SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE TO/A
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 1
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)
<PAGE>
1
CALCULATION OF FILING FEE
- ----------------------------------- ------------------------------
Transaction valuation* $135,625,578 Amount of Filing Fee** $27,125
- ----------------------------------- ------------------------------
* 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 per share, and
(iii) 407,193 options to acquire shares with an aggregate value of
$3,257,544.
** 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.
[X] 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: $27,125
Form or Registration No.: Schedule TO
Filing Party: Automatic Data Processing, Inc.
Date Filed: May 11, 2000
[ ] 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: [ ]
<PAGE>
- ------------------------- -------------------------
CUSIP No. 231157108 Page 2 of 5 Pages
- ------------------------- -------------------------
This Amendment No. 1 amends and supplements the Tender Offer Statement
on Schedule TO filed with the Securities and Exchange Commission (the
"Commission") on May 11, 2000 (the "Schedule TO") by Automatic Data Processing,
Inc., a Delaware corporation ("Parent"), and FIS Acquisition Corp., a New Jersey
corporation and a wholly owned subsidiary of ADP (the "Purchaser"). The Schedule
TO relates to the offer by the Purchaser to purchase all the outstanding shares
of common stock, no par value (the "Shares"), of Cunningham Graphics
International, Inc., a New Jersey corporation (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 the
Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively. This Amendment
No. 1 is being filed on behalf of the Purchaser and Parent. Any capitalized term
used and not otherwise defined herein shall have the meaning ascribed to such
term in the Offer to Purchase and the Schedule TO.
ITEM 11. ADDITIONAL INFORMATION.
Item 11 of the Schedule TO is hereby amended and supplemented to include the
following information:
On May 12, 2000, Parent and the Company were informed that, on May 5,
2000, two purported shareholder class action complaints were filed in the
Chancery Division of the Superior Court of New Jersey for Hudson County, one by
Kenneth Sherman (Docket No. C-67-00) (the "Sherman Action") and the other by Nat
Orme (Docket No. C-69-00) (the "Orme Action" and, together with the Sherman
Action, the "Actions"), both of whom claim to be shareholders of the Company and
purport to bring their Actions on behalf of all shareholders of the Company
other than the Individual Defendants (as defined below) and related parties. The
complaints in the Actions, which are identical in all material substantive
respects, name as defendants the Company and the directors of the Company (the
"Individual Defendants") and allege, among other things, that the Individual
Defendants have breached their fiduciary obligations by (i) having thus far
failed to announce any active auction or open bidding procedures for the sale of
the Company and (ii) agreeing to an Offer Price and Merger Consideration that do
not represent the true value of the Company and its future prospects. The
complaints request that the Superior Court, among other things, declare that
each of the Actions is a proper class action, declare that entering into the
Merger Agreement constitutes a breach of the Individual Defendants' fiduciary
duties, enjoin the ongoing performance of the Merger Agreement and the
consummation of the Merger (unless and until the Company adopts and implements a
procedure or process, such as an auction, that allegedly would obtain the
highest possible price for the Company), rescind, to the extent already
implemented, the Merger Agreement or any of the terms thereof, and award
appropriate damages and costs and disbursements of the Actions, including
reasonable attorneys' and experts' fees.
ITEM 12. EXHIBITS.
(a)(5)(A) Complaint of Kenneth Sherman against Michael R. Cunningham,
Gordon Mays, Laurence Gerber, James J. Cunningham, Arnold
Spinner, Stanley Moss and Cunningham Graphics International,
Inc., filed in the Chancery Division of the Superior Court of
New Jersey for Hudson County on May 5, 2000
(a)(5)(B) Complaint of Nat Orme against Michael R. Cunningham, Gordon
Mays, Laurence Gerber, James J. Cunningham, Arnold Spinner,
Stanley Moss and Cunningham Graphics International, Inc.,
filed in the Chancery Division of the Superior Court of New
Jersey for Hudson County on May 5, 2000
<PAGE>
- ------------------------- -------------------------
CUSIP No. 231157108 Page 3 of 5 Pages
- ------------------------- -------------------------
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 18, 2000
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
<PAGE>
- ------------------------- -------------------------
CUSIP No. 231157108 Page 4 of 5 Pages
- ------------------------- -------------------------
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
*(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 Automatic Data
Processing, Inc. on May 3, 2000
*(a)(1)(H) Summary Advertisement, published May 11, 2000
(a)(5)(A) Complaint of Kenneth Sherman against Michael R.
Cunningham, Gordon Mays, Laurence Gerber, James J.
Cunningham, Arnold Spinner, Stanley Moss and
Cunningham Graphics International, Inc., filed in the
Chancery Division of the Superior Court of New Jersey
for Hudson County on May 5, 2000
(a)(5)(B) Complaint of Nat Orme against Michael R. Cunningham,
Gordon Mays, Laurence Gerber, James J. Cunningham,
Arnold Spinner, Stanley Moss and Cunningham Graphics
International, Inc., filed in the Chancery Division
of the Superior Court of New Jersey for Hudson County
on May 5, 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.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Gerald (L.J.) Baillargeon
- -----------------------------
* Previously filed
<PAGE>
- ------------------------- -------------------------
CUSIP No. 231157108 Page 5 of 5 Pages
- ------------------------- -------------------------
*(d)(5) Employment Agreement, dated as of May 2, 2000,
between ADP Financial Information Services, Inc.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Michael R. Cunningham
*(d)(6) Employment Agreement, dated as of May 2, 2000,
between ADP Financial Information Services, Inc.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Ned Hood
*(d)(7) Employment Agreement, dated as of May 2, 2000,
between ADP Financial Information Services, Inc.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Ioannis Lykogiannis
*(d)(8) Employment Agreement, dated as of May 2, 2000,
between ADP Financial Information Services, Inc.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Gordon Mays
*(d)(9) Employment Agreement, dated as of May 2, 2000,
between ADP Financial Information Services, Inc.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Timothy Mays
*(d)(10) Employment Agreement, dated as of May 2, 2000,
between ADP Financial Information Services, Inc.,
Cunningham Graphics International, Inc., Cunningham
Graphics Inc. and Robert Needle
- -----------------------------
* Previously filed
Exhibit 99(a)(5)(A)
<PAGE>
2
WILLIAM J. PINILIS
Attorney At Law
237 South Street
Morristown, NJ 07960
(973) 401-1111
Attorney for Plaintiff
(Additional Counsel Listed
on Signature Page)
..........................................................x
KENNETH SHERMAN :
:
Plaintiff, : SUPERIOR COURT OF
: NEW JERSEY
v. : CHANCERY DIVISION
: HUDSON COUNTY
MICHAEL R. CUNNINGHAM, GORDON MAYS, :
LAURENCE GERBER, JAMES J. CUNNINGHAM, : DOCKET NO. C-67-00
ARNOLD SPINNER, STANLEY MOSS and :
CUNNINGHAM GRAPHICS INTERNATIONAL INC. : CLASS ACTION
: COMPLAINT
Defendants. :
..........................................................x
CLASS ACTION COMPLAINT
Plaintiff, Kenneth Sherman, by his attorneys, alleges upon information
and belief, except as to paragraph 1 which is alleged upon personal knowledge,
as follows:
THE PARTIES
1. Plaintiff Kenneth Sherman ("plaintiff") is the owner of common stock
of Cunningham Graphics International, Inc. ("CGII" or the "Company") and has
<PAGE>
3
been the owner of such shares continuously since prior to the wrongs complained
of herein.
2. Defendant CGII is a corporation duly existing and organized under
the laws of the State of New Jersey, with its principal executive offices
located at 100 Burma Road, Jersey City, New Jersey. 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.
3. Defendant Michael R. Cunningham ("Cunningham") is and at all times
relevant hereto has been President, Chief Executive Officer, and Chairman of the
Board of CGII. Cunningham beneficially owns 35.6% of the Company's outstanding
common stock.
4. Defendant Gordon Mays ("Mays") is and at all times relevant hereto
has been Executive Vice President and a director of CGII. Mays beneficially owns
4% of the Company's outstanding common stock.
5. Defendants Laurence Gerber, James J. Cunningham, Arnold Spinner and
Stanley J. Moss are and at all times relevant hereto have been directors of
CGII.
6. The defendants referred to in paragraphs 3 through 5 are
collectively referred to herein as the "Individual Defendants."
7. By reason of the above Individual Defendants' positions with the
Company as officers and/or directors, said individuals are in a fiduciary
relationship with plaintiff and the other public stockholders of CGII, and owe
plaintiff and the other
<PAGE>
4
members of the class the highest obligations of good faith, fair dealing, due
care, loyalty and full, candid and adequate disclosure.
CLASS ACTION ALLEGATIONS
8. Plaintiff brings this action on her own behalf and as a class
action, pursuant to Rule 4:32-1 of the Rules of this Court, on behalf of herself
and holders of CGII common stock (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants.
9. This action is properly maintainable as a class action.
10. The Class is so numerous that joinder of all members is
impracticable. As of May 3, 2000, there were approximately 5.75 million shares
of CGII common stock outstanding.
11. There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class members. The
common questions include, inter alia, the following:
(1) whether the merger is grossly unfair to the Class; .
(2) whether plaintiff and the other members of the Class would
be irreparably damaged were the transactions complained
of herein consummated; and
(3) whether defendants have breached their
fiduciary and other common law duties owed
by them to plaintiff and the other members
of the Class.
<PAGE>
5
12. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiffs claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Accordingly, plaintiff is
an adequate representative of the Class and will fairly and adequately protect
the interests of the Class.
13. Plaintiff anticipates that there will be no difficulty in the
management of this litigation.
14. Defendants have acted on grounds generally applicable to the Class
with respect to the matters complained of herein, thereby making appropriate the
relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
15. On May 3, 2000, CGII announced that it has entered into a
definitive merger agreement with Automatic Data Processing, Inc. ("ADPI")
whereby ADPI has agreed to buy CGII for $125.8 million. ADPI will pay about $22
a share for CCII (the "Offer"). The Offer is 2.2% lower than the closing price
of CGII stock on May 2, 2000, the day prior to the announcement.
16. ADPI, one of the world's largest independent computing services
firms in the world, expects to commence a tender offer to purchase all of CGII's
common shares by May 10, 2000.
17. Certain directors and officers of CGII, including defendant
Cunningham, holding in the aggregate approximately 45% of the outstanding common
shares, have agreed to tender their common shares pursuant to ADPI's Offer.
<PAGE>
6
18. The consideration to be paid to Class members is unconscionable,
unfair and grossly inadequate because, among other things:
(1) the consideration agreed upon did not result from an
appropriate consideration of the value of CGII as the
Individual Defendants were presented with, and asked to
evaluate, the proposed merger without any attempt to
sufficiently ascertain the true value of CGII through open
bidding or a "market check" mechanism;
(2) under the terms of the merger agreement, plaintiff and the
other members of the Class will not receive any premium and
are being asked to sell their CGII shares for less than their
current market value; and
(3) CGII shares traded as high as $29 as recently as March 30,
2000.
19. The Individual Defendants have thus far failed to announce any
active auction or open bidding procedures best calculated to maximize
shareholder value and have, instead, agreed to the merger which will only serve
to inhibit the maximization of shareholder value.
20. The Individual Defendants were and are under a duty:
(1) to fully inform themselves of CGII's market value before
taking, or agreeing to refrain from taking, action;
(2) to act in the interests of the equity owners;
(3) to maximize shareholder value;
<PAGE>
7
(4) to obtain the best financial and other terms when the
Company's independent existence will be materially altered by
a transaction;
(5) to act in accordance with their fundamental duties of due care
and loyalty.
21. By the acts, transactions and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme or in breach of
their fiduciary duties to plaintiff and the other members of the Class, are
attempting unfairly to deprive plaintiff and other members of the Class of the
true value of their investment in CGII.
22. CGII shareholders will, if the transaction is consummated, be
deprived of the opportunity for substantial gains which the Company may realize.
23. By reason of the foregoing acts, practices and course of conduct,
defendants have failed to exercise ordinary care and diligence in the exercise
of their fiduciary obligations toward plaintiff and the other CGII public
stockholders.
24. As a result of the actions of defendants, plaintiff and the other
members of the Class have been and will be damaged in that they have not and
will not receive their fair proportion of the value of CGII's assets and
businesses and will be prevented from obtaining appropriate consideration for
their shares of CGII common stock.
25. Unless enjoined by this Court, the defendants will continue to
breach their fiduciary duties owed to plaintiff and the other members of the
Class, and may consummate the proposed transaction which will exclude the Class
from its fair
<PAGE>
8
proportionate share of CGII's valuable assets and businesses, and/or benefit
them in the unfair manner complained of herein, all to the irreparable harm of
the Class, as aforesaid.
26. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment and preliminary and permanent
relief, including injunctive relief, in his favor and in favor of the Class and
against defendants as follows:
1. Declaring that this action is properly maintainable as a class
action;
2. Declaring and decreeing that the merger agreement was entered
into in breach of the fiduciary duties of the Individual
Defendants and is therefore unlawful and unenforceable;
3. Enjoining defendants from proceeding with the merger
agreement;
4. Enjoining defendants from consummating the merger, or a
business combination with a third party, unless and until the
Company adopts and implements a procedure or process, such as
an auction, to obtain the highest possible price for the
Company;
5. Directing the Individual Defendants to exercise their
fiduciary duties to obtain a transaction which is in the best
interests of shareholders until the process for the sale or
auction of the Company is completed and the highest possible
price is obtained;
6. Rescinding, to the extent already implemented, the merger
agreement or any of the terms thereof;
7. Awarding plaintiff and the Class appropriate damages;
<PAGE>
9
8. Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys' and experts, fees;
9. Granting such other and further relief as this Court may deem
just and proper.
DATED: May 4, 2000
By: /s/ William J. Pinilis
----------------------
WILLIAM J. PINILIS
Attorney At Law
237 South Street
Morristown, NJ 07960
(973) 401-1111
Of Counsel:
SCHIFFRIN & BARROWAY, LLP
Marc A. Topaz
Patricia C. Weiser
Three Bala Plaza East
Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706
Exhibit 99(a)(5)(B)
<PAGE>
2
WILLIAM J. PINILIS
Attorney At Law
237 South Street
Morristown, NJ 07960
(973) 401-1111
Attorney for Plaintiff
(Additional Counsel Listed
on Signature Page)
.........................................................x
NAT ORME, :
:
Plaintiff, : SUPERIOR COURT OF
: NEW JERSEY
v. : CHANCERY DIVISION
: HUDSON COUNTY
MICHAEL R. CUNNINGHAM, GORDON MAYS, :
LAURENCE GERBER, JAMES J. CUNNINGHAM, : DOCKET NO. C-69-00
ARNOLD SPINNER, STANLEY MOSS and :
CUNNINGHAM GRAPHICS INTERNATIONAL INC. : CLASS ACTION
: COMPLAINT
Defendants. :
.........................................................x
CLASS ACTION COMPLAINT
Plaintiff, Nat Orme, by his attorneys, alleges upon information and
belief, except as to paragraph 1 which is alleged upon personal knowledge, as
follows:
THE PARTIES
1. Plaintiff Nat Orme ("plaintiff") is the owner of common stock of
Cunningham Graphics International, Inc. ("CGII" or the "Company") and has been
the owner of such shares continuously since prior to the wrongs complained of
herein.
<PAGE>
3
2. Defendant CGII is a corporation duly existing and organized under
the laws of the State of New Jersey, with its principal executive offices
located at 100 Burma Road, Jersey City, New Jersey. 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.
3. Defendant Michael R. Cunningham ("Cunningham") is and at all times
relevant hereto has been President, Chief Executive Officer, and Chairman of the
Board of CGII. Cunningham beneficially owns 35.6% of the Company's outstanding
common stock.
4. Defendant Gordon Mays ("Mays") is and at all times relevant hereto
has been Executive Vice President and a director of CGII. Mays beneficially owns
4% of the Company's outstanding common stock.
5. Defendants Laurence Gerber, James J. Cunningham, Arnold Spinner and
Stanley J. Moss are and at all times relevant hereto have been directors of
CGII.
6. The defendants referred to in paragraphs 3 through 5 are
collectively referred to herein as the "Individual Defendants."
7. By reason of the above Individual Defendants' positions with the
Company as officers and/or directors, said individuals are in a fiduciary
relationship with plaintiff and the other public stockholders of CGII, and owe
plaintiff and the other members of the class the highest obligations of good
faith, fair dealing, due care, loyalty and full, candid and adequate disclosure.
<PAGE>
4
CLASS ACTION ALLEGATIONS
8. Plaintiff brings this action on her own behalf and as a class
action, pursuant to Rule 4:32-1 of the Rules of this Court, on behalf of herself
and holders of CGII common stock (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants.
9. This action is properly maintainable as a class action.
10. The Class is so numerous that joinder of all members is
impracticable. As of May 3, 2000, there were approximately 5.75 million shares
of CGII common stock outstanding.
11. There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class members. The
common questions include, inter alia, the following:
(1) whether the merger is grossly unfair to the Class; .
(2) whether plaintiff and the other members of the Class would
be irreparably damaged were the transactions complained
of herein consummated; and
(3) whether defendants have breached their
fiduciary and other common law duties owed
by them to plaintiff and the other members
of the Class.
12. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiffs claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the
<PAGE>
5
other members of the Class. Accordingly, plaintiff is an adequate representative
of the Class and will fairly and adequately protect the interests of the Class.
13. Plaintiff anticipates that there will be no difficulty in the
management of this litigation.
14. Defendants have acted on grounds generally applicable to the Class
with respect to the matters complained of herein, thereby making appropriate the
relief sought herein with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
15. On May 3, 2000, CGII announced that it has entered into a
definitive merger agreement with Automatic Data Processing, Inc. ("ADPI")
whereby ADPI has agreed to buy CGII for $125.8 million. ADPI will pay about $22
a share for CCII (the "Offer"). The Offer is 2.2% lower than the closing price
of CGII stock on May 2, 2000, the day prior to the announcement.
16. ADPI, one of the world's largest independent computing services
firms in the world, expects to commence a tender offer to purchase all of CGII's
common shares by May 10, 2000.
17. Certain directors and officers of CGII, including defendant
Cunningham, holding in the aggregate approximately 45% of the outstanding common
shares, have agreed to tender their common shares pursuant to ADPI's Offer.
18. The consideration to be paid to Class members is unconscionable,
unfair and grossly inadequate because, among other things:
<PAGE>
6
(1) the consideration agreed upon did not result from an
appropriate consideration of the value of CGII as the
Individual Defendants were presented with, and asked to
evaluate, the proposed merger without any attempt to
sufficiently ascertain the true value of CGII through open
bidding or a "market check" mechanism;
(2) under the terms of the merger agreement, plaintiff and the
other members of the Class will not receive any premium and
are being asked to sell their CGII shares for less than their
current market value; and
(3) CGII shares traded as high as $29 as recently as March 30,
2000.
19. The Individual Defendants have thus far failed to announce any
active auction or open bidding procedures best calculated to maximize
shareholder value and have, instead, agreed to the merger which will only serve
to inhibit the maximization of shareholder value.
20. The Individual Defendants were and are under a duty:
(1) to fully inform themselves of CGII's market value before
taking, or agreeing to refrain from taking, action;
(2) to act in the interests of the equity owners;
(3) to maximize shareholder value;
<PAGE>
7
(4) to obtain the best financial and other terms when the
Company's independent existence will be materially altered by
a transaction;
(5) to act in accordance with their fundamental duties of due care
and loyalty.
21. By the acts, transactions and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme or in breach of
their fiduciary duties to plaintiff and the other members of the Class, are
attempting unfairly to deprive plaintiff and other members of the Class of the
true value of their investment in CGII.
22. CGII shareholders will, if the transaction is consummated, be
deprived of the opportunity for substantial gains which the Company may realize.
23. By reason of the foregoing acts, practices and course of conduct,
defendants have failed to exercise ordinary care and diligence in the exercise
of their fiduciary obligations toward plaintiff arid the other CGII public
stockholders.
24. As a result of the actions of defendants, plaintiff and the other
members of the Class have been and will be damaged in that they have not and
will not receive their fair proportion of the value of CGII's assets and
businesses and will be prevented from obtaining appropriate consideration for
their shares of CGII common stock.
25. Unless enjoined by this Court, the defendants will continue to
breach their fiduciary duties owed to plaintiff and the other members of the
Class, and may consummate the proposed transaction which will exclude the Class
from its fair
<PAGE>
8
proportionate share of CGII's valuable assets and businesses, and/or benefit
them in the unfair manner complained of herein, all to the irreparable harm of
the Class, as aforesaid.
26. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment and Preliminary and permanent
relief, including injunctive relief, in his favor and in favor of the Class and
against defendants as follows:
1. Declaring that this action is properly maintainable as a class
action;
2. Declaring and decreeing that the merger agreement was entered
into in breach of the fiduciary duties of the Individual
Defendants and is therefore unlawful and unenforceable;
3. Enjoining defendants from proceeding with the merger
agreement;
4. Enjoining defendants from consummating the merger, or a
business combination with a third party, unless and until the
Company adopts and implements a procedure or process, such as
an auction, to obtain the highest possible price for the
Company;
5. Directing the Individual Defendants to exercise their
fiduciary duties to obtain a transaction which is in the best
interests of shareholders until the process for the sale or
auction of the Company is completed and the highest possible
price is obtained;
6. Rescinding, to the extent already implemented, the merger
agreement or any of the terms thereof;
7. Awarding plaintiff and the Class appropriate damages;
<PAGE>
9
8. Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys' and experts, fees;
9. Granting such other and further relief as this Court may deem
just and proper.
DATED: May 4, 2000
By: /s/ William J. Pinilis
----------------------
WILLIAM J. PINILIS
Attorney At Law
237 South Street
Morristown, NJ 07960
(973) 401-1111
Of Counsel:
CAULEY & GELLER
Paul Geller
7200 West Camino Real
Suite 203
Boca Raton, FL 33433
(561) 750-3000
