EXHIBIT 10.04
CERIDIAN CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
PARTIES
CERIDIAN CORPORATION (A DELAWARE CORPORATION)
0000 00XX XXXXXX XXXXX
XXXXXXXXXXX, XXXXXXXXX 00000-0000
AND
XXXX X. XXXXXXXX ("EXECUTIVE")
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:
(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;
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(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.
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.
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.
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.
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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);
(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, that 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 through a notice
period 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
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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 notice of 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.
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.
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(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 PENSION SUPPLEMENT. If Ceridian terminates Executive's employment without
cause prior to Executive's 65th birthday, Ceridian shall provide to
Executive, out of its general assets, a monthly supplemental retirement
benefit in an amount equal to the actuarial equivalent of the difference,
if any, between:
(a) the monthly benefit to which Executive would have been entitled under
the defined benefit pension plan or plans in which he or she
participated immediately prior to his or her termination of employment
if the amount of payment to which Executive is entitled under Section
4.03(b)(2) were taken into account for purposes of determining his or
her "final average pay" or similar term (as then defined under the
terms of such plan or plans) for either (1) the year in which
Executive's termination of employment occurred; or (2) the prior full
year, whichever provides the highest total final average pay; and
(b) the amount to which Executive is, in fact, entitled under such plan or
plans.
The benefit calculated under this Section 4.05 shall be paid at the same
time and in the same form as the benefit under the plan with respect to
which such calculation is made.
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.
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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 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
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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 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
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NON-COMPETITION, NON-RECRUITMENT
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 respond or object to such notice
shall not in any way constitute acquiescence or waiver of Ceridian's
rights under this Article VI.
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(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
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
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(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 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.
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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) "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, 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
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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 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).
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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."
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
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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.
7.08 PENSION SUPPLEMENT. In the event of a Change of Control Termination,
Parent Corporation shall, within five days, make a lump sum payment to
Executive in an amount equal to the actuarial equivalent of the difference,
if any, between:
(a) the monthly benefit to which Executive would have been entitled under
the defined benefit pension plan or plans in which he or she
participated immediately prior to his or her Change of Control
Termination if the amount of payment to which Executive is entitled
under Section 7.03 were taken into account for purposes of determining
his or her "final average pay" or similar term (as then defined under
the terms of such plan or plans) for either (1) the year in which the
Change of Control Termination occurred; or (2) the prior full year,
whichever provides the highest total final average pay; and
(b) the amount to which Executive is, in fact, entitled under such plan or
plans.
For purposes of determining actuarial equivalencies for this Section 7.08,
the actuarial factors specified in the particular plan or plans with
respect to which the determination is being made shall be applied.
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
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(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.
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.
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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 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
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/s/ J.R. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Title: Vice President
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