Document:

Exhibit
10.40

October 5, 2006

Mr. Jan H. Loeb

Mr. Nauman S. Toor

c/o Olshan Grundman Frome Rosenzweig & Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

Attn.: Steven Wolosky, Esq.

Re: Golf Trust
of America, Inc. — Director Candidates

Gentlemen:

Please confirm the
following by executing this letter below and returning an executed copy to the
undersigned:

1.     Golf
Trust of America, Inc. (the “Company”) shall: (i) increase the number of the
Company’s directors from five, consisting of two Class I directors, the term of
which expires at the 2006 Annual Meeting (as hereinafter defined), two Class II
directors, the term of which expires at the 2008 annual meeting of stockholders
(the “2008 Annual Meeting”) and one Class III director, the term of which
expires at the 2007 annual meeting of stockholders (the “2007 Annual Meeting”)
to seven, consisting of three Class I directors, two Class II directors and two
Class III directors; (ii) include (and recommend the candidacy of) Mr. Jan H.
Loeb (“Loeb”) in the Company’s Board of Directors’ slate of three nominees for
potential election as Class I directors of the Company at the 2006 Annual
Meeting of Stockholders (the “2006 Annual Meeting”) and provide Loeb with
substantially the same assistance that the Company provides the other Board
candidates, and (iii) nominate (and recommend the candidacy of) Mr. Nauman S.
Toor (“Toor” and, together with Loeb, the “Director Candidates”) as the only
candidate for potential election as an additional Class III director of the
Company at the 2006 Annual Meeting to fill the vacancy created by the increase
in the number of Class III directors from one to two (and to serve for a term
expiring at the 2007 Annual Meeting) and, for purposes of the proxy solicitation,
provide Toor with substantially the same assistance that the Company provides
the other Board candidates.  Each
Director Candidate hereby acknowledges and agrees that the Company cannot
assure the Director Candidates of the outcome of any stockholder vote, and each
Director Candidate hereby agrees that the Company, its Board of Directors, its
officers and its affiliates (collectively the “GTA Parties”) shall have no
liability in the event that the stockholders do not approve the Director
Candidates after the Company distributes to the stockholders the proxy
materials including the Director Candidates as nominees to the Board.  The Director Candidates further agree that
(x) the GTA Parties shall have no further obligations

 

 

under this Section 1 in the event that the stockholders do not
elect one or both of the Director Candidates and (y) the GTA Parties shall have
no obligation to hire a proxy solicitor to solicit votes for the Director
Candidates.  The Company’s obligations
under this letter agreement, including, without limitation, this Section 1 are
conditioned upon the Company’s receipt of true, correct (in all material
respects) and complete copies of the D&O Questionnaires from the Director
Candidates.

2.     Each
Director Candidate shall not, and each Director Candidate will not authorize or
knowingly permit his affiliates and associates to, (i) solicit proxies or
engage in a proxy contest with respect to the election of directors or any
other proposal to be considered at the 2006 Annual Meeting or present any
proposal for consideration at such annual meeting of stockholders, or (ii)
encourage any other person or entity to solicit proxies or engage in a proxy
contest with respect to the election of directors or any other proposal to be
considered at the 2006 Annual Meeting or present any other proposal for
consideration at the 2006 Annual Meeting. 
In furtherance of the foregoing, Loeb hereby withdraws in its entirety
his letter dated August 23, 2006 (the “Loeb Notice”) providing notice to the
Company of Loeb’s intention to nominate Mr. Loeb and Mr. Toor for election as
directors of the Company at the 2006 Annual Meeting and to introduce certain
other matters at the 2006 Annual Meeting (the “Board Composition Proposals”),
and the Director Candidates and their affiliates shall immediately cease all
efforts, direct or indirect, in furtherance of the Board Composition Proposals
and any related solicitation, and any other action to obtain or influence
control of the Company, and shall not vote, deliver or otherwise use any
proxies heretofore obtained in connection with the Board Composition Proposals.

3.     Following
the date hereof, neither Director Candidate shall issue, and neither Director
Candidate shall authorize or knowingly permit any of his affiliates, associates
or representatives to issue, any other press releases or other public
announcements or make any filings with the Securities and Exchange Commission
concerning the terms hereof or the relationship between the parties (including,
without limitation, any Schedule 13Gs) without the prior written consent of the
Company.  Notwithstanding anything to the
contrary in this Section 3, the Director Candidates may (i) file an
amendment or amendments to the Schedule 13D in accordance with Paragraph 1 of
this letter agreement or as otherwise required by law or (ii) make other
filings as required by law; provided, however, the Company must
be given a reasonable opportunity to review any such draft filings in advance
of any filing and provide comments to the draft thereof, and the Director
Candidates must reasonably consider for incorporation into any such filings any
reasonable comments from the Company.

4.     Each
Director Candidate agrees that the Director Candidates, if elected to the
Company’s Board of Directors, shall be governed by the same obligations
regarding confidentiality, conflicts of interests, fiduciary duties, trading
and disclosure policies and other governance guidelines as the other members of
the Company’s Board of Directors.  Each
Director Candidate hereby represents to the Company that there is no voting
agreement or similar arrangement between the Director Candidates, and each
Director Candidate covenants that there will be no future voting agreement or
similar arrangement between the Director Candidates.  In addition, each Director Candidate hereby
acknowledges that the Company’s stockholders have previously approved and
adopted a Plan of Liquidation of the Company (the “Plan of Liquidation”), and
that the Company’s Board of Directors intends to conduct the

 2
 

 

operations of the Company in a manner consistent with the Plan of
Liquidation, unless or until the Company’s Board and the Company’s stockholders’
approve otherwise.  Each Director
Candidate hereby agrees to act in a manner consistent with and in furtherance
of the Plan of Liquidation as approved by the Company’s stockholders, unless or
until the Company’s Board and the Company’s stockholders’ approve
otherwise.  Nothing herein shall prevent
a Director from proposing to the Board for its preliminary consideration
(subject to approval by the Company’s stockholders) of a modification to the
Plan of Liquidation.

5.     This
letter agreement shall remain in full force and effect and shall be fully
binding on the Company and the Director Candidates in accordance with the
provisions hereof until the close of the 2006 Annual Meeting, including any
adjournment thereof (the “Termination Date”), provided, however, that the
representations, warranties, covenants and agreements of the Director
Candidates set forth in Sections 2, 3 and 4 and the final
sentence of Section 1 shall survive until such time as neither Toor nor
Loeb serve as a member of the Company’s Board of Directors.  Notwithstanding the foregoing, the Company
shall reimburse the Director Candidates the reasonable and actually incurred
legal fees incurred by the Director Candidates solely in furtherance of
concluding this letter, the proposed nomination of the Director Candidates and
the preparation of the related Schedules 13D, which shall in no event exceed
$25,000 in the aggregate (the “Legal Expenses”) as, when and if the following
first occur:  (i) Mr. W. Bradley Blair
II, the Company’s Chief Executive Office and President, and Mr. Scott D.
Peters, the Company’s Senior Vice President and Chief Financial Officer, have
first been paid milestone payments currently due and payable to them by the
Company (or such persons have individually irrevocably waived the milestone
payments owed to them); and (ii) the Director Candidates have not withdrawn
their candidacy as Director Candidates at any time prior to the 2006 Annual
Meeting; and (iii) the Director Candidates shall have delivered to the Company
a true, correct and complete original of the invoice of the Legal Expenses
within thirty (30) days after the date hereof.

6.     This
letter agreement shall be deemed to have been executed and delivered within the
State of Maryland, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws
of the State of Maryland without regard to principles of conflict of laws.  Any action or proceeding arising from or
relating to this letter agreement must be brought in Maryland, and each party
irrevocably submits to the jurisdiction and venue of any such court in any such
action or proceeding.

7.     Neither
Director Candidate may transfer, assign, pledge or hypothecate, by operation of
law or otherwise, its rights and obligations under this letter agreement
without the prior written consent of the Company.  Subject to the foregoing sentence, this
letter agreement shall inure to the benefit of and be binding upon the parties
hereto, and to their respective successors, and no other person shall have any
right or obligation hereunder.

8.     The
invalidity or unenforceability of any section, paragraph or provision of this
letter agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. 
If any section, paragraph or provision of this letter agreement is for
any reason determined to be invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

 3
 

 

9.     The Company, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of its rights under this
letter agreement.  Each Director
Candidate agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this letter
agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

10.   This letter agreement
constitutes the entire agreement of the parties hereto with respect to the
matters discussed herein.

11.     This letter agreement may
be executed in several counterparts with the same effect as if the parties
executing the several counterparts had all executed one counterpart.

Thank you.

	
  

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  /s/ W. Bradley
  Blair, II

  	
   

  
	
   

  	
  W. Bradley
  Blair, II

  Chief Executive
  Officer, President and

  
	
   

  	
  Chairman of the
  Board of Directors of

  Golf Trust of
  America, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

AGREED TO AND APPROVED
BY:

“Director
Candidates”

“Loeb”

	
  /s/ Jan H. Loeb

  	
   

  
	
  Jan H. Loeb

  
	
   

  
	
  “Toor”

  
	
   

  
	
  /s/ Nauman S.
  Toor

  	
   

  
	
  Nauman S. Toor

  

 

 4EXHIBIT
10.1

CERIDIAN
CORPORATION

EXECUTIVE
EMPLOYMENT AGREEMENT

PARTIES

Ceridian
Corporation

3311 East Old Shakopee Road

Minneapolis, Minnesota 55425-1640

and

Kathryn
V. Marinello

(“Executive”)

Date:             October 1, 2006

RECITALS

A.            Ceridian wishes to
obtain the services of Executive for the duration of this Agreement, and
Executive wishes to provide services for such period.

B.            Ceridian desires
reasonable protection of Ceridian’s Confidential Information (as defined
below).

C.            Ceridian desires
assurance that Executive will not compete with Ceridian, engage in recruitment
of Ceridian’s employees or make disparaging statements about Ceridian after
termination of employment, and Executive is willing to refrain from such
competition, recruitment and disparagement.

D.            Executive desires to
be assured of a minimum Base Salary (as defined below) from Ceridian for
Executive’s services for the term of this Agreement.

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 forbearance of
career options.

 1
 

 

G.            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.

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        “Affiliate”
means any entity with whom Ceridian would be considered a single employer under
Section 414(b) or 414(c) of the Code.

1.02        “Base Salary”
means annualized base salary as defined under Section 3.01 of Article III.

1.03        “Board” means
the Board of Directors of Parent Corporation.

1.04        “Cause” means
cause as defined under Section 4.02 of Article IV.

1.05        “Ceridian” means
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 1.12).

1.06        “Code” means
the Internal Revenue Code of 1986, as amended.

1.07        “Committee” means
the Compensation Committee of the Board.

1.08        “Confidential
Information” means information or material of Ceridian which is not
generally available to or used by others, or the utility or value of which is
not generally known or recognized as standard practice, whether or not the
underlying details are in the public domain, including:

(a)           information or material
relating to Ceridian and its business as conducted or anticipated to be
conducted; business plans; operations; past, current or anticipated 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;

 2
 

 

(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
services, products or software;

(c)           information on or
material relating to Ceridian which when received is marked as “proprietary,” “private,”
or “confidential;”

(d)           trade secrets of
Ceridian;

(e)           software of Ceridian in
various stages of development, software designs, web-based solutions,
specifications, programming aids, programming languages, interfaces, visual
displays, technical documentation, user manuals, data files and databases of
Ceridian; and

(f)            any similar
information of the type described above which Ceridian obtained from another
party and which Ceridian treats as or designates as being proprietary, private
or confidential, whether or not owned or developed by Ceridian.

Notwithstanding the foregoing, “Confidential
Information” does not include any information which is properly published or in
the public domain; provided, however, that information which is published by or
with the aid of Executive outside the scope of employment or contrary to the
requirements of this Agreement will not be considered to have been properly
published, and therefore will not be in the public domain for purposes of this
Agreement.

1.09        “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.

1.10        “Good Reason”
means any one or more of the following events which shall occur without
Executive’s express written consent:

(a)           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.

(b)           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

 3
 

 

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;

(c)           Ceridian requiring Executive to be based
anywhere other than within 50 miles of Executive’s job location as of the
Commencement Date;

(d)           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;

(e)           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

(f)            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.

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.

1.11        “Parent Corporation”
means Ceridian Corporation.  “Parent
Corporation” shall not include any Subsidiary.

1.12        “Subsidiary”
means:  (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 1.12.

1.13        “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

 4
 

 

experiences a
change in employment status with Ceridian and its Affiliates that constitutes a
“separation from service” under Section 409A of the Code.

ARTICLE
II

EMPLOYMENT,
DUTIES AND TERM

2.01      Employment.  Upon the terms and conditions set forth in
this Agreement, Ceridian hereby employs Executive as President and Chief
Executive Officer, and Executive accepts such employment.

2.02      Duties.  Executive shall devote her full-time and best
efforts to Ceridian and to fulfilling the duties of her position which shall
include such duties as may from time to time be assigned 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.

Executive also agrees to serve, for any period for
which the Executive is elected, as a member of the Board or as a director or
officer of any Affiliate; provided, however, that Executive shall not be
entitled to any additional compensation for serving in any of such capacities.  Unless prohibited by applicable law, court
order or binding shareholder action, Ceridian will place the name of Executive
in nomination to serve as Chair of the Board upon the first anniversary of the
Commencement Date (as defined below) and from time to time thereafter.  Upon termination of Executive’s employment,
for whatever reason, Executive agrees to resign immediately from the Board and
from all Affiliate boards of directors on which she is then currently serving.

2.03      Term.  Subject to the provisions of Articles IV and
VIII, Executive’s employment with Ceridian shall commence on October 23, 2006
or such earlier date as may be mutually agreed upon by the parties (the “Commencement
Date”) and shall continue until October 22, 2009 (the “Initial Term”).  Following the end of the Initial Term and on
each anniversary thereof, and subject to the provisions of Article 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.

 5
 

 

ARTICLE
III

COMPENSATION
AND EXPENSES

3.01        Base Salary.  As base compensation for all services
rendered under this Agreement, Executive shall receive an annualized base
salary (“Base Salary”) of Seven Hundred Eighty Thousand Dollars ($780,000.00),
starting on the Commencement Date.  The
Base Salary shall be paid in accordance with Ceridian’s normal payroll
procedures and policies, as such procedures and policies may be modified from
time to time.  At least once annually,
the Base Salary shall be reviewed and adjusted in the sole discretion of the
Committee.

3.02        Bonus and Incentive.  Bonus or incentive compensation shall be at
the sole discretion of the Committee (including any goals the Committee
establishes to govern such plans for any year), in accordance with the terms
and conditions of any Ceridian bonus or incentive plans; provided, however,
that for purposes of Executive’s 2007 cash incentive (payable in 2008),
Executive’s “threshold” cash incentive shall mean an amount equal to 80% of
Base Salary; “target” cash incentive shall mean an amount equal to 110% of Base
Salary; and “superior” cash incentive shall mean an amount equal to 140% of
Base Salary.  In addition, Executive’s
2007 cash incentive shall be multiplied by 1.25 (representing three months of
2006 and all of 2007).  Except as
otherwise provided in this Section 3.02 and in Article VII, Ceridian shall have
the right, in accordance with their terms, to alter, amend or eliminate any
bonus or incentive plans without compensation to Executive.

3.03.       Stock Option and
Restricted Stock Grants. 
Ceridian hereby grants to Executive an option to purchase shares of Ceridian’s
common stock, effective as of the Commencement Date.  The number of shares subject to Executive’s
option shall be determined by taking Two Million Seven Hundred Fifty Thousand
Dollars ($2,750,000) divided by the “fair market value” of Ceridian’s common
stock as of the close of business on the Commencement Date (as reported in the
Midwest Edition of the Wall Street Journal) and further divided by 33% (or such
other appropriate percentage as required under the Black Scholes method for
converting dollar amounts into option shares). 
The exercise price for this option shall be the fair market value of
Ceridian’s common stock as of the close of business on the Commencement Date,
as reported in the Midwest Edition of the Wall Street Journal.

 6
 

 

Ceridian hereby also grants to Executive Ceridian
restricted shares of Ceridian’s stock having a value in the gross amount of One
Million Three Hundred Fifty Thousand Dollars ($1,350,000) as of the date of
grant, which shall coincide with the Commencement Date (such value to be
determined as of the close of business on the Commencement Date, as reported in
the Midwest Edition of the Wall Street Journal).  Such option and restricted shares shall vest
ratably in annual 33-1/3% increments over a three-year period, in accordance
with the following schedule:

	
  Vesting Date:

  	
   

  	
  Percentage of Equity Award Vested:

  	
   

  
	
  October 1, 2007

  	
   

  	
  33-1/3%

  	
   

  
	
  October 1, 2008

  	
   

  	
  33-1/3%

  	
   

  
	
  October 1, 2009

  	
   

  	
  33-1/3%

  	
   

  

 

Except as expressly set forth in this Section 3.03,
Section 4.03(a) and Section 7.03(e), the option and restricted shares to be
awarded to Executive under this Section 3.03 shall be provided in all other
respects subject to and in conformity with the provisions of Ceridian’s 2004
Long Term Stock Incentive Plan (the “Stock Plan”), as the same may be amended
from time to time, and Ceridian’s standard form of non-qualified stock option
and restricted stock agreements, to be entered into by Executive and Ceridian.

3.04.       Retention Bonus.  In consideration of Executive’s commencement
and continuation of employment with Ceridian as provided herein, and to replace
forfeited compensation earned at her previous employer, Ceridian will provide
to Executive as a Retention Bonus restricted shares of Ceridian’s stock having
a value in the gross amount of Two Million Five Hundred Thousand Dollars
($2,500,000) as of the date of grant, which shall coincide with the
Commencement Date (such value to be determined as of the close of business on
the Commencement Date, as reported in the Midwest Edition of the Wall Street
Journal).  Such restricted shares shall
vest ratably in annual 33-1/3% increments over a three-year period, in
accordance with the following schedule:

	
  Vesting Date:

  	
   

  	
  Percentage of Retention Bonus Vested:

  	
   

  
	
  October 1, 2007

  	
   

  	
  33-1/3%

  	
   

  
	
  October 1, 2008

  	
   

  	
  33-1/3%

  	
   

  
	
  October 1, 2009

  	
   

  	
  33-1/3%

  	
   

  

 

Executive
may, at her option, elect to receive some or all of the Retention Bonus in the
form of an option to purchase shares of Ceridian’s common stock, provided that
Executive has made and communicated such election to Ceridian in writing on or
prior to the Commencement Date.  For
purposes of converting Executive’s restricted shares into an option, the number
of shares subject to Executive’s option shall be determined by dividing the
number of restricted shares designated for conversion by 33% (or such other
appropriate percentage as required under the Black Scholes method for
converting restricted shares into option shares).  The exercise price for this option shall be
the fair

 7
 

 

market
value of Ceridian’s common stock as of the close of business on the
Commencement Date, as reported in the Midwest Edition of the Wall Street
Journal.

Except
as expressly set forth in this Section 3.04, Section 4.03(a) and Section 7.03(e),
the option (if any) and restricted shares to be awarded to Executive as a
Retention Bonus shall be provided in all other respects subject to and in
conformity with the provisions of Ceridian’s Stock Plan, as the same may be
amended from time to time, and Ceridian’s standard form of non-qualified stock
option and restricted stock agreements, to be entered into by Executive and
Ceridian.

3.05.       Signing Bonus.  In consideration of Executive’s execution and
delivery of this Agreement and her commencement of employment with Ceridian,
Ceridian will pay to the Executive a one-time lump sum payment in the gross
amount of Nine Hundred Fifty Thousand Dollars ($950,000), which shall be
payable within ten (10) working days following the Commencement Date.

3.06.       Benefit Plans.  Executive shall be entitled to participate in
the employee health and welfare, retirement and other employee benefits
programs offered generally by Ceridian to its executive employees, to the
extent that Executive’s position, tenure, salary, health, and other
qualifications make Executive eligible to participate.  Executive shall also receive an allowance, to
be determined periodically by the Committee, for membership in a country club
of her choice.

3.07        Additional Annual
Payment in Lieu of Certain Perquisites. 
Executive shall be paid a minimum of Forty Five Thousand Dollars
($45,000) per annum in lieu of certain perquisites, the first payment of which
shall be payable within ten (10) working days following the Commencement Date
and in subsequent years shall be paid in accordance with Ceridian’s normal
payroll procedures and policies, as such procedures and policies may be
modified from time to time.    No such
policies or procedures shall allow for the non-payment of the amounts due
pursuant to this Section 3.07.  Such
compensation shall be reviewed and increased in the sole discretion of the
Committee.

3.08        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 her duties as an employee of Ceridian,
provided that Executive accounts promptly for such expenses to Ceridian in the
manner prescribed from time to time by Ceridian.

ARTICLE
IV

EARLY
TERMINATION

4.01        Early Termination.  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.

 8
 

 

4.02        Termination for Cause.  Ceridian may terminate this Agreement and
Executive’s employment immediately for Cause. 
For the purpose hereof “Cause” means:

(a)           fraud;

(b)           misrepresentation which
has or could have a materially adverse effect on Ceridian;

(c)           theft or embezzlement
of Ceridian assets;

(d)           conviction of a crime
involving moral turpitude;

(e)           failure to follow
Ceridian’s conduct and ethics policies; and/or

(f)            the continued failure
by Executive to attempt in good faith to perform 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.

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.

4.03        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:

(a)           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

 9
 

 

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:

(1)           a
lump sum cash payment equal to two times the sum of (i) Executive’s
then-current Base Salary and (ii) the bonus, if any, to which Executive became
entitled under all applicable Ceridian annual bonus plans for the full fiscal
year completed immediately prior to termination (or, if termination occurs in
Executive’s first fiscal year, the bonus, if any, to which Executive would
otherwise have become entitled under all applicable Ceridian annual 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 her duties in the same manner as they were performed
immediately prior to termination, without giving effect to any reduction in
bonus opportunity constituting Good Reason).

(2)           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);

(3)           reasonable
executive-level outplacement services, not to exceed $50,000, 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

(4)           if
following her termination, Executive elects COBRA continuation coverage for
Executive and her eligible dependents under Ceridian’s group health plan,
Ceridian shall reimburse Executive for the applicable COBRA premiums paid
during the COBRA continuation period.

Notwithstanding the foregoing, in the event that a
Termination of Executive’s Employment under this Section 4.03(a) occurs before
October 1, 2007, 33-1/3% of the options and restricted shares awarded to
Executive under Section 3.03 and Section 3.04 shall become fully vested and
exercisable and, if applicable, free from all restrictions.  The payment
and provision of the severance benefits provided for in this Section 4.03(a)
are conditioned upon Executive executing a release, similar to that attached as
Exhibit A, of all claims against Ceridian. 
Payment and provision of benefits shall commence promptly following
termination and Executive’s endorsement of the Release attached as Exhibit A
and the expiration of the right of rescission set forth in Exhibit A without
Executive exercising her right of rescission (or, in the case of any bonus in
Section

 10
 

 

4.03(a)(1) or Section 4.03(a)(2)
that is calculated upon completion of the fiscal year in which termination
occurs, payment shall be within 15 days after the date such bonus would
have been paid had Executive remained employed for the full fiscal year, if
later).

(b)           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.

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 the following death benefits as soon as
practicable following Ceridian’s receipt of notice of Executive’s death, a lump
sum cash payment equal to one year of Executive’s then-current Base Salary.

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.

(b)           In the event of
Executive’s Disability, Base Salary shall be terminated as of the end of the
month in which the last day of the six-month period of Executive’s inability to
perform her duties, despite Ceridian’s
efforts to reasonably accommodate, occurs.

(c)           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 (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 is the number of days in the applicable fiscal
year through the date of termination and the denominator of 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.

4.05        Retirement.  Executive may terminate this Agreement and
Executive's employment as a result of Executive’s decision to retire from
Ceridian.  Executive shall provide
Ceridian with at least 30 days' written notice of the date upon which Executive
intends to retire.  Executive shall be
paid at the usual rate of her annual Base Salary through the date of retirement
stipulated in the written notice.

 11

 

4.06.       Entire Termination Payment.  The
compensation provided for in this Article IV for early termination of this
Agreement and Termination of Executive’s Employment pursuant to this
Article IV shall constitute Executive’s sole remedy for such termination.  Executive shall not be entitled to any other
termination or severance payment which may be payable to Executive under any
other agreement between Executive and Ceridian.

ARTICLE
V

CONFIDENTIALITY,
DISCLOSURE AND ASSIGNMENT

5.01        Confidentiality.  Executive 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 this Agreement or her
employment, publish, disclose, or utilize in any manner any Confidential
Information obtained while employed by Ceridian except in connection with
performing her duties as an Executive of 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 transfer 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

 12
 

 

if Executive leaves the employ of Ceridian, Ceridian
shall pay Executive at a rate of $5,000 per business day, plus reasonable
traveling or other expenses.

5.05
       Inventions Developed on Executive’s Own Time.  The two immediately preceding sections
entitled “Disclosure” and “Instruments of Assignment” do not apply to
inventions in which a Ceridian claim of any rights will create a violation of
Chapter 181 Minnesota Statutes, Section 181.78, reproduced below and
constituting the written notification of its Subdivision 3.

181.78 Agreements; terms relating to inventions

Subdivision 1.

Any provision in an employment agreement which
provides that an employee shall assign or offer to assign any of the employee’s
rights in an invention to the employer shall not apply to an invention for
which no equipment, supplies, facility or trade secret information of the
employer was used and which was developed entirely on the employee’s own time,
and (1) which does not relate (a) directly to the business of the
employer or (b) to the employer’s actual or demonstrably anticipated
research or development, or (2) which does not result from any work
performed by the employee for the employer. 
Any provision which purports to apply to such an invention is to that
extent against the public policy of this state and is to that extent void and
unenforceable.

Subdivision 2.

No employer shall require a provision made void and
unenforceable by subdivision 1 as a condition of employment or continuing
employment.

Subdivision 3.

IF AN EMPLOYMENT AGREEMENT ENTERED INTO AFTER
AUGUST 1, 1977, CONTAINS A PROVISION REQUIRING THE EMPLOYEE TO ASSIGN OR
OFFER TO ASSIGN ANY OF THE EMPLOYEE’S RIGHTS IN ANY INVENTION TO AN EMPLOYER,
THE EMPLOYER MUST ALSO, AT THE TIME THE AGREEMENT IS MADE, PROVIDE A WRITTEN
NOTIFICATION TO THE EMPLOYEE THAT THE AGREEMENT DOES NOT APPLY TO AN INVENTION
FOR WHICH NO EQUIPMENT, SUPPLIES, FACILITY OR TRADE SECRET INFORMATION OF THE
EMPLOYER WAS USED AND WHICH WAS DEVELOPED ENTIRELY ON THE EMPLOYEE’S OWN TIME,
AND (1) WHICH DOES NOT RELATE (a) DIRECTLY TO THE BUSINESS OF THE EMPLOYER OR
(b) TO THE EMPLOYER’S ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR
DEVELOPMENT, OR (2) WHICH DOES NOT RESULT FROM ANY WORK PERFORMED BY THE
EMPLOYEE FOR THE EMPLOYER.

5.06
       Executive’s Declaration. Executive has
no inventions, data bases, improvements, discoveries, software, writings or
other works of authorship useful to Ceridian in the

 13
 

 

normal course of business, which were conceived, made
or written prior to the date of this Agreement and which are excluded from this
Agreement.

5.07
       Survival.  The obligations of this Article V shall
survive the expiration or termination of this Agreement and Executive’s
employment.

ARTICLE
VI

NON-COMPETITION,
NON-RECRUITMENT, AND NON-DISPARAGEMENT

6.01        General.  The parties hereto recognize and agree that
(a) upon commencement of employment, Executive shall serve as a senior executive
of Ceridian and as a key executive of Ceridian, (b) Executive has received, and
will in the future receive, substantial amounts of Confidential Information,
(c) Ceridian’s business is conducted on a worldwide basis, and (d) provision
for non-competition, non-recruitment and non-disparagement obligations by
Executive is critical to Ceridian’s continued economic well-being and
protection of Ceridian’s Confidential Information.  In light of these considerations, this
Article VI sets forth the terms and conditions of Executive’s obligations of
non-competition, non-recruitment and non-disparagement subsequent to the
termination of this Agreement and/or Executive’s employment for any reason
other than a Change of Control Termination. 
Sections 6.02 and 6.03 of this Agreement shall be of no further force or
effect upon a Change of Control Termination.

6.02        Non-Competition.

(a)           During
the term of this Agreement, Executive will devote full time and energy to
furthering Ceridian’s business and will not pursue any other business activity
without Ceridian’s written consent; provided, however, that Executive may serve
on the board of directors of one other entity that is not an Affiliate, subject
to the Executive’s prior consultation with the nominating and governance
committee of the Board; and provided, further, that Executive may author one
book, on the condition that her time and efforts associated with such
authorship do not diminish her full and faithful discharge of all her
responsibilities to Ceridian under this Agreement, including but not limited to
her duties as President and Chief Executive Officer and her obligations under
Article V above and Section 6.04 below.   
Unless the obligation is waived or limited by Ceridian in accordance
with subsection (b) of this Section 6.02, Executive agrees that during her
employment with Ceridian and for a period of two years following termination of employment for
any reason other than a Change of Control Termination (“Non-Compete Period”),
Executive will not directly or indirectly, alone or as a partner, officer,
director, shareholder or employee of any other firm or entity, engage in any
commercial activity in competition with any part of Ceridian’s business as
conducted as of the date of such termination of employment or with any part of
Ceridian’s contemplated business with respect to which Executive has
Confidential Information.  For purposes
of this subsection

 14
 

 

(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 at any
time within the Non-Compete Period, waive or limit the time and/or geographic
area in which Executive cannot engage in competitive activity.

(c)           During the Non-Compete
Period, prior to accepting employment with or agreeing to provide consulting
services to, any firm or entity which offers competitive products or services,
Executive shall give 30 days prior written notice to Ceridian.  Such written notice shall describe the firm
and the employment or consulting services to be rendered to the firm or entity,
and shall include a copy of the written offer of employment or engagement of
consulting services.  Ceridian shall
respond within 20 days with approval of or objection to Executive’s notice of
desire to render employment or consulting services with such firm or entity.

6.03        Non-Recruitment.  During the term of employment and for a
period of two years following
termination of employment for any reason other than a Change of Control
Termination, Executive will not directly or indirectly hire any of Ceridian’s
employees, or solicit any of Ceridian’s employees for the purpose of hiring
them or inducing them to leave their employment with Ceridian, nor will
Executive own, manage, operate, join, control, consult with, participate in the
ownership, management, operation or control of, be employed by, or be connected
in any manner with any person or entity which engages in the conduct proscribed
in this Section 6.03.  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        Non-Disparagement.  Executive will not, during the term or
after the termination or expiration of this Agreement or Executive’s
employment, make disparaging statements, in any form, about Ceridian, its
officers, directors, agents, employees, products or services which Executive
knows, or has reason to believe, are false or misleading.  Ceridian will not, during the term or after
the termination or expiration of this Agreement or Executive’s employment, make
disparaging statements, in any form, about Executive which Ceridian knows, or
has reason to believe, are false or misleading.

6.05        Survival and
Enforceability.  The obligations
of this Article VI shall survive the expiration or termination of this
Agreement and Executive’s employment. 
Should any provision of this Article VI be held invalid or illegal, such
illegality shall not invalidate the whole of this Article VI or the Agreement,
but, rather, Article VI shall be construed as if it did not contain the illegal
part or narrowed to permit its enforcement, and the

 15
 

 

rights and obligations of the parties shall be
construed and enforced accordingly. In
furtherance of and not in limitation of the foregoing, Executive expressly
agrees that should the duration of or geographical extent of, or business
activities covered by, any provision of this Article VI be in excess of that
which is valid or enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities that may validly
be covered.  Executive acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Article VI 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
Article VI does not replace and is in addition to any other agreements
Executive may have with Ceridian on the matters addressed herein.

ARTICLE
VII

CHANGE
OF CONTROL

7.01        Definitions.  For purposes of this Article VII, the
following definitions shall be applied:

(a)           “Benefit Plan” means any formal or
informal plan, program or other arrangement heretofore or hereafter adopted by
Ceridian for the direct or indirect provision of compensation to Executive
(including groups or classes of participants or beneficiaries of which
Executive is a member), whether or not such compensation is deferred, is in the
form of cash or other property or rights, or is in the form of a benefit to or
for Executive.

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

(1)           there is consummated a merger or consolidation to
which Ceridian or any direct or indirect Subsidiary of Ceridian is a party if
the merger or consolidation would result in the voting securities of Ceridian
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 Ceridian or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation; or

(2)           the direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of  1934, as amended (the “Exchange Act”)) in the
aggregate of securities of Ceridian representing twenty percent (20%) or more
of the total combined voting power of Ceridian’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 hereof, the
following acquisitions shall not constitute a Change of Control: (A) any acquisition
by Ceridian or any of its subsidiaries, (B) any acquisition directly from
Ceridian or any of its 

 16
 

 

subsidiaries, (C) any acquisition by
any employee benefit plan (or related trust or fiduciary) sponsored or
maintained by Ceridian or any corporation controlled by Ceridian, (D) any
acquisition by an underwriter temporarily holding securities pursuant to an
offering of such securities, (E) any acquisition by a corporation owned,
directly or indirectly, by the stockholders of Ceridian in substantially the
same proportions as their ownership of stock of Ceridian, (F) 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 on Schedule
13D, beneficial ownership of all of the voting securities of Ceridian
beneficially owned by it on such date, and (G) any acquisition in connection
with a merger or consolidation which, pursuant to paragraph (1) above, does not
constitute a Change of Control; or

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

(4)           the stockholders of Ceridian approve any plan or
proposal for the liquidation of Ceridian; or

(5)           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 (A) those members of the Board who were
directors on the Commencement Date and (B) those members of the 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 Ceridian) who were
elected or appointed by, or on the nomination or recommendation of, at least a
two-thirds (2/3) majority of the then-existing directors who either were
directors on the date hereof or were previously so elected or appointed; or

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

 17
 

 

Notwithstanding any
provision in this Section 7.01(b) to the contrary, a Change of Control shall
not include a sale, spin off, reverse spin off or similar disposition of any
Subsidiary of Ceridian, unless or until the Board shall determine that such
disposition constitutes a Change of Control.

(c)           “Change of Control Compensation” means
any payment or benefit (including any transfer of property) in the nature of
compensation, to or for the benefit of Executive under this Agreement or any
Other Agreement or Benefit Plan, which is considered to be contingent on a
change in the ownership or effective control of Ceridian for purposes of
Section 280G of the Code.

(d)           “Change of Control Termination” means,
with respect to Executive, any of the following events:

(1)           On or within two years
after a Change of Control, Termination of Executive’s Employment by Ceridian
for any reason other than (A) fraud, (B) theft or embezzlement of Ceridian
assets, (C) conviction of a crime involving moral turpitude, or (D)
failure to follow Ceridian’s conduct and ethics policies;

(2)           On or within two years
after a Change of Control, Termination of Executive’s Employment by Executive
for Good Reason; or

(3)           A Termination of Executive’s Employment by Ceridian other than for the
reasons described in clauses (A) through (D) of Section 7.01(d)(1) during the
pendency of a Potential Change of Control and Executive reasonably demonstrates
that such termination was at the request or direction of a person or entity who
has entered into an agreement, the consummation of which would result in a
Change of Control, or is otherwise in connection with or in anticipation of a
Change of Control (whether or not a Change of Control ever occurs).  For purposes of this Agreement, in the event
of a termination described in the preceding sentence, a Change of Control will
be deemed to have occurred immediately prior to the Termination of Executive’s
Employment for purposes of this Agreement.

A Change of Control Termination by Executive shall not, however,
include termination by reason of death or Disability.  A Termination
of Executive’s Employment by Ceridian shall not constitute a termination
described in clauses (A) through (D) of Section 7.01(d)(1) 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), (B), (C) or (D) of Section 7.01(d)(1) 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-

 18
 

 

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 the 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) or (D) of Section
7.01(d)(1), and specifying the particulars thereof in detail.

(e)           “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.

(f)            “Potential Change of Control” shall be deemed to have occurred if the event set
forth in any one of the following subsections shall have occurred: (A) Ceridian
enters into an agreement, the consummation of which would result in the
occurrence of a Change of Control; (B) Ceridian or any person or entity
publicly announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change of Control; (C) any person becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of Ceridian representing 15% or more of either the
then outstanding shares of common stock of Ceridian or the combined voting
power of Ceridian’s then outstanding securities; or (D) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change of Control has occurred.

7.02        Termination by
Executive.   The Termination of
Executive’s Employment as described in Section 7.01(d)(2) shall be accomplished
by, and effective upon, Executive giving written notice to Ceridian of
Executive’s decision to terminate. 
Except as otherwise expressly provided in this Agreement, upon the
exercise of said right, all obligations and duties of Executive under this
Agreement shall be of no further force and effect.

7.03        Change of Control
Termination Payment.

(a)           In the event
of a Change of Control Termination, Ceridian shall make a lump sum severance
payment to Executive in an amount equal to three times the sum of (1), (2) and
(3) below:

(1)           one
year of Executive’s then-current Base Salary (without giving effect to any
reduction in Base Salary constituting Good Reason), plus the bonus, if any, to
which Executive became entitled under all applicable Ceridian annual bonus
plans for the full fiscal year completed immediately prior to the Change of
Control Termination (or, if termination occurs in Executive’s first fiscal
year, the bonus, if any, to which Executive would otherwise have become
entitled under all applicable Ceridian annual bonus plans in effect had Executive
remained continuously employed for the full fiscal year in which termination
occurred and continued to perform

 19
 

 

her duties in the same manner as they were performed
immediately prior to termination, without giving effect to any reduction in
bonus opportunity constituting Good Reason);

(2)           the
bonus, if any, that Executive would have earned under all applicable Ceridian
bonus plans for the year in which the termination occurs had “superior” goals
been achieved (without giving effect to any reduction in bonus opportunity
constituting Good Reason); and

(3)           the
highest annual amount of 401(k) Restoration Match (as defined in the Ceridian
Corporation Deferred Compensation Plan (the “DCP”)) and Supplemental Match
Credit (as defined in the DCP) made by Ceridian on behalf of Executive into the
DCP over the last three fiscal years prior to termination of Executive.

(b)           In the event
of a Change of Control Termination, Ceridian shall also pay to Executive, along
with the lump sum severance payment described in Section 7.03(a), a prorated
portion of Executive’s bonus compensation for the fiscal year in which the
Change of Control Termination occurs (assuming that any applicable performance
objectives were achieved at the “target” level of performance and without giving
effect to any reduction in bonus opportunity constituting Good Reason)
calculated by multiplying (A) the maximum achievable amount of such bonus
compensation by (B) 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.

(c)           In the event of a
Change of Control Termination, Executive shall be entitled to continued medical
and dental coverage in accordance with Section 7.06

(d)           Following
a Change of Control Termination, Ceridian shall provide Executive with
reasonable executive-level outplacement services, not to exceed $50,000, 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. 
Following a Change of Control Termination, Ceridian shall reimburse
Executive for all customary relocation expenses actually incurred by Executive
in one move out of the Executive’s state of residence within the one-year
period following such Change of Control Termination, provided such move is
necessitated by Executive’s acceptance of an offer of employment.

(e)           In the event of a Change of Control Termination, all outstanding Ceridian
options and other equity awards held by Executive shall become fully vested and
exercisable and, if applicable, free from all restrictions.

(f)            The payments and benefits described in this Article
VII shall be conditioned upon Executive executing (and not effectively rescinding)
a release of claims against Ceridian substantially identical to that attached
as Exhibit A hereto.  Payment and
provision of benefits shall commence promptly following termination and 

 20
 

 

Executive’s endorsement of the Release attached as Exhibit A and the
expiration of the right of rescission set forth in Exhibit A without Executive
exercising her right of rescission (or, in the case of any bonus in Section
7.03(a) and 7.03(b) calculated at the end of the fiscal year in which
termination occurs, payment shall be within 15 days after the
date such bonus would have been paid had Executive remained employed for the
full fiscal year, if later).

7.04          Interest.  In the event Ceridian does not make timely
payment in full of the Change of Control Termination Payment described in
Section 7.03, Executive shall be entitled to receive interest on any unpaid
amount at the lower of:  (a) the prime
rate of interest (or such comparable index as may be adopted) established from time
to time by the Bank of America National Trust and Savings Association, New
York, New York or its successor in interest; or (b) the maximum rate permitted
under Section 280G(d)(4) of the Internal Revenue Code.

7.05        Attorneys’ Fees.  In the event Executive incurs any legal
expense to enforce or defend 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 reasonable expenses for fees and expenses
reasonably incurred.  Such payments shall be made within five (5) business
days after delivery of Executive’s written requests for payment accompanied
with such evidence of fees and expenses incurred as Ceridian reasonably may
require.  Ceridian shall reimburse
Executive for up to $10,000 for legal expenses incurred in connection with the
negotiation of the terms of this Agreement which become effective as of the
Commencement Date.

7.06        Benefits Continuation.  In the event
of a Change of Control Termination, Executive shall, until age 65, be entitled
to receive from Ceridian medical and dental insurance coverage substantially
equivalent to the coverage Executive had on the day immediately prior to the
Change of Control, including coverage then in effect for Executive’s spouse and
dependents.  During any continuation
period required under the Consolidated Omnibus Budget Reconciliation Act of
1986 (“COBRA”), Ceridian shall continue to provide group medical and dental
coverage under one or more of Ceridian’s group medical and dental plans as if
Executive were still employed, and Executive shall be required to pay no more
for such insurance coverage than Executive would be required to pay had
Executive continued in active employment with Ceridian.  From the expiration of the COBRA period until
Executive’s attainment of age 65, Ceridian shall use its reasonable best
efforts to continue group coverage on the same terms; provided, however, that
if Ceridian determines that such continued coverage under its group medical and
dental plans after the COBRA period would jeopardize the tax-qualified status
of such plans or cause Executive to incur penalty taxes under Section 409A of
the Code, Ceridian shall have the right to: 
(i) require Executive to reimburse Ceridian for such amounts as may be
necessary to preserve group coverage without jeopardizing tax-qualified status
or triggering penalty taxes; or (ii) discontinue such coverage and use its
reasonable best efforts to obtain for Executive, her spouse and her dependents
comparable individual coverage at comparable rates.  Ceridian shall reimburse Executive for the
cost of such individual insurance coverage up to the amount Ceridian would be
required to pay under

 21
 

 

Ceridian’s group plans had Executive continued in active employment with
Ceridian, and Executive shall be responsible for all additional costs, if any.

7.07        Mitigation; Offset.  Following a
Change of Control Termination, Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive pursuant to this Article VII. 
The amount of any payment or benefit provided for in this Agreement
shall not be reduced by any compensation earned by Executive as the result of
employment by another employer, by retirement benefits, or by offset against
any amount claimed to be owed by Executive to Ceridian or otherwise.

ARTICLE
VIII

GENERAL
PROVISIONS

8.01        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 Article V or Article VI and
therefore injunctive relief is appropriate. 
Therefore, if either party shall institute any action or proceeding to
enforce the provisions of Article V or Article VI 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.

8.02        Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of Ceridian, 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.

8.03        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

3311 East Old Shakopee Road

Minneapolis, Minnesota 55425-1640

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

 22
 

 

receipt, and shall
be deemed received within the second business day thereafter or when it is
actually received, whichever is sooner.

8.04        Captions.  The various headings or captions in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.

8.05        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.

8.06        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.

8.07        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.

8.08        Modification.  Any changes or amendments to this Agreement
must be in writing and signed by both parties.

8.09        Tax Compliance.  Notwithstanding anything to the contrary
herein, if either Ceridian determines in good faith that any payment or benefit
due to Executive under this Agreement is subject to Section 409A(a)(2)(B)(i) of
the Code, as amended (the six month distribution delay requirement for certain
payments to key employees of publicly traded companies), such payment or
benefit shall not be made or provided sooner than permitted under such Section
409A(a)(2)(B)(i) of the Code and shall be made or provided on the date that is
the first business day after the date that is six months after the date of “separation
from service”, as such phrase is defined under Section 409A of the Code and the
guidance and regulations issued thereunder. 
Ceridian shall consult with the Executive before making any such
determinations.

8.10        Entire Agreement.  This Agreement constitutes the entire
agreement and understanding between the parties hereto in reference to all the
matters herein agreed upon.  This

 23
 

 

Agreement replaces
in full all prior employment or Change of Control agreements or understandings
of the parties hereto with respect to such subject matter, and any and all such
prior agreements or understandings are hereby rescinded by mutual agreement.

[Remainder
of This Page Left Intentionally Blank]

 24
 

 

IN
WITNESS WHEREOF, The parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.

	
  EXECUTIVE

  	
   

  	
  CERIDIAN CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kathryn V.
  Marinello

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ L. White Matthews, III

  	
   

  
	
  Kathryn
  V. Marinello

  	
   

  	
  Name:

  	
   

  	
  L. White Matthews, III

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Chairman of the Board

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13710 Dunbar Way

  	
   

  	
   

  	
   

  	
   

  
	
  St. Paul, MN
  55124

  	
   

  	
   

  	
   

  	
   

  
							

 

 25

 

Exhibit
A

RELEASE

I, Kathryn V.
Marinello, in consideration of the payments of $              
subject to appropriate withholding, which includes compensation to which I
would not be otherwise entitled, do, except as specifically provided below,
hereby fully and completely release and waive any and all claims, complaints,
causes of action or demands of whatever kind which I have or may have against
Ceridian Corporation, its predecessors, successors, subsidiaries and Affiliates
and all past and present members of the Board of Directors, officers, employees
and agents of those persons and companies (“Ceridian”) arising out of any
actions, conduct, decisions, behavior or events occurring up to the date of my
execution of this Release.

I understand and
accept that this Release specifically covers but is not limited to any and all
claims, complaints, causes of action or demands which I have or may have
against the above-referenced released parties relating in any way to the terms,
conditions and circumstances of my employment up to the date of my signature
below, any form of employment discrimination prohibited under any state’s human
rights act, Title VII of the Federal Civil Rights Act of 1964, the Federal
Americans with Disabilities Act, the Federal Family and Medical Leave Act,  the Federal Age Discrimination in Employment
Act and any other similar federal, state or local statute or ordinance.  I further understand that this Release extends
to but is not limited to all claims which I may have based on statutory or
common law claims for negligence or other breach of duty, wrongful discharge,
breach of contract, breach of any express or implied promise,
misrepresentation, fraud, retaliation, breach of public policy, “whistleblowing,”
retaliation, infliction of emotional distress, defamation, promissory estoppel,
invasion of privacy, failure to pay wages or any other theory, whether legal or
equitable.  Notwithstanding the foregoing, I do not waive my rights to (i) enforce the
performance by Ceridian of its obligations under the Executive Employment
Agreement between myself and Ceridian (including, without limitation, the
obligation to make the payments and provide the benefits described in Articles
III, IV and VII thereof if applicable), (ii) any employee benefits payable
pursuant to the terms of the applicable plans of Ceridian or any affiliate,
which benefits shall be paid or provided in accordance with the terms of such
plans or (iii) indemnification from Ceridian with respect to my service with
Ceridian, whether provided pursuant to Ceridian’s bylaws or otherwise.

Nothing contained
herein, however, shall be construed to prohibit me from filing a charge with
the Equal Employment Opportunity Commission, but my release includes a release
of my right to file a court action or to seek individual remedies or damages in
any Equal Employment Opportunity Commission-filed court action, and my release
of these rights shall apply with full force and effect to any proceedings
arising from or relating to such a charge.

I agree that my
only remedy for any dispute I have about the enforceability of this Release
shall be to submit that dispute to final and binding arbitration in accordance
with the rules of the American Arbitration Association.  Ceridian and I agree that I must send written
notice of any claim to Ceridian by certified mail, return receipt
requested.  Written notice to Ceridian
shall be sent to its Secretary at 3311 East Old Shakopee Road, Minneapolis, MN
55425-1640.

 A-1
 

 

I understand that
I may rescind this Release if I do so in writing, delivered by certified mail,
return receipt requested, to Office of the General Counsel, Ceridian
Corporation, 3311 East Old Shakopee Road, Minneapolis, MN 55425-1640, within
fifteen (15) calendar days of the date of my signature below.  Upon the expiration of fifteen (15) calendar
days from the date indicated below, if I have not rescinded this Release, then
Ceridian Corporation shall promptly deliver to me the above-referenced payment,
subject to appropriate withholding, this Release being contingent upon payment
of that sum.

If sent by mail,
the rescission must be:

·              Postmarked
within the 15 calendar-day period;

·              Properly
addressed to Ceridian; and

·              Sent
by certified mail, return receipt requested.

By my signature
below, I acknowledge that I fully understand and accept the terms of this
Release, and I represent and agree that my signature is freely, voluntarily and
knowingly given.  I have had 21 days in
which to consider this agreement.  By my
signature below, I further acknowledge that I have been provided a full
opportunity to review and reflect on the terms of this Release and to seek the
advice of legal counsel of my choice, which advice I have been encouraged to
obtain.

If I do not
execute this Release within 30 days after I receive it, the offer Ceridian has
made for a payment herein is null and void.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Kathryn V. Marinello

  

 

 A-2

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