Of the securities exchange act of 1934


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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) September 29, 2014

 

 

CDK Global, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction of incorporation)

 

 

 

 

1-36486

 

46-5743146

(Commission File Number)

 

(I.R.S. Employer Identification No.)

 

 

1950 Hassell Road, Hoffman Estates, IL

 

60169

(Address of principal executive offices)

 

(Zip Code)

(847) 397-1700

(Registrant’s Telephone Number, Including Area Code)

CDK Global Holdings, LLC

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 




Item 1.01.

Entry into a Material Definitive Agreement.

On September 30, 2014, Automatic Data Processing, Inc. (“ADP”) completed the distribution to its stockholders of all of the outstanding shares of common stock of CDK Global, Inc. (the “ Company ”) in a tax free spin-off. The distribution was paid in the amount of one share of the Company’s common stock for every three shares of ADP common stock owned by ADP’s stockholders as of 5:00 p.m. New York City time on September 24, 2014, the record date for the distribution.

A registration statement on Form 10 describing the spin-off was filed by the Company with the Securities and Exchange Commission (the “ SEC ”) and has been declared effective. An information statement (the “ Information Statement ”) regarding the Company and the spin-off was sent to all holders of record of ADP stock on September 24, 2014.

In connection with the distribution, the Company entered into certain agreements with ADP as of September 29, 2014, prior to its conversion from a limited liability company to a corporation, to govern the terms of the spin-off and to define its ongoing relationship with ADP, including obligations with respect to liabilities relating to the Company’s business and to ADP’s business and obligations with respect to each company’s employees, certain transition services, intellectual property and taxes.

Separation and Distribution Agreement

The Company entered into a separation and distribution agreement with ADP, which contains the key provisions relating to the separation of ADP’s Dealer Services business unit (to be carried on after the separation by the Company) from that of ADP and the distribution of the Company’s common stock to the stockholders of ADP. The separation and distribution agreement identifies the assets transferred and liabilities assumed by each of the Company and ADP in the separation, and it describes when and how these transfers and assumptions occur. In addition, it includes the procedures by which ADP and the Company became separate and independent companies. It also contains the conditions that were required to be satisfied, or waived by ADP, prior to completion of the separation and distribution.

Pre-Distribution Occurrences. The separation and distribution agreement provides, subject to the terms and conditions contained in the agreement and prior to the distribution, that the following will occur:

 

 



 

the consolidation of the Company’s international and domestic subsidiaries that are engaged in ADP’s Dealer Services business under the Company, a wholly owned subsidiary of ADP;

 

 



 

the Company’s conversion from a Delaware limited liability company to a Delaware corporation; and

 

 



 

the Company’s entry into a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, providing for a senior unsecured revolving credit facility and a senior unsecured term loan facility, and the Company’s payment of a cash dividend to ADP.

 

1
Distribution. The separation and distribution agreement provides that the completion of the separation and distribution was subject to several conditions that were required to be satisfied, or waived by ADP, including:

 

 



 

the board of directors of ADP shall have given final approval of the separation and distribution, which approval the board of directors of ADP may give in its sole and absolute discretion;

 

 



 

the SEC shall have declared effective the registration statement relating to the separation and distribution, and no stop order shall be in effect with respect to the registration statement;

 

 



 

the actions and filings necessary or appropriate to comply with federal and state securities and blue sky laws and any comparable foreign laws shall have been taken and where applicable become effective or been accepted;

 

 



 

The NASDAQ Stock Market LLC (the “NASDAQ”) shall have accepted for listing the shares of the Company’s common stock distributed in the distribution, subject to official notice of issuance;

 

 



 

no order by any court or other legal or regulatory restraint preventing completion of the separation or the distribution shall have been threatened or in effect;

 

 



 

ADP shall have received an opinion from its counsel, Paul, Weiss, Rifkind, Wharton & Garrison LLP, satisfactory to ADP, to the effect that the distribution of the Company’s shares by ADP to its stockholders will qualify as a distribution that is tax-free under Section 355 and other related provisions of the Internal Revenue Code of 1986, as amended;

 

 



 

all consents and governmental or other regulatory approvals required in connection with the transactions contemplated by the separation and distribution agreement shall have been received;

 

 



 

each of the tax matters agreement, transition services agreement, data center services agreement, intellectual property transfer agreement and employee matters agreement shall have been entered into prior to the distribution and remain in full force and effect;

 

 



 

ADP shall have established the record date for determining stockholders of ADP entitled to receive shares of the Company’s common stock pursuant to the distribution;

 

 



 

the distribution shall not have violated or resulted in a breach of law or any material agreement;

 

 



 

each of the other pre-distribution occurrences shall have occurred; and

 

 



 

the board of directors of ADP shall not have determined that any event or development has occurred or exists that makes it inadvisable to effect the distribution.

 

2
Assumption of Liabilities and Indemnification. In general, under the separation and distribution agreement, the Company will indemnify ADP and its representatives and affiliates against certain liabilities to the extent relating to, arising out of or resulting from:

 

 



 

the Company’s failure to pay, perform or otherwise promptly discharge any of its liabilities or any of its contracts or agreements in accordance with their respective terms;

 

 



 

any of the Company’s liabilities, any of its assets or the operation of its business or prior businesses, whether arising prior to or after the distribution;

 

 



 

any breach by the Company of the separation and distribution agreement;

 

 



 

any untrue statement or alleged untrue statement of a material fact or material omission or material alleged omission to state a material fact required to be stated in the registration statement relating to the separation and distribution or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, other than certain information relating to ADP and the distribution;

 

 



 

the Company’s failure to substitute a subsidiary or affiliate, owned by the Company immediately prior to the distribution but after the reorganization, for any subsidiary or affiliate of ADP, owned by ADP immediately after the distribution, as guarantor or primary obligor for any of the Company’s agreements or liabilities; and

 

 



 

the Company’s failure to perform in connection with any contribution, assignment, transfer, conveyance, delivery or assumption related to the distribution that has (i) not been consummated as of the time and date of the distribution and (ii) is held by ADP for the Company’s benefit or account.

In general, under the separation and distribution agreement, ADP will indemnify the Company and its representatives and affiliates against certain liabilities to the extent relating to, arising out of or resulting from:

 

 



 

the failure of ADP to pay, perform or otherwise promptly discharge any liability of ADP or any ADP contract or agreement in accordance with its respective terms;

 

 



 

any of ADP’s liabilities, any of its assets or the operation of its retained business, whether arising prior to or after the distribution;

 

 



 

any breach by ADP of the separation and distribution agreement;

 

 



 

any untrue statement or alleged untrue statement of a material fact or material omission or material alleged omission to state a material fact required to be stated in the registration statement relating to the separation and distribution or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, only for certain information relating to ADP and the distribution;

 

3


 



 

the failure by ADP to substitute a subsidiary or affiliate of ADP, owned by ADP immediately after the distribution, for any of the Company’s subsidiaries or affiliates, owned by the Company immediately prior to the distribution but after the reorganization, as guarantor or primary obligor for any agreement or liability of ADP; and

 

 



 

the failure by ADP to perform in connection with any contribution, assignment, transfer, conveyance, delivery or assumption related to the distribution that has (i) not been consummated as of the time and date of the distribution and (ii) is held by the Company for the benefit or account of ADP.

Indemnification with respect to taxes will be governed by the tax matters agreement described below.

Further Action and Delayed Transfers. The separation and distribution agreement provides that the Company and ADP will cooperate to effect any contributions, assignments, transfers or assumptions not completed on the distribution date, due to approval, consent or other issues, as promptly following that date as is practicable. Until these contributions, assignments, transfers or assumptions can be completed, the party retaining the assets, liabilities or contracts to be contributed, assigned, transferred or assumed will hold in trust for the benefit of the other party any such assets, liabilities or contracts. In an effort to place each party, insofar as reasonably possible, in the same position as that party would have been in had the contributions, assignments, transfers or assumptions occurred at the time contemplated by the separation and distribution agreement, the separation and distribution agreement provides that the economic benefit or detriment associated with those assets, liabilities or contracts will generally be passed on to the party that would have received the assets, liabilities or contracts if the contributions, assignments, transfers or assumptions had occurred as contemplated.

Access to Information. Under the separation and distribution agreement, the following terms govern access to information:

 

 



 

after the distribution, subject to applicable confidentiality provisions and other restrictions, the Company and ADP will each give the other any information within that company’s possession that the requesting party reasonably needs (a) to comply with the requirements imposed on the requesting party by a governmental authority, (b) for use in any proceeding to satisfy audit, accounting, insurance claims, regulatory, litigation or other similar requirements, (c) to comply with its obligations under the separation and distribution agreement or certain of the ancillary agreements or (d) to enable the requesting party’s auditors to be able to complete their audit and preparation of financial statements and to meet the requesting party’s timetable for dissemination of its financial statements;

 

 



 

the Company and ADP will retain certain significant information owned or in their respective possession in accordance with their respective practices from time to time; and

 

 



 

the Company and ADP will, subject to applicable confidentiality provisions and other restrictions, use reasonable best efforts to make available to the other party, their respective past and present directors, officers, employees and other personnel and agents to the extent reasonably required in connection with any proceedings in which the other party may become involved.

 

4
Limited Representations and Warranties. Pursuant to the separation and distribution agreement, the Company and ADP made customary representations and warranties only with respect to their capacity to enter into and the validity and enforceability of the separation and distribution agreement and the ancillary agreements. Except as otherwise agreed, the Company and ADP both took all assets and liabilities “as is, where is” and bore the economic risk relating to conveyance of, title to or the assumption of the assets and liabilities conveyed to one another.

Expenses. In general, ADP will be responsible for expenses incurred in connection with the transactions contemplated in the separation and distribution agreement prior to the distribution.

The foregoing does not purport to be a full and complete description of the separation and distribution agreement. A copy of the separation and distribution agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
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