EXHIBIT 10.08
CERIDIAN CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
PARTIES
CERIDIAN CORPORATION
0000 XXXX XXX XXXXXXXX XXXX
XXXXXXXXXXX, XXXXXXXXX 00000-0000
AND
XXXXXX X. XXXXXX
("EXECUTIVE")
DATE: JANUARY 29, 2002
RECITALS
A. Ceridian wishes to obtain the services of Executive for the duration of
this Agreement, and Executive wishes to provide services for such period.
B. Ceridian desires reasonable protection of Ceridian's Confidential
Information (as defined below).p
C. Ceridian desires assurance that Executive will not compete with Ceridian,
engage in recruitment of Ceridian's employees or make disparaging
statements about Ceridian after termination of employment, and Executive
is willing to refrain from such competition, recruitment and
disparagement.
D. Executive desires to be assured of a minimum Base Salary (as defined
below) from Ceridian for Executive's services for the term of this
Agreement.
E. It is expressly recognized by the parties that Executive's acceptance of,
and continuance in, Executive's position with Ceridian and agreement to be
bound by the terms of this Agreement represents a substantial commitment
to Ceridian in terms of Executive's personal and professional career and a
foregoing of present and future career options by Executive, for all of
which Ceridian receives substantial value.
F. The parties recognize that a Change of Control (as defined below) may
result in material alteration or diminishment of Executive's position and
responsibilities and substantially frustrate the purpose of Executive's
commitment to Ceridian and forbearance of career options.
1
G. The parties recognize that in light of the above-described commitment and
forbearance of career options, it is essential that, for the benefit of
Ceridian and its stockholders, provision be made for the possibility of a
Change of Control Termination (as defined below) in order to enable
Executive to accept and effectively continue in Executive's position in
the face of inherently disruptive circumstances arising from the
possibility of a Change of Control of Ceridian Corporation (as defined
below), although no such change is now contemplated or foreseen.
H. The parties wish to replace any and all employment and Change of Control
agreements between Executive and Ceridian Corporation.
NOW, THEREFORE, in consideration of Executive's acceptance of and continuance in
Executive's employment for the term of this Agreement and the parties' agreement
to be bound by the terms contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 "BASE SALARY" shall mean regular cash compensation paid on a periodic
basis exclusive of benefits, bonuses or incentive payments.
1.02 "BOARD" shall mean the Board of Directors of Parent Corporation.
1.03 "CERIDIAN" shall mean Ceridian Corporation, a Delaware corporation f/k/a
New Ceridian Corporation, and, except for purposes of Section 7.01(b) and
(h), and Section 9.02 of Article IX,
(a) any Subsidiary (as that term is defined in Section 1.07); and
(b) any successor in interest by way of consolidation, operation of law,
merger or otherwise.
1.04 "CONFIDENTIAL INFORMATION" shall mean information or material of Ceridian
which is not generally available to or used by others, or the utility or
value of which is not generally known or recognized as standard practice,
whether or not the underlying details are in the public domain, including:
(a) information or material relating to Ceridian and its business as
conducted or anticipated to be conducted; business plans;
operations; past, current or anticipated services, products or
software; customers or prospective customers; relations with
business partners or prospective business partners; or research,
engineering, development, manufacturing, purchasing, accounting, or
marketing activities;
2
(b) information or material relating to Ceridian's inventions,
improvements, discoveries, "know-how," technological developments,
or unpublished writings or other works of authorship, or to the
materials, apparatus, processes, formulae, plans or methods used in
the development, manufacture or marketing of Ceridian's services,
products or software;
(c) information on or material relating to Ceridian which when received
is marked as "proprietary," "private," or "confidential;"
(d) trade secrets of Ceridian;
(e) software of Ceridian in various stages of development, software
designs, web-based solutions, specifications, programming aids,
programming languages, interfaces, visual displays, technical
documentation, user manuals, data files and databases of Ceridian;
and
(f) any similar information of the type described above which Ceridian
obtained from another party and which Ceridian treats as or
designates as being proprietary, private or confidential, whether or
not owned or developed by Ceridian.
Notwithstanding the foregoing, "Confidential Information" does not include
any information which is properly published or in the public domain;
provided, however, that information which is published by or with the aid
of Executive outside the scope of employment or contrary to the
requirements of this Agreement will not be considered to have been
properly published, and therefore will not be in the public domain for
purposes of this Agreement.
1.05 "DISABILITY" shall mean the inability of Executive to perform his duties
under this Agreement because of illness or incapacity for a continuous
period of six months.
1.06 "PARENT CORPORATION" shall mean Ceridian Corporation and, except for
purposes of Article VIII and Section 9.02 of Article IX, any successor in
interest by way of consolidation, operation of law, merger or otherwise.
"Parent Corporation" shall not include any Subsidiary.
1.07 "SUBSIDIARY" shall mean: (a) any corporation at least a majority of whose
securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the occurrence
of a contingency) is at the time owned by Parent Corporation and/or one or
more Subsidiaries; and (b) any division or business unit (or portion
thereof) of Parent Corporation or a corporation described in clause (a) of
this Section 1.07.
3
ARTICLE II
EMPLOYMENT, DUTIES AND TERM
2.01 EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Ceridian hereby employs Executive, and Executive accepts such employment.
2.02 DUTIES. Executive shall devote his full-time and best efforts to Ceridian
and to fulfilling the duties of his position which shall include such
duties as may from time to time be assigned him by Ceridian, provided that
such duties are reasonably consistent with Executive's education,
experience and background. Executive shall comply with Ceridian's policies
and procedures to the extent they are not inconsistent with this Agreement
in which case the provisions of this Agreement prevail.
2.03 TERM. Subject to the provisions of Articles IV and VIII, this Agreement
and Executive's employment shall continue until January 29, 2005 (the
"Initial Term"). On each anniversary of the date of this Agreement, and
subject to the provisions of Article IV and VIII, this Agreement and
Executive's employment shall be automatically extended for an additional
one-year period. For purposes hereof, the Initial Term, together with any
subsequent extensions thereof, are hereinafter referred to as the "Term."
Upon the occurrence of a Change of Control during the Term, all applicable
Change of Control protections set forth herein (including, without
limitation, those set forth in Article VII hereof) shall continue to apply
for the 24-month period commencing on the date of the Change of Control.
ARTICLE III
COMPENSATION AND EXPENSES
3.01 BASE SALARY. For all services rendered under this Agreement during the
Term, Ceridian shall pay Executive a minimum Base Salary at no less than
the annual rate currently being paid or, if Executive is not currently in
Ceridian's employ, at the annual rate specified in the written offer of
employment. If Executive's salary is increased from time to time during
the term of this Agreement, the increased amount shall be the Base Salary
for the remainder of the term.
3.02 BONUS AND INCENTIVE. Bonus or incentive compensation shall be at the sole
discretion of Ceridian. Except as otherwise provided in Article VII,
Ceridian shall have the right, in accordance with their terms, to alter,
amend or eliminate any bonus or incentive plans, or Executive's
participation therein, without compensation to Executive.
3.03 BUSINESS EXPENSES. Ceridian shall, consistent with its policies in effect
from time to time, bear all ordinary and necessary business expenses
incurred by Executive in
4
performing his duties as an employee of Ceridian, provided that Executive
accounts promptly for such expenses to Ceridian in the manner prescribed
from time to time by Ceridian.
3.04 SUPPLEMENTAL RETIREMENT BENEFIT.
(a) ENTITLEMENT.
(1) TERMINATION OF EMPLOYMENT. Subject to Sections 3.04(a)(2),
3.04(a)(3) and 3.04(a)(4), Executive shall be entitled to a
supplemental retirement benefit pursuant to this Section 3.04
following his termination of employment with Ceridian at any
time for any reason.
(2) FORFEITURE. Executive or his surviving spouse, as the case may
be, shall not be entitled to receive or retain a supplemental
retirement benefit pursuant to this Section 3.04 if (A)
Executive's employment with Ceridian terminates or is
terminated for any reason prior to his attainment of age 62
(other than pursuant to a Change of Control Termination) and
(B) Executive breached or breaches any of his obligations
arising under Articles V or VI of this Agreement. If, after
Executive or his surviving spouse, as the case may be, has
received a benefit pursuant to this Section 3.04, Ceridian
determines that Executive is not entitled to the benefit,
Executive or his surviving spouse, as the case may be, shall
promptly repay to Ceridian the benefit payment previously
received pursuant to this Section 3.04 together with interest
on such payment for the period beginning on the date on which
it was paid to Executive or his surviving spouse, as the case
may be, and ending on the date on which it is repaid to
Ceridian at the prime rate of interest (or such comparable
index as may be adopted) established from time to time by the
Bank of America National Trust and Savings Association, New
York, New York, or its successor in interest, as in effect
from time to time during the period in question.
(3) DEATH. Except as provided in Section 3.04(d), no benefit shall
be paid pursuant to this Section 3.04 to Executive or any
other person if Executive's employment with Ceridian
terminates because of Executive's death or if Executive dies
after his termination of employment with Ceridian but before
his supplemental retirement benefit pursuant to this Section
3.04 is paid to Executive.
(4) OTHER CONDITIONS. As a condition to receiving any benefit
pursuant to this Section 3.04, Executive or his surviving
spouse, as the case may be, agrees to provide to Ceridian on a
timely basis any such information as Ceridian may reasonably
request to determine the entitlement of Executive or his
surviving spouse, as the case may be, to a benefit pursuant to
this Section 3.04 or the amount or timing of the benefit
payment or to resolve any other issue or assist Ceridian in
making any determination regarding the benefit.
5
(b) COMMENCEMENT AND FORM. The benefit pursuant to this Section 3.04
shall be paid on or as soon as administratively practicable after
the Determination Date in the form of a lump sum cash payment.
(c) AMOUNT.
(1) DETERMINATION DATE ON OR AFTER AGE 60. If the Determination
Date is on or after the date on which Executive attains age
60, the amount of Executive's benefit pursuant to this Section
3.04 shall be a lump sum amount that is actuarially equivalent
to a monthly benefit, paid in the Normal Form and commencing
as of the Determination Date, equal to one-twelfth of the
excess of:
(A) the sum of
(i) the product of Executive's Final Average Pay
multiplied by his Years of Service through the
calendar year during which he attains age 62 (or,
if earlier, through the date on which he
terminates employment) multiplied by .025 plus
(ii) the product of Executive's Final Average Pay
multiplied by his Years of Service, if any,
following the calendar year during which he
attains age 62 multiplied by .0167;
over
(B) the Offset Amount.
(2) DETERMINATION DATE BEFORE AGE 60. If the Determination Date is
before the date on which Executive attains age 60, the amount
of Executive's benefit pursuant to this Section 3.04 shall be
a lump sum amount that is actuarially equivalent to a monthly
benefit, paid in the Normal Form and commencing as of the
Determination Date, equal to one-twelfth of the excess of:
(A) the product of Executive's Final Average Pay multiplied
by his Years of Service multiplied by .025, reduced by
one-fourth of one percent for each month by which the
Determination Date precedes the first day of the month
coinciding with or next following the date on which
Executive attains age 60;
over
(B) the Offset Amount.
(3) ACTUARIAL EQUIVALENCE. For the purpose of this Section
3.04(c), actuarial equivalence for a given Determination Date
shall be based on the annual interest rate on 30-year Treasury
securities for the month of November of
6
the calendar year immediately preceding the calendar year that
includes the Determination Date, as determined in accordance
with published guidance from the Internal Revenue Service
pursuant to Section 417(e)(3) of the Code (as defined in
Section 7.1(e)) and mortality rates per the "applicable
mortality table" published in Revenue Ruling 95-6 or other
applicable guidance from the Internal Revenue Service pursuant
to Section 417(e)(3) of the Code in effect as of the
Determination Date.
(d) DEATH BENEFITS.
(1) DEATH BEFORE DETERMINATION DATE. If Executive dies before the
Determination Date, his surviving spouse, if any, shall,
subject to Sections 3.04(a)(2) and 3.04(a)(4), be entitled to
a surviving spouse benefit. The benefit shall be paid to
Executive's surviving spouse on or as soon as administratively
practicable after the Determination Date in the form of a lump
sum cash payment. The amount of the surviving spouse benefit
pursuant to this Section 3.04(d)(1) shall be equal to fifty
percent (50%) of the amount of the supplemental retirement
benefit that would have been paid to Executive pursuant to
this Section 3.04 had he terminated employment on the date of
his death (or, if earlier, on the actual date on which he
terminated employment) and lived until he received his
supplemental retirement benefit. If Executive's surviving
spouse dies after becoming entitled to a surviving spouse
benefit pursuant to this Section 3.04(d)(1) but before the
benefit is paid to the surviving spouse, the benefit shall be
paid to the surviving spouse's estate at the same time the
benefit would have been paid to the surviving spouse had she
lived.
(2) DEATH ON OR AFTER DETERMINATION DATE. If Executive dies on or
after the Determination Date but before payment of his
supplemental retirement benefit pursuant to this Section 3.04,
the benefit that would have been paid to Executive had he
lived shall, subject to Sections 3.04(a)(2) and 3.04(a)(4), be
paid to Executive's estate at the same time the benefit would
have been paid to Executive had he lived.
(e) NONASSIGNABILITY. The benefit pursuant to this Section 3.04 and the
right to receive a future benefit pursuant to this Section 3.04 may
not be anticipated, alienated, sold, transferred, assigned, pledged,
encumbered or subjected to any charge or legal process.
(f) RABBI TRUST. Ceridian may, but is not required to, provide for
payment of the benefit pursuant to this Section 3.04 through a
trust. The trust must (1) be a grantor trust with respect to which
Ceridian is treated as the grantor, (2) not cause benefits under
this Section 3.04 to be funded for federal income tax purposes or
for purposes of the Employee Retirement Income Security Act of 1974,
as amended, and (3) provide that trust assets will, upon Ceridian's
insolvency, be used to satisfy the claims of Ceridian's general
creditors. If Ceridian elects to
7
provide benefits through such a trust, neither Executive nor o his
surviving spouse shall have any interest in the assets of the trust.
(g) NATURE OF INTEREST. Nothing contained in this Section 3.04 is to be
construed as providing for assets to be held for the benefit of
Executive or his surviving spouse. If Executive or his surviving
spouse acquires a right to receive benefit payments pursuant to this
Section 3.04, that right is no greater than the right of any
unsecured general creditor of Ceridian.
(h) DETERMINATIONS. Ceridian shall make all determinations as to
entitlement, amount and timing of any benefit payment pursuant to
this Section 3.04. Ceridian shall have discretionary power and
authority to interpret, construe, apply, enforce and otherwise
administer the terms of this Section 3.04 and any reasonable
determination made by Ceridian in good faith shall be binding and
conclusive on Executive and his surviving spouse. Any determination
by Ceridian denying a claim by Executive or his surviving spouse
shall be stated in writing and shall set forth the specific reason
for the denial. Ceridian shall afford a reasonable opportunity to
the claimant for a full and fair review of the determination denying
the claim. A claimant must exhaust the procedure described in this
Section 3.04(h) before pursuing the claim in any other proceeding.
(i) SPECIAL DEFINITIONS. The definitions set forth in this Section
3.04(i) apply in construing this Section 3.04 unless the context
otherwise indicates. Other terms used in this Section 3.04 have the
meanings ascribed to them in Article I of this Agreement. In
addition, the general provisions of Article IX of this Agreement
apply to this Section 3.04 unless the context otherwise indicates.
(1) "CERIDIAN" means, for purposes of Sections 3.04(a)(4),
3.04(f), and 3.04(h), Ceridian Corporation and any successor
in interest by way of consolidation, operation of law, merger
or otherwise, but not any Subsidiary.
(2) "DETERMINATION DATE means the first day of the fourth calendar
month following Executive's termination of employment with
Ceridian.
(3) "FINAL AVERAGE PAY" means Executive's "final average pay" as
defined in the Retirement Plan but determined by disregarding
any part of the definition of final average pay in the
Retirement Plan that is included for the purpose of complying
with Section 401(a)(17) of the Code (within the meaning of
Section 7.01(e)). If the Retirement Plan is terminated
effective as of a date that is before the date on which
Executive terminates employment with Ceridian, the previous
sentence shall be applied after the effective date of the
termination of the Retirement Plan based on the definition of
final average pay in effect under the Retirement Plan on the
effective date of the termination of the Retirement Plan as if
the Retirement Plan had continued in effect.
8
(4) "NORMAL FORM" means monthly payments to Executive for his life
with the last payment made for the month during which
Executive dies and with no death benefits payable to any
person.
(5) "OFFSET AMOUNT" means the annual benefit to which Executive
would be entitled under the "offset plans" if his benefit
under the offset plans commenced as of the Determination Date
and was paid in the Normal Form, based on the terms of the
offset plans in effect and applicable to Executive on the
Determination Date or, if earlier, as of the effective date of
the termination of an offset plan. If the Determination Date
is before the earliest date on which Executive's benefit could
commence under an offset plan, the Offset Amount with respect
to that offset plan shall be determined by calculating the
Offset Amount as of the earliest date on which Executive's
benefit could commence under the offset plan and then reducing
that benefit by one fourth of one percent for each month by
which the offset date precedes the earliest date on which
Executive's benefit could commence under the offset plan. The
Offset Amount shall be determined without regard to the actual
timing of commencement and form of Executive's benefit
pursuant to the offset plans. For the purpose of this Section
3.04(i)(5), the offset plans are the Retirement Plan, the
Ceridian Corporation Benefit Equalization Plan and any defined
benefit pension plan maintained by any previous employer of
Executive which was or is operated by such previous employer
as a qualified plan pursuant to Section 401(a) of the Code
(within the meaning of Section 7.01(e)), or any successor to
any such plans.
(6) "RETIREMENT PLAN" means the Ceridian Corporation Retirement
Plan as from time to time amended.
(7) "YEARS OF SERVICE" means (A) each calendar year from and
including 1993 through and including 2000 and (B) each
calendar year after 2000 and before 2012 during any part of
which Executive is an employee of Ceridian (as classified by
Ceridian at the time without regard to any subsequent
retroactive reclassification). Executive shall not be credited
with any Years of Service for any period of employment with
Ceridian after 2011.
3.05 SUPPLEMENTAL DISABILITY BENEFITS.
(a) ENTITLEMENT. Executive will be entitled to the Supplemental
Long-Term Disability Benefit coverages under this section as long as
Executive continues employment with Ceridian.
9
(b) DISABILITY BENEFITS. Executive will be entitled to coverage under a
policy of insurance or a self-insured arrangement that, when coupled
with the coverage otherwise provided to Executive under the Ceridian
Long-Term Disability Insurance Plan, will provide a benefit equal to
65% of his compensation (as defined for purposes of the Long-Term
Disability Insurance Plan without regard to any dollar limits under
such plan), if Executive becomes disabled (within the meaning of the
plan). Executive will also be entitled to coverage under a policy of
insurance or a self-insured arrangement that, when coupled with the
coverage otherwise provided to Executive under the Ceridian
catastrophic disability insurance plan for executives, will provide
a benefit equal to 35% of his compensation (as defined for purposes
of the catastrophic disability plan without regard to any dollar
limits under such plan), if Executive incurs a catastrophic
disability (within the meaning of the plan). Benefits under this
provision will be payable at the same time and under the same
conditions as benefits would be payable under the corresponding
Ceridian benefit plan.
ARTICLE IV
EARLY TERMINATION
4.01 EARLY TERMINATION. This Article shall not apply to a Change of Control
Termination which is governed solely by the provisions of Article VII, and
does not alter the respective continuing obligations of the parties
pursuant to Articles V, VI, and IX.
4.02 TERMINATION FOR CAUSE. Ceridian may terminate this Agreement and
Executive's employment immediately for cause. For the purpose hereof
"cause" means:
(a) fraud;
(b) misrepresentation;
(c) theft or embezzlement of Ceridian assets;
(d) intentional violations of law involving moral turpitude;
(e) failure to follow Ceridian's conduct and ethics policies; and/or
(f) the continued failure by Executive to attempt in good faith to
perform his duties as reasonably assigned to Executive pursuant to
Section 2.02 of Article II of this Agreement for a period of 60 days
after a written demand for such performance which specifically
identifies the manner in which it is alleged Executive has not
attempted in good faith to perform such duties.
10
In the event of termination for cause pursuant to this Section 4.02,
Executive shall be paid at the usual rate of Executive's annual Base
Salary through the date of termination specified in any written
notice of termination.
4.03 TERMINATION WITHOUT CAUSE. Either Executive or Ceridian may terminate this
Agreement and Executive's employment without cause on at least 75 days'
written notice. In the event of termination of this Agreement and of
Executive's employment pursuant to this Section 4.03, compensation shall
be paid as follows:
(a) if the notice of termination is given by Executive, Executive shall
be paid at the usual rate of his annual Base Salary through the 75
day notice period;
(b) if the notice of termination is given by Ceridian, (1) Executive
shall be paid at the usual rate of his annual Base Salary through
the 75 day notice period, however, Ceridian shall have the option of
making termination of the Agreement and Executive's employment
effective immediately upon notice in which case Executive shall be
paid a lump sum representing the value of 75 days worth of salary;
and (2) Executive shall receive, starting within 15 days after the
end of the 75 day notice period, three years' annual Base Salary and
annual perquisite cash adder payable, at the sole discretion of
Ceridian, in either the form of a lump sum payment or on a regular
payroll period basis. In addition, Executive shall receive the
bonus, if any, to which Executive would otherwise have become
entitled under all applicable Ceridian annual bonus plans in effect
at the time of termination of this Agreement had Executive remained
continuously employed for the full fiscal year in which termination
occurred and continued to perform his duties in the same manner as
they were performed immediately prior to termination, multiplied by
a fraction, the numerator of which shall be the number of whole
months Executive was employed in the year in which termination
occurred and the denominator of which is 12. This bonus amount shall
be paid within 15 days after the date such bonus would have been
paid had Executive remained employed for the full fiscal year. In
addition, Ceridian shall provide or make arrangements for reasonable
outplacement services for Executive based on his level within
Ceridian. The payment and provision of the severance payments and
benefits provided for in this Section 4.03 are conditioned upon
Executive executing a release, similar to that attached as Exhibit
A, of all claims against Ceridian.
4.04 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement shall
terminate in the event of death or Disability of Executive.
(a) In the event of Executive's death, Ceridian shall pay an amount
equal to 12 months of Base Salary and annual perquisite cash adder
at the rate in effect at the time of Executive's death plus the
amount Executive would have received in annual incentive plan bonus
for the year in which the death occurs had "target" goals been
achieved. Such amount shall be paid (1) to the beneficiary or
beneficiaries designated in writing to Ceridian by Executive, (2) in
the absence of
11
such designation to the surviving spouse, or (3) if there is no
surviving spouse, or such surviving spouse disclaims all or any
part, then the full amount, or such disclaimed portion, shall be
paid to the executor, administrator or other personal representative
of Executive's estate. The amount shall be paid as a lump sum as
soon as practicable following Ceridian's receipt of notice of
Executive's death. All such payments shall be in addition to any
payments due pursuant to Section 4.04(c) below.
(b) In the event of Executive's Disability, Base Salary shall be
terminated as of the end of the month in which the last day of the
six-month period of Executive's inability to perform his duties
occurs.
(c) In the event of termination by reason of Executive's death or
Disability, Ceridian shall pay to Executive any amount equal to (1)
the amount Executive would have received in annual incentive plan
bonus for the year in which termination occurs had "target" goals
been achieved, multiplied by (2) a fraction, the numerator of which
shall be the number of whole months Executive was employed in the
year in which the death or Disability occurred and the denominator
of which is 12. The amount payable pursuant to this Section 4.04(c)
shall be paid within 15 days after the date such bonus would have
been paid had Executive remained employed for the full fiscal year.
4.05 RETIREMENT.
(a) Executive may terminate this Agreement and Executive's employment as
a result of Executive's decision to retire from Ceridian. Executive
shall provide Ceridian with at least 75 days' written notice of the
date upon which Executive intends to retire. Executive shall be paid
at the usual rate of his annual Base Salary and annual perquisite
cash adder through the date of retirement stipulated in the written
notice.
(b) If Executive terminates employment with Ceridian by retirement after
attaining 55 years of age and completing five or more years of
service to Ceridian, then Executive shall, until age 65, be entitled
to receive from Ceridian health, dental, accidental death and
dismemberment, and life insurance coverage substantially equivalent
to the coverage Executive had on the day immediately prior to
retiring, including any coverage then in effect for Executive's
spouse, domestic partner or dependents. Executive shall be required
to pay no more for the above mentioned benefits than Executive paid
as an active employee immediately prior to Executive's retirement.
4.06 ENTIRE TERMINATION PAYMENT. The compensation provided for in this Article
IV for early termination of this Agreement and termination pursuant to
this Article IV shall constitute Executive's sole remedy for such
termination. Executive shall not be entitled to any other termination or
severance payment which may be payable to Executive under any other
agreement between Executive and Ceridian.
12
ARTICLE V
CONFIDENTIALITY, DISCLOSURE AND ASSIGNMENT
5.01 CONFIDENTIALITY. Executive acknowledges that Ceridian has taken reasonable
measures to preserve the secrecy of its Confidential Information.
Executive will not, during the term or after the termination or expiration
of this Agreement or his/her employment, publish, disclose, or utilize in
any manner any Confidential Information obtained while employed by
Ceridian. If Executive leaves the employ of Ceridian, Executive will not,
without Ceridian's prior written consent, retain or take away any drawing,
writing or other record in any form containing any Confidential
Information.
5.02 BUSINESS CONDUCT AND ETHICS. During the term of employment with Ceridian,
Executive will engage in no activity or employment which may conflict with
the interest of Ceridian, and will comply with Ceridian's policies and
guidelines pertaining to business conduct and ethics.
5.03 DISCLOSURE. Executive will disclose promptly in writing to Ceridian all
inventions, discoveries, software, writings and other works of authorship
which are conceived, made, discovered, or written jointly or singly on
Ceridian time or on Executive's own time, providing the invention,
improvement, discovery, software, writing or other work of authorship is
capable of being used by Ceridian in the normal course of business, and
all such inventions, improvements, discoveries, software, writings and
other works of authorship shall belong solely to Ceridian.
5.04 INSTRUMENTS OF ASSIGNMENT. Executive will sign and execute all instruments
of assignment and other papers to evidence transfer of Executive's entire
right, title and interest in such inventions, improvements, discoveries,
software, writings or other works of authorship in Ceridian, at the
request and the expense of Ceridian, and Executive will do all acts and
sign all instruments of assignment and other papers Ceridian may
reasonably request relating to applications for patents, patents,
copyrights, and the enforcement and protection thereof. If Executive is
needed, at any time, to give testimony, evidence, or opinions in any
litigation or proceeding involving any patents or copyrights or
applications for patents or copyrights, both domestic and foreign,
relating to inventions, improvements, discoveries, software, writings or
other works of authorship conceived, developed or reduced to practice by
Executive, Executive agrees to do so, and if Executive leaves the employ
of Ceridian, Ceridian shall pay Executive at a rate mutually agreeable to
Executive and Ceridian, plus reasonable traveling or other expenses.
5.05 INVENTIONS DEVELOPED ON EXECUTIVE'S OWN TIME. The two immediately
preceding sections entitled "Disclosure" and "Instruments of Assignment"
do not apply to inventions in which a Ceridian claim of any rights will
create a violation of Chapter 181
13
Minnesota Statutes, Section 181.78, reproduced below and constituting the
written notification of its Subdivision 3.
181.78 Agreements; terms relating to inventions
Subdivision 1.
Any provision in an employment agreement which provides that an employee
shall assign or offer to assign any of the employee's rights in an
invention to the employer shall not apply to an invention for which no
equipment, supplies, facility or trade secret information of the employer
was used and which was developed entirely on the employee's own time, and
(1) which does not relate (a) directly to the business of the employer or
(b) to the employer's actual or demonstrably anticipated research or
development, or (2) which does not result from any work performed by the
employee for the employer. Any provision which purports to apply to such
an invention is to that extent against the public policy of this state and
is to that extent void and unenforceable.
Subdivision 2.
No employer shall require a provision made void and unenforceable by
subdivision 1 as a condition of employment or continuing employment.
Subdivision 3.
IF AN EMPLOYMENT AGREEMENT ENTERED INTO AFTER AUGUST 1, 1977, CONTAINS A
PROVISION REQUIRING THE EMPLOYEE TO ASSIGN OR OFFER TO ASSIGN ANY OF THE
EMPLOYEE'S RIGHTS IN ANY INVENTION TO AN EMPLOYER, THE EMPLOYER MUST ALSO,
AT THE TIME THE AGREEMENT IS MADE, PROVIDE A WRITTEN NOTIFICATION TO THE
EMPLOYEE THAT THE AGREEMENT DOES NOT APPLY TO AN INVENTION FOR WHICH NO
EQUIPMENT, SUPPLIES, FACILITY OR TRADE SECRET INFORMATION OF THE EMPLOYER
WAS USED AND WHICH WAS DEVELOPED ENTIRELY ON THE EMPLOYEE'S OWN TIME, AND
(1) WHICH DOES NOT RELATE (a) DIRECTLY TO THE BUSINESS OF THE EMPLOYER OR
(b) TO THE EMPLOYER'S ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR
DEVELOPMENT, OR (2) WHICH DOES NOT RESULT FROM ANY WORK PERFORMED BY THE
EMPLOYEE FOR THE EMPLOYER.
5.06 EXECUTIVE'S DECLARATION. Executive has no inventions, data bases,
improvements, discoveries, software, writings or other works of authorship
useful to Ceridian in the normal course of business, which were conceived,
made or written prior to the date of this Agreement and which are excluded
from this Agreement.
5.07 SURVIVAL. The obligations of this Article V shall survive the expiration
or termination of this Agreement and Executive's employment.
14
ARTICLE VI
NON-COMPETITION, NON-RECRUITMENT, AND NON-DISPARAGEMENT
6.01 GENERAL. The parties hereto recognize and agree that (a) Executive is a
senior executive of Ceridian and is a key executive of Ceridian, (b)
Executive has received, and will in the future receive, substantial
amounts of Confidential Information, (c) Ceridian's business is conducted
on a worldwide basis, and (d) provision for non-competition,
non-recruitment and non-disparagement obligations by Executive is critical
to Ceridian's continued economic well-being and protection of Ceridian's
Confidential Information. In light of these considerations, this Article
VI sets forth the terms and conditions of Executive's obligations of
non-competition, non-recruitment and non-disparagement subsequent to the
termination of this Agreement and/or Executive's employment for any reason
other than a Change of Control Termination. Sections 6.02 and 6.03 of this
Agreement shall be of no further force or effect upon a Change of Control
Termination.
6.02 NON-COMPETITION.
(a) During the term of this Agreement, Executive will devote full time
and energy to furthering Ceridian's business and will not pursue any
other business activity without Ceridian's written consent. Unless
the obligation is waived or limited by Ceridian in accordance with
subsection (b) of this Section 6.02, Executive agrees that during
his employment with Ceridian and for a period of three years
following termination of employment for any reason other than a
Change of Control Termination ("Non-Compete Period"), Executive will
not directly or indirectly, alone or as a partner, officer,
director, shareholder or employee of any other firm or entity,
engage in any commercial activity in competition with any part of
Ceridian's business as conducted as of the date of such termination
of employment or with any part of Ceridian's contemplated business
with respect to which Executive has Confidential Information. For
purposes of this subsection (a), "shareholder" shall not include
beneficial ownership of less than five percent (5%) of the combined
voting power of all issued and outstanding voting securities of a
publicly held corporation whose stock is traded on a major stock
exchange. Also for purposes of this subsection (a), "Ceridian's
business" shall include business conducted by Ceridian or its
affiliates and any partnership or joint venture in which Ceridian or
its affiliates is a partner or joint venturer; provided that,
"affiliate" as used in this sentence shall not include any
corporation in which Ceridian has ownership of less than fifteen
percent (15%) of the voting stock.
(b) At its sole option Ceridian may, by written notice to Executive at
any time within the Non-Compete Period, waive or limit the time
and/or geographic area in which Executive cannot engage in
competitive activity.
(c) During the Non-Compete Period, prior to accepting employment with or
agreeing to provide consulting services to, any firm or entity which
offers competitive
15
products or services, Executive shall give 30 days prior written
notice to Ceridian. Such written notice shall describe the firm and
the employment or consulting services to be rendered to the firm or
entity, and shall include a copy of the written offer of employment
or engagement of consulting services. Ceridian's failure to respond
or object to such notice shall not in any way constitute
acquiescence or waiver of Ceridian's rights under this Article VI.
(d) In the event Executive has provided notice to Ceridian pursuant to
subsection (c) of this Section 6.02 and has not accepted employment
with or agreed to provide consulting services to, any firm or entity
directly as a result of his non-competition obligation pursuant to
this Section 6.02, Ceridian shall pay Executive an amount equal to
the usual rate of Executive's Base Salary in effect at the time of
termination on a regular payroll period basis until the end of the
Non-Compete Period. There shall be credited against Ceridian's
obligation to make such payments any other payments made by Ceridian
to Executive pursuant to Article IV of this Agreement. In the event
that Ceridian elects, pursuant to subsection (b) of this Section
6.02, to waive all or any portion of the non-competition obligation
set forth in subsection (a) hereof, no payment shall be required by
Ceridian with respect to the portion of the Non-Compete Period which
has been waived.
(e) In the event Executive fails to provide notice to Ceridian pursuant
to subsection (c) of this Section 6.02 and/or in anyway violates its
non-competition obligation pursuant to Section 6.02, Ceridian may
enforce all of its rights and remedies provided to it under this
Agreement, in law and in equity, and Executive shall be deemed to
have expressly waived any rights he may have had to payments under
subsection (d) of this Section 6.02.
6.03 NON-RECRUITMENT. During the term of employment and for a period of three
years following termination of employment for any reason other than a
Change of Control Termination, Executive will not directly or indirectly
hire any of Ceridian's employees, or solicit any of Ceridian's employees
for the purpose of hiring them or inducing them to leave their employment
with Ceridian, nor will Executive own, manage, operate, join, control,
consult with, participate in the ownership, management, operation or
control of, be employed by, or be connected in any manner with any person
or entity which engages in the conduct proscribed in this Section 6.03.
This provision shall not preclude Executive from responding to a request
(other than by Executive's employer) for a reference with respect to an
individual's employment qualifications.
6.04 NON-DISPARAGEMENT. Executive will not, during the term or after the
termination or expiration of this Agreement or Executive's employment,
make disparaging statements, in any form, about Ceridian, its officers,
directors, agents, employees, products or services which Executive knows,
or has reason to believe, are false or misleading.
6.05 SURVIVAL AND ENFORCEABILITY. The obligations of this Article VI shall
survive the expiration or termination of this Agreement and Executive's
employment. Should any provision of this Article VI be held invalid or
illegal, such illegality shall not invalidate
16
the whole of this Article VI or the Agreement, but, rather, Article VI
shall be construed as if it did not contain the illegal part or narrowed
to permit its enforcement, and the rights and obligations of the parties
shall be construed and enforced accordingly. In furtherance of and not in
limitation of the foregoing, Executive expressly agrees that should the
duration of or geographical extent of, or business activities covered by,
any provision of this Article VI be in excess of that which is valid or
enforceable under applicable law, then such provision shall be construed
to cover only that duration, extent or activities that may validly be
covered. Executive acknowledges the uncertainty of the law in this respect
and expressly stipulates that this Article VI shall be construed in a
manner that renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.
This Article VI does not replace and is in addition to any other
agreements Executive may have with Ceridian on the matters addressed
herein.
ARTICLE VII
CHANGE OF CONTROL
7.01 DEFINITIONS. For purposes of this Article VII, the following definitions
shall be applied:
(a) "BENEFIT PLAN" means any formal or informal plan, program or other
arrangement heretofore or hereafter adopted by Ceridian for the
direct or indirect provision of compensation to Executive (including
groups or classes of participants or beneficiaries of which
Executive is a member), whether or not such compensation is
deferred, is in the form of cash or other property or rights, or is
in the form of a benefit to or for Executive.
(b) "CHANGE OF CONTROL" shall mean the first of the following events to
occur:
(1) there is consummated a merger or consolidation to which
Ceridian or any direct or indirect subsidiary of Ceridian is a
party if the merger or consolidation would result in the
voting securities of Ceridian outstanding immediately prior to
such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) less
than 60% of the combined voting power of the securities of
Ceridian or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; or
(2) the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") in the aggregate of securities of
Ceridian representing twenty percent (20%) or more of the
total combined voting power of Ceridian's then issued and
outstanding securities is acquired by any person or entity, or
group of associated persons or entities acting in concert;
provided, however, that for purposes hereof, the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition by Ceridian or any of
17
its subsidiaries, (B) any acquisition directly from Ceridian
or any of its subsidiaries, (C) any acquisition by any
employee benefit plan (or related trust or fiduciary)
sponsored or maintained by Ceridian or any corporation
controlled by Ceridian, (D) any acquisition by an underwriter
temporarily holding securities pursuant to an offering of such
securities, (E) any acquisition by a corporation owned,
directly or indirectly, by the stockholders of Ceridian in
substantially the same proportions as their ownership of stock
of Ceridian, (F) any acquisition in connection with which,
pursuant to Rule 13d-1 promulgated pursuant to the Exchange
Act, the individual, entity or group is permitted to, and
actually does, report its beneficial ownership on Schedule 13G
(or any successor Schedule); provided that, if any such
individual, entity or group subsequently becomes required to
or does report its beneficial ownership on Schedule 13D (or
any successor Schedule), then, for purposes of this paragraph,
such individual, entity or group shall be deemed to have first
acquired, on the first date on which such individual, entity
or group becomes required to or does so report on Schedule
13D, beneficial ownership of all of the voting securities of
Ceridian beneficially owned by it on such date, and (G) any
acquisition in connection with a merger or consolidation
which, pursuant to paragraph (1) above, does not constitute a
Change of Control; or
(3) there is consummated a transaction contemplated by an
agreement for the sale or disposition by Ceridian of all or
substantially all of Ceridian's assets, other than a sale or
disposition by Ceridian of all or substantially all of
Ceridian's assets to an entity, at least 60% of the combined
voting power of the voting securities of which are owned by
stockholders of Ceridian in substantially the same proportions
as their ownership of Ceridian immediately prior to such sale;
or
(4) the stockholders of Ceridian approve any plan or proposal for
the liquidation of Ceridian; or
(5) a change in the composition of the Board such that the
"Continuity Directors" cease for any reason to constitute at
least a majority of the Board. For purposes of this clause,
"Continuity Directors" means (A) those members of the Board
who were directors on the date hereof and (B) those members of
the Board (other than a director whose initial assumption of
office was in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of Ceridian) who were
elected or appointed by, or on the nomination or
recommendation of, at least a two-thirds (2/3) majority of the
then-existing directors who either were directors on the date
hereof or were previously so elected or appointed; or
18
(6) such other event or transaction as the Board shall determine
constitutes a Change of Control.
(c) "CHANGE OF CONTROL COMPENSATION" means any payment or benefit
(including any transfer of property) in the nature of compensation,
to or for the benefit of Executive under this Agreement or any Other
Agreement or Benefit Plan, which is considered to be contingent on a
change in the ownership or effective control of Ceridian for
purposes of Section 280G of the Code.
(d) "CHANGE OF CONTROL TERMINATION" means, with respect to Executive,
either of the following events occurring on or within two years
after a Change of Control:
(1) Termination of Executive's employment by Ceridian for
any reason other than (A) fraud, (B) theft or
embezzlement of Ceridian assets, (C) intentional
violations of law involving moral turpitude, or (D)
failure to follow Ceridian's conduct and ethics
policies; or
(2) Termination of employment with Ceridian by Executive for
Good Reason.
A Change of Control Termination by Executive shall not, however,
include termination by reason of death or Disability. A termination
of Executive's employment by Ceridian shall not constitute a
termination described in clauses (A) through (D) of Section
7.01(d)(1) unless (i) there has been delivered to Executive by the
Board, at least 10 days prior to such termination, a written notice
which specifically identifies conduct described in clauses (A), (B),
(C) or (D) of Section 7.01(d)(1) in which the Board believes
Executive has engaged and provides Executive an opportunity to cure
such conduct and (ii) the Board has duly adopted (following the
expiration of the aforementioned cure period) a resolution, by the
affirmative vote of not less than two-thirds (2/3) of the entire
membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before
the Board) finding that, in the good faith opinion of the Board, the
Executive was guilty of conduct described in clauses (A), (B), (C)
or (D) of Section 7.01(d)(1), and specifying the particulars thereof
in detail. For purposes of this Agreement, Executive's employment
shall be deemed to have been terminated pursuant to a Change of
Control Termination, if Executive's employment is terminated by
Ceridian other than for the reasons described in clauses (A) through
(D) of Section 7.01(d)(1) during the pendency of a Potential Change
of Control and Executive reasonably demonstrates that such
termination was at the request or direction of a person or entity
who has entered into an agreement, the consummation of which would
result in a Change of Control, or is otherwise in connection with or
in anticipation of a Change of Control (whether or not a Change of
Control ever occurs). For purposes of this Agreement, in the event
of a termination described in the preceding sentence, a Change of
Control
19
will be deemed to have occurred immediately prior to the termination
of Executive's employment for purposes of this Agreement.
(e) "CODE" means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code shall include the corresponding
section of such Code as from time to time amended.
(f) "GOOD REASON" means a good faith determination by Executive, in
Executive's sole and absolute judgment, that any one or more of the
following events has occurred, without Executive's express written
consent on or after a Change of Control:
(1) A change in Executive's reporting responsibilities, titles or
office as in effect immediately prior to the Change of
Control, or any removal of Executive from, or any failure to
re-elect Executive to, any of such positions, which has the
effect of materially diminishing Executive's responsibility or
authority (it being expressly understood that Executive shall
have Good Reason if he ceases to be an executive officer of a
publicly-held corporation);
(2) A reduction by Ceridian in Executive's Base Salary, bonus
opportunity or annual perquisite cash adder as in effect
immediately prior to the Change of Control or as the same may
be increased from time to time thereafter or any failure by
Ceridian to pay any portion of Executive's compensation when
due;
(3) Ceridian requiring Executive to be based anywhere other than
within 50 miles of Executive's job location at the time of the
Change of Control;
(4) Without replacement by plans, programs, or arrangements which,
taken as a whole, provide benefits to Executive at least
reasonably comparable to those discontinued or adversely
affected, (A) the failure by Ceridian to continue in effect,
any pension, bonus, incentive, stock ownership, purchase,
option, life insurance, health, accident, disability, or any
other employee compensation or benefit plan, program or
arrangement, in which Executive is participating immediately
prior to a Change of Control; or (B) the taking of any action
by Ceridian that would materially and adversely affect
Executive's participation or materially reduce Executive's
benefits under any of such plans, programs or arrangements;
(5) The failure by Ceridian to provide office space, furniture,
and secretarial support at least comparable to that provided
Executive immediately prior to the Change of Control or the
taking of any similar action by Ceridian that would materially
adversely affect the working conditions in or under which
Executive performs his employment duties;
20
(6) If Executive's primary employment duties are with a
Subsidiary, the sale, merger, contribution, transfer or any
other transaction in conjunction with which Parent
Corporation's ownership interest in such Subsidiary decreases
below the level specified in Section 1.07 of Article I unless
(A) this Agreement is assigned to the purchaser/transferee
with the provisions of Article VII in full force and effect
and operative as if a Change of Control has occurred with
respect to the purchaser/transferee as Parent Corporation
immediately after the purchase/transfer becomes effective, and
(B) such purchaser/transferee has a creditworthiness
reasonably equivalent to Parent Corporation's; or
(7) Any material breach of this Agreement by Ceridian.
Executive's right to terminate employment for Good Reason shall not
be affected by Executive's incapacity due to physical or mental
illness. Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any event
constituting Good Reason hereunder.
(g) "OTHER AGREEMENTS" means any agreement, contract or understanding
heretofore or hereafter entered into between Executive and Ceridian
for the direct or indirect provision of compensation to Executive.
(h) "POTENTIAL CHANGE OF CONTROL" shall be deemed to have occurred if
the event set forth in any one of the following subsections shall
have occurred: (A) Ceridian enters into an agreement, the
consummation of which would result in the occurrence of a Change of
Control; (B) Ceridian or any person or entity publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change of Control; (C) any person
becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Ceridian
representing 15% or more of either the then outstanding shares of
common stock of Ceridian or the combined voting power of Ceridian's
then outstanding securities; or (D) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change
of Control has occurred.
7.02 TERMINATION BY EXECUTIVE. The termination of Executive's employment as
described in Section 7.01(d)(2) shall be accomplished by, and effective
upon, Executive giving written notice to Ceridian of Executive's decision
to terminate. Except as otherwise expressly provided in this Agreement,
upon the exercise of said right, all obligations and duties of Executive
under this Agreement shall be of no further force and effect.
21
7.03 CHANGE OF CONTROL TERMINATION PAYMENT.
(a) In the event of a Change of Control Termination, Ceridian shall,
within five days of such termination, make a lump sum payment to
Executive in an amount equal to three times the sum of (i) 12 months
of Base Salary at the rate in effect at the time of Executive's
termination (without giving effect to any reduction in Base Salary
constituting Good Reason), (ii) the bonus, if any, that Executive
would have earned under all applicable Ceridian bonus plans for the
year in which the termination occurs had "superior" goals been
achieved (without giving effect to any reduction in bonus
opportunity constituting Good Reason), and (iii) the annual
perquisite cash adder Executive would have received in the year in
which the termination occurs (without giving effect to any reduction
in the annual perquisite cash adder constituting Good Reason).
Ceridian shall also pay to Executive, within five days of such
termination, a prorated portion of Executive's bonus compensation
for the fiscal year in which the Change of Control Termination
occurs (assuming that any applicable performance objectives were
achieved at the "target" level of performance and without giving
effect to any reduction in bonus opportunity constituting Good
Reason) calculated by multiplying (A) the maximum achievable amount
of such bonus compensation by (B) a fraction, the numerator of which
is the number of days in the applicable fiscal year through the date
of termination and the denominator of which is 365.
(b) In addition to the payments pursuant to Section 7.03(a) hereof, in
the event of a Change of Control Termination, Ceridian shall provide
also to Executive a pension supplement equivalent to the difference,
if any, between: (i) the monthly benefits to which Executive would
have been entitled under the defined benefit pension plan or plans
in which Executive participates immediately prior to the Change of
Control Termination which includes an additional three years of age
and service; and (ii) the amount to which Executive is, in fact,
entitled under such defined benefit pension plan or plans.
Executive's supplemental retirement benefit pursuant to Section 3.04
shall not be considered a defined benefit pension plan in which
Executive participates immediately prior to the Change of Control
Termination for the purpose of this Section 7.03(b).
(c) In addition to the payments pursuant to Section 7.03(a) and Section
7.03(b), in the event of a Change of Control Termination, in
determining Executive's supplemental retirement benefit pursuant to
Section 3.04:
(1) An additional three years of age and Years of Service shall be
added to Executive's actual age and Years of Service (the
additional Years of Service shall not be limited by the final
sentence of Section 3.04 (i)(7)); and
(2) the benefit shall not be reduced for commencement before age
60 pursuant to Section 3.04(c)(2), if applicable.
22
(d) Neither the payments made pursuant to Section 7.03(a), the pension
supplement provided pursuant to Section 7.03(b) or the additional
supplemental retirement benefits provided pursuant to Section 3.04
due to the adjustments pursuant to Section 7.03(c) nor any other
compensation to be provided to Executive by Ceridian pursuant to
this Agreement or any Other Agreement or Benefit Plan which may be
considered Change of Control Compensation shall be subject to any
limitation on Change of Control Compensation which may otherwise be
expressed in any such Other Agreement or Benefit Plan.
(e) Following a Change of Control Termination, Ceridian shall provide
Executive with outplacement services suitable to the Executive's
position for a period of three years or, if earlier, until the first
acceptance by the Executive of an offer of employment. Following a
Change of Control Termination, Ceridian shall reimburse Executive
for all customary relocation expenses incurred by Executive in one
move out of Executive's state of residence within the one year
period following such Change of Control Termination.
(f) In the event of a Change of Control Termination, all outstanding
Ceridian options and other equity awards held by Executive shall
become fully vested and exercisable and, if applicable, free from
all restrictions.
(g) The payments and benefits described in this Article VII shall be
conditioned upon Executive executing (and not effectively
rescinding) a release of claims against Ceridian substantially
identical to that attached as Exhibit A hereto.
7.04 TAX REIMBURSEMENT.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payments or distributions by
Ceridian, any person or entity whose actions result in a Change of
Control or any person or entity affiliated with the Company or such
person or entity, to or for the benefit of Executive (whether paid
or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
payments required under this Section 7.04) (collectively, the
"Payments") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment") in an amount
such that, after payment by Executive of all taxes (and any interest
or penalties imposed with respect to such taxes), including any
income taxes and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 7.04(d), all determinations
required to be made under this Section 7.04, including whether and
when a Gross-Up Payment is required and the amount such Gross-Up
Payment and the assumptions to be
23
utilized in arriving at such determination, shall be made by
Ceridian's external auditors (the "Accounting Firm"), which shall
provide detailed supporting calculations both to Ceridian and
Executive within 15 business days of the receipt of notice from
Executive that there has been a Payment, or such earlier time as is
requested by Ceridian. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, Executive shall appoint another
nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to
as the "Accounting Firm" hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by Ceridian. Any Gross-Up
Payment, as determined pursuant to this Section 7.04, shall be paid
by Ceridian to Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting
Firm shall be binding upon Ceridian and Executive.
(c) As a result of uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which should have
been made by Ceridian will not have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In
the event that Ceridian exhausts its remedies pursuant to Section
7.04(d) and Executive thereafter is required to make a payment of
any additional Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Ceridian to or for the
benefit of Executive.
(d) Executive shall notify Ceridian in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Ceridian of any Gross-Up
Payment. Such notification shall be given as soon as practicable but
no later than ten business days after Executive knows of such claim
and shall apprise Ceridian of the nature of such claim and the date
on which such claim is requested to be paid. Executive shall not pay
such claim prior to the expiration of the thirty-day period
following the date on which it gives such notice to Ceridian (or
such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If Ceridian notifies Executive
in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give Ceridian any information reasonably requested
by Ceridian relating to such claim;
(ii) take such action in connection with contesting
such claim as Ceridian shall reasonably request in
writing from time to time, including accepting
legal representation with respect to such claim by
an attorney reasonably selected by Ceridian;
24
(iii) cooperate with Ceridian in good faith in order to
effectively contest such claim; and
(iv) permit Ceridian to participate in any proceedings
relating to such claim;
provided, however, that Ceridian shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 7.04(d), Ceridian shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to
pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as
Ceridian shall determine; provided further, however, that if
Ceridian directs Executive to pay such claim and xxx for a refund,
Ceridian shall advance the amount of such payment to Executive on an
interest-free basis and shall indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to
such advance; and provided further that any extension of the statute
of limitations relating to payment of taxes for the taxable year of
Executive with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore,
Ceridian's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(e) If, after the receipt by Executive of an amount advanced by Ceridian
pursuant to Section 7.04(d), Executive becomes entitled to receive
any refund with respect to such claim, Executive shall (subject to
Ceridian's complying with the requirements of Section 7.04(d))
promptly pay to Ceridian the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Executive of an amount advanced
by Ceridian pursuant to Section 7.04(d), a determination is made
that Executive shall not be entitled to any refund with respect to
such claim and Ceridian does not notify Executive in writing of its
intent to contest such denial of refund prior to the expiration of
thirty days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
25
7.05 INTEREST. In the event Ceridian does not make timely payment in full of
the Change of Control Termination Payment described in Section 7.03,
Executive shall be entitled to receive interest on any unpaid amount at
the lower of: (a) the prime rate of interest (or such comparable index as
may be adopted) established from time to time by the Bank of America
National Trust and Savings Association, New York, New York or its
successor in interest; or (b) the maximum rate permitted under Section
280G(d)(4) of the Internal Revenue Code.
7.06 ATTORNEYS' FEES. In the event Executive incurs any legal expense to
enforce or defend his rights under this Article VII of this Agreement, or
to recover damages for breach thereof, Executive shall be entitled to
recover from Ceridian any expenses for attorneys' fees and disbursements
incurred. Such payments shall be made within five (5) business days after
delivery of Executive's written requests for payment accompanied with such
evidence of fees and expenses incurred as Ceridian reasonably may require.
7.07 BENEFITS CONTINUATION. In the event of a Change of Control Termination,
Executive shall, until age 65, be entitled to receive from Ceridian
health, dental, accidental death and dismemberment, and life insurance
group coverages substantially equivalent to the group coverage Executive
had on the day immediately prior to the Change of Control, including any
group coverage then in effect for Executive's spouse, domestic partner or
dependents, but excluding supplemental disability coverage provided for in
Section 3.05(b) of this Agreement. Executive shall be required to pay no
more for the above mentioned benefits than the amount Executive would have
been required to pay had Executive continued to be an active employee of
Ceridian. If continuation of any of such coverage is made available to
employees terminating at age 55 with 15 or more years of service,
Executive shall be required to pay no more for continuation than is
required of such employees on the day immediately prior to the Change of
Control. If the provision of any such coverage to Executive causes
inclusion of any amount in Executive's gross income that would not have
been so included had Executive received such coverage as an active
employee, Ceridian shall pay Executive the amount necessary to wholly
offset the federal and state income taxes attributable to such amount and
the tax reimbursement amounts paid pursuant to this sentence.
7.08 MITIGATION; OFFSET. Following a Change of Control Termination, Executive
is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by pursuant to this Article
VII. The amount of any payment or benefit provided for in this Agreement
shall not be reduced by any compensation earned by Executive as the result
of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by Executive to Parent Corporation,
any Subsidiary or otherwise.
26
ARTICLE VIII
CHANGE OF SUBSIDIARY STATUS
In the event that, prior to a Change of Control: (a) a Subsidiary is sold,
merged, contributed, or in any other manner transferred, or if for any reason
Parent Corporation's ownership interest in any such Subsidiary falls below the
level specified in Section 1.07, (b) Executive's primary employment duties are
with the Subsidiary at the time of the occurrence of such event, and (c)
Executive does not, in conjunction therewith, transfer employment directly to
Parent Corporation or another Subsidiary, then:
(1) If Executive gives his written consent to the assignment of this
Agreement to such Subsidiary, or to the purchaser or new majority
interest holder of such Subsidiary, (and such assignment is
accepted) this Agreement shall remain in full force and effect
between Executive and the assignee, except that the provisions of
Article VII of this Agreement shall become null and void;
(2) If such assignment is not accepted by the Subsidiary or purchaser,
then this Agreement shall be deemed to have been terminated by
Ceridian without cause pursuant to Section 4.03 of Article IV; and
(3) In all other cases, this Agreement shall be deemed terminated for
cause pursuant to Section 4.02 of Article IV.
ARTICLE IX
GENERAL PROVISIONS
9.01 NO ADEQUATE REMEDY. The parties declare that it is impossible to measure
in money the damages which will accrue to either party by reason of a
failure to perform any of the obligations under this Agreement and
therefore injunctive relief is appropriate. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof,
such party against whom such action or proceeding is brought hereby waives
the claim or defense that such party has an adequate remedy at law, and
such party shall not urge in any such action or proceeding the claim or
defense that such party has an adequate remedy at law.
9.02 SUCCESSORS AND ASSIGNS. Except as otherwise provided in Article VIII, this
Agreement shall be binding upon and inure to the benefit of the successors
and assigns of Parent Corporation and each Subsidiary, whether by way of
merger, consolidation, operation of law, assignment, purchase or other
acquisition of substantially all of the assets or business of Ceridian,
and any such successor or assign shall absolutely and unconditionally
assume all of Ceridian's obligations hereunder.
27
9.03 NOTICES. All notices, requests and demands given to or made pursuant
hereto shall, except as otherwise specified herein, be in writing and be
delivered or mailed to any such party at its address:
(a) Ceridian Corporation
0000 Xxxx Xxx Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Office of General Counsel
(b) In the case of Executive shall be:
At the address listed on the last page of this Agreement.
Either party may, by notice hereunder, designate a changed address.
Any notice, if mailed properly addressed, postage prepaid,
registered or certified mail, shall be deemed dispatched on the
registered date or that stamped on the certified mail receipt, and
shall be deemed received within the second business day thereafter
or when it is actually received, whichever is sooner.
9.04 CAPTIONS. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of
this Agreement.
9.05 GOVERNING LAW. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Minnesota and any
and every legal proceeding arising out of or in connection with this
Agreement shall be brought in the appropriate courts of the State of
Minnesota, each of the parties hereby consenting to the exclusive
jurisdiction of said courts for this purpose. The parties hereto expressly
recognize and agree that the implementation of this Governing Law
provision is essential in light of the fact that Parent Corporation's
corporate headquarters and its principal executive offices are located
within the State of Minnesota, and there is a critical need for uniformity
in the interpretation and enforcement of the employment agreements between
Ceridian and its senior executives.
9.06 CONSTRUCTION. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
9.07 WAIVERS. No failure on the part of either party to exercise, and no delay
in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise
of any other right or remedy granted hereby or by any related document or
by law.
28
9.08 MODIFICATION. Any changes or amendments to this Agreement must be in
writing and signed by both parties.
9.09 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters
herein agreed upon. This Agreement replaces in full all prior employment
or Change of Control agreements or understandings of the parties hereto
with respect to such subject matter, and any and all such prior agreements
or understandings are hereby rescinded by mutual agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
29
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
EXECUTIVE CERIDIAN CORPORATION
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------- ---------------------
Xxxxxx X. Xxxxxx Title: Sr. Vice President,
Human Resources
Address:
-------------------------------
-------------------------------
-------------------------------
30
EXHIBIT A
RELEASE
I, Xxxxxx X. Xxxxxx, in consideration of the payments of $_________
subject to appropriate withholding, which includes compensation to which I would
not be otherwise entitled, do, except as specifically provided below, hereby
fully and completely release and waive any and all claims, complaints, causes of
action or demands of whatever kind which I have or may have against Ceridian
Corporation, its predecessors, successors, subsidiaries and affiliates and all
past and present members of the Board of Directors, officers, employees and
agents of those persons and companies ("Ceridian") arising out of any actions,
conduct, decisions, behavior or events occurring up to the date of my execution
of this Release.
I understand and accept that this Release specifically covers but is not
limited to any and all claims, complaints, causes of action or demands which I
have or may have against the above-referenced released parties relating in any
way to the terms, conditions and circumstances of my employment up to the date
of my signature below, any form of employment discrimination prohibited under
any state's human rights act, Title VII of the Federal Civil Rights Act of 1964
and the Federal Age Discrimination in Employment Act. I further understand that
this Release extends to but is not limited to all claims which I may have based
on statutory or common law claims for negligence or other breach of duty,
wrongful discharge, breach of contract, breach of any express or implied
promise, misrepresentation, fraud, retaliation, breach of public policy,
infliction of emotional distress, defamation, promissory estoppel, failure to
pay wages or any other theory, whether legal or equitable. Notwithstanding the
foregoing, I do not waive my rights to (i) enforce the performance by Ceridian
of its obligations under the Executive Employment Agreement between myself and
Ceridian (including, without limitation, the obligation to make the payments and
provide the benefits described in Article VII thereof if applicable), (ii) any
pension or other employee benefits payable pursuant to the terms of the
applicable plans of Ceridian or any affiliate, which benefits shall be paid or
provided in accordance with the terms of such plans or (iii) indemnification
from Ceridian with respect to my service with Ceridian, whether provided
pursuant to Ceridian's bylaws or otherwise.
Nothing contained herein, however, shall be construed to prohibit me from
filing a charge with the Equal Employment Opportunity Commission, but my release
includes a release of my right to file a court action or to seek individual
remedies or damages in any Equal Employment Opportunity Commission-filed court
action, and my release of these rights shall apply with full force and effect to
any proceedings arising from or relating to such a charge.
I agree that my only remedy for any dispute I have about the
enforceability of this Release shall be to submit that dispute to final and
binding arbitration in accordance with the rules of the American Arbitration
Association. Ceridian and I agree that I must send written notice of any claim
to Ceridian by certified mail, return receipt requested. Written notice to
Ceridian shall be sent to its Secretary at 0000 Xxxx Xxx Xxxxxxxx Xxxx,
Xxxxxxxxxxx, XX 00000-0000.
I understand that I may rescind this Release if I do so in writing,
delivered by certified mail, return receipt requested, to Office of the General
Counsel, Ceridian Corporation, 3311 East
00
Xxx Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000-0000, within fifteen (15) calendar days
of the date of my signature below. Upon the expiration of fifteen (15) calendar
days from the date indicated below, if I have not rescinded this Release, then
Ceridian Corporation shall promptly deliver to me the above-referenced payment,
subject to appropriate withholding, this Release being contingent upon payment
of that sum.
If sent by mail, the rescission must be:
- Postmarked within the 15 calendar-day period;
- Properly addressed to Ceridian; and
- Sent by certified mail, return receipt requested.
By my signature below, I acknowledge that I fully understand and accept
the terms of this Release, and I represent and agree that my signature is
freely, voluntarily and knowingly given. I have had 21 days in which to consider
this agreement. By my signature below, I further acknowledge that I have been
provided a full opportunity to review and reflect on the terms of this Release
and to seek the advice of legal counsel of my choice, which advice I have been
encouraged to obtain.
If I do not execute this Release within 30 days after I receive it, the
offer Ceridian has made for a payment herein is null and void.
Date:
----------------------------- ---------------------------------
Xxxxxx X. Xxxxxx
32
