EXHIBIT 10.2
PERSONNEL AGREEMENT
BETWEEN
CERIDIAN CORPORATION
(TO BE RENAMED ARBITRON INC.)
AND
NEW CERIDIAN CORPORATION
(TO BE RENAMED CERIDIAN CORPORATION)
PERSONNEL AGREEMENT
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..........................................................................1
1.1 General..................................................................................1
ARTICLE II GENERAL INTENT......................................................................3
2.1 Employees................................................................................3
2.2 Benefits.................................................................................3
2.3 Indemnifiable Losses.....................................................................3
ARTICLE III EMPLOYEE MATTERS...................................................................4
3.1 Employment...............................................................................4
3.2 Terminations/Layoff/Severance............................................................4
3.3 Workers' Compensation....................................................................5
3.4 Employment Solicitation..................................................................5
3.5 Personnel Records........................................................................5
3.6 Contractors..............................................................................5
ARTICLE IV WELFARE PLANS.......................................................................6
4.1 Assumption of the Corporation's Welfare Plans by New Ceridian............................6
4.2 Plan Assets..............................................................................6
4.3 Termination of Participation by the Corporation..........................................6
4.4 Active Medical and Dental Plans..........................................................6
4.5 Retiree Medical Plans....................................................................6
4.6 Cafeteria Plan...........................................................................7
4.7 Disability Plans.........................................................................7
4.8 Life Insurance Plans.....................................................................7
4.9 Severance Plans..........................................................................7
4.10 Tuition Assistance Plan................................................................7
4.11 Scholarship Program....................................................................8
4.12 Adoption Assistance....................................................................8
4.13 Welfare Plan Liabilities...............................................................8
ARTICLE V CURRENT CASH COMPENSATION, stock-based compensation AND BENEFIT ARRANGEMENTS.........9
5.1 Cessation of Participation in the Corporation's Benefit Arrangements.....................9
5.2 Assumption of Certain Employee Related Obligations.......................................9
5.3 New Ceridian Stock Option Plans..........................................................9
5.4 Corporation Stock Option Plans..........................................................11
5.5 Retiree and Decedent Options............................................................11
5.6 Option Definitions......................................................................12
5.7 Restricted Stock........................................................................12
5.8 Employee Stock Purchase Plan............................................................12
5.9 Save as You Earn Plan...................................................................13
5.10 Accrued Personal Days Off and Sick Leave..............................................13
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TABLE OF CONTENTS
(continued)
PAGE
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5.11 Past Service Credit...................................................................13
ARTICLE VI PENSION PLANS......................................................................13
6.1 Assumption of Retirement Plan...........................................................13
6.2 Spinoff of the Arbitron Retirement Plan.................................................14
6.3 Assumption of Benefit Equalization Plan.................................................16
6.4 Spinoff of Arbitron Benefit Equalization Plan...........................................16
6.5 Assumption of 401(k) Plans..............................................................17
6.6 Spinoff of Arbitron 401(k) Plan.........................................................18
6.7 Assumption of Executive Investment Plan.................................................19
6.8 Spinoff of Arbitron Executive Investment Plan...........................................19
6.9 Rabbi Trusts............................................................................20
6.10 Deferred Compensation Agreements......................................................20
6.11 Other Liabilities.....................................................................20
ARTICLE VII SPECIAL PROVISIONS................................................................20
7.1 International Liabilities...............................................................20
7.2 Disabled Employees......................................................................21
7.3 SBC Employee Liabilities................................................................22
ARTICLE VIII GENERAL PROVISIONS...............................................................22
8.1 Miscellaneous Provisions................................................................22
8.2 Relevant Time...........................................................................22
8.3 Further Cooperation.....................................................................22
8.4 Third Party Agreements..................................................................22
8.5 Preservation of Rights to Amend or Terminate............................................23
8.6 Applicability to Subsidiaries...........................................................23
8.7 Administrative Complaints/Litigation....................................................23
8.8 Reimbursement and Indemnification.......................................................23
8.9 No Third Party Beneficiaries............................................................23
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PERSONNEL AGREEMENT
This Personnel Agreement, dated as of _________________, 2000, is
between Ceridian Corporation, a Delaware corporation to be renamed Arbitron Inc.
("Arbitron" or the "Corporation"), and New Ceridian Corporation, a Delaware
corporation to be renamed Ceridian Corporation ("New Ceridian").
RECITALS
WHEREAS, the Corporation and New Ceridian have entered into a
Distribution Agreement (the "Distribution Agreement") pursuant to which the
Corporation is transferring and assigning to New Ceridian certain assets and
properties in exchange for the assumption by New Ceridian of certain Liabilities
and obligations of the Corporation and the issuance by New Ceridian to the
Corporation of shares of New Ceridian common stock; and
WHEREAS, the Distribution Agreement provides that the Corporation and
New Ceridian shall enter into this Personnel Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Personnel Agreement and in the Distribution
Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL. As used in this Agreement, the following terms shall have the
meanings set forth below. Capitalized terms used but not defined in this
Agreement shall have the meanings set forth in the Distribution Agreement.
(a) "Arbitron Employee" means any employee, whether full-time,
part-time or temporary, of the Corporation or any of its Subsidiaries,
who, at the Effective Time, has employment duties principally related to
the Media Information Business, including any such employee who is then
on medical, non-medical or short-term disability leave of absence or
absent from active employment due to occupational illness or injury
covered by workers' compensation, who immediately prior to becoming an
inactive employee had such employment duties, but excluding any such
employee who is then an inactive employee receiving benefits under the
Corporation's long-term disability insurance plan (or is determined to
have been qualified for long-term disability insurance benefits at the
Effective Time).
(b) "Arbitron Option" means any option to acquire common stock of
the Corporation issued pursuant to any of the following plans, as in
effect immediately prior to the Effective Time: Ceridian Corporation
1990 Long-Term Incentive Plan; Ceridian Corporation 1993 Non-Employee
Director Stock Plan; Ceridian Corporation 1993 Long-Term Incentive Plan;
Ceridian Corporation 1994 Stock Option Plan; Ceridian Corporation 1996
Director Performance Incentive Plan; Ceridian Corporation 1999 Stock
Incentive Plan; Ceridian Corporation 2000 Director Performance Incentive
Plan; Comdata Holdings Corporation Stock Option and Restricted Stock
Purchase Plan; EAS
Technologies Stock Option Plan; ABR Information Services, Inc. Amended
and Restated 1987 Stock Option Plan; ABR Information Services, Inc.
Amended and Restated 1993 Stock Option Plan; ABR Information Services,
Inc. 1977 Stock Option Plan; and ABR Information Services, Inc. 1996
Non-Employee Director Stock Option Plan.
(c) "Benefit Arrangement" means each contract, agreement, policy,
practice, plan, trust or arrangement, providing for benefits,
perquisites or compensation of any nature to any current or former
employee or other individual providing or who previously provided
personal services, or to any family member, dependent, domestic partner
or beneficiary with respect to any such current or former employee or
other individual, other than a Pension Plan, a Welfare Plan, Current
Compensation or a stock purchase plan intended to qualify under Code
section 423 or any grant of restricted stock or stock options.
(d) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at
section 4980B of the Code.
(e) "Current Compensation" means cash compensation for the
performance of services paid not later than the fifteenth day of the
third calendar month after the end of the employer's taxable year during
which the services are performed.
(f) "Effective Date" means January 1, 2001.
(g) "Employment Related Claim" means an Action for Indemnifiable
Losses by or on behalf of any applicant for employment, employee, former
employee or person claiming through or on behalf of any applicant for
employment, employee or former employee, individually or in a class or
group, that arises in connection with or relates to any aspect of the
hiring process, the decision not to hire the applicant, the employee's
or former employee's retention as an employee of a specified employer,
the job assignment or performance of duties as such an employee, the
terms or conditions of such employment, any accident, illness, injury or
other harm of any nature arising in connection with or relating to such
employment, or the termination of such employment. For purposes of this
provision, the term "employee" shall include an individual who claims to
have been a common-law employee, notwithstanding such individual's
classification by the employer as an independent contractor or other
non-employee.
(h) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the Department of Labor regulations promulgated
thereunder, including successor legislation.
(i) "Former Arbitron Employee" means any individual who, at the
Effective Time, is a former employee of the Corporation or any of its
Subsidiaries, or of a predecessor of any of them, who had employment
duties principally related to the Media Information Business. An
individual is a Former Arbitron Employee only with respect to a period
or periods during which his or her employment duties related principally
to the Media Information Business.
(j) "Former New Ceridian Employee" means any individual who, at the
Effective Time, is a former employee of the Corporation or any of its
Subsidiaries, or of a
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predecessor of any of them, other than a Former Arbitron Employee. An
individual is a Former New Ceridian Employee only with respect to a
period or periods with respect to which he or she would not be a Former
Arbitron Employee.
(k) "New Ceridian Employee" means any employee, whether full-time,
part-time or temporary, of the Corporation or any of its Subsidiaries,
who is not an Arbitron Employee.
(l) "Pension Plan" means any plan, fund or program that provides
benefits of the type described in section 3(2) of ERISA, whether or not
such plan, fund or program is subject to the provisions of ERISA.
(m) "Welfare Plan" means any plan, fund or program that provides
benefits of the type described in section 3(1) of ERISA, whether or not
such plan, fund or program is subject to the provisions of ERISA, or
that provides dependent care assistance, reimbursement of adoption
costs, scholarships or reimbursement of education expenses, or that is a
cafeteria plan under Code section 125.
ARTICLE II
GENERAL INTENT
2.1 EMPLOYEES. The parties intend that individuals who are Arbitron
Employees shall continue to be employees of the Corporation or its Subsidiaries
and that New Ceridian and its Subsidiaries shall have no Liability or
responsibility arising out of their employment with the Corporation, whether
before or after the Effective Time, except as otherwise expressly provided in
this Agreement. The parties intend that individuals who are New Ceridian
Employees shall transfer to employment with New Ceridian (or remain employed by
its Subsidiaries), and New Ceridian or its Subsidiaries shall assume all
Liabilities and responsibility arising out of their employment with the
Corporation or its Subsidiaries prior to the Effective Time, except as otherwise
expressly provided in this Agreement. The Corporation and its Subsidiaries shall
have no Liability or responsibility arising out of the employment of a New
Ceridian Employee or Former New Ceridian Employee with the Corporation or its
Subsidiaries, whether before or after the Effective Time, except as otherwise
expressly provided in this Agreement
2.2 BENEFITS. The parties intend that, except as otherwise expressly
provided in this Agreement, New Ceridian shall assume, before the Effective
Time, sponsorship of all Pension Plans, Welfare Plans and Benefit Arrangements
maintained by the Corporation and shall thereafter have all Liabilities and
responsibility for their administration and funding. The Corporation shall
establish such Pension Plans, Welfare Plans and Benefit Arrangements as are
provided in this Agreement and shall have all Liabilities and responsibility for
their sponsorship, administration and funding. The Corporation and its
Subsidiaries shall cease to be participating employers with respect to the
Pension Plans, Welfare Plans and Benefit Arrangements assumed by New Ceridian.
2.3 INDEMNIFIABLE LOSSES. The parties intend that, except as otherwise
expressly provided in this Agreement, the Corporation shall indemnify and hold
harmless the New Ceridian Indemnitees for all Indemnifiable Losses from
Employment Related Claims by any Arbitron
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Employee, Former Arbitron Employee or applicant for employment with employment
duties principally related to the Media Information Business, and New Ceridian
shall indemnify and hold harmless the Media Information Indemnitees for all
Indemnifiable Losses from Employment Related Claims by any New Ceridian
Employee, Former New Ceridian Employee or applicant for employment with
employment duties not principally related to the Media Information Business.
ARTICLE III
EMPLOYEE MATTERS
3.1 EMPLOYMENT.
(a) ACTIVE EMPLOYEES. At or before the Effective Time, New Ceridian
shall, or shall cause its Subsidiaries to, employ or continue to employ
each New Ceridian Employee who, at the time such action is taken, is
actively employed. Any employment agreement between New Ceridian and
such an employee shall (i) supersede any employment agreement between
such employee and the Corporation and (ii) release the Media Information
Indemnitees from all Liabilities and responsibility with respect to any
Employment Related Claims arising prior to the Effective Time or in
connection with the transactions contemplated by this Agreement or the
Distribution Agreement. Any employment agreement between the Corporation
and a New Ceridian Employee shall, as of the Effective Time and subject
to any contrary provisions of such agreement, be deemed to be assigned
to New Ceridian.
(b) LEAVE OF ABSENCE. Not later than the Effective Time, New
Ceridian shall, or shall cause its Subsidiaries to, employ or continue
to employ and continue the status of a New Ceridian Employee on approved
medical, non-medical, short-term disability or long-term disability
leave of absence as of the Effective Time and shall recall, reinstate or
terminate the employment of any such employee in accordance with the New
Ceridian policies in effect from time to time.
(c) EMPLOYEE SERVICES. Prior to the Effective Time, the Corporation
shall furnish to New Ceridian such personnel as New Ceridian reasonably
requires to conduct its business and maintain its properties. Any
individual performing services for New Ceridian shall remain employed by
the Corporation until such time as his or her transfer of employment
under Section 3.1(a) is effected.
3.2 TERMINATIONS/LAYOFF/SEVERANCE. The Corporation and New Ceridian intend
that the transactions contemplated by this Agreement and the Distribution
Agreement shall not constitute a termination of employment of any New Ceridian
Employee or Arbitron Employee. New Ceridian Employees shall not be eligible for
any severance benefits as a result of their transfer to New Ceridian or its
Subsidiaries. Arbitron Employees shall not be eligible for any severance
benefits as a result of any transfer to Arbitron or its Subsidiaries. Subject to
the provisions of Section 7.2, New Ceridian shall be liable to pay any severance
benefits to which a Former New Ceridian Employee or a New Ceridian Employee is
entitled under the severance plan, if any, in effect with respect to the Former
New Ceridian Employee or New Ceridian Employee on the date his or her employment
terminates, whether before or after the Effective Time. Neither the Corporation
nor
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any of its Subsidiaries shall have any responsibility to provide such
severance benefits, and New Ceridian shall indemnify and hold harmless the
Media Information Indemnitees from all Indemnifiable Losses arising from or
related to such severance plan. Commencing as of the Effective Date, the
Corporation shall be liable to pay any severance benefits to which a Former
Arbitron Employee or an Arbitron Employee is entitled under the severance
plan in effect with respect to the Former Arbitron Employee or Arbitron
Employee on the date his or her employment terminates, whether before or
after the Effective Date. Neither New Ceridian nor any of its Subsidiaries
shall have any responsibility to provide such severance benefits, and the
Corporation shall indemnify and hold harmless the New Ceridian Indemnitees
from all Indemnifiable Losses arising from or related to such severance plan.
3.3 WORKERS' COMPENSATION. Not later than the Effective Time, New
Ceridian shall, by assignment or otherwise, become the employer under the
Corporation's workers' compensation insurance policies, and the Corporation
shall obtain policies providing coverage required by law for Arbitron
Employees. The Corporation shall indemnify and hold harmless the New Ceridian
Indemnitees from all Indemnifiable Losses arising from Employment Related
Claims made by any Former Arbitron Employee or Arbitron Employee on account
of any illness or injury subject to workers' compensation incurred after the
Effective Time. Each party will cooperate with the other in resolving any
issues relating to workers' compensation claims and in implementing return to
work programs.
3.4 EMPLOYMENT SOLICITATION. For a period of twelve months following the
Effective Time, neither the Corporation nor New Ceridian may, and shall not
permit any of their Subsidiaries or the agents of any of them to, solicit or
recruit for employment any then current employee of the other company or its
Affiliates or Subsidiaries, without the prior written consent of the other
company. Nothing in this section shall be construed so as to (i) prohibit the
hiring by either company or its Affiliates or Subsidiaries of any employee of
the other who in good faith is believed to be actively seeking employment on his
or her own initiative without prior contact initiated by any employee or agent
of the company where employment is sought or (ii) prohibit the hiring of any
person who first applied for such employment in response to any public medium
advertising.
3.5 PERSONNEL RECORDS. All information and records regarding employment and
personnel matters of applicants for employment, New Ceridian Employees and
Former New Ceridian Employees shall be New Ceridian Assets, but the Corporation
shall have reasonable access to such records after the Distribution Date as
necessary for business and plan administration purposes. Each party shall
cooperate with the other in furnishing records and data in such party's
possession that are reasonably requested by such other party.
3.6 CONTRACTORS. Any contract or agreement with the Corporation under which
an individual performs services that are not principally related to the Media
Information Business will, effective as of the Effective Time and subject to any
contrary provisions of such agreement, be deemed to be amended to substitute New
Ceridian in place of the Corporation. New Ceridian shall indemnify and hold
harmless the Media Information Indemnitees from all Indemnifiable Losses related
to any such individual or to any person claiming through or on behalf of any
such individual. The Corporation shall indemnify and hold harmless the New
Ceridian Indemnitees from all Indemnifiable Losses related to any individual who
is a party to a contract or agreement
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to perform services that are principally related to the Media Information
Business or to any person claiming through or on behalf of any such
individual.
ARTICLE IV
WELFARE PLANS
4.1 ASSUMPTION OF THE CORPORATION'S WELFARE PLANS BY NEW CERIDIAN. Except as
otherwise provided in this Agreement, New Ceridian shall, before the Effective
Time, assume the sponsorship of each of the Corporation's Welfare Plans, which
shall continue to be maintained for participating New Ceridian Employees and
Former New Ceridian Employees and, until immediately prior to the Effective
Date, for participating Arbitron Employees and Former Arbitron Employees. New
Ceridian or the designated officer or employee of New Ceridian shall succeed the
Corporation or its designated officer or employee as the plan administrator of
each such plan.
4.2 PLAN ASSETS. All assets of every Welfare Plan assumed by New
Ceridian, including any insurance rebates, refunds or distributions, whether
paid before or after the Effective Time, shall remain assets of such Plan. No
such assets shall become assets of the Welfare Plans adopted by the
Corporation. The trusteeship of each trust established in connection with a
Welfare Plan assumed by New Ceridian, including each trust qualified as a
voluntary employee beneficiary association under Code section 501(c)(9),
shall, at or before the Effective Time, be transferred to New Ceridian or to
a person designated by New Ceridian, which shall be substituted for the
Corporation as grantor.
4.3 TERMINATION OF PARTICIPATION BY THE CORPORATION. Except as otherwise
provided in this Agreement or as required by the terms of any Welfare Plan of
the Corporation or by COBRA or any comparable state law, not later than the
Effective Date, the Corporation shall cease to be a participating employer in
each Welfare Plan assumed by New Ceridian.
4.4 ACTIVE MEDICAL AND DENTAL PLANS. The Corporation shall establish,
effective as of the Effective Date, one or more group medical and dental plans,
affording coverage to all Arbitron Employees who, as of the Effective Time, are
eligible for coverage under the plans assumed by New Ceridian and who are
employed by the Corporation or any of its Subsidiaries on the Effective Date.
The Corporation's plans shall pay medical and dental benefits due with respect
to all claims incurred by such Arbitron Employees and their covered spouses,
domestic partners and dependents on or after the Effective Date. The New
Ceridian medical and dental plans shall pay benefits due with respect to all
claims incurred by Arbitron Employees and their covered spouses, domestic
partners and dependents prior to the Effective Date.
4.5 RETIREE MEDICAL PLANS. The Corporation shall establish, effective as
of the Effective Date, one or more group medical and dental plans that
provide coverage to employees of the Corporation or any of its Subsidiaries
who retire after the Effective Time and satisfy the conditions for coverage.
The retiree health care plans maintained by New Ceridian, as amended from
time to time, shall provide coverage to Former Arbitron Employees who satisfy
the conditions for coverage as amended from time to time and who terminated
employment with the Corporation and its Subsidiaries prior to the Effective
Time. No Arbitron Employee shall be eligible for coverage under the retiree
health plans maintained by New Ceridian other than coverage related to
employment with New Ceridian or its Subsidiaries after the Effective Time.
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4.6 CAFETERIA PLAN. On the Effective Date, the Corporation shall have in
place a Code section 125 cafeteria plan that provides flexible spending accounts
for health care and dependent day care expenses and for pre-tax payment of
premiums for group medical and dental coverage and affords coverage to all
Arbitron Employees who, as of the Effective Time, are eligible for coverage
under the plans assumed by New Ceridian and who are employed by the Corporation
or any of its Subsidiaries on the Effective Date. The Corporation shall pay all
benefits due with respect to claims for eligible expenses incurred with respect
to such Arbitron Employees on or after the Effective Date. New Ceridian shall
pay all benefits due with respect to claims made under the cafeteria plan
assumed by New Ceridian for eligible expenses incurred prior to the Effective
Date.
4.7 DISABILITY PLANS. On the Effective Date, the Corporation shall have in
place short- and long-term disability plans, in which Arbitron Employees covered
by the disability plans assumed by New Ceridian and who are employed by the
Corporation or any of its Subsidiaries at the Effective Time shall be
immediately eligible to participate, including one or more plans providing
disability benefits substantially equivalent to those provided under the
Corporation's executive disability benefit plan. The Corporation shall use
reasonable good faith efforts to provide that any preexisting condition
exclusions and limitations otherwise applicable to such plans shall be waived
with respect to such Arbitron Employees except to the extent such exclusions and
limitations would have been applied under the corresponding New Ceridian plan if
the employee had been employed by New Ceridian. The Corporation's disability
plans shall provide benefits due to eligible Arbitron Employees from and after
the Effective Time.
4.8 LIFE INSURANCE PLANS. On the Effective Date, the Corporation shall have
in place life, business travel accident, spouse and dependent life, and
accidental death and dismemberment insurance plans, affording coverage to all
Arbitron Employees who, as of the Effective Time, are eligible for coverage
under the corresponding plans assumed by New Ceridian and who are employed by
the Corporation or any of its Subsidiaries at the Effective Date . The
Corporation shall use reasonable good faith efforts to cause any preexisting
condition exclusions and limitations otherwise applicable to such plans to be
waived with respect to such Arbitron Employees except to the extent such
exclusions and limitations would have been applied under the corresponding New
Ceridian plan if the employee had been employed by New Ceridian. If any Arbitron
Employee is entitled to any continuation or conversion option under any such
plan assumed by New Ceridian, the Corporation shall reimburse New Ceridian for
any costs it incurs in providing such conversion or continuation after the
Effective Date.
4.9 SEVERANCE PLANS. On the Effective Date, the Corporation shall have in
place a severance plan affording coverage to all Arbitron Employees and Former
Arbitron Employees who, as of the Effective Time, are eligible for coverage or
benefits under the corresponding plan assumed by New Ceridian. For any Arbitron
Employee whose employment terminates within six months following the Effective
Date, the plan shall provide a benefit at least equivalent to the benefit to
which such person would have been entitled under the plan assumed by New
Ceridian, and the Liability for such benefits shall be retained by the
Corporation.
4.10 TUITION ASSISTANCE PLAN. As of the Effective Time, each business unit of
New Ceridian shall continue the tuition assistance plan that was in effect for
employees of such business unit immediately before the Effective Time. New
Ceridian shall have full responsibility for all
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benefits due with respect to tuition assistance benefits to New Ceridian
Employees that are payable on or after the Effective Time. The Corporation shall
retain the Liability for tuition assistance benefits due to Arbitron Employees
under the Corporation's tuition assistance plan as amended from time to time.
4.11 SCHOLARSHIP PROGRAM. As of the Effective Time, New Ceridian shall have
in place a scholarship program that is substantially the same as the scholarship
program funded by the Corporation. New Ceridian shall assume the responsibility
to provide the scholarships previously awarded under the Corporation's program
to individuals who are related to New Ceridian Employees and Former New Ceridian
Employees. The Corporation shall retain the responsibility to provide
scholarships awarded under the Corporation's program to individuals who are
related to Arbitron Employees and Former Arbitron Employees.
4.12 ADOPTION ASSISTANCE. As of the Effective Time, New Ceridian shall have
in place an adoption assistance program that is substantially the same as the
adoption assistance program funded by the Corporation. New Ceridian shall assume
the responsibility to provide all adoption benefits payable under the program,
as it may be amended from time to time, to New Ceridian Employees on and after
the Effective Time, including any such benefits due with respect to adoptions
completed prior to the Effective Time. The Corporation shall retain the
responsibility to provide the adoption benefits payable under the Corporation's
program, as amended from time to time, to Arbitron Employees.
4.13 WELFARE PLAN LIABILITIES.
(a) NEW CERIDIAN LIABILITIES. Not later than the Effective Time,
except as expressly provided otherwise in this ARTICLE IV, New Ceridian
shall assume and be solely responsible for all employer Liabilities
arising under or in connection with the Welfare Plans maintained prior
to the Effective Time by the Corporation or New Ceridian or any of their
Subsidiaries, including such Liabilities relating to actions or
omissions of or by the Corporation or any officer, director, employee or
agent of the Corporation, or fiduciary or agent of such Welfare Plan,
prior to the Effective Time.
(b) CORPORATION LIABILITIES. The Corporation shall assume
responsibility for employer Liabilities under its Welfare Plans arising
on and after the Effective Date, including such Liabilities relating to
actions or omissions of or by the Corporation or any officer, director,
employee or agent of the Corporation, or fiduciary or agent of such
Welfare Plan, with respect to the following persons:
(i) CURRENT EMPLOYEES AND DEPENDENTS. (A) Any individual who
is or becomes an employee of the Corporation or any of its
Subsidiaries on or after the Effective Time, (B) any Arbitron
Employee employed on or after the Effective Date and (C) any
other person entitled to coverage under any Welfare Plan
maintained by the Corporation on or after the Effective Date by
reason of his or her relationship to an individual described in
(A) or (B).
(ii) FORMER EMPLOYEES. Any Former Arbitron Employee eligible
for COBRA or other continuation coverage under any Welfare Plan
whose election for such
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coverage is not received by the Corporation or its agent prior
to the Effective Time, which coverage shall be provided under
the corresponding Welfare Plan adopted by the Corporation.
(iii) DEPENDENTS. Any former spouse or dependent of an
Arbitron Employee or Former Arbitron Employee eligible for COBRA
or other continuation coverage under any Welfare Plan whose
election for such coverage is not received by the Corporation or
its agent prior to the Effective Time, which coverage shall be
provided under the corresponding Welfare Plan adopted by the
Corporation.
(iv) INACTIVE EMPLOYEES. Any Arbitron Employee who is an
inactive employee on medical, non-medical, or short-term
disability leave of absence or absent from active employment due
to occupational illness or injury covered by workers'
compensation and entitled to participate any Welfare Plan, which
participation shall be transferred to the corresponding Welfare
Plan adopted by the Corporation.
(c) INSURANCE POLICIES. To the extent that New Ceridian assumes
sponsorship of any Welfare Plan or Benefit Arrangement that is, in whole
or in part, funded through an insurance policy, the Corporation shall
assign all of its rights under such policy to New Ceridian as of the
Effective Time. Any such assignment not completed on or before the
Effective Time shall, when completed, be deemed to have been effective
as of the Effective Time.
ARTICLE V
CURRENT CASH COMPENSATION, STOCK-BASED
COMPENSATION AND BENEFIT ARRANGEMENTS
5.1 CESSATION OF PARTICIPATION IN THE CORPORATION'S BENEFIT ARRANGEMENTS.
Except as otherwise provided in this Agreement or as required by the terms of
any of the Corporation's Benefit Arrangements, New Ceridian Employees'
participation in the Corporation's Benefit Arrangements will cease as of the
Distribution Date.
5.2 ASSUMPTION OF CERTAIN EMPLOYEE RELATED OBLIGATIONS. Effective as of the
Effective Time, New Ceridian shall assume and the Corporation shall have no
further Liability for:
(a) Current Cash Compensation due to any New Ceridian Employee or
Former New Ceridian Employee; and
(b) All Liabilities and obligations whatsoever with respect to
claims made by or with respect to New Ceridian Employees or Former New
Ceridian Employees relating to Benefit Arrangements and not otherwise
provided for in this Agreement or the Distribution Agreement, including
such Liabilities relating to actions or omissions of or by the
Corporation or any officer, director, employee or agent of the
Corporation prior to the Effective Time.
5.3 NEW CERIDIAN STOCK OPTION PLANS. Before the Effective Time, New Ceridian
shall adopt one or more stock option plans pursuant to which employees,
non-employee directors,
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consultants and independent contractors of New Ceridian and its Subsidiaries may
be granted options to purchase shares of New Ceridian Stock ("New Ceridian
Option Plan"). The Arbitron Options held by (i) New Ceridian Employees, (ii) the
non-employee directors who will become non-employee directors of New Ceridian
following the transactions contemplated by the Distribution Agreement, and (iii)
consultants and independent contractors of New Ceridian shall be exercised or
converted as follows:
(a) To the extent any Arbitron Option held by a New Ceridian
Employee is exercisable as of the Effective Time, it shall continue to
be exercisable after the Effective Time in accordance with the
applicable plan, treating the transfer of employment to New Ceridian as
a termination of employment for purposes of the plan, and the number of
shares and exercise price underlying such Arbitron Option shall be
determined as provided in Section 5.4 below. Any New Ceridian Employee
who holds a Arbitron Option exercisable in whole or in part as of the
Effective Time may instead elect, prior to the record date for the
Distribution, to cancel the exercisable portion of such option and
receive in its place an option to acquire New Ceridian common stock
under the New Ceridian Option Plan, the number of shares and exercise
price to be determined as provided in Section 5.3(b) below.
(b) To the extent any Arbitron Option held by a New Ceridian
Employee is not exercisable as of the Effective Time, the
non-exercisable portion of such Arbitron Option shall be exchanged for
an option to purchase shares of New Ceridian common stock in accordance
with the following rules.
(i) The price to be paid for each share of New Ceridian
common stock under the new option ("New Ceridian Exercise
Price") shall be equal to the Post-Distribution Price of New
Ceridian Stock multiplied by the Conversion Ratio and rounded
downward to the nearest whole cent.
(ii) The number of shares of New Ceridian common stock to be
covered by the options issued in the exchange shall be equal to:
the number of shares covered by the cancelled Arbitron Option;
multiplied by the exercise price of the cancelled Arbitron
Option; divided by the New Ceridian Exercise Price; and rounded
upwards to the nearest full share.
(iii) If any Arbitron Option provides for vesting based on
performance criteria that includes exceeding a specified stock
trading price for a specified period, the performance criteria
in the replacement award will be adjusted to prevent dilution or
enlargement of the rights of the option holder.
(iv) The replacement awards to be made under the New Ceridian
option plans shall contain the same terms and conditions as the
Arbitron Options for which they were substituted, and shall be
made in accordance with section 424 of the Code, the Treasury
Regulations issued pursuant thereto, and the FASB Emerging
Issues Task Force Issue 90-9 so as to avoid improving the
economic position of the option holder and additional
compensation expense. The stock option plans adopted by New
Ceridian shall be administered so as to avoid adversely
affecting
10
any rights of a New Ceridian Employee under the terms of the
plan under which the Arbitron Option was granted.
5.4 CORPORATION STOCK OPTION PLANS. The Corporation shall continue in effect
each stock option plan under which any person holds an outstanding option to
purchase shares of the Corporation's common stock after the Effective Time.
Except as otherwise provided in Section 5.5, each Arbitron Option held by a
person other than a New Ceridian Employee or a New Ceridian director, consultant
or independent contractor, whether or not exercisable as of the Effective Time,
shall be adjusted in accordance with the following rules.
(a) The price to be paid for each share of Arbitron common stock
under the option shall be equal to the Post-Distribution Price of
Arbitron Stock multiplied by the Conversion Ratio and rounded downward
to the nearest whole cent.
(b) The number of shares of Arbitron common stock to be issued in
the exchange shall be equal to: the number of shares covered by the
existing Arbitron Option (prior to any adjustment under the plans for
the contemplated reverse stock split); multiplied by the
Pre-Distribution Price of the Corporation's Stock; divided by the
Post-Distribution Price of Arbitron Stock; and rounded upwards to the
nearest full share.
(c) If any Arbitron Option provides for vesting based on performance
criteria that includes exceeding a specified stock trading price for a
specified period, the performance criteria in the replacement award will
be adjusted to prevent dilution or enlargement of the rights of the
option holder.
5.5 RETIREE AND DECEDENT OPTIONS. Any Arbitron Option held by a (i) Former
Arbitron Employee or Former New Ceridian Employee who was entitled to continue
benefits as a retired employee of the Corporation following his or her
termination of employment, (ii) by the successors of an individual who is
deceased, (iii) by a former director of ABR Information Services, Inc., or (iv)
a former employee of the Corporation who is currently employed by IBM Global
Services shall, notwithstanding the preceding provisions of this article, be
converted to separate options to purchase common stock of Arbitron and New
Ceridian as follows:
(a) The option plan of New Ceridian shall grant options to the
option holder to purchase the same number of shares as were outstanding
under the Arbitron Option immediately prior to the Effective Time. The
Arbitron Option held by the optionee shall be converted into an option
to purchase a number of shares of Arbitron common stock equal to the
number of shares that were outstanding under the Arbitron Option
immediately prior to the Effective Time adjusted pursuant to the terms
of the option plan for the contemplated reverse stock split, and then
rounded upwards to the nearest full share.
(b) The exercise price for a share of New Ceridian stock under the
New Ceridian option plan shall equal the product of (i) the Conversion
Ratio multiplied by (ii) the Pre-Distribution Price of the Corporation's
Stock less the quotient of Post-Distribution Price of Arbitron Stock
divided by the number of shares of Arbitron common stock as of the
Effective Time that are equivalent to one share of Arbitron common stock
immediately
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following the contemplated reverse stock split, rounded downward to the
nearest whole cent.
(c) The exercise price for a share of Arbitron stock under the
revised Arbitron Option plan shall equal the product of (i) the
Conversion Ratio multiplied by (ii) the Post-Distribution Price of
Arbitron Stock, rounded downward to the nearest whole cent.
(d) The replacement awards to be made under the New
Ceridian option plans shall contain the same terms and conditions as
the Arbitron Options for which they were substituted, and shall be
made in accordance with section 424 of the Code, the Treasury
Regulations issued pursuant thereto, and the FASB Emerging Issues
Task Force Issue 90-9 so as to avoid improving the economic position
of the option holder and additional compensation expense. The stock
option plans adopted by New Ceridian shall be administered so as to
avoid adversely affecting any rights of an option holder under the
terms of the plan under which the Arbitron Option was granted.
5.6 OPTION DEFINITIONS. For purposes of this Article,
(a) The "Pre-Distribution Price of the Corporation's Stock" shall be
the average of the arithmetic mean between the highest and lowest sales
prices per share of the Corporation's common stock on the New York Stock
Exchange Composite Tape on each of the five trading days prior to the
first day on which there is trading in New Ceridian's common stock.
(b) The "Post-Distribution Price of New Ceridian Stock" shall be the
average of the arithmetic mean between the highest and lowest sales
prices per share of New Ceridian's common stock on the New York Stock
Exchange Composite Tape on each of the five trading days beginning with
the sixth day on which there is trading in New Ceridian's common stock.
(c) The "Post-Distribution Price of Arbitron Stock" shall be the
average of the arithmetic mean between the highest and lowest sales
prices per share of Arbitron's common stock on the New York Stock
Exchange Composite Tape on each of the five trading days beginning with
the sixth day on which there is trading in New Ceridian's common stock.
(d) The "Conversion Ratio" is the quotient of the exercise price of
the Arbitron Option being converted divided by the Pre-Distribution
Price of the Corporation's Stock.
5.7 RESTRICTED STOCK. Before the Effective Time, New Ceridian shall
establish a restricted stock plan that will benefit the New Ceridian Employees
and the members of the board of directors of New Ceridian who, as of the
Effective Time, hold restricted stock under one or more restricted stock plans
of the Corporation. New Ceridian shall, to the extent that the cessation of
employment or of a directorship with the Corporation at the Effective Time
causes the forfeiture of any such restricted stock, provide for the distribution
of shares of New Ceridian common stock to the affected persons, subject to the
same restrictions to which the forfeited stock was subject, under the new
restricted stock plan. Such New Ceridian common stock shall have a value equal
to the value of the forfeited stock, determined in a manner similar to that used
with respect to New Ceridian stock options under Section 5.3. To the extent that
any restricted stock of the Corporation held by a New Ceridian Employee or a
member of the Board of Directors of New Ceridian would vest if such person's
employment with or directorship of the Corporation continued until December 31,
2000, it shall become fully vested at the Effective Time notwithstanding the
cessation of such employment or directorship.
5.8 EMPLOYEE STOCK PURCHASE PLAN. New Ceridian Employees shall become
ineligible to participate in the Corporation's employee stock purchase plan upon
completion of the last purchase under such plan prior to the Distribution Date.
Any amount deducted from a
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participant's pay that has not been applied to a purchase prior to the
Distribution Date will be returned to the participant. Shares of the
Corporation's common stock purchased by New Ceridian Employees under the plan
will be treated in the same manner as other shares issued and outstanding on the
Distribution Date.
5.9 SAVE AS YOU EARN PLAN. The Ceridian Corporation Savings-Related Share
Option Plan ("XXXX Plan") is a plan that has been approved by Inland Revenue in
the United Kingdom under the "save as you earn" scheme for certain employees of
the Corporation's subsidiaries in the United Kingdom. It is anticipated that, at
the Effective Time, the employees of the Corporation's human resource services
businesses and subsidiaries who are participants in the XXXX Plan will cease to
be associated with the Corporation. As of the Effective Time, New Ceridian's
United Kingdom subsidiaries shall assume all Liabilities for benefits under the
XXXX Plan for such participants, and the Corporation shall cease to have any
responsibility for any claim under the XXXX Plan related to such participants.
New Ceridian's United Kingdom subsidiaries intend to seek approval of Inland
Revenue in the United Kingdom of a new plan under the "save as you earn" scheme
for the benefit of the employees of New Ceridian's United Kingdom subsidiaries
and to provide additional supplemental benefits to XXXX Plan participants who
have suffered a loss under the XXXX Plan on account of the transfer of
employment or the Distribution.
5.10 ACCRUED PERSONAL DAYS OFF AND SICK LEAVE. New Ceridian shall recognize
and assume all Liability for personal days off and sick leave accrued by New
Ceridian Employees as of the Effective Time. New Ceridian shall credit each New
Ceridian Employee with such personal days off accrual and with any sick leave
reserve for such employee under the Corporation's prior sick leave program.
5.11 PAST SERVICE CREDIT. New Ceridian shall credit New Ceridian Employees
with all years of service with the Corporation and its Affiliates and
predecessors for all purposes relating to New Ceridian's Benefit Arrangements as
if such service were service for New Ceridian.
ARTICLE VI
PENSION PLANS
6.1 ASSUMPTION OF RETIREMENT PLAN. Not later than the Effective Time, New
Ceridian shall assume the sponsorship of the Ceridian Corporation Retirement
Plan (the "Ceridian Retirement Plan"). Except as otherwise provided in Section
6.2, as of the effective date of such assumption of sponsorship, New Ceridian
shall assume and be solely responsible for all employer Liabilities arising from
or related to the Ceridian Retirement Plan and the trust created for the purpose
of implementing benefits under the Ceridian Retirement Plan (the "Ceridian
Retirement Trust") and their administration and funding, including such
Liabilities relating to actions or omissions of or by the Corporation or any
officer, director, employee or agent of the Corporation, or fiduciary or agent
of the Ceridian Retirement Plan or Ceridian Retirement Trust, prior to the
Effective Time. The Corporation shall remit to the trustee of the Ceridian
Retirement Trust all participant contributions, whether pre-tax or after-tax,
due under the Ceridian Retirement Plan for (i) Arbitron Employees, (ii) Former
Arbitron Employees and (iii) Disabled Arbitron Employees, as defined in Section
7.2, with respect to payroll periods ending before the Effective Date.
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6.2 SPINOFF OF THE ARBITRON RETIREMENT PLAN. The Corporation shall, on or
before, and effective as of, the Effective Date, establish a defined benefit
Pension Plan qualified under section 401(a) of the Code (the "Arbitron
Retirement Plan") and create a trust for the purpose of implementing benefits
under the Arbitron Retirement Plan (the "Arbitron Retirement Trust").
(a) The Corporation shall assume and be solely responsible for all
employer Liabilities arising from or related to the Arbitron Retirement
Plan and Arbitron Retirement Trust and their administration and funding,
including such Liabilities relating to (i) benefits earned under the
Ceridian Retirement Plan by any Spun-off Participant, as defined in
Section 6.2(b) prior to the Effective Date and (ii) actions or omissions
of or by New Ceridian, the Corporation or any officer, director,
employee or agent of either New Ceridian or the Corporation or any
fiduciary or agent of either the Ceridian Retirement Plan or the
Ceridian Retirement Trust, prior to the Effective Date, affecting any
Spun-off Participant or any person claiming by, through or on behalf
of any Spun-off Participant.
(b) As of the Effective Date, the Arbitron Retirement Plan shall
assume and be solely responsible for all Liabilities under the Ceridian
Retirement Plan related to any Arbitron Employee who is employed by the
Corporation or one of its Subsidiaries on the Effective Date (a
"Spun-off Participant") or any person claiming by, through or on behalf
of any Spun-off Participant, other than Liabilities related to a Spun-
off Participant's employment with New Ceridian or one of its
Subsidiaries on or after the Effective Date. The Ceridian Retirement
Plan shall retain and be solely responsible for all Liabilities under
the Ceridian Retirement Plan for (i) Arbitron Employees who terminate
employment with Arbitron and its Subsidiaries prior to the Effective
Date, (ii) Former Arbitron Employees and (iii) Disabled Arbitron
Employees, as defined in Section 7.2, and (iv) any person claiming
by, through or on behalf of an individual described in item (i), (ii)
or (iii).
(c) On or as soon as administratively practicable after the first
business day following the Effective Date, New Ceridian shall cause the
trustee of the Ceridian Retirement Trust to transfer to the trustee of
the Arbitron Retirement Trust, by wire transfer of immediately available
funds, an amount equal to 80 percent of the present value of the
aggregate accrued benefits (whether or not vested) of the Spun-off
Participants under the Ceridian Retirement Plan as of December 31, 2000,
based on a good faith estimate of the Ceridian Retirement Plan's
actuary. For this purpose, present value shall be determined using the
following actuarial assumptions:
(i) If the spin-off contemplated by this Section 6.2(c) is
de minimus, within the meaning of Treasury Regulation Section
1.414(l)-1(n)(2), using the actuarial assumptions that would be
used by the Pension Benefit Guaranty Corporation as of December
31, 2000, present value shall be determined using the actuarial
assumptions that would be used by the Pension Benefit Guaranty
Corporation as of December 31, 2000; or
(ii) If clause (i) is not applicable, present value shall be
determined using reasonable actuarial assumptions selected by
the Ceridian Retirement Plan's actuary.
(d) As soon as administratively practicable after the Effective
Date, New Ceridian shall cause the Ceridian Retirement Plan's actuary to
determine the present value of the
14
aggregate accrued benefits (whether or not vested) of the Spun-off
Participants under the Ceridian Retirement Plan as of December 31, 2000.
Such determination shall be made using the same actuarial assumptions
that were used to make the estimate pursuant to Section 6.2(c), and
shall be binding on New Ceridian, the Ceridian Retirement Plan, the
Ceridian Retirement Trust, the Corporation, the Arbitron Retirement
Plan, the Arbitron Retirement Trust and all other interested persons.
(e) If the amount determined pursuant to Section 6.2(d) exceeds the
amount transferred pursuant to Section 6.2(c), as soon as
administratively practicable following its receipt of the Ceridian
Retirement Plan actuary's determination pursuant to Section 6.2(d), New
Ceridian shall cause the trustee of the Ceridian Retirement Trust to
transfer to the trustee of the Arbitron Retirement Trust, by wire
transfer of immediately available funds, the amount by which the amount
determined pursuant to Section 6.2(d) exceeds the amount transferred
pursuant to Section 6.2(c), together with interest on the difference for
the period beginning on the date of the transfer pursuant to Section
6.2(c) and ending on the date of the transfer pursuant to this Section
6.2(e) at the rate of eight percent per year (based on a 365 day year),
compounded annually.
(f) If the amount determined pursuant to Section 6.2(d) is less than
the amount transferred pursuant to Section 6.2(c), as soon as
administratively practicable following its receipt of the Ceridian
Retirement Plan actuary's determination pursuant to Section 6.2(d), the
Corporation shall cause the trustee of the Arbitron Retirement Trust to
transfer to the trustee of the Ceridian Retirement Trust, by wire
transfer of immediately available funds, the amount by which the amount
transferred pursuant to Section 6.2(c) exceeds the amount determined
pursuant to Section 6.2(d), together with interest on the difference for
the period beginning on the date of the transfer pursuant to Section
6.2(c) and ending on the date of the transfer pursuant to this Section
6.2(f) at the rate of eight percent per year (based on a 365 day year),
compounded annually.
(g) The Arbitron Retirement Plan (i) shall provide for immediate
participation by each Spun-off Participant, (ii) shall protect benefits,
rights and features of Spun-off Participants under the Ceridian
Retirement Plan as of December 31, 2000 to the extent required to
satisfy requirements applicable to a defined benefit Pension Plan
qualified under Code section 401(a), (iii) shall not, as of the
Effective Date, provide for a significant decrease in the rate of future
benefit accruals, within the meaning of ERISA section 204(h), for any
Spun-off Participant as compared to the rate of future benefit accruals
in effect under the Ceridian Retirement Plan as of December 31, 2000 and
(iv) shall reflect the provisions of Section 7.2(c).
(h) During the "remedial amendment period," within the meaning of
Code section 401(b), applicable in connection with the adoption of the
Arbitron Retirement Plan, the Corporation shall submit a determination
letter request to the Internal Revenue Service with respect to the
Arbitron Retirement Plan and shall timely make any changes to the form
or operation of the Arbitron Retirement Plan as may be required by the
Internal Revenue Service to obtain a determination letter from the
Internal Revenue Service that the Arbitron Retirement Plan, as adopted
by the Corporation, satisfies the qualification
15
requirements of Code section 401(a) and the Arbitron Retirement Trust is
exempt from federal income tax pursuant to Code section 501(a).
(i) The Corporation shall, and shall cause the Arbitron Retirement
Plan and the trustee of the Arbitron Retirement Trust, to cooperate in
the timely implementation of any corrections determined by New Ceridian
to be advisable in connection with any Employee Plans Compliance
Resolution Systems (within the meaning of Revenue Procedure 2000-16) or
Voluntary Fiduciary Correction Program submission or self-correction
pending with respect to the Ceridian Retirement Plan as of the Effective
Time.
(j) The Arbitron Retirement Plan shall be a continuation of the
Ceridian Retirement Plan as to the Spun-off Participants and the
transfer of assets and liabilities from the Ceridian Retirement Plan to
the Arbitron Retirement Plan pursuant to this Agreement shall not be
deemed a termination or partial termination of the Ceridian Retirement
Plan.
6.3 ASSUMPTION OF BENEFIT EQUALIZATION PLAN. Not later than the Effective
Time, New Ceridian shall assume the sponsorship of the Ceridian Corporation
Benefit Equalization Plan (the "Ceridian Benefit Equalization Plan"). Except as
otherwise provided in Section 6.4, as of the effective date of such assumption
of sponsorship, New Ceridian shall assume and be solely responsible for all
employer Liabilities arising from or related to the Ceridian Benefit
Equalization Plan and its administration, including such Liabilities relating to
actions or omissions of or by the Corporation or any officer, director, employee
or agent of the Corporation prior to the Effective Time.
6.4 SPINOFF OF ARBITRON BENEFIT EQUALIZATION PLAN. The Corporation shall, on
or before, and effective as of, the Effective Date, establish a nonqualified
Pension Plan (the "Arbitron Benefit Equalization Plan") that is substantially
similar to the Ceridian Benefit Equalization Plan for the benefit of Arbitron
Employees who are eligible to participate in the Arbitron Retirement Plan and
create a trust (the "Arbitron Benefit Protection Trust") that is substantially
similar to the Ceridian Corporation Benefit Protection Trust.
(a) The Corporation shall assume and be solely responsible for all
employer Liabilities arising from or related to the Arbitron Benefit
Equalization Plan and Arbitron Benefit Protection Trust and their
administration, including such Liabilities relating to (i) benefits
earned under the Ceridian Benefit Equalization Plan by any Spun-off
Participant, as defined in Section 6.2 (b), prior to the Effective Date
and (ii) actions or omissions of or by New Ceridian, the Corporation or
any officer, director, employee or agent of either New Ceridian or the
Corporation, prior to the Effective Date, affecting any Spun-off
Particpant or any person claiming by, through or on behalf of any
Spun-off Participant.
(b) The Arbitron Benefit Protection Trust shall (i) be a grantor
trust of which the Corporation and, if applicable, its Subsidiaries, are
treated as grantors, within the meaning of subpart E, part I, subchapter
J, chapter 1, subtitle A of the Code, (ii) be an unfunded arrangement
that does not affect the status of the Arbitron Benefit Equalization
Plan or any other plan for which the Arbitron Benefit Protection Trust
provides a source of funds for paying benefits as an unfunded plan for
purposes of the Code and ERISA and (iii) constitute a successor trust
that satisfies the conditions specified in Section 2.7 of
16
the Ceridian Corporation Benefit Protection Trust Agreement such that
the transfer of assets from the Ceridian Corporation Benefit Protection
Trust to the Arbitron Benefit Protection Trust contemplated by this
Section 6.4 may be effected.
(c) As of the Effective Date, the Corporation shall assume and be
solely responsible for all Liabilities under the Ceridian Benefit
Equalization Plan related to any Spun-off Participant or any person
claiming by, through or on behalf of any Spun-off Participant, as
defined in Section 6.2(b), other than Liabilities related to a Spun-off
Participant's employment with New Ceridian or one of its Subsidiaries on
or after the Effective Date. New Ceridian shall retain and be solely
responsible for all Liabilities under the Ceridian Benefit Equalization
Plan for (i) Arbitron Employees who terminate employment with Arbitron
and its Subsidiaries prior to the Effective Date, (ii) Former Arbitron
Employees and (iii) Disabled Arbitron Employees, as defined in Section
7.2 or any person claiming by, through or on behalf of any individual
described in item (i), (ii) or (iii).
(d) On or as soon as administratively practicable after the first
business day following the Effective Date, New Ceridian shall cause the
trustee of the Ceridian Corporation Benefit Protection Trust to transfer
to the trustee of the Arbitron Benefit Protection Trust, by wire
transfer of immediately available funds, an amount equal to the
aggregate fair market value as of December 31, 2000 of the portion of
the assets of the Ceridian Corporation Benefit Protection Trust
attributable to the Ceridian Benefit Equalization Plan, as determined in
good faith by the trustee of the Ceridian Corporation Benefit Protection
Trust, multiplied by a fraction, the numerator of which is the projected
benefit obligations under the Ceridian Benefit Equalization Plan as of
December 31, 2000 with respect to the Spun-off Participants and the
denominator of which is the projected benefit obligations under the
Ceridian Benefit Equalization Plan as of December 31, 2000 with respect
to all participants who terminate employment or die after December 1,
1994, in each case as such projected benefit obligations are determined
by the Ceridian Benefit Equalization Plan's actuary using the same
assumptions as are used to prepare the fiscal 2000 year end disclosure
information for the Corporation's financial statements.
6.5 ASSUMPTION OF 401(k) PLANS. Not later than the Effective Time, New
Ceridian shall assume the sponsorship of the Ceridian Corporation Personal
Investment Plan ("PIP") and the Ceridian Corporation Savings and Investment Plan
("SIP") (collectively the PIP and the SIP are sometimes referred to as the
"Ceridian 401(k) Plans"). Except as otherwise provided in Section 6.6, New
Ceridian shall assume and thereafter be solely responsible for all employer
Liabilities arising from or related to the Ceridian 401(k) Plans and their
related trusts and their administration and funding, including such Liabilities
relating to actions or omissions of or by the Corporation or any officer,
director, employee or agent of the Corporation, or fiduciary or agent of the PIP
trust or the SIP trust, prior to the Effective Time. The Corporation shall make
all contributions due under the Ceridian 401(k) Plans for (i) Arbitron
Employees, (ii) Former Arbitron Employees and (iii) Disabled Arbitron Employees,
as defined in Section 7.2, with respect to payroll periods ending before the
Effective Date, including all basic matching contributions and performance-based
matching contributions, if any, due for the 2000 plan year; provided that any
such contribution that is made following the transfer of assets and liabilities
to the Arbitron 401(k) Plan established pursuant to Section 6.6 may be made
directly to the Arbitron 401(k) Plan. Prior to such transfer of assets and
liabilities, the Corporation shall continue to collect by payroll deduction
amounts payable by Arbitron Employees with respect to loans from the Ceridian
401(k) Plans and shall remit such amounts directly to the PIP trustee or
17
the SIP trustee, as the case may be, with such information as the trustee may
require to allocate such payments properly.
6.6 SPINOFF OF ARBITRON 401(k) PLAN. The Corporation shall, on or before,
and effective as of, the Effective Date establish a savings plan qualified under
section 401(a) and 401(k) of the Code (the "Arbitron 401(k) Plan").
(a) The Corporation shall assume and thereafter be solely
responsible for all employer Liabilities arising from or related to the
participation in the PIP or the SIP of any Arbitron Employee or Former
Arbitron Employee and the Arbitron 401(k) Plan and its related trust and
their administration and funding, including such Liabilities relating to
(i) benefits under the PIP or SIP earned by or paid to any Arbitron
Employee or Former Arbitron Employee and (ii) actions or omissions of or
by New Ceridian, the Corporation or any officer, director, employee or
agent of either New Ceridian or the Corporation or any fiduciary or
agent of the Ceridian 401(k) Plans or their related trusts, prior to the
Effective Date, affecting any Arbitron Employee, Former Arbitron
Employee or any person claiming by, through or on behalf of any Arbitron
Employee or Former Arbitron Employee.
(b) On the Effective Date Arbitron Employees who are participants in
the PIP or the SIP shall cease active participation in such plan.
(c) The Arbitron 401(k) Plan shall contain provisions that permit a
trust-to-trust transfer of account balances of Arbitron Employees and
Former Arbitron Employees from the Ceridian 401(k) Plans to the Arbitron
401(k) Plan in accordance with applicable law and that provide for any
optional form of benefit or other benefit provided under the Ceridian
401(k) Plans that is required to be preserved under section 411(d)(6) of
the Code.
(d) As soon as practicable after the establishment of the Arbitron
401(k) Plan, New Ceridian shall cause the trustee of the PIP and the SIP
to transfer to the trustee of the trust established in connection with
the Arbitron 401(k) Plan, the account balances of the Arbitron Employees
and Former Arbitron Employees who are then participants in either such
plan (and of any beneficiaries of, and alternate payees under
qualified domestic relations orders with respect to, any Arbitron
Employee or Former Arbitron Employee), including promissory notes
evidencing any participant loans made pursuant to the terms of the plan.
Promissory notes evidencing participant loans and shares of the
Corporation or New Ceridian common stock shall be transferred in kind,
and, unless the parties otherwise agree, other assets shall be sold or
otherwise disposed of and the net cash proceeds shall be transferred.
The Corporation shall cause the promissory notes, securities and cash so
transferred to be allocated among the participants' accounts in the
manner it was allocated under the applicable Ceridian 401(k) plan.
(e) The Corporation shall cooperate and shall cause the trustee of
the Arbitron 401(k) Plan to comply with any requests for distributions
from the Arbitron 401(k) Plan to Arbitron Employees determined by New
Ceridian to be necessary to permit the PIP and the SIP to satisfy the
requirements imposed by sections 402(g), 401(k), 401(m) and 415 of the
Code for the 2000 plan year.
(f) During the "remedial amendment period," within the meaning of
Code section 401(b), applicable in connection with the adoption of the
Arbitron 401(k) Plan, the
18
Corporation shall submit a determination letter request to the Internal
Revenue Service with respect to the Arbitron 401(k) Plan and shall
timely make any changes to the form or operation of the Arbitron 401(k)
Plan as may be required by the Internal Revenue Service to obtain a
determination letter from the Internal Revenue Service that the Arbitron
401(k) Plan, as adopted by the Corporation, satisfies the qualification
requirements of Code section 401(a) and the Arbitron 401(k) Plan's
related trust is exempt from federal income tax pursuant to Code section
501(a).
(g) The Corporation shall, and shall cause the Arbitron 401(k) Plan
and the trustee of its related trust, to cooperate in the timely
implementation of any correction determined by New Ceridian to be
advisable in connection with any Employee Plans Compliance Resolution
Systems (within the meaning of Revenue Procedure 2000-16) or Voluntary
Fiduciary Correction Program submission or self-correction pending with
respect to the Ceridian 401(k) Plans as of the Effective Time.
(h) The Arbitron 401(k) Plan shall be a continuation of the PIP and
the SIP as to the participants whose accounts are transferred from the
PIP of the SIP to the Arbitron 401(k) Plan pursuant to this Agreement
and the cessation of participation of such participants in the PIP or
the SIP shall not be deemed a termination or partial termination of the
PIP or the SIP.
6.7 ASSUMPTION OF EXECUTIVE INVESTMENT PLAN. Not later than the Effective
Time, New Ceridian shall assume the sponsorship of the Ceridian Corporation
Executive Investment Plan (the "Ceridian Executive Investment Plan"). Except as
otherwise provided in Section 6.8, as of the effective date of such assumption
of sponsorship, New Ceridian shall assume and be solely responsible for all
employer Liabilities arising from or related to the Ceridian Executive
Investment Plan and its administration, including such Liabilities relating to
actions or omissions of or by the Corporation or any officer, director, employee
or agent of the Corporation prior to the Effective Time.
6.8 SPINOFF OF ARBITRON EXECUTIVE INVESTMENT PLAN. The Corporation shall, on
or before, and effective as of, the Effective Date, establish a nonqualified,
individual account deferred compensation plan (the "Arbitron Deferred
Compensation Plan").
(a) The Corporation shall assume and be solely responsible for all
then existing or future Liabilities arising from or related to the
participation in the Ceridian Executive Investment Plan of any Arbitron
Employee or Former Arbitron Employee and the Arbitron Deferred
Compensation Plan and its administration, including such Liabilities
relating to (i) benefits under the Ceridian Executive Investment Plan
earned by or paid to any Arbitron Employee or Former Arbitron Employee
and (ii) actions or omissions of or by New Ceridian, the Corporation or
any officer, director, employee or agent of either New Ceridian or the
Corporation, prior to the Effective Date, affecting any Arbitron
Employee, Former Arbitron Employee or any person claiming by, through or
on behalf of any Arbitron Employee or Former Arbitron Employee.
(b) As of the Effective Date, the Corporation shall assume and be
solely responsible for all Liabilities under the Ceridian Executive
Investment Plan related to any participant who is an Arbitron Employee
or a Former Arbitron Employee, other than Liabilities
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related to such a participant's employment with New Ceridian or one of
its Subsidiaries on or after the Effective Date.
(c) The Arbitron Deferred Compensation Plan shall (i) provide for
immediate participation by each Arbitron Employee or Former Arbitron
Employee who was a participant in the Ceridian Executive Investment Plan
immediately prior to the Effective Time and (ii) provide the participant
with the same contractual rights with respect to the balance of his or
her accounts under the Ceridian Executive Investment Plan as of December
31, 2000 that the participant had under the Ceridian Executive
Investment Plan.
(d) On or as soon as administratively practicable after the first
business day following the Effective Date, New Ceridian shall cause the
trustee of the Ceridian Corporation Benefit Protection Trust to transfer
to the trustee of the Arbitron Benefit Protection Trust, by wire
transfer of immediately available funds, an amount equal to the
aggregate balance as of December 31, 2000 of the Ceridian Executive
Investment Plan account balances of each Arbitron Employee and each
Former Arbitron Employee.
6.9 RABBI TRUSTS. Not later than the Effective Time, the Corporation shall,
by assignment or otherwise, cause the assets and control of the following trusts
to be assigned to New Ceridian: (a) Ceridian Corporation Benefit Protection
Trust; (b) Ceridian Corporation Executive Benefit Protection Trust Number One;
(c) Ceridian Corporation Executive Benefit Protection Trust Number Two; and (d)
any other trust established in conjunction with any nonqualified Pension Plan
the assets of which are treated for federal income tax purposes as assets of the
Corporation.
6.10 DEFERRED COMPENSATION AGREEMENTS. As of the Effective Time, New Ceridian
shall assume and be solely responsible for all employer Liabilities arising from
or related to any individual deferred compensation agreement with a New Ceridian
Employee or Former New Ceridian Employee, and the Corporation shall retain and
be solely responsible for all employer Liabilities arising from or related to
any individual deferred compensation agreement with an Arbitron Employee or
Former Arbitron Employee.
6.11 OTHER LIABILITIES. New Ceridian or its Subsidiaries shall assume or
retain and be solely responsible for all employer Liabilities arising from or
related to any Pension Plan that are not otherwise expressly allocated pursuant
to this article.
ARTICLE VII
SPECIAL PROVISIONS
7.1 INTERNATIONAL LIABILITIES. As of the Effective Time, New Ceridian shall
assume all Liabilities for Employment Related Claims arising from or incurred in
connection with international New Ceridian Employees and international Former
New Ceridian Employees, including such Liabilities relating to any Welfare Plan,
Pension Plan, Current Cash Compensation or Benefit Arrangement, and New Ceridian
shall cause its Subsidiaries to assume all such Liabilities with respect to
their international New Ceridian Employees and international Former New Ceridian
Employees.
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7.2 DISABLED EMPLOYEES. Notwithstanding any contrary provision of this
Agreement, this section shall control the allocation of obligations of the
Corporation and New Ceridian with respect to each employee of the Corporation or
any of its Subsidiaries who would have been an Arbitron Employee but for his or
her absence from active employment on account of his or her receiving long-term
disability insurance benefits ("Disabled Arbitron Employee").
(a) Immediately prior to the Effective Time, New Ceridian shall, or
shall cause its Subsidiaries to, employ each Disabled Arbitron Employee
and to continue his or her participation in New Ceridian Pension Plans,
Welfare Plans and Benefit Arrangements in accordance with their
generally applicable provisions.
(b) If a Disabled Arbitron Employee is released to work after the
Effective Time and prior to his or her termination of employment, the
Corporation shall, or shall cause one of its Subsidiaries to:
(i) provide such Disabled Arbitron Employee with a job
suitable to his or her abilities and limitations; or
(ii) reimburse New Ceridian for the gross amount of all
severance benefits, sick leave reserve and pay for accrued
personal days off (disregarding any tax savings or benefits to
New Ceridian as a result of the payment of such benefits), if
any, that are then payable to the Disabled Arbitron Employee
under the Welfare Plans and Benefit Arrangements of New Ceridian
then in effect.
(c) If a Disabled Arbitron Employee becomes an employee of the
Corporation or any of its Subsidiaries after the Effective Time, all of
the Disabled Arbitron Employee's service with the Corporation and its
Subsidiaries prior to the Effective Time shall be taken into account for
all purposes under the Arbitron Retirement Plan, as defined in Section
6.2, to the same extent as if the Disabled Arbitron Employee had been a
Spun-off Participant, as defined in Section 6.2, and to the extent
permitted by applicable qualification requirements, service taken into
account under the Ceridian Retirement Plan, as defined in Section 6.1,
after the Effective Time shall be taken into account under the Arbitron
Retirement Plan to the same extent and for the same purposes as such
service was taken into account under the Ceridian Retirement Plan;
provided, first, that the Arbitron Retirement Plan shall not be required
to credit service for any period or any purpose for which a similarly
situated active employee of the Corporation or one of its Subsidiaries
is not credited with service; and, second, that to the extent service is
taken into account under the Arbitron Retirement Plan pursuant to this
Section 7.2(c) that is taken into account in determining a Disabled
Arbitron Employee's accrued benefit under the Ceridian Retirement Plan,
the Arbitron Retirement Plan benefit shall be reduced by the value of
the Ceridian Retirement Plan benefit in accordance with the terms of the
Arbitron Retirement Plan.
(d) The Corporation shall, upon demand by New Ceridian, reimburse
New Ceridian for all costs incurred by New Ceridian or its Subsidiaries
in providing coverage to each Disabled Arbitron Employee under each
Pension Plan, Welfare Plan and Benefit Arrangement, such costs to be
measured by the gross amount of the employer
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contributions made with respect to such employee (disregarding any tax
savings or benefits to New Ceridian as a result of the payment of such
benefits); provided that this provision shall not apply with respect to
any Disabled Arbitron Employee who has been continuously totally
disabled since prior to 1992.
7.3 SBC EMPLOYEE LIABILITIES. Notwithstanding any contrary provision of this
Agreement, this section shall control the allocation of obligations of the
Corporation and New Ceridian under the Benefits Agreement between Service Bureau
Corporation, Control Data Corporation and International Business Machines
Corporation, dated as of January 12, 1973 (the "SBC Agreement").
(a) The Corporation shall, as of the Effective Time, be relieved of
all Liability and responsibility under the SBC Agreement with respect to
any individual who is not employed by the Corporation or any of its
Subsidiaries at any time after the Effective Time. The Corporation
shall, except as otherwise provided in this section, have full Liability
and responsibility for benefits due under the SBC Agreement with respect
to any individual who is employed by the Corporation or any of its
Subsidiaries at any time after the Effective Time.
(b) Except as otherwise provided in this section, New Ceridian shall
be relieved of all Liability and responsibility under the SBC Agreement
with respect to any Arbitron Employee or any other individual employed
by the Corporation or any of its Subsidiaries after the Effective Time.
New Ceridian shall assume all Liabilities under the SBC Agreement with
respect to any individual who is not employed by the Corporation or any
of its Subsidiaries at any time after the Effective Time.
ARTICLE VIII
GENERAL PROVISIONS
8.1 MISCELLANEOUS PROVISIONS. All the provisions contained in Article VIII
of the Distribution Agreement are fully applicable to this Agreement and are
incorporated in this Agreement by this reference.
8.2 RELEVANT TIME. Any reference in this agreement to a specific date shall
be effective immediately following the midnight, New York time, that precedes
the 24-hour period that comprises the date specified.
8.3 FURTHER COOPERATION. The parties shall provide each other such records
and information as may be necessary or appropriate to carry out their
obligations under this Agreement or for the purposes of administering the
Pension Plans, Welfare Plan and Benefit Arrangements, and they shall cooperate
in the filing of documents required by any transfer of assets and Liabilities.
Each of the parties shall cooperate in making amendments to plans, policies and
programs and in assigning agreements with third party vendors as necessary or
advisable to implement the provisions of this Agreement.
8.4 THIRD PARTY AGREEMENTS. The provisions of Section 2.1(f) of the
Distribution Agreement shall apply to insurance contracts, administration
contracts, investment management contracts,
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trust agreements and similar agreements related to the maintenance and
administration of the Pension Plans, Welfare Plans and Benefit Arrangements of
the parties.
8.5 PRESERVATION OF RIGHTS TO AMEND OR TERMINATE. Except as expressly
provided in this Agreement, any right which the Corporation or New Ceridian or
any of their respective Subsidiaries would otherwise have under the terms of any
plan, fund, program, contract, agreement, policy, practice, trust or arrangement
to amend or terminate such plan, fund, program, contract, agreement, policy,
practice, trust or arrangement or terminate the participation of any individual
or employer in such plan, fund, program, contract, agreement, policy, practice,
trust or arrangement shall not be limited by this Agreement in any way.
8.6 APPLICABILITY TO SUBSIDIARIES. The obligations of a party in this
Agreement shall also be applicable to any Subsidiary of such party to the extent
they relate to persons employed by such Subsidiaries, and each party shall cause
its Subsidiaries to comply with such obligations.
8.7 ADMINISTRATIVE COMPLAINTS/LITIGATION. New Ceridian shall be solely
liable for the handling, administration, investigation, and defense of Actions,
including, without limitations, ERISA, discrimination and unemployment
compensation claims, asserted against the Corporation or New Ceridian by any New
Ceridian Employee or Former New Ceridian Employee arising out of or relating to
employment with New Ceridian and of Actions involving Liabilities in connection
with a Welfare Plan that New Ceridian assumed under Section 4.13(a). Any Losses
arising from such Actions shall be New Ceridian Liabilities. The Corporation
shall be solely liable for the handling, administration, investigation, and
defense of Actions, including, without limitations, ERISA, discrimination and
unemployment compensation claims, asserted against the Corporation or New
Ceridian by any Arbitron Employee or Former Arbitron Employee arising out of or
relating to employment with the Corporation other than to the extent such Action
involves Liabilities in connection with a Welfare Plan that New Ceridian assumed
under Section 4.13(a). Any Losses arising from such Actions shall be Media
Information Liabilities. The Corporation reserves the right to participate in
the investigation or defense of any matter to the extent it deems reasonably
necessary.
8.8 REIMBURSEMENT AND INDEMNIFICATION. The parties agree to reimburse each
other, within 30 days of receipt from the other party of appropriate
verification, for all costs and expenses each may incur on behalf of the other
as a result of any of the Welfare Plans, Pension Plans and Benefit Arrangements.
All Liabilities retained, assumed or indemnified against by New Ceridian
pursuant to this Agreement shall be deemed New Ceridian Liabilities, and all
Liabilities retained, assumed or indemnified against by the Corporation pursuant
to this Agreement shall be deemed Media Information Liabilities, and in each
case shall be subject to the indemnification provisions of Article III of the
Distribution Agreement.
8.9 NO THIRD PARTY BENEFICIARIES. No New Ceridian Employee, Former New
Ceridian Employee, Arbitron Employee or Former Arbitron Employee (or his/her
spouse, domestic partner, dependent or beneficiary), or any other person not a
party to this Agreement, shall be entitled to assert any claim under this
Agreement. This Agreement shall be binding upon and inure to the benefit only of
the Corporation, New Ceridian and their respective successors. Notwithstanding
any other provisions to the contrary except with respect to such successors, it
is
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not intended and shall not be construed for the benefit of any third party or
any person who is not a signatory. In no event shall this Agreement constitute a
third party beneficiary contract.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed in their names by a duly authorized officer as of the date set forth
above.
NEW CERIDIAN CORPORATION CERIDIAN CORPORATION
By: By:
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Title: Title:
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