Document:

exv10w04

 

EXHIBIT 10.04

THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of September 30,
2004, is entered into by and among CERIDIAN CORPORATION, a Delaware corporation formerly known as
New Ceridian Corporation (the “Borrower”), the several financial institutions party to the
Credit Agreement defined below (each a “Lender” and, collectively, the “Lenders”)
and BANK OF AMERICA, N.A., as administrative agent for itself and the other Lenders (in such
capacity, the “Administrative Agent”).

RECITALS

     A. The Borrower, each Lender and the Administrative Agent are parties to that certain
Credit Agreement dated as of January 31, 2001 as amended (the “Credit Agreement”),
pursuant to which the Administrative Agent and the Lenders have extended certain credit
facilities to the Borrower.

     B. The Borrower has advised the Lenders that because of the review of certain
capitalization and expensing procedures as disclosed in the Borrower’s press releases dated
July 19, 2004 and August 5, 2004, it has determined that it will not be able to file with the
SEC its quarterly report on Form 10-Q with respect to the fiscal quarter ending June 30, 2004
within the time period contemplated by the Second Amendment to Credit Agreement dated as of
August 4, 2004 among the parties hereto, and the Borrower has requested that the Lenders agree
to certain amendments of the Credit Agreement to accommodate such determination.

     C. The Borrower has further advised the Lenders that the above-described accounting review
could prospectively require the Borrower to restate past financial statements and related
reports, and the Borrower has requested that the Lenders agree to certain amendments of the
Credit Agreement to accommodate any prospective determination to make any such restatement.

     D. The Lenders are willing to amend the Credit Agreement subject to the terms and
conditions of this Amendment.

     NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings, if any, assigned to them in the Credit Agreement.

     2. Amendments to Credit Agreement. The Credit Agreement shall be amended as
follows, effective as of the Effective Date:

     (a) The definition of “Material Adverse Effect” appearing in Section 1.01 of the
Credit Agreement shall be hereby amended by adding the following new sentence at the end
thereof:

 

 

     It is understood and agreed that none of the following, individually or in the
aggregate, will constitute a Material Adverse Effect: (a) any delay in filing the Borrower’s
quarterly report on Form 10-Q filed with the SEC for the fiscal quarter of the Borrower
ending June 30, 2004, which does not extend to a date later than November 9, 2004; (b) any
determination by the Borrower made on or before November 9, 2004, that a restatement is
required of financial reports or other information previously required to be delivered under
this Agreement with respect to any period ending before June 30, 2004, as a result of the
review of certain capitalization and expensing procedures at its Human Resources Solutions
business, as disclosed in the Borrower’s press releases dated July 19, 2004 and August 5,
2004 (the “Review”); (c) any such actual restatement which is furnished to the
Lenders on or before November 9, 2004, to the extent such restatement is not asserted in
writing by the Required Lenders on or before November 24, 2004 to constitute a Material
Adverse Effect; and (d) any effect of the Review on the financial statements furnished to
the Lenders with respect to the fiscal quarter ending June 30, 2004 which are furnished to
the Lenders on or before November 9, 2004, to the extent such effect is not asserted in
writing by the Required Lenders on or before November 24, 2004 to constitute a Material
Adverse Effect.

     (b) Section 1.01 of the Credit Agreement shall be hereby amended by inserting the
following defined term in alphabetical position:

“Review” has the meaning set forth in the definition of “Material Adverse
Effect”.

     (c) Section 6.01(b) of the Credit Agreement shall be amended by inserting the
following proviso before the period at the end thereof:

; provided however, that with respect to the fiscal quarter of the Borrower ending
June 30, 2004, the Borrower will not be required to deliver the reports or other
information described above in this Section 6.01(b) until November 9, 2004; provided
further, that it will not be a violation of this Section 6.01(b) if (x) the
Borrower determines on or before November 9, 2004 that a restatement of financial reports
of the Borrower or other information previously required to be delivered under this
Section 6.01(b) with respect to any period ending before June 30, 2004, is required
as a result of the Review or (y) any such actual restatement is furnished to the Lenders,
to the extent such restatement is not asserted in writing by the Required Lenders to
constitute a material restatement of such previously delivered financial reports and other
information.

     (d) Section 6.02(a) of the Credit Agreement shall be amended by inserting the
following proviso before the period at the end thereof:

; provided however, that it will not be a violation of this Section 6.02(a)
if (x) the Borrower determines on or before November 9, 2004 that a restatement of
financial reports of the Borrower or other information previously required to be furnished
under this Section 6.02(a) with respect to any period ending before June 30, 2004,
is required as a result of the Review; or (y) any such actual restatement is furnished to
the Lenders, to the extent such restatement is not asserted in writing by the Required
Lenders to

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constitute a material restatement of such previously delivered financial reports and other
information.

     (e) Section 6.09 of the Credit Agreement shall be amended by inserting the following
proviso before the period at the end of the first sentence thereof:

; provided however, that the Borrower will not be deemed to have breached or
violated this Section 6.09 if (x) the Borrower determines on or before November 9,
2004 that it is required as a result of the Review to restate its books and records of
account for any period ending before June 30, 2004; or (y) any such actual restatement is
furnished to the Lenders, to the extent such restatement is not asserted in writing by the
Required Lenders to constitute a material restatement of such books and records of account.

     (f) Sections 7.09 and 7.10 shall be amended by inserting the following proviso before
the period at the end thereof:

; provided however, that this requirement will not be measured with respect to the
fiscal quarter ending June 30, 2004 until the financial reports required under Section
6.01(b) with respect to such period are furnished in accordance with Section
6.01(b).

     (g) Section 8.01(d) shall be amended by inserting the following proviso before the
semi-colon at the end thereof:

; provided however, that no representation or warranty made by the Borrower which is
based on or related to any previously furnished reports or information required to be
restated as a result of the Review will be deemed to have been incorrect in any material
respect when made or deemed made, for all purposes under this Agreement, (x) notwithstanding
that the Borrower determines on or before November 9, 2004 that it is required as a result
of the Review to restate its books and records, financial reports or related information
furnished under this Agreement with regard to any period ending before June 30, 2004; or (y)
if any such actual restatement is furnished to the Lenders, to the extent such restatement
is not asserted in writing by the Required Lenders to constitute a material restatement of
such previously delivered reports or information.

     3. Representations and Warranties. The Borrower hereby represents and warrants to the
Administrative Agent and the Lenders as follows:

        (a) No Default or Event of Default has occurred and is continuing.

        (b) The execution, delivery and performance by the Borrower of this Amendment have been duly
authorized by all necessary corporate and other action and do not and will not require any
registration with, consent or approval of, notice to or action by, any Person (including any
Governmental Authority) in order to be effective and enforceable. The Credit Agreement as amended
by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable
against it in accordance with its respective terms, without defense, counterclaim or offset.

        (c) All representations and warranties of the Borrower contained in Article V of the
Credit Agreement are true and correct as of the Effective Date, except to the extent such

3

 

representations and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date.

        (d) The Borrower is entering into this Amendment on the basis of its own investigation and for
its own reasons, without reliance upon the Administrative Agent and the Lenders or any other
Person.

     4. Effective Date. This Amendment will become effective on the date when each of the
conditions precedent set forth in this Section 4 has been satisfied (such date, the
“Effective Date”), to the extent satisfied on or prior to September 30, 2004:

        (a) The Administrative Agent shall have received from each of the Borrower and the Required
Lenders a duly executed original (or, if elected by the Administrative Agent, an executed facsimile
copy) counterpart to this Amendment.

        (b) The Administrative Agent shall have received from the Borrower a certificate executed by
the secretary, deputy secretary or assistant secretary of the Borrower providing satisfactory
evidence of the authorization of the execution, delivery and performance by the Borrower of this
Amendment.

        (c) The Borrower shall have paid all Attorney Costs of the Administrative Agent to the extent
invoiced prior to September 30, 2004, plus such additional amounts of Attorney Costs as shall
constitute the Administrative Agent’s reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings related to this Amendment (provided that
such estimate shall not thereafter preclude a final settling of accounts between the Borrower and
the Administrative Agent).

        (d) The Administrative Agent shall have received, in form and substance satisfactory to it,
such additional approvals, consents, opinions, documents and other information as the
Administrative Agent may request prior to September 30, 2004.

     5. Reservation of Rights. The Borrower acknowledges and agrees that the execution and
delivery by the Administrative Agent and the Required Lenders of this Amendment shall not (a) be
deemed to create a course of dealing or otherwise obligate the Administrative Agent or the Lenders
to execute similar amendments under the same or similar circumstances in the future or (b) be
deemed to create any implied waiver of any right or remedy of the Administrative Agent or any
Lender with respect to any term or provision of any Loan Document.

     6. Miscellaneous.

        (a) Except as herein expressly amended, all terms, covenants and provisions of the Credit
Agreement are and shall remain in full force and effect and all references therein to the Credit
Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment. This
Amendment shall be deemed incorporated into, and a part of, the Credit Agreement.

        (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and
thereto and their respective successors and assigns. No third party beneficiaries are intended in
connection with this Amendment.

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        (c) THIS AMENDMENT IS SUBJECT TO THE PROVISIONS OF SECTIONS 10.17 AND 10.18 OF
THE CREDIT AGREEMENT RELATING TO GOVERNING LAW AND WAIVER OF RIGHT TO TRIAL BY JURY, THE PROVISIONS
OF WHICH ARE BY THIS REFERENCE HEREBY INCORPORATED HEREIN IN FULL.

        (d) This Amendment may be executed in any number of counterparts, each of which shall be
deemed an original, but all such counterparts together shall constitute but one and the same
instrument. Each of the parties hereto understands and agrees that this Amendment (and any other
document required herein) may be delivered by any party thereto either in the form of an executed
original or an executed original sent by facsimile transmission to be followed promptly by mailing
of a hard copy original, and that receipt by the Administrative Agent of a facsimile transmitted
document purportedly bearing the signature of a Lender or the Borrower shall bind such Lender or
the Borrower, respectively, with the same force and effect as the delivery of a hard copy original.
Any failure by the Administrative Agent to receive the hard copy executed original of such document
shall not diminish the binding effect of receipt of the facsimile transmitted executed original of
such document of the party whose hard copy page was not received by the Administrative Agent.

        (e) This Amendment, together with the Credit Agreement, contains the entire and exclusive
agreement of the parties hereto with reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with respect thereto. This Amendment may
not be amended except in accordance with the provisions of Section 10.01 of the Credit
Agreement.

        (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under
any applicable law, such provision shall be invalidated without affecting the remaining provisions
of this Amendment or the Credit Agreement, respectively.

        (g) The Borrower covenants to pay to or reimburse the Administrative Agent and the Lenders,
upon demand, for all out-of-pocket costs and expenses incurred in connection with the development,
preparation, negotiation, execution and delivery of this Amendment.

        (h) This Amendment shall constitute a “Loan Document” under and as defined in the Credit
Agreement.

(Remainder of page intentionally left blank)

5

 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the
date first above written.

	 	 	 	 	 	 	 	 
	 	 	CERIDIAN
CORPORATION, as the
 Borrower
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ David B. Kuhnau
	

	 	 	 	 	 	 	 
	 	 	Name:	 	David B. Kuhnau
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Vice President and Treasurer
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-1

 

	 	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,as the

Administrative Agent, a Lender and L/C Issuer
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ B. Kenneth Burton, Jr.
	

	 	 	 	 	 	 	 
	 	 	Name:	 	B. Kenneth Burton, Jr.
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-2

 

	 	 	 	 	 	 	 	 
	 	 	AMSOUTH BANK, as
a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Eric Kruse
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Eric Kruse
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Assistant Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-3

 

	 	 	 	 	 	 	 	 
	 	 	BANK ONE, N.A.,
as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Sabir Hashmy
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Sabir Hashmy
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Director
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-4

 

	 	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, N.A.,
as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Steven L. Hipsman
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Steven L. Hipsman
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Director
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-5

 

	 	 	 	 	 	 	 	 
	 	 	MELLON BANK, N.A.,
as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Daniel J. Lenckos
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Daniel J. Lenckos
	

	 	 	 	 	 	 	 
	 	 	Title:	 	First Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-6

 

	 	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL
ASSOCIATION, as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Luke G. McElhinny
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Luke G. McElhinny
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Assistant Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-7

 

	 	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW
YORK, as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ John-Paul Marotta
	

	 	 	 	 	 	 	 
	 	 	Name:	 	John-Paul Marotta
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-8

 

	 	 	 	 	 	 	 	 
	 	 	THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH, as a Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Shinichiro Munechika
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Shinichiro Munechika
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Deputy General Manager
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-9

 

	 	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE
BANK, as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Beth Grossman
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Beth Grossman
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-10

 

	 	 	 	 	 	 	 
	 	 	THE ROYAL BANK OF
SCOTLAND PLC,
 as a Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Maria Amaral-LeBlanc
	

	 	 	 	 	 	 	 

	 	 	Name:	 	Maria Amaral-LeBlanc
	

	 	 	 	 	 	 	 

	 	 	Title:	 	Senior Vice President
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-11

 

	 	 	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL
ASSOCIATION, as a 
Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Ziad W. Amra
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Ziad W. Amra
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Corporate Banking Officer
	

	 	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-12

 

	 	 	 	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION,
 as a Lender
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Mark H. Halldorson
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Mark H. Halldorson
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Vice President
	

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Jennifer Barrett
	

	 	 	 	 	 	 	 
	 	 	Name:	 	Jennifer Barrett
	

	 	 	 	 	 	 	 
	 	 	Title:	 	Vice President & Loan Team Manager
	

	 	 	 	 	 	 	 

(Signature Page to Amendment)

S-13exv10w05

 

EXHIBIT 10.05

CERIDIAN CORPORATION

2004 LONG-TERM STOCK INCENTIVE PLAN

Non-Qualified Stock Option Agreement

(U.S. Employee: Time Based Stock Option)

     THIS AGREEMENT is entered into and effective as of [GRANT DATE] (the “Date of Grant”), by and
between Ceridian Corporation, a Delaware corporation (the “Company”), and [NAME] (the “Optionee”).

     A. The Company has adopted the Ceridian Corporation 2004 Long-Term Stock Incentive Plan (as
may be amended or supplemented, the “Plan”) authorizing the Compensation and Human Resources
Committee of the Board of Directors of the Company (the “Committee”), to grant stock options to
employees of the Company and its Subsidiaries (as defined in Section 9 of the Agreement).

     B. The Company desires to give the Optionee an inducement to acquire a proprietary interest in
the Company and an added incentive to advance the interests of the Company by granting to the
Optionee an option to purchase shares of common stock of the Company pursuant to the Plan.

     Accordingly, the parties agree as follows:

1. Grant of Option.

     The Company hereby grants to the Optionee the right, privilege and option (the “Option”) to
purchase [NUMBER OF SHARES] shares (the “Option Shares”) of the Company’s common stock, $0.01 par
value (the “Common Stock”), according to the terms and subject to the conditions hereinafter set
forth and as set forth in the Plan. The Option granted hereunder shall not be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).

2. Option Exercise Price.

     The per share price to be paid by Optionee in the event of an exercise of the Option will be
$[STRIKE PRICE].

3. Duration of Option and Time of Exercise.

     3.1 Initial Period of Exercisability. Except as provided in Sections 3.2 and 3.3
hereof, the Option shall become exercisable with respect to one-third of the Option Shares on each
of the first, second and third anniversaries of the Date of Grant. The foregoing rights to
exercise the Option will be cumulative with respect to the Option Shares becoming exercisable on
each such date, but in no event will the Option be exercisable after, and the Option will become
void and expire as to all unexercised Option Shares at, 5:00 p.m. (Minneapolis, Minnesota USA time)
on fifth anniversary of the Date of Grant (the “Time of Option Termination”).

     3.2 Termination of Employment.

     (a) Termination Due to Death, Disability or Retirement. In the event
the Optionee’s employment with the Company and all Subsidiaries is terminated by
reason of death, Disability or Retirement (as such terms are defined in Section

 

 

9 of this Agreement), the Option will become immediately exercisable in full and
remain exercisable until the Time of Option Termination.

     (b) Termination for Reasons Other Than Death, Disability or
Retirement. In the event that the Optionee’s employment with the Company and
all Subsidiaries is terminated for any reason other than death, Disability or
Retirement, or the Optionee is in the employ of a Subsidiary and the Subsidiary
ceases to be a Subsidiary of the Company (unless the Optionee continues in the
employ of the Company or another Subsidiary), all rights of the Optionee under the
Plan and this Agreement will immediately terminate without notice of any kind, and
the Option will no longer be exercisable; provided, however, that, if such
termination is due to any reason other than termination by the Company or any
Subsidiary for Cause (as defined in Section 9 of this Agreement), the Option will
remain exercisable to the extent exercisable as of such termination for a period of
three months after such termination (but in no event after the Time of Option
Termination).

     3.3 Impact of Change of Control. If a Change of Control (as defined in Section 9 of
this Agreement) occurs, the Option will become immediately exercisable in full and will,
notwithstanding the provisions of Section 3.2 hereof, remain exercisable until the Time of Option
Termination, regardless of whether the Optionee remains in the employ of the Company or any
Subsidiary. In addition, if a Change of Control of the Company occurs, the Committee, in its sole
discretion and without the consent of the Optionee, may determine that the Optionee will receive,
with respect to some or all of the Option (and in satisfaction of the applicable portion of the
Option), as of the effective date of any such Change of Control of the Company, cash in an amount
equal to the excess of the Fair Market Value (as defined in the Plan) of the applicable Option
Shares immediately prior to the effective date of such Change of Control of the Company over the
Option Exercise Price per share of the Option.

4. Manner of Option Exercise.

     4.1 Notice. This Option may be exercised by the Optionee in whole or in part from
time to time, subject to the conditions contained in the Plan and in this Agreement, by delivery,
in person, by facsimile or electronic transmission or through the mail, to the Company at its
principal executive office in Minneapolis, Minnesota USA (Attention: Corporate Treasury), of a
written notice of exercise. Such notice must be in a form satisfactory to the Committee, must
identify the Option, must specify the number of Option Shares with respect to which the Option is
being exercised, and must be signed by the person or persons so exercising the Option. Such notice
must be accompanied by payment in full of the total exercise price and any applicable taxes for the
Option Shares to be purchased. In the event that the Option is being exercised, as provided by the
Plan and Section 3.2 of this Agreement, by any person or persons other than the Optionee, the
notice must be accompanied by appropriate proof of right of such person or persons to exercise the
Option. If the Optionee retains the Option Shares purchased, as soon as practicable after the
effective exercise of the Option, the Optionee will be recorded on the stock transfer books of the
Company as the owner of the Option Shares purchased, and the Company will deliver to the Optionee
one or more duly issued stock certificates evidencing such ownership.

     4.2 Payment. At the time of exercise of the Option, the Optionee must pay the total
exercise price of the Option Shares to be purchased entirely in cash (including a check, bank draft
or money order, payable to the order of the Company); provided, however, that the Committee, in its
sole discretion and upon terms and conditions established by the Committee, may allow such

2

 

payment to be made, in whole or in part, by tender of a Broker Exercise Notice or Previously Acquired
Shares (as such terms are defined in Section 9 of this Agreement), or by a combination of such
methods. In the event the Optionee is permitted to pay the total purchase price of the Option in
whole or in part with Previously Acquired Shares, the value of such shares will be equal to their
Fair Market Value on the date of exercise of the Option. The delivery of any shares already owned
by the Optionee may be made through delivery of a written attestation of ownership if permitted by
the Committee.

5. Rights and Restrictions of Optionee; Transferability.

     5.1 Employment. Nothing in this Agreement will interfere with or limit in any way the
right of the Company or any Subsidiary to terminate the employment of the Optionee at any time, nor
confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary at
any particular position or rate of pay or for any particular period of time.

     5.2 Rights as a Stockholder. The Optionee will have no rights as a stockholder unless
and until all conditions to the effective exercise of the Option (including, without limitation,
the conditions set forth in Sections 4 and 6 of this Agreement) have been satisfied and the
Optionee has become the holder of record of such shares. No adjustment will be made for dividends
or distributions with respect to the Option Shares as to which there is a record date preceding the
date the Optionee becomes the holder of record of such Option Shares, except as may otherwise be
provided in the Plan or determined by the Committee in its sole discretion.

     5.3 Restrictions on Transfer. Except as otherwise provided by the Committee, neither
the Option nor any rights under the Option shall be transferable by the Optionee other than by will
or by the laws of descent and distribution. The Committee may establish procedures as it deems
appropriate for the Optionee to designate a Person or Persons, as beneficiary or beneficiaries, to
exercise the rights of the Optionee and receive any property distributable with respect to the
Option in the event of the Optionee’s death. The Option shall be exercisable during the Optionee’s
lifetime only by the Optionee or, if permissible under applicable law, by the Optionee’s guardian
or legal representative. Neither the Option nor any right under any the Option may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.

     5.4 Restrictions Regarding Employment.

     (a) The Optionee agrees that he or she will not take any Adverse Actions (as
defined below) against the Company or any Subsidiary at any time during the period
before one year following the Optionee’s termination of employment with the Company
or any Subsidiary, whichever is later (the “Restricted Period”). The Optionee
acknowledges that damages which may arise from a breach of this Section 5.4 may be
impossible to ascertain or prove with certainty. Notwithstanding anything in this
Agreement or the Plan to the contrary, in the event that the Company determines in
its sole discretion that the Optionee has taken Adverse Actions against the Company
or any Subsidiary at any time during the Restricted Period, in addition to other legal remedies
which may be available, (i) the Company will be entitled to an immediate injunction
from a court of competent jurisdiction to end such Adverse Action, without further
proof of damage, (ii) the Committee will have the authority in its sole discretion
to terminate immediately all rights of the Optionee under the Plan and this
Agreement without notice of any kind, and (iii) the Committee will have the
authority in its sole

3

 

discretion to rescind the exercise of all or any portion of
the Option to the extent that such exercise occurred within six months prior to the
date the Optionee first commences any such Adverse Actions and require the Optionee
to disgorge any profits (however defined by the Committee) realized by the Optionee
relating to such exercised portion of the Option or any Option Shares issued or
issuable upon such exercise. Such disgorged profits paid to the Company must be
made in cash (including check, bank draft or money order) or, with the Committee’s
consent, shares of Common Stock with a Fair Market Value on the date of payment
equal to the amount of such payment. The Company will be entitled to withhold and
deduct from future wages of the Optionee (or from other amounts that may be due and
owing to the Optionee from the Company or a Subsidiary) or make other arrangements
for the collection of all amounts necessary to satisfy such payment obligation.

     (b) For purposes of this Agreement, an “Adverse Action” will mean any of the
following: (i) failing to adhere to the Company’s Code of Conduct; (ii) engaging
in any commercial activity in competition with the business conducted by the
Company or any Subsidiary as conducted during the Restricted Period; (iii)
diverting or attempting to divert from the Company or any Subsidiary any business
of any kind, including, without limitation, interference with any business
relationships with suppliers, customers, licensees, licensors, clients or
contractors; (iv) participating in the ownership, operation or control of, being
employed by, or connected in any manner with any person or entity which solicits,
offers or provides any services or products similar to those which the Company or
any Subsidiary offers to its customers or prospective customers; (v) making, or
causing or attempting to cause any other person or entity to make, any statement,
either written or oral, or conveying any information about the Company or any
Subsidiary that is disparaging or that in any way reflects negatively on the
Company or any Subsidiary; or (vi) engaging in any other activity that is hostile,
contrary or harmful to the interests of the Company or any Subsidiary, including,
without limitation, influencing or advising any person who is employed by or in the
service of the Company or any Subsidiary to leave such employment or service to
compete with the Company or any Subsidiary or to enter into the employment or
service of any actual or prospective competitor of the Company or any Subsidiary,
influencing or advising any competitor of the Company or any Subsidiary to employ
to otherwise engage the services of any person who is employed by or in the service
of the Company or any Subsidiary, or improperly disclosing or otherwise misusing
any trade secrets or confidential information regarding the Company or any
Subsidiary.

     (c) Should any provision of this Section 5.4 of the Agreement be held invalid
or illegal, such illegality shall not invalidate the whole of this Section 5.4 of
the Agreement, but, rather, the Agreement shall be construed as if it did not
contain the illegal part or narrowed to permit its enforcement, and the rights and
obligations of the parties shall be construed and enforced accordingly. In furtherance of and not in limitation of the foregoing, the Optionee expressly
agrees that should the duration of or geographical extent of, or business
activities covered by, any provision of this Agreement be in excess of that which
is valid or enforceable under applicable law, then such provision shall be
construed to cover

4

 

only that duration, extent or activities that may validly or
enforceably be covered. The Optionee acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement shall be construed in a
manner that renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law. This Section 5.4 of
the Agreement does not replace and is in addition to any other agreements the
Optionee may have with the Company or any of its Subsidiaries on the matters
addressed herein. This Section 5.4 shall not apply to any termination that occurs
on or following a Change of Control.

6. Securities Law and Other Restrictions.

     Notwithstanding any other provision of the Plan or this Agreement, the Company will not be
required to issue, and the Optionee may not sell, assign, transfer or otherwise dispose of, any
Option Shares, unless (a) there is in effect with respect to the Option Shares a registration
statement under the Securities Act of 1933, as amended, and any applicable state or foreign
securities laws or an exemption from such registration, (b) the Option Shares have been admitted
for trading on the New York Stock Exchange or any other securities exchange or the National
Association of Securities Dealers, Inc. that are applicable to the Company, and (c) there has been
obtained any other consent, approval or permit from any other regulatory body which the Committee,
in its sole discretion, deems necessary or advisable. The Company may condition such issuance,
sale or transfer upon the receipt of any representations or agreements from the parties involved,
and the placement of any legends on certificates representing Option Shares, as may be deemed
necessary or advisable by the Company in order to comply with such securities law or other
restrictions.

7. Withholding Taxes.

     In order to comply with all applicable federal, state, local or foreign income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure that all applicable
federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole
and absolute responsibility of the Optionee, are withheld or collected from the Optionee. In order
to assist the Optionee in paying all or a portion of the applicable taxes to be withheld or
collected upon exercise of the Option, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the Optionee to satisfy such tax
obligation by using Previously Acquired Shares with a Fair Market Value equal to the amount of such
taxes. If permitted by the Committee, the Optionee must elect to use Previously Acquired Shares on
or before the date that the amount of tax to be withheld is determined.

8. Adjustments.

     In the event that the Committee shall determine that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the Company or other
similar corporate transaction or event affects the Common Stock such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the

5

 

number and type of Common Stock (or other securities or other property) subject to the Option
and (ii) the exercise price with respect to the Option.

9. Certain Definitions.

     For purposes of this Agreement, the following additional definitions will apply:

     (a) “Broker Exercise Notice” means a written notice pursuant to which
Optionee, upon exercise of an Option, irrevocably instructs a broker or dealer to
sell a sufficient number of shares or loan a sufficient amount of money to pay all
or a portion of the exercise price of the Option and/or any related withholding tax
obligations and remit such sums to the Company and directs the Company to deliver
stock certificates to be issued upon such exercise directly to such broker or
dealer.

     (b) “Cause” will have the meaning set forth in any employment or other
agreement or policy applicable to the Optionee or, if no such agreement or policy
exists, will mean (i) failure to adhere to the Company’s Code of Conduct, (ii)
dishonesty, fraud, misrepresentation, theft, embezzlement or injury or attempted
injury, in each case related to the Company or any Subsidiary, (iii) any unlawful
or criminal activity of a serious nature, (iv) any breach of duty, habitual neglect
of duty or unreasonable job performance, or (v) any material breach of any
employment, service, confidentiality or noncompete agreement entered into with the
Company or any Subsidiary.

     (c) “Change of Control” shall mean the first of the following events to occur:

     (i) there is consummated a merger or consolidation to which the
Company or any direct or indirect subsidiary of the Company is a party
if the merger or consolidation would result in the voting securities of
the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) less than 60% of the combined voting power of the securities of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation; or

     (ii) 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 the Company representing 20% or more of the total combined
voting power of the Company’s then issued and outstanding securities is
acquired 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: (1) any acquisition by the Company or any of its subsidiaries,
(2) any acquisition directly from the Company or any of its subsidiaries,
(3) any acquisition by any employee benefit plan (or related trust or
fiduciary) sponsored or maintained by the Company or any corporation
controlled by the Company, (4) any acquisition by an underwriter
temporarily holding securities pursuant to an offering of such securities,

6

 

(5) any acquisition by a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company, (6) any acquisition in
connection with which, pursuant to Rule 13d-1 promulgated pursuant to the
Exchange Act, the individual, entity or group is permitted to, and
actually does, report its beneficial ownership on Schedule 13G (or any
successor Schedule); provided that, if any such individual, entity or
group subsequently becomes required to or does report its beneficial
ownership on Schedule 13D (or any successor Schedule), then, for purposes
of this paragraph, such individual, entity or group shall be deemed to
have first acquired, on the first date on which such individual, entity or
group becomes required to or does so report, beneficial ownership of all
of the voting securities of the Company beneficially owned by it on such
date, and (7) any acquisition in connection with a merger or consolidation
which, pursuant to paragraph (c)(i) above, does not constitute a Change of
Control; or

     (iii) there is consummated a transaction contemplated by an agreement
for the sale or disposition by the Company of all or substantially all of
the Company’s assets, other than a sale or disposition by the Company of
all or substantially all of the Company’s assets to an entity, at least
60% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale; or

     (iv) the stockholders of the Company approve any plan or proposal for
the liquidation of the Company; or

     (v) a change in the composition of the Board such that the
“Continuity Directors” cease for any reason to constitute at least a
majority of the Board. For purposes of this clause, “Continuity
Directors” means those members of the Board who either (i) were directors
on January 29, 2002, or (ii) were elected by, or on the nomination or
recommendation of, at least a two-thirds (2/3) majority of the
then-existing Board (other than a director whose initial assumption of
office was in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company); or

     (vi) such other event or transaction as the Board shall determine
constitutes a Change of Control.

     (d) “Disability” means the disability of the Optionee such as would entitle
the Optionee to receive disability income benefits pursuant to the long-term
disability plan of the Company or Subsidiary then covering the Optionee or, if no
such plan exists or is applicable to the Optionee, the permanent and total
disability of the Optionee within the meaning of Section 22(e)(3) of the Code.

7

 

     (e) “Previously Acquired Shares” means shares of Common Stock that are already
owned by the Optionee or that are to be issued upon the exercise of the Option.

     (f) “Retirement” means the termination (other than for Cause or by reason of
death or Disability) of an Optionee’s employment or other service on or after the
date on which the Optionee has attained the age of 55 and has completed 10 years of
continuous service to the Company or any Subsidiary (such period of service to be
determined in accordance with the retirement/pension plan or practice of the
Company or Subsidiary then covering the Optionee, provided that if the Optionee is
not covered by any such plan or practice, the Optionee will be deemed to be covered
by the Company’s plan or practice for purposes of this determination).

     (g) “Subsidiary” means any entity that is directly or indirectly controlled by
the Company or any entity in which the Company has a significant equity interest,
as determined by the Committee.

10. Subject to Plan.

     The Option and the Option Shares granted and issued pursuant to this Agreement have been
granted and issued under, and are subject to the terms of, the Plan. The terms of the Plan are
incorporated by reference in this Agreement in their entirety, and the Optionee, by execution of
this Agreement, acknowledges having received a copy of the Plan. The provisions of this Agreement
will be interpreted as to be consistent with the Plan, and any ambiguities in this Agreement will
be interpreted by reference to the Plan. In the event that any provision of this Agreement is
inconsistent with the terms of the Plan, the terms of the Plan will prevail.

11. Miscellaneous.

     11.1 Binding Effect. This Agreement will be binding upon the heirs, executors,
administrators and successors of the parties to this Agreement.

     11.2 Governing Law. This Agreement and all rights and obligations under this
Agreement will be construed in accordance with the Plan and governed by the laws of the State of
Delaware, without regard to conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive laws of another jurisdiction.

     11.3 Entire Agreement. This Agreement and the Plan set forth the entire agreement and
understanding of the parties to this Agreement with respect to the grant and exercise of the Option
and the administration of the Plan and supersede all prior agreements, arrangements, plans and
understandings relating to the grant and exercise of the Option and the administration of the Plan.

     11.4 Amendment and Waiver. Other than as provided in the Plan, this Agreement may be
amended, waived, modified or canceled only by a written instrument executed by the parties to this
Agreement or, in the case of a waiver, by the party waiving compliance.

[The Remainder of This Page Left Intentionally Blank]

8

 

     The parties to this Agreement have executed this Agreement effective as of the Date of Grant.

	 	 	 
	

	CERIDIAN CORPORATION
	 
	 	 
	

	By:	 
	

	 	 
	

	Its:	 
	

	 	 
	 
	 	 
	By execution of this Agreement,
the Optionee acknowledges having
received a copy of the Plan.

	OPTIONEE	 
	

	 
	

	(Signature)
	 
	 	 
	

	 
	

	(Name and Address)
	 
	 	 
	

	 
	 
	 	 
	

	 
	 
	 	 
	

	Employee Number:
	

	 	 

Version: 12-17-2004

9

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