UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 3, 1998
THE VINCAM GROUP, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 0-28148 59-2452823
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
10200 SUNSET DRIVE MIAMI, FLORIDA 33173
(Address of principal executive offices) (Zip Code)
(305) 630-1000
(Registrant's telephone number, including area code)
2850 DOUGLAS ROAD CORAL GABLES, FLORIDA 33134
(Former name, former address, and former fiscal year,
if changed since last report)
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ITEM 1. CHANGE IN CONTROL OF REGISTRANT
(a) Not applicable.
(b) On December 3, 1998, The Vincam Group, Inc. ("Vincam") entered
into a definitive Agreement and Plan of Merger (the "Merger Agreement") with
Automatic Data Processing, Inc. ("ADP") and ADP Acquisition Corp. (Florida), a
newly formed, wholly owned subsidiary of ADP. Pursuant to the Merger Agreement,
Vincam will become a subsidiary of ADP.
Under the terms of the Merger Agreement, which was unanimously approved
by the board of directors of Vincam, holders of outstanding common stock of
Vincam will receive 0.229 shares of ADP common stock for each outstanding share
of Vincam common stock, provided that the average ADP stock price for the 10
trading days ending three business days prior to the shareholders meeting to be
held to approve the transaction is between $68.781 and $84.065. For average ADP
stock prices between $61.138 and $68.781, the exchange ratio adjusts to keep the
value constant at $15.25 per Vincam share. Similarly, between $84.065 and
$91.708, the exchange ratio adjusts to keep the value to Vincam shareholders
constant at $19.25 per share. Above $91.708, the exchange ratio remains fixed at
.2099 ADP shares for each Vincam share. Should ADP's average stock price fall
below $61.138, Vincam has the option to accept an exchange ratio of .2576 ADP
shares for each Vincam share or it may request that ADP issue additional shares
to keep the value at $15.75. If ADP does not issue additional shares, Vincam can
terminate the agreement. The transaction is expected to be tax free to
shareholders of both Vincam and ADP.
Effective as of December 3, 1998, ADP entered into voting agreements
with each of Carlos A. Saladrigas, Jose M. Sanchez, Michael J. Gatsas, Theodore
L. Gastas and certain of their affiliates, pursuant to which, among other
things, each of such persons have agreed to vote his or its respective shares of
Vincam common stock in favor of the transaction (the "Voting Agreement").
Messrs. Saladrigas, Sanchez, M. Gatsas and T. Gatsas, and their affiliates, have
voting control over approximately 45% of Vincam's outstanding common stock. In
addition, Vincam will be required to pay ADP a break-up fee of $8.5 million if
the merger agreement is terminated for certain reasons, including if Vincam
accepts or recommends an alternative transaction and ADP terminates the Merger
Agreement.
The transaction is subject to approval by Vincam's stockholders,
pooling-of-interests accounting treatment and the receipt of certain regulatory
approvals, including expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary
closing conditions. No assurance can be given that all of the conditions to
consummation of the proposed merger will be satisfied.
The foregoing is a summary only and is qualified in its entirety by
reference to the Merger Agreement and the Voting Agreement, each of which is
filed as an exhibit hereto.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
2 Agreement and Plan of Merger, dated as of December 3,
1998, by and among Automatic Data Processing, Inc.,
ADP Acquisition Corp. (Florida), and The Vincam
Group, Inc.*
10.1 Voting Agreement, dated as of December 3, 1998, by
and among Automatic Data Processing, Inc., Carlos A.
Saladrigas, Saladrigas Family Limited Partnership,
Jose M. Sanchez, Michael J. Gatsas, Theodore L.
Gatsas, and Gatsas Family Limited Partnership.
- ------------
* Schedules and exhibits to Exhibit 2 have not been filed with the Securities
and Exchange Commission (the "Commission"). The Registrant agrees to provide
such schedules and exhibits supplementally upon the request of the
Commission.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE VINCAM GROUP, INC.
Date: DECEMBER 8, 1998 By: /s/ CARLOS A. RODRIGUEZ
--------------------------------
Carlos A. Rodriguez, Chief Financial
Officer and Senior Vice President
Finance and Administration (Principal
Financial Officer)
4
<PAGE>
Index to Exhibits
EXHIBIT
NUMBER EXHIBIT
- ------ -------
2 Agreement and Plan of Merger, dated as of December 3, 1998, by and
among Automatic Data Processing, Inc., ADP Acquisition Corp.
(Florida), and The Vincam Group, Inc.
10.1 Voting Agreement, dated as of December 3, 1998, by and among
Automatic Data Processing, Inc., Carlos A. Saladrigas, Saladrigas
Family Limited Partnership, Jose M. Sanchez, Michael J. Gatsas,
Theodore L. Gatsas, and Gatsas Family Limited Partnership.
5
EXHIBIT 2
================================================================================
AGREEMENT AND PLAN OF MERGER
among
AUTOMATIC DATA PROCESSING, INC.,
ADP ACQUISITION CORP. (FLORIDA)
and
THE VINCAM GROUP, INC.
Dated as of December 3, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER.......................................................2
1.1 The Merger.......................................................2
1.2 Closing..........................................................2
1.3 Effective Time...................................................2
1.4 Certificate of Incorporation and By-laws.........................2
1.5 Officers and Directors...........................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES.....................................................3
2.1 Effect on Capital Stock..........................................3
(a) Capital Stock of Sub.......................................3
(b) Exchange Ratio for VCAM Common Stock.......................3
(c) Cancellation of Treasury Stock and ADP-Owned Stock.........5
2.2 Exchange of Certificates.........................................5
(a) Exchange Agent.............................................5
(b) Exchange Procedures........................................5
(c) Distributions with Respect to Unexchanged Shares...........6
(d) No Further Ownership Rights in VCAM Common Stock...........6
(e) No Fractional Shares.......................................7
(f) Termination of Exchange Fund...............................7
(g) No Liability...............................................8
(h) Withholding Rights.........................................8
2.3 Stock Options....................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
VCAM AND ADP.....................................................9
3.1 Representations and Warranties of VCAM...........................9
(a) Organization, Standing and Corporate Power;
Subsidiaries.............................................9
(b) Certificate of Incorporation and By-laws..................10
(c) Capitalization............................................10
(d) SEC Documents; Financial Statements.......................11
(e) Authority.................................................11
(f) Compliance with Applicable Laws...........................12
i
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PAGE
----
(g) Government Approvals; Required Consents...................13
(h) Non-Contravention.........................................13
(i) Litigation................................................14
(j) Taxes and Related Tax Matters.............................14
(k) Certain Agreements........................................15
(l) Employee Benefits.........................................16
(m) Contracts.................................................19
(n) Environmental Matters.....................................20
(o) Absence of Certain Changes or Events......................21
(p) Information Supplied......................................21
(q) Real Estate...............................................21
(r) Intellectual Property.....................................22
(s) Accounts Receivable.......................................23
(t) Clients...................................................24
(u) Investment Company Act....................................24
(v) Brokers or Finders........................................24
(w) Vote Required.............................................24
(x) Opinion of Financial Advisor..............................24
(y) Accounting Matters........................................25
(z) Ownership of ADP Common Stock.............................25
(aa) Appraisal Rights and Dissenters' Rights...................25
3.2 Representations and Warranties of ADP and Sub...................28
(a) Organization, Standing and Corporate Power;
Subsidiaries............................................28
(b) Certificate of Incorporation and By-laws..................28
(c) Capitalization............................................28
(d) SEC Documents; Financial Statements.......................28
(e) Authority.................................................29
(f) Government Approvals; Required Consents...................29
(g) Non-Contravention.........................................30
(h) Information Supplied......................................30
(i) Brokers or Finders........................................30
(j) Material Adverse Change...................................31
(k) Accounting Matters........................................31
ARTICLE IV COVENANTS.......................................................31
4.1 Mutual Covenants of ADP and VCAM................................31
(a) Confidentiality...........................................31
ii
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PAGE
----
(b) Publicity.................................................32
(c) Preparation of the Proxy Statement and the Registration
Statement...............................................32
(d) Satisfaction of Conditions; Additional Agreements.........32
(e) Other Actions.............................................33
(f) Advice of Changes; SEC Documents..........................33
(g) Legal Conditions to Merger................................33
4.2 Covenants of VCAM...............................................34
(a) Access to Information.....................................34
(b) Ordinary Course...........................................34
(c) Meetings; Fiduciary Duties................................36
(d) No Solicitation...........................................37
(e) Superior Acquisition Proposal.............................38
(f) Affiliates................................................38
(g) Compliance with Laws......................................39
(h) Advice of Changes.........................................39
4.3 Listing.........................................................39
ARTICLE V ADDITIONAL AGREEMENTS...........................................39
5.1 Indemnification; Directors' and Officers' Insurance.............39
5.2 Additional Agreements; Reasonable Efforts.......................41
5.3 Accounting Treatment............................................41
5.4 Tax Treatment...................................................41
5.5 Employee Matters................................................42
ARTICLE VI CONDITIONS PRECEDENT............................................42
6.1 Conditions to the Obligations of ADP and VCAM to Effect the
Merger..........................................................42
(a) Stockholder Approval......................................42
(b) Registration Statement....................................42
(c) Blue Sky Laws.............................................43
(d) Listing...................................................43
(e) No Injunctions or Restraints..............................43
(f) HSR Act...................................................43
(g) Governmental and Regulatory Consents......................43
6.2 Conditions to the Obligations of ADP............................43
(a) Accuracy of Representations and Warranties................43
(b) Performance of Agreements.................................44
iii
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PAGE
----
(c) No Material Adverse Change................................44
(d) Auditors' Letter..........................................44
(e) Affiliate Letters.........................................44
(f) VCAM Required Consents....................................44
6.3 Conditions to the Obligations of VCAM...........................44
(a) Accuracy of Representations and Warranties................44
(b) Performance of Agreements.................................45
(c) Fairness Opinions.........................................45
(d) Tax Opinion...............................................45
ARTICLE VII TERMINATION AND AMENDMENT.......................................45
7.1 Termination.....................................................45
7.2 Effect of Termination...........................................47
ARTICLE VIII GENERAL PROVISIONS..............................................47
8.1 Certain Definitions.............................................47
8.2 Notices.........................................................53
8.3 Interpretation..................................................54
8.4 Waivers and Amendments..........................................55
8.5 Expenses and Other Payments.....................................55
8.6 Assignment......................................................56
8.7 Entire Agreement; No Third Party Beneficiaries..................56
8.8 Representations and Warranties..................................56
8.9 Governing Law...................................................57
8.10 Counterparts....................................................57
iv
<PAGE>
VCAM DISCLOSURE SCHEDULE
- ------------------------
Section 1.5 Directors
Section 3.1(a) Subsidiaries
Section 3.1(c) Stock Options and Warrants
Section 3.1(f) Compliance with Applicable Laws
Section 3.1(g) Government Approvals; Required Consents
Section 3.1(i) Litigation
Section 3.1(j) Taxes and Related Tax Matters
Section 3.1(k) Certain Agreements
Section 3.1(l) Employee Benefits
Section 3.1(m) Contracts
Section 3.1(n) Environmental Matters
Section 3.1(o) Absence of Certain Changes or Events
Section 3.1(q) Real Estate
Section 3.1(s) Accounts Receivable
Section 3.1(t) Clients
Section 3.1(cc) Insurance
Section 4.2(b)(iii) Bonuses
Section 4.2(b)(v) Sale of Property or Assets
Section 4.2(b)(vi) Incurrence of Indebtedness
Section 4.2(b)(ix) Forms of Client Contracts
ADP DISCLOSURE SCHEDULE
- -----------------------
Section 3.2(f) Government Approvals; Required Consents
EXHIBITS
- --------
Exhibit A Form of Employment Agreement for Carlos Saladrigas
Exhibit B Form of Employment Agreement for Jose Sanchez
Exhibit C ADP Tax Certificate
v
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of December 3, 1998
(the "AGREEMENT"), among AUTOMATIC DATA PROCESSING, INC., a Delaware corporation
("ADP"), ADP ACQUISITION CORP. (FLORIDA), a Florida corporation and a wholly
owned subsidiary of ADP ("SUB"), and THE VINCAM GROUP, INC., a Florida
corporation ("VCAM").
W I T N E S S E T H
WHEREAS, upon the terms and subject to the conditions of this
Agreement, VCAM and ADP wish to enter into a business combination transaction
pursuant to which Sub will merge with and into VCAM (the "MERGER");
WHEREAS, the Board of Directors of VCAM has determined that
the Merger is fair to, and in the best interests of, VCAM and the holders of
common stock, par value $.001 per share ("VCAM COMMON STOCK"), of VCAM and has
approved and adopted this Agreement and has approved the Merger and the other
transactions contemplated hereby and recommended approval and adoption of this
Agreement and approval of the Merger by the holders of VCAM Common Stock;
WHEREAS, the Board of Directors of ADP has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of ADP and is fair to, and in the best interests of, ADP and its stockholders
and has approved and adopted this Agreement, the Merger and the other
transactions contemplated hereby;
WHEREAS, for federal income tax purposes, it is intended that
the Merger qualify as a reorganization under the provisions of Section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a "pooling-of-interests";
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Michael Gatsas, Theodore Gatsas, the Gatsas Family Limited
Partnership, Jose Sanchez, The Saladrigas Family Limited Partnership and Carlos
Saladrigas, have entered into a Voting Agreement dated as of the date hereof
with ADP (the "VOTING AGREEMENT");
<PAGE>
WHEREAS, ADP, Sub and VCAM wish to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger; and
WHEREAS, certain capitalized terms used herein have the
meanings set forth in Article VIII.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Florida Business
Corporation Act (the "FBCA"), Sub shall be merged with and into VCAM at the
Effective Time. Upon and after the Effective Time, the separate corporate
existence of Sub shall cease and VCAM shall be the surviving corporation in the
Merger (the "SURVIVING CORPORATION"). In accordance with the FBCA, all of the
rights, privileges, powers, immunities and purposes of Sub and VCAM shall vest
in the Surviving Corporation and all of the debts, liabilities, obligations and
duties of Sub and VCAM shall become the debts, liabilities, obligations and
duties of the Surviving Corporation.
1.2 CLOSING. The closing of the Merger (the "CLOSING") will
take place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison at 10:00
a.m. on the first Business Day following the date on which each of the
conditions set forth in Article VI have been satisfied or waived by the party
entitled to the benefit of such conditions or at such other place, time and date
as ADP and VCAM may agree. The time and date upon which the Closing occurs is
referred to herein as the "CLOSING DATE."
1.3 EFFECTIVE TIME. On the Closing Date (or on such other date
as ADP and VCAM may agree), Sub and VCAM shall cause Articles of Merger (the
"ARTICLES OF MERGER") to be executed and filed with the Secretary of State of
the State of Florida, in accordance with the relevant provisions of the FBCA and
shall make all other filings or recordings required under the FBCA. The Merger
shall become effective at such time as the Articles of Merger are duly filed
with the Secretary of State of the State of Florida, or at such later time as is
specified in the Articles of Merger (the "EFFECTIVE TIME").
<PAGE>
1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate
of Incorporation of Sub shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law. The By-laws of Sub shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
1.5 OFFICERS AND DIRECTORS. The directors of Sub (which will
include the current directors of VCAM listed on Section 1.5 of the VCAM
Disclosure Schedule) and the executive officers of VCAM at the Effective Time
shall be the directors and officers of the Surviving Corporation and shall hold
office until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Certificate of Incorporation and By-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of VCAM Common Stock or capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each share of common stock,
par value $.01 per share ("SUB COMMON STOCK"), of Sub issued and outstanding
immediately prior to the Effective time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation;
(b) EXCHANGE RATIO FOR VCAM COMMON STOCK. Each share
of VCAM Common Stock issued and outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.2, be converted by virtue
of the Merger and without any action on the part of the holder thereof into and
exchangeable for the right to receive a number of fully paid and non-assessable
shares of common stock, par value $.10 per share (the "ADP COMMON STOCK"), of
ADP equal to the "EXCHANGE RATIO," determined in the manner set forth below:
(i) If the Average ADP Stock Price is equal
to or greater than $68.781 and less than or equal to $84.065, then the Exchange
Ratio shall be .229; PROVIDED, THAT, if the Outstanding Diluted VCAM Stock
Amount exceeds 16,190,804, then the Exchange
<PAGE>
Ratio shall equal the quotient (rounded to four decimal points) obtained by
dividing (x) 3,707,694 by (y) the Outstanding Diluted VCAM Stock Amount;
(ii) If the Average ADP Stock Price is equal
to or greater than $61.138 and less than $68.781, then the "Exchange Ratio"
shall be equal to the quotient (rounded to four decimal points) obtained by
dividing 15.75 by the Average ADP Stock Price; PROVIDED, that if the Outstanding
Diluted VCAM Stock Amount exceeds 16,190,804, then the Exchange Ratio shall be
equal to the quotient (rounded to four decimal points) obtained by dividing (x)
the quotient obtained by dividing (1) $255,018,909 by (2) the Average ADP Stock
Price by (y) the Outstanding Diluted VCAM Stock Amount;
(iii) If the Average ADP Stock Price is
greater than $84.065 and less than or equal to $91.708, then the "Exchange
Ratio" shall be equal to the quotient (rounded to four decimal points) obtained
by dividing 19.25 by the Average ADP Stock Price; PROVIDED, that if the
Outstanding Diluted VCAM Stock Amount exceeds 16,190,804, then the Exchange
Ratio shall be equal to the quotient (rounded to four decimal points) obtained
by dividing (x) the quotient obtained by dividing (1) $311,687,306 by (2) the
Average ADP Stock Price by (y) the Outstanding Diluted VCAM Stock Amount;
(iv) If the Average ADP Stock Price is
greater than $91.708, then the "Exchange Ratio" shall be .2099; PROVIDED, that
if the Outstanding Diluted VCAM Stock Amount exceeds 16,190,804, then the
Exchange Ratio shall be equal to the quotient (rounded to four decimal points)
obtained by dividing (x) 3,398,693 by (y) the Outstanding Diluted VCAM Stock
Amount;
(v) If the Average ADP Stock Price is less
than $61.138, then the "Exchange Ratio" shall be .2576; PROVIDED, that if the
Outstanding Diluted VCAM Stock Amount exceeds 16,190,804, then the Exchange
Ratio shall be equal to the quotient obtained by dividing (x) 4,171,201 by (y)
the Outstanding Diluted VCAM Stock Amount; PROVIDED, FURTHER, that VCAM shall
have the right to give written notice to ADP (the "TOP-UP REQUEST NOTICE")
requesting that the Exchange Ratio be increased to equal to the quotient
(rounded to four decimal points) obtained by dividing (x) the quotient obtained
by dividing (1) $255,018,909 by (2) the Average ADP Stock Price by (y) the
Outstanding Diluted VCAM Stock Amount (the "TOPPED-UP EXCHANGE RATIO"). The
Top-Up Request Notice shall be delivered to and received by ADP no later than
2:00 p.m. on the second Business Day prior to the Stockholders' Meeting. ADP,
may, in its sole discretion, agree or not agree to increase the Exchange Ratio
to the Topped-Up Exchange Ratio. Within 24 hours of receiving the Top-Up Request
Notice, ADP shall provide VCAM written notice of its determination with respect
thereto. If ADP agrees to increase the Exchange Ratio to the Topped-Up Exchange
Ratio, the Exchange Ratio shall be equal to the Topped-Up Exchange Ratio for
purposes of this Agreement. If ADP does not agree in its sole discretion that
the Exchange Ratio shall be
<PAGE>
increased to be the Topped-Up Exchange Ratio (which disagreement shall be deemed
to have occurred if ADP does not respond to the Top-Up Request Notice within the
24 hour period specified above), VCAM shall either (x) agree that the Exchange
Ratio shall be as determined pursuant to the first sentence of this Section
2.1(b)(v) without giving effect to the proviso to such sentence or (y) give
written notice (the "TERMINATION NOTICE") that VCAM elects to terminate this
Agreement. The Termination Notice shall be delivered to ADP no later than 5:00
p.m. on the Business Day prior to the Stockholders' Meeting; PROVIDED, that if
the Termination Notice has not been received by ADP by such time, VCAM shall be
deemed to have accepted the Exchange Ratio as determined pursuant to the first
sentence of this Section 2.1(b)(v) without giving effect to the proviso to such
sentence and VCAM shall have no further right to terminate this Agreement
pursuant to this Section 2.1(b)(v) or Section 7.1(e);
(vi) If, between the date of this Agreement
and the Effective Time, the outstanding shares of VCAM Common Stock or ADP
Common Stock are changed into a different number or class of shares by reason of
any stock split, division or subdivision of shares, stock dividend, reverse
stock split, consolidation of shares, reclassification, recapitalization or
other similar transaction, then the provisions of this Section 2.1(b) shall be
appropriately adjusted; and
(c) CANCELLATION OF TREASURY STOCK AND ADP-OWNED
STOCK. Each outstanding share of VCAM Common Stock, held by VCAM as treasury
stock or owned by ADP or any Subsidiary of ADP immediately prior to the
Effective Time shall be canceled, and no payment shall be made with respect
thereto.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, ADP
shall deposit with Chase Mellon Shareholder Services or such other bank or trust
company designated by ADP (and reasonably acceptable to VCAM) (the "EXCHANGE
AGENT"), for the benefit of the holders of shares of VCAM Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent,
certificates representing the shares of ADP Common Stock (such shares of ADP
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "EXCHANGE FUND") issuable pursuant to
Section 2.1 in exchange for outstanding shares of VCAM Common Stock. For this
purpose, the number of shares of ADP Common Stock issuable under Section 2.1
shall mean the product of (i) the Exchange Ratio multiplied by (ii) the number
of outstanding shares of VCAM Common Stock as of the Effective Time, rounded up
to the nearest whole number.
(b) EXCHANGE PROCEDURES. As soon as reasonably
practicable after the Effective Time, ADP shall instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented
<PAGE>
outstanding shares of VCAM Common Stock (the "CERTIFICATES") whose shares were
converted into the right to receive shares of ADP Common Stock pursuant to
Section 2.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as are usual and customary as ADP may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of ADP Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by ADP, together with such
letter of transmittal and such other customary documents as may be required
pursuant to such instructions, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
that number of whole shares of ADP Common Stock and cash in lieu of any
fractional share of ADP Common Stock, plus any dividends, which such holder has
the right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of VCAM Common Stock which is not registered in the
transfer records of VCAM, a certificate representing the proper number of shares
of ADP Common Stock may be issued to a transferee if the Certificate
representing such VCAM Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of ADP Common
Stock and cash in lieu of any fractional shares of ADP Common Stock as
contemplated by Section 2.2(e). Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of ADP Common Stock issued
in exchange therefor, without interest, (x) at the time of such surrender (or as
soon thereafter as the cash from the sale of the Excess Shares referred to in
Section 2.2(e) is obtained by the Exchange Agent), the amount of any cash
payable in lieu of a fractional share of ADP Common Stock to which such holder
is entitled pursuant to Section 2.2(e), (y) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of ADP Common
Stock and (z) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of ADP Common Stock.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
No dividends or other distributions declared or made after the Effective Time
with respect to ADP Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of ADP Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder
<PAGE>
pursuant to Section 2.2(e) until the holder of record of such Certificate shall
surrender such Certificate.
(d) NO FURTHER OWNERSHIP RIGHTS IN VCAM COMMON STOCK.
All shares of ADP Common Stock issued upon the surrender for exchange of shares
of VCAM Common Stock in accordance with the terms hereof (including any cash
paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of VCAM Common
Stock, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of VCAM Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing
fractional shares of ADP Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of ADP.
(ii) As promptly as practicable following
the Effective Time, the Exchange Agent shall determine the excess of (x) the
number of full shares of ADP Common Stock in the Exchange Fund over (y) the
aggregate number of full shares of ADP Common Stock to be distributed to holders
of VCAM Common Stock pursuant to Section 2.2(b) (such excess being herein called
the "EXCESS SHARES"). As soon after the Effective Time as practicable, the
Exchange Agent, as agent for the holders of VCAM Common Stock, shall sell the
Excess Shares at then prevailing prices on the NYSE, all in the manner provided
in paragraph (iii) of this Section.
(iii) The sale of the Excess Shares by the
Exchange Agent shall be executed on the NYSE through one or more member firms of
the NYSE and shall be executed in round lots to the extent practicable. Until
the net proceeds of such sale or sales have been distributed to the holders of
VCAM Common Stock, the Exchange Agent will hold such proceeds in trust for the
holders of VCAM Common Stock (the "COMMON SHARES TRUST"). All commissions,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such sale of
the Excess Shares shall be paid by ADP. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each holder of VCAM Common Stock
shall be entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Common Shares Trust by a fraction, the numerator of
which is the amount of the fractional share interest to which such holder of
VCAM Common Stock is entitled and the denominator of which is the
<PAGE>
aggregate amount of fractional share interests to which all holders of VCAM
Common Stock are entitled; PROVIDED, HOWEVER, that in lieu of the foregoing, at
the sole option of ADP, ADP may instead satisfy payment with respect to such
Excess Shares by delivering to the Exchange Agent reasonably promptly following
the Effective Time cash (without interest) in an amount equal to the aggregate
amount of all such Excess Shares multiplied by the closing price per share of
ADP Common Stock on the NYSE on the trading day immediately prior to the
Effective Time.
(iv) As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of VCAM
Common Stock in lieu of any fractional share interests, the Exchange Agent shall
make available such amounts to such holders of VCAM Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund and Common Shares Trust which remains undistributed to the stockholders of
VCAM for six months after the Effective Time shall, upon demand, be delivered to
ADP, and any stockholders of VCAM who have not theretofore complied with this
Article II shall thereafter look only to ADP for payment of their claim for ADP
Common Stock, cash in lieu of fractional shares and any dividends or
distributions with respect to ADP Common Stock.
(g) NO LIABILITY. Neither ADP nor VCAM shall be liable to any
holder of shares of VCAM Common Stock or ADP Common Stock, as the case may be,
for such shares (or dividends or distributions with respect thereto) or cash
from the Common Shares Trust delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. ADP or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of VCAM Common Stock such
amounts as ADP or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by ADP or
the Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of VCAM Common
Stock in respect of which such deduction and withholding was made by ADP or the
Exchange Agent.
2.3 STOCK OPTIONS. (a) At the Effective Time, each outstanding
option to purchase shares of VCAM Common Stock (a "VCAM STOCK OPTION") issued
pursuant to the VCAM Stock Plans, whether vested or unvested, shall be assumed
by ADP. Each VCAM Stock Option shall be deemed, without further action on the
part of ADP or the holders of such VCAM Stock Options, to constitute an option
to acquire, on the same terms and conditions as
<PAGE>
were applicable under such VCAM Stock Option (except to the extent that such
terms and conditions may be altered in accordance with their terms as a result
of the transactions contemplated hereby including accelerated vesting of VCAM
Stock Options which shall occur by virtue of consummation of the Merger to the
extent required with respect to the VCAM Stock Options set forth in Section
3.1(c) of the VCAM Disclosure Schedule), shares of ADP Common Stock in such
amount and at the exercise price provided below:
(i) the number of shares of ADP Common Stock
to be subject to the option (as adjusted) shall be equal to the product of (x)
the number of shares of VCAM Common Stock subject to the original option and (y)
the Exchange Ratio (rounded to four decimal points);
(ii) the exercise price per share of ADP
Common Stock under the option (as adjusted) shall be equal to (x) the exercise
price per share of VCAM Common Stock under the original option divided by (y)
the Exchange Ratio (rounded to the nearest $0.01); and
(iii) in accordance with the terms of the
VCAM Stock Option Plan under which the VCAM Stock Options were issued,
fractional shares of any assumed VCAM Stock Options resulting from the
adjustments set forth in this Section 2.3(a) shall be eliminated.
In the case of any option to which section 421 of the Code
applies by reason of its qualification under any of sections 422-424 of the
Code, the exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be effected
in a manner consistent with the requirements of section 424(a) of the Code.
(b) As soon as practicable after the Effective Time, ADP shall
deliver to the holders of VCAM Stock Options appropriate notices setting forth
such holders' rights pursuant to the respective VCAM Stock Plans and the
agreements evidencing the grants of such VCAM Stock Options and that such
options and the related option agreements shall be assumed by ADP and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 2.3 after giving effect to the Merger).
(c) ADP shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of ADP Common Stock for delivery upon
exercise of the VCAM Stock Options assumed in accordance with this Section 2.3.
No later than the Effective Time, ADP shall prepare and file a registration
statement on Form S-8 (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of ADP Common Stock subject to such
options and shall use its reasonable commercial efforts
<PAGE>
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding and cause such
shares to be listed on the NYSE.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VCAM AND ADP
3.1 REPRESENTATIONS AND WARRANTIES OF VCAM. VCAM represents
and warrants to ADP as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER; SUBSIDIARIES.
Each of VCAM and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not have a Material Adverse
Effect with respect to VCAM. Section 3.1(a) of the disclosure schedule delivered
to ADP by VCAM on or prior to the date hereof (the "VCAM DISCLOSURE SCHEDULE")
sets forth a true and complete list of all of VCAM's Subsidiaries, including (x)
the jurisdiction of incorporation or organization of each such Subsidiary and
(y) the percentage of each such Subsidiary's outstanding capital stock or other
ownership interest owned by VCAM and/or another Subsidiary of VCAM, as the case
may be, if less than 100%. All of the outstanding shares of capital stock or
other ownership interests in each of the Significant Subsidiaries of VCAM are
duly authorized, validly issued, fully paid and nonassessable and, except as set
forth in Section 3.1(a) of the VCAM Disclosure Schedule, are owned (of record
and beneficially) by VCAM and/or by another Subsidiary of VCAM, as the case may
be, free and clear of all pledges, claims, options, rights of first refusal,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "LIENS"), and not subject to preemptive rights created
by statute, such Subsidiary's respective Certificate of Incorporation or By-laws
or equivalent organizational documents or any agreement to which such
Subsidiary is a party or by which such Subsidiary is bound. Other than as set
forth in Section 3.1(a) of the VCAM Disclosure Schedule or in the VCAM SEC
Documents, VCAM does not directly or indirectly own any material equity interest
in any Person.
(b) CERTIFICATE OF INCORPORATION AND BY-LAWS. Complete and
correct copies of the Certificate of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of VCAM and each of its
Significant Subsidiaries have been
<PAGE>
delivered to ADP prior to the date hereof. The Certificates of Incorporation,
By-laws and equivalent organizational documents of VCAM and each of its
Significant Subsidiaries are in full force and effect. Neither VCAM nor any of
its Significant Subsidiaries is in violation of any material provision of its
Certificate of Incorporation, By-laws or equivalent organizational documents.
(c) CAPITALIZATION. As of the date hereof, the authorized
capital stock of VCAM consists of (i) 60,000,000 shares of VCAM Common Stock of
which, (A) 15,733,031 shares are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights, of which 31,224 shares are held in the treasury, or by a
Subsidiary, of VCAM, and (B) 2,677,160 shares are reserved for future issuance
for the exercise of stock options with a term, exercise price, vesting schedule
and other material terms set forth separately for each of VCAM's stock option
plans in Section 3.1(c) of the VCAM Disclosure Schedule and (ii) 20,000,000
shares of preferred stock, par value $.01 per share, of VCAM of which none is
issued and outstanding. Except as described in this Section 3.1(c) or in Section
3.1(c) of the VCAM Disclosure Schedule, no shares of the capital stock or other
equity securities of VCAM are authorized, issued or outstanding, or reserved for
any other purpose, and there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
(including, without limitation, obligations to issue shares as the deferred
purchase price for acquisitions of stock or assets of third parties) to which
VCAM or any of its Subsidiaries is a party relating to the issued or unissued
capital stock or other equity securities or ownership interests of VCAM or any
of its Subsidiaries or obligating VCAM or any of its Subsidiaries to grant,
issue or sell any shares of capital stock or other equity securities or
ownership interests of VCAM or any of its Subsidiaries. VCAM has no outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote or which are convertible into or exercisable for securities having
the right to vote with the stockholders of VCAM on any matter. Other than as
contemplated by this Agreement or as set forth in Section 3.1(c) of the VCAM
Disclosure Schedule, there are no outstanding contractual obligations,
commitments, understandings or arrangements of VCAM or any of its Subsidiaries
to repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock or other equity securities or ownership interests of
VCAM or any of its Subsidiaries.
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS. The forms, reports,
schedules, registration statements and proxy statements filed by VCAM with the
SEC since January 1, 1996 (as such documents have since the time of their filing
been amended or supplemented, the "VCAM SEC DOCUMENTS"), are all the documents
(other than preliminary material) that VCAM was required to file with the SEC
since such date. As of their respective dates, the VCAM SEC Documents (other
than preliminary material) complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES
<PAGE>
ACT"), or the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
as applicable, and the rules and regulations of the SEC thereunder applicable to
such VCAM SEC Documents and none of the VCAM SEC Documents (including all
financial statements included therein and exhibits and schedules thereto and
documents incorporated by reference therein) contained any untrue statement of a
material fact or omitted to state a 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. The historical financial state ments of
VCAM included in the VCAM SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited financial statements, as permitted by
the Exchange Act) and fairly present in all material respects (subject, in the
case of the unaudited financial statements, to normal, recurring audit
adjustments that, individually or in the aggregate, were not and will not be
material) the consolidated financial position of VCAM and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
(e) AUTHORITY. VCAM has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder
and to consummate the transactions contemplated hereby, subject, in the case of
the Merger, to the approval of this Agreement by the stockholders of VCAM. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of VCAM and no other corporate
proceedings on the part of VCAM are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby, subject, in the case of the
Merger, to the approval of this Agreement by the stockholders of VCAM. This
Agreement has been duly and validly executed and delivered by VCAM and
constitutes a valid and binding obligation of VCAM enforceable against VCAM in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws limiting creditors' rights generally and to general
equitable principles.
(f) COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
Section 3.1(f) of the VCAM Disclosure Schedule, VCAM and its Subsidiaries hold
all VCAM Permits. VCAM and its Subsidiaries are in compliance with the terms of
the VCAM Permits, except where any such failure so to comply, individually and
in the aggregate, would not have a Material Adverse Effect with respect to VCAM.
All professional employer organization licenses and registrations included in
the VCAM Permits are set forth in Section 3.1(f) of the VCAM Disclosure
Schedule. Neither VCAM nor any of its Subsidiaries nor, to the knowledge of
VCAM, any client of VCAM or any of its Subsidiaries (since the date such client
became a client), has operated (nor is any of VCAM or any of its Subsidiaries or
their
<PAGE>
respective clients currently operating) in violation of any law applicable to
VCAM or its Subsidiaries or their respective clients or by which any of their
respective properties is bound or affected, including without limitation, laws
with respect to the regulation or licensure of professional employer
organizations, prepaid limited health services organizations, health maintenance
organizations, prepaid health plans or other similar entities, the Occupational
Safety and Health Act, the Equal Employment Opportunities Act, the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act, the
Vocational Rehabilitation Act, the Americans with Disabilities Act, the Vietnam
Era Veterans Readjustment Act, the Fair Labor Standards Act, the Federal Drug
Free Workplace Act, the Worker Adjustment Retraining and Notification Act
("WARN"), Laws with respect to immigration and naturalization and all Laws
relating to wages and hours, workers' compensation, state unemployment
insurance, labor practice regulations, employment discrimination and state
employee leasing and registration requirements, other than violations that,
individually or in the aggregate, would not have a Material Adverse Effect with
respect to VCAM. Other than as disclosed in Section 3.1(f) of the VCAM
Disclosure Schedule, neither VCAM nor any of its Subsidiaries nor, to the
knowledge of VCAM, any of their respective clients since the date such client
became a client, has received notice of any pending employee claims alleging
violation of federal or state laws prohibiting discrimination or sexual
harassment or any other charges reportable to the Equal Employment Opportunity
Commission or comparable state human rights or equal employment opportunity
agencies, that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect with respect to VCAM. Except as set forth in
Section 3.1(f) of the VCAM Disclosure Schedule, no investigation or review by
any Governmental Entity with respect to VCAM or any of its Subsidiaries is
pending or, to the knowledge of VCAM, threatened.
(g) GOVERNMENT APPROVALS; REQUIRED CONSENTS.
(i) No material consent, approval or authorization
of, or declaration or filing with, or notice to, any Governmental Entity on the
part of VCAM is required in connection with the execution or delivery by VCAM of
this Agreement, the consummation by VCAM of the transactions contemplated hereby
or compliance by VCAM with the provisions hereof, other than (A) the filing of
the Articles of Merger with the Secretary of State of the State of Florida in
accordance with the FBCA, (B) filings with the SEC and the NASDAQ, (C) filings
under state securities or "Blue Sky" laws, (D) filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR ACT"), (E) such consents,
approvals, authorizations, declarations, filings or notices required under any
federal or state statute or regulation affecting professional employer
organizations or health care providers and (F) as otherwise set forth in Section
3.1(g)(i) of the VCAM Disclosure Schedule (any such consents, approvals,
authorizations, declarations, filings or notices specified in clauses (A)
through (F) being referred to as "VCAM GOVERNMENTAL APPROVALS").
<PAGE>
(ii) No material consent, approval or action
of, or filing with, or notice to, any Person (other than a Governmental Entity)
is required in connection with the execution or delivery by VCAM of this
Agreement, consummation by VCAM of the transactions contemplated hereby or
compliance by VCAM with the provisions hereof, other than as set forth in
Section 3.1(g)(ii) of the VCAM Disclosure Schedule (the "VCAM REQUIRED
CONSENTS").
(h) NON-CONTRAVENTION. The execution and delivery of this
Agreement by VCAM do not, and the consummation of the transactions contemplated
hereby and compliance by VCAM with the provisions hereof will not, (i) conflict
with or result in any violation of any provision of the Certificate of
Incorporation or By-laws or equivalent organizational documents, in each case
as amended and/or restated, of VCAM or any of its Subsidiaries; (ii) if the VCAM
Required Consents are obtained, result in any violation or breach of, or result
in a modification of the effect of, or constitute (with or without notice or
lapse of time or both) a default under or give rise to any right of termination,
cancellation or acceleration under, any contract, agreement (including any
professional employer organization agreement), indenture, note, bond, loan,
mortgage, lease, instrument, license, permit, concession, franchise, commitment
or other binding arrangement (collectively, "CONTRACTS") to which VCAM or any of
its Subsidiaries is a party or by or to which any of them or any of their
properties may be bound or subject, or result in the creation of any Lien upon
the properties of VCAM or any of its Subsidiaries in each case pursuant to the
terms of any such Contract; (iii) if the VCAM Governmental Approvals are
obtained, result in any violation of any law, statute, regulation, order, writ,
judgment or decree of any Governmental Entity applicable to VCAM; or (iv) if the
VCAM Governmental Approvals and the VCAM Required Consents are obtained, result
in the violation, revocation or suspension of any VCAM Permit, other than with
respect to clauses (ii) through (iv) above, any such violations, breaches,
modifications, defaults, terminations, cancellations, accelerations, Liens,
revocations or suspensions that, individually or in the aggregate, would not
have a Material Adverse Effect with respect to VCAM.
(i) LITIGATION. As of the date of this Agreement and
as of the Closing Date, except as set forth in Section 3.1(i) of the VCAM
Disclosure Schedule or as described in the VCAM SEC Documents, there is no suit,
action or proceeding pending or, to the knowledge of VCAM, threatened against
VCAM or any Subsidiary of VCAM that, individually or in the aggregate with any
other such suits, actions or proceedings, could reasonably be expected to have a
Material Adverse Effect with respect to VCAM, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against VCAM or any Subsidiary of VCAM that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect with respect to
VCAM.
<PAGE>
(j) TAXES AND RELATED TAX MATTERS.
(i) Other than Taxes and Tax Sharing
Agreement Amounts that individually or in the aggregate are not material (A)
except as set forth in Section 3.1(j) of the VCAM Disclosure Schedule, all
federal, state, county, local, foreign and other taxes (including, without
limitation, income, profits, premium, estimated, excise, sales, use, occupancy,
gross receipts, franchise, ad valorem, severance, capital levy, production,
transfer, withholding, employment, unemployment compensation, payroll related
and property taxes, import duties and other governmental charges and
assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, and penalties
with respect thereto (hereinafter "TAXES" or, individually, a "TAX") required to
be paid on or before the date hereof by or with respect to VCAM and its
Subsidiaries (or any of them), including amounts, other than amounts being
contested in good faith, required to be paid on or before the date hereof with
respect to Taxes as a result of any tax sharing agreement or similar arrangement
("TAX SHARING AGREEMENT AMOUNTS") of VCAM and its Subsidiaries (or any of them),
have been timely paid, and (B) any Taxes or Tax Sharing Agreement Amounts
required to be paid by or with respect to VCAM and its Subsidiaries (or any of
them) after the date hereof and on or before the Effective Time shall be timely
paid.
(ii) Except as provided in Section 3.1(j) of
the VCAM Disclosure Schedule, all returns and reports required to be filed by or
with respect to VCAM and its Subsidiaries (or any of them) with respect to Taxes
(hereinafter "TAX RETURNS" or, individually, a "TAX RETURN") on or before the
date hereof have been timely filed. All Tax Returns required to be filed by or
with respect to VCAM and its Subsidiaries (or any of them) after the date hereof
and on or before the Effective Time shall be prepared and timely filed, in a
manner consistent with prior years and applicable laws and regulations. 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 VCAM or any of its Subsidiaries
or payment of any Tax of VCAM or any of its Subsidiaries, required to be filed
or paid on or before the Effective Time.
(iii) With respect to all Tax Returns filed
by or with respect to VCAM and any of its Subsidiaries, (A) except as set forth
in Section 3.1(j) of the VCAM Disclosure Schedule, the statute of limitations
for the assessment of corporate income taxes has expired for all years prior to
1994; (B) except as set forth in Section 3.1(j) of the VCAM Disclosure Schedule,
no audit is in progress and no extension of time has been executed with respect
to any date on which any material Tax Return was or is to be filed; (C) except
as set forth in Section 3.1(j) of the VCAM Disclosure Schedule, no waiver or
agreement has been executed for the extension of time for the assessment or
payment of any material Tax; and (D) except as set forth in Section 3.1(j),
there is no deficiency proposed or threatened in writing against VCAM or any of
its Subsidiaries.
<PAGE>
(iv) Except as set forth in Section 3.1(j)
of the VCAM Disclosure Schedule, neither VCAM nor any of its Subsidiaries has
been or is a party to any tax sharing agreement or similar arrangement.
(v) Section 3.1(j) of the VCAM Disclosure
Schedule identifies (i) with respect to Subsidiaries of VCAM acquired after
December 31, 1993 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 VCAM or any
of its Subsidiaries since December 31, 1993, (ii) all material Tax liabilities,
of which VCAM has knowledge, that have been asserted by the Internal Revenue
Service (the "IRS") in writing with respect to any such return and all claims
with respect to Taxes in a material amount that have been asserted against VCAM
under any tax sharing agreement to which it is a party.
(k) CERTAIN AGREEMENTS. Except as set forth in Section 3.1(k)
and/or Section 3.1(l) of the VCAM Disclosure Schedule, and except for this
Agreement, as of the date of this Agreement, neither VCAM nor any of its
Subsidiaries is a party to any oral or written (i) agreement with any executive
officer or other key employee of VCAM or any Subsidiary of VCAM the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving VCAM of the nature contemplated by this
Agreement, or agreement with respect to any executive officer of VCAM providing
any term of employment or compensation guarantee (x) extending for a period
longer than one year after the Closing Date or (y) for the payment of in excess
of $100,000 per annum or (ii) plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
(l) EMPLOYEE BENEFITS.
(i) Section 3.1(l) of the VCAM Disclosure
Schedule lists all pension, retirement, savings, disability, medical, dental,
health, life (including all individual life insurance policies as to which VCAM
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 VCAM or
<PAGE>
any of its Subsidiaries or their respective ERISA Affiliates (as defined below)
are entitled to participate by reason of their employment with VCAM 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 VCAM or any of its Subsidiaries or their
respective ERISA Affiliates are a party or a sponsor or a fiduciary thereof or
by which VCAM 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 VCAM or any of its Subsidiaries otherwise may have any liability as
described in Section 3.1(l) of the VCAM Disclosure Schedule, specifically
including as to this Subsection (i)(B) but not Subsection (i)(A) any such plan,
trust, arrangement, contract, agreement, policy or committment maintained by a
client of VCAM or any of its Subsidiaries or their respective ERISA Affiliates
(the "EMPLOYEE BENEFIT PLANS"). For each Employee Benefit Plan, VCAM has
provided true and correct copies of all plan documents, summary plan
descriptions, determination letters, material employee communications and the
three most recent Forms 5500, including financial statement where applicable.
For purposes of this Agreement, any reference to an "employee" of VCAM or any of
its Subsidiaries or their respective ERISA Affiliates, or to any related term
such as "employed" or "employment," shall include any relationship in which a
person is treated as co-employed by any such entity and a client thereof.
(ii) Except as set forth in Section 3.1(l)
of the VCAM Disclosure Schedule, VCAM, 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 penalties have been or are reasonably expected to be imposed on
VCAM or its Subsidiaries or their respective ERISA Affiliates, and no material
penalties may be imposed on ADP under ERISA, the Code or otherwise with respect
to the Employee Benefit Plans or any related trusts.
(iii) 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, VCAM or any of its Subsidiaries
within the meaning of Section 414(b), (c), (m) or (o) of the Code. Section
3.1(l) of the VCAM Disclosure Schedule lists all ERISA Affiliates of VCAM or any
of its Subsidiaries.
(iv) As used in this Agreement, "PENSION
PLAN" means any Employee Benefit Plan which is an employee pension benefit plan
as defined in Section 3(2) of
<PAGE>
ERISA or is otherwise a pension, savings or retirement plan or a plan of
deferred compensation.
(v) With respect to the Employee Benefit Plans:
(A) None of the Employee Benefit Plans is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA or a
"defined benefit plan" as such term is defined in Section 3(35) of ERISA. Except
as set forth in Section 3.1(l) of the VCAM Disclosure Schedule, each of the
Employee Benefit Plans that is subject to ERISA is and has at all times been in
substantial compliance (both in form and operation) with ERISA, the Code and all
other applicable laws; 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 substantially in accordance with all laws
so as to maintain such qualification.
(B) All contributions or other amounts payable by
VCAM or any of its Subsidiaries or their ERISA Affiliates through the Effective
Time with respect to each Employee Benefit Plan in respect of current or prior
plan years have been or will be (prior to or at the Effective Time) either paid
or accrued on VCAM's regularly prepared financial statements.
(C) Except as set forth in Section 3.1(l) of the VCAM
Disclosure Schedule, there are no pending, or to VCAM'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 knowledge of VCAM, by, on behalf of or against any fiduciary
of such plans.
(vi) Except as set forth in Section 3.1(l) of the VCAM
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not, with respect to employees or former employees of VCAM 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).
(vii) Except as set forth in Section 3.1(l) of the VCAM
Disclosure Schedule, each Employee Benefit Plan may be amended or terminated in
accordance with applicable law on or at any time after the Effective Time.
<PAGE>
(viii) Except as set forth in Section 3.1(l)
of the VCAM Disclosure Schedule, (A) neither VCAM nor any of its Subsidiaries
has or will have any liability or obligation under any Employee Benefit Plan
which provides medical or death benefits with respect to current or former
employees of VCAM or and of its Subsidiaries beyond their termination of
employment (other than coverage mandated by law); and (B) each of VCAM, its
Subsidiaries and their respective ERISA Affiliates which maintains a "group
health plan," within the meaning of Sections 601 ET SEQ. of ERISA ("COBRA"), has
materially complied with the notice and health care continuation requirements of
COBRA.
(ix) 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 tax, penalty or other amount may reasonably be expected to be
imposed on VCAM or any of its Subsidiaries or their respective ERISA Affiliates.
(x) Except as set forth in Section 3.1(l) of
the VCAM Disclosure Schedule, no violation of ERISA has occurred with respect to
the filing of applicable reports, documents and notices regarding any Employee
Benefit Plan with the Secretary of Labor or the Secretary of the Treasury or the
furnishing of such documents to the participants or beneficiaries of any
Employee Benefit Plan.
(xi) Any bonding required with respect to
any Employee Benefit Plan in accordance with applicable provisions of ERISA has
been obtained and is in full force and effect.
(xii) None of VCAM 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.
(xiii) 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 each other nationally recognized rating agency.
(xiv) To VCAM's knowledge, there has been no
"mass layoff" or "plant closing," as each such term is defined in the WARN, with
respect to the employees of VCAM or any of its Subsidiaries, with respect to
which there could be any future liability to such employees under WARN.
<PAGE>
(xv) Except as set forth in Section 3.1(l)
of the VCAM Disclosure Schedule, none of VCAM, its Subsidiaries or, to VCAM's
knowledge, their respective clients is a party to any collective bargaining or
other labor union contract. To VCAM's knowledge, there are no union organization
attempts underway with respect to any employees of VCAM, any of its Subsidiaries
or any of their respective clients. There is no pending or, to the knowledge of
VCAM, threatened labor dispute, strike or work stoppage involving such
employees. To the knowledge of VCAM, neither VCAM nor any of its Subsidiaries
nor any of their respective clients has committed any 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 3.1(l) of
the VCAM Disclosure Schedule, there is no pending or, to the knowledge of VCAM,
threatened charge or complaint against VCAM or any of its Subsidiaries or any of
their respective clients by the National Labor Relations Board or any comparable
state or local agency.
(m) CONTRACTS. There is no contract, agreement or
understanding required to be described in or filed as an exhibit to any VCAM SEC
Document that is not described in or filed as required by the Securities Act or
the Exchange Act, as the case may be. All such contracts, agreements and
understanding are, unless terminated or expired, valid and binding and are in
full force and effect and enforceable in accordance with their respective terms,
except where the failure to be so enforceable could not reasonably be expected
to have a Material Adverse Effect with respect to VCAM. Except for the VCAM
Required Consents and except as set forth in Section 3.1(m) of the VCAM
Disclosure Schedule, (i) no approval or consent of, or notice to, any Person is
needed in order that such contract, agreement or understanding shall continue in
full force and effect in accordance with its terms without penalty, acceleration
or rights of early termination following the consummation of the transactions
contemplated by this Agreement, and (ii) VCAM is not in violation or breach of
or in default under any such contract, agreement or understanding nor to VCAM's
knowledge is any other party to any such contract, agreement or understanding in
violation, breach or default thereof except for any violations, breaches or
defaults which could not reasonably be expected to have a Material Adverse
Effect with respect to VCAM. With respect to any professional employer
organization agreement to which VCAM or any of its Subsidiaries is a party,
whether or not such agreement is currently in effect, Section 3.1(m) of the VCAM
Disclosure Schedule sets forth as of the date hereof (i) each pending claim in
writing for breach of contract or failure of performance in excess of $25,000
which was made against VCAM or any of its Subsidiaries from January 1, 1996
through the date hereof and (ii) each claim for breach of contract or failure of
performance made in writing against VCAM or any of its Subsidiaries from January
1, 1996 through the date hereof which was settled and in connection with such
settlement, VCAM or any of its Subsidiaries were required to pay an amount in
excess of $25,000. None of VCAM or any VCAM Subsidiary has any indebtedness for
money borrowed except for (i) amounts that are reflected on the consolidated
balance sheet of VCAM as of September 30, 1998 or reflected in the notes thereto
or in the notes to VCAM's
<PAGE>
consolidated financial statements as at and for the year ended December 31,
1997, or (ii) amounts not comprehended by clause (i) in excess of $100,000 in
the aggregate set forth in Section 3.1(m) of the VCAM Disclosure Schedule.
(n) ENVIRONMENTAL MATTERS. Except as set forth in Section
3.1(n) of the VCAM Disclosure Schedule, (A) VCAM and each of its Subsidiaries
has obtained and is in material compliance with the terms and conditions of all
permits, licenses and other authorizations required under applicable federal,
state, local and foreign laws, regulations and codes as currently in effect
relating to pollution and protection of the environment ("ENVIRONMENTAL LAWS");
(B) no asbestos in a friable condition or equipment containing polychlorinated
biphenyls or leaking underground or above-ground storage tanks is contained in
or located at any facility owned, leased or controlled by VCAM or any of its
Subsidiaries or, to the knowledge of VCAM, at any client work sites; (C) VCAM
and each of its Subsidiaries is in material compliance with all applicable
Environmental Laws, and has fully disclosed all known material past and present
non-compliance with Environmental Laws, and all known past discharges,
emissions, leaking or releases known to VCAM of any substance or waste regulated
under or defined by Environmental Laws that could reasonably be expected to form
the basis of any claim, action, suit, proceeding, hearing or investigation under
any applicable Environmental Laws;(D) neither VCAM nor any of its Subsidiaries
has received notice of any past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans that have resulted in or
threaten to result in any common law or legal liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation under any
applicable Environmental Laws; and (E) neither VCAM nor any of its Subsidiaries
has generated, used, treated, disposed of, released or stored Hazardous
Materials on, or transported Hazardous Material in any material quantities to or
from, any owned or leased property; PROVIDED, HOWEVER, that clauses (A) through
(E) address only those matters that would have a Material Adverse Effect with
respect to VCAM.
(o) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 3.1(o) of the VCAM Disclosure Schedule, as disclosed in the VCAM SEC
Documents, or except as contemplated by this Agreement, since January 1, 1998,
VCAM and its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course, and, as of the date of this Agreement, there has not
been (i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of VCAM's
capital stock; (ii) any return of any capital or other distribution of assets to
stockholders of VCAM; (iii) any material investment by VCAM or any of its
Subsidiaries either by the purchase of any property or assets or by any
acquisition (by merger, consolidation or acquisition of stock or assets) of any
corporation, partnership or other business organization or division thereof;
(iv) any sale, disposition or other transfer of assets or properties of VCAM or
its Subsidiaries (other than the sale of inventory in the ordinary course of
business) in excess of $500,000 individually or $2,000,000 in the aggregate; or
(v)
<PAGE>
as of the date hereof, any change, occurrence or circumstance of any character
(whether or not in the ordinary course of business) that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect with respect to VCAM.
(p) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by VCAM for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by ADP in connection
with the issuance of shares of ADP Common Stock in the Merger (the "REGISTRATION
STATEMENT") and (ii) the proxy statement to be filed with the SEC by VCAM in
connection with the meeting of the VCAM stockholders called in connection with
the Merger (the "PROXY STATEMENT") will, at the time the Registration Statement
is filed with the SEC, at any time it is amended or supplemented or at the time
it becomes effective under the Securities Act or at the time the Proxy Statement
is mailed to the VCAM stockholders, as the case may be, 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 not misleading in
light of the circumstances in which they were made.
(q) REAL ESTATE.
(i) Section 3.1(q)(i) of the VCAM Disclosure Schedule
sets forth all real property owned by VCAM or any of its Subsidiaries. Except as
set forth in Section 3.1(q) of the VCAM Disclosure Schedule, VCAM or one of its
Subsidiaries is the owner of (a) fee title to the real property described in the
VCAM SEC Documents as being owned by VCAM and to all of the buildings,
structures and other improvements located thereon and (b) a leasehold interest
in the new headquarters facility of VCAM as described in the VCAM SEC Documents
(the "HEADQUARTERS FACILITY"), in each case free and clear of any mortgage, deed
of trust, lien, pledge, security interest, claim, lease, charge, option, right
of first refusal, easement, restrictive covenant, encroachment or other survey
defect, encumbrance or other restriction or limitation except for any of the
foregoing which would not have a Material Adverse Effect with respect to VCAM.
(ii) Section 3.1(q)(ii) of the VCAM Disclosure
Schedule sets forth all material leases, subleases, licenses or other agreements
under which VCAM or any of its Subsidiaries uses or occupies, or has the right
to use or occupy, now or in the future, any real property or improvements
thereon (the "VCAM REAL PROPERTY LEASES"). Except as disclosed in the VCAM SEC
Documents, to VCAM's knowledge all VCAM Real Property Leases are valid and
binding on the lessors thereunder in accordance with their respective terms and
to VCAM's knowledge, there is not under any such VCAM Real Property Leases any
existing default, or any condition, event or act which with notice or lapse of
time or both would constitute such a default, which in either case, considered
individually or in the aggregate with all such other VCAM Real Property Leases
under which there is such a default, condition, event or act, has or will have a
Material Adverse Effect with respect to VCAM.
<PAGE>
(iii) Except as set forth in Section 3.1(q)(iii) of
the VCAM Disclosure Schedule, Fleet Real Estate, Inc., a Rhode Island
corporation ("FLEET"), is the owner of fee title to the Headquarters Facility
free and clear of any mortgage, deed of trust, lien, pledge, security interest,
claim, lease, charge, option, right of first refusal, easement, restrictive
covenant, encroachment or other survey defect, encumbrance or other restriction
or limitation (collectively, "REAL PROPERTY LIENS"). VCAM has the ability to
terminate the lease with respect to the Headquarters Facility at any time
without penalty for an amount equal to the total of (v) the amount of loans
outstanding with respect to the property, (w) Fleet's investment in the
facility, (x) any accrued and unpaid interest and fees on such outstanding
loans, (y) all accrued and unpaid yield on Fleet's equity investment and (z)
other amounts owing under the transaction documents (including all unpaid
impositions payable pursuant to the transaction documents) and has the right to
require Fleet to transfer fee title to it free and clear of any Real Property
Liens.
(r) INTELLECTUAL PROPERTY.
(i) VCAM or one of its Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, computer software programs or applications, and
tangible or intangible proprietary information or material that are used in the
business of VCAM and its Subsidiaries as currently conducted, except as could
not reasonably be expected to have a Material Adverse Effect with respect to
VCAM.
(ii) Except as would not reasonably be expected to
have a Material Adverse Effect with respect to VCAM: VCAM is not, nor will it be
as a result of the consummation of the Merger and the transactions contemplated
by this Agreement or the performance of its obligations hereunder, in violation
of any licenses, sublicenses and other agreements as to which VCAM is a party
and pursuant to which VCAM is authorized to use any third-party patents,
trademarks, service marks and copyrights ("THIRD-PARTY INTELLECTUAL PROPERTY
RIGHTS"). Except as would not reasonably be expected to have a Material Adverse
Effect with respect to VCAM, no claims with respect to the patents, registered
and material unregistered trademarks and service marks, registered copyrights,
trade names and any applications therefor owned by VCAM or any of its
Subsidiaries (the "VCAM INTELLECTUAL PROPERTY RIGHTS"), any trade secret
material to VCAM, or Third Party Intellectual Property Rights to the extent
arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through VCAM or any of its Subsidiaries, are
currently pending or, to the knowledge of VCAM, are threatened by any Person.
Except as would not reasonably be expected to have a Material Adverse Effect
with respect to VCAM, VCAM does not know of any valid grounds for any bona fide
claims (A) against the use by VCAM or any of it Subsidiaries, of any trademarks,
trade names, trade secrets, copyrights, patents,
<PAGE>
technology, know-how or computer software programs and applications used in the
business of VCAM or any of its Subsidiaries as currently conducted or as
proposed to be conducted; (B) challenging the ownership, validity or
effectiveness of any of VCAM Intellectual Property Rights or other trade secret
material to VCAM; or (C) challenging the license or legally enforceable right to
use of the Third Party Intellectual Rights by VCAM or any of its Subsidiaries.
(iii) To VCAM's knowledge and except as
would not reasonably be expected to have a Material Adverse Effect with respect
to VCAM, (A) all patents, registered trademarks, service marks and copyrights
held by VCAM are valid and subsisting and (B) there is no unauthorized use,
infringement or misappropriation of any of the VCAM Intellectual Property by any
third party, including any employee or former employee of VCAM or any of its
Subsidiaries.
(s) ACCOUNTS RECEIVABLE. The accounts receivable of VCAM and
its Subsidiaries as reflected in the most recent financial statements contained
in the VCAM SEC Documents (the "VCAM FINANCIAL STATEMENTS"), to the extent
uncollected on the date hereof, and the accounts receivable reflected on the
books of VCAM and its Subsidiaries (i) have arisen in the ordinary course of
business of VCAM 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 VCAM and its Subsidiaries
in the aggregate recorded amounts shown in the VCAM Financial Statements in
accordance with their terms. Section 3.1(s) of the VCAM Disclosure Schedule sets
forth an accounts receivable report as of the date set forth in such schedule
listing all accounts receivable of VCAM and its Subsidiaries indicating the
amount and due date of each such account receivable and reflecting the aging
thereof in the following intervals (except as otherwise noted in Section 3.1(s)
of the VCAM Disclosure Schedule): 15-30 days, 31-60 days, 61-90 days, 91-120
days and greater than 120 days.
(t) CLIENTS. Section 3.1(t) of the VCAM Disclosure Schedule
sets forth a list of as of the date set forth in such schedule (i) substantially
all of the clients of VCAM and its Subsidiaries, (ii) for each such client, the
amount of the dollar volume for the period beginning January 1, 1998 and ending
as of the Business Day second preceding the date hereof and the past due amount
thereof as of such Business Day (if any), and (iii) confirmation of whether a
written agreement exists between VCAM or any of its Subsidiaries and each such
client and the effective date of each such written agreement. The relationships
of VCAM and its Subsidiaries with such clients are good commercial working
relationships and, except as set forth in Section 3.1(t) of the VCAM Disclosure
Schedule, (i) no Person listed on Section 3.1(t) of the VCAM Disclosure Schedule
within the last twelve months has threatened in writing to
<PAGE>
cancel or otherwise terminate the relationship of such Person with VCAM or any
of its Subsidiaries.
(u) INVESTMENT COMPANY ACT. Each of VCAM and its Subsidiaries
either (i) is not an "investment company," or a company "controlled" by, or an
"affiliated company" with respect to, an "investment company," within the
meaning of the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT") or (ii) satisfies all conditions for an exemption from the
Investment Company Act, and, accordingly, neither VCAM nor any of its
Subsidiaries is required to be registered under the Investment Company Act.
(v) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other Person retained by or on behalf of VCAM is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except for Goldman, Sachs & Co. whose fees and expenses will be paid by VCAM in
accordance with VCAM's agreement with such firm.
(w) VOTE REQUIRED. The affirmative vote of a majority of the
votes that the holders of the outstanding shares of VCAM Common Stock are
entitled to cast with respect to the adoption and approval of this Agreement is
the only vote of the holders of any class or series of the capital stock of VCAM
necessary to approve the Merger and the other transactions contemplated hereby.
(x) OPINION OF FINANCIAL ADVISOR. VCAM has received the oral
opinion of Goldman, Sachs & Co. (to be confirmed in writing with an opinion
dated the date hereof) to the effect that, as of such date, the Exchange Ratio
(as determined pursuant to Section 2.1(b)) is fair to VCAM's stockholders from a
financial point of view, a copy of which written opinion will be delivered to
ADP.
(y) ACCOUNTING MATTERS. Neither VCAM nor, to its knowledge,
any of its Affiliates, has taken or agreed to take any action that would prevent
ADP from accounting for the business combination to be effected by the Merger as
a pooling-of-interests.
(z) OWNERSHIP OF ADP COMMON STOCK. As of the date hereof,
neither VCAM nor, to its knowledge, any of its affiliates or associates, (i)
beneficially owns, directly or indirectly, or (ii) are parties to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of ADP, which in the
aggregate, represent 10% or more of the outstanding shares of capital stock of
ADP entitled to vote generally in the election of directors.
(aa) APPRAISAL RIGHTS AND DISSENTERS' RIGHTS. The stockholders
of VCAM do not have appraisal or dissenters' rights in connection with the
Merger.
<PAGE>
(bb) YEAR 2000 COMPLIANCE. VCAM has developed a plan (the "Y2K
PLAN") to ensure that all computer hardware and software (including all computer
hardware and software contained in imbedded systems) used in and material to the
business of VCAM and its Subsidiaries (whether such hardware and software is
owned by VCAM or its Subsidiaries or is licensed from third parties)
(collectively, the "TECHNOLOGY SYSTEMS") is designed to operate prior to, during
and after the calendar year 2000 to accurately process date data (including, but
not limited to calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including leap year calculations (the
"YEAR 2000 COMPLIANCE"). It is currently contemplated that the Y2K Plan will be
completed by December 31, 1999 and VCAM and its Subsidiaries have in their good
faith reasonable judgment sufficient resources (including appropriate reserves
to the extent required by GAAP) to complete the Y2K Plan by such date. As of the
date hereof, the Y2K Plan with respect to the Pay-Plus Payroll application is
contemplated to be completed by March 31, 1999. Assuming the consummation of the
Y2K Plan, the occurrence of the calendar year 2000 will not cause a Material
Adverse Effect with respect to VCAM and its Subsidiaries. The Y2K Plan includes
reasonable steps to determine whether the failure of any third parties with
which VCAM and its Subsidiaries have a material relationship to achieve Year
2000 Compliance could, individually or in the aggregate, have a Material Adverse
Effect with respect to VCAM. VCAM and its Subsidiaries have confirmed, or intend
to confirm, with all material third party suppliers and/or clients that
communicate electronically with VCAM and its Subsidiaries that such
communications will not be disrupted and will continue to function properly
prior to, during and after the calendar year 2000 and that such communications
during the aforesaid time periods will not disrupt the Technology Systems or the
operations of VCAM and its Subsidiaries, except to the extent that the failure
to so function would not, individually or in the aggregate, have a Material
Adverse Effect with respect to VCAM.
(cc) INSURANCE. (i) Section 3.1(cc)(i) of the VCAM Disclosure
Schedule sets forth the following information with respect to each insurance
policy (including policies providing property, casualty, liability, workers
compensation, and bond and surety arrangements) under which VCAM or any of its
Subsidiaries has been an insured, a named insured or otherwise the principal
beneficiary of coverage at any time within the past three years (except policies
(other than workers compensation policies) for the year ended December 31, 1995,
in which case Schedule 3.1(cc)(i) of the VCAM Disclosure Schedule sets forth the
following information only to the extent set forth therein):
(A) the name, address and telephone number
of the agent or broker;
(B) the name of the insurer and the names of
the principal insured and each named insured;
<PAGE>
(C) the policy number and the period of
coverage (specifying in each such case, the expiration date for each
such insurance policy and whether such policy would terminate or be
terminable as a result of the consummation of the transactions
contemplated by this Agreement);
(D) the type, scope (including an indication
of whether the coverage was on a claims made, occurrence or other
basis) and amount (including a description of how deductibles,
retentions and aggregates are calculated and operate) of coverage; and
(E) the premium charged for the policy,
including, without limitation, a description of any retroactive premium
adjustments or other loss-sharing arrangements.
(ii) Except as set forth in Section 3.1(cc)(ii) of
the VCAM Disclosure Schedule, with respect to each such insurance policy: (A)
the policy is legal, valid, binding and enforceable in accordance with its terms
and, except for policies that have expired under their terms in the ordinary
course, is in full force and effect; (B) neither VCAM nor any of its
Subsidiaries is in breach or default (including any breach or default with
respect to the payment of premiums or the giving of notice), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default or permit termination or modification, under the policy; (C) all
premiums charged for such policy have been paid when payment has become due and
payable thereunder and, there are no unfunded or unpaid premiums, loss costs or
retentions outstanding; (D) all liabilities with respect to such policy are
fully and adequately reflected in accordance with GAAP on the VCAM Financial
Statements as of the respective dates thereof; (E) no party to the policy has
repudiated, or given notice of an intent to repudiate, any provision thereof,
(F) to the knowledge of VCAM, no insurer on the policy has been declared
insolvent or placed into receivership, conservatorship or liquidation or
currently has a rating of "B+" or below from A.M. Best & Co. or a claims paying
ability rating of "BBB" or below from Standard & Poors, Inc ("Qualified
Carriers") and (G) there is no oral or written agreement or understanding which
amends, modifies or otherwise changes the terms of such policy.
(iii) Section 3.1(cc)(iii) of the VCAM Disclosure
Schedule sets forth, with respect to worker's compensation, all risks against
which VCAM and each of its Subsidiaries is self-insured or subject to a
deductible and details for the last three full calendar years (and the period
from the end of the last such calendar year to the Business Day Second preceding
the date hereof) of VCAM and each of its Subsidiaries' loss experience with
respect to such risks.
<PAGE>
(iv) Except as set forth in Section
3.1(cc)(iv) of the VCAM Disclosure Schedule, all "tail" liabilities relating to
workers' compensation claims or related liabilities are (i) reinsured with
insurance with Qualified Carriers and (ii) to the extent required, reflected in
the VCAM Financial Statements. Except with respect to the United States Employer
Consumer Self-Insurance Fund of Florida, neither VCAM nor any of its
Subsidiaries has any relationship with or liability or assessment (whether
individually or jointly or severally with others) arising out of any
self-insurance arrangements.
(v) At no time subsequent to January 1, 1996
has VCAM or any of its Subsidiaries (x) been denied any material insurance or
indemnity bond coverage which it has requested, (y) made any material reduction
in the scope or amount of its insurance coverage, or, except as set forth in
Section 3.1(cc)(v) of the VCAM Disclosure Schedule, received written notice from
any of its insurance carriers that any insurance premiums will be subject to
increase in an amount materially disproportionate to the amount of the increases
with respect thereto (or with respect to similar insurance) in prior years or
that any insurance coverage listed in Section 3.1(cc)(i) of the VCAM Disclosure
Schedule will not be available in the future substantially on the same terms as
are now in effect or (z) suffered any extraordinary increase in premium for
renewed coverage. Except as set forth in Section 3.1(cc)(v) of the VCAM
Disclosure Schedule, since January 1, 1996, no insurance carrier has canceled,
failed to renew or materially reduced any material insurance coverage for VCAM
or any of its Subsidiaries or given any written notice, not renew or reduce any
such coverage.
(dd) FULL DISCLOSURE. All documents, Contracts,
instruments, certificates, notices, consents, affidavits, letters, statements,
schedules (including Schedules to this Agreement), exhibits and any other papers
whatsoever delivered by or on behalf of VCAM or any of its Subsidiaries in
connection with this Agreement and the transactions contemplated hereby are
complete and authentic. No (I) representation or warranty (x) of VCAM contained
in this Agreement or (y) of any stockholder in the Voting Agreement (A) with
respect to record ownership by each such stockholder of shares of VCAM Common
Stock (based on inquiry of the stock transfer agent of VCAM) and (B) with
respect to beneficial ownership (as determined pursuant to Rule 13(d)-3 under
the Exchange Act) by each such stockholder of shares of VCAM Common Stock (based
on a review of filings made with the SEC by such stockholders), and (II) no
certificate furnished by or on behalf of VCAM or any of its Subsidiaries to ADP
pursuant to this Agreement contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements made, in the context in which made, not materially false or
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF ADP AND SUB. ADP and Sub
represent and warrant to VCAM as follows:
<PAGE>
(a) ORGANIZATION, STANDING AND CORPORATE POWER;
SUBSIDIARIES. Each of ADP, Sub and each of ADP's Significant Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted.
(b) CERTIFICATE OF INCORPORATION AND BY-LAWS.
Complete and correct copies of the Certificate of Incorporation and By-laws,
each as amended to date, of ADP and Sub have been delivered to VCAM. The
Certificates of Incorporation and By-laws of ADP and Sub are in full force and
effect. Neither ADP nor Sub is in violation of any provision of its Certificate
of Incorporation or By-laws.
(c) CAPITALIZATION. As of the date hereof, (i) the
authorized capital stock of ADP consists of (A) 1,000,000,000 shares of ADP
Common Stock, 302,102,291 of which are issued and outstanding as of October 31,
1998, and are duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights and (B) 300,000 shares of preferred stock, par
value $1.00 per share of ADP, none of which are issued and outstanding and (ii)
the authorized capital stock of Sub consists of 1,000 shares of Sub Common
Stock, 1,000 shares of which are issued and outstanding and are duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights.
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS. ADP has made
available to VCAM a true and complete copy of each form, report, schedule and
registration statement filed with the SEC by ADP since June 30, 1997 (as such
documents have since the time of their filing been amended or supplemented, the
"ADP SEC DOCUMENTS"), which are all the documents (other than preliminary
material) that ADP or its respective Subsidiaries was required to file with the
SEC since such date. As of their respective dates, the ADP SEC Documents (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 ADP SEC
Documents, and none of the ADP SEC Documents (including all financial statements
included therein and exhibits and schedules thereto and documents incorporated
by reference therein) contained any untrue statement of a material fact or
omitted to state a 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. The financial statements of ADP and each Subsidiary of ADP
included in the ADP SEC Documents comply as to form in all material respects
with applicable accounting requirements and with the rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited financial statements, as
permitted by the Exchange Act) and fairly present in all material respects
(subject, in the case of the unaudited financial statements, to normal,
recurring audit adjustments
<PAGE>
that, individually and in the aggregate, were and will not be not material) the
consolidated financial position of ADP and/or the applicable Subsidiaries of ADP
and its consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
(e) AUTHORITY. ADP and Sub have all requisite corporate power
and authority to enter into this Agreement and to perform their obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of ADP and Sub and no other corporate proceedings
on the part of ADP or Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by ADP and Sub and constitutes a valid and
binding obligation of ADP and Sub enforceable against ADP in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws limiting creditors' rights generally and to general equitable principles.
(f) GOVERNMENT APPROVALS; REQUIRED CONSENTS.
(i) No material consent, approval or authorization
of, or declaration or filing with, or notice to, any Governmental Entity on the
part of ADP or Sub is required in connection with the execution or delivery by
ADP or Sub of this Agreement, and the consummation by ADP and Sub of the
transactions contemplated hereby or compliance by ADP and Sub with the
provisions hereof, other than (A) the filing of the Articles of Merger with the
Secretary of State of Florida in accordance with the FBCA, (B) filings with the
SEC and any applicable national security exchange, (C) filings under State
securities or "Blue Sky" laws, (D) filings under the HSR Act, (E) such consents,
approvals, authorizations, declarations, filings or notices required under any
federal or state statute or regulation affecting professional employer
organizations or health care providers and (F) as otherwise set forth in Section
3.2(f)(i) of the disclosure schedules delivered to VCAM by ADP on or prior to
the date hereof (the "ADP DISCLOSURE SCHEDULE") (any such consents, approvals,
authorizations, declarations, filings or notices specified in clauses (A)
through (F) being referred to as "ADP GOVERNMENTAL APPROVALS").
(ii) No material consent, approval or action of, or
filing with, or notice to, any Person (other than a Governmental Entity) shall
be required in connection with the execution or delivery by ADP or Sub of this
Agreement, the consummation by ADP and Sub of the transactions contemplated
hereby or compliance by ADP and Sub with the provisions hereof, other than as
set forth in Section 3.2(f)(ii) of the ADP Disclosure Schedule (the "ADP
REQUIRED CONSENTS").
<PAGE>
(g) NON-CONTRAVENTION. The execution and delivery of this
Agreement by ADP and Sub does not, and the consummation of the transactions
contemplated hereby and compliance by ADP and Sub with the provisions hereof
will not, (i) conflict with or result in any violation of any provision of the
Certificate of Incorporation or By-laws, in each case as amended and/or
restated, of ADP and its Subsidiaries; (ii) if the ADP Required Consents are
obtained, result in any violation or breach of, or result in a modification of
the effect of, or constitute (with or without notice or lapse of time or both) a
default under or give rise to any right of termination, cancellation or
acceleration under, any contracts to which ADP and its Subsidiaries are a party
or by or to which any of them or any of their properties may be bound or
subject, or result in the creation of any Lien upon the properties of ADP and
its Subsidiaries in each case pursuant to the terms of any such Contract; or
(iii) if the ADP Governmental Approvals are obtained, result in any violation of
any law, statute, regulation, order, writ, judgment or decree of any
Governmental Entity applicable to ADP and its Subsidiaries other than with
respect to clauses (ii) and (iii) above, any such violations, breaches,
modifications, defaults, terminations, cancellations, accelerations, Liens,
revocations or suspensions that, individually and in the aggregate, would not
have a Material Adverse Effect with respect to ADP.
(h) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by ADP for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, 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 not misleading.
(i) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other Person retained by or on behalf of ADP is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except Lehman Brothers whose fees and expenses will be paid by ADP in accordance
with ADP's agreement with such firm.
(j) MATERIAL ADVERSE CHANGE. Since June 30, 1998, there has
not been a material adverse change in the business, assets, properties, results
of operations, prospects or financial condition of ADP and its Subsidiaries
taken as a whole.
(k) ACCOUNTING MATTERS. Neither ADP nor, to its knowledge, any
of its Affiliates, has taken or agreed to take any action that would prevent ADP
from accounting for the business combination to be effected by the Merger as a
pooling-of-interests.
(l) TAX MATTERS. Neither ADP nor Sub has taken or agreed to
take any action, or knows of any circumstances, that (without regard to any
action taken or agreed
<PAGE>
to be taken by VCAM or any of its Subsidiaries) would prevent the Merger from
qualifying as a reorganization within the meaning of Sections 368(a)(1)(A) or
368(a)(2)(E) of the Code.
ARTICLE IV
COVENANTS
4.1 MUTUAL COVENANTS OF ADP AND VCAM. Each of ADP and VCAM
agrees that, except as expressly contemplated or permitted by this Agreement, it
shall (and shall cause each of its Subsidiaries to) comply with the following
covenants:
(a) CONFIDENTIALITY. From and after the date hereof,
each party shall, and shall use its best efforts to cause its Affiliates and its
and their respective Agents to keep secret and hold in strictest confidence any
and all documents and information relating to the other party and its respective
Affiliates furnished to such first party (whether before or after the date
hereof) in connection with the transactions contemplated hereunder, other than
the following: (i) information that has become generally available to the public
other than as a result of a wrongful disclosure by such party, its Affiliates or
its Agents; (ii) information that becomes available to such party or an Agent of
such party on a nonconfidential basis from a third party having no obligation of
confidentiality to a party to this Agreement and which has not to the knowledge
of the receiving party itself received such information directly or indirectly
in breach of any such obligation of confidentiality; (iii) information that is
required to be disclosed by applicable law, judicial order or pursuant to any
listing agreement with, or the rules or regulations of, any securities exchange
on which securities of such party or any such Affiliate are listed or traded;
provided that the party making such disclosure or whose Affiliates or Agents are
making such disclosure shall notify the other party as promptly as practicable
(and, if possible, prior to making such disclosure) and shall use its reasonable
best efforts to limit the scope of such disclosure and seek confidential
treatment of the information to be disclosed; and (iv) disclosures made by any
party as shall be reasonably necessary in connection with obtaining the ADP
Required Consents and/or the VCAM Required Consents. Notwithstanding the
foregoing, ADP and VCAM agree that the Confidentiality Agreement, dated as of
October 5, 1998 (the "CONFIDENTIALITY AGREEMENT"), between ADP and VCAM shall
remain in full force and effect and shall control to the extent of any conflict
between the terms of this Section 4.1(a) and the Confidentiality Agreement.
(b) PUBLICITY. Except as otherwise required by
applicable law or the rules or regulations of any securities exchange on which
the securities of such party or any Affiliate of such party are listed or traded
as determined in the good faith opinion of the disclosing person's counsel,
until the earlier of (i) the date on which this Agreement ceases to be in effect
and (ii) the Closing Date, no party shall issue or cause the publication of any
press
<PAGE>
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party and in any
event each party agrees that it will give the other party reasonable opportunity
to review and comment upon any such release or announcement prior to publication
of the same.
(c) PREPARATION OF THE PROXY STATEMENT AND THE
REGISTRATION STATEMENT. As soon as practicable following the date of this
Agreement, at the direction of, and with all reasonably necessary assistance
from, VCAM, ADP shall prepare and cause to be filed with the SEC the
Registration Statement, in which the Proxy Statement will be included as part of
a Proxy Statement/Prospectus. Each party shall provide the other party and its
Agents with reasonable opportunity to review and comment upon the Registration
Statement, including all amendments thereto and all supplements to the Proxy
Statement contained therein, prior to the filing thereof with the SEC and/or the
distribution thereof to the stockholders of VCAM, and shall make all reasonable
changes thereto requested by such other party or its Agents. Each party hereto
shall use its reasonable commercial efforts to have the Registration Statement
declared effective by the SEC as promptly as practicable consistent with a
desired Effective Time of on or prior to February 28, 1999; PROVIDED, that the
failure of the Effective Time to have occurred on or prior to February 28, 1999
shall not be considered to be a breach of this Agreement. Each party shall
provide and shall be deemed to have provided the other party with the
information concerning it required to be included in the Registration Statement.
ADP shall take any action required to be taken under any applicable state
securities laws in connection with the issuance of the Shares of ADP Common
Stock to be issued in the Merger pursuant to this Agreement.
(d) SATISFACTION OF CONDITIONS; ADDITIONAL
AGREEMENTS. Subject to the terms and conditions of this Agreement, each party
hereto agrees to use its reasonable commercial efforts to cause the conditions
set forth in Article VI of this Agreement to be satisfied, and to take, or cause
to be taken, all 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 as promptly as practicable the transactions contemplated by this
Agreement consistent with a desired Effective Time of on or prior to February
28, 1999, including obtaining any VCAM Required Consents or VCAM Governmental
Approvals and cooperating fully with the other party, including by provision of
information and making of all necessary filings in connection with, among other
things, the HSR Act; PROVIDED, that the failure of the Effective Time to have
occurred on or prior to February 28, 1999 shall not be considered to be a breach
of this Agreement. In case at any time after the Closing Date any further action
is necessary or desirable to carry out the purposes of this Agreement, each
party shall take all such necessary action.
(e) OTHER ACTIONS. From the date hereof through the
Closing Date, each of ADP and VCAM shall not, and shall cause its Subsidiaries
not to, take any action that
<PAGE>
would or is reasonably likely to result in any of the representations and
warranties of ADP or VCAM, as the case may be, set forth in this Agreement being
untrue in any material respect as of the date made, or in any of the conditions
to the Closing set forth in Article VI of this Agreement not being satisfied.
ADP shall take all actions reasonably necessary to comply with Rule 144(c) under
the Securities Act.
(f) ADVICE OF CHANGES; SEC DOCUMENTS. Subject to
applicable law, each party shall confer on a regular and frequent basis with the
other, report on operational matters and promptly advise the other orally and in
writing of (i) any material notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any
material notice or other communication from any regulatory authority or national
securities exchange in connection with the transactions contemplated by this
Agreement; and (iii) any claims, actions, proceedings or investigations
commenced or, to the best of such party's knowledge, threatened, involving or
affecting such party or any of its Subsidiaries, or any of its property or
assets, or, to the best of such party's knowledge, any employee, consultant,
director or officer, in his or her capacity as such, of such party or any of its
Subsidiaries, which relates to the consummation of the Merger or the other
transactions contemplated by this Agreement.
(g) LEGAL CONDITIONS TO MERGER. Each of VCAM, ADP and
Sub will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger
(including furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with the Merger. Each of VCAM, ADP and Sub will, and will cause
its Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by ADP, Sub or VCAM or any
of its Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement or the Stock Option Agreement.
4.2 COVENANTS OF VCAM. During the period from the date of this
Agreement and continuing until the Closing Date, VCAM agrees that, except as
expressly contemplated or permitted by this Agreement, or to the extent that ADP
shall otherwise consent in writing (which consent may be withheld in its sole
discretion):
(a) ACCESS TO INFORMATION. Subject to Section 4.1(a),
upon reasonable notice, VCAM shall, and shall cause its Subsidiaries to, afford
to ADP and its Agents, access, during normal business hours during the period
prior to the Closing Date, to
<PAGE>
all its properties, books, Contracts, commitments and records and, during such
period, VCAM shall, and shall cause its Subsidiaries to, promptly furnish or
otherwise make available to ADP (i) a copy of each report, schedule,
registration statement and other document filed or received by any of them
during such period pursuant to the requirements of Federal securities laws and
(ii) all other information concerning its business, properties and personnel as
ADP may reasonably request.
(b) ORDINARY COURSE. VCAM shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and use
its commercially reasonable efforts to preserve intact their current business
organizations, retain and keep available the services of their current officers
and employees and preserve their relationships with customers, suppliers,
contractors, distributors, licensors, licensees and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
not be impaired in any material respect at the Closing Date (it being understood
and agreed by ADP and VCAM that this Section 4.2(b) is a material covenant and
ADP is relying on VCAM's compliance with the provisions of this covenant between
the date hereof and the Closing Date for purposes of Section 6.2(b) hereof).
Without limiting the generality of the foregoing, and except as otherwise
required by law, neither VCAM nor any of its Subsidiaries shall:
(i) (x) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its capital
stock (except dividends and distributions by a direct or indirect wholly owned
Subsidiary of VCAM to its parent), (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or (z)
purchase, redeem or otherwise acquire any shares of capital stock of VCAM or any
of its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) authorize for issuance, issue, deliver,
sell or agree or commit to issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise), pledge or otherwise encumber any shares of its capital stock or
the capital stock of any of its Subsidiaries, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities or any other securities
or equity equivalents (including without limitation stock appreciation rights)
(other than (x) issuances upon exercise of stock options or warrants outstanding
on the date hereof and listed in Section 3.1(c) of the VCAM Disclosure Schedule
and (y) issuances of up to 70,000 options to acquire shares of VCAM Common Stock
at the then-current market price for VCAM Common Stock as of the time of the
grant of any such options in accordance with the terms of The
<PAGE>
Vincam Group, Inc. 1996 Long Term Incentive Plan or The Vincam Group, Inc. 1998
Long Term Incentive Plan;
(iii) except as set forth on Section
4.2(b)(iii) of the VCAM Disclosure Schedule and with respect to annual bonuses
made in the ordinary course of business consistent with past practice, adopt or
amend in any material respect any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, pension,
retirement, employment or other employee benefit agreement, trust, plan or other
arrangement for the benefit or welfare of any director, officer or employee of
VCAM or any of its Subsidiaries or increase in any manner the compensation or
fringe benefits of any director, officer or employee of VCAM or any of its
Subsidiaries or pay any benefit not required by any existing agreement or place
any assets in any trust for the benefit of any director, officer or employee of
VCAM or any of its Subsidiaries (in each case, except with respect to employees
(other than directors or officers) in the ordinary course of business consistent
with past practice);
(iv) amend its certificate of incorporation,
by-laws or equivalent organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the corporate
structure or ownership of any Subsidiary of VCAM;
(v) except as set forth on Section 4.2(b)(v)
of the VCAM Disclosure Schedule, sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its material
properties or assets, except sales or licenses of assets in the ordinary course
of business consistent with past practice;
(vi) except as set forth on Section
4.2(b)(vi) of the VCAM Disclosure Schedule and except for borrowings under
credit facilities or other agreements filed as exhibits to the VCAM SEC
Documents, incur any Debt, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of VCAM 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 make any loans, advances or capital contributions to, or investments in, any
other Person, other than to VCAM or any direct or indirect wholly owned
Subsidiary of VCAM;
(vii) change any accounting principle used
by it, unless required by the SEC or the Financial Accounting Standards Board;
(viii) enter into any transaction or series
of transactions with any Affiliate of VCAM (other than a wholly owned Subsidiary
of VCAM) or otherwise that would be required to be disclosed pursuant to Item
404 of Regulation S-K other than on terms
<PAGE>
and conditions substantially as favorable to VCAM or such Subsidiary as would be
obtainable by VCAM or such Subsidiary at the time of such transaction with a
Person that is not an Affiliate of VCAM; and
(ix) enter into or amend, modify, supplement
or waive any material provision of any contract, agreement or arrangement with
any client or potential client if, in the aggregate, the terms of such
contracts, agreements or arrangements as entered into or so amended, modified,
supplemented or waived differ in any materially adverse respects from the terms
set forth in the forms of client contracts attached to Section 4.2(b)(ix) of the
VCAM Disclosure Schedule or would not otherwise be in the ordinary course of
VCAM's business.
(c) MEETINGS; FIDUCIARY DUTIES. VCAM shall, promptly
after the date hereof and consistent with a desired Effective Time of on or
prior to February 28, 1999, take all action necessary in accordance with the
FBCA and its Certificate of Incorporation and By-laws to convene a meeting of
its stockholders as promptly as practicable after the effectiveness of the Form
S-4, among other things, consider and vote upon this Agreement and the Merger
(the "STOCKHOLDERS' MEETING"), and VCAM shall consult with ADP in connection
therewith; PROVIDED, that the failure of the Effective Time to have occurred on
or prior to February 28, 1999 shall not be considered to be a breach of this
Agreement. VCAM will use its best efforts to obtain the requisite stockholder
approval as soon as practicable after the date hereof. Without limiting the
generality of the foregoing, VCAM agrees that its obligations pursuant to the
first two sentences of this Section 4.2(c) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to ADP of any
Transaction Proposal or (ii) the withdrawal or modification by the Board of
Directors of VCAM of its approval or recommendation of this Agreement or the
Merger. Subject to the provisions of Sections 4.2(d) and 4.2(e) hereof, the
Board of Directors of VCAM shall recommend that VCAM's stockholders vote in
favor of the adoption and approval of this Agreement (the "RECOMMENDATION") and
the Board of Directors of VCAM shall not withdraw, condition or modify or
propose to withdraw, condition or modify in a manner adverse to ADP, the
Recommendation, except as provided in Section 4.2(e). VCAM shall use its best
efforts to solicit from stockholders of VCAM proxies in favor of the approval
and adoption of this Agreement and to secure the vote or the consent of the
stockholders required by the FBCA to approve and adopt this Agreement.
(d) NO SOLICITATION. Neither VCAM nor any of its
Subsidiaries shall, nor shall it or any of its Subsidiaries authorize or permit
any of their respective Agents to, (i) solicit, initiate, encourage (including
by way of furnishing information or assistance) or take any other action to
facilitate, any inquiry or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any acquisition or purchase of a substantial
amount of assets of, or any equity interest in, VCAM or any of its Subsidiaries
or any tender offer (including a self tender offer) or exchange offer, merger,
consolidation, business combination,
<PAGE>
sale of substantially all assets, sale of securities, recapitalization,
liquidation, dissolution or similar transaction involving VCAM or any of its
Subsidiaries (other than the transactions contemplated by this Agreement) or any
other material corporate transaction the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or materially delay
the Merger (collectively, "TRANSACTION PROPOSALS") or agree to or endorse any
Transaction Proposal or (ii) propose, enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish to any
other Person any information with respect to its business, properties or assets
or any of the foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing; PROVIDED, HOWEVER, that the foregoing
clauses (i) and (ii) shall not prohibit VCAM from, prior to the Stockholders'
Meeting (A) furnishing information pursuant to an appropriate confidentiality
letter concerning VCAM and its businesses, properties or assets to a third party
which has made an unsolicited Qualified Transaction Proposal (as defined below),
(B) engaging in discussions or negotiations with such a third party which has
made an unsolicited Qualified Transaction Proposal or (C) following receipt of
an unsolicited Qualified Transaction Proposal, taking and disclosing to its
shareholders a position with respect to such Qualified Transaction Proposal, but
in each case referred to in the foregoing clauses (A) through (C) only after the
Board of Directors of VCAM concludes in good faith, following receipt of a
written opinion addressed to VCAM from outside counsel, that such action is
necessary for the Board of Directors of VCAM to comply with its fiduciary
obligations to stockholders under applicable law and that the third party which
made the unsolicited Qualified Transaction Proposal has the ability and the
financial wherewithal to consummate a Superior Acquisition Proposal (as defined
below). If the Board of Directors of VCAM receives a Transaction Proposal, then
VCAM shall immediately (and in any event within 24 hours) inform ADP of the
material terms and conditions of such proposal and the identity of the Person
making it and shall keep ADP fully informed regarding any significant details or
developments with respect to any such Transaction Proposal and of all
significant steps it is taking in response to such Transaction Proposal. For
purposes of this Agreement, the term "QUALIFIED TRANSACTION PROPOSAL" shall mean
a Transaction Proposal that the Board of Directors of VCAM determines in good
faith after consultation with its outside financial advisors, is reasonably
capable of being financed and is not subject to any material contingencies
relating to financing. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in this Section 4.2(d) by (or at the
direction of) an officer, director of or any investment banker, attorney,
accountant, Agent or other advisor or representative of VCAM or any of VCAM's
Subsidiaries, whether or not such person is purporting to act on behalf of VCAM,
an VCAM Subsidiary or otherwise, shall be deemed to be a breach of this
paragraph by VCAM. VCAM immediately shall cease and cause to be terminated all
existing discussions or negotiations with any persons conducted heretofore with
respect to, or that could reasonably be expected to lead to, any Qualified
Transaction Proposal.
<PAGE>
(e) SUPERIOR ACQUISITION PROPOSAL. Neither the Board
of Directors of VCAM nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to ADP, the
Recommendation or any approval or recommendation by the Board of Directors of
VCAM or any committee thereof of this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Qualified Transaction
Proposal. Notwithstanding the foregoing, the Board of Directors of VCAM, to the
extent it concludes in good faith, following receipt of a written opinion
addressed to VCAM from outside counsel, that such action is necessary for the
Board of Directors of VCAM to comply with its fiduciary obligations to
stockholders under applicable law, may approve or recommend (and, in connection
therewith, withdraw or modify the Recommendation or its approval of this
Agreement or the Merger) a Superior Acquisition Proposal (as defined below). For
purposes of this Agreement, "SUPERIOR ACQUISITION PROPOSAL" means a bona fide
written proposal made by a third party to acquire VCAM pursuant to a tender or
exchange offer, a merger, a share exchange, a sale of all or substantially all
of its assets or otherwise, in any such case, on terms which a majority of the
members of the Board of Directors of VCAM determines in their good faith
judgment (after consultation with independent financial advisors) to be more
favorable to VCAM and its stockholders than the Merger and for which financing,
to the extent required, is then fully committed or which, in the good faith
judgment of a majority of such members (after consultation with independent
financial advisors), is reasonably capable of being financed by such third
party.
(f) AFFILIATES. Concurrently with the execution of
this Agreement, VCAM is delivering to ADP (i) a letter identifying all Persons
who, to the knowledge of VCAM, may be deemed to be "affiliates" of VCAM under
Rule 145 under the Securities Act, including, without limitation, all directors
and executive officers of VCAM, and (ii) not later than 30 days prior to the
Stockholders' Meeting copies of letter agreements, each in the form prepared by
ADP and reasonably acceptable to VCAM, executed by each such Person so
identified as an "affiliate" of VCAM (the letters described in clauses (i) and
(ii) being collectively referred to as "AFFILIATE LETTERS").
(g) COMPLIANCE WITH LAWS. VCAM agrees to conduct its
businesses and cause the businesses of its Subsidiaries to be conducted in
material compliance with all applicable laws and regulations.
(h) ADVICE OF CHANGES. VCAM shall promptly advise ADP
in writing of any claims, actions, proceedings or investigations commenced or,
to the best of VCAM's knowledge, threatened, involving or affecting VCAM or any
of its Subsidiaries, or any of VCAM's property or assets, or, to the best of
VCAM's knowledge, any employee, consultant, director or officer, in his or her
capacity as such, of VCAM or any of its
<PAGE>
Subsidiaries, which, if pending on the date of this Agreement, would have been
required to have been disclosed in the VCAM Disclosure Schedule.
(i) POOLING LETTERS. VCAM shall use commercially
reasonable efforts to cause Price Waterhouse Coopers LLP to deliver a letter
dated the Closing Date stating in their opinion that VCAM is a poolable entity
for accounting purposes and VCAM shall deliver a letter addressed to Deloitte &
Touche LLC to the same effect.
4.3 LISTING. ADP shall use its best efforts to cause the
shares of ADP Common Stock to be issued in the Merger to be approved for listing
on the NYSE, subject to official notice of issuance.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) VCAM shall, and from and after the Effective
Time, ADP and the Surviving Corporation (each, an "INDEMNIFYING PARTY") shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer, director or employee of VCAM or any of its Subsidiaries (collectively,
the "INDEMNIFIED PARTIES") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in settlement with
the approval of the Indemnifying Party (which approval shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or employee of VCAM or
any Subsidiary and arising out of actions or omissions, occurring at or prior to
the Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("INDEMNIFIED LIABILITIES") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby; PROVIDED,
that in the case of clauses (i) and (ii) above, each Indemnifying Party shall
only be required to indemnify an Indemnified Party pursuant to this Section 5.1
to the extent a corporation is permitted under the law of the state of
incorporation of the Indemnifying Party to indemnify its own directors, officers
and employees, as the case may be (and ADP and the Surviving Corporation, as the
case may be, will pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent permitted by
law upon receipt of any undertaking required or contemplated by applicable law).
In addition, the articles of incorporation and by-laws of the Surviving
Corporation and its successors and assigns shall contain provisions with respect
<PAGE>
to indemnification no less favorable in all material respects to the present and
former directors and officers of VCAM than those in effect in the Articles of
Incorporation of VCAM and the By-laws of VCAM as in effect on the date of this
Agreement.
(b) Each Indemnified Party under this Section 5.1
will, promptly after the receipt of notice of the commencement of any action or
other proceeding against such Indemnified Party in respect of which indemnity
may be sought from an Indemnifying Party under this Section 5.1, notify the
Indemnifying Party in writing of the commencement thereof. The omission of any
Indemnified Party so to notify an Indemnifying Party of any such action shall
not relieve such Indemnifying Party from any liability which it may have to such
Indemnified Party other than pursuant to this Section 5.1 or, unless, and only
to the extent that, such omission results in such Indemnifying Party's
forfeiture of substantive rights or defenses. In case any such action or other
proceeding shall be brought against any Indemnified Party and it shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party; PROVIDED, HOWEVER, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense. Notwithstanding
the foregoing, in any action or proceeding in which both the Indemnifying Party
and an Indemnified Party is, or is reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel at the
Indemnifying Party's expense and to control its own defense of such action or
proceeding if, in the reasonable written opinion of counsel to such Indemnified
Party, (a) there are or may be legal defenses available to such Indemnified
Party or to other Indemnified Parties that are different from or additional to
those available to the Indemnifying Party or (b) any conflict or potential
conflict exists between the Indemnifying Party and such Indemnified Party that
would make such separate representation advisable; PROVIDED, HOWEVER, that in no
event shall the Indemnifying Party be required to pay fees and expenses under
this Section 5.1 for more than one firm of attorneys in any jurisdiction in any
one legal action or group of related legal actions. The Indemnifying Party shall
not, without the consent of the Indemnified Party (which consent shall not be
unreasonably withheld), consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation or which requires action other
than the payment of money by the Indemnifying Party. The rights accorded to
Indemnified Parties hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise.
(c) For not less than six years after the Effective
Time, ADP, or the Surviving Corporation or their respective successors or
assigns shall maintain in effect directors' and officers' liability insurance
with respect to claims arising from facts or events arising prior to and
including the Effective Time covering the Indemnified Parties (which may
<PAGE>
include including such persons in ADP's existing plans) who are currently
covered by VCAM's existing directors' and officers' liability insurance, on
terms and conditions no less favorable to such directors and officers than those
in effect on the date hereof with respect to ADP's officers and directors;
PROVIDED, HOWEVER, that in no event shall ADP or the Surviving Corporation be
required to expend pursuant to this Section 5.1(c) more than an amount equal to
200% of the current annual premiums paid by VCAM for such insurance.
(d) The provisions of this Section 5.1 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives.
5.2 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all 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 the transactions
contemplated by this Agreement, subject to the appropriate vote of stockholders
of VCAM described in Section 6.1(a), including cooperating fully with the other
party, including by provision of information and making of all necessary filings
in connection with, among other things, under the HSR Act. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of any party to this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
5.3 ACCOUNTING TREATMENT. ADP and VCAM shall use reasonable
best efforts and shall cooperate fully to allow the Merger and other
transactions contemplated by this Agreement to be accounted for as a
"pooling-of-interests" in accordance with GAAP acceptable to the SEC.
5.4 TAX TREATMENT. Each of ADP, Sub and VCAM shall use
reasonable commercial efforts to cause the Merger to qualify as a reorganization
under the provisions of Section 368(a) of the Code, including, without
limitation, forebearing from taking any action that would cause the Merger not
to qualify as a reorganization under the provisions of Section 368(a) of the
Code.
5.5 EMPLOYEE MATTERS.
(a) ADP agrees that individuals who are employed by
VCAM or any of VCAM's Subsidiaries (other than client employees) immediately
prior to the Closing Date shall remain employees of VCAM or such Subsidiary as
of the Closing Date (each such employee, an "AFFECTED EMPLOYEE"); PROVIDED,
HOWEVER, that nothing contained herein shall
<PAGE>
confer upon any Affected Employee the right to continued employment by VCAM or
any of its Subsidiaries for any period of time after the Closing Date which is
not otherwise required by law or contract.
(b) To the extent that any Affected Employees are
moved by ADP to any employee benefit plan maintained by ADP or any of its
Subsidiaries, (i) ADP shall, or shall cause such Subsidiary to, give such
Affected Employees full credit solely for the purposes of eligibility and
vesting under such employee benefits plans for such Affected Employee's service
with ADP, VCAM or any affiliate thereof to the same extent recognized
immediately prior to the Closing Date and (ii) such Affected Employees will not
be subject to any limitations regarding preexisting conditions under any such
employee benefit plan; PROVIDED, that the entry dates into such employee benefit
plans for such Affected Employees will be in the normal course of such plan's
administration, which may be the beginning of the plan year.
(c) After the Effective Time, until the date ADP
determines in its discretion to move Affected Employees to ADP employee health
and welfare benefit plans, ADP shall cause VCAM to maintain employee health and
welfare plans (but not bonus or equity-based plans) that are substantially
comparable to the health and welfare plans maintained by VCAM on the date
hereof.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO THE OBLIGATIONS OF ADP AND VCAM TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have
been approved and adopted by the affirmative vote of a majority of the votes
that the holders of the outstanding shares of VCAM Common Stock are entitled to
cast.
(b) REGISTRATION STATEMENT. The Registration
Statement shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceedings seeking a stop order.
(c) BLUE SKY LAWS. ADP shall have received all state
securities or "Blue Sky" permits and other authorizations, if any, necessary to
issue the shares of ADP Common Stock.
<PAGE>
(d) LISTING. The ADP Common Stock to be issued in the
Merger pursuant to this Agreement shall have been authorized for listing on the
NYSE or any other national securities exchange or automated quotation system
approved by ADP and VCAM, in each case, subject to official notice of issuance.
(e) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"INJUNCTION") restraining or preventing the consummation of the Merger or
subjecting any party or any of its Affiliates to substantial damages as a result
of the consummation of the Merger shall be in effect; PROVIDED, HOWEVER, that
the party invoking this condition shall have used reasonable best efforts to
have vacated such Injunction.
(f) HSR ACT. All HSR Act waiting periods shall have
expired or been terminated.
(g) GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, Governmental Entities, including, without limitation, those
set forth in the ADP Disclosure Schedule and/or the VCAM Disclosure Schedule, in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by ADP and VCAM will have
been made or obtained (as the case may be) other than those failures which could
not reasonably be expected to have a Material Adverse Effect on VCAM.
6.2 CONDITIONS TO THE OBLIGATIONS OF ADP. The obligations of
ADP under this Agreement to consummate the transactions contemplated hereby are
subject to the satisfaction of the following conditions, the imposition of which
is solely for the benefit of ADP and any one of more of which may be expressly
waived by ADP, in its sole discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of VCAM contained herein modified by the phrase
"Material Adverse Effect" or any similar materiality modifier shall have been
true and correct in all respects when made, and shall be true and correct in all
respects at and as of the Closing Date as though made on and as of the Closing
Date, and the other representations and warranties of VCAM contained herein
shall have been true and correct in all material respects when made, and shall
be true and correct in all material respects at and as of the Closing Date as
though made on and as of the Closing Date (except to the extent that any such
representation and warranty had by its terms been made as of a specific date, in
which case such representation and warranty shall have been true and correct as
of such specific date). ADP shall have
<PAGE>
received a certificate dated the Closing Date signed by an executive officer of
VCAM certifying to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. VCAM shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants and conditions contained in this
Agreement or otherwise contemplated hereby to be performed and complied with by
it at or prior to the Closing Date. ADP shall have received a certificate dated
the Closing Date signed by an executive officer of VCAM certifying to the
fulfillment of this condition.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been
no Material Adverse Change.
(d) AUDITORS' LETTER. ADP shall have received a
letter dated the Closing Date, from its auditors, Deloitte & Touche LLP, stating
in effect that in their opinion ADP may treat the transaction contemplated by
this Agreement as a pooling-of-interests for accounting purposes in accordance
with generally accepted accounting principles.
(e) AFFILIATE LETTERS. ADP shall have received the
Affiliate Letters.
(f) VCAM REQUIRED CONSENTS. The VCAM Required
Consents shall have been obtained and be in full force and effect, except for
those the failure of which to be obtained would not have a Material Adverse
Effect with respect to VCAM and its Subsidiaries (and ADP shall have received
evidence thereof reasonably satisfactory to it).
(g) EMPLOYMENT AGREEMENTS. Carlos Saladrigas and Jose
Sanchez shall have executed and delivered employment agreements with VCAM, in
substantially the form attached hereto as Exhibits A and B, respectively.
6.3 CONDITIONS TO THE OBLIGATIONS OF VCAM. The obligations of
VCAM to consummate the transactions contemplated hereby are subject to the
satisfaction of the following conditions, the imposition of which is solely for
the benefit of VCAM and any one or more of which may be expressly waived by
VCAM, in its sole discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of ADP contained herein modified by the phrase
"Material Adverse Effect" or any similar materiality modifier shall have been
true and correct in all respects when made, and shall be true and correct in all
respects at and as of the Closing Date as though made on and as of the Closing
Date, and the other representations and warranties of ADP contained herein shall
have been true and correct in all material respects when made, and shall be true
<PAGE>
and correct in all material respects at and as of the Closing Date as though
made on and as of the Closing Date (except to the extent that any such
representation and warranty had by its terms been made as of a specific date, in
which case such representation and warranty shall have been true and correct as
of such specific date). VCAM shall have received a certificate dated the Closing
Date signed by an executive officer of ADP certifying to the fulfillment of this
condition.
(b) PERFORMANCE OF AGREEMENTS. ADP shall have
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants and conditions contained in this
Agreement to be performed and complied with by it at or prior to the Closing
Date. VCAM shall have received a certificate dated the Closing Date signed by an
executive officer of ADP certifying to the fulfillment of this condition.
(c) FAIRNESS OPINIONS. VCAM shall have received the
opinion of Goldman, Sachs & Co., as of the date the Proxy Statement is mailed to
VCAM stockholders, to the effect that the Exchange Ratio (as determined pursuant
to Section 2.1(b)) is fair to the VCAM stockholders from a financial point of
view.
(d) TAX OPINION. VCAM shall have received an opinion
from Steel Hector & Davis LLP, counsel to VCAM, dated as of the Closing Date, in
form and substance reasonably satisfactory to VCAM, substantially to the effect
that the Merger will constitute a reorganization for U.S. federal income tax
purposes within the meaning of Section 368(a) of the Code. In rendering such
opinion, counsel to VCAM shall be entitled to rely upon representations
contained in a certificate of VCAM substantially in the form of the VCAM Tax
Certificate attached to the VCAM Disclosure Schedule, a certificate of ADP
substantially in the form of the ADP Tax Certificate attached hereto as Exhibit
C and representations contained in other appropriate certificates of VCAM, ADP,
certain shareholders of VCAM, and others.
(e) EMPLOYMENT AGREEMENTS. VCAM shall have executed
and delivered the employment agreements with Carlos Saladrigas and Jose Sanchez,
in substantially the form attached hereto as Exhibits A and B.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time whether before or after approval by the stockholders of ADP or VCAM:
<PAGE>
(a) by mutual written consent of ADP and VCAM;
(b) (x) by ADP if there has been a material breach of
any representation, warranty, covenant or agreement on the part of VCAM, set
forth in this Agreement which breach, if not a wilful breach, has not been
cured within fifteen (15) Business Days following receipt by the breaching party
of notice of such breach or (y) by VCAM if there has been a material breach of
any representation, warranty, covenant or agreement on the part of ADP set forth
in this Agreement which breach, if not a wilful breach, has not been cured
within fifteen (15) Business Days following receipt by the breaching party of
notice of such breach, but in the case of either (x) or (y), only if the
terminating party is not then itself in material breach of any representation,
warranty, covenant or agreement hereunder.
(c) by either ADP or VCAM if the Merger shall not
have been consummated before June 30, 1999 (or such later date as may be agreed
to by ADP and VCAM); PROVIDED, HOWEVER, that neither party may terminate this
Agreement under this Section 7.1(c) if the failure has been caused by such
party's material breach of this Agreement;
(d) by either ADP or VCAM, if this Agreement shall
fail to receive the requisite vote for approval and adoption by the stockholders
of VCAM at the Stockholders' Meetings;
(e) by VCAM, in the manner specified in Section
2.1(b)(v);
(f) by ADP, if (i) the Board of Directors of VCAM
shall withdraw, modify, condition or change the Recommendation in a manner
adverse to ADP or shall have resolved to do any of the foregoing; (ii) the Board
of Directors of VCAM shall have recommended to the stockholders of VCAM a
Superior Transaction Proposal; (iii) VCAM shall have entered into any agreement
with respect to a Qualified Transaction Proposal (other than a confidentiality
agreement as contemplated hereby); (iv) a tender offer (including a self-tender
offer) or exchange offer for shares of capital stock of VCAM, which would result
in the beneficial ownership by any Person or any "group" (as defined in Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
of more than 30% of the outstanding shares of any class of capital stock of
VCAM, is commenced, and the Board of Directors of VCAM recommends that the
stockholders of VCAM tender their shares in such tender or exchange offer; or
(v) any Person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or, except in connection with the execution and
delivery of the Voting Agreement, any "group" shall have been formed which
beneficially owns, or has the right to acquire "beneficial ownership" of, more
than 30% of the then outstanding shares of any class of capital stock of VCAM;
and
<PAGE>
(g) by ADP or VCAM if a court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the consummation of the Merger and such order, decree, ruling or other action
shall have become final and nonappealable.
7.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated and the Merger abandoned pursuant to Section 7.1, all further
obligations of the parties hereunder shall terminate except that the obligations
set forth in Sections 4.1(a) and 4.1(b), this Section 7.2 and Section 8.5 shall
survive; PROVIDED that, if this Agreement is so terminated by a party because
one or more of the conditions to such party's obligations hereunder is not
satisfied as a result of the other party's willful or knowing failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies for breach of contract or otherwise, including,
without limitation, damages relating thereto, shall also survive such
termination unimpaired.
ARTICLE VIII
GENERAL PROVISIONS
8.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings set forth in this Section:
"AFFECTED EMPLOYEE" has the meaning set forth in Section
5.5(a).
"AFFILIATE" means, with respect to any Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first Person.
"AFFILIATE LETTERS" has the meaning set forth in Section
4.2(f).
"AGENT" means, with respect to any Person, such Person's
officers, directors, employees, attorneys, accountants, investment bankers,
financial advisors or other representatives or agents.
"AGREEMENT" has the meaning set forth in the introductory
paragraph.
"ADP" has the meaning set forth in the introductory paragraph.
"ADP COMMON STOCK" has the meaning set forth in Section
2.1(b).
<PAGE>
"ADP DISCLOSURE SCHEDULE" has the meaning set forth in Section
3.2(f).
"ADP GOVERNMENTAL APPROVALS " has the meaning set forth in
Section 3.1(f)(i).
"ADP REQUIRED CONSENTS " has the meaning set forth in Section
3.1(f)(ii).
"ADP SEC DOCUMENTS" has the meaning set forth in Section 3.2.
"ARTICLES OF MERGER" has the meaning set forth in Section 1.3.
"AVERAGE ADP STOCK PRICE" means the average of the daily
closing sale prices of the ADP Common Stock as reported on the NYSE Composite
Transactions Tape (as reported by THE WALL STREET JOURNAL (national edition) or,
if not reported thereby, as reported by another authoritative source as mutually
agreed by ADP and VCAM) for the 10 consecutive trading days ending on the third
Business Day (including such third Business Day) immediately prior to the
Stockholders Meeting.
"BUSINESS COMBINATION" has the meaning set forth in Section
8.5(d).
"BUSINESS DAY" means any day other than a day on which (i)
banks in the State of New York are authorized or obligated to be closed or (ii)
the NYSE is closed.
"CERTIFICATES" has the meaning set forth in Section 2.2(b).
"CLOSING" has the meaning set forth in Section 1.2.
"CLOSING DATE" has the meaning set forth in Section 1.2.
"COBRA" has the meaning set forth in Section 3.1(l)(viii).
"CODE" has the meaning set forth in the fourth Whereas clause
of this Agreement.
"COMMON SHARES TRUST" has the meaning set forth in Section
2.2(e)(iii)
"CONFIDENTIALLY AGREEMENT" has the meaning set forth in
Section 4.1(a).
"CONTRACTS" has the meaning set forth in Section 3.1(h).
"DEBT" of any Person means, without duplication, (A) all
indebtedness of such Person for borrowed money; (B) all obligations of such
Person evidenced by notes, bonds,
<PAGE>
debentures or other similar instruments; (C) all obligations of such Person as
lessees under leases that have been or should be, in accordance with GAAP,
recorded as capital leases; (D) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities; (E) all
Debt of others referred to in clauses (i) through (iv) above guaranteed directly
or indirectly in any manner by such Person; and (F) all Debt of others referred
to in clauses (i) through (v) above secured by (or for which the holder of such
Debt has an existing right, contingent or otherwise, to be secured by) any Lien
on property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
"DOCUMENTS" has the meaning set forth in Section 3.1(dd).
"EFFECTIVE TIME" has the meaning set forth in Section 1.3.
"EMPLOYEE BENEFIT PLANS has the meaning set forth in Section
3.1(l)(i).
"ENVIRONMENTAL LAWS" has the meaning set forth in Section
3.1(n).
"ERISA" has the meaning set forth in Section 3.1(l)(i).
"ERISA AFFILIATES " has the meaning set forth in Section
3.1(l)(iii).
"EXCESS SHARES" has the meaning set forth in Section
2.2(e)(ii).
"EXCHANGE ACT" has the meaning set forth in Section 3.1(d).
"EXCHANGE AGENT" has the meaning set forth in Section 2.2(a).
"EXCHANGE FUND" has the meaning set forth in Section 2.2(a).
"EXCHANGE RATIO" has the meaning set forth in Section 2.1.
"FBCA" has the meaning set forth in Section 1.1.
"FLEET" has the meaning set forth in Section 3.1(q)(iii).
"GAAP" has the meaning set forth in Section 3.1(d).
"GOVERNMENTAL ENTITY" means any foreign, federal, state,
municipal or other governmental or regulatory department, commission, board,
bureau, agency or instrumentality.
<PAGE>
"HAZARDOUS MATERIALS" means all hazardous substances, wastes,
materials or constituents, solid wastes, special wastes, toxic substances,
pollutants, contaminants, petroleum or petroleum derived substances or wastes,
radioactive materials, urea formaldehyde, polychlorinated biphenyls, radon gas
and related materials, including, without limitation, any such materials
defined, listed, identified under or described in any applicable Environmental
Laws.
"HEADQUARTERS FACILITY" has the meaning set forth in Section
3.1(q)(i).
"HSR ACT" has the meaning set forth in Section 3.1(g).
"INDEMNIFIED LIABILITIES" has the meaning set forth in Section
5.1(a).
"INDEMNIFIED PARTIES" has the meaning set forth in Section
5.1(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section
5.1(a).
"INJUNCTION" has the meaning set forth in Section 6.1(e).
"INVESTMENT COMPANY ACT" has the meaning set forth in Section
3.1(v).
"IRS" has the meaning set forth in Section 3.1(j)(v).
"LIENS" has the meaning set forth in Section 3.1(a).
"MATERIAL ADVERSE CHANGE" means any event, occurrence, fact,
condition, change, development or effect occurring after September 30, 1998 and
resulting in or reasonably likely to result in a material adverse change in the
consolidated financial condition, results of operations, assets, business,
properties, or prospects of VCAM and its Subsidiaries taken as a whole, other
than: (i) those specified in the VCAM Disclosure Schedule, (ii) those specified
in the periodic financial statements and the related management, discussion and
analysis section of the VCAM SEC Documents filed from January 1, 1998 through
the date hereof, (iii) those known to Russ Fradin, Terri Lecamp, Michael Rooney,
Thomas Hall, Richard Burke and Cecil R. House on the date hereof as a result of
ADP's due diligence investigation, and (iv) those reasonably resulting from the
execution of this Agreement or the announcement or the consummation of the
transactions contemplated hereby.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person,
any change or effect that is or is reasonably likely to be materially adverse to
the consolidated financial condition, business, results of operations or
prospects of such Person and its Subsidiaries taken
<PAGE>
as a whole or materially and adversely affects the ability of such Person to
consummate the transactions contemplated by this Agreement in any material
respect.
"MERGER" has the meaning set forth in the first Whereas clause
of this Agreement.
"NASDAQ " means the NASDAQ National Market, Inc.
"NYSE " means the New York Stock Exchange, Inc.
"OUTSTANDING DILUTED VCAM STOCK AMOUNT" shall equal the sum of
(i) 16,190,804 plus (ii) as of the close of the Business Day immediately prior
to the Stockholders' Meeting, the in-the-money portion of the number of shares
(using a $17.50 market price) of VCAM Common Stock issuable with respect to all
VCAM Stock Options, warrants and other convertible securities which are granted
by VCAM after the date hereof (other than any options to acquire VCAM Common
Stock granted by VCAM pursuant to and not in violation of Section 4.2(b)(ii)(y))
and, as of such date, have an exercise or conversion price which is less than
$17.50 plus (iii) the number of shares of VCAM Common Stock issued after the
date hereof (other than in connection with the exercise or conversion of any
VCAM Stock Options or warrants outstanding on the date hereof and listed in
Section 3.1(c) of the VCAM Disclosure Schedule).
"PENSION PLAN" has the meaning set forth in Section
3.1(l)(iv).
"PERSON" means any individual, corporation, partnership, firm,
group (as such term is used in Section 13(d)(3) of the Exchange Act), joint
venture, association, trust, limited liability company, unincorporated
organization, estate, trust or other entity.
"PROXY STATEMENT" has the meaning set forth in Section 3.1(p).
"QUALIFIED STOCK OPTIONS" has the meaning set forth in Section
2.3(a).
"QUALIFIED TRANSACTION PROPOSAL" has the meaning set forth in
Section 4.2(d).
"RECOMMENDATION" has the meaning set forth in Section 4.2(c).
"REGISTRATION STATEMENT" has the meaning set forth in Section
3.1(p).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" has the meaning set forth in Section 3.1(d).
<PAGE>
"SIGNIFICANT SUBSIDIARY" shall have the meaning ascribed to
such term in Section 1-02(v) of Regulation S-X under the Securities Act and,
shall include, with respect to ADP, Sub.
"STOCKHOLDERS' MEETING " has the meaning set forth in Section
4.2(c).
"SUB" has the meaning set forth in the introductory paragraph.
"SUB COMMON STOCK" has the meaning set forth in Section
2.1(a).
"SUBSIDIARY" of any Person means any corporation, partnership,
joint venture or other legal entity of which such Person (either directly or
through or together with any other Subsidiary of such Person), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or similar governing body of such corporation, partnership, joint venture or
other legal entity.
"SUPERIOR ACQUISITION PROPOSAL" has the meaning set forth in
Section 4.2(e).
"SURVIVING CORPORATION" has the meaning set forth in Section
1.1.
"TAXES" has the meaning set forth in Section 3.1(j)(i).
"TAX RETURN" has the meaning set forth in Section 3.1(j)(ii).
"TAX SHARING AGREEMENT AMOUNTS" has the meaning set forth in
Section 3.1(j)(i).
"TECHNOLOGY SYSTEMS" has the meaning set forth in Section
3.1(bb).
"TERMINATION NOTICE" has the meaning set forth in Section
2.1(v).
"THIRD PARTY INTELLECTUAL PROPERTY RIGHTS " has the meaning
set forth in Section 3.1(r)(i).
"TOPPED-UP EXCHANGE RATIO" has the meaning set forth in
Section 2.1(v).
"TOP-UP REQUEST NOTICE" has the meaning set forth in Section
2.1(v).
"TRANSACTION PROPOSALS " has the meaning set forth in Section
4.2(f).
<PAGE>
"VCAM" has the meaning set forth in the introductory
paragraph.
"VCAM COMMON STOCK" has the meaning set forth in the second
Whereas clause of this Agreement.
"VCAM DISCLOSURE SCHEDULE" has the meaning set forth in
Section 3.1(a).
"VCAM FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.1(s).
"VCAM GOVERNMENTAL APPROVALS" has the meaning set forth in
Section 3.1(g)(i).
"VCAM INTELLECTUAL PROPERTY RIGHTS " has the meaning set forth
in Section 3.1(r)(ii).
"VCAM PERMITS" means all permits, registrations, licenses
(including, without limitation, all licenses or registrations required as
professional employer organizations and/or as control persons thereof),
variances, exemptions, orders and approvals of all Governmental Entities that
are necessary or appropriate to the operation of the business of VCAM and its
Subsidiaries or which are required as a result of the activities of VCAM and its
Subsidiaries other than those by the absence of which would not have a Material
Adverse Effect on VCAM.
"VCAM REAL PROPERTY LEASES" has the meaning set forth in
Section 3.1(q)(ii).
"VCAM REQUIRED CONSENTS" has the meaning set forth in Section
3.1(g)(ii).
"VCAM SEC DOCUMENTS" has the meaning set forth in Section
3.1(d).
"VCAM STOCK OPTION" has the meaning set forth in Section
2.3(a).
"VCAM STOCK PLANS" means, collectively, The Vincam Group, Inc.
1995 Stock Option Plan, The Vincam Group, Inc. 1996 Long Term Incentive Plan and
The Vincam Group, Inc. 1998 Long Term Incentive Plan.
"VOTING AGREEMENT" has the meaning set forth in the sixth
Whereas clause of this Agreement.
"WARN" has the meaning set forth in Section 3.1(f).
"YEAR 2000 COMPLIANCE" has the meaning set forth in Section
3.1(bb).
<PAGE>
"Y2K PLAN" has the meaning set forth in Section 3.1(bb).
8.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, upon a
receipt of a transmittal confirmation if sent by facsimile or like transmission,
and on the next Business Day when sent by Federal Express, Express Mail or
similar overnight courier service to the parties at the following addresses or
facsimile numbers (or at such other address or facsimile number for a party as
shall be specified by like notice):
(a) If to The Vincam Group, Inc., to:
The Vincam Group, Inc.
10200 Sunset Drive
Attention: General Counsel
Facsimile: 305-630-3010
with a copy to:
Steel Hector & Davis LLP
200 S. Biscayne Blvd.
Miami, FL 33131-2398
Attention: Ira N. Rosner, P.A.
Facsimile: (305) 577-7001
(b) If to Automatic Data Processing, Inc. or ADP
Acquisition Corp.
(FLORIDA):
Automatic Data Processing, Inc.
One ADP Blvd.
Roseland, N.J. 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 10019-6064
Attention: Richard S. Borisoff, Esq.
Facsimile: (212) 757-3990
<PAGE>
8.3 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. Dollar
amounts referred to in this Agreement shall not be deemed to establish any
standard of materiality.
8.4 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by written instruments signed by the parties to this Agreement, or in the
case of a waiver, by the party waiving compliance. Except where a specific
period for action or inaction is provided herein, no delay on the part of a
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof. Neither any waiver on the part of a party of any such right,
power or privilege, nor any single or partial exercise of any such right, power
or privilege, shall preclude any further exercise thereof or the exercise of any
other such right, power or privilege.
8.5 EXPENSES AND OTHER PAYMENTS.
(a) The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses incurred
in connection with the preparation, execution and performance of this Agreement
and the transactions contemplated hereby, including, without limitation, all
fees and expenses of their respective Agents.
(b) VCAM agrees that if this Agreement shall be
terminated pursuant to:
(i) Section 7.1(b) and (A) such termination
is the result of (x) a material breach by VCAM of any representation or warranty
contained herein or (y) a willful and material breach by VCAM of any covenant or
agreement contained herein, which, in the case of (x) or (y), is not cured, and
(B) within 12 months after the date of termination of this Agreement, a Business
Combination (as hereinafter defined) shall have occurred or VCAM shall have
entered into a definitive agreement providing for a Business Combination;
(ii) Section 7.1(d) and the Board of
Directors of VCAM shall have on or prior to the date of the Stockholders'
Meeting withdrawn, modified or changed the Recommendation in a manner adverse to
ADP or shall have resolved to do any of the
<PAGE>
foregoing or any of the stockholders that are a party to the Voting Agreement
shall not have voted in favor of the Merger at the Stockholders Meeting; or
(iii) Section 7.1(f);
then, in the case of clauses (i), (ii) or (iii), VCAM shall pay to ADP an amount
equal to $8,500,000 (which amount, in the case of clause (i) to the extent such
termination results from a material breach of a representation or warranty that
is not wilful, or clauses (ii) and (iii), shall be ADP's sole remedy hereunder
and shall be deemed to include the reimbursement of all of ADP's out-of-pocket
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby including, without limitation, legal,
accounting and investment banking fees and expenses).
(c) Any payment required to be made pursuant to
Section 8.5(b) shall be made as promptly as practicable but not later than two
Business Days after termination of this Agreement and shall be made by wire
transfer of immediately available funds to an account designated by ADP, except
that any payment to be made as the result of an event described in Section
8.5(b)(i) shall be made as promptly as practicable but not later than two
Business Days after the earlier to occur of the Business Combination or the
execution of the definitive agreement providing for a Business Combination.
(d) For purposes of this Section 8.5, the term
"BUSINESS COMBINATION" shall mean (i) a merger, consolidation, share exchange,
business combination or similar transaction involving VCAM; (ii) a sale, lease,
exchange, transfer or other disposition of 50% or more of the assets of VCAM and
its Subsidiaries taken as a whole, in a single transaction or series of
transactions; or (iii) the acquisition by any Person or "group" (as defined in
Section 13(d) of the Exchange Act and the rules and regulations thereunder) of
"beneficial ownership" of 50% or more of VCAM Common Stock whether by tender
offer or exchange offer or otherwise.
8.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
<PAGE>
8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein) (a) constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) other than
Section 5.1 is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
8.8 REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties of the parties made in this Agreement or in any
instrument delivered hereunder shall survive the Closing. The inclusion of any
item or matter in the VCAM Disclosure Schedule is in respect of an abundance of
caution and shall not be construed or deemed to be an admission that such item
meets any particular standard of materiality set forth in this Agreement.
8.9 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state, except to the
extent that the laws of the State of Florida mandatorily apply.
8.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first above written.
AUTOMATIC DATA PROCESSING, INC.
By: /s/ James B. Benson
--------------------------------------
Name: James B. Benson
Title: Vice President
ADP ACQUISITION CORP. (FLORIDA)
By: /s/ James B. Benson
--------------------------------------
Name: James B. Benson
Title: President
THE VINCAM GROUP, INC.
By: /s/ Carlos A. Saladrigas
--------------------------------------
Name: Carlos A. Saladrigas
Title: Chairman and Chief
Executive Officer
EXHIBIT 10.1
VOTING AGREEMENT
VOTING AGREEMENT, dated as of December 3, 1998 (this
"AGREEMENT"), by and among Automatic Data Processing, Inc., a Delaware
corporation ("ADP"), and the Persons listed on Schedule 1 hereto (each, a
"SHAREHOLDER" and, collectively, the "SHAREHOLDERS").
WHEREAS, The Vincam Group, Inc., a Florida corporation (the
"COMPANY"), and ADP propose to enter into an Agreement and Plan of Merger, dated
as of the date hereof (the "MERGER AGREEMENT"), which provides for, among other
things, the merger of a wholly owned subsidiary of ADP with and into the Company
(the "MERGER");
WHEREAS, as of the date hereof, the Shareholders are holders
of record or Beneficially Own (as defined herein) shares of common stock, par
value $.001 per share ("COMPANY COMMON STOCK"), of the Company; and
WHEREAS, as a condition to the willingness of ADP to enter
into the Merger Agreement, ADP has required that each Shareholder agree, and in
order to induce ADP to enter into the Merger Agreement, each Shareholder has
agreed, to enter into this Agreement with respect to all of the shares of
Company Common Stock now held of record or Beneficially Owned and which may
hereafter be acquired by such Shareholder (collectively, the "SHARES").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 GENERAL. Capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement.
Section 1.2 BENEFICIAL OWNERSHIP. For purposes of this
Agreement, "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities shall mean "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(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,
<PAGE>
2
securities Beneficially Owned by a Shareholder shall include securities
Beneficially Owned by all other Persons (as defined in the Merger Agreement)
with whom such Person would constitute a "group" within the meaning of Section
13(d) of the Exchange Act other than parties to this Agreement.
ARTICLE II
Section 2.1 VOTING AGREEMENT. Each of the Shareholders hereby
irrevocably and unconditionally agrees that during the term of this Agreement as
specified in Section 5.1, at any meeting of the shareholders of the Company,
however called, and in any action by consent of the shareholders of the Company,
each of the Shareholders shall vote (or cause to be voted) the Shares held of
record (to the extent such Person also has the right to vote such Shares) or
Beneficially Owned (to the extent such Person also has the right to vote such
Shares) by such Shareholder in favor of the Merger, the Merger Agreement (as
amended from time to time) and the transactions contemplated by the Merger
Agreement. Each of the Shareholders acknowledges receipt and review of a copy of
the Merger Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
Each of the Shareholders hereby represents and warrants,
severally and not jointly, to ADP as follows:
Section 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. 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. Where such Shareholder is a corporation,
partnership or other entity, the execution and delivery of this Agreement by
such Shareholder and the consummation by such Shareholder of the transactions
contemplated hereby have been duly and validly authorized by the board of
directors or other governing body of such Shareholder, and no other proceedings
on the part of such Shareholder are necessary to authorize this Agreement or to
consummate such transactions. This Agreement has been duly and validly executed
and delivered by such Shareholder and, assuming the due authorization, execution
and delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws affecting creditors' rights
generally or by general principles governing the availability of equitable
remedies.
<PAGE>
3
Section 3.2 NO CONFLICT. (a) The execution and delivery of
this Agreement by such Shareholder does not, and the performance of this
Agreement by such Shareholder shall not, (i) where such Shareholder is a
corporation, partnership or other entity, conflict with or violate the
organizational documents of such Shareholder, (ii) conflict with or violate any
agreement, arrangement, law, rule, regulation, order, judgment or decree to
which such Shareholder is a party or by which such Shareholder (or the Shares
held of record or Beneficially Owned by such Shareholder) is bound or affected
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse or time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the Shares held of record or
Beneficially Owned by such Shareholder pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Shareholder is a party or by which such
Shareholder (or the Shares held of record or Beneficially Owned by such
Shareholder) is bound or affected, except, in the case of clauses (ii) and (iii)
of this Section 3.2, for any such conflicts, violations, breaches, defaults or
other occurrences which would not prevent or delay the performance by such
Shareholder of its obligations under this Agreement.
(b) 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 governmental entity 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 its obligations under this Agreement.
Section 3.3 TITLE TO THE SHARES. As of the date hereof, such
Shareholder is the record or Beneficial Owner of the Shares listed opposite the
name of such Shareholder on Schedule 1 hereto. The Shares listed opposite the
name of such Shareholder on Schedule 1 hereto are all the securities of the
Company either held of record or Beneficially Owned by such Shareholder. Such
Shareholder has not appointed or granted any proxy, which appointment or grant
is still effective, with respect to the Shares held of record or Beneficially
Owned by such Shareholder. Each Shareholder has the right to vote or cause to be
voted each of the Shares listed opposite the name of such Shareholder on
Schedule 1 hereto and the Shares listed opposite the name of such Shareholder on
Schedule 1 hereto are owned free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
such Shareholder's voting rights, charges and other encumbrances of any nature
whatsoever.
<PAGE>
4
ARTICLE IV
COVENANTS OF THE STOCKHOLDER
Section 4.1 NO INCONSISTENT AGREEMENT OR ACTION. Each of the
Shareholders hereby covenants and agrees that, except as contemplated by this
Agreement, and the Merger Agreement, such Shareholder shall not, or permit any
Person under such Shareholder's control to, enter into any voting agreement or
grant a proxy or power of attorney with respect to the Shares held of record or
Beneficially Owned by such Shareholder or form any "group" for purposes of the
Exchange Act or the rules promulgated thereunder, in each such case, which is
inconsistent with this Agreement. Except as set forth in the Merger Agreement,
no Shareholder shall (i) solicit, initiate, encourage (including by way of
furnishing information or assistance) or take any other action to facilitate,
any inquiry or the making of any proposal which constitutes, or may reasonably
be expected to lead to, any Transaction Proposals (as defined in the Merger
Agreement) or agree to or endorse any Transaction Proposal or (ii) propose,
enter into or participate in any discussions or negotiations regarding any of
the foregoing, or furnish to any other Person any information with respect to
its business, properties or assets or any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek any of the foregoing
Section 4.2 TRANSFER OF TITLE. Each of the Shareholders hereby
covenants and agrees that such Shareholder shall not (i) tender any Shares, (ii)
sell, assign or transfer record or Beneficial Ownership of any of the Shares, or
(iii) further pledge, hypothecate or otherwise dispose of any Shares; PROVIDED,
that a Shareholder may transfer record ownership of any of the Shares so long as
such Shareholder maintains Beneficial Ownership of such Shares (including,
without limitation, the unfettered right to vote such Shares in the manner set
forth in Section 2.1). Notwithstanding anything to the contrary contained
herein, Michael J. Gatsas, or Gatsas Family Limited Partnership and Theodore
Gatsas may each sell and transfer record and Beneficial Ownership of a number of
Shares such that immediately after giving effect to such sale and transfer each
of Michael J. Gatsas and Theodore Gatsas shall maintain Beneficial Ownership of
at least 784,766 shares of Company Common Stock.
<PAGE>
5
ARTICLE V
MISCELLANEOUS
Section 5.1 TERMINATION. This Agreement shall be effective as
of the date of this Agreement and shall terminate upon the earlier to occur of
(i) the closing of the transactions contemplated by the Merger Agreement and
(ii) the date the Merger Agreement is terminated in accordance with its terms.
Section 5.2 ADDITIONAL SHARES. If, after the date hereof, a
Shareholder acquires the right to vote any additional shares of Company Common
Stock (any such shares shall be referred to herein as "ADDITIONAL SHARES"),
including, without limitation, upon exercise of any option, warrant or right to
acquire shares of Company Common Stock or through any stock dividend or stock
split, the provisions of this Agreement applicable to the Shares shall be
applicable to such Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the immediately preceding
sentence shall be effective with respect to Additional Shares without action by
any Person immediately upon the acquisition by a Shareholder of record or
Beneficial Ownership of such Additional Shares.
Section 5.3 S-3. Prior to the closing of the transactions
contemplated by the Merger Agreement, ADP shall enter into a registration rights
agreement with the Shareholders (which registration rights agreement will
provide that the Company will pay the applicable SEC registration fee for the
registration statement contemplated by such agreement) and, as contemplated
thereby, agrees to file promptly after the Registration Statement (as defined in
the Merger Agreement) is declared effective and use its reasonable commercial
efforts to have declared effective by the SEC on or prior to Effective Time a
registration statement on Form S-3 (the "FORM S-3") covering the shares of ADP
Common Stock to be received by the Shareholders in the Merger in exchange for
their Shares and use its reasonable commercial efforts to maintain the
effectiveness of such registration statement until the earlier of (x) the date
all such shares are disposed of and (y) one year from the date of effectiveness.
Section 5.4 SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
Section 5.5 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between ADP and the Shareholders with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between ADP and the Shareholders with respect to the subject
matter hereof.
<PAGE>
6
Section 5.6 AMENDMENT. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
Section 5.7 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereby shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated.
Section 5.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state, except to the
extent that the laws of the State of Florida mandatorily apply.
Section 5.9 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, each of the Shareholders and ADP have
caused this Agreement to be duly executed on the date hereof.
AUTOMATIC DATA PROCESSING, INC.
By: /s/ James B. Benson
------------------------------
Name: James B. Benson
Title: Vice President
/s/ Carlos A. Saladrigas
------------------------------
Carlos A. Saladrigas
SALADRIGAS FAMILY LIMITED
PARTNERSHIP
By: /s/ Carlos A. Saladrigas
------------------------------
Name: Carlos A. Saladrigas
Title: General Partner
/s/ Jose M. Sanchez
------------------------------
Jose M. Sanchez
/s/ Michael J. Gatsas
------------------------------
Michael J. Gatsas
/s/ Theodore L. Gatsas
------------------------------
Theodore L. Gatsas
GATSAS FAMILY LIMITED PARTNERSHIP
By: /s/ Michael J. Gatsas
------------------------------
Name: Michael J. Gatsas
Title: Member
<PAGE>
SCHEDULE 1
NAME OF SHAREHOLDER NUMBER OF SHARES
- ------------------- ----------------
Carlos S. Saladrigas 1,194,328
Saladrigas Family Limited Partnership 1,437,075
Jose M. Sanchez 2,653,503
Michael J. Gatsas 81,900
Gatsas Family Limited Partnership 818,100
Theodore L. Gatsas 900,000
