Exhibit 10.5
CERIDIAN
CORPORATION
EXECUTIVE EMPLOYMENT
AGREEMENT
PARTIES
Ceridian
Corporation
3311 East Old Shakopee
Road
Minneapolis, Minnesota
55425-1640
and
Perry H. Cliburn
(“Executive”)
Date: December 14,
2006
RECITALS
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A.
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Ceridian wishes
to obtain the services of Executive for the duration of this
Agreement, and Executive wishes to provide services for such
period.
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B.
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Ceridian
desires reasonable protection of Ceridian’s Confidential
Information (as defined below).
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C.
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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.
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D.
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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.
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E.
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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.
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F.
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The parties
recognize that a Change of Control (as defined below) may result in
material alteration or diminishment of Executive’s position
and responsibilities and substantially frustrate the purpose of
Executive’s commitment to Ceridian and forbearance of career
options.
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G.
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The parties
recognize that in light of the above-described commitment and
forbearance of career options, it is essential that, for the
benefit of Ceridian and its stockholders, provision be made for the
possibility of a Change of Control Termination (as defined below)
in order to enable Executive to accept and effectively continue in
Executive’s position in the face of inherently disruptive
circumstances arising from the possibility of a Change of Control
of Ceridian Corporation (as defined below), although no such change
is now contemplated or foreseen.
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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
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1.01
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“
Affiliate ” means any entity with whom Ceridian would be
considered a single employer under Section 414(b) or 414(c) of
the Code.
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1.02
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“
Base Salary ” shall mean regular cash compensation paid on a
periodic basis exclusive of benefits, bonuses or incentive
payments.
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1.03
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“
Board ” shall mean the Board of Directors of Parent
Corporation.
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1.04
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“
Cause ” means cause as defined under Section 4.2 of
Article IV.
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1.05
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“
Ceridian ” shall mean Ceridian Corporation, a Delaware
corporation f/k/a New Ceridian Corporation, and, except for
purposes of Section 7.01(b) and (f), any Subsidiary (as that
term is defined in Section 1.11).
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1.06
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“
Code ” means
the Internal Revenue Code of 1986, as amended.
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1.07
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“
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:
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(a)
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information or
material relating to Ceridian and its business as conducted or
anticipated to be conducted; business plans; operations; past,
current or anticipated services, products or software; customers or
prospective customers; relations with business partners or
prospective business partners; or research, engineering,
development, manufacturing, purchasing, accounting, or marketing
activities;
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(b)
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information or
material relating to Ceridian’s inventions, improvements,
discoveries, “know-how,” technological developments, or
unpublished writings or other works of authorship, or to the
materials, apparatus, processes, formulae, plans or methods used in
the development, manufacture or marketing of Ceridian’s
services, products or software;
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(c)
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information on
or material relating to Ceridian which when received is marked as
“proprietary,” “private,” or
“confidential;”
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(d)
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trade secrets
of Ceridian;
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(e)
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software of
Ceridian in various stages of development, software designs, web-
based solutions, specifications, programming aids, programming
languages, interfaces, visual displays, technical documentation,
user manuals, data files and databases of Ceridian; and
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(f)
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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.
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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.
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1.08
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“
Disability ” means totally and permanently disabled as
defined in Ceridian’s group long- term disability plan
applicable to senior executives, as may be amended from time to
time.
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1.09
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“
Good Reason ” means any one or more of the following events
which shall occur without Executive’s express written
consent:
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(a)
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A change in
Executive’s reporting responsibilities, titles or office, 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,
excluding for this purpose an isolated, insubstantial or
inadvertent action not taken in bad faith and which is remedied by
Ceridian promptly after receipt of written notice thereof given by
Executive and excluding any diminution attributable to a sale, spin
off, reverse spin off or similar disposition of any Subsidiary of
Ceridian.
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(b)
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A reduction by
Ceridian in Executive’s Base Salary or bonus opportunity or
as the same may be increased from time to time thereafter or any
failure by Ceridian to pay any portion of Executive’s
compensation when due, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is
remedied by Ceridian promptly after receipt of written notice
thereof given by Executive;
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(c)
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Ceridian
requiring Executive to be based anywhere other than within 50 miles
of Executive’s job location as of the Commencement
Date;
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(d)
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Without
replacement by plans, programs, or arrangements which, taken as a
whole, provide benefits to Executive at least reasonably comparable
to those discontinued or adversely affected, (A) the failure
by Ceridian to continue in effect, any 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; or
(B) the taking of any action by Ceridian that would materially
and adversely affect Executive’s participation or materially
reduce Executive’s benefits under any of such plans, programs
or arrangements;
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(e)
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The failure by
Ceridian to provide office space, furniture, and secretarial
support at least comparable to that provided Executive immediately
prior to such failure or the taking of any similar action by
Ceridian that would materially adversely affect the working
conditions in or under which Executive performs her employment
duties; or
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(f)
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Any material
breach of this Agreement by Ceridian, or the failure by a successor
to Ceridian to assume the provisions of this Agreement, including
without limitation, Articles III, IV and VII.
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Executive’s right to terminate
employment for Good Reason shall not be affected by
(Executive’s incapacity due to physical or mental illness.
Executive’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any event constituting
Good Reason hereunder.
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1.10
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“
Parent Corporation ” shall mean Ceridian Corporation and, except for
purposes of Section 8.02, any successor in interest by way of
consolidation, operation of law, merger or otherwise. “Parent
Corporation” shall not include any Subsidiary.
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1.11
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“
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 1.11.
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1.12
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“
Termination of Executive’s Employment
” means
(i) Executive has severed her employment relationship with
Ceridian and all Affiliates provided such termination constitutes a
“separation from service” under Section 409A of
the Code, or (ii) Executive experiences a change in employment
status with Ceridian and its Affiliates that constitutes a
“separation from service” under Section 409A of
the Code.
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ARTICLE II
EMPLOYMENT, DUTIES AND
TERM
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2.01
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Employment . Upon
the terms and conditions set forth in this Agreement, Ceridian
hereby employs Executive, and Executive accepts such
employment.
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2.02
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Duties . Executive shall devote his full-time and best
efforts to Ceridian and to fulfilling the duties of his position
which shall include such duties as may from time to time be
assigned him by Ceridian, provided that such duties are reasonably
consistent with Executive’s education, experience and
background. Executive shall comply with Ceridian’s policies
and procedures to the extent they are not inconsistent with this
Agreement in which case the provisions of this Agreement
prevail.
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2.03
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Term . Subject to the provisions of Articles IV and
VIII, this Agreement and Executive’s employment shall
continue until December 14, 2009 (the “Initial
Term”). On each anniversary of the Agreement, and subject to
the provisions of Articles IV and VIII, this Agreement and
Executive’s employment shall be automatically extended for an
additional one-year period. For purposes hereof, the Initial Term,
together with any subsequent extensions thereof, are hereinafter
referred to as the “Term.” Upon the occurrence of a
Change of Control during the Term, all applicable Change of Control
protections set forth herein (including, without limitation, those
set forth in Article VII hereof) shall continue to apply for the
24-month period commencing on the date of the Change of
Control.
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ARTICLE III
COMPENSATION AND
EXPENSES
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3.01
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Base
Salary . For
all services rendered under this Agreement during the Term,
Ceridian shall pay Executive a minimum Base Salary, at no less than
the annual rate currently being paid or, if Executive is not
currently in Ceridian’s employ, at the annual rate specified
in the written offer of employment. If Executive’s salary is
increased from time to time during the term of this Agreement, the
increased amount shall be the Base Salary for the remainder of the
term.
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3.02
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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.
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3.03
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Benefit
Plans .
Executive shall be entitled to
participate in the employee health and welfare, retirement and
other employee benefits programs offered generally from time to
time by Ceridian to its executive employees, to the extent that
Executive’s position, tenure, salary, and other
qualifications make Executive eligible to participate.
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3.04
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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
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4.01
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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 and VI.
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4.02
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Termination for Cause
. Ceridian may terminate this Agreement and
Executive’s employment immediately for cause. For the purpose
hereof “cause” means:
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(c)
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theft or
embezzlement of Ceridian assets;
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(d)
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intentional
violations of law involving moral turpitude;
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(e)
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failure to
follow Ceridian’s conduct and ethics policies;
and/or
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(f)
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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.
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A Termination of Executive’s
Employment by Ceridian shall not constitute a termination for Cause
unless (i) there has been delivered to Executive by the Board,
at least 10 days prior to such termination, a written notice which
specifically identifies conduct described in clauses
(a) through (f) in which the Board believes Executive has
engaged and (ii) the Board has duly adopted a resolution, by
the affirmative vote of not less than two-thirds (2/3) of the
entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination
(after reasonable notice to Executive and an opportunity for the
Executive, together with the Executive’s counsel, to be heard
before the Board) finding that, in the good faith opinion of the
Board, the Executive was guilty of conduct described in clauses
(a), (b), (c), (d), (e) or (f), and specifying the particulars
thereof in detail. 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.
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4.03
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Termination Without Cause; Termination for Good
Reason . Ceridian may terminate this Agreement and
Executive’s employment without Cause on at least 30
days’ written notice. Executive may terminate this Agreement
and Executive’s employment with or without Good Reason on at
least 30 days’ written notice. In the event of Termination of
Executive’s Employment pursuant to this Section 4.03,
compensation shall be paid as follows:
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(a)
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If the notice
of termination is given by Ceridian without Cause or by Executive
for Good Reason, Executive shall be paid at the usual rate of her
annual Base Salary through the 30 day notice period (provided,
however, that Ceridian shall have the option of making termination
of the Agreement and Termination of Executive’s Employment
effective immediately upon notice in which case Executive shall be
paid a lump sum representing the value of 30 days worth of salary),
and Executive shall become entitled to the following severance
benefits:
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(1)
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a lump sum cash
payment equal to two times the Executive’s then-current
annual Base Salary.
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(2)
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a prorated
portion of Executive’s bonus compensation, if any, to which
Executive would have otherwise become entitled for the fiscal year
in which the Termination of Employment occurs had Executive
remained continuously employed for the full fiscal year, calculated
by multiplying such bonus compensation by a fraction, the numerator
of which is the number of days in the applicable fiscal year
through the date of termination and the denominator of which is 365
(without giving effect to any reduction in bonus opportunity
constituting Good Reason);
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(3)
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reasonable
executive-level outplacement services, not to exceed $20,000, for a
period of up to 24 months (or if earlier, until the first
acceptance by Executive of an offer of employment), to be provided
through Executive’s preferred provider of such services;
and
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(4)
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if following
termination, Executive elects COBRA continuation coverage for
Executive and his/her eligible dependents under Ceridian’s
group health plan, Ceridian shall reimburse Executive for the
applicable COBRA premiums paid for the first six months of the
COBRA continuation period.
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(b)
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If Executive is
a “specified employee” for the purposes of complying
with the requirements of Section 409A(a)(2)(B)(i) of the Code,
then any payments of severance, other than reasonable outplacement
services, or other amounts of deferred compensation due under this
Section 4.03, will be suspended and not made until the first
day immediately following the date that his six (6) months
after the date of the Executive’s termination of employment
(or, if earlier, upon the Executive’s death).
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(c)
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If the notice
of termination is given by Executive without Good Reason, Executive
shall be paid at the usual rate of her annual Base Salary through
the 30 day notice period.
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4.04
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Termination In The Event of Death or
Disability . This
Agreement shall terminate in the event of death or Disability of
Executive.
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(a)
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In the event of
Executive’s death, Ceridian shall pay a lump sum cash payment
equal to one year of Executive’s then-current Base Salary as
soon as practicable following Ceridian’s receipt of notice of
Executive’s death. Such amount shall be paid (i) to the
beneficiary or beneficiaries designated in writing to Ceridian by
Executive, (ii) in the absence of such designation to the
surviving spouse, or (iii) 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.
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(b)
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In the event of
Executive’s Disability, Base Salary shall be terminated as of
the end of the month in which the last day of the six-month period
of Executive’s inability to perform his duties, despite
Ceridian’s efforts to reasonably accommodate,
occurs.
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(c)
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In the event of
termination by reason of Executive’s death or Disability, in
addition to the death or Disability benefits provided in
Section 4.04(a) and Section 4.04(b), Ceridian shall pay
to Executive a prorated bonus equal to (i) 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 (ii) a fraction, the numerator of
which is the number of days in the applicable fiscal year through
the date of termination and the denominator or which is 365. 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.
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4.05
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Retirement . Executive may terminate this Agreement and
Executive’s employment as a result of Executive decision to
retire from Ceridian. Executive shall provide Ceridian with at
least 30 days’ written notice of the date upon which
Executive intends to retire. Executive shall be paid at the usual
rate of his annual Base Salary and annual perquisite cash adder
through the date of retirement stipulated in the written
notice.
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4.06
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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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4.07
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Termination On Account of Change in Status of
Affiliate. In the
event that, prior to a Change of Control or a termination for Cause
under Section 4.02, Executive incurs a termination of
employment as defined under Section 4.01 solely on account of
being primarily employed by an entity that ceases to be an
Affiliate, then:
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(a)
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if at the time of such
termination of employment, Executive has entered into or has been
offered an agreement with the Affiliate or an entity that has or
will have
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an interest in such Affiliate and
such agreement provides or would provide rights that are identical
to the Executive’s rights under Article IV of this Agreement,
then such termination will be treated as a termination for Cause
pursuant to Section 4.02; and
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(b)
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in all other
cases, such termination of employment will be treated as a
termination without Cause under Section 4.03.
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ARTICLE V
CONFIDENTIALITY, DISCLOSURE
AND ASSIGNMENT
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5.01
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Confidentiality . Executive acknowledges that Ceridian has taken
reasonable measures to preserve the secrecy of its Confidential
Information. Executive will not, during the term or after the
termination or expiration of t
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