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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 1998
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CERIDIAN CORPORATION
(Exact name of registrant as specified in charter)
Delaware 1-1969 52-0278528
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(State or other juris- (Commission File (IRS Employer
diction of incorporation Number) Identification No.)
8100 34th Avenue South, Minneapolis, MN 55425
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 612-853-8100
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 10, 1998, Ceridian Canada Ltd. ("Ceridian Canada"), an
indirect, wholly-owned subsidiary of Ceridian Corporation ("Ceridian"),
acquired substantially all of the assets and assumed certain liabilities of
the payroll processing and payroll management business conducted by the
Comcheq Services Limited ("Comcheq") subsidiary of the Canadian Imperial Bank
of Commerce ("CIBC"). The transaction occurred pursuant to an Agreement for
the Purchase and Sale of Certain of the Assets of Comcheq Services Limited,
dated as of March 10, 1998, among Comcheq, CIBC and Ceridian Canada.
The aggregate consideration paid by Ceridian Canada to Comcheq consisted
of $105.4 million in cash, with the amount of such consideration having been
determined by negotiations between Ceridian, Ceridian Canada, CIBC and
Comcheq. In the negotiations, consideration was given by the parties to the
current business and financial position and future prospects of the Comcheq
payroll business, financial terms of other business combinations recently
effected in the information services industry, the degree to which Comcheq's
product and service offerings and technological expertise are expected to
complement those of Ceridian's Employer Services business generally, and
other relevant factors.
Approximately $42 million of the purchase consideration was borrowed by
Ceridian Canada from CIBC under a revolving credit facility established
pursuant to a Credit Agreement dated as of March 2, 1998 between Ceridian
Canada and CIBC. Ceridian guarantees Ceridian Canada's obligations under
this credit facility, which matures July 31, 2002. The balance of the
purchase consideration was provided by Ceridian from its existing cash and
equivalents to Ceridian Canada as equity capital.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following is a complete list of Exhibits filed or
incorporated by reference as part of this report:
Exhibit 2.1 Agreement for the Purchase and Sale of Certain of the Assets
of Comcheq Services Limited, dated as of March 10, 1998,
among Comcheq Services Limited, Canadian Imperial Bank of
Commerce and Ceridian Canada Ltd. (exhibits and schedules
omitted).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CERIDIAN CORPORATION
Dated: March 25, 1998
By: /s/ Loren D. Gross
-----------------------------------
Name: Loren D. Gross
Title: Vice President and
Corporate Controller
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Agreement dated March 10, 1998 is made
B E T W E E N:
COMCHEQ SERVICES LIMITED
(the "Vendor")
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
("CIBC")
- and -
CERIDIAN CANADA LTD.
(the "Purchaser")
RECITALS
A. The Vendor carries on the Business;
B. The Parties have executed the Letter of Intent;
C. The Vendor is willing to sell and the Purchaser is willing to purchase
the Assets and the Purchaser is willing to assume the Assumed Liabilities,
all on the terms and conditions contained in this Agreement; and
D. CIBC proposes to enter into a Transitional Services Agreement with the
Purchaser pursuant to which CIBC will provide certain services to the
Purchaser, in connection with the business to be carried on by the Purchaser
with the Assets.
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For good and valuable consideration, the receipt and adequacy of which
arehereby acknowledged, the Parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions. In this Agreement, the following terms shall have
the meanings set out below unless the context requires otherwise:
(1) "Accountant" has the meaning given in Section 2.6(4).
(2) "Adjustment Amount" has the meaning given in Section 2.7(1).
(3) "Adjustment Date" has the meaning given in Section 2.7(1).
(4) "Affiliate" means, with respect to any Person, any other Person who
directly or indirectly controls, is controlled by, or is under
direct or indirect common control with, such Person, and includes
any Person in like relation to an Affiliate. A Person shall be
deemed to control a Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the
term "controlled" shall have a similar meaning.
(5) "Agreement" means this Agreement, including the Exhibits and the
Schedules to this Agreement, as it or they may be amended or
supplemented from time to time, and the expressions "hereof",
"herein", "hereto", "hereunder", "hereby" and similar expressions
refer to this Agreement and not to any particular Section or other
portion of this Agreement.
(6) "Applicable Law" means, with respect to any Person, property,
transaction, event or other matter, any law, rule, statute,
regulation, order, judgment, decree, treaty or other requirement
having the force of law (collectively, the "Law") relating or
applicable to such Person, property, transaction, event or other
matter. Applicable Law also includes, where appropriate, any
interpretation of the Law (or any part thereof) by any Person
having jurisdiction over it, or charged with its administration or
interpretation.
(7) "Assets" means all of the properties, assets, interests and rights
of the Vendor which are Related to the Business, excluding, for
greater certainty, the Assets under Administration - Payroll
Account and the Excluded Assets, but including the following:
(a) the Receivables;
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(b) the Prepaid Amounts;
(c) the Contracts;
(d) the Personal Property;
(e) the Intellectual Property;
(f) the Books and Records;
(g) all rights and interests of the Vendor to and in the Leased
Premises and under the Premises Leases;
(h) all rights and interests under or pursuant to all warranties,
representations and guarantees, express, implied or otherwise,
of or made by suppliers or others in connection with the
Assets or the Assumed Liabilities;
(i) all goodwill of the Vendor including the present telephone
numbers, internet domain addresses and other communications
numbers and addresses of the Vendor; and
(j) all proceeds of any or all of the foregoing received or
receivable after the Effective Time.
(8) "Assets Under Administration - Payroll Account" means the cash and
short term deposits and investments managed by or on behalf of the
Vendor during the period of time between the transfer of such funds
by customers of the Business to the Vendor and the time the Vendor
arranges for payment of such customers' payroll obligations and
payment and satisfaction of certain statutory obligations.
(9) "Assumed Liabilities" means the following Liabilities of the Vendor
to the extent they are Related to the Business:
(a) all Liabilities under or in respect of (i) the Permitted
Liens; (ii) the Leases; (iii) the Contracts; and (iv) the
Intellectual Property arising after the Effective Time;
(b) all current liabilities of the Vendor to the extent set forth
in the Statement of Assets and Liabilities;
(c) Liabilities incurred in the ordinary course of business before
the Effective Time to the extent (i) not settled or otherwise
paid pursuant to Article 9; and (ii) set forth in the
Statement of Assets and Liabilities, regarding Employees'
expenses, commissions, wages, bonuses and salaries and
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vacation pay, workers' compensation levies, Canada Pension
Plan contributions and employment insurance premiums in
respect of such amounts; and
(d) Liabilities in respect of the Assumed Plans and Funds to the
extent assumed in accordance with the terms of Article 9.
(10) "Assumed Plans and Funds" means the Comcheq Plan, the Comcheq Fund,
the DPSP, the DPSP Fund, the GRSPs and the GRSP accounts.
(11) "Books and Records" means all books, records, files and papers of
the Vendor including drawings, engineering information, manuals and
data, sales and advertising materials, sales and purchases
correspondence, trade association files, research and development
records, lists of present and former customers and suppliers,
personnel, employment and other records, and all copies and
recordings of the foregoing, but excluding the Vendor's minute
books and other like corporate records.
(12) "Business" means the business of payroll processing and payroll
management carried on by the Vendor.
(13) "Business Day" means any day except Saturday, Sunday or any day on
which banks are generally not open for business in the City of
Toronto.
(14) "Canadian Dollars" means the lawful currency of Canada.
(15) "CIBC Plan Employees" has the meaning given in Section 9.3(2).
(16) "CIBC Plans" means the Canadian Imperial Bank of Commerce
Contributory Pension Plan and the Canadian Imperial Bank of
Commerce Non-Contributory Pension Plan.
(17) "Claim" has the meaning given in Section 7.1.
(18) "Closing" means the completion of the purchase and sale of the
Assets in accordance with the provisions of this Agreement.
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(19) "Closing Date" means March 10, 1998 or such earlier or later date
as may be agreed upon in writing by the Parties.
(20) "Closing Statements" has the meaning given in Section 2.6(1).
(21) "Closing Time" means the time of closing on the Closing Date
provided for in Section 4.1.
(22) "Comcheq Fund" has the meaning given in Section 9.3(1).
(23) "Comcheq Plan" means the Retirement Plan for the Employees of
Comcheq Services Limited.
(24) "Computer Software" means all computer software and all copyright
and other rights and interests in all computer software (in source
code, object code, machine readable and human readable forms)
Related to the Business including all associated documentation and
technical information sufficient to permit the Purchaser to
understand, operate, support and modify such computer software,
including the Vendor's Computer Software and the Third Party
Software; and
"Vendor's Computer Software" means the Computer Software identified
in Schedules 6.2(13)(a)(i) and 6.2(13)(a)(ii).
(25) "Consents and Approvals" means (a) the consents and approvals
listed in Schedule 1.1(25); and (b) all other consents, approvals,
orders and authorizations of any Person (or registrations,
declarations, filings or recordings with any Person) required in
connection with the completion of the transaction contemplated by
this Agreement, the execution of this Agreement, the Closing or the
performance of any of the terms and conditions of this Agreement
other than such consents, approvals and authorizations of parties
to Contracts which, if not obtained, would not individually or in
the aggregate, result in a Material Adverse Change.
(26) "Contracts" means all rights and interests of the Vendor in all
pending and/or executory contracts to or by which the Vendor or any
of the Assets or Business is bound or entitled to benefits
including contracts in progress, the Material Contracts and the
Leases, but excluding the Employee Plans.
(27) "Copyright" means all copyright in and to works which are Related
to the Business excluding Computer Software; and
"Vendor's Copyright" means all Copyright owned by the Vendor,
including the Copyright identified in Schedule 6.2(13)(b).
(28) "Deposit" means the deposit in the amount of U.S. $2,950,000 paid
by the Purchaser to Blake, Cassels & Graydon pursuant to the Letter
to Intent, and held
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in trust by Blake, Cassels & Graydon in an interest
bearing account of CIBC, to be disbursed pursuant to
Section 2.5.
(29) "DPSP" and "DPSP Fund" have the meanings given in Section 9.3(4).
(30) "Effective Time" means 5:00 a.m. Central Standard Time on the day
immediately following the Closing Date or such other time as the
Parties may agree.
(31) "Effective Time Net Book Value" means the amount by which the book
value of the Assets exceeds the book value of the Assumed
Liabilities as at the Effective Time, all as shown in the Statement
of Assets and Liabilities.
(32) "Employee" means an individual who is employed by the Vendor
including those on long term disability, short term disability,
statutory leave or other approved absence; and "Employees" means
every Employee.
(33) "Employee Plans" has the meaning given in Section 6.2(18).
(34) "Employment Contracts" has the meaning given in Section 6.2(17)(b).
(35) "Excluded Assets" means
(a) all cash on hand or in banks or other depositories (including
treasury-bills, bonds and other like instruments) (which for
greater certainty, does not include any cash held as part of
the Assets Under Administration - Payroll Account);
(b) any Tax refunds arising on or before the Closing which have
not yet been paid to the Vendor; and
(c) those items marked with an asterisk on the interim balance
sheet of the Vendor prepared as of February 28, 1998 and
forming part of Schedule 6.2(7), which items will be excluded
from the Statement of Assets and Liabilities.
(36) "Excluded Liabilities" means all Liabilities of the Vendor (other
than the Assumed Liabilities) including, without limitation:
(a) all income taxes payable; and
(b) any liability for any fees payable to CIBC Oppenheimer Corp.
in connection with the transactions contemplated by this
Agreement.
(37) "Financial Statements" has the meaning given in Section 6.2(7).
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(38) "GAAP" means those accounting principles which are recognized as
being generally accepted in Canada from time to time as set out in
the handbook published by the Canadian Institute of Chartered
Accountants, consistently applied.
(39) "GRSPs" and "GRSP accounts" have the meanings given in Section
9.3(5).
(40) "GST" means goods and services tax imposed under Part IX of the
Excise Tax Act (Canada).
(41) "Inactive Employees" means the Employees who, as of the Closing
Date, are on short term disability, long term disability or
statutory leave or approved absence.
(42) "including" means "including without limitation", and "includes"
means "includes without limitation".
(43) "Indemnified Party" means a Person whom the Vendor, CIBC or the
Purchaser, as the case may be, has agreed to indemnify under
Article 7.
(44) "Indemnifying Party" means, in relation to an Indemnified Party,
the Party to this Agreement that has agreed to indemnify that
Indemnified Party under Article 7.
(45) "Intellectual Property" means the Trade-marks, Computer Software,
Copyrights, Patents and Technology.
(46) "Interim Net Book Value" means the Vendor's good faith estimate of
the Effective Time Net Book Value, which estimate shall be
delivered to the Purchaser no later than three (3) Business Days
prior to the Closing Date.
(47) "Interim Period" means the period from the date of this Agreement
to the Closing.
(48) "Interim Unrealized Gain (Mortgages Investment)" means
$2,066,621.00, being the Vendor's good faith estimate of the
Unrealized Gain (Mortgages Investment).
(49) "Leased Premises" means all real property that is leased or
occupied by the Vendor under the Premises Leases.
(50) "Leases" means Personal Property Leases and Premises Leases.
(51) "Letter of Intent" means the letter of intent signed by the Parties
on January 26, 1998.
(52) "Liabilities" means all costs, expenses, charges, debts,
liabilities, claims, demands and obligations, whether primary or
secondary, direct or indirect, fixed,
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contingent, absolute or otherwise, under or in respect of any
contract, agreement, arrangement, lease, commitment, undertaking or
Applicable Law.
(53) "Lien" means any lien, mortgage, charge, security interest, prior
assignment, lease, sublease, right to possession, encumbrance or
claim, which affects the right, title or interest in or to any
particular property.
(54) "Material Adverse Change" means a change in the condition or
operation of the Business which has affected or could reasonably be
expected to materially adversely affect the value, condition
(financial or otherwise), or prospects of the Business or the
Assets.
(55) "Material Contract" means any agreement (whether oral or written)
to which the Vendor is a party or by which the Vendor or any of the
Assets or the Business is bound but does not include (a) any
agreement which involves or may reasonably be expected to involve
the payment to or by the Vendor of less than $100,000 over the one
year period commencing on February 1, 1998 and (b) the Employee
Plans, Leases and Contracts in respect of the Intellectual Property.
(56) "Mortgages Investment" means the investments in the Assets Under
Administration - Payroll Account listed in Schedule 1.1(86).
(57) "Obligations - Payroll Account" means the payroll liabilities and
customer advances on payrolls maintained by the Vendor as an
ancillary aspect of its payroll processing and payroll management
system.
(58) "Party" means a party to this Agreement and any reference to a
Party includes its successors and permitted assigns; and "Parties"
means every Party.
(59) "Patents" means all inventions, industrial designs, patents and
registrations and applications for registration for any of the
foregoing, Related to the Business; and
"Vendor's Patents" means all Patents owned by the Vendor, including
the Patents identified in Schedule 6.2(13)(c).
(60) "Payroll Account Adjustment Amount" has the meaning given in
Section 3.4.
(61) "Payroll Account Adjustment Date" has the meaning given in Section
3.4.
(62) "Payroll Account Closing Statement" has the meaning given in
Section 3.3.
(63) "Pension Plans" means the Comcheq Plan and the CIBC Plans.
(64) "Permitted Liens" means:
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(a) Liens for Taxes if such Taxes are not due and payable;
(b) mechanics', construction, carriers', workers', repairers',
storers' or other similar liens (inchoate or otherwise) which
individually or in the aggregate are not material; and
(c) the Liens listed in Schedule 1.1(64) to the extent they secure
Assumed Liabilities.
(65) "Person" is to be broadly interpreted and includes an individual, a
corporation, a partnership, a trust, an unincorporated
organization, the government of a country or any political
subdivision thereof or any agency or department of any such
government, and the executors, administrators or other legal
representatives of an individual in such capacity.
(66) "Personal Property" means all machinery, equipment, furniture,
motor vehicles and other chattels Related to the Business owned or
leased by the Vendor.
(67) "Personal Property Leases" means all chattel leases, equipment
leases, rental agreements, conditional sales contracts and other
similar agreements Related to the Business.
(68) "Premises Leases" means all the leases, agreements to lease,
subleases, licence agreements and occupancy or other agreements
relating to the Leased Premises.
(69) "Prepaid Amounts" means all pre-payments, prepaid charges,
deposits, sums and fees made by the Vendor.
(70) "Prime Rate" means the prime rate of interest per annum quoted by
CIBC from time to time as its reference rate of interest for
Canadian dollar demand loans made to its commercial customers in
Canada and which CIBC refers to as its "prime rate", as such rate
may be changed from time to time.
(71) "Purchase Price" has the meaning given in Section 2.3.
(72) "Purchaser's Welfare Benefit Plans" has the meaning given in
Section 9.4.
(73) "QST" means the sales tax imposed under the Quebec Sales Tax Act.
(74) "Receivables" means all accounts receivable Related to the Business
together with any unpaid interest accrued thereon.
(75) "Related to the Business" means, directly or indirectly, used in,
arising from or relating in any manner to the Business.
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(76) "Rights" has the meaning given in Section 4.5.
(77) "Statement of Assets and Liabilities" has the meaning set forth in
Section 2.6.
(78) "Taxes" means all taxes including all income, sales, use, goods and
services, capital, capital gains, alternative, withholding,
payroll, employer health, excise, real property and personal
property taxes.
(79) "Technology" means all processes, data, trade secrets, designs,
know-how, technology, technical information, reports and similar
materials recording or evidencing expertise or information Related
to the Business, excluding Patents, Computer Software and any
information that is in the public domain; and
Vendor's Technology" means all Technology owned by the Vendor,
including the Technology identified in Schedule 6.2(13)(d).
(80) "Third Party Claim" has the meaning given in Section 7.5.
(81) "Third Party Software" means the Computer Software identified in
Schedule 6.2(13)(e)(i) and the Computer Software relating to the
licences identified in Schedule 6.2(13)(e)(ii).
(82) "To the Best of the Vendor's and CIBC's Knowledge" means to the
best of the knowledge of the Vendor, or John Bowden (Director,
Comcheq), Robin A. Stansfield (Senior Vice President, CIBC),
Christine Govern (Manager, CIBC) or Mark Crestohl (Counsel, CIBC).
(83) "To the Best of CIBC's Knowledge" means to the best of the
knowledge of John Bowden, Robin A. Stansfield, Christine Govern or
Mark Crestohl.
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(84) "Trademarks" means all trademarks, trade names, designs, graphics,
logos and business names and other commercial symbols Related to
the Business, excluding those portions of all trademarks, trade
names, designs, graphics, logos and business names and all other
commercial symbols Related to the Business which include, refer to
or otherwise identify CIBC; and
"Vendor's Trademarks" means all Trademarks identified in Schedule
6.2(13)(f).
(85) "Transfer Election" has the meaning given in Section 4.5.
(86) "Unrealized Gain (Mortgages Investment)" means the amount by which
the fair market value of the Mortgages Investment exceeds the book
value of the Mortgages Investment, as of February 28, 1998,
calculated employing the methodology used by TAL Investment Counsel
Ltd. prior to the date hereof to determine the value of the
Mortgages Investment.
(87) "Vendor's Welfare Benefit Plans" has the meaning given in Section
9.4.
1.2 Headings and Table of Contents. The division of this Agreement
into Articles and Sections, the insertion of headings, and the provision of
any table of contents are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
1.3 Number and Gender. Unless the context requires otherwise, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.4 Business Days. If any payment is required to be made or other
action is required to be taken pursuant to this Agreement on a day which is
not a Business Day, then such payment or action shall be made or taken on the
next Business Day.
1.5 Currency and Payment Obligations. Except as otherwise expressly
provided in this Agreement:
(1) all dollar amounts referred to in this Agreement are stated in
Canadian Dollars;
(2) any payment contemplated by this Agreement shall be made by cash,
certified cheque or any other method that provides immediately
available funds; and
(3) except in the case of any payment due on the Closing Date, any
payment due on a particular day must be received and available not
later than 2:00 p.m. (Toronto time) on the due date and any payment
made after that time shall be deemed to have been made and received
on the next Business Day.
1.6 Calculation of Interest. In calculating interest payable under
this Agreement for any period of time, the first day of such period shall
be included and the last day of such period
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shall be excluded.
1.7 Statute References. Any reference in this Agreement to any statute
or any section thereof shall, unless otherwise expressly stated, be deemed to
be a reference to such statute or section as amended, restated or re-enacted
from time to time.
1.8 Section and Schedule References. Unless the context requires
otherwise, references in this Agreement to Sections, Exhibits or Schedules
are to Sections, Exhibits or Schedules of this Agreement.
ARTICLE 2
PURCHASE OF ASSETS
2.1 Agreement to Purchase and Sell. On the Closing Date, effective as
of the Effective Time and subject to the terms and conditions of this
Agreement:
(1) the Vendor shall sell to the Purchaser, and the Purchaser shall
purchase from the Vendor, the Assets as they exist at the Effective
Time; and
(2) the Purchaser shall assume the Assumed Liabilities.
2.2 No Assumption of Other Liabilities. For greater certainty, the
Purchaser is not assuming and shall not be responsible for any of the
liabilities, debts or obligations of the Vendor, whether present or future,
absolute or contingent and whether or not relating to the Business, other
than the Assumed Liabilities.
2.3 Amount of Purchase Price. The purchase price payable by the
Purchaser to the Vendor for the Assets (the "Purchase Price") shall be equal
to the sum of:
(1) $138,460,962;
(2) the Effective Time Net Book Value; and
(3) the Unrealized Gain (Mortgages Investment).
2.4 Payment of Purchase Price. The Purchase Price shall be paid and
satisfied as follows:
(1) at the Closing, the Purchaser shall pay to the Vendor an amount
equal to $138,460,962 plus the Interim Net Book Value plus the
Interim Unrealized Gain (Mortgages Investment);
(2) on the Adjustment Date, the Adjustment Amount shall be paid in the
manner
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provided for in Section 2.7; and
(3) any difference between the Interim Unrealized Gain (Mortgages
Investment) and the Unrealized Gain (Mortgages Investment) shall be
paid by the applicable Party as provided for in Section 2.7.
In addition, at the Effective Time, the Purchaser shall assume the Assumed
Liabilities by the execution and delivery of a general conveyance and
assumption of liabilities agreement substantially in the form of
Exhibit 4.2(1).
2.5 Deposit. The Deposit shall be disbursed in accordance with the
following provisions:
(1) if the Closing occurs on the Closing Date, then the Deposit plus
all interest earned thereon shall be released from trust and paid
to Ceridian Corporation within five (5) Business Days after the
Closing Date;
(2) if the Closing does not occur on the Closing Date for one of the
following reasons:
(a) despite using its reasonable best efforts, any Party fails to
obtain any of the Consents and Approvals,
(b) either CIBC or the Vendor determines unilaterally not to
proceed with the Closing, or
(c) subsequent to the date hereof, the Purchaser discovers a
condition or conditions which could reasonably be expected to
adversely affect the value of the Business taken as a whole by
an aggregate of $5,000,000.00 or more and which condition or
conditions was or were not disclosed to the Purchaser by CIBC
or the Vendor prior to the date hereof,
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then the Deposit plus all interest earned thereon shall be released
from trust and paid to Ceridian Corporation within five (5)
Business Days after the Closing Date; or
(3) if the Closing does not occur on the Closing Date for any reason
other than those enumerated in Section 2.5(2) above, then the
Deposit plus the interest earned thereon shall be released from
trust and paid to the Vendor within five (5) Business Days after
the Closing Date.
2.6 Preparation of Closing Statements.
(1) As soon as practicable, and in any event within 30 Business Days
after the Closing Date, the Vendor shall prepare and deliver to the
Purchaser (a) unaudited financial statements of the Vendor for the
period beginning on the first day of the current financial year of
the Vendor and ending at the Effective Time, comprising a balance
sheet, an income statement and a statement of changes in financial
position, prepared in accordance with GAAP in a manner consistent
with the Financial Statements (the "Closing Statements") and (b) a
statement (the "Closing Mortgages Investment Statement") detailing
the manner in which the Unrealized Gain (Mortgages Investment) was
calculated and setting forth the Unrealized Gain (Mortgages
Investment), based on market value calculations prepared by TAL
Investment Counsel Ltd. The Closing Statements shall also include
a statement in the form of Exhibit 2.6(1) setting forth the Assets
and Assumed Liabilities as of the Effective Time, prepared in
accordance with GAAP in a manner consistent with the Financial
Statements (the "Statement of Assets and Liabilities") provided,
however, that there shall be reflected in the Statement of Assets
and Liabilities (i) a contra asset line item in the amount of
$28,389 reflecting the time value discount of the "Interest
Receivable" line item until date of collection and (ii) a liability
line item in the amount of $159,091, reflecting 7/11 of $250,000
related to stay bonuses for five of the Vendor's officers.
(2) During the period from the Closing Date until the date of delivery
of the Closing Statements and the Closing Mortgages Investment
Statement, the Purchaser will give the Vendor and its agents and
representatives such assistance and access to the Books and Records
as the Vendor and its agents and representatives may reasonably
request to enable them to prepare the Closing Statements and the
Closing Mortgages Investment Statement.
(3) The Statement of Assets and Liabilities shall be conclusive of the
amount of the Effective Time Net Book Value and be final and
binding upon the Parties unless on or before the 30th Business Day
after the date on which the Closing Statements are delivered to the
Purchaser, the Purchaser gives to the Vendor a notice of objection
to any matter stated in the Closing Statements.
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(4) The Closing Mortgages Investment Statement shall be conclusive of
the Unrealized Gain (Mortgages Investment) and shall be final and
binding upon the Parties unless on or before the 30th Business Day
after the date on which the Closing Mortgages Investment Statement
is delivered to the Purchaser, the Purchaser gives to the Vendor a
notice of objection stating that, in the Purchaser's opinion (a)
the method used to value the Unrealized Gain (Mortgages Investment)
is not a generally accepted valuation method which would be
employed by a valuer qualified to value the Unrealized Gain
(Mortgages Investment), acting reasonably; or (b) an error has been
made in calculating the Unrealized Gain (Mortgages Investment). In
the case of Section 2.6(4)(a), the Purchaser shall have the burden
of demonstrating the correctness of such opinion and of proposing
an alternative methodology.
(5) If the Purchaser gives a notice of objection pursuant to Section
2.6(3) or 2.6(4), then the Vendor and the Purchaser shall consult
with each other with respect to the objection. If they are unable
to reach agreement within 10 Business Days after the notice of
objection has been given, then the dispute shall be resolved by
Deloitte & Touche (the "Accountant"). The resolution of the
dispute by the Accountant will be final and binding on the Parties.
The fees and expenses of the Accountant, unless otherwise agreed
by the Parties, will be borne equally by the Vendor and the
Purchaser.
2.7 Payments on Adjustment Date(s).
(1) If the Purchaser has not delivered a notice of objection pursuant
to Section 2.6 (3), then on the 35th Business Day after delivery of
the Closing Statements pursuant to Section 2.6(1) (the "Adjustment
Date"), an amount (the "Adjustment Amount") equal to the absolute
amount of difference between:
(a) the Effective Time Net Book Value, and
(b) the Interim Net Book Value,
shall be paid in the following manner (subject, however, to the
provisions of section 2.7(2)):
(c) if the amount referred to in Section 2.7(1)(a) is greater than
the amount referred to in Section 2.7(1)(b), then the
Purchaser will pay to the Vendor an amount equal to the
Adjustment Amount plus interest on the Adjustment Amount at
the Prime Rate from the Closing Date to the date of payment; or
(d) if the amount referred to in Section 2.7(1)(a) is less than
the amount referred to in Section 2.7(1)(b), then the Vendor
will pay to the Purchaser
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an amount equal to the Adjustment Amount plus interest on the
Adjustment Amount at the Prime Rate from the Closing Date to
the date of payment.
(2) If the Purchaser gives a notice of objection to the Closing
Statements pursuant to Section 2.6(3), then the Purchaser or the
Vendor, as the case may be, shall pay the portion, if any, of the
Adjustment Amount in respect of which there is no objection plus
interest on that undisputed portion of the Adjustment Amount in
accordance with Section 2.7(1) on the Adjustment Date. Upon the
resolution of the dispute with respect to the Closing Statements,
the Purchaser or the Vendor, as the case may be, shall pay any
additional amounts or overpayments, as the case may be, as are
determined to be payable, together with interest thereon, in
accordance with the provisions of Section 2.7(1).
(3) If the Purchaser has not delivered a notice of objection pursuant
to Section 2.6 (4), then on the 35th Business Day after delivery of
the Closing Mortgages Investment Statement pursuant to Section
2.6(1) (the "Mortgages Adjustment Date"), an amount (the "Mortgages
Adjustment Amount") equal to the absolute amount of difference
between:
(a) the Unrealized Gain (Mortgages Investment), and
(b) the Interim Unrealized Gain (Mortgages Investment),
shall be paid in the following manner (subject, however, to the
provisions of Section 2.7(4)):
(c) if the amount referred to in Section 2.7(3)(a) is greater than
the amount referred to in Section 2.7(3)(b), then the
Purchaser will pay to the Vendor an amount equal to the
Mortgages Adjustment Amount plus interest on the Mortgages
Adjustment Amount at the Prime Rate from the Closing Date to
the date of payment; or
(d) if the amount referred to in Section 2.7(3)(a) is less than
the amount referred to in Section 2.7(3)(b), then the Vendor
will pay to the Purchaser an amount equal to the Mortgages
Adjustment Amount plus interest on the Mortgages Adjustment
Amount at the Prime Rate from the Closing Date to the date of
payment.
(4) If the Purchaser gives a notice of objection to the Closing
Mortgages Investment Statement pursuant to Section 2.6(4), then the
Purchaser or the Vendor, as the case may be, shall pay the portion,
if any, of the Mortgages Adjustment Amount in respect of which
there is no objection plus interest on that undisputed portion of
the Adjustment Amount in accordance with Section 2.7(3) on the
Adjustment
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Date. Upon the resolution of the dispute with respect to the
Closing Mortgages Investment Statement, the Purchaser or the
Vendor, as the case may be, shall pay any additional amounts or
overpayments, as the case may be, as are determined to be payable,
together with interest thereon, in accordance with the provisions
of Section 2.7(3).
2.8 Allocation of Purchase Price. The Purchase Price shall be
allocated in accordance with Schedule 2.8. The Purchaser and the Vendor
shall follow the agreed allocation in Schedule 2.8 in determining and
reporting their liabilities for any Taxes and, without limitation, shall file
their respective income tax returns prepared in accordance with such
allocations.
2.9 Section 22 and Section 20(24) Elections. The Purchaser and the
Vendor shall execute jointly an election in the prescribed form under section
22 of the Income Tax Act (Canada) in respect of the Receivables and shall
each file such election with their respective tax returns for their
respective taxation years that include the Effective Time. The Purchaser and
the Vendor shall execute jointly an election in the prescribed manner under
subsection 20(24) of the Income Tax Act (Canada) in respect of all deposits
and other prepayments received by the Vendor from customers of the Business.
2.10 GST Election and QST Election. At the Closing, the Vendor and the
Purchaser shall execute jointly an election under section 167 of the Excise
Tax Act (Canada) to have the sale of the Assets take place on a GST-free
basis under Part IX of the Excise Tax Act (Canada) and shall execute jointly
an election under Section 75 of the Quebec Sales Tax Act to have the sale of
Assets take place on a QST-free basis under the Quebec Sales Tax Act and the
Purchaser shall file such elections with its GST and QST returns for the
reporting period in which the sale of the Assets takes place. The Purchaser
shall indemnify and hold harmless the Vendor in respect of any GST, QST,
penalties and interest that may be assessed against the Vendor under the
Excise Tax Act (Canada) or the Quebec Sales Tax Act in the event that any
such election may not be made in respect of the transaction contemplated by
this Agreement.
2.11 Objections or Appeal. If Revenue Canada or any provincial or other
authority does not accept or recognize the elections referred to in Sections
2.9 and 2.10 above in whole or in part, or issues or proposes to issue an
adverse assessment for Taxes with respect to the sale of the Assets to the
Purchaser pursuant hereto, the Vendor and CIBC shall cooperate with the
Purchaser in the exercise of all rights of objection or appeal.
ARTICLE 3
PAYROLL ACCOUNT
3.1 Transfer and Assumption. On the Closing Date, effective as of the
Effective Time, the Vendor shall transfer to the Purchaser the Assets Under
Administration - Payroll Account and the Purchaser shall assume the
Obligations - Payroll Account. The Vendor shall ensure that at the Effective
Time, the book value of the Assets Under Administration - Payroll Account
shall equal
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(as nearly as possible) the amount of the obligations under the Obligations -
Payroll Account.
3.2 Payroll Account Closing Statement.
(1) As soon as possible, and in any event within 30 Business Days after
the Closing Date, the Vendor shall prepare and deliver to the
Purchaser a statement (the "Payroll Account Closing Statement")
showing the book value of the Assets Under Administration - Payroll
Account and the amount of the obligations under the Obligations -
Payroll Account (collectively, the "Final Payroll Account
Amounts"), all as at the Effective Time.
(2) During the period from the Closing Date until the date of delivery
of the Payroll Account Closing Statement, the Purchaser will give
the Vendor and its agents and representatives such assistance and
access to the records relating to the Assets Under Administration -
Payroll Account and the Obligations - Payroll Account as the Vendor
and its agents and representatives may reasonably request to enable
them to prepare the Payroll Account Closing Statement.
(3) The Payroll Account Closing Statement shall be conclusive of the
amount of the Final Payroll Account Amounts and shall be final and
binding upon the Parties unless on or before the 30th Business Day
after the date on which the Payroll Account Closing Statement is
delivered to the Purchaser, the Purchaser gives to the Vendor a
notice of objection to any matter stated in the Payroll Account
Closing Statement.
(4) If the Purchaser gives a notice of objection pursuant to Section
3.2(3), then the Vendor and the Purchaser shall consult with each
other with respect to the objection. If they are unable to reach
agreement within 10 Business Days after the notice of objection has
been given, then the dispute shall be resolved by the Accountant.
The resolution of the dispute by the Accountant will be final and
binding on the Parties. The fees and expenses of the Accountant,
unless otherwise agreed by the Parties, will be borne equally by
the Vendor and the Purchaser.
3.3 Payroll Account Adjustment.
(1) If the Purchaser has not delivered a notice of objection pursuant
to Section 3.2(3), then on the 35th Business Day after delivery of
the Payroll Account Closing Statement (the "Payroll Account
Adjustment Date"), an amount (the "Payroll Account Adjustment
Amount") equal to the absolute amount of the difference between:
(a) the book value of the Assets Under Administration - Payroll
Account (as at the Effective Time); and
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(b) the book value of the Obligations - Payroll Account (as at the
effective Time),
shall be paid in the following manner (subject, owever, to the
provisions of Section 3.3(2)):
(c) if the amount referred to in Section 3.3(1)(a) is greater
than the amount referred to in Section 3.3(1)(b), the
Purchaser will pay to the Vendor an amount equal to the
Payroll Account Adjustment Amount plus interest thereon at the
Prime Rate from the Closing Date to the date of payment, or
(d) if the amount referred to in Section 3.3(1)(a) is less than
the amount referred to in Section 3.3(1)(b), the Vendor will
pay to the Purchaser an amount equal to the Payroll Account
Adjustment Amount plus interest thereon at the Prime Rate from
the Closing Date to the date of payment.
(2) If the Purchaser gives a notice of objection to the Payroll Account
Closing Statement pursuant to Section 3.2(3), then the Purchaser or
the Vendor, as the case may be, shall pay the portion, if any, of
the Payroll Account Adjustment Amount in respect of which there is
no objection plus interest on that undisputed portion of the
Payroll Account Adjustment Amount in accordance with Section 3.3(1)
on the Payroll Account Adjustment Date. Upon the resolution of the
dispute with respect to the Payroll Account Closing Statement, the
Purchaser or the Vendor, as the case may be, shall pay any
additional amounts or overpayments, as the case may be, as are
determined to be payable, together with interest thereon, in
accordance with the provisions of Section 3.3(1).
ARTICLE 4
CLOSING ARRANGEMENTS
4.1 Closing. The Closing shall take place at 10:00 a.m. on the Closing
Date at the offices of Blake, Cassels & Graydon in Toronto, Ontario, or such
other place as may be agreed orally or in writing by the Vendor and the
Purchaser.
4.2 Vendor's Closing Deliveries. At the Closing, the Vendor and CIBC
shall deliver or cause to be delivered to the Purchaser the following documents:
(1) a general conveyance and assumption of liabilities agreement, duly
executed by the Vendor substantially in the form of Exhibit 4.2(1);
(2) a "corporate" certificate of the secretary or other officer of the
Vendor;
(3) evidence in form satisfactory to the Purchaser acting reasonably
that the Consents
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and Approvals have been obtained;
(4) the elections referred to in Section 2.10;
(5) a Non-Compete Agreement between CIBC and the Vendor and the
Purchaser, duly executed by the Vendor and CIBC substantially in
the form of Exhibit 4.2(5);
(6) all deeds of conveyance, bills of sale, assurances, transfers,
assignments, consents and such other agreements, documents and
instruments as may be reasonably required by the Purchaser to
complete the transactions provided for in this Agreement;
(7) a Transitional Services Agreement between CIBC and the Purchaser
duly executed by CIBC substantially in the form of Exhibit 4.2(7);
(8) a Referral Agreement between the Purchaser and CIBC, duly executed
by CIBC substantially in the form of Exhibit 4.2(8);
(9) a Marketing Understanding between CIBC, Ceridian Corporation and
the Purchaser, duly executed by CIBC substantially in the form of
Exhibit 4.2(9);
(10) a list of all Inactive Employees as of the Closing Date;
(11) an opinion of Blake, Cassels & Graydon regarding the Vendor
addressed to the Purchaser and Osler, Hoskin & Harcourt
substantially in the form of Exhibit 4.2(11); and
(12) an opinion of in-house counsel of CIBC addressed to the Purchaser
and Osler, Hoskin & Harcourt substantially in the form of Exhibit
4.2(12).
4.3 Purchaser's Closing Deliveries. At the Closing, the Purchaser shall
deliver or cause to be delivered to the Vendor the following documents and
payments:
(1) a general conveyance and assumption of liabilities agreement, duly
executed by the Purchaser substantially in the form of Exhibit
4.2(1);
(2) a "corporate" certificate of the Secretary or other officer of the
Purchaser;
(3) the payments referred to in Section 2.3 and Section 3.2;
(4) the elections referred to in 2.10;
(5) a Non-Compete Agreement between CIBC and the Vendor and the
Purchaser, duly executed by the Purchaser substantially in the form
of Exhibit 4.2(5);
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(6) a Transitional Services Agreement between CIBC and the Purchaser,
duly executed by the Purchaser substantially in the form of Exhibit
4.2(7);
(7) a Referral Agreement between the Purchaser and CIBC duly executed
by the Purchaser substantially in the form of Exhibit 4.2(8);
(8) a Marketing Understanding between CIBC, Ceridian Corporation and
the Purchaser covering the distribution of alternative products,
duly executed by Ceridian Corporation and the Purchaser
substantially in the form of Exhibit 4.2(9);
(9) an opinion of Osler, Hoskin & Harcourt addressed to the Vendor and
Blake, Cassels & Graydon substantially in the form of Exhibit
4.3(9); and
(10) all such other assurances, consents, documents, agreements and
instruments as may reasonably be required by the Vendor to complete
the transactions provided for in this Agreement.
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4.4 Possession. On the Closing Date, the Vendor shall deliver or
cause to be delivered to the Purchaser possession of the Assets.
4.5 Non-Transferable and Non-Assignable Assets. To the extent that any
of the Assets to be transferred to the Purchaser on the Closing, or any
claim, right or benefit arising under or resulting from such Assets, or any
non-solicitation, non-competition, or similar covenant or agreement in
respect of the Business (collectively, the "Rights") is not capable of being
transferred without the approval, consent or waiver of any third Person, or
if the transfer of a Right would constitute a breach of any obligation under,
or a violation of, any Applicable Law unless the approval, consent or waiver
of such third Person is obtained, then, except as expressly otherwise
provided in this Agreement and without limiting the rights and remedies of
the Purchaser contained elsewhere in this Agreement, this Agreement shall not
constitute an agreement to transfer such Rights unless and until such
approval, consent or waiver has been obtained. After the Closing and until
all such Rights are transferred to the Purchaser, the Vendor shall:
(a) maintain its existence and hold the Rights in trust for the
Purchaser; and
(b) cooperate with the Purchaser in any reasonable and lawful
arrangements designed to provide the benefits of such Rights to the
Purchaser;
provided, however, that the Purchaser shall:
(c) comply with the terms and provisions of the Rights at the
Purchaser's cost and for the Purchaser's benefit; and
(d) enforce, at the discretion of the Purchaser and at the expense and
for the account of the Purchaser, any rights of the Vendor arising
from such Rights against any third Person, including the right to
elect to terminate any such rights in accordance with the terms of
such rights.
The Purchaser shall indemnify and hold the Vendor harmless from and against any
claim or Liability under or in respect of such Rights arising because of any
action of the Vendor (which is commercially reasonable) or the Purchaser taken
pursuant to this Section.
ARTICLE 5
CONDITIONS OF CLOSING
5.1 Purchaser's Conditions. The Purchaser shall not be obliged to
complete the purchase and sale of the Assets pursuant to this Agreement unless,
at or before the Closing Time, each of the following conditions has been
satisfied, it being understood that the following conditions are included for
the exclusive benefit of the Purchaser and may be waived, in whole or in part,
in writing by the Purchaser at any time; and the Vendor and CIBC agree with the
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Purchaser to take all such actions, steps and proceedings as are reasonably
within their control as may be necessary to ensure that the following conditions
are fulfilled at or before the Closing Time:
(1) Truth and Accuracy of Representations and Warranties. All of the
representations and warranties of CIBC and the Vendor made in or
pursuant to this Agreement shall be true and correct as at the
Closing Time.
(2) Vendor's Compliance. The Vendor and CIBC shall have performed and
complied with, in all material respects, all of the terms and
conditions in this Agreement on their part to be performed or
complied with at or before Closing and shall have executed and
delivered or caused to have been executed and delivered to the
Purchaser at the Closing all the documents contemplated in Section
4.2 or elsewhere in this Agreement.
(3) No Litigation. There shall be no litigation or proceedings pending
or threatened against any of the Parties or against any of their
respective Affiliates or any of their respective directors or
officers, for the purpose of enjoining, preventing or restraining
the completion of the transactions contemplated by this Agreement.
(4) Competition Act. Either:
(a) The Purchaser shall have obtained either:
(i) an advance ruling certificate pursuant to Section 102 of
the Competition Act (Canada) to the effect that the
Director of Investigation and Research under that Act is
satisfied that there would not be sufficient grounds upon
which to apply to the Competition Tribunal under Section
92 of such Act with respect to the transactions
contemplated by this Agreement; or
(ii) written notification pursuant to Section 123 of the
Competition Act (Canada) that the Director of
Investigation and Research under that Act does not at
that time intend to make application to the Competition
Tribunal under Section 92 of that Act in respect of the
transactions contemplated by this Agreement; or
(b) the waiting period prescribed by Section 123 of the
Competition Act (Canada) shall have expired unless within that
waiting period the Director of Investigation and Research
under that Act has notified the Purchaser that he intends to
make application to the Competition Tribunal under Section 92
of that Act in respect of the
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transactions contemplated by this Agreement.
(5) Consents and Approvals. All of the Consents and Approvals shall have
been obtained.
5.2 Condition not Fulfilled. If any condition in Section 5.1 has not
been fulfilled at or before the Closing Time, then the Purchaser may, without
limiting any rights or remedies available to the Purchaser at law or in equity,
either:
(1) terminate this Agreement by notice to the Vendor, in which event
the Purchaser shall be released from its obligations under this
Agreement to complete the purchase of the Assets; or
(2) waive compliance with any such condition without prejudice to its
right of termination in the event of non-fulfilment of any other
condition.
5.3 Vendor's and CIBC's Conditions. Neither the Vendor nor CIBC shall
be obliged to complete the transactions contemplated by this Agreement unless,
at or before the Closing Time, each of the following conditions has been
satisfied, it being understood that the following conditions are included for
the exclusive benefit of the Vendor and CIBC, and may be waived, in whole or in
part, in writing by the Vendor and CIBC at any time; and the Purchaser agrees
with the Vendor and CIBC to take all such actions, steps and proceedings as are
reasonably within the Purchaser's control as may be necessary to ensure that the
following conditions are fulfilled at or before the Closing Time:
(1) Truth and Accuracy of Representations and Warranties. All of the
representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct as at the Closing Time
and with the same effect as if made at and as of the Closing Time.
(2) Purchaser's Compliance. The Purchaser shall have performed and
complied with in all material respects all of the terms and
conditions in this Agreement on its part to be performed or
complied with at or before the Closing Time and shall have executed
and delivered or caused to have been executed and delivered to the
Vendor at the Closing Time all the documents contemplated in
Section 4.3 or elsewhere in this Agreement.
(3) No Litigation. There shall be no litigation or proceedings pending
or threatened against any of the Parties or against any of their
respective Affiliates or any of their respective directors or
officers, for the purpose of enjoining, preventing or restraining
the completion of the transactions contemplated by this Agreement.
(4) Competition Act. Either:
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(a) The Purchaser shall have obtained either:
(i) an advance ruling certificate pursuant to Section 102 of
the Competition Act (Canada) to the effect that the
Director of Investigation and Research under that Act is
satisfied that there would not be sufficient grounds upon
which to apply to the Competition Tribunal under Section
92 of such Act with respect to the transactions
contemplated by this Agreement; or
(ii) written notification pursuant to Section 123 of the
Competition Act (Canada) that the Director of
Investigation and Research under that Act does not at
that time intend to make application to the Competition
Tribunal under Section 92 of that Act in respect of the
transactions contemplated by this Agreement; or
(b) the waiting period prescribed by Section 123 of the
Competition Act (Canada) shall have expired unless within that
waiting period the Director of Investigation and Research
under that Act has notified the Purchaser that he intends to
make application to the Competition Tribunal under Section 92
of that Act in respect of the transactions contemplated by
this Agreement.
5.4 Condition not Fulfilled. If any condition in Section 5.3 shall not
have been fulfilled at or before the Closing Time, then the Vendor or CIBC may,
without limiting any rights or remedies available to the Vendor or CIBC at law
or in equity, either:
(1) terminate this Agreement by notice to the Purchaser in which event
the Vendor and CIBC shall be released from all obligations under
this Agreement; or
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(2) waive compliance with any such condition without prejudice to its
(or their) right of termination in the event of non-fulfilment of
any other condition.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of CIBC. CIBC represents and
warrants to the Purchaser as follows:
(1) Incorporation of CIBC. CIBC is a bank incorporated under the laws
of Canada.
(2) Authorization by CIBC. CIBC has the power, authority and capacity
to enter into this Agreement and all other agreements and
instruments to be executed by it as contemplated by this Agreement
and to carry out its obligations under this Agreement and such
other agreements and instruments. The execution and delivery of
this Agreement and such other agreements and instruments and the
completion of the transactions contemplated by this Agreement and
such other agreements and instruments have been duly authorized by
all necessary action on the part of CIBC.
(3) Enforceability of CIBC's Obligations. This Agreement constitutes a
valid and binding obligation of CIBC enforceable against CIBC in
accordance with its terms subject, however, to limitations on
enforcement imposed by bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of the rights of creditors and
others and to the extent that equitable remedies such as specific
performance and injunctions are only available in the discretion of
the court from which they are sought.
(4) Absence of Conflicting Agreements. The execution, delivery and
performance of this Agreement by CIBC and the completion of the
transactions contemplated by this Agreement do not and will not
result in or constitute a default, breach or violation or an event
that, with notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions or provisions
of the letters patent or by-laws of CIBC or any Applicable Law.
(5) Litigation. Except as listed in Schedule 6.2(15), there is no
action, suit, proceeding, claim, application, complaint or
investigation in any court or before any arbitrator or before or by
any regulatory body or tribunal or governmental or non-governmental
body pending or, To the Best of CIBC's Knowledge, threatened by or
against CIBC Related to the Business or affecting the Business or
the operations or capital of the Vendor or the transactions
contemplated by this Agreement.
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(6) Regulatory Approvals. Other than as provided in the Competition
Act (Canada), no governmental or regulatory authorization,
approval, order, consent or filing is required on the part of CIBC,
in connection with the execution, delivery and performance of this
Agreement or any other documents and agreements to be delivered
under this Agreement or the performance of CIBC's obligations under
this Agreement or any other documents and agreements to be
delivered under this Agreement.
(7) Non-Competition. Except as would be permitted by the Non-Compete
Agreement to be entered into by CIBC, the Purchaser and the Vendor
as contemplated by Section 4.2(5), neither CIBC nor any of its
Affiliates carry on any Competing Business (as defined under such
agreement).
6.2 Representations and Warranties of the Vendor. The Vendor
represents and warrants to the Purchaser as follows:
(1) Incorporation of Vendor. The Vendor is a corporation incorporated
under the laws of Canada. The Vendor has the corporate power and
authority and is qualified to own and dispose of the Assets.
(2) Authorization by Vendor. The Vendor has the corporate power,
authority and capacity to enter into this Agreement and all other
agreements and instruments to be executed by it as contemplated by
this Agreement and to carry out its obligations under this
Agreement and such other agreements and instruments. The execution
and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by
this Agreement and such other agreements and instruments have been
duly authorized by all necessary corporate action on the part of
the Vendor.
(3) Enforceability of Vendor's Obligations. This Agreement constitutes
a valid and binding obligation of the Vendor enforceable against
the Vendor in accordance with its terms subject, however, to
limitations on enforcement imposed by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of the
rights of creditors and others and to the extent that equitable
remedies such as specific performance and injunctions are only
available in the discretion of the court from which they are sought.
(4) Title to Assets. The Vendor has good and marketable title to the
Assets (other than the Intellectual Property, the title to which is
addressed in Section 6.2(13)) free and clear of any and all Liens,
except for Permitted Liens. Other than this Agreement, there is no
agreement, option or other right or privilege outstanding in favour
of any Person for the purchase from the Vendor of the Business or
any of the Assets out of the ordinary course of business.
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(5) Residence of Vendor. The Vendor is not a non-resident of Canada
for purposes of Section 116 of the Income Tax Act (Canada).
(6) Bankruptcy. The Vendor is not an insolvent person within the
meaning of the Bankruptcy and Insolvency Act (Canada) nor has it
made an assignment in favour of its creditors nor a proposal in
bankruptcy to its creditors or any class thereof nor had any
petition for a receiving order presented in respect of it. The
Vendor has not initiated proceedings with respect to a compromise
or arrangement with its creditors or for its winding up,
liquidation or dissolution. No receiver has been appointed in
respect of the Vendor or any of the Assets.
(7) Financial Statements. Attached as Schedule 6.2(7) are the annual
unaudited financial statements of the Vendor for the fiscal year
ended October 31, 1997 (the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP, except for
the footnotes that would be required by GAAP for such statements.
The balance sheet contained in such Financial Statements fairly
presents all of the assets and liabilities of Vendor and the
financial position of the Vendor as at October 31, 1997 and the
statements of earnings and retained earnings contained in the
Financial Statements fairly present the results of operations for
the periods indicated. Also attached as Schedule 6.2(7) are the
interim unaudited financial statements of the Vendor for the four
months ended February 28, 1998. The balance sheet contained in
such interim unaudited financial statements fairly presents all of
the assets and liabilities of the Vendor and the financial position
of the Vendor as of February 28, 1998 and the statements of
earnings and retained earnings contained in such interim financial
statements fairly present the results of operations for the periods
indicated; however, the Vendor makes no representation or warranty
respecting the compliance of such statements with GAAP.
(8) Absence of Certain Changes or Events. Since the date of the
Financial Statements, the Vendor has not:
(a) suffered any Material Adverse Change;
(b) disposed of any of the Assets reflected on the balance sheet
forming part of the Financial Statements, except in the
ordinary course of business;
(c) changed any accounting or costing systems or methods in any
material respect;
(d) incurred or assumed any Liabilities, except in the normal
course of business;
(e) mortgaged, pledged, granted a security interest in or
otherwise encumbered
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any of the Assets, except in the normal course of business; or
(f) entered into any Material Contract that was not in the normal
course of business.
(9) Leased Premises. Schedule 6.2(9) lists all the Premises Leases to
which the Vendor is a party. Except as listed in Schedule 6.2(9),
each Premises Lease is in full force and effect and is unamended by
oral or written Agreement. All payments required to be made by the
Vendor pursuant to the Premises Leases have been duly made and the
Vendor is not otherwise in material default in meeting its
obligations under any of the Premises Leases. The Vendor does not
own any real property.
(10) Material Contracts. Schedule 6.2(10) lists all the Material
Contracts. To the Best of the Vendor's and CIBC's Knowledge each
Material Contract is in full force and effect, unamended by written
or oral agreement.
(11) Customers. The Vendor has provided to the Purchaser a true and
complete list of all the customers of the Business as at February
27, 1998. Schedule 6.2(11) sets out a list of all customers of the
Business for which the customer contract's terms and conditions
materially differ from the form attached to Schedule 6.2(11).
(12) Receivables. The Receivables are valid obligations which arose in
the ordinary course of business, have been properly recorded in the
ordinary course of business, are not subject to any offset or
counterclaim except in the ordinary course of business, and, after
taking into account all provisions, allowances and reserves for
doubtful accounts to be reflected in the Statement of Assets and
Liabilities, are, in the aggregate, good and collectible at the
recorded amounts due.
(13) Intellectual Property.
(a) Except for computer software which is owned by CTI-ComTel Inc.
and embedded in the Vendor's Computer Software, the Vendor is
the owner of the Vendor's Computer Software identified in
Schedule 6.2(13)(a)(i), the Vendor's Copyright, the Vendor's
Patents, the Vendor's Technology and the Vendor's Trademarks
free and clear of any and all Liens, except for Permitted
Liens.
(b) The Vendor is the owner of all registrations and applications
for registration of the Vendor's Copyrights, the Vendor's
Trademarks and the Vendor's Patents.
(c) All of the registrations and applications for registration of
the Vendor's Copyrights, the Vendor's Trademarks and the
Vendor's Patents are in
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good standing and are recorded in the name of the Vendor.
(d) Except as disclosed in Schedule 6.2(13)(g), the Vendor has not
granted any right, licence or interest to the Vendor's
Copyright, the Vendor's Patents, the Vendor's Technology or
the Vendor's Trademarks to any Person.
(e) With the exception of any licences granted by the Vendor to
customers of the Vendor, the Vendor has not granted any right,
licence or interest to the Vendor's Computer Software to any
Person.
(f) Except as disclosed in Schedule 6.2(13)(h), no Person has
challenged (i) the validity of any trademark registration for
the Vendor's Trademarks, any registration for the Vendor's
Copyrights or any of the Vendor's Patents;(ii) the Vendor's
title to the Vendor's Trademarks, the Vendor's Copyrights, the
Vendor's Patents, the Vendor's Technology or the Vendor's
Software; or (iii) the Vendor's use of or right to use the
Intellectual Property.
(g) To the Best of the Vendor's and CIBC's Knowledge, neither the
Vendor's use of the Intellectual Property nor the conduct of
the Business in connection with the Intellectual Property has
infringed or currently infringes upon the intellectual
property rights of any other Person.
(h) To the Best of the Vendor's and CIBC's Knowledge, no other
Person has infringed the Vendor's rights to the Intellectual
Property, except as disclosed in Schedule 6.2(13)(i).
(i) The Vendor will maintain all registrations and applications
for the Vendor's Trademarks, the Vendor's Copyrights and the
Vendor's Patents in full force and effect through the Closing
Date and will make all applications for renewals for renewal
periods ending on or prior to the Closing Date, subject to
expiration on or prior to the Closing Date.
(j) As of the Closing Date, the Intellectual Property will be
sufficient to the extent necessary to carry on the Business.
(k) The Vendor's Computer Software:
(i) shall perform in accordance with its published
specifications; and
(ii) has been designed, developed, configured and implemented
in a good and workmanlike manner,
provided that, in respect of the Vendor's Computer Software
identified in Schedule 6.2(13)(a)(ii), the representation and
warranty is made To the
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Best of the Vendor's and CIBC's Knowledge only.
(l) The Vendor's Computer Software is free of all disabling
devices, and, To the Best of the Vendor's and CIBC's
Knowledge, the Vendor's Computer Software is free of all
viruses, errors and defects.
(m) Schedule 6.2(13)(e) is a complete listing of all Computer
Software which the Vendor has licenced from third parties.
Except as disclosed in Schedule 6.2(13)(e)(iii), the licences
for the Computer Software listed in Schedule 6.2(13)(e)(i) and
the licences listed in Schedule 6.2(13)(e)(ii) are in good
standing and no dispute, actual or potential, exists between
the Vendor and the licensors with respect to any of the rights
or obligations of any of the parties under such licences.
(n) The Vendor's Computer Software listed in Schedule
6.2(13)(a)(i) was originally designed to meet the
specifications of the Business. The Vendor's Computer
Software listed in Schedule 6.2(13)(a)(ii) was originally
designed or has been modified to meet the specifications of
the Business.
(14) Absence of Conflicting Agreements. The execution, delivery and
performance of this Agreement by the Vendor and CIBC and the
completion of the transactions contemplated by this Agreement do
not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with notice or
lapse of time or both, would be a default, breach or violation
of any of the terms, conditions or provisions of the articles
or by-laws of the Vendor or of any Material Contract or any
Applicable Law;
(b) an event which, pursuant to the terms of any Material Contract
causes any material right or interest of the Vendor to come to
an end; or
(c) the creation or imposition of any Lien on any Asset.
(15) Litigation. Except as listed in Schedule 6.2(15), there is no
action, suit, proceeding, claim, application, complaint or
investigation in any court or before any arbitrator or before or by
any regulatory body or tribunal or governmental or non-governmental
body pending or, To the Best of the Vendor's and CIBC's Knowledge,
threatened by or against the Vendor Related to the Business or
affecting the Business or the operations or capital of the Vendor
or the transactions contemplated by this Agreement.
(16) Insurance. Particulars of the policies of insurance maintained by
the Vendor
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Related to the Business at the date of this Agreement are set
out in Schedule 6.2(16). All such policies are in full
force and effect and the Vendor is not in default, whether as to
the payment of premiums or otherwise, under the terms of such
policies.
(17) Employees.
(a) Schedule 6.2(17) contains a true and complete list of the
Employees, their titles and positions held as of the date of
this Agreement, their length of service with the Vendor, the
locations of their employment and the material terms and
conditions of their employment or engagement including their
current annual compensation, standard hours of work, policies,
commissions and bonuses and their benefits and perquisites and
participation in the Employee Plans. Schedule 6.2(17)
indicates whether such Employees are inactive and the nature
of any absence and its expected duration, if known.
(b) Except for the contracts provided to the Purchaser by the
Vendor, which contracts are listed and summarized in Schedule
6.2(17), (the "Employment Contracts") there are (i) no written
contracts of employment entered into with any Employees; (ii)
no oral contracts of employment which provide termination
notice or pay in lieu of such notice or severance pay to any
of the Employees in excess of termination notice or pay in
lieu of such notice or severance pay required by applicable
labour or employment standards law or common law; and (iii) no
non-competition or non-solicitation contracts with any
Employees.
(c) The Vendor has not made any agreements with any labour union or
employee association in connection with the Business nor made
any commitments to or conducted any negotiations with any
labour union or employee association with respect to any
future agreements relating to the Business. To the Best of
the Vendor's and CIBC's Knowledge there have been no attempts
to organize a trade union or employee association for any
employees of the Business. There is no labour strike,
employee disturbance or work stoppage or slowdown pending or,
To the Best of the Vendor's and CIBC's Knowledge, threatened
against the Vendor with respect to the Business.
(d) Except as disclosed in Schedule 6.2(18), the Vendor has no
liability of any kind to any Employee except for compensation,
commissions, bonuses, out of pocket expenses and benefits
payable to such employee in the ordinary course of the
Business.
(e) The Vendor is in compliance with all applicable laws,
statutes, regulations,
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rules and by-laws relating to the employment of Employees,
including, without limiting the generality of the foregoing,
those related to wages, pay equity, hours of work, collective
bargaining and labour relations, occupational health and
safety, workers' compensation, human rights, pension benefits
standards and labour and employment standards and is not
liable for any arrears of wages, assessments, penalties or
other sums for failure to comply with any of the foregoing.
(f) Except as disclosed in Schedule 6.2(17), with respect to the
Employees, no commitment, express or implied, has been made to
change compensation or to change any benefits under the
Employee Plans or to offer additional benefits.
(g) Except as disclosed in Schedule 6.2(17), there are no benefits
promised or provided to retired employees or their dependents
other than in respect of the Pension Plans.
(h) There are no permits, licences, registrations or governmental
authorizations providing for exemptions from Applicable Law
relating to any Employee.
(i) Schedule 6.2(17) sets out the current retirees who receive
benefits and identifies the benefits they receive.
(18) Employee Plans.
(a) Schedule 6.2(18) sets forth all the Vendor's employee benefit,
health, welfare, supplemental unemployment benefit, bonus,
pension, profit sharing, deferred compensation, stock
compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability and similar
plans or arrangements or practices relating to the Employees
and retired Employees of the Vendor, including the Pension
Plans, the DPSP and the GRSPs (the "Employee Plans").
(b) The Vendor has provided to the Purchaser true and complete
copies of all Employee Plans other than the CIBC Plans in
effect as of the date hereof together with copies of all
funding agreements, all employee booklets and material
employee communications relative to the Employee Plans. No
communications or representations inconsistent therewith which
could bind the Vendor have been made to the Employees.
(c) All contributions to the Assumed Plans and Funds that were
required to be made in accordance with the terms of any such
plan and fund and the laws that govern such plan and fund have
been made and will continue to be made in a timely manner
until the Closing Date. All material reports,
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returns, valuations and similar documents with respect to the
Assumed Plans and Funds required to be filed with any
governmental agency or distributed to any participant have
been duly filed or distributed on a timely basis.
(d) The Employee Plan covering persons on long term disability is
a fully insured plan and all premiums are now and will
continue to be up-to-date at the Closing Date.
(e) The Assumed Plans and Funds have been and will until the
Closing Date continue to be established, registered (where
required), administered and invested, in compliance with the
terms thereof and all applicable laws and neither the Vendor
nor CIBC has received any notice from any person questioning
or challenging such compliance, nor has any knowledge of any
such notice.
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(f) There are no pending investigations by any governmental or
regulatory agency or authority involving or relating to the
Assumed Plans and Funds and no pending or threatened claims
(except for claims for benefits payable in the normal
operation of the plan), suits or proceedings against the
Assumed Plans and Funds or asserting any rights or claims to
benefits under the Assumed Plans and Funds that could give
rise to a liability nor are there any facts that could give
rise to any liability in the event of such investigations,
claim, suit or proceeding.
(g) Neither the Vendor, nor CIBC, nor, To the Best of Vendor's and
CIBC's Knowledge, the administrators of the Assumed Plans and
Funds or any of their trustees or agents are breaching or have
breached any of their obligations with respect to the
operation, administration, investment or funding of the
Assumed Plans and Funds.
(h) All data necessary to administer the Assumed Plans and Funds
is complete and up-to-date.
(19) Tax Matters. Except as set out in Schedule 6.2(19), the Vendor has
correctly prepared and duly and timely filed all tax returns
required to be filed by it and has paid or remitted all Taxes which
are due and payable or remittable as at the date hereof. The
Vendor has made adequate and timely instalments of Tax as of the
date hereof. All Tax returns filed by the Vendor have been duly
and accurately completed as required by Applicable Law. With
respect to any period for which Tax returns have not yet been filed
or for which Taxes are not yet due and payable or remittable, the
Vendor has only incurred liabilities for Taxes in the ordinary
course of its business. All Tax returns of the Vendor have been
assessed through and including October 31, 1996 and there are no
outstanding waivers of any limitation periods or agreements
providing for an extension of time for filing any Tax returns or
any payment of any Tax by the Vendor. All deficiencies proposed as
a result of such assessments or reassessments of the Tax returns
through and including October 31, 1996 have been paid and settled.
The Vendor has withheld from the payments made to any of its past
and present shareholders, directors, officers, employees and agents
the amount of all Taxes and other deductions required to be
withheld and has paid such amounts when due or made adequate
provision for the payment of such amounts to the proper receiving
authorities. The Vendor has provided to the Purchaser access to
all technical descriptions related to any research and development
tax credit claims Related to the Business.
(20) GST. The Vendor is a "registrant" under the Quebec Sales Tax Act
and Part IX of the Excise Tax Act (Canada). The Vendor's Quebec
Sales Tax registration number is 1015413294 and the Vendor's GST
registration number is 101061638RT.
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(21) Brokerage Fees. Except for the engagement of CIBC Oppenheimer
Corp. (which shall be the obligation of the Vendor) the Vendor has
not entered into any agreement which would entitle any Person to
any valid claim against either the Vendor or the Purchaser for a
broker's commission, finder's fee or any like payment in respect of
the purchase and sale of the Assets or any other matters
contemplated by this Agreement.
(22) Regulatory Approvals. Other than as provided under the Competition
Act (Canada), no governmental or regulatory authorization,
approval, order, consent or filing is required on the part of the
Vendor, in connection with the execution, delivery and performance
of this Agreement or any other documents and agreements to be
delivered under this Agreement or the performance of the Vendor's
obligations under this Agreement or any other documents and
agreements to be delivered under this Agreement.
(23) Business in Compliance with Law. In all material respects, the
operations of the Business have been and are now conducted in
compliance with all Applicable Laws of each jurisdiction in which
the Business has been and is carried on; and the Vendor has not
received any notice of any alleged breach of any such Applicable
Laws.
(24) Copies of Documents; Negotiations. Current and complete copies of
the Permitted Liens, the Leases and the Material Contracts have
been provided to the Purchaser. Except as set out in Schedules
1.1(64), 6.2(9) and 6.2(10), there are not current or pending
negotiations with respect to the renewal, repudiation or amendment
of the Permitted Liens, the Leases or the Material Contracts
outside the ordinary course of business.
(25) Sufficiency of Assets. The Assets, the services contemplated under
the Transitional Services Agreement to be entered into between CIBC
and the Purchaser substantially in the form of Exhibit 4.2(7), and
the Assets Under Administration - Payroll Account constitute all
the rights, undertakings and assets required to enable the
Purchaser to carry on the Business in substantially the same manner
as the Business has heretofore been carried on by the Vendor.
(26) Assets Under Administration - Payroll Account.
(a) Subject to the Obligations - Payroll Account, the Vendor has
good and marketable title to the Assets Under Administration -
Payroll Account free and clear of all Liens other than
Permitted Liens.
(b) Schedule 6.2(26) contains a list of all Assets Under
Administration - Payroll Account as of February 28, 1998.
Since February 28, 1998, there have been no material
transactions in connection with the Assets Under
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Administration - Payroll Account outside the ordinary course
of business.
(c) The Assets Under Administration - Payroll Account are
evidenced by valid and genuine written instruments and
certificates (except where in non-certificated form or held
through a depository clearing system) and such instruments and
certificates are in the possession or control of the Vendor or
held by an authorized custodian in accordance with Applicable
Laws.
(d) The Assets Under Administration - Payroll Account comply with
the investment criteria approved by the Vendor's board of
directors on April 10, 1997, a copy of which is attached to
Schedule 6.2(26).
(27) Obligations - Payroll Account.
(a) Schedule 6.2(26) summarizes the Obligations - Payroll Account
as of February 28, 1998. A true and complete list of all
Obligations - Payroll Account as of February 28, 1998 has been
delivered to the Purchaser. Since February 28, 1998 there
have been no material transactions in connection with the
Obligations - Payroll Account outside the ordinary course of
business.
(b) None of the Obligations - Payroll Account is in default or has
otherwise been breached by the Vendor.
6.3 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Vendor and CIBC as follows:
(1) Incorporation and Power. The Purchaser is a corporation
incorporated under the laws of Canada. No act or proceeding has
been taken by or against the Purchaser in connection with the
dissolution, liquidation, winding-up, bankruptcy or reorganization
of the Purchaser.
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(2) Due Authorization. The Purchaser has all necessary corporate
power, authority and capacity to enter into this Agreement
and all other agreements and instruments to be executed by it
as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and
instruments. The execution and delivery of this Agreement and
such other agreements and instruments and the completion of
the transactions contemplated by this Agreement and such other
agreements and instruments have been duly authorized by all
necessary corporate action on the part of the Purchaser and
its shareholder.
(3) Enforceability of Obligations. This Agreement constitutes a
valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms subject, however, to
limitations on enforcement imposed by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally
and to the extent that equitable remedies such as specific
performance and injunctions are only available in the discretion of
the court from which they are sought.
(4) No Conflict. The execution of this Agreement, the consummation of
the transactions contemplated herein, the performance by the
Purchaser of its obligations hereunder and the compliance by the
Purchaser with this Agreement do not (i) violate, contravene or
breach, or constitute a default under, the articles or by-laws of
the Purchaser or any Applicable Law; (ii) violate, contravene or
breach, or constitute a default under any contract, indenture,
instrument, or commitment to which the Purchaser may be a party, or
by which it is bound.
(5) Regulatory Approvals. Other than as provided under the
Competition Act (Canada) and the requirement to file a notification
within 30 days following the Closing pursuant to the Investment
Canada Act, no governmental or regulatory authorization, approval,
order, consent or filing is required on the part of the Purchaser,
in connection with the execution, delivery and performance of this
Agreement or any other documents and agreements to be delivered
under this Agreement or the performance of the Purchaser's
obligations under this Agreement or any other documents and
agreements to be delivered under this Agreement.
(6) Brokerage Fees. The Purchaser has not entered into any agreement
which would entitle any Person to any valid claim against the
Vendor for a broker's commission, finder's fee or any like payment
in respect of the purchase and sale of the Assets or any other
matters contemplated by this Agreement.
6.4 Survival of Representations and Warranties.
(1) The representations and warranties of CIBC and the Vendor contained
in Sections 6.1 and 6.2 shall survive the Closing for a period of
eighteen (18) months from the Closing Date, and notwithstanding the
Closing and any inspection or inquiries
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made by or on behalf of the Purchaser, shall continue in full force
and effect for the benefit of the Purchaser, except for any
representation and warranty relating to (a) Tax matters, which
shall survive until ninety (90) days after the last date on which
the relevant Tax authority is entitled to assess or reassess the
Vendor with respect to such Tax matters; and (b) Sections 6.2(4),
6.2(13)(a), 6.2(13)(b), 6.2(23) and 6.2(26), which shall survive
until ninety (90) days after the expiry of any limitation period
imposed by any applicable statute of limitation.
(2) The representations and warranties of the Purchaser contained in
Section 6.3 shall survive the Closing for a period of eighteen (18)
months from the Closing Date, and notwithstanding the Closing,
shall continue in full force and effect for the benefit of the
Vendor and CIBC.
(3) If no claim shall have been made under this Agreement against a
Party for any incorrectness in or breach of a representation or
warranty made in this Agreement prior to the expiry of the relevant
survival period, such Party shall have no further liability under
this Agreement with respect to such representation or warranty.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnity by the Vendor and CIBC. The Vendor and CIBC shall
jointly and severally indemnify and hold the Purchaser, its directors, officers,
employees, agents, representatives and the Purchaser's Affiliates and their
respective directors, officers, employees, agents and representatives and the
Purchasers's pension and benefit plans harmless in respect of any claim, demand,
action, cause of action, damage, loss, cost, liability or expense (hereinafter
referred to as a "Claim") which may be made or brought against an Indemnified
Party or which it may suffer or incur directly or indirectly as a result of, in
respect of or arising out of:
(1) any incorrectness in or breach of any representation or warranty
made by CIBC in Section 6.1 of this Agreement or by the Vendor in
Section 6.2 of this Agreement;
(2) any breach of or any non-fulfilment of any covenant or agreement on
the part of the Vendor or CIBC under this Agreement;
(3) any Excluded Liabilities;
(4) all claims brought by or in respect of any of the Employees
resulting from matters arising before the time at which they become
employees of the Purchaser;
(5) any actions or omissions or alleged actions or omissions by the
Vendor, CIBC, the administrators of the Employee Plans (other than
the CIBC Plans which are addressed in Section 7.1(6)), their
trustees or agents with respect to the operation,
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administration, investment or funding of such employee plans to the
Effective Time; or
(6) except as expressly provided in Section 9.3(3), the CIBC Plans,
including without limiting the generality of the foregoing, any
Claim arising in respect to the entitlement to, or calculation of,
amounts or benefits owing to any Employee or former employee or any
other person under any CIBC Plan or any Claim arising from an
actual or deemed wind-up or partial wind-up of a CIBC Plan.
7.2 Indemnity by the Purchaser. The Purchaser shall indemnify and hold
the Vendor and CIBC and their respective directors, officers, employees, agents,
representatives and the Vendor's and CIBC's Affiliates and their respective
directors, officers and employees harmless in respect of any Claim which may be
made or brought against an Indemnified Party or which it may suffer or incur
directly or indirectly as a result of, in respect of or arising out of:
(1) any incorrectness in or breach of any representation or warranty
made by the Purchaser in Section 6.3 of this Agreement;
(2) any breach or non-fulfilment of any covenant or agreement on the
part of the Purchaser under this Agreement; or
(3) any claim by an Inactive Employee or retired employee of the Vendor
to whom the Purchaser is obligated to provide benefits hereunder as
a result of the Purchaser's Welfare Benefit Plans being different
from the benefits provided by the Vendor at the Closing Date (other
than benefits under any CIBC Plan) to the Inactive Employee or
retired employee of the Vendor.
7.3 Threshold. No Party shall have any liability for indemnification
pursuant to Section 7.1(1) or 7.2(1) relating to any breach of any of the
representations and warranties contained in Sections 6.1, 6.2 or 6.3 unless and
until the accumulated aggregate amount of Claims of such Party arising from
breaches of representations and warranties hereunder exceeds $1,000,000.00,
following which all further Claims (and only such further Claims) of such Party
shall be recoverable as provided in this Agreement. No Claim for breach of
representations or warranties herein may be brought in respect of a fact,
circumstance, event or condition which is fairly and reasonably disclosed in
this Agreement.
7.4 Cap. The Vendor and CIBC shall have no liability for
indemnification pursuant to Section 7.1 or relating to any breach of any
representations and warranties contained in Sections 6.1 or 6.2 in excess of
$72,500,000.00.
7.5 Notice of Claim. If an Indemnified Party becomes aware of a Claim
in respect of which indemnification is provided for pursuant to either of
Section 7.2 or 7.1, as the case may be, the Indemnified Party shall promptly
give written notice of the Claim to the Indemnifying Party. Such notice shall
specify whether the Claim arises as a result of a claim by a Person against the
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Indemnified Party (a "Third Party Claim") or whether the Claim does not so arise
(a "Direct Claim"), and shall also specify with reasonable particularity (to the
extent that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time effectively to contest the determination of
any Liability susceptible of being contested, then the liability of the
Indemnifying Party to the Indemnified Party under this Article shall be reduced
by the amount of any losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
7.6 Direct Claims. In the case of a Direct Claim, the Indemnifying
Party shall have 60 days from receipt of notice of the Claim within which to
make such investigation of the Claim as the Indemnifying Party considers
necessary or desirable. For the purpose of such investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied upon
by the Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or before the expiration of such 60 day period (or any mutually agreed
upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to
binding arbitration in such manner as the parties may agree or shall be
determined by a court of competent jurisdiction.
7.7 Third Party Claims. In the case of a Third Party Claim, the
Indemnifying Party shall have the right, at its expense, to participate in or
assume control of the negotiation, settlement or defence of the Claim. If the
Indemnifying Party elects to assume such control, the Indemnifying Party shall
reimburse the Indemnified Party for all of the Indemnified Party's out-of-pocket
expenses incurred as a result of such participation or assumption. The
Indemnified Party shall have the right to participate in the negotiation,
settlement or defence of such Third Party Claim and to retain counsel to act on
its behalf, provided that the reasonable fees and disbursements of such counsel
shall be paid by the Indemnified Party, unless the Indemnifying Party consents
to the retention of such counsel at its expense or unless the named parties to
any action or proceeding include both the Indemnifying Party and the Indemnified
Party and a representation of both the Indemnifying Party and the Indemnified
Party by the same counsel would be inappropriate due to the actual or potential
differing interests between them (such as the availability of different
defences). The Indemnified Party shall cooperate with the Indemnifying Party so
as to permit the Indemnifying Party to conduct such negotiation, settlement and
defence and for this purpose shall preserve all relevant documents in relation
to the Third Party Claim, allow the Indemnifying Party access on reasonable
notice to inspect and take copies of all such documents and require its
personnel to provide such statements as the Indemnifying Party may reasonably
require and to attend and give evidence at any trial or hearing in respect of
the Third Party Claim. If, having elected to assume control of the negotiation,
settlement or defence of the
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Third Party Claim, the Indemnifying Party thereafter fails to conduct such
negotiation, settlement or defence with reasonable diligence, then the
Indemnified Party shall be entitled to assume such control and the
Indemnifying Party shall be bound by the results obtained by the Indemnified
Party with respect to such Third Party Claim.
7.8 Settlement of Third Party Claims. If the Indemnifying Party fails
to assume control of the defence of any Third Party Claim, the Indemnified Party
shall have the exclusive right to contest, settle or pay the amount claimed.
Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that if the Indemnified Party fails to respond to a request for such
consent for any reason within a reasonable time after the request therefor, the
liability of the Indemnifying Party shall be limited to the proposed settlement
amount, if any.
7.9 Interest on Claims. The amount of any Claim submitted under
Section 7.1 or Section 7.2 as damages or by way of indemnification shall bear
interest from and including the date any Indemnified Party is required to make
payment in respect thereof at the Prime Rate calculated from and including such
date to but excluding the date reimbursement of such Claim by the Indemnifying
Party is made, and the amount of such interest shall be deemed to be part of
such Claim.
7.10 Bulk Sales. The Purchaser hereby waives compliance by the Vendor
with any bulk sales notice requirements of Applicable Laws, and the Vendor and
CIBC shall jointly and severally indemnify and hold the Purchaser harmless from
any Tax or other Liability which shall be incurred by the Purchaser for the
failure to comply with such requirements, except to the extent that such
liability is an Assumed Liability.
ARTICLE 8
INTERIM PERIOD
8.1 Investigation. Until the Closing, the Purchaser and its
representatives and advisers shall be permitted to make such investigations of
the properties and assets of the Vendor and its financial and legal condition as
the Purchaser, acting reasonably, deems necessary or desirable to familiarize
itself with such properties, assets and other matters. Without limiting the
generality of the foregoing, and subject to the necessary consent of any third
party, the Purchaser shall, during normal business hours, be permitted
reasonable access to all documents relating to information scheduled or required
to be disclosed under this Agreement, to the Books and Records, the data
processing system of the Vendor, the Contracts, the Leased Premises, the
Employees, records regarding suppliers, customers and regulators and reports
prepared by advisers of the Vendor and its predecessor companies.
8.2 Purchaser's Employee Plans. Until the Closing, the Vendor and CIBC
and their
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respective representatives and advisers shall be permitted to make
such investigations of employee benefit, health, welfare, supplemental
unemployment benefit, bonus, pension, profit sharing, deferred compensation,
stock compensation, stock purchase, retirement, hospitalization insurance,
medical, dental, legal, disability and similar plans or arrangements or
practices relating to the Purchaser's Canadian employees as the Vendor and CIBC,
acting reasonably, deem necessary or advisable to familiarize themselves with
such matters.
8.3 Authorizations. The Vendor shall execute and deliver any
authorizations required to permit the investigations described in Section 8.1
and the Purchaser shall execute and deliver any authorizations required to
permit the investigations described in Section 8.2.
8.4 Confidentiality.
(1) Each Party shall, and shall cause each of its Representatives (as
defined below), to hold in strictest confidence and not use in any
manner, other than as expressly contemplated by this Agreement, any
Confidential Information (as defined below) of any other Party.
Confidential Information shall be disclosed only to those
Representatives who have a need to know such Confidential
Information. Each Party shall be responsible for any breach of
this Agreement by its Representatives or any Person affiliated with
its Representatives. Additionally, the Vendor and CIBC shall
maintain as confidential following Closing all Confidential
Information Related to the Business.
(2) Section 8.4(1) shall not apply to the disclosure of any
Confidential Information where such disclosure is required by
Applicable Law. In that case, the Party required to disclose (or
whose Representative is required to disclose) shall, as soon as
possible in the circumstances, notify the other Party of the
requirement. Upon receiving such notification, the other Party may
take any reasonable action to challenge the requirement, and the
affected Party shall (or shall cause the applicable Representative
to), at the expense of the other Party, assist the other Party in
taking such reasonable action.
(3) Following the termination of this Agreement in accordance with the
provisions of either of Sections 5.2 or 5.4 or for any other
reason, each Party shall (and shall cause each of its
Representatives to) promptly, upon a request from any other Party,
return to the requesting Party all copies of any tangible items
(other than this Agreement), if any, which are or which contain
Confidential Information of the requesting Party; provided that if
the Party so obligated to return Confidential Information or its
Representatives have prepared summaries, analyses, compilations,
studies, memoranda, notes or other data containing or concerning
any Confidential Information, then such Party may, instead of
returning the summaries or analyses, destroy them and provide a
certificate to that effect to the requesting Party.
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(4) For the purposes of this Section 8.4:
(a) "Confidential Information" of a Party at any time means all
information relating to the business of such Party and its
Affiliates (including business plans, ways of doing business,
business results and prospects and customer lists) which,
(i) at the time is of a confidential nature (whether or not
specifically identified as confidential) and is known or
should be known by the other Party or its Representatives as
being confidential, and
(ii) has been or is from time to time made known to or is
otherwise learned by the other Party or any of its
Representatives as a result of the matters provided for in
this Agreement,
including the following information:
(iii) the terms of this Agreement;
(iv) a Party's proprietary software; and
(v) a Party's business records,
but not including any information that at such time:
(vi) has become generally available to the public other than as a
result of a disclosure by the other Party or any of its
Representatives;
(vii) was available to the other Party or its Representatives on a
non-confidential basis before the date of this Agreement,
provided that nothing in this Section 8.4(4)(a)(vii) excludes
any information that was available to CIBC or its
Representatives respecting the Vendor which, prior to the
date hereof, was of a confidential nature; or
(viii) becomes available to the other Party or its Representatives
on a non-confidential basis from a Person other than the
first-mentioned Party or any of its Representatives who is
not, to the knowledge of such other Party or its
Representatives, otherwise bound by confidentiality
obligations to such first-mentioned Party in respect of such
information or otherwise prohibited from transmitting the
information to the other Party or its Representatives; and
(b) "Representatives" with respect to any Party means its directors,
officers, employees, agents and other representatives and advisers.
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(5) Other than as expressly provided in this Agreement, no Party makes
any representation or warranty, express or implied, as to the
accuracy or completeness of the Confidential Information.
8.5 Action During Interim Period. During the Interim Period, the
Vendor shall:
(1) carry on the Business in the normal course;
(2) notify the Purchaser immediately of any Material Adverse Change and
of any breach of any representation, warranty, covenant or
agreement in this Agreement; and
(3) not do any act that would cause a breach of any representation,
warranty, covenant or agreement contained in this Agreement.
8.6 Consents and Approvals. The Vendor shall cooperate with the
Purchaser and render all necessary assistance required by the Purchaser in
connection with any application, notification or filing of the Purchaser to or
with the Competition Bureau pursuant to the Competition Act (Canada). The
Vendor shall use all reasonable efforts to obtain all of the other Consents and
Approvals prior to the Closing Date.
8.7 Updates to Information. The Vendor shall update on or before the
Closing, by amendment or supplement, any of the informational disclosure
schedules referred to in this Agreement as soon as reasonably possible after new
or conflicting information comes to the attention of the Vendor. No such
amendment or supplement shall affect the Purchaser's right to indemnification
pursuant to Section 6.1 based on the contents of the original schedules.
8.8 Exclusivity. Neither the Vendor nor CIBC will solicit offers for
or negotiate, discuss or agree to the sale of the Business or any shares of the
Vendor with or to any Person prior to March 10, 1998.
ARTICLE 9
EMPLOYEES
9.1 Employees. Before the Closing Date and effective as of the
Effective Time the Purchaser will offer employment to each Employee of the
Vendor on terms no less favourable in the aggregate than those in effect for
such Employee with the Vendor on the date hereof. The Vendor will be responsible
for severance obligations with respect to active Employees who do not accept the
Purchaser's offer of employment. CIBC shall be permitted to review and comment
on the form of all offer letters to be delivered to any Employee prior to the
distribution of any such offer letter. The Vendor and CIBC will provide all
reasonable assistance to encourage Employees to accept an offer of employment
with the Purchaser. The Vendor will not actively terminate any Employees on or
prior to the Closing Date except in the ordinary course of business or give
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termination letters or notices to the Employees advising that they will be
dismissed from employment as a result of the sale or if they do not accept the
Purchaser's offer of employment (or any letter or notice to like effect) except
for letters in the form set out in Exhibit 9.1. With respect to Inactive
Employees, the Purchaser reserves the right, at its expense, to require those
employees to provide a medical certificate or other confirmation of their
fitness to return to work, if applicable, before permitting them to resume
active employment. The Purchaser shall provide coverage under the Purchaser's
Welfare Benefit Plans to all Inactive Employees whether they return to work with
the Purchaser or not during the period of their disability, absence or leave.
The Purchaser shall also provide coverage under the Purchaser's Welfare Benefit
Plans to all retired employees of the Vendor to whom the Vendor has outstanding
benefit responsibilities (other than benefits under any CIBC Plan).
Notwithstanding the foregoing the Vendor will be responsible for, and indemnify
the Purchaser for, severance payments and all other costs (including legal
costs) relating to Inactive Employees who do not accept the Purchaser's offer of
employment on receipt of their offer or when they are eligible to return to
work.
9.2 Adjustment. In consideration of the Purchaser continuing to
provide benefits to Inactive Employees and retired employees in accordance with
Section 9.1 hereof, the Vendor will pay to the Purchaser on Closing $577,000.00.
It is understood and agreed that the $577,000.00 will be (i) reduced, as
appropriate, with respect to Inactive Employees who do not accept an offer of
employment with the Purchaser and (ii) adjusted, as appropriate, to reflect
changes in the list of Inactive Employees and retired employees and/or changes
in benefits from the data considered by William M. Mercer Ltd. in arriving at
the $577,000.00 amount.
9.3 Pensions and Benefits.
(1) (a) Effective as of the Effective Time, the Vendor shall
assign and transfer to the Purchaser its rights,
obligations and liabilities with respect to the Comcheq
Plan and its related funding medium (the "Comcheq Fund").
Effective as of the Effective Time, the Purchaser shall
accept such assignment and transfer and shall assume all
obligations, liabilities, duties and responsibilities
required of it as the successor sponsor of the Comcheq
Plan and the Comcheq Fund pursuant to the terms thereof
and Applicable Law except that the Purchaser accepts no
liability for any actions or omissions or alleged actions
or omissions referred to in Section 7.1(5). The Vendor
agrees to cause to be filed with the applicable federal
and provincial regulatory authorities, as soon as
practicable after the Effective Time, such documentation
as may be required by Applicable Law or under the terms
of the Comcheq Plan and the Comcheq Fund with respect to
the assumption of sponsorship of the Comcheq Plan and the
Comcheq Fund as provided for hereunder. The Purchaser
agrees to do all things required of it under Applicable
Law to establish that it is a successor sponsor to the
Vendor under the terms of the Comcheq Plan as provided
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hereunder.
Without limiting the generality of the foregoing, the
Purchaser agrees to cause to be filed with the applicable
federal and provincial regulatory authorities, as soon as
practicable following the Effective Time, such
documentation as may be required to establish the
Purchaser in such capacity.
(b) With respect to the administration of the Comcheq Plan
from the Effective Time until sponsorship and effective
control and direction over the Comcheq Plan and the
Comcheq Fund have transferred to the Purchaser, the
Vendor shall direct, or cause to be directed, the funding
agent of the Comcheq Plan in accordance with the
instructions given to the Vendor by the Purchaser in
connection herewith. After sponsorship and effective
control and direction over the Comcheq Plan and the
Comcheq Fund have transferred to the Purchaser, the
Vendor shall not have any further obligation or liability
with respect to the Comcheq Plan and the Comcheq Fund
except as expressly provided herein. The Vendor shall be
responsible for satisfying any and all governmental
reporting and/or disclosure requirements applicable to
the Comcheq Plan and the Comcheq Fund with respect to
plan years ending prior to the Effective Time and the
Purchaser shall be responsible for satisfying any and all
governmental reporting and/or disclosure requirements
applicable to the Comcheq Plan and the Comcheq Fund with
respect to plan years ending on or after the Effective
Time. The Vendor and the Purchaser shall cooperate with
each other with respect to such reporting requirements
for the plan years 1997 and 1998 and each shall provide
the other with assistance reasonably requested in
connection therewith. Prior to and following the
Effective Time, the Vendor agrees to use all reasonable
efforts to provide the Purchaser with such books, records
and other relevant data within its control or access
relating to benefit matters with respect to the members
of the Plan and any other persons entitled to benefits
thereunder as the Purchaser shall reasonably request.
(2) Effective as of the Effective Time, the Employees who become
employed by the Purchaser and who participated in any way in the
CIBC Plans (the "CIBC Plan Employees") shall cease to accrue
benefits under either of the CIBC Plans. All Employees who
become employed by the Purchaser, including Employees who are
also CIBC Plan Employees, shall be entitled to participate in
benefits under the Comcheq Plan in respect of service with the
Purchaser from the Effective Time and shall be entitled to
credit in the Comcheq Plan for their period of employment with
the Vendor (including any period of employment the Vendor has
recognized, or was required to recognize, in respect of such
Employees for the purpose of determining eligibility for
membership in and entitlement to benefits under the Comcheq Plan
as required under Applicable Laws. From the Effective Time for
a minimum of two years thereafter, all contributions in respect
of Employees who
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participate in the Comcheq Plan shall be made under the
Comcheq Plan and the Purchaser shall continue to maintain
the Comcheq Plan.
(3) Except as provided herein, the Purchaser will have no
responsibility to any Employee or former employee or any other
person with respect to benefit entitlements under the CIBC Plans.
The Purchaser will cause the Comcheq Plan to accept transfers of
cash from a CIBC Plan for any Employee who elects to convert his
or her defined benefit under a CIBC Plan to a defined
contribution benefit under the Comcheq Plan. The Purchaser
shall, or shall cause the funding agents of the Comcheq Plan to
allocate to each CIBC Plan Employee's account under the Comcheq
Plan his or her cash transfer amount as described in this Section
9.3(3). The Purchaser shall have no responsibility for
determining the appropriateness of such an election in any
particular case nor for determining the correctness or adequacy
of the amount being transferred, such responsibility to rest with
the Vendor, CIBC and the Employee. The Vendor and the Purchaser
shall do all things necessary to implement this Section 9.3 and
shall cooperate to obtain any regulatory approvals required to
complete the asset transfers provided for herein. Written
confirmation of any and all such regulatory approvals shall be
forwarded by each Party to the other forthwith upon receipt.
(4) Effective as of the Effective Time, the Vendor shall assign and
transfer to the Purchaser its rights, obligations and liabilities
with respect to the Employee Deferred Profit Sharing Program of
the Vendor (the "DPSP") and the related fund (the "DPSP Fund").
Effective as of the Effective Time, the Purchaser shall accept
such assignment and transfer and shall assume all liabilities,
duties and responsibilities required of it as a successor sponsor
of the DPSP and the DPSP Fund pursuant to the terms thereof and
Applicable Laws except that the Purchaser accepts no
responsibility for any actions or omissions or alleged actions or
omissions referred to in Section 7.1(5). The Vendor and the
Purchaser agree to do all things required of them under
Applicable Laws to establish the Purchaser as a successor sponsor
to the Vendor under the terms of the DPSP as provided hereunder.
Effective as of the Effective Time, the Purchaser will be
responsible for all costs and expenses related to the DPSP and
the DPSP Fund except as expressly provided herein. After
sponsorship and effective control and direction over the DPSP and
the DPSP Fund have been transferred to the Purchaser, the Vendor
and CIBC will not have any further obligations or liability with
respect to the DPSP. Notwithstanding the foregoing, with respect
to the fiscal year November 1, 1997 to October 31, 1998 (the
"Transition Year"), forthwith after completion of the Closing
Statements, the Vendor will make a contribution into the DPSP
Fund of 5% of its pre-tax profits as reflected in the income
statement prepared as part of the Closing Statements. The
Purchaser's contribution obligation for the Transition Year will
relate to the period commencing on the Effective Time. The
Parties will co-operate to make all necessary amendments to the
DPSP Plan and DPSP Fund to reflect the arrangements necessary for
the Transition Year.
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(5) Effective as of the Effective Time, the Vendor shall assign and
transfer to the Purchaser its rights, obligations and liabilities
with respect to the group retirement savings plans it sponsors
for the Employees and which are identified in Schedule 6.2(18)
(the "GRSPs") and all the related accounts (the "GRSP accounts").
Effective as of the Effective Time, the Purchaser shall accept
such assignment and transfer and shall assume all liabilities,
duties and responsibilities required of it as the successor
sponsor of the GRSPs and the GRSP accounts pursuant to the terms
thereof and Applicable Laws except that the Purchaser accepts no
responsibility for any actions or omissions or alleged actions or
omissions referred to in Section 7.1(5). The Vendor and the
Purchaser agree to do all things required of them under
Applicable Laws to establish the Purchaser as a successor sponsor
to the Vendor under the terms of the GRSPs as provided hereunder.
Effective as of the Effective Time, the Purchaser will be
responsible for all costs and expenses related to the GRSPs and
the GRSP accounts to the extent the Vendor was so responsible.
After sponsorship and effective control and direction over the
GRSPs and the GRSP accounts have been transferred to the
Purchaser, the Vendor shall not have any further obligations or
liability with respect to the GRSPs.
9.4 Welfare Benefit Plans. Effective as of the Effective Time, the
Purchaser shall establish or cause to be established, at its own expense,
benefit plans ("Purchaser's Welfare Benefit Plans") to provide life insurance,
healthcare, dentalcare, accidental death and dismemberment insurance and
disability and other group non-pension benefits for the Employees (other than
those who do not accept employment with the Purchaser), and those persons who
have retired from the Vendor on or prior to the Effective Time and in respect of
whom the Purchaser has agreed to provide benefits under Section 9.1, in
connection with any and all claims of such Employees and such retirees incurred
on and after the Effective Time. Effective as of the Effective Time, such
Employees and retirees who participate in the Vendor's life insurance,
healthcare, dentalcare, accidental death and dismemberment insurance, disability
and other group non-pension benefit arrangements (the "Vendor's Welfare Benefit
Plans") according to the terms thereof shall cease to participate in and accrue
benefits under the Vendor's Welfare Benefit Plans and shall commence
participation in and accrue benefits under the Purchaser's Welfare Benefit
Plans. Employees who are not participants in the Vendor's Welfare Benefit Plans
on the Effective Time shall, subject to normal eligibility requirements, be
eligible to participate in and accrue benefits under the Purchaser's Welfare
Benefit Plans as of the Effective Time recognizing their period of employment
with the Vendor (including any period of employment the Vendor has recognized,
or was required to recognize, in respect of such employees).
9.5 Welfare Benefit Plans - Claims.
(1) Any claims for benefits incurred under the Vendor's Welfare
Benefit Plans up to the Effective Time shall be payable by the
Vendor's Welfare Benefit Plans. The Vendor shall be liable to
the Purchaser and shall defend, indemnify and hold harmless the
Purchaser and the Purchaser's Welfare Benefit Plans against any
and
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all loss, liability or expense arising out of any such claims
incurred before the Effective Time.
(2) Any claims for benefits incurred on and after the Effective Time
by the Employees and retirees covered by the Purchaser's Welfare
Benefit Plans shall be payable by the Purchaser's Welfare Benefit
Plans according to their terms. The Purchaser shall be liable to
the Vendor and CIBC shall defend, indemnify and hold harmless the
Vendor and CIBC and the Vendor's Welfare Benefit Plans against
any and all loss, liability or expense arising out of any such
claims incurred on and after the Effective Time.
(3) For purposes of Section 9.5(1) and 9.5(2), a claim shall be
deemed to have been incurred with respect to all extended health
or dental services or supplies, on the date a service or supply
giving rise to a claim under the applicable Plan is purchased or
received by the claimant or his/her eligible dependent. Where a
claim includes more than one service or supply, each of which
occurs at a single point in time (for example, a series of dental
appointments related to a treatment plan), each such service or
supply shall result in a separate claim incurred as of the date
on which the supply or service is purchased or received as
aforesaid. If sufficient information is not available to
identify charges associated with each claim (but is sufficient
for payment of the claims in the ordinary course of claims
adjudication), the total charges shall be prorated over the
number of claims.
ARTICLE 10
POST-CLOSING MATTERS
10.1 Co-operation in Filing of Returns, etc.. Following the Closing,
the Purchaser agrees to provide to the Vendor, CIBC and any of their
representatives and advisers such information and co-operation as reasonably
required by the Vendor and CIBC, including all reasonable co-operation in
connection with the filing of income tax returns of the Vendor in respect of
which the Books and Records delivered to the Purchaser pursuant to this
Agreement are relevant. Following the Closing, the Vendor and CIBC agree to
provide to the Purchaser and any of its representatives and advisers such
information and cooperation Related to the Business as is reasonably required by
the Purchaser in its ongoing operation of the Business and its dealings with
regulatory authorities, including the Competition Bureau.
10.2 Change Vendor's Name. Forthwith following the Closing Date, the
Vendor shall discontinue further use of the name "Comcheq", except where legally
required to identify the Vendor until its name has been changed to another name
and, not later than thirty (30) days after the Closing Date, shall file articles
of amendment or otherwise take such corporate action as may be necessary to
change the corporate name of the Vendor to another name not including the word
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"Comcheq" and not otherwise being confusingly similar to its present name.
10.3 Non-Merger. Each Party agrees that all provisions of this
Agreement, other than (a) the conditions in Article 5 and (b) the
representations and warranties contained in Article 6 and the related
indemnities in Sections 7.1 and 7.2 (which shall be subject to the special
arrangements provided in such Article or Sections) shall forever survive the
execution, delivery and performance of this Agreement, Closing and the
execution, delivery and performance of any and all documents delivered in
connection with this Agreement.
10.4 Letters of Credit. For a period of one year after Closing, at the
direction of the Purchaser (which direction shall be accompanied by all such
original documents and certificates and other materials as the Vendor acting
reasonably considers necessary), the Vendor will draw down under any letter of
credit or letter of guarantee naming the Vendor as beneficiary which has been
posted by a customer of the Business (as at the Effective Time) but only to the
extent permitted by Applicable Law and only to the extent that the Vendor has
any rights to make such a draw down under the terms of any such letter of credit
or letter of guarantee; provided, however, that the Purchaser shall indemnify
and hold harmless the Vendor in respect of any claim, loss, damage, liability
and expense in connection with or arising out of any such draw down under any
such letter of credit or guarantee. Any such letter of credit or letter of
guarantee, when and if renewed, shall name the Purchaser as beneficiary.
ARTICLE 11
GENERAL
11.1 Expenses. Each Party shall be responsible for its own legal and
other expenses (including any Taxes imposed on such expenses) incurred in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the transactions contemplated by this
Agreement.
11.2 Payment of Taxes. Except as otherwise provided in this Agreement,
the Purchaser shall pay all Taxes applicable to, or resulting from transactions
contemplated by this Agreement (other than Taxes payable under applicable
legislation by the Vendor) and any filing or recording fees payable in
connection with the instruments of transfer provided for in this Agreement.
11.3 Public Announcements. Except to the extent otherwise required by
law or by requirements or policies of any stock exchange or with the prior
consent of the other Parties, no Party shall make any public announcement
regarding this Agreement or the transactions contemplated by this Agreement.
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11.4 Notices.
(1) Any notice, certificate, consent, determination or other
communication required or permitted to be given or made under
this Agreement shall be in writing and shall be effectively given
and made if (i) delivered personally, (ii) sent by prepaid
courier service or mail, or (iii) sent prepaid by fax or other
similar means of electronic communication, in each case to the
applicable address set out below:
(i) if to CIBC or the Vendor, to:
Canadian Imperial Bank of Commerce
Commerce Court West - 9th Floor
Commerce Court West Postal Station
Toronto, Ontario
M5L 1A2
Attention: Robin A. Stansfield, Senior Vice-President,
Strategic Initiatives
Facsimile: (416) 368-0513
with a copy to:
Blake, Cassels & Graydon
Box 25, Commerce Court West
Toronto, Ontario
M5L 1A9
Attention: John Teolis/Greg Frenette
Facsimile: (416) 863-2653
(ii) if to the Purchaser, to:
c/o: Ceridian Corporation
8100 34th Avenue South
Minneapolis, Minnesota
55425-1640
Attention: A. Reid Shaw, Vice-President Transactions and Associate
General Counsel
Facsimile: (612) 853-6262
with a copy to:
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Osler, Hoskin & Harcourt
1 First Canadian Place - 66th Floor
P.O. Box 50, Stn. 1st Can. Place
Toronto, Ontario
M5X 1B8
Attention: Stephen Sigurdson
Facsimile: (416) 862-6666
(2) Any such communication so given or made shall be deemed to have
been given or made and to have been received on the day of
delivery if delivered, or on the day of faxing or sending by
other means of recorded electronic communication, provided that
such day in either event is a Business Day and the communication
is so delivered, faxed or sent before 4:30 p.m. (Toronto time) on
such day. Otherwise, such communication shall be deemed to have
been given and made and to have been received on the next
following Business Day. Any such communication sent by mail
shall be deemed to have been given and made and to have been
received on the fifth Business Day following the mailing thereof;
provided however that no such communication shall be mailed
during any actual or apprehended disruption of postal services.
Any such communication given or made in any other manner shall be
deemed to have been given or made and to have been received only
upon actual receipt.
(3) Any Party may from time to time change its address under this
Section by notice to the other Parties given in the manner
provided by this Section.
11.5 Time of Essence. Time shall be of the essence of this Agreement in
all respects.
11.6 Entire Agreement. This Agreement and the other agreements
expressly contemplated hereby constitute the entire agreement between the
Parties pertaining to the subject matter of this Agreement and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, including the Letter of Intent. There are no conditions, warranties,
representations or other agreements between the Parties in connection with the
subject matter of this Agreement (whether oral or written, express or implied,
statutory or otherwise) except as specifically set out in this Agreement and the
other agreements expressly contemplated hereby.
11.7 Waiver. A waiver of any default, breach or non-compliance under
this Agreement is not effective unless in writing and signed by the Party to be
bound by the waiver. No waiver shall be inferred from or implied by any failure
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to act or delay in acting by a Party in respect of any default, breach or
non-observance or by anything done or omitted to be done by any other Party.
The waiver by a Party of any default, breach or non-compliance under this
Agreement shall not operate as a waiver of that Party's rights under this
Agreement in respect of any continuing or subsequent default, breach or
non-observance (whether of the same or any other nature).
11.8 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such prohibition or unenforceability and shall be
severed from the balance of this Agreement, all without affecting the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.9 Further Assurances. Each Party shall promptly do, execute, deliver
or cause to be done, executed and delivered all further acts, documents and
things in connection with this Agreement that any other Party may reasonably
require for the purposes of giving effect to this Agreement.
11.10 Language. The Parties have required that this Agreement and all
deeds, documents and notices relating to this Agreement be drawn up in the
English language. Les parties aux presentes ont exige que le present contrat et
tous autres contrats, documents ou avis afferents aux presentes soient rediges
en langue anglaise.
11.11 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable in that Province and shall be treated, in all respects, as an Ontario
contract.
11.12 Attornment. Each Party agrees (a) that any action or proceeding
relating to this Agreement may (but need not) be brought in any court of
competent jurisdiction in the Province of Ontario, and for that purpose now
irrevocably and unconditionally attorns and submits to the jurisdiction of such
Ontario court; (b) not to oppose any such Ontario action or proceeding on the
basis of forum non conveniens or for any other reason; and (c) not to oppose the
enforcement against it in any other jurisdiction of any judgment or order duly
obtained from an Ontario Court as contemplated by this Section.
11.13 Successors and Assigns. This Agreement shall enure to the benefit
of, and be binding on, the Parties and their respective successors and permitted
assigns. No Party may assign or transfer, whether absolutely, by way of
security or otherwise, all or any part of its respective rights or obligations
under this Agreement without the prior written consent of the other Parties.
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Notwithstanding the foregoing: (a) CIBC shall be entitled to assign its rights
under this Agreement to a wholly-owned subsidiary of CIBC, provided that no
assignment shall relieve CIBC from any of its liabilities and obligations
hereunder; and (b) the Purchaser shall be entitled to assign its rights under
this Agreement to any direct or indirect subsidiary of Ceridian Corporation,
provided that no assignment shall relieve the Purchaser from any of its
liabilities and obligations hereunder. In the event of an assignment as
contemplated by this Section 11.13, the assigning party or parties shall enter
into such assurances as may be reasonably required by the non-assigning party or
parties.
11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument.
Counterparts may be executed either in original or faxed form and the Parties
adopt any signatures received by a receiving fax machine as original signatures
of the Parties; provided, however, that any Party providing its signature in
such manner shall promptly forward to the other Parties an original of the
signed copy of this Agreement which was so faxed.
IN WITNESS WHEREOF the Parties have executed this Agreement.
COMCHEQ SERVICES LIMITED
By: /s/Richard Ball
Name: Richard Ball
Title: Vice-President, Finance,
Secretary and Treasurer
Name: Corrine Burleigh
Title: Vice-President,
Systems & Operations
CANADIAN IMPERIAL BANK OF
COMMERCE
By: /s/John Bowden
Name: John Bowden
Title: Executive Vice-President,
Commercial Banking
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Name: Christine Govern
Title: General Manager, Strategic
Initiatives, Commercial
Banking
CERIDIAN CANADA LTD.
By: /s/A. Reid Shaw
Name: A. Reid Shaw
Title: Vice-President &
Assistant Secretary
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