connection with
the provisions by ISSC of machines, equipment and software
in performing the Services. This limited power of attorney
shall be effective as of the Commencement Date and shall
expire one year after the expiration or earlier
termination of this Agreement.
17.17 Headings
All headings herein and the table of contents are not to be
considered in the construction or interpretation of any provision
of this Agreement. This Agreement was drafted with the joint
participation of both Parties and shall be construed neither
against nor in favor of either, but rather in accordance with the
fair meaning thereof. In the event of any apparent conflicts or
inconsistencies between this Agreement or any Supplements,
Schedules, Exhibits or other Attachments to this Agreement, to
the extent possible such provisions shall be interpreted so as to
make them consistent, and if such is not possible, the provisions
of this Agreement shall prevail.
22
<PAGE>
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT,
UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.
FURTHER, THE PARTIES AGREE THAT THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES RELATING TO THIS
SUBJECT SHALL CONSIST OF 1) THIS AGREEMENT. 2) THE SUPPLEMENT AND
3) THE SCHEDULES, INCLUDING THOSE MADE EFFECTIVE BY THE PARTIES
IN THE FUTURE. THIS STATEMENT OF THE AGREEMENT SUPERSEDES ALL
PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN AND ALL
OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT
MATTER DESCRIBED IN THIS AGREEMENT.
Accepted by: Accepted by:
Integrated Systems Solutions Comdata Network, Inc.
Corporation
{d/b/a ISSC, Inc.}
By /s/Robert W. Casey By /s/G. L. McTavish
Authorized Authorized
Robert W. Casey 08/18/95 G. L. McTavish 08/29/95
Name (Type or Print) Date Name (Type or Print) Date
23
<PAGE>
Supplement
Name and Address of Customer:
Comdata Network, Inc.
5301 Maryland Way
Brentwood, TN 37027
ISSC Address: IBM Branch Office Address:
Integrated Systems Solutions Corporation IBM Corporation
44 South Broadway 150 Fourth Avenue, North
White Plains, New York 10601 Nashville, TN 37219
<TABLE>
Term Commencement Date: May 1, 1995
Term End Date: April 30, 2005
Contract Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Annual Services Charge
Base Charge 9.920 18.624 17.040 17.040 17.040 17.040 17.040 17.040 17.040 17.040 5.680
($ in Millions)
Termination Charge 24.7 23.7 19.7 17.3 15.0 12.1 9.8 7.9 5.2 2.6 0.0
($ in Millions)
Enhancement Baseline 40,700 81,400 81,400 81,400 81,400 81,400 81,400 81,400 81,400 81,400 27,133
(FTE in hours)*
* An FTE defined as 1850 person hours per year.
</TABLE>
1
<PAGE>
Exhibit 1
Guaranty
THIS GUARANTY ("Guaranty"), dated August 2, 1995, is made by
COMDATA HOLDINGS CORPORATION, a Delaware corporation, having its
principal place of business at 5301 Maryland Way, Brentwood, TN
37027 ("Guarantor"), in favor of Integrated Systems Solution
Corporation, d/b/a ISSC, Inc. a Delaware corporation having its
principal place of business at 44 South Broadway, White Plains,
New York 10601 ("ISSC"). Capitalized terms used in this Guaranty
and not otherwise defined herein are used with the meanings set
forth in that certain Amended and Restated Agreement for Systems
Operations Services, of even date herewith, between ISSC and
Comdata Network, Inc. ("Comdata") (such agreement, as it may from
time to time be supplemented, modified and amended, being
referred to in this Guaranty as the "Agreement").
ISSC is entering into the Agreement with Comdata to provide
certain systems operations services to Comdata. Comdata is a
wholly-owned subsidiary of Guarantor. To induce ISSC to enter
into the Agreement with Comdata, Guarantor agrees as follows:
1. Guarantor absolutely and unconditionally guarantees the full
performance of all obligations of Comdata under the
Agreement, as such obligations may from time to time be
supplemented, modified, amended, renewed and extended, and
whether evidenced by new or additional documents
(collectively, the "Guaranteed Obligations").
2. All notices and other communications provided under this
Guaranty shall be in writing and (a) delivered by nationally
recognized express courier, (b) mailed by certified mail,
return receipt requested or (c) personally delivered, to
Guarantor or ISSC, as the case may be, at the following
address:
a. if to Guarantor:
Comdata Holdings Corporation
5301 Maryland Way
Brentwood, TN 37027
Attention: President
1
<PAGE>
b. if to ISSC:
Integrated Systems Solutions Corporation
44 South Braodway
White Plains, New York 10601
Attention: Vice President and General Counsel
or at any other address as may be designated by Guarantor or
ISSC, as the case may be, in a written notice sent to the
other in accordance with the Agreement. If any notice or
other communication is given by (i) nationally recognized
courier, it will be effective one day after delivery to such
courier, (ii) mail, it will be effective on the earlier of
receipt or the third day after deposit in the United States
mail with first-class postage prepaid, or (iii) personal
delivery, when delivered.
3. This Guaranty shall be binding on and insure to the benefit
of Guarantor and its respective successors and assigns.
4. This Guaranty shall be governed by, and construed and
enforced in accordance with, the laws of New York applicable
to agreements made and to be performed entirely within said
state.
"GUARANTOR"
COMDATA HOLDINGS CORPORATION
By: _______________________
George L. McTavish
Chairman and CEO
2
<PAGE>
Schedules to
Amended and Restated Agreement for Systems Operations Services
SCHEDULE A - Applications Software
SCHEDULE B Systems Software
SCHEDULE C - Comdata Machines
SCHEDULE D - ISSC Machines
SCHEDULE E - Support Services, Performance Standards and
Operational
Responsibilities
SCHEDULE F - Acquired Assets, Leases, Licenses and Contracts
SCHEDULE G - Disaster Recovery Services
SCHEDULE H - Transition Plan
SCHEDULE I - End User Locations
SCHEDULE J - ISSC Charges, Measures of Utilization and
Financial
Responsibilities
SCHEDULE K - Application Installation Standards
SCHEDULE L - Security Procedures
SCHEDULE M - DSM Help Desk
SCHEDULE N - Projects
SCHEDULE O - Affected Employees
SCHEDULE P - Maintenance Terms
SCHEDULE Q - Claims
SCHEDULE R - End User Machines
Subject to Maintenance
SCHEDULE S - Bill-of-Sale
SCHEDULE T - DSM Environment
SCHEDULE U - ISSC Machines Subject to Baseline
1
<PAGE>
Schedule A
Application Software
Vendor Description Location
Consumer Services Applications
ISSC Development Agent Commission Checks Brentwood TN
ISSC Development Credit Card Brentwood TN
ISSC Development Credit Collections Brentwood TN
Corporate Systems Applications
ISSC Development ACH Brentwood TN
ISSC Development Aging and Past Due Notices Brentwood TN
ISSC Development Alliance Rebate System Brentwood TN
ISSC Development Assorted PC Applications Brentwood TN
ISSC Development Accounting Systems Brentwood TN
ISSC Development Bank Reconciliation Brentwood TN
ISSC Development CDI Connect Time Processing Brentwood TN
ISSC Development CMO Commission Check System Brentwood TN
ISSC Development CTS Invoicing, Reporting, & Commissions Brentwood TN
ISSC Development Cash Applications Brentwood TN
ISSC Development Comdata Borrowing Balance Reporting Brentwood TN
ISSC Development Comdata Complete Brentwood TN
ISSC Development Comdata Corporation Services Brentwood TN
ISSC Development Credit Reporting Brentwood TN
ISSC Development Data Export to SUN Brentwood TN
ISSC Development Deposits Brentwood TN
ISSC Development Disaster Recovery Brentwood TN
ISSC Development Draft Processing Brentwood TN
ISSC Development Equipment Billing System Brentwood TN
ISSC Development Field Inventory Tracking Brentwood TN
ISSC Development Fixed Assets Brentwood TN
ISSC Development General Ledger Brentwood TN
ISSC Development Invoice Processing Brentwood TN
ISSC Development Loadmatcher Billing Brentwood TN
ISSC Development Lockbox Processing Brentwood TN
ISSC Development Order Routing Brentwood TN
ISSC Development Permit A/R Processing Brentwood TN
ISSC Development Production Control Brentwood TN
ISSC Development Revenue Reporting Brentwood TN
ISSC Development Sales Journal Brentwood TN
ISSC Development Service Center Processing Brentwood TN
1
<PAGE>
ISSC Development Settlement Processing Brentwood TN
ISSC Development Super Driver Invoicing System Brentwood TN
ISSC Development Telemar Processing Brentwood TN
ISSC Development Telephone Accounting System Brentwood TN
ISSC Development Traffic Analysis Brentwood TN
ISSC Development Willis Corroon Check Reconciliation Brentwood TN
Multiple Product Applications
ISSC Development Assorted PC Applications Brentwood TN
ISSC Development Autodial Brentwood TN
ISSC Development Card Embossing Brentwood TN
ISSC Development Carrier Dial In Brentwood TN
ISSC Development Credit Process Brentwood TN
ISSC Development Customer Maintenance Brentwood TN
ISSC Development Draft Printing Brentwood TN
ISSC Development Draft Process Brentwood TN
ISSC Development Information Transfer Brentwood TN
ISSC Development Order Process Brentwood TN
ISSC Development PC Alliance Workstation Brentwood TN
ISSC Development PC Downdisk Brentwood TN
ISSC Development PC Remote Brentwood TN
ISSC Development PC Voice Center Workstation Brentwood TN
ISSC Development Point of Sales Brentwood TN
ISSC Development LU 6.2/x.25 Communication Brentwood TN
ISSC Development POS Terminal Software Brentwood TN
ISSC Development Service Center Maintenance Brentwood TN
ISSC Development S. C. Relationship Management Brentwood TN
ISSC Development Voice Response Brentwood TN
Third Party Software
Info Management Association Telemar Brentwood TN
Lawson General Ledger/Accounts Payable Brentwood TN
Lawson Universe Brentwood TN
Lawson Fixed Assets Brentwood TN
Graphic Management Group\ GDCM-100 NW Library
Dunn Arthur Associates U.S. LAA Toll Pricer Brentwood TN
Dunn & Bradstreet Accounts Receivable Brentwood TN
2
<PAGE>
United Communications QTEL 9000 Brentwood TN
Microfocus Cobol Workbench Brentwood TN
Microfocus Host Compatibility Brentwood TN
Microfocus MF-370 Assembler Brentwood TN
Microfocus MF-370 Production Brentwood TN
Microfocus MF-AD /PC Brentwood TN
Microfocus ProxMVS Brentwood TN
Microfocus MF-CICS OS/2 Brentwood TN
Microfocus Cobol Workbench Brentwood TN
Transceiver Applications
ISSC Development Fuel Tax Carrollton TX
ISSC Development Permit Services Carrollton TX
Transportation Applications
ISSC Development Comm Manager Brentwood TN
ISSC Development CMO Brentwood TN
ISSC Development Credit Cards Brentwood TN
ISSC Development Express Cash Brentwood TN
ISSC Development Express Pay Brentwood TN
ISSC Development Express Codes Brentwood TN
ISSC Development Express Check Brentwood TN
ISSC Development Fuel Brentwood TN
ISSC Development Fuel Tax Brentwood TN
ISSC Development Loadmatcher Brentwood TN
ISSC Development Phone Brentwood TN
ISSC Development PC/Fuel Tax Brentwood TN
ISSC Development Q/Point to Point Brentwood TN
ISSC Development RapFax Brentwood TN
ISSC Development Transportation Reporting Brentwood TN
ISSC Development Transportation Special Project Brentwood TN
ISSC Development Tranz Brentwood TN
ISSC Development Truck Fax Brentwood TN
3
<PAGE>
Schedule B
Systems Software
Software Product Vendor Version Release
Main Frame System in LaVergne. TN
3270 Super Optimizer BMC Software 2 5
Abend-Aid/MVS/Radar Compuware 6 1
Abend-Aid/Batch Compuware 6 3
Abend-Aid/CICS Compuware 5 4
ACF/NCP IBM Corporation 4 3.1
ACF/SSP IBM Corporation 3 5
ACF/SSP/EP IBM Corporation 2 o
ACF/VTAM IBM Corporation 3 3
Answer Sterling Software
Assembler IBM Corporation 2 1
BTAM/SP IBM Corporation 1 1
CA-One MVS Computer Associates 5 0
CA-Eleven MVS Computer Associates 1 4
CA-Seven MVS Computer Associates 2 9
CA-Share-Option 5 Computer Associates 2 5.2
CA-90's Services Computer Associates 1 2
Cache Reporter IBM Corporation 1 4
CEMT From Batch MacKinney Systems 4 9
CICS IBM Corporation 2 1.2
CICS Message MacKinney Systems 4 2
CICS/OLFU MacKinney Systems 3 2
CICS/Show & Tell II MacKinney Systems 1 0
CICS /SPY MacKinney Systems 1 1
DF/DSS IBM Corporation 2 5
DF/HSM IBM Corporation 2 6
DFP IBM Corporation 3 1.1
DFSORT IBM Corporation 1 11.1
DITTO IBM Corporation 1 3
DSF IBM Corporation 1 13
DYL/280 11 MVS Sterling Software 3 5
Enlighten Software Professionals
EREP IBM Corporation 3 5
File-Aid/SPF/Batch/XE Compuware 7 1
GDDM IBM Corporation 2 3
GPARS IBM Corporation 1 2.1
GTF/PARS IBM Corporation 1 1.3
Info Management IBM Corporation 4 2
Info System IBM Corporation 4 2
ISPF IBM Corporation 3 5
ISPF/PDF IBM Corporation 3 5
Inspector-MVS-Reel Knowledgeware 5 0
ES2 IBM Corporation 2 2.3
Job Scan Diversified Software 6 1.B
1
<PAGE>
Kwik-Key MacKinney Systems
Listcat-Plus MacKinney Systems
Netview IBM Corporation 1 3
Net-Worker R. M. Graphic Management Systems 1 4
Omegamon II for MVS Candle 3
Omegamon II for CICS Candle 3
OS PL/I Compiler IBM Corporation 2 3.1
OS/VS Cobol IBM Corporation 1 2.4
OS/VS2 IBM Corporation 3 8
PC File Xsfer IBM Corporation 1 1.1
Pinpoint-MVS-Reel Knowledgeware 5 0
PL1 to Cobol Conversion Business Information Systems
RACF IBM Corporation 1 9
Radar Compuware 4 3.1
Recoder Knowledgeware 5 0
RMF IBM Corporation 3 5.1
RPG/II IBM Corporation 1 1
SF IBM Corporation 1 2
ivice Drct IBM Corporation 4 0
SLR IBM Corporation 3 3
SMP/E IBM Corporation 1 8
Supertracs/Combo Sterling Software 4 3.1
Supertracs/ISPF Sterling Software
Sysview (FAQS) Legent Corporation 4 2
The Monitor for CICS Landmark Systems 8 2
TMF-Auditor/SQL USA Software
TSO/E IBM Corporation 2 1
VPS IBM Corporation 6 2
VS Cobol II IBM Corporation 1 4
VTAM Printer Support System Levi, Ray & Shoup, Inc.
X.25 NPSI IBM Corporation 2 0
Xpediter/CICS/Assembler/CICS/As Compuware 6 6
Expediter/TSO/Assembler Compuware 5 3
Tandem System in Carrollton, TX
Exchange Remote Job Entry Tandem
EM3270 Access Method Tandem
X25AM X.25 Access Method Tandem
AM3270 Access Method Tandem
TR3271 Access Method Tandem
AM6520 Access Method Tandem
uardian 90XF Tandem
P 6100 Tandem
Measure Upgrade Tandem
2
<PAGE>
Nonstop SQL (Qty 10) Tandem
Netbatch Plus Tandem
Cobol 85 Tandem
IXF-Host Tandem
Safeguard Tandem
Enlighten Software Professionals
Control Source/Library System Network Concepts
Jupiter System in Brentwood, TN
Operating System Jupiter 3 7
Bisync Suite Jupiter
PBX Session Manager Jupiter
Voice Response System in Brentwood, TN
E-Maintenance Syntellect
Gateway Syntellect
onitor Syntellect
AS-4OO in Brentwood, TN
5738 AS/400 Application Development IBM Credit Corporation 2 3
5738 AS/400 PC Support IBM Credit Corporation 2 3
3738 AS/400 Performance Tools IBM Credit Corporation 2 3
5738 AS/400 Query IBM Credit Corporation 2 3
5738 AS/400 S/38 Utilities IBM Credit Corporation 2 3
5738 Operating System 1400 IBM Credit Corporation 2 3
5738 RPG/400 IBM Credit Corporation 2 3
Open Connect/FTP Clients Open Connect Systems 2 2
Open Connect/FTP Servers Open Connect Systems 2 2
AS/400 Rumba/400 for Windows & OS/ IBM Credit Corporation 2 3
R/S 6000 in Brentwood, TN
AIX IBM Credit Corporation 3 2.5
AIX Windows Environment IBM Credit Corporation 1 2.3
AIX Xstation Manager IBM Credit Corporation 1 4.1
CLEO RJT Software IBM Credit Corporation 3
AIX 6000 Performance Management IBM Credit Corporation 1 3/94.231
Voice Mail in Brentwood, TN
all Processing Exchange Dytel 5 1
3
<PAGE>
Telecom Equipment in Brentwood, TN
Definity AT&T 3 2
R2V4 AT&T 2 2
UNIX Operating System AT&T 3 2.1
Call Management System AT&T
Call Management System AT&T
CMS AT&T 2.3.1 1.3
Telecom Equipment in Avon, CT
R1V3 AT&T 2 2
Call Accounting System AT&T 300 2.1
Telecom Equipment in Cincinnati, OH
R1V3 AT&T 2 2
Call Accounting System AT&T 300 2.1
Telecom Equipment in Dallas, TX
R2V4 AT&T 2 1
UNIX Operating System AT&T 3 1
Call Management System AT&T 2.28 1.1
4
<PAGE>
Schedule C
Comdata Machines
Description Model S/N #
Andatco MICROP 211 15MQ1086402
AT&T 386 with Monitor
AT&T 572 Printer 406152983
AT&T 715 BCS Terminal 2412824
AT&T G3R PBX
AT&T Switchboard Console 302A1 94DR10601570
AT&T UPS for CMS
Codaram 23 inch cabinet
Drive 2113207042
Fujitsu Tape Drive M248581 JU220
Motorola CSU/DSU FT100S
Motorola UDS AID Modems 212
Motorola UDS Modem Racks RM16
PDM Rack with Modems
Racal Host Security Module
SMC Elite 108T Concentrator 3608TB
Sun Monitor 3651-1-1286-01
Sun Workstation 600-3295-1
1
<PAGE>
Schedule C-1
Comdata Licensed Software
Software Product Vendor
R2V4 AT&T
Call Management System AT&T
Definity AT&T
R2V4 AT&T
UNIX Operating System AT&T
CMS AT&T
Call Management System AT&T
Call Accounting System AT&T
UNIX Operating System AT&T
Call Accounting System AT&T
R1V3 AT&T
R1V3 AT&T
Call Management System AT&T
Accts Rec: E MVS Dunn & Bradstreet
The Monitor for CICS Landmark Systems
Fixed Asset System Lawson Associates
Universe Lawson Associates
General Ledger, Prt. Writer Lawson Associates
Accounts Payable Lawson Associates
Sysview (FAQS) Legent Corporation
Control Source/Library System Network Concepts
Open Connect/FTP Clients Open Connect Systems
Open Connect/FTP Server Open Connect Systems
Enlighten Software Professionals
Enlighten Software Professionals
Supertracs/ISPF Sterling Software
Answer Sterling Software
DYL/280 II MVS Sterling Software
Supertracs/Combo Sterling Software
E-Maintenance Syntellect
Gateway Syntellect
Monitor Syntellect
Q-Tel 900 United Communications
TMF-Auditor/SQL Group USA Software
1
<PAGE>
Schedule D
ISSC Machines
DESCRIPTION MAKE MODEL SERIAL #
14.4 Modem Intel 1114 212415
15 Local Area Data Sets Micom 400LD
2 Cabinets Memotec A352382
2 Cabinets Memotec A352381
3270 CPU IBM 5271 107951
360CE Laptop IBM 2620 HBZ35
360CE Laptop IBM 2620 GZP75
360CE Laptop IBM 2620 GZT42
360CE Laptop IBM 2620 HCG62
360CE Laptop IBM 2620 GZR26
360CE Laptop IBM 2620 HCF71
360CE Laptop IBM 2620 GZV11
360CE Laptop IBM 2620 HCF84
360CE Laptop IBM 2620 GZR50
360CE Laptop IBM 2620 GZP51
5 DBU's AT&T 839 FILI
8 Local Area Data Sets Micom 400LD
8 Local Area Data Sets Micom 400LD
8 Modems AT&T MPDM
8 Port Modem Assembly Microcom SXCH 1103380273
3 Port Modem Rack with mode Microcom SX/CH 404585
AS400 Disk Drive IBM 9336 16654
AS400 Disk Drive IBM 9336 34632
AS400 RACK IBM 9309 B3730
Async Multiplexors Teleglobe DM-2200 D930413
Async Multiplexors Teleglobe MC-2200 D930359
Async Multiplexors Teleglobe MC-2200 D930361
Async Multiplexors Teleglobe DM-2200 D930412
Async Multiplexors Teleglobe DM-2200 D930414
AT&T Monitor on Feline AT&T 33141
Auto Attdt/Voice Mail Dytel 9600M 167AC
Auto Attd/Voice Mail Dytel 9600M 196AC
Autodial CPU Panasonic Business Partner
Autodial CPU IBM PC
Autodial CPU Clone
Autodial CPU IBM PC
Autodial CPU IBM PC
Autodial CPU IBM PC
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic FX600F1 6GCKS03255
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Clone
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU IBM PC
Autodial CPU Panasonic Business Partner
Autodial CPU CLONE
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU IBM PC
Autodial CPU 18M PC
Autodial CPU Panasonic Business Partner
1
<PAGE>
Autodial CPU IBM PC
Autodial CPU IBM PC
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU IBM PC
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU IBM PC
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Clone
Autodial CPU 18M PC
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial CPU Panasonic Business Partner
Autodial Modem Okidata Okitel 1200 9080326A
Autodial Modem Okidata Okitel 1200 9080750A
Autodial Modem Okidata Okitel 1200 9060202A
Autodial Modem Okidata Okitel 1200 90616598
Autodial Modem Okidata Okitel 1200 9061662A
Autodial Modem Okidata Okitel 1200 11721A
Autodial Modem Okidata Okitel t200 9090386A
Autodial Modem Okidata Okitel 1200 906t115A
Autodial Modem Okidata Okitel 1200 9061186A
Autodial Modem Okidata Okitel 1200 9061066A
Autodial Modem Okidata Okitel 1200 9061117A
Autodial Modem Okidata Okitel 1200 9061660A
Autodial Modem Okidata Okitel 1200 9061112A
Autodial Modem Okidata Okitel 1200 9061064A
Autodial Modem Okidata Okitel 1200 9090387A
Autodial Modem Okidata Okitel 1200 909024EA
Autodial Modem Okidata Okitel 1200 9061189A
Autodial Modem Okidata Okitel 1200 9080301A
Autodial Modem Okidata Okitel 1200 9080689A
Autodial Modem Okidata Okitel 1200 9070072A
Autodial Modem Okidata Okitel 1D0 9061658A
Autodial Modem Okidata Okitel 1200 9070064A
Autodial Modem Okidata Okitel 1200 9061185A
Autodial Modem Okidata Okitel 1200 9061663A
Autodial Modem Okidata Okitel 1200 9090243A
Autodial Modem Okidata Okitel 1200 9070190A
Autodial Modem Okidata Okitel 1200 9061114A
Autodial Modem Okidata Okitel 1200 9061653A
2
<PAGE>
Autodial Modem Okidata Okitel 1200 9061116A
Autodial Modem Okidata Okitel 1200 9090244A
Autodial Modem Okidata Okitel 1200 9090246A
Autodial Modem Okidata Okitel 1200 9080303A
Autodial Modem Okidata Okitel 1200 9080681A
Autodial Modem Okidata Okitel 1200 9061011A
Autodial Modem Okidata Okitel 1200 9091385A
Autodial Modem Okidata Okitel 1200 9061187A
Autodial Modem Okidata Okitel 1200 9090241A
Autodial Modem Okidata Okitel 1200 9061068A
Autodial Modem Okidata Okitel 1200 9061205A
Autodial Modem Okidata Okitel 1200 909024lA
Autodial Modem Okidata Okitel 1200 11722A
Autodial Modem Okidata Okitel 1200 9061065A
Autodial Modem Okidata Okitel 1200 9061188A
Autodial Modem Okidata Okitel 1200 9080566A
Autodial Modem Okidata Okitel 1200 9061661A
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
3
<PAGE>
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor IBM Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodial Monitor Panasonic Monochrome
Autodialer Racal Vadic
Autodialer Racal Vadic
Autodialer Racal Vadic
Autodialer Racal Vadic
Aux Cabinet AT&T J543886N 13534
Aux Cabinet AT&T J58886N 68306
Bridge Retix 4810 0446D1
Bridge Retix 4810 04411E
Cabinet AT&T 25545
Card Expansion Unit IBM 4577 18679
Card Expansion Unit IBM 5030 35094
rd Read Punch IBM 1442 40958
rd Sorter IBM 83 unknown
Cartridge Tape Drives IBM 3480 62805
Cartridge Tape Drives IBM 3480 65439
Cassette Drive IBM 7207 46581
CMS Console AT&T 4425 614259424L
CMS System 11 AT&T XM140SS 9950126
COAX Mux IBM 3299 4210
COAX Mux IBM 3299 52863
Communication Controller IBM 3725 1636
Communication Controller IBM 3725 697
Communication Equipment OTC 850XL 78938
Communication Equipment Memotec 224 Series II
Communication Equipment Memotec MP9000 1182
Communication Equipment Memotec MP9000 1180
Communication Equipment Memotec MC508 AB1023
Communication Equipment Memotec DM 456 A81728
Communication Switch IBM 3728 7064
Communication Switch IBM 3728 7063
Communications Controller IBM 3274 15962
Communications Controller IBM 3274 G3242
Communications Controller IBM 3274 F1282
Communications Controller IBM 3274 G6855
Communications Controller IBM 3274 87088
Communications Controller IBM 3274 G3243
Communications Controller IBM 3274 F4513
Communications Controller IBM 3274 G3245
Communications Controller IBM 3174 N7791
Communications Processor Jupiter NPSD614/A W00151
Communications Processor Jupiter NPSS608/A W00118
Communications Processor Jupiter INlPSD614/A W00216
Communications Processor Jupiter NPS9614/A W00130
Communications Processor Jupiter FJPS9614/A W00528
Communications Processor Jupiter NPSS614/A W00129
4
<PAGE>
Communications Switch IBM 3728 7172
Communications Switch IBM 3728 7115
Communications Switch IBM 3728 7114
Communications Stitch IBM 3728 7116
Comm. Controller IBM 3726 580
Comm. Controller IBM 3726 198
Controller IBM 3725 7925
Controller IBM 3274 E4008
Controller Telex 2742C 10433
Controller IBM 3274 H8113
Controller IBM 3274 E4007
Controller IBM 3274 34724
Controller IBM 3274 E3286
Controller IBM 3274 D4217
Controller IBM 3274 E4006
Controller IBM 3274 H5210
Controller IBM 3274 F0621
Controller IBM 3274 G8127
Controller IBM 5394 8510
Controller IBM 3274 F10818
Controller IBM 3274 H4349
Controller IBM 3274 E6315
Controller IBM 3725 7393
Controller IBM 3274 F3750
Controller IBM 3274 F2397
Controller IBM 3274 E0408
Controller IBM 3274 90129
Controller IBM 3274 84466
Controller IBM 3274 17768
Controller Telex 274C2 10431
Controller Telex 2742C 10430
Controller IBM 3274 F0936
Controller IBM 3274 90940
Controller IBM 3274 D8801
CPU IMS 486DX50 DX501932
CPU IMS 486DX2/66 2125M
CPU IMS 486DX33 486DX331701
CPU IMS 486DX50 DX214331
CPU AT&T WGS6286 89570900940
CPU IMS 486DX50 DX50702
CPU IMS 486DX2/66 2126M
CPU IMS 486DX33 486DX331702
CPU IMS 486DX50 DX214343
CPU IMS 486DX50 48650071052
CPU IMS 486DX50 4865007125
CPU AT&T 6286 6413600
CPU IMS 486DX50 4865007122
CPU IMS 486DX2/66 2123M
CPU AT&T WGS6386 895708005977
CPU IMS 386 SM256169212
CPU IMS 486SX33 11178
CPU IMS 486DXS DX214333
CPU IMS 486DX50 4865007123
CPU IMS 486DX50 DX501935
CPU IMS 486DXS0 DX50934
CPU IMS 486DX50 DX501932
CPU AT&T WGS6286 6450506
CPU IMS 486DX50 4865007095
CPU IMS 486DX33 486DX3311
CPU IMS 486DX50 DX501931
CPU MacIntosh IICI F2188CMF9803LL/A
CPU IMS 486DX50 4865007105
CPU IMS 486DX33 11179
CPU IMS 486DX50 48650070951
CPU IMS 486DXS0 DX50931
CPU AT&T WGS6286 6441947
CPU IMS 486DX2/66 2437M
CPU MacIntosh IICI F10342A3740
CPU IMS 486DX2/66 2127M
CPU IMS 486DX50 4865007124
CPU DSH 486DX/33 1246
CPU IMS 4436SX25 486250613
CPU IMS 486DX2/66 2505S
CPU IMS 486DX2/66 2128M
CPU AT&T WGS6286 6424742
CPU AT&T WGS62-XP1330 6444730
CPU IMS 486DX33 486DX331703
CPU AT&T PC7300 370429045
CPU IMS 486DX50 DX501930
CPU IMS 486DX50 486500712
CPU IBM S1960 35160
CPU IMS 486DX50 DX50933
CPU IMS 486DX50 DX50701
CPU IMS 486DX246 486660713
CPU IMS 386SX 114838
CPU IMS 486DX50 DX214332
CPU IMS 486DX50 DX50701011
CPU Computrend 38S33 AM9480-0326
CPU AT&T WGS6286 6450304
CPU AST BRAVO 5 TWA1066749
CPU IMS 486DX50 214344
CPU UDS V.3225 59044
CPU Computrend 386 PC 9242-0725
CPU IMS 486DX50 7865007126
CPU IMS 486DX50 4865007121
CPU IMS 486DX33 486DX331704
CPU FastData 486SX25 33920
CPU FastData 486SX25 339211
CPU AST Bravo 286 TWA1090453
CPU AT&T 6286WGS 6426763
CPU FastData 486XC25 337767
CPU CCDI 926212R
CPU FastData 486SX25 337765
CPU CCDI 92621-SH
CPU CCDI 926214H
CPU IBM 5160 5107108
CPU Wyse 1079012
CPU FastData 486SX25 337768
CPU FastData 486SX25 339208
CPU AST Bravo 286 166676
CPU IBM PS/2 62959
CPU IMS 486DX2/66 2436M
CPU IMS 486DX2/66 25095
CPU Leading Edge D3SC 14011203213
CPU Vanguard 386SX25 9210009800
CPU IBM 8580 8020579
CPU FastData 486SX25 337766
CPU ICAS 486DX50 214345
CPU AT&T 286 6443811
CPU (Feline) AT&T 6286 6426598
CPU-CMS AT&T 4425 614259519L
CPU-CMS AT&T 3B2-600 880C05952417
CPU-CMS AT&T 3B2-600 880C0295
CPU-CMS) Black Black CSU/DSU MS 337A4785
CTX Monitor CTX 6468 42306261
Data Set Ark EASI1B 3764178
Data Set Codex LS1 9600 63109
Datascope Digilog 320 380901D
Digital Switch Panel Spectron
Disk Mux DSU Eazy TM421187A
Disk Drive IBM 9335 B5D09
Disk Drive IBM 9335 B4E3B
Disk Drive IBM 9335 C4ERDE
Disk Drive IBM 9335 B5ECC
Disk Drive IBM 9335 D382F
Disk Drive IBM 9335 83431
Disk Drive Rack IBM 9309 23478
Disk Drive Rack IBM 9309 82674
Disk Drive Rack IBM 9309 23628
Disk Drives IBM 9335 84243
Disk Drives IBM 9335 A2CF6
Diskette Drive IBM 9331 15353
DS1 Test Set Plantronics Wilcom T30801A 1743
Duplicated Common Control C AT&T J58886K 13521
Ext Scsi Drive Micropolis 1.7 GB 4011229075
Ext Tape Drive Connor 2 GB LBA10440
Fax Machine Murata F-50 F5Y01200021031L
Fax Machine Okifax OKIFAX 800 130898
Fax Machine Okifax 800 130903
G2 CMS Workstation AT&T 1204990
Generators PILLER GENERATOR 1136358
Generators PILLER PARALLEL UNIT
Generators PILLER GENERATOR 1182295
HDMS MICROCOM HSMS 445045
HDMS MICROCOM HDMS 444931
Info Window IBM 3476 19345
lk Jet Printer HP 550C SG39N260GD
Inspector MCPU Graham Magnetics 650000R2 4105
Laptop IMS 386SX Laptop D0002403
Laptop P.C. Zenith ZFL-181 8351118602
Laptop P.C. Toshiba T1000 11832590
Laser Printer H.P. LaserJet III 3104JD4268
Laser Printer H.P. LaserJet III 3105J32921
LDDS Black Box LD485S
LDDS Black Box ME711B 923P5032
LDDS Black Box ME711B 915P1772
MAU IBM 8228 WK099
MAU IBM 8228 XT367
MAU IBM 8228 WK095
MAU IBM 8228 87BDV
MAU IBM 8228 468DW
Microfilm Reader Northwest 575 H046849
Modem IBM 5853 24843
Modem Multitech V.32 2024189
Modem IBM 5853 75591
Modem IBM 5853 24836
Modem IBM 5853 24844
Modem IBM 5853 24839
Modem Microcom AX/2400C 1303161468
Modem IBM 5853 24762
Modem Everex 24E 0945A-00
Modem AT&T 4024 89MG10015230
Modem UDS V.3225 44568
Modem IBM 5853 24835
Modem IBM 5853 9506
Modem MultiTech V.32 2031278
Modem AST 2X2400 393
Modem Okidata CLP296 OO90084
Modem IBM 5853 24756
Modem UDS 32X 7455
Modem IBM 5853 24841
Modem IBM 5866 93871
Modem Black Box SW010B 613016996
Modem IBM 5853 24840
Modem UDS V.3225 5034
Modem MultiTech MT1432 3203726
Modem IBM 5853 24838
Modem IBM 5853 24761
Modem Okidata CLP296 90119
Modem IBM 5853 24761
Modem UDS 9648T OO8690
Modem AST 2X2400 US000495
Modem IBM 5855 24842
Modem UDS V.3225 36019
Modem IBM 5853 24837
Modem AST 2X2400 US000619
Modem Okidata CLP296 90101
Modem Microcom AX-2400C 14030-28420
Modem 2400 Microcom AX2400/C D31309124
Modem 2400 Microcom AX2400/C B313131213
Modem Cabinet ROCKWELL G36800/A
Modem Eliminators Black Box RM700A 037P1771
Modem Eliminators Black Box RM700A 13401112
Modem Eliminators Black Box RM7008 040P2128
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo VDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem Rack with 16 V.32 Mo UDS RM16M
Modem-CMS AT&T 890C01950710
Modem-CMS AT&T 890C02950224
Module Control Cabinet AT&T J58886B 33384
Module Control Cabinet AT&T J58886B 68308
Module Control Cabinet AT&T J58886B 13528
Module Control Cabinet AT&T J58886B 68309
Module Control Cabinet AT&T J58886B 68311
Module Control Cabinet AT&T J58886B 13532
Module Control Cabinet AT&T J58886B 68307
Module Control Cabinet AT&T J58886B 68310
Module Control Cabinet AT&T J58886B 13530
Monitor IBM 8512 120828
Monitor CTX 6468 42306729
Monitor CTX 6468 35101243
Monitor CTX 1461 32001622
Monitor CTX SVGA 6468ES A10-42401996
Monitor Panasonic Business Partner
Monitor VIEWSONIC 7031 1623486294
Monitor CTX SVGA 6468ES A1042402071
Monitor CTX 5486 249009343
Monitor CTX 6468 42003727
Monitor Samsung 4571 504010
Monitor CTX 1451 402051
Monitor CTX SVGA 6468ES A10-42402011
Monitor CTX 1452 40806612
Monitor AST VGA C1492
Monitor CTX 1451 40806612
Monitor AT&T 329M 888610007109
Monitor Mitak SVGA N-30109634
Monitor AST
Monitor Tatung monochrome 90700171
Monitor CTX 1451 4050345
Monitor AST CVGA 14771
Monitor AT&T
Monitor Leading Edge CMON.28 501012018617
Monitor IBM PC
Monitor IBM 5153 394699
Monitor ADC MM411 1450038065
Monitor CTX SVGA COLOR A40-24702129
Monitor CTX SVGA COLOR A40-31203863
Monitor CTX CVP-5468A K40-24900042
Monitor CTX SVGA COLOR A40-30201294
Monitor MacIntosh
Monitor CTX CVP-5468A K40-24900093
Monitor CTX SVGA COLOR A40-31201268
Monitor Viewsonic 6E 3720800129
Monitor Magnavox Professional
Monitor CTX SVGA COLOR A70-23100792
Monitor AT&T Monochrome 885408039197
Monitor AT&T CRT 313 1795023
Monitor CTX SVGA COLOR A40-31203958
Monitor CTX CVP-5468A K40-24900007
Monitor CTX SVGA 6468ES A10-42402053
Monitor AT&T Monochrome 88547031115
Monitor CTX CVP-5468A A40-3023285
Monitor CTX SVGA COLOR A40-31203855
Monitor CTX SVGA COLOR A40-31405011
Monitor Viewsonic 7031 1620156510
Monitor CTX SVGA COLOR A70-S3100638
Monitor CTX SVGA COLOR A40-31404983
Monitor AT&T
Monitor CTX SVGA COLOR A70-23100528
Monitor CTX SVGA COLOR A40-31203878
Monitor CTX SVGA COLOR A40-31203879
Monitor CTX CVP-5468A K40-24900110
Monitor Arcus CM-1402A 4310310088
Monitor AT&T
Monitor AT&T WGS6286 6424742
Monitor AT&T Monochrome 898610029645
Monitor CTX SVGA COLOR A40-31203106
Monitor CTX SVGA COLOR A40-23400727
Monitor CTX SVGA COLOR a40-24702128
Monitor CTX CVP-5468A A40-30601131
Monitor CTX SVGA COLOR A40-31101227
Monitor IBM 5272 F7634
Monitor CTX SVGA COLOR A40-31101119
Monitor CTX SVGA COLOR A40-31404955
Monitor CTX SVGA COLOR A40-23100614
Monitor Viewsonic 6E 1814020715
Monitor CTX CVP-5468A A40-30201275
Monitor AST 0024UIC1545
Monitor CTX 1451 4050338
Monitor CTX 1451 40401033
Monitor CTX CVP-5468A A40-30601146
Monitor Viewsonic 7031 1620156638
Monitor Panasonic Business Partner
Monitor CTX SVGA COLOR A40-31203885
Monitor CTX SVGA COLOR A40-25302334
Monitor IBM 5272 A1966
Monitor CTX SVGA COLOR A40-30600652
Monitor Premio Premio 96460168
Monitor AT&T CRT 314 885402005606
Monitor CTX CVP-5468A A40-30203245
Monitor AT&T
Monitor AT&T CRT 314 885402008286
Monitor CTX CVP-5468A K40-24900006
Monitor CTX SVGA COLOR A40-25001692
Monitor CTX SVGA COLOR A40-30201303
Monitor CTX CVP-5468A K40-24900134
Monitor CTX 1451 40401049
Monitor CTX 1451 3470556
Monitor CTX SVGA 41960118
Monitor Panasonic Business Partner
Monitor for Remote Print Arcus CM-1042 4310310087
Multi Port Spooler II Black Box P1523 9051856
Multiplexor IBM 3299 C8933
Multiplexor IBM 3299 C8874
Multiplexor IBM 3299 C2715
Multiplexor IBM 3299 C9923
Multiplexor IBM 3299 C8916
Multiplexor IBM 3299 C8993
Multiplexor IBM 3299 C0421
Multiplexor IBM 3299 C2176
Multiplexor IBM 3299 C8929
Multi-Protocol Intellegent Hub IBM 8250 93478
NEC Digital DS3 Multiplexor RC-28D 2345
Notebook Computer Avanti 25 103799
Notebook Computer Avanti 25 103779
Notebook Computer CTX EzBOOK 87795
Overhead Projector 3M 910 918441
PCM-CIA Token Ring Card IBM 9339 10762
Plazma screen IBM 3290 AT795
Plazma screen IBM 3290 A7783
Plotter HP 7475A 2325A75918
Plotter IBM 6180 A6273
Port Cabinet AT&T J58886C 68313
Port Cabinet AT&T J58886C 13533
Port Cabinet AT&T J58886C 68317
Port Cabinet AT&T J58886C 33386
Port Cabinet AT&T J58886C 68312
Port Cabinet AT&T J58886C 68315
Port Cabinet AT&T J58886C 13529
Port Cabinet AT&T J58886C 13531
Port Cabinet AT&T J58886C 68318
Port Cabinet AT&T J58886C 25543
Port Cabinet AT&T J58886C 25544
Port Cabinet AT&T J58886C 683t4
Port Cabinet AT&T J58886C 68316
Power Display 17 IBM 3818 12230
Power Display 17 IBM 3818 1410
Power Dist Unit Controlled Power 72C8DLX7SSD D2035990
Power Dist Unit Controlled Power 72C8DLX125SD D10041990
Printer Okidata m1182plus 812a0099092
Printer Okidata GE525OU 901A0100269
Printer Panasonic KXP10911 7KKALH83608
Printer Okidata GE5251B 504A0042040
Printer Hewlett Packard LaserJet III 3001A36328
Printer Okidata GE5250U 008A1146340
Printer Okidata GES2E0U 904A0115897
Printer IBM 6262 12562
Printer Panasonic KXP1091 6EKACU60363
Printer Okidata GE5250U 006A1132525
Printer NEC Pinwriter P6 580297732
Printer OMS LPP-410-1 2210
Printer Okidata GE5250B 706B03759125
Printer Okidata GE5250U 904A1016057
Printer Okidata GE5250 907A1039300
Printer IBM 4201 51472
Printer Okidata GE5250U 902A1001243
Printer Panasonic KX-P10911 7KKALH82773
Printer Epson LQ810 OA50205661
Printer Epson FX1050 OE10072002
Printer IBM PC Graphics 96542
Printer Okidata GE5250U 911A1080148
Printer Okidata GE5250B 812B0502092
Printer NEC P6 580264939NY
Printer IBM 6262 12563
Printer Epson LX-810 P80SA OA50205636
Printer Okidata 182 115899
Printer Panasonic KX-P4410 LASER 2LMBRK56957
printer Okidata GE52500 010A1187163
Printer Okidata GES250B 706B0379134
Printer IBM Pro Printer 3478438
Printer Okidata GE5250U 101A1216563
Printer Okidata GE5250U 101A1213595
Printer Okidata GE5250U 909A1062377
Printer IBM 4201 35636
Printer Okidata 5250 1025615
Printer Epson LQ810 OA50205655
Printer Okidata 182 1039120
Printer NEC Pinwriter P6 580297691
Printer Okidata GE5250U 911A1080612
Printer Okidata GE5250U 901A0100281
Printer IBM 3287 H0987
Printer QMS PS810 2357
Printer OKIDATA 182 115897
Printer IBM 3812 51946
Printer IBM 5533 10775
Printer IBM Proprinter 44614
Printer Star NP10 270070310212
Printer Okidata GES250U 904A0115908
Printer Epson LQ850 0F21000830
Printer IBM 3820 966
Printer Okidata 182 1156346
Printer 18M 4029030 D0277
Printer Okidata 182 1062387
Printer IBM 4224 34741
Processor IBM 9406 28135
Protocol Converter Vendata Resolver VIII 1276
Protocol Converter IBM 5208 11826
Protocol Converter IBM 5208 12394
Protocol Converter IBM 3708 7280
Rapfax CPU AT&T Monochrome
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T Monochrome
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T WGS6 286 6450490
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS 6425828
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax CPU AT&T 6286 WGS
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Rapfax Monitor AT&T Monochrome
Remote Print PC DSH RM\100 1245
Risc 6000 IBM 7013 39433
SCSI Dataswitch Dataswitch DDS1022 1259
Series 8 Multiple Modem Syste AJ M8 3073
Shredder DESTROYIT 2206
S rs Black Box TL604 N/A
Stat 24 MUX Black Black Stat 24
Stat 24 MUX Black Black Stat 24
Stat 24 MUX Black Black Stat 24
SVGA Monitor CTX 6468 43704096
SVGA Monitor CTX 1451 44200849
SVGA Monitor CTX 6468 42309554
SVGA Monitor CTX 1451 44201208
SVGA Monitor C5X 1451 44201204
Switch Sys 75 AT&T SD-66983-01 10000230540
Sync Multiplexors Teleglobe MC508 C930054
Sync Multiplexors Teleglobe MC508 C930052
System 85 - R2V5 AT&T Generic II 5683190
S/1 Cabinet #10 IBM 4997 22538
S/1 Cabinet #2 IBM 4997 39522
S/1 Cabinet #3 IBM 4997 47248
S/1 Cabinet #4 IBM 4997 38812
S/1 Cabinet #5 IBM 4997 31890
S/1 Cabinet #6 IBM 4997 none
S/1 Cabinet #7 IBM 4997 32833
S/1 Cabinet #8 IBM 4997 20857
Tape Control Unit IBM 3480 19067
Tape Drive Colorado Mem Trakker 250 50174274
Tape Drive Cypher 995 C900050975
Tape Drive Colorado Mem Trakker 250 50174267
Tape Drive IBM 3422 A6620
Tape Drive (Cart) IBM 3480 64494
Tape Drive (Cart) IBM 3480 64221
Tape Unit IBM 3420 M1974
Tape Unit IBM 3420 72517
Tape Unit IBM 3420 M5954
Terminal IBM WY-50 20557
Terminal Memorex-TElex 1192F 99494
Terminal HP 700-43 3041A06695
Terminal IBM 3197 EP390
Terminal Lear Seigler ADM-31 411229
Terminal Wyse WY-50 1161860
Terminal Televideo 905 22A-A88112979E
Terminal IBM 3180 EZ287
Terminal HP 700-43 3101A07561
Terminal IBM 3727 A5747
Terminal IBM 3191 W5164
Terminal IBM 3191 W5211
Terminal IBM 3197 EP399
Terminal IBM 3205 1591
Terminal IBM 3178 GW816
Terminal Wyse 1055821
Terminal IBM 3191 W5150
Terminal DIGITAL VT220 TA733L0255
Terminal Console Wyse WY-50 10501543
Terminal Server Xylogics Annex 3 47306
Time Mulpxr Cabinet AT&T J58886F 13536
TMS/RMI Cabinet AT&T J58886F 68320
Transmission Test Set HP 4935A 2314A04999
Typewriter IBM Selectric II
Typewriter IBM 670X 50th Anniversary
UDS 801 UDS 801 A/C 7862
UDS Modem UDS V.3225 40055
UPS APC 600 B93060527671
UPS APC 600 B94104177550
UPS APC 600 B93060527635
V4 CMS Workstation AT&T 1204988
Videodisk Player Sony LDP-1450 813736
Videodisk Player Sony LDP-1450 813511
Voice Response Cabinet Syntellect Emperor 23465
Voice Response Cabinet Syntellect Emperor 23077
Voice Response Cabinet Syntellect Emperor 23636
Voice Response Cabinet Syntellect Emperor 22857
Voice Response Cabinet Syntellect Emperor 21886
Voice Response Cabinet Syntellect Emperor 22859
Voice Response Cabinet Syntellect Emperor 23025
Voice Response Unit Syntellect Premier 23378
Voice Response Unit Syntellect Premier 21830
Voice Response Unit Syntellect Premier 22794
Voice Response Unit Syntellect Premier 21642
Voice Response Unit Syntellect Premier 23261
Voice Response Unit Syntellect Premier 21988
Voice Response Unit Syntellect Premier 21615
Voice Response Unit Syntellect Premier 23798
Voice Response Unit Syntellect Premier 23144
Voice Response Unit Syntellect Premier 22978
Voice Response Unit Syntellect Premier 25004
Voice Response Unit Syntellect Premier 22446
Voice Response Unit Syntellect Premier 23386
Voice Response Unit Syntellect Premier 23264
Voice Response Unit Syntellect Premier 23145
Voice Response Unit Syntellect Premier 23137
Voice Response Unit Syntellect Premier 23142
Voice Response Unit Syntellect Premier 22070
Voice Response Unit Syntellect Premier 23092
Voice Response Unit Syntellect Premier 22549
Voice Response Unit Syntellect Premier 23173
Voice Response Unit Syntellect Premier 22792
Voice Response Unit Syntellect Premier 22936
Voice Response Unit Syntellect Premier 23824
Voice Response Unit Syntellect Premier 25220
Voice Response Unit Syntellect Premier 23146
Voice Response Unit Syntellect Premier 21983
Voice Response Unit Syntellect Premier 21796
Voice Response Unit Syntellect Premier 23807
Voice Response Unit Syntellect Premier 21401
Voice Response Unit Syntellect Premier 23826
Voice Response Unit Syntellect Premier 22791
Voice Response Unit Syntellect Premier 21637
Voice Response Unit Syntellect Premier 23718
Voice Response Unit Syntellect Premier 23174
Voice Response Unit Syntellect Premier 23263
Voice Response Unit Syntellect Premier 22732
Voice Response Unit Syntellect Premier 23269
XStation 140 IBM 7010 25117
Printer Okidata 5250 394494
Terminal AT&T 53D4102AA 901300903594
Digital Analyser Cook NT7M25AA G06-22-423
Printer Okidata 250U 1038790
MPDM AT&T SD-10327-01 4009625
Switch AT&T Sys 75 030-005-595-2
Monitor AT&T CRT314 885403011193
Modem AT&T MPDM SD1D32741
CPU AT&T 6300 170154
Monitor AT&T 56D 187102529L
Modem AT&T 2224CEO 91P058821786
CPU-CMS AT&T 3B2-400 860C10951221
Digital Announcer AT&T NT7M100AA G0916103
CPU-CAS AT&T 300 6446082
Modem AT&T 2192 89MG10007830
Digital Announcer AT&T 2680 G0917006
Digital Announcer AT&T 2680 G0916105
Switch Sys 75 AT&T SD66969-01
Printer Okidata ML182 1038785
Terminal Tandem 6526 AEU19
Printer Okidata 182 80280436541
Terminal Tandem 6526 ARR52
Terminal Tandem 6526 ABZ17
Printer Data Products LM 615 2926A07972
Printer Tandem 5516 2629A00953
Printer Tandem 5516 2629A01058
Terminal Tandem 6526 ABB65
printer HP Laserjet IV USBB107356
PC Dell 486SX25 2GR57
Laser Printer HP Laserjet III 3303J84130
Paper White Monitor CornerStone DP120 1696-D
PC Dell 486DX2-50 2CZDJ
Paper White Monitor CornerStone DP120 14719
Laser Printer HP Laserjet IV USBB108231
Laser Printer HP Laserjet III 304BA34500
Paper White Monitor CornerStone DP120 19377-D
Laser Printer HP Laserjet III 3034J84169
PC Dell 486DX2-50 2CZDG
Terminal Tandem 6526 AVM94
Terminal Tandem 6532 10153
PC Dell 486DX2-50 2CZ93
PC Dell 4B6DX2-50 2CZCX
PC Dell 486DX2-50 2CZCT
PC Dell 486DX2-50 2CZD7
PC Dell 486DX2-50 2GR55
PC Dell 486DX2-50 2CZ8M
PC Dell 486DX2-50 2CZ98
PC Dell 486DX2-50 2CZ9X
PC Dell 486DX2-50 2CZ91
Printer Tandem LA34-DA 83990
PC Dell 486DX2-50 2CZ9N
PC Dell 486/66 3444T
PC Dell 486/66 340SN
PC Dell 486/66 2CXNR
PC Dell 486/66 2CY13
Terminal Tandem 6526 A72883
Terminal Tandem 6531 24737H139
Paper White Monitor CornerStone DP120 1582-D
K1000 CPU w/32MB Tandem H12ZTT
Paper White Monitor CornerStone DP120 14701
Disk Drive Tandem 4240 TJ47110
PC Dell 486SX25 2GR63
Paper White Monitor CornerStone DP120 1701-D
CLX Tape Cabinet Tandem
Tape Drive Tandem 5107 3008A02025
CLX Cabinet 1 Tandem
K1000 CPU w/32MB Tandem H12ZUJ
Disk Drive Tandem 4250 SR708515
Disk Drive Tandem 4240 TJ29334
PC Dell 486SX25 2GRSV
Disk Drive Tandem 4230 S08KEZ
MFC Controller Tandem 3681 9122
MFC Controller Tandem 3681 8691
Ethernet Controller Tandem 3612 H0S4NN
3606 Controller Tandem 3606 4702
PC Dell 486DX2-50 2CZDC
3606 Controller Tandem 3606 1424
Paper White Monitor CornerStone DP120 1579-D
PC Dell 486SX25 2GR5X
Paper White Monitor CornerStone DP120 16241-D
PC Dell 486SX25 2CBR5D
PC Dell 486SX25 2GR61
Paper White Monitor CornerStone DP120 14786-D
PC Dell 486SX25 2GR59
Paper White Monitor CornerStone DP120 14717
PC Dell 486SX25 2GR5Z
Paper White Monitor CornerStone DP120 19372-D
PC Dell 486SX25 2GRSC
Paper White Monitor CornerStone DP120 15101-D
Paper White Monitor CornerStone DP120 19373-D
Paper White Monitor CornerStone DP120 1700-D
Paper White Monitor CornerStone DP120 20302-D
PC Dell 486SX25 2GR5H
PC Dell 486SX25 2GR58
Paper White Monitor CornerStone DP120 16238-D
PC Dell 486SX25 2GR67
Paper White Monitor CornerStone DP120 20300-D
PC Dell 486SX25 2GR56
PC Dell 486DX2-50 2CZDK
Control Unit HP 3274 K7014
Optical Library HP C1710C-100 3268A0015G
Printer HP Laserjet III USSB035817
Terminal Tandem 6526 AE622
Printer Okidata 182 907A1038943
Flat Screen Monitor NEC 3FGX 15" .281024 M31588A
PC Dell 486DX2-50 2CZCY
Flat Screen Monitor NEC 3FGX 15" .28 1024 M31537A
Controller- pc cards IBM 5294 55273
PC Dell 486DX2-50 2CZCW
Terminal Tandem 6526 AVK42
INX 5000 3Slot Chassis Racal INX5000 10084198
Personal Computers Tandem 6AX40 6AX40
Scanner Fujitsu M3093E 2288
Monitor Dell 15FS 15" .28 1024 33480125
PC Tandem MLAD 20141116
PC Tandem 386SX16 UPS7022645
PC Tandem 386SX16 UPS7022641
PC Tandem 386SX16 UPS7019883
Controller- pc cards IBM 5394 8548
24 Post Ethernet Hub Racal INX5000
12 Port Ethernet Hub Racal INX5000
Terminal Tandem 6526 AO239
ROM Burner Yamaha
Disk Drive - 2000 MB Tandem 4510 COLPMU
2GB External Drive Seagate N3039593
2GB External Drive Seagate N3013687
Tape Racks
Monitor Viewsonic 15" monitor
Monitor Viewsonic 17" SVGA
Tape Backup System
Dell Pentium PC Dell
Laser Printer HP Laserjet III 3120J57723
Pentium PC Dell Dimension P-90
dem Memory Upgrade Tandem
Optical Jukebox Model 40T HP C1700T 3332A00396
Modem Hayes internal N Wallace
Modem Hayes internal T Kipp
Modem Hayes internal A Ables
Printer Okidata 182 206A0057817
Personal Computers Tandem 6AX40 A-JEC70
Printer Okidata 182 206A0034Z4
CD-ROM Tandem 1 X60002793
Terminal Tandem 6530 10863
PC Dell 486DX2-50 2CZB9
Terminal Tandem 6526 ML64
Terminal Tandem TS-530 2101155
Flat Screen Monitor NEC 3FGX 15" .28 1024 M11525A
Terminal Tandem 6526 AH3774
Printer Data Products LM615 2904A07061
Terminal Tandem 6530 13205
Personal Computers Tandem 6AX40 A-1292
Flat Screen Monitor NEC 3FGX 15" .28 1024 M31596A
Laser Printer H.P. LaserJet III 3105466J32922
Printer TI 820 482005164
Rack #4 Tandem
Rack #3 Tandem
Rack #2 Tandem
Rack #1 Tandem
CO-ROM Tandem 1X60004361
Controller - pc cards IBM 5294 55275
Printer Okidata 182 206A0057793
Terminal Tandem TS 530 2104748
Terminal Tandem 6530 NONE
Scanner Fujitsu M3096E 1137
Terminal Tandem TS-530 2277894
Printer Okidata 320 1 02C048581
Flat Screen Monitor NEC 3FGX 15" .28 1024 M31590A
Controller- pc cards IBM 5294 55274
PC Dell 486DX2-50 2CZCQ
Monitor Dell 15FS 15" .28 1024 324A5335
PC Dell 486DX2-50 2CZD3
PC Dell 486DX2-50 2CZDQ
Flat Screen Monitor NEC 3FGX 15t .28 1024 M33033A
PC Dell 486SX25 2GR64
Optical Drive HP C171 6C Corsair 5.25 3264ACL1936
Terminal Tandem 6526 AJ240
Terminal Tandem TS-530 2185354
Controller- pc cards IBM 5294 55447
PC Dell 486DX2-50 2CZBL
Printer Okidata 182 906A1025774
3601 Controller Tandem 3601 HOPMBU
3606 Controller Tandem 3606 444
Disk Drive - 2000 MB Tandem 4510 COLPM5
Disk Drive - 2000 MB Tandem 4510 COLPM3
MFC Controller Tandem 3681 HOS03A
K1000 CPU w/32MB Tandem K1000 H128KD
K1000 32MB Memory Board Tandem K1000 H1251S
K1000 CPU w/32MB Tandem K1000 H1231J
K1000 32MB Memory Board Tandem K1000 HOXEOH
Disk Drive Tandem 4230 S08KEW
Disk Drive Tandem 4230 S08KEN
3606 Controller Tandem 3606 4600
MFC Controller Tandem 3681 HORZYL
3601 Controller Tandem 3601 FJ04V8R
3606 Controller Tandem 3606 4596
3606 Controller Tandem 3606 4218
3601 Controller Tandem 3601 HORVBZ
32 port Mux Racal Milgo Omnimux 322 ZW02037
32 port Mux Racal Milgo Omnimux 322 ZW03911
32 port Mux Racal Milgo Omnimux 322 ZW06215
CLX Cabinet 1 Tandem
3606 Controller Tandem 3606 4550
DSU Racal Milgo 556RD AES2386
Ethernet Controller with Trans Tandem T/3613-1 HORVMO
MFC Controller Tandem 3681 13702
3605 controller Tandem 3605 5412
3602 Controller Tandem 3602 HOS7KE
Disk Controller Tandem 3126 V03RDE
Controller Tandem 3126 V031N0
Cabinet 1A Tandem
Disk Drive Tandem 4250 SR285436
Disk Drive Tandem 4250 SR285439
3606 Controller Tandem 3606 5320
Disk Drive Tandem 4250 4424623
Disk Drive Tandem 4250 44241O4
MFC Controller Tandem 3681 21342
MFC Controller Tandem 3681 21334
3606 Controller Tandem 3606 7828
3506 Controller Tandem 3606 6858
32 port Mux Racal Milgo Omnimux 322 ZW05951
DSU Racal Milgo 556RD AES5515
DSU Racal Milgo 556RD AES7X9
Disk Drive Tandem 4220 S03E7E
Port Cabinet AT&T J5886C 29721
Gateway 2000 Color Notebook Gateway 2000 9312851S8 1959522
CPU-CMS AT&T 3B2/400 88OCD3951541
System Managment Terminal AT&T J58889K1
Aux Cabinet AT&T J58886N 29717
Module Control Cabinet AT&T J58886K 29722
Module Control Cabinet AT&T J58886B 29719
System 85 AT&T J588B6B 29718
Time Mulpxr Cabinet AT&T J58886F 29723
Modem Hayes external A0015106K788
System 85 AT&T J58886C 29720
High Speed Laser Printer XEROX 4850 200021
High Speed Laser Printer XEROX 4850 200020
Modem Racal-Vadic V12422PA-SVC CBJK4728
Modem Racal-Vadic V12422PA-SVC CBJK4709
Drive - 2000 MB Tandem 4510 COLPKL
m Hayes external A0015105K787
Controller IBM 3274 D0416
DSU Racal Milgo 556RD AES2870
12 Port Ethernet Hub RACAL INX5000
16 Port Terminal Server RACAL INX5000
12 Port Ethernet Hub RACAL INX5000
INX 5000 3Slot Chassis RACAL INX5000 10083205
16 Port Terminal Server RACAL INX LINK
12 Port Ethernet Hub RACAL INX5000
24 Port Ethernet Hub RACAL INX5000
Diagnostic Mux RACAL EOM APP4687
INX 5000 3Slot Chassis RACAL INX5000 10083028
Printer IBM 3812 33452
Bridge RACAL RNX6300 BIK0274
Tape Drive Super Array 14102
Cartridge Tape Drive Novadyne 5180NLC C900052128
Cartridge Tape Drive Novadyne 5180NLC C800013141
Monitor NEC 3V14".26 1024 3406091KA
Controller - pc cards IBM 5394 8542
MFC Controller Tandem 3681 13709
Tape Drive Cabinet Novadyne
Disk Drive Tandem 4220 WE124949
MFC Controller Tandem 3681 V03S4H
Cabinet 4 Tandem
K1000 CPU w/32MB Tandem K1000 H14N1M
K1000 CPU w/32MB Tandem K1000 H13JAN
K1000 32MB Memory Board Tandem K1000 H125K2
K1000 32MB Memory Board Tandem K1000 HOW888
MFC Controller Tandem 3681 V03S6K
Tape Controller Tandem 3214 V0194W
Ethernet Controller Tandem 3215 H156WJ
Tape Drive Tandem 5107 3008A02163
Disk Controller Tandem 3128 V00U4D
Disk Controller Tandem 3128 H0XWK7
CLX Cabinet 3A Tandem
Disk Drive Tandem 4240 B031329
MFC Controller Tandem 3681 13628
MFC Controller Tandem 3681 13578
Tape Drive Tandem 5107 3008A01756
CLX Tape Cabinet Tandem
3606 Controller Tandem 3606 4595
Disk Drive -1038 MB Tandem 4500 CO6VSL
Disk Drives Tandem 4220
Disk Drive - 2000 MB Tandem 4510 COKYUP
Disk Drive - 2000 MB Tandem 4510 COKYUL
Disk Drive - 2000 MB Tandem 4510 C0LPMV
Disk Drive - 2000 MB Tandem 4510 C0LPM1
Disk Mosaic W/Pedistal - 18 D Tandem 4500
Disk Drive -1038 MB Tandem 4500 CO6860
Disk Drive -1038 MB Tandem 4500 CO6VSK
Disk Drive -1038 MB Tandem 4500 C06VS9
Disk Drive -1038 MB Tandem 4500 C06VTC
Disk Drive -1038 MB Tandem 4500 C06VSV
Disk Drive -1038 MB Tandem 4500 C06VSH
Disk Drive -1038 MB Tandem 4500 C06VSD
Disk Drive -1038 MB Tandem 4500 C06VSB
Disk Drive -1038 MB Tandem 4500 C06VSA
3606 Controller Tandem 3006 4601
Disk Drive -1038 MB Tandem 4500 C06042
3606 Controller Tandem 3606 4591
3606 Controller Tandem 3606 4589
3606 Controller Tandem 3606 4586
3606 Controller Tandem 3681 13633
3606 Controller Tandem 3681 13624
3606 Controller Tandem 3606 V00T09
3606 Controller Tandem 3606 18666
3606 Controller Tandem 3606 5960
3606 Controller Tandem 3606 4587
3606 Controller Tandem 3606 968
3606 Controller Tandem 3606 4324
Disk Drives Tandem 4240 626166
CLX Cabinet 2 Tandem
K1000 CPU w/32MB Tandem K1000 H123LX
K1000 32MB Memory Board Tandem K1000 H11W9H
K1000 32MB Memory Board Tandem K1000 H11W93
Controller Tandem 3606 4545
K1000 CPU w/32MB Tandem K1000 HOZZT8
Disk Drive Tandem 4230 SO8KEV
3606 Controller Tandem 3606 4598
Disk Drive Tandem 4240 B035193
CLX Cabinet 2A Tandem
Disk Drive Tandem 4240 B03708A
3606 Controller Tandem 3606 4541
Disk Controller Tandem 3128 V03RDL
CLX Cabinet 3 Tandem
K1000 CPU w/32MB Tandem K1000 H12ZY5
K1000 32MB Memory Board Tandem K1000 H11W9B
K1000 CPU w/32MB Tandem K1000 H08L8X
K1000 32MB Memory Board Tandem K1000 H0XEOE
MFC Controller Tandem 3681 13712
Tape Controller Tandem 3214 H0M5L4
3605 Controller Tandem 3605 9095
Disk Controller Tandem 3128 V03SRC
3606 Controller Tandem 3606 3861
MFC Controller Tandem 3681 13707
Tape Drive 3420 M7343
Tape Drive 3420 51671
Cartridge Tape Unit IBM 3480 B0125
Cartridge Tape Unit IBM 3480
Cartridge Tape Unit IBM 3480 66941
3390 18M 339O A1078
3390 IBM 3390 B2161
Cartridge Tape Unit IBM 3480 69616
Cartridge Tape Unit IBM 3480 21645
Controller IBM 3174 AA466
Controller IBM 3174 AW594
Controller IBM 3174 N7807
Controller IBM 3174 N3521
Tape Unit IBM 3420 51672
Controller IBM 3174 N0153
Cartridge Tape Unit IBM 3480 69620
Disk Controller IBM 3990 32355
Tape Drive IBM 3480 70773
3390 IBM 3390 B2260
Cartridge Tape Unit IBM 3480 65184
Printer IBM 3287 4421
Cartridge Tape Unit IBM 3480 66786
Cartridge Tape Unit IBM 3480 16595
Tape Unit IBM 3420 M17336
Tape Unit IBM 3420 89287
Tape Drive IBM 3480 50588
Tape Drive IBM 3480 73272
Disk Controller IBM 3880 97570
DASD IBM 3380 TU368
DASD IBM 3380 TU416
DASD IBM 3380 TU430
DASD IBM 3380 AE799
DASD IBM 3390 A4946
DASD IBM 3380 TU415
DASD IBM 3380 TU395
Disk Controller IBM 3880 97682
DASD IBM 3380 AE682
Printer IBM 3287 C4777
Power Unit IBM 3089 45841
DASD # IBM 3380 TU432
DASD IBM 3390 B4105
Tape Unit IBM 3420 M7378
Tape Drive IBM 3480 23706
DASD IBM 3380 M9983
Autodial/Modem IBM 3864 48202
Tape Unit IBM 3420 38514
Data Station IBM 3741 57542
Communication Search IBM 3728 7772
Controller IBM 3174 AW604
Disk Controller IBM 3990 40263
Disk Drives IBM 3390 A4007
Disk Drives IBM 3390 B6383
Autodial Modem IBM 3864 65581
Disk Drives IBM 3390 B6376
Tape Unit IBM 3420 50412
CPU IBM 5273 25635
Disk Controller IBM 3990 32644
DASD IBM 3390 B4028
Cartridge Tape Unit IBM 3480 53497
Power Unit IBM 3089 47115
Communication Switch IBM 3728 7772
Power Unit IBM 3089 47752
Front End Processor IBM 3725 10389
Power Unit IBM 3089 47425
Tape Drive IBM 3480 50586
Power Unit IBM 3089 47753
Processor Unit IBM 3092 85275
Power Controller IBM 3097 75017
Communication Switch IBM 3728 7776
Communication Switch IBM 3728 7773
Front End Processor IBM 3725 1812
Front End Processor IBM 3725 8443
Communication Switch IBM 3728 7775
Communication Switch IBM 3728 7774
Front End Processor IBM 3725 8851
Tape Control Unit IBM 3803 21493
Communications Controller IBM 3174 N3514
Front End Processor IBM 3725 5433
Processor IBM 3090 75017
Power Controller IBM 3097 75018
Front End Processor IBM 3725 5584
Communication Switch IBM 3728 7777
Voice Response Unit Syntellect Premier 22723
Voice Response Unit Syntellect Premier 22728
Voice Response Unit Syntellect Premier 23121
Voice Response Unit Syntellect Premier 22726
Voice Response Unit Syntellect Premier 23175
Voice Response Cabinet Syntellect Emperor 23740
Voice Response Unit Syntellect Premier 22678
Voice Response Unit Syntellect Premier 22729
Voice Response Unit Syntellect Premier 23030
Voice Response Unit Syntellect Premier 23808
Voice Response Unit Syntellect Premier 23806
Schedule E
Support Services, Performance Standards and
Operational Responsibilities
Section E-1
Support Services
I. INTRODUCTION
This Schedule describes the Data Center and Data Network
Performance Standards which ISSC is required to meet while
performing the Services. It describes the support services,
Performance Standards and operation responsibilities which ISSC
is required to meet while performing the Services. ISSC also has
certain responsibilities with respect to system availability, on-
line and batch services, distribution services, Software
maintenance, network operations and support, systems management,
and other services comprising the Services. This schedule also
describes the responsibilities of Comdata.
All capitalized terms used but not defined in this Schedule E
shall have the meanings given them in the Agreement.
II. SYSTEMS MANAGEMENT CONTROLS
ISSC will provide to Comdata, and ISSC and Comdata will mutually
agree on and use, the Systems Management Control ("SMC")
Procedures as the standard set of disciplines for managing
information systems. The SMC procedures shall be included in the
Procedures Manual. ISSC will administer each SMC discipline. In
general, ISSC's SMC responsibilities shall include the following
processes:
A. Batch Management - for controlling production batch work
including the scheduling of resources, the processing of
data and transactions. Setup and scheduling shall be
performed and controlled by ISSC in accordance with the
Procedures Manual.
B. Capacity Management - for the development and maintenance of
tactical and strategic plans to ensure that the Data Center
and Data Network environments accommodate Comdata's growing
or changing business requirements. Periodically, ISSC will
provide capacity management and resource usage information
to Comdata in order to assist Comdata in determining if the
capacity of the existing CPU(s), associated DASD, tape,
other peripheral equipment attached to such processing
unit(s), network equipment and peripherals as specified in
Schedule U need to be increased.
C. Change Management - to assess if the change is necessary,
validate the adequacy of the acceptance test, schedule the
promotion into the test environment, notify the appropriate
functions and verify successful implementation.
D. Configuration Management - for processing hardware and
Software configuration changes and maintaining lists and
diagrams of systems configurations in the Procedures Manual.
ISSC will provide revised configurations to Comdata upon
Comdata's reasonable request.
E. Inventory Management - of the ISSC Machines (including
incoming and outgoing) in the Data Center and Data Network.
This activity is to include, but not be limited to, serial
number tracking, vendor coordination and maintenance.
F. On-Line Management - for coordinating the appropriate
skills, information, tools and procedures required to manage
on-line networks and their supporting hardware and software
systems.
G. Performance Management - to monitor, measure. analyze and
report systems performance as it compares to the Performance
Standards. Where warranted, ISSC may make changes to the
Applications Software and with the advance consent of
Comdata, ISSC may make changes to the DSM Applications
Software to enable system performance improvement.
H. Problem Management - to identify, record, track, and correct
issues impacting service delivery, recognize recurring
problems, address procedural issues and contain or reduce
the impact of problems that occur. ISSC will organize/chair
daily problem management meetings in accordance with the
Problem Management Procedures. ISSC shall research the
causes of operational problems, and provide Comdata s
management with recommendations regarding the correction of
such problems and take actions to correct the problems.
I. Recovery Management - for planning, establishing and testing
the recovery procedures required to provide the Services to
End Users in the event of a failure. The intent of this
process is to anticipate and minimize the impact of systems
resource failure through the development of predefined,
documented procedures and software/hardware recovery
capabilities. Comdata instructions on what and how to
recover shall be provided to ISSC and included in the
Procedures Manual.
III. SYSTEMS/OPERATIONS RESPONSIBILITIES
A. Application Processing
The standards for application processing are as follows:
1. ISSC will make available and process on-line and batch jobs
and programs, including scheduled and unscheduled as well as
End User initiated processing, as provided in this Schedule
E.
a. ISSC will run production batch processing jobs so that
on-line applications which are dependent on batch
processing will-be available as scheduled.
b. ISSC will coordinate and modify schedules for special
requests.
c. ISSC will provide the environment for Comdata personnel
to execute test jobs. Comdata will designate personnel
to be included in the contact list in the Procedures
Manual if applications support is required. Comdata
shall keep such contact list current.
d. ISSC will, construct on-line test environments which
will allow Comdata's test staff self-control over its
test system resources, with minimal dependency on ISSC
support and intervention.
2. ISSC will maintain job scheduling and cooperate with Comdata
by responding to reasonable special processing requests and
new processing requirements.
3. ISSC will maintain and update file back-up and recovery
procedures pertaining to DASD volumes. Such procedures shall
provide, at a minimum:
a. ISSC will maintain, if any, libraries for systems,
production, test, development and End Users in
accordance with the Procedures Manual.
b. ISSC will conduct back-up and recovery procedures for
DASD volumes so as to minimize impact on scheduled
operations.
c. ISSC will archive all inactive DASD user files
automatically as defined by Comdata procedures existing
as of the execution of this Agreement.
4. ISSC will provide and maintain application libraries used to
perform the Services in accordance with the Procedures
Manual.
5. ISSC will provide back out services for both hardware and
Software in accordance with the Change Management
Procedures.
6. ISSC will notify Comdata of scheduled and unscheduled system
downtime in accordance with Change Management and On-line
Management processes.
7. ISSC will provide data storage and retention support for
Data Center data in accordance with mutually defined data
retention requirements to be included in the Procedures
manual. Such requirements shall be no less rigorous than
data storage and retention procedures in effect as of the
Commencement Date.
B. Documentation
ISSC is responsible for:
1. updating and maintaining the Procedures Manual in
consultation with Comdata;
2. reviewing operations documentation for adherence to
operational procedures and standards;
3. periodically distributing to Comdata employees, information
bulletins regarding new or changed operations and
procedures;
4 updating and maintaining Command Center documentation and
procedures and distributing to appropriate Comdata
personnel; and
5. developing operations documentation for all Systems
Software.
C. Fraud and Abuse
ISSC will assist Comdata and its agents with fraud and abuse
detection. protection and control measures with respect to
the Data Center, the Data Network, and the DSM Environment.
Subject to Comdata's responsibility set forth in the
Agreement. ISSC will recommend and assist in implementing
data security enhancements where a computer service,
hardware, or software product poses a threat to the
operating environments or where the confidentiality of
corporate information may be at risk.
D. Production Control and Quality Assurance
1. ISSC will perform production program transfers from test
library to production library (when installed) as authorized
through the quality assurance process and by Comdata. ISSC
will monitor application processing for post-transfer
problems, and will resolve any discrepancies.
2. ISSC will update the scheduler data base as required to
reflect changes to the production environment.
3. ISSC will monitor scheduler related incidents, and develop
and recommend refinements and revisions to the scheduler
data base.
4. ISSC will review new production jobs and JCL for correctness
and conformance to mutually agreed to standards of efficient
resource utilization.
5. ISSC will organize/chair weekly change management meetings
in accordance with the Change Management Procedures.
IV. OTHER SERVICES
A. Command Center
ISSC will provide a single point of contact for End User
support as provided by Comdata as of the Amended
Commencement Date to assist in problem determination,
problem source identification and problem resolution.
ISSC will manage the problem to resolution utilizing the
Problem Management process and tools to assure that problems
have ownership through resolution and that defined problem
escalation paths are used.
B. Technology
ISSC will assist Comdata in the review of vendor proposals
affecting ISSC's ability to provide the Services to ensure
existing and future systems' compatibility with changing
industry standards. ISSC will consult with Comdata regarding
new telecommunications and data processing systems, as
appropriate.
C. Vendor Liaison and Product Assessment
ISSC will maintain contact with vendors providing data
processing or telecommunications services or products in
order to keep abreast and apprise Comdata of the latest;
technological product developments. ISSC will share with
Comdata all information reasonably believed by ISSC to be
related to the Services provided under this Agreement or
reasonably requested by Comdata that is related to the
Services provided under this Agreement, regarding pre-
release information, strategic directions, and future
product announcements and directions, and position papers or
technical papers, that the ISSC Project Executive is aware
of and are not otherwise subject to restrictions on
disclosure.
D. Service Review Meetings
ISSC will participate in service review meetings with
vendors and service providers providing services relating to
this Agreement, as reasonably requested by Comdata. ISSC
will conduct, record and distribute to Comdata
representatives the minutes of service review meetings
relating to the scope of ISSC's responsibilities in the
format and level of detail reasonably satisfactory to ISSC
and Comdata.
Schedule E
Support Services, Performance Standards and
Operational Responsibilities
Section E-2
Data Center and Data Network Performance Standards
I. INTRODUCTION
This Section E-2 further describes:
A. certain duties, obligations and responsibilities of ISSC
including, but not limited to, on-line application
availability, host on-line response time, data network
operations and other activities comprising the Services;
B. the Performance Standards for defined applications and
Services which ISSC is required to meet during the Term of
this Agreement; and
C. certain responsibilities of Comdata.
ISSC will utilize standard measurement tools to monitor the
performance levels described below. If ISSC's performance differs
from the agreed to delivery level found in the Service Level
Agreements, ISSC will be liable for Performance Standard debits
or credits.
By the tenth business day of each month, ISSC will submit to
Comdata a report or set of reports assessing ISSC's performance
against the Performance Standards during the previous calendar
month. ISSC will also be responsible for promptly investigating
and correcting failures to meet Performance Standards by:
D. initiating problem investigations to identify root causes of
failures;
E. promptly reporting problems to Comdata that reasonably could
be expected to have a material adverse effect on Comdata
operations; and
F. making written recommendations to Comdata for improvement in
procedures.
ISSC shall identify root causes, correct problems and minimize
recurrences of missed Performance Standards for which it is
responsible. Comdata will correct and minimize the recurrence of
problems for which Comdata is responsible and which prevent ISSC
from meeting the Performance Standards.
ISSC shall be relieved of any Performance Standard(s) and any
associated Performance Standards debits where ISSC's failure to
meet the Performance Standard(s) is due to:
1. Comdata's failure to perform its obligations under this
Agreement; or
2. circumstances that constitute a force Majeure Event pursuant
to Section 17.5 of the Agreement.
II. DEFINITIONS
For purposes of this Schedule E, the following terms shall have
the following meanings:
A. "Availability" means actual Uptime plus Excusable Downtime
divided by Scheduled Uptime. For purposes of determining
whether ISSC's performance meets any Availability
Performance Standard, ISSC's Availability performance will
be measured based on a monthly average during each month of
the Terms to be calculated once monthly within ten business
days following the end of each calendar month.
B. "Excusable Downtime" means of the Scheduled Uptime, the
aggregate number of hours in any month during which the
Network and/or each defined critical Application is down due
to action or inaction by Comdata or due to a Force Majeure
Event (as defined in Section 17.5 of the Agreement).
C. "Host System" means ISSC Machines and related Systems
Software.
D. "Scheduled Downtime" means of the Scheduled Hours, the
aggregate number of hours in any month during which the
Network and/or each defined critical application is
scheduled to be unavailable for use by End Users due to such
things as preventive maintenance, system upgrades, etc.
Scheduled Downtime must be mutually agreed to by the
Parties.
E. "Scheduled Hours" means the days of the week and hours per
day that the Network and/or each defined critical
Application is scheduled to be available for use by End
Users, subject to adjustment for mutually agreed upon
Scheduled Downtime.
III. PERFORMANCE STANDARDS
A. On-Line Applications Availability and Scheduled Hours: On-
line Application services will be scheduled to be available
24 hours a day, 7 days a week, 365 days a year, except for
Scheduled Downtime and Excusable Downtime.
B. Data Network Availability and Scheduled Hours: The Data
Network will be scheduled to be available 24 hours a day, 7
days a week, 365 days a year, except for Scheduled Downtime
and Excusable Downtime.
C. Voice Network Availability and Scheduled Hours: The Voice
Network will be scheduled to be available 24 hours a day, 7
days a week, 365 days a year, except for Scheduled Downtime
and Excusable Downtime.
D. Scheduled Batch Services: ISSC will perform scheduled batch
processing services. ISSC's commitment to the batch services
Performance Standards is contingent upon ISSC's receipt from
Comdata of critical inputs by the designated time, and
successful completion of the appropriate application batch
job stream Comdata recognizes that its deviation from
scheduled batch job streams may result in batch output not
being available by the scheduled time. The critical inputs
for each batch processing job shall be mutually agreed upon.
E. Unscheduled Batch Services: ISSC will perform on-request or
on-demand batch jobs for Comdata. Each of the Unscheduled
Batch Services shall be initiated by ISSC subject to a
written and properly authorized request from Comdata for
such services.
ISSC is responsible for notifying the Comdata contact
person(s) when batch output will not be available by the
scheduled time. The Comdata interface contact will notify
the appropriate End Users as necessary. Comdata recognizes
that its deviation from scheduled batch job streams may
result in batch output not being available by the scheduled
time resulting in impact to on-line availability.
F. DSM Environment: ISSC will operate the DSM Environment in a
manner which is equal to or better than Comdata's historical
performance prior to the Amended Comencement Date. Comdata
agrees to provide to ISSC DSM Environment historical
performance data as soon as practical after the Amended
Commencement Date. Starting with the first full month after
Comdata has provided to ISSC such historical performance
data, and for a period of 180 days thereafter, ISSC and
Comdata shall measure and monitor the DSM Environment
resource utilization with the intent of using such measured
activity to validate Comdata's historical data and for
establishing DSM Environment Performance Standards.
Schedule F-1
Acquired Assets
Description Vendor Model Serial #
Voice Response Unit Syntellect Premier 22549
Voice Response Unit Syntellect Premier 22446
Terminal WYSE WY-50 20557
Voice Response Unit Syntellect Premier 21796
Voice Response Unit Syntellect Premier 22678
Datascope ele Spectro D2000 1433620
Printer Tandem 5516 2629A00953
CPU Wyse 1079012
CD-ROM Tandem 1X60002793
Terminal Tandem 6526 ABZ17
Personal Computers Tandem 6AX40 A-JK70
Terminal Tandem 6526 A72883
Terminal Tandem 6526 AEU19
Terminal Tandem 6526 AJ240
Printer Tandem LA34-DA 83990
Terminal Tandem 6526 AH3774
Voice Response Cabinet Syntellect Emperor 21886
Terminal Tandem 6526 AO239
Personal Computers Tandem 6AX40 A-1292
Voice Response Unit Syntellect Premier 21983
CD-ROM Tandem 1X60004361
Voice Response Unit Syntellect Premier 22070
Laptop P.C. Zenith ZFL-181 8351118602
Terminal Tandem 6531 24737H139
Terminal Tandem 6526 AVK42
Voice Response Unit Syntellect Premier 21988
Personal Computers Tandem 6AX40 6AX40
Terminal Tandem 6526 ARR52
Printer Tandem 5516 2629A01058
Voice Response Unit Syntellect Premier 22732
Voice Response Unit Syntellect Premier 23807
Voice Response Unit Syntellect Premier 25220
Voice Response Unit Syntellect Premier 25004
Voice Response Unit Syntellect Premier 23121
Voice Response Cabinet Syntellect Emperor 23025
Voice Response Unit Syntellect Premier 23030
Voice Response Cabinet Syntellect Emperor 23077
Voice Response Unit Syntellect Premier 23092
Terminal Tandem 6532 10153
Voice Response Unit Syntellect Premier 22936
Terminal Tandem 6530 10863
Voice Response Unit Syntellect Premier 23137
Voice Response Unit Syntellect Premier 23142
Voice Response Unit Syntellect Premier 23144
Voice Response Unit Syntellect Premier 22978
Voice Response Cabinet Syntellect Emperor 22859
Voice Response Unit Syntellect Premier 23146
Protocol Converter Vendata Resolver VIII 1276
Printer TI 820 482005164
Laptop P.C. Toshiba T1000 12719691
Terminal Tandem 6526 ML64
Terminal Wyse WY-50 1161860
Terminal Console Wyse WY-50 10501543
Voice Response Cabinet Syntellect Emperor 22857
Modem UDS 9648T 008690
Voice Response Unit Syntellect Premier 22791
Voice Response Unit Syntellect Premier 22792
Voice Response Unit Syntellect Premier 22794
Voice Response Unit Syntellect Premier 23145
Controller Telex 2742C 10433
Voice Response Unit Syntellect Premier 23173
Voice Response Unit Syntellect Premier z3826
Voice Response Unit Syntellect Premier 22729
Voice Response Cabinet Syntellect Emperor 23740
Voice Response Unit Syntellect Premier 23798
Voice Response Unit Syntellect Premier 23806
Laptop P.C. Toshiba T1000 11832590
Voice Response Unit Syntellect Premier 22728
Voice Response Cabinet Syntellect Emperor 23636
Voice Response Unit Syntellect Premier 22726
Voice Response Unit Syntellect Premier 22723
Voice Response Unit Syntellect Premier 23808
Voice Response Unit Syntellect Premier 23824
Voice Response Unit Syntellect Premier 23718
Voice Response Cabinet Syntellect Emperor 23465
Controller Telex 274C2 10431
Modem UDS V.3225 40057
Voice Response Unit Syntellect Premier 23174
Voice Response Unit Syntellect Premier 23175
Voice Response Unit Syntellect Premier 23261
Voice Response Unit Syntellect Premier 23263
Controller Telex 2742C 10430
Voice Response Unit Syntellect Premier 23386
Voice Response Unit Syntellect Premier 23264
Terminal Televideo 905 22A-A88112979E
Voice Response Unit Syntellect Premier 23269
Voice Response Unit Syntellect Premier 23378
Voice Response Unit Syntellect Premier 21830
DASD IBM 3380 31696
Voice Response Unit Syntellect Premier 21642
Voice Response Unit Syntellect Premier 21637
DASD IBM 3380 M9983
Tape Unit IBM 3420 M1974
Tape Unit IBM 3420 M5954
Disk Drive IBM 3380 M6707
Tape Unit IBM 3420 M7336
Tape Unit IBM 3420 M7378
Disk Drive IBM 3380 M9883
Terminal IBM 3192 RK061
Disk Drive IBM 3380 J6120
Terminal IBM o191 W5165
Terminal IBM 3191 W5172
Comm. Controller IBM 3726 198
Comm. Controller IBM 3726 580
Communication Controller IBM 3725 697
Terminal IBM 3205 1591
Control Unit IBM 3274 K7014
Controller IBM 3274 H5210
Controller IBM 3274 H8113
Modem IBM 5801 6242
Controller IBM 3274 F3750
Terminal IBM 3197 EP399
Controller IBM 3274 F0621
Controller IBM 3274 F0936
Disk Drive IBM 3380 F0962
Disk Drive IBM 3380 F0983
DASD IBM 3380 F3075
Controller IBM 3274 F6015
Controller IBM 3274 H4349
Controller IBM 3274 F6016
Disk Drive IBM 3380 G0120
Disk Drive IBM 3380 G0206
Disk Drive IBM 3380 G0214
Controller IBM 3274 G8127
Controller IBM 3274 H0818
Communication Controller IBM 3725 1636
Modem IBM 5853 9506
Controller IBM 3274 E6315
Modem IBM 5853 24843
Modem IBM 5853 24836
Modem IBM 5853 24838
Modem IBM 5853 24839
Modem IBM 5853 24840
Modem IBM 5853 24841
Modem IBM 5853 24842
Modem IBM 5853 24844
Modem IBM 5853 24762
S/1 Cabinet #7 IBM 4997 32833
Printer IBM 3812 33452
Printer IBM 3812 33537
Controller IBM 3274 34724
Printer IBM 4224 34741
CPU IBM S1960 35160
Modem IBM 5853 24835
Disk Controller IBM 3880 23475
Modem IBM 5853 24756
Autodial/Modem IBM 3864 11240
Tape Control Unit IBM 3803 15087
Protocol Converter IBM 5208 11826
Protocol Converter IBM 5208 12394
Printer IBM 6262 12562
Printer IBM 6262 12563
Switching Unit IBM 2914 13613
CPU IBM 4381 13947
Tape Controller IBM 3705 15805
S/1 Cabinet #10 IBM 4997 22538
Controller IBM 3274 17768
CPU IBM 8550 17915
Info Window IBM 3476 19345
S/1 Cabinet #8 IBM 4997 20857
Diskette Reader I/O Unit IBM 3540 21050
Tape Control Unit IBM 3803 21493
Terminal IBM 3197 EP390
Controller IBM 3274 E4007
Controller IBM 3274 E4008
Tape Unit IBM 3420 38514
CPU AT&T WGS6286 6458552
CPU AT&T S628-XP1 6444730
CPU AT&T WGS6286 6450304
CPU & Monitor AT&T 286 6450316
RAPFAX CPU AT&T WGS6286 6450490
CPU AT&T WGS6286 6450506
CPU AT&T WGS6286 6458460
CPU AT&T PC7300 370429045
CPU AT&T 286 6443811
CPU AT&T WGS6386 895708005977
Modem Eliminators Black Box RM700A 037P1771
Modem Eliminators Black Box RM700A 040P2128
Modem Black Box 87BSPN671
LDDS Black Box ME711B 915P1772
LDDS Black Box ME711B 923P5032
CPU AT&T WGS6286 6443918
CPU AT&T WGS6286 6441947
CPU AT&T WGS6286 6442000
Modem Eliminators Black Box RM700A 13401112
CPU AST BRAVO 5 TWA1066749
Monitor ADC MM411 1450038065
DataSet Ark EAS11B 3764-178
CPU AST Bravo 286 TWA1090453
Modem AST 2X2400 US000495
Modem AST 2X2400 US000619
Modem AST 2X2400 347
Modem AT&T 4024 89MG10015230
CPU AT&T 6286WGS 6426763
System 85 AT&T J58886C 29720
CPU AT&T 6286 6413600
CPU AT&T WGS6286 6424742
Monitor AT&T WGS6286 6424742
RAPFAX CPU AT&T 6286 WGS 6425828
PC AT&T 6286WGS 6426146
Multi Port Spooler II Black Box P1523 9051856
Modem Black Box SW0108 613016996
Controller IBM 3274 E4006
Disk Drive IBM 3380 B1083
Disk Drive IBM 3380 A2829
DASD IBM 3380 A5677
Disk Drive IBM 3380 A6798
Disk Drive IBM 3380 A6898
Plazma screen IBM 3290 A7783
Plazma screen IBM 3290 A7795
Disk Drive IBM 3380 B3623
Terminal HP 70043 3041A06695
DASD IBM 3380 B5733
Controller IBM 3274 D4217
Controller IBM 3274 D8801
Controller IBM 3274 E0408
Disk Drive IBM 3380 E1658
Controller IBM 3274 E3286
Terminal HP 70043 3101A07561
Modem Everex 24E 0945A-00
Printer wlett Packa LaserJet111 3001A36328
CPU CCDI 926212R
Terminal DIGITAL VT220 TA733L0255
CPU CCDI 926214H
CPU CCDI 92621-SH
CPU Computrend 386 PC 9242-0725
Printer ata Product LM615 2904A07061
Printer ata Product LM 615 2926A07972
Datascope Digilog 320 380901D
Auto Attd/Voice Mail Dytel 9600M 167AC
Printer Epson FX1050 OE10072002
Auto Attd/Voice Mail Dytel 9600M 196AC
Printer Epson P12PA 00D0036627
Printer Epson LQ810 OA50205661
Printer Epson LQ850 OF21000830
Printer Epson X-810 P80S OA50205636
Printer Epson LQ810 OA50205655
Printer IBM 4201 35636
S/1 Cabinet #4 IBM 4997 38812
Voice Response Unit Syntellect Premier 21615
S/1 Cabinet #2 IBM 4997 39522
AUTODIAL MODEM Okidata Okitel 1200 9061186A
AUTODIAL MODEM Okidata Okitel 1200 9061112A
AUTODIAL MODEM Okidata Okitel 1200 9061114A
AUTODIAL MODEM Okidata Okitel 1200 9061115A
AUTODIAL MODEM Okidata Okitel 1200 9061116A
AUTODIAL MODEM Okidata Okitel 1200 9061117A
AUTODIAL MODEM Okidata Okitel 1200 906118EA
AUTODIAL MODEM Okidata Okitel 1200 9061187A
AUTODIAL MODEM Okidata Okitel 1200 9061066A
AUTODIAL MODEM Okidata Okitel 1200 9061188A
AUTODIAL MODEM Okidata Okitel 1200 9061189A
AUTODIAL MODEM Okidata Okitel 1200 9061205A
AUTODIAL MODEM Okidata Okitel 1200 9061653A
AUTODIAL MODEM Okidata Okitel 1200 9061658A
AUTODIAL MODEM Okidata Okitel 1200 9061659A
AUTODIAL MODEM Okidata Okitel 1200 9061068A
AUTODIAL MODEM Okidata Okitel 1200 9061064A
AUTODIAL MODEM Okidata Okitel 1200 9061065A
AUTODIAL MODEM Okidata Okitel 1200 9061661A
Printer Okidata GE5250B 812B0502092
AUTODIAL MODEM Okidata Okitel 1200 11722A
Printer Okidata GE5251B 504A0042040
Printer Okidata GE5250B 706B03759125
Printer Okidata GE5250B 706B0379134
Printer Okidata 182 802B0436541
printer Okidata m1182plus 812aO099092
Printer Okidata GE5250U 901A0100269
AUTODIAL MODEM Okidata Okitel 1200 9061011A
Printer Okidata GE525OU 901A0100281
Printer Okidata GE5250U 902A1001243
Printer Okidata GES2E0U 904A0115897
Printer Okidata GES250U 904A0115908
Printer Okidata GE5250U 904A1016057
AUTODIAL MODEM Okidata Okitel 1200 9060202A
AUTODIAL MODEM Okidata Okitel 1200 9061660A
AUTODIAL MODEM Okidata Okitel 1200 9061663A
AUTODIAL MODEM Okidata Okitel 1200 9061602A
Printer Okidata GE5250U 101A1216563
Printer Panasonic KXP10911 7KKALH83608
Printer Okidata GE5250U 911A1080612
Modem Okidata CLP296 0090084
Fax Machine Okifax 800 130903
AUTODIAL CPU Panasonic FX600F1 6GCKB03255
Printer Panasonic KX-P10911 7KKALH82773
Printer Panasonic KX-P10911 7KKALH82780
DS1 Test Set tronics Wil T30801A 1743
Printer Okidata GE5250U 909A1062377
Printer QMS LPP-410-1 2210
Printer QMS PS810 2357
32 port Mux Racal Milgo mnimux 32 ZW03911
32 port Mux Racal Milgo mnimux 32 ZW05951
MODEM CABINET OCKWELL G36800-A
Voice Response Unit Syntellect Premier 21401
Printer Okidata GE5250U 911A1080148
AUTODIAL MODEM Okidata Okitel 1200 9090387A
AUTODIAL MODEM Okidata Okitel 1200 9091385A
Printer Okidata 182 906A1025774
AUTODIAL MODEM Okidata Okitel 1200 9080303A
AUTODIAL MODEM Okidata Okitel 1200 9070064A
AUTODIAL MODEM Okidata Okitel 1200 9070072A
AUTODIAL MODEM Okidata Okitel 1200 9070190A
Printer Okidata 182 907A1038943
Printer Okidata GE5250 907A1039300
AUTODIAL MODEM Okidata Okitel 1200 9080301A
AUTODIAL MODEM Okidata Okitel 1200 9080681A
AUTODIAL MODEM Okidata Okitel 1200 9090386A
AUTODIAL MODEM Okidata Okitel 1200 9080689A
AUTODIAL MODEM Okidata Okitel 1200 9090241A
AUTODIAL MODEM Okidata Okitel 1200 9090243A
AUTODIAL MODEM Okidata Okitel 1200 9090244A
AUTODIAL MODEM Okidata Okitel 1200 9090245A
AUTODIAL MODEM Okidata Okitel 1200 9090246A
AUTODIAL MODEM Okidata Okitel 1200 11721A
Printer Okidata GE5250U 101A1213595
Card Read Punch IBM 1442 40958
Disk Controller IBM 3880 59890
Disk Controller IBM 3880 54962
Controller pc cards IBM 5294 55273
Controller pc cards IBM 5294 55274
Controller pc cards IBM 5294 55447
Disk Controller IBM 3880 56902
Data Station IBM 3741 57542
Disk Controller IBM 3880 60245
Printer IBM 4201 53512
DASD IBM 3380 60769
CPU IBM PS/2 62959
Tape Unit IBM 3420 72517
Modem IBM 5853 75591
Printer IBM Proprinter 76956
Controller IBM 3274 77824
Disk Controller IBM 3880 54327
Tape Unit IBM 3420 51672
Printer IBM 3812 51946
Controller IBM 3274 84121
Controller IBM 3274 43007
Disk Controller IBM 3880 41252
Comm. Controller IBM 3705 41606
Disk Controller IBM 3880 42258
Disk Controller IBM 3880 42477
Tape Controller IBM 3705 42749
Controller IBM 3274 43006
Tape Controller IBM 3705 43231
Printer IBM 4201 51472
Printer IBM Proprinter 44614
S/1 Cabinet #3 IBM 4997 47248
Disk Controller IBM 3880 47495
Disk Controller IBM 3880 49787
Tape Unit IBM 3420 50412
Printer IBM 4201 51437
Controller IBM 3274 83109
Controller IBM 3274 84466
Printer Okidata GE52500 010A1187163
Printer NEC Pinwriter P6 580247946NY
Modem Microcom AX-2400C 14030-28420
8 Port Modem Rack with modems Microcom SX/CH 404585
HDMS ICROCO HDMS 444931
8 PORT MODEM ASSEMBLY ICROCO SXCH 1103380273
Modem Multitech V.32 2024189
Fax Machine Murata F-50 F5Y01200021031L
Printer NEC Pinwriter P6 580263900
Printer NEC Pinwriter P6 530034634
2 Cabinets Memotec A352381
Printer NEC Pinwriter P6 580297500
Printer NEC Pinwriter P6 580297691
Printer NEC Pinwriter P6 580297732
Microfilm Reader Northwest 575 H046849
Printer Okidata GE5250U 006A1132525
Printer Okidata GE5250U 008A1146340
2 Cabinets Memotec A352382
CPU Macintosh IICI 2188CMF9803LL/
Tape Unit IBM 3420 89287
CPU IMS 386SX 114838
Controller IBM 3274 89475
Controller IBM 3274 90129
Controller IBM 3274 90940
Modem IBM 5866 93871
CPU IMS 386-Sx 386SX25715924
CPU IMS 386-SX 386S>(25715928
Communications Processor Jupiter NPS9614/A W00129
Communications Processor Jupiter NPS9608/A W00118
CPU Macintosh IICI F10342A3740
Communications Processor Jupiter NPS9614/A W00130
Communications Processor Jupiter NPS9614/A W00151
Communications Processor Jupiter NPS9614/A W00216
Communications Processor Jupiter NPS9614/A W00528
Terminal Lear Seigler ADM-31 411229
CPU Zeos AIC-286 4110
Card Expansion Unit IBM 4577 18679
Schedule F-2
Leases
Vendor ID # Description
AT&T Credit Corporation 3019 Cabinet
AT&T Credit Corporation 3016 Call Management System
AT&T Credit Corporation 3017 Telecom Equipment
AT&T Credit Corporation 3018 Circuit Pack
AT&T Credit Corporation 3032 Telecom Equipment
AT&T Credit Corporation 3020 Telecom Equipment
AT&T Credit Corporation 3014 PBX Additions
AT&T Credit Corporation 3033 Telecom Equipment
AT&T Credit Corporation 3035 Telecom Equipment
AT&T Credit Corporation 3038 Telecom Equipment
AT&T Credit Corporation 3015 PBX Additions
AT&T Credit Corporation 3013 System 85
AT&T Credit Corporation 3004 System 85
AT&T Credit Corporation 2008 PBX Additions
AT&T Credit Corporation 2012 Circuit Packs
El Camino Resources* ES8-CDN System 85
El Camino Resources* ES7-CDN Gateway Software
El Camino Resources* ES7-CDN Infobot
*Formerly Bell Atlantic Systems
Schedule F-3
Contracts
Description Vendor
Maintenance PBX at Rotec, Avon, CT AT&T
Maintenance Dallas CMS AT&T
Maintenance Dallas PBX AT&T
Maintenance Brentwood G-2 AT&T
Maintenance Brentwood V-4 AT&T
3270 Super Optimizer BMC Software
PL1 to Cobol Conversion Business Information Systems
Maintenance PBX/Telecom Equipment Cincinnati OH Cincinnati Bell
MVS Seven Computer Associates
MVS Eleven Computer Associates
MVS One Computer Associates
Share-Option 5 Computer Associates
IBM 3540 Disk Reader Data Processing Equipment
Job Scan - + Diversified Software
Accounts Receivable Dun & Bradstreet
GDCM-100/NW Library Graphic Management Group
Net-Worker R.M Graphic Management Group
CM-90 Graphic Management Group
5728 AS/400 Application Development Tools IBM Credit Corporation
5728 AS/400 PC Support IBM Credit Corporation
5728 AS/400 Performance Tools IBM Credit Corporation
5728 AS/400 Query IBM Credit Corporation
5728 AS/400 S/38 Utilities IBM Credit Corporation
5728 Operating System /400 IBM Credit Corporation
5728 RPG/400 IBM Credit Corporation
5730 AS/400 Implement-Add Top IBM Credit Corporation
5730 AS/400 Implementation IBM Credit Corporation
The Monitor for CICS Landmark Systems
Universe Lawson Associates
General Ledger, Print Writer Lawson Associates
Accounts Payable Lawson Associates
Fixed Asset System Lawson Associates
Sysview (FAQS) Legent Corporation
FAQS/ASO For VSE Legent Corporation
U.S. L.A.A. Toll Pricer Lynn Arthur Associates
Kwik-Key MacKinney Systems
Show & Tell 11 MacKinney Systems
CICS Spy MacKinney Systems
CICS Message MacKinney Systems
CICS CEMT from Batch MacKinney Systems
LFU/CICS MacKinney Systems
Listcat-Plus MacKinney Systems
Maintenance Memotech
Control Source/Library System Network Concepts, Inc.
Carrollton Network Racal-Datacom, inc.
Enlighten Software Professionals
Answer Sterling Software
DYL/280 II MVS Sterling Software
Supertracs/ISPF Sterling Software
Supertracs/Combo Sterling Software
Monitor Syntellect
E-Maint Syntellect
Gateway Syntellect
Dytel Voice Mail Syntellect
Q-TEL 9000 United Communications Group
TMF-Auditor/SQL USA Software
Schedule G
Disaster Recovery Services
Section G-1
A. Introduction
ISSC will be responsible for the provision of Disaster Recovery
capability and services to Comdata for Comdata's MVS mainframe
services
It is ISSC's intent to provide Disaster Recovery services for
Critical Applications at a level of performance which will allow
Comdata to restore and continue those functions which are vital
to the continuation of Comdata's business operations during a
declared Disaster. ISSC will make commercially reasonable efforts
to meet the Performance Standards during such Disaster. No
performance credits or debits will be applicable during such
Disaster.
B. Definitions
1. "Configuration" means the hardware and Software
designated for the support of the Critical Applications
during a declared Disaster.
2. "Critical Applications" means the applications specified
by Comdata to support Comdata's vital business functions
in the event of a Disaster.
3. "Disaster" means any unplanned interruption of
information processing for Comdata, due to causes beyond
the control of Comdata or ISSC, which significantly
impairs the ability of ISSC to operate the Critical
Applications at the Data Center. Examples are:
a. loss of the building to fire;
b. loss of power to the facility due to tornado damage;
and
c. inability to access the facility due to a chemical
spill, etc.
4. "Disaster Recovery" means the restoration, at a location
other than the Data Center, of Critical Applications
following a declared Disaster.
5. "Recovery Center" means the facility from which ISSC
provides Disaster Recovery services.
C. Services
1. Disaster Recovery Plan
The plan for recovering the Critical Applications,
necessary for continuation of the vital business
processes of Comdata will be completed within 180 days
from the Amended Commencement Date, will be subject to
the mutual approval of the Parties, and will include, but
not be limited to, the following:
- a brief description of the critical services and
functions, including a prioritized listing of the
Critical Applications;
- the hardware and Software comprising the
Configuration;
- the hardware and Software necessary for connection to
the Data Network;
- ISSC's and Comdata's recovery responsibilities;
- contact listings of key personnel;
- identification of recovery teams;
- recovery scenarios;
- criteria for Disaster declaration, recovery and
testing:
- names of those individuals who are authorized by each
Party to declare a Disaster;
- backup process and components,
- notification procedures;
- recovery information, procedures, schedules, etc.;
- testing results and any required corrective action
plans; and
- procedures for maintaining the Disaster Recovery
Plan.
ISSC will provide a representative who is knowledgeable
in Disaster Recovery planning and the Disaster Recovery
Plan for the Services covered by this Agreement to serve
as a single point of contact for Comdata's Disaster
Recovery related communications and activities The ISSC
representative will be responsible for the development
and maintenance of the Disaster Recovery Plan and will
ensure safe storage and distribution of copies as
follows:
a. off-site vital records storage;
b. Comdata's Disaster Recovery coordinator;
c. ISSC's Disaster Recovery coordinator; and
d. ISSC Project Office.
ISSC, in cooperation with Comdata, will review and
update, if necessary, the Disaster Recovery Plan on an
annual basis or as warranted by business and/or technical
changes to ensure compatibility with Comdata's and ISSC's
overall Disaster Recovery strategies and related plans.
Any additional updates which are necessary as a result of
actions by Comdata may be considered New Services.
ISSC, in cooperation with Comdata, will test the Disaster
Recovery Plan at least twice during the first year and
annually thereafter to ensure the plan remains
practicable and current. ISSC will notify Comdata at
least twenty (20) days in advance before performing a
test of the Disaster Recovery Plan, and Comdata will be
entitled to observe such tests and to participate where
appropriate. Results of the tests will be documented in
writing and a copy supplied to Comdata promptly. Disaster
Recovery testing will be coordinated with Comdata and
ISSC will provide Comdata with a report of the test
results following each Disaster Recovery test.
2. Data Center Recovery
The declaration of a Disaster will require mutual
agreement of the representatives designated by ISSC and
Comdata and specified in the Disaster Recovery Plan.
In the event of a declared Disaster, ISSC will take
immediate action to prepare the Recovery Center for use
and will provide the agreed to required resources to
support Comdata's Critical Applications. Restoration of
Services for the Critical Applications will be provided
within 24 hours after a Disaster is declared and will
include, but not be limited to:
a. delivering the data and Software archived in off-site
storage to the Recovery Center designated in the
Disaster Recovery Plan or at such other location as
may be established by ISSC thereafter;
b. rerouting the data communications circuits to the
Recovery-Center;
c. operating the Critical Applications on the
Configuration at the Recovery Center; and
In the event of a Disaster, access to the Recovery Center
or other recovery facility will be on a first-come-first-
served basis and may be shared with other subscribers
also experiencing a Disaster. Comdata will be provided
priority access over:
a. customers who are not Disaster Recovery services
customers;
b. customers who have scheduled testing; and
c. customers who subsequently notify the Recovery Center
that they have declared a Disaster.
If the Recovery Center specified in Section C.2(a) above
is not available when a Disaster is declared. Disaster
Recovery services will be provided at another Recovery
Center or at an ISSC internal information processing
facility.
3. Data Network Recovery
Comdata, in cooperation with ISSC, will develop a Data
Network recovery plan to be completed within 180 days of
the Amended Commencement Date. The Data Network recovery
plan will utilize the strategy for redundancy currently
in place and during a disaster will only be recoverable
to the extent to which Comdata has implemented that plan.
ISSC is not responsible for End User recovery.
4. Resources and Growth
The resources for Disaster Recovery services are the
current capacities. Growth in the capacity will be
provided at a rate necessary to support the the new
capacity and will be considered a replacement service.
5. New Services
Additional services, including DSM Disaster Recovery,
functions or capacity will be added at the request of
Comdata subject to Section 6.4 of the Agreement.
Schedule G
Disaster Recovery Services
Section G-2
Configuration
The detail Configuration will be maintained in the Disaster
Recovery plan. This plan will be reviewed with Comdata in
conjunction with the annual test.
Schedule G
Disaster Recovery Services
Section G-3
Critical Applications
The Comdata critical applications will be supplied by Comdata and
maintained in the Disaster Recovery plan. This list will be
reviewed at least yearly in conjunction with the annual test.
Schedule H
Transition Plan
TRANSITION MANAGEMENT PLAN
1. OVERVIEW
There will be a three month transition period ("Transition
Period") beginning on the Amended Commencement Date. The
Transition Period may be extended with mutual agreement of
the Parties. During the Transition Period. ISSC will be
responsible for;
- providing the Services; and
- reimbursing Comdata for the base salary paid to and
direct benefit costs for each Affected Employee until the
earlier of the following:
- the date of employment with ISSC; or
- the date the Affected Employees who decline
employment with ISSC who 1) voluntarily resign from
Comdata or 2) are reassigned by Comdata to perform
work other than in direct support of the Services, or
3) ISSC notifies Comdata that the work being
performed by the Affected Employee in direct support
of the Services is no longer required. Such date to
be no later than three months after the Commencement
Date.
During the first 60 days of the Transition Period, the
Parties will commence and complete a written plan to be
mutually agreed upon for the transition of the necessary
staff and resources from Comdata to ISSC. Comdata will
cooperate with ISSC in accomplishing all aspects of the
transition, including the commitment of the resources
necessary to complete the the transition during the
Transition Period and will continue to provide support to the
Services until the transition is completed.
Comdata will use reasonable efforts to maintain staffing to
support the DSM Environment. By no later than 60 days after
the Effective Date ISSC may consider those Comdata employees
listed on Schedule O (the "Affected Employees") for
employment with ISSC. ISSC will be solely responsible for
making any hiring decisions regarding the Affected Employees.
ISSC will hire those Affected Employees receiving offers who:
- are employed by Comdata as of the date the offer is made;
- meet ISSC's customary preemployment screening procedures
for health, drug and background criteria; and
- accept the offer of employment from ISSC within ten days
from the date the offer is made.
All Affected Employees remaining on Comdata's payroll shall
perform their duties under the direction and control of
Comdata and will be treated as Comdata employees for all
purposes throughout the Transition Period; provided. however,
that nothing herein shall be interpreted so as to relieve
ISSC of its obligations to provide the Services as of the
Amended Commencement Date.
Replacements for the Affected Employees shall be selected by
ISSC as it deems necessary, and ISSC shall have financial
responsibility for salary and benefits for replacements of
Affected Employees.
Each offer of employment to an Affected Employee shall
include an initial base salary not less than the base salary
each such Affected Employee currently receives from Comdata
Such offers will include the benefits package available to
similarly situated ISSC employees.
2. INTRODUCTION
The Transition Plan will address the migration of certain
functions currently being performed by Comdata to ISSC These
include:
- Comdata's DSM Environment.
- Network management of the Harris switch located in
Newberry, South Carolina with off hours support from
Comdata.
The Transition Plan will describe and outline:
- the goals, expectations and individual objectives of the
project,
- the technical assumptions and dependencies inherent in
the project, and
- the timeliness activity dates and people responsible for
individual tasks throughout the transition.
The Plan will be modified as new requirements emerge and
additional constraints demand. Revised versions of the Plan
will be provided to Comdata first and second line managers
responsible for the transition project for their review.
3. GOALS AND EXPECTATIONS
The goal of this transition project is for ISSC to assume the
responsibilities, listed above, which are currently being
performed by Comdata. Support and operational services
provided by the ISSC will range from technical activities
such as software support and operational monitoring to the
implementation and management of the SMC disciplines in the
DSM Environment.
4. METHODOLOGY
The Project Management Methodology is based on a matrix
management system with resources assigned by Comdata and
ISSC. Major project activities will be assigned to the
appropriate resource as designated by Comdata and/or ISSC.
Each major activity will have a stand-alone project plan
which will be integrated into the overall Transition Plan by
the ISSC Transition Manager and assigned staff.
5. ROLES AND RESPONSIBILITIES
a. ISSC Responsibilities
ISSC is responsible for the development and
implementation of the Transition Plan. Responsibilities
include management of project status meetings and the
tracking of all tasks. Regular updates to Comdata
management will be provided
b. Comdata Responsibilities
- Comdata will be required to assign personnel to the
Transition Management Team.
- Comdata personnel currently performing the functions
referenced in this schedule will continue to perform
those functions until such time as they are
transitioned to ISSC.
Schedule I
End User Locations
Affiliate City
Trendar Nashville, Tennessee
Transceiver Network, Inc. Carrollton, Texas
Transceiver Cincinnati, Ohio
Cal Permits, Inc. San Bernardino, California
Consumer Services Pleasantville, New Jersey
Consumer Services Las Vegas, Nevada
Consumer Services Reno, Nevada
Saunders Leasing Birmingham, Alabama
Cash Control Newberry, South Carolina
ROTEC Avon, Connecticut
**This list does not include point of sale locations.
Schedule J
ISSC Charges, Measures of Utilization and
Financial Responsibilities
I. Introduction
This Schedule J describes the methodology for calculating
any extra charge with respect to the Services being
provided to Comdata pursuant to this Agreement, other than
those Services which may be provided to Comdata on a pass-
through billing basis or to the extent this Agreement
expressly provides otherwise. The Annual Services Charge
("ASC"), as adjusted by the Cost of Living Adjustment
("COLA") and any related charge agreed to as set forth in
Section 6.2 of the Agreement are intended, in the aggregate
to compensate ISSC for all of the resources used in
providing the Services. In addition, this Schedule J
describes the measures of resource utilization and the
tracking thereof.
All capitalized terms used and not defined in this Schedule
J shall have the same meanings given them in the Agreement,
Supplement or other Schedules.
II. Annual Services Charge
The Annual Services Charge is the fixed charge to Comdata
for ISSC's provision of the Services.
Beginning on the Amended Commencement Date and monthly
thereafter, ISSC will invoice Comdata in advance for the
proportional amount of the Annual Services Charge due ISSC
for that month. The monthly amount will be calculated by
dividing the Annual Services Charge specified in the
Supplement for that period by the number of months or
portion thereof in that period
III. Cost of Living Adjustment
The Parties agree to use the December unadjusted Consumer
Price Index, as published in the "Summary Data from the
Consumer Price Index News Release" by the Bureau of Labor
Statistics, U.S. Department of Labor, For All Urban
Consumers, ("CPI-U"), for purposes of determining actual
inflation.
ISSC will calculate the Cost of Living Adjustment beginning
in January following the Amended Commencement Date using
the factor specified below, (the "COLA Factor"). If such
factor is in excess of zero, CO A monies will be due ISSC
for the applicable period. The COLA is applied and payable
monthly on a prospective basis (e.g., the actual inflation
for year 1995 will determine the COLA for 1996) on the
Annual Services Charge and will include any extra charges
payable by Comdata under this Agreement for the subsequent
calendar year. The COLA Factor will be determined as soon
as practicable after the end of each calendar year and the
COLA will be calculated as follows:
A. Actual Inflation:
ISSC will calculate the COLA by comparing the change in
the year-to-year CPI-U with the CPI-U for the December
preceding the Amended Commencement Date, (the "Base
Year Index"). For each year of the Term, the actual
CPI-U for the December prior to the year for which COLA
is being calculated, (the "Actual Inflation"), is
compared to the Base Year Index set forth in the
Supplement. If the Actual Inflation is equal to or less
than the Base Year Index, then no COLA is due. However,
if the Actual Inflation is greater than the Base Year
Index, then COLA will be applied to the Annual Services
Charge and other expenses due ISSC. For example
purposes, we will assume that the actual CPI-Us for
December of each of the first few years are:
Base 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
CPI-U
149.70 154.00 151.00 163.50 168.80
B. COLA Factor:
COLA is equal to the Cola Factor times the monies due
ISSC (ASC plus extra charges) for each month of the
calendar year succeeding the calendar year during which
Actual Inflation is greater than the Base Year Index.
The COLA Factor is calculated as follows:
COLA Factor = {((Actual Inflation -
Base Year Index)/Base Year Index) x 0.90}
Where:
Actual Inflation = The CPI-U for December
preceding the calendar year for
which COLA is being calculated.
Base Year Index = The CPI-U for the December
preceding the Amended
Commencement Date.
0.90 = The portion of the charges that
are inflation sensitive.
C. COLA Calculation:
Following is an example for calculating the COLA for
years beginning January 1, 1996 for an Agreement having
a 1995 Commencement Date using the Actual Inflation,
Base Year Index and COLA Factor specified above:
As you can see, there will be COLA for calendar years
1996, 1997 and 1998 as the Actual Inflation for their
preceding years is greater than the Base Year Index,
i.e., Decembers 1995, 1996 and 1997 CPI-Us (154.00,
151.00 and 163.50) are greater than the Base Year Index
(149.70).
To determine the COLA monies due. in addition to the
other charges, for January of 1996 where the monthly
prorated portion of the ASC for January is S1,400,000
and there are no extra charges applicable, the
calculation will be as follows:
COLA = ASC x {COLA Factor}
COLA = $1,400,000 x {((154.00- 149.70)/149.70) x 0.90}
COLA = $1,400,000 x {((4.30)/149.70) x 0.90}
COLA = $1,400,000 x {(0.0287) x 0.90}
COLA = $1,400,000 x {0.0258}
COLA = $36,120.00
The COLA for each month of each year in which COLA is
due is calculated as above substituting the appropriate
monthly monies and COLA Factors based upon the calendar
year.
In the event the Bureau of Labor Statistics stops
publishing the CPI-U or substantially changes its content
and format. the Parties will substitute another comparable
index published at least annually by a mutually agreeable
source. If the Bureau of Labor Statistics merely redefines
the base year for the CPI-U from 1982-84 to another year,
the Parties will continue to use the CPI-U, but will
convert the Base Year Index to the new base year by using
an appropriate conversion formula.
ISSC will invoice Comdata for COLA, if any, starting in
January 1997 and monthly thereafter as specified in Section
7.2 of the Agreement.
IV. Units of Measure for Resource Categories
Starting at the Amended Commencement Date and monthly
thereafter, ISSC will measure, track and report usage of
resources in the categories listed below.
A. CPU Utilization:
Resource usage for this category will be the capacity
of the existing CPU(s), associated DASD, tape, other
peripheral equipment attached to such processing
unit(s), network equipment and peripherals as specified
in Schedule U.
Additional capacity, whether needed for:
1. Increased processing requirements for existing
users;
2. maintaining agreed upon service levels for Comdata
End Users;
3. processing requirements for new users;
4. processing requirements for additional applications
development and maintenance; or
5. processing new applications, will be the
responsibility of Comdata or, at Comdata's request,
will be provided by ISSC as New Services pursuant
to Section 6.4 of the Agreement.
In the event Comdata's utilization of resources provided
under this Agreement impact's ISSC's ability to meet a
Performance Standard, then the Parties will discuss whether
additional resource capacity or other course of action will
alleviate the impact upon ISSC's ability to meet the
Performance Standard. ISSC will be relieved of such
Performance Standard to the extent affected until the
earlier of: a) Comdata's resource utilization reverts to
Comdata's utilization prior to the impact upon ISSC's
ability to meet the Performance Standard; or b) Comdata
implements, at its expense, the corrective measures
discussed by the Parties, or ISSC implements such
corrective measures at Comdata's request and subject to
Section 6.4 of the Agreement.
If Comdata is either unable or does not wish to implement,
or have ISSC implement, the corrective measures discussed
by the Parties, and if Comdata's resource utilization does
not revert to the utilization prior to the impact upon
ISSC's Performance Standard, Comdata and ISSC will create a
mutually agreed-upon environment against which a benchmark
will be taken, both prior and subsequent to the change in
utilization, in order that a) the affected Performance
Standard can be adjusted accordingly; or b) Comdata and
ISSC mutually agree on a new Performance Standard.
B. Voice Systems.
The "Voice Resource Baseline" ("VRB") of the Voice Systems
shall be the capacity of such systems as of the Effective
Date. To the extent Comdata requires services, features or
functions in excess of those which can be provided by the
Voice Systems as configured as of the Effective Date (e.g.,
additional line cards, memory or larger switches), ISSC
will provide such services, features or functions, all of
which will be charged to Comdata as New Services or
Replacement Service pursuant to Sections 6.4 and 6.5 of the
Agreement
C. DSM Environment:
Resource usage for this category will be the capacity of
the DSM Environment specified in Schedule C for the Comdata
Machines specified in Schedule C. Comdata is responsible
for additional capacity at existing DSM Network Locations
and for any new DSM Network locations.
D. DSM Help Desk:
The DSM Help Desk for the DSM Environment will be staffed
by 2 FTEs on prime shift (Monday to Friday) only The number
of calls will be tracked and reported to Comdata monthly,
however there is no baseline of calls for this category. At
Comdata s request, additional FTE's will be provided by
ISSC as New Services pursuant to Section 6.4 of the
Agreement, or as Replacement Services pursuant to Section
6.5 of the Agreement.
E. AD/M Services:
The Parties have agreed that they will use full time
equivalent ("FTE") person-years to measure the quantity of
AD/M Services delivered by ISSC to Comdata. An FTE equals
1850 hours (exclusive of holidays, vacation time, sick
leave or other personal time off) of AD/M Services per year
or 154.1 hours per month.
The quantity of FTEs included in the Annual Services Charge
is specified in the AD/M Services Baseline in the
Supplement.
On a two year cycle, or as mutually agreed upon, the
Parties will conduct a strategic planning session during
which Comdata's Applications Development and Maintenance
direction will be reviewed, prioritized and AD/M Services
resources allocated according to the mutually agreed upon
AD/M schedule. In addition, the Parties will periodically
review the AD/M Resource Category quantity and skills mix
and mutually agree upon the required changes if any, to
provide support for the upcoming year(s). The results of
the strategic planning sessions and other Comdata AD/M
forecasts will determine AD/M Services resource deployment
and will be the basis for determining additional charges,
if any.
If Comdata requires AD/M Services resources in addition to
the planned AD/M Services resources referenced above, ISSC
shall provide these AD/M Services resources as New Services
pursuant to Section 6.4 in the Agreement. Alternatively,
ISSC and Comdata will jointly evaluate the reassignment of
existing AD/M Services resources to determine if current
Projects may be re-prioritized to accommodate additional
short term AD/M Projects. ISSC will provide and use a
formal change control procedure to document and monitor
changes to Project estimates and schedules.
Schedule K
Application Installation Standards
Comdata agrees that Software provided to ISSC for execution,
operational support and/or AD/M Services will conform to the
following standards:
1. DSM Environment
- Standards and conventions will be developed by ISSC and
Comdata within six months of the Effective Date. These
standards will include:
- LAN Configurations
- Software standards
- Back out and recovery procedures
- Application Documentation standards.
- Operational run procedures
- All DSM Software developed by ISSC, Comdata or any third
party must conform to these standards.
2. Software other than DSM Software
- Current standards and conventions will be updated by ISSC
and Comdata within six months of the Effective Date. These
standards will include:
- File allocation and naming conventions
- Sysout classes
- Job execution classes
- Forms standards
- Accounting fields
- Job Name standards
- User Acceptance Testing, in the appropriate test
environment. to ensure accuracy and conformity to
specifications
- Final sign-off for acceptance of the Application
Software
- Any other standards mutually agreed upon and documented
within the existing "Standards Manual".
- Back out and recovery procedures will be documented
- On a minimum two year cycle, coincident with the ISP.
these standards and conventions will be reviewed and
mutually agreed upon between Comdata and ISSC.
Schedule L
Security Procedures and Responsibilities
ISSC will:
1. install, maintain and upgrade (with financial responsibility
as otherwise provided for in this Agreement) new or existing
Systems Software for data access control;
2. implement the functions and features of the access control
software which will satisfy Comdata's security standards and
practices as defined in the Procedures Manual;
3. identify the protection requirements for operating system
resources and implement this protection via the access
control software;
4. use the system access granted to ISSC employees only to the
extent necessary to perform activities required by this
Agreement;
5. restrict access to the Data Center to authorized personnel
only;
6. conduct periodic reviews of the Data Center access logs for
unusual occurrences and perform follow-up activities;
7. implement controls which protect printed output from
unauthorized access while under ISSC's control;
8. provide storage and security for portable storage media
including, but not limited to, tapes and disk packs under
ISSC's control;
9. keep abreast of the latest concepts and techniques
associated with system and data security; and
10. review security policies and procedures for effectiveness
and recommend improvements.
Comdata will:
1. provide ISSC with Comdata's most recent data security
standards and practices and updates as they occur;
2. identify the protection requirements for application
resources and protect them via the access control software;
3. identify the protection requirements for End User data and
protect it via the access control software;
4. establish. change, deactivate and remove logon IDs and
associated access authorities;
5. reset logon ID passwords and disclose passwords to
authorized personnel;
6. periodically review logon IDs and remove those for which
management authorization no longer exists;
7. review, approve and grant requests for privileged user
authorities;
8. periodically review privileged user authorities and remove
those for which management approval no longer exists;
9. implement and maintain security controls for those
subsystems which do not use the access control software for
their security;
10. keep abreast of the latest concepts and techniques
associated with system and data security:
11. review security policies and procedures for effectiveness
and recommend improvements; and
12. have financial responsibility for Systems Software for data
access control as otherwise provided for in this Agreement.
AS/400 Resources
ISSC will control operation System Software installs, upgrades
and maintenance.
ISSC will have on-line security file administration
responsibility to grant read, write, create, and scratch access
to the ISSC operating system files, libraries, and Application
Software dependent on proper registration.
ISSC will have on-line security file administration
responsibility to create End User ID's (i.e. on-line
responsibility to update the security file).
ISSC will have on-line security file administration
responsibility to grant read, write, create, and scratch access
to Comdata business application files and libraries (i.e. on-line
responsibility to update the security file).
ISSC will control and be responsible for the AS/400 Security
Officer ("QSECOFR") user ID. Use of the user class of *SECOFR
and/or the special authority ALLOBJ within other user ID s will
be restricted to ISSC. When ISSC is performing security
administration functions (user ID processing and password
authorization), the *SECADM user class and *SECACDM special
authority will be restricted to ISSC user ID's.
Comdata will relinquish the QSECOFR user ID and remove *SECOFR
user class and the special authority ALLOBJ from any other user
ID's or allow ISSC to remove these authorizations from existing
user profiles. When ISSC is performing security administration
functions (user ID processing and password authorization), the
*SECADM user class and *SECADM special authority will be removed
from Comdata user ID's.
Comdata will validate new users, password resets and their
associated library access.
Schedule M
DSM Help Desk
ISSC will staff and support a level one help desk in support of
the DSM Environment. The DSM Help Desk will be staffed during
prime shift only as defined below. Calls placed during off shift
will be routed to and logged by the command center. ISSC's
responsibilities are described below.
DSM Help Desk
The DSM Help Desk will perform first level problem determination,
resolution and/or tracking for Comdata End Users and other
support personnel who are using on-line or batch services
provided within the DSM Environment. The staff will perform the
following functions:
1. Initiate a Problem Management Record ("PMR") to document
service outages;
2. provide preliminary problem determination;
3. classify the PMR with a severity level classification, as
defined in the Procedures Manual;
4. perform dispatch of vendor or ISSC resources, as
appropriate. All problems are dispatched during the Prime
Shift hours (described below). Only severity 1 and severity
2 problems are dispatched during Off Shift hours (described
below).
5. update Comdata with complete and accurate systems status;
6. recycle, start and stop devices.
7. report on the status of batch jobs upon request;
8. manage and monitor daily data transmissions;
9. notify designated Comdata personnel of systems or equipment
failures, or of an emergency, according to the Procedures
Manual:
10. maintain and distribute an updated help desk telephone
number listing as required;
11. dispatch local and long distance carriers for line problems;
and
12. provide a monthly report to Comdata assessing ISSC's help
desk performance.
Hours of Operation
The DSM Help Desk hours will be
Prime Shift Monday - Friday 0800 - 1700 Central Time, excluding
holidays Off Shift and all hours not covered in Prime Shift.
Comdata Responsibilities
Comdata will be responsible for the following:
1. Applications training:
2. Designating Comdata personnel to answer questions and
resolve problems not within the scope of the Help Desk (e.g.
calls from point of sale locations and other Comdata
customers), and otherwise assist Help Desk personnel.
3. maintaining an updated Comdata contact listing for use by
help desk personnel;
4. providing support for all End User Equipment;
5. providing support, training, problem determination, and
problem resolution for applications resident on End User
Equipment which have not been developed by ISSC.
6. Software and configuration management for End User Equipment
and End User applications.
7. assisting in the resolution of recurring problems which are
the result of End User errors; and
8. performing password administration for End Users, including
password resets.
9. reporting problems to the DSM Help Desk.
Baseline
This agreement provides two (2) full-time equivalents to provide
DSM Help Desk support on a level-of-effort basis. If additional
resources are needed, they will be supplied as New Services or
Replacement Services pursuant to Section 6.4 and 6.5,
respectively, of the Agreement.
Schedule N
Projects
Introduction
ISSC is assuming responsibility for the application development
and related projects set forth in this Schedule (the "Projects")
as part of the Annual Services Charge and within the quantity of
FTE's specified in the AD/M Services Baseline in the Supplement.
It is acknowledged by Comdata that information with respect to
the requirements and specifications for each of the Projects is
in summary form and will be subject to the joint verification
period as described in Section 3.7 of the Agreement
ISSC Responsibilities
1. MVS mainframe installation, configuration and support of the
following:
- TCP/I P communication software.
- DB2 relational database software.
Any products chosen to replace the products specified above
will be treated as Replacement Services as defined in
Section 6.5.
2. Project Management responsibility for the following areas:
- One Project Manager assigned for projects such as BSI,
UNISYS and TATA development.
- One Project Manager assigned for Trendar development,
until December, 1995.
3. Development of a transition plan for Year 2000 processing.
4. Scheduled use of TeamFocus environment utilizing on-site
resources.
ISSC/Comdata Responsibilities
1. JAD (Joint Application Design) support for the E-NADS
(Electronic New Account Data Sheet) project will be provided
by appropriate ISSC and Comdata personnel.
2. ISSC will perform a replacement study for the Autodial and
RapFax platforms with support and assistance from Comdata's
Product Center.
3. ISSC will perform a security review, including MVS mainframe
and Sun system access, within 60 days of the Effective Date.
Comdata participation will be required.
4. Information Strategic Plan (ISP)
- Within 60 Days of the Effective Date. an ISP will be
scheduled using Solution/2000 methodology within the
TeamFocus environment. Comdata Executive, Product Center
and other Comdata Associates participation will be
required. The ISP will be complete within four months of
initiation.
- Each 2 years, the ISP will be revalidated using existing
on-site resources from both ISSC and Comdata.
5. Application Projects
- PIDRAS (Permit Image Disaster Recovery)
- Master Software
- Enhanced CDI (Carrier Dial-In)
- A pilot D82 project will be jointly identified and
defined. Development will be performed by ISSC, with
testing and participation from Comdata personnel.
Schedule O
Affected Employees
Ira Childress
Larry Long
Percy Owens
Schedule P
Maintenance Services
Comdata and ISSC agree that the following terms and conditions
will apply to maintenance service provided by ISSC for Machines
and Software under this Agreement.
1. Machines Required to be Maintained By ISSC at No Additional
Charge
For the purposes of this Section 1, Required Maintenance
Machine(s) means ISSC-owned machines for which ISSC is obligated
to provide maintenance services under Section 4.10(d) of the
Agreement.
At no additional charge to Comdata, ISSC shall perform all
maintenance services necessary to keep the Required Maintenance
Machines in good operating condition and operating in accordance
with applicable manufacturers' warranties and performance
standards. The required maintenance services shall include but
not be limited to preventive maintenance, regularly scheduled
maintenance and service, and prompt repair or replacement of
Required Maintenance Machines not performing in accordance with
the applicable manufacturers' warranties and performance
standards.
2. Maintenance by ISSC of Software
Pursuant to Sections 4.9 and 4.10 of the Agreement, ISSC shall
perform all maintenance services necessary to keep the ISSC
licensed Software performing in accordance with applicable
manufacturers' warranties and performance standards. This shall
include but not be limited to regular updating, installation of
new versions and new releases in accordance with this Agreement,
error correction services and emergency responses.
Subject to Section 5.2 of the Agreement, ISSC, at Comdata's
request. will also perform the above maintenance services for
Comdata licensed software. This activity will either be chargable
against the Enhancement Baseline specified in the Supplement or
provided as a New Service.
3. Comdata's Responsibilities
Comdata agrees to provide a suitable environment for Machines
located at End User Locations, as specified by the Machines'
manufacturers, if any are included within the Services. Comdata
will provide ISSC reasonable access to Machines so that ISSC may
provide on-site services. Comdata agrees to inform ISSC of
changes in a Machine's location if Comdata performs a move, add
or change with respect to a Machine.
Comdata shall perform all maintenance services neccessary to keep
Comdata Machines and the DSM Machines in good operating condition
and operating in accordance with applicable manufacturers'
warranties and performance standards. The required maintenance
services shall include but not be limited to preventive
maintenance, regularly scheduled maintenance and service. and
prompt repair or replacement of Comdata Machines not performing
in accordance with the applicable manufactures' warranties and
performance standards. In the event Comdata does not perform such
maintenance services, Comdata will relieve ISSC of the
responsibility for that portion of the Services affected by the
lack of performance and shall reimburse ISSC for all additional
expenses. if any, incurred during such period of non-performance.
Subject to Section 5.6 of the Agreement, ISSC, at Comdata s
request, will also perform the above maintenance services for
Comdata Machines or the DSM Machines. This activity will either
be chargable against the Enhancement Baseline specified in the
Supplement or provided as a New Service.
Schedule Q
Claims
NONE
Schedule R
End User Machines Subject to ISSC Maintenance
Vendor Description S/N # Location
Dell 453SE System Unit 2CY13 Carrollton
Dell 45CSE System Unit 2CXNR Carrollton
Dell 486/D50 SYSTEM UNIT 2CZCY Carrollton
Dell 486/D50 SYSTEM UNIT 2CZCW Carrollton
Dell 486/D50 SYSTEM UNIT 2CZB9 Carrollton
Dell 486/D50 SYSTEM UNIT 2CZBL Carrollton
Dell 486/D50 SYSTEM UNIT 2CZCO Carrollton
Dell 486/D50 SYSTEM UNIT 2CZDO Carrollton
Dell 486/D50 SYSTEM UNIT 2CZDK Carrollton
Dell 486/D50 SYSTEM UNIT 2CZ9N Carrollton
Dell 486/D50 SYSTEM UNIT 2CZ93 Carrollton
Dell 486/D50 SYSTEM UNIT 2CZ9X Carrollton
Dell 486/D50 SYSTEM UNIT 2CZ98 Carrollton
Dell 486/D50 SYSTEM UNiT 2CZ8M Carrollton
Dell 486/D50 SYSTEM UNIT 2CZDG Carrollton
Dell 486/D50 SYSTEM UNIT 2CZD7 Carrollton
Dell 486/D50 SYSTEM UNIT 2CZCT Carrollton
Dell 486/D50 SYSTEM UNIT 2CZCX Carrollton
Dell 486/D50 SYSTEM UNIT 2CZDB Carrollton
Dell 486/D50 SYSTEM UNIT 2CZDC Carrollton
Dell 486/D50 SYSTEM UNIT 2CZDJ Carrollton
Dell 486/D50 SYSTEM UNIT 2CZ91 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR55 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR56 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR57 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR58 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR59 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR5C Carrollton
Dell 486/D50 SYSTEM UNIT 2GR5D Carrollton
Dell 486/D50 SYSTEM UNIT 2GR5H Carrollton
Dell 486/D50 SYSTEM UNIT 2GR5V Carrollton
Dell 486/D50 SYSTEM UNIT 2GR5X Carrollton
Dell 486/D50 SYSTEM UNIT 2GR5Z Carrollton
Dell 486/D50 SYSTEM UNIT 2GR61 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR63 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR64 Carrollton
Dell 486/D50 SYSTEM UNIT 2GR67 Carrollton
NEC Monochrome VGA Monitor 2 N/A Carrollton
NEC MultiSync3FGX 14" Monitor N/A Carrollton
NEC MultiSync3FGX 14" Monitor N/A Carrollton
NEC MultiSync3FGX 14" Monitor N/A Carrollton
NEC MultiSync3FGX 14" Monitor N/A Carrollton
NEC MultiSync3FGX 14" Monitor N/A Carrollton
NEC MultiSync3FGX 14" Monitor N/A Carrollton
Kofax Compression Board, 2.5 MB N/A Carrollton
Kofax Compression Board, 1.5 MB N/A Carrollton
Kofax Printer Option Board with Cable N/A Carrollton
Cornerstone Paper White Monitor DP120 19" 147B6-D Carrollton
Cornerstone Paper White Monitor DP120 19" 20300-D Carrollton
Cornerstone Paper White Monitor DP120 19" 19377-D Carrollton
Cornerstone Paper White Monitor DP120 19" 20302-D Carrollton
Cornerstone Paper White Monitor DP120 19" 15101-D Carrollton
Cornerstone Paper White Monitor DP120 19" 19373-D Carrollton
Cornerstone Paper White Monitor DP120 19" 14719 Carrollton
Cornerstone Paper White Monitor DP120 19" 20299-D Carrollton
Cornerstone Paper White Monitor DP120 19" 19372-D Carrollton
Cornerstone Paper White Monitor DP120 19" 14717 Carrollton
Cornerstone Paper White Monitor DP120 19" 16283-D Carrollton
Cornerstone Paper White Monitor DP120 19" 16241-D Carrollton
Cornerstone Paper White Monitor DP120 19" 14701 Carrollton
Cornerstone Paper White Monitor DP120 19" 1701-D Carrollton
Cornerstone Pdper White Monitor DP120 19" 1582-D Carrollton
Cornerstone Paper White Monitor DP120 19" 1579-D Carrollton
Cornerstone Paper White Monitor DP120 19" 1696-D Carrollton
Cornerstone Paper White Monitor DP120 19" 1700-D Carrollton
HP Optical Disc Drive PC1-MFMH 3264AC1936 Carrollton
HP Optical Jukebox C1710M 3268A0015G Carrollton
HP Laser Jet III Printer N/A Carrollton
Fijitsu Scanner M3093E 1137 Carrollton
Schedule S
Bill-of-Sale
Comdata Network, Inc., a corporation having a place of business
at 5301 Maryland Way, Brentwood, Tennessee ("Seller"), for
consideration of _______________ ($______) the receipt of which
is hereby acknowledged, paid by INTEGRATED SYSTEMS SOLUTIONS
CORPORATION, a wholly owned IBM subsidiary, having its
headquarters at 44 South Broadway, White Plains, New York 10601
("Purchaser"), by this Bill-of-Sale does sell, transfer, grant
and convey to Purchaser, its successors and assigns, all of
Seller's right, title and interest in and to the equipment, goods
and other assets (all of the foregoing being hereinafter
collectively referred to as the "Property"), made and effective
as of ______________ ___, 199__. Seller warrants that it has
clear title to the Property free of any liens and encumbrances.
IN WITNESS WHEREOF, Seller has duly executed this Bill of Sale as
of the ___ day of _________, 199__.
Comdata Network, Inc.
By _____________________________
Authorized Signature
________________________________
Name (Type or Print) Date
Schedule T-1
DSM Machines
Description Vendor
SPARCserver 20 (cdev-ii) SUN
12.0GB SCSI Disk Storage SUN
12.0GB SCSl Disk Storage SUN
3.6GB Disk Drive (109 drives) Andataco
Stacking Tape Drives (4 units) Exabyte
SPARC 10 SUN
SPARC 10 SUN
MADO/MAX Tape Drive MADD
SPARC 1000 (cdm02) SUN
SPARC 1000 (ECHO) SUN
SPARC 1000 (cdm03) SUN
SPARC 1000 (cdm02) SUN
SPARCstation 5 (SNIAGW1) SUN
SPARCstation 5 (SNIAGW2) SUN
SPARCstation 5 (SNIAGW3) SUN
SPARCclassic (NIS Server) SUN
SPARCclassic (3480serv) SUN
Model 200T Optical Disk Library Hewlett Packard
Model 200T Optical Disk Library Hewlett Packard
Schedule T-2
DSM Systems Software
Description Vendor
SYBASE Database release 4.9 runtime license SYEASE
SYBASE SYSTEM10 runtime license SYBASE
SY8ASE SYSTEM10 development license SYBASE
ISOFAX Modem software Bristol Group
SUN OS release 4.1.3 Operating System SUN
SOLARIS Operating System SUN
SNA Gateway Open Connec
5250 Gateway Open Connec
AUTOPLAN
Schedule T-3
DSM Applications Software
Description Vendor
Comdata, Brentwood, TN
THS Transaction History Broadway Seymour
IMS Check Imaging System Broadway Seymour
Workflow Bank Recon, Credit, Collections Broadway Seymour
COLD Report Retrieval Broadway Seymour
MOTRS/TMM Unisys
3270 Emulation Broadway Seymour
AMASSins Imaging Retrieval (2 Versions) Broadway Seymour
Permit Image and Fax Management End User Application
Microsoft Windows #3.1 Carrollton, TX
Microsoft DOS 5.0 Carrollton, TX
Novell Netware (50 user lic Carrollton, TX
Optika Image Filer Carrollton, TX
Optika ImageFinder Carrollton, TX
Optika JukeBox Server Carrollton, TX
Optika PrintServer Carrollton, TX
Optika FaxServer Carrollton, TX
Borland C++/Application Fr Carrollton, TX
Symantec Object Graphics Libr Carrollton, TX
Microsoft Windows 3.1 Softwa Carrollton, TX
XID Xtend License Carrollton, TX
XID Xpedite License Carrollton, TX
XID Image Interface Libr Carrollton, TX
Master Software Multi-mode Carrollton, TX
Schedule U
ISSC Machines
Subject to Baseline
SYSTEM DESCRIPTION MAKE TYPE MODEL SERIAL #
AS/400 Card Expansion Unit IBM 4577 18679
AS/400 Card Expansion Unit IBM 5030 35094
AS/400 Disk Drive Rack IBM 9309 OO2 23628
AS/400 Disk Drive Rack IBM 9309 OO2 23467
AS/400 AS400 RACK IBM 9309 OO2 3730
AS/400 Disk Drive Rack IBM 9309 OO2
AS/400 Diskette Drive IBM 9331 OO1 160c4
AS/400 Disk Drive IBM 9335 A01 160c4
AS/400 Disk Drive IBM 9335 B01 160c4
AS/400 Disk Drive IBM 9335 B01 160c4
AS/400 Disk Drive IBM 9335 B01 160c4
AS/400 Disk Drives IBM 9335 A01 160c4
AS/400 Disk Drive IBM 9335 B01 160c4
AS/400 Disk Drives IBM 9335 A01 160c4
AS/400 Disk Drive IBM 9335 B01 160c4
AS/400 AS/400 Disk Drive IBM 9336 20 4271135
AS/400 AS/400 Disk Drive IBM 9336 20 160c4
AS/400 Processor IBM 9406 B60 160c4
MVS Power Unit IBM 3089 003 47752
MVS Power Unit IBM 3089 003 47752
MVS Power Unit IBM 3089 40J 47752
MVS Processor IBM 3090 003 47752
MVS Processor Unit IBM 3092 003 47752
MVS Power Controller IBM 3097 003 47752
MVS Power Controller IBM 3097 003 47752
MVS Controller IBM 3174 11L AW604
MVS Controller IBM 3174 11R AA4660
MVS Controller IBM 3174 11R N7807
MVS Controller IBM 3174 11L N3521
MVS Controller IBM 3174 11L N0153
MVS Controller IBM 3174 11L AW594
MVS DASD IBM 3380 AK4 AE682
MVS DASD IBM 3380 BK4 TU395
MVS DASD IBM 3380 BK4 TU432
MVS DASD IBM 3380 BK4 TU416
MVS DASD IBM 3380 BK4 TU368
MVS DASD IBM 3380 AK4 AE799
MVS DASD IBM 3380 BK4 TU430
MVS DASD IBM 3380 BK4 TU415
MVS DASD IBM 3390 A38 A4946
MVS DASD IBM 3390 B3C B4028
MVS Disk Drives IBM 3390 B3C B6383
MVS Disk Drives IBM 3390 A38 A4007
MVS 3390 IBM 3390 B3C B2161
MVS 3390 IBM 3390 A38 A1078
MVS 3390 IBM 3390 B3C B2260
MVS DASD IBM 3390 B3C B4105
MVS Disk Drives IBM 3390 B3C B6376
MVS Tape Drive IBM 3420 008 51671
MVS Tape Drive IBM 3420 008 M7343
MVS Tape Unit IBM 3420 008 M7378
MVS Tape Drive IBM 3422 A01 A6620
MVS Tape Drive IBM 3480 A22 23706
MVS Cartridge Tape Drive IBM 3480 B22 65439
MVS Tape Drive IBM 3480 B22 73272
MVS Tape Drive IBM 3480 B22 70773
MVS Tape Drive IBM 3480 BS2 50588
MVS Tape Drive IBM 3480 B22 50586
MVS Tape Control Unit IBM 3480 A22 19067
MVS Cartridge Tape Drive IBM 3480 B22 62805
MVS Tape Drive (Cart) IBM 3480 B22 64494
MVS Tape Drive (Cart) IBM 3480 B22 64221
MVS Cartridge Tape Unit IBM 3480 B22 69616
MVS Cartridge Tape Unit IBM 3480 BS2 B0125
MVS Cartridge Tape Unit IBM 3480 B22 69620
MVS Cartridge Tape Unit IBM 3480 B22 64384
MVS Cartridge Tape Unit IBM 3480 B22 66941
MVS Cartridge Tape Unit IBM 3480 B22 53497
MVS Cartridge Tape Unit IBM 3480 B22 66786
MVS Cartridge Tape Unit IBM 3480 A22 16595
MVS Cartridge Tape Unit IBM 3480 822 65184
MVS Cartridge Tape Unit IBM 3480 A22 21645
MVS Diskette Reader 1/0 Unit IBM 3540 001 21050
MVS Communication Controller IBM 3725 001 697
MVS Front End Processor IBM 3725 001 8443
MVS Controller IBM 3725 001 7393
MVS Controller IBM 3725 001 7925
MVS Front End Processor IBM 3725 001 10389
MVS Front End Processor IBM 3725 001 5584
MVS Front End Processor IBM 3725 001 B51
MVS Front End Processor IBM 3725 001 5433
MVS Communication Controller IBM 3725 001 1636
MVS Front End Processor IBM 3725 001 1812
MVS Comm. Controller IBM 3726 001 580
MVS Comm. Controller IBM 3726 001 198
MVS Terminal IBM 3727 94432
MVS Terminal IBM 3727 700 85334
MVS Terminal IBM 3727 700 8C078
MVS Terminal IBM 3727 700 SC168
MVS Communication Switch IBM 3728 001 7773
MVS Communication Switch IBM 3728 001 7775
MVS Communication Switch IBM 3728 001 7774
MVS Communication Switch IBM 3728 001 7772
MVS Communication Switch IBM 3728 001 7776
MVS Communications Switch IBM 3728 001 7114
MVS Communications Switch IBM 3728 001 7116
MVS Communication Switch IBM 3728 001 7777
MVS Communications Switch IBM 3728 001 7172
MVS Communications Switch IBM 3728 001 7115
MVS Communication Switch IBM 3728 001 7063
MVS Communication Switch IBM 3728 001 7064
MVS Tape Control Unit IBM 3&03 002 21493
MVS Autodial/Modem IBM 3864 48202
MVS Autodial/Modem IBM 3864 65581
MVS Disk Controller IBM 3880 J23 97570
MVS Disk Controller IBM 3880 J23 97682
MVS Disk Controller IBM 3990 J03 32355
MVS Disk Controller IBM 3990 G03 32644
MVS Disk Controller IBM 3990 G03 40269
MVS Printer IBM 6262 T14 12562
MVS Printer IBM 6262 T14 12563
TANDEM Optical Drive HP C1716C Corsair 5.25 3264ACL1936
TANDEM Scanner Fujitsu M3096E 1137
TANDEM Optical Library HP C1710C-100 3268A0015G
TANDEM CD-ROM Tandem 1X60002793
TANDEM CD-ROM Tandem 1X600CS4361
TANDEM Rack #1 Tandem
TANDEM Rack #2 Tandem
TANDEM Rack #3 Tandem
TANDEM Rack #4 Tandem
TANDEM Terminal Tandem 6526 ML64
TANDEM Personal Computers Tandem 6AX40 A-1292
TANDEM Terminal Tandem 6530 10863
TANDEM Terminal Tandem 6530 13205
TANDEM Printer Data Products LM615 2904A07061
TANDEM Terminal Tandem 6526 AH3774
TANDEM Terminal Tandem TS-530 2101155
TANDEM Terminal Tandem TS-530 2277894
TANDEM Terminal Tandem 6530 NONE
TANDEM Control Unit IBM 3274 K7014
TANDEM Optical Jukebox Model 40T HP C1700T 3332A00396
TANDEM 12 Port Ethemet Hub RACAL INX5000
TANDEM 24 Port Ethemet Hub RACAL INX5000
TANDEM Scanner Fujitsu M3093E 2288
TANDEM CLX Cabinet 2 Tandem
TANDEM K1000 CPU w/32MB Tandem K1000 HOZZT8
TANDEM K1000 32MB Memory Board Tandem K1000 H11W93
TANDEM K1000 32MB Memory Board Tandem K1000 H11W9H
TANDEM K1000 CPU w/32MB Tandem K1000 H123LX
TANDEM 3606 Controller Tandem 3606 4324
TANDEM 3606 Controller Tandem 3606 968
TANDEM Disk Drive Tandem 4220 WE124949
TANDEM 3606 Controller Tandem 3606 4586
TANDEM 3606 Controller Tandem 3606 4587
TANDEM 3606 Controller Tandem 3606 4598
TANDEM 3606 Controller Tandem 3606 5960
TANDEM Disk Drives Tandem 4220
TANDEM Disk Drive Tandem 4220 S03E7E
TANDEM 3606 Controller Tandem 3606 VOOTO9
TANDEM Ethemet Controller with Transceiver Tandem T/3613-1 HORVMO
TANDEM Disk Drive Tandem 4250 4424104
TANDEM Disk Drive Tandem 4250 4424623
TANDEM Disk Drive Tandem 4250 SR285436
TANDEM Disk Drive Tandem 4250 SR285439
TANDEM Disk Controller Tandem 3126 V031NO
TANDEM CLX Cabinet 1A Tandem
TANDEM MFC Controller Tandem 3681 13709
TANDEM Disk Controller Tandem 3126 V03RDE
TANDEM 3~2 Controller Tandem 3602 HOS7KE
TANDEM 3605 controller Tandem 36Q5 5412
TANDEM MFC Controller Tandem 3681 13702
TANDEM 3606 Controller Tandem 3606 18666
TANDEM MFC Controller Tandem 3681 13633
TANDEM MFC Controller Tandem 3681 13624
TANDEM MFC Controller Tandem 3681 21334
TANDEM 3606 Controller Tandem 3606 4589
TANDEM 3&06 Controller Tandem 3606 444
TANDEM 5606 Controller Tandem 3606 3861
TANDEM 3606 Controller Tandem 3606 4541
TANDEM 3606 Controller Tandem 3606 4545
TANDEM 3606 Controller Tandem 3606 4595
TANDEM 396 Controller Tandem 3606 4591
TANDEM K1000 CPU w/32MB Tandem K1000 H12ZY5
TANDEM 3606 Controller Tandem 3606 4601
TANDEM MFC Controller Tandem 3&81 13578
TANDEM MFC Controller Tandem 3681 13628
TANDEM Disk Drive Tandem 4240 B031329
TANDEM K1000 32MB Memory Board Tandem K1000 H11W9B
TANDEM Disk Drive Tandem 4230 S08KEV
TANDEM Disk Controller Tandem 3128 V03SRC
TANDEM Disk Drives Tandem 4240 626166
TANDEM Disk Drive Tandem 4240 B035193
TANDEM CLX Cabinet 2A Tandem
TANDEM Disk Controller Tandem 3128 V03RDL
TANDEM 3605 Controller Tandem 3605 9095
TANDEM Tape Controller Tandem 3214 HOM5L4
TANDEM K1000 32MB Memory Board Tandem K1000 HOXEOE
TANDEM MFC Controller Tandem 3681 13707
TANDEM MFC Controller Tandem 3681 13712
TANDEM Disk Drive Tandem 424() BO3708A
TANDEM K1000 CPU w/32MB Tandem K1000 H08L8X
TANDEM MFC Controller Tandem 3681 21342
TANDEM 3606 Controller Tandem 3606 7828
TANDEM Disk Controller Tandem 3128 HOXWK7
TANDEM Cartridge Tape Drive Novadyne 5180NLC C800013141
TANDEM Controller IBM 3274 D0416
TANDEM Tape Drive Cabinet Novadyne
TANDEM Cartridge Tape Drive Novadyne 5180NLC C900052128
TANDEM Tape Drive Super Array 14102
TANDEM 24 Post Ethemet Hub RACAL INX5000
TANDEM High Speed Laser Printer XEROX 4850 200020
TANDEM High Speed Laser Printer XEROX 44350 200021
TANDEM 12 Port Ethemet Hub RACAL INX5000
TANDEM 16 Port Terminal Server RACAL INX5000
TANDEM 12 Port Ethemet Hub RACAL INX5000
TANDEM 3606 Controller Tandem 3606 6858
TANDEM K1000 CPU w/32MB Tandem K1000 H1231J
TANDEM MFC Controller Tandem 3681 HOS03A
TANDEM Disk Drive Tandem 4230 S08KEN
TANDEM Disk Drive Tandem 4230 S08KEW
TANDEM K1000 32MB Memory Board Tandem K1000 HOXEOH
TANDEM K1000 CPU w/32MB Tandem K1000 H128KD
TANDEM K1000 32MB Memory Board Tandem K1000 H1251S
TANDEM 3606 Controller Tandem 3606 4600
TANDEM CLX Cabinet 1 Tandem
TANDEM 3601 Controller Tandem 3601 H04VBR
TANDEM 3606 Controller Tandem 3606 4550
TANDEM 3606 Controller Tandem 3606 5320
TANDEM MFC Controller Tandem 3681 HORZYL
TANDEM 3606 Controller Tandem 3606 4596
TANDEM INX 5000 3Slot Chassis RACAL INX5000 10083205
TANDEM 12 Port Ethemet Hub RACAL INX5000
TANDEM 16 Port Terminal Server RACAL INX5000
TANDEM 396 Controller Tandem 3606 4218
TANDEM 3601 Controller Tandem 3601 HORVBZ
TANDEM CLX Cabinet 3A Tandem
TANDEM CLX Cabinet 3 Tandem
TANDEM Disk Controller Tandem 3128 V00U4D
TANDEM Tape Controller Tandem 3214 V0194W
TANDEM Ethemet Controller Tandem 3215 H156WJ
TANDEM CUM Tape Cabinet Tandem
TANDEM CLX Cabinet 1 Tandem
TANDEM Tape Drive Tandem 5107 3008A02025
TANDEM Disk Drive - 2000 MB Tandem 45t0 COKYUL
TANDEM Disk Drive - 1038 MB Tandem 45t}0 C06VSH
TANDEM Disk Drive - 1038 MB Tandem 4500 C06VSV
TANDEM 3601 Controller Tandem 3601 H0PMBU
TANDEM Disk Drive - 1038 MB Tandem 4500 C06VSD
TANDEM 3606 Controller Tandem 3606 1424
TANDEM Disk Drive - 1038 MB Tandem 4500 C06042
TANDEM 3606 Controller Tandem 3606 4702
TANDEM Disk Drive - 1038 MB Tandem 4500 C06VSB
TANDEM Disk Drive - 1038 MB Tandem 4500 C06VTC
TANDEM Disk Drive - 2000 MB Tandem 4510 COLPMU
TANDEM Disk Drive- 1038 MB Tandem 4500 C06860
TANDEM Disk Drive- 1038 MB Tandem 4500 C06VS9
TANDEM Disk Drive- 1038 MB Tandem 4500 C06VSL
TANDEM Disk Drive - 2000 MB Tandem 4510 COLPM1
TANDEM Disk Drive - 2000 MB Tandem 4510 COLPMV
TANDEM Disk Drive - 2000 MB Tandem 4510 COKYUP
TANDEM Disk Drive - 1038 MB Tandem 4500 C06VSK
TANDEM Disk Drive - 2000 MB Tandem 4510 COUPM5
TANDEM Disk Drive - 2000 MB Tandem 4510 COLPKL
TANDEM Disk Drive - 2000 MB Tandem 4510 COLPM3
TANDEM Disk Drive- 1038 MB Tandem 4500 C06VSA
TANDEM Ethemet Controller Tandem 3612 HOS4NN
TANDEM Disk Drive Tandem 4230 S08KEZ
TANDEM K1000 32MB Memory Board Tandem K1000 H125K2
TANDEM K1000 CPU w/32MB Tandem K1000 H13JAN
TANDEM Disk Drive Tandem 4250 SR708515
TANDEM K1000 CPU w/32 MB Tandem H12ZTT
TANDEM K1000 32MB Memory Board Tandem K1000 HOW888
TANDEM Disk Drive Tandem 4240 TJ29334
TANDEM K1000 CPU w/32MB Tandem H12ZUJ
TANDEM Disk Controller Tandem 3681 V03S6K
TANDEM Disk Controller Tandem 3681 V03S4H
TANDEM Disk Drive Tandem 4240 TJ47110
TANDEM Disk Mosaic W/Pedistal - 18 Drive Tandem 4500
TANDEM CLX Tape Cabinet Tandem
TANDEM MFC Controller Tandem 3681 9122
TANDEM Tape Drive Tandem 5107 3008A02163
TANDEM Tape Controller Tandem 3681 8691
TANDEM Tape Drive Tandem 5107 3008A01756
TANDEM K1000 CPU w/32MB Tandem K1000 H14N1M
TANDEM CLX Cabinet 4 Tandem
Page 56
<PAGE>
<PAGE>
EXHIBIT 10.21
WORLDCOM
TELECOMMUNICATIONS SERVICE AGREEMENT
This Telecommunications Service Agreement (this "Agreement")
is made as of the 1st day of December, 1994 (the "Effective
Date"), by and between WORLDCOM, INC. d/b/a LDDS/WorldCom, a
Georgia corporation with its principal place of business located
at 515 East Amite, Suite 200, Jackson, Mississippi 39201-2702
("WorldCom"), and COMDATA NETWORK, INC., a Maryland corporation,
and a wholly owned subsidiary of Comdata Holdings Corporation, a
Delaware corporation, with its principal place of business
located at 5301 Maryland Way, Brentwood, Tennessee 37027 ("CNI")
and COMDATA TELECOMMUNICATIONS SERVICES, INC., a Delaware
corporation, and a wholly owned subsidiary of CNI, with its
principal place of business located at 5301 Maryland Way,
Brentwood, Tennessee 37027 ("CTS"). For purposes of this
Agreement, CNI and CTS are collectively referred to as
"Customer". In consideration of the mutual promises and
covenants set forth in this Agreement the parties agree as
follows:
1. Services:
1.1 WorldCom will provide Customer certain
telecommunications services as further described on Exhibit
"A" attached hereto (the "Services") to Customer pursuant to
LDDS Communications, Inc. (now known as WorldCom, Inc.) FCC
Tariff No. 1, FCC Tariff No. 2 and applicable state tariffs,
all as may be amended from time to time (the "Tariffs").
All of the terms and conditions of the Tariffs now or
hereafter in effect are incorporated in this Agreement. In
the event that any provision set forth in this Agreement
conflicts with the terms and conditions of any of the
Tariffs, WorldCom agrees to tariff the provision in the
applicable Tariff. If WorldCom fails to file any tariff as
described herein which is required to be filed, Customer
shall have the right to terminate this Agreement without any
further liability.
1.1.1 Any additional Services not covered in this Agreement
(e.g., frame relay, Canadian origination) that WorldCom
subsequently provides for resale will be made available to
Customer upon terms and conditions generally available to
WorldCom's other resale customers.
1.2 This Agreement will not be construed to impose
obligations upon WorldCom to Customer's customers (each, an
"End User") or to create rights enforceable by End Users
against WorldCom.
1.3 WorldCom will provide Customer certain billing
services, including without limitation the preparation and
mailing of invoices to Customer's End Users (the "Billing
Services"). The Billing Services shall be the reasonably
substantial equivalent billing services that WorldCom
Page 1 of 11
<PAGE>
currently uses as of the Effective Date of this Agreement to
provide billing to WorldCom's customers including without
limitation, any enhancements to such Billing Services which
are generally available as determined by WorldCom ("Billing
System"). Customer's access to, and use of the Billing
Services shall be provided by WorldCom at no charge
provided that the rates contained in Schedule A, attached
hereto, remain unchanged. In the event Customer requests
modifications to the Billing Services outside the scope of
the Billing Services being offered by WorldCom, Customer
agrees to pay WorldCom the costs for such modifications.
1.4 WorldCom appoints Customer a WorldCom agent to sell
enhanced features at WorldCom tariffed rates as shown in
Schedule B attached hereto (the "Enhanced Features").
Customer will receive a fifty percent (50%) commission (the
"Commission") on all sales of Enhanced Features. WorldCom
may waive Enhanced Feature charges for Customer's End Users
from time to time. The Commission due to Customer will be
applied as an offset to Customer's invoice for rates charged
to Customer for Customer's use of the services listed in
Schedule B.
1.5 The WorldCom Standard Implementation Schedule for the
Services ("Implementation Schedule"), which may be amended
from time to time, will be as set forth in Schedule C,
attached hereto. Said Implementation Schedule is non-
binding and is only provided for informational purposes.
2. Term; Termination:
2.1 The term of this Agreement will commence as of December
1, 1994, and end on January 22, 2003 (the "Term"). Unless
either party gives written notice to the other party at
least one hundred and twenty (120) days prior to the end of
the Term, the Term will continue on a month to month basis
until this Agreement is terminated by either party on at
least one hundred and twenty (120) days prior written notice
to the other party. Except as provided in Subsections 8.2
or 8.3 below, in the event Customer terminates this
Agreement prior to the end of the Term, Customer agrees to
pay WorldCom twelve and one-half percent (12 1/2%) of the
average of the last twelve (12) months measured usage
charges times the number of full months remaining in the
Term (the "Contract Deficiency Charge").
2.2 In the event that (i) there is a change in control of
Customer such that Customer is acquired or purchased,
whether by stock purchase, asset purchase, merger or
otherwise, and such acquisition or purchase is approved by
the appropriate regulatory authorities ("Customer
Acquisition/Purchase") and (ii) pursuant to such Customer
Acquisition/Purchase, Customer obtains access to an
alternate rate plan which results in an overall savings over
current charges paid to WorldCom pursuant to this Agreement
WorldCom may make such adjustments to the rates contained
herein to provide an equivalent overall savings. In the
event that WorldCom dos not make such adjustment, then
Page 2 of 11
<PAGE>
Customer may, within sixty (60) days after Customer
Acquisition/Purchase, at its election, terminate this
Agreement upon ten (10) days prior written notice to
WorldCom without incurring further liability to WorldCom.
3. Transition of Services Upon Termination or Expiration.
3.1 Upon termination or expiration of this Agreement for
any reason, WorldCom shall expend reasonable efforts to
avoid any substantial disruption of Customer's
telecommunications services and shall take such actions at
no additional cost to WorldCom as may be reasonably
necessary to facilitate the uninterrupted transfer of the
Services provided for herein to another telecommunications
provider.
4. Rates; Minimum Yearly Usage Commitment.
4.1 Commencing with the Effective Date and continuing
through the end of the Term, rates for the Services will be
as set forth in Schedule A, attached hereto. Services
provided by WorldCom which are not listed in Schedule A
shall be at the rates and terms (i) set forth in WorldCom's
applicable Tariffs, or (ii) generally available to
WorldCom's other similarly situated customers (collectively
referred to as "Non-Contract Services").
4.2 Commencing with the Effective Date, and continuing
through the end of the Term of this Agreement, Customer will
pay to WorldCom the greater of (i) the amount actually
incurred by Customer for Services and Non-Contract Services
pursuant to paragraph 4.1 of this Agreement or (ii) ten
million dollars ($10,000,000) ("Minimum Annual
Commitment"). In the event there is a substantial change
in the regulatory environment of Customer's business,
including without limitation the banking, gaming and
telecommunications environments, which substantially
prohibits Customer's performance under this Agreement,
WorldCom agrees to negotiate with Customer in good faith
concerning the reduction of the Minimum Annual Commitment as
described herein. Further, in the event there is a
substantial technological change in the telecommunications
industry and based on the purchase of a new product or
offering Customer's rates for Services hereunder would be
significantly reduced, WorldCom agrees to negotiate with
Customer concerning the purchase of such product or offering
and the reduction of the Minimum Annual Commitment described
herein, provided WorldCom continues to receive the same
percentage of Customer's traffic after such reduction as it
did prior to such technological change. Finally, in the
event CTS completely ceases providing telecommunications
services, WorldCom agrees to reduce the Minimum Annual
Commitment described herein by an amount equal to the
product obtained by multiplying (i) the previous three (3)
months' average usage charges for Services purchased by
Customer under this Agreement which are attributable to CTS
by (ii) twelve (12). CTS agrees to provide WorldCom
reasonable and sufficient documentation to substantiate the
Services attributable to CTS hereunder.
Page 3 of 11
<PAGE>
4.3 The rates set forth herein shall not be modified during
the Term of this Agreement. Notwithstanding the immediately
above sentence, WorldCom may, upon at least ninety (90) days
prior written notice to Customer, increase any rate set
forth in this Agreement so as to offset an increase to
WorldCom in the costs of providing the Services either
directly or indirectly that is caused solely by changes in
the rules, regulations or operating procedures of any
governmental or regulatory authority.
4.4 During the Term Customer (which for purposes of this
Subsection 4.4 shall include all Comdata affiliates existing
as of October 15, 1995, including without limitation, CNI,
CTS and Comdata Holdings Corporation) agrees to purchase
from LDDS at least eighty percent (80%) of Customer's
internal corporate traffic as well as Customer's resale
traffic, excluding ETS (an AT&T aggregator currently
providing services to Customer) traffic existing as of
December 1, 1994; provided, however, Customer's obligation
under this paragraph 4.4 shall not exceed twenty million
dollars ($20,000,000) in any twelve (12) month consecutive
period, nor be less than the Minimum Annual Commitment
contained in paragraph 4.2.
4.5 Beginning as of December 1, 1994 and continuing through
the Term of this Agreement, Customer will pay to WorldCom
the following monthly recurring rates for all existing and
new Customer premises equipment:
Dialers: $20.00 per month
Channel Banks $500 installation/$400 per month
One Year Minimum on Channel Banks.
The above charges will be reduced after three (3) years
of being in service to the cost of maintenance charges
only.
4.6 During the Term, WorldCom agrees to waive all WorldCom
installation charges (i.e., excluding any third party
installation charges) for Services ordered by Customer
hereunder provided such Services are used solely by Customer
or its affiliates for internal use (i.e., not for resale).
5. Billing and Payment of Charges:
5.1 Customer will pay all charges for the Services provided
by WorldCom within forty-five (45) days of the date of the
invoice (the "Due Date"). In the event that Customer
fails to make any required payment in full on or before the
fifteenth (15th) day following the Due Date, Customer shall
pay a late fee in the amount of the lesser of one and one-
half percent (1 1/2%) of the unpaid principal balance per
month or the maximum lawful rate allowable under the
applicable state tariff. If Customer disagrees with an
invoice for any of the Services, Customer shall promptly pay
the amount that it believes to be correct and, at the same
time, notify WorldCom in writing of the basis for and amount
in dispute. Failure to notify WorldCom of a disputed charge
Page 4 of 11
<PAGE>
will result in all charges being deemed correct. WorldCom
and Customer shall promptly address any disputed claim and
use their best efforts to resolve the disputed amount. In
the event Customer fails to make any non-disputed payment in
accordance with the terms of this Section 5.2, WorldCom may
provide Customer with written notice of interruption of
service. If by (i) the third (3rd) day following receipt of
written notice of interruption of service, or (ii) the
thirty-sixth (36th) day after the Due Date (which ever shall
last occur), Customer fails to make payment of such non-
disputed amount in full, WorldCom may interrupt service to
Customer until such time as the non-disputed amount is
received by WorldCom. Such interruption, if any, by
WorldCom pursuant to this Section 5.1 shall in no event be
deemed a breach of WorldCom' obligations under this
Agreement. Failure of WorldCom to exercise its right to
give notice of interruption and/or to interrupt service
shall in no event be deemed a waiver of WorldCom' rights to
payment hereunder.
5.2 It is the Customer's non-delegable duty to pay any and
all taxes or duties of any kind or nature whatsoever
relative to or in any way resulting from the performance of
this Agreement. Notwithstanding the above, as an additional
service to the Customer, WorldCom agrees to do the
following:
5.2.1 make advance payments of Customer's taxes billed
through the WorldCom-provided standard IX Plus billing
environment unless Customer provides appropriate
documentation to WorldCom which evidences an exemption
therefor. Customer agrees to reimburse WorldCom for all
such tax or duty payments made by WorldCom within ten (10)
days of Customer's receipt of each WorldCom invoice
detailing such advanced payment, together with a surcharge
amounting to one-half of one percent (1/2%) of the total of
each invoice;
5.2.2 prepare billings to Customer's End Users for
telecommunications services provided hereunder in accordance
with rates provided by Customer which shall include taxes
calculated in accordance with the relevant tax statutes
applicable to each End User; remit said tax payments to the
appropriate taxing authorities; and provide Customer with
accurate documentation related thereto.
5.2.3 Nothing herein shall be construed to imply that
WorldCom agrees to assume liability for any act of
commission or omission with regard to Customer' obligations
or duties to governmental authorities or End Users.
Customer agrees to indemnify and hold WorldCom harmless with
respect to any claim, levy, charge or liability whatsoever
in connection with WorldCom's performance of the above-
stated service.
5.4 Customer's obligation to pay all undisputed charges
billed by WorldCom is absolute and unconditional under any
and all circumstances.
5.5 Customer will provide WorldCom with all necessary tax
exemption certificates in a form acceptable to the
Page 5 of 11
<PAGE>
applicable taxing authority or pay all necessary taxes at
such time as such taxes become due.
6. Service Interruptions:
6.1 The Services will meet or exceed quality of service
standards (including, but not limited to, standards for call
set-up time, unintended disconnects, trunk capacity and
audio quality) in the long distance telephone industry in
the United States of America. If Customer, in its good
faith judgment, determines that the Service does not
materially meet such standards and that WorldCom is solely
responsible for such failure, Customer may terminate the
affected Service upon at least thirty (30) days prior
written notice to WorldCom provided that such failure in not
cured by WorldCom within thirty (30) days of the date of
such notice. In such case, Customer's Minimum Annual
Commitment shall be reduced for the remainder of the Term by
an amount equal to the product obtained by multiplying (i)
the previous three (3) months' average usage charges for
such terminated Service by (ii) twelve (12).
6.2 Notwithstanding paragraph 6.1 above, Customer may
terminate this Agreement upon fifteen (15) days prior
written notice, if (i) substantially the same service
problems with respect to the telecommunications services
provided hereunder recur during any consecutive sixty (60)
day period, notwithstanding the thirty (30) day cure
provision set forth in Section 6.1 hereof, or (ii) upon
verified twelve (12) hour prior notification to the WorldCom
Trouble Reporting Center, if Customer is required to utilize
the services of an alternate telecommunications provider for
a period of twenty-four (24) hours or longer due to service
problems with respect to the telecommunications services
provided hereunder by WorldCom.
6.3 WORLDCOM SHALL NOT BE LIABLE FOR DAMAGES OR
INTERRUPTIONS OF SERVICE CAUSED BY OR RESULTING FROM ANY ACT
OF GOD OR OTHER UNCONTROLLABLE FORCE. UNCONTROLLABLE FORCE
IS ANY CAUSE BEYOND THE CONTROL OF WorldCom, INCLUDING BUT
NOT LIMITED TO, FLOOD, EARTHQUAKE, STORM, LIGHTNING, FIRE,
EPIDEMIC, WAR, RIOT, CIVIL DISTURBANCE, SABOTAGE, OR
RESTRAINT, INJUNCTION OR RESTRICTION BY ANY FEDERAL OR STATE
COURT, AGENCY, ADMINISTRATIVE BODY, OR PUBLIC AUTHORITY, OR
A LAWFUL ORDER ENTERED IN ANY LAWSUIT OR REGULATORY
PROCEEDING WHICH EFFECTS A RESTRAINT OF WORLDCOM'S
PERFORMANCE UNDER THIS AGREEMENT. WORLDCOM SHALL NOT BE
LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, SPECIAL,
ACTUAL, OR PUNITIVE DAMAGES, OR FOR ANY LOST PROFITS OF ANY
KIND OR NATURE WHATSOEVER ARISING OUT OF ANY DEFECTS OR ANY
OTHER CAUSE. THIS WARRANTY AND THESE REMEDIES ARE EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES OR REMEDIES, WHETHER
EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
6.4 Notwithstanding Section 6.1, Customer's damages for any
service interruption or delay by WorldCom not caused by any
Page 6 of 11
<PAGE>
Act of God or uncontrollable force as describe in Section
6.3 above shall not exceed the average of two (2) days
billing under this Agreement prior to the event of
interruption or the actual amount of the damages, whichever
is less. However, where an applicable state tariff calls
for a different calculation of damages, the provisions of
the state tariff will govern.
6.5 Except as provided otherwise in this Agreement,
WorldCom makes no representations or warranties as to its
abilities to process service activation submissions.
WorldCom will provide Customer's customers an equivalent
standard of service as WorldCom provides its customers.
7. Letters of Agency:
7.1 Customer will obtain a valid and acceptable letter of
agency ("LOA") from each End User whose ANI Customer submits
to WorldCom.
7.2 Customer is entirely responsible for the validity of
each LOA that it submits as well as for the correctness of
the information that is contained in such LOA. Customer
understands that any inaccuracies in such information may
result in lengthy delays in the activation of the subject
ANI.
7.3 Customer will notify each End User that WorldCom is the
primary interexchange carrier that is providing Services to
Customer.
8. Rights and Obligations Upon Either Party's Breach:
8.1 In the event Customer is in material breach of this
Agreement, including without limitation (i) Customer's
failure to pay undisputed charges when due as provided in
Section 5 above, and (ii) Customer's failure on three (3)
separate occasions to act as WorldCom requests after making
a material misrepresentation to a third party or End User
concerning the Services purchased by Customer hereunder, and
fails to cure such breach within ten (10) days after receipt
of notice of such breach, WorldCom may:
8.1.1 terminate this Agreement effective immediately in
which case the Contract Deficiency Charge will be
immediately due and payable; and
8.1.2 upon termination of the Agreement as provided in
(i), contact each End User directly for the purpose of
notifying such End User that WorldCom will no longer provide
long distance telephone services to Customer, that WorldCom
will provide long distance telephone service to it pursuant
to the Tariffs and that WorldCom will continue to provide
such service unless such End User notifies its LEC to change
its long distance telephone service to another primary
interexchange carrier.
Page 7 of 11
<PAGE>
8.2 In the event WorldCom is in material breach of this
Agreement, and fails to cure such breach within thirty (30)
days after receipt of notice of such breach, Customer may
terminate this Agreement effective immediately without any
further liability.
8.3 This Agreement shall automatically terminate effective
immediately if:
8.3.1 Either party becomes insolvent, files a petition
in bankruptcy or makes an assignment for the benefit of
creditors;
8.3.2 Either party applies for or consents to the
appointment of a trustee or receiver, or a trustee or
receiver is appointed for Customer; or
8.3.3 Bankruptcy, insolvency or liquidation proceedings are
commenced against either party and such proceedings are not
discharged or dismissed within thirty (30) days after such
commencement.
9. Confidential Information:
9.1 Each party understands that in performing this
Agreement it may have access to private or confidential
information relating to the other party or such other
party's Customers End Users ("Confidential Information").
Each party agrees that the Confidential Information will:
9.1.1 remain the exclusive property of the disclosing
party;
9.1.2 not to be copied, published or disclosed to
others;
9.1.3 be used solely in the performance of this
Agreement; and
9.1.4 be returned to the disclosing party upon
termination of this Agreement.
10. Regulatory Requirements:
10.1 Customer represents and warrants that it has obtained,
or will undertake promptly and diligently to obtain, any and
all Certificates of Public Necessity, authority or other
consents ("Authority") which are required by the states
and jurisdictions within which Customer currently provides
or intends to provide long distance service to End Users or
others. If requested by WorldCom, Customer will provide
copies of said Authority before submitting any ANIs to
WorldCom. When Customer is in the process of obtaining said
Authority, Customer shall provide copies of the Authority to
WorldCom as soon as it becomes available. In the event
that Customer is permanently or temporarily denied Authority
in any particular state or jurisdiction and/or is prohibited
from providing long distance or other telecommunications
services within that state or jurisdiction, then Customer
Page 8 of 11
<PAGE>
shall within 24 hours notify WorldCom of said denial via
facsimile and via U.S. Mail. Customer agrees to indemnify
and hold WorldCom harmless with respect to any and all
damages, demands. suits, causes of action, liability,
losses, assessments, fees, levies, charges, or any other
claims whatsoever which are asserted against WorldCom with
regard to the failure of Customer to obtain the
aforementioned Authority.
11. Notices:
11.1 Any notice required by this Agreement will be effective
and deemed delivered (i) three (3) business days after
posting with the United States Postal Service when mailed by
certified mail, return receipt requested, properly addressed
and with the correct postage, (ii) one (1) business day
after pick-up by the courier service when sent by overnight
courier, properly addressed and prepaid or (iii) one (1)
business day after the date of the sender's electronic
confirmation of receipt when sent by facsimile transmission.
11.2 Notices will be sent to the addresses or FAX numbers
set forth in this Agreement, unless either party notifies
the other in writing of an address or FAX number change.
12. General:
12.1 Neither party may assign this Agreement or any of its
obligations without the prior written consent of the other
party hereto. Notwithstanding anything to the contrary
contained herein, Customer may assign this Agreement or any
of its obligations to an affiliate of Customer provided
Customer remains liable for the financial obligations
contained herein, including without limitation, the Minimum
Annual Commitment and the Contract Deficiency Charge.
12.2 Customer may not subcontract with other persons or
entities to undertake any of Customer's obligations that are
set forth in this Agreement provided however, that this
Section 12.2 shall not prohibit Customer from contracting
with third parties with respect to reselling and marketing
activities for Customer's telecommunications services.
12.3 This Agreement is a Georgia agreement and is governed
by and interpreted according to the laws of the state of
Georgia applicable to Georgia agreements, except to the
extent that the Communications Act of 1934, as amended and
is interpreted and applied by the Federal Communications
Commission, applies.
12.4 Neither party will be liable for failure to perform its
obligations hereunder due to causes beyond its control,
including accidental damage to WorldCom's network, acts of
God, laws or requirements of any government or national
emergencies.
12.5 If any of the provisions of this Agreement are
determined to be invalid, the remaining provisions will
still be valid.
Page 9 of 11
<PAGE>
12.6 Headings are used in this Agreement for convenience
only and are not to be used to interpret this Agreement or
any of its provisions.
12.7 This Agreement will be deemed effective only upon full
execution of this Agreement by each of the parties. This
Agreement may be modified only pursuant to a writing that is
signed by each of the parties.
12.8 This Agreement is subject to all applicable existing
and future laws, rules and regulations of any governmental
authority.
12.9 Each party represents and warrants that it has the full
legal and regulatory authority to enter into this Agreement
and to consummate the transactions contemplated by this
Agreement, and that this Agreement is not in conflict with
any other agreement to which such party is bound.
12.10 In any action arising out of or relating to this
Agreement, the prevailing party will be entitled to recover
its reasonable attorneys' fees and other costs in addition
to any other relief that may be awarded.
12.11 This Agreement contains the full understanding of
the parties and supersedes any prior agreements including
the August 30, 1991 agreement, the October 18, 1991 addendum
to the August 30, 1991 agreement, and the July 21, 1993
notice, between the parties.
12.12 Each party hereto shall have the right to contract
with a third party to inspect and audit, during regular
business hours and upon written request, any relevant books
and records of the other party hereto for the purpose of
verifying payments made or to be made hereunder or
confirming the performance of such party. The inspection
and audit rights granted pursuant to this Section shall
remain in full force and effect during the Term of this
Agreement and for a period of three (3) months following the
date of expiration or termination of this Agreement., upon
written request, during regular business hours.
12.13 None of the provisions of this Agreement is
intended to create nor shall be deemed or construed to
create any relationship between the parties hereto other
than that of independent entities contracting with each
other hereunder solely for the purpose of effecting the
provisions of this Agreement. Neither of the parties
hereto, nor any of their respective employees, shall be
construed to be the agent, employer, or representative of
the other. WorldCom and Customer agree that WorldCom is
only providing the services under this Agreement as an
independent contractor.
IN WITNESS WHEREOF, the parties have signed this Agreement
and the individuals signing below represent that they have the
authority to sign for and on behalf of the respective parties.
COMDATA NETWORK, INC. WORLDCOM, INC.
BY: /s/Edward A. Barbieri BY: /s/Diana Day
NAME: Edward A. Barbieri NAME: Diana Day
TITLE: President and Cief TITLE: Senior Vice President
Operating Officer
DATE: October 18, 1995 DATE: October 18, 1995
FAX: 615-370-7614 FAX: 601-974-8450
Page 10 of 11
<PAGE>
COMDATA TELECOMMUNICATIONS
SERVICES, INC.
BY: /s/Edward A. Barbieri
NAME: Edward A. Barbieri
TITLE: President and Cief
Operating Officer
DATE: October 18, 1995
FAX: 615-370-7614
Page 11 of 11
<PAGE>
CREDIT AGREEMENT
Dated as of December 12, 1995,
Among
CERIDIAN CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
and
THE FINANCIAL INSTITUTIONS PARTIES HERETO
Arranged By
BA SECURITIES, INC.
With
THE BANK OF NEW YORK
and
FIRST BANK NATIONAL ASSOCIATION,
as Lead Managers
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS................................................1
1.01 Defined Terms.........................................1
1.02 Other Interpretive Provisions........................19
(a) Defined Terms...................................19
(b) The Agreement...................................19
1.03 Accounting Principles................................20
ARTICLE II
THE CREDITS...............................................20
2.01 Amount and Terms of Commitments......................20
(a) The Committed Loans ............................20
(b) The Letters of Credit...........................20
(c) Participation; Old Letters of Credit............21
2.02 Loan Accounts........................................21
2.03 Procedure for Committed Borrowings...................21
2.04 Letter of Credit Requests............................22
2.05 Extension of Letters of Credit.......................23
2.06 Conversion and Continuation Elections for Committed
Borrowings...........................................23
2.07 Bid Borrowings.......................................24
2.08 Procedure for Bid Borrowings.........................25
2.09 Voluntary Termination or Reduction of Commitments....28
2.10 Optional Prepayments................................ 28
2.11 Repayment............................................29
2.12 Repayment of Letter of Credit Drawings...............29
2.13 Default in Reimbursement of Issuing Bank.............30
2.14 Interest.............................................31
2.15 Fees.................................................31
(a) Fees Payable to BofA and the Agent...............31
(b) Commitment Fees..................................32
(c) Letter of Credit Fees............................32
(d) Fees under the Existing Company Credit Agreement.33
2.16 Computation of Fees and Interest.....................33
2.17 Payments by the Company..............................33
2.18 Payments by the Banks to the Agent...................34
-i-
<PAGE>
2.19 Sharing of Payments, Etc.............................34
2.20 Pro Rata Treatment. ................................35
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY....................35
3.01 Taxes................................................35
3.02 Illegality...........................................37
3.03 Increased Costs and Reduction of Return..............38
3.04 Funding Losses.......................................38
3.05 Inability to Determine Rates.........................39
3.06 Substitution of Banks................................39
3.07 Survival.............................................40
ARTICLE IV
CONDITIONS PRECEDENT......................................40
4.01 Conditions to Effectiveness and Initial Advances of
Loans and Issuances of Letters of Credit up to an
Aggregate Exposure of $75 Million....................40
(a) Credit Agreement................................40
(b) Resolutions; Incumbency.........................40
(c) Organization Documents; Good Standing...........40
(d) Legal Opinion...................................41
(e) Certificate.....................................41
(f) Payment of Fees and Expenses....................41
(g) Subsidiary Guaranty.............................41
(h) Merger..........................................41
(i) Existing Indebtedness...........................42
(j) Pro Forma Financial Statements..................42
(k) Indebtedness....................................42
(l) Approvals and Consents..........................42
(m) Compliance Certificate..........................42
(n) Other Documents................................ 42
.
4.02 Conditions to Advances of Loans and Issuances of
Letters of Credit in
Excess of $75 Million of Aggregate Exposure..........42
(a) After Comdata Debt Retired......................43
(b) Before Comdata Debt Retired.....................43
(i) Debt Tender Offer..........................43
(ii) Approvals and Consents.....................43
(iii)Legal Opinion..............................44
(iv) Non-Tendered Senior Notes and Senior
Subordinated Debentures....................44
(v) Junior Subordinated Notes..................44
-ii-
<PAGE>
4.03 Conditions to All Credit Extensions..................44
(a) Notice of Borrowing or Continuation/Conversion..44
(b) Notice of Acceptance............................44
(c) Letter of Credit Request........................45
(d) Continuation of Representations and Warranties..45
(e) No Existing Default.............................45
ARTICLE V
REPRESENTATIONS AND WARRANTIES............................45
5.01 Corporate Existence and Power........................45
5.02 Corporate Authorization; No Contravention............46
5.03 Governmental Authorization...........................46
5.04 Binding Effect.......................................46
5.05 Litigation...........................................47
5.06 No Default...........................................47
5.07 ERISA Compliance.....................................47
5.08 Title to Properties..................................48
5.09 Taxes................................................48
5.10 Financial Condition..................................48
5.11 Environmental Matters................................49
5.12 Regulated Entities...................................49
5.13 No Burdensome Restrictions...........................50
5.14 Solvency.............................................50
5.15 Labor Relations......................................50
5.16 Copyrights, Patents, Trademarks and Licenses, etc....50
5.17 Material Subsidiaries and Equity Investments.........50
5.18 Insurance............................................50
5.20 Full Disclosure......................................51
ARTICLE VI
AFFIRMATIVE COVENANTS.....................................51
6.01 Financial Statements.................................51
6.02 Certificates; Other Information......................51
6.03 Notices..............................................52
6.04 Preservation of Corporate Existence, Etc.............53
6.05 Maintenance of Property..............................54
6.06 Insurance............................................54
6.07 Payment of Obligations...............................54
6.08 Compliance with Laws.................................54
6.09 Inspection of Property and Books and Records.........55
6.10 Environmental Laws...................................55
-iii-
<PAGE>
6.11 Use of Proceeds......................................55
6.12 Additional Guarantors................................55
6.13 Further Assurances...................................56
ARTICLE VII
NEGATIVE COVENANTS........................................56
7.01 Limitation on Liens..................................56
7.02 Mergers, Consolidations and Dispositions of Assets...57
7.03 Cash Investments; Minority Investments...............59
7.04 Indebtedness.........................................59
7.05 Contingent Obligations...............................59
7.06 Use of Proceeds......................................59
7.07 Hostile Acquisitions.................................59
7.08 Lease Obligations....................................60
7.09 Consolidated Net Worth...............................60
7.10 Fixed Charge Coverage Ratio..........................60
7.11 Leverage Ratio.......................................60
7.12 Change in Business...................................60
7.13 Accounting Changes...................................60
7.14 Contracts of Subsidiaries............................60
ARTICLE VIII
EVENTS OF DEFAULT.........................................61
8.01 Event of Default.....................................61
(a) Non-Payment.....................................61
(b) Representation or Warranty......................61
(c) Specific Defaults...............................61
(d) Other Defaults..................................61
(e) Cross-Default...................................61
(f) Insolvency; Voluntary Proceedings...............61
(g) Involuntary Proceedings.........................62
(h) ERISA...........................................62
(i) Monetary Judgments..............................62
(j) Ownership.......................................62
(k) Subsidiary Guaranty.............................63
8.02 Remedies.............................................63
8.03 Rights Not Exclusive.................................63
-iv-
<PAGE>
ARTICLE IX
THE AGENT.................................................63
9.01 Appointment and Authorization........................63
9.02 Delegation of Duties.................................64
9.03 Liability of Agent...................................64
9.04 Reliance by Agent....................................64
9.05 Notice of Default....................................65
9.06 Credit Decision......................................65
9.07 Indemnification......................................66
9.08 Agent in Individual Capacity.........................66
9.09 Successor Agent......................................67
ARTICLE X
MISCELLANEOUS.............................................67
10.01 Amendments and Waivers..............................67
10.02 Notices.............................................68
10.03 No Waiver; Cumulative Remedies......................68
10.04 Costs and Expenses..................................68
10.05 Indemnity...........................................69
(a) General Indemnity...............................69
(b) Survival; Defense...............................69
10.06 Marshalling; Payments Set Aside.....................70
10.07 Successors and Assigns..............................70
10.08 Assignments, Participations, etc....................70
10.09 Set-off.............................................72
10.10 Automatic Debits of Fees............................72
10.11 Notification of Addresses, Lending Offices, Etc.....72
10.12 Counterparts........................................72
10.13 Severability........................................73
10.14 No Third Parties Benefited..........................73
10.15 Time................................................73
10.16 GOVERNING LAW AND JURISDICTION......................73
10.17 WAIVER OF JURY TRIAL................................73
10.18 Entire Agreement....................................74
10.19 Interpretation......................................74
10.20 Term of Agreement...................................74
10.21 Foreign Currency Conversion.........................74
-v-
<PAGE>
SCHEDULES
Schedule 1.01 Old Letters of Credit
Schedule 2.01 Bank Commitments
Schedule 4.01 Indebtedness
Schedule 5.05 Litigation
Schedule 5.07 ERISA Disclosures
Schedule 5.10 Contingent Obligations and Partnerships
Schedule 5.11 Environmental Matters
Schedule 5.17 Subsidiaries and Material Subsidiaries
Schedule 5.17(A) Minority Investments
Schedule 7.02 Assets Permitted to be Disposed of as of the
Closing Date
EXHIBITS
Exhibit A Compliance Certificate
Exhibit B Assignment Agreement
Exhibit C Invitation for Competitive Bids
Exhibit D Letter of Credit Application
Exhibit E Notice of Borrowing
Exhibit F Notice of Conversion/Continuation
Exhibit G Subsidiary Guaranty
Exhibit H Competitive Bid Request
Exhibit I Competitive Bid
Exhibit J-1 Opinion of Counsel to Company
Exhibit J-2 Opinion of Counsel to Company
Exhibit K Bid Loan Note
-vi-
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of December 12,
1995 by and among Ceridian Corporation, a Delaware corporation
(the "Company"), the several financial institutions from time to
time parties to this Agreement (collectively, the "Banks";
individually, a "Bank") and Bank of America National Trust and
Savings Association, as Agent for the Banks.
WHEREAS, the Banks have agreed to make available to the
Company a revolving credit facility upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the Company, the Banks
and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
I.1 Defined Terms. In addition to the terms defined
elsewhere in this Agreement, the following terms have the
following meanings:
"Absolute Rate" has the meaning specified in
subsection 2.08(c).
"Absolute Rate Auction" means a solicitation of
Competitive Bids setting forth Absolute Rates pursuant to Section
2.08.
"Absolute Rate Bid Loan" means a Bid Loan that bears
interest at a rate determined with reference to the Absolute
Rate.
"Acquisition Corp." means Convoy Acquisition Corp., a
Delaware corporation.
"Affected Bank" has the meaning specified in
Section 3.06.
"Affiliate" means, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. A Person shall
be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of the other Person,
whether through the ownership of voting securities, membership
interests, by contract or otherwise. Without limitation, any
director, executive officer or beneficial owner of 15% or more of
the voting equity of a Person shall for the purposes of this
Agreement, be deemed to control the other Person.
"Agent" means BofA in its capacity as agent for the
Banks hereunder, and any successor agent appointed pursuant to
Section 9.09..
"Agent-Related Persons" means BofA and any successor
agent arising under Section 9.09, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and
the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Agent's Payment Office" means the address for
payments set forth on the signature page hereto in relation to
the Agent or such other address as the Agent may from time to
time specify in accordance with Section 10.02.
"Aggregate Commitment" means the combined Commitments
of the Banks, in the initial amount of Three Hundred Twenty-Five
Million Dollars ($325,000,000), as such amount may be reduced
from time to time pursuant to this Agreement.
"Aggregate Exposure" means at any time, the sum of (a)
the aggregate principal amount of outstanding Committed Loans and
Bid Loans, plus (b) the aggregate undrawn face amount of all
outstanding Letters of Credit, plus (c) the aggregate amount of
drawings made under Letters of Credit for which the applicable
Issuing Bank has not yet been reimbursed.
"Agreement" means this Credit Agreement, as amended,
restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"Applicable Commitment Fee Percentage," "Applicable
Financial L/C Percentage," "Applicable Margin" and "Applicable
Performance L/C Percentage" mean the percentages (the "Applicable
Percentages") specified in the table below after applying the
rules of application which immediately follow the table:
Company's Actual or Implied Senior
Unsecured Long-Term Debt
Rating (S&P/Moody's):
Applicable Level I Level Level Level Level V
Percentages: BBB- II III IV B+/B1
/Baa3 BB+/Ba1 BB/Ba2 BB- and
and /Ba3 Below
Above
Applicable 0.175% 0.225% 0.25% 0.275% 0.35%
Commitment Fee
Percentage
Applicable 0.475% 0.65% 0.80% 1.0% 1.375%
Financial L/C
Percentage
Applicable Margin:
Base Rate 0% 0% 0% 0% 0.375%
Committed Loans
Applicable Margin: 0.475% 0.65% 0.80% 1.0% 1.375%
Offshore Rate
Committed Loans
Applicable 0.2375% 0.325% 0.40% 0.50% 0.6875%
Performance L/C
Percentage
where the following rules of application shall apply:
-2-
<PAGE>
(a) the Company's senior unsecured long-term debt
rating as in effect on the last business day of any calendar
month shall be used to determine the Applicable Percentages
for the immediately succeeding calendar month;
(b) if at any time S&P and Moody's assign different
senior unsecured long-term debt ratings to the Company, the
Applicable Percentages shall be determined based on the
higher of such ratings if the lower of such ratings is not
more than two ratings levels lower than the higher, and
shall be determined based on the lower of such ratings if
the lower of such ratings is more than two ratings levels
lower than the higher;
(c) if at any time only one Rating Agency assigns a
senior unsecured long-term debt rating to the Company, that
rating shall be used to determine the Applicable
Percentages;
(d) if at any time neither Rating Agency assigns a
senior unsecured long-term debt rating to the Company, but
either or both Rating Agencies rate the Company's preferred
stock, then the Applicable Percentages shall be determined
utilizing such preferred stock rating(s) in accordance with
the foregoing table and rules of applicability except that
each ratings level specified in the table for senior
unsecured long-term debt shall be adjusted two ratings
levels lower for application to the Company's preferred
stock;
(e) if at any time neither Rating Agency assigns a
senior unsecured long-term debt rating to the Company and
neither Rating Agency rates the Company's preferred stock,
then the Applicable Percentages shall be determined
utilizing Level V in the table above; and
(f) as of the Closing Date, the Applicable Percentages
shall be determined utilizing Level II until adjusted as
provided herein.
"Arranger" means BA Securities, Inc.
"Assignee" is defined in subsection 10.08(a).
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external counsel, the non-
duplicative allocated cost of internal legal services and all
disbursements of internal counsel.
"BAI" means Bank of America Illinois, an Illinois
chartered bank.
"Bank" (a) has the meaning specified in the
introductory clause hereto and (b) also includes any financial
institution becoming a party hereto by execution of an assignment
and acceptance agreement in accordance with Section 10.08.
"Bank Affiliate" means a Person engaged primarily in
the business of commercial banking and that is a Subsidiary of a
Bank or of a Person of which a Bank is a Subsidiary.
"Bankruptcy Code" means the Federal Bankruptcy Reform
Act of 1978 (11 U.S.C. S 101, et seq.).
-3-
<PAGE>
"Base Rate" means the higher of:
(a) the rate of interest publicly announced from time
to time by BofA in San Francisco, California, as its
"reference rate." It is a rate set by BofA based upon
various factors including BofA's costs and desired return,
general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate; and
(b) 0.50% per annum above the latest Federal Funds
Rate.
Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in
the public announcement of such change.
"Base Rate Committed Loan" means a Committed Loan that
bears interest based on the Base Rate.
"Bid Borrowing" means a Borrowing hereunder consisting
of one or more Bid Loans made to the Company on the same day by
one or more Banks.
"Bid Loan" means a Loan by a Bank to the Company under
Section 2.07, which may be an IBOR Bid Loan or an Absolute Rate
Bid Loan.
"Bid Loan Lender" means, in respect of any Bid Loan,
the Bank making such Bid Loan to the Company.
"Bid Loan Note" has the meaning specified in Section
2.02.
"BofA" means Bank of America National Trust and
Savings Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of
Loans of the same Type and, other than in the case of Base Rate
Committed Loans, having the same Interest Period made to the
Company on the same day by the Banks under Article II, and may be
a Committed Borrowing or a Bid Borrowing.
"Borrowing Date" means any date on which a Borrowing
occurs under Section 2.03 or 2.08, or any date on which a Letter
of Credit is issued under Section 2.04.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in Chicago, New
York City or San Francisco are authorized or required by law to
close and, if the applicable Business Day relates to any Offshore
Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not
-4-
<PAGE>
having the force of law, in each case, regarding capital adequacy
of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period, the
aggregate of all capitalized software costs and all expenditures
by the Company and its Subsidiaries for the acquisition of fixed
or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such
period) as shown in the Company's consolidated statements of cash
flow for such period in accordance with GAAP.
"Capital Lease" has the meaning specified in the
definition of Capital Lease Obligations.
"Capital Lease Obligations" means all monetary
obligations of the Company or any of its Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP, is
classified as a capital lease ("Capital Lease").
"Cash Equivalents" means:
(b) securities issued or fully guaranteed or insured
by the United States Government or any agency thereof having
maturities of not more than six months from the date of
acquisition;
(c) certificates of deposit, time deposits, Eurodollar
time deposits, repurchase agreements, reverse repurchase
agreements, or bankers' acceptances, having in each case a
tenor of not more than six months, issued by any Bank, or by
any U.S. commercial or investment bank or broker having
combined capital and surplus of not less than $100,000,000
whose short term securities are rated at least A-1 by S&P
and P-1 by Moody's; and
(d) commercial paper or promissory notes of an issuer
rated at least A-1 by S&P or P-1 by Moody's and in either
case having a tenor of not more than three months.
"Closing Date" means December 12, 1995.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder as
from time to time in effect.
"Comdata" means Comdata Network, Inc., a Maryland
corporation.
"Comdata Holdings" means Comdata Holdings Corporation,
a Delaware corporation.
"Commitment" means (a) as to each Bank executing this
Agreement on the Closing Date, its commitment to extend credit to
the Company in the amount set forth opposite its name on Schedule
2.01 (as such amount may be reduced from time to time in
accordance with Section 2.09 or Section 10.08) and (b) as to each
financial institution becoming a Bank hereunder pursuant to
-5-
<PAGE>
Section 10.08, its commitment to extend credit in the amount
agreed upon in the assignment and acceptance agreement entered
into by it in accordance with Section 10.08.
"Commitment Percentage" means, as to any Bank, the
percentage derived by dividing such Bank's Commitment by the
Aggregate Commitment.
"Committed Borrowing" means a Borrowing hereunder
consisting of Committed Loans made on the same day by the Banks
ratably according to their respective Commitment Percentages and,
in the case of Offshore Rate Committed Loans, having the same
Interest Period.
"Committed Loan" means a Loan by a Bank to the Company
under subsection 2.01(a), and may be an Offshore Rate Committed
Loan or a Base Rate Committed Loan (each, a "Type" of Committed
Loan).
"Competitive Bid" means an offer by a Bank to make a
Bid Loan in accordance with subsection 2.08(b).
"Competitive Bid Request" is defined in
subsection 2.08(a).
"Compliance Certificate" means a certificate delivered
to the Agent by the Company pursuant to subsection 6.02(a),
substantially in the form of Exhibit A attached hereto.
"Consolidated Fixed Charges" means, at any time, (a)
Consolidated Interest Expense for the four fiscal quarters ending
on or before the date of determination, plus (b) Current
Maturities of Long Term Debt measured as of the last day of the
fiscal quarter ending on or before the date of determination (but
excluding principal payable under the Loan Documents), plus (c)
dividends paid on preferred stock issued by the Company
(including the Preferred Stock) for the four fiscal quarters
ending on or before the date of determination, as determined in
accordance with GAAP.
"Consolidated Indebtedness" means, at any time, all
amounts which would, in accordance with GAAP, be included as
Indebtedness on a consolidated balance sheet of the Company and
its Subsidiaries as of such time.
"Consolidated Interest Expense" means, for any period,
gross consolidated interest expense for such period (including
all commissions, discounts, fees and other charges in connection
with Letters of Credit) for the Company and its Subsidiaries.
"Consolidated Net Income (Loss)" means, for any
period, all amounts which would, in accordance with GAAP, be
included in net income (loss) on the consolidated income
statement of the Company and its Subsidiaries for such period.
"Consolidated Net Worth" means, at any time, with
respect to the Company and its Subsidiaries, shareholders' equity
on the date of determination as determined in accordance with
GAAP (except that the effects of direct charges or credits to
shareholders' equity related to accounting for pensions
("FAS 87") and foreign currency translation ("FAS 52") are to be
disregarded).
-6-
<PAGE>
"Consolidated Total Assets" means, at any time, the
total consolidated assets of the Company and its Subsidiaries
measured as of the last day of the fiscal quarter ending on or
before the date of determination, as determined in accordance
with GAAP.
"Contingent Obligation" means, as to the Company or
any of its Subsidiaries, (a) any Guaranty Obligation of that
Person; (b) any reimbursement obligation of that Person with
respect to a standby letter of credit, surety bond, banker's
acceptance or similar instrument; (c) any obligation of that
Person to purchase any materials, supplies or other property
from, or to obtain the services of, another Person (other than
the Company or one of its Subsidiaries) if the relevant contract
or other related document or obligation requires that payment for
such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such
services are ever performed or tendered; and (d) all Indebtedness
(other than that of the Company or any of its Subsidiaries)
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien on property (including accounts and contract rights) owned
by the Company or any such Subsidiary; but in all events
excluding obligations of the type described in clauses (a)
through (d) above to the extent that reserves or liabilities have
been established therefor in the Company's consolidated financial
statements.
"Contractual Obligations" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed of
trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is bound.
"Conversion Date" means any date on which the Company
elects to convert a Base Rate Committed Loan to an Offshore Rate
Committed Loan or to convert an Offshore Rate Committed Loan to a
Base Rate Committed Loan.
"Credit Extension" means a Borrowing, a continuance or
conversion of Loans or the issuance of or purchase of a
participation under subsection 2.01(c) in a Letter of Credit.
"Credit Extension Date" means the date on which a
Credit Extension is made.
"Current Maturities of Long Term Debt" means the
principal portion of any Indebtedness with a maturity date in
excess of one year that is due within the next 12 months.
"Debt Tender Offer" means the offer by Comdata to
purchase for cash all of its outstanding Senior Notes and all of
its outstanding Senior Subordinated Debentures, and the related
solicitation of consents to amend the related indentures, as set
forth in the Offer to Purchase.
"Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an Event
of Default.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
-7-
<PAGE>
"Domestic Lending Office" means, with respect to each
Bank, the office of that Bank designated as such in the signature
pages hereto or such other office of the Bank as it may from time
to time specify to the Company and the Agent.
"EBIT" means, for any period, for the Company and its
Subsidiaries determined in accordance with GAAP, the sum of (a)
Consolidated Net Income (Loss), plus (b) Consolidated Interest
Expense, plus (c) provision for income taxes to the extent
included in the determination of Consolidated Net Income (Loss),
and minus (d) interest income, all determined on a consolidated
basis for the Company and its Subsidiaries; provided, however,
that Consolidated Net Income (Loss) shall be computed for these
purposes without giving effect to extraordinary losses or gains
or losses or gains from discontinued operations.
"EBITDA" means, for any period, for the Company and
its Subsidiaries on a consolidated basis, determined in
accordance with GAAP, the sum of (a) EBIT plus (b) depreciation
and amortization expenses.
"Eligible Assignee" means (a) a commercial bank
organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least
$100,000,000; (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political
subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States;
and (c) any Bank Affiliate.
"Environmental Claims" means all claims, however
asserted, by any Governmental Authority or other Person alleging
potential liability or responsibility for violation of any
Environmental Law or for release or injury to the environment or
threat to public health, personal injury (including sickness,
disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response
costs, restitution, civil or criminal penalties, injunctive
relief, or other type of relief, resulting from or based upon (a)
the alleged or actual presence, placement, migration, spillage,
leakage, disposal, discharge, emission or release of any
Hazardous Material at, in, or from property, whether or not owned
by the Company, or (b) any other circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances
and codes, together with all administrative orders, directed
duties, requests, licenses, authorizations, registration
requirements and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental
and land use matters or health and safety matters involving
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations
promulgated thereunder as from time to time in effect.
-9-
<PAGE>
"ERISA Affiliate" means any trade or business (whether
or not incorporated) under common control with the Company within
the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by the Company or any
ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d)
the filing of a notice of intent to terminate, the treatment of a
Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any
ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning
specified in the definition of "Offshore Rate".
"Event of Default" means any of the events or
circumstances specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of
1934, and regulations promulgated thereunder.
"Existing Comdata Credit Agreement" means that certain
Amended and Restated Credit Agreement dated as of March 3, 1995
by and among Comdata, Comdata Holdings, BT Commercial
Corporation, as agent, and the financial institutions parties
thereto, as amended.
"Existing Company Credit Agreement" means that certain
Second Amended and Restated Credit Agreement dated as of May 23,
1995 by and among the Company, BofA, as agent, and the financial
institutions parties thereto.
"Extension" is defined in Section 2.05.
"Extension Refusal Date" is defined in Section 2.05.
"Federal Funds Rate" means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Federal Reserve
Board (including any such successor, "H.15(519)") for such day
opposite the caption "Federal Funds (Effective)". If on any
relevant day such rate is not yet published in H.15(519), the
rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m.
-9-
<PAGE>
Quotation") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day the appropriate rate for
such previous day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the
arithmetic mean of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York
time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors
of the Federal Reserve System, or any successor thereto.
"Financial L/C" means, with respect to any Letter of
Credit, a "financial standby letter of credit" as such term is
defined in the Adequacy Guidelines For Bank Holding Companies:
Risk-Based Measure, 12 C.F.R. Part 225, Appendix A, III.D (1993)
and as the definition of such term may be amended from time to
time prior to issuance of any such Letter of Credit. Such term
is described in the 1993 Code of Federal Regulations as
"irrevocable obligations of the banking organization to pay a
third-party beneficiary when a customer (account party) fails to
repay an outstanding loan or debt instrument (direct credit
substitute)."
"GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such other
entity as may be in general use by significant segments of the
U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Guarantors" means, collectively, Comdata Holdings,
Comdata and any domestic Material Subsidiary that executes the
Subsidiary Guaranty pursuant to Section 6.12.
"Guaranty Obligation" means, as applied to the Company
or any of its Subsidiaries, any agreement of the Company or any
such Subsidiary to guarantee the Indebtedness of a Person other
than the Company or any of its Subsidiaries (the "primary
obligor"), or any obligation or undertaking of the Company or any
such Subsidiary which, in economic effect, is substantially
equivalent to a guarantee of the primary obligor's Indebtedness
("primary obligations"), including any obligation of the Company
or any such Subsidiary, whether or not contingent, (a) to
purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligation, or (ii) to
maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency or any balance
sheet item, level of income or financial condition of the primary
obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
-11-
<PAGE>
primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or
hold harmless the holder of any such primary obligation against
loss in respect thereof.
"Hazardous Materials" means all those substances which
are regulated by, or which may form the basis of liability under,
any Environmental Law, including all substances identified under
any Environmental Law as a pollutant, contaminant, hazardous
waste, hazardous constituent, hazardous chemicals, special waste,
hazardous substance, hazardous material, regulated substance, or
toxic substance, or petroleum or petroleum derived substance or
waste.
"IBOR Auction" means a solicitation of Competitive
Bids setting forth an IBOR Bid Margin pursuant to Section 2.08.
"IBOR Bid Loan" means any Bid Loan that bears interest
at a rate based upon the IBO Rate.
"IBOR Bid Margin" has the meaning specified in
subsection 2.08(c)(ii)(C).
"IBO Rate" has the meaning specified in the definition
of "Offshore Rate".
"Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade payables
entered into in the Ordinary Course of Business pursuant to
ordinary terms); (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of
property, assets or businesses; (d) all indebtedness created or
arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect
to property acquired by the Person (even though the rights and
remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property);
and (e) all Capital Lease Obligations. Indebtedness owed to the
Company by its Subsidiaries, by one Subsidiary to another or by
the Company to a Subsidiary shall not constitute Indebtedness.
"Indemnified Person" has the meaning specified in
subsection 10.05(a).
"Indemnified Liabilities" has the meaning specified in
subsection 10.05(a).
"Insolvency Proceeding" means, with respect to any
Person, (a) any case, action or proceeding with respect to such
Person before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or
(b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other,
similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case for clause (a)
and (b) above, undertaken under U.S. Federal, State or foreign
law, including the Bankruptcy Code.
"Interest Payment Date" means (a) as to any Base Rate
Committed Loan, the first Business Day of January, April, July
and October, each date on which such Committed Loan is converted
into an Offshore Rate Committed Loan, and the Termination Date;
-11-
<PAGE>
(b) as to any Offshore Rate Committed Loan, the last day of each
Interest Period applicable to such Loan and, if any such Interest
Period exceeds three months, the date that falls three months
after the beginning of such Interest Period; (c) as to any
Absolute Rate Bid Loan or any IBOR Bid Loan, the last day of each
Interest Period applicable to such Loan and any intervening dates
prior to the maturity thereof as may be specified by the Company
and agreed to by the applicable Bid Loan Lender in the applicable
Competitive Bid.
"Interest Period" means, (a) as to any Offshore Rate
Loan, the period commencing on the Business Day such Loan is
disbursed, or (in the case of any Offshore Rate Committed Loan)
on the Conversion Date on which such Loan is converted into or
continued as an Offshore Rate Committed Loan, and ending on the
date one, two, three or six months thereafter, as selected by the
Company in its Notice of Borrowing, Notice of
Conversion/Continuation or Competitive Bid Request, as the case
may be; and (b) as to any Absolute Rate Bid Loan, a period of not
less than 14 days and not more than 365 days as selected by the
Company in the applicable Competitive Bid Request; provided,
however, that:
(a) if any Interest Period would otherwise end on a
day which is not a Business Day, that Interest Period shall
be extended to the next succeeding Business Day unless, in
the case of an Offshore Rate Loan, the result of such
extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
(b) any Interest Period pertaining to an Offshore Rate
Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the
Termination Date.
"Investment" of a Person means the outstanding amount
of any loan, advance, extension of credit (other than loans,
advances or extensions of credit arising in the Ordinary Course
of Business), or the amount of any contribution of capital by
such Person to any other Person or any investment in, or purchase
or other acquisition of, the stock, partnership or membership
interests, notes, debentures or other securities of any other
Person made by such Person.
"Invitation for Competitive Bids" means a solicitation
for Competitive Bids, substantially in the form of Exhibit C
attached hereto.
"Issuing Bank" means, with respect to each Letter of
Credit, BAI (or any of its Affiliates including BofA) or such
other Bank which may issue a Letter of Credit.
"IRS" means the Internal Revenue Service or any entity
succeeding to any of its principal functions under the Code.
"Joint-Applicant" means, with respect to any Letter of
Credit, a Subsidiary of the Company which together with the
Company signs a Letter of Credit Application.
-12-
<PAGE>
"Junior Subordinated Notes" means Comdata's 11% Junior
Subordinated Extendible Notes due 1997.
"Lending Office" means, with respect to any Bank, the
office or offices of such Bank specified as its "Lending Office"
or "Domestic Lending Office" or "Offshore Lending Office", as the
case may be, opposite its name on the applicable signature page
hereto, or such other office or offices of the Bank as it may
from time to time notify the Company and the Agent in writing.
"Letter of Credit" means (a) a standby letter of
credit issued under this Agreement by the Issuing Bank for the
account of the Company and (b) any Old Letter of Credit
outstanding on the Closing Date, including an Extension of any
letter of credit.
"Letter of Credit Application" means a letter of
credit application and agreement in form and substance
satisfactory to the Issuing Bank. Attached hereto as Exhibit D
is the initial form of Letter of Credit Application.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or other security interest
(including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest
of a lessor under a Capital Lease Obligation and any financing
lease having substantially the same economic effect as any of the
foregoing) and any contingent or other agreement to provide any
of the foregoing, but not including the interest of a lessor
under an Operating Lease.
"Loan" means an extension of credit by a Bank to the
Company pursuant to Article II, and may be a Committed Loan or a
Bid Loan.
"Loan Documents" means this Agreement, the Notes, the
Letter of Credit Applications, the Subsidiary Guaranties, and all
documents delivered to the Agent or any Bank in connection
herewith or therewith, as such instruments, agreements and
documents may be amended, supplemented, restated, modified or
renewed from time to time.
"Majority Banks" means (a) at any time prior to the
Termination Date, Banks then having 51% or more of the
Commitments and (b) at all other times, Banks then holding 51% or
more of the then aggregate unpaid principal amount of the Credit
Extensions.
"Margin Stock" means "margin stock" as such term is
defined in Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole or
(b) a material adverse effect upon the validity or enforceability
against the Company or any Guarantor of any of the Loan
Documents.
"Material Subsidiary" means at any time any Subsidiary
of the Company the assets of which are 10% or more of
Consolidated Total Assets (or the equivalent thereof in another
currency).
-13-
<PAGE>
"Merger" means the merger of Acquisition Corp. with
and into Comdata Holdings pursuant to the Plan of Merger.
"Merger Documents" means the Plan of Merger and all
instruments, agreements and documents executed and delivered in
connection with the Plan of Merger.
"Moody's" means Moody's Investors Service, Inc. and
any successor thereto.
"Multiemployer Plan" means a "multiemployer plan",
within the meaning of Section 4001(a)(3) of ERISA, to which the
Company or any ERISA Affiliate makes, is making, or is obligated
to make contributions or, during the preceding three calendar
years, has made, or been obligated to make, contributions.
"Notes" means the Bid Loan Notes.
"Notice of Borrowing" means a notice given by the
Company to the Agent pursuant to Section 2.03, in substantially
the form of Exhibit E attached hereto.
"Notice of Conversion/Continuation" means a notice
given by the Company to the Agent pursuant to Section 2.06, in
substantially the form of Exhibit F attached hereto.
"Notice of Lien" means any "notice of lien" or similar
document intended to be filed or recorded with any court,
registry, recorder's office, central filing office or other
Governmental Authority for the purpose of evidencing, creating,
perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"Obligations" means all Loans, and other Indebtedness,
advances, debts, liabilities, obligations, covenants and duties
owing by the Company or any Guarantor to any Bank, the Agent, or
any other Person required to be indemnified under any Loan
Document, of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether or
not for the payment of money, whether arising by reason of an
extension of credit, the issuance of a Letter of Credit, loan,
guaranty, indemnification or in any other manner, whether direct
or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter
arising and however acquired.
"Offer to Purchase" means the Offer to Purchase and
Consent Solicitation Statement of Comdata dated November 22, 1995
relating to the Senior Notes and Senior Subordinated Debentures
as it may subsequently be amended (including any amendments to
increase the tender offer consideration), but without giving
effect to any amendments thereto relating to the amendments or
waivers to the Indentures (as defined therein) proposed thereby.
"Offshore Lending Office" means with respect to each
Bank, the office of such Bank designated as such in the signature
pages hereto or such other office of such Bank as such Bank may
from time to time specify to the Company and the Agent.
-14-
<PAGE>
"Offshore Rate" means, for each Interest Period in
respect of Offshore Rate Loans comprising part of the same
Borrowing, an interest rate per annum (rounded upward to the
nearest 1/16th of 1%) determined pursuant to the following
formula:
Offshore Rate = IBO Rate
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means (a) with respect
to Offshore Rate Committed Loans, the maximum reserve
percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date the IBO Rate
for such Interest Period is determined (whether or not
applicable to any Bank) under regulations issued from time
to time by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities") having a term comparable to such
Interest Period; (b) with respect to IBOR Bid Loans, 0%; and
"IBO Rate" means for any Interest Period with respect
to an IBOR Bid Loan or Offshore Rate Committed Loan, the
rate of interest per annum determined by the Agent as the
rate of interest at which dollar deposits in the approximate
amount of, in the case of IBOR Bid Loans, the IBOR Bid Loans
to be borrowed in such Bid Loan Borrowing, and, in the case
of Offshore Rate Committed Loans, the Offshore Rate
Committed Loan to be made by BofA, and having a maturity
comparable to such Interest Period, would be offered by
BofA's Grand Cayman Branch, Grand Cayman B.W.I., to major
banks in the offshore dollar interbank market upon request
of such banks at approximately 11:00 a.m. (New York City
time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as
of the effective date of any change in the Eurodollar
Reserve Percentage.
"Offshore Rate Committed Loan" means any Committed
Loan that bears interest based on the Offshore Rate.
"Offshore Rate Loan" means an IBOR Bid Loan or an
Offshore Rate Committed Loan.
"Old Letters of Credit" means letters of credit issued
by BofA or BankAmerica International under the Existing Company
Credit Agreement and outstanding on the Closing Date, all of
which are listed on Schedule 1.01 attached hereto.
"Operating Lease" means, as applied to any Person, any
lease of property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any
transaction involving the Company or any Subsidiary of the
Company, the ordinary course of such Person's business, as
-15-
<PAGE>
conducted by any such Person in accordance with past practice and
undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document.
"Organization Documents" means, for any corporation,
the certificate or articles of incorporation, the bylaws, any
certificate of designations or instrument relating to the rights
of preferred shareholders of such corporation, and all applicable
resolutions of the board of directors (or any committee thereof)
of such corporation.
"Other Taxes" has the meaning specified in subsection
3.01(b).
"Participant" has the meaning specified in subsection
10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan, as defined in
Section 3(2) of ERISA, subject to Title IV of ERISA, which the
Company or any ERISA Affiliate sponsors or maintains, or to which
the Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions, or in the case of a multiple
employer plan, as described in Section 4064(a) of ERISA, has made
contributions at any time during the immediately preceding five
plan years; but excluding in all cases any Multiemployer Plan.
"Performance L/C" means, with respect to any Letter of
Credit, a "performance standby letter of credit" as such term is
defined in the Adequacy Guidelines For Bank Holding Companies:
Risk-Based Measure, 12 C.F.R. Part 225, Appendix A, III.D (1993)
as the definition of such term may be amended from time to time
prior to issuance of any such Letter of Credit. Such term is
described in the 1993 Code of Federal Regulations as "irrevocable
obligations of the banking organization to pay a third-party
beneficiary when a customer (account party) fails to perform some
other contractual non-financial obligation."
"Permitted Liens" is defined in Section 7.01.
"Person" means an individual, partnership,
corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint venture
or Governmental Authority.
"Plan" means an employee benefit plan, as defined in
Section 3(3) of ERISA, which the Company or any ERISA Affiliate
sponsors or maintains, or to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make
contributions, and includes any Pension Plan or Multiemployer
Plan.
"Plan of Merger" means that certain Agreement and Plan
of Merger dated as of August 23, 1995 by and among the Company,
Acquisition Corp. and Comdata Holdings.
"Preferred Stock" means the Company's 5-1/2%
Cumulative Convertible Exchangeable Preferred Stock, par value
$100 per share.
-16-
<PAGE>
"Purchase" means any transaction, or any series of
related transactions, consummated on or after the Closing Date,
by which the Company or any of its Subsidiaries (a) acquires any
ongoing business or all or substantially all of the assets of any
firm, corporation or division thereof, whether through purchase
of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in
a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary
voting power for the election of directors (other than securities
having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding partnership or membership interests of a partnership
or limited liability company, respectively.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other
agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"Rating Agency" means S&P and Moody's.
"Replacement Bank" has the meaning specified in
Section 3.07.
"Reportable Event" means any of the events set forth
in Section 4043(b) of ERISA or the regulations promulgated
thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by
the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of any arbitrator or of a Governmental Authority,
in each case applicable to or binding upon the Person or any of
its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the chief executive
officer, the chief financial officer, the president, any
executive vice president, the controller or the treasurer of the
Company.
"S&P" means Standard & Poor's Ratings Group, a
division of The McGraw Hill Companies and any successor thereto.
"SEC" means the Securities and Exchange Commission, or
any successor thereto.
"Senior Notes" means Comdata's 12-1/2% Senior Notes
due 1999.
"Senior Subordinated Debentures" means Comdata's 13-
1/4% Senior Subordinated Debentures due 2002.
"Solvent" means, as to any Person at any time, that
(a) the fair value of the property of such Person is greater than
the fair value of such Person's liabilities (including disputed,
contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for
purposes of the Uniform Fraudulent Conveyances Act (as enacted in
the State of Illinois); (b) the present fair saleable value of
-17-
<PAGE>
the property of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person is
able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d)
such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature; and (e) such Person is
not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Stated Amount" means, with respect to any Letter of
Credit, at any date of determination thereof, the maximum
aggregate amount available for drawing thereunder plus the
aggregate amount of all unreimbursed payments and disbursements
under such Letter of Credit.
"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint
venture or other business entity of which more than 50% of the
voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more
of the Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein
to a "Subsidiary" refer to a Subsidiary of the Company.
"Subsidiary Guaranty" means the Subsidiary Guaranty
executed and delivered by each Guarantor in the form of Exhibit G
attached hereto together with each additional guaranty in
substantially such form executed and delivered by a domestic
Material Subsidiary pursuant to Section 6.12, in each case as
amended, restated, supplemented or otherwise modified from time
to time.
"Taxes" has the meaning specified in subsection
3.01(a).
"Termination Date" means the earlier to occur of:
(b) November 30, 1998; and
(c) the date on which the Aggregate Commitment
terminates in accordance with Section 2.09 or Section 8.02.
"Transferee" has the meaning specified in subsection
10.08(e).
"Type" has the meaning specified in the definition of
"Committed Loan".
"UCC" means the Uniform Commercial Code as in effect
in the State of Illinois.
"United States" and "U.S." each means the United
States of America.
"Wholly-Owned Subsidiary" means any corporation in
which (other than directors' qualifying shares required by law)
100% of the capital stock of each class having ordinary voting
power, and 100% of the capital stock of every other class, in
each case, at the time as of which any determination is being
-18-
<PAGE>
made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries, or both.
I.2 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein
or therein, all terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document
made or delivered pursuant hereto. The meaning of defined terms
shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein and that are defined in the UCC shall
have the meanings therein described.
(b) The Agreement.
(i) The words "hereof", "herein", "hereunder" and
words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular
provision of this Agreement; and subsection, section,
schedule and exhibit references are to this Agreement unless
otherwise specified.
(ii) The term "documents" includes any and all
instruments, documents, agreements, certificates,
indentures, notices and other writings, however evidenced.
The term "including" is not limiting and means "including
without limitation". In the computation of periods of time
from a specified date to a later specified date, the word
"from" means "from and including"; the words "to" and
"until" each mean "to but excluding", and the word "through"
means "to and including."
(iii) Unless otherwise expressly provided
herein, (A) references to agreements (including this
Agreement) and other contractual instruments shall be deemed
to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan
Document, and (B) references to any statute or regulation
are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(iv) The captions and headings of this Agreement
are for convenience of reference only and shall not affect
the interpretation of this Agreement.
(v) This Agreement and other Loan Documents may
use several different limitations, tests or measurements to
regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Agent
or the Banks by way of consent, approval or waiver shall be
deemed modified by the phrase "in its/their sole
discretion."
(vi) This Agreement and the other Loan Documents
are the result of negotiations among and have been reviewed
by counsel to the Agent, the Company and the other parties,
and are the products of all parties. Accordingly, they
-19-
<PAGE>
shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in their
preparation.
I.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed
in accordance with GAAP as in effect from time to time, but all
financial computations required under this Agreement shall be
made in accordance with GAAP as in effect and applied by the
Company on September 30, 1995, consistently applied, except to
the extent otherwise agreed upon by the parties hereto.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
II.1 Amount and Terms of Commitments. Within the limits of
each Bank's Commitment, and subject to the other terms and
conditions hereof, the Company may borrow, repay and reborrow
Loans and obtain the issuance of Letters of Credit.
(a) The Committed Loans. From time to time on any
Business Day during the period from the Closing Date to the
Termination Date, each Bank severally agrees, on the terms and
conditions hereinafter set forth, to make Committed Loans to the
Company in an aggregate outstanding amount not to exceed at any
time the amount of such Bank's Commitment Percentage of the
difference between (i) the Aggregate Commitment minus (ii) the
sum of (A) the aggregate principal amount of all outstanding
Committed Loans and Bid Loans, plus (B) the aggregate undrawn
face amount of all outstanding Letters of Credit and plus (C)
the aggregate amount of drawings made under Letters of Credit for
which the applicable Issuing Bank has not yet been reimbursed.
(b) The Letters of Credit. The Issuing Bank agrees,
on the terms and conditions hereinafter set forth, on any
Business Day on or prior to the Termination Date, to issue
Letters of Credit for the account of the Company and, if
applicable, a Joint-Applicant, in a face amount not in excess at
any time of the Aggregate Commitment, minus the sum of (i) the
aggregate principal amount of all outstanding Loans, plus (ii)
the aggregate undrawn face amount of all outstanding Letters of
Credit, plus (iii) the aggregate amount of drawings made under
Letters of Credit for which the applicable Issuing Bank has not
yet been reimbursed; provided, however, that (A) in no event may
the Stated Amount of Letters of Credit issued to support worker's
compensation obligations of the Company and its Subsidiaries
exceed $10,000,000 at any one time and (B) in no event may the
aggregate Stated Amount of all Letters of Credit outstanding
exceed $75,000,000 at any time. BAI may, at its option, fulfill
its Commitment to issue Letters of Credit by arranging for the
issuance of Letters of Credit by an Affiliate of BAI. Any Letter
of Credit issued by an Affiliate of BAI shall be deemed to be
issued by BAI for the purpose of BAI's fulfilling its Commitment
and retaining a proportionate interest in Letters of Credit
pursuant to subsection (c) of this Section 2.01.
-20-
<PAGE>
(c) Participation; Old Letters of Credit. Each Bank
(other than the Issuing Bank) agrees to purchase a participation
(i) in each Letter of Credit on the date of issuance of such
Letter of Credit and (ii) in each amendment increasing the face
amount of a Letter of Credit after the issuance thereof, on the
date of such amendment, in an amount equal to its Commitment
Percentage. The Issuing Bank shall retain a proportionate
interest in the amount of its Commitment Percentage in each
Letter of Credit after such purchase of participations. With
respect to Old Letters of Credit, upon the effectiveness of this
Agreement pursuant to Section 4.01, each Bank (other than the
Issuing Bank) shall be deemed to have purchased a participation
in the amount of its Commitment Percentage in such Old Letters of
Credit and such Old Letters of Credit shall be deemed to be
Letters of Credit existing under this Agreement.
II.2 Loan Accounts.
(a) The Committed Loans made by each Bank shall be
evidenced by one or more loan accounts or records maintained by
such Bank in the ordinary course of business. The loan accounts
or records maintained by the Agent and each Bank shall be
conclusive absent manifest error of the amount of the Committed
Loans made by the Banks to the Company and the interest and
payments thereon. Any failure so to record or any error in doing
so shall not, however, limit or otherwise affect the obligation
of the Company hereunder to pay any amount owing with respect to
the Committed Loans. At the request of any Bank, the Company
shall execute and deliver a promissory note in form and substance
satisfactory to the Company and such Bank to reflect the
Committed Loans evidenced by such loan accounts or records.
(b) The Bid Loans made by each Bank shall be evidenced
by one or more notes ("Bid Loan Notes"), in addition to the loan
accounts referenced in subsection 2.02(a). Each such Bank shall
endorse on the schedules annexed to its Bid Loan Note the date,
amount and maturity of each Bid Loan made by it and the amount of
each payment of principal made by the Company with respect
thereto. Each such Bank is irrevocably authorized by the Company
to endorse its Bid Loan Note and each Bank's record shall be
conclusive absent manifest error; provided, however, that the
failure of a Bank to make, or an error in making, a notation
thereon with respect to any Bid Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under any such
Bid Loan Note to such Bank.
II.3 Procedure for Committed Borrowings.
(a) Each Committed Borrowing shall be made upon the
Company's irrevocable written notice (or telephonic notice,
promptly confirmed by a writing) delivered to the Agent in the
form of a Notice of Borrowing (which notice must be received by
the Agent prior to (i) 9:30 a.m. (Chicago time) two Business Days
prior to the requested Borrowing date, in the case of Offshore
Rate Committed Loans and (ii) 10:30 a.m. (Chicago time) on the
same Business Day of such proposed Borrowing, in the case of Base
Rate Committed Loans, specifying:
(A) the amount of the Committed Borrowing, which shall
be in an aggregate minimum principal amount of $5,000,000 or
any multiple of $1,000,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
-21-
<PAGE>
(C) whether the Committed Borrowing is to be comprised
of Offshore Rate Committed Loans or Base Rate Committed
Loans; and
(D) the duration of the Interest Period applicable to
such Committed Loans included in such notice. If the Notice
of Borrowing fails to specify the duration of the Interest
Period for any Committed Borrowing, such Borrowing shall
consist of Base Rate Committed Loans, regardless of the type
of Loans requested by the Company;
(b) Upon receipt of the Notice of Borrowing, the Agent
will promptly notify each Bank thereof and of the amount of such
Bank's Commitment Percentage of the Committed Borrowing.
(c) Each Bank will make the amount of its Commitment
Percentage of each Committed Borrowing available to the Agent for
the account of the Company at the Agent's Payment Office by 1:00
p.m. (Chicago time) on the Borrowing date requested by the
Company in funds immediately available to the Agent. The
proceeds of all such Committed Loans will then be made available
to the Company by the Agent at such office by crediting the
account of the Company on the books of BofA with the aggregate of
the amounts made available to the Agent by the Banks and in like
funds as received by the Agent.
(d) Unless the Majority Banks shall otherwise agree,
during the existence of a Default or Event of Default, the
Company may not elect to have a Loan be made as, converted into
or continued as an Offshore Rate Loan.
(e) After giving effect to any Committed Borrowing,
conversion or continuation, there shall not be more than ten
different Interest Periods in effect in respect of all Committed
Loans and all Bid Loans then outstanding.
II.4 Letter of Credit Requests
(a) Whenever the Company wishes to have the Issuing
Bank issue a Letter of Credit, the Company shall deliver to the
Issuing Bank a Letter of Credit Application with appropriate
insertions, signed by the Company, and, if such Letter of Credit
is also to be issued for the account of a Joint-Applicant, signed
by the Joint-Applicant. Such Letter of Credit Application shall
be delivered at least two and not more than fifteen Business Days
prior to the requested date of issuance, except as provided in
clause (iv) in the proviso to Section 2.05. Requests for
amendments to Letters of Credit shall be submitted in writing at
least two and not more than fifteen Business Days prior to the
requested amendment date. If at any time the Issuing Bank is not
the Agent, a copy of such Letter of Credit Application shall be
delivered to the Agent as well. The Agent shall deliver notice
of the request for the issuance of a Letter of Credit to all
other Banks and copies thereof to all such Banks which have
requested such copies. In each Letter of Credit Application, the
Company shall designate whether the Letter of Credit is a
Financial L/C or a Performance L/C and whether, if it is a
Financial L/C, it is being issued to support worker's
compensation obligations of the Company and its Subsidiaries.
The determination of the Issuing Bank and the Agent as to such
designation shall be made at or prior to the time such Letter of
Credit is issued, shall be conclusive in the event of any
disagreement with the Company with respect thereto and shall
-22-
<PAGE>
govern during the term of this Agreement, notwithstanding any
subsequent change in the definition of any such term in the
applicable regulations.
(b) Letters of Credit may be Financial L/Cs or
Performance L/Cs, and all Letters of Credit shall be denominated
in Dollars. No Letter of Credit shall have a final expiration
date later than the earlier of (i) one year from the date
issuance or (ii) the Termination Date.
(c) The Agent shall deliver to the Company a copy of
each Letter of Credit issued and each amendment thereto and shall
also promptly deliver a copy thereof to each other Bank which has
requested such a copy. Each Letter of Credit shall provide that
payment thereunder shall not be made earlier than three Business
Days after receipt of any documents demanding payment thereunder.
2.05 Extension of Letters of Credit. If (a) any Letter of
Credit provides that the term thereof will be automatically
extended or renewed (by issuance of a substitute Letter of Credit
or otherwise) unless notice is given by the Issuing Bank on or
before a specified date (hereinafter called the "Extension
Refusal Date") that such Issuing Bank will not permit such
extension or renewal or (b) the Company requests the extension or
renewal of any other Letter of Credit, then for purposes of
Sections 2.01, 2.04, and 4.03 of this Agreement, any such renewal
or extension granted by the Issuing Bank (hereinafter called an
"Extension") shall be deemed to be the issuance of a new Letter
of Credit and such issuance shall be deemed to occur on the
Extension Refusal Date in the case of a Letter of Credit
described in clause (a) above, or the date of such request in the
case of a Letter of Credit described in clause (b) above;
provided, however, that (i) such extension shall not cause the
respective Letter of Credit to expire later than the earlier of
(A) one year from the extension date or (B) the Termination Date;
(ii) the Extension shall not be deemed to cause any duplication
of the amount of such Letter of Credit for purposes of
determining compliance with subsection 2.01(b); (iii) the Issuing
Bank shall receive at least ten but not more than thirty Business
Days' prior written notice of such Extension, and the
accompanying Letter of Credit Application shall state that it
relates to such Extension and shall specify the related Extension
Refusal Date, if any; and (iv) no document need be delivered by
the Issuing Bank pursuant to subsection 2.04(c) with respect to
any Letter of Credit described in clause (a) above unless the
terms of such Letter of Credit so require.
2.06 Conversion and Continuation Elections for Committed
Borrowings.
(a) Prior to the Termination Date, the Company may,
upon irrevocable written notice (or telephonic notice, promptly
confirmed by a writing) to the Agent in accordance with
subsection 2.06(b):
(i) elect, as of any Business Day, in the case of
Base Rate Committed Loans, or as of the last day of the
applicable Interest Period, in the case of Offshore Rate
Committed Loans, to convert any such Committed Loans (or any
part thereof in an amount not less than $5,000,000, or that
is in an integral multiple of $1,000,000 in excess thereof)
into Committed Loans of any other Type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Offshore Rate Committed
Loans having Interest Periods expiring on such day (or any
-23-
<PAGE>
part thereof in an amount not less than $5,000,000, or that
is in an integral multiple of $1,000,000 in excess thereof);
provided, however, that if the aggregate amount of Offshore Rate
Committed Loans has been reduced, by payment, prepayment, or
conversion of part thereof to be less than $5,000,000, such
Offshore Rate Committed Loans shall automatically convert into
Base Rate Committed Loans, and on and after such date the right
of the Company to continue such Committed Loans as, and convert
such Committed Loans into, Offshore Rate Committed Loans shall
terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation in accordance with Section 10.02 to be
received by the Agent not later than (i) 9:30 a.m. (Chicago time)
at least two Business Days in advance of the Conversion Date or
continuation date, if the Committed Loans are to be converted
into or continued as Offshore Rate Committed Loans; and (ii)
10:30 a.m. (Chicago time) on the Conversion Date, if the
Committed Loans are to be converted into Base Rate Committed
Loans; specifying:
(A) the proposed Conversion Date or continuation date;
(B) the aggregate amount of Committed Loans to be
converted or continued;
(C) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of conversions into Base
Rate Committed Loans, the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Committed Loans, the Company has
failed to select a new Interest Period to be applicable to such
Offshore Rate Committed Loans or if any Default or Event of
Default shall then exist, the Company shall be deemed to have
elected to convert such Offshore Rate Committed Loans into Base
Rate Committed Loans effective as of the expiration date of such
current Interest Period.
(d) Upon receipt of a Notice of Conversion/
Continuation, the Agent will promptly notify each Bank thereof,
or, if no timely notice is provided by the Company, the Agent
will promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made pro
rata according to the respective outstanding principal amounts of
the Committed Loans with respect to which the notice was given
held by each Bank.
(e) Unless the Majority Banks shall otherwise consent,
during the existence of a Default or Event of Default, the
Company may not elect to have a Committed Loan converted into or
continued as an Offshore Rate Committed Loan.
II.7 Bid Borrowings. In addition to Committed Borrowings
pursuant to Section 2.01, each Bank severally agrees that the
Company may, as set forth in Section 2.08, from time to time
request the Banks prior to the Termination Date to submit offers
to make Bid Loans to the Company; provided, however, that the
Banks may, but shall have no obligation to, submit such offers
and the Company may, but shall have no obligation to, accept any
-24-
<PAGE>
such offers; and provided, further, that at no time shall (a) the
outstanding aggregate principal amount of all Bid Loans made by
all Banks, plus the outstanding aggregate principal amount of all
Committed Loans made by all Banks, plus the aggregate undrawn
face amount of all outstanding Letters of Credit, plus the
aggregate amount of drawings made under Letters of Credit for
which the applicable Issuing Bank has not yet been reimbursed
exceed the Aggregate Commitment; (b) the outstanding aggregate
principal amount of all Bid Loans made by all Banks exceed 75% of
the Aggregate Commitment; or (c) the number of Interest Periods
for Bid Loans then outstanding plus the number of Interest
Periods for Committed Loans then outstanding exceed ten.
2.08 Procedure for Bid Borrowings. (a) When the Company
wishes to request the Banks to submit offers to make Bid Loans
hereunder, it shall transmit to the Agent by facsimile
transmission a notice in substantially the form of Exhibit H
attached hereto (a "Competitive Bid Request") so as to be
received no later than 11:00 a.m. (Chicago time) (i) four
Business Days prior to the date of a proposed Bid Borrowing in
the case of an IBOR Auction, or (ii) one Business Day prior to
the date of a proposed Bid Borrowing in the case of an Absolute
Rate Auction, specifying:
(A) the date of such Bid Borrowing, which shall be a
Business Day;
(B) the aggregate amount of such Bid Borrowing, which
shall be a minimum amount of $5,000,000 or in integral multiples
of $1,000,000 in excess thereof;
(C) whether the Competitive Bids requested are to be
for IBOR Bid Loans or Absolute Rate Bid Loans or both; and
(D) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of "Interest
Period" herein.
Subject to subsection 2.08(c), the Company may not request
Competitive Bids for more than three Interest Periods in a single
Competitive Bid Request and may not request Competitive Bids more
than once in any period of five Business Days.
(b) Upon receipt of a Competitive Bid Request, the
Agent will promptly send to the Banks by facsimile transmission
an Invitation for Competitive Bids, which shall constitute an
invitation by the Company to each Bank to submit Competitive Bids
offering to make the Bid Loans to which such Competitive Bid
Request relates in accordance with this Section 2.08.
(c) (i) Each Bank may at its discretion submit a
Competitive Bid containing an offer or offers to make Bid Loans
in response to any Invitation for Competitive Bids. Each
Competitive Bid must comply with the requirements of this
subsection 2.08(c) and must be submitted to the Agent by
facsimile transmission at the Agent's office for notices set
forth on the signature pages hereto not later than (A) 8:30 a.m.
(Chicago time) three Business Days prior to the proposed date of
Borrowing, in the case of an IBOR Auction or (B) 8:30 a.m.
(Chicago time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction; provided, however, that Competitive
Bids submitted by BofA (or any Affiliate of BofA) in the capacity
of a Bank may be submitted, and may only be submitted, if BofA or
such Affiliate notifies the Company of the terms of the offer or
-25-
<PAGE>
offers contained therein not later than (1) 8:15 a.m. (Chicago
time) three Business Days prior to the proposed date of
Borrowing, in the case of an IBOR Auction or (2) 8:15 a.m.
(Chicago time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially
the form of Exhibit I attached hereto, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for
which such Competitive Bid is being made, which principal
amount (1) may be equal to, greater than or less than the
Commitment of the quoting Bank, (2) must be $5,000,000 or in
multiples of $1,000,000 in excess thereof, and (3) may not
exceed the principal amount of Bid Loans for which
Competitive Bids were requested;
(C) in case the Company elects an IBOR Auction,
the margin above or below the IBO Rate (the "IBOR Bid
Margin") offered for each such Bid Loan, expressed in
multiples of 1/1000th of one basis point to be added to or
subtracted from the applicable IBO Rate and the Interest
Period applicable thereto;
(D) in case the Company elects an Absolute Rate
Auction, the rate of interest per annum expressed in
multiples of 1/1000th of one basis point (the "Absolute
Rate") offered for each such Bid Loan; and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by
the quoting Bank with respect to each Interest Period specified
in the related Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be disregarded
if it:
(A) is not substantially in conformity with
Exhibit I or does not specify all of the information
required by subsection (c)(ii) of this Section;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bids; or
(D) arrives after the time set forth in
subsection (c)(i).
(d) Promptly on receipt and not later than 9:00 a.m.
(Chicago time) three Business Days prior to the proposed date of
Borrowing in the case of an IBOR Auction, or 9:00 a.m. (Chicago
time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction, the Agent will notify the Company of the
terms (i) of any Competitive Bid submitted by a Bank that is in
accordance with subsection 2.08(c), and (ii) of any Competitive
-26-
<PAGE>
Bid that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid submitted by such Bank with respect to
the same Competitive Bid Request. Any such subsequent
Competitive Bid shall be disregarded by the Agent unless such
subsequent Competitive Bid is submitted solely to correct a
manifest error in such former Competitive Bid and only if
received within the times set forth in subsection 2.08(c). The
Agent's notice to the Company shall specify (i) the aggregate
principal amount of Bid Loans for which offers have been received
for each Interest Period specified in the related Competitive Bid
Request; and (ii) the respective principal amounts and IBOR Bid
Margins or Absolute Rates, as the case may be, so offered.
Subject only to the provisions of Sections 3.02, 3.05 and 4.03
and the provisions of this subsection (d), any Competitive Bid
shall be irrevocable except with the written consent of the Agent
given on the written instructions of the Company.
(e) Not later than 9:30 a.m. (Chicago time) three
Business Days prior to the proposed date of Borrowing, in the
case of an IBOR Auction, or 9:30 a.m. (Chicago time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction, the Company shall notify the Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant to
subsection 2.08(d). The Company shall be under no obligation to
accept any offer and may choose to reject all offers. In the
case of acceptance, such notice shall specify the aggregate
principal amount of offers for each Interest Period that is
accepted. The Company may accept any Competitive Bid in whole or
in part; provided, however, that:
(i) the aggregate principal amount of each Bid
Borrowing may not exceed the applicable amount set forth in
the related Competitive Bid Request;
(ii) the principal amount of each Bid Borrowing
must be $5,000,000 or in any integral multiple of $1,000,000
in excess thereof;
(iii) acceptance of offers may only be made on
the basis of ascending IBOR Bid Margins or Absolute Rates
within each Interest Period, as the case may be; and
(iv) the Company may not accept any offer that is
described in subsection 2.08(c)(iii) or that otherwise fails
to comply with the requirements of this Agreement.
(f) If offers are made by two or more Banks with the
same IBOR Bid Margins or Absolute Rates, as the case may be, for
a greater aggregate principal amount than the amount in respect
of which such offers are accepted for the related Interest
Period, the principal amount of Bid Loans in respect of which
such offers are accepted shall be allocated by the Agent among
such Banks as nearly as possible (in such multiples, not less
than $1,000,000, as the Agent may deem appropriate) in proportion
to the aggregate principal amounts of such offers. Determination
by the Agent of the amounts of Bid Loans shall be conclusive in
the absence of manifest error.
(g) (i) The Agent will promptly notify each Bank
having submitted a Competitive Bid if its offer has been
accepted and, if its offer has been accepted, of the amount
of the Bid Loan or Bid Loans to be made by it on the date of
the Bid Borrowing.
(ii) Each Bank which has received notice pursuant
to subsection 2.08(g)(i) that its Competitive Bid has been
accepted shall make the amounts of such Bid Loans available
-27-
<PAGE>
to the Agent for the account of the Company at the Agent's
Payment Office, by 1:00 p.m. (Chicago time) on such date of
Bid Borrowing, in funds immediately available to the Agent
for the account of the Company at the Agent's Payment
Office.
(iii) Promptly following each Bid Borrowing, the
Agent shall notify each Bank of the ranges of bids submitted
and the highest and lowest Bids accepted for each Interest
Period requested by the Company and the aggregate amount
borrowed pursuant to such Bid Borrowing.
(iv) From time to time, the Company and the Banks
shall furnish such information to the Agent as the Agent may
request relating to the making of Bid Loans, including the
amounts, interest rates, dates of borrowings and maturities
thereof, for purposes of the allocation of amounts received
from the Company for payment of all amounts owing hereunder.
(h) If, on or prior to the proposed date of
Borrowing, the Commitments have not been terminated and if, on
such proposed date of Borrowing all applicable conditions to
funding referenced in Sections 3.02, 3.05 and 4.03 are satisfied,
the Banks whose offers the Company has accepted will fund each
Bid Loan so accepted. Nothing in this Section 2.08 shall be
construed as a right of first offer in favor of the Banks or to
otherwise limit the ability of the Company to request and accept
credit facilities from any Person (including any of the Banks),
provided that no Default or Event of Default would otherwise
arise or exist as a result of the Company executing, delivering
or performing under such credit facilities.
2.09 Voluntary Termination or Reduction of Commitments.
The Company may, upon not less than three Business Days' prior
written or telephonic (promptly confirmed with a writing) notice
to the Agent given prior to 11:00 a.m. (Chicago time) (which
notice shall be irrevocable), terminate or permanently reduce the
Aggregate Commitment by an aggregate minimum amount of
$10,000,000 or any integral multiple of $5,000,000 in excess
thereof; provided, however, that no such reduction or termination
shall be permitted if, after giving effect thereto and to any
prepayments of Committed Loans made on the effective date
thereof, the sum of the then outstanding principal amount of the
Loans and the Stated Amount of the then outstanding Letters of
Credit would exceed the Aggregate Commitment then in effect and,
provided, further, that once reduced in accordance with this
Section 2.09, the Aggregate Commitment may not be increased. Any
reduction of the Aggregate Commitment shall be applied to each
Bank's Commitment in accordance with such Bank's Commitment
Percentage. All accrued commitment fees to, but not including
the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such
reduction or termination.
II.10 Optional Prepayments. (a) Subject to Section 3.04,
the Company may, at any time or from time to time, upon at least
one Business Day's notice to the Agent with respect to Base Rate
Committed Loans and at least three Business Days' notice to the
Agent with respect to Offshore Rate Committed Loans, ratably
prepay Committed Loans in whole or in part, in an aggregate
amount of $5,000,000 or any integral multiple of $1,000,000 in
excess thereof. Each such notice shall be delivered no later
than 11:00 a.m. (Chicago time). Such notice of prepayment shall
specify the date and amount of such prepayment and the type of
Committed Loans being prepaid. Such notice shall not thereafter
be revocable by the Company and the Agent will promptly notify
-29-
<PAGE>
each Bank thereof and of such Bank's Commitment Percentage of
such prepayment. Such notice may be given by telephone, promptly
confirmed by a writing. If such notice is given by the Company,
the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such
date on the amount prepaid and any amounts required pursuant to
Section 3.04.
(b) Bid Loans may not be voluntarily prepaid.
2.11 Repayment. The Company shall repay to the Banks in
full on the Termination Date the aggregate principal amount of
the Loans outstanding on the Termination Date. The Company shall
repay each Bid Loan on the last day of the relevant Interest
Period.
2.12 Repayment of Letter of Credit Drawings
(a) With respect to each Letter of Credit,
(i) when a draft or other demand for payment is
received by the Issuing Bank, it shall promptly give notice
thereof by telecopy or telephone to the Agent and the
Company;
(ii) when a payment is made by the Issuing Bank,
it shall promptly give notice thereof to the Company and the
Agent by telephone or telecopy; and
(iii) the Company agrees, and shall cause each
Joint-Applicant through its execution of a Letter of Credit
Application to agree, to promptly reimburse the Issuing Bank
(by making payment to the Agent for the account of such
Issuing Bank) on the date of any payment or disbursement
made by such Issuing Bank under such Letter of Credit for
such payment or disbursement; provided, however, that the
Company shall not be deemed to be in default of this
subsection 2.12(a) or subsection 8.01(a) with respect to any
such reimbursement obligation prior to the second Business
Day after it has been notified that the related payment or
disbursement has been made by the Issuing Bank. Any amount
not reimbursed (by making payment to the Issuing Bank) on
the date of such payment or distribution by the Issuing Bank
shall bear interest from and including the date of such
payment or disbursement to but not including the date the
Issuing Bank is reimbursed by the Company therefor, payable
on demand, at a rate per annum equal to (A) the Base Rate
from time to time in effect for each day through the third
Business Day after the Company's receipt of the notice
provided for in subsection (a)(i) above, and (B) the Base
Rate plus 2% per annum for each day thereafter.
(b) Subject to the terms and conditions of this
Agreement, the Company may use the proceeds of a Loan hereunder
to so reimburse the Issuing Bank. If on or before the first
Business Day after receipt of the notice required pursuant to
subsection 2.12(a)(i), the Company requests a Loan to which it is
entitled under the terms of this Agreement for the purpose of
paying the related reimbursement obligation and in an amount
sufficient to fully pay such reimbursement obligation, then the
Company shall not be deemed to be in default of its reimbursement
-29-
<PAGE>
obligations under this Section or subsection 8.01(a) even though
such Loan is not made until a subsequent Business Day (pursuant
to the notice provisions of Section 2.03 or 2.08).
(c) The Company's obligation to reimburse the Issuing
Bank for payments and disbursements made by the Issuing Bank
under any Letter of Credit shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Company or a
Joint-Applicant may have or have had against the Issuing Bank (or
the Agent or any other Bank), including, without limitation,
failure of the Issuing Bank to comply with subsections (a)(i) and
(ii) of this Section, any defense based on the failure of the
demand for payment under such Letter of Credit to conform to the
terms of such Letter of Credit or the legality, validity,
regularity or enforceability of such Letter of Credit or any
defense based on the identity of the transferee of such Letter of
Credit or the sufficiency of the transfer if such Letter of
Credit is transferable; provided, however, that the Company shall
not be obligated to reimburse such Issuing Bank for any wrongful
payment or disbursement made under any Letter of Credit as a
result of acts or omissions constituting gross negligence or
willful misconduct on the part of the Issuing Bank or any of its
officers, employees or agents.
(d) The Company agrees that it will promptly examine
the copy of each Letter of Credit (and any amendments thereto)
sent to it by the Issuing Bank, as well as any and all
instruments and documents delivered to the Company from time to
time, and in the event the Company has any claim of
non-compliance with the Company's instructions or of
discrepancies or other irregularity, the Company will promptly
notify the Issuing Bank and the Agent thereof in writing, and the
Company and any Joint-Applicant shall be deemed by their
execution and delivery of the related Letter of Credit
Application to have waived any such claim against the Issuing
Bank unless such prompt notice is given.
(e) Unless specified to the contrary in the relevant
Letter of Credit Application, or any amendment to a Letter of
Credit, the Company and each Joint-Applicant agree by their
execution of such application that the Issuing Bank and its
correspondents may receive and accept (i) any item drawn or
presented under such Letter of Credit or other document otherwise
in order, issued or purportedly issued by an agent, executor,
trustee in bankruptcy, receiver or other representative of the
party who is authorized under such Letter of Credit to issue such
item or other document, as complying with the terms of such
Letter of Credit and (ii) documents which on their face appear to
comply with the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 or by later Uniform Customs and Practice
fixed by later Congresses of the International Chamber of
Commerce as in effect on the date the related Letter of Credit is
issued.
2.13 Default in Reimbursement of Issuing Bank
(a) If the Issuing Bank is not reimbursed by the
Company for any payment or disbursement under a Letter of Credit,
the Agent shall promptly notify each of the other Banks of such
unreimbursed payment or disbursement, and upon such notice the
other Banks shall promptly on the same day (or the next Business
Day if such notice is received after 10:00 a.m., Chicago time)
provide the Agent with immediately available funds in Dollars for
the account of such Issuing Bank, covering such Bank's Commitment
Percentage of such payment or disbursement. If the Agent
-30-
<PAGE>
subsequently receives from the Company or any Joint-Applicant any
reimbursement of such payment or disbursement, the Agent shall
promptly remit to each Bank its Commitment Percentage of such
reimbursement. All interest payments received by the Issuing
Bank or the Agent on account of reimbursements under this
Agreement shall be promptly distributed by the Agent to the
Issuing Bank and the other Banks pro rata according to their
respective Commitment Percentages (except to the extent that the
Issuing Bank was not promptly reimbursed by any such Bank).
(b) The obligation of each Bank to provide the Agent
with such Bank's pro rata share of the amount of any payment or
disbursement made by the Issuing Bank under any outstanding
Letter of Credit shall be absolute and unconditional under any
and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which such Bank may have or
have had against the Issuing Bank (or the Agent or any other
Bank), including, without limitation, any defense based on the
failure of the demand for payment under such Letter of Credit to
conform to the terms of such Letter of Credit or the legality,
validity, regularity or enforceability of such Letter of Credit
or any defense based on the identity of the transferee of such
Letter of Credit or the sufficiency of the transfer if such
Letter of Credit is transferable; provided, however, that the
Banks shall not be obligated to reimburse such Issuing Bank for
any wrongful payment or disbursement made under any Letter of
Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of such Issuing Bank
or any of its officers, employees or agents.
2.14 Interest.
(a) Subject to subsection 2.14(c), each Committed Loan
shall bear interest on the outstanding principal amount thereof
from the date when made until paid in full at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be,
plus the Applicable Margin for Base Rate Committed Loans or
Offshore Rate Committed Loans, as the case may be. Subject to
subsection 2.14(c), each Bid Loan shall bear interest on the
outstanding principal amount thereof from the relevant Borrowing
Date at a rate per annum equal to the IBO Rate plus (or minus, as
the case may be) the IBOR Bid Margin, or at the Absolute Rate, as
the case may be.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of Committed Loans pursuant to Section
2.10 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence
of any Event of Default, interest shall be paid on demand.
(c) While any Event of Default exists or after
acceleration of the Obligations, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all Obligations due
and unpaid at a rate per annum equal to the Base Rate plus 2%.
2.15 Fees.
(a) Fees Payable to BofA and the Agent. The Company
shall pay to the Agent for the Arranger's and the Agent's own
account fees in the amounts and at the times set forth in a
letter agreement between the Company, BofA and the Arranger dated
October 20, 1995.
-31-
<PAGE>
(b) Commitment Fees. The Company shall pay to the
Agent for the account of each Bank a commitment fee of the
Applicable Commitment Fee Percentage per annum on the average
daily unused portion of such Bank's Commitment, computed as of
the end of each calendar quarter in arrears based upon the daily
utilization for that quarter as calculated by the Agent. Such
commitment fee shall accrue from the Closing Date to the
Termination Date and shall be due and payable quarterly in
arrears on the fifteenth day after the end of each calendar
quarter through the Termination Date, with the first payment due
on January 16, 1996 and the final payment to be made on the
Termination Date; provided, however, that, (i) in connection with
any reduction of Commitments pursuant to Section 2.09, the
accrued commitment fee calculated for the period ending on such
date shall also be paid on the date of such reduction, with the
next succeeding quarterly payment being calculated on the basis
of the period from the reduction date to the end of the quarter
in which such reduction occurs and (ii) in connection with any
termination of the Commitments pursuant to Section 2.09 or
Article VIII, the accrued commitment fee shall be paid on the
date on which the termination takes place. The commitment fees
provided in this subsection shall accrue at all times after the
Closing Date, including at any time during which one or more
conditions in Article IV are not met. For purposes of
calculating the commitment fee, the principal amount of
outstanding Committed Loans and the Stated Amount of outstanding
Letters of Credit shall be deemed utilization of the Commitments,
but the principal amount of outstanding Bid Loans shall not be
deemed utilization of the Commitments.
(c) Letter of Credit Fees.
(i) The Company shall pay to the Agent for the
account of the Banks, pro rata, a fee, according to their
respective Commitment Percentages, with respect to all
Letters of Credit issued for the account of the Company.
Such fee shall be computed as of the end of each calendar
quarter as follows:
(x) With respect to all Financial L/Cs, the
Applicable Financial L/C Percentage per annum of the
daily average Stated Amount of each such Letter of
Credit; and
(y) With respect to Performance L/Cs, the
Applicable Performance L/C Percentage per annum of the
daily average Stated Amount of such Performance L/Cs.
Such Letter of Credit fees shall be payable in arrears on the
fifteenth day after the end of each calendar quarter for Letters
of Credit outstanding during such quarter, with the first such
payment due on January 16, 1996, and on the expiration of the
last Letter of Credit outstanding under this Agreement.
(ii) The Company shall pay to the Issuing Bank for
its sole account:
(x) In arrears on the fifteenth day after
the end of each calendar quarter, with the first such
payment due on January 16, 1996, and on the expiration
of the last Letter of Credit issued by the Issuing
Bank and outstanding under this Agreement, an issuance
fee of 0.15% per annum of the daily average Stated
-32-
<PAGE>
Amount of all Letters of Credit issued by the Issuing
Bank and outstanding during the preceding calendar
quarter; and
(y) From time to time, upon the amendment of
any Letter of Credit, such fees as the Issuing Bank
customarily charges in connection therewith at the
times customarily charged by the Issuing Bank.
(d) Fees under the Existing Company Credit Agreement.
On the Closing Date, the Company shall pay to the Agent the fees
owed under the Existing Company Credit Agreement which have not
heretofore been paid.
2.16 Computation of Fees and Interest.
(a) All computations of interest payable in respect of
Base Rate Committed Loans at all times as the Base Rate is
determined by BofA's "reference rate" shall be made on the basis
of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest under this
Agreement shall be made on the basis of a 360-day year and actual
days elapsed. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first
day thereof to the last day thereof.
(b) The Agent will, with reasonable promptness, notify
the Company and the Banks of each determination of an Offshore
Rate; provided, however, that any failure to do so shall not
relieve the Company of any liability hereunder or provide the
basis for any claim against the Agent.
(c) Each determination of an interest rate by the
Agent pursuant hereto shall be conclusive and binding on the
Company the Banks in the absence of manifest error.
II.17 Payments by the Company.
(a) All payments (including prepayments) to be made by
the Company on account of principal, interest, fees and other
amounts required hereunder, including reimbursement of drawings
under Letters of Credit, shall be made without set-off,
recoupment or counterclaim and shall, except as otherwise
expressly provided herein, be made to the Agent for the ratable
account of the Banks at the Agent's Payment Office, in dollars
and in immediately available funds, no later than 1:00 p.m.
(Chicago time) on the dates specified herein. The Agent will
promptly distribute to each Bank its Commitment Percentage (or
other applicable share as expressly provided herein) of such
principal, interest, fees or other amounts, in like funds as
received. Any payment which is received by the Agent later than
1:00 p.m. (Chicago time) shall be deemed to have been received on
the immediately succeeding Business Day and any applicable
interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to
be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of
interest or fees, as the case may be; subject to the provisions
set forth in the definition of "Interest Period" herein.
-33-
<PAGE>
(c) Unless the Agent shall have received notice from
the Company prior to the date on which any payment is due to the
Banks hereunder that the Company will not make such payment in
full as and when required hereunder, the Agent may assume that
the Company has made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall
not be so required), in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent the Company
shall not have made such payment in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to
such Bank, together with interest thereon for each day from the
date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate
as in effect for each such day.
2.18 Payments by the Banks to the Agent.
(a) Unless the Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after
the Closing Date, at least one Business Day prior to the date of
any proposed Borrowing, that such Bank will not make available to
the Agent as and when required hereunder for the account of the
Company the amount of that Bank's Commitment Percentage of the
Committed Borrowing or that Bank's Bid Loan, as the case may be,
the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Company
on such date a corresponding amount. If and to the extent any
Bank shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such
circumstances has made available to the Company such amount, that
Bank shall on the next Business Day following the date of such
Borrowing make such amount available to the Agent, together with
interest at the Federal Funds Rate for and determined as of each
day during such period. A notice of the Agent submitted to any
Bank with respect to amounts owing under this subsection 2.18(a)
shall be conclusive, absent manifest error. If such amount is so
made available, such payment to the Agent shall constitute such
Bank's Loan on the Borrowing Date for all purposes of this
Agreement. If such amount is not made available to the Agent on
the next Business Day following such Borrowing Date, the Agent
shall notify the Company of such failure to fund and, upon demand
by the Agent, the Company shall pay such amount to the Agent for
the Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any
Borrowing Date shall not relieve any other Bank of any obligation
hereunder to make a Loan on such Borrowing Date, but no Bank
shall be responsible for the failure of any other Bank to make
the Loan to be made by such other Bank on any Borrowing Date.
2.19 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of
any Credit Extension made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Commitment Percentage (or other share
contemplated hereunder) of payments on account of the Credit
Extensions obtained by all the Banks, such Bank shall forthwith
(a) notify the Agent of such fact, and (b) purchase from the
other Banks such participations in the Credit Extensions made by
-34-
<PAGE>
them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however,
that if all or any portion of such excess payment is thereafter
recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with
an amount equal to such paying Bank's Commitment Percentage
(according to the proportion of (i) the amount of such paying
Bank's required repayment to (ii) the total amount so recovered
from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so
recovered. The Company agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 2.19
may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to
Section 10.09) with respect to such participation as fully as if
such Bank were the direct creditor of the Company in the amount
of such participation. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of
participations purchased pursuant to this Section 2.19 and will
in each case notify the Banks following any such purchases or
repayments.
2.20 Pro Rata Treatment. All Committed Borrowings and
repayments shall be effected so that after giving effect thereto
all Committed Loans shall be pro rata among the Banks according
to their Commitment Percentages. All participations and Letters
of Credit shall be effected so that after giving effect thereto
all participations in each Letter of Credit shall be pro rata
among the Banks according to their Commitment Percentages.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes.
(a) Subject to subsection 3.01(g), any and all
payments by the Company to each Bank or the Agent under this
Agreement shall be made free and clear of, and without deduction
or withholding for, any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Bank and the
Agent, such taxes (including income taxes or franchise taxes)
imposed on or measured by such Bank's or the Agent's net income
(all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred
to as "Taxes").
(b) In addition, the Company shall pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other
Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 3.01(g), the Company shall
indemnify and hold harmless each Bank, the Issuing Bank and the
Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 3.01) paid by such Bank, the Issuing
Bank or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or
-35-
<PAGE>
were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date any
Bank, the Issuing Bank or the Agent makes written demand
therefor, except that the Company shall not be required to make
such payment within 30 days if (i) no Default or Event of Default
has occurred and is continuing and (ii) the Company is diligently
contesting such Taxes or Other Taxes and has agreed in writing to
the satisfaction of each Bank, the Issuing Bank and the Agent to
pay to each such Bank, the Issuing Bank and the Agent all such
penalties, fines and interest incurred by such Bank, the Issuing
Bank and the Agent as a result of the Company's actions and the
resulting delay in payment. Notwithstanding the foregoing, if at
any time a Default or Event of Default occurs and is continuing,
each Bank, the Issuing Bank and the Agent may request the
Company, and the Company shall, make payment under this
indemnification within 10 days from the date such Bank, the
Issuing Bank or the Agent makes written demand therefor. In any
event, the obligations owed by the Company under this subsection
(c) shall be paid not later than the Termination Date, unless
otherwise agreed by the affected Bank and the Company.
(d) If the Company shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any
sum payable hereunder to any Bank or the Agent, then, subject to
subsection 3.01(g):
(i) the sum payable shall be increased as necessary so
that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 3.01) such Bank or the Agent, as the case may be,
receives an amount equal to the sum it would have received
had no such deductions been made;
(ii) the Company shall make such deductions, and
(iii) the Company shall pay the full amount
deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(e) Within 30 days after the date of any payment by
the Company of Taxes or Other Taxes, the Company shall furnish to
the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment
satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a
person other than a United States person for United States
Federal income tax purposes) agrees no later than the Closing
Date (or, in the case of a Bank which becomes a party hereto
pursuant to Section 10.08 after the Closing Date, the date upon
which the Bank becomes a party hereto) to deliver to the Company
through the Agent two accurate and complete signed originals of
Internal Revenue Service Form 1001, 4224 or any successor
thereto, as appropriate, in each case indicating that the Bank is
on the date of delivery thereof entitled to receive payments
under this Agreement free from withholding of United States
Federal income tax.
(g) The Company shall not be required to pay any
additional amounts in respect of United States Federal income tax
pursuant to subsection 3.01(d) to any Bank for the account of any
Lending Office of such Bank:
-36-
<PAGE>
(i) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Bank to
comply with its obligations under subsection 3.01(f) in
respect of such Lending Office; or
(ii) if such Bank shall have delivered to the
Company the forms referred to in subsection 3.01(f), and
such Bank shall not at any time be entitled to exemption
from deduction or withholding of United States Federal
income tax in respect of payments by the Company hereunder
for the account of such Lending Office for any reason other
than a change in United States law or regulations or in the
official interpretation of such law or regulations by any
governmental authority charged with the interpretation or
administration thereof (whether or not having the force of
law) after the date of delivery of such forms.
(h) If the Company is required to pay additional
amounts to any Bank or the Agent pursuant to subsection 3.01(d),
then such Bank shall use its reasonable efforts (consistent with
legal and regulatory restrictions) to change the jurisdiction of
its Lending Office so as to eliminate any such additional payment
by the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise disadvantageous to such
Bank.
3.2 Illegality.
(a) If any Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law
or in the interpretation or administration thereof, has made it
unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Bank or its
Lending Office to make Offshore Rate Loans, then, on notice
thereof by the Bank to the Company through the Agent, the
obligation of that Bank to make Offshore Rate Loans (including in
respect of any IBOR Bid Loan as to which the Company has accepted
such Bank's Competitive Bid, but as to which the Borrowing Date
has not arrived) shall be suspended until the Bank shall have
notified the Agent and the Company that the circumstances giving
rise to such determination no longer exists.
(b) If a Bank determines that it is unlawful for such
Bank to maintain any Offshore Rate Loan, the Company shall prepay
in full all Offshore Rate Loans of that Bank then outstanding,
together with interest accrued thereon, either on the last day of
the Interest Period thereof if the Bank may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if
the Bank may not lawfully continue to maintain such Offshore Rate
Loans, together with any amounts required to be paid in
connection therewith pursuant to Section 3.04.
(c) If the Company is required to prepay any Offshore
Rate Loan immediately as provided in subsection 3.02(b), then
concurrently with such prepayment, the Company shall borrow from
the affected Bank, in the amount of such repayment, a Base Rate
Committed Loan.
(d) If the obligation of any Bank to make or maintain
Offshore Rate Loans has been so terminated or suspended, the
Company may elect, by giving notice to the Bank through the Agent
that all Loans which would otherwise be made by the Bank as
Offshore Rate Loans shall be instead Base Rate Committed Loans.
-37-
<PAGE>
(e) Before giving any notice to the Agent pursuant to
this Section 3.02, the affected Bank shall designate a different
Lending Office with respect to its Offshore Rate Loans if such
designation will avoid the need for giving such notice or making
such demand and will not, in the judgment of the Bank, be illegal
or otherwise disadvantageous to the Bank.
3.3 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the
introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or in the interpretation of
any law or regulation or (ii) the compliance with any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), there is any increase
in the cost to such Bank of agreeing to make or making, funding
or maintaining any Offshore Rate Committed Loans or issuing or
participating in any Letter of Credit, then the Company shall be
liable for, and shall from time to time, upon demand therefor by
such Bank (with a copy of such demand to the Agent), pay to the
Agent for the account of such Bank, upon receipt of a certificate
from such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs. Such certificate
shall set forth the amount owed to such Bank by the Company under
this subsection (a), shall explain the reason the payment is
required and shall be conclusive absent manifest error.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change
in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or its Lending Office) or any
corporation controlling the Bank, with any Capital Adequacy
Regulation; reduces or would reduce the rate of return on such
Bank's capital as a consequence of its Commitment, the Loans, the
Letters of Credit or its participation therein to a level below
that which such Bank could have achieved but for such
introduction, change or compliance (taking into consideration
such Bank's or such corporation's policies with respect to
capital adequacy) then, upon demand of such Bank (with a copy to
the Agent), the Company shall pay to the Bank, from time to time
as specified by the Bank, upon receipt of a certificate from such
Bank, additional amounts sufficient to compensate the Bank for
such reduction. Such certificate shall set forth the amount owed
to such Bank by the Company under this subsection (b), shall
explain the reason the payment is required and shall be
conclusive absent manifest error.
3.4 Funding Losses. The Company agrees to reimburse each
Bank and to hold each Bank harmless from any loss or expense
which the Bank may sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely
basis any payment or required prepayment of principal of any
Offshore Rate Loan (including payments made after any
acceleration thereof);
(b) the failure of the Company to borrow, continue or
convert a Committed Loan after the Company has given a Notice of
Borrowing or a Notice of Conversion/Continuation;
-38-
<PAGE>
(c) the failure of the Company to make any prepayment
of any Committed Loan after the Company has given a notice in
accordance with Section 2.10;
(d) the prepayment or other payment (including after
acceleration thereof) of an Offshore Rate Loan or Absolute Rate
Bid Loan on a day which is not the last day of the relevant
Interest Period with respect thereto;
(e) the automatic conversion under Section 2.06
of any Offshore Rate Committed Loan to a Base Rate Committed Loan
on a day that is not the last day of the relevant Interest
Period; or
(f) the conversion pursuant to Section 2.06 of any
Offshore Rate Committed Loan to a Base Rate Committed Loan on a
day that is not the last day of the respective Interest Period;
including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its Offshore
Rate Loans hereunder or from fees payable to terminate the
deposits from which such funds were obtained. Solely for
purposes of calculating amounts payable by the Company to the
Banks under this Section 3.04, each Offshore Rate Committed Loan
made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been
funded at the IBO Rate for such Offshore Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for
a comparable amount and for a comparable period, whether or not
such Offshore Rate Loan is in fact so funded.
3.5 Inability to Determine Rates. If the Agent determines
that for any reason adequate and reasonable means do not exist
for ascertaining the IBO Rate for any requested Interest Period
with respect to a proposed Offshore Rate Loan or that the IBO
Rate applicable pursuant to subsection 2.14(a) for any requested
Interest Period with respect to a proposed Offshore Rate Loan
does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will forthwith give notice of such
determination to the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans
hereunder shall be suspended until the Agent revokes such notice
in writing. Upon receipt of such notice, the Company may revoke
any Notice of Borrowing, Notice of Conversion/Continuation or
notice of acceptance of an offer with respect to an IBOR Bid
Loan. If the Company does not revoke such notice, the Banks
shall make, convert or continue the Offshore Rate Loans, as
proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Offshore
Rate Loans shall be made, converted or continued as Base Rate
Committed Loans instead of Offshore Rate Loans.
3.6 Substitution of Banks. Upon the receipt by the
Company from any Bank (an "Affected Bank") of a claim for
compensation pursuant to Sections 3.01, 3.02 or 3.03, the Company
may: (i) request one or more of the other Banks to acquire and
assume all or part of such Affected Bank's Loans and Commitments
but no Bank shall be required to do so; or (ii) designate an
Eligible Assignee satisfactory to the Company and the Agent to
acquire and assume all or part of such Affected Bank's Loans and
Commitments (a "Replacement Bank"). Any such designation of a
Replacement Bank under clause (ii) shall be subject to the prior
written consent of the Agent, and such Replacement Bank shall
comply with Section 10.08 as if it were an Assignee.
-39-
<PAGE>
3.7 Survival. The agreements and obligations of the
Company in this Article III shall survive the payment of all
other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness and Initial Advances of
Loans and Issuances of Letters of Credit up to an Aggregate
Exposure of $75 Million. This Agreement shall not become
effective until, and the obligation of (i) each Bank to make its
initial Committed Loans hereunder and (ii) the Issuing Bank to
issue, and of each Bank to purchase a participation in, the
initial Letter of Credit, is subject to the condition that (A)
the Agent shall have received on or before the Closing Date the
items set forth in subsections (a) through (n) below in form and
substance satisfactory to the Agent and each Bank in sufficient
copies for each Bank and (B) the condition that the events set
forth in subsections (h), (i) and (l) below shall have been, or
shall be concurrently, completed to the satisfaction of the Agent
and the Banks:
(a) Credit Agreement. This Agreement, executed by
each party thereto (provided that the Agent may accept a
facsimile transmitted signature page from any Bank (to be
confirmed promptly by receipt of originally executed pages) which
shall bind such Bank with the same force and effect as an
originally executed signature page from such Bank);
(b) Resolutions; Incumbency. Each of the following
documents:
(i) copies of the resolutions of the board of
directors of the Company and each Guarantor, or any duly
authorized committee thereof, approving and authorizing the
execution, delivery and performance of this Agreement and
the other Loan Documents and the transactions contemplated
hereby, and authorizing the Credit Extensions, certified as
of the Closing Date by the Secretary or an Assistant
Secretary of the Company and such Guarantor; and
(ii) a certificate of the Secretary or Assistant
Secretary of the Company and each Guarantor, certifying the
names and true signatures of the officers of the Company and
such Guarantor authorized to execute, deliver and perform,
as applicable, this Agreement and all other Loan Documents
to be delivered by each such Person hereunder;
(c) Organization Documents; Good Standing. Each of
the following documents:
(i) the articles or certificate of incorporation and
the bylaws of the Company and each Guarantor as in effect on
the Closing Date, certified by the Secretary or Assistant
Secretary of the Company or such Guarantor as of the Closing
Date; and
(ii) a good standing certificate for the Company
and each Guarantor from the Secretary of State (or similar,
applicable Governmental Authority) of its state of
-40-
<PAGE>
incorporation and, with respect to the Company, the state
of Minnesota, and, with respect to Comdata, the states of
Tennessee, Nevada and New Jersey.
(d) Legal Opinion. The opinions of John A. Haveman,
counsel to the Company, and of Reboul, MacMurray, Hewitt, Maynard
& Kristol, counsel to the Guarantors, addressed to the Agent and
the Banks, substantially in the form of Exhibit J-1 attached
hereto;
(e) Certificate. A certificate signed by a
Responsible Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article V are true and correct on and as of such date as
though made on and as of such date both before and after
giving effect to the Merger;
(ii) no Default or Event of Default exists or
would result from the initial Borrowing; and
(iii) except as disclosed in filings by the Company
and Comdata Holdings with the Securities and Exchange
Commission on Form 10-K for the year ended December 31,
1994, on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995 and September 30, 1995, on Form 8-K dated
August 24, 1995 and in a Joint Proxy Statement/Prospectus
dated November 9, 1995, there has occurred since December
31, 1994, no event or circumstance that has resulted or
could reasonably be expected to result in a material adverse
change in the financial condition, business, operations,
properties or prospects of the Company and its Subsidiaries
or of Comdata Holdings and its Subsidiaries; and
(iv) all of the conditions precedent set forth in
Section 4.01 on the part of the Company or any Subsidiary of
the Company to be satisfied have been satisfied in full as
of the Closing Date;
(f) Payment of Fees and Expenses. The Company shall
have paid all fees due on the Closing Date, together with the
Agent's Attorney Costs incurred up to and including the Closing
Date;
(g) Subsidiary Guaranty. The Subsidiary Guaranty
executed by Comdata Holdings and Comdata.
(h) Merger. The closing of the transactions
contemplated by the Plan of Merger shall have occurred pursuant
to the terms and conditions of the Plan of Merger; the Plan of
Merger shall not have been amended in a manner that is, in the
reasonable judgment of the Agent and the Banks, adverse to the
interests of the Banks; the Plan of Merger shall have been
approved by the boards of directors of the Company, Acquisition
Corp. and Comdata Holdings, all requisite shareholder approvals
of the Merger shall have been obtained in accordance with the
Plan of Merger and all Requirements of Law, and all other
conditions to the Merger in the Plan of Merger shall have been
satisfied without giving effect to any waiver thereof not
approved in writing by the Agent and the Banks; and the Agent and
-41-
<PAGE>
each Bank shall have received satisfactory evidence of the filing
and acceptance of a properly executed certificate of merger with
the Delaware Secretary of State.
(i) Existing Indebtedness. All loans and letters of
credit outstanding under, and all other amounts due in respect
of, the Existing Comdata Credit Agreement and the Existing
Company Credit Agreement shall have been repaid in full or
canceled (except that the Old Letters of Credit shall be deemed
to exist and continue under this Agreement); the commitments
thereunder shall have been permanently terminated and all
obligations thereunder and any security interests relating
thereto shall have been discharged; and the Agent shall have
received reasonably satisfactory evidence of such repayment,
termination and discharge;
(j) Pro Forma Financial Statements. Pro forma
consolidated financial statements of the Company after giving
effect to the Merger and the consummation of the other
transactions contemplated hereby as of (i) September 30, 1995 as
contained in the Ceridian Corporation and Comdata Holdings
Corporation Joint Proxy Statement/Prospectus of Ceridian
Corporation dated November 9, 1995 and (ii) December 31, 1995 as
contained in the October 1995 Confidential Information Memorandum
delivered to each of the Banks;
(k) Indebtedness. After giving effect to the Merger
and the other transactions contemplated hereby, the Company and
its Subsidiaries shall have outstanding no Indebtedness or
preferred stock as of the Closing Date other than (i) the
Obligations, (ii) the Preferred Stock and (iii) other
Indebtedness set forth on Schedule 4.01 hereto;
(l) Approvals and Consents. All requisite or
necessary governmental authorities and third parties shall have
approved or consented to the Merger and the other transactions
contemplated hereby to the extent required, all such approvals
and consents shall remain in effect and all applicable appeal
periods shall have expired, and there shall be no governmental or
judicial action, actual or threatened, that has a reasonable
likelihood of restraining, preventing or imposing burdensome
conditions on the Merger or the other transactions contemplated
hereby;
(m) Compliance Certificate. An estimated pro forma
Compliance Certificate as of December 31, 1995 after giving
effect to the Merger and the consummation of the other
transactions contemplated hereby.
(n) Other Documents. Such other approvals, opinions
or documents as the Agent or any Bank may reasonably request.
Notwithstanding the foregoing, from and after the satisfaction in
full by the Company and its Subsidiaries of the conditions
precedent set forth in this Section 4.01, the Aggregate Exposure
shall exceed $75,000,000 only if and to the extent that the
Company is in compliance with Section 4.02.
4.2 Conditions to Advances of Loans and Issuances of
Letters of Credit in Excess of $75 Million of Aggregate Exposure.
The obligation of each Bank to make Committed Loans hereunder
and of the Issuing Bank to issue, and of each Bank to purchase
participations in, Letters of Credit, in any amount which would
cause the Aggregate Exposure to exceed $75,000,000 at any time,
and the obligation of each Bank to receive through the Agent the
initial and any subsequent Competitive Bid Requests, is subject
to the prior or concurrent satisfaction of (i) the conditions
specified in either subsection (a) or (b) below in the case of
Committed Loans and Letters of Credit and (ii) the conditions
specified in subsection (a) below in the case of Competitive Bid
-42-
<PAGE>
Requests, in each case in accordance with the governing
indentures and all applicable Requirements of Law and subject to
the prior or concurrent receipt of the applicable items set forth
below by the Agent and the Banks, in form and substance
reasonably satisfactory to the Agent and the Banks:
(a) After Comdata Debt Retired. All outstanding
Senior Notes, Senior Subordinated Debentures and Junior
Subordinated Notes shall have been repurchased or redeemed and
canceled or defeased (contractually or, in the case of the Senior
Notes and Senior Subordinated Debentures, "in substance") by
Comdata and/or the Company, proceeds of Loans shall have been
utilized to effect any such repurchase, redemption or defeasance
and to pay all interest and premiums in connection therewith,
supplemental indentures to the indentures governing the Senior
Notes and the Senior Subordinated Debentures shall have been duly
executed and delivered by all necessary parties which contain the
amendments to such indentures specified in the Offer to Purchase,
and the Agent shall have received a certificate of a Responsible
Officer of the Company specifying the actions taken to retire or
defease the full amount of each of the Senior Notes, the Senior
Subordinated Debentures and the Junior Subordinated Notes and
certifying that Loan proceeds were used to effect such actions
and that such indentures have been duly executed and delivered by
all necessary parties;
(b) Before Comdata Debt Retired. So long as the
conditions specified in subsection 4.02(a) remain unsatisfied,
the Company shall only be entitled to obtain, and the Banks shall
only be obligated to make, Committed Loans the principal amount
of which would result in an Aggregate Exposure in excess of
$75,000,000 (the "Debt Retirement Loans") subject to the prior or
concurrent satisfaction of the conditions specified in
subsections (i) through (iv) below with respect to Debt
Retirement Loans relating to the Senior Notes and Senior
Subordinated Debentures and subsection (v) below with respect to
Debt Retirement Loans relating to the Junior Subordinated Notes:
(i) Debt Tender Offer. There shall have been validly
tendered and not withdrawn prior to the expiration date of
the Debt Tender Offer at least a majority in principal
amount of the Senior Notes outstanding and a majority in
principal amount of the Senior Subordinated Debentures
outstanding, supplemental indentures to the indentures
governing the Senior Notes and Senior Subordinated
Debentures shall have been duly executed and delivered by
all necessary parties which contain the amendments to such
indentures specified in the Offer to Purchase, and proceeds
of Loans shall be irrevocably deposited (by the Company or
by Comdata through an intercompany loan and/or capital
contribution from the Company) with the depositary under the
Debt Tender Offer in an amount sufficient to make payment
for all Senior Notes and Senior Subordinated Debentures so
tendered (including payment of principal, accrued interest,
tender premium and consent premium), all in accordance with
the Offer to Purchase, the governing indentures and all
applicable Requirements of Law;
(ii) Approvals and Consents. All requisite or
necessary governmental authorities and third parties shall
have approved or consented to the Debt Tender Offer to the
extent required, all such approvals and consents shall
-43-
<PAGE>
remain in effect and there shall be no governmental or
judicial action, actual or threatened, that has a reasonable
likelihood of restraining, preventing or imposing burdensome
conditions on the Debt Tender Offer;
(iii) Legal Opinion. An opinion of John A.
Haveman, counsel to the Company, and of Reboul, MacMurray,
Hewitt, Maynard & Kristol, counsel to the Guarantors,
addressed to the Agent and the Banks substantially in the
form of Exhibit J-2 hereto;
(iv) Non-Tendered Senior Notes and Senior
Subordinated Debentures. With respect to Senior Notes and
Senior Subordinated Debentures which are not tendered and
purchased pursuant to the Debt Tender Offer, the Company
shall be entitled at any time after the completion of the
Debt Tender Offer and after the due execution and delivery
of supplemental indentures to the indentures governing the
Senior Notes and the Senior Subordinated Debentures by all
necessary parties which contain the amendments to such
indentures specified in the Offer to Purchase, to utilize
the proceeds of Debt Retirement Loans to repurchase, redeem
or defease (contractually or "in substance") any and all
such remaining Senior Notes and Senior Subordinated
Debentures; and
(v) Junior Subordinated Notes. The Junior
Subordinated Notes shall have been called for redemption and
proceeds of Loans shall be irrevocably deposited (by the
Company or by Comdata through an intercompany loan and/or
capital contribution from the Company) with the trustee for
the holders of the Junior Subordinated Notes in an amount
sufficient to pay and discharge the entire indebtedness on
such notes (including principal, premium and interest) as of
the redemption date, such that the Junior Subordinated Notes
and the related indenture shall be contractually defeased
upon such deposit, all in accordance with the governing
indenture and all applicable Requirements of Law.
Notwithstanding the foregoing, at no time shall the Aggregate
Exposure in excess of $75,000,000 exceed the sum of (i) the
aggregate principal amount of the Junior Subordinated Notes which
have been paid in full and discharged or legally defeased, plus
(ii) the aggregate principal amount of the Senior Notes and
Senior Subordinated Debentures which have been purchased and
canceled or defeased legally or "in substance" as described above
and plus (iii) the aggregate amount of interest, fees and premium
paid in connection with the transactions described in clauses (i)
and (ii) above; provided, however, that upon the satisfaction of
the conditions precedent set forth in subsection 4.02(a), the
Aggregate Exposure may exceed $75,000,000 without restriction as
provided above in this sentence on the terms and conditions set
forth in this Agreement.
4.3 Conditions to All Credit Extensions. The obligation
of each Bank to make any Credit Extension to be made by it
hereunder is subject to the satisfaction of the following
conditions precedent on the date of the relevant Credit
Extension:
(a) Notice of Borrowing or Continuation/Conversion
With respect to each Committed Borrowing, the Agent shall have
received a Notice of Borrowing or a Notice of
Continuation/Conversion, as applicable;
(b) Notice of Acceptance. With respect to each Bid
Borrowing, the Agent shall have received notice of acceptance of
the offer(s) by the Company pursuant to subsection 2.08(e);
-44-
<PAGE>
(c) Letter of Credit Request. With respect to each
request for the issuance or amendment of a Letter of Credit, the
Issuing Bank shall have received (and in the event the Issuing
Bank is not the Agent, the Agent shall have received) (i) a
Letter of Credit Application, with all blanks completed, signed
by the Company and any Subsidiary of the Company also requesting
the issuance of such Letter of Credit and (ii) a written
certificate signed by a Responsible Officer, designating the
Letter of Credit as a Financial L/C or a Performance L/C and
indicating whether such Letter of Credit supports worker's
compensation obligations;
(d) Continuation of Representations and Warranties.
The representations and warranties made by the Company contained
in Article V shall be true and correct on and as of such Credit
Extension Date with the same effect as if made on and as of such
date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be
true and correct as of such earlier date); provided, however,
that the Company shall not represent or warrant as to subsection
5.10(c) on the date of any Credit Extension which only involves a
conversion or continuation of an existing Loan and/or the
extension of a Letter of Credit and does not require an advance
of a new Loan by the Banks; and
(e) No Existing Default. No Default or Event of
Default shall exist or shall result from such Credit Extension.
Each such Notice of Borrowing, Notice of Continuation/Conversion,
notice of acceptance with respect to any Bid Loan offer or Letter
of Credit Application submitted by the Company hereunder shall
constitute a representation and warranty by the Company
hereunder, as of the date of each such notice or application and
as of the date of each Credit Extension that the conditions in
this Section 4.03 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each
Bank that:
5.1 Corporate Existence and Power.
(a) Each of the Company and each Material Subsidiary:
(i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation;
(ii) has the power and authority and all material
governmental licenses, authorizations, consents and
approvals to own its assets and carry on its business and to
execute, deliver, and perform its obligations under the Loan
Documents and the Merger Documents;
-45-
<PAGE>
(iii) is duly qualified as a foreign corporation,
licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such
qualification or license, except where the failure to be so
qualified, licensed or in good standing would not adversely
affect the business or operations of the Company or such
Subsidiary in any significant manner; and
(iv) is in compliance with all material
Requirements of Law applicable to it.
(b) Each Subsidiary of the Company which is not a
Material Subsidiary:
(i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation;
(ii) has the power and authority and all
governmental licenses, authorizations, consents and
approvals to own its assets and carry on its business;
(iii) is duly qualified as a foreign corporation,
licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such
qualification; and
(iv) is in compliance with all material
Requirements of Law applicable to it;
except where any failure to comply with the requirements of this
subsection (b) would not, individually or in the aggregate,
result in a Material Adverse Effect.
5.2 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Company and the
Guarantors of this Agreement and each other Loan Document to
which such Person is a party have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of such Person's
Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which such Person is a
party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law applicable to the
such Person.
5.3 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or
enforcement against, the Company or any Guarantor of this
Agreement or any other Loan Document.
5.4 Binding Effect. This Agreement and each other Loan
Document to which the Company or any of its Subsidiaries is a
party, when executed and delivered, will constitute the legal,
-46-
<PAGE>
valid and binding obligations of the Company and any of its
Subsidiaries to the extent it is a party thereto, enforceable
against such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating
to enforceability.
5.5 Litigation. Attached hereto as Schedule 5.05 is a
list of all material litigation in which the Company or any
Subsidiary is a plaintiff or a defendant as of the Closing Date.
Except as provided in Part A of Schedule 5.05, there are no
actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of the Company, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of
their respective properties which:
(a) purport to affect or pertain to this Agreement, or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) would reasonably be expected to have a Material
Adverse Effect (and taking into account the reasonable likelihood
of an adverse decision). No injunction, writ, temporary
restraining order or any order of any nature has been issued by
any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement
or any other Loan Document, or directing that the transactions
provided for herein or therein not be consummated as herein or
therein provided.
5.6 No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the
Company. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in
any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse
Effect.
5.7 ERISA Compliance. Except as referenced or provided
for in either Schedule 5.05 or Schedule 5.07 attached hereto:
(a) To the best knowledge of the Company, no facts or
circumstances exist which would reasonably be expected to have a
Material Adverse Effect in connection with the failure of any
Plan, or the failure of the Company, an ERISA Affiliate or any
Person with regard to the Plan, to comply with the applicable
provisions of ERISA, the Code and other Federal or state law.
The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been
made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has
resulted or would, if determined adversely to the Company or any
Plan, reasonably be expected to result in a Material Adverse
Effect. There has been no prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which
has resulted or would reasonably be expected to result in a
Material Adverse Effect.
-47-
<PAGE>
(c) To the best knowledge of the Company (i) no ERISA
Event has occurred or is reasonably expected to occur; (ii)
neither the Company nor any ERISA Affiliate has incurred, nor
reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due
and not delinquent under Section 4007 of ERISA); (iii) neither
the Company nor any ERISA Affiliate has incurred, nor reasonably
expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (iv) neither the
Company nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
5.8 Title to Properties. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
5.9 Taxes. The Company and its Subsidiaries have filed
all Federal and other material tax returns and reports required
to be filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise
due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves
have been provided in accordance with GAAP and no Notice of Lien
has been filed or recorded. There is no proposed tax assessment
against the Company or any of its Subsidiaries which would, if
the assessment were made, have a Material Adverse Effect.
5.10 Financial Condition.
(a) The audited consolidated financial statements of
the Company and its Subsidiaries dated December 31, 1994 and the
unaudited consolidated financial statements of the Company and
its Subsidiaries dated September 30, 1995:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as
otherwise expressly noted therein; and
(ii) are complete, accurate and fairly present the
financial condition of the Company and its Subsidiaries as
of the date thereof and results of operations for the period
covered thereby.
(b) The audited consolidated financial statements of
Comdata Holdings and its Subsidiaries dated December 31, 1994 and
the unaudited consolidated financial statements of Comdata
Holdings and its Subsidiaries dated September 30, 1995:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as
otherwise expressly noted therein; and
(ii) are complete, accurate and fairly present the
financial condition of Comdata Holding's and its
Subsidiaries as of the date thereof and results of
operations for the period covered thereby.
-48-
<PAGE>
(c) Except as disclosed in filings by the Company and
Comdata Holdings with the Securities and Exchange Commission on
Form 10-K for the year ended December 31, 1994, on Form 10-Q for
the quarters ended March 31, 1995, June 30, 1995 and September
30, 1995, on Form 8-K dated August 24, 1995 and in a Joint Proxy
Statement/Prospectus dated November 9, 1995, since December 31,
1994, there has been no Material Adverse Effect.
(d) Attached hereto as Schedule 5.10 is a list of
(i) Contingent Obligations of the Company and its consolidated
Subsidiaries and Comdata Holdings and its consolidated
Subsidiaries and (ii) general partnership interests owned by the
Company and its consolidated Subsidiaries and Comdata Holdings
and its consolidated Subsidiaries, showing the aggregate
liabilities of such partnerships and Contingent Obligations on a
pro forma basis as of November 30, 1995 after giving effect to
the consummation of the Merger and the other transactions
contemplated hereby. As of the Closing Date, neither the Company
and its consolidated Subsidiaries nor Comdata Holdings and its
consolidated Subsidiaries have incurred any material Contingent
Obligations except for those set forth on Schedule 5.10.
5.11 Environmental Matters.
(a) The on-going operations of the Company and each of
its Subsidiaries comply in all respects with all Environmental
Laws, except such non-compliance which would not (if enforced in
accordance with applicable law) result in liability that would
reasonably be expected to have a Material Adverse Effect.
(b) As of the Closing Date, except as specifically
disclosed on Schedule 5.11, none of the Company, any of its
Subsidiaries or any of their respective present property or
operations is subject to any outstanding written order from or
agreement with any Governmental Authority nor subject to any
judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material.
(c) Except as specifically disclosed on Schedule 5.11,
there are no Hazardous Materials or other conditions or
circumstances existing with respect to any property, or arising
from operations of the Company or any of its Subsidiaries that
would reasonably be expected to give rise to Environmental Claims
with a potential liability of the Company and its Subsidiaries
that in the aggregate for any such condition, circumstance or
property would reasonably be expected to have a Material Adverse
Effect.
5.12 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary of the Company, is
(a) an "investment company" within the meaning of the Investment
Company Act of 1940; or (b) subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act, any state public utilities
code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness, except that certain
Persons who may be deemed to control the Company, Comdata
Holdings or Comdata are registered investment companies within
the meaning of the Investment Company Act of 1940.
-49-
<PAGE>
5.13 No Burdensome Restrictions. Neither the Company nor
any of its Subsidiaries is a party to or bound by any Contractual
Obligation, or subject to any charter or corporate restriction,
or any Requirement of Law, which could reasonably be expected to
have a Material Adverse Effect.
5.14 Solvency. The Company and each of its Material
Subsidiaries are Solvent.
5.15 Labor Relations. There are no strikes, lockouts or
other labor disputes against the Company or any of its
Subsidiaries, or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of its
Subsidiaries, and no significant unfair labor practice complaint
is pending against the Company or any of its Subsidiaries or, to
the best knowledge of the Company, threatened against any of them
before any Governmental Authority which, in any case, could
reasonably be expected to have a Material Adverse Effect.
5.16 Copyrights, Patents, Trademarks and Licenses, etc
Except for any failure to comply with the requirements of this
Section 5.16 which would not, individually or in the aggregate,
result in a Material Adverse Effect: (a) the Company or its
Subsidiaries own or are licensed or otherwise have the right to
use all of the patents, trademarks, service marks, trade names,
copyrights, franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person;
(b) to the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed
by the Company or any of its Subsidiaries infringes upon any
rights held by any other Person; and (c) except as specifically
disclosed on Schedule 5.05 attached hereto, no claim or
litigation regarding any of the foregoing is pending or
threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed.
5.17 Material Subsidiaries and Equity Investments. As of
the Closing Date, the Company has no Subsidiaries other than the
Subsidiaries set forth on Schedule 5.17 attached hereto. The
Company has no Material Subsidiaries other than as set forth on
Schedule 5.17 or as disclosed to the Agent and the Banks pursuant
to Section 6.03(h) (including their jurisdiction of
incorporation) and has no Investment in any Person which is not a
Subsidiary of the Company except for such Investments that do not
exceed in the aggregate 10% of Consolidated Total Assets. All
Investments of the Company and its Subsidiaries (other than
Investments in Subsidiaries) with a net book value in excess of
$1,000,000 as of the Closing Date are set forth on Schedule
5.17(A) attached hereto.
5.18 Insurance. As of the Closing Date, the properties of
the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such
Subsidiary operates.
5.19 Merger. The Company has delivered to the Agent and
each of the Banks a true, complete and correct copy of the Plan
of Merger. The Plan of Merger as originally executed and
delivered by the parties thereto is in full force and effect and
has not been amended, waived, supplemented or modified in any
material respect without the consent of the Agent and the
Required Banks. Each of the representations and warranties of
-50-
<PAGE>
the Company (and, to the Company's knowledge, of Comdata
Holdings) therein is true and correct in all material respects as
of the date hereof. Neither the Company nor, to the Company's
knowledge, any other party thereto is in material default in the
performance of or compliance with any provision thereof. The
Merger has become effective in accordance with the terms of the
Plan of Merger and in accordance with applicable laws and
regulations.
5.20 Full Disclosure. None of the representations or
warranties made by the Company or any of its Subsidiaries in the
Loan Documents as of the date such representations and warranties
are made or deemed made, and none of the statements contained in
each exhibit, report, statement or certificate furnished by or on
behalf of the Company or any Subsidiary in connection with the
Loan Documents as of the date such statements are made or deemed
made, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
under which they are made, not misleading.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank
shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, unless the
Majority Banks waive compliance in writing:
6.1 Financial Statements. The Company shall deliver to
the Agent in form and detail satisfactory to the Agent and the
Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 120 days
after the end of each fiscal year, a copy of the audited
consolidated financial statements of the Company as of the end of
such fiscal year, setting forth in each case in comparative form
the figures for the previous year, and accompanied by the opinion
of KPMG Peat Marwick LLP or another nationally-recognized
independent public accounting firm which report shall state that
such consolidated financial statements present fairly in all
material respects the financial position of the Company and its
Subsidiaries as of the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with GAAP; such opinion shall not be qualified or
limited for any reason, including, without limitation, because of
a restricted or limited examination by such accountant of any
material portion of the Company's or any Subsidiary's records;
and
(b) as soon as available, but not later than 60 days
after the end of each calendar quarter, a copy of the Company's
quarterly report on Form 10-Q filed with the SEC with respect to
such fiscal quarter and an operating report similar to that
provided by the Company under the Existing Credit Agreement
showing the relevant data by business unit of the Company.
6.2 Certificates; Other Information. The Company shall
furnish to the Agent, with sufficient copies for each Bank:
-51-
<PAGE>
(a) concurrently with the delivery of the financial
statements referred to in subsections 6.01(a) and (b) above, a
Compliance Certificate, signed by a Responsible Officer;
(b) copies of each registration statement (or
prospectus contained therein) of the Company other than with
respect to employee benefit plans, each periodic report regarding
the Company required pursuant to Section 13 of the Exchange Act,
each annual report, each proxy statement and any amendments to
any of the above filed or reported by the Company with or to any
securities exchange or the Securities and Exchange Commission, of
each communication from the Company or any Subsidiary to the
Company's shareholders generally, promptly upon the filing or
making thereof and copies of such other filings, reports and
communications with the Company's shareholders as the Agent may
from time to time request;
(c) upon release, copies of all financially material
press releases;
(d) promptly after the creation or Purchase of any
Material Subsidiary, the name of such Subsidiary, a description
of its business, the price paid for the stock or assets of such
Subsidiary, its net worth and the value of its assets; and
(e) promptly, such additional business, financial,
corporate affairs and other information as the Agent, at the
request of any Bank, may from time to time reasonably request.
6.3 Notices. The Company shall promptly notify the Agent
and each Bank upon a Responsible Officer of the Company obtaining
knowledge:
(a) of the occurrence of any Default or Event of
Default;
(b) of (i) any breach or non-performance of, or any
default under, any Contractual Obligation of the Company or any
of its Subsidiaries which would reasonably be expected to result
in a Material Adverse Effect; and (ii) any dispute, litigation,
investigation, proceeding or suspension which may exist at any
time between the Company or any of its Subsidiaries and any
Governmental Authority which would reasonably be expected to
result in a Material Adverse Effect (and taking into account the
reasonable likelihood of an adverse decision);
(c) of the commencement of, or any material
development in, any litigation or proceeding affecting the
Company or any Subsidiary (i) which would reasonably be expected
to have a Material Adverse Effect (and taking into account the
reasonable likelihood of an adverse decision), or (ii) in which
the relief sought is an injunction or other stay of the
performance of this Agreement or any Loan Document;
(d) of (i) any and all enforcement, cleanup, removal
or other governmental or regulatory actions instituted or
threatened against the Company or any of its Subsidiaries or any
of their respective properties pursuant to any applicable
Environmental Laws, (ii) all other Environmental Claims, and
(iii) any environmental or similar condition on any real property
adjoining or in the vicinity of the property of the Company or
any Subsidiary that could reasonably be anticipated to cause the
property of the Company or any of its Subsidiaries or any part
thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use of such property under any
-52-
<PAGE>
Environmental Laws, if, individually or in the aggregate, the
events or conditions described or the amount claimed in clauses
(i), (ii) and (iii) would reasonably be expected to result in a
Material Adverse Effect;
(e) of the occurrence of any ERISA Event affecting the
Company or any ERISA Affiliate, and deliver to the Agent and each
Bank a copy of any notice with respect to such event that is
filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with
respect to such event;
(f) any Material Adverse Effect subsequent to the date
of the most recent audited financial statements of the Company
delivered to the Banks pursuant to subsection 6.01(a);
(g) of any labor controversy resulting in or
threatening to result in any strike, work stoppage, boycott,
shutdown or other labor disruption against or involving the
Company or any of its Subsidiaries;
(h) of any Subsidiary (including its jurisdiction
of incorporation) which is not a Guarantor being or becoming a
Material Subsidiary; and
(i) of any change in any rating assigned by any Rating
Agency with respect to the Company.
Each notice pursuant to this Section 6.03 shall be
accompanied by a written statement by a Responsible Officer of
the Company setting forth details of the occurrence referred to
therein, and stating what action, if any, the Company proposes to
take with respect thereto and at what time. Each notice under
subsection 6.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document
that have been breached or violated.
6.4 Preservation of Corporate Existence, Etc The Company
shall, and shall cause each of its Subsidiaries to:
(a) except as permitted in Section 7.02, preserve and
maintain in full force and effect its corporate existence and
good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all
material rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of
its business except in connection with transactions permitted by
Section 7.02;
(c) use its reasonable efforts, in the Ordinary Course
of Business, to preserve its business organization and preserve
the goodwill and business of the customers, suppliers and others
having material business relations with it; and
(d) preserve or renew all of its registered
trademarks, trade names and service marks, the non-preservation
of which would reasonably be expected to have a Material Adverse
Effect, provided, however, that the Company shall not be deemed
-61-
<PAGE>
to be in default under this Section 6.04 if a Subsidiary (other
than a Material Subsidiary) fails to comply herewith so long as
such failure is not material.
6.5 Maintenance of Property. The Company shall maintain,
and shall cause each of its Subsidiaries to maintain, and
preserve all its property which is used or useful in its business
in good working order and condition, ordinary wear and tear
excepted, make all necessary repairs thereto and renewals and
replacements thereof, and to keep such property free of any
Hazardous Materials, except where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect,
except as permitted by Section 7.02. The Company shall use at
least the standard of care typical in the industry in the
operation of its facilities.
6.6 Insurance. The Company shall maintain, and shall
cause each of its Material Subsidiaries to maintain, with
financially sound and reputable independent insurers, insurance
with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in
such amounts as are customarily carried under similar
circumstances by such other Persons; including workers'
compensation insurance, public liability and property and
casualty insurance. Upon request of the Agent or any Bank, the
Company shall furnish the Agent, with sufficient copies for each
Bank, at reasonable intervals (but not more than once per
calendar year) a certificate of a Responsible Officer of the
Company (and, if requested by the Agent, any insurance broker of
the Company) setting forth the nature and extent of all insurance
maintained by the Company and its Material Subsidiaries in
accordance with this Section 6.06 (and which, in the case of a
certificate of a broker, were placed through such broker).
6.7 Payment of Obligations. The Company shall, and shall
cause its Subsidiaries to, pay and discharge as the same shall
become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings
and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness;
provided, however, that the Company and its Subsidiaries shall
not be deemed to be in default under this Section 6.07 if failure
to comply herewith would not result in a Material Adverse Effect.
6.8 Compliance with Laws. The Company shall comply, and
shall cause each of its Subsidiaries to comply, in all material
respects with all material Requirements of Law applicable to it
or its business (including the Federal Fair Labor Standards Act),
except such as may be contested in good faith or as to which a
bona fide dispute may exist.
-54-
<PAGE>
6.9 Inspection of Property and Books and Records. The
Company shall maintain and shall cause each of its Material
Subsidiaries to maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions
and matters involving the assets and business of the Company and
such Subsidiaries. The Company shall permit, and shall cause
each of its Material Subsidiaries to permit, representatives and
independent contractors of the Agent or any Bank to visit and
inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective
officers and independent public accountants at such reasonable
times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the
Company; provided, however, when a Default exists, (i) the Agent
or any Bank may do any of the foregoing with respect to the
Company or any Subsidiary at any time during normal business
hours and without advance notice and (ii) such inspection,
examination and meetings shall be at the Company's expense.
6.10 Environmental Laws.
(a) The Company shall, and shall cause each of its
Subsidiaries to, conduct its operations and keep and maintain its
property in compliance in all material respects with all
Environmental Laws.
(b) Upon the written request of the Agent or any Bank,
the Company shall submit to the Agent with sufficient copies for
each Bank, at the Company's sole cost and expense, a report
providing an update of the status of any environmental, health or
safety compliance, hazard or liability issue identified in any
notice or report required pursuant to subsection 6.03(d).
6.11 Use of Proceeds. The Company shall use the proceeds
of the Loans and the Letters of Credit (a) to provide all or a
portion of the funds necessary (i) to repay in full all of the
indebtedness owing by Comdata under the Existing Comdata Credit
Agreement, (ii) to repay in full all of the indebtedness owing by
the Company, and replace any letters of credit outstanding under
the Existing Company Credit Agreement, (iii) to repurchase or
redeem the Senior Notes, the Junior Subordinated Notes and the
Senior Subordinated Debentures, or to provide for such repurchase
or redemption, (iv) to pay fees, premiums and expenses in
connection with the payment, repurchase or redemption of the
Existing Comdata Credit Agreement, the Existing Company Credit
Agreement, the Senior Notes, the Junior Subordinated Notes and
the Senior Subordinated Debentures, the consummation of the
Merger and the transactions contemplated hereby, and (b) for
working capital and other general corporate purposes (including
permitted Purchases). Letters of Credit shall be used by the
Company and its Subsidiaries for Ordinary Course of Business
purposes.
6.12 Additional Guarantors. The Company shall cause any
domestic Subsidiary which becomes a Material Subsidiary at any
time to promptly execute and deliver to the Agent, in sufficient
copies for all Banks, a Subsidiary Guaranty.
-55-
<PAGE>
6.13 Further Assurances.
(a) The Company shall ensure that all written
information, exhibits and reports furnished to the Agent or the
Banks do not and will not contain any untrue statement of a
material fact and do not and will not omit to state any material
fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and the Banks and correct any
defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgment or recordation
thereof.
(b) Promptly upon request by the Agent or the Majority
Banks, the Company shall (and shall cause any of its Subsidiaries
to) do, execute, acknowledge and deliver any and all such further
acts, certificates, assurances and other instruments as the Agent
or such Banks, as the case may be, may reasonably require from
time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document, and (ii)
to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Agent and Banks the rights granted or
now or hereafter intended to be granted to the Banks under any
Loan Document or under any other document executed in connection
therewith.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any
Bank shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, unless the
Majority Banks waive compliance in writing:
7.1 Limitation on Liens. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property, whether
now owned or hereafter acquired, other than the following
("Permitted Liens"):
(a) any Lien created under any Loan Document;
(b) Liens for taxes, fees, assessments or other
governmental charges or statutory obligations which are not
delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.07, provided
that no notice of Lien has been filed or recorded under the Code;
(c) Liens arising in the Ordinary Course of Business
in connection with obligations (other than obligations for
borrowed money) that are not overdue or which are being contested
in good faith and by appropriate proceedings, including, but not
limited to Liens under bid, performance and other surety bonds,
supersedeas and appeal bonds, Liens on advance or progress
payments received from customers under contracts for the sale,
lease or license of goods, software or services and upon the
products being sold or licensed, in each case securing
performance of the underlying contract or the repayment of such
advances in the event final acceptance of performance under such
-56-
<PAGE>
contracts does not occur; and Liens upon funds collected
temporarily from others pending payment or remittance on their
behalf;
(d) Liens (other than any Lien imposed by ERISA)
required in the Ordinary Course of Business in connection with
workers' compensation, unemployment insurance and other social
security legislation;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the Ordinary Course of Business
which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct
of the businesses of the Company and its Subsidiaries;
(f) purchase money security interests on any property
acquired or held by the Company or its Subsidiaries in the
Ordinary Course of Business securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such property to the extent permitted under Section
7.04; provided, however, that (i) any such Lien attaches to such
property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the
property so acquired in such transaction, and (iii) the principal
amount of the debt secured thereby does not exceed 100% of the
cost of such property;
(g) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of
set-off or similar rights and remedies as to deposit accounts or
other funds maintained with a creditor depository institution;
provided, however, that (i) such deposit account is not a
dedicated cash collateral account and is not subject to
restrictions against access by the Company in excess of those set
forth by regulations promulgated by the Federal Reserve Board,
and (ii) such deposit account is not intended by the Company or
any of its Subsidiaries to provide collateral to the depository
institution;
(h) rights of the holders of Senior Notes, Senior
Subordinated Debentures or Junior Subordinated Notes in deposits
placed in trust to legally or "in substance" defease such notes
or such debentures; and
(i) any Lien (not otherwise permitted by this Section
7.01) securing an obligation of the Company or any Subsidiary if
the aggregate amount of all such obligations secured by all such
Liens does not exceed 15% of Consolidated Total Assets; provided,
however, that the assets of any Material Subsidiary may only be
subject to Liens permitted under this subsection 7.01(i) which
secure obligations that do not exceed 15% of such Material
Subsidiary's total assets, as determined in accordance with GAAP
(except that the terms of this proviso shall not apply to
Computing Devices Canada Ltd. prior to April 1, 1996).
7.2 Mergers, Consolidations and Dispositions of Assets
(a) Except as provided in Section 7.02(b), the Company
shall not, and shall not permit any of its Subsidiaries to: (i)
sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of related transactions) any property
or assets (including accounts and notes receivable, with or
without recourse) (collectively, "transfer") to any Person except
-57-
<PAGE>
in the Ordinary Course of Business; (ii) transfer to any Person
other than the Company or a Subsidiary any outstanding capital
stock that has been issued by any Subsidiary; or (iii)
consolidate with or merge into any other Person.
(b) Subsection 7.02(a) shall not apply to or restrict:
(i) the merger or consolidation of any third Person
with or into the Company or any existing Subsidiary of the
Company, provided that (A) no Default or Event of Default
has occurred and is continuing at the time of, or would
result from, the consummation of such merger or
consolidation, and (B) either (1) the Company or such
existing Subsidiary of the company is the surviving entity
in such merger or, if the third Person or a new entity is
the surviving or resulting entity in such merger or
consolidation, it becomes a Subsidiary of the Company by
virtue of such merger or consolidation with an existing
Subsidiary, or (2) if the merger or consolidation involves
an existing Subsidiary of the Company and clause (B)(1) is
not applicable, the transaction would be permitted by
subsection 7.02(b)(ix) utilizing the net book value of the
Subsidiary;
(ii) the merger or consolidation of any Subsidiary
into the Company, or with or into any other Subsidiaries,
provided that if any such transaction is between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned
Subsidiary is the continuing or surviving corporation;
(iii) the transfer by any Subsidiary of the Company
of any assets (upon voluntary liquidation or otherwise) to
the Company or a Wholly-Owned Subsidiary of the Company;
(iv) transfers of real estate not used or useful
in the business of the Company and its Subsidiaries, any
bulk sale of inventory not representing a then current
product line of the Company or its Subsidiaries, or any sale
of property or assets used in connection with discontinued
or abandoned product lines of the Company or its
Subsidiaries;
(v) the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price
of similar replacement equipment, or the proceeds of such
sale are reasonably promptly applied to the purchase price
of such replacement equipment;
(vi) (A) the transfer of assets by the Company to
any of its Subsidiaries if such transfer is a sale for fair
market value and the consideration received by the Company
is cash and (B) the transfer of the business and assets of
the Company's Computing Devices International division to a
Subsidiary of the Company;
(vii) the transfer, merger or consolidation of the
assets listed on Schedule 7.02 attached hereto;
(viii) any transfer of assets by the Company or
any of its Subsidiaries to any Person in connection with the
extension of Indebtedness or making an investment or
acquisition transaction or business combination otherwise
permitted under this Agreement; and
-58-
<PAGE>
(ix) transfers of assets not otherwise permitted
hereunder (whether by merger, consolidation or otherwise)
occurring after the Closing Date which are made for fair
market value; provided, however, that (A) at the time of any
transfer, no Default or Event of Default exists or would
result from such transfer and (B) the aggregate net book
value of all assets so transferred by the Company and its
Subsidiaries together shall not exceed 10% of Consolidated
Total Assets.
7.3 Cash Investments; Minority Investments. The Company
shall not, and shall not permit any of its Subsidiaries to, (A)
invest any assets classified in accordance with GAAP on the
Company's consolidated balance sheet as "cash and equivalents" or
"short-term investments" in investments other than Cash
Equivalents and investment grade marketable securities or (B)
make any Investment in any Person which is not a Subsidiary of
the Company except for such Investments that, when aggregated
with the Investments set forth on Schedule 5.17(A) hereto, do not
exceed in the aggregate 10% of Consolidated Total Assets.
7.4 Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, incur, assume or suffer to
exist any Indebtedness if a Default or Event of Default has
occurred and is continuing or would result from the incurrence or
assumption of such Indebtedness.
7.5 Contingent Obligations. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Contingent Obligations
except:
(a) Contingent Obligations incurred pursuant to this
Agreement;
(b) endorsements for collection or deposit in the
Ordinary Course of Business;
(c) any Contingent Obligations relating to letters of
credit, bank guarantees or similar instruments incurred by
Computing Devices Canada Ltd. in connection with the IRIS system
contract dated April 18, 1991 and in connection with a contract
dated as of January 3, 1994 with the Diesel Division of General
Motors Canada Limited; and
(d) Contingent Obligations of the Company and its
Subsidiaries in an aggregate amount not in excess of $45,000,000.
7.6 Use of Proceeds. The Company shall not and shall not
suffer or permit any of its Subsidiaries to use any portion of
the Loan proceeds, directly or indirectly, (i) to purchase or
carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Company or others incurred to purchase or
carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14
of the Exchange Act.
7.7 Hostile Acquisitions. The Company shall not, and
shall not permit any of its Subsidiaries to, (a) Purchase, or
attempt to Purchase, any Person by means of a public debt or
equity tender offer or other unsolicited takeover (or the
equivalent thereof in any jurisdiction) or (b) engage in a proxy
contest (or the equivalent thereof in any jurisdiction) for
control of the board of directors (or the functional equivalent
thereof) of any Person, in either case which has not been
-59-
<PAGE>
approved and recommended by the board of directors (or the
functional equivalent thereof) of the Person being acquired or
proposed to be acquired or which is the subject of such proxy
contest.
7.8 Lease Obligations. The Company shall not permit the
aggregate minimum non-cancelable payment commitments in respect
of Operating Leases for the Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP at the end
of any fiscal year to exceed, for any subsequent fiscal year,
$60,000,000 (exclusive of $16,000,000, or such lesser amount as
may be reserved in the Company's consolidated financial
statements to pay such commitments).
7.9 Consolidated Net Worth. The Company shall not permit
its Consolidated Net Worth at the end of any fiscal quarter to be
less than $115,000,000 plus (a) 75% of Consolidated Net Income,
if positive, subsequent to December 31, 1995, plus (b) 100% of
the net cash proceeds from the issuance of any capital stock
(other than stock issued to or in connection with employee or
director benefit plans), plus (c) the amount of any conversion of
indebtedness to equity by the Company after December 31, 1995.
7.10 Fixed Charge Coverage Ratio. On and after the
Closing Date, the Company shall not permit its ratio of
(a) EBITDA, plus interest income, minus Capital Expenditures to
(b) Consolidated Fixed Charges, all calculated on a consolidated
basis for the immediately preceding four fiscal quarters of the
Company, to be less than 2.25 to 1.00.
7.11 Leverage Ratio. On and after the Closing Date,
the Company shall not permit its ratio of (a) Consolidated
Indebtedness to (b) EBITDA, minus Capital Expenditures and minus
dividends paid on preferred stock issued by the Company
(including the Preferred Stock), all calculated on a consolidated
basis for the immediately preceding four fiscal quarters of the
Company, to be more than 3.00 to 1.00.
7.12 Change in Business. The Company shall not, and
shall not permit any of its Subsidiaries to, (i) engage in any
material line of business substantially different from those
lines of business carried on by the Company and its Subsidiaries
on the Closing Date; or (ii) extend any material amount of
Indebtedness to or make any material equity investment in any
Person which engages in one or more lines of business all of
which are substantially different from those lines of business
carried on by the Company and its Subsidiaries on the Closing
Date; or (iii) enter into any joint venture which engages in a
material line of business substantially different from those
lines of business carried on by the Company and its Subsidiaries
on the Closing Date.
7.13 Accounting Changes. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, make any
significant change in accounting treatment or reporting
practices, except as required or permitted by GAAP, or change the
fiscal year of the Company or of any of its consolidated
Subsidiaries.
7.14 Contracts of Subsidiaries The Company shall not
permit any of its Subsidiaries (other than Computing Devices
Canada Ltd. and Computing Devices Company Ltd. and its
Subsidiaries) to enter into any contract restricting the ability
of such Subsidiary to pay dividends or make loans to the Company
or Subsidiaries of the Company.
-60-
<PAGE>
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when
and as required to be paid herein, any amount of principal of any
Loan, or any reimbursement obligation in respect of a Letter of
Credit, or (ii) within 5 days after the same shall become due,
any interest, fee or any other amount payable hereunder or
pursuant to any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company or any of its Subsidiaries made or deemed
made herein, in any Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Company, any of its Subsidiaries, or their respective Responsible
Officers, furnished at any time under this Agreement, or in or
under any Loan Document, shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform
or observe any term, covenant or agreement contained in
subsection 6.03(a), (b), (c), (d) or (f), Section 6.09 or in
Article VII; or the Company fails to perform or observe any term,
covenant or agreement contained in Section 6.01 or 6.02 or in
subsection 6.03(e), (g), (h) or (i), and such default continues
unremedied for a period of 10 days; or
(d) Other Defaults. The Company fails to perform or
observe any other term or covenant contained in this Agreement or
any Loan Document, and such default continues unremedied for a
period of 20 days; or
(e) Cross-Default. The Company or any of its
Subsidiaries (i) fails to make any required payment when due in
respect of any Indebtedness or Contingent Obligation having a
principal or face amount of $7,500,000 or more when due or any
Rate Contract having a notional amount of $7,500,000 or more when
due (whether at scheduled maturity or required prepayment or by
acceleration, demand, or otherwise); or (ii) fails to perform or
observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, and
such failure continues after the applicable grace or notice
period, if any, specified in the document relating thereto on the
date of such failure if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be
declared to be due and payable prior to its stated maturity, or
such Contingent Obligation to become payable or cash collateral
in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or
any other Subsidiary of the Company (i) ceases or fails to be
Solvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the
-61-
<PAGE>
ordinary course; (iii) commences an y Insolvency Proceeding with
respect to itself; or (iv) takes any action to effectuate or
authorize any of the foregoing; provided, however, that it shall
not be an Event of Default under this subsection (f) if any
Subsidiary of the Company (other than a Guarantor) to which this
subsection applies does not have annual revenues in excess of 1%
of the consolidated revenues of the Company or net worth which
constitutes more than 5% of the Consolidated Net Worth of the
Company in the fiscal year immediately preceding the date this
subsection first becomes applicable to such Subsidiary; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company
or any other Subsidiary of the Company, or any writ, judgment,
warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's or any of its
Subsidiaries' Properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released,
vacated or fully bonded within 60 days after commencement, filing
or levy; (ii) the Company or any of its Subsidiaries admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any of its Subsidiaries acquiesces in the
appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its
property or business; provided, however, that it shall not be an
Event of Default under this subsection (g) if any Subsidiary of
the Company (other than a Guarantor) to which this subsection
applies does not have annual revenues in excess of 1% of the
consolidated revenues of the Company or net worth which
constitutes more than 5% of the Consolidated Net Worth of the
Company in the fiscal year immediately preceding the date this
subsection first becomes applicable to such Subsidiary; or
(h) ERISA. (i) An ERISA Event shall occur with
respect to a Pension Plan or Multiemployer Plan which has
resulted or would reasonably be expected to result in liability
of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount which would
reasonably be expected to result in a Material Adverse Effect; or
(ii) the Company or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount which would reasonably be expected to result in
a Material Adverse Effect; or
(i) Monetary Judgments. One or more final
(non-interlocutory) judgments, orders or decrees shall be entered
against the Company or any of its Subsidiaries involving in the
aggregate a liability (not fully covered by independent
third-party insurance) as to any single or related series of
transactions, incidents or conditions, of $10,000,000 or more,
and the same shall remain unvacated and unstayed pending appeal
for a period of 10 days after the entry thereof; or
(j) Ownership. Any Person or group of Persons is the
beneficial owner of 30% or more of the voting power of the
Company for a period of 30 days or more. For purposes of this
subsection (j), the terms "group" and "beneficial owner" shall
have the meanings given to those terms in Section 13 of the
Securities Exchange Act of 1934, as amended; or
-62-
<PAGE>
(k) Subsidiary Guaranty. Any Subsidiary Guaranty
shall fail to remain in full force and effect (except, with
respect to any Subsidiary, upon the merger of such Subsidiary
with and into the Company or any other Subsidiary which is a
Guarantor), or any action shall be taken to discontinue or to
assert the invalidity or unenforceability of any Subsidiary
Guaranty, or any Guarantor shall fail to comply with any of the
terms or provisions of its Subsidiary Guaranty, or any Guarantor
denies that it has any further liability under its Subsidiary
Guaranty, or gives notice to such effect.
8.2 Remedies. If any Event of Default occurs, the
Agent shall, at the request of, or may, with the consent of, the
Majority Banks,
(a) declare the Commitment of each Bank to make Loans
and purchase participations in Letters of Credit and of the
Issuing Bank to issue Letters of Credit to be terminated,
whereupon such Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other
Loan Document to be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all
rights and remedies available to it and the Banks under the Loan
Documents or applicable law;
provided, however, that upon the occurrence of any event
specified in paragraph (f) or (g) of Section 8.01 above (in the
case of clause (i) of paragraph (g) upon the expiration of the
60-day period mentioned therein), the obligation of each Bank to
make Loans and purchase participations in Letters of Credit and
of the Issuing Bank to issue Letters of Credit shall
automatically terminate without notice to the Company and the
unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and
payable without further act of the Agent or any Bank and without
notice to the Company. If at the time an Event of Default
occurs, Letters of Credit are issued and unexpired, the Company
shall deposit with the Agent cash in an amount equal to the
Stated Amount of all Letters of Credit to be held as collateral
therefor.
8.3 Rights Not Exclusive. The rights provided for in
this Agreement and the other Loan Documents are cumulative and
are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter
arising.
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization. Each Bank hereby
irrevocably (subject to Section 9.09) appoints, designates and
authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to
-63-
<PAGE>
exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the
Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting
the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative
relationship between independent contracting parties.
-64-
<PAGE>
9.2 Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken
by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or
(ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any
officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or any other Loan
Document, or for the value of any collateral or the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the
Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or
Affiliates.
9.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel to
the Company), independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or
concurrence of the Majority Banks as it deems appropriate and, if
it so requests, it shall first be indemnified to its satisfaction
by the Banks against any and all liability and expense which may
-65-
<PAGE>
be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of
the Majority Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the
conditions specified in Sections 4.01, 4.02 and 4.03, each Bank
that has executed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Agent to such Bank
for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank, unless an officer of the Agent
responsible for the transactions contemplated by the Loan
Documents shall have received notice from the Bank prior to the
initial Borrowing specifying its objection thereto and either
such objection shall not have been withdrawn by notice to the
Agent to that effect or the Bank shall not have made available to
the Agent the Bank's ratable portion of such Borrowing.
9.5 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment
of principal, interest and fees required to be paid to the Agent
for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Company referring to
this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give
notice thereof to the Banks. The Agent shall take such action
with respect to such Default or Event of Default as shall be
requested by the Majority Banks in accordance with Article VIII;
provided, however, that unless and until the Agent shall have
received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable or in the best interest of the Banks.
9.6 Credit Decision. Each Bank expressly acknowledges
that none of the Agent-Related Persons has made any
representation or warranty to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other
condition and creditworthiness of the Company and its
Subsidiaries, and all applicable bank regulatory laws relating to
the transactions contemplated thereby, and made its own decision
to enter into this Agreement and extend credit to the Company
hereunder. Each Bank also represents that it will, independently
and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of
-66-
<PAGE>
the Company which may come into the possession of any of the
Agent-Related Persons.
9.7 Indemnification. Whether or not the transactions
contemplated hereby shall be consummated, the Banks shall
indemnify upon demand the Agent-Related Persons (to the extent
not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), ratably from
and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Loans and
the termination or resignation of the related Agent) be imposed
on, incurred by or asserted against any such Person any way
relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken
or omitted by any such Person under or in connection with any of
the foregoing; provided, however, that no Bank shall be liable
for the payment to the Agent-Related Persons of any portion of
such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document,
or any document contemplated by or referred to herein to the
extent that the Agent is not reimbursed for such expenses by or
on behalf of the Company. Without limiting the generality of the
foregoing, if the Internal Revenue Service or any other
Governmental Authority of the United States or other jurisdiction
asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Bank
shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction
on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The
obligation of the Banks in this Section shall survive the payment
of all Obligations hereunder and the resignation or replacement
of the Agent.
9.8 Agent in Individual Capacity. BofA and its Affiliates
may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent
hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such
Affiliates) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to
its Loans, BofA shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though
it were not the Agent, and the terms "Bank" and "Banks" shall
include BofA in its individual capacity.
9.9 Successor Agent. The Agent may, and at the request of
the Majority Banks shall, resign as Agent upon 30 days' notice to
the Banks. If the Agent shall resign as Agent under this
Agreement, the Majority Banks shall appoint from among the Banks
a successor agent for the Banks which successor agent shall be
approved by the Company. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Banks and the
Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article IX
and Sections 10.04 and 10.05 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the
Banks shall perform all of the duties of the Agent hereunder
until such time, if any, as the Majority Banks appoint a
successor agent as provided for above.
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the Company or any
Guarantor therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Banks (or by the Agent at
the written request of the Majority Banks), the Company and
acknowledged by the Agent, and then such waiver shall be
effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all
the Banks, the Company and acknowledged by the Agent, do any of
the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to subsection
8.02(a)) or subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment
of principal, interest, fees or other amounts due to the Banks
(or any of them) hereunder or under any Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts
payable hereunder or under any Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be
required for the Banks or any of them to take any action under
any Loan Document;
(e) release any Guarantor from the Subsidiary Guaranty
to which it is a party; or
(f) amend this Section 10.01 or Section 2.19;
and, provided further, that no amendment, waiver or consent
-68-
<PAGE>
shall, unless in writing and signed by the Agent in addition to
the Majority Banks or all the Banks, as the case may be, affect
the rights or duties of the Agent under this Agreement or any
other Loan Document.
10.2 Notices.
(a) All notices, requests, consents, approvals,
waivers and other communications provided for hereunder or in
connection herewith shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission,
provided that any matter transmitted by the Company by facsimile
(i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on the applicable signature
page hereof, and (ii) shall be followed promptly by a hard copy
original thereof) and mailed, faxed or delivered, to the address
or facsimile number specified for notices on the applicable
signature page hereof; or, as directed to the Company or the
Agent, to such other address as shall be designated by such party
in a written notice to the other parties, and as directed to each
other party, at such other address as shall be designated by such
party in a written notice to the Company and the Agent.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next day) delivery, or
transmitted by facsimile machine, respectively, or if delivered,
upon delivery, except that notices pursuant to Article II or IX
shall not be effective until actually received by the Agent.
(c) The Company acknowledges and agrees that any
agreement of the Agent and the Banks in Article II herein to
receive certain notices by telephone and facsimile is solely for
the convenience and at the request of the Company. The Agent and
the Banks shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by the Company to
give such notice and the Agent and the Banks shall not have any
liability to the Company or other Person on account of any action
taken or not taken by the Agent or the Banks in reliance upon
such telephonic or facsimile notice. The obligation of the
Company to repay the Loans shall not be affected in any way or to
any extent by any failure by the Agent and the Banks to receive
written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at
variance with the terms understood by the Agent and the Banks to
be contained in the telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
10.4 Costs and Expenses. The Company shall, whether or not
the transactions contemplated hereby shall be consummated:
(a) pay or reimburse BofA (including in its capacity
as Agent) within twenty Business Days after demand (subject to
subsection 4.01(f)) for all costs and expenses incurred by BofA
(including in its capacity as Agent) in connection with the
development, preparation, delivery, administration and execution
of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement, any Loan
Document and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions
contemplated hereby and thereby, including the reasonable
Attorney Costs incurred by BofA (including in its capacity as
Agent) with respect thereto;
-69-
<PAGE>
(b) pay or reimburse each Bank and the Agent within
twenty Business Days after demand (subject to subsection 4.01(f))
for all costs and expenses incurred by them in connection with
the enforcement, attempted enforcement, or preservation of any
rights or remedies (including in connection with any "workout" or
restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding) under this
Agreement, any other Loan Document, and any such other documents,
including Attorney Costs incurred by the Agent and any Bank; and
(c) pay or reimburse BofA (including in its capacity
as Agent) within twenty Business Days after demand (subject to
subsection 4.01(i)) for all audit, environmental inspection and
review (including the allocated cost of such internal services),
search and filing costs, fees and expenses, incurred or sustained
by BofA (including in its capacity as Agent) in connection with
the matters referred to under subsections (a) and (b) of this
Section 10.04.
10.5 Indemnity. Whether or not the transactions
contemplated hereby shall be consummated:
(a) General Indemnity. The Company shall pay, defend,
indemnify, and hold each Bank, the Agent, the Arranger and each
of their respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including cleanup costs and
engineering consulting costs in respect of Environmental Claims
and Attorney Costs) of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and
administration of this Agreement and any other Loan Documents, or
the transactions contemplated hereby and thereby, and with
respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding, Environmental Claim proceedings or
appellate proceeding) related to this Agreement or the Loans or
the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, however, that the Company
shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross
negligence or willful misconduct of such Indemnified Person.
(b) Survival; Defense. The obligations in this
Section 10.05 shall survive payment and cancellation of all other
Obligations. At the election of any Indemnified Person, the
Company shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Company;
provided, however, that the Company shall only be obligated to
hire one counsel to represent all of the Banks unless any Bank
advises the Company that its legal counsel has advised it that
its interest is materially different from that of the other Banks
and it would not be adequately represented without its own
separate counsel, in which case the Company shall hire separate
counsel for such Bank, satisfactory to such Bank. All amounts
owing under this Section 10.05 shall be paid within 30 days after
demand.
-69-
<PAGE>
10.6 Marshalling; Payments Set Aside. Neither the Agent
nor the Banks shall be under any obligation to marshall any
assets in favor of the Company or any other Person or against or
in payment of any or all of the Obligations. To the extent that
the Company makes a payment or payments to the Agent or the
Banks, or the Agent or the Banks exercise their rights of
set-off, and such payment or payments or the proceeds of such
set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Agent
or such Bank in its sole discretion) to be repaid to a trustee,
receiver or any other party in connection with any Insolvency
Proceeding, or otherwise, then (a) to the extent of such recovery
the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or
set-off had not occurred, and (b) each Bank severally agrees to
pay to the Agent upon demand its pro rata share of any amount so
recovered from or repaid by the Agent.
10.7 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of the Agent and each Bank.
10.8 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the
Company (which consent shall not be unreasonably withheld or
delayed) at all times other than during the existence of an Event
of Default and of the Agent and the Issuing Bank, at any time
assign and delegate to one or more Eligible Assignees (provided
that no written consent of the Company, the Agent or the Issuing
Bank shall be required in connection with any assignment and
delegation by a Bank to a Bank Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Bank
hereunder, and if in part, in a minimum amount of $10,000,000;
provided, however, that (i) the Company and the Agent may
continue to deal solely and directly with such Bank in connection
with the interest so assigned to an Assignee until (A) written
notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agent by such Bank
and the Assignee; (B) such Bank and its Assignee shall have
delivered to the Company and the Agent an assignment and
acceptance agreement in substantially the form of Exhibit B
attached hereto, together with any Notes subject to such
assignment and (C) the assignor Bank or Assignee has paid to the
Agent a processing fee in the amount of $3,500. The consent of
the Company to any such assignment shall not be unreasonably
withheld.
(b) From and after the date that the Agent notifies
the assignor Bank that it has received (and provided its consent
with respect to) an executed assignment and acceptance and
payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to
such assignment and acceptance agreement, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned
by it pursuant to such assignment and acceptance agreement,
relinquish its rights and be released from its obligations under
the Loan Documents.
-70-
<PAGE>
(c) Promptly after its receipt of notice by the Agent
that it has received an executed assignment and acceptance
agreement and payment of the processing fee, the Company shall
execute and deliver to the Agent a new Note evidencing such
Assignee's Bid Loans and, if the assignor Bank has not retained
any portion of its Loans and its Commitment, the assignor Bank
shall return its original Note to the Company for cancellation.
Immediately upon each Assignee's making its processing fee
payment under the assignment and acceptance agreement, this
Agreement, shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee
and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce
such Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company
(a "Participant") participating interests in any Loans, the
Commitment of that Bank and the other interests of that Bank (the
"originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations
under this Agreement shall remain unchanged, (ii) the originating
Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Agent shall continue to
deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall
transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other
Loan Document, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks as described
in clauses (a), (b) and (c) in the first proviso to Section
10.01. In the case of any such participation, the Participant
shall be entitled to the benefit of Sections 3.01, 3.03 and 10.05
as though it were also a Bank hereunder, and if amounts
outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality
of all information identified as "confidential" by the Company
and provided to it by the Company or any Subsidiary of the
Company, or by the Agent on such Company's or Subsidiary's
behalf, in connection with this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any
such information for any purpose or in any manner other than
pursuant to the terms contemplated by this Agreement; except to
the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by
the Bank, or (ii) was or becomes available on a non -confidential
basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the
Company known to the Bank; provided further, however, that any
Bank may disclose such information (A) at the request or pursuant
to any requirement of any Governmental Authority to which the
Bank is subject or in connection with an examination of such Bank
by any such authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the
provisions of any applicable requirement of law; and (D) to such
Bank's independent auditors and other professional advisors.
Notwithstanding the foregoing, the Company authorizes each Bank
to disclose to any Participant or Assignee (each, a "Transferee")
and to any prospective Transferee, such financial and other
information in such Bank's possession concerning the Company or
-82-
<PAGE>
its Subsidiaries which has been delivered to Agent or the Banks
pursuant to this Agreement or which has been delivered to the
Agent or the Banks by the Company in connection with the Banks'
credit evaluation of the Company prior to entering into this
Agreement; provided that, unless otherwise agreed by the Company,
such Transferee agrees in writing to such Bank to keep such
information confidential to the same extent required of the Banks
hereunder.
(f) Notwithstanding any other provision contained in
this Agreement or any other Loan Document to the contrary, any
Bank may assign all or any portion of the Loans or Notes held by
it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating
Circular issued by such Federal Reserve Bank, provided that any
payment in respect of such assigned Loans or Notes made by the
Company to or for the account of the assigning or pledging Bank
in accordance with the terms of this Agreement shall satisfy the
Company's obligations hereunder in respect to such assigned Loans
or Notes to the extent of such payment. No such assignment shall
release the assigning Bank from its obligations hereunder.
X.9 Set-off. In addition to any rights and remedies of
the Banks provided by law, if an Event of Default exists, each
Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the
Company to the fullest extent permitted by law, to set off and
apply any and all Company deposits (general or special, time or
demand, provisional or final) at any time held by, and other
-71-
<PAGE>
indebtedness at any time owing by, such Bank to or for the credit
or the account of the Company against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of
whether or not the Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Agent after any such
set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each
Bank under this Section 10.09 are in addition to the other rights
and remedies (including other rights of set-off) which the Bank
may have.
10.10 Automatic Debits of Fees. With respect to any fee, or
any other cost or expense (including Attorney Costs) due and
payable to the Agent or BofA under the Credit Documents, the
Company hereby irrevocably authorizes BofA to debit any deposit
account of the Company with BofA in an amount such that the
aggregate amount debited from all such deposit accounts does not
exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount
of the fee or other cost or expense then due, such debits will be
reversed (in whole or in part, in BofA's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such
debit under this Section 10.10 shall be deemed a setoff.
10.11 Notification of Addresses, Lending Offices, Etc. Each
Bank shall notify the Agent in writing of any changes in the
address to which notices to the Bank should be directed, of
addresses of its Offshore Lending Office, of payment instructions
in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably
request.
10.12 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement in any number of
separate counterparts, each of which, when so executed, shall be
-72-
<PAGE>
deemed an original, and all of said counterparts taken together
shall be deemed to constitute but one and the same instrument. A
set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Agent.
10.13 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Company, the Banks and the Agent, and their permitted successors
and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the
other Loan Documents. Neither the Agent nor any Bank shall have
any obligation to any Person not a party to this Agreement or
other Loan Documents.
10.15 Time. Time is of the essence as to each term or
provision of this Agreement and each of the other Loan Documents.
10.16 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY,
THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
10.17 WAIVER OF JURY TRIAL. THE COMPANY, THE BANKS AND THE
AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
-73-
<PAGE>
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Company, the Banks and the Agent, and
supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof, except for the letter
agreement between the Agent, the Arranger and the Company
described in subsection 2.15(a).
10.19 Interpretation. This Agreement is the result of
negotiations between and has been reviewed by counsel to the
Agent, the Company and other parties, and is the product of all
parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against the Banks or the Agent
merely because of the Agent's or Banks' involvement in the
preparation of such documents and agreements.
10.20 Term of Agreement. This Agreement shall not terminate
until all Obligations (other than inchoate obligations under
Article III and Section 10.05 which survive the termination of
this Agreement) have been paid to the Agent and the Banks, even
though the Termination Date may have occurred.
10.21 Foreign Currency Conversion. If for the purpose of
(a) determining the amount owed to an Issuing Bank in respect of
payments made under a Letter of Credit or (b) obtaining judgment
in any court, it is necessary to convert a sum due hereunder in
another currency into U.S. Dollars, the Company agrees, to the
fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase such other currency
with U.S. Dollars at San Francisco, California on the Business
Day preceding that on which the reimbursement amount in respect
of the Letter of Credit is due or final judgment is given.
-74-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
CERIDIAN CORPORATION
By: /s/John H. Grierson
Name:John H. Grierson
Title:Vice President & Treasurer
Address for notices:
8100 34th Avenue South
Minneapolis, Minnesota 55425
Attention: Treasury Department
Facsimile: (612) 853-3932
Telephone: (612) 853-5265
S-1
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:/s/Judith L. Kramer
Name: Judith L. Kramer
Title: Vice President
Address for notices:
Bank of America National Trust and
Savings Association
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services #5596
Re: Ceridian
Facsimile: (415) 436-2700
Telephone: (415) 436-2766
Address for payment:
Bank of America NT&SA
ABA No. 121-000-358
Attn: Agency Management Services
No. 5596
Credit to Account No. 12339-15086
Ref: Ceridian Corporation
S-2
<PAGE>
BANK OF AMERICA ILLINOIS
By: /s/M. A. Detrick
Name:M. A. Detrick
Title:Vice President
Lending Office:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
Address for notices:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
With a copy to:
Bank of America Illinois
231 South LaSalle Street (9Q)
Chicago, IL 60697
Attention: Margaret Detrick
Facsimile: (312) 987-1276
Telephone: (312) 828-5201
S-3
<PAGE>
BANK OF MONTREAL
By: /s/Erin M. Keyser
Name:Erin M. Keyser
Title:Director
Lending Office:
Bank of Montreal
115 S. LaSalle Street, 12th Floor
Chicago, IL 60603
Attention: Angela Cobett
Facsimile: 2) 750-3798
(31
Telephone: (312) 750-4363
Address for notices:
Bank of Montreal
115 S. LaSalle Street, 12th Floor
Chicago, IL 60603
Attention: Erin M. Keyser
Facsimile: (312) 750-6057
Telephone: (312) 750-5943
S-4
<PAGE>
THE BANK OF NEW YORK
By: /s/Richard A. Raffetto
Name:Richard A. Raffetto
Title:Assistant Vice President
Lending Office:
The Bank of New York
101 Barclay Street
New York, NY 10007
Attention: Commercial Lending Office
Facsimile: (212) 635-7923 or 7924
Telephone: (212) 635-6991
Address for notices:
The Bank of New York
One Wall Street, 19th Floor
New York, NY 10286
Attention: Richard A. Raffetto
Facsimile: (212) 635-1208 or 1209
Telephone: (212) 635-8044
S-5
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By: /s/John C. Solomon
Name:John C. Solomon
Title:Vice President
Lending Office:
The Boatmen's National Bank of St. Louis
One Boatmen's Plaza
St. Louis, MO 63101
Attention: Sharron Kovsch
Facsimile: (314) 466-6499
Telephone: (314) 466-6944
Address for notices:
The Boatmen's National Bank of St. Louis
One Boatmen's Plaza
St. Louis, MO 63101
Attention: John C. Solomon
Facsimile: (314) 466-6499
Telephone: (314) 466-6730
S-6
<PAGE>
CHEMICAL BANK
By: /s/John J. Huber III
Name:John J. Huber III
Title:Managing Director
Lending Office:
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: Donna Montgomery
Facsimile: (212) 622-0136
Telephone: (212) 622-1440
Address for notices:
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: John Huber
Facsimile: (212) 270-4711
Telephone: (212) 270-1402
S-7
<PAGE>
FIRST AMERICAN NATIONAL BANK
By: /s/Russell S. Rogers
Name:Russell S. Rogers
Title:Vice President
Lending Office:
First American National Bank
315 Union Street
Nashville, TN 37237-0075
Attention: Frenisa Joy
Facsimile: (615) 748-6098
Telephone: (615) 736-6747
Address for notices:
First American National Bank
315 Union Street
Nashville, TN 37237-0075
Attention: Russell S. Rogers
Facsimile: (615) 748-6072
Telephone: (615) 748-2548
S-8
<PAGE>
FIRST BANK NATIONAL ASSOCIATION
By: /s/Todd W. Nelson
Name:Todd W. Nelson
Title:Vice President
Lending Office:
First Bank National Association
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Karen Johnson
Facsimile: (612) 973-0825
Telephone: (612) 973-0546
Address for notices:
First Bank National Association
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Todd W. Nelson
Facsimile: (612) 973-0825
Telephone: (612) 973-0550
S-9
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/Jon C. Otterberg
Name:Jon C. Otterberg
Title:Assistant Vice President
Lending Office:
PNC Bank, National Association
One PNC Plaza
Pittsburgh, PA 15265
Attention: Tammy Dunn
Facsimile: (312) 906-3420
Telephone: (312) 906-3403
Address for notices:
PNC Bank, National Association
500 W. Madison Street, Suite 3140
Chicago, IL 60661
Attention: Jon C. Otterberg
Facsimile: (312) 906-3420
Telephone: (312) 906-3425
S-10
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/Laila S. Partridge
Name:Laila S. Partridge
Title:Vice President
Lending Office:
Wells Fargo Bank, N.A.
420 Montgomery Street, 9th Floor
San Francisco, CA 94104
Attention: Judi Steele
Facsimile: (415) 989-4319
Telephone: (415) 396-3807
Address for notices:
Wells Fargo Bank, N.A.
420 Montgomery Street, 9th Floor
San Francisco, CA 94104
Attention: Laila Partridge
Facsimile: (415) 421-1352
Telephone: (415) 396-2494
S-11
<PAGE>
ABN AMRO BANK N.V.
By: /s/Bernard J. McGuigan
Name:Bernard J. McGuigan
Title:Group Vice President
By: /s/Christine E. Holmes
Name:Christine E. Holmes
Title:Vice President
Lending Office:
ABN AMRO Bank N.V.
135 S. LaSalle Street, Suite 425
Chicago, IL 60674-9135
Attention: Loan Operations
Facsimile: (312) 606-8435
Telephone: (312) 904-2961
Address for notices:
ABN AMRO Bank N.V.
135 S. LaSalle Street, Suite 425
Chicago, IL 60674-9135
Attention: Jozef A.C. Henriquez
Facsimile: (312) 606-8425
Telephone: (312) 904-2611
S-12
<PAGE>
TORONTO DOMINION BANK (TEXAS), INC.
By: /s/Frederic Hawley
Name:Frederic Hawley
Title:Vice President
Lending Office:
Toronto Dominion Bank (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, TX 77010
Attention: Jorge Garcia
Facsimile: (713) 951-9921
Telephone: (713) 653-8242
Address for notices:
Toronto Dominion Bank (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, TX 77010
Attention: Jorge Garcia
Facsimile: (713) 951-9921
Telephone: (713) 653-8242
S-13
<PAGE>
THE LONG TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/Richard E. Stahl
Name:Richard E. Stahl
Title:Senior Vice President and
Joint General Manager
Lending Office:
The Long Term Credit Bank of
Japan, Ltd.
Chicago Branch
190 South LaSalle Street, Suite 800
Chicago, IL 60603
Attention: John R. Carley
Facsimile: (312) 704-8505
Telephone: (312) 853-9516
Address for notices:
The Long Term Credit Bank of
Japan, Ltd.
Chicago Branch
190 South LaSalle Street, Suite 800
Chicago, IL 60603
Attention: John R. Carley
Facsimile: (312) 704-8505
Telephone: (312) 853-9516
S-14
<PAGE>
BofA is a party to this Agreement solely as an Issuing Bank with
respect to Letters of Credit. BofA shall have no commitment to
make Loans, to hold or purchase a participation in any Letter of
Credit, or to issue any additional Letters of Credit hereunder.
Notwithstanding the foregoing, BofA shall be a "Bank", under the
provisions of this Agreement, with a Commitment Percentage of
zero percent (0%).
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/Dennis Dubois
Name:Dennis Dubois
Title:Vice President
Address for payment:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
Address for notices:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
CERIDIAN CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<S> <C> <C> <C>
(Amounts in thousands, except Year Ended December 31
per sharedata) 1995 1994 1993
Net earnings (loss) $ 58,562 $ 97,689 $(252,109)
Dividends on Ceridian
preferred stock (12,980) (12,980) (325)
Net earnings (loss) for
common stock - primary 45,582 84,708 (252,434)
Extraordinary loss 38,947 - 8,400
Earnings (loss) before
extraordinary item - 84,528 84,708 (244,034)
primary
Dividends on Ceridian
preferred stock 12,980 12,980 325
Earnings (loss) before
extraordinary item - fully
diluted $ 97,508 $ 97,689 $(243,710)
Weighted average common
shares outstanding 66,135 65,825 64,452
Common share equivalents -
stock options 3,217 1,801
Weighted average common
shares and equivalents 69,352 67,626 64,452
outstanding - primary
Shares issuable assuming
conversion of Ceridian 10,384 10,384 260
preferred stock
Weighted average common
shares and equivalents 79,736 78,010 64,712
outstanding - full
dilution
Primary earnings (loss) per
share
before extraordinary item $ 1.22 $ 1.25 $ (3.79)
Extraordinary loss (0.56) 0.00 (0.13)
Net earnings (loss) $ 0.66 $ 1.25 $ (3.92)
Fully diluted earnings
(loss) per share
before extraordinary item(1) $ 1.22 $ 1.25 $ (3.77)
Net earnings (loss) (1) $ 0.73 $ 1.25 $ (3.90)
(1) The calculation of fully diluted earnings (loss) per share
appearing above is submitted in accordance with Regulation S-X
item 601(b)(11). These amounts are not permitted to be
reported under generally accepted accounting principles (APBO
No. 15) because they are the same or better than (antidilutive
to) the primary earnings (loss) per share amounts.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS Exhibit 12
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1995 1994 1993 1992 1991
Earnings (Loss) before income taxes and
other items (1) $116.2 $115.2 $(239.7) $(344.3) $(11.0)
Earnings (Loss) of majority owned
affiliates - not consolidated - - - (0.6) -
Total earnings (loss) before income taxes
and other items 116.2 115.2 (239.7) (343.7) (11.0)
Add:
Interest 30.6 32.2 46.8 54.8 64.9
Interest portion of rentals (2) 14.0 14.0 14.6 19.0 33.4
Adjusted earnings (loss) before income
taxes and other items $160.8 $161.4 $(178.3) $(269.9) $87.3
Dividends on preferred stock:
Preferred dividend requirements $23.8 $26.0 $12.9 $1.7 $0.8
Pre-tax to net income ratio (3) 84% 85% 100% 100% 100%
Preferred dividend factor on a
pre-tax basis 28.3 30.6 12.9 1.7 0.8
Interest 30.6 32.2 46.8 54.8 64.9
Interest portion of rentals 14.0 14.0 14.6 19.0 33.4
Fixed charges and preferred dividends $73.0 $76.8 $74.3 $75.5 $99.1
Ratio of earnings to combined fixed
charges and preferred dividends 2.20 2.10
Earnings to combined fixed charges
and preferred dividends deficiency $252.6 $345.4 $11.8
(1) Results include discontinued operations and are restated for the poolings of Comdata
and Resumix in 1995.
(2) Assumed to be one-third of rental expense.
(3) Represents the reciprocal of the ratio of the income tax provision to earnings before
income taxes. A tax gross-up would not have a material effect prior to 1994
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SELECTED FIVE-YEAR DATA (Dollars in millions, except per share data)
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
Revenue $ 1,333.0 $ 1,177.8 $ 1,109.8 $ 1,031.1 $ 953.3
Earnings (Loss) from continuing operations (1) $ 97.5 $ 97.7 $ (243.7) $ (30.3) $ 54.1
Loss from discontinued operations (2) - - - (321.6) (74.7)
Extraordinary loss (3) (38.9) - (8.4) (20.5) (1.2)
Cumulative effect of accounting
change (FAS 106) (4) - - - (41.8) -
Net Earnings (Loss) $ 58.6 $ 97.7 $ (252.1) $ (414.2) $ (21.8)
Earnings Per Common Share (5)
Continuing operations $ 1.22 $ 1.25 $ (3.79) $ (0.48) $ 0.84
Net earnings (loss) $ 0.66 $ 1.25 $ (3.92) $ (6.48) $ (0.35)
Shares used in calculations (in thousands) 69,352 67,626 64,452 63,939 63,848
Balance Sheet Data
Total assets $ 1,126.1 $ 977.5 $ 850.8 $ 989.9 $ 1,409.7
Debt obligations $ 209.9 $ 238.4 $ 250.7 $ 415.0 $ 458.4
Stockholders' equity (deficit) (6) $ 150.0 $ 86.9 $ (8.9) $ (3.7) $ 483.9
Equity (Deficit) Per Common Share (7) $ (1.28) $ (2.23) $ (3.74) $ (0.06) $ 7.41
Common shares outstanding at end of
year (in thousands) 67,277 66,723 65,503 64,125 63,851
Number of Employees at End of Year 10,200 9,500 9,600 10,500 11,300
Prior year amounts have been restated for the 1995 acquisitions of Resumix and Comdata by Ceridian as further
described in Note J.
(1) Includes pooling expenses of $29.7 in 1995, restructuring loss (gain) of $67.0 in 1993, $76.2 in 1992, and
$(16.2) in 1991 and the write-off of $230.3 of Comdata goodwill and other intangibles in 1993. For
additional information about the 1993 losses, see Note B to the consolidated financial statements.
(2) Relates to the disposition of Ceridian's automated wagering, energy management and computer products
businesses.
(3) Relates to the early retirement of debt. For additional information about the 1995 and 1993 losses,
see Notes B and I to the consolidated financial statements.
(4) The Company adopted FAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," in 1992.
(5) Fully diluted amounts do not differ from primary earnings (loss) per share for any year presented.
Shares used in the fully diluted calculations in 1995 and 1994 were 79,736,000 and 78,010,000, respectively.
(6) The Company has not declared a cash dividend on common stock since 1985. For information regarding the sale
in 1993 of preferred stock with a redemption value of $236.0, see Note F to the consolidated financial statements.
(7) Computed by reducing stockholders' equity by the redemption value of outstanding preferred stock and dividing by the
number of outstanding common shares at the end of the year. Assuming that outstanding preferred stock were converted
to common stock, the equity per common share would be $1.93 and $1.13 at December 31, 1995 and 1994, respectively.
1
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Results for all periods include the historical results of Comdata
Holdings Corporation ("Comdata"), acquired by the Company on December 12,
1995, and Resumix, Inc. ("Resumix"), acquired by the Company on August 31,
1995, and the effect of the issuance of shares of Ceridian common stock in
those acquisition transactions, which were accounted for by the
pooling-of-interests method.
For 1995, the Company reported net earnings of $58.6 million, or $0.66
per fully diluted share of common stock, on revenue of $1,333.0 million,
compared to net earnings in 1994 of $97.7 million, or $1.25 per fully diluted
share, on revenue of $1,177.8 million. Included in the 1995 results is a
$38.9 million extraordinary loss, or $0.56 per fully diluted share, resulting
from the refinancing of certain debt of Comdata following its acquisition by
the Company, $29.4 million of expenses associated with the acquisition of
Comdata, and $9.5 million of balance sheet adjustments discussed below.
For 1993, the Company reported a net loss of $252.1 million, or $3.92 per
fully diluted share, on revenue of $1,109.8 million. Included in the 1993
results is the write-off by Comdata of $230.3 million of goodwill and other
intangibles, a net restructure loss of $67.0 million, and an extraordinary
loss of $8.4 million resulting from the redemption of Ceridian's 8 1/2%
Convertible Subordinated Debentures Due June 15, 2011 ("8 1/2% Debentures").
Comdata provides funds transfer, regulatory permit and other services
to trucking companies at truck stops and other locations. Other trucking
company services include debit card issuance and authorization, telephone
services and backhaul information, all of which make use of the information
processing or telecommunications capabilities of Comdata's proprietary
computerized telecommunications network. Comdata also uses its network to
provide cash advance services to the gaming industry using credit cards and
debit services employing automated teller machines and similar devices. The
Company issued 20,472,176 shares of its common stock to effect the acquisition
of Comdata and reserved for issuance an additional 1,083,136 such shares in
connection with the assumption of outstanding Comdata stock options. Resumix
provides skills management software and services to enable an organization to
manage large volumes of resume data to identify qualified candidates for hire
and match them with available staffing needs, and to place current employees
in new jobs or projects. The Company issued 849,010 shares of its common
stock to effect the acquisition of Resumix and reserved for issuance an
additional 104,642 such shares in connection with the assumption of
outstanding Resumix stock options.
The following table sets forth revenue for the last three years for the
Company, its two industry segments, and the businesses that comprise those
segments. Additional financial information regarding the Company's industry
segments is contained in Note K, Segment Data, to the consolidated financial
statements.
1995 1994 1993
(Dollars in millions)
Information Services Segment
Arbitron $ 137.2 $ 121.3 $ 172.2
The Human Resources Group(1) 412.2 321.5 244.0
Comdata Holdings Corporation 274.1 243.3 212.3
Other Services(2) -- 5.4 20.0
Total Information Services 823.5 691.5 648.5
Defense Electronics Segment
Computing Devices International 509.5 486.3 461.3
Total Revenue $1,333.0 $1,177.8 $1,109.8
__________________
(1) The Human Resources Group consists of the Company's Employer Services
business (which includes the Company's Centre-file subsidiary), the
Company's Tesseract, Resumix, User Technology and MiniData subsidiaries,
and its Employee Advisory Resource business.
(2) Consists of revenue from TeleMoney Services and the Company's related
network and computer center operations (collectively, "TeleMoney"),
which were sold in May 1994.
The following table sets forth the percentage of total revenue by
industry segment, the gross profit of each industry segment as a percentage
of that segment's revenue, and certain items in the consolidated statements
of operations as a percentage of total revenue, for the periods indicated.
16
<PAGE>
<TABLE>
<S> <C> <C> <C>
Years Ended December 31,
1995 1994 1993
Revenue:
Information Services 61.8% 58.7% 58.4%
Defense Electronics 38.2% 41.3% 41.6%
Total revenue 100.0% 100.0% 100.0%
Gross profit:
Information Services 51.4% 51.1% 45.2%
Defense Electronics 21.5% 19.5% 18.4%
Total gross profit 40.0% 38.0% 34.1%
Operating expenses
Selling, general & administrative 23.2% 23.3% 22.4%
Research and development 4.1% 3.4% 3.3%
Other expense (income) 2.5% (0.3%) (0.3%)
Write-off of intangibles -- -- 20.8%
Restructure loss -- -- 6.0%
Total operating expenses 29.9% 26.4% 52.2%
Earnings (loss) before interest & taxes 10.1% 11.6% (18.1%)
Interest income (expense) (1.4%) (1.8%) (3.5%)
Earnings (loss) before income taxes 8.7% 9.8% (21.6%)
Income tax provision 1.4% 1.5% 0.4%
Net earnings (loss) before
extraordinary item 7.3% 8.3% (22.0%)
Extraordinary loss (2.9%) -- (0.8%)
Net earnings (loss) 4.4% 8.3% (22.7%)
</TABLE>
1995 Compared with 1994
The Company's revenue increased 13.2% from 1994 to 1995, reflecting
revenue growth in Information Services of 19.1% and in Computing Devices of
4.8%. In Information Services, the Human Resources Group ("HRG") reported a
revenue increase of 28.2%, Comdata an increase of 12.7% and Arbitron an
increase of 13.1%. About 30% of the revenue growth in HRG was due to three
acquisitions: the June 1994 purchase of Tesseract Corporation (Tesseract"),
which provides integrated payroll, human resource management and benefits
administration software systems; the December 1994 purchase of User
Technology Services, Inc., which provides training and other services to
effectively utilize information management systems; and the October 1995
purchase of the Centre-file business, which provides payroll processing
services and human resource management software in the United Kingdom.
Apart from these acquisitions, HRG's revenue increased 20.8% from 1994 to
1995, which included an increase in the average annual yield on
the investment of payroll tax filing deposits from 4.24% in 1994 to 5.95%
in 1995. Excluding also the additional revenue derived from increased
investment yields, HRG's revenue increased 15.3% from 1994 to 1995. The
majority of this revenue growth was in Employer Services, reflecting new
customer installations for payroll processing services, a 17.8% increase in
average invested tax filing balances to $1,021.6 million due to growth in
the tax filing customer base, and the 1994 purchase of a tax filing customer
base. Revenue also increased in Resumix, particularly from software
maintenance products and services. HRG's revenue growth was restrained
somewhat from 1994 to 1995, however, due to a 1.5 percentage point decrease
in the retention rate during 1994 for existing payroll processing customers.
Because of the significance to HRG's revenue of investment income from
tax filing deposits, and the interest rate sensitivity of that income, the
Company has entered into a series of seven interest rate collar transactions,
each with a notional amount of $100 million, during 1995. These collars,
which have remaining terms ranging from June 1996 to June 1999, have an
average interest rate floor of 5.2%. HRG's revenue and profitability tend
to be greater in the first and fourth quarters of each year because the
volume of payroll items processed increases in those quarters in connection
with employers' year-end reporting requirements, and because the amount of
tax filing deposits also tends to be greatest in the first quarter.
Comdata's revenue increase from 1994 to 1995 reflected 11.4% revenue
growth from transportation services and 24.8% revenue growth from gaming
services, increases that were partially offset by the February 1995 sale of
Comdata's retail services division from which Comdata had derived $8.4
million more revenue in 1994 than in 1995. Apart from the March 1995
acquisition of Trendar Corporation ("Trendar"), which provides fuel purchase
transaction processing systems to the transportation industry, revenue from
transportation services increased 4.7%, or $6.7 million, from 1994 to 1995,
reflecting increases in funds transfer revenue of 5.7% and in
telecommunications revenue of 20.5%, which were partially offset by the
discontinuance of certain products and by decreased sales of routing and
scheduling software. The growth in funds transfer revenue included a $2.6
million
17
<PAGE>
increase in revenue from unsettled transactions. The rate of revenue growth
from both funds transfer and telecommunications services was less than the
rate of growth in the number of transactions processed. In the case of funds
transfer services, this difference was due largely to a decrease in per
transaction fees for most funds transfer services and greater transaction
growth in lower fee services. These factors primarily reflect competitive
pressures and continuing consolidation in the trucking industry, as a result
of which larger trucking companies tend to have greater purchasing power and
to more often utilize lower fee direct billing transactions. In the case of
telecommunications services, the decrease in average fee per transaction was
largely due to rate reductions introduced at the end of 1994 to stimulate
transaction growth.
The $23.2 million increase in revenue from gaming services was primarily
attributable to an increase in the number of cash advance transactions at
gaming establishments, but also included a $2.9 million increase in revenue
from unsettled transactions and $1.9 million in revenue growth from debit
services involving automated teller machines. The majority of the gaming
transaction growth occurred in gaming locations outside of the traditional
casino markets in Nevada and Atlantic City, and was attributable to new
accounts that were added during 1994 and 1995. Comdata's revenue from gaming
services tends to be greater in the second and third quarters of each year,
corresponding to a higher level of vacation travel during those periods of
the year.
Comdata's services for the trucking and gaming industries require it
to process millions of transactions annually over its network. In 1995,
approximately 48 million transactions were processed, the vast majority
involving the transfer of approximately $9.1 billion of funds. In a very
small portion of these transactions, final settlement may not occur or drafts
and settlements payable may not clear in the ordinary course of business,
resulting in Comdata receiving unapplied funds in excess of funds transmitted
on behalf of customers and their affiliates. It is Comdata's policy to take
the amount of such unapplied funds into revenue as earned for goods and
services rendered if the transactions are not definitively settled within a
period of twelve months through the assertion of valid claims. It has been
Comdata's experience that an insignificant number of claims for unsettled
funds are asserted after such twelve month period. The amount of unsettled
transactions included in Comdata's 1993, 1994 and 1995 revenue was $9.2
million, $8.7 million and $14.2 million, respectively. The increase from
1994 to 1995 was primarily due to an increase in the volume of transactions
processed and the application of this policy to certain categories of
transactions to which it had not previously been applied. As a result of
Comdata's inability to settle definitively all funds transfer transactions,
it may have contingent liabilities for unapplied fund balances, the magnitude
of which cannot be determined. In certain cases, Comdata may have in its
possession unclaimed or abandoned funds that may be payable to governmental
authorities under state escheatment laws. Based on its past experience,
Comdata does not believe that escheatment laws create material liabilities
for it, although no assurances can be given that such liabilities will not
be asserted in the future.
Arbitron's revenue increased 13.1% from 1994 to 1995. Revenue from
radio audience measurement services and analytical software, which comprises
approximately 85% of Arbitron's revenue, increased 8.8% due to an increased
rate of customer renewals, a higher percentage of syndicated ratings
customers also subscribing for analytical software applications, and price
increases related to increases in the sample size for radio surveys. The
revenue increase from radio was complemented by a revenue increase resulting
from the Company's year-end 1994 exchange of its interest in the Competitive
Media Reporting ("CMR") joint venture for an interest in the Scarborough
Research Partnership ("SRP"). As a result of this transaction, Arbitron no
longer derives revenue from the sale of commercial monitoring services
provided by CMR, but SRP's results are consolidated with Arbitron's.
The revenue increase for Computing Devices from 1994 to 1995 was
attributable to its international operations, with revenue from its
Canadian operations, which accounted for 48.6% of Computing Devices' total
1995 revenue, increasing 8.7% and revenue from its United Kingdom operations,
which accounted for 7.6% of Computing Devices' 1995 revenue, increasing 30.4%.
Revenue from Computing Devices' U.S. operations decreased 2.6% in total, but
6.5% after excluding the purchase of Paragon
18
<PAGE>
Imaging, Inc. in December 1994. The revenue increase in the Canadian
operations was primarily due to its ground systems products, particularly a
multi-year contract to develop and produce a light armored vehicle
reconnaissance system, and the Iris contract to provide a communications
system to the Canadian Department of National Defence. Although revenue
from the Iris contract increased 6.5% from 1994 to 1995, performance under
that contract has progressed to the point that the Company expects revenue
from the contract to be essentially unchanged in 1996 and to decline
moderately beginning in 1997. The revenue increase in the United Kingdom
operations in large measure reflected progress on a multi-year
reconnaissance systems contract.
Gross Margin. The Company's gross margin improvement from 38.0% in
1994 to 40.0% in 1995 reflected margin improvement in both industry segments,
particularly Computing Devices, and also the relatively greater revenue
growth in the Information Services segment, which has higher gross margins
than Computing Devices. The increase in Information Services' gross margin
from 51.1% in 1994 to 51.4% in 1995 reflected not only gross margin
improvements in Arbitron and HRG, but also the 1994 sale of TeleMoney, which
had a very low gross margin. Partially offsetting these factors was a
decrease in Comdata's gross margin. Arbitron's improvement was primarily a
function of revenue mix, as low margin revenue from the sale of commercial
monitoring services provided by CMR did not continue in 1995 as a result of
the CMR/SRP transaction, and higher margin revenue from sales of radio
audience measurement services and analytical software increased.
The gross margin improvement in HRG was due principally to increased
investment yields on tax filing deposits, generally higher gross margin (but
not operating margin) levels in businesses acquired during 1994 and 1995, and
gross margin increases in the smaller businesses in this group. Offsetting
much of this improvement were increased levels of costs in Employer Services'
tax filing and payroll processing operations. The increased costs in the tax
filing operation were generally associated with increased staffing to deal
with the rapid growth in business volume and an increased level of penalties
and interest payments to taxing authorities. The increased costs and reduced
gross margin in the payroll processing operation primarily relate to a longer
than anticipated period of time to transition to a newly established national
customer service center, incremental costs associated with Employer Services'
internal development effort to upgrade its payroll processing software
(referred to as "CII") by adapting the Tesseract payroll processing software
to run in Employer Services' multi-customer data center environment and with
the corresponding project to consolidate payroll processing utilizing the CII
software in centralized facilities, the previously mentioned decrease in
customer retention rate during 1994, and increased costs of supplies,
particularly paper and forms.
The most significant factors in the decrease in Comdata's gross margin
were the relatively greater increase in revenue from gaming services, which
has a lower gross margin than transportation services revenue, the increase
in agent commissions paid to locations offering gaming cash advance services,
and $4.0 million in 1995 balance sheet adjustments that included an increase
in bad debt expense. Agent commissions increased from $43.4 million, or
46.3% of consumer and gaming revenue, in 1994 to $55.7 million, or 47.7% of
such revenue, in 1995, reflecting both the increase in the volume of gaming
transactions and competitive pressures. Partially offsetting the impact of
the foregoing factors on Comdata's gross margin was the February 1995 sale
of the retail services division, which had a very low gross margin.
The improvement in Computing Devices' gross margin from 19.5% in 1994
to 21.5% in 1995 was due to improved gross margins in its U.S. operations,
reflecting the completion of certain contracts, the movement of other
contracts from the development phase into the production phase, and the
effects of reduced employment levels on existing fixed price contracts.
Although the gross margin on the Iris contract increased from 1994 to 1995,
overall gross margins in Computing Devices' international operations were
little changed and were generally lower than in the U.S. operations. In
large measure, this reflects an increasing amount of revenue from contracts
with a large subcontractor content, which tend to have lower gross margins.
19
<PAGE>
Operating Expenses. The most significant factor in the increase in the
Company's operating expenses as a percentage of revenue from 1994 to 1995 was
the $29.4 million of expenses associated with the acquisition of Comdata.
Apart from this factor, operating expenses for the Company increased from
26.4% of revenue in 1994 to 27.7% of 1995 revenue. This increase reflected
increases in both Computing Devices and Information Services (the latter
including $5.5 million in 1995 Comdata balance sheet adjustments), and the
relatively greater revenue growth in Information Services, which has higher
operating expenses as a percentage of revenue than Computing Devices.
The slight decrease in the Company's selling, general and administrative
("SG&A") expenses as a percentage of revenue reflected a decrease in
Information Services from 30.6% to 29.6% of revenue and a $3.2 million
decrease in such expenses not attributable to either industry segment,
factors that were substantially offset by the revenue mix issue noted
earlier and an increase in Computing Devices' SG&A expenses from 10.7% to
11.4% of revenue. Information Services' selling expense as a percentage of
revenue decreased 1.2 percentage points, primarily reflecting increased
concentration of Employer Services' sales and marketing efforts on medium
and large employers and increased revenue with which there is associated a
lesser percentage of selling expense, such as revenue attributable to
increased interest rates on tax filing deposits. General expense was
essentially unchanged as a percentage of revenue for Information Services
despite an increase of $6.0 million in amortization of goodwill and other
intangible assets due to acquisitions made during 1994 and 1995, and
Comdata's 1995 write-off of $1.9 million of goodwill related to the 1994
acquisition of RoTec, a developer of routing and scheduling software. The
comparative general and administrative expenses for the Company as a whole
were also affected by an increase in compensation expense of $5.4 million
during 1995 associated with the Company's performance restricted stock plan,
primarily as a result of the Company's favorable stock price performance
during 1995. Also contributing to the increase in Computing Devices' SG&A
expenses were increased amortization expense attributable to the December
1994 acquisition of Paragon Imaging and expenditures related to quality
improvement programs.
R&D expense increased from 2.5% to 3.2% of revenue in Computing Devices
from 1994 to 1995, and from 1.7% to 2.0% of revenue in Information Services
over the same period. The increase in Computing Devices primarily involved
expenditures to upgrade and enhance existing technologies, while the increase
in Information Services was largely due to the June 1994 acquisition of
Tesseract and 1995 charges related to development costs in connection with
Comdata's Windows-based management information software for trucking companies.
Apart from the previously mentioned $29.4 million in expenses related
to the Comdata acquisition, other expense in 1995 primarily consisted of
Arbitron's partner's share of SRP's income, Computing Devices' share of the
losses of a commercial satellite joint venture, and Comdata's loss on the
sale of its retail services division.
Earnings Before Interest and Taxes. The Company's earnings before
interest and taxes ("EBIT") decreased $2.0 million, or 1.5%, from 1994 to
1995. Information Services' EBIT decreased $8.1 million, from 16.9% percent
of revenue to 13.2% of revenue. Partially offsetting this decrease was a
$3.1 million increase in Computing Devices' EBIT, from 6.3% to 6.6% of
revenue, and a $3.0 million decrease in expenses not allocated to either
industry segment, in large measure due to the compensation expense
associated with the Company's restricted stock plan mentioned earlier.
Apart from the $29.4 million of Comdata acquisition expenses and accruals,
the Company's EBIT would have increased $27.4 million, or 20.0%. Computed
on that basis, the Company's EBIT as a percentage of revenue increased from
11.6% in 1994 to 12.3% in 1995, and Information Services' EBIT as a
percentage of revenue decreased slightly from 16.9% to 16.8%, reflecting
operating margin improvement in HRG that was offset by operating margin
decreases in Comdata, due in large measure to the 1995 balance sheet
adjustments, and to a much lesser degree in Arbitron.
20
<PAGE>
Interest Income and Expense. The $1.4 million increase in interest
income from 1994 to 1995 primarily resulted from higher interest rates
during 1995. The $1.6 million decrease in interest expense from 1994 to
1995 generally reflected slightly lower debt levels during the year.
Taxes and Net Operating Loss Carryforwards. The Company's income
tax provision increased from $4.0 million in 1993 to $17.5 million in 1994,
and to $18.7 million in 1995. Amounts in the latter two years primarily
represent tax charges related to Comdata prior to its acquisition by
Ceridian, and amounts in all three years include tax charges related to
Ceridian's international operations. Comdata's pre-acquisition effective
tax rate increased during 1994 as a result of the utilization of most of
Comdata's net operating loss carryforwards for U.S. federal income tax
purposes ("NOLs"). Ceridian estimates that it currently has NOLs of
$1,019 million, which may be used, to the extent available, to offset
regular taxable income of the Company during the carryforward period
(through 2008). If unused, the Company's NOLs would begin to expire in a
modest amount in 1997. Although the Company expects that it will utilize
its NOLs prior to their expiration, the losses which the Company has
reported in three of the last five years have caused the Company to maintain
a valuation allowance equal to the net deferred tax asset attributable to
the existence of the Company's NOLs. The Company also has accrued $243
million of expenses for financial statement reporting purposes which are
expected to be deductible for federal income tax purposes in future
taxable years.
Section 382 of the Internal Revenue Code of 1986, as amended, contains
complex rules that place an annual limit on the amount of NOLs that a
company may utilize after an "ownership change." Generally, an ownership
change occurs on a given date if the aggregate of the increases in the
percentage of stock owned by certain stockholders (generally those owning
during the preceding three years 5% or more of the stock of the Company and
those receiving stock in a new issuance during that three-year period) over
the lowest percentage owned by such stockholders over the past three years
exceeds 50 percentage points. Because the amount of the annual limit is
computed by multiplying the equity value of the Company (generally the
Company's market capitalization reduced by capital contributions made to
the Company during the previous two years) immediately prior to an ownership
change by the then applicable federal long-term tax exempt rate, the higher
the Company's equity value at the time of an ownership change, the higher
the resulting annual NOL limitation applicable to the Company. Although the
Company does not believe that such an annual limitation on NOLs is currently
applicable, events could occur, either within or outside the control of the
Company, that would cause an ownership change and trigger the limitations of
Section 382.
Extraordinary Loss. The Company's 1995 extraordinary loss of $38.9
million ($40.5 million on a pre-tax basis) represents $33.6 million in costs
associated with the repurchase pursuant to a tender offer of substantially
all of the $130 million in principal amount of Comdata's 12.5% Senior Notes
due 1999 ("Senior Notes") and the $75 million in principal amount of
Comdata's 13.25% Convertible Subordinated Debentures due 2002 ("13.25%
Debentures") during December 1995, the redemption of the $6.2 million
remaining principal amount of Comdata's 11% Junior Subordinated Extendible
Notes due 1997 ("Junior Notes"), and the in-substance defeasance of such
debt that remained outstanding at December 31, 1995, as well as the
write-off of $6.9 million of deferred financing costs associated with such
debt and Comdata's revolving credit agreement that was cancelled in
December 1995.
1994 Compared with 1993
Revenue. The 6.6% increase in Information Services' revenue from 1993
to 1994 was a function of 31.8% revenue growth in HRG and 14.6% revenue
growth in Comdata being offset in large measure by decreased revenue from
Arbitron and the sale of the TeleMoney business in April 1994. Slightly
more than half of HRG's revenue growth was attributable to acquisitions,
most significantly the October 1993 acquisition of the Systems Tax Service
("STS") tax filing business and the June 1994 acquisition of Tesseract.
Apart from acquisitions, HRG's revenue increased 15.8% from 1993 to 1994,
primarily reflecting new payroll processing customer installations and an
increased retention rate during 1993 for existing customers, and increased
payroll
21
<PAGE>
tax filing revenue, due largely to a higher percentage of Employer
Services' payroll processing customers also utilizing its tax filing
service. The investment income component of the revenue increase reflects
average balances of payroll tax filing deposits in 1994 that were
approximately 25% greater than Employer Services' and STS' combined balances
in 1993, and an average yield on investments that was 4.23% compared to
4.00% in 1993. Also contributing to HRG's revenue growth was an a 60%
increase in Resumix' revenue.
Comdata's $31.0 million revenue increase from 1993 to 1994 reflected
12.5% revenue growth, or $15.5 million, from transportation services and
23.4% revenue growth, or $17.8 million, from consumer and gaming services.
Revenue from Comdata's retail services division, which was sold in February
1995, decreased $2.3 million from 1993 to 1994. About 70% of the revenue
growth in transportation services was due to the December 1993 acquisition
of Saunders, Inc., which provides funds transfer, fuel tax, licensing and
permit services, and the February 1994 acquisition of the assets of RoTec.
Apart from acquisitions, transportation services revenue increased 3.6%, due
primarily to revenue growth of 7.1% in funds transfer services. Restraining
transportation services' revenue growth in 1994 was a revenue decrease of
$2.6 million from the discontinuance of Comdata's in-cab communication
service. The increase in revenue from gaming services was primarily due to
an increase in the number of cash advance transactions at gaming
establishments, including gaming locations outside of the traditional casino
markets in Nevada and Atlantic City. These increases were partially offset
by a $2.9 million reduction in revenue from nongaming locations resulting
from credit card association regulations limiting Comdata's ability to do
business in nongaming locations.
The Arbitron revenue decrease of $50.8 million from 1993 to 1994 was
primarily attributable to the discontinuance of its television ratings
service, which had provided $44.9 million of revenue during 1993. Also
contributing to the decrease was the year-end 1993 transfer from Arbitron
to the CMR joint venture of certain contracts for commercial monitoring
services, which decreased Arbitron's revenue in 1994 by $13.8 million.
Partially offsetting this decrease was a revenue increase of approximately
7% in 1994 in the other aspects of Arbitron's business.
Computing Devices' revenue increased $25.0 million, or 5.4%, from 1993
to 1994. Constraining the revenue increase were the near completion at
year-end 1993 of a contract to manufacture equipment for Control Data
Systems, Inc., which was spun-off from the Company in mid-1992, and the
July 1993 sale of the Company's Barrios Technology subsidiary, activities
which together provided $29.6 million more revenue in 1993 than in 1994.
Apart from these items, Computing Devices' revenue increased 12.7% from
1993 to 1994. About 90% of this revenue increase was attributable to a
$49.9 million increase in revenue from the Iris contract. Computing
Devices' ongoing U.S. operations also reported an increase in revenue
of 6.6% from 1993 to 1994.
Gross Margin. The Company's gross margin improvement from 34.1%
in 1993 to 38.0% in 1994 was primarily due to an increase in Information
Services from 45.2% to 51.1%. The most significant factor in this
improvement in Information Services was the discontinuance of Arbitron's
unprofitable syndicated television ratings service at the end of 1993.
The Company estimates that this discontinuance contributed 2.8 percentage
points of the segment's gross margin improvement. Two other significant
factors in the gross margin improvement in Information Services were the
previously mentioned decrease in Arbitron's commercial monitoring revenue
(the cost of such revenue having been a 90% royalty payable to the CMR joint
venture) and the sale of TeleMoney in May 1994. These two factors
contributed an estimated 1.8 percentage points of the segment's gross margin
increase. The balance of the Information Services improvement was
attributable to gross margin improvements in HRG and Comdata. In HRG, margin
improvements in its tax filing operations and in Resumix and as a result of
the acquisition of Tesseract were substantially offset by decreased gross
margins in payroll processing operations and an increase in lower margin
revenue associated with a human resources information software consulting
service. The margin improvement in tax filing operations was primarily due
to the consolidation of Ceridian's tax filing activity on STS' more highly
22
<PAGE>
automated system and increased investment income from tax filing balances.
The margin decrease in payroll processing was due largely to costs to
establish and equip a national customer service center and costs of related
actions to upgrade communications systems.
The increase in Computing Devices' gross margin from 1993 to 1994 was
attributable to a four percentage point improvement in its U.S. operations,
primarily reflecting actions taken in 1993 to reduce employment levels and
a reduction in low margin revenue from the manufacture of equipment for
Control Data Systems, Inc. Lessening Computing Devices' overall gross margin
improvement was a decrease in gross margin in its U.K. operations, primarily
reflecting provisions established in 1994 for costs to complete certain
contracts, including a development contract for an avionics system for the
Eurofighter 2000 aircraft, and the increase in the relative revenue
contribution from the Iris contract. Although the gross margin on the Iris
contract improved from 1993 to 1994, it has lower gross margins than most
other aspects of Computing Devices' business.
Operating Expenses. The Company's operating expenses decreased from
52.2% of revenue in 1993 to 26.4% of revenue in 1994. The Company's 1993
operating expenses included a $230.3 million fourth quarter write-off by
Comdata of goodwill and certain other long-lived intangible assets,
primarily related to its transportation business, based on Comdata's
assessment of future operations of the businesses involved. The effect of
this write-off was to reduce annual amortization expense for Comdata
beginning in 1994 by about $8 million. Also included in 1993 operating
expenses was a net restructuring loss of $67.0 million, which included
$75.9 million in restructuring charges for Information Services, $5.5
million in charges for Computing Devices, and a net restructure gain of
$14.4 million not attributable to either industry segment. Information
Services' charges included $57.0 million resulting from the October 1993
decision to discontinue Arbitron's syndicated television ratings service.
The principal components of this charge involved the write-off of
metering and other assets, severance and other costs related to the
termination of approximately 700 employees, and lease and other obligations
related to facilities and equipment. The discontinuance of this unprofitable
service is estimated to have benefited the Company's 1994 results by about
$6 million. Information Services' 1993 restructuring charges also included
$18.9 million of charges recorded by HRG, primarily related to actions to
discontinue payroll data processing in Employer Services' district offices
in conjunction with a program to consolidate such processing in centralized
processing facilities and actions to discontinue most telephonic customer
support in district offices in conjunction with a program that consolidated
such support activities into a single national center. The principal
components of the Employer Services charges included severance and other
costs related to the termination of about 330 employees, incremental costs
related to the reduction of payroll processing and telephonic customer
support capabilities in district offices, and lease and other obligations
related to facilities and equipment.
The restructuring charges recorded by Computing Devices in the fourth
quarter 1993 involved actions taken to reduce employment levels by 205
employees in its U.S. and U.K. operations. Although these actions resulted
in the elimination of approximately $8 million of annual employment expense,
they were not expected to improve profitablity by a comparable amount, but
rather were undertaken to enable Computing Devices to maintain competitive
cost and expense levels. Because pricing of government contracts is
typically predicated on a concept of "allowable" costs, actions to reduce
costs tend to improve profitability only on fixed price contracts currently
in place.
The 1993 net restructuring gain not attributable to either industry
segment primarily consisted of a gain resulting from the Company's October
1993 receipt of a $35.5 million refund of taxes and related interest from
the Internal Revenue Service. The refund relates to restructure losses
recorded by the Company during the 1980s.
Apart from the impact of the 1993 intangibles write-off and
restructuring, the Company's operating expenses increased from 25.4% of
revenue in 1993 to 26.4% of revenue in 1994. As a percentage of revenue,
SG&A expenses for the Company increased from 22.4% to 23.3%, due to an
increase in Information Services from 29.5% to 30.6% of revenue, and a
$2.4 million increase in such expenses
23
<PAGE>
not attributable to either industry segment, due largely to compensation
expense associated with the Company's restricted stock plan that was not
allocated to the industry segments in the first half of 1994. Information
Services' SG&A expense increase as a percentage of revenue was attributable
to Arbitron, reflecting the sizeable decrease in Arbitron's revenue and the
proportionately smaller decrease in its SG&A expenses. In part this reflects
the past dependence of Arbitron's radio and television services on a common
support structure. Also contributing to the increase were provisions
established in 1994 for certain claims and litigation involving Arbitron.
SG&A expenses as a percentage of revenue did, however, decrease in HRG and
Comdata from 1993 to 1994. Computing Devices' SG&A expenses were unchanged
from 1993 to 1994 as a percentage of revenue.
The Company's R&D expense increased from 3.3% to 3.4% of revenue from
1993 to 1994. In the Information Services segment, R&D expense increased
modestly in dollars and as a percentage of revenue (from 1.4% to 1.7%), as
increased R&D spending in HRG, primarily due to the acquisition of
Tesseract, was substantially offset by the discontinuance of Arbitron's
television ratings service and the sale of TeleMoney. R&D expense also
increased in Computing Devices, both in dollars and as a percentage of
revenue (from 2.0% to 2.5%), primarily due to concept development efforts
intended to attract additional government funding for product development
efforts.
Earnings (Loss) Before Interest and Taxes. The Company's earnings
before interest and taxes ("EBIT") in 1994 totaled $136.7 million as
compared to a loss before interest and taxes of $201.4 million in 1993.
Excluding the $230.3 million write-off of intangibles and the $67.0 million
net restructure loss from 1993 results, the Company's EBIT increased $40.8
million, or 42.5%, from 1993 to 1994, from 8.6% of revenue in 1993 to 11.6%
of revenue in 1994. Information Services was the primary contributor to this
improvement, with EBIT (computed without regard to the intangibles write-off
or restructuring) increasing $40.8 million, or 53.8%, from 1993 to 1994, from
11.7% of revenue in 1993 to 16.9% of revenue in 1994. Computing Devices'
EBIT (without regard to 1993 restructuring) increased $3.6 million, or 13.5%,
from 1993 to 1994, and as a percentage of revenue from 5.9% to 6.3%.
Interest Income and Expense. The $14.6 million decrease in interest
expense from 1993 to 1994 principally reflected the redemption at the end of
1993 of $163.5 million in principal amount of Ceridian's 8 1/2% Debentures
with the majority of the proceeds of the sale of Ceridian's 5 1/2%
Cumulative Convertible Exchangeable Preferred Stock ("5 1/2% Preferred
Stock"). The annual dividend obligation in connection with the 5 1/2%
Preferred Stock is $13.0 million. The $2.2 million increase in interest
income over the same period reflected higher balances of cash and short-term
investments during 1994, primarily as a result of the 5 1/2% Preferred Stock
offering, and generally increasing interest rates during 1994.
Financial Condition
The Company's cash and short-term investments decreased from $192.4
million at December 31, 1994 to $151.7 million at December 31, 1995.
Approximately $81.1 million of the Company's cash and short-term investments
at December 31, 1995 were the U.S. dollar equivalent of unhedged Canadian
dollar cash and short-term investments held by the Company's Canadian
subsidiary. The Company expects that this balance in Canada will not
change materially during 1996.
During 1995, operating cash flows provided $192.2 million of cash,
compared to $62.5 million in 1994 and $56.3 million in 1993. Net earnings
adjusted to a cash basis provided cash of $163.5 million in 1995, $146.3
million in 1994 and $75.2 million in 1993. Reflected in the $46.4 million
of cash provided in 1995 in connection with working capital items was a
$52.7 million increase in customer advances and deferred income, primarily
reflecting Computing Devices' receipt of customer advances as a result of
achieving significant milestones under the Iris contract, a $34.2 million
increase in Comdata's drafts and settlements payable, and a $42.0 increase
in other current liabilities, primarily due to accruals related to the
Comdata acquisition. Comdata's drafts and settlements payable is
significantly affected by the day of the week on which the accounting
period ends, with higher balances on weekends because of the large volume
24
<PAGE>
of weekend transactions in its gaming services. Reducing the 1995 cash
provided by working capital items was a $73.1 million increase in trade
and other receivables, primarily reflecting increases in Comdata's
receivables related to 1995 ending on a Sunday, increases in Computing
Devices' unbilled receivables, principally related to the Iris contract,
and increases in Employer Services' receivables reflecting end of year
billings.
The following table summarizes the cash payments made during the
three year period ended December 31, 1995 with respect to restructuring
reserves, as well as the Company's estimate of remaining restructuring
reserves expected to require cash outlays during 1996.
Restructure Cash Payments
Actual Expected
Category 1993 1994 1995 1996
Severance and Related Costs $17.0 $14.7 $2.0 $7.3
Equipment Lease Termination 4.0 4.9 0.8 0.6
Vacant Space 23.4 16.8 9.0 7.6
Costs to Dispose of Businesses 5.1 6.6 1.0 0.2
Legal Costs 4.3 4.3 1.5 1.7
Environmental Costs 1.1 1.2 1.4 1.0
Duplicate Processing/Support -- 3.2 1.5 0.6
Other 4.8 2.0 1.0 0.2
Total $59.7 $53.7 $18.2 $19.2
Of the $51.2 million of restructuring reserves expected to require
cash outlays after 1996, the largest portions relate to obligations with
respect to vacant space (generally payable during 1997-1999), the obligation
to indemnify the purchaser of the Company's former disk drive manufacturing
subsidiary against certain environmental remediation costs related thereto
(expected to be payable over ten years or more), and defense or settlement
costs related to age discrimination litigation involving the Company (see
Note N, Legal Matters, to the consolidated financial statements).
The following table summarizes the major components of restructuring
and discontinued operations reserves established and utilized during the
three year period ended December 31, 1995, as well as the balance of such
reserves at that date. The December 31, 1992 reserve balance of $140.7
million shown in the table principally involved obligations relating to
the disposition of a computer chip manufacturing operation, the sale of
a disk drive manufacturing subsidiary (including under an indemnification
provided to the purchaser for certain environmental liabilities), the
Company's investments in wind energy ventures and Business and Technology
Centers, and excess facilities.
<TABLE>
Restructure and Discontinued Operations Reserves (1)
<S> <C> <C> <C> <C> <C> <C>
Employer Computing
(Dollars in millions) Arbitron Arbitron Services Devices
TV ScanAm Consolidation Severance Other Total
Reserve Balance 12/31/92 $ - $ 0.6 $ 6.0 $ 1.1 $ 133.0 $ 140.7
1993 Restructure Loss (1) 57.0 18.9 5.5 0.3 81.7
Cash Payments (4.1) (0.6) (4.0) (6.1) (44.9) (59.7)
Asset Write-Off (26.8) (15.0) (41.8)
Adoption of FAS 112 (2) (12.0) (12.0)
Other Non-cash Items (0.9) (0.9)
Reserve Balance 12/31/93 26.1 - 20.9 0.5 60.5 108.0
1994 Restructure Loss (1) 15.0 15.0
Sale of TeleMoney (3) 14.1 14.1
Cash Payments (17.4) (8.5) (0.5) (27.3) (53.7)
Other Non-cash Items 2.4 2.5 4.9
Reserve Balance 12/31/94 11.1 - 12.4 - 64.8 88.3
Cash Payments (3.9) (0.7) (13.6) (18.2)
Other Non-cash Items 0.3 0.3
Reserve Balance 12/31/95 $ 7.5 $ - $ 11.7 $ - $ 51.2 $ 70.4
(1) Does not include restructure gains of $7.6 in 1992, $14.7 in 1993 and $15.0 in 1994.
(2) Represents the reclassification to other liabilities of FAS 106 and FAS 112 obligations.
(3) Represents obligations undertaken in connection with the sale of TeleMoney.
</TABLE>
25
<PAGE>
Investing activities utilized $109.4 million of cash during 1995,
including expenditures of $76.8 million for business acquisitions,
principally Centre-file ($52.1 million) and Trendar ($12.7 million).
Investing activities in 1995 also included $53.0 million expended for
capital assets, principally in Employer Services, and $51.2 million expended
for deferred assets, principally the development of the CII software in
Employer Services. Partially offsetting these 1995 expenditures were $54.6
million in cash received from the liquidation of short-term investments,
$10.6 million received in final payment of a note received in connection
with the 1989 sale of the Company's disk drive subsidiary, and $6.4 million
from the sale of Comdata's retail services division and a Computing Devices
facility in the United Kingdom. The net use of $45.6 million of cash for
investing activities during 1994 reflected expenditures of $69.0 million for
business acquisitions, principally Tesseract, $45.9 million for capital
assets and $13.5 million for deferred assets, principally internally
developed software, as well as proceeds of $48.8 million from the
liquidation of short-term investments and $33.5 million from the sale of
TeleMoney and the final settlement of obligations under a tax sharing
agreement with Commercial Credit Company. The increase in expenditures
for deferred assets from 1994 to 1995 was primarily due to the costs, which
are incremental to normal operations, of the CII software development effort.
As of December 31, 1995, the net amount of these capitalized costs for CII
was $44.2 million, an increase of $38.9 million during 1995.
The Company's capital expenditures presently planned for 1996 total
approximately $62 million, with the majority of the expected increase over
the 1995 level of spending to be in Computing Devices. Planned capital
expenditures for 1996 generally involve equipment and leasehold improvements
to expand and improve Employer Services' communications and service delivery
capabilities, equipment to support Computing Devices' R&D efforts, and
routine replacements and upgrades for existing equipment and systems. The
Company also expects to capitalize in 1996 approximately $38 million of
software development and related costs, primarily to complete the CII
project and to develop human resource information software for
client/server environments.
Financing activities utilized $69.1 million of cash during 1995,
due principally to the payment of $244.4 million to retire Comdata's Senior
Notes and 13.25% Debentures and to redeem its Junior Notes, and to the
receipt of $195.0 million of cash from net borrowings under the credit
facility established by the Company in December 1995. Financing activities
utilized $8.6 million of cash in 1994, primarily reflecting the receipt in
January of an additional $15.5 million in net cash proceeds from the sale by
the Company of additional shares of 5 1/2% Preferred Stock as a result of the
underwriters' exercise of their over-allotment option, the payment of $13.0
million in dividends on that stock, and the net repayments under revolving
credit and overdraft lines of $13.5 million. Financing activities produced
$47.9 million of cash during 1993, primarily from the receipt of $213.0
million of net cash proceeds from the public offering of the 5 1/2%
Preferred Stock, $168.1 million of which was used to redeem the Company's
remaining 8 1/2% Debentures.
The portion of the Company's revenue derived from operations outside
of the U.S. (Computing Devices' operations in Canada and the U.K. and
Centre-file) has increased from 19.4% in 1993 to 21.9% in 1994 to 22.2%
in 1995. Despite this trend, the Company believes that its foreign
currency exposure is relatively small and largely limited to a risk that
profits of its overseas operations denominated in Canadian dollars or pounds
will be worth less in U.S. dollars if those currencies weaken against the
U.S. dollar. About 86% of the Company's non-U.S. revenue is from the
Canadian operations, and about 84% of the revenue of the Canadian
operations is provided by contracts, principally the Iris contract, which
are denominated in Canadian dollars but contain provisions which protect
the Company from any currency exposure on non-Canadian dollar costs. In
the case of the Company's U.K. operations, which provide the remainder of
non-U.S. revenue, approximately 92% of their revenue and costs are based in
pounds. Approximately 13% of the Company's non-U.S. revenue is U.S.
dollar based.
During 1994, the Company's Board of Directors authorized the Company
to repurchase up to 2,000,000 shares of its common stock in open market
26
<PAGE>
or privately negotiated transactions, principally to provide shares to be
issued under the Company's employee stock plans. Purchases may be made from
time to time at the discretion of Company management, depending on share
price and market conditions. As of December 31, 1995, the Company had
repurchased 262,000 shares in the open market, including 192,000 shares
during 1995, at an average purchase price of $32.66.
On December 12, 1995, Ceridian concluded a $325 million revolving credit
facility with a commercial bank syndicate, with Bank of America as agent.
The credit facility is unsecured but is guaranteed by Comdata and its Comdata
Network subsidiary, and has a final maturity of November 30, 1998. The full
amount of the credit facility may be utilized for revolving loans and up to
$75 million of the credit facility may be used to obtain standby letters of
credit. The credit facility was utilized to finance Comdata's tender offers
for its Senior Notes and 13.25% Debentures, and the redemption of its Junior
Notes. The pricing of the credit facility for both loans and letters of
credit is determined based on the Company's senior unsecured debt ratings.
Current ratings enable the Company to obtain revolving loans either at prime
rate or at 65 basis points above 1, 2, 3 or 6-month IBOR, which means that
the $195 million in loans outstanding under the facility at December 31,
1995 bore an annual interest rate of approximately 6.3%. At that same
date, there were also $1.5 million in letters of credit outstanding under
the facility.
Under the terms of the credit facility, Ceridian must satisfy various
financial tests on a consolidated basis. The Company must maintain a
minimum consolidated net worth which is subject to increase based on the
Company's consolidated net earnings after December 31, 1995 and certain
equity contributions to the Company after the same date. The Company is
also required to maintain a fixed charge coverage ratio of 2.25 to 1 on a
rolling four quarters basis, and to limit consolidated debt to three times
earnings before interest, taxes, depreciation and amortization ("EBITDA")
minus capital expenditures and dividends on the Company's 5 1/2% Preferred
Stock on a rolling four quarters basis. As of December 31, 1995, the
Company was in compliance with the net worth test by $42.6 million, its
fixed charge coverage ratio was 2.30 to 1, and its permitted debt ratio
was 2.59 to 1. So long as the Company's margin of compliance with the
latter two financial tests is relatively small, the Company's ability to
fully utilize the credit facility will be correspondingly limited. At
December 31, 1995, for example, the permitted debt ratio would have
accommodated an additional $32.8 million of borrowing under the credit
facility, while the fixed charge coverage ratio would have accommodated
additional borrowings under the credit facility whose debt service was no
greater than about $1 million annually. Because these are rolling four
quarter tests, the Company expects that a combination of factors,
principally increased earnings and reduced interest expense in 1996 as
compared to 1995 (see "1996 Financial Outlook" below), will progressively
permit more extensive utilization of the credit facility if the need arises.
The credit facility also limits liens, contingent obligations, operating
leases, minority equity investments and divestitures, and the Company was
in compliance with all such limitations at December 31, 1995.
The Company's liquidity needs are expected to be met from existing
cash balances, cash flow from operations and borrowings under the credit
facility. Cash flow from operations of the combined entity is expected to
benefit from reduced debt service costs, as described above, and
utilization of the Company's NOLs. Given the expected negative arbitrage
between the interest rates applicable to the Company's cash balances and
interest rates under the credit facility, the Company expects that it will
commonly utilize excess cash to reduce amounts outstanding under the credit
facility. The Company may also utilize cash from these sources to make
acquisitions. The Company expects to remain active in this regard and to
concentrate its acquisitions in areas related to or which complement the
Information Services segment. In structuring any such acquisitions, the
Company would seek to emphasize the use of its common stock as acquisition
consideration in order to make pooling-of-interests accounting
treatment available.
27
<PAGE>
1996 Financial Outlook
The statements regarding the outlook for the Company's businesses
contained in this section, elsewhere in this Annual Report to Stockholders
and in the Company's Annual Report on Form 10-K for 1995 into which this
Management's Discussion and Analysis is incorporated are forward-looking
statements based on current expectations, and entail various risks and
uncertainties that could cause actual results to differ materially from
those expressed in such forward-looking statements. This section also
identifies important factors known to the Company that could cause such
material differences.
Without regard to any acquisitions that may be made by the Company
during 1996, the Company expects 1996 revenue to increase approximately
12% over 1995, to about $1,490 million. This increase reflects expected
revenue growth in Information Services of about 16%, and in Computing
Devices of about 4%. The Company's 1996 net earnings are expected to be
approximately $2.20 per share on a fully diluted basis. Contributing to
the projected increase in earnings is an expected $20 million reduction
in interest expense from 1995 to 1996 (assuming no borrowings to finance
acquisitions during 1996 and relatively constant interest rates during the
year) as a result of the refinancing of Comdata's debt and an expected
reduction in overall debt levels with cash flow from operations. In
addition, and assuming no ownership change during 1996 that would impose
a restrictive limitation on the Company's ability to utilize its NOLs,
the Company estimates that its effective tax rate during 1996 will be
approximately 8%, primarily reflecting state and foreign taxes, as compared
to an effective rate of approximately 16% during 1995.
Information Services' expected revenue growth reflects, among other
things, a full year's revenue from Centre-file, which was acquired in
early October 1995 and contributed $8.4 million of 1995 revenue to the
Company, a sizeable increase from 1994 to 1995 in the annualized revenue
value of orders received by HRG, and an assumed continuing high rate of
growth in the gaming industry. Revenue and earnings growth in Information
Services in 1996 could, however, be adversely affected by a variety of
factors. Interest rates in the U.S. are expected to decline in 1996,
although at an uncertain rate, with a corresponding negative impact on the
Company's revenue from the investment of tax filing deposits. Also
negatively affecting this source of revenue in 1996 and 1997 is the
continuing phased introduction of IRS regulatory changes that reduce by
one day the period of time the Company may earn investment income on
certain tax filing deposits. A portion of the expected revenue growth in
Information Services, particularly in Arbitron and in Comdata's
transportation services business, is attributable to new or enhanced
product and service offerings which may not achieve the desired level of
market acceptance or may be the subject of difficulties or delays in
introduction. Difficulties or delays may also be experienced in other
software development projects that could adversely impact future costs
and revenue. The Company's ability to effectively manage internal growth
and assimilate recent and future acquisitions will also have an impact on
Information Services' profitability.
Difficulties or delays in the introduction of Employer Services'
CII software or in the transition of existing payroll customers to
centralized processing on the CII software, or unanticipated technological
problems with that software when placed in service, could also have an
adverse effect on Employer Services' revenue, costs, orders and customer
retention. The introduction of the CII software, the transition of
customers and the phased reduction of processing capabilities in Employer
Services' district offices is expected to occur over a 30 to 36 month
period, largely because of the system conversion and customer training
efforts required of Employer Services to assure a satisfactory transition
process for customers electing the software upgrade. Ceridian expects that
the transition process will entail incremental costs that principally
reflect the costs of systems and data conversion, maintaining duplicate
processing systems during the transition period, and providing necessary
training. Although a portion of these incremental costs (relating to the
reduction of processing capabilities in the district offices) will be
charged to existing restructure reserves, the majority of the incremental
costs, estimated to be an additional $50 million to $60 million over about
a three year period, will be accounted for outside of restructuring and
will be
28
<PAGE>
incurred relatively evenly over the customer transition period.
The impact of these incremental costs is, however, expected to be
substantially offset over the course of the transition period by upgrade
fees to be paid by customers electing to take advantage of the added
features of the enhanced system and by various efficiencies, such as
reduced installation, operating and maintenance costs, resulting from
increasing utilization of the enhanced system. Because the benefits of
these additional fees and efficiencies should be greater in the latter
portion of the transition period when a sizeable percentage of customers
will have completed the transition, the burden of the incremental costs
is expected to be relatively greater early in the transition period,
particularly during 1996, putting pressure on Employer Services' margins.
The time when the consolidation of payroll processing can begin is
principally a function of the timing of Ceridian's introduction of the
CII software and the availability of resources required to transition the
existing customer base. Customers who were part of the beta test of the
first version of this software began to process their payrolls utilizing
this version of the CII software during the first quarter 1996. Testing
of the "production" version of the CII software began in the first quarter
of 1996 and is expected to be completed during the first half of 1996.
During the third quarter of 1996, Ceridian expects that existing
customers who participated in the testing of the production version will
be utilizing this software exclusively, and that the installation of
certain large new payroll processing customers on the enhanced system
utilizing the upgraded software will be in process. The installation of
all new customers on the enhanced system and the general transition of
existing customers to that system are expected to begin during 1997.
Employer Services will continue, for the foreseeable future, to make
payroll processing utilizing its existing software available to customers
who do not wish to upgrade. Amortization of the substantial capitalized
software costs associated with this development effort is expected to begin
in 1996 and occur over a seven year period.
A somewhat smaller percentage of Computing Devices' expected 1996
revenue is covered by backlog at the beginning of the year than was the
case at the beginning of 1995, increasing the risk of achieving the
planned revenue level. Government budgetary constraints and increasing
competition for the remaining new defense procurement programs have
affected order levels, particularly in the United States. The adaptation
by Computing Devices of certain commercial technologies to defense markets
may occur more slowly or at greater cost than anticipated, and the resulting
product offerings may not achieve the desired level of market acceptance or
may be the subject of difficulties or delays in introduction. Because
Computing Devices' Canadian and United Kingdom operations have accounted
for an increasing portion of its revenue during recent years, and for 56%
of its 1995 order value, currency fluctuations can have an increasing
impact on Computing Devices' revenue.
The Company's expectations for 1996 could also be significantly
affected by other, more general factors. Comdata's gaming services are
subject to policies and regulations adopted from time to time by the major
credit card associations which affect the scope of its permitted services
and the amount of merchant discounts to which Comdata is subject. For
example, VISA USA, Inc. announced in late 1995 a merchant discount increase
that would be applicable to Comdata beginning in 1996. Trade, monetary and
fiscal policies, and general economic conditions may substantially change,
with corresponding impact on the industries which the Company serves,
particularly more economically sensitive industries such as trucking.
Competition may become more intense than anticipated, including as a result
of industry consolidation, such as in the defense contracting industry, or
by the entry of new competitors, such as in the trucking services industry.
The Company may also be affected by unanticipated costs or other effects of
legal and administrative cases now pending or that may be instituted in
the future.
29
<PAGE>
Report of Management
The consolidated financial statements and other related financial information
of Ceridian published in this Annual Report were prepared by Company
management, which acknowledges its responsibility therefor. Such statements
and information were prepared in accordance with generally accepted accounting
principles and were necessarily based in part on reasonable estimates, giving
due consideration to materiality.
Ceridian maintains a system of internal controls which, in the opinion
of management, provides reasonable assurance that assets are adequately
safeguarded, that financial records accurately reflect all transactions
and can be relied upon in all material respects in the prep-aration of
financial statements, and that the Company's business is conducted in
compliance with its policy on business ethics. The control system is
supported by written policies and procedures, and its effectiveness is
monitored by a regular program of internal auditing.
Our independent auditors, KPMG Peat Marwick LLP, in their audit
of Ceridian's consolidated financial statements, considered the internal
control structure of the Company to gain a basic understanding of the
accounting system in order to design an effective and efficient audit
approach, not for the purpose of providing assurance on the system of
internal control.
The Audit Committee, consisting of outside directors, is responsible
to the Board of Directors for reviewing the financial controls and reporting
practices and for recommending appointment of the independent auditors. The
committee meets periodically with representatives of the internal audit
department and the independent auditors, both with and without Ceridian
management being present.
/s/Lawrence Perlman
Lawrence Perlman
Chairman, President and
Chief Executive Officer
/s/John R. Eickhoff
John R. Eickhoff
Executive Vice President and
Chief Financial Officer
30
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders of
Ceridian Corporation:
We have audited the accompanying consolidated balance sheets of Ceridian
Corporation and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations and cash flows for each of
the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We did not audit
the financial statements of Comdata Holdings Corporation, a wholly-owned
subsidiary, which statements reflect total assets constituting 29 percent
and 28 percent at December 31, 1995 and 1994, respectively, and total
revenues constituting 21 percent, 21 percent and 19 percent in 1995, 1994
and 1993, respectively, of the related consolidated totals. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Comdata Holdings
Corporation, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report
of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Ceridian Corporation and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/KPMG Peat Marwick
KPMG Peat Marwick
Minneapolis, Minnesota
January 23, 1996
31
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in millions, except per share data)
<S> <C> <C> <C>
Years Ended December 31,
1995 1994 1993
Revenue
Product sales $ 562.8 $ 528.0 $ 450.2
Services 770.2 649.8 659.6
Total 1,333.0 1,177.8 1,109.8
Cost of revenue
Product sales 411.0 406.1 358.8
Services 389.3 323.6 372.7
Total 800.3 729.7 731.5
Gross profit 532.7 448.1 378.3
Operating expenses
Selling, general and administrative 309.9 274.1 248.8
Research and development 54.5 40.5 37.1
Other expense (income) 33.6 (3.2) (3.5)
Write-off of goodwill and other intangibles - - 230.3
Restructure loss - - 67.0
Earnings (Loss) before interest and taxes 134.7 136.7 (201.4)
Interest income 12.1 10.7 8.5
Interest expense (30.6) (32.2) (46.8)
Earnings (Loss) before income taxes 116.2 115.2 (239.7)
Income tax provision 18.7 17.5 4.0
Earnings (Loss) before extraordinary item 97.5 97.7 (243.7)
Extraordinary loss 38.9 - 8.4
Net earnings (loss) $ 58.6 $ 97.7 $ (252.1)
Primary earnings (loss) per share
Before extraordinary item $ 1.22 $ 1.25 $ (3.79)
Net earnings (loss) $ 0.66 $ 1.25 $ (3.92)
Fully diluted earnings (loss) per share
Before extraordinary item $ 1.22 $ 1.25 $ (3.79)
Net earnings (loss) $ 0.66 $ 1.25 $ (3.92)
Shares used in calculations (in thousands)
Primary 69,352 67,626 64,452
Fully diluted 79,736 78,010 64,452
See notes to consolidated financial statements.
</TABLE>
32
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS (Dollars in millions, except per share data)
<S> <C> <C>
December 31,
1995 1994
ASSETS
Current assets
Cash and equivalents $ 151.7 $ 137.8
Short-term investments - 54.6
Trade and other receivables
Trade, less allowance of $12.4 and $12.2 278.9 226.3
Unbilled 86.5 57.3
Other 7.4 11.7
Total 372.8 295.3
Inventories 30.4 26.5
Other current assets 15.9 9.4
Total current assets 570.8 523.6
Investments and advances 6.9 14.5
Property, plant and equipment, net 120.9 111.8
Goodwill and other intangibles, net 262.6 211.4
Software and development costs, net 72.6 28.5
Prepaid pension cost 88.6 78.0
Other noncurrent assets 3.7 9.7
Total assets $ 1,126.1 $ 977.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion of long-term obligations $ 4.6 $ 8.2
Accounts payable 54.4 46.0
Drafts and settlements payable 146.3 112.1
Customer advances 73.7 23.4
Deferred income 90.1 84.5
Accrued taxes 68.7 64.2
Employee compensation and benefits 63.6 59.9
Restructure reserves, current portion 19.2 18.8
Other accrued expenses 85.0 63.5
Total current liabilities 605.6 480.6
Long-term obligations, less current portion 205.3 230.2
Deferred income taxes 7.1 7.7
Restructure reserves, less current portion 51.2 69.5
Employee benefit plans 78.7 80.5
Deferred income and other noncurrent liabilities 28.2 22.1
Stockholders' equity
5-1/2% Cumulative Convertible Exchangeable Preferred Stock,
$100 par value (liquidation preference of $236.0 million),
authorized 50,600 shares, issued and outstanding 47,200 4.7 4.7
Common Stock, $.50 par, authorized 100,000,000 shares, issued
67,325,372 and 66,836,309 33.7 33.4
Additional paid-in capital 1,106.6 1,073.9
Accumulated deficit (963.9) (998.7)
Other stockholders' equity items (31.1) (26.4)
Total stockholders' equity 150.0 86.9
Total liabilities and stockholders' equity $ 1,126.1 $ 977.5
See notes to consolidated financial statements.
</TABLE>
33
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in millions, except per share data)
<S> <C> <C> <C>
Years Ended December 31,
1995 1994 1993
Cash Flows from Operating Activities
Net earnings (loss) $ 58.6 $ 97.7 $ (252.1)
Adjustments to reconcile net earnings (loss) to net
cash provided by (used for) operating activities:
Extraordinary loss 38.9 - 8.4
Restructure reserves established - - 67.0
Restructure reserves utilized (18.2) (53.7) (59.7)
Depreciation and amortization of capital and deferred assets 63.4 42.3 274.6
Other 3.1 6.3 (22.7)
Decrease (Increase) in trade and other receivables (73.1) (61.7) (8.6)
Decrease (Increase) in other current assets (9.4) 7.9 10.8
Increase (Decrease) in customer advances and deferred income 52.7 2.6 20.7
Increase (Decrease) in drafts and settlements payable 34.2 38.0 (4.6)
Increase (Decrease) in other current liabilities 42.0 (16.9) 22.5
Net cash provided by (used for) operating activities 192.2 62.5 56.3
Cash Flows from Investing Activities
Expended for capital assets (53.0) (45.9) (35.0)
Expended for deferred assets (51.2) (13.5) (8.5)
Short-term investments 54.6 48.8 (39.0)
Proceeds from sales of businesses and assets 6.4 33.5 11.5
Expended for business acquisitions, less cash acquired (76.8) (69.0) (7.5)
Collection of notes from asset sales 10.6 0.5 0.2
Net cash provided by (used for) investing activities (109.4) (45.6) (78.3)
Cash Flows from Financing Activities
Revolving credit and overdrafts, net 193.9 (13.5) 7.3
Retirement of public debt (244.4) - (168.1)
Borrowings of other debt 2.6 - -
Repayment of other debt (15.1) (2.2) (9.4)
Sale of 5-1/2% Preferred Stock - 15.5 213.0
Preferred dividends (13.0) (13.0) (0.3)
Proceeds from exercise of stock options and other 6.9 4.6 5.4
Net cash provided by (used for) financing activities (69.1) (8.6) 47.9
Effect of exchange rate changes on cash 0.2 (0.3) (0.9)
Net Cash Flows Provided (Used) 13.9 8.0 25.0
Cash and equivalents at beginning of year 137.8 129.8 104.8
Cash and equivalents at end of year $ 151.7 $ 137.8 $ 129.8
See notes to consolidated financial statements.
Years Ended December 31,
Interest and Income Taxes Paid (Refunded) 1995 1994 1993
Interest paid $ 28.4 $ 29.2 $ 43.5
Income taxes paid $ 15.3 $ 12.5 $ 8.7
Income taxes refunded $ (2.7) $ (2.2) $ (36.2)
</TABLE>
34
<PAGE>
INDEX TO NOTES
35 A. Accounting Policies
38 B. Extraordinary and Unusual Losses
38 C. Supplementary Data to Statements of Operations
39 D. Income Taxes
40 E. Capital and Deferred Assets
40 F. Stockholders' Equity
42 G. Retirement Plans
44 H. Stock Plans
45 I. Financing Arrangements
46 J. Investing Activity
47 K. Segment Data
48 L. Leasing Arrangements as Lessee
49 M. Commitments and Contingencies
50 N. Legal Matters
A. ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements of Ceridian Corporation ("Ceridian" or
the "Company") include the accounts of Resumix, Inc. ("Resumix") and Comdata
Holdings Corporation ("Comdata"), which were acquired during 1995 in
transactions accounted for by the pooling-of-interests method, and of all
majority owned subsidiaries.
Investments in other affiliated companies where Ceridian has significant
influence are accounted for by the equity method. Other investments are
accounted for by the cost method. All material intercompany transactions have
been eliminated from the consolidated financial statements.
Future Changes in Accounting Principles
The Company believes that neither FAS 121, dealing with accounting for
impairment of the value of long-lived assets, nor FAS 123, dealing with
accounting for stock-based compensation, will have a material effect on
its financial statements when they become effective for Ceridian in 1996.
The Company believes its present policy for recognizing asset impairment
meets the requirements of FAS 121. With regard to FAS 123, the Company
has elected to adopt only the disclosure requirements and will not recognize
compensation expense with regard to its fixed stock option plans.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Changes in Presentation
In certain cases, prior year amounts have been reclassified to conform to the
current year's presentation, notably the reclassification to selling expense
of other technical expenses.
Cash and Short-term Investments
Investments which are readily convertible to cash within three months of
purchase are classified in the balance sheet as cash equivalents.
Investments with longer maturities are considered available-for-sale under
FAS 115 and reported in the balance sheet as short-term investments. The
fair value of short-term investments is not materially different from their
amortized cost, and the amount of investments expected to be held more than
one year beyond the balance sheet date is not considered material. Net changes
in short-term investments, which are shown as investing cash flows in the
Statements of Cash Flows, may relate to investment decisions by an independent
investment manager as well as to changes in the financing needs of the Company.
Property, Plant and Equipment
Property, plant and equipment are carried at cost and depreciated for
financial statement purposes using straight-line and accelerated methods
at rates based on the estimated lives of the assets, which are generally
as follows:
Buildings 40-50 years
Building improvements 5-20 years
Machinery and equipment 3-8 years
Computer equipment 3-6 years
35
<PAGE>
Repairs and maintenance are expensed as incurred. Gains or losses on
dispositions are included in results of operations.
Goodwill and Other Intangibles
Goodwill, which represents the excess purchase price over the fair value of
net assets of businesses acquired, is assigned to operating units based on
the benefits derived from the acquisition and amortized on a straight line
basis over the expected periods to be benefited, ranging up to 40 years.
Other intangible assets represent amounts assigned to intangible assets
at the time of a purchase acquisition and includes such items as customer
lists and bases, technology, covenants not to compete, trademarks and other
rights. Such costs are generally amortized on a straight line basis over
periods ranging up to 20 years.
Recorded amounts are regularly reviewed and recoverability assessed.
The review considers factors such as whether the amortization of the goodwill
and other intangibles balance for each business segment over its remaining
life can be recovered through forecasted results of future operations.
Software and Development Costs
The Company capitalizes purchased software which is ready for service and
software development costs incurred from the time technological feasibility
of the software is established until the software is ready for use to provide
processing services to customers. Research and development costs and other
computer software maintenance costs related to software development are
expensed as incurred. Software development costs, which includes costs
related to the software which will become an integral part of the Company's
revenue producing payroll processing system ("CII"), are amortized using the
straight-line method over periods ranging from three to seven years. The
remaining software development costs and costs of purchased software are
amortized using the straight-line method over a maximum of three to five
years or the expected life of the product, whichever is less.
The carrying value of software and development costs is reviewed by the
Company and impairments are recognized when the expected undiscounted future
cash flows derived from such assets are less than their carrying value.
Earnings (Loss) Per Share
Primary earnings per share is calculated by dividing the net earnings after
reduction for preferred dividends by the weighted average of outstanding
common stock and common stock equivalents. When the result would be a loss
per share, equivalents are ignored. Common stock equivalents includes the
impact of outstanding dilutive stock options and restricted stock. Fully
diluted earnings per share assumes that the Company's 5-1/2% Preferred Stock
was converted to common shares at the beginning of the reporting period.
Therefore, the calculation uses net earnings without reduction for preferred
stock dividends divided by weighted average common shares and common share
equivalents plus the additional common shares which would have resulted from
the assumed conversion. When the fully diluted amount is more favorable than
the primary amount, only the primary amount may be reported.
Income Taxes
The provision for income taxes is based on income recognized for financial
statement purposes and includes the effects of temporary differences between
such income and that recognized for tax return purposes. The Company and its
eligible subsidiaries file a consolidated U.S. federal income tax return.
Certain subsidiaries which are consolidated for financial reporting are not
eligible to be included in the consolidated U.S. federal income tax return
and separate provisions for income taxes have been determined for these
entities. The tax benefit of losses from U.S. operations in prior years has
been provided as the losses are utilized.
Except for selective dividends, Ceridian intends to reinvest the
unremitted earnings of its non-U.S. subsidiaries and postpone their
remittance indefinitely. Accordingly, no provision for U.S. income taxes was
required on such earnings during the three years ended December 31, 1995.
Revenue Recognition
Revenue from product sales is related primarily to fixed price, long-term
contracts with government customers and is recognized on a percentage of
completion basis. Percentage of completion is determined by reference to
the extent of contract performance, future performance risk and cost
incurrence. Costs and estimated earnings in excess of billings on
uncompleted contracts are reported as unbilled receivables, a portion of
which represents a holdback reserve which is billable as allowed under the
contract terms. Contracts in progress are reviewed quarterly, and sales and
earnings are adjusted in current accounting periods based on revisions in
contract value and estimated costs at completion. Provisions for estimated
losses on contracts are recorded when identified.
Revenue from sales of services is recognized when the services are
performed and billable, except for services provided by Comdata and the
portion of Employer Services tax filing revenue which is recognized as
earned from the investment of customer deposits.
36
<PAGE>
Revenue from Comdata funds transfer and regulatory permit services
consists of the transaction fees charged to customers. Such revenue does
not include the costs of goods and services for which funds are advanced by
Comdata (e.g., fuel purchased, permit provided or face amount of the COMCHEK,
purchased and cashed). However, Comdata must pay the issuing agent (e.g.,
truck stop, casino or state agency) for the full cost of the goods and
services provided and accordingly, bills the customer for such cost as well
as the transaction fee. As a result, the Company's accounts receivable
include both the cost of the goods and services purchased and the
transaction fees. The Company's drafts and settlements payable includes the
amount due to the issuing agent for the cost of the goods and services.
Revenue is recognized for the amount of the transaction fee at the time the
goods and services are purchased.
In a very small portion of Comdata funds transfer transactions, customer
transactions may not be settled or drafts and settlements payable cleared in
the ordinary course of business, resulting in unapplied cash balances that are
carried as credits to accounts receivable or as unsettled drafts payable.
Comdata's policy is to take the amount of such unsettled transactions into
revenue as earned for goods and services rendered if the transactions are not
definitively settled within a period of twelve months through the assertion
of valid customer claims. Some portion of the amounts so taken into revenue
may remain subject to claims by Comdata's customers or, under certain
circumstances, by states under specific escheat laws. It has been Comdata's
experience that an insignificant number of claims for unsettled funds are
asserted after such twelve month period.
Inventories
Inventories consist primarily of electronic components which are purchased in
anticipation of funding for specific contracts and programs and are stated at
the lower of first in, first out or average cost or net realizable value.
Although inventories include costs related to long-term contracts, most of the
inventoried costs are expected to be charged to cost of sales within one year.
Payments received in advance of billings on long-term contracts are recorded as
a liability for customer advances until contract milestones are accomplished.
Payroll Tax Filing Services
In connection with Ceridian's payroll tax filing services, the Company
collects funds for payment of taxes due, holds such funds in trust until
payment is due, remits the funds to the appropriate taxing authority, files
federal, state and local tax returns, handles related regulatory
correspondence and amendments, and selectively absorbs regulatory charges for
certain penalties and interest. For such services, the Company derives its
payroll tax filing revenue from fees charged and from investment income it
receives on tax filing deposits temporarily held pending remittance on behalf
of customers to taxing authorities. These funds are held in a tax filing
trust established by Ceridian to more clearly evidence the fiduciary capacity
in which such funds are held. The trust invests primarily in high quality
collateralized short-term investments or top tier commercial paper. The
trust also invests in U.S. Treasury and Agency securities, AAA rated
asset-backed securities and corporate securities rated A3/A- or better.
The amount of collected but unremitted funds varies significantly during
the year and averaged $1,021.6 in 1995, $867.5 in 1994 and $460.0 in 1993.
The increase in such balances during 1994 was due primarily to the acquisition
of Systems Tax Service, Inc. in October 1993. The amount of such funds at
December 31, 1995 and 1994, was $1,456.1 and $918.2.
Translation of Foreign Currencies
Local currencies have been determined to be functional currencies for the
Company's international operations. Foreign currency balance sheets are
translated at the end-of-period exchange rates and earnings statements at
the average exchange rates for each period. The resulting translation gains
or losses are recorded as "foreign currency translation adjustment" in the
stockholders' equity section of the balance sheet. Gains and losses from
translation of assets and liabilities denominated in other than the
functional currency of the operation are recorded in results of operations
as "other expense (income)." Canadian operations include a significant
number of contracts which either provide for exchange rate adjustments or
are denominated in the U.S. dollar, which benefits the management of
exchange rate risk.
37
<PAGE>
B. EXTRAORDINARY AND UNUSUAL LOSSES
Extraordinary Loss
The Company recorded an extraordinary loss of $38.9 in December 1995 due to
early retirement of debt acquired in the Comdata acquisition. As further
described in Note I, the retirement was accomplished by tender offers for
the $130.0 principal amount of 12.5% Senior Notes due 1999 and the $75.0
principal amount of 13.25% Senior Subordinated Debentures due 2002 and the
in-substance defeasance of the $6.2 principal amount of 11% Junior
Subordinated Extendible Notes due 1997, as well as the minor amounts of
untendered Senior Notes and Debentures. The loss, which is net of an income
tax benefit of $1.6, includes $6.9 to write-off unamortized debt issue costs
and $33.6 for the direct costs of the tender offers and defeasance
arrangements, premiums paid, and interest expense related to the defeased
amount.
Restructure Loss
During second quarter 1994, the Company recorded restructure gains of $7.8
from the sale of its TeleMoney Services and related data services operations
and $7.2 from the final settlement of a tax-sharing arrangement with a former
subsidiary. These gains were offset by a $15.0 provision for costs related
to age discrimination litigation arising out of downsizing actions taken by
the Company in past years.
In 1993, the net restructure loss of $67.0 included charges of $75.9 for
Information Services and $5.5 for Defense Electronics. These charges were
offset in part by a gain of $14.4, not attributable to either industry
segment, which includes a gain of $14.7 resulting from the receipt of a
refund of taxes and related interest and a $0.3 net adjustment of prior
years' restructuring provisions.
The $75.9 Information Services charges included a charge of $57.0
related to the discontinuance of Arbitron's syndicated television ratings
service. Also included is a charge of $18.9 for Employer Services,
primarily to consolidate its payroll processing activities into centralized
processing facilities and its customer service operations into a single
national center.
Write-off of Comdata Goodwill and Other Intangibles
In fourth quarter 1993, Comdata management evaluated the realizability of
goodwill related to its retail and transportation businesses and determined
that this goodwill was impaired in that the projected net income of these
businesses would not recover its carrying value. Furthermore, there was no
evidence of any external or other factors which would improve this outcome.
Since this method of measurement was considered preferable to Comdata's
former policy, which evaluated the realizability of goodwill using income
before interest, taxes, depreciation and amortization, the preferable method
was adopted and substantially all of the remaining balance of goodwill and
other long-lived intangible assets of these businesses, amounting to $230.3,
was written off to operations.
C. SUPPLEMENTARY DATA TO STATEMENTS OF OPERATIONS
Years Ended December 31,
Other Expense (Income) 1995 1994 1993
Foreign currency translation expense (income) $ - $ - $ (0.5)
Loss (Gain) on sale of assets 1.0 0.6 (0.9)
Other expense (income) (1.2) (2.9) (0.9)
Minority interest and equity in
operations of affiliates 4.1 (0.9) (1.2)
Pooling expense 29.7 - -
Total $ 33.6 $ (3.2) $ (3.5)
38
<PAGE>
D. INCOME TAXES
The cumulative amount of undistributed earnings of international subsidiaries
for which U.S. income taxes have not been provided was approximately $42.0
at December 31, 1995. It is not practical to estimate the amount of
unrecognized deferred U.S. taxes on these undistributed earnings.
Under tax sharing agreements existing at the time of the disposition
of certain former operations of the Company, Ceridian remains subject to
income tax audits in various jurisdictions for the years 1985-1992.
Ceridian considers its tax accruals adequate to cover any U.S. and
international tax deficiencies not recoverable through deductions in
future years.
The Company has U.S. net operating loss carryforwards, future tax
deductions and general business tax credits of $1,019.0, $242.7 and $26.8,
respectively, which will be available to offset substantially all of its U.S.
earnings during the carryforward period. The increase to the net operating
loss carryforward during 1995 is due to the offset of some of the future tax
deductions and separate net operating losses of recently acquired companies.
The tax benefits of these items are reflected in the accompanying table of
deferred tax assets and liabilities. If not used, these carryforwards begin
to expire with a nominal amount in 1997. U.S. tax rules impose limitations
on the use of net operating loss carryforwards following certain changes in
ownership. If such a change were to occur with respect to the Company, the
limitation could reduce the amount of these benefits that would be available
to offset future taxable income each year, starting with the year of
ownership change.
Components of Earnings and Taxes 1995 1994 1993
Earnings (Loss) Before Income Taxes
U.S. $ 98.1 $ 100.0 $(248.6)
International 18.1 15.2 8.9
Total $ 116.2 $ 115.2 $(239.7)
Income Tax Provision
Current
U.S. $ 11.7 $ 10.2 $ 0.1
International 7.9 3.1 2.6
State and other 0.4 2.0 0.7
20.0 15.3 3.4
Deferred
International (1.3) 2.2 0.6
Total $ 18.7 $ 17.5 $ 4.0
Effective Rate Reconciliation 1995 1994 1993
U.S. statutory rate 35% 35% 35%
Income tax provision (benefit) at
U.S. statutory rate $ 40.7 $ 40.3 $ (83.9)
International rate differences (0.9) (0.7) (0.8)
State income taxes, net 0.4 2.0 0.7
Losses for which no tax benefit
was provided 1.6 1.2 87.9
Utilization of loss carryforwards (24.7) (26.2) -
Other 1.6 0.9 0.1
Income tax provision $ 18.7 $ 17.5 $ 4.0
Tax Effect of Items That Comprise a Significant Portion of Deferred
Tax Assets and Liabilities at December 31, 1995
Item Description Deferred Tax Deferred Tax
Asset Liability
Net operating loss carryforwards $ 401.6 $ -
Restructuring and other accruals 81.7
International (6.4)
Other 14.6 (0.7)
Total 497.9 (7.1)
Less valuation allowance (497.9)
Deferred income taxes $ - $ (7.1)
The net deferred tax asset at December 31, 1995, is fully offset by a
valuation allowance. During 1995, both the deferred tax asset and the
valuation allowance decreased by $4.7. The amount of the valuation
allowance is reviewed annually.
39
<PAGE>
<TABLE>
<S> <C> <C>
E. CAPITAL AND DEFERRED ASSETS
December 31,
1995 1994
Plant, Property and Equipment
Land $ 3.0 $ 3.0
Machinery and equipment 236.0 207.2
Buildings and improvements 79.4 73.0
Construction in progress 4.9 10.3
323.3 293.5
Accumulated depreciation (202.4) (181.7)
Property, plant and equipment, net $ 120.9 $ 111.8
Goodwill and Other Intangibles
Goodwill $ 220.3 $ 190.6
Accumulated amortization (27.6) (17.7)
Goodwill, net 192.7 172.9
Other intangible assets 78.8 44.0
Accumulated amortization (8.9) (5.5)
Other intangibles, net 69.9 38.5
Goodwill and other intangibles, net $ 262.6 $ 211.4
Software and Development Costs
Purchased software $ 34.0 $ 27.3
CII development cost 44.2 5.3
Other software development cost 18.5 9.1
96.7 41.7
Accumulated amortization (24.1) (13.2)
Software and development costs, net $ 72.6 $ 28.5
Depreciation and Amortization
of Capital and Deferred Assets 1995 1994 1993
Depreciation and amortization of capital assets $ 39.1 $ 31.9 $ 29.6
Amortization of goodwill 9.9 5.7 10.5
Amortization of other intangibles 3.4 1.6 2.1
Amortization of software and development costs 10.6 3.1 1.4
Other amortization 0.4 - 0.7
Write-off of goodwill and other intangibles - - 230.3
Total $ 63.4 $ 42.3 $ 274.6
</TABLE>
F. STOCKHOLDERS' EQUITY
Preferred Stock
From a class of preferred stock with 750,000 authorized shares (the
"Preferred Stock"), a series consisting of 50,600 such shares has been
designated as 5-1/2% Cumulative Convertible Exchangeable Preferred Stock,
par value $100 per share (the "5-1/2% Preferred Stock"). In December 1993,
the Company completed the sale in an underwritten public offering of
4,400,000 Depositary Shares, each representing a one one-hundredth interest
in a share of 5-1/2% Preferred Stock, for $50 per share, or net cash
proceeds of $213.0, and received a commitment from the underwriters to
purchase an additional 320,000 Depositary Shares, at $50 per share, which
purchase occurred in early January 1994.
Dividends on the 5-1/2% Preferred Stock and depositary shares are
cumulative and payable on a quarterly basis. The depositary shares are
convertible at the option of the holder into common stock of the Company
at a conversion price of $22.72 per common share, subject to adjustment
under certain conditions. The Depositary Shares are redeemable, in whole
or in part, at the option of the Company, at any time on or after December
31, 1996, initially at a redemption price per share of $51.10 and thereafter
at prices declining to $50.00, in all cases plus accrued and unpaid dividends
to the redemption date. The Depositary Shares are exchangeable, in whole but
not in part, at the option of the Company, on any quarterly dividend payment
date on or after December 31, 1995, for the Company's 5-1/2% Convertible
Subordinated Debentures due 2008 at a rate of $50.00 principal amount of
such Debentures for each depositary share. Depositary Shares are non-voting
except that holders will be entitled to vote as a separate class under
certain conditions resulting from nonpayment of dividends or other actions
adverse to their interest.
All of Comdata's outstanding Series B and Series C Preferred Stock was
converted into approximately 19 million shares of Comdata common stock on
October 25, 1995 as Comdata exercised its right to force such a conversion
when the common stock reached and maintained for a stated time period certain
specified trading price and volume levels. Dividends declared on Comdata
preferred stock and the results of Comdata stock option activity are included
in the following table.
40
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Common Stock, Shares Additional
Additional Paid-In Capital Treasury Common Paid-In Accumulated
and Accumulated Deficit Outstanding Stock Issued Stock Capital Deficit
Balance December 31, 1992 as reported 42,803,872 200,738 43,004,610 $21.5 $ 585.0 $ (699.1)
Resumix pooling adjustment 849,010 849,010 0.4 9.3 (5.9)
Comdata pooling adjustment 20,472,176 20,472,176 10.2 193.6 (100.4)
Balance December 31, 1992 as adjusted 64,125,058 200,738 64,325,796 32.1 787.9 (805.4)
Exercises of stock options 252,851 252,851 0.1 2.3
Restricted stock awards 119,000 (119,000) (0.2)
Net loss (252.1)
Sale of 5-1/2% Preferred Stock
depositary shares 223.8
Preferred stock dividends (0.3)
Issued for purchase of Systems
Tax Service 1,005,908 1,005,908 0.5 13.3
Comdata stock transactions 2.6
Dividends on Comdata stock (12.6)
Balance December 31, 1993 65,502,817 81,738 65,584,555 32.7 1,029.7 (1,070.4)
Repurchase of common shares (70,000) 70,000
Exercises of stock options 462,462 (33,708) 428,754 0.2 4.4
Restricted stock awards 827,500 (4,500) 823,000 0.5 21.4
Net earnings 97.7
Sale of 5-1/2% Preferred Stock
depositary shares (0.4)
Preferred stock dividends (13.0)
Comdata stock transactions 18.8
Dividends on Comdata stock (13.0)
Balance December 31, 1994 66,722,779 113,530 66,836,309 33.4 1,073.9 (998.7)
Repurchase of common shares (192,000) 192,000
Exercises of stock options 613,376 (168,267) 445,109 0.3 3.2
Restricted stock awards 94,327 (89,327) 5,000 13.8
Employee Stock Purchase Plan 38,954 38,954 1.4
Net earnings 58.6
Preferred stock dividends (13.0)
Comdata stock transactions 14.3
Dividends on Comdata stock (10.8)
Balance December 31, 1995 67,277,436 47,936 67,325,372 $33.7 $1,106.6 $ (963.9)
Authorized but unissued or treasury common shares reserved for future issuance as of December 31, 1995,
included 8,231,865 shares for exercise of stock options and awards of restricted stock, as discussed in
Note I, 461,046 shares for the Employee Stock Purchase Plan and 10,384,000 shares for conversion of 5-1/2%
Preferred Stock depositary shares.
</TABLE>
<TABLE>
<S> <C> <C> <C>
December 31,
Other Stockholders' Equity Items 1995 1994 1993
Foreign currency translation adjustment $ (2.4) $ (2.2) $ (1.9)
Restricted stock awards (21.9) (17.6) (2.3)
Pension liability adjustment (5.2) (4.2) (4.1)
Treasury stock, at cost (1.6) (2.4) (1.6)
Total $ (31.1) $ (26.4) $ (9.9)
</TABLE>
41
<PAGE>
G. RETIREMENT PLANS
Pension Benefits
Ceridian maintains two defined benefit pension plans for U.S. employees which
were closed to new participants effective January 1, 1995. Ceridian's
Canadian and UK subsidiaries also have defined benefit pension plans which
constitute a minor portion of the amounts in accompanying tables. The plans'
assets consist principally of equity securities, U.S. government securities,
and other fixed income obligations and do not include securities of the
Company. Benefits under these plans are calculated on maximum or career
average earnings and years of participation in the plans. U.S. employees
participate in these plans by means of salary reduction contributions.
Certain former employees are inactive participants in the plans. Employer
cash contributions to the U.S. plans amounted to $9.9 in 1995, $13.8 in 1994
and $24.9 in 1993. Retirement plan funding amounts are based on independent
consulting actuaries' determination of the Employee Retirement Income
Security Act of 1974 ("ERISA") funding requirements in the U.S. and local
statutory requirements in other countries.
The Company also sponsors a nonqualified supplemental retirement plan.
The projected benefit obligation at September 30, 1995 and 1994 for this plan
was $20.0 and $19.2, respectively, and the net periodic pension cost was
$2.3 for 1995, $2.1 for 1994, and $2.2 for 1993.
The cost recognized by the Company with respect to its defined
contribution (401k) plans was $4.9 in 1995, $3.5 in 1994, and $2.2 in 1993.
<TABLE>
<S> <C> <C>
Funded Status of Defined Benefit September 30,
Retirement Plans at Measurement Date 1995 1994
Actuarial present value of obligation:
Vested benefit obligation $ 662.9 $ 585.5
Accumulated benefit obligation 663.5 589.4
Projected benefit obligation $ 712.5 $ 648.7
Plan assets at fair value 730.0 654.5
Plan assets in excess of
projected benefit obligation 17.5 5.8
Unrecognized net loss 39.9 44.8
Prior service cost 34.3 35.4
Unrecognized net asset (10.3) (12.7)
Net pension asset recognized
in the consolidated balance sheet $ 81.4 $ 73.3
</TABLE>
<TABLE>
The assumptions used in determining the funded status information are as follows:
<S> <C> <C> <C> <C> <C> <C>
Rate of Long-term Rate
Discount Rate Salary Progression of Return on Assets
U.S. International U.S. International U.S. International
1995 7.50% 8.0% 4.5% 6.0 - 6.5% 9.0% 8.0 - 9.0%
1994 8.25% 7.5 - 8.0% 4.5% 6.0 - 7.0% 9.0% 8.0 - 9.0%
1993 7.25% 7.5 - 8.0% 4.0% 6.0 - 7.0% 9.0% 8.0 - 9.0%
</TABLE>
<TABLE>
<S> <C> <C> <C>
Net Periodic Pension Cost (Credit) 1995 1994 1993
Service cost $ 6.2 $ 6.1 $ 6.0
Interest cost on projected benefit obligation 53.5 51.5 52.2
Actual return on plan assets (103.2) (14.7) (103.0)
Net amortization and deferral 46.0 (41.8) 47.5
Total $ 2.5 $ 1.1 $ 2.7
</TABLE>
42
<PAGE>
Postretirement Benefits
Ceridian provides health care and life insurance benefits for eligible
retired employees, including individuals who retired from operations of
the Company that were subsequently sold or discontinued. The Company
sponsors several health care plans in the U.S. for both pre- and post-age
65 retirees. Company contributions to these plans differ for various groups
of retirees and future retirees. Employees hired on or after January 1,
1992, will be allowed to enroll in company-sponsored plans at retirement,
but receive no company subsidy. For employees hired before January 1, 1992,
and retiring in 1992 or later, the Company subsidizes pre-age 65 coverage only.
The Company's subsidy is a fixed dollar contribution determined at retirement
equal to 2.5% of the catastrophic plan cost for each year of service.
Employees who retired prior to 1992 are subject to various cost-sharing
policies depending on when retirement began and eligibility for Medicare.
This is a closed group of retirees. Most retirees outside
the United States are covered by governmental health care programs, and the
Company's cost is not significant.
The following tables present the funded status and the components of
the net periodic postretirement benefit cost for the plans. The Company does
not prefund these costs.
<TABLE>
<S> <C> <C>
Funded Status of Postretirement
Health Care and Life Plans
December 31,
1995 1994
Accumulated postretirement benefit obligation:
Retirees $45.4 $42.9
Fully eligible active participants 4.1 3.2
Other active participants 8.2 6.8
57.7 52.9
Unrecognized net gain (loss) (1.6) 3.7
Accrued benefits cost $56.1 $56.6
Current portion $ 6.0 $ 6.0
Noncurrent portion 50.1 50.6
Total $56.1 $56.6
</TABLE>
<TABLE>
<S> <C> <C> <C>
Net Periodic Postretirement Benefit Cost
1995 1994 1993
Service cost $ 0.2 $ 0.3 $ 0.4
Interest cost 4.2 4.0 4.4
Other (1.1) - -
Net periodic benefit cost $ 3.3 $ 4.3 $ 4.8
</TABLE>
The assumed health care cost trend rate used in measuring the benefit
obligation is 13.0% pre-age 65 and 9% post-65 in 1995, declining at a rate
of 1% per year to an ultimate rate of 5.75% in 2003 pre-age 65 and 1999
post-age 65. A one percent increase in this rate in each year would increase
the benefit obligation at December 31, 1995 by $3.8 and the aggregate service
and interest cost for 1995 by $0.3. The weighted average discount rates used
in determining the benefit obligation at December 31, 1995 and 1994 are 7.00%
and 8.25%, respectively.
43
<PAGE>
H. STOCK PLANS
The 1993 Long-Term Incentive Plan as amended ("1993 LTIP") authorizes the
issuance until February 1999 of up to 6,000,000 common shares in connection
with awards of stock options, restricted stock, stock appreciation rights
and performance units to key executive and managerial employees. The 1994
Stock Options Plan, adopted in connection with the acquisition of Tesseract,
authorizes the issuance of up to 500,000 common shares in connection with
awards of stock options to key employees of businesses acquired by Ceridian.
The exercise price of stock options awarded under this plan and the 1993 LTIP
may not be less than the fair market value of the underlying stock at the
date of grant. These plans also provide for the accelerated exercisability
of options and the accelerated lapse of transfer restrictions on restricted
stock if a participant's employment terminates for specified reasons within
two years of a change of control of the Company.
During 1995 and 1994, respectively, 91,000 and 828,000 common shares,
net of forfeitures, were awarded pursuant to the 1993 LTIP to senior
executives under a performance restricted stock program. Under the terms
of these awards, shares awarded are generally eligible to vest in three
installments in 1996, 1997 and 1998, provided the executive is still employed
by the Company on the vesting dates, but vesting will occur only to the extent
that the total return to holders of Ceridian common stock over two, three and
four year performance periods ending in those years meets certain prescribed
levels as compared to other companies in the S&P 500. Of the shares eligible
to vest on any given date, generally 25% of the shares would vest if the
Company's total return to stockholders over the applicable performance period
is at least at the 60th percentile of companies in the S&P 500, 50% would vest
at the 75th percentile, and 100% would vest at the 90th percentile. If the
60th percentile is not achieved, no shares would vest on that date. Shares
which have not yet vested as of the end of the final performance period will
be forfeited. The amount of compensation expense charged to operations under
this performance-based program was $11.3 in 1995 and $5.9 in 1994.
The 1993 Non-Employee Director Stock Plan provided for the issuance of
up to 50,000 common shares in connection with awards of stock options and
restricted stock to non-employee directors of the Company. Options to
purchase 23,000 shares and 9,000 shares of restricted stock were awarded
under this plan as of December 31, 1995.
The acquisitions of Comdata and Resumix resulted in the assumption by
Ceridian of the stock option plans of those companies and the conversion of
stock options under those plans into Ceridian stock options as indicated in
the accompanying table. In connection with the acquisition of Systems Tax
Service, the Company adopted a plan pursuant to which 107,000 common shares
were awarded as stock options or restricted stock to senior executives of
the acquired company.
In July 1994, the Company's Board of Directors authorized the repurchase
by the Company of up to 2,000,000 of its outstanding common shares for the
purpose of providing shares to be issued under the Company's stock-based
compensation plans, thereby reducing dilution of common stockholders'
equity. The Company repurchased 192,000 and 70,000 shares in 1995 and 1994,
respectively, for this purpose.
<TABLE>
<S> <C> <C> <C> <C>
Stock Plans Option Price Outstanding Exercisable Available
Per Share for Grant
At December 31, 1992 $ 7.09-$40.24 2,777,459 945,052 3,402
Authorized 3,157,000
Granted 14.25- 19.13 1,069,965 (1,069,965)
Became exercisable 7.09- 15.96 401,174
Exercised 7.30- 16.27 (252,851) (252,851)
Canceled 7.52- 14.75 (40,557) (93) 40,557
Expired 7.30- 32.29 467 467
Awards of restricted stock (119,000)
At December 31, 1993 $ 7.09-$40.24 3,554,483 1,093,749 2,011,994
Authorized 500,000
Granted 19.13- 26.38 1,388,855 (1,388,855)
Became exercisable 7.52- 23.63 731,702
Exercised 7.52- 24.45 (462,462) (462,462)
Canceled 7.52- 24.13 (261,394) (4,278) 265,821
Expired 24.44- 40.24 (5,928) (5,928) (1,895)
Awards of restricted stock (830,000)
At December 31, 1994 $ 7.09-$31.74 4,213,554 1,352,783 557,065
Authorized 3,000,000
Resumix conversion 1.77- 35.40 104,642 32,448
Comdata conversion 10.52- 30.04 1,083,136 584,248
Granted 24.13- 45.50 1,049,282 (1,049,282)
Became exercisable 2.65- 34.88 1,012,481
Exercised 1.77- 26.38 (613,376) (613,376)
Canceled 2.65- 41.25 (141,906) (1,481) 129,824
Expired 16.27 (3,574) (3,574)
Awards of restricted stock (97,500)
At December 31, 1995 $ 1.77- $45.50 5,691,758 2,363,529 2,540,107
Average option price $21.29
</TABLE>
44
<PAGE>
I. FINANCING ARRANGEMENTS
On December 12, 1995, Ceridian concluded a three-year, $325 million revolving
credit facility with a commercial bank syndicate, with Bank of America as
agent, replacing its then-existing $35 million domestic revolving credit
facility, which had been extended for one year in May 1995. Borrowings under
the new credit facility were used to retire the public debt of Comdata,
comprised of principal amounts of $130.0 and $75.0 of its 12.5% Senior Notes
due 1999 and 13.25% Senior Subordinated Debentures due 2002, respectively,
and $6.2 principal amount of its 11% Junior Subordinated Extendible Notes
due 1997. The retirement was accomplished by means of the purchase, as a
result of tender offers (the "Debt Tender Offers"), of $128.7 of the Senior
Notes and $74.9 of the Senior Subordinated Debentures. The remainder of
those issues and all of the Junior Notes, which were called for redemption
on December 29, 1995, were retired through an in-substance defeasance which
involved the deposit of $8.2 in defeasance trusts.
The revolving credit facility is unsecured but is guaranteed by Comdata,
and has a final maturity of November 30, 1998. Under the facility, Ceridian
is able to obtain up to $325.0 including loan advances and up to $75.0 in
standby letters of credit. At December 31, 1995, the amount of advances and
letters of credit outstanding was $195.0 and $1.5, respectively, and the
interest rate for advances, determined by a number of factors, was
approximately 6.3%. Under the terms of the facility, the Company must
maintain a minimum consolidated net worth, which is subject to increase
based on the Company's net earnings after December 31, 1995 and certain
equity contributions to the Company after the same date. Ceridian must also
maintain a fixed charge coverage ratio of 2.25 to 1 and limit consolidated
debt to 3 times earnings before interest, taxes, depreciation and amortization
minus capital expenditures and preferred dividends on a rolling four quarter
basis. The Company is subject to additional covenants which limit liens,
contingent obligations, operating leases, minority equity investments and
divestitures. The Company is in compliance with all covenants associated
with this credit facility.
Comdata financing activity in 1995 included an amendment in March to
its revolving credit facility to increase the commitment from $37.5 to
$75.0, extend the maturity and lower the interest rate. The facility was
terminated when Comdata was acquired by Ceridian. In connection with the
Debt Tender Offers, the indentures governing Comdata's Senior Notes and
Junior Subordinated Debentures were amended to eliminate, modify or waive
most restrictive covenants in such indentures.
<TABLE>
<S> <C> <C>
December 31,
Debt Obligations 1995 1994
Revolving credit agreements and overdrafts $ 195.0 $ 1.1
Mortgages payable 6.0 9.7
Public debt of Comdata - 210.8
Other long-term debt obligations 8.9 16.8
Total debt obligations 209.9 238.4
Less short-term debt and current
portions of long-term debt 4.6 8.2
Long-term obligations, less current portions $ 205.3 $ 230.2
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Amounts of Maturities at December 31, 1995
1996 1997 1998 1999 2000 Thereafter Total
Mortgages payable $0.1 $0.1 $ 0.1 $0.1 $0.1 $5.5 $ 6.0
Revolving credit - - 195.0 - - - 195.0
Other 4.5 2.7 1.1 0.3 0.2 0.1 8.9
Total $4.6 $2.8 $196.2 $0.4 $0.3 $5.6 $209.9
</TABLE>
45
<PAGE>
J. INVESTING ACTIVITY
On December 12, 1995, Ceridian acquired Comdata, a leading provider of
transaction processing services to the trucking and gaming industries, in
a reverse subsidiary merger transaction that resulted in the exchange of
0.57 of a share of Ceridian common stock for each outstanding share of
Comdata common stock, for a total issuance of 20,472,176 Ceridian shares.
On August 31, 1995, Ceridian acquired Resumix, a privately held
California-based company that provides skills management software and
services, in a reverse subsidiary merger transaction in which the outstanding
shares of Resumix capital stock were exchanged for 849,010 newly issued shares
of Ceridian common stock.
The mergers qualify as a tax-free reorganizations and were accounted for
by the pooling-of-interests method. Accordingly, the Company's financial
statements have been restated to include the results of Comdata and Resumix
as if the mergers had taken place on the first day of the earliest reported
period. The accompanying table presents the combined and separate results
of the merged companies during the periods preceding the mergers. In
connection with the mergers, Ceridian incurred $29.7 in pooling expenses,
including fees for investment bankers and legal firms in addition to other
acquisition costs.
On October 2, 1995, Ceridian acquired the assets of the Centre-file
personnel and payroll services business in a purchase transaction for $52.1
in cash. Centre-file provides payroll processing services and human resource
management software to customers in the UK. In addition to $8.0 of assets and
$6.3 of liabilities, the Company recorded goodwill of $15.2 and other
intangibles of $35.2 to be amortized over periods of 5 to 20 years.
Comdata 1995 investing activity included the March purchase of the stock
of Trendar Corporation, which provides transaction processing services to the
transportation industry, for $12.7 in cash and a $1.5 note payable in March
1996. Comdata also sold in February the net assets of its retail services
division, which provided check authorization and collection services, for
$3.5 in cash, subject to certain contingencies, at a loss of $1.0.
In May 1994, Ceridian sold TeleMoney Services and related network and
computer center operations, received $24.3 of net cash proceeds and
recognized a $7.8 restructuring gain.
In June 1994, Ceridian purchased all of the outstanding stock of
Tesseract Corporation. The acquisition used $54.3 in cash, net of cash
acquired of $7.2. The Company received other assets valued at $9.9 and
liabilities, primarily deferred income, of $28.2, and recorded intangible
assets valued at $37.0 with amortization periods ranging from 10 to 20 years
and goodwill of $35.6 with a life of 20 years.
In October 1993, the Company purchased Systems Tax Service, Inc. for
1,005,908 shares of Ceridian common stock. The transaction was valued at
$18.8 and resulted in the recording of goodwill and other intangible assets
of $21.1 to be amortized over a 15-year period.
In December 1994, the Company sold its interest in the CMR joint venture
to VNU Business Information Services, Inc. ("VNU") in exchange for a 50.5%
interest in a partnership into which the business and assets of VNU's
Scarborough Research Corporation subsidiary had been placed, resulting in
no gain or loss.
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Restated Results of Mergers (9 Mos.) (12 Mos.) (12 Mos.)
Revenue
Ceridian $767.2 $ 916.3 $ 886.1
Resumix (a) 18.2 11.4
Comdata 204.3 243.3 212.3
Combined $971.5 $ 1,177.8 $ 1,109.8
Net earnings (loss)
Ceridian (b) $ 75.9 $ 78.6 $ (30.4)
Resumix (a) (1.5) (4.6)
Comdata (c) 22.4 20.6 (217.1)
Combined $ 98.3 $ 97.7 $ (252.1)
(a) Resumix included in Ceridian amount in 1995. Resumix revenue and net
earnings (loss) have been restated to conform to Ceridian's revenue
recognition policy.
(b) Includes extraordinary loss of $8.4 in 1993.
(c) Income tax provision restated to eliminate the benefit from deferred
tax asset recorded in 1994 and 1995.
</TABLE>
46
<PAGE>
K. SEGMENT DATA
Industry Segments
The two industry segments of Ceridian are Information Services and Defense
Electronics. The Information Services segment consists of Arbitron, Comdata,
and the Human Resources Group, along with a small services business sold in
May 1994. The Information Services businesses collect, manage and analyze
data and process transactions on behalf of customers in the human resources,
transportation, gaming, and electronic media markets and report information
resulting from such activities to customers. The products and services
provided by the Information Services businesses address specific information
management and transaction processing needs of other businesses to enable
them to operate more efficiently. These products and services are typically
provided through long-term customer relationships that result in a high level
of recurring revenue. Information Services 1995 earnings before interest and
taxes was reduced by pooling expenses of $29.7 related to the acquisitions of
Comdata and Resumix.
The Defense Electronics segment, consisting of Computing Devices
International, develops, manufactures and markets electronic systems,
subsystems and components, and provides systems integration and other
services, primarily to government defense agencies. The "other" category
represents corporate center operations and unallocated assets, primarily cash
and short-term investments. Intersegment sales are not material.
Major Customers
Revenue in 1995, 1994 and 1993, respectively, included sales under prime
contracts or subcontracts to the U.S. government of $214.9, $225.8 and $232.3
and the Canadian government of $190.7, $172.5 and $137.4, substantially all
of which are reported in the Defense Electronics segment. Of the sales to
the Canadian government, $163.9 in 1995, $153.8 in 1994 and $105.1 in 1993
were from the Iris contract.
<TABLE>
<S> <C> <C> <C> <C>
Information Defense
Industry Segment Data Services Electronics Other Consolidated
1995
Revenue $ 823.5 $ 509.5 $ - $ 1,333.0
Earnings (Loss) before
interest and taxes $ 108.6 $ 33.7 $ (7.6) $ 134.7
Identifiable assets $ 707.5 $ 294.9 $ 123.7 $ 1,126.1
Capital expenditures $ 39.1 $ 12.0 $ 1.9 $ 53.0
Depreciation $ 26.6 $ 11.6 $ 0.9 $ 39.1
1994
Revenue $ 691.5 $ 486.3 $ - $ 1,177.8
Earnings (Loss) before
interest and taxes $ 116.7 $ 30.6 $ (10.6) $ 136.7
Identifiable assets $ 534.3 $ 210.0 $ 233.2 $ 977.5
Capital expenditures $ 31.9 $ 13.4 $ 0.6 $ 45.9
Depreciation $ 23.8 $ 10.1 $ 1.6 $ 35.5
1993
Revenue $ 648.5 $ 461.3 $ - $ 1,109.8
Earnings (Loss) before
write-off of intangibles,
restructure, interest
and taxes $ 75.9 $ 27.0 $ (7.0) $ 95.9
Restructure gain (loss) (75.9) (5.5) 14.4 (67.0)
Write-off of intangibles (230.3) - - (230.3)
Earnings (Loss) before
interest and taxes $(230.3) $ 21.5 $ 7.4 $ (201.4)
Identifiable assets $ 368.8 $ 209.7 $ 272.3 $ 850.8
Capital expenditures $ 23.5 $ 10.6 $ 0.9 $ 35.0
Depreciation $ 31.1 $ 8.7 $ 1.1 $ 40.9
</TABLE>
47
<PAGE>
Geographic Segments
The Company's international operations consist of defense electronics
operations in Canada and the UK and a payroll processing business in the
UK acquired in October 1995. The amounts of the parent company's equity in
net assets of and advances to international subsidiaries and branches were
$107.7 and $47.9 at December 31, 1995 and 1994, respectively.
<TABLE>
<S> <C> <C> <C>
Geographic Segment Data United States International Consolidated
1995
Revenue $ 1,037.2 $ 295.8 $ 1,333.0
Earnings before interest and taxes $ 118.0 $ 16.7 $ 134.7
Identifiable assets $ 862.7 $ 263.4 $ 1,126.1
1994
Revenue $ 919.7 $ 258.1 $ 1,177.8
Earnings before interest and taxes $ 120.6 $ 16.1 $ 136.7
Identifiable assets $ 841.6 $ 135.9 $ 977.5
1993
Revenue $ 893.9 $ 215.9 $ 1,109.8
Earnings before restructure,
write-off of intangibles, interest and taxes $ 83.8 $ 12.1 $ 95.9
Restructure loss (65.5) (1.5) (67.0)
Write-off of intangibles (230.3) - (230.3)
Earnings (Loss) before interest and taxes $ (212.0) $ 10.6 $ (201.4)
Identifiable assets $ 717.7 $ 133.1 $ 850.8
</TABLE>
L. LEASING ARRANGEMENTS AS LESSEE
Ceridian conducts a substantial portion of its operations in leased
facilities. Most such leases contain renewal options and require payments
for taxes, insurance, and maintenance. Downsizing activities in prior years
have resulted in assignment of leases under which Ceridian remains secondarily
liable for future rental obligations totaling $31.2 at December 31, 1995. The
Company does not anticipate any material nonperformance by the assignees of
these leases, which principally involve Control Data Systems, Inc. and Seagate
Technology, Inc.
Virtually all leasing arrangements for equipment and facilities are
operating leases and the rental payments under these leases are charged to
operations as incurred. The amounts in the accompanying tables do not
include assigned leases or obligations recorded as liabilities as the result
of restructuring actions in prior years.
The amounts of rental expense and sublease income for each of the three
years ended December 31, 1995 appear in the following table.
Rental Expense 1995 1994 1993
Rental expense $45.0 $44.8 $46.2
Sublease rental income (2.9) (2.7) (2.5)
Net rental expense $42.1 $42.1 $43.7
48
<PAGE>
Future minimum noncancelable lease payments and related sublease income,
on operating leases existing at December 31, 1995 which have an initial
term of more than one year, are described in the following table.
Future Minimum Lease Payments
Sublease
Lease Rental
Payments Income Net
1996 35.3 (2.5) 32.8
1997 31.1 (2.5) 28.6
1998 26.9 (2.3) 24.6
1999 23.7 (2.3) 21.4
2000 21.0 (2.3) 18.7
Thereafter 37.9 (7.7) 30.2
M. COMMITMENTS AND CONTINGENCIES COMMITMENTS
In January 1995, Ceridian entered into a technology services agreement
with Integrated Systems Solutions Corporation ("ISSC"), a wholly-owned
subsidiary of IBM Corporation. Under the technology services agreement,
whose term extends through December 31, 2004, ISSC will provide centralized
computer processing services required by the Company's Employer Services
business for payroll processing customers nationwide. While the Company
expects to spend approximately $110.0 over the term of the agreement, the
future minimum noncancelable annual service charges payable by the Company
are $6.1 in 1996, $3.9 in 1997 and $2.6 in 1998.
Comdata contracted with ISSC in 1991 for substantially all data
processing functions for a term of ten years. In connection with the
agreement, ISSC paid $15.0 in cash to Comdata for certain property and
rights and to reimburse certain transition expenses of Comdata. This amount,
net of $0.7 for assets sold to ISSC, was recorded as a deferred credit and
is being amortized over the term of the agreement. In 1995, the agreement
was amended to increase the minimum monthly payment from $1.0 to $1.7 in 1996
and $1.5 thereafter. The amount of expense incurred, net of amortization of
the deferred credit, was $13.9 in 1995, $11.2 in 1994 and $10.0 in 1993.
Cancellation of the agreement for convenience in 1996 would require payment
of a termination fee of $23.7.
Under a Telecommunications Services Agreement with LDDS/WorldCom
("LDDS" formerly "ATC"), renewed in 1995, Comdata agreed to purchase a
minimum of $10.0 of long distance services each year until 2003. Under
this agreement, expenses of $18.5 in 1995, $13.7 in 1994 and $11.2 in 1993
were incurred on behalf of LDDS, which was a Comdata stockholder prior to
its merger with Ceridian and remained a Ceridian stockholder at December 31,
1995. The amount payable to LDDS at December 31, 1995 was $3.3.
Cancellation of the agreement for convenience requires the payment of $16.2.
INTEREST RATE COLLARS AND SWAPS
During 1995, Ceridian executed a series of seven interest rate collar
transactions of $100.0 each for the purpose of hedging interest rate risk
on invested customer deposits held in its tax filing trust. The
counterparties to these arrangements are domestic commercial banks with debt
ratings of A or better. Under current accounting standards, neither the
collar arrangements nor the related trust investments and offsetting
liability to customers are reflected in the Company's balance sheet. These
arrangements, which do not require collateral, provide for the bank to pay
Ceridian the amount by which a certain index of short-term interest rates
falls below a floor strike level (5% or 5.5%). Alternatively, when that
index exceeds a cap strike level (ranging from 6.15% to 8.47% and averaging
7.41%), Ceridian pays out the excess above the cap strike level. The
remaining terms of the collars range from 5 to 42 months. In addition to
the collar arrangements, the Company continued to hold at December 31, 1995,
three interest rate swap agreements, maturing in the first half of 1996, with
an A-rated financial institution for an aggregate notional amount of $75.0
with no collateral required. The risk of accounting loss through
non-performance by the counterparties under any of these arrangements is
considered negligible.
OTHER MATTERS
In connection with the spin-off of Control Data Systems, Ceridian agreed
to indemnify the U.S. Pension Benefit Guaranty Corporation ("PBGC") if the
Control Data Systems defined benefit pension plan is terminated in a
distress termination and the PBGC is unable to recover the full amount of
any unfunded benefit liabilities. The maximum amount of this contingent
liability is $16.0, which will decrease by $4.0 each July 31 beginning in
1996. The Company monitors all such contingent liabilities and has
established restructure or other reserves for those which it believes are
probable of payment. With respect to these contingent obligations, the
Company believes that there is not a material exposure to an accounting
loss as of December 31, 1995.
49
<PAGE>
N. LEGAL MATTERS
Age Discrimination Litigation.
Certain former employees, purporting to act on behalf of a class of all
former employees of the Company who were terminated after the age of 40,
filed suit against the Company in U.S. District Court in Minnesota in 1990
alleging violations of the Age Discrimination in Employment Act. An earlier
administrative proceeding before the Equal Employment Opportunity Commission
involving some of the named plaintiffs was dismissed in October 1988. With
the Court's permission, plaintiffs invited all individuals in the alleged
class to join as additional plaintiffs. About 1,100 former employees
indicated a desire to do so. In addition, certain of the plaintiffs in this
action, along with other individuals, filed two parallel age discrimination
class action lawsuits in state court in Minnesota, which have been stayed
pending resolution of the federal court action. In December 1992, the Court
denied plaintiffs' motion for certification of the requested class of former
employees, but ordered that putative class members would be allowed to file
individual age discrimination claims against the Company. In response, eight
complaints covering 419 of the putative class members were filed against the
Company in early 1993. Later that year the Company made individual settlement
offers to these plaintiffs, 92 of whom accepted offers in an aggregate amount
of $0.6.
In late 1993, the parties agreed to commence by September 1994 a series
of three six-week test trials, each involving twelve randomly selected
plaintiffs, that were to be determinative as to issues of liability, but not
damage amounts (if any), with respect to the plaintiffs involved. The Company
agreed to the test case process and has explored settlement opportunities
principally because of the costs of defending these actions. In light of
settlement discussions that occurred in the second quarter 1994 and the
Company's estimates of costs to defend these actions, the Company
established reserves totaling $15 million with respect to these cases in June
1994. The Company indicated at that time that it was prepared to either
absorb that amount in settlement costs if settlement were to occur within a
reasonable period of time or commit that amount to a multi-year defense of
these actions, as a result of which the Company firmly believes it would
prevail.
The first test trial did not begin by the specified time, and counsel
for the plaintiffs took the position that he does not wish to re-institute
the test trial process. In February 1995, these cases were reassigned to a
second district judge. In late 1995, the federal magistrate assigned to
these cases entered an order that contemplates a consolidated trial on the
limited question of whether the Company engaged in a "pattern or practice"
of age discrimination. The Company has appealed the magistrate's ruling
regarding the consolidated trial because a pattern or practice trial is
inappropriate in the absence of a class. In January 1996, these cases were
reassigned to a third district judge. Plaintiffs have also requested that
the EEOC intervene in this case, presumably seeking to avail themselves of
the EEOC's enhanced powers to obtain consolidated trials of multi-party
litigation. The local office of the EEOC has recommended intervention to
the EEOC national office in Washington D.C., which, if it concurs, must
obtain the court's permission to intervene. The local EEOC office has also
sought to reinstitute settlement conferences between the parties. Although
the Company would be amenable to a global settlement of these cases in light
of the high costs of defending them, it is not optimistic that a settlement
can be achieved in the near term on acceptable terms, given the lack of merit
of the plaintiffs' cases.
Comdata Antitrust Cases.
In October 1995, a lawsuit was filed by Imperial Bank of Los Angeles against
Comdata and its Comdata Network, Inc. subsidiary ("Network") in U.S. District
Court for the Central District of California alleging that certain business
practices of Network in providing cash advance services at legalized gaming
establishments, truck stops and check cashing establishments violated the
federal antitrust laws. Specifically, the lawsuit alleges that certain
provisions of Network's long-term contracts with its customers unlawfully
excluded others from providing competing services. The lawsuit
seeks injunctive relief, money damages "in excess of $20 million," treble
damages under the antitrust laws and attorneys fees and costs. A similar
lawsuit was also filed in October 1995 in U.S. District Court for the
Northern District of California by Preferred Card Services, Inc., which is
understood to be an independent marketing organization for Imperial Bank.
Preferred Card Services seeks relief similar to that sought by Imperial Bank,
including money damages "in excess of $8 million." A third similar lawsuit
was filed in December 1995 in U.S. District Court for the District of Nevada
by Service Data Corporation, dba Premier Cashlink, which is a competitor of
Comdata's in the gaming industry. Service Data also seeks relief similar to
that sought by Imperial Bank, including money damages "in excess of $10
million." The Company believes that Comdata and Network have not engaged
in any illegal conduct and intends to vigorously contest the lawsuits.
50
<PAGE>
Retirement Plan Litigation.
In August 1995, the Company and its primary defined benefit pension plan
maintained for certain U.S. employees (the "Plan") were named as co-defendants
in a lawsuit filed in U.S. District Court for the District of Minnesota. The
two plaintiffs, who left the employ of the Company in 1989 and elected at that
time to receive their vested benefit under the Plan in the form of a single
enhanced lump sum payment, purport to act on behalf of a class of all persons
who elected to receive a lump sum benefit under the Plan. The plaintiffs
allege that the Company and the Plan utilized an incorrect methodology in
calculating the amount of enhanced lump sum benefits payable to the plaintiffs
and the other class members. Specifically, the plaintiffs allege that an
improperly high interest (discount) rate was utilized to calculate the lump
sum benefit amounts, thereby lowering the benefit amounts, in contravention
of the Employee Retirement Income Security Act of 1974, the Plan and the
defendants' fiduciary duties. The Company believes that the proper
methodology was consistently utilized in calculating lump sum benefit
payments at all times since that feature was introduced into the Plan in 1989,
and denies the plaintiffs allegations. Moreover, any finding in favor of the
plaintiffs would not likely have a direct financial effect on the Company, but
rather would result in an increase in Plan liabilities that is not currently
estimable. Such an increase in Plan liabilities would, in turn, become one of
many factors affecting the funded status of the Plan. The funded status of
the Plan, in turn, is one of many factors affecting the determination of the
Company's obligation (if any) to make an annual contribution to the Plan and
the determination of its annual pension expense (if any) attributable to
the Plan.
Seagate Securities Litigation.
The Company and Lawrence Perlman, its chairman, president and CEO, have been
named as co-defendants in a lawsuit filed in U.S. District Court for the
Northern District of California against Seagate Technology, Inc., certain of
its present or former officers, and three investment banking firms. The
plaintiffs purport to act on behalf of a class consisting of all purchasers
of Seagate common stock during the period October 11, 1990 through June 26,
1991 (the "Class Period"). During the Class Period, the Company sold 10.7
million shares of Seagate common stock in a registered public offering.
The plaintiffs allege that during the Class Period, the defendants acted in
concert with each other to issue false and misleading public statements
regarding Seagate's earnings, products and future prospects which
artificially inflated the price of Seagate common stock during the Class
Period and permitted the Company and the individual defendants to profit
from stock sales during the Class Period. The plaintiffs allege that such
conduct violated federal securities laws and also allege "controlling person"
liability under those laws against, among others, the Company and Mr. Perlman.
The Company believes that the claims against it and Mr. Perlman are without
merit, and has notified Seagate that this matter and any expenses the Company
incurs in connection therewith are subject to an indemnification obligation
undertaken by Seagate at the time it issued the 10.7 million shares to the
Company as partial payment for Seagate's purchase of the Company's Imprimis
subsidiary.
Other Matters.
The Company is also involved in a number of other judicial and administrative
proceedings considered normal in the nature of its current and past
operations, including employment-related disputes, contract disputes and tort
claims. It is anticipated that final disposition of some of these
proceedings may not occur for several years.
In the opinion of management, the final disposition of all current judicial
and administrative proceedings will not, considering the merits of the claims
and available reserves, have a material adverse effect on the Company's
financial position or results of operations.
51
<PAGE>
<TABLE>
SUPPLEMENTARY QUARTERLY DATA (Unaudited) (Dollars in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994
4th 3rd 2nd 1st 4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Revenue $ 361.5 $ 317.9 $ 327.4 $ 326.2 $ 301.3 $ 310.7 $ 284.3 $ 281.5
Cost of revenue 216.9 189.4 198.4 195.6 181.6 196.4 178.8 172.9
Gross profit 144.6 128.5 129.0 130.6 119.7 114.3 105.5 108.6
Selling, general and administrative 91.5 71.5 74.7 72.2 74.2 69.2 65.2 65.5
Research and development 13.4 13.1 13.8 14.2 11.6 11.1 9.3 8.5
Other expense (income) (1) 32.8 0.6 0.7 (0.5) (2.5) (1.2) 0.1 0.4
Earnings (Loss) before interest and taxes 6.9 43.3 39.8 44.7 36.4 35.2 30.9 34.2
Interest income 2.6 3.9 2.9 2.7 2.8 2.8 3.2 1.9
Interest expense (7.3) (7.7) (7.9) (7.7) (8.0) (8.0) (8.1) (8.1)
Earnings (Loss) before income taxes 2.2 39.5 34.8 39.7 31.2 30.0 26.0 28.0
Income tax provision 3.0 5.9 5.5 4.3 8.0 2.8 3.1 3.6
Earnings (Loss) before extraordinary item (0.8) 33.6 29.3 35.4 23.2 27.2 22.9 24.4
Extraordinary loss (2) 38.9 - - - - - - -
Net earnings (loss) $ (39.7) $ 33.6 $ 29.3 $ 35.4 $ 23.2 $ 27.2 $ 22.9 $ 24.4
Earnings (loss) per share (3)
Primary $ (0.06) $ 0.44 $ 0.38 $ 0.47 $ 0.29 $ 0.35 $ 0.29 $ 0.31
Fully diluted $ (0.06) $ 0.42 $ 0.37 $ 0.45 $ 0.29 $ 0.35 $ 0.29 $ 0.31
Shares used in calculations (in thousands) (4)
Primary 66,258 69,592 69,042 68,631 67,819 68,001 67,584 67,257
Fully diluted 66,258 79,976 79,426 79,015 78,203 78,385 77,968 77,641
Common Stock-per share
Market price ranges (5)
High 47-1/2 46-7/8 37-5/8 34-1/2 27-1/8 27-1/2 25-5/8 24-3/4
Low 36-5/8 36-3/4 31-5/8 26-1/8 23-1/2 24 21-1/2 18-1/2
No cash dividends have been declared on common stock during the periods presented.
(1) Includes pooling expenses of $29.7 related to Resumix and Comdata mergers.
(2) For details on the early retirement of debt, see notes B and I.
(3) Net earnings (loss) for calculation of primary earnings (loss) per share has been reduced by preferred dividends.
Fully diluted results per share may not be more favorable than primary.
(4) For calculation of a loss per share, common stock equivalents and the assumed conversion of preferred stock are ignored.
(5) Source: New York Stock Exchange-Composite Transactions.
</TABLE>
52
<PAGE>
<PAGE>
Exhibit 21
CERIDIAN CORPORATION
SUBSIDIARIES
DECEMBER 31, 1995
State or
Other Jurisdiction
of Incorporation
CD Plus S.A. France
Ceridian Holdings U.K. Limited United Kingdom
Centre-file Limited (f/k/a Datacarrer Limited) United Kingdom
Comdata Holdings Corporation Delaware
Comdata Network, Inc. Maryland
Cashcall Systems, Inc. Canada
Comdata Telecommunications Services, Inc. Delaware
Permicom Permits Services, Inc. Canada
Transceiver United, Inc. Nevada
Trendar Corporation Tennessee
Computing Devices Canada Ltd. Canada
Computing Devices Company Limited (Hastings) United Kingdom
Computing Devices International Satellite Services, Inc. Delaware
Minidata Services, Inc. New Jersey
Paragon Imaging, Inc. Florida
Resumix, Inc. California
Scarborough Research (General Partnership) Delaware
Tesseract Corporation California
User Technology Services Inc. New York
Certain subsidiaries, which in the aggregate would not constitute a
significant subsidiary, are omitted from this listing.
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
of Ceridian Corporation:
We consent to incorporation by reference in Registration Statements
Nos. 33-49601, 33-61551, 33-34035, 2-97570, 2-67753, 33-56833, 33-15920, 2-
81865, 2-93345, 33-26839, 33-54379, 33-56325, 33-61001, 33-62319, 33-64913,
333-01793, 333-01887 on Forms S-8 of Ceridian Corporation and in
Registration Statement No. 33-56351 on Form S-4 of our reports dated
January 23, 1996. Such reports relate to the consolidated financial
statements and related financial statement schedules of Ceridian
Corporation and subsidiaries as of December 31, 1995 and 1994 and for each
of the years in the three-year period ended December 31, 1995 and are
included or incorporated by reference in the 1995 Annual Report on Form 10-
K of Ceridian Corporation.
/s/ KPMG Peat Marwick
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 25, 1996
<PAGE>
Exhibit 23.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated January 20, 1996 on the consolidated financial statements of
Comdata Holdings Corporation incorporated by reference into Ceridian
Corporation's Form 10-K for the year ended December 31, 1995, into Ceridian
Corporation's previously filed Registration Statement File Nos. 33-49601,
33-61551, 33-34035, 2-97570, 2-67753, 33-56833, 33-15920, 2-81865, 2-93345,
33-26839, 33-54379, 33-56325, 33-61001, 33-62319, 33-64913, 333-01793,
333-01887 and 33-56351. It should be noted that we have not audited any
financial statements of Comdata Holdings Corporation subsequent to
December 31, 1995 or performed any audit procedures subsequent to the
date of our report.
/s/ ARTHUR ANDERSEN
ARTHUR ANDERSEN LLP
Nashville, Tennessee
March 21, 1996
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a Director of
Ceridian Corporation (the "Company"), a Delaware corporation, do hereby
make, nominate and appoint JOHN R. EICKHOFF, STEVEN J. OLSON and JOHN A.
HAVEMAN, and each of them, to be my attorney in fact for three months from
the date hereof, with full power and authority to sign his name on the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended; provided that such Form
10-K is first reviewed by the Audit Committee of the Board of Directors of
the Company and by my attorney in fact; and his name, when thus signed,
shall have the same force and effect as though I had manually signed such
Form 10-K.
IN WITNESS WHEREOF, I have signed this Power of Attorney as of
February 2, 1996.
/s/Lawrence Perlman /s/George R. Lewis
Lawrence Perlman George R. Lewis
/s/Ruth M. Davis /s/Charles Marshall
Ruth M. Davis Charles Marshall
/s/Allen W. Dawson /s/Carole J. Uhrich
Allen W. Dawson Carole J. Uhrich
/s/Richard G. Lareau /s/Richard W. Vieser
Richard G. Lareau Richard W. Vieser
/s/Paul S. Walsh
Paul S. Walsh
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Dec-31-1995
<PERIOD-TYPE> YEAR
<CASH> 151,700
<SECURITIES> 0
<RECEIVABLES> 385,200
<ALLOWANCES> 12,400
<INVENTORY> 30,400
<CURRENT-ASSETS> 570,800
<PP&E> 323,300
<DEPRECIATION> 202,400
<TOTAL-ASSETS> 1,126,100
<CURRENT-LIABILITIES> 605,600
<BONDS> 209,900
<COMMON> 33,700
0
4,700
<OTHER-SE> 111,600
<TOTAL-LIABILITY-AND-EQUITY> 1,126,100
<SALES> 562,800
<TOTAL-REVENUES> 1,333,000
<CGS> 411,000
<TOTAL-COSTS> 800,300
<OTHER-EXPENSES> 33,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,600
<INCOME-PRETAX> 116,200
<INCOME-TAX> 18,700
<INCOME-CONTINUING> 97,500
<DISCONTINUED> 0
<EXTRAORDINARY> 38,900
<CHANGES> 0
<NET-INCOME> 58,600
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
