IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

Transcription

1 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION, on behalf of itself and all other similarly situated shareholders of Ceridian Corporation, Plaintiff, v. CERIDIAN CORPORATION, KATHRYN V. MARINELLO, NICHOLAS D. CHABRAJA, RONALD T. LEMAY, GEORGE R. LEWIS, L. WHITE MATTHEWS, III, RICHARD SZAFRANSKI, WILLIAM L. TRUBECK, ALAN F. WHITE, THOMAS H. LEE PARTNERS LP, FIDELITY NATIONAL FINANCIAL, INC., FOUNDATION HOLDINGS, INC. AND FOUNDATION MERGER SUB, INC., C.A. No CC Defendants. MINNEAPOLIS FIREFIGHTERS RELIEF ASSOCIATION, Petitioner, v. CERIDIAN CORPORATION, C.A. No CC Respondent. NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED CLASS ACTION DETERMINATION, PROPOSED SETTLEMENT OF CLASS ACTION, SETTLEMENT HEARING AND RIGHT TO APPEAR TO: ALL RECORD HOLDERS AND BENEFICIAL OWNERS OF COMMON STOCK OF CERIDIAN CORP. ( CERIDIAN OR THE COMPANY ) AT ANY TIME FROM AND INCLUDING FEBRUARY 13, 2007 THROUGH AND INCLUDING NOVEMBER 9, 2007, INCLUDING THEIR RESPECTIVE SUCCESSORS IN INTEREST, PREDECESSORS, REPRESENTATIVES, TRUSTEES, EXECUTORS, ADMINISTRATORS, HEIRS, ASSIGNS OR TRANSFEREES, IMMEDIATE AND REMOTE, AND ANY PERSON OR ENTITY ACTING FOR OR ON BEHALF OF, OR CLAIMING UNDER ANY OF THEM (THE CLASS ). PLEASE READ THIS NOTICE CAREFULLY. YOUR RIGHTS COULD BE AFFECTED BY THE LEGAL PROCEEDINGS IN THIS ACTION. IF THE COURT APPROVES THE PROPOSED SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE FAIRNESS OF THE PROPOSED SETTLEMENT, OR PURSUING THE SETTLED CLAIMS (AS DEFINED BELOW). IF YOU HELD COMMON STOCK OF CERIDIAN FOR THE BENEFIT OF ANOTHER, PLEASE PROMPTLY TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL OWNER. I. PURPOSE OF NOTICE The purpose of this Notice is to inform you of the proposed settlement (the Settlement ) of the above actions (the Actions ) pending in the Delaware Court of Chancery (the Court ). This Notice also informs you of the Court s certification, for purposes of the Settlement, of a class consisting of all persons (excluding Defendants, their immediate families, heirs and assigns, and those in privity with them) who owned common stock of the Company, as record or beneficial holders, at any time from and including February 13, 2007 through and including November 9, 2007 (the Class Period ), including any and all of their respective successors in interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns or transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under any of them, and each of them (the Class ), and notifies you of your right to participate in a hearing to be held on February 25, 2008 at 2:30 p.m., before the Court at 34 The Circle, Georgetown, Delaware (the Settlement Hearing ) to determine, among other things, (a) whether the Court should approve the Settlement as fair, reasonable, adequate and in the best interests of the Class; (b) whether the Court should certify the Actions as a class action and certify the named plaintiff, the Minneapolis Firefighters Relief Association (the Plaintiff ), as the representative of the Class; (c) whether the Court should enter final judgment dismissing the class claims asserted in the Actions on the merits and with prejudice as against the Plaintiff and the Class; (d) whether Plaintiff and its counsel have adequately represented the interests of the Class in the Actions, (e) whether to grant the application of Plaintiff s Counsel for an award of attorneys fees and reimbursement of expenses; and (f) such other matters as the Court may deem appropriate. The Court has reserved the right to adjourn the Settlement Hearing from time to time by oral announcement at such Settlement Hearing or at any adjournment thereof, without further notice of any kind. The Court has also reserved the right to approve the Settlement with or without modification, to enter an Order and Final Judgment, and to order the payment of attorneys fees and expenses without further notice of any kind.

2 This Notice describes the rights you may have under the Settlement and what steps you may, but are not required to, take in relation to the Settlement. If the Court approves the Settlement, the Parties will ask the Court at the Settlement Hearing to enter an Order and Final Judgment dismissing the Actions with prejudice on the merits. THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE COURT. IT IS BASED ON STATEMENTS OF THE PARTIES AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY OF THE CLAIMS OR DEFENSES RAISED BY ANY OF THE PARTIES. II. BACKGROUND OF THE LAWSUIT On May 11, 2006, Ceridian held an annual meeting of shareholders, at which Ceridian shareholders were asked to, among other things, vote for the election of directors. On January 18, 2007, hedge fund Pershing Square Capital Management, L.P. ( Pershing Square ), which had previously publicly urged Ceridian to pursue a spin-off transaction involving Ceridian s Comdata subsidiary, filed a Schedule 13D with the SEC stating that it intended to conduct a proxy contest and nominate a slate of alternative directors at Ceridian s 2007 annual meeting of stockholders. On February 13, 2007, Ceridian issued a press release announcing that the Company was considering strategic alternatives and had retained legal and financial advisors to provide guidance. In addition to receiving offers for the entire Company, the Ceridian board received proposals for, among other things, a recapitalization of the Company, including a preferred equity investment followed by the purchase by the Company of just over 50% of Ceridian s outstanding common stock for $37 per share. On May 30, 2007, Ceridian announced that it had entered into a definitive agreement (the Merger Agreement ) to be acquired by Thomas H. Lee Partners LP and Fidelity National Financial, Inc. (collectively, the Buyers ). Under the terms of the Merger Agreement, the Company s stockholders would receive $36 in cash for each share of Ceridian common stock ( the Proposed Transaction ). Sections 5.3(a) and (b) of the Merger Agreement provided that the Ceridian board of directors could not communicate or negotiate with third parties regarding any potential Alternative Proposal (as defined in Section 5.3(f) of the Merger Agreement) unless the board first concluded that such proposal constitutes or is reasonably likely to lead to a Superior Proposal, which, as defined in Section 5.3(g) of the Merger Agreement, required that such proposal involve the purchase or acquisition of at least 66 2/3% of Ceridian s assets or common stock. Section 7.1(j) of the Merger Agreement permitted the Buyers to terminate the agreement if a majority of the board s nominees were not elected at the next annual meeting of Ceridian shareholders. On June 4, 2007, Plaintiff filed a complaint in the Delaware Court of Chancery, Civil Action No CC, against Defendants, alleging, inter alia, that the Proposed Transaction was unfair to Ceridian s public stockholders, that the Ceridian directors breached their fiduciary duties by, inter alia, conducting an inadequate sales process resulting in their approval of the Proposed Transaction and by entering into the Merger Agreement, and that the Buyers aided and abetted the alleged breaches of fiduciary duty. Among other things, Plaintiff challenged the validity and operation of Section 5.3 of the Merger Agreement based on Plaintiff s assertion that the definition of Superior Proposal was improperly restrictive of the Ceridian s board s freedom to perform its fiduciary duties in considering potential alternatives to the Proposed Transaction. In its papers, Plaintiff characterized this provision as an illusory fiduciary out. In addition, Plaintiff challenged the validity of Section 7.1(j) of the Merger Agreement based on the alleged coercive effect the provision would have on the ability of Ceridian s shareholders to vote with respect to the election of directors without fear that a vote to replace the board would trigger an option for the Buyers to abandon the Proposed Transaction without any further consequence. In its papers, Plaintiff characterized this provision as the Election Walkaway right. On June 6, 2007, Plaintiff moved for a preliminary injunction and expedited trial. On June 11, 2007, (1) Plaintiff filed a petition pursuant to Section 211 of the Delaware General Corporation Law, Civil Action No CC, seeking an order requiring Ceridian to hold its 2007 annual meeting of stockholders following adjudication of Section 7.1(j) s validity, and (2) following a hearing on Plaintiff s June 6 motion, the Court of Chancery consolidated the Actions, allowed expedited discovery to proceed and scheduled a trial to take place on August 1-2, Plaintiff thereafter served party and non-party discovery requests, and the parties negotiated a Stipulation and Order Governing the Protection and Exchange of Confidential Materials and a Joint Stipulation and Proposed Scheduling Order, which the Court approved and Ordered. Plaintiff retained investment banking and financial consultants and potential testifying experts, who assisted in the review of documents, the preparation for depositions, and in a subsequent assessment of the terms of a potential settlement. Beginning on June 21, 2007, the parties produced documents in accordance with the above Orders. Plaintiff then engaged in extensive expedited document discovery of the Defendants and non-parties, including the reviewing over two hundred thousand of pages of documents, scheduling and preparing to take party and third-party depositions during the period July 9-23, Plaintiffs also retained an investment banking consultant and potential testifying expert, who assisted in, among other things, the review of documents and the preparation for depositions. On June 26, 2007, Plaintiff served on Defendants (and subsequently filed with the Court) a consolidated amended complaint that expanded on the existing allegations, including with respect to the process leading to the board s approval of the Proposed Transaction, adding disclosure claims based on Ceridian s preliminary proxy statement (dated as of June 15, 2007), and challenging the provision of the confidentiality agreements signed by potential bidders that precluded requesting a waiver of the standstill provisions contained in the confidentiality agreements. In its papers, Plaintiff characterized this provision as the Don t Ask Don t Waive Standstill. 2

3 On July 5, 2007, Plaintiff filed a motion requesting that the Court schedule a preliminary injunction hearing, to take place on August 3, 2007, regarding the challenged standstill provisions and certain deal protections in the Merger Agreement, which motion the Court granted on July 10, During the period between July 6 through July 11, 2007, Defendants Counsel and Plaintiff s Counsel engaged in extensive good faith discussions with regard to a potential settlement of the Actions, which resulted in an agreement in principle entered by the Parties on July 11, 2007, as set forth in a Settlement Term Sheet entered on that date (the Settlement Term Sheet ), with Plaintiff reserving the right to assert certain claims. On July 12, 2007, the Parties gave notice to the Court of the Parties agreement regarding the Settlement. Plaintiff informed the Court that, before agreeing to the Settlement Term Sheet, Plaintiff shared the terms of the proposed settlement with Pershing Square, and Pershing Square provided input regarding the terms of the Settlement and advised Plaintiff s Counsel that it would not oppose the motion seeking approval of the Settlement. 1 The Court gave the Parties authority to implement the terms of the Settlement in advance of a formal settlement hearing at a later date, and entered an Order directing that the votes on Ceridian s director election and the Proposed Transaction be held on September 12, 2007, subject to certain conditions. In accordance with the permission granted by the Court, the Defendants partially performed the terms of the Settlement, including by amending the Merger Agreement as set forth herein and by notifying the parties who signed confidentiality agreements that they were relieved of the restriction against seeking a waiver and could take steps in furtherance of seeking a waiver from the standstill agreements. Within 24 hours of receiving notification of the modified terms of the standstill, one of the parties who had previously signed a confidentiality agreement with Ceridian and participated in the earlier bidding process sought a release from the standstill provisions, which release the Ceridian board subsequently granted. Before entering into a definitive Stipulation of Settlement with Defendants, dated December 5, 2007 (the Stipulation ), Plaintiff s Counsel consulted with their investment banking expert, and conducted additional discovery to confirm the fairness of the Settlement, including taking the depositions of (i) Kathryn V. Marinello, Ceridian s President and Chief Executive Officer; (ii) L. White Matthews, III, Chairman of Ceridian s Board of Directors; and (iii) Jeffrey F. Buckalew, Co-Head of U.S. Mergers & Acquisition at Greenhill & Co., Ceridian s outside financial advisor. The Merger Agreement and the Proposed Transaction set forth therein were submitted to a vote of Ceridian s stockholders at Ceridian s annual meeting held September 12, 2007, and the Proposed Transaction was approved, with more than 99% of the shares voted cast in favor of the Proposed Transaction. The Proposed Transaction closed on November 9, III. THE SETTLEMENT AND PARTICIPATION IN THE SETTLEMENT In consideration for the full settlement and release of all Settled Claims (as defined below), the Parties agreed as follows: a. The shareholder votes to elect directors and the vote on the Proposed Transaction would be held together on September 12, The annual meeting of Ceridian stockholders would be held, pursuant to an Order entered in connection with the petition pursuant to Section 211 of the D.G.C.L., on September 12, 2007, and Plaintiff would no longer request or support a bifurcated vote, so that a vote on the Proposed Transaction and the director election would occur on that date. The quorum requirement for the vote on the Merger and for the vote on the director election would be as set forth in Ceridian s bylaws as amended, as of March 30, 2001, and the applicable shareholder voting requirement of 8 Del. C. 251(c) would apply to the vote on the Merger. Other than by way of Court Order, the September 12 date for the annual meeting could be adjourned, modified or delayed only (a) upon agreement of the Parties, or (b) by the Company if necessary to have a vote on the proposed Merger on the same day as the election of directors, in each case, only so long as the election of directors is held within 20 calendar days of September 12, b. The Merger Agreement was amended to eliminate the Election Walkaway right, and to modify the definition of Superior Proposal for purposes of the fiduciary out provision. The Buyers and Ceridian amended the Merger Agreement as follows: (a) the termination right set forth in Section 7.1(j)(i) (and all references thereto) was deleted, with the provision in Section 7.1(h) amended to delete the words giving rise to Parent s right to terminate this Agreement pursuant to Section 7.1(j)(i) and substituting therefor the words (at one or more stockholders meetings) resulting in a majority of the Board of Directors of the Company being comprised of persons who were not nominated by the Board of Directors of the Company in office immediately prior to such election ; (b) the percentage of stock or assets set forth in the definition of Superior Proposal in Section 5.3(g) was reduced from 66 2/3% to 40%; and (c) the Buyers were entitled to waive, on behalf of all parties to the Merger Agreement, the state regulatory approvals condition set forth in Section 6.1(d) of the Merger Agreement. c. Ceridian waived the restriction in the standstill agreements that Plaintiff had characterized as the Don t Ask Don t Waive Standstill provision. Ceridian notified the signatories to the confidentiality/standstill agreements that they were relieved from the restriction in paragraph 5 of those agreements that stated as follows: [t]he Potential Acquirer further agrees during such 18-month period not to (i) request, directly or indirectly, that the Company (1) amend or waive any provision of this paragraph (including this sentence), or (2) otherwise consent to any action inconsistent with any provision of this paragraph (including this 1 Subsequently, on August 14, 2007, Pershing Square announced that it intended to support the Proposed Transaction. Commenting on the announcement, William A. Ackman of Pershing Square stated, We and our advisors have spent considerable time and resources reviewing alternatives for the company. We have also carefully monitored the significant developments in the credit markets. In light of current market conditions and after the completion of our review process, we are confident that the buyout offer at $36 per share is the highest all-cash price reasonably attainable for the company. 3

4 sentence). The form of notice to the parties to the confidentiality agreements was the result of negotiations among Plaintiff s Counsel and Defendants Counsel. d. Defendants agreed to provide Plaintiff s Counsel with information about alternative proposals for Ceridian and requests for waiver of any standstill provisions. The Parties agreed that Plaintiff s Counsel would receive information about any Alternative Proposal consistent with the terms of Section 5.3(c) of the Merger Agreement, and within 24 hours, would receive: (a) notice of (and, if applicable, copies of) any request for waiver, release or amendment of any standstill provisions, or by a third party for a confidentiality agreement or for any confidential information pursuant to the written notification sent to the signatories to the confidentiality/standstill agreements that they are relieved from the restriction in paragraph 5 of those agreements; and (b) the Company s response to (and, if applicable, copies of its response to) such request. e. Plaintiff submitted extensive comments regarding proposed additional and amended disclosures prior to the filing of the definitive proxy statement distributed to shareholders. Plaintiff s Counsel was provided an opportunity to review the draft proxy statement and to provide suggestions for additional disclosures to counsel for Ceridian. As part of the Settlement, Plaintiff reserved all rights to assert disclosure claims based on issues raised by Plaintiff no less than five days before Ceridian s definitive proxy statement (the Proxy ) was filed with the SEC but not resolved by the Parties, or, except as set forth below, based on conduct occurring after July 11, 2007, provided that such claims are asserted on a timely basis. Plaintiff s Counsel reviewed the draft proxy statement and submitted extensive comments regarding proposed additional and amended disclosures prior to the filing of Ceridian s definitive proxy statement with the SEC, which comments Ceridian considered and responded to in preparing the proxy statement. There were no disclosure issues raised by Plaintiff in this process that the Parties were not able to resolve in good faith. Accordingly, Plaintiff has agreed to release any and all disclosure claims relating to the definitive proxy statement that Ceridian filed with the SEC on or about July 30, After extensive review of the draft proxy statement, the document production, depositions, relevant public filings and applicable case law, Plaintiff s Counsel, as a result of arm s-length negotiation with Defendants, asked for and obtained new or amended disclosures in the Proxy regarding, among other things, the issues listed below: i. The Ceridian board s July 2006 exploration of a potential agreement with a possible strategic investor and financial backer, as disclosed at page 11 of the Proxy. ii. iii. iv. The board s focus on possible tax liability from the potential sale of Comdata or the HRS division as a factor in the board s exploration of strategic alternatives, as disclosed at page 12 of the Proxy. The solicitation by Greenhill of potential financial buyers, who were invited to bid by February 23, 2007, based solely on non-public information and did not receive an offering memorandum or otherwise gain access to confidential information about Ceridian, coupled with preliminary contacts with certain strategic buyers who expressed potential interest in acquiring all or a part of Ceridian following Ceridian s February 13, 2007 press release, as disclosed at page 12 of the Proxy. The standstill agreements signed by potential buyers contained standstill provisions prohibiting the third party from, among other things, making an offer except as requested by Ceridian or seeking a waiver of the standstill provisions, as disclosed at page 12 of the Proxy. v. The decision by certain potential buyers, both financial and strategic, not to engage in the board s bidding process because they were only interested in parts but not all of Ceridian, as disclosed at page 12 of the Proxy. vi. vii. viii. ix. The board-level discussion regarding the different characteristics and possible long term interests and strengths that may be brought to the bidding group of THL, a financial buyer, and FNF, an operating company, as disclosed at page 13 of the Proxy. The board s and its advisors specific valuation and analysis of the relative benefits and risks of pursuing equity sponsored and standalone leveraged recapitalization proposals as alternatives to a buyout of the whole company, including assumed future trading ranges under various assumptions and including the confidence on the part of Ceridian s management in their ability to achieve the management projections, which generally supported higher valuations, as disclosed at pages of the Proxy. The level of debt assumed by the final equity-sponsored leveraged recapitalization proposal considered by the Ceridian board (5.5 times Ceridian s trailing twelve months EBITDA), as disclosed at page 14 of the Proxy. The May 12 board discussion about the potential alternatives, including that the recapitalization may result in values exceeding $36 per share if management projections were met, as disclosed on page 15 of the Proxy. x. The board s reasons for pursuing the buyout proposal while allowing a lapse of negotiations with the party proposing the equity sponsored recapitalization, as disclosed at page 15 of the Proxy. xi. The terms of the Settlement and the request by one of the signatories to the confidentiality agreements for a release from the standstill provisions, promptly following the implementation of the Settlement, as disclosed at page 17 of the Proxy. 4

5 xii. xiii. xiv. xv. xvi. xvii. xviii. The fact that part of the stock price increase since Pershing Square s initial purchase of Ceridian shares may have been due to other intervening events, as disclosed at page 18 of the proxy. The way Greenhill calculated the weighted average cost of capital and discount rates and the assumptions that underlie the analyst sensitivity case that were used for purposes of Greenhill s discounted cash flow analysis, disclosed on pages of the Proxy. The various multiples and comparable values for the precedent transactions that Greenhill considered as part of its analysis, as disclosed at pages of the Proxy. The assumptions that supported Greenhill s use in its leveraged buyout analysis of higher exit multiples than it used for purposes of its DCF analysis, as disclosed at page 30 of the Proxy. The relationship of Greenhill s incentive fee with the size of the transaction ultimately approved, as disclosed at page 31 of the Proxy. The negotiations between the Buyers and Ms. Marinello regarding Ms. Marinello s and the management team s compensation if the Proposed Transaction closes, as disclosed at page 33 of the Proxy. The different views that the Company and the Buyers, respectively, took with respect to the interpretation of the termination fee provision of the Merger Agreement, as disclosed at page 55 of the Proxy. Pursuant to the subsequent Stipulation of Settlement, Ceridian also agreed to pay all costs of providing this Notice of Settlement to holders of Ceridian common stock. IV. RELEASE The Stipulation provides that, subject to Court approval of the Settlement, and in consideration for the benefits provided by the Settlement, the Actions shall be completely discharged and dismissed with prejudice on the merits. In addition, the Plaintiff, individually and on behalf of the Class, has agreed to fully, finally, and forever release, discharge, settle, relinquish, and dismiss with prejudice on the merits any and all actual or potential claims, demands, rights, actions or causes of action, liabilities, damages, losses, obligations, judgments, decrees, duties, costs, debts, expenses, interest, penalties, sanctions, fees, attorneys fees, suits, matters, issues and controversies of any kind, nature or description whatsoever (including any claims for costs, attorneys fees or expenses), whether known or unknown (including any Unknown Claims as defined below), contingent or absolute, suspected or unsuspected, apparent or not apparent, foreseen or unforeseen, mature or not yet mature, accrued or unaccrued, liquidated or not liquidated, or disclosed or undisclosed, and whether individual, class, direct, derivative, representative, legal, equitable or of any other type, and whether based on or arising under federal, state, local, statutory, regulatory or common law or any other law, rule or regulation (including the law of any jurisdiction outside of the United States and including any claims under the federal securities laws within the exclusive jurisdiction of the federal courts), against any and all Defendants, their respective families, parent entities, associates, affiliates or subsidiaries and each and all of their respective past, present or future officers, directors, stockholders, representatives, employees, attorneys, financial or investment advisors, consultants, accountants, investment bankers, commercial bankers, engineers, advisors or agents, heirs, executors, trustees, general or limited partners or partnerships, personal representatives, estates, administrators, predecessors, successors and assigns, and any and all of Defendants respective present, former and future officers, directors, employees, managers, members, managing members, fiduciaries, managing directors, agents, managing agents, attorneys, legal counsel, advisors, consultants, insurers, co-insurers, reinsurers, accountants, auditors, trustees, underwriters, financial advisors, commercial bank lenders, persons who provided opinions relating to the Proposed Transaction, investment bankers, associates, representatives, affiliates, parents, subsidiaries, partnerships, member firms, partners, joint ventures, limited liability companies, corporations, divisions, shareholders, principals, trusts, foundations, family members, beneficiaries, distributees, heirs, executors, personal representatives, estates, administrators, predecessors, successors and assigns, and their respective former, current and future direct or indirect equity holders, controlling persons, affiliates, stockholders, general or limited partners or partnerships, or assignees and including but not limited to any directors, officers, agents, partners, members, managers, or employees of any of the foregoing (collectively, the Released Persons ), that Plaintiff or any member of the Class ever had, now has or may have, that, now or hereafter, are based upon, arise out of, relate to, or involve, directly or indirectly, any of the allegations, facts, practices, events, transactions, acts, occurrences, statements, representations, misrepresentations, omissions, claims or any other matter, thing or cause whatsoever, or any series thereof, that were, could have been, or in the future can or might be alleged, asserted, claimed, embraced, involved, set forth, referred to in, or otherwise related to, directly or indirectly, the Actions or the subject matter of the Actions in any court, tribunal, forum or proceeding, including any and all claims that are based upon, arise out of, relate in any way to, or involve, directly or indirectly, the Merger Agreement, Ceridian s exploration of strategic alternatives or the definitive proxy statement that Ceridian filed with the SEC on or about July 30, 2007, and all prior versions and pre- and post-effective amendments thereto (the Proxy ) (collectively, the Settled Plaintiff s Claims ); provided, however, that (1) except for any and all disclosure claims relating to the Proxy, Plaintiff and the Class are not releasing any claims for any conduct occurring after July 11, 2007 and Plaintiff has the right to seek relief on such claims, (2) Plaintiff and the Class are not releasing the right to challenge any aspect of the termination fee provisions in Section 7.2(a) of the Merger Agreement relating to the payment of any termination fee upon the occurrence of an alleged Qualifying Transaction involving a reorganization, recapitalization or similar transaction involving the Company as set forth in Section 5.3(f)(i) of the Merger Agreement, and (3) the Settled Plaintiff s Claims will not include any claims (i) for validly claimed appraisal rights under Section 262 of the Delaware General Corporation Law, (ii) arising from the performance or non-performance of the Settlement terms (including payment of any attorneys fees and expenses awarded by the Court pursuant to Paragraph 13 of the Stipulation), or 5

6 (iii) for payment of the merger consideration. For the avoidance of doubt, the Settled Plaintiff s Claims shall include any and all disclosure claims that Plaintiff or any member of the Class ever had, now has or may have relating to the Proxy. Also, each and every of the Defendants, individually and collectively, on behalf of themselves, their heirs, executors, administrators, agents, successors and assigns, immediate and remote, and any person they represent shall (i) fully, finally, and forever release, discharge, settle, relinquish, and dismiss with prejudice on the merits any and all actual or potential claims, demands, rights, actions or causes of action, liabilities, damages, losses, obligations, judgments, suits, matters and issues of any kind or nature whatsoever, whether known or unknown (including any Unknown Claims as defined below), contingent or absolute, suspected or unsuspected, disclosed or undisclosed (including any claims for costs, attorneys fees or expenses, and including any claims arising under the federal securities laws or under federal, state, local, statutory or common law or any other law, rule or regulation, including the law of any jurisdiction outside of the United States), and whether legal or equitable or of any other type, which arose through July 11, 2007 that Defendants ever had or now have against Plaintiff or the members of the Class which have arisen or could have arisen out of or relate in any manner to Plaintiff s filing, pursuit or settlement of the Actions (the Settled Defendants Claims ). The Settled Defendants Claims will not include any claims arising from the performance or non-performance of the Settlement terms. Unknown Claims means any claims that any of Defendants or Plaintiff, for itself and on behalf of the Class, do not know or suspect to exist at the time of the release, which, if known, might have affected the decision to enter into the release or to object or not to object to the Settlement. Plaintiff, Defendants, and each member of the Class shall be deemed to waive, and shall waive and relinquish to the fullest extent permitted by law any and all provisions, rights and benefits conferred by any law of the United States or any state or territory of the United States, or principle of common law, which governs or limits a Person s release of Unknown Claims; further, (i) the Plaintiff, for itself and on behalf of the Class, and Defendants shall be deemed to waive, and shall waive and relinquish, to the fullest extent permitted by law, the provisions, rights and benefits of Section 1542 of the California Civil Code, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR (ii) Plaintiff, for itself and on behalf of the Class, and Defendants also shall be deemed to waive any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to California Civil Code 1542; and (iii) Plaintiff, for itself and on behalf of the Class, and Defendants acknowledge that Plaintiff, members of the Class, and/or Defendants may discover facts in addition to or different from those that they now know or believe to be true with respect to the subject matter of this release, but that it is their intention, as Plaintiff and on behalf of the Class, and Defendants, to fully, finally and forever settle and release any and all claims released hereby known or unknown, suspected or unsuspected, which now exist, or heretofore existed, or may hereafter exist, and without regard to the subsequent discovery or existence of such additional or different facts. If you are a Class member, you will be bound by any judgment entered in the litigation whether or not you actually receive this Notice. You may not opt out of the Class. V. REASONS FOR THE SETTLEMENT Plaintiff, through Plaintiff s Counsel, has conducted a thorough investigation of the claims and allegations asserted in the Actions, as well as the underlying events and transactions relevant to the Actions. Plaintiff engaged in extensive expedited discovery, obtaining over two hundred thousand pages of documents from Defendants and non-parties, and conducting depositions of the following witnesses: (i) Kathryn V. Marinello, Ceridian s President and Chief Executive Officer; (ii) L. White Matthews, III, Chairman of Ceridian s Board of Directors; and (iii) Jeffrey F. Buckalew, co-head of U.S. Mergers & Acquisition at Greenhill & Co., Ceridian s outside financial advisor. Plaintiff s Counsel also have consulted with their experts and have carefully reviewed documents obtained through publicly available sources and the documents produced by Defendants and non-parties in the Actions, and conducted factual and legal research concerning the validity of Plaintiff s claims. Based on the discovery and investigation they conducted, Plaintiff and Plaintiff s Counsel believe that the claims alleged in the Actions are meritorious. In evaluating the Settlement, Plaintiff and its counsel have considered: (i) the immediate substantial benefits to the members of the Class from the Settlement; (ii) the facts developed during the discovery process; (iii) the attendant risks of continued litigation; and (iv) the probability of success on the merits and allegations contained in the Actions, including the uncertainty relating to the proof of those allegations. In particular, Plaintiff and Plaintiff s Counsel have determined that the Settlement provided broad and significant substantive relief on virtually all of Plaintiff s claims, and that the benefit to Ceridian s stockholders of implementing the terms of the Settlement as promptly as possible, including the elimination of Section 7.1(j) of the Merger Agreement, the modification of Section 5.3 of the Merger Agreement and the elimination of the challenged standstill restrictions in the confidentiality agreements signed by potential bidders cured any breach of fiduciary duty by the Ceridian directors and allowed an adequate opportunity for alternative transactions to emerge and for Ceridian s shareholders to be adequately and fully informed regarding the Proposed Transaction. Plaintiff and Plaintiff s Counsel believe that the substantial benefits of the Settlement provided virtually all of the relief that could have been obtained through the trial of the Actions, previously scheduled for August 1-3, Therefore, in conjunction with their consultants and experts, and in light of the significant legal and factual defenses asserted in the Actions, Plaintiff and Plaintiff s Counsel have determined that the Settlement is fair, reasonable and adequate and in the best interests of the Class. Defendants have denied, and continue to deny, all allegations of wrongdoing, fault, liability, or damage to Plaintiff and the putative class, deny that they engaged in any wrongdoing or committed any violation of law or breach of duty, and believe they acted properly at all times, but wish to settle the Actions on the terms and conditions stated in the Stipulation and summarized herein in order 6

7 to eliminate the burden and expense of further litigation and to put the claims to be released hereby to rest finally and forever, which Defendants believe is in the best interest of the Company and its shareholders. VI. APPLICATION FOR ATTORNEYS FEES AND EXPENSES At or before the Settlement Hearing, discussed below, Plaintiffs Counsel, based upon the above events and circumstances surrounding the litigation and the role that Plaintiff s Counsel played in connection with achieving the benefits of the Settlement for Ceridian Shareholders, will apply to the Court for an award of attorneys fees and expenses in an amount not to exceed $7,000,000. Defendants have not agreed to this amount and reserve all rights to object, consent or take no position on the Fee Application. Buyers have agreed to pay such amounts as approved by the Court. The Court may consider and rule upon the fairness, reasonableness and adequacy of the Settlement independently of any award of attorneys fees and expenses. VII. CLASS ACTION DETERMINATION The Court has ordered that, for purposes of the Settlement only, the Actions shall be conditionally certified as a class action, represented by Plaintiff and Plaintiff s Counsel as counsel for the Class, pursuant to Delaware Court of Chancery Rules 23(a), 23(b)(1) and 23(b)(2). Inquiries or comments about the Settlement may be directed to the attention of counsel for the Class as identified below. VIII. RIGHT TO APPEAR AND OBJECT Any member of the Class who (a) objects to the: (i) Settlement, (ii) class action determination, (iii) dismissal of the Actions, (iv) judgment to be entered with respect thereto, and/or (v) the request for fees and reimbursement of costs and expenses in the Actions by counsel for Plaintiff; or (b) otherwise wishes to be heard, may appear in person or by his or her attorney at the Settlement Hearing. If you want to do so, however, you must, not later than fifteen (15) calendar days prior to the Settlement Hearing (unless the Court in its discretion shall otherwise direct for good cause shown), file with the Register in Chancery, New Castle County Courthouse, 500 North King Street, Wilmington, Delaware 19801: (i) a written notice of intention to appear; (ii) proof of membership in the Class, including a listing of all transactions in Ceridian common stock during the Class Period; (iii) a detailed statement of your objections to any matters before the Court, and (iv) the grounds thereof or the reasons for your desiring to appear and be heard, as well as any documents or writings you desire the Court to consider. Also, on or before the date you file such papers with the Court, you must serve copies of such filings by e-filing or, in the alternative, by hand or overnight mail on the following counsel of record: BOUCHARD MARGULES & FRIEDLANDER David J. Margules 222 Delaware Avenue, Suite 1400 Wilmington, Delaware (302) BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP Gerald H. Silk 1285 Avenue of the Americas New York, NY (212) Plaintiffs Co- Lead Counsel YOUNG CONAWAY STARGATT & TAYLOR, LLP David C. McBride The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware (302) WACHTELL, LIPTON, ROSEN & KATZ Stephen R. DiPrima 51 West 52nd Street New York, NY (212) Counsel for Ceridian and the Director Defendants ABRAMS & LASTER LLP Kevin G. Abrams 20 Montchanin Road, Suite 200 Wilmington, Delaware (302) WEIL, GOTSHAL & MANGES LLP Joseph S. Allerhand 767 Fifth Avenue New York, New York (212) Counsel for the Buyer Defendants Any Class member who does not object to the Settlement, the class action determination, the request by Plaintiff s Counsel for an award of attorneys fees or expenses, or any of the other matters discussed above, need not do anything at this time. Unless the Court otherwise directs, no person will be entitled to object to the approval of the Settlement, the class action determination, the request by Plaintiff s Counsel for an award of attorneys fees and expenses, or the judgment to be entered in the Actions, or otherwise to be heard, except by serving and filing written objections as described above. Any person who fails to object in the manner described above shall be deemed to have waived the right to object (including the right to appeal) and will be forever barred from raising such objection in this or any other action or proceeding. 7

8 IX. ORDER AND FINAL JUDGMENT OF THE COURT If the Court determines that the Settlement, as provided for in the Stipulation, is fair, reasonable, adequate and in the best interests of the Class, the Parties will ask the Court to enter an Order and Final Judgment, which will, among other things: 1. approve the Settlement and adjudge the terms thereof to be fair, reasonable, adequate and in the best interests of the Class, pursuant to Court of Chancery Rule 23(e); 2. authorize and direct the performance of the Settlement in accordance with its terms and conditions and reserve jurisdiction to supervise the consummation of the Settlement provided herein; 3. finally certify the Class pursuant to Court of Chancery Rules 23(a) and 23(b)(1) and (b)(2); 4. dismiss the Actions with prejudice on the merits and release Defendants, and each of them, and all the Released Persons from the Settled Plaintiff s Claims; and 5. permanently bar and enjoin the members of the Class from instituting, commencing, prosecuting, participating in or continuing any action or other proceeding in any court or tribunal of this or any other jurisdiction, either directly or indirectly, representatively, derivatively or in any other capacity, asserting any claims that are, arise out of, or in any way relate to, Settled Plaintiff s Claims. In the event the Settlement is not approved, or such approval does not become final, then the Settlement shall be of no further force and effect, and each party then shall be returned to his, her or its respective position prior to the Settlement without prejudice and as if the Settlement had not been entered into. X. NOTICE TO PERSONS OR ENTITIES HOLDING OWNERSHIP ON BEHALF OF OTHERS Brokerage firms, banks and/or other persons or entities who held shares of Ceridian common stock for the benefit of others are directed to send this Notice promptly to all of their respective beneficial owners. If additional copies of the Notice are needed for forwarding to such beneficial owners, any requests for such additional copies may be made to: Ceridian Securities Litigation c/o The Garden City Group, Inc. PO Box 9238 Dublin, OH XI. SCOPE OF THE NOTICE This Notice is not all-inclusive. The references in this Notice to the pleadings in the Actions, the Stipulation and other papers and proceedings are only summaries and do not purport to be comprehensive. For the full details of the Actions, claims which have been asserted by the Parties and the terms and conditions of the Settlement, including a complete copy of the Stipulation, members of the Class are referred to the Court files in the Actions. You or your attorney may examine the Court files during regular business hours of each business day at the office of the Register in Chancery, in the New Castle County Courthouse, 500 North King Street, Wilmington, Delaware Questions or comments may be directed to Plaintiff s Counsel: David J. Margules, Bouchard Margules & Friedlander, 222 Delaware Avenue, Suite 1400, Wilmington, Delaware 19801, (302) or Gerald H. Silk, Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, New York 10019, (212) PLEASE DO NOT WRITE OR TELEPHONE THE COURT Dated: December 20, 2007 BY ORDER OF THE COURT Register in Chancery 8