EXHIBIT 10.03
CERIDIAN CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
PARTIES
CERIDIAN CORPORATION (A DELAWARE CORPORATION)
0000 00XX XXXXXX XXXXX
XXXXXXXXXXX, XXXXXXXXX 00000-0000
AND
XXXXXXX X. XXXXXX
DATE: JULY 1, 1997
RECITALS
A. Ceridian wishes to obtain the services of Executive for at least the
duration of this Agreement, and the Executive wishes to provide his or
her services for such period.
B. Ceridian desires reasonable protection of Ceridian's Confidential
Information (as defined below).
C. Ceridian desires assurance that Executive will not compete with
Ceridian or engage in recruitment of Ceridian's employees for a
reasonable period of time after termination of employment, and
Executive is willing to refrain from competition and recruitment.
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 (unless terminated earlier pursuant to the terms 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 forebearance of options.
G. The parties recognize that in light of the above-described commitment
and forebearance of options, it is essential that, for the benefit of
Ceridian and its stockholders, provision be made for 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 the Parent Corporation (as defined below),
although no such change is now contemplated or foreseen.
H. The parties wish to replace any and all prior agreements and
undertakings with respect to the Executive's employment and Change of
Control occurrences and compensation.
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 Ceridian Corporation (the
"Parent Corporation").
1.03 "CERIDIAN" shall mean Ceridian Corporation and, except as otherwise
provided in Article VIII 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 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:
2
(a) information or material relating to Ceridian and its business as
conducted or anticipated to be conducted; business plans;
operations; past, current or anticipated software, products or
services; customers or prospective customers; or research,
engineering, development, manufacturing, purchasing, accounting,
or marketing activities;
(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 software, products or services;
(c) information which when received is marked as "proprietary,"
"private," or "confidential;"
(d) trade secrets;
(e) software in various stages of development, including computer
programs in source code and binary code form, software designs,
specifications, programming aids (including "library subroutines"
and productivity tools), programming languages, interfaces,
visual displays, technical documentation, user manuals, data
files and databases; 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 or
her duties under this Agreement because of illness or incapacity for a
continuous period of five months.
1.06 "PARENT CORPORATION" shall mean Ceridian Corporation and, except as
otherwise provided in 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.
3
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.
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. Except as expressly provided herein, termination of
this Agreement by either party shall also terminate Executive's
employment by Ceridian.
2.02 DUTIES. Executive shall devote his or her full-time and best efforts
to Ceridian and to fulfilling the duties of his or her position which
shall include such duties as may from time to time be assigned him or
her 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, VII, and VIII,
Executive's employment shall continue until the later of: (a) June
30, 1999; and (b) two years after a Change of Control which occurs
prior to June 30, 1999. In any event, the Agreement shall
automatically terminate without notice when Executive reaches 65 years
of age. If employment is continued after the age of 65 by mutual
agreement, it shall be terminable at will by either party.
ARTICLE III
COMPENSATION AND EXPENSES
3.01 BASE SALARY. For all services rendered under this Agreement during
the term of Executive's employment, Ceridian shall pay Executive a
minimum Base Salary at 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 and any extensions.
4
3.02 BONUS AND INCENTIVE. Bonus or incentive compensation shall be in 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, in accordance with, and to the
extent of, its policies in effect from time to time, bear all ordinary
and necessary business expenses incurred by Executive in performing
his or her 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.
ARTICLE IV
EARLY TERMINATION
4.01 EARLY TERMINATION. Subject to the respective continuing obligations
of the parties pursuant to Articles V, VI, and IX, this Article sets
forth the terms for early termination of this Agreement; provided,
however, that this Article shall not apply to a Change of Control
Termination which is governed solely by the provisions of Article VII.
4.02 TERMINATION FOR CAUSE. Ceridian may terminate this Agreement
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) the continued failure by Executive to satisfactorily perform his
or her 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 satisfactory performance which specifically
identifies the manner in which it is alleged Executive has not
satisfactorily performed such duties. 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 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 at any time
Executive shall be paid at the usual rate of his or her annual
Base Salary through the date of termination specified in such
notice (but not to exceed 75 days);
5
(b) if the notice of termination is given by Ceridian and effective
prior to Executive's 65th birthday, (1) Executive shall be paid
at the usual rate of his or her annual Base Salary through the
date of termination specified in the notice provided, 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 following
termination, a payment equivalent to one years' Base Salary
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, the Executive shall receive the bonus, if any, to which
Executive would otherwise have become entitled under all Ceridian
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 or her 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.
(c) If the event that termination occurs pursuant to Section 4.03(b),
in addition to the payments specified in said Section, Ceridian
shall pay to Executive an amount equal to one years' Base Salary
payable, at the sole discretion of Ceridian, in either the form
of a lump sum payment or on a regular payroll period basis,
provided the Executive executes a release, similar to that
attached as Exhibit A, of all claims against the Company.
(d) If the notice of termination is given by Ceridian to be effective
on or after Executive's 65th birthday, Executive shall be paid at
the usual rate of his or her annual Base Salary through the date
of termination specified in any notice. In addition, Executive
will be paid the bonus, if any, to which Executive would
otherwise have become entitled under all Ceridian 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 or her 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. The amount payable pursuant to this Section 4.03(d) shall
be paid within 15 days after the date such bonus would have been
paid had Executive remained employed for the full fiscal year.
6
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 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
termination 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 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 disability, Base Salary shall be terminated as of
the end of the month in which the last day of the five-month
period of Executive's inability to perform his or her 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 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.
ARTICLE V
CONFIDENTIALITY, DISCLOSURE AND ASSIGNMENT
5.01 CONFIDENTIALITY. Executive will not, during the term or after the
termination or expiration of this Agreement, publish, disclose, or
utilize in any manner any
7
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 vestiture 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 47 Minnesota Revised
Statutes, Section 1-181.78, reproduced below and constituting the
written notification of its Subdivision 3.
181.78 Agreements relating to inventions
Subdivision 1.
Any provision in an employment agreement which provides that an
Executive shall assign or offer to assign any of his rights in an
invention to his employer shall not
8
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
HIS RIGHTS IN ANY INVENTION TO HIS 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, 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.
ARTICLE VI
NON-COMPETITION, NON-RECRUITMENT
9
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
and non-recruitment 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 and non-recruitment subsequent to the
termination of this Agreement and/or Executive's employment for any
reason.
6.02 NON-COMPETITION.
(a) Unless the obligation is waived or limited by Ceridian in
accordance with subsection (b) of this Section 6.02, Executive
agrees that for a period of two years following termination of
employment for any reason, 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 as governed by
Article V of this Agreement. 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
within 30 days after the effective date of termination of
Executive's employment, waive or limit the time and/or geographic
area in which Executive cannot engage in competitive activity.
(c) During the term of the non-competition obligation, prior to
accepting employment with, or agreeing to provide consulting
services to, any firm which offers products or services in the
fields of electronics or information processing, Executive shall
give 30 days prior written notice to Ceridian. Such written
notice shall describe the proposed employment or consulting
services and the firm to which they will be rendered. Ceridian's
failure to
10
respond or object to such notice shall not in any way constitute
acquiescence or waiver of Ceridian's rights under this Article
VI.
(d) During any period of non-competition pursuant to this Article VI
Ceridian shall pay Executive an amount equal to the usual rate of
Executive's Base Salary in effect at the time of termination.
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, no
payment shall be required by Ceridian with respect to the portion
of the non-competition period which has been waived.
6.03 NON-RECRUITMENT. For a period of two years following termination of
employment for any reason, Executive will not initiate or actively
participate in any other employer's recruitment or hiring of Ceridian
employees. 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 SURVIVAL. The obligations of this Article VI shall survive the
expiration or termination of this Agreement.
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 the Executive
(including groups or classes of participants or beneficiaries of
which the 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 the
Executive.
(b) "CHANGE OF CONTROL" shall mean any of the following events:
(1) a merger or consolidation to which Parent Corporation
is a party if the individuals and entities who were
stockholders of Parent Corporation immediately prior to
the effective date of such merger or consolidation have
beneficial ownership (as defined in Rule 13d-3 under
the Securities
11
Exchange Act of 1934) of less than fifty percent (50%)
of the total combined voting power for election of
directors of the surviving corporation immediately
following the effective date of 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) in the aggregate of securities of Parent
Corporation representing twenty-five percent (25%) or
more of the total combined voting power of Parent
Corporation's then issued and outstanding securities by
any person or entity, or group of associated persons or
entities acting in concert; or
(3) the sale of the properties and assets of Parent
Corporation, substantially as an entirety, to any
person or entity which is not a wholly-owned subsidiary
of Parent Corporation; or
(4) the stockholders of Parent Corporation approve any plan
or proposal for the liquidation of Parent Corporation;
or
(5) a change in the composition of the Board at any time
during any consecutive 24 month period such that the
"Continuity Directors" cease for any reason to
constitute at least a seventy percent (70%) majority of
the Board. For purposes of this clause, "Continuity
Directors" means those members of the Board who either
(A) were directors at the beginning of such consecutive
24 month period, or (B) were elected by, or on the
nomination or recommendation of, at least a two-thirds
(2/3) majority of the then-existing Board.
(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 a Participant under this Agreement or any Other
Agreement or Benefit Plan, which is considered to be contingent on a
Change of Control for purposes of Section 280G of the Code.
(d) "CHANGE OF CONTROL TERMINATION" means, with respect to Executive,
either of the following events occurring 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) the
substantial and continuing failure by Executive to
satisfactorily perform his or her duties as
12
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 satisfactory
performance which specifically identifies the manner in
which it is alleged Executive has not satisfactorily
performed such duties; or
(2) Termination of employment with Ceridian by Executive
pursuant to Section 7.02 of this Article VII.
A Change of Control Termination by Executive shall not, however,
include termination by reason of death or Disability.
(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) "EXCISE TAX" means any applicable federal excise tax imposed by
Section 4999 of the Code.
(g) "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, after a Change of Control:
(1) A change in Executive's reporting responsibilities,
titles or offices 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;
(2) A reduction by Ceridian in Executive's Base Salary as
in effect immediately prior to the Change of Control or
as the same may be increased from time to time
thereafter;
(3) Ceridian requiring Executive to be based anywhere other
than within 25 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, within its maximum stated term, any
pension, bonus, incentive, stock ownership, purchase,
option, life insurance,
13
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 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 or her employment duties;
(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.
(h) "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.
(i) "REDUCED AMOUNT" means the largest amount that could be received
by a Participant as Change of Control Compensation such that no
portion of such Change of Control Compensation would be subject to the
Excise Tax.
7.02 CHANGE OF CONTROL TERMINATION RIGHT. For a period of two years
following a Change of Control, Executive shall have the right, at any
time and within Executive's sole discretion, to terminate employment
with Ceridian for Good Reason. Such termination shall be accomplished
by, and effective upon, Executive giving written notice to Ceridian of
Executive's decision to terminate. Except as
14
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.
7.03 CHANGE OF CONTROL TERMINATION PAYMENT. In the event of a Change of
Control Termination, and subject to the "Limitation on Change of
Control Compensation" contained in Section 7.04, then, and without
further action by the Board, Compensation Committee or otherwise,
Parent Corporation shall, within five days of such termination, make a
lump sum payment to Executive in an amount equal to one dollar ($1.00)
less than three times the average annualized compensation, as defined
by Section 280G of the Code, received by Executive from Ceridian and
includible in Executive's gross income for federal income tax purposes
for the five most recent taxable years of the Executive ending before
the date upon which the Change in Control occurred (or such portion of
such period during which Executive was an employee of Ceridian).
7.04 LIMITATION ON CHANGE OF CONTROL COMPENSATION. Notwithstanding any
other provisions of this Agreement or of any Other Agreement or
Benefit Plan, if any Change of Control Compensation would be
considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code and if, after reduction for any Excise Tax and
federal income tax imposed by the Code, Executive's net proceeds of
such Change of Control Compensation would be less than the amount of
Executive's net proceeds resulting from the payment of the Reduced
Amount after reduction for federal income taxes, then the Change of
Control Compensation payable to Executive shall be limited to the
Reduced Amount. The determinations required by the preceding sentence
shall be made by the firm of independent certified public accountants
serving as the outside auditor of Ceridian as of the date of the
applicable Change of Control, and such determinations shall be binding
upon Ceridian and Executive. If Change of Control Compensation to
Executive is limited to the Reduced Amount, then Executive shall have
the right, in his or her sole discretion, to designate those payments
or benefits under this Agreement, any Other Agreements and/or any
Benefit Plans that should be reduced or eliminated so as to avoid
having Executive's Change of Control Compensation be subject to the
Excise Tax. If Executive fails to make such designation within 30
days of having received notification that such designation is
required, Ceridian shall make such designations and shall promptly
inform Executive of its actions in such regard.
7.05 INTEREST. In the event Parent Corporation 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 First Bank National Association, Minneapolis, Minnesota; or (b)
the maximum rate permitted under Section 280G(d)(4) of the Internal
Revenue Code."
15
7.06 ATTORNEYS' FEES. In the event Executive incurs any legal expense to
enforce or defend his or her 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.
7.07 BENEFITS CONTINUATION. In the event of a Change of Control
Termination, Executive (and anyone entitled to claim under or through
Executive) shall, until age 65, be entitled to receive from Ceridian
the same or equivalent health, dental, accidental death and
dismemberment, short and long-term disability, life insurance
coverages, and all other insurance policies and health and welfare
benefits programs, policies or arrangements, at the same levels and
coverages as Executive was receiving on the day immediately prior to
the Change of Control. To the extent that election of continuation of
any of such coverages, programs, policies, or arrangements 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 no such continuation program is available,
Executive shall be required to pay no more than he/she paid as an
active employee, or if provided by Ceridian at no cost to employees on
the day immediately prior to the Change of Control, they shall
continue to be made available to Executive on this basis.
ARTICLE VIII
CHANGE OF SUBSIDIARY STATUS
8.01 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:
(a) If Executive gives his or her 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;
(b) 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
16
(c) 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. 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.
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 00xx Xxxxxx Xxxxx
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.
17
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.
9.08 MODIFICATION. This Agreement may not be and shall not be modified or
amended except by written instrument signed by the parties hereto.
9.09 ARBITRATION. Because the parties recognize that resolving any future
differences in the courts can require a long time and great expense,
Company and Executive agree that their only remedy for disputes either
may have with the other and that arise out of Executive's employment,
or any aspect of this Agreement, shall be to submit all disputes to
final and binding arbitration in accordance with the Employment
Dispute Resolution Rules of the American Arbitration Association. The
aggrieved party must send a written notice of claim to the other party
by certified mail, return receipt requested to the address listed in
Section 9.03 of this Agreement. The arbitrator shall apply the law in
accordance with this Agreement, or federal law, or both, as applicable
to the claim(s) asserted.
9.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the
matters herein
18
agreed upon. This Agreement replaces in full all prior employment
agreements or understandings of the parties hereto, and any and all
such prior agreements or understandings are hereby rescinded by mutual
agreement. Any changes or amendments to this Agreement must be in
writing and signed by both parties.
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/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------- ---------------------
Title: Vice President
----------------
19
