Exhibit 10.2

TAX MATTERS AGREEMENT

by and between

AUTOMATIC DATA PROCESSING, INC.

and

CDK GLOBAL, INC.

Dated as of September 29, 2014

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TABLE OF CONTENTS

 

            Page(s)  

ARTICLE I DEFINITIONS

     1   

Section 1.01

    

Definition of Terms

     1   

Section 1.02

    

General Interpretive Principles

     9   

ARTICLE II PAYMENT OF TAXES

     10   

Section 2.01

    

Income Taxes

     10   

Section 2.02

    

Transaction Taxes

     10   

Section 2.03

    

Other Taxes

     11   

Section 2.04

    

Other Income Taxes

     12   

Section 2.05

    

Allocation of Certain Income Taxes and Income Tax Items

     12   

Section 2.06

    

Refunds

     13   

Section 2.07

    

Carrybacks

     14   

Section 2.08

    

Treatment of Restricted Stock, Stock Options, and Deferred Compensation

     15   

Section 2.09

    

Successor Employer Status

     16   

Section 2.10

    

Advance Pricing Agreement

     16   

ARTICLE III PREPARATION AND FILING OF TAX RETURNS

     17   

Section 3.01

    

ADP Responsibility

     17   

Section 3.02

    

Dealer Responsibility

     18   

Section 3.03

    

Tax Accounting Practices

     18   

Section 3.04

    

Right to Review Tax Returns

     19   

ARTICLE IV TAX-FREE STATUS OF DISTRIBUTION

     19   

Section 4.01

    

Representations

     19   

Section 4.02

    

Covenants

     19   

Section 4.03

    

Procedures Regarding Opinions and Rulings

     22   

Section 4.04

    

Canadian Butterfly

     22   

ARTICLE V TAX CONTESTS; INDEMNIFICATION; COOPERATION

     23   

Section 5.01

    

Notice

     23   

Section 5.02

    

Control of Tax Contests

     23   

Section 5.03

    

Indemnification Payments

     24   

Section 5.04

    

Interest on Late Payments

     25   

Section 5.05

    

Treatment of Payments

     25   

Section 5.06

    

Expenses

     25   

Section 5.07

    

Cooperation

     25   

Section 5.08

    

Confidentiality

     26   

Section 5.09

    

Retention of Tax Records

     26   

ARTICLE VI RESOLUTION OF DISPUTES

     27   

Section 6.01

    

Tax Disputes

     27   

 

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            Page(s)  

ARTICLE VII MISCELLANEOUS PROVISIONS

     27   

Section 7.01

    

Disposition of Dealer Subsidiaries

     27   

Section 7.02

    

Complete Agreement; Representations

     28   

Section 7.03

    

Costs and Expenses

     28   

Section 7.04

    

Governing Law

     28   

Section 7.05

    

Notices

     28   

Section 7.06

    

Amendment, Modification or Waiver

     29   

Section 7.07

    

No Assignment; Binding Effect; No Third Party Beneficiaries

     29   

Section 7.08

    

Counterparts

     30   

Section 7.09

    

Specific Performance

     30   

Section 7.10

    

New York Forum

     30   

Section 7.11

    

WAIVER OF JURY TRIAL

     31   

Section 7.12

    

Interpretation; Conflict With Ancillary Agreements

     31   

Section 7.13

    

Severability

     31   

Section 7.14

    

Survival

     31   

 

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TAX MATTERS AGREEMENT dated as of September 30, 2014 (this “Agreement”) by and
between Automatic Data Processing, Inc., a Delaware corporation (“ADP”) and CDK
Global, Inc., a Delaware corporation whose sole shareholder is ADP (“Dealer”
and, together with ADP, each, a “Party” and collectively, the “Parties”).

WHEREAS, as of the date of this Agreement, the ADP affiliated group includes
Dealer and its Subsidiaries;

WHEREAS, the Parties (or their predecessors-in-interest) have entered into the
Separation Agreement, pursuant to which ADP has contributed to Dealer the stock
and assets associated with the Dealer Business (as defined herein) in exchange
for shares of common stock of Dealer, cash and the assumption by Dealer of
certain liabilities related to the Dealer Business (the “Contribution”);

WHEREAS, ADP intends to distribute on a pro rata basis to its shareholders all
of the shares of stock of Dealer (the “Distribution”);

WHEREAS, the Parties believe the Distribution will provide greater flexibility
for management, capital requirements and growth of the Dealer Business while
ensuring that ADP senior management can focus its time and resources on the
development of the ADP retained businesses;

WHEREAS, the Parties intend that the Contribution and Distribution qualify as a
“reorganization” under Section 368(a) of the U.S. Internal Revenue Code of 1986,
as amended (the “Code”), with respect to which no gain or loss is recognized
under Code Sections 361 and 355;

WHEREAS, as a result of and upon the Distribution, Dealer and its Subsidiaries
will cease to be members of the ADP Group; and

WHEREAS, the Parties desire to allocate the Tax responsibilities, liabilities
and benefits of transactions that occur on or prior to, and that may occur
after, the date on which the Distribution occurs (the “Distribution Date”) and
to provide for and address certain other Tax matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Parties (each on behalf of itself and each of its
Affiliates) hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definition of Terms. The following terms shall have the following
meanings (such meanings to apply equally to both the singular and the plural
forms of the terms defined). All Section and Exhibit references are to this
Agreement unless otherwise stated.

 

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“Action” means any claim, demand, action, cause of action, suit, countersuit,
arbitration, litigation, inquiry, proceeding or investigation by or before any
Governmental Authority or any arbitration or mediation tribunal or authority.

“Active Trade or Business” means the active conduct by Dealer of the businesses
conducted by the members of the Dealer Group as of the Distribution (determined
in accordance with Code Section 355(b)), which shall include, for the avoidance
of doubt, the businesses conducted by the ATB Entities.

“Adjustment Request” means any formal or informal claim or request filed with
any governmental authority for any Refund, underpayment or overpayment of Tax or
any change in available Tax Attributes.

“ADP” has the meaning set forth in the recitals.

“ADP Amalco” has the meaning assigned to such term in the definition of Canadian
Restructuring.

“ADP Business” means all businesses and operations of the ADP Group, other than
the Dealer Business.

“ADP Consolidated Group” means the affiliated group of corporations (within the
meaning of Section 1504 of the Code) of which ADP is the common parent prior to
the Distribution Date.

“ADP Employee” means an employee of ADP or any ADP Affiliate immediately after
the Distribution.

“ADP Group” means ADP and each Person that will be a direct or indirect
Subsidiary of ADP immediately after the Distribution and each Person that is or
becomes a member of the ADP Group after the Distribution, including any Person
that is or was merged into ADP or any such direct or indirect Subsidiary, and
each other Person that would have been included in the ADP Group in connection
with the Restructuring but for the delayed transfers required by Section 2.3(b)
of the Separation Agreement.

“ADP Restricted Stock” means ADP common stock received by an ADP Employee in
connection with his or her employment, which restricted stock unit has not yet
been settled as of the Distribution Date.

“ADP Restricted Stock Unit” means an ADP restricted stock unit received by an
ADP Employee in connection with his or her employment, which stock has not yet
been included in the income of such ADP Employee as of the Distribution Date.

“ADP Stock Option” means an Option to acquire ADP common stock received by an
ADP Employee in connection with his or her employment, which Option has not yet
been exercised as of the Distribution Date.

 

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“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person; provided,
however, that for purposes of this Agreement, no member of either Group shall be
deemed to be an Affiliate of any member of the other Group. As used herein,
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.

“Agreement” has the meaning set forth in the recitals.

“Ancillary Agreement” has the meaning set forth in the Separation Agreement.

“APA” means the advance pricing agreement currently being negotiated, as such
agreement is finally agreed, or any similar agreement (including any related
competent authority agreement for pre-APA years) that is finally agreed, among
ADP Amalco, ADP and the United States Subsidiaries of ADP, with the Internal
Revenue Service and the Canada Revenue Agency (including any competent authority
for the United States or Canada) relating to the pricing of services and
software that ADP and its United States Subsidiaries (both in the Dealer
Business and in the ADP Business) provide to ADP Amalco and its Subsidiaries.
For the avoidance of doubt, the APA shall not apply to Dealer or any Subsidiary
of Dealer for any period or portion thereof beginning from and after the
Separation.

“ATB Entities” means the entities listed on Schedule A.

“Balance Sheet” has the meaning set forth in Section 2.01(a).

“Butterfly Transactions” means each of the transactions involving ADP, Dealer
and the other applicable parties specifically set out in the Canadian Tax
Ruling.

“Canadian Restructuring” means the amalgamation under the Laws of Nova Scotia,
Canada, of ADP Canada Holding Co., a corporation incorporated pursuant to the
laws of Nova Scotia, and ADP Canada Co./Compagnie ADP Canada, a corporation
amalgamated pursuant to the laws of Nova Scotia to form “ADP Amalco”, followed
by the transfer of the Dealer Business conducted directly or indirectly by ADP
Amalco from ADP Amalco to a new Canadian company that will be transferred to a
second newly formed Canadian company that will be a Subsidiary of, and treated
for United States federal income tax purposes as disregarded from, Dealer in a
transaction intended to qualify as a tax-free spin-off pursuant to Sections
368(a)(1)(D) and 355 of the Code and as tax-free pursuant to paragraph 55(3)(b)
of the Income Tax Act (Canada).

“Canadian Tax Ruling” means the advance income tax ruling issued by the CRA
(whether granted prior to, on or after the date hereof) relating to the
Butterfly Transactions and includes all supplemental rulings, requests for
rulings, information and legal submissions and exhibits to the foregoing.

 

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“Canadian Tax-Free Status” means the Canadian federal and provincial income tax
position of the applicable parties relating to the Butterfly Transactions that
would arise on the assumptions that (i) each of the rulings and opinions
provided in the Canadian Tax Ruling applied to determine such income tax
position of the applicable parties and (ii) the requisite conditions for such
rulings and opinions as set out in the Canadian Tax Ruling were satisfied.

“Code” has the meaning set forth in the recitals.

“Contribution” has the meaning set forth in the recitals.

“CRA” means the Canada Revenue Agency.

“Dealer” has the meaning set forth in the recitals.

“Dealer Assets” has the meaning set forth in the Separation Agreement.

“Dealer Business” has the meaning set forth in the Separation Agreement.

“Dealer Capital Stock” means (i) all classes or series of capital stock of
Dealer, including common stock and all other instruments treated as equity in
Dealer for U.S. federal Income Tax purposes and (ii) all options, warrants and
other rights to acquire such capital stock.

“Dealer Cash” means the cash amounts which are distributed to ADP in one or more
transactions intended to qualify as tax-free pursuant to Section 361(b) of the
Code.

“Dealer Employee” means an employee of Dealer or an employee of any member of
the Dealer Group immediately after the Distribution.

“Dealer Group” means Dealer and each Person that will be a direct or indirect
Subsidiary of Dealer immediately prior to the Distribution (but after giving
effect to the Restructuring) and each Person that is or becomes a member of the
Dealer Group after the Distribution, including any Person that is or was merged
into Dealer or any such direct or indirect Subsidiary, and each other Person
that would have been included in the Dealer Group in connection with the
Restructuring but for the delayed transfers required by Section 2.3(b) of the
Separation Agreement.

“Dealer Restricted Stock” means Dealer common stock received by a Dealer
Employee in connection with his or her employment, which stock has not yet been
included in the income of such Employee as of the Distribution Date.

“Dealer Restricted Stock Unit” means a Dealer restricted stock unit received by
a Dealer Employee in connection with his or her employment, which stock has not
yet been included in the income of such Dealer Employee as of the Distribution
Date.

 

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“Dealer Stock Option” means an Option to acquire Dealer common stock received by
a Dealer Employee in connection with his or her employment, which Option has not
yet been exercised as of the Distribution Date.

“Distribution” has the meaning set forth in the recitals.

“Distribution Date” has the meaning set forth in the recitals.

“Final Determination” means the final resolution of liability for any Tax for
any taxable period by or as a result of (i) a final and unappealable decision,
judgment, decree or other order by any court of competent jurisdiction; (ii) a
final settlement with the IRS, a closing agreement or accepted offer in
compromise under Code Sections 7121 or 7122, or a comparable arrangement under
the laws of another jurisdiction; (iii) any allowance of a Refund in respect of
an overpayment of Tax, but only after the expiration of all periods during which
such amount may be recovered by the Taxing Authority imposing the Tax; (iv) a
final settlement resulting from a competent authority determination; or (v) any
other final disposition, including by mutual agreement of the parties or by
reason of the expiration of the applicable statute of limitations or period for
the filing of claims for refunds, amended Tax Returns or appeals from adverse
determinations.

“Gain Recognition Agreement” means any agreement to recognize gain that is
described in Treasury Regulation Section 1.367(a)-8 and entered into in
connection with the Transactions and to which any member of the ADP Group or the
Dealer Group is a party.

“Governmental Authority” means any federal, state, local, foreign or
international court, government, department, commission, board, bureau or
agency, or any other regulatory, self-regulatory, administrative or governmental
organization or authority, including the NASDAQ.

“Group” means the ADP Group and/or the Dealer Group, as the context requires.

“Income Taxes” means all federal, state, local, and foreign income or franchise
Taxes or other Taxes based on income or net worth.

“Indemnifying Party” has the meaning set forth in Section 5.01.

“Indemnitee” has the meaning set forth in Section 5.01.

“IRS” means the U.S. Internal Revenue Service.

“Joint Return” means any Return that includes both a member of the ADP Group and
a member of the Dealer Group.

“Law” means any applicable foreign, federal, national, state, provincial or
local law (including common law), statute, ordinance, rule, regulation, code or
other requirement enacted, promulgated, issued or entered into, or act taken, by
a Governmental Authority.

 

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“NASDAQ” means the NASDAQ Global Select Market.

“New CanCo 2” has the meaning assigned to such term in Section 2.10(a).

“Option” means an option to acquire common stock, or other equity-based
incentives the economic value of which is designed to mirror that of an option,
including non-qualified stock options, discounted non-qualified stock options,
cliff options to the extent stock is issued or issuable (as opposed to cash
compensation), and tandem stock options to the extent stock is issued or
issuable (as opposed to cash compensation).

“Other Taxes” means all Taxes other than Income Taxes, including (but not
limited to) transfer, sales, use, payroll, property, and unemployment Taxes.

“Past Practices” has the meaning set forth in Section 3.03(a).

“Person” means any natural person, corporation, general or limited partnership,
limited liability company or partnership, joint stock company, joint venture,
association, trust, bank, trust company, land trust, business trust or other
organization, whether or not a legal entity, and any Governmental Authority.

“Post-Distribution Tax Period” means any taxable period (or portion thereof)
beginning after the Distribution Date.

“Pre-Distribution Tax Period” means any taxable period (or portion thereof)
ending on or before the close of the Distribution Date.

“Proposed Acquisition Transaction” has the meaning set forth in
Section 4.02(b)(i).

“Refund” means any cash refund of Taxes or reduction of Taxes by means of
credit, deduction, offset or otherwise.

“Reportable Transaction” means a reportable or listed transaction as defined in
Section 6011 of the Code or the Treasury Regulations promulgated thereunder,
other than a loss transaction as defined in Treasury Regulations
Section 1.6011-4(b)(5).

“Restricted Period” means the period beginning on the date of this Agreement and
ending on, and including, the last day of the two-year period following the
Distribution Date.

“Restructuring” has the meaning assigned to such term in the Separation
Agreement.

“Ruling” means all private letter rulings granted by the IRS, the CRA or any
other taxing authority relating to the Transactions (whether granted prior to,
on or after the date hereof), requests for such rulings, including all
supplemental ruling requests and information submissions, and any exhibit to any
of the foregoing.

 

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“Satisfactory Guidance” means either a ruling from the IRS (or the CRA in
respect of Section 4.04) or an Unqualified Tax Opinion, at the election of
Dealer, in either case reasonably satisfactory to ADP in both form and
substance, including with respect to any underlying assumptions or
representations. Satisfactory Guidance shall not include an Unqualified Tax
Opinion with respect to which ADP’s counsel, of recognized national standing,
provides an opinion to ADP that the conclusions in such Unqualified Tax Opinion
are not free from doubt. For the avoidance of doubt, this definition is intended
to allow ADP to prevent Dealer from taking the action that is the subject of a
ruling from the IRS or an Unqualified Tax Opinion, if ADP determines in good
faith that there is any Tax risk to it from such action based upon either
(1) any uncertainty concerning any underlying assumptions or representations in
such ruling or opinion or (2) any legal uncertainty referred to in advice it
receives from its counsel.

“Section 355 Entities” means the entities listed on Schedule B.

“Separation” means the separation of the Dealer Business and the ADP Business
into two independent companies on the terms and subject to the conditions set
forth in the Separation Agreement.

“Separate Return” means (i) in the case of the Dealer Group, a Tax Return of any
member of that Group (including any consolidated, combined, affiliated or
unitary Return) that does not include, for all or any portion of the relevant
taxable period, any member of the ADP Group and (ii) in the case of the ADP
Group, a Tax Return of any member of that Group (including any consolidated,
combined, affiliated or unitary Return) that does not include, for all or any
portion of the relevant taxable period, any member of the Dealer Group.

“Separation Agreement” means the Separation and Distribution Agreement, as
amended from time to time, by and between ADP and Dealer (or its
predecessor-in-interest) dated as of September 29, 2014.

“Straddle Period” means any taxable period beginning on or before the
Distribution Date and ending after the Distribution Date.

“Subsidiary” means, with respect to any Person, any other Person of which such
first Person (either alone or through or together with any other Subsidiary of
such first Person) owns, directly or indirectly, a majority of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such other
Person.

“Tax Advisor” means a U.S. Tax counsel or other Tax advisor of recognized
national standing reasonably acceptable to both Parties.

 

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“Tax Attributes” means earnings and profits, Tax basis, net operating and
capital loss carryovers or carrybacks, alternative minimum Tax credit carryovers
or carrybacks, general business credit carryovers or carrybacks, Tax credits or
credits against Tax, disqualified interest and excess limitation carryovers or
carrybacks, overall foreign losses, research and experimentation credit base
periods, all other items that are determined or computed on an affiliated group
basis (as defined in Section 1504(a) of the Code determined without regard to
the exclusion contained in Section 1504(b)(3) of the Code) or other
consolidated, combined or unitary basis, and any other item of loss, deduction,
or credit that could reduce a Tax liability.

“Tax Contest” means an audit, review, examination or any other administrative or
judicial proceeding with the purpose or effect of determining or redetermining
Taxes (including any administrative or judicial review of any Adjustment
Request).

“Tax Dispute” means any dispute arising in connection with this Agreement.

“Tax-Free Status” means the qualification of the Contribution and Distribution
taken together as a transaction, (i) that is a “reorganization” described in
Code Sections 355(a) and 368(a)(1)(D), (ii) in which the Dealer stock
distributed is “qualified property” for purposes of Code Sections 355(c) and
361(c), (iii) in which no gain or loss will be recognized by ADP upon the
receipt of the Dealer Cash from Dealer, (iv) in which ADP, Dealer and the
shareholders of ADP recognize no income or gain for U.S. federal Income Tax
purposes pursuant to Code Sections 355, 361 and 1032 and (v) that qualifies for
tax-free treatment under comparable provisions of state, local and foreign law.
For the avoidance of doubt, recognition of income or gain that relates to items
described in Sections 2.03(c)(i)(A) or 2.04 or to intercompany items shall not
cause the Distribution to fail to achieve Tax-Free Status.

“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of
credit, or any other item (including the basis or adjusted basis of property)
which increases or decreases Income Taxes paid or payable in any taxable period.

“Tax Opinions/Rulings” means (i) any Ruling and (ii) the opinions of Tax
Advisors relating to the Transactions including, without limitation, those
issued either at the time of the Distribution or to allow a Party to take
actions otherwise prohibited under this Agreement.

“Tax Return” or “Return” means any return, filing, report, questionnaire,
information statement, claim for Refund, or other document required or permitted
to be filed, including any amendments that may be filed, for any taxable period
with any Taxing Authority.

“Taxes” means all forms of taxation or duties imposed, or required to be
collected or withheld, including charges, together with any related interest,
penalties or other additional amounts. For the avoidance of doubt, the term
“Taxes” does not include amounts to be paid to any governmental authority
pursuant to escheat law.

 

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“Taxing Authority” means any governmental authority imposing Taxes.

“Transaction Taxes” means all (i) Taxes of any member of the ADP Group or the
Dealer Group resulting from, or arising in connection with, the failure of the
Contribution and the Distribution to have Tax-Free Status, (ii) Taxes of the
type described in clause (i) of any third party for which any member of the ADP
Group or the Dealer Group is or becomes liable, and (iii) reasonable out of
pocket legal, accounting and other advisory and court fees in connection with
liability for Taxes described in clauses (i) or (ii).

“Transactions” means the Contribution, the Distribution, the transactions
contemplated by the Separation Agreement and any other transfer of assets
(whether by contribution, sale or otherwise) between any member of the ADP Group
and any member of the Dealer Group in connection with the Contribution or the
Distribution.

“Transition Services Agreement” has the meaning set forth in the Separation
Agreement.

“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor
that permits reliance by ADP. The Tax Advisor, in issuing its opinion, shall be
permitted to rely on the validity and correctness, as of the date given, of any
previously issued Tax Opinions/Rulings, unless such reliance would be
unreasonable under the circumstances.

Section 1.02 General Interpretive Principles. (i) Words in the singular shall
include the plural and vice versa, and words of one gender shall include the
other gender, in each case, as the context requires, (ii) the words “hereof,”
“herein,” “hereunder,” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement and not to any
particular provision of this Agreement, and references to Article, Section,
paragraph and Schedule are references to the Articles, Sections, paragraphs and
Schedules to this Agreement unless otherwise specified, (iii) the word
“including” and words of similar import when used in this Agreement shall mean
“including, without limitation,” unless otherwise specified, (iv) any reference
to any federal, state, local or non-U.S. statute or Law shall be deemed to also
refer to all rules and regulations promulgated thereunder, in each case as
amended from time to time, unless the context otherwise requires and
(v) references to a Person also refer to its predecessors and permitted
successors and assigns.

 

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ARTICLE II

PAYMENT OF TAXES

Section 2.01 Income Taxes.

(a) Except as provided in sections 2.02 and 2.04, ADP shall be responsible for
all Income Taxes (i) of Dealer and its Affiliates for any Pre-Distribution Tax
Period; (ii) of Dealer and its Affiliates for any Straddle Period, but only to
the extent allocated to ADP pursuant to Section 2.05; or (iii) imposed under
Treasury Regulation Section 1.1502–6 or under any comparable or similar
provision of state, local or foreign laws or regulations on Dealer or an
Affiliate solely as a result of such company being a member of a consolidated,
combined, or unitary group with ADP or any ADP Affiliate during any Tax period,
in each case to the extent in excess of amounts provided for in respect of such
Income Taxes on the condensed combined balance sheet of Dealer, including the
notes thereto, as of September 30, 2014 (the “Balance Sheet”).

(b) Dealer shall be responsible for all Income Taxes (i) of Dealer and its
Affiliates which are not the responsibility of ADP pursuant to Section 2.01(a)
(including Income Taxes for Post–Distribution Tax Periods of Dealer and its
Affiliates); and (ii) of ADP and its Affiliates attributable to acts or
omissions of Dealer or its Affiliates taken after the Distribution (other than
acts or omissions in the ordinary course of business or otherwise contemplated
by the Separation Agreement and Ancillary Agreements).

Section 2.02 Transaction Taxes.

(a) Dealer shall be liable, and shall indemnify the ADP Group, for any
Transaction Taxes that are attributable to (i) any inaccurate statement or
representation of fact or intent (or omission to state a material fact) in
Section 4.01 that relates to the Dealer Group; (ii) any inaccurate statement or
representation of fact or intent (or omission to state a material fact) in a
letter or certificate that is provided by any member of the Dealer Group after
the date hereof, and that forms the basis for the Tax Opinions/Rulings;
(iii) any act or omission by the Dealer Group after the date of this Agreement
inconsistent with the covenants set forth in this Agreement; or (iv) any other
act or omission by the Dealer Group after the date of this Agreement (except for
acts disclosed in any Ruling request submitted to the IRS or the CRA prior to
the date hereof or required by the Separation Agreement or any of the Ancillary
Agreements), including any act or omission that would have resulted in Dealer
being in breach of Section 4.02(b) but for the receipt by Dealer of a Ruling
from the IRS or the CRA, an Unqualified Tax Opinion or a waiver.

(b) ADP shall be liable, and shall indemnify the Dealer Group, for any
Transaction Taxes attributable to: (i) any inaccurate statement or
representation of fact or intent (or omission to state a material fact) made
(x) in Section 4.01 that relates to the ADP Group or (y) before the date hereof
and that formed the basis for any Tax Opinions/Rulings; (ii) any inaccurate
statement or representation of fact or intent (or

 

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omission to state a material fact) in a letter or certificate that is provided
by any member of the ADP Group after the date hereof and that forms the basis
for the Tax Opinions/Rulings; (iii) any act or omission by the ADP Group after
the date of this Agreement inconsistent with the covenants set forth in this
Agreement; or (iv) any other act or omission (except for acts disclosed in any
Ruling request submitted to the IRS prior to the date hereof or required by the
Separation Agreement or any of the Ancillary Agreements) by the ADP Group.

(c) Liability for any Transaction Taxes described in both paragraphs (a) and
(b) shall be shared by ADP and Dealer according to relative fault.

Section 2.03 Other Taxes.

(a) ADP shall be responsible for all Other Taxes attributable to ADP and its
Affiliates (other than Dealer and its Affiliates) and to its business activities
other than the Dealer Business, or resulting from the Transactions for all
Pre–Distribution Tax Periods, Straddle Periods, and Post–Distribution Tax
Periods.

(b) Dealer shall be responsible for all Other Taxes attributable to Dealer and
its Affiliates, to the Dealer Business, or to any Dealer Asset, without
duplication, for all Pre–Distribution Tax Periods, Straddle Periods, and
Post–Distribution Tax Periods, including (1) all Other Taxes to the extent
relating to, arising out of or resulting from any terminated, divested or
discontinued business or operations of the Dealer Business; and (2) all Other
Taxes to the extent relating to, arising out of or resulting from actions,
inactions, omissions, conditions, facts or circumstances occurring or existing
prior to, at or after the Distribution Date, in each case to the extent such
Other Taxes relate to, arise out of or result from (w) any Dealer Asset, (x) the
Dealer Business, (y) any service or function used by the Dealer Group at shared
locations or (z) any service or function performed by any member of the ADP
Group for (but not exclusively for) the Dealer Business.

(c) In each case the responsibilities of Section 2.03(a) and 2.03(b) shall be
consistent with the principles described below:

(i) Transfer Taxes.

(A) The ADP Group shall be liable, and shall indemnify the Dealer Group, for any
stamp, sales, use, gross receipts, value-added, real estate transfer or other
transfer Taxes imposed in connection with the Transactions.

(B) If business operations of an ADP entity are transferred to a Dealer entity
as part of the Transactions, the transferee shall assume any and all liabilities
for stamp, sales, use, gross receipts, value-added, real estate transfer and
other transfer Taxes associated with such transferred operations (excluding any
Taxes described in sub-clause (A) of this clause (i)) and will have sole
responsibility for satisfying such liabilities.

 

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(C) With respect to Refund claims pending on the Distribution Date involving any
sales, use, gross receipts or other similar Taxes, (x) in the case of a Refund
received by ADP and payable to Dealer pursuant to the terms hereof, the amount
of such payment shall be net of all contingent fee expenses and Taxes paid by
ADP and related to such Refund, or (y) in the event that Dealer receives a
Refund directly from the relevant Taxing Authority, it shall reimburse ADP for
all contingent fee expenses and Taxes paid by ADP with respect to such Refund.
For the avoidance of doubt, Dealer shall not be liable for any contingent fee
expenses or Taxes related to Refunds received prior to the Distribution Date.

(ii) Property Taxes. If property is transferred between legal entities, the
transferee shall assume any and all liabilities for real and personal property
Taxes associated with such transferred property and will have sole
responsibility for satisfying such liabilities.

(iii) Payroll Taxes. Except as otherwise provided in the Transition Services
Agreement, if an employee moves from one employer to another, the “new” employer
shall assume any and all employment related Taxes attributable to such
transferred employee and will have sole responsibility for satisfying such
liabilities.

Section 2.04 Other Income Taxes. Without regard to anything to the contrary in
this Article II, ADP shall be liable, and shall indemnify the Dealer Group, for
all Taxes arising as a result of the Transactions from (i) excess loss accounts
taken into account under Code Section 1502, (ii) Code Section 357(c) or
(iii) Code Section 361(b), in each case, including under similar state and local
law provisions. Any Taxes attributable to deferred intercompany gains that are
triggered as a result of the Transactions shall be the responsibility of ADP and
shall not be included in determining the Dealer Group’s Income Tax liability. To
the extent there are adjustments to the amount of any deferred intercompany gain
triggered as a result of the Distribution, ADP shall be responsible for paying
the additional Tax associated with any increase in the amount of gain and shall
also be entitled to a Refund attributable to any reduction of gain.

Section 2.05 Allocation of Certain Income Taxes and Income Tax Items.

(a) If ADP, Dealer or any of their respective Affiliates is permitted but not
required under applicable U.S. federal, state, local or foreign Tax laws to
treat the Distribution Date as the last day of a taxable period, then the
Parties shall treat such day as the last day of a taxable period under such
applicable Tax law, and shall file any elections necessary or appropriate to
such treatment; provided that this Section 2.05(a) shall not be construed to
require ADP to change its taxable year.

(b) Transactions occurring, or actions taken, on the Distribution Date but after
the Distribution outside the ordinary course of business by, or

 

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with respect to, Dealer or any of its Affiliates shall be deemed subject to the
“next day rule” of Treasury Regulation Section 1.1502–76(b)(1)(ii)(B) (and under
any comparable or similar provision under state, local or foreign laws or
regulations, provided that if there is no comparable or similar provision under
state, local or foreign laws or regulations, then the transaction will be deemed
subject to the “next day rule” of Treasury Regulation
Section 1.1502–76(b)(1)(ii)(B)) and as such shall for purposes of this Agreement
be treated (and consistently reported by the Parties) as occurring in a
Post–Distribution Tax Period of Dealer or a Dealer Affiliate, as appropriate.

(c) Any Taxes for a Straddle Period with respect to Dealer and/or its Affiliates
(or entities in which Dealer and/or one of its Affiliates has an ownership
interest) shall, for purposes of this Agreement, be apportioned between ADP and
Dealer based on the portion of the period ending on and including the
Distribution Date and the portion of the period beginning after the Distribution
Date, and each such portion of such period shall be deemed to be a taxable
period (whether or not it is in fact a taxable period). Any allocation of income
or deductions required to determine any Income Taxes for a Straddle Period shall
be made by means of a closing of the books and records of Dealer and its
Affiliates as of the close of business on the Distribution Date; provided that
(i) ADP may elect to allocate Tax Items (other than any extraordinary Tax Items)
ratably in the month in which the Distribution occurs (and if ADP so elects,
Dealer shall so elect) as described in Treasury Regulation
Section 1.1502–76(b)(2)(iii) and corresponding provisions of state, local, and
foreign Tax laws; and (ii) subject to (i), exemptions, allowances or deductions
that are calculated on an annual basis, and not on a closing of the books
method, (including depreciation and amortization deductions) shall be allocated
between the period ending on and including the Distribution Date and the period
beginning after the Distribution Date based on the number of days for the
portion of the Straddle Period ending on and including the Distribution Date, on
the one hand, and the number of days for the portion of the Straddle Period
beginning after the Distribution Date, on the other hand.

(d) Tax Attributes determined on a consolidated or combined basis for taxable
periods ending before or including the Distribution Date shall be allocated to
ADP and its Affiliates, and Dealer and its Affiliates, in accordance with the
Code and the Treasury Regulations (and any applicable state, local, or foreign
law or regulation). ADP shall reasonably determine the amounts and proper
allocation of such attributes, and the Tax basis of the assets and liabilities
transferred to Dealer in connection with the Transactions, as of the
Distribution Date; provided that Dealer shall be entitled to participate in such
determination. ADP and Dealer agree to compute their Tax liabilities for taxable
periods after the Distribution Date consistent with that determination and
allocation, and treat the Tax Attributes and Tax Items as reflected on any
federal (or applicable state, local or foreign) Income Tax Return filed by the
Parties as presumptively correct.

Section 2.06 Refunds. Except as provided in Section 2.07:

(a) ADP shall be entitled to all Refunds with respect to any Tax for which ADP
is responsible under Sections 2.01, 2.02, 2.03, or 2.04. Dealer shall be
entitled to all Refunds with respect to any Tax for which Dealer is responsible
under Sections 2.01, 2.03, or 2.04.

 

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(b) Dealer and ADP shall each forward to the other Party, or reimburse such
other Party for, any Refunds received by the first Party and due to such other
Party pursuant to this Section (net of all contingent fees and Taxes payable by
the first Party and related to such Refund). Where a Refund is received in the
form of a deduction from, or credit or other offset against other or future Tax
liabilities, reimbursement with respect to such Refund shall be due in each case
on the due date for payment of the Tax from or against which such Refund has
been deducted, credited or otherwise offset.

(c) If one Party reasonably so requests, the other Party (at the first Party’s
expense) shall file for and pursue any Refund to which the first Party is
entitled under this Section; provided that the other Party need not pursue any
Refund on behalf of the first Party unless the first Party provides the other
Party a certification by an appropriate officer of the first Party setting forth
the first Party’s belief (together with supporting analysis) that the Tax
treatment of the Tax Items on which the entitlement to such Refund is based is
more likely than not correct, and is not a Tax Item arising from a Reportable
Transaction.

(d) If the other Party pays any amount to the first Party under this
Section 2.06 and, as a result of a subsequent Final Determination, the first
Party is not entitled to some or all of such amount, the other Party shall
notify the first Party of the amount to be repaid to the other Party, and the
first Party shall then repay such amount to the other Party, together with any
interest, fines, additions to Tax, penalties or any additional amounts imposed
by a Taxing Authority relating thereto.

Section 2.07 Carrybacks.

(a) Notwithstanding anything in this Agreement, Dealer shall file (or cause to
be filed) on a timely basis any available election to waive the carryback of net
operating losses, Tax credits or other Tax Items by Dealer or any Affiliate from
a Post–Distribution Tax Period to a Straddle Period or Pre–Distribution Tax
Period. Such elections shall include, but not be limited to, the election
described in Treasury Regulation Section 1.1502–21T(b)(3)(ii)(B), and any
analogous election under state, local, or foreign Income Tax laws, to waive the
carryback of net operating losses for U.S. federal Income Tax purposes.

(b) If, notwithstanding the provisions of Section 2.07(a), Dealer is required to
carryback losses or credits, Dealer shall be entitled to any Refund of any Tax
obtained by ADP or an ADP Affiliate as a result of the carryback of losses or
credits of Dealer or its Affiliate from any Post-Distribution Tax Period to any
Pre-Distribution Tax Period. Such Refund is limited to the net amount received
by ADP or an ADP Affiliate, net of any Tax cost incurred by ADP or such
Affiliate resulting from such Refund. Upon request by Dealer, ADP shall advise
Dealer of an estimate of any Tax cost ADP projects will be associated with any
carryback of losses or credits of Dealer or its Affiliates as provided in this
Section 2.07(b).

 

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(c) If Dealer has a Tax Item that must be carried back to any Pre-Distribution
Tax Period, Dealer shall notify ADP in writing that such Tax Item must be
carried back. Such notification shall include a description in reasonable detail
of the grounds for the Refund and the amount thereof, and a certification by an
appropriate officer of Dealer setting forth Dealer’s belief (together with
supporting analysis) that the Tax treatment of such Tax Item is more likely than
not correct, and is not a Tax Item arising from a Reportable Transaction.

(d) If ADP pays any amount to Dealer under Section 2.07(b) and, as a result of a
subsequent Final Determination, Dealer is not entitled to some or all of such
amount, ADP shall notify Dealer of the amount to be repaid to ADP, and Dealer
shall then repay such amount to ADP, together with any interest, fines,
additions to Tax, penalties or any additional amounts imposed by a Taxing
Authority relating thereto.

Section 2.08 Treatment of Restricted Stock, Stock Options, and Deferred
Compensation.

(a) To the extent permitted by law, ADP (or the appropriate ADP Affiliate) shall
claim all Tax deductions arising by reason of the grant, vesting or settlement
of ADP Restricted Stock or ADP Restricted Stock Units, and by reason of
exercises of ADP Stock Options, at the time such Tax deduction can be claimed.
To the extent permitted by law, Dealer (or the appropriate Dealer Affiliate)
shall claim all Tax deductions arising by reason of the grant, vesting or
settlement of Dealer Restricted Stock or Dealer Restricted Stock Units, and by
reason of exercises of Dealer Stock Options, at the time such Tax deduction can
be claimed. To the extent permitted by law, Dealer (or the appropriate Dealer
Affiliate) shall claim all Tax deductions arising by reason of the payment (or
inclusion in income) of compensation the receipt of which was deferred by a
Dealer Employee prior to the Distribution Date, the payment of which will occur
after the Distribution Date, and the obligation to make such payment is assumed
by Dealer in connection with the Contribution and Distribution.

(b) If, pursuant to a Final Determination, all or any part of a Tax deduction
claimed by a Party (or Affiliate thereof) pursuant to Section 2.08(a) is
disallowed, then, to the extent permitted by law, the other Party (or Affiliate
thereof) shall claim such Tax deduction. If such other Party (or Affiliate
thereof) realizes a Tax benefit from the claiming of such Tax deduction, such
other Party (or Affiliate) shall pay the amount of such Tax benefit (net of any
Tax detriment suffered by the payor) to the Party who originally claimed the Tax
deduction.

(c) The Party (or Affiliate thereof) initially claiming the Tax deduction
described in Section 2.08(a) shall withhold applicable Taxes and satisfy
applicable Tax reporting obligations with respect to the taxation of the
restricted stock, restricted stock unit, option, or deferred compensation with
respect to which the Tax deduction is claimed. The Parties to this Agreement
shall cooperate so as to permit the Party initially claiming such deduction to
discharge any applicable Tax withholding and Tax reporting obligations.

 

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Section 2.09 Successor Employer Status. ADP and Dealer shall, to the extent
permitted by law, (i) treat Dealer and its Affiliates (as applicable) as a
“successor employer” and ADP and its Affiliates (as applicable) as a
“predecessor,” within the meaning of sections 3121(a)(1) and 3306(b)(1) of the
Code, with respect to employees of the Dealer Business who were employed by
Dealer and its Affiliates starting on October 1, 2014 for purposes of Taxes
imposed under the United States Federal Unemployment Tax Act or the United
States Federal Insurance Contributions Act and (ii) cooperate with each other to
avoid the filing of more than one IRS Form W–2 with respect to each such
employee for the calendar year in which the Distribution occurs.

Section 2.10 Advance Pricing Agreement.

(a) ADP Amalco shall transfer to a CDK Global (Canada) Co. (“New CanCo 2”), and
New CanCo 2 shall assume the liability for, a portion of the amount, if any,
finally determined to be payable by ADP Amalco to ADP or its Affiliates under
the APA (as defined below), if so determined in the sole discretion of ADP prior
to the Separation. ADP Amalco shall transfer to New CanCo2, and New CanCo 2
shall acquire the right to a portion of, the receivable, if any, finally
determined to be owing to ADP Amalco by ADP or its Affiliates under the APA, if
so determined in the sole discretion of ADP prior to the Separation.

(b) If it is finally determined that an amount is owing by ADP Amalco under the
APA (an “APA Liability”) and New CanCo 2 has assumed a portion of such APA
Liability as described in paragraph (a) above, then ADP and/or the United States
Subsidiaries of ADP, as applicable, shall be deemed to have contributed to
Dealer and/or the United States Subsidiaries of Dealer, prior to the Separation,
receivables owing under the APA such that the total amount of receivables owing
to Dealer and/or the United States Subsidiaries of Dealer, as applicable, under
the APA equals the amount of the APA Liability assumed by New CanCo 2, which New
CanCo 2 will then pay directly to Dealer and/or the United States Subsidiaries
of Dealer, as applicable.

(c) If it is finally determined that an APA Liability is owing by ADP Amalco to
a United States Subsidiary of Dealer (to the extent in excess of the portion of
any such APA Liability that has been assumed by New CanCo 2 pursuant to
paragraph (b) above), then such United States Subsidiary of Dealer shall be
deemed to have distributed to ADP, prior to the Separation, the corresponding
receivable owing to it by ADP Amalco under the APA.

(d) If it is finally determined under the APA that an amount is owing to ADP
Amalco (an “APA Receivable”) and New CanCo 2 has assumed a portion of such APA
Receivable as described in paragraph (a) above, then Dealer and/or the United
States Subsidiaries of Dealer, as applicable, shall be deemed to have assumed a
liability from ADP and/or the United States Subsidiaries of ADP, as applicable,
prior to

 

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the Separation, such that the total amount owing by Dealer and/or the United
States Subsidiaries of Dealer, as applicable, under the APA equals the amount of
the APA Receivable acquired by New CanCo 2, which Dealer and/or the United
States Subsidiaries of Dealer, as applicable, will pay directly to New CanCo 2.

(e) If it is finally determined that an APA Receivable is owing to ADP Amalco
from a United States Subsidiary of Dealer (to the extent in excess of the
portion of any such APA Receivable that has been acquired by New CanCo 2
pursuant to paragraph (d) above), then ADP shall be deemed to have assumed,
prior to the Separation, the corresponding liability of the United States
Subsidiary of Dealer owing to ADP Amalco under the APA.

(f) For the avoidance of doubt, and notwithstanding anything herein to the
contrary, any tax owing or refund due as a result of the APA shall be treated as
an Income Tax or a refund of an Income Tax, in each case that is governed by
Section 2.01 of this Agreement.

(g) For greater certainty, the result of (i) Sections 2.10(a) and (b), to the
extent applicable, is that any APA Liability ultimately owing by New CanCo 2
shall be payable to Dealer (and/or its United States Subsidiaries);
(ii) Sections 2.10(a), (b) and (c), to the extent applicable, is that any APA
Liability ultimately owing by ADP Amalco (less any amount assumed by New CanCo
2) shall be owing to ADP (and/or its United States Subsidiaries); (iii) Sections
2.10(a) and (d), to the extent applicable, is that any APA Receivable
ultimately owing to New CanCo 2 shall be payable by Dealer (and/or its United
States Subsidiaries); and (iv) Section 2.10(a), (d) and (e), to the extent
applicable, is that any APA Receivable ultimately owing to ADP Amalco (less any
receivable transferred to New CanCo 2) shall be payable by ADP.

ARTICLE III

PREPARATION AND FILING OF TAX RETURNS

Section 3.01 ADP Responsibility.

(a) Subject to paragraph (b) below, ADP shall make all determinations with
respect to, have ultimate control over the preparation of and file all (i) Joint
Returns and ADP Separate Returns, in each case as it determines to be mandatory
or advisable for all taxable periods, (ii) Dealer Separate Returns that are
Income Tax Returns for all Pre-Distribution Tax Periods and (iii) at ADP’s
election, Dealer Separate Returns that are Income Tax Returns for all Straddle
Periods provided that ADP provides written notice to Dealer 45 days after the
end of such Straddle Period that ADP is exercising its right to prepare such Tax
Return.

(b) If, in connection with the preparation of any Return, ADP materially
modifies any information relating to, or provided in, the pro forma federal and
state Income Tax Returns or other information related to members of the Dealer
Group prepared by Dealer and provided to ADP pursuant to Section 3.02 below, the
portions of

 

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the Returns that include such information shall be submitted to Dealer no later
than 30 days prior to the due date (including extensions) for filing of such
federal Returns and 20 days prior to the due date (including extensions) for
filing of such state Returns (or if such due date is within 30 days following
the Distribution Date, as promptly as practicable following the Distribution
Date). Within 10 days after delivery of any such revised portions of any Return,
Dealer shall provide comments to ADP in writing to the extent Dealer objects to
any revisions that could reasonably be expected to adversely impact any member
of the Dealer Group. Such Dealer comments shall be incorporated into the Return
upon the consent of ADP, not to be unreasonably withheld. If Dealer does not so
notify ADP of any objection, Dealer shall be considered to have consented to the
filing of such Return. The dates for submissions to Dealer required in this
section may be modified by mutual agreement of ADP and Dealer.

Section 3.02 Dealer Responsibility.

(a) Dealer shall make all determinations with respect to, have ultimate control
over the preparation of and file all Tax Returns (other than those described in
Section 3.01) for the Dealer Group as it determines to be mandatory or advisable
and for all taxable periods. Dealer shall provide to ADP all information related
to members of the Dealer Group that is reasonably requested by ADP and required
to complete any Tax Return which is the responsibility of ADP pursuant to
Section 3.01, in the format reasonably requested by ADP, and at least 110 days
prior to the due date (including extensions) of the relevant federal Tax Return
and at least 100 days prior to the due date (including extensions) of the
relevant state Tax Return and at least 120 days prior to the due date of the
relevant Canadian Tax Return and at such times as are reasonably requested by
ADP in the case of other relevant Tax Returns. In particular, the Dealer Group
tax department will support ADP and the filing of these Tax Returns with respect
to data collection and compilation requirements. Dealer shall reimburse ADP for
all reasonable costs and expenses (it being agreed and understood that the fees
of ADP’s outside accounting firms are reasonable costs and expenses) incurred by
the ADP Group in connection with the preparation of any Tax Return which is the
responsibility of ADP pursuant to clause (ii) or (iii) of Section 3.01. The
dates for submissions to ADP required in this section may be modified by mutual
agreement of ADP and Dealer.

(b) In the case of any Tax Return that is the responsibility of ADP pursuant to
Section 3.01(a) and that relates to an Income Tax that is provided for on the
Balance Sheet, Dealer shall pay to ADP the amount of the provision for such
Income Tax no later than 10 days prior to the due date (including extensions)
for the filing of such Tax Return.

Section 3.03 Tax Accounting Practices.

(a) Except as provided in Section 3.03(b), any Tax Return for any
Pre-Distribution Tax Period, to the extent it relates to members of the Dealer
Group, shall be prepared in accordance with practices, accounting methods,
elections, conventions and Tax positions used with respect to the Tax Return in
question for periods prior to the Distribution (“Past Practices”), and, in the
case of any item the treatment of

 

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which is not addressed by Past Practices, in accordance with generally
acceptable Tax accounting practices. Notwithstanding the foregoing, for any Tax
Return described in the preceding sentence, (i) a Party will not be required to
follow Past Practices with either the written consent of the other Party (not to
be unreasonably withheld) or a “should” level opinion from a Tax Advisor that
the proposed method of reporting is correct and (ii) ADP shall have the right to
determine which entities will be included in any consolidated, combined,
affiliated or unitary Return that it is responsible for filing.

(b) The Parties shall report the Transactions for all Tax purposes in a manner
consistent with the Tax Opinions/Rulings, unless, and only to the extent, an
alternative position is required pursuant to a Final Determination. ADP shall
determine the Tax treatment to be reported on any Tax Return of any Tax issue
relating to the Transactions that is not covered by the Tax Opinions/Rulings.

Section 3.04 Right to Review Tax Returns. Upon request, each Party shall make
available to the other Party the portion of Pre-Distribution Tax Period Tax
Returns that relates to the Dealer Group that the first Party is responsible for
preparing under this Article III.

ARTICLE IV

TAX-FREE STATUS OF DISTRIBUTION

Section 4.01 Representations. Each of Dealer and ADP represents that (i) it
knows of no fact (other than the facts disclosed in any Ruling request submitted
prior to the date hereof) that may cause the Contribution and the Distribution
to fail to have Tax-Free Status and (ii) it has no plan or intention to take any
action inconsistent with the Tax Opinions/Rulings or the covenants set forth in
this Agreement.

Section 4.02 Covenants.

(a) Each of Dealer and ADP will not take or fail to take, or permit its
Affiliates to take or fail to take, any action (which includes the undertaking
of any transaction) where that action or omission would (i) violate, be
inconsistent with or cause to be untrue any covenant, representation or
statement in any Tax Opinions/Rulings or a letter or certificate that forms the
basis therefor, or (ii) prevent, or be reasonably likely to prevent, or be
inconsistent with, the Tax-Free Status.

(b) During the Restricted Period, except as provided in paragraph (c), Dealer
shall not, and shall not permit its Affiliates to, in a single transaction or in
a series of transactions:

(i) permit any transaction or series of transactions (or any agreement,
understanding or arrangement to enter into a transaction or series of
transactions, whether any such transaction is to occur during or after the
Restricted Period) as determined for purposes of Code Section 355(e), in
connection with which (A) any member of the Dealer Group would merge or
consolidate with any Person other

 

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than any other member of the Dealer Group, (B) any member of the Dealer Group
would form one or more joint ventures with any Person other than any other
member of the Dealer Group in which, in the aggregate, more than 10% of the
gross assets of the Dealer Group are transferred to such joint ventures or
(C) one or more Persons would acquire, or have the right to acquire, directly or
indirectly, from any other Person or Persons, an interest in the equity of any
Section 355 Entity that, when combined with any other acquisitions of the equity
of such Section 355 Entity (but excluding any other acquisition described in the
final sentence of this clause (i)) comprises 10% or more of the value or the
total combined voting power of all interests that are treated as outstanding
equity in such Section 355 Entity for U.S. federal income Tax purposes
immediately after such transaction, or, in the case of a series of related
transactions, immediately after any transaction in such series (each of (A),
(B), and (C), a “Proposed Acquisition Transaction). For these purposes, any
recapitalization, repurchase or redemption of equity in any Section 355 Entity
shall be treated as an indirect acquisition of such stock by any non-exchanging
shareholder to the extent such shareholder’s percentage interest in the issuer
increases by vote or value. Notwithstanding the foregoing, a Proposed
Acquisition Transaction shall not include (w) the adoption by Dealer of a
shareholder rights plan that meets the requirements of IRS Revenue Ruling 90-11,
(x) issuances of Dealer Capital Stock pursuant to an employee stock purchase
agreement or equity compensation plan that ADP has notified Dealer in writing is
acceptable to ADP in its sole discretion (for the avoidance of doubt, (i) any
modification or amendment to such agreement or plan is also subject to the prior
written consent of ADP and (ii) ADP’s approval is required for the underlying
purchase agreement or plan but not for each issuance of stock pursuant thereto),
(y) transfers on an established market of Dealer Capital Stock described in Safe
Harbor VII of Treasury Regulation Section 1.355-7(d) or (z) issuances of Dealer
Capital Stock described in Safe Harbor VIII (relating to acquisitions in
connection with a Person’s performance of services) or Safe Harbor IX (relating
to acquisitions by a retirement plan of an employer) of Treasury Regulation
Section 1.355-7(d).

(ii) liquidate or partially liquidate Dealer, any Section 355 Entity, or any ATB
Entity, whether by merger, consolidation or otherwise;

(iii) cause or permit any ATB Entity to cease to engage in its Active Trade or
Business;

(iv) sell or transfer assets, other than inventory sold or transferred in the
ordinary course of business, constituting (A) 50% or more of the gross assets
that are held by any ATB Entity and are used in the Active Trade or Business and
are relied upon to satisfy the requirements of Code Section 355(b), (B) 50% or
more of the consolidated gross assets of the Dealer Group that are used in an
Active Trade or Business (such percentages to be measured based on fair market
value as of the Distribution Date) or (C) any lesser amount if that sale or
transfer could reasonably be expected to result in a significant and material
change to, or termination of, the Active Trade or Business immediately after the
Distribution Date;

 

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(v) redeem or otherwise repurchase (directly or indirectly) any Dealer Capital
Stock, except to the extent such redemptions or repurchases satisfy
Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to its
amendment by Revenue Procedure 2003-48).

(vi) amend its certificate of incorporation (or other organizational documents),
or take any other action, affecting the relative voting rights of the separate
classes of Dealer Capital Stock; provided, however, that this clause (vi) shall
not be deemed to be violated upon Dealer’s adoption of a shareholder rights plan
that meets the requirements of IRS Revenue Ruling 90-11.

(c) Notwithstanding paragraph (b):

(i) clauses (i) through (vi) of paragraph (b) shall not apply upon the prior
written consent of ADP, which consent may not be withheld if ADP determines in
good faith that Dealer has provided it with Satisfactory Guidance concluding
that the proposed actions will not result in Transaction Taxes;

(ii) clause (iv) of paragraph (b) shall not apply after the six month
anniversary of the Distribution Date;

(iii) for purposes of clause (i), if Dealer provides ADP an Unqualified Tax
Opinion that is intended to be Satisfactory Guidance concerning a Proposed
Acquisition Transaction, then such Opinion may be based on the assumption that
ADP did not have any agreement, understanding, arrangement or substantial
negotiations, within the meaning of Treasury Regulations Section 1.355-7(h),
with the counterparty to the Proposed Acquisition Transaction within the two
year period preceding the Distribution Date and such assumption shall not
prevent such Unqualified Tax Opinion from being considered Satisfactory Guidance
by the Parties, provided that (x) such assumption must be based on a certificate
of such counterparty that such assumption is true to the best of its knowledge
and belief, and (y) ADP may deem such Opinion not to be Satisfactory Guidance
if, in its reasonable judgment, there is a risk that such assumption is not
correct; and

(d) Notwithstanding anything herein to the contrary, for purposes of paragraph
(c), no Ruling shall be obtained from the IRS if ADP determines that there is a
reasonable possibility that such an action could have a significant adverse
impact on any member of the ADP Group.

(e) Dealer will not take any action (including the sale or disposition of any
stock, securities or other assets), or permit its Affiliates to take any such
action, and Dealer will not fail to take any action or permit its Affiliates to
fail to take any action that would cause ADP or any of its Affiliates or Dealer
or any of its Affiliates to recognize gain under any Gain Recognition Agreement.

 

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Section 4.03 Procedures Regarding Opinions and Rulings.

(a) Subject to Section 4.02(d), if Dealer may take certain actions conditioned
upon the receipt of Satisfactory Guidance, ADP, at the request of Dealer, shall
use commercially reasonable efforts to expeditiously obtain, or assist Dealer in
obtaining, such Satisfactory Guidance. ADP shall not be required to take any
action pursuant to this Section 4.03(a) if Dealer fails to certify, upon
request, that all information and representations relating to any member of the
Dealer Group in the relevant documents are true, correct and complete. Dealer
shall reimburse ADP for all reasonable out-of-pocket costs and expenses incurred
by the ADP Group in obtaining Satisfactory Guidance.

(b) ADP shall have the right to obtain a Ruling from the IRS (or any other
Taxing Authority) or an Unqualified Tax Opinion at any time in its sole
discretion. ADP shall reimburse Dealer for all reasonable out-of-pocket costs
and expenses incurred by the Dealer Group in obtaining such a Ruling or
Unqualified Tax Opinion.

(c) ADP shall have exclusive control over the process of obtaining any Ruling
relating to the Transactions and neither Dealer nor any of its Affiliates shall
independently seek any guidance concerning the Transactions from any Taxing
Authority at any time. In connection with any Ruling relating to the
Transactions that can reasonably be expected to affect Dealer liabilities under
this Agreement, ADP shall (i) keep Dealer informed of all material actions taken
or proposed to be taken by ADP, (ii) reasonably in advance of the submission of
any Ruling request provide Dealer with a draft thereof, consider Dealer’s
comments on such draft, and provide Dealer with a final copy, and (iii) provide
Dealer with notice reasonably in advance of, and permit Dealer to attend, any
formally scheduled meetings with the IRS (subject to the approval of the IRS)
that relate to such Ruling.

Section 4.04 Canadian Butterfly.

(a) Each of Dealer and ADP represents that (i) it knows of no fact (other than
the facts disclosed in any Ruling request submitted to the CRA prior to the date
hereof) that may cause the Butterfly Transactions to fail to have Canadian
Tax-Free Status and (ii) it has no plan or intention to take any action
inconsistent with the request for the Canadian Tax Ruling or the Canadian
Tax-Free Status or the covenants set forth in this Agreement.

(b) Each of Dealer and ADP will not take or fail to take, or permit its
Affiliates to take or fail to take, any action (which includes the undertaking
of any transaction) where that action or omission would (i) violate, be
inconsistent with or cause to be untrue any covenant, representation or
statement in the Canadian Tax Ruling, or (ii) prevent, or be reasonably likely
to prevent, or be inconsistent with, the Canadian Tax-Free Status, in each case
without first obtaining Satisfactory Guidance concluding that the proposed
action or omission will not have such effect.

 

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ARTICLE V

TAX CONTESTS; INDEMNIFICATION; COOPERATION

Section 5.01 Notice.

(a) Within 15 days after a Party (the “Indemnitee”) becomes aware of the
existence of a Tax Contest that may give rise to an indemnification claim under
this Agreement by it against the other Party (the “Indemnifying Party”), the
Indemnitee shall promptly notify the Indemnifying Party of the Tax Contest, and
thereafter shall promptly forward or make available to the Indemnifying Party
copies of notices and communications with a Taxing Authority relating to such
Tax Contest.

(b) The Indemnifying Party shall not be responsible for any increase in amounts
to which the Indemnitee is otherwise entitled to the extent that such increase
results solely from the failure of the Indemnitee to provide timely notice as
required pursuant to Section 5.01(a).

Section 5.02 Control of Tax Contests.

(a) Except as otherwise provided in paragraphs (b) and (c):

(i) ADP shall control, and have sole discretion in handling, settling or
contesting, any Tax Contest relating to any Joint Returns, as well as any
Separate Returns or other Return if any such Return is related to Taxes for
which ADP is responsible pursuant to Article II, or the Tax treatment of the
Transactions, provided that (x) ADP shall act in good faith in connection with
its control of any such Tax Contests and (y) Dealer shall have the right to
participate in and advise on (including the opportunity to review and comment
upon ADP’s communications with the Taxing Authority, which comments shall be
incorporated upon the consent of ADP, not to be unreasonably withheld) such
items for which Dealer could be liable under Article II as a result of such Tax
Contest; and

(ii) If Dealer disagrees with ADP’s decision to settle a Tax Contest that may
reasonably be expected materially to affect amounts for which Dealer is liable
under Article II, Dealer shall have the right to contest its liability to ADP
under Article II notwithstanding the settlement. Dealer shall provide written
notice to ADP of its intention to contest its liability as a result of any
settlement (and its irrevocable election described below) prior to the time such
settlement is entered into. Any such contest by Dealer shall be made under the
procedures set forth in Article VI. Under those procedures, Dealer may
irrevocably elect, in its sole discretion, to require the Tax Advisor or the
arbitrator to determine either (x) the amount of a settlement with the relevant
Taxing Authority that would most accurately reflect the litigation risk of the
relevant issue, or (y) the most likely outcome of the issue if it were litigated
without a settlement. In either such case, Dealer shall be liable to ADP, or ADP
shall be liable to Dealer, based solely on the determination of the Tax Advisor
or the arbitrator as if a settlement or litigation implementing such
determination had actually occurred, without regard to the actual settlement.
For the avoidance of doubt, this clause (ii) shall not limit ADP’s ability to
settle a Tax Contest.

 

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(b) Dealer shall control and have sole discretion in handling, settling or
contesting, any Tax Contest for a Pre-Distribution Tax Period to the extent such
Tax Contest relates solely to Taxes that are the responsibility of Dealer
pursuant to Article II; provided that ADP shall have the right to participate in
and advise on all aspects of such Tax Contests and may coordinate discussions
with the relevant Taxing Authority with respect thereto.

(c) ADP and Dealer shall jointly control Tax Contests relating to Tax liability
arising from the failure of the Transactions to qualify for tax-free treatment
under Code Sections 355 or 361, if there is a reasonable likelihood that Dealer
would be liable to ADP under Article II as a result of such Tax Contest. Neither
Party shall have the right to settle any such Tax Contest without the consent of
the other Party; provided that ADP may settle any such Tax Contest without the
consent of Dealer if ADP waives any claim for indemnification with respect
thereto.

(d) Except as otherwise provided in paragraph (a), (b) or (c), Dealer shall have
sole control over any Tax Contest that relates to Dealer Separate Returns for
any Post-Distribution Tax Period.

(e) Any out-of-pocket costs incurred in handling, settling or contesting a Tax
Contest shall be borne ratably by the Parties based on their ultimate liability
under this Agreement for the Taxes to which the Tax Contest relates; provided,
however, that if Dealer contests a settlement made by ADP as provided in clause
(ii) of paragraph (a), ADP shall bear the costs relating to Dealer’s contest of
such settlement unless ADP substantially prevails in such contest.

Section 5.03 Indemnification Payments.

(a) An Indemnitee shall be entitled to make a claim for payment pursuant to this
Agreement when the Indemnitee determines that it is entitled to such payment and
the amount of such payment (including the finalization of a Return before
filing). The Indemnitee shall provide to the Indemnifying Party notice of such
claim within 10 days of the date on which it first so becomes entitled to claim
such payment, including a description of such claim and a detailed calculation
of the amount of the indemnification payment that is claimed, provided, however,
that no delay on the part of the Indemnitee in notifying the Indemnitor shall
relieve the Indemnitor from any obligation hereunder unless (and then solely to
the extent) the Indemnitor is actually and materially prejudiced thereby. Except
as provided in paragraph (b), the Indemnifying Party shall make the claimed
payment to the Indemnitee within 10 days after receiving such notice, unless the
Indemnifying Party reasonably disputes its liability for, or the amount of, such
payment.

(b) If the Indemnitee will be obligated to make the payment described in
paragraph (a) to a Taxing Authority or other third Party (including expenses

 

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reimbursable under this Agreement), the Indemnifying Party shall not be
obligated to pay the Indemnitee more than 5 days before the Indemnitee incurs
such expense or makes such payment. If the Indemnitee’s claim for payment arises
from a payment that the Indemnifying Party will receive from a third Party, such
as a Refund, the Indemnifying Party shall not be obligated to pay the Indemnitee
until 5 days after the Indemnifying Party receives such payment.

(c) In the case of a claim under Article II where no payment will be made to or
received from a Taxing Authority, paragraph (b) shall be applied to the payments
that would be made to or from a Taxing Authority if the Dealer Group was treated
as a standalone group for all taxable periods.

Section 5.04 Interest on Late Payments. Interest shall accrue with respect to
any indemnification payment (including any disputed payment that is ultimately
required to be made), not made within the period for payment, at the rate and in
the manner provided in the Code for interest on large corporate underpayments
for the relevant period.

Section 5.05 Treatment of Payments.

(a) The amount of all indemnification obligations under this Agreement shall be
decreased to take into account the Tax benefits to the Indemnitee of the
deductibility of any indemnified item (whether or not any Tax benefit is
actually received for a deductible item and assuming the highest applicable
taxable rate) and shall be increased where necessary so that, after all the
required deductions (whether or not any Tax benefit is actually received for a
deductible item and assuming the highest applicable taxable rate) have been made
and Taxes imposed, the Indemnitee receives the amount it would have been
entitled to receive under this Agreement in the absence of such deductions and
Taxes.

(b) Any payments made to one Party by another Party pursuant to (i) this
Agreement or (ii) Sections 2.3(b), 2.3(c), 4.2, and 4.3 of the Separation
Agreement (or any other payment made pursuant to the Separation Agreement that
relates to taxable periods (or portions thereof) ending on or before the
Distribution) shall be treated by the Parties for all Tax purposes as a
distribution by, or capital contribution to, Dealer, as the case may be, made
immediately prior to the Distribution, except to the extent otherwise required
by a Final Determination.

Section 5.06 Expenses. Except as otherwise provided herein, each Party and its
Affiliates shall bear their own expenses incurred in connection with preparation
of Tax Returns, Tax Contests, and other matters under this Agreement.

Section 5.07 Cooperation. Each member of the ADP Group and the Dealer Group
shall cooperate fully with all reasonable requests from the other Party in
connection with the preparation and filing of Tax Returns and Adjustment
Requests, Tax Contests and other matters covered by this Agreement.

 

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(a) Such cooperation shall include:

(i) the retention until the expiration of the applicable statute of limitations,
and the provision upon request, of Tax Returns, books, records (including
information regarding ownership and Tax basis of property), documentation and
other information relating to the Tax Returns, including accompanying schedules,
related workpapers, and documents relating to Rulings or other determinations by
Taxing Authorities;

(ii) the execution of any document that may be necessary or reasonably helpful
in connection with any Tax Contest, the filing of a Tax Return or Adjustment
Request by a member of the ADP Group or the Dealer Group, obtaining a Tax
opinion or private letter ruling (except as otherwise provided in
Section 4.02(d)), or other matters covered by this Agreement, including
certification (provided in such form as may be required by applicable law or
reasonably requested and made to the best of a Party’s knowledge) of the
accuracy and completeness of the information it has supplied;

(iii) the use of the Parties’ reasonable best efforts to obtain any
documentation that may be necessary or reasonably helpful in connection with any
of the foregoing;

(iv) the use of the Parties’ reasonable best efforts to make the applicable
Party’s current or former directors, officers, employees, agents and facilities
available on a reasonable and mutually convenient basis in connection with the
foregoing matters; and

(v) making determinations with respect to actions described in Section 4.02(c)
as promptly as practicable including making determinations within 10 days with
respect to modifications and amendments of employee stock purchase agreements or
equity compensation plans under Section 4.02(b)(i)(x).

(b) If a Party fails to comply with any of its obligations set forth in this
Section 5.07 upon reasonable request and notice by the other Party, and such
failure results in the imposition of additional Taxes, the nonperforming Party
shall be liable in full for such additional Taxes.

Section 5.08 Confidentiality. Any information or documents provided under this
Agreement shall be kept confidential by the recipient-Party, except as may
otherwise be necessary in connection with the filing of Tax Returns or with any
Tax Contest. In addition, if ADP or Dealer determines that providing such
information could be commercially detrimental, violate any law or agreement or
waive any privilege, the Parties shall use reasonable best efforts to permit
compliance with the obligations under this Agreement in a manner that avoids any
such harm or consequence.

Section 5.09 Retention of Tax Records. Dealer may request from ADP and retain
copies of (i) with respect to any Joint Return, all pro forma federal

 

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and state Tax Returns, supporting schedules and workpapers related to members of
the Dealer Group, and (ii) any Separate Returns for any Dealer Group members,
including supporting schedules and workpapers. If either ADP or Dealer intends
to dispose of documentation with respect to any Pre-Distribution Tax Period,
including books, records, Tax Returns and all supporting schedules and
information relating thereto (after the expiration of the applicable statute of
limitations), of any member of the other Group, or in the case of the Dealer
Group any member included in a Joint Return, they shall provide written notice
to the other Party describing the documentation to be disposed of 30 days prior
to taking such action. The other Party may arrange to take delivery of the
documentation described in the notice at its own expense during the succeeding
30 day period.

ARTICLE VI

RESOLUTION OF DISPUTES

Section 6.01 Tax Disputes. The Parties will endeavor, and will cause their
respective Affiliates to endeavor, to resolve in an amicable manner all disputes
arising in connection with this Agreement. The Parties shall negotiate in good
faith to resolve any Tax Dispute for not less than 45 days. Upon written notice
of either Party after 45 days, the matter will be referred to a Tax Advisor
acceptable to both Parties. The Tax Advisor may, in its discretion, obtain the
services of any third-party necessary to assist it in resolving the dispute. The
Tax Advisor shall furnish written notice to the Parties of its resolution of the
dispute as soon as practicable, but in any event no later than 45 days after its
acceptance of the matter for resolution. Any such resolution by the Tax Advisor
will be binding on the Parties and the Parties shall take, or cause to be taken,
any action necessary to implement the resolution. All fees and expenses of the
Tax Advisor shall be shared equally by ADP, on the one hand, and Dealer, on the
other hand. If, having determined that the dispute must be referred to a Tax
Advisor, after 45 days the Parties are unable to find a Tax Advisor willing to
adjudicate the dispute in question and whom the Parties in good faith find
acceptable, then the dispute will be submitted for arbitration to the American
Arbitrators Association, provided, however, that only an arbitrator that
qualifies as a Tax Advisor shall be selected.

ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.01 Disposition of Dealer Subsidiaries. In the event that Dealer
disposes of the stock of a Subsidiary that is not a Party to this Agreement
(i) without receiving compensation equal to the fair market value of such
Subsidiary, prior to the disposition, such Subsidiary shall deliver to ADP an
executed agreement, in a form reasonably acceptable to ADP, agreeing to be bound
by this Agreement as if it had been an original Party hereto or (ii) in an
exchange intended to result in the receipt of compensation equal to the fair
market value of such Subsidiary, prior to the disposition,

 

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such Subsidiary shall deliver to ADP an executed agreement, in a form reasonably
acceptable to ADP, agreeing to be bound by Sections 5.07, 5.08, 5.09 and
Article VII of this Agreement as if it had been an original Party hereto.

Section 7.02 Complete Agreement; Representations.

(a) Except as explicitly stated herein, this Agreement, together with the
exhibits and schedules hereto constitutes the entire agreement between the
Parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.

(b) ADP represents on behalf of itself and each other member of the ADP Group
and Dealer represents on behalf of itself and each other member of the Dealer
Group as follows:

(i) each such Person has the requisite corporate or other power and authority
and has taken all corporate or other action necessary in order to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated by this Agreement; and

(ii) this Agreement has been duly executed and delivered by such Person (if such
Person is a Party) and constitutes a valid and binding agreement of it
enforceable in accordance with the terms thereof (assuming the due execution and
delivery thereof by the other Party), except as such enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other Laws relating to creditors’ rights generally and by general
equitable principles.

Section 7.03 Costs and Expenses. All costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Agreement
and the transactions contemplated hereby shall be borne as provided in the
Separation Agreement.

Section 7.04 Governing Law. This Agreement and any dispute arising out of, in
connection with or relating to this Agreement shall be governed by and construed
in accordance with the Laws of the State of New York, without giving effect to
the conflicts of laws principles thereof.

Section 7.05 Notices. All notices, requests, claims, demands and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the Parties at the following addresses or facsimile
numbers:

If to ADP or any member of the ADP Group, to:

Automatic Data Processing, Inc.

One ADP Boulevard

Roseland, New Jersey 07068

Attn: General Counsel

Fax: (973) 974-3399

 

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If to Dealer or any member of the Dealer Group, to:

CDK Global, Inc.

1950 Hassell Road Suite 1000

Hoffman Estates, IL 60169-6308

Attn: General Counsel

Fax: (847) 781-9873

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this section, be deemed given upon receipt and (iii) if delivered by
mail in the manner described above to the address as provided in this section,
be deemed given upon receipt. Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other party.

Section 7.06 Amendment, Modification or Waiver.

(a) Prior to the Distribution, this Agreement may be amended, modified, waived,
supplemented or superseded, in whole or in part, by ADP in its sole discretion
by execution of a written amendment delivered to Dealer. Subsequent to the
Distribution, this Agreement may be amended, modified, supplemented or
superseded only by a written instrument signed by duly authorized signatories of
both Parties.

(b) Following the Distribution, any term or condition of this Agreement may be
waived at any time by the Party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No waiver
by any Party of any term or condition of this Agreement, in any one or more
instances, shall be deemed or construed as a waiver of the same or any other
term or condition of this Agreement on any future occasion. All remedies, either
under this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.

Section 7.07 No Assignment; Binding Effect; No Third Party Beneficiaries.

(a) Neither this Agreement nor any right, interest or obligation hereunder may
be assigned by either Party hereto without the prior written consent of the
other Party hereto and any attempt to do so will be void, except that following
the Distribution Date each Party hereto may assign any or all of its rights,
interests and obligations hereunder to an Affiliate; provided that any such
Affiliate agrees in writing to be bound by all of the terms, conditions and
provisions contained herein; provided,

 

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further, that any such assignment shall not relieve the assigning party of its
obligations or liabilities hereunder. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
Parties hereto and their respective successors and permitted assigns.

(b) The terms and provisions of this Agreement are intended solely for the
benefit of each Party hereto and their respective Affiliates, successors or
permitted assigns, and it is not the intention of the Parties to confer third
party beneficiary rights upon any other Person.

Section 7.08 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

Section 7.09 Specific Performance. From and after the Distribution, in the event
of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of this Agreement, the Parties agree that the Party or
Parties to this Agreement who are or are to be thereby aggrieved shall have the
right to specific performance and injunctive or other equitable relief of its or
their rights under this Agreement, in addition to any and all other rights and
remedies at law or in equity, and all such rights and remedies shall be
cumulative. The Parties agree that, from and after the Distribution, the
remedies at law for any breach or threatened breach of this Agreement, including
monetary damages, are inadequate compensation for any loss, that any defense in
any action for specific performance that a remedy at law would be adequate is
hereby waived, and that any requirements for the securing or posting of any bond
with such remedy are hereby waived.

Section 7.10 New York Forum. Each of the Parties agrees that, except as
otherwise provided in Section 6.01, all Actions arising out of or in connection
with this Agreement, or for recognition and enforcement of any judgment arising
out of or in connection with this Agreement, shall be tried and determined
exclusively in the state or federal courts in the State of New York, County of
New York, and each of the Parties hereby irrevocably submits with regard to any
such Action for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of
the Parties hereby expressly waives any right it may have to assert, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in any
such Action: (a) any claim that it is not subject to personal jurisdiction in
the aforesaid courts for any reason; (b) any claim that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts; and (c) any claim that (i) any of the aforesaid courts
is an inconvenient or inappropriate forum for such Action, (ii) venue is not
proper in any of the aforesaid courts and (iii) this Agreement, or the subject
matter hereof, may not be enforced in or by any of the aforesaid courts. Each of
the Parties agrees that mailing of process or other papers in connection with
any such Action in the manner provided in Section 7.05 or any other manner as
may be permitted by Law shall be valid and sufficient service thereof.

 

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Section 7.11 WAIVER OF JURY TRIAL EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVER IN THIS SECTION, (B) SUCH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) SUCH
PARTY MAKES SUCH WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND
CERTIFICATIONS HEREIN.

Section 7.12 Interpretation; Conflict With Ancillary Agreements. The Parties
acknowledge and agree that (i) each Party reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision, (ii) the rule
of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement and
(iii) the terms and provisions of this Agreement shall be construed fairly as to
each of the Parties, regardless of which Party was generally responsible for the
preparation of this Agreement. Notwithstanding the foregoing, the purposes of
Article IV are to ensure the Tax-Free Status and, accordingly, the Parties agree
that the language thereof shall be interpreted in a manner that serves this
purpose to the greatest extent possible. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the meaning
or interpretation of this Agreement. If, and to the extent, the provisions of
this Agreement conflict with the Separation Agreement, or any Ancillary
Agreement, the provisions of this Agreement shall control.

Section 7.13 Severability. If any provision or any portion of any provision of
this Agreement shall be held invalid or unenforceable, the remaining portion of
such provision and the remaining provisions of this Agreement shall not be
affected thereby. If the application of any provision or any portion of any
provision of this Agreement to any Person or circumstance shall be held invalid
or unenforceable, the application of such provision or portion of such provision
to Persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby.

Section 7.14 Survival. Except with respect to Sections 5.07, 5.08 and 5.09 which
shall remain in effect without limitation as to time, the provisions in this
Agreement shall be unconditional and absolute and shall remain in effect until
the expiration of the statute of limitations for all taxable periods that end
before or include June 30 of the calendar year in which the Distribution occurs
and the resolution of all disputes under this Agreement that arose during such
periods.

 

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Section 7.15 No Set-off. Neither ADP’s obligation nor Dealer’s obligation to pay
fees or make any other required payments under this Agreement shall be subject
to any right of offset, set-off, deduction or counterclaim, however arising,
including, without limitation, pursuant to any claims under the Separation
Agreement or the Ancillary Agreements.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first above written.

 

AUTOMATIC DATA PROCESSING, INC. By:  

/s/ Michael A. Bonarti

  Name:   Michael A. Bonarti   Title:   Vice President CDK GLOBAL, INC. By:  

/s/ Steven J. Anenen

  Name:   Steven J. Anenen   Title:   Chief Executive Officer