-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H8zoEDblL8ml/otafSzaR2wy/I3caglI4ul5VkjmttikxR9hDokKT80zHkDONZiF 6XOjkqgXRHnNaUAjWUsjAg== 0000912057-00-023135.txt : 20000512 0000912057-00-023135.hdr.sgml : 20000512 ACCESSION NUMBER: 0000912057-00-023135 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 20000511 GROUP MEMBERS: AUTOMATIC DATA PROCESSING INC GROUP MEMBERS: FIS ACQUISITION CORP. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CUNNINGHAM GRAPHICS INTERNATIONAL INC CENTRAL INDEX KEY: 0001053949 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 223561164 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: SEC FILE NUMBER: 005-55215 FILM NUMBER: 625406 BUSINESS ADDRESS: STREET 1: 100 BURMA RD CITY: JERSEY CITY STATE: NJ ZIP: 07305 BUSINESS PHONE: 2012171990 MAIL ADDRESS: STREET 1: 629 GROVE STREET CITY: JERSEY CITY STATE: NJ ZIP: 07310 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AUTOMATIC DATA PROCESSING INC CENTRAL INDEX KEY: 0000008670 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 221467904 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: ONE ADP BOULVARD CITY: ROSELAND STATE: NJ ZIP: 07068 BUSINESS PHONE: 2019945000 MAIL ADDRESS: STREET 1: ONE ADP BOULEVARD CITY: ROSELAND STATE: NJ ZIP: 07068 SC TO-T 1 SCHEDULE TO-T 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 - ----------------------------------------------- ----------------------------------------------- Transaction Valuation* Amount of Filing Fee** $135,625,578 $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 $22.00 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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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. (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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(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.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. Not applicable.
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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 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
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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 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
EX-99.A(1)(A) 2 EXHIBIT 99(A)(1)(A) 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 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 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 TABLE OF CONTENTS
PAGE -------- 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
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 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 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 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- 4 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. 5 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. 6 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, 7 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 8 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. 9 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 10 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 11 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 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 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 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.
HIGH LOW ----------------------------- ------------------------------ 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
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 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." 16 CUNNINGHAM GRAPHICS INTERNATIONAL, INC. SELECTED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEARS ENDED --------------------------------- DEC. 31, DEC. 31, DEC. 31, 1999 1998 1997 --------- --------- --------- 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
AT AT DECEMBER 31, 1999 DECEMBER 31, 1998 ------------------ ------------------ 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 ======== =======
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 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)
PROJECTED FISCAL YEAR ENDED DECEMBER 31, 2000 ----------------- 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
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 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 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 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. 21 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. 22 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. 23 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, 24 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 25 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. 26 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, 27 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 28 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. 29 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. 30 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 31 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. 32 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 33 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. 34 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. 35 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 36 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 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 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - ---------------------------------- ------------------------------------------------------- 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.
39
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - ---------------------------------- ------------------------------------------------------- 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.
40
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS - ---------------------------------- ------------------------------------------------------- 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.
(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.
POSITION WITH PURCHASER; PRESENT PRINCIPAL OCCUPATION NAME AND MATERIAL POSITIONS HELD DURING PAST FIVE YEARS - ---------------------------------- ------------------------------------------------------- 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.
41 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 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
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 EX-99.A(1)(B) 3 EXHIBIT 99(A)(1)(B) 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 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
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.
DESCRIPTION OF SHARES TENDERED 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) Total Number of Shares Share Evidenced by Number Certificate Share of Shares Number(s)* Certificate(s)* Tendered** 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.
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.
/ / 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:
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 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 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 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 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 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 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 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 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 ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING: PAYER'S NAME: WILMINGTON TRUST COMPANY - --------------------------------------------------------------------------------------------------------------------------- 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 - ---------------------------------------------------------------------------------------------------------------------------
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 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 EX-99.A(1)(C) 4 EXHIBIT 99(A)(1)(C) 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 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
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. 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. 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):
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. Name of Firm: Authorized Signature Address: Title Name: Zip Code Please Print Date: , 2000 ADDRESS Area Code and Tel. No.:
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A(1)(D) 5 EXHIBIT 99(A)(1)(D) 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 OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JUNE 8, 2000, UNLESS THE OFFER IS EXTENDED.
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 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
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.
EX-99.A(1)(E) 6 EXHIBIT 99(A)(1)(E) 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 OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON THURSDAY, JUNE 8, 2000, UNLESS THE OFFER IS EXTENDED.
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 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. 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:*____________________ 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)
- ------------------------ * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.A(1)(F) 7 EXHIBIT 99(A)(1)(F) 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. - ----------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ----------------------------------------------- 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-- - ----------------------------------------------- 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
- --------------------------------------------- - --------------------------------------------- (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. 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. EX-99.A(1)(G) 8 EXHIBIT 99(A)(1)(G) 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. EX-99.A(1)(H) 9 EXHIBIT 99(A)(1)(H) 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. 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 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. 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 EX-99.D(1) 10 EXHIBIT 99(D)(1) 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 TABLE OF CONTENTS ARTICLE I THE OFFER 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
i 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
ii 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
iii GLOSSARY OF DEFINED TERMS
DEFINED TERMS DEFINED IN SECTION - ------------- ------------------- 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
iv 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)
v 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 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 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 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 (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, 5 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. 6 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 7 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 8 "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 9 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 10 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, 11 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 12 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 13 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. 14 (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. 15 (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 16 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; 17 (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 18 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. 19 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"); 20 (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 21 (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 22 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. 23 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 24 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 25 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; 26 (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. 27 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 28 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. 29 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 30 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. 31 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 32 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. 33 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 34 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. 35 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 36 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 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 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. 39 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. 40 (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. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 41 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] 42 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 (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 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 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 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 EX-99.D(2) 11 EXHIBIT 99(D)(2) 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. 1 "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 2 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: 3 (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 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 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 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. 7 (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 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 SCHEDULE 1
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) - ------------------- ------------------------------ ------------- ------------------------ 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
- ------------ (1) Other than Owned Shares issuable upon exercise of Options listed in the next column. 10 EX-99.D(3) 12 EXHIBIT 99(D)(3) 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. 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 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 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. 4 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. 5 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). 6 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: 7 EX-99.(D)(4) 13 EXHIBIT 99(D)(4) 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 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. 2 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 3 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 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 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 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 7 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 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 EX-99.(D)(5) 14 EXHIBIT 99(D)(5) 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. (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. 2 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 3 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 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 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 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 7 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 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 9 EX-99.(D)(6) 15 EXHIBIT 99(D)(6) 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 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 2 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 3 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 4 "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 5 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. 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 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 7 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 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 9 EX-99.(D)(7) 16 EXHIBIT 99(D)(7) 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. (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. 2 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 3 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 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 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 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 7 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 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 9 EX-99.(D)(8) 17 EXHIBIT 99(D)(8) 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. (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. 2 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 3 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 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 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 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 7 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 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 EX-99.(D)(9) 18 EXHIBIT 99(D)(9) 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. (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 2 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 3 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. 4 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. 5 (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, 6 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 7 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. 8 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.] 9 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 10 EX-99.(D)(10) 19 EXHIBIT 99(D)(10) 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. (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 2 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 3 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 4 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 5 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. 6 (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 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 8 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.] 9 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 10 -----END PRIVACY-ENHANCED MESSAGE-----