EXHIBIT 10.03
CERIDIAN CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
PARTIES
CERIDIAN CORPORATION (A DELAWARE CORPORATION)
0000 00XX XXXXXX XXXXX
XXXXXXXXXXX, XXXXXXXXX 00000-0000
AND
XXXXXX X. XXXXXX
("EXECUTIVE")
DATE: OCTOBER 1, 1999
RECITALS
A. Ceridian wishes to obtain the services of Executive for the duration of
this Agreement, and 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,
engage in recruitment of Ceridian's employees or make disparaging
statements about Ceridian after termination of employment, and Executive
is willing to refrain from such competition, recruitment and
disparagement.
D. Executive desires to be assured of a minimum Base Salary (as defined
below) from Ceridian for Executive's services for the term of this
Agreement (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
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frustrate the purpose of Executive's commitment to Ceridian and
forebearance of career options.
G. The parties recognize that in light of the above-described commitment and
forebearance of career 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 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 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 of Ceridian
which is not generally available to or used by others, or the utility or
value of which is not generally known or recognized as standard practice,
whether or not the underlying details are in the public domain,
including:
(a) information or material relating to Ceridian and its business as
conducted or anticipated to be conducted; business plans;
operations; past, current or anticipated software, products or
services; customers or prospective customers; or
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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 on or material relating to Ceridian which when
received is marked as "proprietary," "private," or "confidential;"
(d) trade secrets of Ceridian;
(e) software of Ceridian in various stages of development, 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 of Ceridian; and
(f) any similar information of the type described above which Ceridian
obtained from another party and which Ceridian treats as or
designates as being proprietary, private or confidential, whether
or not owned or developed by Ceridian.
Notwithstanding the foregoing, "Confidential Information" does not
include any information which is properly published or in the public
domain; provided, however, that information which is published by or with
the aid of Executive outside the scope of employment or contrary to the
requirements of this Agreement will not be considered to have been
properly published, and therefore will not be in the public domain for
purposes of this Agreement.
1.05 "DISABILITY" shall mean the inability of Executive to perform his or her
duties under this Agreement because of illness or incapacity for a
continuous period of six months.
1.06 "PARENT CORPORATION" shall mean Ceridian Corporation and, except 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.
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.
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ARTICLE II
EMPLOYMENT, DUTIES AND TERM
2.01 EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Ceridian hereby employs Executive, and Executive accepts such employment.
2.02 DUTIES. Executive shall devote his 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, this
Agreement and Executive's employment shall continue until the later of:
(a) OCTOBER 1, 2002; and (b) two years after a Change of Control which
occurs prior to OCTOBER 1, 2002 ("Initial Term"). Upon expiration of the
Initial Term and subject to the provisions of Articles IV, VII and VIII,
this Agreement and Executive's employment shall be automatically extended
for successive three year periods.
ARTICLE III
COMPENSATION AND EXPENSES
3.01 BASE SALARY. For all services rendered under this Agreement during the
term of this Agreement, 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.
3.02 BONUS AND INCENTIVE. Bonus or incentive compensation shall be at the
sole discretion of Ceridian. Except as otherwise provided in Article
VII, Ceridian shall have the right, in accordance with their terms, to
alter, amend or eliminate any bonus or incentive plans, or Executive's
participation therein, without compensation to Executive.
3.03 BUSINESS EXPENSES. Ceridian shall, consistent with its policies in
effect from time to time, bear all ordinary and necessary business
expenses incurred by Executive in 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.
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ARTICLE IV
EARLY TERMINATION
4.01 EARLY TERMINATION. This Article shall not apply to a Change of Control
Termination which is governed solely by the provisions of Article VII,
and does not alter the respective continuing obligations of the parties
pursuant to Articles V, VI, and IX.
4.02 TERMINATION FOR CAUSE. Ceridian may terminate this Agreement and
Executive's employment immediately for cause. For the purpose hereof
"cause" means:
(a) fraud;
(b) misrepresentation;
(c) theft or embezzlement of Ceridian assets;
(d) intentional violations of law involving moral turpitude;
(e) failure to follow Ceridian's conduct and ethics policies; and/or
(f) the continued failure by Executive to attempt in good faith to
perform his 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 performance
which specifically identifies the manner in which it is alleged
Executive has not attempted in good faith to perform 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 written notice of
termination.
4.03 TERMINATION WITHOUT CAUSE. Either Executive or Ceridian may terminate
this Agreement and Executive's employment without cause on at least 75
days' written notice. In the event of termination of this Agreement and
of Executive's employment pursuant to this Section 4.03, compensation
shall be paid as follows:
(a) if the notice of termination is given by Executive, Executive
shall be paid at the usual rate of his or her annual Base Salary
through the 75 day notice period;
(b) if the notice of termination is given by Ceridian, (1) Executive
shall be paid at the usual rate of his or her annual Base Salary
through the 75 day notice period, however, Ceridian shall have the
option of making termination of the Agreement and Executive's
employment effective immediately upon notice in which case
Executive shall be paid a lump sum representing the value of 75
days worth of salary; and (2) Executive shall receive, starting
within 15 days after the end of the
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75 day notice period, two year's 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, Executive
shall receive the bonus, if any, to which Executive would
otherwise have become entitled under all applicable 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. In addition,
Ceridian shall provide or make arrangements for reasonable
outplacement services for Executive based on his or her level
within Ceridian.
(c) In the event that termination occurs pursuant to Section 4.03(b),
in addition to the payments specified therein, Ceridian shall pay
to Executive an amount equal to one year's 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 Executive
executes a release, similar to that attached as Exhibit A, of all
claims against Ceridian.
4.04 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement shall
terminate in the event of death or disability of Executive.
(a) In the event of Executive's death, Ceridian shall pay an amount
equal to 12 months of Base Salary at the rate in effect at the
time of Executive's death plus the amount Executive would have
received in annual incentive plan bonus for the year in which the
death occurs had "target" goals been achieved. Such amount shall
be paid (1) to the beneficiary or beneficiaries designated in
writing to Ceridian by Executive, (2) in the absence of such
designation to the surviving spouse, or (3) if there is no
surviving spouse, or such surviving spouse disclaims all or any
part, then the full amount, or such disclaimed portion, shall be
paid to the executor, administrator or other personal
representative of Executive's estate. The amount shall be paid as
a lump sum as soon as practicable following Ceridian's receipt of
notice of Executive's death. All such payments shall be in
addition to any payments due pursuant to Section 4.04(c) below.
(b) In the event of Executive's disability, Base Salary shall be
terminated as of the end of the month in which the last day of the
six-month period of Executive's inability to perform his 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
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had "target" goals been achieved, multiplied by (2) a fraction,
the numerator of which shall be the number of whole months
Executive was employed in the year in which the death or
disability occurred and the denominator of which is 12. The
amount payable pursuant to this Section 4.04(c) shall be paid
within 15 days after the date such bonus would have been paid
had Executive remained employed for the full fiscal year.
4.05 RETIREMENT.
(a) Executive may terminate this Agreement and Executive's employment
as a result of Executive's decision to retire from Ceridian.
Executive shall provide Ceridian with at least 75 days' written
notice of the date upon which Executive intends to retire.
Executive shall be paid at the usual rate of his or her annual
Base Salary through the date of retirement stipulated in the
written notice.
(b) In the event that Executive terminates this Agreement as a result
of Executive's decision to retire from Ceridian and Executive is
at least 55 years of age with five or more years of service to
Ceridian, then 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 his or her retirement. Executive shall be
required to pay no more for the above mentioned benefits than
he/she paid as an active employee, or if provided by Ceridian
at no cost to employees on the day immediately prior to
Executive's retirement, they shall continue to be made
available to Executive on this basis.
4.06 ENTIRE TERMINATION PAYMENT. The compensation provided for in this
Article IV for early termination of this Agreement and termination
pursuant to this Article IV shall constitute Executive's sole remedy for
such termination. Executive shall not be entitled to any other
termination or severance payment which may be payable to Executive under
any other agreement between Executive and Ceridian.
ARTICLE V
CONFIDENTIALITY, DISCLOSURE AND ASSIGNMENT
5.01 CONFIDENTIALITY. Executive will not, during the term or after the
termination or expiration of this Agreement or his/her employment,
publish, disclose, or utilize in any manner any Confidential Information
obtained while employed by Ceridian. If Executive leaves the employ of
Ceridian, Executive will not, without Ceridian's prior written consent,
retain or take away any drawing, writing or other record in any form
containing any Confidential Information.
5.02 BUSINESS CONDUCT AND ETHICS. During the term of employment with Ceridian,
Executive will engage in no activity or employment which may conflict
with the interest of Ceridian, and will comply with Ceridian's policies
and guidelines pertaining to business conduct and ethics.
5.03 DISCLOSURE. Executive will disclose promptly in writing to
Ceridian all inventions, discoveries, software, writings and other works
of authorship which are conceived, made, discovered, or written jointly
or singly on Ceridian time or on Executive's own time, providing the
invention, improvement, discovery, software, writing or other work of
authorship is capable of being used by Ceridian in the normal course of
business, and all such inventions, improvements, discoveries, software,
writings and other works of authorship shall belong solely to Ceridian.
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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 181 Minnesota Statutes, Section 181.78,
reproduced below and constituting the written notification of its
Subdivision 3.
181.78 Agreements; terms relating to inventions
Subdivision 1.
Any provision in an employment agreement which provides that an employee
shall assign or offer to assign any of the employee's rights in an
invention to the employer shall not apply to an invention for which no
equipment, supplies, facility or trade secret information of the employer
was used and which was developed entirely on the employee's own time, and
(1) which does not relate (a) directly to the business of the employer or
(b) to the employer's actual or demonstrably anticipated research or
development, or (2) which does not result from any work performed by the
employee for the employer. Any provision which purports to apply to such
an invention is to that extent against the public policy of this state
and is to that extent void and unenforceable.
Subdivision 2.
No employer shall require a provision made void and unenforceable by
subdivision 1 as a condition of employment or continuing employment.
Subdivision 3.
IF AN EMPLOYMENT AGREEMENT ENTERED INTO AFTER AUGUST 1, 1977, CONTAINS A
PROVISION REQUIRING THE EMPLOYEE TO ASSIGN OR OFFER TO ASSIGN ANY OF THE
EMPLOYEE'S RIGHTS IN ANY INVENTION TO AN
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EMPLOYER, THE EMPLOYER MUST ALSO, AT THE TIME THE AGREEMENT IS MADE,
PROVIDE A WRITTEN NOTIFICATION TO THE EMPLOYEE THAT THE AGREEMENT DOES
NOT APPLY TO AN INVENTION FOR WHICH NO EQUIPMENT, SUPPLIES, FACILITY
OR TRADE SECRET INFORMATION OF THE EMPLOYER WAS USED AND WHICH WAS
DEVELOPED ENTIRELY ON THE EMPLOYEE'S OWN TIME, AND (1) WHICH DOES NOT
RELATE (a) DIRECTLY TO THE BUSINESS OF THE EMPLOYER OR (b) TO THE
EMPLOYER'S ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT,
OR (2) WHICH DOES NOT RESULT FROM ANY WORK PERFORMED BY THE EMPLOYEE FOR
THE EMPLOYER.
5.06 EXECUTIVE'S DECLARATION. Executive has no inventions, data bases,
improvements, discoveries, software, writings or other works of
authorship useful to Ceridian in the normal course of business, which
were conceived, made or written prior to the date of this Agreement and
which are excluded from this Agreement.
5.07 SURVIVAL. The obligations of this Article V shall survive the expiration
or termination of this Agreement and Executive's employment.
ARTICLE VI
NON-COMPETITION, NON-RECRUITMENT, AND NON-DISPARAGEMENT
6.01 GENERAL. The parties hereto recognize and agree that (a) Executive is
a senior executive of Ceridian and is a key executive of Ceridian, (b)
Executive has received, and will in the future receive, substantial
amounts of Confidential Information, (c) Ceridian's business is
conducted on a worldwide basis, and (d) provision for non-competition,
non-recruitment and non-disparagement obligations by Executive is
critical to Ceridian's continued economic well-being and protection of
Ceridian's Confidential Information. In light of these
considerations, this Article VI sets forth the terms and conditions of
Executive's obligations of non-competition, non-recruitment and
non-disparagement subsequent to the termination of this Agreement
and/or Executive's employment for any reason.
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 three years following termination of
employment for any reason ("Non-Compete Period"), Executive will
not directly or indirectly, alone or as a partner, officer,
director, shareholder or employee of any other firm or entity,
engage in any commercial activity in competition with any part of
Ceridian's business as conducted as of the date of such
termination of employment or with any part of Ceridian's
contemplated business with respect to which Executive has
Confidential Information. For purposes of this subsection (a),
"shareholder" shall
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not include beneficial ownership of less than five percent (5%)
of the combined voting power of all issued and outstanding
voting securities of a publicly held corporation whose stock is
traded on a major stock exchange. Also for purposes of this
subsection (a), "Ceridian's business" shall include business
conducted by Ceridian or its affiliates and any partnership or
joint venture in which Ceridian or its affiliates is a partner
or joint venturer; provided that, "affiliate" as used in this
sentence shall not include any corporation in which Ceridian
has ownership of less than fifteen percent (15%) of the voting
stock.
(b) At its sole option Ceridian may, by written notice to Executive at
any time within the Non-Compete Period, waive or limit the time
and/or geographic area in which Executive cannot engage in
competitive activity.
(c) During the Non-Compete Period, prior to accepting employment with
or agreeing to provide consulting services to, any firm or entity
which offers competitive products or services, Executive shall
give 30 days prior written notice to Ceridian. Such written
notice shall describe the firm and the employment or consulting
services to be rendered to the firm or entity, and shall include a
copy of the written offer of employment or engagement of
consulting services. Ceridian's failure to respond or object to
such notice shall not in any way constitute acquiescence or waiver
of Ceridian's rights under this Article VI.
(d) In the event Executive has provided notice to Ceridian pursuant to
subsection (c) of this Section 6.02 and has not accepted
employment with or agreed to provide consulting services to, any
firm or entity directly as a result of his or her non-competition
obligation pursuant to this Section 6.02, Ceridian shall pay
Executive an amount equal to the usual rate of Executive's Base
Salary in effect at the time of termination on a regular payroll
period basis until the end of the Non-Compete Period. There shall
be credited against Ceridian's obligation to make such payments
any other payments made by Ceridian to Executive pursuant to
Article IV of this Agreement. In the event that Ceridian elects,
pursuant to subsection (b) of this Section 6.02, to waive all or
any portion of the non-competition obligation set forth in
subsection (a) hereof, no payment shall be required by Ceridian
with respect to the portion of the Non-Compete Period which has
been waived.
(e) In the event Executive fails to provide notice to Ceridian
pursuant to subsection (c) of this Section 6.02 and/or in anyway
violates its non-competition obligation pursuant to Section 6.02,
Ceridian may enforce all of its rights and remedies provided to it
under this Agreement, in law and in equity, and Executive shall be
deemed to have expressly waived any rights he or she may have had
to payments under subsection (d) of this Section 6.02.
6.03 NON-RECRUITMENT. For a period of three 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
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from responding to a request (other than by Executive's employer) for a
reference with respect to an individual's employment qualifications.
6.04 NON-DISPARAGEMENT. Executive will not, during the term or after the
termination or expiration of this Agreement or Executive's employment,
make disparaging statements, in any form, about Ceridian, its officers,
directors, agents, employees, products or services which Executive knows,
or has reason to believe, are false or misleading.
6.05 SURVIVAL. The obligations of this Article VI shall survive the
expiration or termination of this Agreement and Executive's employment.
ARTICLE VII
CHANGE OF CONTROL
7.01 DEFINITIONS. For purposes of this Article VII, the following definitions
shall be applied:
(a) "BENEFIT PLAN" means any formal or informal plan, program or other
arrangement heretofore or hereafter adopted by Ceridian for the
direct or indirect provision of compensation to Executive
(including groups or classes of participants or beneficiaries of
which Executive is a member), whether or not such compensation is
deferred, is in the form of cash or other property or rights, or
is in the form of a benefit to or for Executive.
(b) "CHANGE OF CONTROL" shall mean 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
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;
provided, however, that for purposes of hereof, the
following acquisitions shall not constitute a Change
of Control: (A) any acquisition by Parent
Corporation, or (B) any acquisition by any
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employee benefit plan (or related trust) sponsored
or maintained by Parent Corporation or any
corporation controlled by Parent Corporation; 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; or
(6) such other event or transaction as the Board shall
determine constitutes a Change of Control.
(c) "CHANGE OF CONTROL COMPENSATION" means any payment or benefit
(including any transfer of property) in the nature of compensation, to or
for the benefit of Executive under this Agreement or any Other Agreement
or Benefit Plan, which is considered to be contingent on a Change 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)
misrepresentation, (C) theft or embezzlement of
Ceridian assets, (D) intentional violations of law
involving moral turpitude, or (E) failure to follow
Ceridian's conduct and ethics policies; or
(2) Termination of employment with Ceridian by Executive
pursuant to Section 7.02 of this Article VII.
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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) "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, 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;
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(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.
(g) "OTHER AGREEMENTS" means any agreement, contract or understanding
heretofore or hereafter entered into between Executive and Ceridian for
the direct or indirect provision of compensation to Executive.
7.02 CHANGE OF CONTROL TERMINATION RIGHT. For a period of two years following
a Change of Control that occurred during the term of this Agreement,
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 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.
(a) In the event of a Change of Control Termination that occurred
during the term of this Agreement, then, and without further
action by the Board, Compensation Committee or otherwise, Ceridian
shall, within five days of such termination, make a lump sum
payment to Executive in an amount equal to three times the sum of
(i) 12 months of Base Salary at the rate in effect at the time of
Executive's termination, (ii) the bonus, if any, that Executive
would have received under all applicable Ceridian bonus plans
for the year in which the termination occurs had "superior" goals
been achieved, and (iii) the annual perquisite cash adder
Executive would have received in the year in which the termination
occurs.
(b) In addition to the payments made pursuant to Section 7.03(a)
hereof, in the event the Change of Control Termination that
occurred during the term of this Agreement, then, and without
further action by the Board, Compensation Committee or otherwise,
Ceridian shall provide to Executive a pension supplement
equivalent to the difference, if any, between: (i) the monthly
benefits to which Executive would have been entitled under the
defined benefit pension plan or plans in which Executive
participates immediately prior to the Change of Control
Termination which includes an additional five years of age and
service for terminations on or prior to December 31, 2004 or an
additional three years of age and service for terminations after
December 31, 2004; and (ii) the amount to which Executive is, in
fact, entitled under such defined benefit pension plan or plans.
(c) Neither the payments made or the pension supplement provided
pursuant to this Section 7.03 nor any other compensation to be
provided to Executive by Ceridian pursuant to this Agreement or
any other agreement or Benefit Plan which may be considered Change
of Control Compensation shall be subject to any limitation on
Change of Control Compensation which may otherwise be expressed
in any such agreement or Benefit Plan.
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7.04 TAX REIMBURSEMENT.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payments or distributions by
Ceridian to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
payments required under this Section 7.04) (collectively, the
"Payments") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that, after payment by Executive of
all taxes (and any interest or penalties imposed with respect to
such taxes), including any income taxes and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7.04(d), all determinations
required to be made under this Section 7.04, including whether and
when a Gross-Up Payment is required and the amount such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Ceridian's external auditors (the
"Accounting Firm"), which shall provide detailed supporting
calculations both to Ceridian and Executive within 15 business
days of the receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by Ceridian. In the
event that the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting the Change of
Control, Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the
"Accounting Firm" hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by Ceridian. Any Gross-Up
Payment, as determined pursuant to this Section 7.04, shall be
paid by Ceridian to Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon Ceridian and Executive.
(c) As a result of uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments
which should have been made by Ceridian will not have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that Ceridian exhausts its remedies
pursuant to Section 7.04(d) and Executive thereafter is required
to make a payment of any additional Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by
Ceridian to or for the benefit of Executive.
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(d) Executive shall notify Ceridian in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by Ceridian of any Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive
knows of such claim and shall apprise Ceridian of the nature of
such claim and the date on which such claim is requested to be
paid. Executive shall not pay such claim prior to the expiration
of the thirty-day period following the date on which it gives
such notice to Ceridian (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If Ceridian notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim,
Executive shall:
(i) give Ceridian any information reasonably
requested by Ceridian relating to such claim;
(ii) take such action in connection with
contesting such claim as Ceridian shall
reasonably request in writing from time to
time, including accepting legal
representation with respect to such claim by
an attorney reasonably selected by Ceridian;
(iii) cooperate with Ceridian in good faith in
order to effectively contest such claim; and
(iv) permit Ceridian to participate in any
proceedings relating to such claim;
provided, however, that Ceridian shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 7.04(d), Ceridian shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Ceridian shall determine;
provided further, however, that if Ceridian directs Executive to
pay such claim and xxx for a refund, Ceridian shall advance the
amount of such payment to Executive on an interest-free basis and
shall indemnify and hold Executive harmless, on an after-tax
basis, from any
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Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and
provided further that any extension of the statute of
limitations relating to payment of taxes for the taxable year
of Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, Ceridian's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(e) If, after the receipt by Executive of an amount advanced by
Ceridian pursuant to Section 7.04(d), Executive becomes entitled
to receive any refund with respect to such claim, Executive shall
(subject to Ceridian's complying with the requirements of Section
7.04(d)) promptly pay to Ceridian the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an
amount advanced by Ceridian pursuant to Section 7.04(d), a
determination is made that Executive shall not be entitled to any
refund with respect to such claim and Ceridian does not notify
Executive in writing of its intent to contest such denial of
refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
7.05 INTEREST. In the event Ceridian does not make timely payment in full of
the Change of Control Termination payment described in Section 7.03,
Executive shall be entitled to receive interest on any unpaid amount at
the lower of: (a) the prime rate of interest (or such comparable index
as may be adopted) established from time to time by the Bank of America
National Trust and Savings Association, New York, New York or its
successor in interest; or (b) the maximum rate permitted under Section
280G(d)(4) of the Internal Revenue Code.
7.06 ATTORNEYS' FEES. In the event Executive incurs any legal expense to
enforce or defend his 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
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the Change of Control at a cost not to exceed the amount Executive would
continue to pay had he/she continued to be an active employee of
Ceridian. 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
In the event that, prior to a Change of Control: (a) a Subsidiary is sold,
merged, contributed, or in any other manner transferred, or if for any reason
Parent Corporation's ownership interest in any such Subsidiary falls below the
level specified in Section 1.07, (b) Executive's primary employment duties are
with the Subsidiary at the time of the occurrence of such event, and (c)
Executive does not, in conjunction therewith, transfer employment directly to
Parent Corporation or another Subsidiary, then:
(1) If Executive gives his 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;
(2) If such assignment is not accepted by the Subsidiary or purchaser,
then this Agreement shall be deemed to have been terminated by
Ceridian without cause pursuant to Section 4.03 of Article IV; and
(3) In all other cases, this Agreement shall be deemed terminated for
cause pursuant to Section 4.02 of Article IV.
ARTICLE IX
GENERAL PROVISIONS
9.01 NO ADEQUATE REMEDY. The parties declare that it is impossible to measure
in money the damages which will accrue to either party by reason of a
failure to perform any of the obligations under this Agreement and
therefore injunctive relief is appropriate. Therefore, if either party
shall institute any action or proceeding to enforce the provisions
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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.
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.
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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. Any changes or amendments to this Agreement must be in
writing and signed by both parties.
9.09 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters
herein agreed upon. This Agreement replaces in full all prior employment
agreements or understandings of the parties hereto, and any and all such
prior agreements or understandings are hereby rescinded by mutual
agreement.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
EXECUTIVE CERIDIAN CORPORATION
/s/Xxxxxx X. Xxxxxx By: /s/Xxxx X. Xxxxx
Title: Chair, Compensation and
Human Resources Committee
Address:
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