<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
(Name of Subject Company (Issuer))
AUTOMATIC DATA PROCESSING, INC.
AND
FIS ACQUISITION CORP.
(Names of Filing Persons (Offerors))
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
231157108
(CUSIP Number of Class of Securities)
JAMES B. BENSON, ESQ.
AUTOMATIC DATA PROCESSING, INC.
ONE ADP BOULEVARD
ROSELAND, NEW JERSEY 07068
(973) 974-5000
COPIES TO:
DOUGLAS A. CIFU, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NY 10019
(212) 373-3000
(Name, Address and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee**
$135,625,578 $27,125
- ----------------------------------------------- -----------------------------------------------
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* For purposes of calculating the filing fee pursuant to Rule 0-11(d), the
Transaction Valuation was calculated on the basis of (i) 5,757,606 shares of
common stock, no par value, of Cunningham Graphics International, Inc.,
(ii) the tender offer price of $22.00 per share, and (iii) 407,193 options
to acquire shares with an aggregate value of $8,958,246.
** The filing fee, calculated in accordance with Rule 0-11 of the Securities
Exchange Act of 1934, is 1/50th of one percent of the aggregate Transaction
Valuation.
/ / Check the box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third-party tender offer subject to Rule 14d-1.
/ / issuer tender offer subject to Rule 13e-4.
/ / going-private transaction subject to Rule 13e-3.
/ / amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: / /
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CUSIP No. 231157108 Page 2 of 5 Pages
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This Tender Offer Statement on Schedule TO (this "Schedule TO") relates to
the offer by FIS Acquisition Corp. (the "Purchaser"), a New Jersey corporation
and a wholly owned subsidiary of Automatic Data Processing, Inc., a Delaware
corporation ("Parent"), to purchase all the outstanding shares of common stock,
no par value (the "Shares") of Cunningham Graphics International, Inc. (the
"Company"), at a purchase price of $22.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated May 11, 2000 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") which are annexed to
and filed with this Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B),
respectively. This Schedule TO is being filed on behalf of the Purchaser and
Parent.
All information set forth in the Offer to Purchase filed as
Exhibit (a)(1)(A) to this Schedule TO is incorporated by reference in answer to
items 1 through 13 in this Schedule TO, except those items as to which
information is specifically provided herein.
ITEM 10. FINANCIAL STATEMENTS.
Not applicable.
ITEM 11. ADDITIONAL INFORMATION.
(b) Reference is hereby made to the Form of Letter of Transmittal and the
Form of Notice of Guaranteed Delivery, copies of which are filed as Exhibits
(a)(1)(B) and (a)(1)(C), respectively, and to the Agreement and Plan of Merger
among Parent, Purchaser and Company, dated as of May 2, 2000, a copy of which is
attached hereto as Exhibit (d)(1).
ITEM 12. EXHIBITS.
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(a)(1)(A) Offer to Purchase, dated as of May 11, 2000
(a)(1)(B) Form of Letter of Transmittal
(a)(1)(C) Form of Notice of Guaranteed Delivery
(a)(1)(D) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(1)(E) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(1)(G) Text of Press Release issued by Parent on May 3, 2000
(a)(1)(H) Summary Advertisement, published May 11, 2000
(b) Not applicable.
(d)(1) Agreement and Plan of Merger, dated as of May 2, 2000, among
Automatic Data Processing, Inc., FIS Acquisition Corp. and
Cunningham Graphics International, Inc.
(d)(2) Voting and Tender Agreement, dated as of May 2, 2000 among
Automatic Data Processing, Inc., FIS Acquisition Corp. and
the Shareholders listed therein
(d)(3) Confidentiality Agreement, dated as of January 5, 2000,
between Prudential Securities Incorporated, as agent for
Cunningham Graphics International, Inc., and ADP Financial
Information Services, Inc.
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CUSIP No. 231157108 Page 3 of 5 Pages
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(d)(4) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Gerald (L.J.) Baillargeon
(d)(5) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Michael R. Cunningham
(d)(6) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Ned Hood
(d)(7) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Ioannis Lykogiannis
(d)(8) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Gordon Mays
(d)(9) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Timothy Mays
(d)(10) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Robert Needle
(g) Not applicable.
(h) Not applicable.
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ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
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CUSIP No. 231157108 Page 4 of 5 Pages
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: May 11, 2000
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AUTOMATIC DATA PROCESSING, INC.
By: /s/ JAMES B. BENSON
-----------------------------------------
Name: James B. Benson
Title: Corporate Vice President
FIS ACQUISITION CORP.
By: /s/ JAMES B. BENSON
-----------------------------------------
Name: James B. Benson
Title: President
</TABLE>
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CUSIP No. 231157108 Page 5 of 5 Pages
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INDEX TO EXHIBITS
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EXHIBIT NUMBER DESCRIPTION
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(a)(1)(A) Offer to Purchase, dated as of May 11, 2000
(a)(1)(B) Form of Letter of Transmittal
(a)(1)(C) Form of Notice of Guaranteed Delivery
(a)(1)(D) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(1)(G) Text of Press Release issued by Parent on May 3, 2000
(a)(1)(H) Summary Advertisement, published May 11, 2000
(d)(1) Agreement and Plan of Merger, dated as of May 2, 2000, among
Automatic Data Processing, Inc., FIS Acquisition Corp. and
Cunningham Graphics International, Inc.
(d)(2) Voting and Tender Agreement, dated as of May 2, 2000 among
Automatic Data Processing, Inc., FIS Acquisition Corp. and
the Shareholders listed therein
(d)(3) Confidentiality Agreement, dated as of January 5, 2000,
between Prudential Securities Incorporated, as agent for
Cunningham Graphics International, Inc., and ADP Financial
Information Services, Inc.
(d)(4) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Gerald (L.J.) Baillargeon
(d)(5) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Michael R. Cunningham
(d)(6) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Ned Hood
(d)(7) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Ioannis Lykogiannis
(d)(8) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Gordon Mays
(d)(9) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Timothy Mays
(d)(10) Employment Agreement, dated as of May 2, 2000, between ADP
Financial Information Services, Inc., the Company,
Cunningham Graphics Inc. and Robert Needle
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
of
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
at
$22.00 Net Per Share
by
FIS ACQUISITION CORP.
a wholly owned subsidiary of
AUTOMATIC DATA PROCESSING, INC.
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JUNE 8, 2000, UNLESS THE OFFER IS
EXTENDED.
</TABLE>
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF MAY 2, 2000 (THE "MERGER AGREEMENT"), AMONG AUTOMATIC DATA
PROCESSING, INC. ("PARENT"), FIS ACQUISITION CORP. ("PURCHASER") AND CUNNINGHAM
GRAPHICS INTERNATIONAL, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER
(EACH AS DEFINED HEREIN), DETERMINED THAT THE OFFER AND THE MERGER ARE ADVISABLE
AND FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES OF COMMON STOCK, NO PAR VALUE (THE "SHARES"), OF THE COMPANY
WHICH, WHEN ADDED TO ANY SHARES BENEFICIALLY OWNED BY THE PURCHASER OR PARENT,
REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING ON A
FULLY DILUTED BASIS ON THE DATE OF PURCHASE, AND (II) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. SEE SECTION 14 OF THIS OFFER TO
PURCHASE.
------------------------------
IMPORTANT
If you wish to tender all or any portion of your Shares, you should either
(1) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, have your
signature guaranteed if required by Instruction 1 to the Letter of Transmittal,
mail or deliver the Letter of Transmittal (or such facsimile) and any other
required documents to the Depositary (as defined herein) and either (i) deliver
the certificates for such Shares to the Depositary along with the Letter of
Transmittal (or facsimile) or (ii) deliver such Shares pursuant to the procedure
for book-entry transfer as set forth in Section 2, or
(2) request your broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for you.
If you have Shares registered in the name of a banker, dealer, broker, trust
company or other nominee, you must contact it if you desire to tender your
Shares.
If you wish to tender Shares and your certificates for Shares are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis, or time will not permit all required documents to
reach the Depositary prior to the Expiration Date (as defined herein), your
tender may be effected by following the procedure for guaranteed delivery set
forth in Section 2.
Questions and requests for assistance may be directed to Innisfree M&A
Incorporated, the Information Agent, or to Lehman Brothers Inc., the Dealer
Manager, at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be obtained from the Information Agent or from the Dealer
Manager.
------------------------------
The Dealer Manager for the Offer is:
[LOGO]
May 11, 2000
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TABLE OF CONTENTS
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PAGE
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SUMMARY TERM SHEET............................................................... 1
SECTION 1. TERMS OF THE OFFER.......................................... 6
SECTION 2. PROCEDURES FOR TENDERING SHARES............................. 8
SECTION 3. WITHDRAWAL RIGHTS........................................... 11
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT.......................... 12
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 13
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS ON SHARES; PARENT PURCHASES
OF SHARES................................................... 15
SECTION 7. POSSIBLE EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS............... 15
SECTION 8. CERTAIN INFORMATION CONCERNING THE COMPANY.................. 16
SECTION 9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER..... 19
SECTION 10. SOURCE AND AMOUNT OF FUNDS.................................. 20
SECTION 11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.......... 20
SECTION 12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY................. 22
SECTION 13. DIVIDENDS AND DISTRIBUTIONS................................. 33
SECTION 14. CERTAIN CONDITIONS OF THE OFFER............................. 33
SECTION 15. CERTAIN LEGAL MATTERS....................................... 35
SECTION 16. FEES AND EXPENSES........................................... 37
SECTION 17. MISCELLANEOUS............................................... 37
SCHEDULE I....................................................................... 39
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<PAGE>
SUMMARY TERM SHEET
FIS Acquisition Corp., which is referred to in this offer to purchase as the
"Purchaser", is offering to purchase all of the outstanding shares of common
stock of Cunningham Graphics International, Inc., which is referred to in this
offer to purchase as the "Company", for $22.00 per share in cash. The following
are some of the questions you, as a shareholder of Cunningham Graphics
International, Inc., may have and answers to those questions. We urge you to
read the remainder of this offer to purchase and the letter of transmittal
carefully because the information in this summary is not complete and additional
important information is contained in the remainder of this offer to purchase
and the letter of transmittal.
Q. WHO IS OFFERING TO BUY MY SHARES?
A. FIS Acquisition Corp. is a New Jersey corporation formed for the purpose of
making this tender offer. FIS Acquisition Corp. is a wholly owned subsidiary
of Automatic Data Processing, Inc., a Delaware corporation, which is
referred to in this offer to purchase as "Parent." See Section 9 of this
offer to purchase--"CERTAIN INFORMATION CONCERNING PARENT AND THE
PURCHASER."
Q. WHAT SHARES ARE BEING SOUGHT IN THE OFFER?
A. FIS Acquisition Corp. is offering to purchase all of the outstanding shares
of common stock of CGII. See "INTRODUCTION" and Section 1 of this offer to
purchase--"TERMS OF THE OFFER."
Q. HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
A. FIS Acquisition Corp. is offering to pay $22.00 per share, net to you, in
cash. See "INTRODUCTION" and Section 1 of this offer to purchase--"TERMS OF
THE OFFER."
Q. DO YOU HAVE THE FINANCIAL RESOURCES TO PAY FOR THE SHARES?
A. ADP will provide FIS Acquisition Corp. with sufficient funds to complete the
offer from ADP's own resources. The offer is not conditioned upon any
financing arrangements. See Sections 10 and 14 of this offer to
purchase--"SOURCE AND AMOUNT OF FUNDS" and --"CERTAIN CONDITIONS OF THE
OFFER."
Q. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
A. We do not think our financial condition is relevant to your decision whether
to tender shares and accept the offer because:
- the offer is being made for all outstanding shares solely for cash,
- the offer is not subject to any financing condition, and
- if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger.
Q. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
A. You will have at least until 12:00 midnight, New York City time, on Thursday,
June 8, 2000, to decide whether to tender your shares in the offer. See
Sections 1 and 2 of this offer to purchase--"TERMS OF THE OFFER"
and--"PROCEDURES FOR TENDERING SHARES."
Q. CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
A. Yes. We have agreed with CGII that we may extend the offer if at the time the
offer is scheduled to expire (including at the end of an earlier extension)
any of the offer conditions is not satisfied (or waived by us) or if we are
required to extend the offer by the rules of the Securities and Exchange
Commission. See Section 1 of this offer to purchase--"TERMS OF THE OFFER."
We may also elect to provide a "subsequent offering period," which is an
additional period of time beginning after we have purchased shares tendered
during the offer,
1
<PAGE>
during which shareholders may tender their shares and receive the offer
consideration. If we decide to provide a "subsequent offering period" we
intend to make a public announcement of our decision at least five business
days in advance. See Section 1 of this offer to purchase--"TERMS OF THE
OFFER."
Q. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
A. If we extend the offer, we will inform Wilmington Trust Company (which is the
depositary for the offer) of that fact and will make a public announcement
of the extension, by not later than 9:00 a.m., New York City time, on the
date after the day on which the offer was scheduled to expire.
Q. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
A. We are not obligated to purchase any tendered shares unless:
- the number of shares tendered and not properly withdrawn prior to the
expiration of the offer, when added to any shares then beneficially owned
by ADP or FIS Acquisition Corp., equals at least a majority of the shares
of CGII outstanding on a fully diluted basis at the time of expiration of
the offer; and
- any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, has expired or terminated.
The offer is also subject to a number of other conditions. See Section 14 of
this offer to purchase--"CERTAIN CONDITIONS OF THE OFFER."
Q. HOW DO I TENDER MY SHARES?
A. To tender shares, you must deliver the certificates representing your shares,
together with a completed letter of transmittal and any other documents
required, to Wilmington Trust Company, the depositary for the offer, not
later than the time the offer expires. If your shares are held in street
name, the shares can only be tendered by your nominee through The Depository
Trust Company. If you cannot deliver something that is required to be
delivered to the depositary prior to the expiration of the offer, you may
get a little extra time to do so by having a broker, a bank or other
fiduciary, which is a member of the Securities Transfer Agents Medallion
Program or other eligible institution, guarantee that the missing items will
be received by the depositary within three Nasdaq National Market trading
days. However, the depositary must receive the missing items within that
three trading day period. See Section 2 of this offer to
purchase--"PROCEDURE FOR TENDERING SHARES."
Q. HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
A. To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. You can withdraw shares at any
time until the offer has expired and, if we have not agreed to accept your
shares for payment by June 8, 2000, you can withdraw them at any time after
such time until we accept shares for payment. If we decide to provide a
subsequent offering period, we will accept shares tendered during that
period immediately and thus you will not be able to withdraw shares tendered
in the offer during any subsequent offering period. See Sections 1 and 3 of
this offer to purchase--"TERMS OF THE OFFER" and --"WITHDRAWAL RIGHTS."
Q. WHAT DOES THE CGII BOARD OF DIRECTORS THINK OF THE OFFER?
A. FIS Acquisition Corp. is making the offer pursuant to a merger agreement with
CGII. The Board of Directors of CGII unanimously approved the merger
agreement, FIS Acquisition Corp.'s tender offer and the merger with FIS
Acquisition Corp. The CGII Board of Directors has determined that the offer
and the merger are advisable and fair to, and in the best interests of,
CGII's shareholders and it unanimously recommends that shareholders accept
the offer and tender their shares pursuant to the offer. See Section 11 of
this
2
<PAGE>
offer to purchase--"BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY."
CGII has prepared a Solicitation and Recommendation Statement containing
additional information regarding the CGII Board of Director's determination
and recommendation, which is being sent to shareholders contemporaneously
with this offer to purchase.
Q. WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT
TENDERED IN THE OFFER?
A. If, following completion of the offer, we own a majority of the shares of
CGII outstanding on a fully diluted basis, FIS Acquisition Corp. will be
merged with Cunningham Graphics International, Inc. If that merger takes
place, ADP and its affiliates will own all of the shares of CGII and all
other shareholders of CGII will receive the same price paid in the offer,
that is $22.00 per share in cash. See "INTRODUCTION" and Section 12 of this
offer to purchase--"PURPOSE OF THE OFFER; PLANS FOR THE COMPANY." There are
no appraisal rights available in connection with the offer or the merger
under New Jersey law. See Section 12 of this offer to purchase--"PURPOSE OF
THE OFFER; PLANS FOR THE COMPANY--Appraisal Rights."
Q. IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
A. If the proposed second-step merger takes place, shareholders who do not
tender in the offer will receive in such merger the same amount of cash per
share which they would have received had they tendered their shares in the
offer. Therefore, if the merger takes place, the only difference to you
between tendering shares and not tendering shares is that you will be paid
earlier if you tender your shares. However, until the merger is consummated
or if the merger were not to take place for some reason, the number of
shareholders of CGII and the shares of CGII which are still in the hands of
the public may be so small that there will no longer be an active public
trading market (or, possibly, any public trading market) for the shares.
Also, the shares may no longer be eligible to be traded on the Nasdaq
National Market or any other securities exchange, and CGII may cease making
filings with the Securities and Exchange Commission or otherwise cease being
required to comply with the Securities and Exchange Commission's
rules relating to publicly held companies. See Sections 7 and 12 of this
offer to purchase--"POSSIBLE EFFECT OF THE OFFER ON THE MARKET FOR THE
SHARES; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS" and "PURPOSE OF THE
OFFER; PLANS FOR THE COMPANY."
Q. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A. On May 2, 2000, the last trading day before ADP, FIS Acquisition Corp. and
CGII announced that they had signed the merger agreement, the last sale
price of the shares was $22.50 per share. On May 10, 2000, the last full
trading day prior to the mailing of this offer to purchase, the closing sale
price for the Shares was $21.81 per share. We advise you to obtain a recent
quotation for shares of CGII in deciding whether to tender your shares. See
Section 6 of this offer to purchase--"PRICE RANGE OF SHARES; DIVIDENDS ON
SHARES; PARENT PURCHASES OF SHARES."
Q. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
A. You can call Innisfree M&A Incorporated, which is acting as the information
agent or Lehman Brothers Inc., which is acting as the dealer manager for our
offer. See the back cover page of this offer to purchase.
INNISFREE M&A INCORPORATED
Bankers and Brokers Call collect:
(212) 750-5833
All Others Call Toll free:
(888) 750-5834
LEHMAN BROTHERS INC.
Call Collect:
(212) 526-9611 or (212) 526-3046
3
<PAGE>
To the Holders of Shares of Cunningham Graphics International, Inc.:
INTRODUCTION
FIS Acquisition Corp., a New Jersey corporation (the "Purchaser") and a
wholly owned subsidiary of Automatic Data Processing, Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock, no par value (the "Shares"), of Cunningham Graphics International, Inc.,
a New Jersey corporation (the "Company"), at a price of $22.00 per Share, net to
the seller in cash, without interest thereon (the "Offer Price"), on the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). Unless the context indicates otherwise, as used herein,
references to "you" or "shareholders" shall mean holders of Shares.
If your Shares are registered in your own name and you tender Shares
directly to the Depositary (as defined herein) you will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant
to the Offer. If you hold Shares through a broker or bank, we urge you to check
with such institution as to whether you will be charged any service fee. If you
fail to complete and sign the Substitute Form W-9 that is included in the Letter
of Transmittal, you may be subject to a required backup federal income tax
withholding of 31% of the gross proceeds payable in the Offer. See Section 2. We
will pay all charges and expenses of Lehman Brothers Inc. as Dealer Manager (the
"Dealer Manager"), Wilmington Trust Company as Depositary (the "Depositary"),
and Innisfree M&A Incorporated as Information Agent (the "Information Agent"),
incurred in connection with the Offer. See Section 16.
The Board of Directors of the Company (the "Company Board") has unanimously
approved the Merger Agreement (as defined herein), the Offer and the Merger,
determined that the Offer and the Merger (as defined herein) are advisable and
fair to, and in the best interests of, shareholders of the Company and
unanimously recommends that shareholders of the Company accept the Offer and
tender their Shares pursuant to the Offer. The factors considered by the Company
Board in arriving at its decision to approve the Merger Agreement and to
unanimously recommend that shareholders of the Company accept the Offer and
tender their Shares pursuant to the Offer will be described in the
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
to be filed with the Securities and Exchange Commission (the "Commission").
Prudential Securities Incorporated ("Prudential Securities") has acted as
the Company's financial advisor. The opinion of Prudential Securities dated
May 2, 2000, that, as of such date, and based on and subject to the matters
described in such opinion, the $22.00 per Share cash consideration to be
received in the Offer and the Merger by the Company's shareholders is fair, from
a financial point of view, to such shareholders, will be set forth in full as an
Annex to the Schedule 14D-9. You are urged to, and should, read such opinion
carefully in its entirety.
We are not required to purchase Shares unless, among other things,
(i) there is validly tendered and not properly withdrawn prior to the expiration
of the Offer that number of Shares which, when added to the Shares beneficially
owned by the Purchaser or Parent would represent at least a majority of the
total number of outstanding Shares on a fully diluted basis on the date of
purchase (the "Minimum Condition"), and (ii) any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") has expired or been terminated.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. We expect to consummate, as soon as practicable
following the consummation of the Offer, a second-
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step merger (the "Merger"), with the Purchaser or other subsidiary of Parent,
pursuant to which each then outstanding Share (other than Shares owned by
Parent, Purchaser or any of their subsidiaries or affiliates or by the Company)
would be converted into the right to receive an amount in cash equal to the
price per Share paid in the Offer. Following such merger the Company would
become a wholly owned subsidiary of Parent. See Sections 11 and 12.
We reserve the right, subject to applicable laws, to acquire additional
Shares after expiration or termination of the Offer, through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as we may determine, which may
be more or less than the price to be paid per Share in the Offer and could be
for cash or other consideration.
The Offer is subject to a number of conditions, including the following:
MINIMUM CONDITION. Consummation of the Offer is conditioned upon there
being validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Shares which, when added to the Shares beneficially owned
by the Purchaser or Parent, represents at least a majority of the total number
of outstanding Shares on a fully diluted basis on the date of purchase.
We currently do not beneficially own any Shares.
According to the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1999 (the "Company 10-K"), as of April 24, 2000, there were
5,757,606 Shares and options to acquire 418,410 Shares outstanding.
Based on the foregoing and assuming no additional Shares (or options,
warrants or rights exercisable for, or securities convertible into, Shares) have
been issued other than as set forth above (other than Shares issued pursuant to
the exercise of the stock options referred to above), if we were to purchase
approximately 3,088,009 Shares pursuant to the Offer, the Minimum Condition
would be satisfied.
According to the Company's Proxy Statement in respect of its annual meeting
of shareholders held on May 11, 1999, as of April 1, 1999, the officers and
directors of the Company, as a group, held approximately 46.9% of the Shares
outstanding.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 2, 2000 (the "Merger Agreement"), among the Purchaser, Parent and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by us and further provides that, following the consummation of the
Offer, upon the terms and subject to the conditions of the Merger Agreement and
the New Jersey Business Corporation Act (the "NJBCA"), the Purchaser will be
merged with and into the Company (the "Merger") with the Company surviving the
Merger as a wholly owned subsidiary of Parent. In the Merger, each issued Share
(other than Shares owned by Parent, the Purchaser or any subsidiary or affiliate
of Parent or the Purchaser or by the Company) will be converted into the right
to receive an amount in cash equal to the price per Share paid pursuant to the
Offer, without interest thereon.
If the Minimum Condition and other conditions to the Offer are satisfied and
the Offer is consummated, we will own a sufficient number of Shares to ensure
that the Merger will be approved. Under the NJBCA, if, after consummation of the
Offer, the Purchaser owns at least ninety percent of the Shares outstanding, the
Purchaser shall be able to cause the Merger to occur without a vote of the
Company's shareholders. If, however, after consummation of the Offer, the
Purchaser owns less than ninety percent of the then-outstanding Shares, a vote
of the Company's shareholders will be required under the NJBCA to approve the
Merger.
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Certain other conditions to the Offer are described in Section 14. We
expressly reserve the right, in our sole discretion, to waive any one or more of
the conditions to the Offer. See Sections 14 and 15.
Concurrently with the execution of the Merger Agreement, Parent and four of
the Company's shareholders entered into a Voting and Tender Agreement (the
"Voting and Tender Agreement") pursuant to which, subject to the terms and
conditions of the Voting and Tender Agreement, such shareholders have agreed to
tender 2,557,827 Shares in the aggregate in the Offer, constituting
approximately 44.4% of the issued and outstanding Shares. The Voting and Tender
Agreement is more fully described in Section 12.
WE RESERVE THE RIGHT TO AMEND OR WAIVE ANY ONE OR MORE OF THE CONDITIONS TO
THIS OFFER, SUBJECT TO THE TERMS OF THE MERGER AGREEMENT AND THE APPLICABLE
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION").
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
SECTION 1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), we will purchase all Shares validly tendered and not properly
withdrawn prior to the Expiration Date. The term "Expiration Date" means 12:00
midnight, New York City time, on Thursday, June 8, 2000, unless we, in our sole
discretion, extend the period of time during which the Offer (not including any
Subsequent Offering Period (as defined herein)) is open, in which event the term
"Expiration Date" will mean the latest time and date at which the Offer (not
including any Subsequent Offering Period), as so extended, will expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM CONDITION, THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED
BY THE HSR ACT AND THE SATISFACTION OR WAIVER OF THE OTHER CONDITIONS SET FORTH
IN SECTION 14.
In the Merger Agreement, we agreed that we will not, without the prior
written consent of the Company, (a) decrease the price per Share or change the
form of consideration payable in the Offer, (b) reduce the maximum number of
Shares to be purchased in the Offer, (c) impose conditions to the Offer in
addition to those set forth in Section 14, (d) change the conditions of the
Offer or (e) make any other change in the terms or conditions of the Offer which
is adverse to the holders of Shares. However, the Merger Agreement provides
that, without the consent of the Company, we may (i) extend the Offer, if at the
scheduled expiration date of the Offer any of the conditions set forth in
Section 14 have not been satisfied or waived, (ii) extend the Offer for any
period required by any regulation, interpretation or position of the Commission
applicable to the Offer or (iii) elect to provide one or more Subsequent
Offering Periods (as defined herein) for an aggregate period of not more than 20
business days. In addition, we have agreed that, without the consent of the
Company, we may increase the price per share payable in the Offer and extend the
Offer in connection with such increase to the extent required by law.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR
TENDERED SHARES, WHETHER OR NOT WE EXERCISE OUR RIGHT TO EXTEND THE OFFER.
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If by the Expiration Date any or all of the conditions to the Offer have not
been satisfied or waived, we reserve the right (but we shall not be obligated),
subject to the applicable rules and regulations of the Commission and subject to
the terms of and the limitations set forth in the Merger Agreement, to
(a) terminate the Offer and not pay for any Shares and return all tendered
Shares to tendering shareholders, (b) waive or reduce all the unsatisfied
conditions and, subject to any required extension, accept for payment and pay
for all Shares validly tendered prior to the Expiration Date, (c) extend the
Offer and, subject to your right to withdraw Shares until the Expiration Date,
retain the Shares that have been tendered during the period or periods for which
the Offer is extended or (d) amend the Offer.
The rights we reserve in the three preceding paragraphs are in addition to
our rights pursuant to Section 14. There can be no assurance that we will
exercise our right to extend the Offer. Any extension, amendment, delay, waiver
or termination will be followed as promptly as practicable by public
announcement. In the case of an extension, Rule 14e-l(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") requires that the
announcement be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date, or the first
opening of the Nasdaq National Market on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14d-4(d) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require
that any material changes be promptly disseminated to holders of Shares, we will
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.
Pursuant to Rule 14d-11 under the Exchange Act, we may, subject to certain
conditions, provide a subsequent offering period from 3 business days to 20
business days in length following the expiration of the Offer on the Expiration
Date (a "Subsequent Offering Period"). A Subsequent Offering Period would be an
additional period of time, following the expiration of the Offer and the
purchase of Shares in the Offer, during which you may tender Shares not tendered
into the Offer.
During a Subsequent Offering Period, tendering shareholders will not have
withdrawal rights and we will promptly purchase any Shares tendered at the same
price paid in the Offer. Rule 14d-11 provides that we may provide a Subsequent
Offering Period so long as, among other things, (i) the initial 20 business day
period of the Offer has expired, (ii) we offer the same form and amount of
consideration for Shares in the Subsequent Offering Period as in the initial
Offer, (iii) we accept and promptly pay for all Shares tendered during the
initial 20 business day period of the Offer prior to its expiration, (iv) we
announce the results of the Offer, including the approximate number and
percentage of Shares deposited in the Offer, no later than 9:00 a.m. Eastern
time on the next business day after the Expiration Date and immediately begin
the Subsequent Offering Period, (v) the offer is for all outstanding Shares and
(vi) we immediately purchase Shares as they are tendered during the Subsequent
Offering Period.
The Commission has stated its view that providing for a Subsequent Offering
Period would need to be announced at least five business days prior to the
expiration of the initial offering period. If we decide to provide a Subsequent
Offering Period, we intend to make a public announcement of our decision at
least five business days in advance.
If we extend the Offer or if we are delayed in our acceptance for payment of
or payment (whether before or after our acceptance for payment of Shares) for
Shares or we are unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to our rights under the Offer, the Depositary may retain
tendered Shares on our behalf, and such Shares may not be withdrawn except to
the extent tendering shareholders are entitled to withdrawal rights as described
in Section 3. However,
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our ability to delay the payment for Shares we have accepted for payment is
limited by Rule l4e-1(c) under the Exchange Act, which requires that a bidder
pay the consideration offered or return the securities tendered by or on behalf
of holders of securities promptly after the termination or withdrawal of such
bidder's offer.
If we make a material change in the terms of the Offer or the information
concerning the Offer or if we waive a material condition of the Offer, we will
extend the Offer and disseminate additional tender offer materials to the extent
required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in the percentage of securities sought, will
depend upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of 10
business days is generally required to allow for adequate dissemination to
shareholders and investor response.
The Company has provided us with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. We will mail this Offer to Purchase, the related Letter of
Transmittal and other relevant materials to record holders of Shares, and will
furnish the same to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares. The Schedule 14D-9 will also be included in the
package of materials.
SECTION 2. PROCEDURES FOR TENDERING SHARES
VALID TENDER. For you to validly tender Shares in the Offer, either
(a) you must deliver to the Depositary at one of its addresses set forth on the
back cover page of this Offer to Purchase prior to the Expiration Date, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or in the case of a
book-entry transfer, an Agent's Message (as defined below), and any other
required documents, and either (i) certificates for tendered Shares ("Share
Certificates") must be received by the Depositary at one of such addresses or
(ii) such Shares must be delivered pursuant to the procedures for book-entry
transfer set forth below (and a Book-Entry Confirmation (as defined below)
received by the Depositary), in each case prior to the Expiration Date, or
(b) you must comply with the guaranteed delivery procedures set forth below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Depository Trust Company ("DTC" or the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book Entry Transfer Facility's systems may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to in this Offer to Purchase as a "Book-Entry Confirmation." DELIVERY
OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
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THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
Participants in DTC may tender their Shares in accordance with DTC's
Automated Tender Offer Program, to the extent it is available to such
participants for the Shares they wish to tender. A shareholder tendering through
the Automated Tender Offer Program must expressly acknowledge that the
shareholder has received and agreed to be bound by the Letter of Transmittal and
that the Letter of Transmittal may be enforced against such shareholder.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT YOUR ELECTION AND RISK, AND DELIVERY WILL BE CONSIDERED MADE
ONLY WHEN THE DEPOSITARY ACTUALLY RECEIVES THEM. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's systems whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (b) if such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program, or a bank, broker, dealer, credit union, savings association
or other entity which is an "eligible guarantor institution" as such term is
used in Rule 17A under the Exchange Act (each such institution, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal.
If Share Certificates are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the Share Certificates
surrendered, the tendered Share Certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holders appear on the Share Certificates, with the signatures on
the Share Certificates or stock powers guaranteed as described above. See
Instructions 1 and 5 to the Letter of Transmittal.
If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) with all requisite signature guarantees must accompany each
such delivery.
If you hold Shares through brokers or banks, you are urged to consult with
the brokers or banks to determine whether transaction costs may apply if you
tender Shares through the brokers and banks and not directly to the Depositary.
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GUARANTEED DELIVERY. If you want to tender Shares pursuant to the Offer and
your Share Certificates are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, your Shares may still be tendered if all the following conditions are met:
(i) your tender is made by or through an Eligible Institution;
(ii) the Depositary receives, as described below, a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
made available by us, prior to the Expiration Date; and
(iii) the Depositary receives the Share Certificates representing all
tendered Shares, in proper form for transfer (or a Book-Entry Confirmation
with respect to all such Shares), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market is open for
business.
You may deliver the Notice of Guaranteed Delivery by hand to the Depositary
or by telegram, facsimile transmission or mail and you must include a guarantee
by an Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery.
Notwithstanding any other provision of the Offer, we will pay for Shares
only after timely receipt by the Depositary of (a) Share Certificates for (or a
timely Book Entry Confirmation with respect to) such Shares, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering shareholders may be paid at different times
depending upon when Share Certificates or Book-Entry Confirmations with respect
to Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
WE PAY INTEREST ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Our acceptance for payment of Shares validly tendered pursuant to the Offer
will constitute a binding agreement between the tendering shareholder and us
upon the terms and subject to the conditions of the Offer.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal as set forth
above, you are irrevocably appointing our designees as your attorneys-in-fact
and proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of your rights with respect to the
Shares that you tender and that we accept for payment and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after the date of this Offer to Purchase, May 11, 2000 (the
"Applicable Date"). All such proxies will be irrevocable and considered coupled
with an interest in the tendered Shares. This appointment will be effective
when, and only to the extent that we accept such Shares for payment pursuant to
the Offer. Upon such acceptance for payment, all prior powers of attorney,
proxies and consents given by you with respect to such Shares or other
securities or rights will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will not be deemed effective). Our designees will be empowered to
exercise all voting and other rights with respect to the Shares and other
securities or rights in respect of any annual, special, adjourned or postponed
meeting of the Company's shareholders, actions by written consent in lieu of any
such meeting or otherwise, as they in their sole discretion deem proper. We
reserve the right to require that, in order for Shares to be deemed validly
tendered, immediately upon our acceptance for payment of such Shares, we must be
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able to exercise full voting, consent and other rights with respect to such
Shares and other securities or rights, including voting at any meeting of
shareholders.
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the Company's
shareholders, which will be made only pursuant to separate proxy solicitation
materials complying with the Exchange Act.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by us, in our sole discretion, which determination
will be final and binding on all parties. We reserve the absolute right to
reject any or all tenders determined by us not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of our
counsel, be unlawful. We also reserve the absolute right to waive any condition
of the Offer or any defect or irregularity in the tender of any Shares of any
particular shareholder whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of the Purchaser, Parent, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Our interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and its
instructions) will be final and binding on all parties.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, you must, unless an
exemption applies, provide the Depositary with your correct taxpayer
identification number ("TIN") on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that you are not subject to
backup withholding. If you do not provide your correct TIN or you fail to
provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a penalty on you and the payment of cash to you pursuant to
the Offer may be subject to backup withholding of 31% of the amount of such
payment. All shareholders surrendering Shares pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9 included
as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to us and the
Depositary).
Noncorporate foreign shareholders should complete and sign the main
signature form and a Form W-8BEN, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
Instruction 10 to the Letter of Transmittal.
SECTION 3. WITHDRAWAL RIGHTS
Except as otherwise described in this Section 3, tenders of Shares made in
the Offer are irrevocable. You may withdraw Shares that you previously tendered
in the Offer at any time prior to the Expiration Date and, unless previously
accepted for payment pursuant to the Offer, such Shares may also be withdrawn at
any time after July 11, 2000.
For your withdrawal to be effective, you must timely deliver to the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase a written, telegraphic or facsimile transmission notice of
withdrawal. This notice must specify the name of the person having tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If Share Certificates have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on such Share Certificates
must
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be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedure for book-entry transfer as set forth in Section 2, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures.
You may not rescind a withdrawal of Shares, and any Shares that you properly
withdraw will be considered not validly tendered for purposes of the Offer.
However, you may retender withdrawn Shares by again following one of the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by us, in our sole discretion, which
determination will be final and binding. None of the Purchaser, Parent, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
If we extend the Offer or if we are delayed in our acceptance for payment of
or payment (whether before or after our acceptance for payment of Shares) for
Shares or we are unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to our rights under the Offer, the Depositary may retain
tendered Shares on our behalf, and such Shares may not be withdrawn except to
the extent tendering shareholders are entitled to withdrawal rights as described
in this Section 3. However, our ability to delay the payment for Shares that we
have accepted for payment is limited by Rule l4e-1(c) under the Exchange Act,
which requires that a bidder pay the consideration offered or return the
securities tendered by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If we provide a Subsequent Offering Period following the Offer, no
withdrawal rights will apply to Shares tendered during such Subsequent Offering
Period or to Shares tendered in the Offer and accepted for payment.
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), we will purchase, by accepting for payment and paying for, all
Shares validly tendered and not withdrawn (as permitted by Section 3) promptly
after the Expiration Date. All questions as to the satisfaction of such terms
and conditions will be determined by us, in our sole discretion, and our
determination will be final and binding on all parties. See Sections 1 and 14.
We expressly reserve the right, in our sole discretion, to delay acceptance for
payment of or payment for Shares in order to comply in whole or in part with any
applicable law, including, without limitation, the HSR Act. See Section 15. Any
such delays will be effected in compliance with Rule 14e-l(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) Share
Certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal.
12
<PAGE>
For purposes of the Offer, we will be considered to have accepted for
payment, and thereby purchased, Shares validly tendered as, if and when we give
written notice to the Depositary of our acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
validly tendering shareholders for the purpose of receiving payment from us and
transmitting payment to tendering shareholders.
UNDER NO CIRCUMSTANCES WILL WE PAY INTEREST ON THE PURCHASE PRICE OF THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. Upon the deposit of all required funds with the Depositary for the
purpose of making payments in full to tendering shareholders, our obligation to
make such payment shall be satisfied and tendering shareholders must thereafter
look solely to the Depositary for payment of amounts owed to them by reason of
the acceptance for payment of Shares pursuant to the Offer. We will pay any
stock transfer taxes with respect to the transfer and sale to us or our order
pursuant to the Offer, except as otherwise provided in Instruction 6 to the
Letter of Transmittal, as well as any charges and expenses of the Depositary and
the Information Agent.
If we are delayed in our acceptance for payment of or payment for Shares or
we are unable to accept for payment or pay for Shares pursuant to the Offer for
any reason, then, without prejudice to our rights under the Offer (but subject
to compliance with Rule 14e-l(c) under the Exchange Act), the Depositary may,
nevertheless, on our behalf, retain tendered Shares, and such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to exercise,
and duly exercise, withdrawal rights as described in Section 3.
If we do not purchase any tendered Shares pursuant to the Offer for any
reason, we will return Share Certificates for any such unpurchased Shares,
without expense to you (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility), as
promptly as practicable after the expiration, termination or withdrawal of the
Offer.
IF, PRIOR TO THE EXPIRATION DATE, WE INCREASE THE PRICE OFFERED TO HOLDERS
OF SHARES IN THE OFFER, WE WILL PAY THE INCREASED PRICE TO ALL HOLDERS OF SHARES
THAT ARE PURCHASED IN THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR
TO THE INCREASE IN PRICE.
We reserve the right to transfer or assign, in whole or from time to time in
part, to one or more of our wholly owned subsidiaries, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve us of our obligations under the Offer or prejudice your rights to
receive payment for Shares validly tendered and accepted for payment in the
Offer.
If we provide a Subsequent Offering Period following the Offer, we will
immediately accept and promptly pay for all Shares as they are tendered in the
Subsequent Offering Period.
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the sale of Shares pursuant to the Offer and the exchange of
Shares for cash pursuant to the Merger. This summary does not purport to be a
description of all tax consequences that may be relevant to you, and assumes an
understanding of tax rules of general application. It does not address special
rules which may apply to you based on your tax status, individual circumstances
or other factors unrelated to the
13
<PAGE>
Offer or the Merger. You are encouraged to consult your own tax advisors
regarding the Offer and the Merger.
Your receipt of cash for Shares in the Offer or the Merger will be a taxable
transaction for federal income tax purposes, and may also be taxable under
applicable state, local, foreign and other tax laws. For federal income tax
purposes, if you sell or exchange your Shares in the Offer or the Merger you
would generally recognize gain or loss equal to the difference between the
amount of cash received and your tax basis for the Shares that you sold or
exchanged. The gain or loss will be capital gain or loss if the Shares are held
as capital assets by you and will be long-term capital gain or loss if your
holding period for federal income tax purposes is more than one year at the time
of the sale or exchange. Long-term capital gain of a non-corporate shareholder
is generally subject to a maximum federal tax rate of 20 percent. A
shareholder's ability to use capital losses to offset ordinary income is
limited.
BACKUP WITHHOLDING. Under the federal income tax backup withholding rules,
unless an exemption applies, we will be required to withhold 31 percent of all
payments to which you are entitled pursuant to the Offer, unless you provide a
tax identification number and certify under penalties of perjury that the number
is correct. If you are an individual, the tax identification number is your
social security number. If you are not an individual, the tax identification
number is your employer identification number. You should complete and sign the
substitute Form W-9, which will be included with the Letter of Transmittal to be
returned to the Depositary, in order to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exception exists and is proved in a manner satisfactory to the Depositary.
Certain shareholders, including corporations and some foreign individuals, are
not subject to these backup withholding and reporting requirements. In order for
a foreign individual to qualify as an exempt recipient, however, he or she must
submit a Certificate of Foreign Status on Form W-8BEN attesting to his or her
exempt status. Any amounts withheld will be allowed as a credit against the
holder's federal income tax liability for that year.
THE FOREGOING U.S. FEDERAL INCOME TAX DISCUSSION MAY NOT BE APPLICABLE WITH
RESPECT TO SHARES RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT
TO SPECIAL TAX TREATMENT UNDER THE INTERNAL REVENUE CODE, SUCH AS NON-U.S.
PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL
INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL
CIRCUMSTANCES. THE DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS
BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN EFFECT, ALL OF WHICH
ARE SUBJECT TO CHANGE, POSSIBLY RETROACTIVELY. YOU ARE URGED TO CONSULT YOUR OWN
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, OR FOREIGN INCOME OR OTHER
TAX LAWS.
14
<PAGE>
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS ON SHARES; PARENT PURCHASES OF
SHARES
The Shares are listed on the Nasdaq National Market under the symbol CGII.
The following table sets forth the high and low intra-day sales prices per
Share, as reported in publicly available sources for the periods indicated. The
Company did not pay any dividends on the Shares during such periods.
<TABLE>
<CAPTION>
HIGH LOW
----------------------------- ------------------------------
<S> <C> <C>
1998:
Second quarter........................... $21 3/4 $16 5/8
Third quarter............................ $20 1/2 $9 1/8
Fourth quarter........................... $17 3/4 $10 3/4
1999:
First quarter............................ $18 $10
Second quarter........................... $18 1/8 $12 1/16
Third quarter............................ $17 1/2 $11 7/8
Fourth quarter........................... $15 1/2 $9 7/8
2000:
First quarter............................ $29 $13 3/8
Second quarter
(through May 10, 2000)................. $28 3/8 $20 7/8
</TABLE>
On May 2, 2000, the last full trading day prior to the announcement of the
terms of the Offer, the closing price for the Shares was $22.50 per Share. On
May 10, 2000, the last full trading day prior to the mailing of this Offer to
Purchase, the closing price for the Shares was $21.81 per Share. YOU ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Neither Parent nor its affiliates currently owns any Shares.
SECTION 7. POSSIBLE EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements for continued inclusion in the Nasdaq
National Market. If, as a result of the purchase of Shares pursuant to the
Offer, the Shares no longer meet the criteria for continuing inclusion in the
Nasdaq National Market, the market for the Shares could be adversely affected.
According to the Nasdaq National Market's published guidelines, the Shares would
not be eligible for continued listing if, among other things, the number of
Shares publicly held falls below 750,000, the number of beneficial holders of
Shares falls below 400 (round lot holders) or the aggregate market value of such
publicly held Shares does not exceed $5 million. If the Shares were no longer
eligible for inclusion in the Nasdaq National Market, they may nevertheless
continue to be included in the Nasdaq SmallCap Market unless, among other
things, the public float was less than 500,000 shares, or there were fewer than
300 shareholders (round lot holders) in total, or the market value of the public
float was less than $1 million.
In the event that the Shares no longer meet the requirements of the National
Association of Securities Dealers for continued inclusion in any tier of the
Nasdaq Stock Market, it is possible that the Shares would continue to trade in
the over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon the number of holders of Shares
remaining at such time, the
15
<PAGE>
interest in maintaining a market in Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with shareholders' meetings and the related
requirement of furnishing an annual report to shareholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended (the "Securities Act") may be impaired or eliminated.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be eligible for listing on the Nasdaq National Market.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
SECTION 8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company provides a wide range of graphic communications services to
financial institutions and corporations, focusing on printing and distributing
time-sensitive analytical research and marketing materials and on providing
on-demand printing services. The Company operates in select international
markets through its facilities in the United States, Canada, the United Kingdom,
Hong Kong and Singapore. The Company is a major producer of financial research
reports and provides services, on a non-exclusive basis, to a variety of major
international investment banking firms. The Company's principal executive
offices are located at 100 Burma Road, Jersey City, New Jersey 07305 and the
Company's telephone number is (201) 217-1990.
SELECTED FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted from the information contained in the Company 10-K. More
comprehensive financial information is included in the Company 10-K and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such information. The Company 10-K and
such other documents should be available for inspection and copies thereof
should be obtainable in the manner set forth below under "Available
Information."
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<PAGE>
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------
DEC. 31, DEC. 31, DEC. 31,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Operating Information:
Net sales................................................... $110,671 $53,146 $35,744
Cost of production.......................................... 74,707 37,694 26,894
Selling, general and administrative expenses................ 17,921 7,783 5,794
Non-recurring moving costs.................................. 1,017 -- --
Depreciation and amortization............................... 4,873 1,252 694
-------- ------- -------
Operating income............................................ 12,153 6,417 2,362
Interest income (expense)................................... (2,052) 75 (250)
Other income................................................ 195 5 35
Income before income taxes.................................. 10,296 6,497 2,147
Income tax provision........................................ 3,747 2,489 129
-------- ------- -------
Net income.................................................. $ 6,549 $ 4,008 $ 2,018
======== ======= =======
Basic earnings per share.................................... $ 1.15 $ 0.80 $ 0.43
Diluted earnings per share.................................. $ 1.15 $ 0.80 $ 0.43
</TABLE>
<TABLE>
<CAPTION>
AT AT
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------ ------------------
<S> <C> <C>
Balance Sheet Information:
Current assets.............................................. $ 37,151 $13,582
Total assets................................................ 132,372 43,589
======== =======
Current liabilities......................................... $ 31,109 $ 8,162
Long-term debt, net of current portion...................... 7,844 769
Revolving line of credit, net of current portion............ 38,419 --
Obligations under capital leases, net of current portion.... 5,689 1,216
Deferred income taxes....................................... 3,176 932
Common stock................................................ 36,003 29,395
Accumulated other comprehensive income (loss)............... 469 1
Retained earnings........................................... 9,663 3,114
-------- -------
Stockholders' equity........................................ $ 46,135 $32,510
-------- -------
$132,372 $43,589
======== =======
</TABLE>
PROJECTIONS. In the course of the discussions between Parent and the
Company (see Section 11), the Company provided Parent with certain projections
of its operating performance for 2000 developed by the Company. The projections
do not reflect the consummation of the Offer or the Merger or any other
extraordinary transaction involving the Company. The Company has advised Parent
and Purchaser that it does not as a matter of course disclose projections as to
future revenues, earnings or other income statement data and the projections
were not prepared with a view to public disclosure. In addition, the projections
were not prepared in accordance with generally accepted accounting principles,
or with a view to compliance with the published guidelines of the Commission or
the American Institute of Certified Public Accountants regarding projections,
which would require a more complete presentation of the data than as shown
below. The projections have not been examined,
17
<PAGE>
reviewed or complied by the Company's independent auditors, and accordingly they
have not expressed an opinion or provided any other assurance on the data. The
forecasted information is included herein solely because such information was
furnished to Parent and Purchaser prior to the Offer. Accordingly, the inclusion
of the projections in this Offer should not be regarded as an indication that
Parent, Purchaser or the Company or their respective financial advisors or their
respective officers and directors consider such information to be accurate or
reliable. In addition, because the estimates and assumptions underlying the
projections are inherently subject to significant economic and competitive
uncertainties and contingencies, which are difficult or impossible to predict
accurately and are beyond the control of the Company, Parent or Purchaser, there
can be no assurance that results set forth in the below projections will be
realized and it is expected that there will be differences between actual and
projected results, and actual results may be materially higher or lower than
those set forth below.
Set forth below is a summary of the projections provided by the Company. The
projections should be read together with the financial statements of the Company
referred to herein.
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
PROJECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PROJECTED
FISCAL YEAR ENDED
DECEMBER 31,
2000
-----------------
<S> <C>
Income Statement Data:
Net sales................................................... $181,683
Gross profit................................................ 61,772
Earnings before interest, taxes, depreciation and
amortization.............................................. 31,249
Net income.................................................. 11,345
Diluted earnings per share.................................. $1.87
Balance Sheet Information:
Cash........................................................ $ 1,220
--------
Total long-term debt (including long-term debt and capital
lease obligations)........................................ $ 89,631
Stockholders' equity........................................ 58,498
--------
Total capitalization........................................ $148,129
</TABLE>
AVAILABLE INFORMATION. The Company is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the Commission relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities, any material interests of such persons in transactions
with the Company and other matters is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference room at the Commission's office
450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C., and also
should be available for inspection and copying at the following regional offices
of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies may be obtained by mail, upon payment of the Commission's
customary charges, by writing to its principal office at 450 Fifth Street, N.W.,
Room 1024, Judiciary Plaza, Washington, D.C. 20549. Further information on the
operation of the Commission's Public Reference Room in Washington, D.C. can be
obtained by calling the Commission at 1-800-SEC-0330. The Commission also
maintains an Internet worldwide web site that contains reports,
18
<PAGE>
proxy statements and other information about issuers, such as the Company, who
file electronically with the Commission. The address of that site is
http://www.sec.gov.
COMPANY INFORMATION. The information concerning the Company contained in
this Offer to Purchase has been taken from or based upon publicly available
documents on file with the Commission and other publicly available information.
Although none of Parent, the Purchaser, the Dealer Manager or the Information
Agent has any knowledge that any such information is untrue, none of Parent, the
Purchaser, the Dealer Manager or the Information Agent assumes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information.
SECTION 9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
Parent is a Delaware corporation which, along with its subsidiaries, is
engaged in the computing services business. All of Parent's computing services
enable clients to process and/or distribute data (their own, Parent's or that of
third parties) and/or to interactively access and utilize Parent and third party
databases and information. Parent's business is divided into four main services.
Its "Employer Services" offers a comprehensive range of payroll, human
resources, benefits administration, time and attendance and tax filing and
reporting services to more than 425,000 employers in the United States, Canada,
Europe and Latin America. Parent's "Brokerage Services" provides transaction
processing, desktop productivity applications and investor communications
services to the financial services industry, while its "Dealer Services"
provides computing, data and professional services to automobile and truck
dealerships, as well as manufacturers, worldwide. Finally, Parent's "Claims
Services" offers a broad line of claims information products to property and
casualty insurance companies, claims adjusters, repair shops and auto parts
recycling facilities.
The Purchaser is a newly incorporated New Jersey corporation and a wholly
owned subsidiary of Parent which to date has not conducted any business other
than in connection with the Offer and the Merger.
The principal executive offices of both Parent and the Purchaser are located
at One ADP Boulevard, Roseland, New Jersey 07068 and their telephone number is
(973) 974-5000.
Reference is hereby made to the (i) audited consolidated financial
statements of Parent and its subsidiaries contained in Parent's Annual Report on
Form 10-K for the fiscal year ended June 30, 1999 and (ii) unaudited
consolidated financial statements contained in Parent's Quarterly Report on Form
10-Q for the fiscal quarter ended December 31, 1999. Such reports and other
documents may be inspected and copies may be obtained from the Commission in the
manner set forth below.
During the last five years, to the best of our knowledge, none of the
persons listed in Schedule I hereto (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
any federal or state securities laws.
AVAILABLE INFORMATION. Parent is subject to the informational requirements
of the Exchange Act and, in accordance therewith, files reports relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Parent's directors and officers, their remuneration, stock
options and other matters, the principal holders of Parent's securities and any
material interest of such persons in transactions with Parent is required to be
disclosed in proxy statements distributed to Parent's stockholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the Commission and copies thereof should be
obtainable from the Commission in the same manner as is set forth with respect
to the Company in Section 8 under the heading "Available Information."
19
<PAGE>
CONTACTS WITH THE COMPANY. None of Parent, the Purchaser or any other
affiliate of Parent nor, to the best knowledge of Parent or the Purchaser, any
of the persons listed in Schedule I hereto (which lists the name, citizenship,
business address, principal occupation or employment and five-year employment
history for each of the directors and executive officers of the Purchaser and
Parent), or any associate or majority-owned subsidiary of such persons
(collectively, the "Purchaser Entities"), beneficially owns any equity security
of the Company, and no Purchaser Entity, or, to the best knowledge of Parent,
the Purchaser, or any other affiliate of Parent, any of the other persons
referred to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any equity
security of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, no Purchaser Entity, or, to
the best knowledge of any Purchaser Entity, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, no Purchaser Entity, or, to the best knowledge
of any Purchaser Entity, any of the persons listed in Schedule I hereto has had
any transactions with the Company, or any of its executive officers, directors
or affiliates that would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between any Purchaser Entity, or their respective
subsidiaries, or, to the best knowledge of any Purchaser Entity, any of the
persons listed in Schedule I hereto, on the one hand, and the Company or its
executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors, or a sale or other transfer of a material
amount of assets that would require reporting under the rules of the Commission.
SECTION 10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. The total
amount of funds we require to purchase all of the Shares pursuant to the Offer
and to pay fees and expenses related to the Offer and the Merger is estimated to
be approximately $190 million. The Purchaser will obtain all funds needed for
the Offer and the Merger through a capital contribution from Parent. Parent
currently anticipates funding such capital contribution out of its own
resources.
We expressly reserve our right to obtain financing for the transaction
through alternative sources. However, currently, no alternative financing
arrangements or alternative financing plans exist.
SECTION 11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In January 2000, a representative of Parent met with Michael R. Cunningham,
President and Chief Executive Officer of the Company, to discuss possible joint
business opportunities between Parent and the Company. Soon after such meeting,
Mr. Cunningham contacted Prudential Securities, the Company's financial advisor
in an auction process it had commenced in November 1999, and directed Prudential
Securities to seek Parent to enter a bid in accordance with the auction
procedures. Parent was not one of the companies Prudential Securities had
originally contacted in connection with the auction process.
On January 5, 2000, a wholly owned subsidiary of Parent executed a
confidentiality agreement with the Company and Parent subsequently received
certain information about the Company and its subsidiaries.
On January 20, 2000, Parent submitted a letter containing a preliminary,
non-binding indication of interest with respect to the purchase of all of the
outstanding Shares of the Company on a fully diluted
20
<PAGE>
basis at a price between $17.00 and $18.00 per Share. During the beginning of
February 2000, the Company indicated to the Parent that such price per Share was
not acceptable. The parties proceeded to discuss alternative amounts of
consideration per Share and the structure of a potential business combination.
On February 23, 2000, Parent submitted an oral offer (confirmed in writing)
to acquire the Company at a price of $21.00 per Share in cash. Parent's offer
was subject to several conditions, including that Parent have the opportunity to
conduct to its satisfaction additional due diligence, including, in particular,
environmental due diligence with respect to the Company's properties; that the
Company divest itself of one of its subsidiaries (the "Designated Business");
that an unspecified number of members of the executive management of the Company
enter into three-year employment agreements with Parent; and that Michael
Cunningham and other significant shareholders of the Company enter into voting
and tender agreements with Parent.
In early March 2000, the Company indicated to Parent that it was interested
in continuing to explore an acquisition by Parent of the Company and Parent
continued with its due diligence review of the Company. In the course of
discussions thereafter between representatives of Parent and the Company, Parent
indicated that it might consider an increase in its initial proposed price
following the completion of its due diligence and the Company agreed to allow
Parent to continue its due diligence review of the Company.
During the remainder of March and April, Parent conducted an extensive due
diligence review of the Company's business and operations (in particular it
conducted "Phase I" environmental reviews of the Company's properties); counsel
for Parent and the Company negotiated the terms of the Merger Agreement and the
Voting and Tender Agreement; and the Company negotiated an agreement to transfer
the Designated Business to its former owners contingent upon the concurrent
completion of an acquisition of the Company.
In early April 2000, Parent informed the Company that it had substantially
completed its environmental due diligence to its satisfaction. Parent also
indicated that while it was prepared to seek corporate approval to make a final
proposal to acquire the Company, it did not expect to revise its proposed
purchase price of $21.00 per Share. Representatives of the Company informed
Parent that the proposed price would not be acceptable to the Company. Parent
also informed the Company that any final proposal to acquire the Company would
be subject to approval by Parent's Executive Committee (which was next scheduled
to meet at the end of April 2000). Representatives of the Company informed
Parent that while the Company would consider a further proposal from Parent if
one were made, the Company would continue to consider alternatives to a
transaction with Parent.
On April 26, 2000, the Executive Committee of the Board of Directors of
Parent met to consider, among other matters, the proposed merger between Parent
and the Company.
On April 26, 2000, Parent informed the Company that its Executive Committee
had authorized the making of a further proposal and that Parent was now
proposing to acquire the Company for a per Share price of $22.00 payable in
shares of common stock of Parent, provided that the transaction could be
accounted for as a "pooling of interests." On April 26, 2000, the Company
requested that Parent consider making a cash proposal with an increased price of
at least $23.00 per Share and that it propose a higher price if it wished to
propose a share transaction. (After consulting with its independent accounting
firm, the Company learned, and informed Parent, that the proposed transaction
would not be eligible for "pooling of interests" accounting and the proposal to
acquire the Company in exchange for Parent shares was abandoned.)
On April 28, 2000, Parent informed the Company that it was prepared to make
a final proposal to acquire the Company for a per Share price of $22.00 in cash
and that this was the highest price it would consider. Parent also informed the
Company that it was not prepared to execute an agreement to acquire the Company
until the pending negotiations regarding renewal of the Company's collective
bargaining agreement were concluded with a ratified contract, scheduled to occur
on May 2, 2000, and until the Employment Agreements (as defined below) were
executed.
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At a meeting held on May 2, 2000, the Company's Board of Directors
unanimously approved the Merger Agreement, the Offer and the Merger, determined
that the Offer and the Merger are advisable and fair to, and in the best
interests of, the holders of Shares and unanimously recommended that
shareholders accept the Offer and tender their Shares pursuant to the Offer. The
Company, Parent and the Purchaser executed the Merger Agreement on May 2, 2000.
On the same date, Michael R. Cunningham, James J. Cunningham, Gordon Mays and
Timothy Mays (who in the aggregate own approximately 44.4% of the Shares),
Parent and the Purchaser executed the Voting and Tender Agreement whereby each
such shareholder agreed to tender his Shares pursuant to the Offer and to vote
in favor of the Merger at any shareholders' meeting. The Employment Agreements
were also executed on such date.
On May 3, 2000, Parent and the Company issued press releases announcing the
execution of the Merger Agreement. On May 11, 2000, Parent and the Purchaser
commenced the Offer.
SECTION 12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
PURPOSE. The purpose of the Offer and the Merger is to acquire control of,
and ultimately the entire equity interest in, the Company. The Offer, as the
first step in the acquisition of the Company, is intended to facilitate the
acquisition of all the Shares. The purpose of the Merger is to acquire all
Shares not purchased in the Offer or otherwise. Pursuant to the Merger, each
then outstanding Share (other than Shares owned by us or any of our subsidiaries
or affiliates or by the Company) would be converted into the right to receive an
amount in cash equal to the price per share paid in the Offer.
PLANS FOR THE COMPANY. In connection with the Offer, we have reviewed, and
will continue to review, on the basis of publicly available information, various
possible business strategies that the Company may pursue in the event that we
acquire control of the Company pursuant to this Offer or the Merger. If and to
the extent that we acquire control of the Company or otherwise obtain access to
the books and records of the Company, we intend to conduct a detailed review of
the Company and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider and determine what, if any, changes would be desirable in light of the
circumstances which then exist. Such strategies could include, among other
things, changes in the Company's business strategy, corporate structure,
Certificate of Incorporation, Bylaws, capitalization, management or dividend
policy.
Except as described in this Offer to Purchase, we have no present plans or
proposals that would result in an extraordinary corporate transaction, such as a
merger, consolidation, reorganization, liquidation or sale or transfer of a
material amount of assets, involving the Company or any of its subsidiaries, or
any material changes in the Company's present capitalization, dividend policy,
employee benefit plans, corporate structure or business or any material changes
or reductions in the composition of its management or personnel.
The following is a summary of certain provisions of the Merger Agreement,
the Voting and Tender Agreement, the Confidentiality Agreement (as defined
below) and the Employment Agreements (as defined below) entered into in
connection with the Merger Agreement. This summary is qualified in its entirety
by reference to the Merger Agreement, the Voting and Tender Agreement, the
Confidentiality Agreement and the Employment Agreements which are incorporated
herein by reference and copies or forms of which have been filed with the
Commission as exhibits to the Tender Offer Statement on Schedule TO to which
this Offer to Purchase is an exhibit (the "Schedule TO"). The Merger Agreement,
the Voting and Tender Agreement, the Confidentiality Agreement and the
Employment Agreements may be examined and copies may be obtained in the manner
set forth in Section 8. Defined terms used herein and not defined herein have
the meanings assigned to those terms in the Merger Agreement.
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THE MERGER AGREEMENT
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of those conditions set forth in the Offer as described in Section 14
(including, if the Offer is extended or amended, the terms and conditions of any
extension or amendment) (collectively, the "Offer Conditions"), the Purchaser
will accept for payment, and pay for, all Shares validly tendered pursuant to
the Offer and not withdrawn on or prior to the Expiration Date.
DIRECTORS. Subject to applicable law and to the extent permitted by the
National Association of Securities Dealers, promptly upon the purchase by the
Purchaser pursuant to the Offer of such number of Shares as represents at least
a majority of the outstanding Shares, and from time to time thereafter, the
Purchaser will have the right to designate such number of directors, rounded up
to the next whole number, to serve on the Board of Directors of the Company (the
"Board") as will give the Purchaser representation on the Board equal to the
product of (i) the number of directors on the Board (giving effect to the
election of any additional directors pursuant to this provision) and (ii) the
percentage that such number of Shares beneficially owned by Parent and/or the
Purchaser (including Shares accepted for payment) so purchased bears to the
number of Shares outstanding. The Merger Agreement provides that the Company
will, upon request by the Purchaser, promptly take all actions necessary to
cause the Purchaser's designees to be elected or appointed to the Board,
including without limitation, increasing the size of the Board or securing the
resignations of such number of directors as is necessary to provide the
Purchaser with such level of representation, or both; provided, however, that
the Board will continue to include no fewer than two Continuing Directors (as
defined below) until the time the Merger becomes effective in accordance with
applicable law (the "Effective Time"). Following the election or appointment of
the Purchaser designees and prior to the Effective Time, if any of the directors
of the Company then in office is a director of the Company on the date of the
Merger Agreement (the "Continuing Director"), any amendment or termination of
the Merger Agreement which requires action by the Company, any extension of time
for the performance of any of the obligations or other acts of Parent or the
Purchaser under the Merger Agreement and any exercise or waiver of any of the
provisions of the Merger Agreement providing rights or remedies to the Company,
will require the affirmative vote of a majority of the Continuing Directors.
THE MERGER. The Merger Agreement provides that, after the completion of the
Offer and the satisfaction or waiver of certain conditions, the Purchaser will
be merged with and into the Company and the Company will be the surviving
corporation (the "Surviving Corporation"). At the Effective Time, each
outstanding Share (other than Shares owned by the Company, Parent or the
Purchaser or by a subsidiary (each a "Subsidiary" and collectively, the
"Subsidiaries") or affiliate of Parent, the Purchaser or the Company, all of
which will be canceled without any exchange of consideration) will by virtue of
the Merger and without action by the holder thereof be canceled and converted
into the right to receive an amount in cash equal to the offer price, without
interest (the "Merger Consideration").
Unless the Merger is consummated in accordance with Section 14A:10-5.1 of
the NJBCA, the Company acting through its Board will in accordance with
applicable law duly call, give notice of, convene and hold a special meeting
(the "Special Meeting") of its shareholders as soon as practicable following the
consummation of the Offer for the purpose of approving the plan of merger (the
"Plan of Merger") set forth in the Merger Agreement and include in the letter to
shareholders, notice of meeting, proxy statement and form of proxy, or the
information statement, as the case may be, that may be provided to shareholders
of the Company in connection with the Merger, and in any schedules required to
be filed with the Commission in connection therewith (collectively, the "Proxy
Statement"), the recommendation of its Board that shareholders of the Company
vote in favor of the adoption of such Plan of Merger. Parent and the Purchaser
each agree that, at the Special Meeting, all of the Shares acquired pursuant to
the Offer or otherwise owned or acquired by Parent or the Purchaser or any of
their affiliates will be voted in favor of the Merger.
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The Merger Agreement further provides that, notwithstanding the foregoing,
if the Purchaser or any other direct or indirect Subsidiary of Parent holds at
least 90 percent of the outstanding shares of each class of capital stock of the
Company, they will take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the consummation of the Offer
without a meeting of the shareholders of the Company, in accordance with Section
14A:10-5.1 of the NJBCA.
CHARTER, BYLAWS, DIRECTORS AND OFFICERS. The Certificate of Incorporation
and the Bylaws of the Purchaser in effect immediately prior to the Effective
Time will be the Certificate of Incorporation and Bylaws of the Surviving
Corporation until amended in accordance with applicable law; provided, however,
that all rights to indemnification now existing in favor of directors and
officers of the Company and its Subsidiaries as provided in their respective
charters or by-laws will survive the Merger and continue in full force and
effect for a period of not less than the statute of limitations applicable to
such matters.
The directors of the Purchaser immediately prior to the Effective Time and
the officers of the Company immediately prior to the Effective Time will be the
directors and officers of the Surviving Corporation until their respective
death, permanent disability, resignation or removal or until their respective
successors are duly elected and qualified all in accordance with applicable law.
CONVERSION OF SHARES. Each Share issued and outstanding immediately prior
to the Effective Time (other than Shares owned by Parent, the Purchaser or by
any Subsidiary or affiliate of Parent, the Purchaser or by the Company, all of
which will be canceled without any consideration being exchanged therefor) will,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted at the Effective Time into the right to receive in cash an
amount per Share (subject to any applicable withholding tax) equal to the Merger
Consideration, upon the surrender of the certificate representing such Share. At
the Effective Time, each Existing Stock Option (as defined below) will be
converted into the right to receive the Option Consideration (as defined below).
At the Effective Time, each share of common stock of the Purchaser, no par
value, issued and outstanding immediately prior to the Effective Time, will, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into and become one share of common stock of the Surviving
Corporation.
The Merger Agreement provides that each option or right to acquire Shares
(the "Existing Stock Options") granted under any stock option or similar plan of
the Company or under any agreement to which the Company or any Subsidiary is a
party (other than stock purchase rights under the Company's Employee Stock
Purchase Plan) (the "Stock Option Plans") which is outstanding on the date that
the amendment to Schedule TO reporting the initial acceptance by the Purchaser
of the Shares tendered in the Offer is filed with the Commission (the
"Acceptance Date"), whether or not then exercisable or vested, will by virtue of
the Merger and without any action on the part of the Company or the holder
thereof, be converted into and will become a right to receive an amount in cash,
without interest, with respect to each Share subject thereto equal to the
excess, if any, of the Merger Consideration over the per share exercise or
purchase price of such Existing Stock Option. On the Acceptance Date, each
holder of an Existing Stock Option will be entitled to receive, in full
satisfaction of such Existing Stock Option, an amount in cash without interest
in respect thereof equal to the product of (i) the excess, if any, of the Merger
Consideration over the per share exercise or purchase price of such Existing
Stock Option and (ii) the number of Shares subject to such Existing Stock Option
(such amount being hereinafter referred to as the "Option Consideration") and
each Existing Stock Option will be canceled on the Acceptance Date. The payment
will be reduced by any income or employment tax withholding required under the
Internal Revenue Code of 1986, as amended, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld, such withheld
amounts will be treated for all purposes of this Agreement as having been paid
to the holder of such Existing Stock Option. The Stock Option Plans will
terminate as of the Acceptance Date. All administrative and other rights and
authorities granted under any Stock Option Plan and under the Stock Purchase
Plan to the Company,
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the Board or any Committee or designee thereof, will, following the Acceptance
Date, reside with the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made representations and warranties to Parent and the Purchaser with respect to,
among other matters, its organization and qualification, capitalization,
authority, consents and approvals, financial statements, absence of any material
adverse effect on the Company, information to be included in the Schedule 14D-9,
the Schedule TO (together with the Letter of Transmittal and other ancillary
documents contained therein, the "Offer Documents") and the Proxy Statement,
brokers, employee benefit matters, litigation, tax matters, compliance with law,
environmental matters, intellectual property, real property, material contracts,
opinion of financial advisor, vote required by the Company shareholders to
approve the Merger, inapplicability of state takeover statutes, insurance,
accounts receivable and customers. Each of Parent and the Purchaser has made
representations and warranties to the Company with respect to, among other
matters, its organization and qualification, authority, information to be
included in the Offer Documents and Proxy Statement, consents and approvals,
operations of the Purchaser, brokers, litigation and sufficient funds.
COVENANTS. The Merger Agreement obligates the Company and its Subsidiaries,
from the date of the Merger Agreement until the earlier of the Effective Time
and the date on which the majority of the Company's directors are designees of
Parent or the Purchaser or until the earlier termination of the Merger
Agreement, to conduct their operations only in the ordinary and usual course of
business and consistent with past practice. The Merger Agreement also contains
specific restrictive covenants as to certain activities of the Company during
the period specified in the preceding sentence, which provide that the Company
will not (and will not permit any of its Subsidiaries to) take certain actions
without the prior written consent of Parent, including, among other things and
subject to certain exceptions, issuing or selling its securities or options to
acquire such securities, redeeming or repurchasing securities, changing its
capital structure, proposing or adopting amendments to its Certificate of
Incorporation or Bylaws, granting stock-related awards or bonuses outside the
ordinary course of business, selling, leasing, mortgaging or otherwise
encumbering any of its properties or assets, entering into or amending material
contracts, incurring indebtedness, establishing or amending any benefits plans,
changing any of its accounting policies, entering into or amending any existing
employment agreements or agreeing in writing or otherwise to take any of the
foregoing actions.
NO SOLICITATION. In the Merger Agreement, the Company has agreed not to,
and to cause its Subsidiaries and its and their respective officers, directors,
employees, representatives, agents or affiliates thereof not to, directly or
indirectly, encourage, solicit, initiate or participate in any negotiations
with, or provide any information to, or afford any access to the properties,
books or records of the Company or any of its Subsidiaries, or otherwise take
any other action to assist or facilitate, any person or group concerning any
offer or proposal, or any indication of interest in making an offer or proposal,
which is structured to permit such person or group to acquire beneficial
ownership of at least 20 percent of the assets of the Company and its
Subsidiaries, or at least 20 percent of the capital stock of the Company
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer or exchange offer or
similar transaction, including any single or multi-step transaction or series of
related transactions, in each case other than the Offer and the Merger
("Acquisition Proposal").
Notwithstanding the foregoing, the Company may furnish information to or
enter into discussions or negotiations with any Person or entity that has made
an unsolicited written bona fide Acquisition Proposal ("Potential Acquiror") in
respect of which the Board has reasonably determined in good faith, after
consultation with its independent legal counsel and independent financial
advisor, that such Acquisition Proposal is reasonably likely to result in a
transaction that is more favorable from a financial point of view to the
Company's shareholders than the Offer and the Merger, the conditions to the
consummation of such Acquisition Proposal are reasonably capable of being
satisfied promptly and
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financing for such transaction, to the extent required, is then committed or
reasonably available (a "Superior Proposal"), provided that the Company
(A) notifies Parent within 24 hours of receipt of any such Acquisition Proposal
or request for nonpublic information relating to the Company or for access to
the Company's properties, books or records, (B) receives from such Potential
Acquiror an executed confidentiality agreement that is no more favorable to such
person or group than the confidentiality agreement, dated January 5, 2000,
between ADP Financial Information Services, Inc., a wholly-owned subsidiary of
Parent ("ADP FIS"), and the Company, (C) furnishes or makes available to Parent
the same information provided to such Potential Acquiror and (D) if the Company
participates in discussions or negotiations with, or provides information to,
any such Potential Acquiror, keeps Parent advised on a current basis of any
material developments with respect thereto.
The Merger Agreement provides that unless and until the Merger Agreement has
been terminated, the Company will not withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent or the Purchaser, the approval
or recommendation of the Offer or Merger, approve or recommend or propose
publicly to approve or recommend any Acquisition Proposal or enter into any
letter of intent, agreement in principle or acquisition agreement to effect any
Acquisition Proposal.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. In the Merger
Agreement, Parent and the Purchaser have agreed that all rights to
indemnification existing in favor of the present or former directors, officers
and employees of the Company or any of its Subsidiaries as provided in the
Company's Certificate of Incorporation or Bylaws, or the articles of
organization, bylaws or similar documents of any of the Company's Subsidiaries
as in effect at the date of the Merger Agreement with respect to matters
occurring prior to the Effective Time will survive the Merger and continue in
full force and effect for a period of not less than the statutes of limitations
applicable to such matters. Parent agreed in the Merger Agreement to cause the
Surviving Corporation to comply fully with these obligations and agreed not to
amend, repeal or otherwise modify the Certificate of Incorporation and Bylaws of
the Surviving Corporation for the period set forth in the preceding sentence in
any manner that would adversely affect the rights of individuals who as of the
date of the Merger Agreement were directors, officers or employees of the
Company or otherwise entitled to indemnification under the Certificate of
Incorporation, Bylaws or indemnification agreements (the "Indemnified Parties").
In addition, the Certificate of Incorporation of the Surviving Corporation will
include provisions providing for the indemnification of and advancement of
expenses to such Indemnified Parties identical to those contained in the
Company's Certificate of Incorporation.
Parent, the Purchaser and the Company agreed in the Merger Agreement that
the Company will, to the fullest extent permitted under applicable law and
regardless of whether the Merger becomes effective, indemnify, defend and hold
harmless, and after the Effective Time, Parent and the Surviving Corporation
will, to the fullest extent permitted under applicable law, indemnify, defend
and hold harmless, each Indemnified Party against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement entered into with the
consent of Parent (which consent shall not be unreasonably withheld) in
connection with any claim, action, suit, proceeding or investigation, including
without limitation liabilities arising out of the transactions contemplated in
the Merger Agreement, to the extent that such liabilities are based on the fact
that such Indemnified Party is or was a director, officer or employee of the
Company and arising out of actions or omissions or alleged actions or omissions
occurring at or prior to the Effective Time, and in the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Company or the Surviving Corporation, as applicable,
will pay the reasonable fees and expenses of one counsel (provided that if
different Indemnified Parties are subject to different claims, actions, suits,
proceedings or investigations, each Indemnified Party may select his or her own
counsel) selected by the Indemnified Parties, which counsel must be reasonably
satisfactory to the Company or the Surviving Corporation, promptly as statements
therefor are received, and (ii) the Company and the Surviving Corporation will
cooperate in the defense of any such matter.
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The Merger Agreement further provides that Parent will or will cause the
Surviving Corporation to maintain in effect for a period of six years after the
Effective Time, in respect of acts or omissions occurring prior to the Effective
Time, policies of directors' and officers' liability insurance and fiduciary
liability insurance covering the persons covered by the Company's existing
directors' and officers' liability insurance policies (at the date of the Merger
Agreement) (which may include including such persons under Parent's existing
policies) and providing substantially similar coverage to such existing
policies. However, the Surviving Corporation will not be required in order to
maintain such directors' and officers' liability insurance and fiduciary
liability insurance policies to pay an annual premium in excess of 200 percent
of the aggregate annual amounts paid by the Company at the date of the Merger
Agreement to maintain the existing policies; and provided, further, that, if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of 200 percent of such amount, the Surviving
Corporation will only be required to obtain as much coverage as can be obtained
by paying an annual premium equal to 200 percent of such amount.
Pursuant to the Merger Agreement, the indemnification and directors' and
officers' insurance covenants described above will survive the consummation of
the Merger and are intended to benefit, and will be enforceable by, any person
or entity entitled to be indemnified hereunder (whether or not parties to the
Merger Agreement).
EMPLOYEE BENEFIT ARRANGEMENTS. The Merger Agreement provides that except as
set forth below, the Company will, and will cause its Subsidiaries to, and from
and after the Effective Time, Parent will, and will cause the Surviving
Corporation to, honor, in accordance with their terms, all existing employment,
severance, consulting and salary continuation agreements between the Company or
any of its Subsidiaries and any current or former officer, director, employee or
consultant of the Company or any of its Subsidiaries to the extent specified in
the disclosure letter to the Merger Agreement; provided, however, that nothing
in the Merger Agreement will preclude the Parent or any of its affiliates from
having the right to terminate the employment of any employee, with or without
cause, or to amend or terminate in accordance with its terms and applicable law
any employee benefit plan of Parent ("Parent Benefit Plan") established,
maintained or contributed to by Parent or any of its affiliates after the
Effective Time.
The Merger Agreement also provides that, after the Effective Time, Parent
will either continue existing Employee Benefit Plans (including without
limitation any severance plan or arrangement) and compensation practices or will
provide, or cause the Surviving Corporation or its Subsidiaries to provide,
benefits to employees of the Company and its Subsidiaries, other than employees
covered by collective bargaining agreements, that are no less favorable in the
aggregate than the benefit plans and programs provided to similarly situated
employees of Parent or its Subsidiaries; provided, however, that nothing in the
Merger Agreement will preclude the Parent or any of its affiliates from having
the right to terminate in accordance with its terms and applicable law any
Parent Benefit Plan established, maintained or contributed to by the Parent or
any of its affiliates after the Effective Time.
The Merger Agreement also provides that, except as specifically provided
therein, Parent will, and will cause the Surviving Corporation to, cause service
rendered by employees of the Company and its Subsidiaries prior to the Effective
Time to be taken into account for vesting and eligibility under all employee
benefit plans, programs, policies and arrangements of Parent, the Surviving
Corporation and its Subsidiaries, to the same extent as such service was taken
into account under the corresponding plans of the Company and its Subsidiaries
for those purposes, provided that nothing in the Merger Agreement will result in
the duplication of any benefits. Employees of the Company and its Subsidiaries
will not be subject to any pre-existing condition limitation under any health
plan of Parent, the Surviving Corporation or its Subsidiaries for any condition
for which they would have been entitled to coverage under the corresponding plan
of the Company or its Subsidiaries in which they participated prior to the
Effective Time. Parent will, and will cause the Surviving Corporation and its
Subsidiaries,
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to give such employees credit under such plans for co-payments made and
deductibles satisfied prior to the Effective Time.
INDUSTRIAL SITE RECOVERY ACT COMPLIANCE. The Company and Parent agreed to
take all necessary steps to apply for or seek to obtain prior to the Effective
Time certain exemptions, waivers and agreements in connection with the New
Jersey Industrial Site Recovery Act for certain properties owned or leased by
the Company in New Jersey.
DESIGNATED BUSINESS. Parent's proposal to acquire the Company was expressly
conditioned upon, among other things, the Company divesting itself of the
Designated Business prior to the consummation of any acquisition. In order to be
in a position to satisfy this condition, on May 1, 2000, the Company entered
into an Agreement and Plan of Merger (the "Subsidiary Agreement") providing for
the disposal of the Designated Business through a merger of the Designated
Business with a corporation owned by the acquiror of the Designated Business. In
the Merger Agreement the Company has agreed to consummate such merger in
accordance with the Subsidiary Agreement on or prior to the Acceptance Date. The
Subsidiary Agreement, in turn, provides that such merger will occur concurrently
with, and the Company's obligation to consummate the merger is subject to, the
consummation of the Offer. Accordingly, in the event that the Offer is not
consummated or the Merger Agreement is terminated for any reason, the Designated
Business will not be sold and will continue to be operated by the Company. The
Designated Business is not, in any event, a material subsidiary of the Company.
CONDITIONS TO THE CONSUMMATION OF THE MERGER. Pursuant to the Merger
Agreement, the respective obligations of Parent, the Purchaser and the Company
to consummate the Merger are subject to the satisfaction or waiver, where
permissible, before the Effective Time of the following conditions: (i) unless
the Merger is consummated as contemplated by Section 14A:10-5.1 of the NJBCA,
the Plan of Merger contained in the Merger Agreement will have been approved by
the affirmative vote of the shareholders of the Company as required by and in
accordance with applicable law, (ii) all necessary waiting periods under the HSR
Act applicable to the Merger will have expired or been terminated, (iii) the
consummation of the Merger will not be prohibited, restricted or made illegal by
any statute, rule, regulation, executive order, judgment, decree or injunction
of a court or any Governmental Entity (provided that each party will use all
reasonable efforts to have any such prohibition lifted) and (iv) the Purchaser
will have accepted for purchase and paid, or cause to be paid, for the Shares
tendered pursuant to the Offer.
TERMINATION. The Merger Agreement provides that it may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of the Company (with any
termination by Parent also being an effective termination by the Purchaser):
(1) by mutual written consent of the Company and Parent;
(2) by Parent or the Company if any court of competent jurisdiction or
other Governmental Entity will have issued an order, decree or ruling (which
order, decree or ruling the parties to the Merger Agreement will use
reasonable efforts to lift), or taken any other action restraining,
enjoining or otherwise prohibiting any of the transactions contemplated by
the Merger Agreement and such order, decree, ruling or other action will
have become final and non-appealable;
(3) by the Company if (i) the Purchaser fails to commence the Offer
within seven business days of the public announcement of the terms of the
Merger Agreement, (ii) the Purchaser has not accepted for payment and paid
for Shares pursuant to the Offer in accordance with the terms of the Offer
on or before the 90th day after the date of the Merger Agreement, (iii) the
Purchaser fails to purchase validly tendered Shares in violation of the
terms of the Merger Agreement or (iv) the Purchaser or Parent will have
breached any of the representations, warranties or covenants of the Merger
Agreement, which breach has had or is reasonably likely to have a material
adverse
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effect on the ability of Parent or the Purchaser to consummate the
transactions contemplated by the Merger Agreement;
(4) by Parent if due to an occurrence or circumstance which would
result in a failure to satisfy any of the Offer Conditions, including
without limitation, failure of the holders of a majority of the outstanding
shares of the Company to tender their shares pursuant to the Offer, the
Purchaser will have either (1) terminated the Offer without purchasing any
Shares pursuant to the Offer or (2) failed to accept for payment Shares
pursuant to the Offer prior to the 90th day after the date of the Merger
Agreement;
(5) by the Company, prior to the purchase of Shares pursuant to the
Offer, if (i) the Company has received a Superior Proposal, (ii) the Company
has provided Parent with such notice, and has consulted with its independent
legal and financial advisors in such manner, as is required by the second
paragraph above under "No Solicitation", and (iii) the Company has notified
Parent in writing of its receipt of, and its intention to accept, a Superior
Proposal and the material terms thereof and, during a three (3) day period
following such notice, has afforded Parent the reasonable opportunity to
make one revised proposal (including by negotiating the terms of any such
proposal with Parent), (iv) the Board has concluded, after considering the
results of such negotiations and any revised proposal made by Parent, that
the Superior Proposal giving rise to the Company's notice continues to be a
Superior Proposal, and (v) the Company simultaneously with its termination
of the Merger Agreement pays the Termination Fee (as defined below).
(6) by Parent, prior to the purchase of Shares pursuant to the Offer,
if the Company has taken or the Board has resolved to take any of the
actions referred to in the third paragraph above under "No Solicitation," or
if the Company has withdrawn or modified, or proposed publicly to withdraw
or modify, in a manner adverse to Parent or the Purchaser, its Board's
approval or recommendation of the Offer or the Merger.
EFFECT OF TERMINATION. In the event that the Merger Agreement is terminated
in accordance with its terms and the Merger is abandoned, the Merger Agreement
will become void and have no effect, without any liability on the part of any
party or its directors, officers or shareholders, other than provisions relating
to confidentiality obligations, press releases and public statements and the
payment of certain fees and expenses, including the Termination Fee, which will
survive any such termination; provided that no party will be relieved from
liability for any willful breach of the Merger Agreement.
FEES AND EXPENSES. Except as provided below, whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, the
Merger Agreement and the transactions contemplated by the Merger Agreement will
be paid by the party incurring such expenses.
The Merger Agreement provides that, in the event that such Agreement is
terminated (i) pursuant to paragraphs (5) or (6) above under "Termination" or
(ii) pursuant to paragraph (4) above under "Termination" following the initial
expiration of the Offer and, with respect to this clause (ii) only, at the time
of such termination (A) either (x) the Minimum Tender Condition has not been
satisfied or (y) the condition set forth in paragraph (e) under Section 14 below
has not been satisfied due to the willful breach by the Company; and (B) either
(x) at the time of such termination, an Acquisition Proposal existed or has been
previously announced or (y) within six months thereafter an Acquisition Proposal
has been consummated, then the Company will pay Parent a termination fee of Four
Million U.S. Dollars ($4,000,000) plus the reimbursement of all of the fees and
expenses of Parent and the Purchaser related to the Offer, this Agreement and
the transactions contemplated hereby (including, without limitation, legal,
accounting and investment banking fees and expenses) actually incurred by Parent
and the Purchaser up to One Million U.S. Dollars ($1,000,000) (the "Termination
Fee") in immediately available funds by wire transfer to an account designated
by Parent.
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The Merger Agreement provides that any such Termination Fee will be payable
as promptly as practicable following termination of the Merger Agreement and, if
the Company is the party seeking to terminate the Merger Agreement, as a
condition thereto. If the Company fails to pay promptly all or any portion of
the Termination Fee, and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for such Termination Fee,
the Company shall pay to Parent its costs and expenses (including attorneys'
fees and expenses) in connection with such suit, together with interest from the
date of termination of the Merger Agreement on the amounts so owed at the prime
rate of Chase Manhattan Bank in effect from time to time during such period plus
four percent (4%). The prevailing party in any legal action undertaken to
enforce the Merger Agreement or any provision thereof will be entitled to
recover from the other party the costs and expenses (including attorneys' and
expert witness fees) incurred in connection with such action.
AMENDMENT. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the Boards of Directors of the
Company, Parent and the Purchaser, subject in the case of the Company to the
approval of the Continuing Directors as described under "Directors" above, at
any time before or after approval of the Merger Agreement by the shareholders of
the Company but, after any such shareholder approval, no amendment may be made
which decreases the Merger Consideration or which adversely affects the rights
of the Company's shareholders under the Merger Agreement without the approval of
the shareholders of the Company. Any amendment to the Merger Agreement must be
made by an instrument in writing signed on behalf of all of the parties.
VOTING AND TENDER AGREEMENT
TENDER OF SHARES. In connection with the execution of the Merger Agreement,
Parent and the Purchaser have entered into the Voting and Tender Agreement with
the following four shareholders of the Company (the "Company Shareholders") who
own in the aggregate 2,557,827 Shares, representing approximately 44.4% of the
issued and outstanding Shares: Michael Cunningham, James J. Cunningham, Gordon
Mays and Timothy Mays. Pursuant to the Voting and Tender Agreement, upon the
terms and conditions set forth therein, each Company Shareholder has agreed that
he will tender, pursuant to and in accordance with the terms of the Offer, all
Shares owned by such Company Shareholder.
VOTING OF SHARES. Each Company Shareholder has also agreed, during the
period commencing on the date of the Voting and Tender Agreement and continuing
until the earlier of (x) the consummation of the Offer and (y) the termination
of the Voting and Tender Agreement (a) to appear, or cause the holder of record
on any applicable record date with respect to any Shares owned by such Company
Shareholder to appear, for the purpose of obtaining a quorum at any annual or
special meeting of shareholders of the Company and at any adjournment thereof at
which matters relating to the Merger, Merger Agreement or any transaction
contemplated thereby are considered; and (b) at any meeting of the shareholders
of the Company, however called, and in any action by consent of the shareholders
of the Company, to vote, or cause to be voted by the record holder thereof, the
Shares owned by such Company Shareholder: (i) in favor of the Merger, the Merger
Agreement (as amended from time to time) and the transactions contemplated by
the Merger Agreement and (ii) against any proposal for any extraordinary
corporate transaction, such as a recapitalization, dissolution, liquidation, or
sale of assets of the Company or any merger, consolidation or other business
combination (other than the Merger) between the Company and any person (other
than Parent or a subsidiary of Parent) or any other action or agreement that is
intended or which reasonably could be expected to (A) result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement, (B) result in any of the conditions to the
Company's obligations under the Merger Agreement not being fulfilled or (C)
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement.
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RESTRICTIONS ON TRANSFER. Each Company Shareholder has agreed that, until
the Voting and Tender Agreement is terminated in accordance with its terms, such
Company Shareholder will not, directly or indirectly: (i) except as otherwise
provided in the Voting and Tender Agreement, transfer to any person any or all
Shares owned by such Company Shareholder or cause any security interests, liens,
claims, pledges, charges, encumbrances, options, rights of first refusals,
agreements, or limitations on such Company Shareholder's voting rights, to
attach to the Shares owned by such Company Shareholder to be tendered to the
Purchaser pursuant to the Voting and Tender Agreement or to any options with
respect to Shares or any Shares issuable thereunder; or (ii) grant any proxies
or powers of attorney, deposit any Shares owned by such Company Shareholder into
a voting trust or enter into a voting agreement, understanding or arrangement
with respect to such Shares owned by such Company Shareholder.
NO SOLICITATION. Each Company Shareholder (i) is required to immediately
terminate any discussions with any third party concerning an Acquisition
Proposal and (ii) has agreed not to, and will not permit any of its
representatives, directly or indirectly, (A) to encourage, solicit or initiate
any Acquisition Proposal, (B) participate in negotiations with, or provide any
information to, or otherwise take any other action to assist or facilitate any
person or group (other than Parent or the Purchaser or any affiliate or
associate of Parent or the Purchaser) concerning any Acquisition Proposal,
(C) enter into an agreement with any person, other than Parent, providing for a
possible Acquisition Proposal, or (D) make or authorize any statement,
recommendation or solicitation in support of any possible Acquisition Proposal
by any person, other than by Parent. Notwithstanding the above, such Company
Shareholder may take any actions in the Company Shareholder's capacity as a
director, officer or employee of the Company permitted under the Merger
Agreement.
REPRESENTATIONS AND WARRANTIES. The Voting and Tender Agreement contains
certain customary representations and warranties of the parties thereto,
including, without limitation, representations and warranties by the Company
Shareholders as to ownership of Shares and power and authority to enter into the
Voting and Tender Agreement.
TERMINATION. Generally, with respect to each Company Shareholder, the
Voting and Tender Agreement terminates upon the earlier of (a) the date upon
which Parent shall have purchased and paid for all of the Shares owned by such
Company Shareholder in accordance with the Offer and (b) the date upon which the
Merger Agreement is terminated pursuant to paragraphs 4, 5 or 6 under "Merger
Agreement--Termination" above in accordance with its terms; provided, however,
that if the Merger Agreement is terminated and at the time of such termination
the Termination Fee either is or may become payable pursuant to the Merger
Agreement, the Voting and Tender Agreement will only terminate on the date which
is nine months after the date of termination of the Merger Agreement, provided,
that during such nine month period the Company Shareholders may transfer their
Shares in open market transactions or pursuant to an underwritten public
offering.
CONFIDENTIALITY AGREEMENT
On January 5, 2000, ADP FIS (on behalf of Parent) and Prudential Securities
(as agent for the Company) signed a Confidentiality Agreement (the
"Confidentiality Agreement") providing, among other things, that, subject to the
terms of the Confidentiality Agreement, Parent and its affiliates will keep
confidential certain non-public, confidential or proprietary information
provided by the Company or the Company's agents or representatives (including
attorneys and financial advisors).
EMPLOYMENT AGREEMENTS
As a condition to entering into the Merger Agreement, Parent required and
Michael Cunningham, Gordon Mays, Robert Needle, Timothy Mays, Gerald (L.J.)
Baillargeon, Ioannis Lykogiannis and Ned Hood (each an "Executive" and together,
the "Executives") entered into new employment agreements (each an "Employment
Agreement") with Parent, the Company and Cunningham Graphics
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Inc. ("CGI"). The Employment Agreements will become effective on the Acceptance
Date and they generally provide for a three-year term and supersede each
Executive's previous employment agreement (each a "Prior Agreement"), with the
exception of Mr. Hood, for whom a prior agreement did not exist.
The Employment Agreements provide that Messrs. Cunningham, G. Mays, Needle,
T. Mays, Baillargeon, Lykogiannis and Hood will serve as President, Executive
Vice President--Marketing and Sales, Chief Operating Officer, Executive Vice
President--Sales, Chief Financial Officer, Senior Vice President and Chief
Technology Officer, respectively, and their annual base salaries will be
$261,700, $210,000, $184,000, $184,000, $133,700, $146,000 and $151,700,
respectively. Mr. Baillargeon's new Employment Agreement preserved his
entitlement to a lump sum payment of $150,000 if there is a Change of Control
(as defined in his Prior Agreement) in a transaction approved by the Board if he
remains employed by the Company or CGI six months after the Change of Control or
sooner terminated without Cause. This transaction would constitute such a Change
of Control. Each Executive also will be eligible to receive an annual bonus
ranging from approximately 20% to 40% of annual base salary, plus a stretch
bonus to be established if certain performance objectives are achieved. In
addition, Messrs. Needle and T. Mays will be entitled to commissions of between
1 and 3% of payments actually collected by the Company with respect to certain
sales proceeds. Finally, Messrs. Cunningham, Needle, G. Mays, T. Mays,
Baillargeon, Lykogiannis and Hood will receive options to purchase 15,000,
10,000, 10,000, 10,000, 6,000, 6,000 and 7,500 shares of common stock of Parent,
respectively, subject to the approval of Parent's stock option committee. The
options, if approved, will vest and become exercisable in five equal
installments over a five year period.
If an Executive's employment is terminated by Parent or CGI without Cause
(as such term is defined in the Employment Agreements), the Employment
Agreements provide that such Executive will continue to receive his base salary
and annual bonus, if any, through the remaining term of the agreement, subject
to such Executive executing a general release and waiver, waiving all claims he
may have against Parent and its affiliates. In contrast, the Prior Agreements
provided that such Executive would be entitled to a lump sum payment equal to
two times his base salary and continuation of certain fringe benefits including
medical benefits and life and disability insurance in the event the Executive's
employment is terminated by the Executive for good reason (as defined under the
Prior Agreements) or, by the Company without cause during the one-year period
following a change in control (as defined in the Prior Agreements). Each
Employment Agreement also contains provisions relating to non-competition,
non-solicitation, non-disclosure and the assignment of intellectual property
rights. Under certain circumstances, the period during which the Executives are
restricted under the foregoing provisions may be up to approximately four years
longer than the restricted period under the Prior Agreements.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer or the Merger.
"GOING PRIVATE" TRANSACTIONS. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger. However,
Rule 13e-3 would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the Merger or other business combination or (ii) the
Merger or other business combination is consummated within one year after the
purchase of the Shares pursuant to the Offer and the amount paid per Share in
the Merger or other business combination is at least equal to the amount paid
per Share in the Offer. If applicable, Rule 13e-3 requires, among other things,
that certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority shareholders in such
transaction be filed with the Commission and disclosed to shareholders prior to
the consummation of the transaction. The purchase of a substantial number of
Shares pursuant to the Offer may result in the Company being able to terminate
its Exchange Act registration. If such registration were terminated, Rule 13e-3
would be inapplicable to the Merger or such alternative transaction.
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SECTION 13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should
(a) split, combine or otherwise change the Shares or its capitalization,
(b) acquire or otherwise cause a reduction in the number of outstanding Shares
or other securities or (c) issue or sell additional Shares (other than the
issuance of Shares under option prior to the date of the Merger Agreement, in
accordance with the terms of such options as publicly disclosed prior to the
date of the Merger Agreement), shares of any other class of capital stock, other
voting securities or any securities convertible into, or exchangeable or
exercisable for any of the foregoing, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, then, subject to the
provisions of Section 14, we, in our sole discretion, may make such adjustments
as we deem appropriate to the Offer Price and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased.
SECTION 14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Parent and the Purchaser
will not be required to accept for payment, purchase or pay for any Shares
tendered in connection with the Offer and may terminate or, subject to the terms
of the Merger Agreement, amend the Offer, if (i) the Minimum Condition has not
been satisfied as of the Expiration Date, (ii) any applicable waiting period
under the HSR Act has not, as of the Expiration Date, expired or been
terminated, or (iii) at any time on or after the date of the Merger Agreement
and prior to the time of payment for any Shares, any of the following conditions
exist:
(a) there is instituted or pending any action or proceeding by any
governmental authority or agency (i) challenging or seeking to make illegal,
to delay materially or otherwise directly or indirectly to restrain or
prohibit the making of the Offer, the acceptance for payment of or payment
for the Shares by Parent or the Purchaser or the consummation of the Merger,
(ii) seeking to restrain or prohibit Parent's ownership or operation (or
that of its respective subsidiaries or affiliates) of all or any material
portion of the business or assets of the Company and its subsidiaries, taken
as a whole, or of Parent and its subsidiaries, taken as a whole, or to
compel Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, (iii) seeking to impose or confirm material
limitations on the ability of Parent, the Purchaser or any of Parent's other
subsidiaries or affiliates effectively to exercise full rights of ownership
of the Shares, including without limitation, the right to vote any Shares
acquired or owned by Parent, the Purchaser or any of Parent's other
subsidiaries or affiliates on all matters properly presented to the
Company's shareholders or (iv) seeking to require divestiture by Parent, the
Purchaser or any of Parent's other subsidiaries or affiliates of any Shares;
or
(b) there has been any action taken, or any statute, rule, regulation,
injunction, order, decree, enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by any court, government or
governmental authority or agency, domestic or foreign, other than the
application of the waiting period provisions of the HSR Act to the Offer or
the Merger, that result in any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above; or
(c) there has occurred (1) any general suspension of, or limitation on
prices for, trading in securities on any national securities exchange or in
the over-the-counter market in the United States (other than any suspension
or limitation on trading in any particular security as a result of a
computerized trading limit or any intraday suspension due to "circuit
breakers"), (2) any declaration of any banking moratorium or any suspension
of payments in respect of banks or any limitation (whether or not mandatory)
on the extension of credit by lending institutions in the United States or
(3) any commencement of armed hostilities or other national or international
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calamity involving the United States that has a material adverse effect on
bank syndication for financial markets in the United States or, in the case
of any of the foregoing occurrences existing on or at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(d) any Person or "group" (as such term is used in Section 13(d)(3) of
the Exchange Act)--other than Parent, the Purchaser or another person (who
on the date hereof alone or as part of a "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) is the beneficial owner of more than
5% of the outstanding Shares) or any of their respective affiliates--has
become the beneficial owner (as that term is used in Rule 13d-3 under the
Exchange Act) or has commenced or publicly announced the intention to
commence a tender or exchange offer to acquire beneficial ownership or shall
have been granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership, of more than 15% of the outstanding Shares; or
(e) the Company has breached or failed to comply in any material
respect with any of its material obligations, covenants, or agreements under
the Merger Agreement; or (i) any representation or warranty of the Company
contained in the Merger Agreement that is qualified by reference to a
Material Adverse Effect (as defined below) or (ii) any representation or
warranty contained in either Sections 4.11 (Taxes) or 4.12 (Compliance with
Laws) of the Merger Agreement that is qualified by reference to
"materiality" is not true and correct; or any other such representation or
warranty is not true and correct in any respect that (when taken together
with all such other representations and warranties not true and correct) has
had or would reasonably be likely to have a Material Adverse Effect, in each
case either as of when made or at and as of any time thereafter (except in
the case of any representation or warranty that by its terms is made as of a
date specified therein which need be accurate only as of such date); or
(f) the Merger Agreement has been terminated pursuant to its terms or
has been amended pursuant to its terms to provide for such termination or
amendment of the Offer;
which, in the good faith judgment of Parent, and regardless of the circumstances
giving rise to such conditions, makes it inadvisable to proceed with the Offer
or with acceptance for payment or payment for Shares.
The term "Material Adverse Effect" means any material and adverse effect on
the financial condition, business, properties, assets, liabilities or results of
operations or prospects of the Company and its subsidiaries taken as a whole or
the ability of the Company to consummate the transactions contemplated by the
Merger Agreement in any material respect; provided, however, that no event or
circumstance arising out of, or resulting from, the entering into or the
announcement of the Merger Agreement or the identity of Parent will be deemed to
constitute a Material Adverse Effect. For the avoidance of doubt, a Material
Adverse Effect does not include the institution or pendency of any action, suit
or proceeding instituted by a non-governmental entity that (i) seeks to, but
does not actually, restrain, enjoin or otherwise prevent the consummation of, or
(ii) seeks damages with respect to, any transaction contemplated by the Merger
Agreement.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted or, other than the Minimum Condition, waived by
Parent or the Purchaser in whole or in part at any time or from time to time in
their discretion subject to the terms of the Merger Agreement. The failure of
Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right, which may be asserted at any time and from time to
time.
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A public announcement will be made of a material change in, or waiver of,
such conditions to the extent required by Rules 14d-4(d) and 14d-6(c) under the
Exchange Act, and the Offer will be extended in connection with any such change
or waiver to the extent required by such rules.
The Purchaser acknowledges that the Commission believes (i) if the Purchaser
is delayed in accepting Shares it must either extend the Offer or terminate the
Offer and promptly return the Shares and (ii) the circumstances in which a delay
in payment is permitted or limited do not include unsatisfied conditions of the
Offer except with respect to most required regulatory approvals.
SECTION 15. CERTAIN LEGAL MATTERS
GENERAL. Except as otherwise disclosed herein, based on our review of
publicly available information filed by the Company with the Commission, we are
not aware of (i) any license or regulatory permit that appears to be material to
the business of the Company and its subsidiaries, taken as a whole, that might
be adversely affected by the acquisition of Shares pursuant to the Offer or the
Merger or (ii) any approval or other action, by any governmental, administrative
or regulatory agency or authority, domestic, foreign or supranational, that
would be required for the acquisition or ownership of Shares as contemplated
herein. Should any such approval or other action be required, we currently
contemplate that such approval or action would be sought. While we do not
currently intend to delay the acceptance for payment of Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or action, if needed, would be obtained or would be
obtained without substantial conditions or that adverse consequences might not
result to the business of the Company, the Purchaser or Parent or that certain
parts of the businesses of the Company, the Purchaser or Parent might not have
to be disposed of in the event that such approvals were not obtained or any
other actions were not taken. Our obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions. See Section 14.
ANTITRUST. Under the HSR Act, and rules and regulations that have been
issued by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. We filed a Notification and Report Form with respect to the Offer and
the Merger on May 10, 2000.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent. Accordingly, the
waiting period with respect to the Offer would expire at 11:59 p.m., New York
City time, on May 25, 2000 unless we receive a request for additional
information or documentary material, or the Antitrust Division and the FTC
terminate the waiting period before such time. If, within such 15-day period,
either the Antitrust Division or the FTC requests additional information or
documentary material from us, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day following
substantial compliance by us with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with our consent. In practice, complying with a request for additional
information or documentary materials can take a significant period of time. We
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to the
Offer have been satisfied. See Section 14. Although the Company is required to
file certain information and documentary material with the FTC and the Antitrust
Division in connection with the Offer, neither the Company's failure to make
those filings nor requests made to the Company from the FTC or the Antitrust
Division for additional information or documentary material will extend the
waiting period with respect to the purchase of Shares in the Offer and the
Merger.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as our acquisition of Shares pursuant to
the Offer and the Merger. At any time before or after our acquisition of Shares,
the Antitrust Division or the FTC could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the acquisition of Shares pursuant to the Offer or otherwise
or seeking divestiture of Shares acquired by us or divestiture of substantial
assets of Parent, its subsidiaries or the Company. Private parties and state
attorneys general may also bring action under the antitrust laws under certain
circumstances. Based upon an examination of publicly available information
relating to the businesses in which Parent and the Company are engaged, we
believe that our acquisition of Shares will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by us on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain governmental
actions.
BUSINESS COMBINATION TRANSACTIONS. The Company is incorporated under the
laws of the State of New Jersey, maintains its principal executive officers in
New Jersey and has significant business operations in New Jersey. In general,
Section 14A:10A-4 of the NJBCA prevents an "interested stockholder" (generally,
a person who owns or has the right to acquire 10% or more of a corporation's
outstanding voting stock, or an affiliate or associate thereof) from engaging in
a "business combination" (defined to include mergers and certain other
transactions) with a New Jersey corporation for a period of five years following
the date such person becomes an interested stockholder unless prior to such date
the board of directors of the corporation approved the business combination.
Neither Parent nor the Purchaser is an interested stockholder and the Company
Board has unanimously approved both the Offer and the Merger. Accordingly,
Section 14A:10A-4 is inapplicable to the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger.
OTHER STATE LAWS. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations which
are incorporated, or have substantial assets, shareholders, principal executive
offices or principal places of business, or whose business operations otherwise
have substantial economic effects, in such states. In 1982, in Edgar v. MITE
Corp., the Supreme Court of the United States invalidated on constitutional
grounds the Illinois Business Takeover Statute, which, as a matter of state
securities law, made takeovers of corporations meeting certain requirements more
difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the Indiana Control Share Acquisition Act was
constitutional. Such Act, by its terms, is applicable only to corporations that
have a substantial number of shareholders in Indiana and are incorporated there.
Subsequently, a number of federal courts ruled that various state takeover
statutes were unconstitutional insofar as they apply to corporations
incorporated outside the state of enactment.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. We do not believe that, other than Section 14A:10A-4 of the NJBCA, any
state takeover statutes or similar laws purport to apply to the Offer or the
Merger. We have not currently complied with any other state takeover statute or
regulation. Should any person seek to apply any state takeover law, we will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer and the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, we might be required to file
certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, we might be unable to accept for payment
any Shares tendered pursuant to the Offer, or be delayed in continuing or
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consummating the Offer. In such case, we may not be obligated to accept for
payment any Shares tendered. See Section 14.
FOREIGN APPROVALS. According to the Company 10-K, the Company conducts
business in a number of other foreign countries and jurisdictions. In connection
with the acquisition of the Shares pursuant to the Offer, the laws of certain of
those foreign countries and jurisdictions may require the filing of information
with, or the obtaining of the approval of, governmental authorities in such
countries and jurisdictions. The governments in such countries and jurisdictions
might attempt to impose additional conditions on the Company's operations
conducted in such countries and jurisdictions as a result of the acquisition of
the Shares pursuant to the Offer or the Merger. There can be no assurance that
we will be able to cause the Company or its subsidiaries to satisfy or comply
with such laws or that compliance or non-compliance will not have adverse
consequences for the Company or any subsidiary after purchase of the Shares
pursuant to the Offer or the Merger.
SECTION 16. FEES AND EXPENSES
Lehman Brothers Inc. ("Lehman Brothers") is acting as Dealer Manager in
connection with the Offer, for which services it will receive customary
compensation. Parent also has agreed to reimburse the Dealer Manager for its
out-of-pocket expenses, including the fees and expenses of legal counsel and
other advisors, incurred in connection with its engagement, and to indemnify the
Dealer Manager and certain related persons against liabilities and expenses in
connection with its engagement, including certain liabilities under the federal
securities laws. Lehman Brothers has rendered various investment banking
services and other advisory services to Parent and its affiliates in the past
and may continue to render such services, for which they have received and may
continue to receive customary compensation from Parent and its affiliates. In
the ordinary course of business, Lehman Brothers and its affiliates are engaged
in securities trading and brokerage activities as well as investment banking and
financial advisory services. In the ordinary course of their trading and
brokerage activities, Lehman Brother and its affiliates may hold positions, for
their own account or the account of customers, in equity, debt or other
securities of Parent or the Company.
Innisfree M&A Incorporated has been retained by us as Information Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee shareholders to forward material relating to
the Offer to beneficial owners of Shares. We will pay the Information Agent
reasonable and customary compensation for all such services in addition to
reimbursing the Information Agent for reasonable out-of-pocket expenses in
connection therewith. We have agreed to indemnify the Information Agent against
certain liabilities and expenses in connection with the Offer, including,
without limitation, certain liabilities under the federal securities laws.
Wilmington Trust Company has been retained as the Depositary. We will pay
the Depositary reasonable and customary compensation for its services in
connection with the Offer, will reimburse the Depositary for its reasonable
out-of-pocket expenses in connection therewith and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including,
without limitation, certain liabilities under the federal securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer. Brokers, dealers, commercial banks and trust companies and other nominees
will, upon request, be reimbursed by us for customary clerical and mailing
expenses incurred by them in forwarding offering materials to their customers.
SECTION 17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in
37
<PAGE>
compliance with the securities, blue sky or other laws of such jurisdiction. We
are not aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent we become aware of any state law that would limit
the class of offerees in the Offer, we will amend the Offer and, depending on
the timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to such holders of Shares prior to the
expiration of the Offer. In any jurisdiction the securities, blue sky or other
laws of which require the Offer to be made by a licensed broker or dealer, the
Offer is being made on our behalf by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON OUR BEHALF NOT CONTAINED HEREIN OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the Commission a Tender Offer Statement on Schedule TO
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments. Such Schedule TO and any amendments thereto, including
exhibits, may be inspected and copies may be obtained in the manner set forth in
Section 8 with respect to the Company (except that such material will not be
available at the regional offices of the Commission).
FIS Acquisition Corp.
May 11, 2000
38
<PAGE>
SCHEDULE I
(1) The name of each director and each executive officer of Parent is set
forth below. The business address of each person listed below is One ADP
Boulevard, Roseland, New Jersey 07068. Unless otherwise indicated, each person
is a citizen of the United States of America. Directors of Parent are indicated
by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------- -------------------------------------------------------
<S> <C>
James B. Benson................... Mr. Benson has been Vice President, General Counsel and
Secretary of Parent since October 1988, August 1989 and
November 1996, respectively, and has served in senior
executive positions at Parent for more than the past
five years.
Richard C. Berke.................. Mr. Berke has been Vice President, Human Resources
since January 1989 and has served in senior executive
positions at Parent for more than the past five years.
Gary C. Butler*................... Mr. Butler has been President and Chief Operating
Officer of Parent since April 1998. Prior thereto, he
had been Group President of the Employer Services Group
of Parent since January 1995. Prior to that he had been
Group President for the Dealer Services Group of Parent
for more than five years. He is also a director of
CareerBuilder, Inc. and Convergys Corp.
Joseph A. Califano, Jr.*.......... Mr. Califano has been Chairman of the Board and
President of The National Center on Addiction and
Substance Abuse at Columbia University since 1992.
Mr. Califano was a senior partner in the Washington,
D.C. office of Dewey Ballantine from 1983 to 1992. He
is also a director of Authentic Fitness Corporation,
HealthPlan Services, Inc., K Mart Corporation, True
North Communications Inc., and Warnaco Inc.
Leon G. Cooperman*................ Mr. Cooperman has been Chairman and Chief Executive
Officer of Omega Advisors, Inc. since 1991. From 1989
to July 1991, he was Chairman and Chief Executive
Officer of Goldman Sachs Asset Management and a limited
partner of Goldman, Sachs & Co.
Richard J. Daly................... Mr. Daly has been Group Co-President, Brokerage
Services since July 1997 and has served in senior
executive positions at Parent for more than the past
five years.
G. Harry Durity................... Mr. Durity has been Vice President, Worldwide Business
Development since September 1994 and has served in
senior executive positions at Parent for more than the
past five years.
Russell P. Fradin................. Mr. Fradin has been Group President, Employer Services
since April 1998. Prior to his promotion to Group
President, Employer Services, he served as Senior Vice
President since 1996. Prior to joining Parent, he was a
senior partner of McKinsey & Company and had been
associated with that firm for 18 years.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------- -------------------------------------------------------
<S> <C>
Eugene A. Hall.................... Mr. Hall has been Senior Vice President of Parent since
1998. Prior to joining Parent, he was a senior partner
of McKinsey & Company and had been associated with that
firm for 16 years.
Richard J. Haviland............... Mr. Haviland has been Chief Financial Officer and Vice
President of Parent since August 1997 and has served in
senior executive positions at Parent for more than the
past five years.
George H. Heilmeier*.............. Dr. Heilmeier has been Chairman Emeritus of Telcordia
Technologies (formerly Bellcore) since November 1997.
Dr. Heilmeier served as Chairman and Chief Executive
Officer of Bellcore from January 1997 to November 1997
and President and Chief Executive Officer from
April 1991 to January 1997. Dr. Heilmeier is also a
director of Compaq Computer Corporation, The MITRE
Corporation, Teletech Holdings Inc. and TRW, Inc.
John Hogan........................ Mr. Hogan has been Group Co-President, Brokerage
Services since July 1997 and has served in senior
executive positions at Parent for more than the past
five years.
Ann Dibble Jordan*................ Ms. Jordan is the former Director, Social Services
Department, Chicago Lying-In Hospital, University of
Chicago Medical Center, a position she assumed in 1970.
She is also a director of Johnson & Johnson
Corporation, Salant Corporation, The Coleman Company
and Citigroup, Inc.
Harvey M. Krueger*................ Mr. Krueger is Vice Chairman of Lehman Brothers and has
been a senior officer of Lehman Brothers and its
predecessor companies for more than the past five
years. He is also a director of Chaus, Inc., Club Med
Inc., IVAX Corporation and R.G. Barry Corporation.
Frederic V. Malek*................ Mr. Malek has been Chairman of Thayer Capital Partners
since 1992. From 1989 to 1997, Mr. Malek was also Co-
Chairman of CB Commercial Real Estate Group. Mr. Malek
is also a director of Aegis Communications
Group, Inc., American Management Systems Corp., CB
Commercial Real Estate Group, FPL Group Incorporated,
Northwest Airlines, Inc., Saga Systems, Inc. and
various PaineWebber mutual funds.
S. Michael Martone................ Mr. Martone has been Group President, Dealer Services
since July 1998 and has served in senior executive
positions at Parent for more than the past five years.
Henry Taub*....................... Mr. Taub became Honorary Chairman of Parent's Board of
Directors in 1986 and has been Chairman of the
Executive Committee since 1983.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------------------------- -------------------------------------------------------
<S> <C>
Laurence A. Tisch*................ Mr. Tisch has been Co-Chairman of the Board of
Directors of Loews Corporation since January 1999. From
October 1994 to January 1999, he was Co-Chairman of the
Board and Co-Chief Executive Officer of Loews
Corporation. Mr. Tisch has also been Chairman of the
Board and Chief Executive Officer of CNA Financial
Corp. since 1990. From January 1987 to November 1995,
Mr. Tisch was Chairman of the Board, President and
Chief Executive Officer of CBS, Inc. He is also a
director of Bulova Corporation.
Arthur F. Weinbach*............... Mr. Weinbach became Chairman of the Board and Chief
Executive Officer of Parent in April 1998, having
served as President and Chief Executive Officer since
1996 and President and Chief Operating Officer since
January 1994. Prior to that time, he served as
Executive Vice President since August 1992. He is also
a director of HealthPlan Services, Inc. and
Schering-Plough Corporation.
Josh S. Weston*................... Mr. Weston became Honorary Chairman of Parent's Board
of Directors in April 1998. He served as Chairman of
the Board of Parent from August 1996 to April 1998.
Prior to August 1996, he served as Chairman of the
Board and Chief Executive Officer of Parent for more
than the past five years. He is also a director of J.
Crew Group Inc., Olsten Corp., Russ Berrie & Co. Inc.
and Shared Medical Systems Corporation.
</TABLE>
(2) The name of each director and each executive officer of the Purchaser
is set forth below. The business address of each person listed below is One ADP
Boulevard, Roseland, New Jersey 07068. Each person is a citizen of the United
States of America. Directors of the Purchaser are indicated by an asterisk.
<TABLE>
<CAPTION>
POSITION WITH PURCHASER; PRESENT PRINCIPAL OCCUPATION
NAME AND MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ---------------------------------- -------------------------------------------------------
<S> <C>
James B. Benson*.................. Mr. Benson is President of the Purchaser. He has been
Vice President, General Counsel and Secretary of Parent
since October 1998, August 1989 and November 1996,
respectively and has served in senior executive
positions at Parent for more than the past five years.
Richard J. Haviland*.............. Mr. Haviland is Vice President of the Purchaser. He has
been Chief Financial Officer and Vice President of
Parent since August 1997 and has served in senior
executive positions of Parent for more than the past
five years.
Robert J. Singer*................. Mr. Singer is Secretary of the Purchaser. He has been
Senior Counsel of Parent for more than the last five
years.
</TABLE>
41
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT COURIER:
Corporate Trust Operations (302) 651-1079 Wilmington Trust Company
Wilmington Trust Company CONFIRM BY TELEPHONE: ATTN: Corporate Trust Operations
Rodney Square North (302) 651-8869 1105 North Market Street
1100 North Market Street First Floor
Wilmington, DE 19890-0001 Wilmington, DE 19801
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses or telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent and the Dealer Manager as set forth below, and will be
furnished promptly at the Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Bankers and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-9611 or (212) 526-3046
<PAGE>
Letter of Transmittal
To Tender Shares of Common Stock
of
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
Pursuant to the Offer to Purchase Dated May 11, 2000
to
FIS ACQUISITION CORP.,
a wholly owned subsidiary of
AUTOMATIC DATA PROCESSING, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JUNE 8, 2000, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT COURIER:
Corporate Trust Operations (302) 651-1079 Wilmington Trust Company
Wilmington Trust Company Attn: Corporate Trust Operations
Rodney Square North CONFIRM BY TELEPHONE: 1105 North Market Street
1100 North Market Street (302) 651-8869 First Floor
Wilmington, DE 19890-0001 Wilmington, DE 19801
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
PURCHASER, PARENT OR THE DEALER MANAGER WILL NOT BE FORWARDED TO THE DEPOSITARY
AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank, exactly as name(s) Share Certificate(s) and Share(s) Tendered
appear(s) on certificate(s)) (Attach additional list, if necessary)
<S> <C> <C> <C>
<CAPTION>
Total Number
of Shares
Share Evidenced by Number
Certificate Share of Shares
Number(s)* Certificate(s)* Tendered**
<S> <C> <C> <C>
Total Shares
* Need not be completed by shareholders delivering Shares by book-entry transfer or in accordance with
DTC's ATOP procedures for transfers.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate
delivered to the Depositary are being tendered hereby. See instruction 4.
/ / CHECK HERE IF CERTIFICATES HAVE BEEN LOST, DESTROYED OR STOLEN. SEE INSTRUCTION 11.
</TABLE>
<PAGE>
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing shares of common stock, no par value, of Cunningham
Graphics International, Inc. (the "Shares") are to be forwarded herewith or if
delivery of Shares is to be made by book-entry transfer to the Depositary's
account at the Depository Trust Company ("DTC" or the "Book-Entry Transfer
Facility") pursuant to the book-entry transfer procedure described in Section 2
of the Offer to Purchase (as defined below). Holders who are participants
("Participants") in the book-entry facility system of DTC may execute their
tender through the Automated Tender Offer Program of DTC as set forth in Section
2 of the Offer to Purchase.
Holders of Shares whose certificates evidencing Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis and who wish to tender their Shares must do so pursuant to the guaranteed
delivery procedure described in Section 2 of the Offer to Purchase. See
Instruction 2.
<TABLE>
<CAPTION>
<S> <C>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY
BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Account Number
Transaction Code Number
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A
PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
Window Ticket No. (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which Guaranteed Delivery
If delivery is by book-entry transfer:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
</TABLE>
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the Share Certificates. The
Share Certificates and the number of Shares that the undersigned wishes to
transfer should be indicated in the appropriate boxes.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to FIS Acquisition Corp., a New Jersey
corporation (the "Purchaser") and a wholly owned subsidiary of Automatic Data
Processing, Inc., a Delaware corporation ("Parent"), the above-described shares
of common stock, no par value (the "Shares"), of Cunningham Graphics
International, Inc., a New Jersey corporation (the "Company"), pursuant to the
Purchaser's offer to purchase all outstanding Shares, at $22.00 per Share, net
to the seller in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
May 11, 2000 (the "Offer to Purchase"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of Parent's wholly owned subsidiaries, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer. Unless the context
indicates otherwise, as used herein, shareholders shall mean holders of Shares.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser, all right, title
and interest in and to all the Shares that are being tendered hereby and all
dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, paid or distributed in respect of such
Shares on or after May 11, 2000 (collectively, "Distributions"), and irrevocably
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares and all Distributions, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver Share Certificates evidencing such
Shares and all Distributions, or transfer ownership of such Shares and all
Distributions on the account books maintained by the Book-Entry Transfer
Facility, together, in either case, with all accompanying evidences of transfer
and authenticity, to or upon the order of the Purchaser upon receipt by the
Depositary, as the undersigned's agent, of the Offer Price (as adjusted, if
appropriate, as provided in the Offer to Purchase), (ii) present certificates
evidencing such Shares and all Distributions for transfer on the books of the
Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares and all Distributions, all in accordance
with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints designees of the Purchaser as proxies of the undersigned, each with
full power of substitution, to the full extent of the undersigned's rights with
respect to the Shares tendered by the undersigned and accepted for payment by
the Purchaser (and any and all Distributions). All such proxies shall be
considered coupled with an interest in the tendered Shares. This appointment
will be effective if, when, and only to the extent that, the Purchaser accepts
such Shares for payment pursuant to the Offer. Upon such acceptance for payment,
all prior proxies given by the undersigned with respect to such Shares (and such
other Shares and securities) will, without further action, be revoked, and no
subsequent proxies may be given nor any subsequent written consent executed by
the undersigned (and, if given or executed, will not be deemed to be effective)
with respect thereto. The designees of the Purchaser will, with respect to the
Shares and other securities for which the appointment is effective, be empowered
to exercise all voting and other rights of the undersigned as they in their sole
discretion may deem proper at any annual or special meeting of the shareholders
of the Company or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting rights and other rights of a record and
beneficial holder with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire Offer Price of the Shares tendered
hereby or deduct from such Offer Price, the amount or value of such Distribution
as determined by the Purchaser in its sole discretion.
3
<PAGE>
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer, including,
without limitation, the undersigned's representation and warranty that the
undersigned owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the Offer Price for all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
Offer Price for all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the Offer Price for all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Shareholders tendering Shares by book-entry transfer may
request that any Shares not accepted for payment be returned by crediting such
shareholder's account maintained at the Book-Entry Transfer Facility. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
Special Payment Instructions, to transfer any Shares from the name of the
registered holder(s) thereof if the Purchaser does not purchase any of the
Shares tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1,5,6 AND 7)
To be completed ONLY if the check for the Offer Price of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1,5,6 AND 7)
To be completed ONLY if the check for the Offer Price of Shares purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Mail: [ ] Check [ ] Share Certificate(s) to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
_______________________________________________________________________________
(Zip Code)
________________________________________________________________________________
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
5
<PAGE>
IMPORTANT
SHAREHOLDERS: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X ______________________________________________________________________________
X ______________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: ___________, 2000
(Must be signed by (i) registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing, or (ii) by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE BELOW
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
Name of Firm: __________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________________________________
Date: ___________, 2000
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program (each such entity, an "Eligible Institution"),
unless (i) this Letter of Transmittal is signed by the registered holder(s) of
the Shares (which term, for purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) tendered hereby and such holder(s) has
(have) completed neither the box entitled "Special Payment Instructions" nor the
box entitled "Special Delivery Instructions" on the reverse hereof or (ii) such
Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used if Share Certificates are to be forwarded herewith, if
Shares are to be delivered by book-entry transfer pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, or Share Certificates evidencing
all physically tendered Shares, or a confirmation of a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, together in each case with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
all required signature guarantees, or an Agent's Message (as defined in
Section 2 of the Offer to Purchase) in connection with a book-entry transfer,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the reverse hereof prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If
Share Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Shareholders whose Share Certificates are not immediately
available, who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis may tender
their Shares pursuant to the guaranteed delivery procedure described in
Section 2 of the Offer to Purchase. Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution; (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Purchaser, must be received by the Depositary prior to the
Expiration Date; and (iii) the Share Certificates evidencing all physically
delivered Shares in proper form for transfer by delivery, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer, in each case together
with a Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three Nasdaq National Market trading days after the date of execution of
such Notice of Guaranteed Delivery, all as described in Section 2 of the Offer
to Purchase.
Participants in DTC may tender their Shares in accordance with DTC's
Automated Tender Offer Program, to the extent it is available to such
participants for the Shares they wish to tender. A shareholder tendering through
the Automated Tender Offer Program ("ATOP") must expressly acknowledge that the
shareholder has received and agreed to be bound by the Letter of Transmittal and
that the Letter of Transmittal may be enforced against such shareholder.
If the tender is not made through ATOP, certificates, as well as this Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Depositary at its address set
forth herein on or prior to the Expiration Date to be effective.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
7
<PAGE>
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the Offer Price for any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the Offer Price for such Shares purchased, unless evidence
satisfactory to the Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE
SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the Offer Price
for any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
8
<PAGE>
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager at their respective addresses or telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
10. SUBSTITUTE FORM W-9. Unless an exemption applies, each tendering
shareholder is required to provide the Depositary with a correct Taxpayer
Identification Number ("TIN") on the Substitute Form W-9 which is provided under
"Important Tax Information" below, and to certify, under penalties of perjury,
that such number is correct and that such shareholder is not subject to backup
withholding of federal income tax. If a tendering shareholder has been notified
by the Internal Revenue Service that such shareholder is subject to back-up
withholding, such shareholder must cross out item (2) of the Certification box
of the Substitute Form W-9, unless such shareholder has since been notified by
the Internal Revenue Service that such shareholder is no longer subject to
backup withholding. Failure to provide the information on the Substitute
Form W-9 may subject the tendering shareholder to 31% federal income tax
withholding on the payment of the Offer Price for all Shares purchased from such
shareholder. If the tendering shareholder has not been issued a TIN and has
applied for one or intends to apply for one in the near future, such shareholder
should write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within
60 days, the Depositary will withhold 31% on all payments of the Offer Price to
such shareholder until a TIN is provided to the Depositary.
Noncorporate foreign shareholders should complete and sign the main
signature form and a Form W-8BEN, Certficate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary. The shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or stolen certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN THE OFFER TO PURCHASE).
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the Offer Price to such
shareholder until a TIN is provided to the Depositary.
10
<PAGE>
ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: WILMINGTON TRUST COMPANY
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PART 1--Taxpayer Identification
Number--For all accounts, enter
taxpayer identification number in
the box at right. (For most
SUBSTITUTE individuals, this is your social
FORM W-9 security number. If you do not SOCIAL SECURITY NUMBER
DEPARTMENT OF THE TREASURY have a number, see Obtaining a OR ------------------------
INTERNAL REVENUE SERVICE Number in the enclosed EMPLOYER IDENTIFICATION NUMBER
PAYER'S REQUEST FOR TAXPAYER Guidelines.) Certify by signing (IF AWAITING TIN WRITE "APPLIED FOR")
IDENTIFICATION NUMBER (TIN) and dating below. Note: If the
account is in more than one name,
see the chart in the enclosed
Guidelines to determine which
number to give the payer.
------------------------------------------------------------------------------
PART II-- For Payees Exempt From Backup Withholding, see the enclosed
Guidelines and complete as instructed therein.
------------------------------------------------------------------------------
PART III--Awaiting TIN / /
- ---------------------------------------------------------------------------------------------------------------------------
CERTIFICATION. Under penalty of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued
to me) and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to
backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by
the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)
Signature -------------------------------------------------------------------- Date , 2000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
IN PART III OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that, if I do not
provide a taxpayer identification number to the Depositary, 31% of all
reportable payments made to me will be withheld, but will be refunded if I
provide a certified taxpayer identification number within 60 days.
Signature _______________________________________________ Date ___________, 2000
Name (please print) ____________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Bankers and Brokers Call Collect:
(212) 750-5833
All Others Call Toll Free:
(888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-9611 or (212) 526-3046
May 11, 2000
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
TENDER OF SHARES OF COMMON STOCK
of
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
to
FIS ACQUISITION CORP.
a wholly owned subsidiary of
AUTOMATIC DATA PROCESSING, INC.
(Not to Be Used for Signature Guarantees)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JUNE 8, 2000, UNLESS THE OFFER IS EXTENDED
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if (i) certificates (the
"Share Certificates") evidencing shares of common stock, no par value (the
"Shares"), of Cunningham Graphics International, Inc., a New Jersey corporation
(the "Company"), are not immediately available, (ii) time will not permit all
required documents to reach the Wilmington Trust Company, as Depositary (the
"Depositary"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or (iii) the procedure for book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or transmitted by telegram, facsimile
transmission or mail to the Depositary. See Section 2 of the Offer to Purchase.
Unless the context indicates otherwise, as used herein, shareholders shall mean
holders of Shares.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE BY HAND/OVERNIGHT
Corporate Trust TRANSMISSION: COURIER:
Operations (302) 651-1079 Wilmington Trust Company
Wilmington Trust Company ATTN: Corporate Trust
Rodney Square North Operations
1100 North Market Street 1105 North Market Street
Wilmington, DE 19890-0001 First Floor
Wilmington, DE 19801
CONFIRM BY TELEPHONE:
(302) 651-8869
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to FIS Acquisition Corp., a New Jersey
corporation (the "Purchaser") and a wholly owned subsidiary of Automatic Data
Processing, Inc., a Delaware corporation ("Parent"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated May 11, 2000 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedures described in Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
Certificate Nos. (if available):
Please Print
Check box if Shares will be tendered by book-entry Address(es):
transfer (including through DTC's ATOP):
/ / The Depository Trust Company
Zip Code
Name of Tendering Institution: Company Area Code and Tel. No.:
Account Number: Area Code and Tel. No.:
Dated: , 2000 Signature (s):
</TABLE>
DELIVERY GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a commercial bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program hereby (a) represents that the
tender of Shares effected hereby complies with Rule 14e-4 of the Securities
Exchange Act of 1934, as amended, and (b) guarantees delivery to the Depositary,
at one of its addresses set forth above, of Share Certificates evidencing the
Shares tendered hereby in proper form for transfer, or confirmation of
book-entry transfer of such Shares into the Depositary's accounts at The
Depository Trust Company (pursuant to the procedures for book-entry transfer,
set forth in Section 2 of the Offer to Purchase), in each case with delivery of
a properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) with any required signature guarantees, or an Agent's Message (as
defined in Section 2 of the Offer to Purchase), and any other documents required
by the Letter of Transmittal, within three Nasdaq National Market trading days
after the date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm: Authorized Signature
Address:
Title
Name:
Zip Code Please Print
Date: , 2000
ADDRESS
Area Code and Tel. No.:
</TABLE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
of
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
at
$22.00 Net Per Share
by
FIS ACQUISITION CORP.
a wholly owned subsidiary of
AUTOMATIC DATA PROCESSING, INC.
<TABLE>
<CAPTION>
<S> <C>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME,
ON THURSDAY, JUNE 8, 2000, UNLESS THE OFFER IS EXTENDED.
</TABLE>
May 11, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by FIS Acquisition Corp., a New Jersey corporation
(the "Purchaser") and a wholly owned subsidiary of Automatic Data Processing,
Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in connection
with the Purchaser's offer to purchase all outstanding shares of common stock,
no par value (the "Shares"), of Cunningham Graphics International, Inc., a New
Jersey corporation (the "Company"), at a price of $22.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 11, 2000 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer") enclosed herewith. Unless the
context indicates otherwise, as used herein, shareholders shall mean holders of
Shares.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY THE
PURCHASER OR PARENT, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (II) THE
EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. SEE SECTION 14 OF
THE OFFER TO PURCHASE.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase, dated May 11, 2000;
2. The Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares;
3. A letter to shareholders of the Company from the Chairman of the Board of
the Company, accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9;
4. The Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates evidencing such Shares (the "Share Certificates") are not
immediately available or time will not permit all required documents to
reach Wilmington Trust Company (the "Depositary") prior to the Expiration
Date (as defined in the Offer to Purchase) or the procedure for book-entry
transfer cannot be completed by the Expiration Date;
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withheld; and
<PAGE>
7. A return envelope addressed to the Depositary.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 2, 2000 (the "Merger Agreement"), among the Purchaser, Parent and the
Company pursuant to which, following the consummation of the Offer and in
accordance with the New Jersey Business Corporation Act, and subject to the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the merger as a wholly owned
subsidiary of Parent (the "Merger"). In the Merger, each outstanding Share
(other than Shares owned by Parent, the Purchaser or any subsidiary or affiliate
of Parent, the Purchaser or by the Company) will be converted into the right to
receive $22.00 per Share, net to the seller in cash, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
The Board of Directors of the Company has unanimously approved the Merger
Agreement, the Offer and the Merger, determined that the Offer and the Merger
are advisable and fair to, and in the best interests of, the shareholders of the
Company and unanimously recommends that the shareholders of the Company accept
the Offer and tender their Shares pursuant to the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the Share Certificates,
timely confirmation of a book-entry transfer of such Shares, if such procedure
is available, into the Depositary's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase, or confirmation of surrender of Shares through DTC's Automated Tender
Offer Program ("ATOP"), (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in Section 2 of the Offer to Purchase), in the
case of a book-entry transfer or tender pursuant to ATOP procedures and (iii)
any other documents required by the Letter of Transmittal.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager, the
Information Agent and the Depositary as described in Section 16 of the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. The Purchaser will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding the
enclosed materials to your clients.
The Purchaser will pay any stock transfer taxes incident to the transfer to
it of validly tendered Shares, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JUNE 8, 2000, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates evidencing the tendered Shares should be delivered
or such Shares should be tendered by book-entry transfer or in accordance with
DTC's ATOP procedures, all in accordance with the Instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender Shares, but it is impracticable for them
to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the procedures for
book-entry transfer or ATOP on a timely basis, a tender may be effected by
following the guaranteed delivery procedures specified under Section 2 of the
Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
Lehman Brothers Inc., the Dealer Manager, or Innisfree M&A Incorporated, the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover page of the Offer to Purchase. Additional copies of the
enclosed materials may be obtained from the Information Agent or the Dealer
Manager at their respective addresses and telephone numbers set forth on the
back cover page of the Offer to Purchase.
Very truly yours,
LEHMAN BROTHERS
<TABLE>
<CAPTION>
<S> <C>
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON AS AN AGENT OF PARENT, THE
PURCHASER, THE COMPANY, THE DEPOSITARY, THE INFORMATION
AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
AND THE STATEMENTS CONTAINED THEREIN.
</TABLE>
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
at
$22.00 Net Per Share
by
FIS ACQUISITION CORP.
a wholly owned subsidiary of
AUTOMATIC DATA PROCESSING, INC.
<TABLE>
<CAPTION>
<S> <C>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT,
NEW YORK CITY TIME ON THURSDAY, JUNE 8, 2000, UNLESS THE
OFFER IS EXTENDED.
</TABLE>
May 11, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 11,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the Offer by FIS Acquisition Corp., a New Jersey corporation (the "Purchaser")
and a wholly owned subsidiary of Automatic Data Processing, Inc., a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock, no
par value (the "Shares") of Cunningham Graphics International, Inc., a New
Jersey corporation (the "Company"), at a price of $22.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Also enclosed is the letter to
shareholders of the Company from the President and Chief Executive Officer of
the Company accompanied by the Company's Solicitation/ Recommendation Statement
on Schedule 14D-9. Unless the context indicates otherwise, as used herein,
shareholders shall mean holders of Shares.
Shareholders whose certificates evidencing Shares (the "Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required by the Letter of Transmittal to Wilmington Trust
Company (the "Depositary") prior to the Expiration Date (as defined in the Offer
to Purchase) or who cannot complete the procedure for delivery by book-entry
transfer to the Depositary's account at the Book-Entry Transfer Facility (as
defined in Section 2 of the Offer to Purchase) on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase. See Instruction 2 of the Letter
of Transmittal. Delivery of documents to the Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary.
THIS MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF RECORD
OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY
BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS BEING FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE
USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The offer price is $22.00 per Share, net to you in cash, without
interest thereon.
2. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined below), the Offer and the Merger (as defined
below), determined that the Offer and the Merger are advisable
<PAGE>
and fair to, and in the best interests of, the shareholders of the Company
and unanimously recommends that the shareholders of the Company accept the
Offer and tender their Shares pursuant to the Offer.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on June 8, 2000, unless the Offer is extended.
4. The Offer is being made for all outstanding Shares.
5. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of May 2, 2000 (the "Merger Agreement"), among the Purchaser,
Parent and the Company pursuant to which, following the consummation of the
Offer and the satisfaction or waiver of certain conditions, the Purchaser
will be merged with and into the Company, with the Company surviving the
merger as a wholly owned subsidiary of Parent (the "Merger"). In the Merger,
each outstanding Share (other than Shares owned by Parent, the Purchaser or
any subsidiary or affiliate of Parent, the Purchaser or by the Company) will
be converted into the right to receive $22.00 per Share, net to the seller
in cash, without interest, as set forth in the Merger Agreement and
described in the Offer to Purchase.
6. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Shares which, when added to the Shares beneficially
owned by the Purchaser or Parent, represents at least a majority of the
total number of Shares outstanding on a fully diluted basis on the date of
purchase and (ii) the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. See Section 14 of the Offer to Purchase.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. Neither the Purchaser
nor Parent is aware of any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of offerees in the Offer, the Purchaser will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to such
holders of shares prior to the expiration of the Offer. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser by
Lehman Brothers Inc. or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
(or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect to such Shares, (ii) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer effected pursuant to the procedures
described in Section 2 of the Offer to Purchase, an Agent's Message (as defined
in the Offer to Purchase), and (iii) any other documents required by the Letter
of Transmittal. Accordingly, tendering shareholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares are actually received by the Depositary. THE PURCHASER
SHALL NOT HAVE ANY OBLIGATION TO PAY INTEREST ON THE PURCHASE PRICE FOR TENDERED
SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If holders of Shares wish to tender Shares, but it is impracticable for them
to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the procedures for
book-entry transfer on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified under Section 2 of the Offer to
Purchase.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
of
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
at
$22.00 Net Per Share
by
FIS ACQUISITION CORP.
a wholly owned subsidiary of
AUTOMATIC DATA PROCESSING, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated May 11, 2000, and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"), in connection
with the Offer by FIS Acquisition Corp., a New Jersey corporation (the
"Purchaser") and a wholly owned subsidiary of Automatic Data Processing, Inc., a
Delaware corporation ("Parent"), to purchase all outstanding shares of common
stock, no par value (the "Shares"), of Cunningham Graphics International, Inc.,
a New Jersey corporation (the "Company"), at a price equal to $22.00 per Share,
net to the seller in cash without interest thereon.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer to Purchase.
Number of Shares to be Tendered:*____________________
<TABLE>
<S> <C>
SIGN HERE
-------------------------------------------------
Account Number: ------------------------ -------------------------------------------------
Signature(s)
-------------------------------------------------
Dated: , 2000 -------------------------------------------------
Please type or print name(s)
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Please type or print address(es) here
-------------------------------------------------
Area Code and Telephone Number
-------------------------------------------------
Taxpayer Identification or
Social Security Number(s)
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE
(YOU) TO GIVE THE PAYER.--Social Security numbers have nine digits separated by
two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
- -----------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4. a. The usual The
revocable grantor-trustee(1)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
state law
5. Sole proprietorship The owner(3)
- -----------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -----------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, The legal entity(4)
estate, or pension
trust
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational, or
other tax-exempt
organization
10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number of
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title).
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME LISTED, THE NUMBER
WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Administration office, or Form SS-4,
Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
PAYEES SPECIFICALLY EXEMPTED FROM THE WITHHOLDING INCLUDE
- An organization exempt from tax under Section 501(a), a individual
retirement account (IRA), or a custodial account under Section 403
(b) (7), if the account satisfies the requirements of Section 401
(f) (2).
- The United States or a state thereof, the District of Columbia, a
possession of the United States, or a political subdivision or
wholly-owned agency or instrumentality of any of the foregoing.
- An international organization or any agency or instrumentality thereof.
- A foreign government an any political subdivision, agency or
instrumentality thereof.
PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- A corporation.
- A financial institution.
- A dealer of securities or commodities required to register in the United
States, the District of Columbia, a possession of the United States
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman know in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
- A foreign central bank
PAYEES OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
- Payments to nonresident aliens subject to withholding under Section 1441
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP
PAYEES OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
CERTAIN PAYMENTS, OTHER THAN PAYMENTS OF INTEREST, DIVIDENDS, AND PATRONAGE
DIVIDENDS, THAT ARE EXEMPT FROM INFORMATION REPORTING ARE ALSO EXEMPT FROM
BACKUP WITHHOLDING. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045,
6049, 6050A AND 6050N AND THE REGULATIONS THEREUNDER.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT"
ON THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6019 requires you to provide your correct taxpayer
identification number to payers who must report the payments to the IRS. The IRS
uses the numbers for identification purposes and to help verify the accuracy of
your return and may also provide this information to various government agencies
for tax enforcement or litigation purposes. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does nor furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
Exhibit (a)(1)(G)
FOR IMMEDIATE RELEASE
ADP TO ACQUIRE CUNNINGHAM GRAPHICS
ROSELAND, NJ, May 3, 2000--Automatic Data Processing, Inc. (NYSE:AUD), has
entered into a definitive agreement to acquire Cunningham Graphics
International, Inc. (NASD:CGII) (Cunningham) for $22 per share in cash, Arthur
F. Weinbach, chairman and chief executive officer announced today.
Cunningham, with annual revenues exceeding $160 million, is a leading
provider of time-sensitive printing to the financial services industry,
specializing in printing and distribution of complex research reports.
Commenting on the transaction, Mr. Weinbach said, "Cunningham's services are
a natural extension of the print and distribution services of our Brokerage
Services Investor Communications business. With the acquisition we will be
better able to (1) offer coordinated, one-stop shopping to meet a broad array of
financial industry investor communication needs, and (2) increase our ability to
offer both print and electronic distribution of critical investor documents."
The transaction is subject to customary closing conditions and various
regulatory approvals. ADP expects to commence a tender offer to purchase all of
Cunningham's common shares within the next seven business days. Certain
directors and officers of Cunningham, holding in the aggregate approximately 45%
of the outstanding common shares, have agreed to tender their common shares
pursuant to ADP's offer.
ADP, with over $5 billion in revenue and more than 450,000 clients, is one
of the largest independent computing services firms in the world.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES OF CUNNINGHAM. AT THE TIME ADP COMMENCES THIS OFFER, IT WILL FILE
A TENDER OFFER STATEMENT AND CUNNINGHAM WILL FILE A SOLICITATION/RECOMMENDATION
STATEMENT WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION. THE TENDER OFFER
STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND
OTHER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER. ADP WILL MAKE AVAILABLE TO ALL SHAREHOLDERS
OF CUNNINGHAM, AT ADP'S EXPENSE, THE OFFER TO PURCHASE, THE RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS AND CUNNINGHAM WILL MAKE AVAILABLE
TO ALL ITS SHAREHOLDERS, AT CUNNINGHAM'S EXPENSE, THE
SOLICITATION/RECOMMENDATION STATEMENT. THE TENDER OFFER STATEMENT (INCLUDING THE
OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND ALL OTHER OFFER
DOCUMENTS FILED WITH THE COMMISSION) AND THE SOLICITATION/RECOMMENDATION
STATEMENT WILL ALSO BE AVAILABLE FOR FREE AT THE COMMISSION'S WEBSITE AT
WWW.SEC.GOV.
This release contains "forward-looking statements" based on management's
expectations and assumptions and are subject to risks and uncertainties that may
cause actual results to differ from those expressed. Factors that could cause
differences include: ADP's success in obtaining, retaining and selling
additional services to clients; the pricing of products and services; overall
economic trends, including interest rate and foreign currency trends; stock
market activity; auto sales and related industry changes; employment levels;
changes in technology; availability of skilled technical associates; and the
impact of new acquisitions.
<PAGE>
EXHIBIT (A)(1)(H)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated May 11, 2000 and the related Letter of
Transmittal (and any amendments or supplements thereto) and is being made to all
holders of Shares.
The Purchaser (as defined below) is not aware of any state where the making
of the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, the Purchaser shall make a good faith effort to comply with such
statute. If, after such good faith effort, the Purchaser cannot comply with such
statute, the Offer will not be made to nor will tenders be accepted from or on
behalf of the holders of Shares in such state.
In those jurisdictions where securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by Lehman Brothers Inc. (the "Dealer Manager")
or one or more registered brokers or dealers that are licensed under the laws of
such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
AT
$22.00 NET PER SHARE
BY
FIS ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
AUTOMATIC DATA PROCESSING, INC.
FIS Acquisition Corp., a New Jersey corporation (the "Purchaser") and a
wholly owned subsidiary of Automatic Data Processing, Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock, no par value (the "Shares"), of Cunningham Graphics International, Inc.,
a New Jersey corporation (the "Company"), at a price of $22 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 11, 2000 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"). Unless the context indicates
otherwise, as used herein, shareholders shall mean holders of Shares.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JUNE 8, 2000 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY THE
PURCHASER OR PARENT, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (II) THE
EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. SEE SECTION 14
OF THE OFFER TO PURCHASE.
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of May 2, 2000 (the "Merger Agreement"), among Parent, the Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, and in accordance with the New
Jersey Business Corporation Act (the "NJBCA"), the Purchaser will be merged with
and into the Company (the "Merger"). In the Merger, each issued and outstanding
Share (other than Shares owned by Parent, the Purchaser or any subsidiary or
affiliate of Parent, the Purchaser or by the Company) will be converted into the
right to receive $22 in cash, without interest. The Merger Agreement is more
fully described in Section 12 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to the Purchaser and not
properly withdrawn as, if and when the Purchaser gives written notice to
Wilmington Trust Company (the "Depositary") of the Purchaser's acceptance for
payment of such Shares. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the aggregate purchase price therefor with the Depositary,
which will act as agent for tendering shareholders for the purpose of receiving
payments from the Purchaser and transmitting such payments to validly tendering
shareholders whose Shares have been accepted for payment. Under no circumstances
will interest on the purchase price for Shares be paid by the Purchaser,
regardless of any extension of the Offer or delay in making such payment. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of Shares into the Depositary's account at
the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with all required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase), and (iii)
any other documents required by the Letter of Transmittal.
The Purchaser expressly reserves the right, at any time or from time to
time, to extend the period of time during which the Offer is open, if at the
expiration date of the Offer any of the conditions specified in Section 14 of
the Offer to Purchase have not been satisfied or such extension is required by
the Securities and Exchange Commission, by giving written notice of such
extension to the Depositary. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering shareholder to withdraw his Shares. Any such extension
will be followed as promptly as practicable by public announcement thereof, such
announcement to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date of the Offer.
Under the Merger Agreement and pursuant to Rule 14d-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Purchaser may,
subject to certain conditions, include a subsequent offering period following
the expiration of the Offer. A subsequent offering period is an additional
period of time from 3 to 20 business days in length, beginning after the
Purchaser purchases Shares tendered in the Offer, during which shareholders may
tender, but not withdraw, Shares not tendered in the Offer. Pursuant to Rule
14d-7 under the Exchange Act, no withdrawal rights will be available for Shares
tendered during a subsequent offering period and no withdrawal rights will be
available during the subsequent offering period with respect to Shares tendered
in the Offer and accepted for payment. During the subsequent offering period,
the Purchaser will promptly purchase and pay for any Shares tendered at the same
price paid in the Offer. See Section 1 of the Offer to Purchase.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date (as
defined below) and, unless theretofore accepted
<PAGE>
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after July 11, 2000. The term "Expiration Date" means 12:00 midnight, New
York City time, on June 8, 2000, unless and until the Purchaser, in its sole
discretion (but subject to the terms and conditions of the Merger Agreement),
shall have extended the period during which the Offer is open, in which event
the term Expiration Date shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire. For a withdrawal to be effective,
a written, telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at its address set forth on the back cover of
the Offer to Purchase. Any such notice of withdrawal must specify the name of
the person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Share Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution (as defined in the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution or by a
registered holder of Shares who has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 2 of
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility and otherwise comply
with the Book-Entry Transfer Facility's procedures. Any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. Withdrawn Shares may, however, be tendered by repeating one of the
procedures set forth in Section 2 of the Offer to Purchase prior to expiration
of the Offer. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination will be final and binding on all parties.
None of the Purchaser, Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any notification.
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6
of the General Rules and Regulations under the Exchange Act is contained in the
Offer to Purchase and is incorporated herein by reference. Requests are being
made to the Company for the use of the Company's shareholder list and security
position listings for the purpose of disseminating the Offer to holders of
Shares and communicating with shareholders in connection with the Offer. The
Offer to Purchase and the related Letter of Transmittal and, if required, other
relevant materials will be mailed to record holders of Shares whose names appear
on the Company's shareholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares by the Purchaser following
receipt of such lists or listings from the Company, or by the Company if it so
elects.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers as
set forth below. The Purchaser will not pay any fees or commissions to any
broker or dealer or to any other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Additional copies of the Offer to Purchase, the Letter of Transmittal and all
other tender offer materials may be obtained from the Information Agent or the
Dealer Manager, and will be furnished promptly at the Purchaser's expense.
<PAGE>
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
BANKERS AND BROKERS CALL COLLECT:
(212) 750-5833
ALL OTHERS CALL TOLL FREE:
(888) 750-5834
The Dealer Manager for the Offer is:
LEHMAN BROTHERS INC.
THREE WORLD FINANCIAL CENTER
200 VESEY STREET
NEW YORK, NEW YORK 10285
CALL COLLECT: (212) 526-9611 OR (212) 526-3046
May 11, 2000
<PAGE>
Exhibit 99(d)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
AUTOMATIC DATA PROCESSING, INC.,
FIS ACQUISITION CORP.
and
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
Dated as of May 2, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE OFFER
<TABLE>
<S> <C> <C>
SECTION 1.01 The Offer........................................................................................1
SECTION 1.02 Company Actions..................................................................................3
SECTION 1.03 Shareholder Lists................................................................................4
SECTION 1.04 Directors........................................................................................4
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.......................................................................................5
SECTION 2.02 Consummation of the Merger.......................................................................5
SECTION 2.03 Effects of the Merger............................................................................5
SECTION 2.04 Certificate of Incorporation and Bylaws..........................................................5
SECTION 2.05 Directors and Officers...........................................................................6
SECTION 2.06 Conversion of Shares.............................................................................6
SECTION 2.07 Conversion of Common Stock of Purchaser..........................................................6
SECTION 2.08 Stockholders'Meeting.............................................................................6
SECTION 2.09 Merger Without Meeting of Shareholders...........................................................6
SECTION 2.10 Withholding Taxes................................................................................7
ARTICLE III
PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Payment for Shares...............................................................................7
SECTION 3.02 Closing of the Company's Transfer Books..........................................................8
SECTION 3.03 Existing Stock Options...........................................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification...................................................................9
SECTION 4.02 Capitalization..................................................................................10
SECTION 4.03 Authority for this Agreement....................................................................11
SECTION 4.04 Consents and Approvals; No Violation............................................................11
SECTION 4.05 Reports; Financial Statements...................................................................12
SECTION 4.06 Absence of Certain Changes......................................................................13
SECTION 4.07 Schedule 14D-9; Offer Documents and Proxy Statement.............................................13
SECTION 4.08 Brokers.........................................................................................14
SECTION 4.09 Employee Benefit Matters........................................................................14
SECTION 4.10 Litigation, etc.................................................................................17
SECTION 4.11 Tax Matters.....................................................................................17
SECTION 4.12 Compliance with Law.............................................................................19
SECTION 4.13 Environmental Matters...........................................................................19
</TABLE>
i
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<S> <C> <C>
SECTION 4.14 Intellectual Property...........................................................................20
SECTION 4.15 Real Property...................................................................................21
SECTION 4.16 Material Contracts..............................................................................22
SECTION 4.17. Opinion of Financial Advisor....................................................................22
SECTION 4.18. Vote Required...................................................................................22
SECTION 4.19. Anti-takeover Plan; State Takeover Statutes.....................................................23
SECTION 4.20. Insurance.......................................................................................23
SECTION 4.21. Accounts Receivable.............................................................................23
SECTION 4.22. Customers.......................................................................................23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01 Organization and Qualification..................................................................24
SECTION 5.02 Authority for this Agreement....................................................................24
SECTION 5.03 Offer Documents; Proxy Statement................................................................24
SECTION 5.04 Consents and Approvals; No Violation............................................................24
SECTION 5.05 Operations of Purchaser.........................................................................25
SECTION 5.06 Brokers.........................................................................................25
SECTION 5.07 Litigation......................................................................................25
SECTION 5.08 Sufficient Funds................................................................................25
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company..............................................................25
SECTION 6.02 No Solicitation.................................................................................28
SECTION 6.03 Access to Information...........................................................................29
SECTION 6.04 Reasonable Efforts; Further Actions.............................................................30
SECTION 6.05 Indemnification and Insurance...................................................................30
SECTION 6.06 Employee Matters................................................................................32
SECTION 6.07 Proxy Statement.................................................................................32
SECTION 6.08 Notification of Certain Matters.................................................................33
SECTION 6.09 Press Releases..................................................................................33
SECTION 6.10 Industrial Site Recovery Act Compliance.........................................................33
SECTION 6.11 Designated Business.............................................................................33
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger......................................34
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination.....................................................................................34
SECTION 8.02 Effect of Termination...........................................................................35
SECTION 8.03 Fees and Expenses...............................................................................36
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 8.04 Amendment.......................................................................................36
SECTION 8.05 Extension; Waiver; Remedies.....................................................................37
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties......................................................37
SECTION 9.02 Entire Agreement; Assignment....................................................................37
SECTION 9.03 Validity........................................................................................37
SECTION 9.04 Notices.........................................................................................38
SECTION 9.05 Governing Law...................................................................................39
SECTION 9.06 Descriptive Headings............................................................................39
SECTION 9.07 Parties in Interest.............................................................................39
SECTION 9.08 Counterparts....................................................................................39
SECTION 9.09 Certain Definitions.............................................................................40
EXHIBIT A ..................................................................................................A-1
EXHIBIT B ..................................................................................................B-1
</TABLE>
iii
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERMS DEFINED IN SECTION
- ------------- -------------------
<S> <C>
Acceptance Date Section 3.03(a)
Acquisition Proposal Section 6.02(f)(i)
Agreement Opening Paragraph
Authorizations Section 4.13(a)(ii)
Certificates Section 3.01(b)
Closing Section 2.02
Code Section 2.10
Company Opening Paragraph
Company Intellectual Property Rights Section 4.14(e)
Company Permits Section 4.12
Company SEC Reports Section 4.05(a)
Company Securities Section 4.02(a)
Confidentiality Agreement Section 6.02(b)
Continuing Directors Section 1.04(b)
Copyrights Section 4.14(d)(ii)
Corporation Section 2.04
Corporation Law Recitals
Designated Business Section 6.11
Disclosure Letter Article IV
Effective Time Section 2.02
Employee Benefit Plans Section 4.09(a)
Environmental Law Section 4.13(b)
ERISA Section 4.09(a)
ERISA Affiliates Section 4.09(c)
Environmental Law Section 4.13(b)
Exchange Act Section 1.01(a)
Expiration Date Exhibit A
Existing Stock Options Section 3.03
Governmental Entity Section 4.04
Hazardous Substance Section 4.13(c)
HSR Act Section 4.04
Indemnified Parties Section 6.05
Intellectual Property Rights Section 4.14(d)
ISRA Section 4.04
ISRA Approval Section 6.10
Material Adverse Effect Section 9.09(e)
Material Contract Section 4.16(a)
Merger Section 2.01
Merger Agreement Exhibit A
Merger Consideration Section 2.06
Minimum Tender Condition Exhibit A
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Offer Section 1.01(a)
Offer Conditions Section 1.01(a)
Offer Documents Section 1.01(b)
Offer Price Section 1.01(a)
Option Consideration Section 3.03
Parent Opening Paragraph
Parent Benefit Plan Section 6.06
Patents Section 4.14(d)(iii)
Paying Agent Section 3.01(a)
Payment Fund Section 3.01(a)
Person Section 9.09(f)
Plan of Merger Section 1.02(a)
Potential Acquirer Section 6.02(a)
Preferred Stock Section 4.02(a)
Preliminary Proxy Statement Section 6.07
Proxy Statement Section 4.07(b)
Prudential Section 1.02(a)
Purchaser Opening Paragraph
Real Property Leases Section 4.15(b)
Release Section 4.13(d)
Schedule TO Section 1.01(b)
Schedule 14D-9 Section 1.02(b)
SEC Section 1.01(a)
Securities Act Section 4.05(a)
Shares Section 1.01(a)
Special Meeting Section 2.08
Software Section 4.14(d)(iv)
Stock Option Plans Section 3.03(a)
Stock Purchase Plan Section 3.03(a)
Subsequent Period Section 1.01(a)(ii)
Subsidiary Section 9.09(g)
Subsidiary Securities Section 4.02(b)
Superior Proposal Section 6.02(f)(ii)
Surviving Corporation Section 2.01
Takeover Laws Section 1.02(a)
Tax Section 9.09(h)
Tax Returns Section 9.09(i)
Termination Fee Section 8.03(b)
Trademarks Section 4.14(d)(i)
Transfer Agent Section 1.03
WARN Section 4.09(l)
1999 Financial Statements Section 4.05(b)
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
May 2, 2000, among AUTOMATIC DATA PROCESSING, INC., a Delaware corporation
("PARENT"), FIS ACQUISITION CORP., a New Jersey corporation and a wholly owned
subsidiary of Parent ("PURCHASER") and CUNNINGHAM GRAPHICS INTERNATIONAL, INC.,
a New Jersey corporation (the "COMPANY").
RECITALS
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that this Agreement and the transactions
contemplated hereby, including the Merger (as defined in Section 2.01), are
advisable and fair to, and in the best interests of, their respective
shareholders;
WHEREAS, the Board of Directors of the Company has adopted
resolutions approving the acquisition of the Company by Parent and Purchaser,
this Agreement and the transactions contemplated hereby, and has agreed to
recommend that the Company's shareholders approve the plan of merger (as such
term is used in Section 14A:10-1 of the New Jersey Business Corporation Act (the
"CORPORATION LAW")) contained in this Agreement and the transactions
contemplated hereby and tender their Shares (as defined in Section 1.01(a)(i));
WHEREAS, simultaneously with the execution and delivery of
this Agreement, certain shareholders of the Company have entered into a Voting
and Tender Agreement, dated as of the date hereof, with Parent; and
WHEREAS, Parent, Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 THE OFFER.
(a) (i) Provided that this Agreement shall not have been
terminated in accordance with Section 8.01 and that none of the events set forth
in clause (iii) of Exhibit A hereto shall have occurred or be existing,
Purchaser shall, and Parent shall cause Purchaser to, as promptly as practicable
(but in no event later than seven (7) business days following the public
announcement of the terms of this Agreement) commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) an offer to purchase all outstanding shares of common stock of the
Company, without par value (the "SHARES"), at a price (such price, or any higher
price as may be paid in the Offer, the "OFFER PRICE") of $22 per Share, net to
the seller in cash (such tender offer, as it may be amended and supplemented
from time to time as permitted under this Agreement, the "OFFER"). The
obligation
<PAGE>
of Purchaser to consummate the Offer and to accept for payment and to pay for
any Shares tendered pursuant thereto shall be subject to only the terms and
conditions set forth in this Agreement and to those conditions set forth in
Exhibit A hereto (the "OFFER CONDITIONS"), any of which (other than the Minimum
Tender Condition (as defined in Exhibit A)) may be waived by Purchaser in its
sole discretion. The initial expiration date of the Offer shall be the twentieth
business day following the commencement of the Offer (determined in accordance
with Rule 14d-1(e)(6) under the Exchange Act). Purchaser expressly reserves the
right to modify the terms of the Offer, except that, without the prior written
consent of the Company, Purchaser shall not (A) decrease the Offer Price or
change the form of the consideration payable in the Offer, (B) decrease the
number of Shares sought pursuant to the Offer, (C) impose additional conditions
to the Offer, (D) change the conditions to the Offer or (E) make any other
change in the terms or conditions of the Offer which is adverse to the holders
of Shares.
(ii) Subject to the terms and conditions of this Agreement and
to the satisfaction or waiver of the Offer Conditions as of any scheduled
expiration of the initial offering period of the Offer, Purchaser shall accept
for payment and pay for Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after such scheduled expiration.
Notwithstanding the foregoing, Purchaser and Parent shall have the right to, (A)
extend the Offer, from time to time, if at the expiration date of the Offer
(with respect to either the initial offering period or an extended offering
period, as the case may be) any of the conditions to the Offer have not been
satisfied or waived, (B) extend the Offer for any period required by any
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, or (C) elect to
provide one or more subsequent offering periods of up to an additional twenty
(20) business days in the aggregate (collectively, the "SUBSEQUENT PERIOD")
pursuant to Rule 14d-11 of the Exchange Act. Purchaser shall immediately accept
and promptly pay for all Shares as they are tendered during the Subsequent
Period. In addition, the Offer Price may be increased and the Offer may be
extended to the extent required by law in connection with such increase in each
case without the consent of the Company.
(b) On the date of commencement of the Offer, Parent and
Purchaser shall file or cause to be filed with the SEC a Tender Offer Statement
on Schedule TO (together with all amendments and supplements thereto, the
"SCHEDULE TO") with respect to the Offer which will comply in all material
respects with the provisions of, and satisfy in all material respects the
requirements of, such Schedule TO and all applicable Federal securities laws and
shall contain the offer to purchase and related letter of transmittal and other
ancillary Offer documents and instruments pursuant to which the Offer will be
made (collectively with any supplements or amendments thereto, the "OFFER
DOCUMENTS"). The Company and its counsel shall be given a reasonable opportunity
to review and comment on the Offer Documents prior to their filing with the SEC.
Parent and Purchaser agree to provide the Company with, and to consult with the
Company regarding, any comments that may be received from the SEC or its staff
with respect to the Offer Documents promptly after receipt thereof. Parent,
Purchaser and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause the Offer Documents as so
corrected
2
<PAGE>
to be filed with the SEC and be disseminated to holders of Shares, in each case,
as and to the extent required by applicable law.
SECTION 1.02 COMPANY ACTIONS. (a) The Company hereby consents
to the Offer and represents and warrants that (i) its Board of Directors (at a
meeting or meetings duly called and held prior to the date hereof) has (A)
determined that the terms of each of the Offer and the Merger (as hereinafter
defined) are advisable and fair to, and in the best interests of, the
shareholders of the Company, (B) approved and adopted this Agreement and the
transactions contemplated hereby (including the Offer and the Merger) (C)
resolved to recommend acceptance of the Offer and approval and adoption of the
plan of merger (as such term is used in Section 14A:10-1 of the Corporation Law
and attached as Exhibit B hereto (the "PLAN OF MERGER")) contained in this
Agreement by the shareholders of the Company and directed that the Plan of
Merger be submitted to the shareholders of the Company for approval, (D) taken
all necessary steps to render the New Jersey Shareholders Protection Act
(Sections 14A:10A-1 to 14A:10A-9 of the Corporation Law) inapplicable to Parent
and Purchaser and to the Merger and the acquisition of Shares pursuant to the
Offer and (E) resolved to elect, to the extent permitted by law, not to be
subject to any "moratorium", "control share acquisition", "business
combination", "fair price" or other form of anti-takeover laws and regulations
(collectively, "TAKEOVER LAWS") of any jurisdiction that may purport to be
applicable to this Agreement (PROVIDED, HOWEVER, that prior to the purchase of
any Shares pursuant to the Offer, such consent, determination, recommendation,
rendering and election by the Company's Board of Directors specified in Section
1.02(a)(i) above may be withdrawn, modified, rescinded or amended if the
Company's Board of Directors determines to accept a Superior Proposal (as
defined in Section 6.02(f) below)), and (ii) Prudential Securities Incorporated
("PRUDENTIAL"), the Company's financial advisor, has delivered to the Company's
Board of Directors an opinion to the effect that the consideration to be paid in
the Offer and the Merger to the Company's shareholders is fair, from a financial
point of view, to such shareholders. The Company hereby represents that it has
obtained all necessary consents to permit the inclusion of the fairness opinion
of Prudential in the Offer Documents and the Proxy Statement (as defined below).
(b) Upon commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-9") containing
the recommendations of its Board of Directors described in Section 1.02(a) and
hereby consents to the inclusion of such recommendations in the Offer Documents
and shall disseminate the Schedule 14D-9 to shareholders of the Company as
required by Rule 14D-9 promulgated under the Exchange Act. The Company shall
cooperate with Parent and Purchaser to include a copy of the Schedule 14D-9 with
the Offer Documents mailed or furnished to the Company's shareholders. Parent
and Purchaser shall provide the Company all information reasonably requested by
the Company for inclusion in the Schedule 14D-9. Parent, Purchaser and their
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
Parent and Purchaser with, and to consult with Parent and Purchaser regarding,
any comments that may be received from the SEC or its staff with respect to the
Schedule 14D-9 promptly upon receipt thereof. Parent, Purchaser and the Company
each agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agree to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed
3
<PAGE>
with the SEC and be disseminated to holders of Shares, in each case, as and to
the extent required by applicable law.
SECTION 1.03 SHAREHOLDER LISTS. In connection with the Offer,
upon Parent's or Purchaser's request, the Company shall cause Continental Stock
Transfer & Trust Company, the Company's transfer agent (the "TRANSFER AGENT"),
to furnish Parent and Purchaser promptly with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and shall
cause the Transfer Agent to furnish Parent and Purchaser with such information
and assistance (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) as Parent or Purchaser or
their agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Subject to the requirements of applicable law,
Parent and Purchaser, except only as is necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, shall hold
in confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger; and
if this Agreement is terminated, will promptly deliver or cause to be delivered
to the Company all copies of such information then in their possession or under
their control.
SECTION 1.04 DIRECTORS. (a) Subject to applicable law and to
the extent permitted by the National Association of Securities Dealers, promptly
upon the purchase by Purchaser pursuant to the Offer of such number of Shares as
represents at least a majority of the outstanding Shares, and from time to time
thereafter, Purchaser shall be entitled to designate such number of directors,
rounded up to the next whole number, to serve on the Board of Directors of the
Company as will give Purchaser representation on the Board of Directors of the
Company equal to the product of (i) the number of directors on the Board of
Directors of the Company (giving effect to the election of any additional
directors pursuant to this section) and (ii) the percentage that such number of
Shares beneficially owned by Parent and/or Purchaser (including Shares accepted
for payment) so purchased bears to the number of Shares outstanding. The Company
shall, upon request by Purchaser, promptly take all actions necessary to cause
Purchaser's designees to be elected or appointed to the Board of Directors of
the Company, including without limitation, increasing the size of the Board of
Directors of the Company or securing the resignations of such number of
directors as is necessary to provide Purchaser with such level of
representation, or both; PROVIDED, HOWEVER, that the Board of Directors of the
Company shall continue to include no fewer than two Continuing Directors (as
defined below) until the Effective Time (as defined in Section 2.02). The
Company will cause persons designated by Purchaser to constitute the same
percentage as is on the entire Board of Directors of the Company (giving effect
to this Section 1.04) to be on (i) each committee of the Board of Directors of
the Company and (ii) each Board of Directors and each committee thereof of each
Subsidiary of the Company. The Company's obligations to appoint designees to its
Board of Directors shall be subject to compliance with Section 14(f) of the
Exchange Act. At the request of Purchaser, the Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 under the Exchange Act
in order to fulfill its obligations under this Section 1.04 and shall include in
the Schedule 14D-9 or otherwise timely mail to its shareholders all necessary
information to comply therewith. Parent and Purchaser will supply to the
Company, and be solely responsible for, all information with respect to
themselves and their respective officers, directors and affiliates required by
such Section and Rule.
4
<PAGE>
(b) Following the election or appointment of Purchaser's
designees pursuant to Section 1.04(a) and prior to the Effective Time, and so
long as there shall be at least one Continuing Director (as defined below), any
amendment or termination of this Agreement requiring action by the Company, any
extension of time for the performance of any of the obligations or other acts of
Parent or Purchaser under this Agreement and any exercise or waiver of any of
the Company's rights or remedies under this Agreement will require the
affirmative vote of a majority of the directors of the Company then in office
who are directors of the Company on the date hereof (the "CONTINUING
DIRECTORS"), which action shall be deemed to constitute the action of the full
Board of Directors even if such majority of Continuing Directors does not
constitute a majority of all directors then in office.
ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the
Corporation Law, Purchaser shall be merged with and into the Company (the
"MERGER") as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VII hereof. The Company
shall be the surviving corporation in the Merger (the "SURVIVING CORPORATION")
under the name "Cunningham Graphics International, Inc." and shall continue its
existence under the laws of New Jersey. In connection with the Merger, the
separate corporate existence of Purchaser shall cease. At the election of
Parent, any direct or indirect wholly-owned subsidiary of Parent may be
substituted for Purchaser as a constituent corporation in the Merger. In such
event, this Agreement shall be deemed modified to reflect the foregoing, and if
requested by Parent, the Company agrees to execute an appropriate amendment to
this Agreement in order to reflect the foregoing.
SECTION 2.02 CONSUMMATION OF THE MERGER. Subject to the
provisions of this Agreement, as soon as practicable following the satisfaction
or waiver of the conditions set forth in Article VII, Purchaser and the Company
shall cause the Merger to be consummated by filing with the office of the
Department of Treasury of the State of New Jersey the executed original and a
copy of the certificate of merger, as required by Section 14A:10-4.1 of the
Corporation Law, and shall take all such other and further actions as may be
required by law to make the Merger effective. Prior to the filing referred to in
this Section, a closing (the "CLOSING") will be held at 10 AM at the offices of
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York (or
such other time and place as the parties may agree) for the purpose of
confirming all the matters contained herein. The time the Merger becomes
effective in accordance with applicable law is referred to as the "EFFECTIVE
TIME."
SECTION 2.03 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth herein and in the applicable provisions of the Corporation
Law.
SECTION 2.04 CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation and the Bylaws of Purchaser, in each case as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation, in each case until
amended in accordance with applicable law; PROVIDED, HOWEVER,
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that Article I of the Certificate of Incorporation of the Surviving Corporation
shall be amended to read in its entirety as follows: "ARTICLE I. The name of the
Corporation is Cunningham Graphics International, Inc. (the "CORPORATION")."
SECTION 2.05 DIRECTORS AND OFFICERS. The directors of
Purchaser immediately prior to the Effective Time and the officers of the
Company immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation until their respective
death, permanent disability, resignation or removal or until their respective
successors are duly elected and qualified all in accordance with applicable law.
SECTION 2.06 CONVERSION OF SHARES. Each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
Parent, Purchaser or by any Subsidiary or affiliate of Parent, Purchaser or by
the Company, all of which shall be canceled without any consideration being
exchanged therefor) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted at the Effective Time into the right to
receive in cash an amount per Share (subject to any applicable withholding tax
specified in Section 2.10 hereof) equal to the Offer Price, without interest
(the "MERGER CONSIDERATION"), upon the surrender of the certificate representing
such Shares as provided in Section 3.01. At the Effective Time, each Existing
Stock Option (as defined in Section 3.03) shall be converted into the right to
receive the Option Consideration (as defined in Section 3.03) pursuant to
Section 3.03 hereof.
SECTION 2.07 CONVERSION OF COMMON STOCK OF PURCHASER. Each
share of common stock, no par value, of Purchaser issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one share of common stock of the Surviving Corporation.
SECTION 2.08 SHAREHOLDERS' MEETING. Unless the Merger is
consummated in accordance with Section 14A:10-5.1 of the Corporation Law as
contemplated by Section 2.09 and subject to applicable law, the Company acting
through its Board of Directors shall in accordance with applicable law duly
call, give notice of, convene and hold a special meeting (the "SPECIAL MEETING")
of its shareholders as soon as practicable following the consummation of the
Offer for the purpose of approving the Plan of Merger set forth in this
Agreement and include in the Proxy Statement (as defined in Section 4.07(b)) the
recommendation of its Board of Directors that shareholders of the Company vote
in favor of the adoption of the Plan of Merger set forth in this Agreement.
Parent and Purchaser each agree that, at the Special Meeting, all of the Shares
acquired pursuant to the Offer or otherwise owned or acquired by Parent or
Purchaser or any of their affiliates shall be voted in favor of the Merger.
SECTION 2.09 MERGER WITHOUT MEETING OF SHAREHOLDERS. If
Purchaser, in combination with Parent or any other direct or indirect Subsidiary
of Parent, shall hold at least 90 percent of the outstanding shares of each
class of capital stock of the Company, each of Parent, Purchaser and the Company
shall take all necessary and appropriate action to cause the Merger to become
effective, as soon as practicable after the consummation of the Offer, without a
meeting of shareholders of the Company, in accordance with Section 14A:10-5.1 of
the Corporation Law.
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SECTION 2.10 WITHHOLDING TAXES. Parent, Purchaser and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares or Existing Stock Options
pursuant to the Offer or the Merger any stock transfer taxes and such amounts as
are required to be withheld under the Internal Revenue Code of 1986, as amended
(the "CODE"), or any applicable provision of state, local or foreign tax law. To
the extent that amounts are so withheld, such withheld amounts shall be treated
for all purposes of this Agreement and the Offer as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made.
ARTICLE III
PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Parent will cause Purchaser
to make available to a bank or trust company designated by Parent (the "PAYING
AGENT") sufficient funds to make the payments pursuant to Section 2.06 hereof on
a timely basis to holders (other than Parent or Purchaser or any of their
respective Subsidiaries) of Shares that are issued and outstanding immediately
prior to the Effective Time (such amounts being hereinafter referred to as the
"PAYMENT FUND"). The Paying Agent shall make the payments provided for in the
preceding sentence out of the Payment Fund. The Payment Fund shall not be used
for any other purpose, except as provided in this Agreement.
(b) As soon as reasonably practicable after the Effective
Time, the Surviving Corporation shall cause the Paying Agent to mail to each
record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificate and receiving
payment therefor. Following surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed and such other documents
as may be reasonably required by the Paying Agent the holder of such Certificate
shall be paid in exchange therefor cash in an amount (subject to any applicable
withholding tax as specified in Section 2.10 hereof) equal to the product of the
number of Shares represented by such Certificate multiplied by the Merger
Consideration, and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a Person (as defined in Section 9.09)
other than the Person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. From and after the
Effective Time and until surrendered in accordance with the provisions of this
Section 3.01, each Certificate (other than Certificates representing Shares
owned by Parent or Purchaser or any of their respective Subsidiaries) shall
represent for all purposes solely the right to receive, in accordance with the
terms hereof, the Merger
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Consideration in cash multiplied by the number of Shares evidenced by such
Certificate, without any interest thereon.
(c) If any Certificate shall have been lost, stolen or
destroyed, upon the making on an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
will deliver in exchange for such affidavit claiming such Certificate is lost,
stolen or destroyed, the applicable Merger Consideration with respect to the
Shares formerly represented thereby.
(d) Any portion of the Payment Fund (including the proceeds of
any investments thereof) that remains unclaimed by the former shareholders of
the Company for six months after the Effective Time shall be repaid to the
Surviving Corporation. Any former shareholders of the Company who have not
complied with Section 3.01 hereof prior to the end of such six-month period
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) but only as general creditors thereof
for payment of their claim for the Merger Consideration, without any interest
thereon, upon due surrender of the Certificates held by them. Neither Parent,
the Surviving Corporation nor the Paying Agent, shall be liable to any holder of
Shares for any monies delivered from the Payment Fund or otherwise to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to two years after the
Effective Time (or such earlier date as shall be immediately prior to the date
that such unclaimed funds would otherwise become subject to any abandoned
property, escheat or similar law) unclaimed funds payable with respect to such
certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
SECTION 3.02 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the
close of business on the day of the Effective Time, the stock transfer books of
the Company shall be closed. At and after the Effective Time, there shall be no
registration of transfers of Shares which were outstanding immediately prior to
the Effective Time on the stock transfer books of the Surviving Corporation.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided in this Agreement or by applicable law. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares previously represented by such Certificates. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged for cash as
provided in this Article III.
SECTION 3.03 EXISTING STOCK OPTIONS. (a) Each option or right
to acquire Shares (the "EXISTING STOCK OPTIONS") granted under any stock option
or similar plan of the Company or under any agreement to which the Company or
any Subsidiary is a party (other than stock purchase rights under the Company's
Employee Stock Purchase Plan) (the "STOCK OPTION PLANS") which is outstanding on
the date that the amendment to Schedule TO reporting the initial acceptance by
Purchaser of the Shares tendered in the Offer is filed with the SEC (the
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"ACCEPTANCE DATE"), whether or not then exercisable or vested, shall by virtue
of the Merger and without any action on the part of the Company or the holder
thereof, be converted into and shall become a right to receive an amount in
cash, without interest, with respect to each Share subject thereto equal to the
excess, if any, of the Merger Consideration over the per share exercise or
purchase price of such Existing Stock Option. On and after the date hereof, the
Company shall grant no additional options or rights to acquire Shares under the
Stock Option Plans. On the Acceptance Date, each holder of an Existing Stock
Option shall be entitled to receive, in full satisfaction of such Existing Stock
Option, an amount in cash without interest in respect thereof equal to the
product of (i) the excess, if any, of the Merger Consideration over the per
share exercise or purchase price of such Existing Stock Option and (ii) the
number of Shares subject to such Existing Stock Option (such amount being
hereinafter referred to as the "OPTION CONSIDERATION") and each Existing Stock
Option shall be canceled on the Acceptance Date. Such payment shall be reduced
by any income or employment tax withholding required under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of such Existing Stock Option. The
Stock Option Plans shall terminate as of the Acceptance Date. In addition, the
Company shall take such actions as are reasonably necessary so that (1) no
offering period under the Company's Employee Stock Purchase Plan (the "STOCK
PURCHASE PLAN") commences after the date hereof, (2) any offering period under
the Stock Purchase Plan which commenced on or prior to the date hereof is
terminated prior to the Acceptance Date and (3) all funds contributed by
employees of the Company or its Subsidiaries under the Stock Purchase Plan that
are not applied on or prior to the Acceptance Date to the purchase of Shares are
returned to such employees as soon as practicable after the Acceptance Date. All
administrative and other rights and authorities granted under any Stock Option
Plan and under the Stock Purchase Plan to the Company, the Board of Directors of
the Company or any Committee or designee thereof, shall, following the
Acceptance Date, reside with the Surviving Corporation.
(b) The Company shall take all reasonable actions required to
exempt under SEC Rule 16(b)-3 the treatment of the Existing Stock Options
contemplated hereby, including, if necessary or appropriate, obtaining the
approval of the Company's Board of Directors, of the type described in a
pertinent SEC no-action letter dated January 12, 1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in appropriately corresponding sections of
the disclosure letter previously delivered by the Company to Parent with respect
to this Agreement (the "DISCLOSURE LETTER"), the Company represents and warrants
to Parent and Purchaser as follows:
SECTION 4.01 ORGANIZATION AND QUALIFICATION. The Company and
each of its Subsidiaries is a duly organized and validly existing corporation in
good standing under the laws of its jurisdiction of incorporation, with all
corporate power and authority to own its properties and conduct its business as
currently conducted on the date hereof; except where the failure to be so
organized, existing and in good standing or to have such power and authority has
not had or
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would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect; and is duly qualified and in good standing as a foreign
corporation authorized to do business in each of the jurisdictions in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing, has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect. Section 4.01 of the Disclosure Letter sets forth a true and
complete list of each of the Company's Subsidiaries. Neither the Company nor any
of its Subsidiaries, directly or indirectly, owns any interest in any Person
other than in the Company's Subsidiaries.
SECTION 4.02 CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 30,000,000 Shares and 10,000,000 shares of Preferred
Stock, without par value (the "PREFERRED STOCK"). As of the close of business on
April 28, 2000, 5,757,606 Shares were issued and outstanding and no shares of
Preferred Stock were issued and outstanding. Section 4.02(a) of the Disclosure
Letter contains a list, as of April 28, 2000, of the name of each Existing Stock
Option holder, the number of outstanding Existing Stock Options held by such
holder, the number of Shares such holder is entitled to receive upon the
exercise of each Existing Stock Option and the corresponding exercise price.
Section 4.02(a) of the Disclosure Letter also contains a list, as of the close
of business on the day immediately preceding the date hereof, of any Shares
issued subsequent to April 28, 2000 upon the exercise of Existing Stock Options
and stock purchase rights under the Stock Purchase Plan, other than the Shares
to be issued subsequent to the date hereof pursuant to the Stock Purchase Plan.
Except as disclosed pursuant to the immediately preceding sentence, since April
28, 2000, the Company has not issued any Shares, has not granted any options,
warrants or rights or entered into other agreements or commitments to issue or
purchase Shares (under the Stock Option Plans or otherwise) and has not split,
combined or reclassified any of its shares of capital stock. All of the
outstanding Shares have been duly authorized and validly issued and are fully
paid and nonassessable and are free of preemptive rights. Except for the
Existing Stock Options and stock purchase rights under the Stock Purchase Plan,
there are no outstanding (i) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or ownership
interests in the Company, (ii) options, warrants, rights or other agreements or
commitments to acquire from the Company, or obligations of the Company to issue,
any capital stock, voting securities or other ownership interests in (or
securities convertible into or exchangeable for capital stock or voting
securities or other ownership interests in) the Company, (iii) obligations of
the Company to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or commitment
relating to any capital stock, voting securities or other ownership interests in
the Company (the items in clauses (i), (ii) and (iii), together with the capital
stock of the Company, being referred to collectively as "COMPANY SECURITIES") or
(iv) obligations by the Company or any of its Subsidiaries to make any payments
based on the price or value of the Shares. There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. There are no voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of capital stock of the Company or any of its
Subsidiaries.
(b) The Company is directly or indirectly the record and
beneficial owner of all the outstanding shares of capital stock of each Company
Subsidiary, except as set forth in
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Section 4.02(b) of the Disclosure Letter, free and clear of any lien, mortgage,
pledge, charge, security interest or encumbrance of any kind, and there are no
irrevocable proxies with respect to any such shares. There are no outstanding
(i) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or ownership
interests in any Subsidiary of the Company, (ii) options, warrants, rights or
other agreements or commitments to acquire from the Company or any of its
Subsidiaries (or obligations of the Company or any of its Subsidiaries to issue)
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any of its Subsidiaries, (iii) obligations
of the Company or any of its Subsidiaries to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting securities
or other ownership interests in any of the Company's Subsidiaries (the items in
clauses (i), (ii) and (iii), together with the capital stock of such
Subsidiaries, being referred to collectively as "SUBSIDIARY SECURITIES") or (iv)
obligations of the Company or any of its Subsidiaries to make any payment based
on the value of any shares of any Subsidiary. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.03 AUTHORITY FOR THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and subject to obtaining any necessary shareholder approval of the Plan of
Merger contained in this Agreement, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated,
other than the approval of the Plan of Merger contained in this Agreement, by
the holders of a majority of the outstanding Shares prior to the consummation of
the Merger (unless the Merger is consummated pursuant to Section 14A:10-5.1 of
the Corporation Law). This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and assuming the due
authorization, execution and delivery of this Agreement by Purchaser and Parent
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
SECTION 4.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation or Bylaws
(or other similar governing documents) of the Company or any of its
Subsidiaries, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any foreign, federal, state or local government
or subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body (a
"GOVERNMENTAL ENTITY") except as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the New Jersey
Industrial Site Recovery Act, N.J.S.A. 13:1K-6 ET SEQ. ("ISRA"), the Securities
Act, the Exchange Act, the Corporation Law and the "blue sky" or securities laws
of various states, (c) except as set forth in Section 4.04(c) of the Disclosure
Letter, require any consent, waiver or approval or result in a default (or give
rise to any right of termination, cancellation, modification or acceleration)
under any of the terms, conditions or provisions of any note,
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license, agreement, contract, indenture or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets may be bound, (d)
result in the creation or imposition of any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind on any asset of the Company or any
of its Subsidiaries or (e) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its Subsidiaries or by
which any of their respective assets are bound, except in the case of clauses
(b), (c), (d) and (e) for any of the foregoing that has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
SECTION 4.05 REPORTS; FINANCIAL STATEMENTS.
(a) Except as set forth in Section 4.05(a) of the Disclosure
Letter, since April 22, 1998, the Company has duly filed all forms, reports,
schedules, proxy statements and documents required to be filed by it with the
SEC. True and correct copies of all filings made by the Company with the SEC
since such date and prior to the date hereof (the "COMPANY SEC REPORTS"),
whether or not required under applicable laws, rules and regulations and
including any registration statement filed by the Company under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), have been either made available
or are publicly available to Parent and Purchaser. As of their respective dates,
the Company SEC Reports (other than preliminary material) complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports and none of the Company SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, at the time filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements of the
Company for the year ended December 31, 1999 (the "1999 FINANCIAL STATEMENTS")
and the audited and unaudited consolidated financial statements of the Company
included (or incorporated by reference) in the Company SEC Reports comply as to
form in all material respects with applicable accounting requirements and with
the rules and regulations of the SEC with respect thereto and were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of their
respective dates, and the consolidated income, shareholders equity, results of
operations and changes in consolidated financial position or cash flows for the
periods presented therein, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which have not been and are not reasonably likely to be materially adverse to
the Company and its Subsidiaries taken as a whole.
(c) Except (i) as reflected or reserved against or disclosed
in the 1999 Financial Statements, (ii) for liabilities that are not required to
be recorded or reflected on a balance sheet under United States generally
accepted accounting principles and (iii) as incurred in the ordinary course of
business since December 31, 1999, neither the Company nor any of its
Subsidiaries has
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any liabilities of any nature, whether accrued, absolute, fixed, contingent or
otherwise, or whether due or to become due, other than liabilities that have not
had or would not reasonably be likely to have, individually or in the aggregate,
a Material Adverse Effect.
SECTION 4.06 ABSENCE OF CERTAIN CHANGES. Except as set forth
in Section 4.06 of the Disclosure Letter, since December 31, 1999, (a) the
Company and its Subsidiaries have not, to the knowledge of the Company, suffered
any change, condition, event or development that would, or could reasonably be
likely to have, a Material Adverse Effect, (b) the Company and its Subsidiaries
have conducted in all material respects their respective businesses only in the
ordinary course consistent with past practice, except for the negotiation and
execution and delivery of this Agreement and (c) there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the Shares or any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of capital stock or
other securities in, or other ownership interests in, the Company or any of its
Subsidiaries; (ii) any change by the Company in accounting methods, principles
or practices except as required by changes in United States generally accepted
accounting principles; or (iii) any action by the Company or any of its
Subsidiaries which, if taken after the date hereof, would constitute a breach of
clauses (a)-(l) of Section 6.01.
SECTION 4.07 SCHEDULE 14D-9; OFFER DOCUMENTS AND PROXY
STATEMENT.
(a) None of the information supplied or to be supplied by or,
to the knowledge of the Company, on behalf of the Company or any affiliate of
the Company expressly for inclusion in the Offer Documents will, at the times
such documents are filed with the SEC and are mailed to shareholders of the
Company, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9 and any supplement or amendment thereto will not,
at the time they are filed with the SEC and at the time of any distribution or
dissemination thereof, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made by the Company
with respect to information supplied in writing by Parent, Purchaser or an
affiliate of Parent or Purchaser for inclusion therein.
(b) The Proxy Statement, and any other schedule or document
required to be filed by the Company in connection with the Merger, will not, at
the time the Proxy Statement is first mailed and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to information supplied in writing by Parent, Purchaser or an
affiliate of Parent or Purchaser for inclusion therein. The letter to
shareholders, notice of meeting, proxy statement and form of proxy, or the
information statement, as the case may be, that may be provided to shareholders
of the Company in connection with the Merger (including any amendments or
supplements), and any schedules required to be filed with the SEC in connection
therewith, as from time to time amended or supplemented, are collectively
referred to as the "PROXY STATEMENT." The 14D-9 and the Proxy
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Statement, and any amendments or supplements thereto, when filed, distributed or
disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the Exchange Act.
SECTION 4.08 BROKERS. Except for Prudential, no Person or
entity is entitled to receive any brokerage, finder's or other fee or commission
in connection with this Agreement or the transactions contemplated hereby based
upon agreements made by or on behalf of the Company or any of its Subsidiaries.
SECTION 4.09 EMPLOYEE BENEFIT MATTERS.
(a) Section 4.09(a) of the Disclosure Letter lists all
material pension, retirement, savings, disability, medical, dental, health, life
(including all individual life insurance policies as to which the Company or any
of its Subsidiaries is the owner, beneficiary or both), death benefit, group
insurance, profit sharing, deferred compensation, stock option or other
equity-based compensation, bonus, incentive, vacation pay, severance pay, Code
Section 125 "cafeteria" or "flexible benefit" plan, or other employee benefit
plan, trust, arrangement, contract, agreement, policy or commitment (including
without limitation, all employee pension benefit plans as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all employee welfare benefit plans as defined in Section 3(1) of
ERISA), (A) under which current or former employees of the Company or any of its
Subsidiaries or their respective ERISA Affiliates (as defined below) are
entitled to participate by reason of their employment with the Company or any of
its Subsidiaries or their respective ERISA Affiliates, whether or not any of the
foregoing is funded, whether insured or self-funded and whether written or oral
and with respect to which the Company or any of its Subsidiaries or their
respective ERISA Affiliates are a party or a sponsor or a fiduciary thereof or
by which the Company or any of its Subsidiaries or their respective ERISA
Affiliates (or any of their rights, properties or assets) are bound or (B) with
respect to which the Company or any of its Subsidiaries otherwise may have any
material liability as described in Section 4.09(a) of the Disclosure Letter (the
"EMPLOYEE BENEFIT PLANS"). For each Employee Benefit Plan, the Company has
provided true and correct copies of all plan documents, summary plan
descriptions, determination letters, all material communications with any
government entity or agency (including the Internal Revenue Service and the
PBGC) given or received with respect to any Employee Benefit Plan within the
past five years, and the three most recent Forms 5500, including all financial
or actuarial reports, if applicable, and all other attached schedules.
(b) The Company, its Subsidiaries and their respective ERISA
Affiliates and, to their knowledge, any "administrator(s)" (as described in
Section 3(16)(A) of ERISA) of the Employee Benefit Plans have complied in all
material respects with such Plans' terms and with the applicable requirements of
ERISA, the Code and all other statutes, orders, rules or regulations,
specifically including the reporting and disclosure requirements of Part 1 of
Title I, and Title IV of ERISA and the Code, in a timely and accurate manner,
such that no material penalties are reasonably expected to be imposed on the
Company or its Subsidiaries or their respective ERISA Affiliates, and no
material penalties may be imposed on the Parent or the Purchaser under ERISA,
the Code or otherwise with respect to the Employee Benefit Plans or any related
trusts.
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(c) For purposes of this Agreement, "ERISA AFFILIATES" shall
mean any trade or business (whether or not incorporated) that is part of the
same controlled group, or under common control with, or part of an affiliated
service group that includes, the Company or any of its Subsidiaries within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
(d) With respect to the Employee Benefit Plans:
(i) No Employee Benefit Plan is subject to Title IV
or ERISA or Section 412 of the Code, and no Employee Benefit Plan is a
"multiemployer" plan within the meaning of Section 3(37) of ERISA. No
Employee Benefit Plan is a "multiple employer plan" within the meaning
of the Code or ERISA. Each of the Employee Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter that the plan complies with
the Tax Reform Act of 1986, as amended, pursuant to a request which
accurately described such plan, and has been administered and operated
in all material respects in accordance with all laws so as to maintain
such qualification.
(ii) All contributions or other amounts payable by
the Company or any of its Subsidiaries or their ERISA Affiliates
through the date hereof with respect to each Employee Benefit Plan in
respect of current or prior plan years have been either paid or accrued
on the Company's regularly prepared financial statements to the extent
required under the terms of such plan or in accordance with US GAAP.
(iii) There are no pending, or to the Company's
knowledge, threatened or anticipated material claims (other than
routine claims for benefits) by, on behalf of or against any of the
Employee Benefit Plans or any trust related thereto or, to the
reasonable knowledge of the Company, by, on behalf of or against any
fiduciary of such plans.
(e) Neither the Company nor any of its Subsidiaries has any
material liability, whether absolute or contingent, direct or indirect,
including any obligations under any Employee Benefit Plan, with respect to any
misclassification of a person as an independent contractor rather than as an
employee or with respect to any employees "leased" from another employer.
(f) Except as provided in Section 3.03 hereof, the
consummation of the transactions contemplated by this Agreement will not, with
respect to employees or former employees of the Company or any of its
Subsidiaries: (A) entitle any individual to severance pay; (B) accelerate the
time of payment or vesting of, increase the amount of, or satisfy a condition to
the compensation due to any individual under any Employee Benefit Plan; or (C)
result in the payment of an amount that could, individually or in combination
with any other such payment, constitute an "excess parachute payment" under Code
section 280G(b)(1).
(g) Except as set forth in Section 4.09(g) of the Disclosure
Letter, each Employee Benefit Plan may be amended or terminated in accordance
with its terms and applicable law after the Effective Time.
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(h) Except as set forth in Section 4.09(h) of the Disclosure
Letter (A) neither the Company nor any of its Subsidiaries has or will have any
material liability or obligation under any Employee Benefit Plan which provides
medical or death benefits with respect to current or former employees of the
Company or any of its Subsidiaries beyond their termination of employment (other
than coverage mandated by law); and (B) each of the Company, its Subsidiaries
and their respective ERISA Affiliates which maintains a "group health plan,"
within the meaning of Section 607(1) of ERISA has materially complied with the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, the
Health Insurance Portability and Accountability Act of 1996 and any other
applicable federal, state or local law.
(i) No "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to
any Employee Benefit Plan subject to ERISA, other than such a transaction
subject to an administrative or statutory exemption, with respect to which a
material tax, penalty or other amount may reasonably be expected to be imposed
on the Company or any of its Subsidiaries or their respective ERISA Affiliates.
(j) None of the Company or any of its Subsidiaries, or any of
their respective ERISA Affiliates, or any organization with respect to which any
such entity is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction described in Section 4069 of
ERISA which has had or would reasonably be likely to have, a Material Adverse
Effect.
(k) No liability under any Employee Benefit Plan has been
funded or satisfied with the purchase of a contract from an insurance company
that is not rated AA by Standard & Poor's Corporation or the equivalent by any
other nationally recognized rating agency.
(l) To the Company's knowledge, there has been no "mass
layoff" or "plant closing," as each such term is defined in the Worker
Adjustment and Retraining Notification Act of 1986 ("WARN"), with respect to the
employees of the Company or any of its Subsidiaries, with respect to which there
could be any future material liability to such employees under WARN.
(m) Other than as required by law, there is no announced plan
or legally binding commitment to create any additional material Employee Benefit
Plans or to amend or modify in any material respects any Existing Employee
Benefit Plan
(n) Except as set forth in Section 4.09(n) of the Disclosure
Letter, none of the Company or any of its Subsidiaries is a party to any
collective bargaining or other labor union contract. To the Company's reasonable
knowledge, there are no union organization attempts underway with respect to any
employees of the Company or, any of its Subsidiaries. There is no pending or, to
the knowledge of the Company, threatened material labor dispute, strike or work
stoppage involving such employees. To the reasonable knowledge of the Company,
neither the Company nor any of its Subsidiaries has committed any material
unfair labor practices (as defined in the National Labor Relations Acts of 1947,
as amended) in connection with the operation of its business and except as set
forth in Section 4.09(n) of the Disclosure Letter, there
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is no pending or, to the reasonable knowledge of the Company, threatened
material charge or complaint against the Company or any of its Subsidiaries by
the National Labor Relations Board or any comparable state or local agency.
SECTION 4.10 LITIGATION, ETC. There is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries that if
adversely determined would reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect or would, individually or in the aggregate,
with any other such claims, suits, actions or proceedings or governmental
investigations, reasonably be likely to have a Material Adverse Effect or, as of
the date hereof, that in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Offer and the Merger or seeks an award of damages.
Neither the Company nor any of its Subsidiaries is subject to any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company that has had or
would reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 4.11 TAX MATTERS.
(a) Except as set forth in Section 4.11(a) of the Disclosure
Letter, the Company and its Subsidiaries have duly filed all Tax Returns
required to be filed by applicable law, regulations and administrative
pronouncements with respect to the Company and its Subsidiaries (or any of them)
or any of their income, properties or operations as of the date hereof in a
timely manner (taking into account applicable filing extensions listed in
Section 4.11(a) of the Disclosure Letter, except to the extent that failure to
make such filing has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect. All such returns
are accurate and complete in all material respects. All Tax Returns required to
be filed by or with respect to the Company and its Subsidiaries (or any of them)
after the date hereof and on or before the Effective Time shall be prepared and
timely filed (taking into account applicable filing extensions) in a manner
consistent with prior years and applicable law, regulations and administrative
pronouncements, except where a failure to make such filing has not had or would
not reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect. Except as set forth in Section 4.11(a) of the Disclosure Letter,
no penalties or other charges in a material amount are or will become due with
respect to the late filing of any Tax Return of the Company and its Subsidiaries
(or any of them) or payment of any Tax of the Company and its Subsidiaries (or
any of them), required to be filed or paid on or before the Effective Time.
(b) Except as set forth in Section 4.11(b) of the Disclosure
Letter and except where a failure of a statement contained in (i)-(iv) below to
be true or complete has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect with respect to all
Tax Returns filed by or with respect to the Company and its Subsidiaries (or any
of them):
(i) to the knowledge of the Company, the statute
of limitations for the assessment of corporate income taxes has expired
for all years prior to 1996;
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(ii) no audit is in progress;
(iii) no waiver or agreement has been executed for
the extension of time for the assessment or payment of any Tax; and
(iv) there is no deficiency proposed by a taxing
authority or threatened in writing by a taxing authority against the
Company or any of its Subsidiaries.
(c) Except as set forth in Section 4.11(c) of the Disclosure
Letter:
(i) all material amounts required to be paid on or
before the date hereof by or with respect to the Company and its
Subsidiaries (or any of them) with respect to Taxes have been timely
paid; and
(ii) any material amounts required to be paid by or
with respect to the Company and its Subsidiaries (or any of them) with
respect to Taxes after the date hereof and on or before the Effective
Time shall be timely paid.
(d) Except as set forth in Section 4.11(d) of the Disclosure
Letter, neither the Company nor any of its Subsidiaries has been or is
a party to any tax sharing agreement or similar arrangement.
(e) Section 4.11(e) of the Disclosure Letter identifies:
(i) with respect to Subsidiaries of the Company
acquired from a common parent of an affiliated group of corporations
that filed a consolidated federal income tax return, the common parent
of such group, and the period to which such returns related, that
included the Company or any of its Subsidiaries;
(ii) all claims with respect to Taxes in a material
amount that have been asserted against the Company and its Subsidiaries
(or any of them) under any tax sharing agreement to which any of them
is a party.
(f) The Company and its Subsidiaries have made adequate
provisions in accordance with United States generally accepted accounting
principles appropriately and consistently applied to each of the Company and its
Subsidiaries in the consolidated financial statements included in the SEC
Reports for the payment of all Taxes for which each of the Company and its
Subsidiaries may be liable for the periods covered thereby that were not yet due
and payable as of the dates thereof, except for inadequate provision for tax
liabilities that has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.12 COMPLIANCE WITH LAW. Neither the Company nor any
of its Subsidiaries is in conflict in any material respect with, in default in
any material respect with respect to or in violation in any material respect of,
any material statute, law, ordinance, rule, regulation, order, judgment or
decree applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected. The
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Company and its Subsidiaries have all permits, licenses, authorizations,
consents, approvals and franchises from Governmental Entities required to
conduct their businesses as currently conducted (the "COMPANY PERMITS"), except
for such permits, licenses, authorizations, consents, approvals and franchises
the absence of which has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect or a material
adverse effect on the ability of the parties to consummate the Offer or the
Merger. The Company and its Subsidiaries are in compliance with the terms of the
Company Permits, except where the failure so to comply has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
SECTION 4.13 ENVIRONMENTAL MATTERS. (a) (i) The Company and
each of its Subsidiaries have been and are in compliance with all applicable
Environmental Laws (as defined in Section 4.13(b)) except for such instances of
non-compliance that have not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect, (ii) the Company
and each of its Subsidiaries have all material permits, licenses, consents,
approvals, waivers, variances and other authorizations ("AUTHORIZATIONS") that
are required with respect to the operation of its business, property and assets
under the Environmental Laws and are in compliance with such Authorizations and
all such Authorizations are in full force and effect except for such
non-compliance or failures to be in full force and effect that have not had and
would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect, (iii) except as set forth in Section 4.13 of the
Disclosure Letter, none of the Company or its Subsidiaries are subject to any
material claims, actions, suits, proceedings, investigations, decrees, judgments
or orders pursuant to Environmental Law or principles of common law relating to
pollution of the environment or health and safety which have had or would
reasonably be likely to have a Material Adverse Effect.
(b) For purposes of this Agreement, "ENVIRONMENTAL LAW" means
any statute, law, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries relating to (i) pollution
or the protection or preservation of the environment or natural resources, (ii)
Releases or threatened Releases, and (iii) the management (including use,
treatment, handling, storage, disposal, transportation, recycling or
remediation) of any Hazardous Substance.
(c) For purposes of this Agreement, "HAZARDOUS SUBSTANCE"
means any substance, pollutant, contaminant, chemical or other material
(including petroleum or any fraction thereof, asbestos or
asbestos-containing-material, polychlorinated biphenyls, urea formaldehyde foam
insulation) or waste that is identified or regulated under any Environmental
Law.
(d) For purposes of this Agreement, "RELEASE" means any spill,
discharge, leak, emission, disposal, injection, escape, dumping, leaching,
dispersal, emanation, migration or release of any kind whatsoever of any
Hazardous Substance in, on, into, through or onto the environment.
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SECTION 4.14 INTELLECTUAL PROPERTY.
(a) Section 4.14(a) of the Disclosure Letter lists the
Company's Intellectual Property Rights on the date hereof falling within the
following categories that are material to the Company and its Subsidiaries taken
as a whole: (i) Trademarks, (ii) Copyrights, (iii) Patents, (iv) Software (other
than commercially available software used under a shrink-wrap license), (v)
agreements under which the Company or any of its Subsidiaries are licensed to
use Intellectual Property owned by a third party (including all amendments or
supplements thereto or continuing thereunder) (other than commercially available
software licenses having annual fee obligations of less than $10,000) and (vi)
agreements under which the Company or any of its Subsidiaries has granted a
license to a third party to use any of the Company Intellectual Property Rights
(including all amendments or supplements thereto or continuing thereunder).
(b) (i) with respect to each of the Company Intellectual
Property Rights, the Company and its Subsidiaries at the Effective Time will
either (A) be the sole and exclusive owners of the Company Intellectual Property
Rights free and clear of any royalty or other payment obligation, lien or charge
or (B) have sufficient rights to use such Company Intellectual Property Rights
under a valid and enforceable license from a third party, (ii) the Company
Intellectual Property Rights are fully assignable, without material conditions,
limitations or restrictions and (iii) there are no agreements which materially
restrict or limit the use by the Company or its Subsidiaries of the Company
Intellectual Property Rights.
(c) (i) to the Knowledge of the Company, (A) the Company
Intellectual Property Rights and the products and services of the Company and
its Subsidiaries do not infringe on Intellectual Property Rights of any person
or entity in any country and (B) there exists no material impediment which would
impair the Company's rights to conduct its business or the business of its
Subsidiaries after the Effective Time pursuant to the Company Intellectual
Property Rights; and (ii) the Company and its Subsidiaries have taken all
reasonable and appropriate steps to protect the Company Intellectual Property
Rights and, where applicable, to preserve the confidentiality of the Company
Intellectual Property Rights.
(d) The term "INTELLECTUAL PROPERTY RIGHTS" means all
proprietary and other rights, including rights granted under license, in and to
the following:
(i) trademarks, service marks, trademark registrations,
service mark registrations, trade names and applications for
registration of trademarks and service marks ("TRADEMARKS");
(ii) copyrights, copyright registrations and applications for
registration of copyrights ("COPYRIGHTS");
(iii) patents, design patents and utility patents, all
applications for grant of any such patents pending as of the date
hereof or as of the Effective Time or filed within five years prior to
the date hereof, and all reissues, divisions, continuations-in-part and
extensions thereof ("PATENTS");
(iv) computer software, including source code, object code,
algorithms, databases, and all related documentation ("SOFTWARE");
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(v) technical documentation, trade secrets, designs,
inventions, processes, formulae, know-how, operating manuals and
guides, plans, new product development, technical and marketing
surveys, material specifications, product specifications, invention
records, research records, labor routings, inspection processes,
equipment lists, engineering reports and drawing, architectural or
engineering plans, know-how agreements and other know-how; marketing
and licensing records, sales literature, customer lists, trade lists,
sales forces and distributor networks lists, advertising and
promotional materials, service and parts records, warranty records,
maintenance records and similar records; and
(vi) all rights and incidents of interest in and to all
noncompetition or confidentiality agreements;
in each case including any all applications therefor or registrations, renewals,
modifications and extensions thereof.
(e) The term "COMPANY INTELLECTUAL PROPERTY RIGHTS" shall mean
all material Intellectual Property Rights owned or used under license by the
Company or any of its Subsidiaries.
SECTION 4.15 REAL PROPERTY.
(a) Section 4.15(a) of the Disclosure Letter lists all of the
real property owned in fee by the Company and its Subsidiaries during the last
five years. Each of the Company and its Subsidiaries has good and marketable
title to each parcel of real property owned by it free and clear of all
mortgages, pledges, liens, encumbrances and security interests, except (i) those
reflected or reserved against in the balance sheet of the Company dated as of
December 31, 1999 and included in the SEC Reports, (ii) Taxes and general and
special assessments not in default and payable without penalty and interest and
(iii) other liens, mortgages, pledges, encumbrances and security interests that
do not materially interfere with the Company's or such Subsidiary's use and
enjoyment of such real property or materially detract from or diminish the value
thereof or that, have had or would reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect.
(b) Section 4.15(b) of the Disclosure Letter sets forth a list
of all material leases, subleases and other agreements under which the Company
or any of its Subsidiaries uses or occupies or has the right to use or occupy,
now or in the future, any material real property (the "REAL PROPERTY LEASES").
Section 4.15(b) of the Disclosure Letter also sets forth a list of all material
leases, subleases and other agreements under which the Company or any of its
Subsidiaries has used or occupied any material real property during the last
five years. Each Real Property Lease is valid, binding and in full force and
effect, and no termination event or condition or uncured default of a material
nature on the part of the Company or any such Subsidiary exists under any Real
Property Lease. Each of the Company and its Subsidiaries has a good and valid
leasehold interest in each parcel of real property leased by it free and clear
of all mortgages, pledges, liens, encumbrances and security interests, except
(i) those reflected or reserved against in the balance sheet of the Company
dated as of December 31, 1999, (ii) Taxes and general and special assessments
not in default and payable without penalty and interest and
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(iii) other liens, mortgages, pledges, encumbrances and security interests that
do not materially interfere with the Company's use and enjoyment of such real
property or materially detract from or diminish the value thereof or that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.16 MATERIAL CONTRACTS. (a) The Company has made
available to Parent and Purchaser copies of all contracts, agreements,
commitments, arrangements, leases (including with respect to personal property)
and other instruments to which the Company or any of its Subsidiaries is a party
or by which the Company, any of its Subsidiaries or any of their respective
assets is bound that (a) involves or could involve aggregate payments of more
than $500,000 or (b) is with any of the Company's officers, directors or
affiliates (each of (a) and (b), a "MATERIAL CONTRACT").
(b) There is no contract, agreement or understanding that was
required to be described in or filed as an exhibit to any Company SEC Report
that was not described in or filed as required by the Securities Act or the
Exchange Act, as the case may be. Except as has not had or would not reasonably
be likely to have, individually or in the aggregate, a Material Adverse Effect,
all such contracts, agreements and understandings are valid and binding and are
in full force and effect and enforceable in accordance with their respective
terms other than contracts, agreements or understandings which are by their
terms no longer in force or effect. Except to the extent any of the following
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company is not in violation or breach of or default
under any such contract, agreement or understanding, nor to the Company's
knowledge is any other party to any such contract, agreement or understanding.
Except as set forth in Section 4.16 of the Disclosure Letter and the Company SEC
Reports, neither the Company nor any of its Subsidiaries is a party to or bound
by any contract, agreement or arrangement (including any lease of real property)
(i) restricting the ability of the Company or any of its Subsidiaries (or after
the Merger, Parent or any of its Subsidiaries) to compete in or conduct any line
of business or to engage in business in any geographic area, (ii) containing
covenants of any other Person not to compete in any material respect with the
Company or any of its Subsidiaries or (iii) containing any so-called "most
favored nation" provisions or any similar provision requiring the Company or any
Subsidiary (or after the Merger, Parent or any of its Subsidiaries) to offer a
third party terms or concessions at least as favorable as offered to one or more
other parties.
SECTION 4.17. OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company has received the opinion of Prudential, a copy of which
has been provided to Parent, to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger, by the
holders of Shares (other than Parent or its affiliates) is fair to such holders
from a financial point of view.
SECTION 4.18. VOTE REQUIRED. The only vote of the holders of
any class or series of Company capital stock necessary to approve the Merger is
the affirmative vote of the holders of a majority of the outstanding Shares.
SECTION 4.19. ANTI-TAKEOVER PLAN; STATE TAKEOVER STATUTES.
Neither the Company nor any Subsidiary has in effect any shareholder rights plan
or similar device or arrangement, commonly or colloquially known as a "poison
pill" or "anti-takeover" plan or any
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similar plan, device or arrangement and the Board of Directors of the Company
has not adopted or authorized the adoption of such a plan, device or
arrangement. The Board of Directors of the Company has taken all necessary
actions to exempt the Offer, the Merger, this Agreement and the transactions
contemplated by this Agreement from the New Jersey Shareholders Protection Act
(Sections 14A:10A-1 to 14A:1A-9 of the Corporation Law). To the best of the
Company's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Offer, the Merger, this
Agreement, or any of the transactions contemplated by this Agreement.
SECTION 4.20. INSURANCE. Except as has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect, (i) the Company maintains, and has maintained, without
interruption, during its existence, policies or binders of insurance covering
such risk, and events, including personal injury, property damage and general
liability in amounts the Company reasonably believes adequate for its business
and operations and (ii) such policies shall not terminate as a result of the
consummation of the transactions contemplated hereby.
SECTION 4.21 ACCOUNTS RECEIVABLE. Except as has not had or
would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect, the accounts receivable of the Company and its
Subsidiaries as reflected in the 1999 Financial Statements, to the extent
uncollected on the date hereof, and the accounts receivable reflected on the
books of the Company and its Subsidiaries (i) have arisen in the ordinary course
of business of the Company and its Subsidiaries and (ii) subject only to
reserves for bad debts computed in a manner consistent with past practice and
reasonably estimated to reflect the probable results of collection, have been
collected or are collectible in the ordinary course of business of the Company
and its Subsidiaries in the aggregate recorded amounts shown in the Company
Financial Statements in accordance with their terms.
SECTION 4.22. CUSTOMERS. Section 4.22 of the Company
Disclosure Letter sets forth a list of (i) the top fifty (50) customers of the
Company and its Subsidiaries (based on revenue for the last completed fiscal
year), (ii) for each such customer, the amount of the dollar volume for calendar
year 1999 and (iii) confirmation of whether a written agreement (other than
periodic purchase orders) exists between the Company or any of its Subsidiaries
and each such customer and the effective date of each such written agreement.
Except as has not had or would not reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect, the relationships of the Company
and its Subsidiaries with such customers are good commercial working
relationships and, (ii) except as set forth in Section 4.22 of the Disclosure
Letter, no Person listed on Section 4.22 of the Disclosure Letter within the
last twelve months has canceled or otherwise terminated the relationship of such
Person with the Company or any of its Subsidiaries.
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ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company as follows:
SECTION 5.01 ORGANIZATION AND QUALIFICATION. Each of Parent
and Purchaser is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization. All of the
issued and outstanding capital stock of Purchaser is owned directly or
indirectly by Parent.
SECTION 5.02 AUTHORITY FOR THIS AGREEMENT. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate proceedings on the part of Parent and
Purchaser. This Agreement has been duly and validly executed and delivered by
Parent and Purchaser and assuming the due authorization, execution and delivery
of this Agreement by the Company, constitutes a legal, valid and binding
agreement of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms.
SECTION 5.03 OFFER DOCUMENTS; PROXY STATEMENT.
(a) None of the Offer Documents will, at the times such
documents are filed with the SEC and are mailed to the shareholders of the
Company, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Purchaser with
respect to information supplied in writing by the Company or an affiliate of the
Company for inclusion therein. The Offer Documents will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC thereunder.
(b) None of the information supplied by Parent, Purchaser or
any affiliate of Parent or Purchaser for inclusion in the Proxy Statement or the
Schedule 14D-9 will, at the date of filing with the SEC, and, in the case of the
Proxy Statement, at the time the Proxy Statement is mailed and at the time of
the Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 5.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by Parent or Purchaser nor the
consummation of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation or Bylaws (or other similar governing documents) of Parent or
Purchaser, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (i) as may be
required under the HSR Act, any non-United States competition, antitrust and
investment laws, the Securities Act, the
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Exchange Act, the Corporation Law and the "takeover", "blue sky" or securities
laws of various states or (ii) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not, individually or in the aggregate, have a material adverse effect on the
ability of the parties hereto to consummate the transactions contemplated
hereby, (c) require any consent, waiver or approval or result in a default (or
give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract, indenture or other instrument or obligation to
which Parent or Purchaser or any of their respective Subsidiaries is a party or
by which Parent or any of its Subsidiaries or any of their respective assets may
be bound, except for such defaults (or rights of termination, cancellation,
modification or acceleration) as to which requisite waivers or consents have
been obtained or which would not individually or in the aggregate have a
material adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, Purchaser or any of
their respective Subsidiaries or by which any of their respective assets are
bound, except for violations which would not, individually or in the aggregate,
have a material adverse effect on the ability of the parties hereto to
consummate the transactions contemplated hereby.
SECTION 5.05 OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted and will conduct its
operations only as contemplated hereby.
SECTION 5.06 BROKERS. No Person or entity is entitled to
receive any brokerage, finder's or other fee or commission in connection with
this Agreement or the transactions contemplated hereby based upon the agreements
made by or on behalf of the Company or any of its Subsidiaries.
SECTION 5.07 LITIGATION. There is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge of Parent
or Purchaser, threatened against either Parent or Purchaser or any of their
Subsidiaries that seeks to or could reasonably be expected to have a material
adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby.
SECTION 5.08 SUFFICIENT FUNDS. Parent has, and at the time of
acceptance for payment of Shares pursuant to the Offer and at the Effective Time
will have and will make available to Purchaser, sufficient and immediately
available funds to purchase all of the Shares and to pay the Merger
Consideration and to pay all amounts that may be due in respect of consummating
the Offer, the Merger and the transactions contemplated hereby.
ARTICLE VI
COVENANTS
SECTION 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as set
forth in Section 6.01 of the Disclosure Letter and expressly contemplated by
this Agreement, during the period from the date of this Agreement to the earlier
of the Effective Time and the date on which a majority of the Company's
directors are designees of Parent or Purchaser, or until the earlier
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termination of this Agreement, the Company will conduct and will cause each of
its Subsidiaries to conduct its operations according to its ordinary and usual
course of business and consistent with past practice. Without limiting the
generality of the foregoing and except as otherwise expressly provided in or
contemplated by this Agreement, during the period specified in the preceding
sentence, without the prior written consent of Parent, the Company will not and
will not permit any of its Subsidiaries to:
(a) issue, sell, grant options or rights to purchase, pledge, or
authorize or propose the issuance, sale, grant of options or rights to
purchase or pledge of (i) any Company Securities (including any
Existing Stock Option) or Subsidiary Securities, or grant or accelerate
any right to convert or exchange any Company Securities or Subsidiary
Securities, other than Shares issuable upon exercise of the Existing
Stock Options and other than as may be provided under the Stock
Purchase Plan or (ii) any other securities in respect of, in lieu of or
in substitution for Shares outstanding on the date hereof;
(b) acquire or redeem, directly or indirectly, or amend any
Company Securities or Subsidiary Securities;
(c) split, combine or reclassify its capital stock or declare,
set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on any shares of its capital stock (other than cash
dividends paid to the Company by its wholly-owned Subsidiaries with
regard to their capital stock);
(d) propose or adopt any amendment to its Certificate of
Incorporation or Bylaws (or similar documents);
(e) other than in the ordinary course of business and consistent
with past practice, grant any stock related performance or similar
awards or bonuses;
(f) (i) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
or (ii) acquire or agree to acquire, lease or manage any assets, other
than in the ordinary course of business and consistent with past
practice and other than assets that are immaterial to the Company and
its Subsidiaries taken as a whole;
(g) other than in the ordinary course of business and consistent
with past practice, sell, lease, license, mortgage or otherwise
encumber or subject to any lien or otherwise dispose of any of its
properties or assets, or stock or other ownership interest in any of
its properties or subsidiaries other than (i) any liens for taxes not
yet due and payable or being contested in good faith by appropriate
proceedings for which adequate reserves have been provided in the
consolidated balance sheet of the Company at December 31, 1999 and (ii)
such mechanics and similar liens, if any, as do not materially detract
from the value of any of such properties, assets, stock or ownership
interests or materially interfere with the present use of any of such
properties or assets;
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(h) make any commitment or enter into, or amend, modify, or
terminate any contract or agreement material to the Company and its
Subsidiaries taken as a whole;
(i) (1) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company or any of its Subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for borrowings under its line of credit for
working capital purposes and the endorsement of checks in the normal
course of business or (2) make any loans, advances or capital
contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned Subsidiary of the
Company and other than travel and entertainment advances to employees
in the ordinary course of business consistent with past practice;
(j) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation stock option,
restricted stock, pension, retirement, deferred compensation,
employment termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any current or former
director, officer and employee;
(k) except as disclosed in the Company SEC Reports and except as
may be required as a result of a change in law or in GAAP or a change
in order to comply with SEC requirements, change any of its accounting
policies or its procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of
accounts receivable);
(l) ensure that it and each of its Subsidiaries shall, use its
reasonable best efforts to keep or cause to be kept its material
existing insurance policies (or substantial equivalents) in such
amounts duly in force until the Effective Time and shall give Parent
notice of any material change in its insurance policies;
(m) (i) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect
at, or as of any time prior to, the Effective Time or (ii) omit to take
any action necessary to prevent any such representation or warranty
from being inaccurate in any material respect at such time;
(n) enter into any new, or amend any existing, employment,
severance, consulting or salary continuation agreements with or for the
benefit of any officers, directors or employees, or grant any increases
in the compensation or benefits to officers, directors and employees
(other than normal increases to persons who are not officers or
directors in the ordinary course of business consistent with past
practices and that, in the aggregate, do not result in a material
increase in benefits or compensation expense of the Company); or
(o) agree in writing or otherwise to take any of the foregoing
actions.
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SECTION 6.02 NO SOLICITATION. (a) The Company shall not, and
shall cause its Subsidiaries and the officers, directors, employees,
representatives (including investment bankers, attorneys and accountants),
agents or affiliates of the Company and its Subsidiaries not to, directly or
indirectly, (i) encourage, solicit or initiate any Acquisition Proposal (as
defined in Section 6.02(f)(i)) or (ii) participate in negotiations with, or
provide any information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries, or otherwise take any other
action to assist or facilitate (including granting any waiver or release under
any standstill or similar agreement with respect to any securities of the
Company) any Person or group (other than Parent or Purchaser or any affiliate or
associate of Parent or Purchaser) (a "POTENTIAL ACQUIROR") concerning any
Acquisition Proposal. In the event the Company receives any Acquisition
Proposal, the Company shall as promptly as reasonably practicable notify Parent
of such receipt and provide Parent with the identity of the Potential Acquiror
and a reasonable description of such Acquisition Proposal (or a copy thereof).
(b) Notwithstanding the provisions of Section 6.02(a), the
Company may take any of the actions referred to in Section 6.02(a)(ii) with
respect to a Potential Acquiror that has made an unsolicited written bona fide
Acquisition Proposal provided that all of the following conditions are
satisfied: (i) the Board of Directors of the Company (acting by a majority of
the entire board) determines in good faith, after consultation with its
independent financial advisor and independent legal counsel, that such
Acquisition Proposal is reasonably likely to result in the making of a Superior
Proposal (as defined in Section 6.02(f)(ii)); (ii) as promptly as reasonably
practicable (and in any event within 24 hours of receipt) the Company notifies
Parent of the receipt of such Acquisition Proposal and/or any request for
nonpublic information relating to the Company or any of its Subsidiaries or for
access to the properties, books or records of the Company or any of its
Subsidiaries by the Potential Acquiror that has made such Acquisition Proposal
and that the Company intends to engage in negotiations with, or to provide
information to such Potential Acquiror, (iii) the Company receives from such
Potential Acquiror an executed confidentiality or standstill agreement that is
no more favorable to such person than the Confidentiality Agreement dated
January 5, 2000, between ADP Financial Information Services, Inc. (a
wholly-owned subsidiary of Parent) and the Company (the "CONFIDENTIALITY
AGREEMENT"); and (iv) the Company furnishes or makes available to Parent the
same information provided to such person (to the extent not previously furnished
or made available). If the Company (or any of its Subsidiaries or its or their
respective officers, directors, employee, representatives, agents or affiliates)
participates in discussion or negotiations with , or provides information to a
Potential Acquiror, the Company will keep Parent advised on a current basis of
any material developments with respect thereto.
(c) The Company will, and will cause its Subsidiaries and the
respective officers, directors, employees, representatives, agents and
affiliates of the Company and its Subsidiaries to, immediately cease and cause
to be terminated any existing solicitation, activity, discussions or
negotiations with any Persons (other than Parent, Purchaser or any of their
respective affiliates or associates) conducted prior to the date hereof with
respect to any Acquisition Proposal.
(d) Unless the Company terminates this Agreement in accordance
with Section 8.01(e), the Company shall not (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation of the Offer or the Merger as set forth in Section
1.02(a), (ii) approve or recommend, or propose
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publicly to approve or recommend, any Acquisition Proposal, or (iii) enter into
any letter of intent, agreement in principle or acquisition agreement related to
any Acquisition Proposal.
(e) Nothing contained in this Section 6.02 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
shareholders a position with respect to an Acquisition Proposal by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
otherwise communicating with the Company's shareholders to the extent required
by law.
(f) For purposes of this Agreement,
(i) "ACQUISITION PROPOSAL" means any offer or proposal, or any
indication of interest in making an offer or proposal, made by a Person
or group at any time which is structured to permit such Person or group
to acquire beneficial ownership of at least 20% of the assets of the
Company and its Subsidiaries taken as a whole, or at least 20% of the
outstanding shares of capital stock of the Company pursuant to a
merger, consolidation or other business combination, sale of shares of
capital stock, sale of assets, tender offer or exchange offer or
similar transaction, including any single or multi-step transaction or
series of related transactions, in each case other than the Offer and
the Merger, and
(ii) "SUPERIOR PROPOSAL" means any unsolicited, bona fide written
Acquisition Proposal which the Board of Directors of the Company
(acting by a majority of the entire board) determines in its good faith
judgment (after consultation with its independent financial advisors
and independent legal counsel) taking into account applicable legal,
financial, regulatory and other relevant aspects of the Acquisition
Proposal, the identity of the Person making the proposal and other
relevant considerations, that (i) such Acquisition Proposal is more
favorable from a financial point of view to the Company's shareholders
than this Agreement, (ii) the conditions to the consummation of such
Acquisition Proposal are reasonably capable of being satisfied promptly
and (iii) financing for such transaction, to the extent required, is
then committed or reasonably available.
SECTION 6.03 ACCESS TO INFORMATION.
(a) From and after the date of this Agreement, the Company
will (i) give Parent and Purchaser and their authorized accountants, investment
bankers, counsel and other representatives access (during regular business hours
upon reasonable notice and in a manner so as not to interfere with the normal
operations of the Company and its Subsidiaries) to the facilities and books and
records of the Company and its Subsidiaries and (ii) cause its officers and
those of its Subsidiaries to furnish Parent and Purchaser with such financial
and operating data and other information with respect to the business,
properties and personnel of the Company and its Subsidiaries as Parent or
Purchaser may from time to time reasonably request.
(b) Information obtained by Parent or Purchaser pursuant to
Section 6.03(a) shall be subject to the provisions of the Confidentiality
Agreement as if Parent was a party thereto, the terms of which are incorporated
herein by reference.
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SECTION 6.04 REASONABLE EFFORTS; FURTHER ACTIONS.
(a) Subject to the terms and conditions herein provided for,
each of the parties hereto agrees to use its reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement. Without limiting the foregoing, (i)
each of the Company, Parent and Purchaser shall use its reasonable best efforts
to make promptly any required submissions under the HSR Act that the Company or
Parent determines should be made, in each case, with respect to the Offer, the
Merger and the transactions contemplated hereby and to respond as promptly as
practicable to all inquiries received from any Governmental Entity with respect
to such submissions for additional information or documentation, and (ii)
Parent, Purchaser and the Company shall cooperate with one another (A) in
promptly determining, in connection with the consummation of the transactions
contemplated by this Agreement, whether any filings are required to be or should
be made or consents, approvals, permits or authorizations are required to be or
should be obtained under any other federal, state or foreign law or regulation
or whether any consents, approvals or waivers are required to be or should be
obtained from other parties to loan agreements or other contracts or instruments
material to the Company's business and (B) in promptly making any such filings,
furnishing information required in connection therewith and seeking to obtain
timely any such consents, permits, authorizations, approvals or waivers.
(b) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
Parent shall cause the proper officers and directors of each party to this
Agreement to take all such necessary action.
(c) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated hereby is
commenced, whether before or after the Effective Time, the parties hereto agree
to cooperate and use all reasonable efforts to defend vigorously against it and
respond thereto.
SECTION 6.05 INDEMNIFICATION AND INSURANCE.
(a) Parent and Purchaser agree that all rights to
indemnification existing in favor of the present or former directors, officers
and employees (or any person who served at the Company's or any of its
Subsidiaries' request as an officer, director, or agent) of the Company or any
of its Subsidiaries (or any other entity or enterprise, such as, a partnership,
joint venture, trust or employee benefit plan) as provided in the Company's
Certificate of Incorporation or Bylaws, or the articles of organization, bylaws
or similar documents of any of the Company's Subsidiaries or other entity or
enterprise and the indemnification agreements, if any, with such person or
persons, as in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect without modification (other than modifications that would
enlarge the indemnification rights) for a period of not less than the statutes
of limitations applicable to such matters, and Parent shall, and after the
Effective Time shall cause the Surviving Corporation to, comply fully with its
obligations hereunder and thereunder. The Certificate of Incorporation and
By-Laws of the Surviving Corporation shall not be amended, repealed or otherwise
modified for the period set forth in the
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preceding sentence in any manner that would adversely affect the rights
thereunder of individuals who as of the date hereof were directors, officers or
employees of the Company or otherwise entitled to indemnification under the
Certificate of Incorporation, By-Laws or indemnification agreements (the
"INDEMNIFIED PARTIES") and such Certificate of Incorporation of the Surviving
Corporation shall include provisions providing for the indemnification of and
the advancement of expenses to, such Indemnified Parties identical to those
contained in the Company's Certificate of Incorporation. It is understood and
agreed that the Company shall, to the fullest extent permitted under applicable
law and regardless of whether the Merger becomes effective, indemnify, defend
and hold harmless, and after the Effective Time, Parent and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify, defend and hold harmless, each Indemnified Party against any costs or
expenses (including reasonable attorney's fees), judgments, fines, losses,
claims, damages, liabilities, and amounts paid in settlement entered into with
the consent of Parent (which consent shall not be unreasonably withheld) in
connection with any claim, action, suit, proceeding or investigation, including
without limitation, liabilities arising out of this Agreement and the
transactions contemplated hereby, to the extent that it was based on the fact
that such Indemnified Party is or was a director, officer or employee of the
Company and arising out of actions or omissions or alleged actions or omissions
occurring at or prior to the Effective Time, and in the event of any such claim,
action, suit proceeding or investigation (whether arising before or after the
Effective Time) (i) the Company or Parent, as applicable, shall pay the
reasonable fees and expenses of one counsel (provided that if different
Indemnified Parties are subject to different claims, actions, suits, proceedings
or investigations , each Indemnified Party may select his or her own counsel)
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly as statements therefor are received and (ii) the Company
and the Surviving Corporation will cooperate in the defense of any such matter.
(b) Parent shall or shall cause the Surviving Corporation to
maintain in effect for a period of six years after the Effective Time, in
respect of acts or omissions occurring prior to the Effective Time, policies of
directors' and officers' liability insurance and fiduciary liability insurance
and fiduciary insurance covering the persons described in Section 6.05(a) (which
may include including such persons under Parent's existing policies); and such
policies provided by Parent shall provide substantially similar coverage as is
provided for the persons who are covered by the Company's existing policies;
PROVIDED, HOWEVER, that Parent will not be required in order to maintain such
policies to pay an annual premium in excess of 200% of the aggregate annual
amounts currently paid by the Company to maintain its existing policies; and
PROVIDED FURTHER that, if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of 200% of such amount, the
Surviving Corporation shall only be required to obtain as much coverage as can
be obtained by paying an annual premium equal to 200% of such amount.
(c) This Section 6.05 shall survive the consummation of the
Merger and is intended to benefit, and shall be enforceable, by any Person or
entity entitled to be indemnified hereunder (whether or not parties to this
Agreement). Parent shall cause the Surviving Corporation to pay all reasonable
costs and expenses, including attorney's fees, that may be incurred by any
Indemnified Parties in enforcing the indemnity and other obligations provided
for in this Section 6.05.
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SECTION 6.06 EMPLOYEE MATTERS (a) Prior to the Effective Time,
except as set forth below, the Company will, and will cause its Subsidiaries to,
and from and after the Effective Time, Parent will, and will cause the Surviving
Corporation to, honor in accordance with their terms all existing employment,
severance, consulting and salary continuation agreements between the Company or
any of its Subsidiaries and any current or former officer, director, employee or
consultant of the Company or any of its Subsidiaries specified in Section
4.09(a) of the Disclosure Letter; PROVIDED, HOWEVER, that nothing herein shall
preclude the Parent or any of its affiliates from having the right to terminate
the employment of any employee, with or without cause, or to amend or to
terminate in accordance with its terms and applicable law any employee benefit
plan of Parent ("PARENT BENEFIT PLAN") established, maintained or contributed to
by the Parent or any of its affiliates after the Effective Time.
(b) After the Effective Time, Parent shall either continue
existing Employee Benefit Plans (including without limitation any severance plan
or arrangement) and compensation practices or shall provide, or cause the
Surviving Corporation or its Subsidiaries to provide, benefits to employees of
the Company and its Subsidiaries, other than employees covered by collective
bargaining agreements, as hereinafter set forth, that are no less favorable in
the aggregate than the benefit plans and programs provided to similarly situated
employees of Parent or its Subsidiaries; PROVIDED, HOWEVER, that nothing herein
shall preclude the Parent or any of its affiliates from having the right to
terminate in accordance with its terms and applicable law any Parent Employee
Benefit Plan established, maintained or contributed to by the Parent or any of
its affiliates after the Effective Time. Employees covered by collective
bargaining arrangements shall have the benefits negotiated therein.
(c) Except as specifically provided herein, Parent will, and
will cause the Surviving Corporation to, cause service rendered by employees of
the Company and its Subsidiaries prior to the Effective Time to be taken into
account for vesting and eligibility purposes under all employee benefit plans,
programs, policies and arrangements of Parent, the Surviving Corporation and its
Subsidiaries, to the same extent as such service was taken into account under
the corresponding plans of the Company and its Subsidiaries for those purposes,
provided that nothing herein shall result in the duplication of any benefits.
Employees of the Company and its Subsidiaries will not be subject to any
pre-existing condition limitation under any health plan of Parent, the Surviving
Corporation or its Subsidiaries for any condition for which they would have been
entitled to coverage under the corresponding plan of the Company or its
Subsidiaries in which they participated prior to the Effective Time. Parent
will, and will cause the Surviving Corporation and its Subsidiaries, to give
such employees credit under such plans for co-payments made and deductibles
satisfied prior to the Effective Time.
SECTION 6.07 PROXY STATEMENT. Unless the Merger is consummated
as contemplated by Section 2.09, the Company shall prepare and file with the
SEC, subject to the prior review and approval of Parent and Purchaser (which
approval shall not be unreasonably withheld), as soon as practicable after the
consummation of the Offer, a preliminary proxy or information statement (the
"PRELIMINARY PROXY STATEMENT") relating to the Merger as required by the
Exchange Act and the rules and regulations thereunder, with respect to the
transactions contemplated hereby. The Company shall obtain and furnish the
information required to be included in the Preliminary Proxy Statement, shall
provide Parent and Purchaser with, and consult with Parent and Purchaser
regarding, any comments that may be received from the SEC
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or its staff with respect thereto, shall, subject to the prior review and
approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), respond promptly to any such comments made by the SEC or its staff
with respect to the Preliminary Proxy Statement, shall cause the Proxy Statement
to be mailed to the Company's shareholders at the earliest practicable date and
shall use all reasonable efforts to obtain the necessary approval of the Merger
by its shareholders.
SECTION 6.08 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent and Purchaser, and Parent or Purchaser, as
the case may be, shall give prompt notice to the Company, of the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which is
likely (a) to cause any representation or warranty of such party contained in
this Agreement to be untrue or inaccurate in any material respect if made as of
any time at or prior to the Effective Time and (b) to result in any material
failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied hereunder (including the conditions
set forth in Exhibit A); PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 6.08 shall not limit or otherwise affect the remedies
available hereunder to any of the parties sending or receiving such notice.
SECTION 6.09 PRESS RELEASES. Parent, Purchaser and the Company
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer or the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation (and affording the other party or parties
an opportunity to comment thereon), except as may be required by applicable law
or stock exchange rules.
SECTION 6.10 INDUSTRIAL SITE RECOVERY ACT COMPLIANCE. The
Company and Parent will take all necessary steps to apply for or seek to obtain
prior to the Effective Time, for each parcel of real property listed in (x)
Section 4.15(a) of the Disclosure Letter or (y) pursuant to the first sentence
of Section 4.15(b) of the Disclosure Letter, in each case located in New Jersey,
either: (i) a Letter of Non-Applicability issued pursuant to ISRA; (ii) a No
Further Action letter as defined at N.J.S.A. 58:10B-1; (iii) a de minimis
quantity exemption as defined in N.J.A.C. 7:26B-2.3, (iv) a Remediation in
Progress Waiver as defined at N.J.S.A. 13:1K-11.5 or (v) a Remediation Agreement
as defined at N.J.S.A. 13:1K-8, which shall, in each instance, allow the
transactions contemplated herein to proceed in compliance with ISRA (the "ISRA
APPROVAL"). If, in connection with the issuance or effectiveness of the ISRA
Approval, the New Jersey Department of Environmental Protection requires the
payment of any fees, the preparation or implementation of any studies or
remediation plans, the posting of any financial assurance or the establishment
of a remedial funding source, then the Company shall comply with all such
requirements.
SECTION 6.11 DESIGNATED BUSINESS. The Company has entered into
an Agreement and Plan of Merger on May 1, 2000, providing for the merger of one
of its Subsidiaries described in Section 6.11 of the Disclosure Letter (the
"DESIGNATED BUSINESS") with and into a corporation owned by the acquiror of the
Designated Business with such corporation continuing as the surviving entity, a
copy of which has been provided to Parent. On or prior to the Acceptance Date,
the Company will consummate the merger of the Designated Business on the terms
of such Agreement and Plan of Merger.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the proposed
Effective Time, of the following conditions:
(a) unless the Merger is consummated as contemplated by
Section 2.09, the Plan of Merger contained in this Agreement shall have
been approved by the affirmative vote of the shareholders of the
Company required by and in accordance with applicable law;
(b) all necessary waiting periods under the HSR Act applicable
to the Merger shall have expired or been terminated;
(c) no statute, rule, regulation, executive order, judgment,
decree or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or Governmental Entity against
Parent, Purchaser or the Company and be in effect that prohibits or
restricts the consummation of the Merger or makes such consummation
illegal (each party agreeing to use all reasonable efforts to have such
prohibition lifted); and
(d) Purchaser shall have accepted for purchase and paid for
the Shares tendered pursuant to the Offer.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time (notwithstanding approval thereof by the
shareholders of the Company) prior to the Effective Time (with any termination
by Parent also being an effective termination by Purchaser):
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling (which order, decree or ruling the parties hereto
shall use reasonable efforts to lift), or taken any other action
restraining, enjoining or otherwise prohibiting the Merger or any of
the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable;
(c) by the Company if (i) Purchaser fails to commence the
Offer in violation of Section 1.01 hereof, (ii) Purchaser shall not
have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before the 90th
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day after the date of this Agreement, (iii) Purchaser fails to
purchase validly tendered Shares in violation of the Offer or the
terms of this Agreement or (iv) Purchaser or Parent shall have
breached any of the representations, warranties or covenants of this
Agreement, which breach has had or is reasonably likely to have a
material adverse effect on the ability of Parent or Purchaser to
consummate the transactions contemplated hereby;
(d) by Parent if, due to an occurrence or circumstance which
would result in a failure to satisfy any of the Offer Conditions,
Purchaser shall have (i) terminated the Offer without purchasing any
Shares pursuant to the Offer or (ii) failed to accept for payment
Shares pursuant to the Offer prior to the 90th day after the date of
this Agreement;
(e) by the Company, prior to the purchase of Shares pursuant
to the Offer, if (i) the Company has received a Superior Proposal, (ii)
the Company has complied with the provisions of Section 6.02(a) and
(b), (iii) the Company has notified Parent in writing of its receipt
of, and its intention to accept, a Superior Proposal and the material
terms thereof and, during a three (3) day period following such notice,
has afforded Parent the reasonable opportunity to make one revised
proposal (including by negotiating the terms of such any such proposal
with Parent), (iv) the Board of Directors of the Company shall have
concluded, after considering the results of such negotiations and any
revised proposal made by Parent that the Superior Proposal giving rise
to the Company's notice continues to be a Superior Proposal, and (v)
the Company simultaneously with its termination of this Agreement make
the payment required by Section 8.03(b); and
(f) by Parent, prior to the purchase of Shares pursuant to the
Offer, if the Company shall have taken or the Board of Directors of the
Company shall have resolved to take any of the actions referred to in
Section 6.02(d) or the Company shall have breached any of its
obligations under Section 6.02.
SECTION 8.02 EFFECT OF TERMINATION. If this Agreement is
terminated and the Merger is abandoned pursuant to Section 8.01 hereof, this
Agreement, except for the provisions of Sections 6.03(b), 6.09, 8.02, 8.03 and
Article IX hereof, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or shareholders.
Nothing in this Section 8.02 shall relieve any party to this Agreement of
liability for any willful breach of this Agreement.
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SECTION 8.03 FEES AND EXPENSES. (a) Whether or not the Merger
is consummated, except as otherwise specifically provided herein, all costs and
expenses incurred in connection with the Offer, the Merger, this Agreement and
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses. Parent and Purchaser acknowledge and agree that the
Company shall be entitled to pay or cause to be paid, at or prior to the
Closing, all fees, costs, and expenses incurred by the Company in connection
with the Offer, this Agreement and the transactions contemplated by this
Agreement.
(b) In the event that this Agreement is terminated (i)
pursuant to Section 8.01(e) or Section 8.01(f) or (ii) pursuant to Section
8.01(d) following the initial expiration of the Offer and, with respect to this
clause (ii) only, at the time of such termination (A) either (x) the Minimum
Tender Condition has not been satisfied or (y) the condition set forth in clause
(iii)(e) of Exhibit A has not been satisfied due to the willful breach by the
Company and (B) either (x) at the time of such termination, an Acquisition
Proposal existed or has been previously announced or (y) within six months
thereafter an Acquisition Proposal shall have been consummated, then the Company
shall pay Parent a termination fee of Four Million U.S. Dollars ($4,000,000)
PLUS the reimbursement of all of the fees and expenses of Parent and Purchaser
related to the Offer, this Agreement and the transactions contemplated hereby
(including, without limitation, legal, accounting and investment banking fees
and expenses) actually incurred by Parent and Purchaser up to One Million U.S.
Dollars ($1,000,000) (the "TERMINATION FEE") in immediately available funds by
wire transfer to an account designated by Parent.
(c) Any amounts payable pursuant to Section 8.03(b) shall be
payable as promptly as practicable following termination of this Agreement and,
if the Company is the party seeking to terminate this Agreement, as a condition
thereto.
(d) The Company acknowledges that the agreements contained in
Section 8.03 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Purchaser would not
have entered into this Agreement. Accordingly, if the Company fails to pay
promptly any amounts due pursuant to Section 8.03, and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
for the fee or expense reimbursement set forth in this Section 8.03, the Company
shall pay to Parent its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest from the date of
termination of this Agreement on the amounts so owed at the prime rate of Chase
Manhattan Bank in effect from time to time during such period plus four percent
(4%).
(e) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.04 AMENDMENT. To the extent permitted by applicable
law, this Agreement may be amended by action taken by or on behalf of the Boards
of Directors of the Company, Parent and Purchaser, subject in the case of the
Company to Section 1.04(b), at any time before or after approval of this
Agreement by the shareholders of the Company but, after any such shareholder
approval, no amendment shall be made which decreases the Merger Consideration or
which adversely affects the rights of the Company's shareholders hereunder
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without the approval of the shareholders of the Company. This Agreement may not
be amended, changed, supplemented or otherwise modified except by an instrument
in writing signed on behalf of all of the parties.
SECTION 8.05 EXTENSION; WAIVER; REMEDIES. (a) At any time
prior to the Effective Time, the parties hereto, by action taken by or on behalf
of the respective Boards of Directors of the Company, Parent and Purchaser,
subject in the case of the Company to Section 1.04(b), may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
(b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto that by its terms contemplates performance after
the Effective Time.
SECTION 9.02 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement,
together with the Disclosure Letter and the Confidentiality Agreement,
constitutes the entire agreement between the parties with respect to subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to subject matter hereof. The
Agreement shall not be assigned by any party by operation of law or otherwise
without the prior written consent of the other parties, PROVIDED, that Parent or
Purchaser may assign any of their respective rights and obligations to any
direct or indirect wholly-owned Subsidiary of Parent, but no such assignment
shall relieve Parent or Purchaser, as the case may be, of its obligations
hereunder.
SECTION 9.03 VALIDITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
37
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jurisdiction such invalidity, illegality or unenforceability will not affect any
other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
SECTION 9.04 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be given (and shall be deemed to have
been duly received if given) by hand delivery in writing or by facsimile
transmission with confirmation of receipt, as follows:
if to Parent or Purchaser:
Automatic Data Processing, Inc.
1 ADP Boulevard
Roseland, New Jersey 07068
Attention: General Counsel
Facsimile: (973) 535-6199
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Douglas A. Cifu
Facsimile: (212) 373-2393
38
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if to the Company:
Cunningham Graphics International, Inc.
Michael R. Cunningham, Inc.
100 Burma Road
Jersey City, New Jersey 07305
Attention: Michael R. Cunningham
Facsimile: (201) 985-2035
With a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Daniel S. Sternberg
Facsimile: 212-225-3999
And with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, NJ 07102
Attention: Lawrence Goldman
Facsimile: 973-639-6283
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 9.05 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey except
insofar as mandatory provisions of the Securities Act and the Exchange Act apply
to the Offer.
SECTION 9.06 DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement except for Section 6.05 (which are intended to be for the benefit
of the Persons referred to therein, and may be enforced by any such Persons).
SECTION 9.08 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
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SECTION 9.09 CERTAIN DEFINITIONS.
(a) The terms "AFFILIATE" and "ASSOCIATE" shall have the
meanings given to such terms in Rule 12b-2 under the Exchange Act.
(b) The term "BENEFICIAL OWNERSHIP" shall have the meaning
given to such term in Rule 13d-3 under the Exchange Act.
(c) The term "HEREBY" shall be deemed to refer to this
Agreement in its entirety, rather than to any Article, Section, or other portion
of this Agreement.
(d) The term "INCLUDING" shall be deemed to be followed by the
phrase "without limitation."
(e) "MATERIAL ADVERSE EFFECT" shall mean any material and
adverse effect on the financial condition, business, properties, assets,
liabilities or results of operations or prospects of the Company and its
Subsidiaries taken as a whole or the ability of the Company to consummate the
transactions contemplated by this Agreement in any material respect, PROVIDED,
HOWEVER, that no event or circumstance arising out of, or resulting from, the
entering into or the announcement of this Agreement or the identity of Parent
shall be deemed to constitute a Material Adverse Effect. For the avoidance of
doubt, a Material Adverse Effect shall not include the institution or pendency
of any action, suit or proceeding instituted by a non-Governmental Entity that
(i) seeks to, but does not actually, restrain, enjoin or otherwise prevent the
consummation of, or (ii) seeks damages with respect to, any transaction
contemplated by this Agreement.
(f) "PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust, estate or other entity or
organization.
(g) The term "SUBSIDIARY" shall mean, when used with reference
to an entity, any other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions, or a majority of the outstanding
voting securities of which, are owned directly or indirectly by such entity.
(h) "TAX" shall mean all taxes, charges, fees, levies,
imposts, duties, and other assessments, including without limitation any income,
alternative minimum or add-on tax, estimated, gross income, gross receipts,
sales, use, transfer, transactions, intangibles, ad valorem, value-added,
franchise, registration, title, license, capital, paid-up capital, profits,
withholding, employee withholding, payroll, worker's compensation, unemployment
insurance, social security, employment, excise (including the federal
communications excise tax under Section 4251 of the Code), severance, stamp,
transfer occupation, premium, recording, real property, personal property,
federal highway use, commercial rent, environmental (including taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other tax, fee
or other like assessment or charge of any kind whatsoever, together with any
interest, penalties, related liabilities, fines or additions to tax that may
become payable in respect thereof imposed by any country, any state, county,
provincial or local government or subdivision or agency thereof.
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(i) "TAX RETURNS" shall mean all returns and reports required
to be filed by the Company and its Subsidiaries (or any of them) with respect to
Taxes.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all at or on the day and year first above written.
AUTOMATIC DATA PROCESSING, INC.
By: /s/ James B. Benson
------------------------------------
Name: James B. Benson
Title: Corporate Vice President
FIS ACQUISITION CORP.
By: /s/ James B. Benson
------------------------------------
Name: James B. Benson
Title: Corporate Vice President
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
By: /s/ Michael R. Cunningham
------------------------------------
Name: Michael R. Cunningham
Title: President and Chief Executive
Officer
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the Agreement to
which it is attached (the "MERGER AGREEMENT").
Notwithstanding any other provision of the Offer, Parent and
Purchaser shall not be required to accept for payment, purchase or pay for any
Shares tendered in connection with the Offer and may terminate or, subject to
the terms of the Merger Agreement, amend the Offer, if (i) there shall not have
been validly tendered and not properly withdrawn as of the expiration of the
initial offering period for the Offer (the "EXPIRATION DATE") that number of
Shares which, together with any Shares then beneficially owned by Purchaser or
Parent, represents at least a majority of the total number of outstanding Shares
on a fully diluted basis on the date of purchase (the "MINIMUM TENDER
CONDITION"), (ii) any applicable waiting period under the HSR Act shall not, as
of such Expiration Date, have expired or been terminated, or (iii) at any time
on or after the date of the Merger Agreement and prior to the time of payment
for any Shares, any of the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any government or governmental authority or agency (i)
challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for the Shares by
Parent or Purchaser or the consummation of the Merger, (ii) seeking to
restrain or prohibit Parent's ownership or operation (or that of its
respective Subsidiaries or Affiliates) of all or any material portion
of the business or assets of the Company and its Subsidiaries, taken as
a whole, or of Parent and its Subsidiaries, taken as a whole, or to
compel Parent or any of its Subsidiaries or Affiliates to dispose of or
hold separate all or any material portion of the business or assets of
the Company and its Subsidiaries, taken as a whole, or of Parent and
its Subsidiaries, taken as a whole, (iii) seeking to impose or confirm
material limitations on the ability of Parent, Purchaser or any of
Parent's other Subsidiaries or affiliates effectively to exercise full
rights of ownership of the Shares, including without limitation, the
right to vote any Shares acquired or owned by Parent, Purchaser or any
of Parent's other Subsidiaries or affiliates on all matters properly
presented to the Company's shareholders or (iv) seeking to require
divestiture by Parent, Purchaser or any of Parent's other Subsidiaries
or affiliates of any Shares; or
(b) there shall have been any action taken, or any statute,
rule, regulation, injunction, order or decree, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by
any court, government or governmental authority or agency, domestic or
foreign, other than the application of the waiting period provisions of
the HSR Act to the Offer or the Merger, that result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or
A-1
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(c) there shall have occurred (1) any general suspension of,
or limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United
States (other than any suspension or limitation on trading in any
particular security as a result of a computerized trading limit or any
intraday suspension due to "circuit breakers"), (2) any declaration of
any banking moratorium or any suspension of payments in respect of
banks or any limitation (whether or not mandatory) on the extension of
credit by lending institutions in the United States or (3) any
commencement of armed hostilities or other national or international
calamity involving the United States that has a material adverse effect
on bank syndication for financial markets in the United States or, in
the case of any of the foregoing occurrences existing on or at the time
of the commencement of the Offer, a material acceleration or worsening
thereof; or;
(d) any Person or "group" (as such term is used in Section
13(d)(3) of the Exchange Act)-other than Parent, Purchaser or another
Person (who on the date hereof alone or as part of a "group" (as such
term is used in Section 13(d)(3) of the Exchange Act) is the beneficial
owner of more than 5% of the outstanding Shares) or any of their
respective affiliates - shall have become the beneficial owner (as that
term is used in Rule 13d-3 under the Exchange Act) or shall have
commenced or publicly announced the intention to commence a tender or
exchange offer to acquire beneficial ownership or shall have been
granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership, of more than 15% of the outstanding
Shares;
(e) the Company shall have breached or failed to comply in any
material respect with any of its material obligations, covenants, or
agreements under the Merger Agreement; or (x) any representation or
warranty of the Company contained in the Merger Agreement that is
qualified by reference to a Material Adverse Effect or (y) any
representation or warranty contained in either Section 4.11 (Taxes) or
4.12 (Compliance With Law) that is qualified by reference to
"materiality" shall not be true and correct; or any other such
representation or warranty shall not be true and correct in any respect
that (when taken together with all such other representations and
warranties not true and correct) has had or would reasonably be likely
to have a Material Adverse Effect, in each case either as of when made
or at and as of any time thereafter (except in the case of any
representation or warranty that by its terms is made as of a date
specified therein which need be accurate only as of such date); or
(f) the Merger Agreement shall have been terminated pursuant
to its terms or shall have been amended pursuant to its terms to
provide for such termination or amendment of the Offer;
which, in the good faith judgment of Parent and regardless of the circumstances
giving rise to such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser and
may be asserted or, other than the Minimum Tender Condition, waived by Parent or
Purchaser in whole or in part at any time or from time to time in their
discretion subject to the terms of the Merger Agreement.
A-2
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The failure of Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right, which may be asserted at any time and from
time to time.
A-3
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EXHIBIT B
PLAN OF MERGER
OF
FIS ACQUISITION CORP.
INTO
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
FIRST: (a) The name of each constituent corporation is as follows:
1. FIS Acquisition Corp., a corporation organized under the laws
of the State of New Jersey ("Purchaser"); and
2. Cunningham Graphics International, Inc., a corporation
organized under the laws of the State of New Jersey (the
"Company").
The Company shall be the surviving corporation in the Merger
(the "Surviving Corporation") and shall continue its existence under the laws of
the State of New Jersey under the name "Cunningham Graphics International,
Inc.". In connection with the Merger, the separate corporate existence of
Purchaser shall cease.
SECOND: The terms and conditions of the Merger, including the manner
and basis of converting the shares of the Company and Purchaser are as follows:
1. EFFECTIVE TIME. The effective time of the Merger (the "Effective
Time") shall be the time of filing of the Certificate of Merger with the
Department of Treasury of the State of New Jersey.
2. CONVERSION OF SHARES. (a)At the Effective Time, by virtue of the
Merger and without any action on the part of any shareholder of the Company each
share to common stock, no par value of the Company ("Shares") issued and
outstanding immediately prior to the Effective Time (other than shares owned by
Parent, Purchaser or by any subsidiary or affiliate of Parent or Purchaser, all
of which shall be cancelled without any consideration being exchanged
therefore), shall be converted into the right to receive cash in an amount per
Share (subject to any applicable withholding tax) equal to $22, without interest
(the "Merger Consideration") upon the surrender of the certificate representing
such Shares.
(b) Each share of common stock no par value of Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on part of the holder thereof, be converted into
and become one share of common stock, no par value of the Surviving Corporation.
B-1
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3. GOVERNING DOCUMENTS; DIRECTORS AND OFFICERS. (a) The Certificate of
Incorporation and By-Laws of Purchaser as in effect immediately prior to the
Effective Time shall, from and after the Effective Time, be the Certificate of
Incorporation and By-Laws of the Surviving Corporation, in each case until
amended in accordance with applicable law; PROVIDED, HOWEVER, that Article I of
the Certificate of Incorporation of the Surviving Corporation shall be amended
to read in its entirety as follow:
"ARTICLE I". The name of the Corporation is Cunningham Graphics
International, Inc. (the "Corporation").
(b) All persons who were directors of Purchaser immediately prior to
the Effective Time shall be the directors of the Surviving Corporation and all
persons who were officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case to hold office
in accordance with the Certificate of Incorporation and the By-Laws of the
Surviving Corporation and until their respective death, resignation or removal
or until their respective successors are duly elected and qualified in
accordance with applicable law.
4. FURTHER ASSURANCES. At any time, or from time to time, after the
Effective Time, the last acting officers of the Company or Purchaser or the
officers of the Surviving Corporation may, in the name of the Company or
Purchaser, execute and deliver all such proper deeds, assignments and other
instruments and take or cause to be taken all such further or other action as
the Surviving Corporation may deem necessary or desirable in order to vest,
perfect or confirm the Surviving Corporation's title to and possession of all of
the property, rights, privileges, powers, and franchises of the Company or
Purchaser and otherwise to carry out the purposes of this Plan of Merger.
B-2
<PAGE>
Exhibit 99(d)(2)
EXECUTION COPY
VOTING AND TENDER AGREEMENT
THIS VOTING AND TENDER AGREEMENT dated as of May 2, 2000 (this
"AGREEMENT") is by and among each of the persons listed on Schedule 1 (each a
"SHAREHOLDER" and collectively, the "SHAREHOLDERS"), AUTOMATIC DATA PROCESSING,
INC., a Delaware corporation ("PARENT"), and FIS ACQUISITION CORP., a New Jersey
corporation ("PURCHASER").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this Agreement,
Parent, Purchaser and Cunningham Graphics International, Inc., a New Jersey
corporation (the "Company"), have entered into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which Purchaser has agreed, among other
things, to commence a cash tender offer (as such tender offer may hereafter be
amended from time to time, the "Offer") to purchase all of the shares of the
Company's Common Stock, no par value (the "Company Common Stock"), followed by
the merger of Purchaser with and into the Company (the "Merger");
WHEREAS, as of the date hereof, each Shareholder is the record
and beneficial owner of, and has the sole right to vote and dispose of, the
number of shares of Company Common Stock listed opposite such Shareholder's name
on Schedule I; and
WHEREAS, as a condition to the willingness of Parent and
Purchaser to enter into the Merger Agreement, each of Parent and Purchaser has
required that the Shareholders agree, and in order to induce Parent and
Purchaser to enter into the Merger Agreement, each Shareholder has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises, representations, warranties, covenants and agreements contained
herein and in the Merger Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"AFFILIATE" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
"BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to
any securities means having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all Affiliates of such Person and all other Persons with whom such Person would
constitute a "group" within the meaning of Section 13(d) of the Exchange Act and
the rules promulgated thereunder.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"OWNED SHARES" means, with respect to any Shareholder, the
shares of Company Common Stock, whether Beneficially Owned or held of record, by
such Shareholder on the date hereof or which may hereafter be acquired by such
Shareholder, together with any other shares of Company Common Stock, except, in
the event of any replacement or subsequent tender offer, Owned Shares shall mean
the shares of Company Common Stock then Beneficially Owned or held of record by
such Shareholder.
"OPTIONS" means, with respect to any Shareholder, the options
to acquire shares of Company Common Stock now owned or which may hereafter be
acquired by such Shareholder.
"PERSON" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"REPRESENTATIVE" means, with respect to any Person, such
Person's officers, directors, employees, agents and representatives (including
any investment banker, financial advisor, agent, representative or expert
retained by or acting on behalf of such Person or its subsidiaries).
"TRANSFER" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
of the Shareholders hereby severally represents and warrants to Parent and
Purchaser, in each case as to himself only, as follows:
(a) TITLE. Such Shareholder is the Beneficial Owner or
holder of record of the Owned Shares and Options listed opposite such
Shareholder's name on Schedule 1. Such Owned Shares and Options are all the
securities of the Company either Beneficially Owned or owned of record by such
Shareholder as of the date hereof and such Shareholder owns no other rights or
interests exercisable for or convertible into any securities of the Company.
Such Owned Shares and Options are owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreement,
limitations on the Shareholder's voting rights, charges and other encumbrances
of any nature whatsoever except, with respect to the Options, the option plans
and agreements pursuant to which such Options were issued. Such Shareholder has
not appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Owned Shares.
(b) AUTHORITY. Such Shareholder has all necessary power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by such SHAREHOLDER of this Agreement and the
consummation by such Shareholder of the transactions contemplated hereunder have
been duly and validly authorized and no other proceedings on the
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<PAGE>
part of such Shareholder is necessary to authorize the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
(c) EXECUTION. This Agreement has been duly and validly
executed and delivered by such Shareholder and constitutes a legal, valid and
binding agreement of such Shareholder, enforceable against such Shareholder in
accordance with its terms except (i) to the extent limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(d) NO CONFLICT. None of the execution and delivery of
this Agreement by such Shareholder, the consummation by such Shareholder of the
transactions contemplated hereby or compliance by such Shareholder with any of
the provisions hereof shall (i) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, lease, permit, franchise, arrangement, understanding, agreement or
other instrument or obligation of any kind to which such Shareholder is a party
or by which such Shareholder or any of his properties or assets (including the
Owned Shares and Options) may be bound, or (ii) violate any order, writ,
injunction, decree, judgment, law, statute, rule or regulation applicable to
such Shareholder or any of his properties or assets, excluding from the
foregoing such violations, breaches or defaults which would not, individually or
in the aggregate, have a material adverse effect on such Shareholder or which
would not materially impair the ability of such Shareholder to consummate the
transactions contemplated hereby.
(e) NO CONSENTS OR APPROVALS. The execution and delivery
of this Agreement by such Shareholder does not, and the performance of this
Agreement by such Shareholder shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any court or
arbitrator or any governmental body, agency or official except for applicable
requirements, if any, of the Exchange Act, and except where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay the performance by such
Shareholder of his obligations under this Agreement.
3. TENDER OF SHARES. Each Shareholder agrees that he shall
tender (or cause the Record Holder (as defined below) to tender), pursuant to
and in accordance with the terms of the Offer (or any replacement or subsequent
tender offer by Parent or any of its Subsidiaries for all of the shares of
Company Common Stock at a price per share in cash equal to at least $22 made
prior to the termination of this Agreement), all Owned Shares.
4. VOTING OF OWNED SHARES. During the period commencing on
the date hereof and continuing until the earlier of (x) the consummation of the
Offer and (y) the termination of this Agreement in accordance with Section 10
each of the Shareholders hereby agrees as follows:
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<PAGE>
(a) to appear, or cause the holder of record on any
applicable record date with respect to any Owned Shares of such
Shareholder (the "RECORD HOLDER") to appear, for the purpose of
obtaining a quorum at any annual or special meeting of shareholders of
the Company and at any adjournment thereof at which matters relating
to the Merger, Merger Agreement or any transaction contemplated
thereby are considered; and
(b) at any meeting of the shareholders of the Company,
however called, and in any action by consent of the shareholders of
the Company, to vote, or cause to be voted by the Record Holder, the
Owned Shares of such Shareholder: in favor of the Merger, the Merger
Agreement (as amended from time to time) and the transactions
contemplated by the Merger Agreement and against any proposal for any
extraordinary corporate transaction, such as a recapitalization,
dissolution, liquidation, or sale of assets of the Company or any
merger, consolidation or other business combination (other than the
Merger) between the Company and any Person (other than Parent or a
Subsidiary of Parent) or any other action or agreement that is
intended or which reasonably could be expected to (x) result in a
breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement, (y)
result in any of the conditions to the Company's obligations under the
Merger Agreement not being fulfilled or (z) impede, interfere with,
delay, postpone or materially adversely affect the Merger and the
transactions contemplated by the Merger Agreement.
5. ACKNOWLEDGMENT. Each Shareholder acknowledges receipt and
review of a copy of the Merger Agreement.
6. NO INCONSISTENT AGREEMENT. Each Shareholder hereby
covenants and agrees that, except as contemplated by this Agreement, such
Shareholder shall not enter into any agreement, arrangement or understanding
with, or grant a proxy or power of attorney to, any Person with respect to the
Owned Shares which would prevent such Shareholder from complying with
obligations under this Agreement.
7. RESTRICTIONS ON TRANSFER, OTHER PROXIES; NO SOLICITATION.
(a) Each Shareholder hereby covenants and agrees that, until this Agreement is
terminated in accordance with Section 10, such Shareholder shall not, directly
or indirectly: (i) except as provided in Sections 3 and 10 hereof, Transfer to
any Person any or all Owned Shares and shall not cause any security interests,
liens, claims, pledges, charges, encumbrances, options, rights of first
refusals, agreements, or limitations on such Shareholder's voting rights, to
attach to the Owned Shares to be tendered to Purchaser pursuant to Section 3
hereof or to the Options or any Owned Shares issuable thereunder; or (ii) grant
any proxies or powers of attorney, deposit any Owned Shares into a voting trust
or enter into a voting agreement, understanding or arrangement with respect to
such Owned Shares.
(b) From the date hereof until the consummation of the
Offer or the termination of this Agreement in accordance with its terms, each
Shareholder (i) shall immediately terminate any discussions with, any third
party concerning an Acquisition Proposal and (ii) shall not, and shall not
permit any of his Representatives to, directly or indirectly, (A) encourage,
solicit or initiate any Acquisition Proposal, (B) participate in negotiations
with, or
4
<PAGE>
provide any information to, or otherwise take any other action to
assist or facilitate any Person or group (other than Parent or Purchaser or any
affiliate or associate of Parent or Purchaser) concerning any Acquisition
Proposal, (C) enter into an agreement with any person, other than Parent,
providing for a possible Acquisition Proposal, or (D) make or authorize any
statement, recommendation or solicitation in support of any possible Acquisition
Proposal by any Person, other than by Parent. Notwithstanding the above, such
Shareholder may take any actions in the Shareholder's capacity as a director,
officer or employee of the Company permitted under the Merger Agreement.
8. STOP TRANSFER. No Shareholder shall request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Owned Shares, unless such
transfer is made in compliance with this Agreement.
9. FURTHER ASSURANCES. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
10. TERMINATION. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the earlier of (a)
the date upon which Parent shall have purchased and paid for all of the Owned
Shares of such Shareholder in accordance with the Offer (or any subsequent or
replacement tender offer by Parent or any of its Subsidiaries) and (b) the date
upon which the Merger Agreement is terminated in accordance with its terms;
PROVIDED, HOWEVER, that if the Merger Agreement is terminated pursuant to any of
Sections 8.01(d), (e) or (f) of the Merger Agreement and at the time of such
termination the Termination Fee either is or may become payable pursuant to
Section 8.03(b) of the Merger Agreement, this Agreement shall only terminate on
the date which is nine months after the date of termination of the Merger
Agreement; and PROVIDED, FURTHER, that during any such nine month period,
neither the limitation on Transfers contained in Section 7(a) nor any other
provision of this Agreement shall prohibit or limit any Transfer of any Owned
Shares by any Shareholder (i) in open market transactions pursuant to Rule 144
under the Securities Act or (ii) pursuant to an underwritten public offering
effectuated in a manner so as to result in a wide-spread distribution of the
subject shares.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
(b) COSTS AND EXPENSES. All costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses.
(c) ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors, personal
5
<PAGE>
or legal representatives, executors, administrators, heirs, distributees,
devisees, legatees and permitted assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either party
(whether by operation of law or otherwise) without the prior written consent of
the other party; PROVIDED, that Parent and Purchaser may assign their respective
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Parent which is an assignee of such parties' rights and
obligations under the Merger Agreement, but no such assignment shall relieve
Parent or Purchaser, as the case may be, of its obligations hereunder. Nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
(d) AMENDMENTS. This Agreement may not be amended,
changed, supplemented, or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by each of the parties
hereto. The parties may waive compliance by the other parties hereto with any
representation, agreement or condition otherwise required to be complied with by
such other party hereunder, but any such waiver shall be effective only if in
writing executed by the waiving party.
(e) NOTICE. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (i) transmitter's
confirmation of a receipt of a facsimile transmission, (ii) confirmed delivery
by a standard overnight carrier or when delivered by hand or (iii) the
expiration of five business days after the day when mailed by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Parent or Purchaser: Automatic Data Processing, Inc.
1 ADP Boulevard
Roseland, New Jersey 07068
Attention: General Counsel
Facsimile: (973) 535-6199
Copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Douglas A. Cifu, Esq.
Telecopier Number: (212) 757-3990
If to the Shareholders: C/o Cunningham Graphics International,
Inc.
Michael R. Cunningham, Inc.
100 Burma Road
Jersey City, New Jersey 07305
Attention: Michael R. Cunningham
Facsimile: (201) 985-2035
6
<PAGE>
Copy to: Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Daniel S. Sternberg
Facsimile: 212-225-3999
Copy to: Gibbons, Del Deo, Dolan, Griffinger &
Vecchione
One Riverfront Plaza
Newark, NJ 07102
Attention: Lawrence Goldman
Facsimile: 973-639-6283
or to such other address or facsimile number as the Person to whom notice is
given shall have previously furnished to the others in writing in the manner set
forth above.
(f) SEVERABILITY. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without affecting the validity or enforceability of the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(a) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement.
(h) REMEDIES. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance by
any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
(i) DIRECTORS' FIDUCIARY DUTIES. Notwithstanding
anything herein to the contrary, nothing set forth herein shall in any way
restrict any director, officer or employee in the exercise of his fiduciary or
other duties as a director, officer or employee of the Company.
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<PAGE>
(j) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey without giving
effect to the principles of conflicts of law thereof.
(k) JURISDICTION. Each party to this Agreement hereby
irrevocably agrees that any legal action proceeding arising out of or relating
to this Agreement or any agreements or transactions contemplated hereby shall be
brought in the courts of the State of New Jersey and hereby expressly submits to
the personal jurisdiction and venue of such courts for the purposes thereof and
expressly waives any claim of improper venue and any claim that such courts are
an inconvenient forum.
(l) HEADINGS; INTERPRETATION. The descriptive headings
used herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
"Include," "includes," and "including" shall be deemed to be followed by
"without limitation" whether or not they are in fact followed by such words or
words of like import.
(m) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and each Shareholder
have caused this Agreement to be duly executed as of the day and year first
above written.
AUTOMATIC DATA PROCESSING, INC.
By: /s/ James B. Benson
-------------------------------
Name: James B. Benson
Title: Corporate Vice President
FIS ACQUISITION CORP.
By: /s/ James B. Benson
-------------------------------
Name: James B. Benson
Title: Corporate Vice President
/s/ Michael R. Cunningham
-------------------------------
Michael R. Cunningham
/s/ James J. Cunningham
-------------------------------
James J. Cunningham
/s/ Gordon Mays
-------------------------------
Gordon Mays
/s/ Timothy Mays
-------------------------------
Timothy Mays
9
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Number of Owned Shares
over which Shareholder
Number of has Investment or Voting
Owned Shares Number of Power (not included
Name of Shareholder (Beneficially or of record)(1) Options owned in prior columns)
- ------------------- ------------------------------ ------------- ------------------------
<S> <C> <C> <C>
Michael R. Cunningham 2,032,928 -
James J. Cunningham 130,898
Gordon Mays 228,198 15,000
Timothy Mays 165,803 5,000
------- -----
2,557,827 20,000
</TABLE>
- ------------
(1) Other than Owned Shares issuable upon exercise of Options listed in the next
column.
10
<PAGE>
Exhibit 99(d)(3)
January 5, 2000
ADP Financial Information Services, Inc.
2 Journal Square Plaza, #1
Jersey City, NJ 07306-4098
Re: CONFIDENTIALITY AGREEMENT
Ladies and Gentlemen:
You, ADP Financial Information Services, Inc. (hereinafter,
the "RECIPIENT") have requested certain information concerning Cunningham
Graphics International, Inc. (together with its subsidiaries, the "COMPANY") in
connection with your consideration of a potential negotiated transaction
involving the Company (any such transaction, a "TRANSACTION"). In consideration
thereof, and as a condition to being furnished such information by the Company,
the Recipient agrees, as set forth in this letter agreement (this "AGREEMENT"),
to treat confidentially any non-public, confidential or proprietary information
that the Company, its agents or its representatives (including its attorneys and
financial advisors) furnish to the Recipient or the Recipient's directors,
officers, employees, agents, advisors, prospective lenders or affiliates or
representatives of the Recipient's agents, advisors, prospective lenders or
affiliates (each of the foregoing, other than the Recipient, a "RECIPIENT'S
REPRESENTATIVE"), whether furnished before or after the date of this Agreement,
regardless of the form in which such information is communicated or maintained,
and all notes, reports, analyses, compilations, studies, files or other
documents or material, whether prepared by the Recipient or others, which are
based on, contain or otherwise reflect such information (collectively, the
"EVALUATION MATERIAL").
The term "Evaluation Material" does not include information
that (i) is or becomes available to the public, other than as a result of a
disclosure by the Recipient or a Recipient's Representative in breach of this
Agreement, (ii) was available to the Recipient or a Recipient's Representative,
or has become available to the Recipient or a Recipient's Representative, on a
non-confidential basis from a source other than the Company, its agents or
representatives; PROVIDED that the source of such information was not bound by a
confidentiality agreement with the Company, its agents or representatives with
respect to such material, or otherwise prohibited from transmitting the
information to the Recipient or such Recipient's Representative by a
contractual, legal or fiduciary obligation or (iii) the Recipient or a
Recipient's Representative independently developed without reference to
Evaluation Material.
<PAGE>
It is understood that the Recipient may disclose Evaluation
Material to those of the Recipient's Representatives that require such material
for the purpose of evaluating a Transaction; PROVIDED that each such Recipient's
Representative shall be informed in writing by the Recipient of the confidential
nature of the Evaluation Material. The Recipient agrees that the Evaluation
Material will be kept confidential by the Recipient and the Recipient's
Representatives and, except with the specific prior written consent of the
Company or as expressly otherwise permitted by the terms hereof, will not be
disclosed by the Recipient or any Recipient's Representative to any person. The
Recipient further agrees that it may be held responsible by the Company for any
action or failure to act that would constitute a breach of the terms of this
Agreement by any Recipient's Representative. The Recipient further agrees that
the Recipient and the Recipient's Representatives will not use Evaluation
Material for any reason or purpose other than to evaluate a potential
Transaction.
Without the prior written consent of the Company, the
Recipient and the Recipient's Representatives will not disclose to any person
the fact that Evaluation Material has been made available to the Recipient or
any Recipient's Representative or that the Recipient or any Recipient's
Representative has inspected Evaluation Material. Neither the Recipient nor any
Recipient's Representative shall disclose to any person (i) the fact that any
discussions or negotiations are taking place concerning a Transaction or (ii)
any of the proposed terms, proposed conditions or other facts with respect to
any Transaction, including the status thereof. Notwithstanding anything in this
paragraph to the contrary, the Recipient may make such disclosures if it is
required to do so under applicable law or the applicable rules or regulations of
any securities exchange or similar self-regulatory organization.
Notwithstanding anything in this Agreement to the contrary, in
the event that the Recipient or any Recipient's Representative is requested or
required, by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process, to disclose
Evaluation Material, it is agreed that the Recipient and any such Recipient's
Representative will provide the Company with prompt notice of such event so that
the Company may seek a protective order or other appropriate remedy or waive
compliance with the applicable provisions of this Agreement by the Recipient or
such Recipient's Representative. In the event the Company determines to seek
such protective order or other remedy, the Recipient and any such Recipient's
Representative will cooperate with the Company in seeking such protective order
or other remedy. In the event that such protective order or other remedy is not
obtained and disclosure of Evaluation Material is required, or the Company
grants a waiver hereunder, the Recipient or such Recipient's Representative, as
the case may be, (i) may, without liability hereunder furnish that portion (and
only that portion) of the Evaluation Material which the Recipient or such
Recipient's Representative is legally required to disclose and (ii) will
exercise its reasonable best efforts to assist the Company in obtaining
confidential treatment accorded any Evaluation Material so furnished.
2
<PAGE>
The Recipient is aware, and the Recipient will advise the
Recipient's Representatives who are informed of the matters that are the subject
of this Agreement, that applicable securities laws restrict persons with
material, non-public information concerning the Company (including matters that
may be the subject of this Agreement) from purchasing or selling securities of
the Company, or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such other person is
likely to purchase or sell such securities.
The Recipient agrees that for a period of two years from the
date of this Agreement neither the Recipient nor any of the Recipient's
affiliates (as such term is defined under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), alone or with others, will in any manner,
without the prior written consent of the Company: (a) effect or seek, offer or
propose (whether publicly or otherwise) to effect, or cause or participate in,
or in any way knowingly assist (including, without limitation, through the
provision of financing) any other person to effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in, (i) any
acquisition of beneficial ownership (as such term is defined under the Exchange
Act) of any voting securities of the Company or securities or rights convertible
into or exchangeable for any voting securities of the Company, (ii) any
acquisition of all or substantially all of the assets of the Company, (iii) any
tender or exchange offer involving the voting securities of the Company, (iv)
any merger, other business combination, recapitalization restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company or (v) any "solicitation" of "proxies" (as such terms are used under the
Exchange Act) or consents with respect to any voting securities of the Company;
(b) form, join or in any way participate in a "group" (as such term is used
under the Exchange Act) with respect to any voting securities of the Company;
(c) otherwise act, alone or in concert with others, to seek to control or
influence the management, board of directors or policies of the Company; (d)
take any action that might require the Company to make a public announcement
regarding any of the types of matters set forth in clause (a) above; or (e)
enter into discussions or arrangements with any third party with respect to any
of the matters set forth in clauses (a) through (d) above. The Recipient also
agrees during such period not to request, directly or indirectly, that the
Company (or its directors, officers, employees or agents) amend or waive any
provision of this paragraph (including this sentence). The Recipient will
promptly advise the Company of any inquiry or proposal made to it or any of its
affiliates with respect to any of the matters referred to in clauses (a) through
(d) of this paragraph.
Without the prior written consent of the Company, (i) neither
the Recipient nor any Recipient's Representative who is aware of the Evaluation
Material or that a Transaction is contemplated will (A) initiate or cause to be
initiated (other than through Prudential Securities, Incorporated) any
communication concerning the Evaluation Material or any potential Transaction
with any employee of the Company that is not aware that a Transaction is
contemplated or (B) except as permitted pursuant to the terms of this Agreement,
otherwise make contact with any employee of the Company under circumstances that
are reasonably likely to
3
<PAGE>
result in disclosure to such employee that a Transaction is being contemplated,
(ii) none of the Recipient's directors, officers, employees or affiliates who
are aware of the Evaluation Material or that a Transaction is contemplated will,
for the two-year period from the date of this Agreement, solicit or cause to be
solicited the employment of, or hire, any employee of the Company and (iii)
neither the Recipient nor any Recipient's Representative who is aware of the
substance of the Evaluation Material or that a Transaction is contemplated will,
for the two-year period from the date of this Agreement, divert or attempt to
divert any business of the Company as of the date of this agreement or any
customer of the Company or any of its affiliates, except in the ordinary course
of business consistent with past practices of the Recipient or Recipient's
Representative (the parties acknowledge that this clause (iii) will not restrict
the Recipient or any Recipient's Representative from pursuing any business
opportunities that are initiated by mutual clients of the Recipient and the
Company, provided that the substance or the existence of the Evaluation Material
or the fact that a Transaction is contemplated is not used in connection
therewith).
In the event that the Recipient decides not to proceed with
the Transaction, or upon the written request of the Company, the Recipient will
promptly deliver or cause to be delivered to the Company (or destroy, with such
destruction to be certified to the Company) all documents or other matter
furnished by the Company or its agents or representatives to the Recipient or
the Recipient's Representatives constituting Evaluation Material, together with
all copies thereof in the possession of the Recipient or the Recipient's
Representatives. In such event, all other documents or other matter constituting
Evaluation Material prepared by the Recipient or the Recipient's Representatives
will be destroyed, with any such destruction certified to the Company.
Although the Recipient understands that the Company has
endeavored to include in the Evaluation Material information known to it which
it believes to be relevant for the purpose of the Recipient's investigation, the
Recipient further understands and acknowledges that neither the Company nor its
agents or its representatives makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation Material or any
other information provided to the Recipient or the Recipient's Representatives
by the Company, its agents or representatives in connection with matters
contemplated hereby. With respect to the accuracy and completeness of Evaluation
Material, only those representations and warranties that may be made to the
Recipient in a definitive written agreement for a Transaction, when, as and if
executed and subject to such limitations and restrictions as may be specified
therein, shall have any legal effect, and the Recipient agrees that if the
Recipient determines to engage in a Transaction such determination will be based
solely on the terms of such definitive written agreement and on the Recipient's
own investigation, analysis and assessment of the Transaction. Except as
provided in any such definitive written agreement, neither the Company nor any
of its agents, representatives or affiliates shall have any liability to the
Recipient or any other party, including, without limitation, the Recipient's
Representatives, resulting from the use of, or reliance on, Evaluation Material
by the Recipient or the Recipient's Representatives.
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<PAGE>
Moreover, unless and until such a definitive written agreement is entered into,
none of the Company or its agents, representatives or affiliates, or the
Recipient or the Recipient's Representatives, by virtue of this Agreement or any
other written or oral expression, will be under any legal obligation of any kind
whatsoever with respect to such a Transaction except for the matters
specifically agreed to in this Agreement. Without limiting the generality of the
foregoing, the Recipient specifically acknowledges and agrees that, unless and
until such a definitive written agreement is entered into, the Company may
conduct and change the process with respect to any possible Transaction as the
Company, in its sole discretion, shall determine, including, without limitation,
at any time terminating access to the Evaluation Material by the Recipient and
the Recipient's Representatives, rejecting any and all offers without stating
reasons, negotiating with one or more other parties and entering into a
definitive agreement for a Transaction without prior notice to the Recipient or
any other person. The Recipient agrees and acknowledges that the Company has not
granted the Recipient any license, copyright, or similar right with respect to
any Evaluation Material.
As used in this Agreement, the term "person" shall mean any
individual, corporation, company, association, partnership, joint venture, trust
or other unincorporated organization or entity.
This Agreement may be modified or amended only by a separate
writing signed by the Company and the Recipient expressly so modifying or
amending this Agreement.
This Agreement supersedes all prior oral or written agreements
or understandings that may exist between any of the parties hereto in respect of
any Evaluation Material.
In the event of litigation regarding this Agreement, if a
court of competent jurisdiction determines in a final, nonappealable order that
this Agreement has been breached by the Recipient or by a Recipient's
Representative, then the Recipient will reimburse the Company for its reasonable
costs and expenses (including, without limitation, reasonable legal fees)
incurred in connection with enforcing this Agreement in such litigation. The
Recipient also acknowledges that money damages would be both incalculable and an
insufficient remedy for any breach of this Agreement by the Recipient or the
Recipient's Representatives and that any such breach would cause the Company
irreparable harm. Accordingly, the Recipient also agrees that in the event of
any breach or threatened breach of this Agreement, the Company, in addition to
any other remedies at law or in equity it may have, shall be entitled, without
the requirement of posting a bond or other security, to equitable relief,
including injunctive relief and specific performance.
It is understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
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The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect to the
fullest extent permitted by law.
Except as provided in any definitive written agreement with
respect to a Transaction, the obligations under this Agreement shall continue
whether or not negotiations continue or a Transaction is consummated, except
that the Recipient's obligations in this Agreement relating to information about
the Company shall terminate on completion of a Transaction.
The Recipient agrees and consents to personal jurisdiction and
venue in any federal or state court within the Borough of Manhattan, in the City
of New York, having subject matter jurisdiction, for the purposes of any action,
suit or proceeding arising out of or relating to this Agreement. To the fullest
extent permitted by law, the Recipient and the Company hereby agree to waive
trial by jury in any action proceeding or counterclaim brought by or on behalf
of either party with respect to any matter whatsoever relating to this
Agreement.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflicts of laws (other than Section 5-1401 of the New York
General Obligations Law).
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This Agreement may be executed in two or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same instrument.
If you are in agreement with the foregoing, please sign and
return one copy of this letter, which thereupon will constitute a binding
agreement between us with respect to the subject matter hereof.
Very truly yours,
PRUDENTIAL SECURITIES
INCORPORATED, as agent
for Cunningham
Graphics
International, Inc.
By: /s/ ROBERT AIELLO
----------------------------------
Name: Robert Aiello
Title: Managing Director
Confirmed and agreed to as of the date first above written:
ADP Financial Information Services, Inc.
By: /s/ ADAM D. AMSTERDAM
--------------------------------------
Name:
Title:
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Exhibit 99(d)(4)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and
Gerald (L.J.) Baillargeon (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition and supersede the agreement dated November 15,
1999 (the "Prior Employment Agreement") between CGI and the Employee.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). Upon effectiveness of this Employment
Agreement, this Employment Agreement shall supersede the Prior Employment
Agreement which shall become null and void, except for provisions thereof that
by their terms survive termination. Notwithstanding the foregoing, the parties
agree that the obligations of CGI set forth in Section 5.3 of the Prior
Employment Agreement (Change of Control Bonus) shall survive the termination of
such Agreement. In the event the Merger Agreement is terminated and the
Acquisition is not consummated, this Employment Agreement shall automatically
terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as Chief Financial
Officer of CGI and shall have the duties and responsibilities commensurate with
such position, and such other duties and responsibilities with the Company and
ADP may reasonably be assigned from time to time by the Company. Employee shall
perform his duties hereunder at the direction, and subject to the authority and
control, of the Group President of the
<PAGE>
Company (or his designee) and in accordance with the terms and conditions of
this Employment Agreement.
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and ADP, and will use his full business
time, energy and skill to promote the business and interests of the Company and
ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of one hundred thirty-three thousand, seven hundred dollars ($133,700)
per annum (the "Base Salary"), payable bi-weekly. The Company shall review the
Employee's performance annually to determine if the Employee shall be granted an
increase in the Base Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
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<PAGE>
4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the Company and Employee each year (the
"Annual Cash Bonus"). The targeted Annual Cash Bonus for ADP's fiscal year ended
June 30, 2001 shall be 25% of the annual Base Salary, thirty-three thousand,
four hundred dollars ($33,400), with a potential to earn up to 37.5% of the
annual Base Salary, fifty thousand, one hundred dollars ($50,100), based, among
other things, upon achievement of performance objectives. Additionally, during
the term of this Employment Agreement the Employee and the Company shall
establish "stretch" bonus goals with respect to the net operating income
component of the Employee's performance objectives thereby entitling the
Employee to an additional bonus of 200% of the bonus component related to that
performance objective. If the Annual Cash Bonus becomes payable, it will be paid
within ninety (90) days after the end of ADP's applicable fiscal year provided
that the Employee is an employee of the Company on the last day of such fiscal
year. Notwithstanding the foregoing, the pro-rated Annual Cash Bonus for the
portion of the Company's fiscal year ended June 30, 2000 that the Employee is
employed hereunder shall be paid together with the Annual Cash Bonus for the
Company's fiscal year ended June 30, 2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase six thousand (6,000) shares of ADP common stock which shall vest in
five equal installments over a five-year period from the date of grant and shall
be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the performance of his duties hereunder and fail to take
appropriate corrective action during the ten (10) day period following the
receipt by the Employee of written notice from the Company or ADP of such
negligence, or commit any act of willful misconduct (such circumstances set
forth in this subsection (iv) are referred to herein as "Cause"), and the
Company or ADP shall elect to terminate the Employee's employment hereunder for
Cause, the date on which the Company or ADP shall give written notice to the
Employee of such election, and (v) the date the Company or
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<PAGE>
ADP terminates the Employee's employment hereunder for any reason other than
as provided in Sections 5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of death of the Employee) shall be entitled to receive,
within thirty (30) days of such termination, in addition to any other benefits
to which the Employee is entitled pursuant to the terms of the employee benefit
plans of ADP applicable to the Employee, (i) Base Salary accrued to the
Employment Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is then
participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or ADP or any of their
respective affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
which are competitive with the businesses or services of the Brokerage Services
Group of ADP (as such
4
<PAGE>
businesses are conducted on the date hereof or at any time during the
Non-Competition Period) (the "Businesses"), or promote, market, become or
acquire an interest in, or associate in a business relationship with, any
other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses
(a "Competitor") or (ii) solicit or refer, directly or indirectly, any
clients or prospective clients of any services and/or products which are
similar to those offered by the Company or ADP (at any time during the
Non-Competition Period) to another provider of such services, or (iii)
promote, market or participate in the sale, lease or licensing of any
equipment or software by which services and/or products similar to those
provided by the Company or ADP (at any time during the Non-Competition
Period) can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever. Notwithstanding anything to the
contrary contained herein, if the Company terminates the Employee's
employment hereunder pursuant to Section 5(a)(v) hereof, the "Non-Competition
Period" shall be defined as the period commencing on the date hereof and
ending on the fourth anniversary of the Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or any other trade
secrets, technical data, or know-how of any kind relating to the Businesses.
Upon termination of Employee's employment hereunder for any reason whatsoever,
Employee shall immediately return all documents and notes (including all copies
thereof) of any and all
5
<PAGE>
information and materials belonging or relating to the Businesses (whether or
not such materials were prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the Company or any of its affiliates, any
person who is now or hereafter becomes an employee or consultant of the Company
or any of its affiliates until such person has ceased to be an employee or
consultant of the Company or ADP or any of their respective affiliates for a
period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation, items which the Employee
neither conceived nor worked on but regarding which the
Employee has knowledge because of the Employee's employment by
the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights
6
<PAGE>
contained herein will cause irreparable injury to the Company and its
affiliates, and that the Company and its affiliates shall be entitled, in
addition to any other rights and remedies they may have, at law or in equity,
to an injunction enjoining and restraining Employee from doing or continuing
to do any such act and any other violations or threatened violations of this
Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All notices to either the Company or
ADP shall be sent to (i) the Company at ADP Financial Information Services,
Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, and (ii) Parent at
Automatic Data Processing, Inc. One ADP Boulevard, etc. Attention: General
Counsel. All notices to the Employee shall be sent to 1 Mansfield Road,
Princeton, New Jersey 08540. All notices to CGI shall be sent to Cunningham
Graphics, Inc., 100 Burma Road, Jersey City, New Jersey 07305. Unless hand
delivered, notices shall be deemed given three business days following the date
deposited in the U.S. mails or one business day following the date of delivery
to a nationally recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission
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<PAGE>
or arbitrator(s) having jurisdiction hereof or thereof, neither party shall
have any cause of action or claim against the other by reason of such
declaration of invalidity, unenforceability or illegality; and any such
declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined
in its operation to that provision hereof only and the remainder of this
Employment Agreement shall remain in full force and effect. The parties
hereto agree to substitute the invalid, unenforceable or illegal provision by
a valid, enforceable or legal one which corresponds to the spirit and purpose
of the invalid, unenforceable or illegal provisions to the greatest extent
possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/s/ GERALD (L.J.) BAILLARGEON
-------------------------------------
Gerald (L.J.) Baillargeon
9
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Exhibit 99(d)(5)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and
Michael R. Cunningham (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition and supersede the agreement dated April 13, 1998
(the "Prior Employment Agreement") between the CGI and the Employee.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). Upon effectiveness of this Employment
Agreement, this Employment Agreement shall supersede the Prior Employment
Agreement which shall become null and void, except for provisions thereof that
by their terms survive termination. In the event the Merger Agreement is
terminated and the Acquisition is not consummated, this Employment Agreement
shall automatically terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as President of CGI and
shall have the duties and responsibilities commensurate with such position, and
such other duties and responsibilities with the Company and ADP may reasonably
be assigned from time to time by the Company. Employee shall perform his duties
hereunder at the direction, and subject to the authority and control, of the
Group President of the Company (or his designee) and in accordance with the
terms and conditions of this Employment Agreement.
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(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and ADP, and will use his full business
time, energy and skill to promote the business and interests of the Company and
ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of two hundred sixty-one thousand, seven hundred dollars ($261,700) per
annum (the "Base Salary"), payable bi-weekly. The Company shall review the
Employee's performance annually to determine if the Employee shall be granted an
increase in the Base Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
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4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the Company and Employee each year (the
"Annual Cash Bonus"). The targeted Annual Cash Bonus for ADP's fiscal year ended
June 30, 2001 shall be 30% of the annual Base Salary, seventy-eight thousand,
five hundred dollars ($78,500), with a potential to earn up to 45% of the annual
Base Salary, one hundred seventeen thousand, eight hundred dollars ($117,800),
based, among other things, upon achievement of performance objectives.
Additionally, during the term of this Employment Agreement the Employee and the
Company shall establish "stretch" bonus goals with respect to the net operating
income component of the Employee's performance objectives thereby entitling the
Employee to an additional bonus of 200% of the bonus component related to that
performance objective. If the Annual Cash Bonus becomes payable, it will be paid
within ninety (90) days after the end of ADP's applicable fiscal year provided
that the Employee is an employee of the Company on the last day of such fiscal
year. Notwithstanding the foregoing, the pro-rated Annual Cash Bonus for the
portion of the Company's fiscal year ended June 30, 2000 that the Employee is
employed hereunder shall be paid together with the Annual Cash Bonus for the
Company's fiscal year ended June 30, 2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase fifteen thousand (15,000) shares of ADP common stock which shall vest
in five equal installments over a five-year period from the date of grant and
shall be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the performance of his duties hereunder and fail to take
appropriate corrective action during the ten (10) day period following the
receipt by the Employee of written notice from the Company or ADP of such
negligence, or commit any act of willful misconduct (such circumstances set
forth in this subsection (iv) are referred to herein as "Cause"), and the
Company or ADP shall elect to terminate the Employee's employment hereunder for
Cause, the date on which the Company or ADP shall give written notice to the
Employee of such election, and (v) the date the Company or
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ADP terminates the Employee's employment hereunder for any reason other than
as provided in Sections 5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of death of the Employee) shall be entitled to receive,
within thirty (30) days of such termination, in addition to any other benefits
to which the Employee is entitled pursuant to the terms of the employee benefit
plans of ADP applicable to the Employee, (i) Base Salary accrued to the
Employment Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is then
participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or ADP or any of their
respective affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
which are competitive with the businesses or services of the Brokerage Services
Group of ADP (as such
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businesses are conducted on the date hereof or at any time during the
Non-Competition Period) (the "Businesses"), or promote, market, become or
acquire an interest in, or associate in a business relationship with, any
other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses
(a "Competitor") or (ii) solicit or refer, directly or indirectly, any
clients or prospective clients of any services and/or products which are
similar to those offered by the Company or ADP (at any time during the
Non-Competition Period) to another provider of such services, or (iii)
promote, market or participate in the sale, lease or licensing of any
equipment or software by which services and/or products similar to those
provided by the Company or ADP (at any time during the Non-Competition
Period) can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever. Notwithstanding anything to the
contrary contained herein, if the Company terminates the Employee's
employment hereunder pursuant to Section 5(a)(v) hereof, the "Non-Competition
Period" shall be defined as the period commencing on the date hereof and
ending on the fourth anniversary of the Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or any other trade
secrets, technical data, or know-how of any kind relating to the Businesses.
Upon termination of Employee's employment hereunder for any reason whatsoever,
Employee shall immediately return all documents and notes (including all copies
thereof) of any and all
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information and materials belonging or relating to the Businesses (whether or
not such materials were prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the Company or any of its affiliates, any
person who is now or hereafter becomes an employee or consultant of the Company
or any of its affiliates until such person has ceased to be an employee or
consultant of the Company or ADP or any of their respective affiliates for a
period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation, items which the Employee
neither conceived nor worked on but regarding which the
Employee has knowledge because of the Employee's employment by
the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights
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contained herein will cause irreparable injury to the Company and its
affiliates, and that the Company and its affiliates shall be entitled, in
addition to any other rights and remedies they may have, at law or in equity,
to an injunction enjoining and restraining Employee from doing or continuing
to do any such act and any other violations or threatened violations of this
Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All notices to either the Company or
ADP shall be sent to (i) the Company at ADP Financial Information Services,
Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, and (ii) Parent at
Automatic Data Processing, Inc. One ADP Boulevard, etc.
Attention: General Counsel. All notices to the Employee shall be sent to
_____________________________________. All notices to CGI shall be sent to
Cunningham Graphics, Inc., 100 Burma Road, Jersey City, New Jersey 07305. Unless
hand delivered, notices shall be deemed given three business days following the
date deposited in the U.S. mails or one business day following the date of
delivery to a nationally recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission
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or arbitrator(s) having jurisdiction hereof or thereof, neither party shall
have any cause of action or claim against the other by reason of such
declaration of invalidity, unenforceability or illegality; and any such
declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined
in its operation to that provision hereof only and the remainder of this
Employment Agreement shall remain in full force and effect. The parties
hereto agree to substitute the invalid, unenforceable or illegal provision by
a valid, enforceable or legal one which corresponds to the spirit and purpose
of the invalid, unenforceable or illegal provisions to the greatest extent
possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/s/ MICHAEL R. CUNNINGHAM
-------------------------------------
Michael R. Cunningham
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Exhibit 99(d)(6)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and Ned
Hood (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). In the event the Merger Agreement is
terminated and the Acquisition is not consummated, this Employment Agreement
shall automatically terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as Chief Technology
Officer of CGI and shall have the duties and responsibilities commensurate with
such position, and such other duties and responsibilities with the Company and
ADP may reasonably be assigned from time to time by the Company. Employee shall
perform his duties hereunder at the direction, and subject to the authority and
control, of the Group President of the Company (or his designee) and in
accordance with the terms and conditions of this Employment Agreement.
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company
<PAGE>
and ADP, and will use his full business time, energy and skill to promote the
business and interests of the Company and ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of one hundred fifty-one thousand, seven hundred dollars ($151,700) per
annum (the "Base Salary"), payable bi-weekly. The Company shall review the
Employee's performance annually to determine if the Employee shall be granted an
increase in the Base Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the
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Company and Employee each year (the "Annual Cash Bonus"). The targeted Annual
Cash Bonus for ADP's fiscal year ended June 30, 2001 shall be 25% of the
annual Base Salary, thirty-seven thousand, nine hundred dollars ($37,900),
with a potential to earn up to 37.5% of the annual Base Salary, fifty-six
thousand, nine hundred dollars ($56,900), based, among other things, upon
achievement of performance objectives. Additionally, during the term of this
Employment Agreement the Employee and the Company shall establish "stretch"
bonus goals with respect to the net operating income component of the
Employee's performance objectives thereby entitling the Employee to an
additional bonus of 200% of the bonus component related to that performance
objective. If the Annual Cash Bonus becomes payable, it will be paid within
ninety (90) days after the end of ADP's applicable fiscal year provided that
the Employee is an employee of the Company on the last day of such fiscal
year. Notwithstanding the foregoing, the pro-rated Annual Cash Bonus for the
portion of the Company's fiscal year ended June 30, 2000 that the Employee is
employed hereunder shall be paid together with the Annual Cash Bonus for the
Company's fiscal year ended June 30, 2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase seven thousand, five hundred (7,500) shares of ADP common stock which
shall vest in five equal installments over a five-year period from the date of
grant and shall be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the performance of his duties hereunder and fail to take
appropriate corrective action during the ten (10) day period following the
receipt by the Employee of written notice from the Company or ADP of such
negligence, or commit any act of willful misconduct (such circumstances set
forth in this subsection (iv) are referred to herein as "Cause"), and the
Company or ADP shall elect to terminate the Employee's employment hereunder for
Cause, the date on which the Company or ADP shall give written notice to the
Employee of such election, and (v) the date the Company or ADP terminates the
Employee's employment hereunder for any reason other than as provided in
Sections 5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of
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death of the Employee) shall be entitled to receive, within thirty (30) days
of such termination, in addition to any other benefits to which the Employee
is entitled pursuant to the terms of the employee benefit plans of ADP
applicable to the Employee, (i) Base Salary accrued to the Employment
Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is
then participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or ADP or any of their
respective affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
which are competitive with the businesses or services of the Brokerage Services
Group of ADP (as such businesses are conducted on the date hereof or at any time
during the Non-Competition Period) (the "Businesses"), or promote, market,
become or acquire an interest in, or associate in a business relationship with,
any other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses (a
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"Competitor") or (ii) solicit or refer, directly or indirectly, any clients
or prospective clients of any services and/or products which are similar to
those offered by the Company or ADP (at any time during the Non-Competition
Period) to another provider of such services, or (iii) promote, market or
participate in the sale, lease or licensing of any equipment or software by
which services and/or products similar to those provided by the Company or
ADP (at any time during the Non-Competition Period) can be performed, to, for
or with any person, corporation, firm, partnership or other entity whatsoever.
Notwithstanding anything to the contrary contained herein, if the Company
terminates the Employee's employment hereunder pursuant to Section 5(a)(v)
hereof, the "Non-Competition Period" shall be defined as the period
commencing on the date hereof and ending on the fourth anniversary of the
Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or any other trade
secrets, technical data, or know-how of any kind relating to the Businesses.
Upon termination of Employee's employment hereunder for any reason whatsoever,
Employee shall immediately return all documents and notes (including all copies
thereof) of any and all information and materials belonging or relating to the
Businesses (whether or not such materials were prepared by the Employee or
another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the
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Company or any of its affiliates, any person who is now or hereafter becomes
an employee or consultant of the Company or any of its affiliates until such
person has ceased to be an employee or consultant of the Company or ADP or
any of their respective affiliates for a period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation, items which the Employee
neither conceived nor worked on but regarding which the
Employee has knowledge because of the Employee's employment by
the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights contained herein will cause irreparable injury to
the Company and its affiliates, and that the Company and its affiliates shall be
entitled, in addition to any other rights and remedies they may have, at law or
in equity, to an injunction enjoining and restraining Employee from doing or
continuing to do any such act and any other violations or threatened violations
of this Section 6.
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7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All notices to either the Company or
ADP shall be sent to (i) the Company at ADP Financial Information Services,
Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, and (ii) Parent at
Automatic Data Processing, Inc. One ADP Boulevard, etc.
Attention: General Counsel. All notices to the Employee shall be sent to
______________________________________. All notices to CGI shall be sent to
Cunningham Graphics, Inc., 100 Burma Road, Jersey City, New Jersey 07305. Unless
hand delivered, notices shall be deemed given three business days following the
date deposited in the U.S. mails or one business day following the date of
delivery to a nationally recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission or arbitrator(s) having jurisdiction hereof or thereof,
neither party shall have any cause of action or claim against the other by
reason of such declaration of invalidity, unenforceability or illegality; and
any such declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined in
its operation to
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that provision hereof only and the remainder of this Employment Agreement
shall remain in full force and effect. The parties hereto agree to substitute
the invalid, unenforceable or illegal provision by a valid, enforceable or
legal one which corresponds to the spirit and purpose of the invalid,
unenforceable or illegal provisions to the greatest extent possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/s/ NED HOOD
-------------------------------------
Ned Hood
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Exhibit 99(d)(7)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and
Ioannis Lykogiannis (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition and supersede the agreement dated April 13, 1998
(the "Prior Employment Agreement") among CGI, CGII and the Employee.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). Upon effectiveness of this Employment
Agreement, this Employment Agreement shall supersede the Prior Employment
Agreement which shall become null and void, except for provisions thereof that
by their terms survive termination. In the event the Merger Agreement is
terminated and the Acquisition is not consummated, this Employment Agreement
shall automatically terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as Senior Vice President
of CGI and shall have the duties and responsibilities commensurate with such
position, and such other duties and responsibilities with the Company and ADP
may reasonably be assigned from time to time by the Company. Employee shall
perform his duties hereunder at the direction, and subject to the authority and
control, of the Group President of the Company (or his designee) and in
accordance with the terms and conditions of this Employment Agreement.
<PAGE>
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and ADP, and will use his full business
time, energy and skill to promote the business and interests of the Company and
ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of one hundred forty-six thousand dollars ($146,000) per annum (the "Base
Salary"), payable bi-weekly. The Company shall review the Employee's performance
annually to determine if the Employee shall be granted an increase in the Base
Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
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<PAGE>
4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the Company and Employee each year (the
"Annual Cash Bonus"). The targeted Annual Cash Bonus for ADP's fiscal year ended
June 30, 2001 shall be 25% of the annual Base Salary, thirty-six thousand, five
hundred dollars ($36,500), with a potential to earn up to 37.5% of the annual
Base Salary, fifty-four thousand, eight hundred dollars ($54,800), based, among
other things, upon achievement of performance objectives. Additionally, during
the term of this Employment Agreement the Employee and the Company shall
establish "stretch" bonus goals with respect to the net operating income
component of the Employee's performance objectives thereby entitling the
Employee to an additional bonus of 200% of the bonus component related to that
performance objective. If the Annual Cash Bonus becomes payable, it will be paid
within ninety (90) days after the end of ADP's applicable fiscal year provided
that the Employee is an employee of the Company on the last day of such fiscal
year. Notwithstanding the foregoing, the pro-rated Annual Cash Bonus for the
portion of the Company's fiscal year ended June 30, 2000 that the Employee is
employed hereunder shall be paid together with the Annual Cash Bonus for the
Company's fiscal year ended June 30, 2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase six thousand (6,000) shares of ADP common stock which shall vest in
five equal installments over a five-year period from the date of grant and shall
be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the performance of his duties hereunder and fail to take
appropriate corrective action during the ten (10) day period following the
receipt by the Employee of written notice from the Company or ADP of such
negligence, or commit any act of willful misconduct (such circumstances set
forth in this subsection (iv) are referred to herein as "Cause"), and the
Company or ADP shall elect to terminate the Employee's employment hereunder for
Cause, the date on which the Company or ADP shall give written notice to the
Employee of such election, and (v) the date the Company or
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ADP terminates the Employee's employment hereunder for any reason other than
as provided in Sections 5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of death of the Employee) shall be entitled to receive,
within thirty (30) days of such termination, in addition to any other benefits
to which the Employee is entitled pursuant to the terms of the employee benefit
plans of ADP applicable to the Employee, (i) Base Salary accrued to the
Employment Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is then
participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or ADP or any of their
respective affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
which are competitive with the businesses or services of the Brokerage Services
Group of ADP (as such
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businesses are conducted on the date hereof or at any time during the
Non-Competition Period) (the "Businesses"), or promote, market, become or
acquire an interest in, or associate in a business relationship with, any
other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses
(a "Competitor") or (ii) solicit or refer, directly or indirectly, any
clients or prospective clients of any services and/or products which are
similar to those offered by the Company or ADP (at any time during the
Non-Competition Period) to another provider of such services, or (iii)
promote, market or participate in the sale, lease or licensing of any
equipment or software by which services and/or products similar to those
provided by the Company or ADP (at any time during the Non-Competition
Period) can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever. Notwithstanding anything to the
contrary contained herein, if the Company terminates the Employee's
employment hereunder pursuant to Section 5(a)(v) hereof, the "Non-Competition
Period" shall be defined as the period commencing on the date hereof and
ending on the fourth anniversary of the Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or any other trade
secrets, technical data, or know-how of any kind relating to the Businesses.
Upon termination of Employee's employment hereunder for any reason whatsoever,
Employee shall immediately return all documents and notes (including all copies
thereof) of any and all
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<PAGE>
information and materials belonging or relating to the Businesses (whether or
not such materials were prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the Company or any of its affiliates, any
person who is now or hereafter becomes an employee or consultant of the Company
or any of its affiliates until such person has ceased to be an employee or
consultant of the Company or ADP or any of their respective affiliates for a
period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation, items which the Employee
neither conceived nor worked on but regarding which the
Employee has knowledge because of the Employee's employment by
the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights
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contained herein will cause irreparable injury to the Company and its
affiliates, and that the Company and its affiliates shall be entitled, in
addition to any other rights and remedies they may have, at law or in equity,
to an injunction enjoining and restraining Employee from doing or continuing
to do any such act and any other violations or threatened violations of this
Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All notices to either the Company or
ADP shall be sent to (i) the Company at ADP Financial Information Services,
Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, and (ii) Parent at
Automatic Data Processing, Inc. One ADP Boulevard, etc. Attention: General
Counsel. All notices to the Employee shall be sent to 15 Elmwood Drive, Warren,
New Jersey 07059. All notices to CGI shall be sent to Cunningham Graphics, Inc.,
100 Burma Road, Jersey City, New Jersey 07305. Unless hand delivered, notices
shall be deemed given three business days following the date deposited in the
U.S. mails or one business day following the date of delivery to a nationally
recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission
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or arbitrator(s) having jurisdiction hereof or thereof, neither party shall
have any cause of action or claim against the other by reason of such
declaration of invalidity, unenforceability or illegality; and any such
declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined
in its operation to that provision hereof only and the remainder of this
Employment Agreement shall remain in full force and effect. The parties
hereto agree to substitute the invalid, unenforceable or illegal provision by
a valid, enforceable or legal one which corresponds to the spirit and purpose
of the invalid, unenforceable or illegal provisions to the greatest extent
possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/S/ IOANNIS LYKOGIANNIS
-------------------------------------
Ioannis Lykogiannis
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Exhibit 99(d)(8)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and
Gordon Mays (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition and supersede the agreement dated April 13, 1998
(the "Prior Employment Agreement") between CGI and the Employee.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). Upon effectiveness of this Employment
Agreement, this Employment Agreement shall supersede the Prior Employment
Agreement which shall become null and void, except for provisions thereof that
by their terms survive termination. In the event the Merger Agreement is
terminated and the Acquisition is not consummated, this Employment Agreement
shall automatically terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as Executive Vice
President - Marketing and Sales of CGI and shall have the duties and
responsibilities commensurate with such position, and such other duties and
responsibilities with the Company and ADP may reasonably be assigned from time
to time by the Company. Employee shall perform his duties hereunder at the
direction, and subject to the authority and control, of the Group President of
the Company (or his designee) and in accordance with the terms and conditions of
this Employment Agreement.
<PAGE>
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and ADP, and will use his full business
time, energy and skill to promote the business and interests of the Company and
ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of two hundred and ten thousand dollars ($210,000) per annum (the "Base
Salary"), payable bi-weekly. The Company shall review the Employee's performance
annually to determine if the Employee shall be granted an increase in the Base
Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
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<PAGE>
4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the Company and Employee each year (the
"Annual Cash Bonus"). The targeted Annual Cash Bonus for ADP's fiscal year ended
June 30, 2001 shall be 25% of the annual Base Salary, fifty-two thousand, five
hundred dollars ($52,500), with a potential to earn up to 37.5% of the annual
Base Salary, seventy-eight thousand, seven hundred fifty dollars ($78,750),
based, among other things, upon achievement of performance objectives.
Additionally, during the term of this Employment Agreement the Employee and the
Company shall establish "stretch" bonus goals with respect to the net operating
income component of the Employee's performance objectives thereby entitling the
Employee to an additional bonus of 200% of the bonus component related to that
performance objective. If the Annual Cash Bonus becomes payable, it will be paid
within ninety (90) days after the end of ADP's applicable fiscal year provided
that the Employee is an employee of the Company on the last day of such fiscal
year. Notwithstanding the foregoing, the pro-rated Annual Cash Bonus for the
portion of the Company's fiscal year ended June 30, 2000 that the Employee is
employed hereunder shall be paid together with the Annual Cash Bonus for the
Company's fiscal year ended June 30, 2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase ten thousand (10,000) shares of ADP common stock which shall vest in
five equal installments over a five-year period from the date of grant and shall
be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the performance of his duties hereunder and fail to take
appropriate corrective action during the ten (10) day period following the
receipt by the Employee of written notice from the Company or ADP of such
negligence, or commit any act of willful misconduct (such circumstances set
forth in this subsection (iv) are referred to herein as "Cause"), and the
Company or ADP shall elect to terminate the Employee's employment hereunder for
Cause, the date on which the Company or ADP shall give written notice to the
Employee of such election, and (v) the date the Company or
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ADP terminates the Employee's employment hereunder for any reason other than
as provided in Sections 5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of death of the Employee) shall be entitled to receive,
within thirty (30) days of such termination, in addition to any other benefits
to which the Employee is entitled pursuant to the terms of the employee benefit
plans of ADP applicable to the Employee, (i) Base Salary accrued to the
Employment Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is then
participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or ADP or any of their
respective affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
which are competitive with the businesses or services of the Brokerage Services
Group of ADP (as such
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<PAGE>
businesses are conducted on the date hereof or at any time during the
Non-Competition Period) (the "Businesses"), or promote, market, become or
acquire an interest in, or associate in a business relationship with, any
other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses
(a "Competitor") or (ii) solicit or refer, directly or indirectly, any
clients or prospective clients of any services and/or products which are
similar to those offered by the Company or ADP (at any time during the
Non-Competition Period) to another provider of such services, or (iii)
promote, market or participate in the sale, lease or licensing of any
equipment or software by which services and/or products similar to those
provided by the Company or ADP (at any time during the Non-Competition
Period) can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever. Notwithstanding anything to the
contrary contained herein, if the Company terminates the Employee's
employment hereunder pursuant to Section 5(a)(v) hereof, the "Non-Competition
Period" shall be defined as the period commencing on the date hereof and
ending on the fourth anniversary of the Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or any other trade
secrets, technical data, or know-how of any kind relating to the Businesses.
Upon termination of Employee's employment hereunder for any reason whatsoever,
Employee shall immediately return all documents and notes (including all copies
thereof) of any and all
5
<PAGE>
information and materials belonging or relating to the Businesses (whether or
not such materials were prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the Company or any of its affiliates, any
person who is now or hereafter becomes an employee or consultant of the Company
or any of its affiliates until such person has ceased to be an employee or
consultant of the Company or ADP or any of their respective affiliates for a
period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation, items which the Employee
neither conceived nor worked on but regarding which the
Employee has knowledge because of the Employee's employment by
the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights
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<PAGE>
contained herein will cause irreparable injury to the Company and its
affiliates, and that the Company and its affiliates shall be entitled, in
addition to any other rights and remedies they may have, at law or in equity,
to an injunction enjoining and restraining Employee from doing or continuing
to do any such act and any other violations or threatened violations of this
Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All notices to either the Company or
ADP shall be sent to (i) the Company at ADP Financial Information Services,
Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, and (ii) Parent at
Automatic Data Processing, Inc. One ADP Boulevard, etc. Attention: General
Counsel. All notices to the Employee shall be sent to 84 Earl Street, Westbury,
New York 11590. All notices to CGI shall be sent to Cunningham Graphics, Inc.,
100 Burma Road, Jersey City, New Jersey 07305. Unless hand delivered, notices
shall be deemed given three business days following the date deposited in the
U.S. mails or one business day following the date of delivery to a nationally
recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission
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or arbitrator(s) having jurisdiction hereof or thereof, neither party shall
have any cause of action or claim against the other by reason of such
declaration of invalidity, unenforceability or illegality; and any such
declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined
in its operation to that provision hereof only and the remainder of this
Employment Agreement shall remain in full force and effect. The parties
hereto agree to substitute the invalid, unenforceable or illegal provision by
a valid, enforceable or legal one which corresponds to the spirit and purpose
of the invalid, unenforceable or illegal provisions to the greatest extent
possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/s/ GORDON MAYS
-------------------------------------
Gordon Mays
9
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Exhibit 99(d)(9)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and
Timothy Mays (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition and supersede the agreement dated April 13, 1998
(the "Prior Employment Agreement") between the CGI and the Employee.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). Upon effectiveness of this Employment
Agreement, this Employment Agreement shall supersede the Prior Employment
Agreement which shall become null and void, except for provisions thereof that
by their terms survive termination. In the event the Merger Agreement is
terminated and the Acquisition is not consummated, this Employment Agreement
shall automatically terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as Executive Vice
President - Sales of CGI and shall have the duties and responsibilities
commensurate with such position, and such other duties and responsibilities with
the Company and ADP may reasonably be assigned from time to time by the Company.
Employee shall perform his duties hereunder at the direction, and subject to the
authority and control, of the Group President of the Company (or his designee)
and in accordance with the terms and conditions of this Employment Agreement.
<PAGE>
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and ADP, and will use his full business
time, energy and skill to promote the business and interests of the Company and
ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of one hundred eighty-four thousand dollars ($184,000) per annum (the
"Base Salary"), payable bi-weekly. The Company shall review the Employee's
performance annually to determine if the Employee shall be granted an increase
in the Base Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
(f) With respect to sales made by Employee, Employee shall be entitled
to a commission on the payments actually collected, net of inkjetting, labeling,
insertion, mainframe printing, shipping and mailing charges, in respect of
printing and binding charges in the amount
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of three percent (3%) for customers directly attributable to Employee as
determined by the President of CGI and in the amount of one and one half
percent (1 1/2%) for existing customers of CGI and customers not directly
attributable to Employee. The commission shall be based on sales booked on
and after the closing of the Acquisition. Payment of the commission shall be
made on a quarterly basis between 45 and 60 days following the end of each
calendar quarter.
4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the Company and Employee each year (the
"Annual Cash Bonus"). The targeted Annual Cash Bonus for ADP's fiscal year ended
June 30, 2001 shall be 20% of the annual Base Salary, thirty-six thousand, eight
hundred dollars ($36,800), with a potential to earn up to 30% of the annual Base
Salary, fifty-five thousand, two hundred dollars ($55,200), based, among other
things, upon achievement of performance objectives. Additionally, during the
term of this Employment Agreement the Employee and the Company shall establish
"stretch" bonus goals with respect to the net operating income component of the
Employee's performance objectives thereby entitling the Employee to an
additional bonus of 200% of the bonus component related to that performance
objective. If the Annual Cash Bonus becomes payable, it will be paid within
ninety (90) days after the end of ADP's applicable fiscal year provided that the
Employee is an employee of the Company on the last day of such fiscal year.
Notwithstanding the foregoing, the pro-rated Annual Cash Bonus for the portion
of the Company's fiscal year ended June 30, 2000 that the Employee is employed
hereunder shall be paid together with the Annual Cash Bonus for the Company's
fiscal year ended June 30, 2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase ten thousand (10,000) shares of ADP common stock which shall vest in
five equal installments over a five-year period from the date of grant and shall
be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the
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performance of his duties hereunder and fail to take appropriate corrective
action during the ten (10) day period following the receipt by the Employee
of written notice from the Company or ADP of such negligence, or commit any
act of willful misconduct (such circumstances set forth in this subsection
(iv) are referred to herein as "Cause"), and the Company or ADP shall elect
to terminate the Employee's employment hereunder for Cause, the date on which
the Company or ADP shall give written notice to the Employee of such
election, and (v) the date the Company or ADP terminates the Employee's
employment hereunder for any reason other than as provided in Sections
5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of death of the Employee) shall be entitled to receive,
within thirty (30) days of such termination, in addition to any other benefits
to which the Employee is entitled pursuant to the terms of the employee benefit
plans of ADP applicable to the Employee, (i) Base Salary accrued to the
Employment Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is then
participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
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6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or ADP or any of their
respective affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
which are competitive with the businesses or services of the Brokerage Services
Group of ADP (as such businesses are conducted on the date hereof or at any time
during the Non-Competition Period) (the "Businesses"), or promote, market,
become or acquire an interest in, or associate in a business relationship with,
any other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses (a
"Competitor") or (ii) solicit or refer, directly or indirectly, any clients or
prospective clients of any services and/or products which are similar to those
offered by the Company or ADP (at any time during the Non-Competition Period) to
another provider of such services, or (iii) promote, market or participate in
the sale, lease or licensing of any equipment or software by which services
and/or products similar to those provided by the Company or ADP (at any time
during the Non-Competition Period) can be performed, to, for or with any person,
corporation, firm, partnership or other entity whatsoever. Notwithstanding
anything to the contrary contained herein, if the Company terminates the
Employee's employment hereunder pursuant to Section 5(a)(v) hereof, the
"Non-Competition Period" shall be defined as the period commencing on the date
hereof and ending on the fourth anniversary of the Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
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<PAGE>
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or any other trade
secrets, technical data, or know-how of any kind relating to the Businesses.
Upon termination of Employee's employment hereunder for any reason whatsoever,
Employee shall immediately return all documents and notes (including all copies
thereof) of any and all information and materials belonging or relating to the
Businesses (whether or not such materials were prepared by the Employee or
another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the Company or any of its affiliates, any
person who is now or hereafter becomes an employee or consultant of the Company
or any of its affiliates until such person has ceased to be an employee or
consultant of the Company or ADP or any of their respective affiliates for a
period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation,
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items which the Employee neither conceived nor worked on but
regarding which the Employee has knowledge because of the
Employee's employment by the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights contained herein will cause irreparable injury to
the Company and its affiliates, and that the Company and its affiliates shall be
entitled, in addition to any other rights and remedies they may have, at law or
in equity, to an injunction enjoining and restraining Employee from doing or
continuing to do any such act and any other violations or threatened violations
of this Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All
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notices to either the Company or ADP shall be sent to (i) the Company at ADP
Financial Information Services, Inc., 2 Journal Square Plaza, Jersey City,
New Jersey 07306, and (ii) Parent at Automatic Data Processing, Inc. One ADP
Boulevard, etc. Attention: General Counsel. All notices to the Employee shall
be sent to 3 Hearthstone Drive, Dix Hills, New York 11746. All notices to CGI
shall be sent to Cunningham Graphics, Inc., 100 Burma Road, Jersey City, New
Jersey 07305. Unless hand delivered, notices shall be deemed given three
business days following the date deposited in the U.S. mails or one business
day following the date of delivery to a nationally recognized overnight
courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission or arbitrator(s) having jurisdiction hereof or thereof,
neither party shall have any cause of action or claim against the other by
reason of such declaration of invalidity, unenforceability or illegality; and
any such declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined in
its operation to that provision hereof only and the remainder of this Employment
Agreement shall remain in full force and effect. The parties hereto agree to
substitute the invalid, unenforceable or illegal provision by a valid,
enforceable or legal one which corresponds to the spirit and purpose of the
invalid, unenforceable or illegal provisions to the greatest extent possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
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18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /S/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/S/ TIMOTHY MAYS
-------------------------------------
Timothy Mays
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Exhibit 99(d)(10)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 2, 2000 (this "Agreement"),
between ADP Financial Information Services, Inc. (the "Company"), Cunningham
Graphics International, Inc. ("CGII"), Cunningham Graphics Inc. ("CGI") and
Robert Needle (the "Employee").
WHEREAS, simultaneously with the execution of this Employment
Agreement, ADP, FIS Acquisition Corp. ("Purchaser") and CGII have entered into
an Agreement and Plan of Merger (as amended from time to time, the "Merger
Agreement"), pursuant to which ADP and Purchaser will acquire CGII (the
"Acquisition", which term includes the acquisition of more than 50% of the
CGII's shares of common stock through any transaction including, without
limitation, a tender offer);
WHEREAS, as a condition to the willingness of ADP and Purchaser to
enter into the Merger Agreement, each of ADP and Purchaser has required that the
Employee agree, and in order to induce ADP and Purchaser to enter into the
Merger Agreement, the Employee has agreed, to enter into this Employment
Agreement; and
WHEREAS, this Employment Agreement shall become effective upon the
consummation of the Acquisition and supersede the agreement dated April 13, 1998
(the "Prior Employment Agreement") among CGI, CGII and the Employee.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
1. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT.
This Employment Agreement shall become effective upon the consummation
of the Acquisition (the "Effective Date"). Upon effectiveness of this Employment
Agreement, this Employment Agreement shall supersede the Prior Employment
Agreement which shall become null and void, except for provisions thereof that
by their terms survive termination. In the event the Merger Agreement is
terminated and the Acquisition is not consummated, this Employment Agreement
shall automatically terminate.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES.
(a) The Company hereby employs the Employee and the Employee hereby
agrees to enter into the employ of the Company, pursuant to the terms and
conditions of this Employment Agreement, until this Employment Agreement shall
be terminated as provided in Section 5(a) hereof (the "Employment Period").
During the Employment Period, the Employee shall serve as Chief Operating
Officer of CGI and shall have the duties and responsibilities commensurate with
such position, and such other duties and responsibilities with the Company and
ADP may reasonably be assigned from time to time by the Company. Employee shall
perform his duties hereunder at the direction, and subject to the authority and
control, of the Group President of the Company (or his designee) and in
accordance with the terms and conditions of this Employment Agreement.
<PAGE>
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and ADP, and will use his full business
time, energy and skill to promote the business and interests of the Company and
ADP.
(c) The principal place of employment of Employee shall be within a
thirty mile radius of Jersey City, New Jersey or such other location as is
consented to by Employee. The duties shall not require Employee to relocate his
residence outside the state of New Jersey without his consent. It is, however,
distinctly understood and agreed that Employee may be required, in connection
with the performance of his duties, to work from time to time at other locations
designated by the Company or as required in connection with the business of the
Company.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, the Company shall pay to the Employee
as compensation for the services to be provided by the Employee hereunder a base
salary of one hundred eighty-four thousand dollars ($184,000) per annum (the
"Base Salary"), payable bi-weekly. The Company shall review the Employee's
performance annually to determine if the Employee shall be granted an increase
in the Base Salary.
(b) During the Employment Period, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
medical and dental, life, accident and disability insurance, stock purchase and
stock option plans which ADP makes available to employees of the Company
generally, pursuant to the terms and conditions of such plans and arrangements
and in accordance with ADP's then current policies. The level and extent of the
Employee's participation under such plans and arrangements shall be equivalent
to that of other employees of the Company of comparable positions and seniority
(taking into account, for eligibility and vesting purposes, the Employee's
service with CGI prior to the Merger).
(c) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to receive reimbursement for all
authorized, reasonable expenses incurred by the Employee in the performance of
his duties hereunder, including, without limitation, reimbursement for
authorized travel and entertainment expenses.
(d) During the Employment Period, the Employee shall be entitled to the
number of days of vacation determined in accordance with ADP's then current
vacation policy.
(e) During the Employment Period, in accordance with ADP's then current
policies, the Employee shall be entitled to a monthly car allowance of $275. The
difference between Employee's current car allowance and the car allowance set
forth in this subsection (e) has been included in Employee's Base Salary.
(f) With respect to sales made by Employee, Employee shall be entitled
to a commission of one percent (1%) on the payments actually collected, net of
inkjetting, labeling, insertion, mainframe printing, shipping and mailing
charges, in respect of printing and binding
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charges. The commission shall be based on sales booked on and after the
closing of the Acquisition. Payment of the commission shall be made on a
quarterly basis between 45 and 60 days following the end of each calendar
quarter.
4. BONUS; STOCK OPTIONS.
(a) In addition to the Base Salary described in Section 3(a) hereof,
during the Employment Period, the Employee shall be eligible to receive an
annual cash bonus based upon the Employee's achievement of performance
objectives to be determined mutually by the Company and Employee each year (the
"Annual Cash Bonus"). The targeted Annual Cash Bonus for ADP's fiscal year ended
June 30, 2001 shall be 25% of the annual Base Salary, forty-six thousand dollars
($46,000), with a potential to earn up to 37.5% of the annual Base Salary,
sixty-nine thousand dollars ($69,000), based, among other things, upon
achievement of performance objectives. Additionally, during the term of this
Employment Agreement the Employee and the Company shall establish "stretch"
bonus goals with respect to the net operating income component of the Employee's
performance objectives thereby entitling the Employee to an additional bonus of
200% of the bonus component related to that performance objective. If the Annual
Cash Bonus becomes payable, it will be paid within ninety (90) days after the
end of ADP's applicable fiscal year provided that the Employee is an employee of
the Company on the last day of such fiscal year. Notwithstanding the foregoing,
the pro-rated Annual Cash Bonus for the portion of the Company's fiscal year
ended June 30, 2000 that the Employee is employed hereunder shall be paid
together with the Annual Cash Bonus for the Company's fiscal year ended June 30,
2001.
(b) As soon as practicable after the date hereof, the Company shall
recommend to ADP's stock option committee that the Employee receive an option to
purchase ten thousand (10,000) shares of ADP common stock which shall vest in
five equal installments over a five-year period from the date of grant and shall
be subject to the terms and conditions of such option grant.
5. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment with the Company pursuant to this
Employment Agreement shall cease and terminate upon the earliest to occur of the
following dates (the "Employment Termination Date"): (i) the third anniversary
of the Effective Date, (ii) the date of death of the Employee or, in the event
the Employee shall be unable by reason of physical or mental disability to
continue the proper performance of his duties hereunder and such disability
shall have continued for a period of at least three (3) months (such
circumstances are referred to herein as "Disability"), the date of Disability,
(iii) the date that the Employee terminates his employment hereunder for any
reason, (iv) in the event that the Employee shall commit a criminal act, fail or
refuse to perform any obligation hereunder and such failure or refusal shall
continue during the ten (10) day period following the receipt by the Employee of
written notice from the Company or ADP of such failure or refusal, commit any
act of negligence in the performance of his duties hereunder and fail to take
appropriate corrective action during the ten (10) day period following the
receipt by the Employee of written notice from the Company or
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ADP of such negligence, or commit any act of willful misconduct (such
circumstances set forth in this subsection (iv) are referred to herein as
"Cause"), and the Company or ADP shall elect to terminate the Employee's
employment hereunder for Cause, the date on which the Company or ADP shall
give written notice to the Employee of such election, and (v) the date the
Company or ADP terminates the Employee's employment hereunder for any reason
other than as provided in Sections 5(a)(i)-(iv) hereof.
(b) If the Employee's employment is terminated during the Employment
Period as provided in Section 5(a)(ii) hereof, the Employee (or his beneficiary
or estate in the event of death of the Employee) shall be entitled to receive,
within thirty (30) days of such termination, in addition to any other benefits
to which the Employee is entitled pursuant to the terms of the employee benefit
plans of ADP applicable to the Employee, (i) Base Salary accrued to the
Employment Termination Date and (ii) all disability or death benefits payable in
accordance with the employee benefit plans of ADP in which the Employee is then
participating.
(c) If the Employee terminates his employment hereunder during the
Employment Period as provided in Section 5(a)(iii) hereof, the Employee shall be
entitled to receive, within thirty (30) days of such termination, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of ADP applicable to the Employee, Base Salary
accrued to the Employment Termination Date.
(d) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(iv) hereof, the
Employee shall only be entitled to receive, within thirty (30) days of such
termination, in addition to any other benefits to which the Employee is entitled
pursuant to the terms of any employee benefit plans of ADP applicable to the
Employee, Base Salary accrued to the Employment Termination Date.
(e) If the Company terminates the Employee's employment hereunder
during the Employment Period as provided in Section 5(a)(v) hereof, the Employee
shall be entitled to receive, in addition to any other benefits which the
Employee is entitled pursuant to the terms of employee benefit plans of ADP
applicable to the Employee, Base Salary and Annual Cash Bonus payable when such
amounts would otherwise have been paid to Employee until the third anniversary
of the Effective Date. Any payments made to the Employee pursuant to this
Section 5(e) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company, ADP and their respective affiliates.
(f) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to pay any amounts under this Employment
Agreement that would be deemed to be an "excess parachute payment" as defined in
the Internal Revenue Code Section 280G.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE; EXCLUSIVE RIGHTS.
(a) NON-COMPETITION. Subject to the last sentence of this Section 6(a),
the Employee agrees that during a period commencing on the date hereof and
ending 12 months after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of
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the Company or ADP or any of their respective affiliates, directly or
indirectly, whether as an officer, director, stockholder, investor, partner,
proprietor, business associate, employee, representative or otherwise, do any
of the following acts: (i) provide services which are competitive with the
businesses or services of the Brokerage Services Group of ADP (as such
businesses are conducted on the date hereof or at any time during the
Non-Competition Period) (the "Businesses"), or promote, market, become or
acquire an interest in, or associate in a business relationship with, any
other person, corporation, firm, partnership or other entity whatsoever who
is or may be engaged in any line of business competitive with the Businesses
(a "Competitor") or (ii) solicit or refer, directly or indirectly, any
clients or prospective clients of any services and/or products which are
similar to those offered by the Company or ADP (at any time during the
Non-Competition Period) to another provider of such services, or (iii)
promote, market or participate in the sale, lease or licensing of any
equipment or software by which services and/or products similar to those
provided by the Company or ADP (at any time during the Non-Competition
Period) can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever. Notwithstanding anything to the
contrary contained herein, if the Company terminates the Employee's
employment hereunder pursuant to Section 5(a)(v) hereof, the "Non-Competition
Period" shall be defined as the period commencing on the date hereof and
ending on the fourth anniversary of the Effective Date.
Notwithstanding anything to the contrary contained herein, (i) the
foregoing provisions of this Section 6(a) shall not be deemed violated by the
purchase and/or ownership by Employee of shares of any class of equity
securities (or options, warrants or rights to acquire such securities, or any
securities convertible into such securities) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible into
such securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Employee not
be otherwise connected with or active in the business of the issuers described
in this Section 6(a), and (ii) Employee shall be permitted, after the Employment
Termination Date, to (A) provide consulting services to entities which are not
Competitors and (B) be employed on a full-time basis (i.e., not on an
independent contracting basis) by any person, firm, corporation, partnership or
other entity to provide for such entity in-house products or services that may
be deemed to be competitive with those offered by the Company only if such
products or services are used exclusively by such entity and are not directly or
indirectly marketed or sold by such entity for the use by any unrelated third
party; provided that in either case Employee complies with the provisions of
sub-sections (b), (c) and (d) of this Section 6 in connection therewith.
(b) NON-DISCLOSURE. The Employee agrees that he will not, directly or
indirectly, disclose, furnish or make accessible to any person, corporation,
firm, partnership or other entity whatsoever (except the Company or ADP or any
of their respective affiliates), or to any officer, director, stockholder,
partner, associate, employee, agent or representative of any such entity, any
proprietary information which is not in the public domain, any customer lists,
business methods, procedures, pricing and marketing structure and strategy,
source or object codes, experimental or research work, names and addresses of
current, former and prospective clients or employees, or
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any other trade secrets, technical data, or know-how of any kind relating to
the Businesses. Upon termination of Employee's employment hereunder for any
reason whatsoever, Employee shall immediately return all documents and notes
(including all copies thereof) of any and all information and materials
belonging or relating to the Businesses (whether or not such materials were
prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the
Non-Competition Period, directly or indirectly, recruit, hire, employ, or
encourage to leave the employ of the Company or any of its affiliates, any
person who is now or hereafter becomes an employee or consultant of the Company
or any of its affiliates until such person has ceased to be an employee or
consultant of the Company or ADP or any of their respective affiliates for a
period of at least two years.
(d) EXCLUSIVE RIGHTS. The Employee hereby assigns to the Company, and
agrees that the Company shall have exclusive right, title and interest for the
entire world in and to all data, programs, specifications, documentation and
other information, including, without limitation, any and all patent, copyright,
trade secret or other proprietary right relating thereto made, prepared or
created by the Employee in connection with anything relating to the Company's
actual or prospective business which the Employee conceives or works on during
the Non-Competition Period. Accordingly, the Employee:
(i) shall promptly and fully disclose all such items to the
Company and will not disclose such items to any other person
or entity (other than employees of the Company or ADP
authorized to review such information), without the Company's
prior written consent;
(ii) shall maintain on the Company's behalf and surrender to the
Company upon termination of the Employee's employment with the
Company all written records regarding all such items;
(iii) shall, but without personal expense, fully cooperate with the
Company and execute all papers and perform all reasonable acts
requested by the Company to establish, confirm or protect the
Company's exclusive rights in such items or to enable it to
transfer legal title to same, together with any patents that
may be issued;
(iv) shall, but without personal expense, provide such information
and true testimony as the Company may request regarding such
items including, without limitation, items which the Employee
neither conceived nor worked on but regarding which the
Employee has knowledge because of the Employee's employment by
the Company; and
(v) states that the only such items in which the Employee
personally holds or claims an interest, and which are not
subject to this Employment Agreement, are listed on the
Ownership Schedule attached hereto. The absence of such
Ownership Schedule means that no such items exist.
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(e) INJUNCTIVE RELIEF. Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose, not to hire and regarding
the Company's exclusive rights contained herein will cause irreparable injury to
the Company and its affiliates, and that the Company and its affiliates shall be
entitled, in addition to any other rights and remedies they may have, at law or
in equity, to an injunction enjoining and restraining Employee from doing or
continuing to do any such act and any other violations or threatened violations
of this Section 6.
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7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and 6
above).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company and/or ADP as to the manner in which the Company shall be run.
9. PURCHASER EMPLOYMENT FORMS. At the Company's request, the Employee
shall complete and execute such other customary employment applications and
other similar forms that the Company or ADP generally require of all of their
employees; provided, however, that in the event of a conflict between the terms
and conditions of this Employment Agreement and the terms and conditions of any
such other employment application or other forms, during the Employment Period
the terms of this Employment Agreement shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the matters contemplated herein and
there are no representations, agreements or understandings between the parties
except as set forth or specifically referred to herein. Any agreement entered
into prior to the date hereof between the Employee and CGI and/or any of their
respective affiliates regarding the matters contemplated herein is hereby
terminated in its entirety and is replaced by this Employment Agreement.
12. NOTICES. All notices shall be sent to the parties by hand delivery,
nationally recognized overnight courier or by certified or registered mail at
the addresses set forth below or to any changed address which may be given in
the manner provided for in this Section 12. All notices to either the Company or
ADP shall be sent to (i) the Company at ADP Financial Information Services,
Inc., 2 Journal Square Plaza, Jersey City, New Jersey 07306, and (ii) Parent at
Automatic Data Processing, Inc. One ADP Boulevard, etc. Attention: General
Counsel. All notices to the Employee shall be sent to 45 Ruby Drive,
Morganville, New Jersey 07751. All notices to CGI shall be sent to Cunningham
Graphics, Inc., 100 Burma Road, Jersey City, New Jersey 07305. Unless hand
delivered, notices shall be deemed given three business days following the date
deposited in the U.S. mails or one business day following the date of delivery
to a nationally recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission or arbitrator(s) having jurisdiction hereof or thereof,
neither party shall have any cause of action or claim against the other by
reason of such declaration of invalidity, unenforceability or illegality; and
any such declaration concerning any provision hereof shall not affect, impair or
invalidate the remainder of this Employment Agreement, but shall be confined in
its operation to
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that provision hereof only and the remainder of this Employment Agreement
shall remain in full force and effect. The parties hereto agree to substitute
the invalid, unenforceable or illegal provision by a valid, enforceable or
legal one which corresponds to the spirit and purpose of the invalid,
unenforceable or illegal provisions to the greatest extent possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified
or amended in any manner except by an instrument in writing signed by all
parties hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto; provided, however, that no consent shall be required hereunder
in the event that the Company assigns this Employment Agreement to any other
affiliate of the Company which shall succeed to the business of the Company and
which assignment does not alter the rights or duties of the Employee hereunder,
in which event the obligations of the Company hereunder shall be binding upon
such assignee.
16. HEADINGS. The headings contained in this Employment Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by the another
party shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of New Jersey, without giving effect to its conflicts of laws
principles.
[Text continues on following page.]
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ JAMES B. BENSON
-------------------------------------
Name: James B. Benson
Title: President
CUNNINGHAM GRAPHICS
INTERNATIONAL, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
CUNNINGHAM GRAPHICS, INC.
By: /s/ MICHAEL CUNNINGHAM
-------------------------------------
Name: Michael Cunningham
Title: President and Chief Executive Officer
/s/ ROBERT NEEDLE
-------------------------------------
Robert Needle
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