AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant[x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE VINCAM GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[x] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock, par value $0.001 per share, of The Vincam Group, Inc. ("Vincam
Common Stock")
(2) Aggregate number of securities to which transaction applies: 15,735,131
shares of Vincam Common Stock
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $16.78125 (based on the average of
the high and low prices of the Common Stock of The Vincam Group, Inc. as
quoted on the Nasdaq National Market on December 21, 1998)
(4) Proposed maximum aggregate value of transaction: $264,055,167.09
(5) Total fee paid: $52,811.03 (fee paid by wire transfer on December 29,
1998). The Vincam Group, Inc.'s CIK number is 0001008896.
[x] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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<PAGE>
[GRAPHIC OMITTED]
PROXY STATEMENT
[GRAPHIC OMITTED]
PROSPECTUS
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The board of directors of The Vincam Group, Inc. has agreed to merge
our company with a subsidiary of Automatic Data Processing, Inc., so that
Vincam would become a wholly-owned subsidiary of ADP.
If the merger is completed, you will receive between 0.4198 shares and
0.5152 shares of ADP common stock for each Vincam share you own, depending on
the average price of ADP common stock. This means that you will receive a
minimum of $15.75 per share, unless the average of ADP's stock price is below
$30.5690. In that case, Vincam can request that ADP give you ADP shares worth
at least $15.75 for each Vincam share you own. If ADP refuses this request,
Vincam can refuse to merge.
You may call toll free any time at 1-800-322-2885 for the current
average ADP stock price and the number of ADP shares you would receive for your
Vincam shares based on that price. After March 8, 1999, we will calculate the
actual number of ADP shares you will receive.
ADP's shares are traded on the New York Stock Exchange under the symbol
"AUD." As of February 8, 1999, ADP's stock price was $41.00.
We cannot complete the merger without the approval of the holders of a
majority of Vincam's common stock. Holders of approximately 45% of Vincam's
common stock have agreed to vote for the merger. This means that only 5% more
of Vincam's shareholders must vote for the merger to ensure its approval.
We have scheduled a special meeting to vote on the merger. If you were
a shareholder of record on January 20, 1999, you may vote at the meeting.
Whether or not you plan to attend, please take the time to vote by completing
and mailing the enclosed voting form to us.
The date, time and place of the special meeting is as follows:
MARCH 11, 1999
9:00 A.M.
10200 SUNSET DRIVE
MIAMI, FLORIDA 33173
This proxy statement/prospectus provides you with detailed information
about the merger. This document is also the prospectus of ADP for the ADP
common stock that will be issued to you in the merger. We encourage you to read
this entire document carefully.
/s/ Carlos A. Saladrigas
- ------------------------------------
Carlos A. Saladrigas
Chairman and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE ADP COMMON STOCK TO BE ISSUED IN
CONNECTION WITH THIS DOCUMENT OR DETERMINED THAT THIS DOCUMENT IS ACCURATE OR
ADEQUATE.
February 10, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE ADP/VINCAM MERGER ........................ 1
SUMMARY .................................................................. 2
The Companies ........................................................... 2
What You Will Receive in the Merger ..................................... 2
Reasons for the Merger .................................................. 3
Voting Agreement ........................................................ 3
Recommendation of the Board ............................................. 3
Opinion of Vincam's Financial Advisor ................................... 3
Interests of Directors and Officers in the Merger ....................... 3
Dissenters' Rights ...................................................... 4
Conditions to the Merger ................................................ 4
Termination of the Merger Agreement ..................................... 4
Termination Payments .................................................... 4
Income Tax Consequences of the Merger ................................... 4
ADP Dividends ........................................................... 4
Accounting Treatment .................................................... 5
Comparison of Shareholder Rights ........................................ 5
Forward-Looking Statements .............................................. 5
Selected Historical Financial Information ............................... 6
Comparative Per Share Information ....................................... 8
Comparative Per Share Market Price Information .......................... 9
THE SPECIAL MEETING ...................................................... 10
Time and Place of Special Meeting ....................................... 10
Purposes of the Special Meeting; The Merger ............................. 10
Record Date ............................................................. 10
Required Votes .......................................................... 10
Proxies; Voting and Revocation .......................................... 11
Solicitation of Proxies ................................................. 11
No Dissenters' Appraisal Rights ......................................... 11
THE MERGER ............................................................... 12
Background .............................................................. 12
Recommendation of the Board; Vincam's Reasons for the Merger ............ 13
Opinion of Financial Advisor to Vincam .................................. 16
Federal Income Tax Consequences to Holders of Vincam Common Stock ....... 26
Accounting Treatment .................................................... 28
Dividend Policy ......................................................... 28
Interests of Directors and Officers in the Merger ....................... 28
Regulatory Approvals .................................................... 29
Stock Exchange Listing .................................................. 30
Federal Securities Laws Consequences .................................... 30
THE MERGER AGREEMENT ..................................................... 31
Terms of the Merger ..................................................... 31
Exchange of New Stock Certificates ...................................... 32
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Representations and Warranties ..................................... 34
Covenants .......................................................... 35
No Solicitation of Transactions .................................... 36
Employment Matters ................................................. 37
Indemnification and Insurance ...................................... 37
Conditions to the Merger ........................................... 38
Termination ........................................................ 39
Termination Fees and Expenses ...................................... 40
RELATED AGREEMENTS .................................................. 41
Voting Agreement ................................................... 41
Employment Agreements .............................................. 41
BUSINESS OF ADP ..................................................... 42
BUSINESS OF VINCAM .................................................. 42
DESCRIPTION OF ADP ACQUISITION CORP. (FLORIDA) ...................... 43
COMPARISON OF RIGHTS OF HOLDERS OF ADP COMMON STOCK
AND VINCAM COMMON STOCK ........................................... 44
General ............................................................ 44
Charter Amendments ................................................. 44
By-Law Amendments .................................................. 44
Special Meetings of Stockholders ................................... 45
Quorum for Stockholder Meetings .................................... 45
Stockholder Voting Requirements .................................... 45
Vote Required for Mergers .......................................... 46
Proxies ............................................................ 46
Action by Written Consent of Stockholders .......................... 46
Board Recommendations Regarding Merger ............................. 47
Merger with Subsidiary ............................................. 47
Consideration for Stock ............................................ 47
Board Vacancies .................................................... 47
Removal of Directors ............................................... 48
Committees of the Board of Directors ............................... 48
Affiliated Transactions ............................................ 49
Control Share Acquisitions ......................................... 51
Other Constituencies ............................................... 51
Indemnification of Directors and Officers .......................... 51
Limitation of Personal Liability of Directors and Officers ......... 52
Derivative Actions ................................................. 53
Appraisal and Dissenters' Rights ................................... 54
Distributions and Redemptions....................................... 55
Inspection of Books and Records .................................... 56
LEGAL MATTERS ....................................................... 56
EXPERTS ............................................................. 56
WHERE YOU CAN FIND MORE INFORMATION ................................. 57
APPENDIX A--THE MERGER AGREEMENT .................................... A-1
APPENDIX B--OPINION OF GOLDMAN, SACHS & CO. ......................... B-1
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE ADP/VINCAM MERGER
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. By March 15, 1999.
Q. WHAT DO I NEED TO DO NOW?
A. After carefully reading and considering the information contained in this
document, please indicate on your voting form how you want to vote and
mail your signed and dated voting form in the enclosed return envelope as
soon as possible.
Q. WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A. Just send in a later-dated, signed voting form to the Secretary of Vincam
before the special meeting or attend the meeting in person and vote.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the merger is completed, the exchange agent will send you written
instructions for exchanging your stock certificates.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME WITHOUT MY INSTRUCTIONS?
A. No. You should instruct your broker to vote your shares, following the
directions provided by your broker. Your failure to instruct your broker
to vote your shares will be the equivalent of voting against the merger.
Q. WHAT IF I PLAN TO ATTEND THE SPECIAL MEETING IN PERSON?
A. We recommend that you send in your voting form in any event. You may request
a ticket for admission to the special meeting by marking the appropriate
box on the voting form and returning it no later than February 25, 1999.
If you hold Vincam shares through a third party, such as a broker, you
should send an account statement or similar documentation of ownership to
MacKenzie Partners, Inc., the proxy solicitors, requesting a ticket.
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have more questions about the merger, you should contact:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Telephone: (800) 322-2885
1
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY
NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE
MERGER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT, INCLUDING THE
APPENDICES AND THE OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. SEE "WHERE
YOU CAN FIND MORE INFORMATION" (PAGE 57). WE HAVE INCLUDED PAGE REFERENCES
PARENTHETICALLY TO DIRECT YOU TO MORE COMPLETE DESCRIPTIONS OF THE TOPICS
PRESENTED IN THIS SUMMARY.
THE COMPANIES (PAGE 42)
THE VINCAM GROUP, INC.
10200 Sunset Drive
Miami, Florida 33173
800-962-4404
Vincam was incorporated in Florida in 1984 as Human Power Resources,
Inc., and changed its name to The Vincam Group, Inc. in 1989. Vincam is a
professional employer organization which provides employee leasing services
primarily to small and medium-sized businesses.
AUTOMATIC DATA PROCESSING, INC.
One ADP Boulevard
Roseland, New Jersey 07068
(973) 994-5000
ADP was incorporated in Delaware in 1961 and is engaged in the computer
services business. With over 425,000 clients, ADP is one of the largest
companies in the world dedicated to providing computerized transaction
processing, data communications and information services.
WHAT YOU WILL RECEIVE IN THE MERGER (PAGE 31)
What you will receive in the merger for your Vincam shares will depend on the
average stock price of ADP common stock, as follows:
<TABLE>
<S> <C>
AVERAGE ADP STOCK PRICE: WHAT YOU WILL RECEIVE:
Equal to or greater than $34.3905 and 0.4580 shares of ADP common stock
less than or equal to $42.0325 per Vincam share
Greater than $42.0325 and less than or ADP shares with a value of $19.25 per
equal to $45.8540 Vincam share
Equal to or greater than $30.5690 and ADP shares with a value of $15.75 per
less than $34.3905 Vincam share
Greater than $45.8540 0.4198 shares of ADP common stock
per Vincam share
Less than $30.5690 At Vincam's option, (a) 0.5152 shares
of ADP common stock per Vincam
share or (b) Vincam may request that
ADP issue ADP shares with a value of
$15.75 per Vincam share. If ADP
declines this request, Vincam can
terminate the merger agreement.
</TABLE>
2
<PAGE>
You will not receive any fractional shares of ADP common stock.
Instead, you will receive cash.
REASONS FOR THE MERGER
The Vincam board considered a number of factors in approving the merger
agreement and recommending it to you, including:
/bullet/ the ability of the combined company to respond more quickly
and effectively to intensifying and increasing competition in the
employee leasing industry;
/bullet/ Vincam's need for continued investment in computer systems;
/bullet/ the potential for each company to market its services to the
other company's customers;
/bullet/ improved sales force recruitment and training;
/bullet/ potential reductions in overhead costs from the elimination of
duplicative administrative and operational facilities; and
/bullet/ the opportunity for you to hold ADP stock, which the board
believed would have greater liquidity and lower volatility than
Vincam's stock.
As a result, the Vincam board believes that the merger should increase
shareholder value to you.
To review the reasons for the merger in greater detail, see pages 13
through 16.
VOTING AGREEMENT (PAGE 41)
Holders of approximately 45% of Vincam's outstanding common stock have
agreed to vote for the merger. This means that only 5% more of Vincam's
shareholders must vote for the merger to ensure its approval.
RECOMMENDATION OF THE BOARD (PAGE 13)
The Vincam board has unanimously determined that the merger agreement
and the merger are fair to you and in your best interests. The Board recommends
that you vote for approval of the merger agreement.
OPINION OF VINCAM'S FINANCIAL ADVISOR (PAGE 16)
Goldman, Sachs & Co., as financial advisor to the board, has delivered
its written opinion to the board that, as of February 8, 1999, the exchange
ratio for ADP common stock was fair from a financial point of view to Vincam
shareholders. The full text of the opinion of Goldman Sachs is attached as
Appendix B. The opinion describes important assumptions and limitations and is
not a recommendation as to how you should vote on the merger.
WE URGE YOU TO READ THE GOLDMAN SACHS OPINION CAREFULLY IN ITS ENTIRETY.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER (PAGES 28, 37 AND 41)
In considering the board's recommendation that you vote for the merger,
you should be aware that a number of Vincam's directors and
3
<PAGE>
officers have interests in the merger that are different from yours as a Vincam
shareholder.
These interests include:
/bullet/ Vincam will enter into employment agreements with Carlos
Saladrigas and Jose Sanchez, which will provide for their
continued employment after the merger;
/bullet/ some directors and officers of Vincam will remain directors
and officers of Vincam following the merger;
/bullet/ ADP will indemnify and provide insurance for Vincam's
directors and officers; and
/bullet/ the vesting of some stock options held by Vincam's directors
and officers will accelerate because of the merger.
DISSENTERS' RIGHTS (PAGE 11)
Under Florida law, you do not have dissenters' rights with respect to
the merger.
CONDITIONS TO THE MERGER (PAGE 38)
We will not complete the merger unless a number of conditions are
satisfied or waived. These include:
/bullet/ a majority of the Vincam shareholders must approve the merger
agreement;
/bullet/ the merger will qualify as a "pooling of interests" for
accounting purposes;
/bullet/ Vincam must obtain regulatory consents and approvals relating
to the business of Vincam; and
/bullet/ Vincam must receive a legal opinion confirming the tax-free
nature of the merger.
TERMINATION OF THE MERGER AGREEMENT (PAGE 39)
We can agree to terminate the merger agreement without completing the
merger. Either one of us can terminate the merger agreement:
/bullet/ if the merger is not completed before June 30, 1999; or
/bullet/ if the other company has failed to perform its obligations
under the merger agreement.
In addition, ADP can terminate the merger agreement under those
circumstances described on pages 39 and 40.
TERMINATION PAYMENTS
Vincam is required to pay ADP a termination payment of $8.5 million if
the merger agreement is terminated under those circumstances described on page
40.
INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 26)
The merger is intended to be tax-free to you, except with respect to cash
received instead of fractional shares of ADP common stock.
THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON THE FACTS OF
YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR.
ADP DIVIDENDS (PAGE 28)
ADP expects to continue to pay quarterly dividends.
4
<PAGE>
ACCOUNTING TREATMENT (PAGE 28)
The merger is expected to qualify as a pooling-of-interests
transaction. This means that after the merger, ADP will treat the companies as
if they had always been combined for accounting and financial reporting
purposes.
COMPARISON OF SHAREHOLDER RIGHTS (PAGE 44)
Vincam and ADP are incorporated in different states having differing
corporation laws. In addition, the governing documents of each company vary. As
a result, you will have different rights as an ADP stockholder than you
currently have as a Vincam shareholder.
FORWARD-LOOKING STATEMENTS
Statements in this document and in the documents incorporated by
reference in this document are or may be forward-looking statements that
involve risks and uncertainties. Actual results may differ materially from
those expressed in such statements depending on a variety of factors. You
should carefully review all information, including the financial statements and
the notes to the financial statements, included or incorporated by reference
into this document.
5
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
We are providing the following historical financial information to aid you
in your analysis of the financial aspects of the merger. The information is
only a summary and you should read it together with our consolidated financial
statements and other financial information contained in our most recent annual
and quarterly reports, which are incorporated by reference and from which we
derived this information. See "Where You Can Find More Information" on pages 57
through 59.
You should note that Vincam's income statement data for 1996 include the
results of operations of the Stone Mountain Group, Inc. business since its date
of acquisition, September 1, 1996. You should also note that Vincam's income
statement and balance sheet data for 1993 exclude the results of operations and
balance sheet data of Staff Administrators, Inc., Amstaff, Inc. and Staffing
Network, Inc., which Vincam acquired during 1997 in poolings-of-interests
transactions.
We have appropriately adjusted the per share data and other financial
information contained in this document to account for a two-for-one stock split
of ADP common stock, which occurred on January 1, 1999.
ADP--HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30,
-------------------------------
1998 1997
--------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Revenue .................. $ 1,210,327 $ 1,038,498
Net earnings ............. 123,200 105,410
Basic earnings
per share .............. 0.20 0.18
Diluted earnings
per share .............. 0.20 0.18
Cash dividends
per share .............. 0.0663 0.0575
At period end:
Working capital .......... 680,788 641,930
Total assets ............. 5,400,638 4,536,086
Long-term debt ........... 176,885 405,517
Shareholders' equity ..... 3,545,366 2,698,539
<CAPTION>
FOR THE YEAR ENDED
JUNE 30,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------- --------------- --------------- --------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenue .................. $ 4,798,061 $ 4,112,186 $ 3,566,597 $ 2,893,742 $ 2,468,966
Net earnings ............. 605,300 513,500 454,700 394,830 329,320
Basic earnings
per share .............. 1.02 0.88 0.79 0.69 0.58
Diluted earnings
per share .............. 0.99 0.86 0.76 0.67 0.57
Cash dividends
per share .............. 0.2563 0.2225 0.1938 0.1563 0.1350
At period end:
Working capital .......... 608,263 785,450 618,670 667,920 507,243
Total assets ............. 5,175,355 4,382,772 3,839,885 3,201,096 2,711,751
Long-term debt ........... 192,063 401,162 403,743 390,177 372,959
Shareholders' equity ..... 3,406,451 2,660,565 2,315,346 2,096,615 1,691,251
</TABLE>
6
<PAGE>
VINCAM--HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS
ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------------- ---------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenue ...................... $ 910,630 $ 699,821 $ 983,629 $ 654,758 $ 419,371 $ 318,565 $ 138,097
Controllable revenue ......... 94,280 76,235 110,376 75,641 46,850 36,584 15,229
Net income ................... 6,651 2,145 1,659 2,090 371 1,847 1,341
Diluted net income per
common share ............... 0.41 0.14 0.10 0.14 0.03 0.14 0.20
Basic net income per
common share ............... 0.43 0.14 0.11 0.16 0.03 0.14 0.20
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
----------------------- ---------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ..................... $ 23,368 $ 17,454 $ 17,412 $ 20,872 $ 253 $ 4,003 $ 1,507
Total assets ........................ 102,240 81,100 95,016 76,361 31,368 14,787 9,482
Long-term borrowings,
including current portion ......... 1,923 1,013 11,098 1,106 2,879 2,879 1,178
Mandatorily Redeemable
Series A Preferred Stock .......... -- -- -- -- 6,264 -- --
Total stockholders' equity
(deficit) ......................... 39,341 32,891 33,311 29,748 (5,179) 2,648 848
</TABLE>
7
<PAGE>
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per share information for our respective
companies on an historical, pro forma and equivalent basis. The ADP pro forma
share information assumes that 7,355,000, 7,374,000, 7,300,000 and 6,004,000
additional weighted shares and potential shares of ADP common stock associated
with the merger were outstanding in the first fiscal quarter of 1999, and
fiscal years 1998, 1997 and 1996, respectively. The Vincam equivalent pro forma
share information assumes an exchange ratio of 0.4580 of a share of ADP common
stock for each share of Vincam common stock.
The merger is not a "significant business combination" for ADP under the
Securities and Exchange Commission's accounting rules. Therefore, no pro forma
financial information has been included in this proxy statement/prospectus,
except as provided below.
The data below should be read in conjunction with our consolidated
financial statements (and related notes), which are incorporated by reference
in this document. See "Where You Can Find More Information" on pages 57 through
59.
The companies may have performed differently if they had actually been
combined during the periods presented. You should not rely on the pro forma
information as being indicative of either the historical results that we would
have had or the future results that we will experience after the merger is
completed.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED
AT OR FOR DECEMBER 31,
NINE MONTHS ENDED ------------------------------------------
SEPTEMBER 30, 1998 1997 1996 1995
------------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C>
VINCAM HISTORICAL
Book value ......................... $ 2.51 $ 2.16 $ 2.47 $ (0.70)
Cash dividends declared ............ -- -- -- --
Earnings per share-diluted ......... 0.41 0.10 0.14 0.03
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED
AT OR FOR JUNE 30,
THREE MONTHS ENDED --------------------------------------
SEPTEMBER 30, 1998 1998 1997 1996
------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
ADP HISTORICAL
Book value .......................... $ 5.85 $ 5.64 $ 4.54 $ 4.02
Cash dividends declared ............. 0.0663 0.2563 0.2225 0.1938
Earnings per share--diluted ......... 0.20 0.99 0.86 0.76
ADP PRO FORMA
Book value .......................... 5.84 5.63
Cash dividends declared ............. 0.0663 0.2563 0.2225 0.1938
Earnings per share--diluted ......... 0.20 0.98 0.85 0.76
VINCAM EQUIVALENT PRO FORMA
Book value .......................... 2.67 2.58
Cash dividends declared ............. 0.0303 0.1174 0.1019 0.0887
Earnings per share--diluted ......... 0.09 0.45 0.39 0.35
</TABLE>
8
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
ADP common stock is traded on the New York, Chicago and Pacific Stock
Exchanges under the symbol "AUD." Vincam common stock is traded on the Nasdaq
National Market under the symbol "VCAM." We list below the per share closing
market price as reported on the New York Stock Exchange Composite Tape for
shares of ADP common stock and on the Nasdaq National Market for shares of
Vincam common stock. We list this information as of December 2, 1998, the last
trading day before public announcement of the signing of the merger agreement,
and as of February 8, 1999, the latest practicable date prior to the printing
of this document.
We also list the implied equivalent per share value for shares of Vincam
common stock, which is the ADP common stock price multiplied by the exchange
ratio of 0.4580.
We urge you to obtain current market quotations for Vincam common stock
and ADP common stock before voting on the merger.
<TABLE>
<CAPTION>
VINCAM SHARE ADP VINCAM
PRICE SHARE PRICE SHARE EQUIVALENT VALUE
-------------- ------------- -----------------------
<S> <C> <C> <C>
December 2, 1998 ......... $ 14.63 $ 39.69 $ 18.18
February 8, 1999 ......... $ 17.81 $ 41.00 $ 18.78
</TABLE>
9
<PAGE>
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING
We are sending this proxy statement/prospectus to you as part of the
solicitation of proxies by the Vincam board for use at the special meeting to
be held on March 11, 1999, at 9:00 a.m., local time, at Vincam's corporate
headquarters, located at 10200 Sunset Drive, Miami, Florida 33173. We are first
mailing this proxy statement/prospectus, the attached notice of special meeting
of shareholders and the enclosed voting form to you on or about February 10,
1999.
PURPOSES OF THE SPECIAL MEETING; THE MERGER
At the special meeting, Vincam shareholders will consider and vote upon a
proposal to approve the Agreement and Plan of Merger, dated as of December 3,
1998, by and among ADP, ADP Acquisition Corp. (Florida) and Vincam. This
agreement provides for the merger of an ADP subsidiary into Vincam, with Vincam
continuing as the surviving corporation. Upon completion of the merger, Vincam
will become a wholly owned subsidiary of ADP.
We know of no matter to be brought before the special meeting other than
the merger. If any other business should properly come before the special
meeting, the persons named in the voting form will vote in their discretion.
THE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT.
RECORD DATE
The board has fixed the close of business on January 20, 1999 as the
record date for the special meeting. Only holders of Vincam common stock on the
record date will be entitled to vote at the special meeting and any
adjournments or postponements thereof. At the record date, 16,735,131 shares of
Vincam common stock were outstanding and entitled to vote. The presence, in
person or by proxy, of a majority of these shares of Vincam common stock is
necessary to constitute a quorum at the special meeting. Abstentions and broker
non-votes will be included in the determination of shares present at the
special meeting for purposes of determining a quorum.
REQUIRED VOTES
All properly executed proxies delivered and not properly revoked will be
voted at the special meeting as specified in such proxies. If you do not
specify a choice, your shares represented by a signed voting form will be voted
for the approval of the merger agreement.
The affirmative vote of the holders of record of a majority of the shares
of Vincam common stock outstanding and entitled to vote on the record date is
required
10
<PAGE>
to approve the merger agreement. Holders of approximately 45% of Vincam's
common stock have already agreed to vote for the merger. This means that only
5% more of Vincam's shareholders must vote for the merger to ensure its
approval. Non-voting shares, including broker non-votes, and abstentions will
have the effect of a vote against the merger agreement. The directors,
executive officers and affiliates of Vincam hold approximately 35% of the
outstanding shares of Vincam common stock.
PROXIES; VOTING AND REVOCATION
Each share of Vincam common stock is entitled to one vote. The proxies may
propose and vote for one or more adjournments or postponements of the special
meeting to permit further solicitation of proxies in favor of the merger
agreement. However, no proxy that is voted against the merger agreement will be
voted in favor of any adjournment or postponement. Votes will be tabulated at
the special meeting by inspectors of election appointed by Vincam.
You may revoke your proxy at any time prior to its being voted by filing
an instrument of revocation with the secretary of Vincam (The Vincam Group,
Inc., 10200 Sunset Drive, Miami, Florida 33173). You may also revoke your proxy
by filing a duly executed proxy bearing a later date or by appearing at the
special meeting in person, notifying the secretary and voting by ballot at the
special meeting. If you attend the meeting, you may vote in person whether or
not you have previously given a proxy, but your presence, without notifying the
secretary of Vincam, at the meeting will not revoke a previously given proxy.
In addition, if you beneficially hold shares of Vincam common stock that are
not registered in your own name, you will need additional documentation from
the record holder of such shares to attend and vote personally at the meeting.
SOLICITATION OF PROXIES
Vincam will pay for the expense of printing and mailing this document and
the material used in this solicitation of proxies. Proxies will be solicited
through the mail and directly by officers, directors and regular employees of
Vincam not specifically employed for such purpose, without additional
compensation. Vincam will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in
forwarding these proxy materials to the principals. Vincam has engaged
MacKenzie Partners, Inc. to represent it in connection with the solicitations
of proxies at a cost of approximately $4,000 plus expenses.
NO DISSENTERS' APPRAISAL RIGHTS
Under Florida law, you will not have appraisal or dissenters' rights in
connection with the merger because Vincam common stock is traded on the Nasdaq
National Market.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT
IMPORTANCE TO YOU. WE URGE YOU TO READ AND CAREFULLY CONSIDER THE INFORMATION
PRESENTED IN THIS DOCUMENT, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED VOTING FORM IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
11
<PAGE>
THE MERGER
BACKGROUND
Since its initial public offering in 1996, Vincam completed a number of
acquisitions to build its core professional employer organization business to
take advantage of economies of scale and increase profitability. Following the
increase in financial market volatility and a broad decline in the trading
prices of equity securities which occurred in the summer of 1998, the board
initiated a review of various alternatives to increase shareholder value. These
included making additional acquisitions, obtaining a strategic partner to make
a significant investment in Vincam or engaging in a business combination
transaction. As a result, the board formally engaged Goldman Sachs on September
3, 1998 to act as its financial advisor in connection with a possible business
combination.
Also on that date, as a result of the exploration by Goldman Sachs of a
number of potential transactions for Vincam, senior management of Vincam and
representatives of Goldman Sachs met with ADP and representatives of Lehman
Brothers, ADP's financial advisor, to discuss a possible business combination
transaction. On September 9, 1998, Vincam sent ADP a proposed confidentiality
agreement. At a telephonic meeting of the board on September 18, 1998,
representatives of Goldman Sachs provided the board with an update of its
activities, including its initial discussions with ADP and Lehman Brothers. On
September 21, 1998, ADP, Lehman Brothers, Goldman Sachs and Vincam engaged in a
telephonic meeting regarding preliminary due diligence matters. Russell Fradin,
president-employer services of ADP, met with Carlos Saladrigas, the chief
executive officer of Vincam, in Miami on September 24, 1998 to discuss a
possible transaction. On October 5, 1998, ADP and Vincam executed a
confidentiality agreement. Vincam and Goldman Sachs met with ADP and Lehman
Brothers on October 13, 1998 to discuss the terms of a potential transaction.
On October 20, 1998, ADP sent Vincam a preliminary indication of interest
setting forth the proposed terms of a business combination. The board met the
next day to consider the indication of interest and designated Mr. Howard Cox
to lead the negotiation of the transaction on behalf of the board.
Between November 3, 1998, and November 20, 1998, the two companies, their
in-house legal departments and their financial advisors held a series of due
diligence meetings in Miami, Florida and Roseland, New Jersey and reviewed each
other's businesses, strategies and documentation produced in response to due
diligence inquiries.
On November 20, 1998, ADP delivered an initial draft of the merger
agreement. Vincam and ADP, and their legal and financial advisors, then began
to negotiate the terms of the definitive agreements. At that time and during
the following weeks, individual members of Vincam's management and of the
board, and Vincam's financial and legal advisors, held informal discussions
with ADP's financial and legal advisors regarding the status and terms of the
potential transaction. During this time, the parties discussed various issues
raised by the draft definitive agreements including potential exchange ratios.
12
<PAGE>
Negotiation of the merger agreement continued until December 3, 1998. On
that date, at a special telephonic meeting of the board, Vincam management
updated the board on the status and terms of the proposed transaction.
Representatives of Goldman Sachs discussed Goldman Sachs' financial analyses.
Vincam's legal advisors also reviewed the terms of the merger agreement and
other legal aspects of the transaction. In addition, Goldman Sachs delivered
its oral opinion that, as of such date, the exchange ratio was fair from a
financial point of view to Vincam shareholders. See "--Opinion of Financial
Advisor to Vincam." Goldman Sachs later confirmed its opinion in writing. After
discussion, the board unanimously determined that the merger agreement and the
merger were in the best interests of Vincam's shareholders and approved the
merger agreement. The board also unanimously resolved to recommend that
Vincam's shareholders vote to approve the merger agreement. For a discussion of
the reasons for the board's decision and factors considered by the board, see
"--Recommendation of the Board; Vincam's Reasons for the Merger."
Vincam and ADP executed the merger agreement on December 3, 1998, and the
two companies issued a joint press release.
RECOMMENDATION OF THE BOARD; VINCAM'S REASONS FOR THE MERGER
In deciding to approve the merger, the board concluded that holding a
portion of a share of ADP common stock equal to the exchange ratio represented
a more favorable investment opportunity than holding one share of Vincam common
stock. The board took into account the risks inherent in each investment. In
evaluating the merger, the board considered all relevant factors and
information, including the following:
/bullet/ the fact that based on the closing market price for ADP common
stock on the last trading day prior to the execution of the merger
agreement, the exchange ratio of 0.4580 of a share of ADP common stock
per share of Vincam common stock represented:
/bullet/ a premium of approximately 24.3% to the $14.63 closing market
price of Vincam common stock on December 2, 1998, and
/bullet/ a premium of approximately 47.7% to the $12.31 average closing
market price of Vincam common stock for the three months prior to the
execution of the merger agreement;
/bullet/ the fact that the adjustment features of the exchange ratio
provided reasonable protection to you against a decline in the value of
ADP common stock while retaining your ability to benefit from an increase
in the value of ADP common stock;
/bullet/ the December 3, 1998 oral opinion of Goldman Sachs, which was
subsequently confirmed in writing, to the effect that as of such date the
exchange ratio was fair from a financial point of view to Vincam's
shareholders;
13
<PAGE>
/bullet/ the financial analyses presented to the board by Goldman Sachs in
connection with the delivery of its opinion. For a discussion of the
Goldman Sachs opinion and such analyses, see "--Opinion of Financial
Advisor to Vincam";
/bullet/ the likelihood of consolidation and increased competition in the
professional employer organization business, including the entrance into
this market by large companies;
/bullet/ the importance of size, economies of scale and national scope in
achieving a stronger competitive position and profitability;
/bullet/ the need to further invest in computer systems;
/bullet/ the need to grow the professional employer organization business
quickly in order to compete effectively;
/bullet/ the volatility in the market for Vincam common stock, which
created obstacles to Vincam effectively raising capital and making
acquisitions;
/bullet/ the opportunity for you to become holders of ADP common stock,
which the board believed would perform at least as well as Vincam common
stock over the long term and would have greater liquidity and lower
volatility than Vincam common stock;
/bullet/ the financial condition, assets, results of operations, business
and prospects of Vincam and ADP and the risks inherent in achieving those
prospects;
/bullet/ the opportunities for operational efficiencies that may result
from a combination of Vincam and ADP, including:
/bullet/ potential marketing of each company's services to the other
company's client base,
/bullet/ a potential reduction in operating costs through more
efficient sales force recruitment and training, and
/bullet/ the ability to leverage general and administrative functions
over a larger operational and revenue base, including by eliminating
the public reporting obligations of Vincam;
/bullet/ the increased growth potential that may result from a combination
of Vincam and ADP, including as a result of:
/bullet/ the greater marketing capabilities, financial stability and
strength of the combined company, and
/bullet/ the opportunity to raise consumer awareness of the combined
company and its reputation, as well as the difficulties in achieving
such growth while integrating the operations of Vincam and ADP;
14
<PAGE>
/bullet/ the history of the negotiations with respect to the exchange
ratio and the belief of the members of the board that the financial terms
reflected in the merger agreement represented the best financial terms
that could be obtained from ADP;
/bullet/ the terms and conditions of the merger agreement, including:
/bullet/ the nature of the parties' representations, warranties,
covenants and agreements, which the board believed would provide
reasonably adequate certainty that Vincam would be able to require
ADP to complete the merger;
/bullet/ the provisions that permit Vincam to consider additional bona
fide third party offers to acquire Vincam and permit Vincam to
provide information to and negotiate with such parties; and
/bullet/ the termination provisions, including the $8.5 million
termination fee. For a discussion of the terms of the merger
agreement, see "The Merger Agreement";
/bullet/ the regulatory approvals required to complete the merger and the
prospects for receiving such approvals;
/bullet/ the advice of Steel Hector & Davis LLP, outside counsel to
Vincam, that the merger is expected to be treated as a tax-free
reorganization for federal income tax purposes. For a discussion of the
tax consequences of the merger, see "--Federal Income Tax Consequences to
Holders of Vincam Common Stock";
/bullet/ the advice of Vincam's independent public accountants that they
concur with Vincam management's conclusion that no conditions exist
related to Vincam that would preclude ADP's accounting for the merger as
a pooling-of-interests for financial accounting purposes. For a
discussion of the accounting treatment of the merger, see "--Accounting
Treatment"; and
/bullet/ the potential adverse effects on Vincam's business, operations
and financial condition if the merger was not completed following public
announcement of the merger agreement. These adverse effects include the
expenses incurred by Vincam in connection with the merger and the
possibility of having to pay termination fees to ADP. Other adverse
effects include a possible loss of customers and employees in reaction to
the announcement or as a result of management being distracted from
operating the business while working to complete the merger.
This discussion is not intended to be exhaustive, but we believe it
includes all material factors considered by the board. In light of the number
and variety of information and factors the board considered, the board did not
find it practicable to, and did not, assign any specific or relative weights to
the factors listed above. In
15
<PAGE>
addition, individual directors may have given differing weights to different
factors. For a discussion of the interests of members of Vincam's management
and the board in the merger, see "--Interests of Directors and Officers in the
Merger." The board recognized such interests and determined that such interests
neither supported nor detracted from the fairness of the merger to Vincam's
shareholders.
OPINION OF FINANCIAL ADVISOR TO VINCAM
On December 3, 1998, Goldman Sachs delivered its oral opinion to the board
that, as of such date, the exchange ratio was fair from a financial point of
view to the Vincam shareholders. Goldman Sachs later delivered a written
opinion dated December 3, 1998 confirming its oral opinion. Goldman Sachs
reconfirmed its December 3, 1998 opinion by delivery of a written opinion dated
February 8, 1999.
WE HAVE ATTACHED AS APPENDIX B TO THIS DOCUMENT THE FULL TEXT OF THE
FEBRUARY 8, 1999 GOLDMAN SACHS OPINION. THE OPINION SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY GOLDMAN
SACHS IN CONNECTION WITH ITS OPINION. WE HAVE INCORPORATED THE OPINION IN THIS
DOCUMENT BY REFERENCE. WE URGE YOU TO READ THE OPINION CAREFULLY IN ITS
ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other
things:
/bullet/ the merger agreement;
/bullet/ the voting agreement;
/bullet/ Vincam's registration statement on Form S-1 for its initial
public offering of Vincam common stock in May 1996;
/bullet/ Vincam's annual reports to shareholders and annual reports on
Form 10-K for the last two fiscal years ended December 31, 1997;
/bullet/ ADP's annual reports to stockholders and annual reports on Form
10-K for the last five years;
/bullet/ recent interim reports to shareholders and quarterly reports of
Vincam and ADP;
/bullet/ other recent communications from Vincam and ADP to their
respective shareholders; and
/bullet/ internal financial analyses and forecasts for Vincam prepared by
its management.
16
<PAGE>
Goldman Sachs also:
/bullet/ held discussions with members of the senior management of Vincam
and ADP regarding the strategic rationale for, and the potential benefits
of, the merger and the past and current business operations, financial
condition and future prospects of their respective companies;
/bullet/ reviewed the reported price and trading activity of Vincam common
stock and ADP common stock;
/bullet/ compared financial and stock market information for Vincam and
ADP with similar information for other public companies;
/bullet/ reviewed the financial terms of certain recent business
combinations in the professional employer organization industry
specifically and in other industries generally;
/bullet/ performed other studies and analyses as Goldman Sachs considered
appropriate.
Goldman Sachs relied upon and assumed the accuracy and completeness of all
of the financial and other information reviewed by it. As the board was aware,
ADP did not make available to Goldman Sachs its projections of expected future
performance. Accordingly, this limited Goldman Sachs to discussions with ADP
management regarding research analysts' estimates of ADP for fiscal years 1999
and 2000. Goldman Sachs assumed with the consent of the board that the merger
will be accounted for as a pooling-of-interests under generally accepted
accounting principles. In addition, Goldman Sachs did not make or receive any
independent evaluation or appraisal of the assets and liabilities of Vincam or
ADP or any of their respective subsidiaries.
Goldman Sachs provided its advisory services and opinion for the
information and assistance of the board in connection with its consideration of
the merger. Goldman Sachs' opinion does not constitute a recommendation as to
how you should vote on the merger.
The following is a summary of the material financial analyses Goldman
Sachs used in connection with providing its December 3, 1998 opinion to the
board. Goldman Sachs utilized substantially the same types of financial
analyses in connection with providing its February 8, 1999 opinion, which we
attached to this document as Appendix B. In connection with some of its
analyses, Goldman Sachs utilized three different potential values for a share
of Vincam common stock that could be implied by the exchange ratio, depending
on the average price of ADP common stock:
/bullet/ $18.18, the value implied by the exchange ratio based on the
$39.69 closing price for ADP common stock on December 2, 1998, the day
before Goldman Sachs delivered its opinion to the board;
17
<PAGE>
/bullet/ $15.75, the minimum value implied by the exchange ratio without
Vincam having the right to terminate the merger agreement (see "The
Merger Agreement--Terms of the Merger--Conversion of Securities"); and
/bullet/ $19.25, the value implied by the exchange ratio if the price of
ADP common stock were to be above $42.0325 and at or below $45.8540.
Goldman Sachs noted that the value for a share of Vincam common stock
implied by the exchange ratio could exceed $19.25 if the price of ADP
common stock were to exceed $45.8540.
Goldman Sachs noted that the actual trading value of ADP common stock
which Vincam shareholders could receive for a share of Vincam common stock in
the merger could be anywhere between $15.75 and $19.25, and as noted above
might even be higher than $19.25. In addition, since the exchange ratio will be
determined based on the average closing prices of ADP common stock before the
merger occurs, the trading price of ADP common stock on the day of the merger
could imply values lower than $15.75 or higher than $19.25. Finally, the
exchange ratio could imply values lower than $15.75 if the ADP stock price were
low enough to permit Vincam to terminate the merger agreement but Vincam
decided not to do so.
HISTORICAL STOCK TRADING ANALYSIS
Goldman Sachs reviewed the historical trading prices for Vincam common
stock and ADP common stock. The following tables list the low, average and high
daily closing prices of Vincam common stock for the periods indicated, as
compared to the three examples described above of possible values Vincam
shareholders might receive in the merger.
HISTORICAL VINCAM COMMON STOCK PRICES
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 2, 1998 LOW AVERAGE HIGH
- ------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
One year ............. $ 8.75 $ 20.72 $ 29.75
Six months ........... $ 8.75 $ 15.69 $ 23.63
Three months ......... $ 8.75 $ 12.31 $ 18.50
One month ............ $ 11.00 $ 13.85 $ 18.50
Ten days ............. $ 11.00 $ 13.80 $ 15.00
VINCAM CLOSING PRICE
DECEMBER 2, 1998 EXAMPLES OF POSSIBLE MERGER VALUES
- ------------------------- -----------------------------------------
$ 14.63 $ 15.75 $ 18.18 $ 19.25
</TABLE>
18
<PAGE>
The following table lists the low, average and high daily closing prices
of ADP common stock for the periods indicated.
HISTORICAL ADP COMMON STOCK PRICES
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 2, 1998 LOW AVERAGE HIGH
- ------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
One year ............. $ 27.38 $ 33.82 $ 41.31
Six months ........... $ 31.88 $ 36.33 $ 41.31
Three months ......... $ 33.16 $ 37.91 $ 41.31
One month ............ $ 38.50 $ 39.86 $ 41.31
Ten days ............. $ 38.50 $ 39.24 $ 39.97
</TABLE>
ADP CLOSING PRICE
DECEMBER 2, 1998
----------------
$39.69
HISTORICAL EXCHANGE RATIO ANALYSIS
Goldman Sachs reviewed the historical ratio of the Vincam common stock
daily closing price to the ADP common stock daily closing price. The following
tables list the low, average and high of the ratios for the periods shown, as
compared to the three exchange ratios corresponding to the examples described
above on pages 17 and 18 of possible values Vincam shareholders might receive
in the merger.
HISTORICAL RATIOS OF VINCAM COMMON STOCK PRICE TO ADP COMMON STOCK PRICE
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 2, 1998 LOW AVERAGE HIGH
- ------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
One year ............. 0.2448 0.6308 0.9276
Six months ........... 0.2448 0.4364 0.6824
Three months ......... 0.2448 0.3240 0.4604
One month ............ 0.2810 0.3478 0.4604
Ten days ............. 0.2810 0.3520 0.3870
RATIO ON
DECEMBER 2, 1998 EXAMPLES OF POSSIBLE EXCHANGE RATIOS IN MERGER
---------------- ------------------------------------------
0.3686 0.4198 0.4580 0.5152
</TABLE>
SELECTED COMPANIES ANALYSIS FOR VINCAM
Goldman Sachs reviewed financial information, ratios and public market
multiples relating to Vincam and compared them to corresponding financial
information, ratios and public market multiples for the following five publicly
traded corporations: Administaff, Inc., Barrett Business Services, Inc.,
Novacare Employee Services, Inc., Staff Leasing, Inc. and TEAM America
Corporation. We refer to these five companies as the Vincam comparison
companies. Goldman Sachs chose the
19
<PAGE>
Vincam comparison companies because they were publicly traded companies with
operations that, for purposes of this analysis, may be considered similar to
Vincam.
In its analysis, Goldman Sachs used closing market prices on December 2,
1998 and other publicly available information. Goldman Sachs calculated the
price-to-earnings per share multiples of Vincam and the Vincam comparison
companies for calendar years 1998 and 1999. The estimates of 1998 and 1999
earnings per share were based on the medians of the latest estimates provided
by I/B/E/S International Inc., a data service which monitors and publishes a
compilation of earnings estimates produced by selected research analysts on
publicly traded companies.
The following tables list the low, mean average, median average and high
price-to-earnings per share multiples for the Vincam comparison companies, as
compared to the price-to-earnings per share multiples which would result from
the three examples described above on pages 17 and 18 of possible values Vincam
shareholders might receive in the merger. The mean and median averages include
the price-to-earnings per share multiple calculated for Vincam based on its
closing stock price on December 2, 1998. Price-to-earnings multiples are
presented based on both 1998 and 1999 earnings estimates.
<TABLE>
<CAPTION>
PRICE-TO-EARNINGS PER SHARE MULTIPLES OF
VINCAM COMPARISON COMPANIES
----------------------------------------
1998 1999
--------- ---------
<S> <C> <C>
Low .................... 9.5x 8.8x
Mean average ........... 25.7x 17.5x
Median average ......... 21.2x 16.4x
High ................... 43.8x 30.3x
EXAMPLES OF VINCAM PRICE-TO-EARNINGS PER SHARE
MULTIPLES IMPLIED BY POSSIBLE MERGER VALUES
----------------------------------------------
1998 1999
--------- ---------
25.4x 18.8x
29.3x 21.6x
31.0x 22.9x
</TABLE>
20
<PAGE>
Goldman Sachs also reviewed the medians of five-year earnings per share
growth rate estimates provided by I/B/E/S International for the Vincam
comparison companies. The following table lists the low, mean average, median
average and high five-year earnings per share growth rate estimates for the
Vincam comparison companies as compared to the growth rate for Vincam.
<TABLE>
<CAPTION>
FIVE-YEAR EARNINGS PER SHARE GROWTH RATES
FOR VINCAM COMPARISON COMPANIES
- -----------------------------------------
<S> <C>
Low ...................... 18.5%
Mean average ............. 34.5%
Median average ........... 31.8%
High ..................... 38.5%
Vincam ................... 34.0%
</TABLE>
Goldman Sachs calculated the ratios of 1999 price-to-earnings per share
multiples to five-year earnings per share growth rates for the Vincam
comparison companies and Vincam. The following table lists the low, mean
average, median average and high ratios for the Vincam comparison companies, as
compared to the same ratios which would result from the three examples
described above on pages 17 and 18 of possible values Vincam shareholders might
receive in the merger.
<TABLE>
<CAPTION>
RATIOS OF 1999 PRICE-TO-EARNINGS PER SHARE MULTIPLES
TO FIVE-YEAR EARNINGS PER SHARE GROWTH RATES
FOR VINCAM COMPARISON COMPANIES OF VINCAM
- ---------------------------------------------------------------------
<S> <C>
Low .................................................. 0.29x
Mean average ......................................... 0.55x
Median average ....................................... 0.55x
High ................................................. 0.79x
EXAMPLES OF RATIOS IMPLIED BY POSSIBLE MERGER VALUES
- ---------------------------------------------------------------------
0.55x 0.63x 0.67x
</TABLE>
SELECTED COMPANIES ANALYSIS FOR ADP
Goldman Sachs reviewed financial information, ratios and public market
multiples relating to ADP and compared them to corresponding financial
information, ratios and public market multiples for the following two publicly
traded corporations: Ceridian Corporation and Paychex, Inc. We refer to these
two companies as the ADP comparison companies. Goldman Sachs chose the ADP
comparison companies because they were publicly traded companies with
operations that, for purposes of this analysis, may be considered similar to
ADP.
21
<PAGE>
In its analysis, Goldman Sachs used closing market prices on December 2,
1998 and other publicly available information. Goldman Sachs compared the
following financial statistics for the ADP comparison companies to those for
ADP:
/bullet/ multiples of enterprise value (i.e., equity market value plus
debt less cash) to earnings before interest, taxes, depreciation and
amortization for the last twelve reported months:
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------- ----------
LOW HIGH
- ------------ ----------
<S> <C> <C>
18.3x 44.3x 17.9x
</TABLE>
/bullet/ 1999 price-to-earnings per share multiples based on I/B/E/S
International estimates:
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------- ----------
LOW HIGH
- ------------ ----------
<S> <C> <C>
29.7x 53.1x 32.6x
</TABLE>
/bullet/ medians of I/B/E/S International estimates of five-year earnings
per share growth rates:
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------- ----------
LOW HIGH
- ------------ ----------
<S> <C> <C>
20.0% 27.5% 15.0%
</TABLE>
/bullet/ ratios of 1999 price-to-earnings per share multiples to five-year
growth rate estimates:
<TABLE>
<CAPTION>
ADP COMPARISON
COMPANIES ADP
- ----------------------- ---------
LOW HIGH
- ----------- ---------
<S> <C> <C>
1.5x 1.9x 2.2x
</TABLE>
/bullet/ earnings before interest, taxes, depreciation and amortization as
a percentage of revenues for the last twelve reported months:
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------- ----------
LOW HIGH
- ------------ ----------
<S> <C> <C>
16.5% 22.7% 26.3%
</TABLE>
22
<PAGE>
/bullet/ earnings before interest and taxes as a percentage of revenues
for the last twelve reported months:
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------- ----------
LOW HIGH
- ------------ ----------
<S> <C> <C>
13.8% 18.0% 21.1%
</TABLE>
/bullet/ net income as a percentage of revenues for the last twelve
reported months:
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------ ----------
LOW HIGH
- ----------- ----------
<S> <C> <C>
7.9% 10.5% 12.5%
</TABLE>
/bullet/ ratios of net debt (i.e., debt less cash) to enterprise value
(all numbers negative because each company's cash exceeded its debt):
<TABLE>
<CAPTION>
ADP COMPARISON COMPANIES ADP
- ------------------------- ----------
LOW HIGH
- ------------ ----------
<S> <C> <C>
-2.5% -3.5% -2.5%
</TABLE>
SELECTED TRANSACTIONS ANALYSIS
Goldman Sachs analyzed information relating to the following 14 selected
transactions in the professional employer organization industry occurring
between October 1, 1995 and December 2, 1998:
/bullet/ Employee Solutions Incorporated/
Hazar, Inc.
/bullet/ Employee Solutions/Renhill Group, Inc.
/bullet/ Employee Solutions/Employer Sources, Inc.
/bullet/ Employee Solutions/TEAM Services (GCK Entertainment Services, Inc. and
Talent, Entertainment and Media Services, Inc.)
/bullet/ Employee Solutions/Leaseway Personnel (Leaseway Personnel Corporation
and Leaseway Administrative Personnel, Incorporated)
/bullet/ Paychex, Inc./National Business Solutions, Inc.
/bullet/ Vincam/Stone Mountain Group, Inc.
/bullet/ Employee Solutions/McClary-Trapp Group
/bullet/ Vincam/Staff Administrators, Inc.
/bullet/ Employee Solutions/ETIC Corporation (d/b/a Employers Trust)
/bullet/ Employee Solutions/CMGR Companies (CMGR, Inc. and Humasys, Inc.)
/bullet/ Vincam/Amstaff, Inc.
/bullet/ Employee Solutions/Prompt Pay, Inc.
/bullet/ Vincam/Staffing Network, Inc.
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<PAGE>
The following table lists the low, mean average, median average and high
for the price paid per worksite employee in these selected transactions as
compared to the comparable calculations for the consideration to be paid in the
merger, based on the three examples described above on pages 17 and 18 of
possible values Vincam shareholders might receive in the merger.
<TABLE>
<CAPTION>
PRICE PAID PER WORKSITE EMPLOYEE
IN THE SELECTED TRANSACTIONS
- ----------------------------------------------
<S> <C>
Low ........................... $ 296
Mean average .................. $ 4,820
Median average ................ $ 3,524
High .......................... $17,933
EXAMPLES OF PRICES PAID PER
WORKSITE EMPLOYEE IN THE MERGER
- -----------------------------------------------
$ 5,486 $6,384 $6,782
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS
Goldman Sachs performed a discounted cash flow analysis using Vincam's
management projections. Goldman Sachs calculated a range of net present values
of free cash flows for the years 1999 through 2003 using discount rates ranging
from 16% to 20%. Goldman Sachs calculated a range of Vincam's terminal values
in the year 2003 based on net income multiples ranging from 13.0x to 17.0x.
Goldman Sachs then discounted these terminal values to present value using
discount rates ranging from 16% to 20%. The per share values of Vincam common
stock implied by this analysis ranged from $15.01 to $21.54, as compared to
$15.75, $18.18 and $19.25 (the three examples described above on pages 17 and
18 of possible values Vincam shareholders might receive in the merger).
Goldman Sachs also applied a sensitivity analysis to the sales growth and
net margin assumptions contained in Vincam's management projections. Goldman
Sachs calculated a range of net present values of free cash flows for the years
1999 through 2003 using a discount rate of 18% and a terminal value net income
multiple of 15.0x, and varying sales growth and net margin assumptions in
Vincam's management projections. The sales growth sensitivities ranged from 5%
less than to 5% greater than Vincam's management projections. The net margin
sensitivities ranged from 1% less than to 1% greater than Vincam's management
projections. The per share values of Vincam common stock implied by this
analysis ranged from $13.35 to $23.97, as compared to $15.75, $18.18 and $19.25
(the three examples described above on pages 17 and 18 of possible values
Vincam shareholders might receive in the merger).
PRO FORMA EARNINGS PER SHARE IMPACT ANALYSIS
Goldman Sachs analyzed the pro forma impact of the merger on ADP's fiscal
year 1999 and 2000 earnings per share, based on the medians of estimates
provided
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<PAGE>
by I/B/E/S International for ADP and on estimates by Vincam's management for
Vincam. Goldman Sachs compared the estimated earnings per share for ADP on a
stand-alone basis to the estimated earnings per share for ADP on a pro forma
combined basis. Goldman Sachs determined that the merger would marginally
increase ADP's earnings per share above what they otherwise would have been
both in fiscal year 1999 and in fiscal year 2000 based on exchange ratios of
0.4198, 0.4580, 0.5152 and 0.5250. The first three exchange ratios in the
preceding sentence correspond to the three examples described above on pages 17
and 18 of possible values Vincam shareholders might receive in the merger. The
fourth exchange ratio of 0.5250 was an illustrative higher exchange ratio
assuming that the ADP stock price was $30.00 and ADP agreed to increase the
exchange ratio above 0.5152 at Vincam's request. See "The Merger
Agreement--Terms of the Merger--Conversion of Securities."
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its opinion, Goldman Sachs
considered the results of all such analyses. No company or transaction used in
the above analyses as a comparison is directly comparable to Vincam or ADP or
the merger.
Goldman Sachs prepared the analyses described above solely for purposes of
providing its opinion to the board as to the fairness from a financial point of
view to Vincam shareholders of the exchange ratio. The analyses do not purport
to be appraisals or necessarily reflect the prices at which businesses or
securities actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by such analyses. These
analyses are inherently subject to uncertainty because they are based upon
numerous factors or events beyond the control of the parties or their advisors.
Therefore, none of Vincam, ADP, Goldman Sachs or any other person assumes
responsibility if future results are materially different from those forecast.
See "Summary--Forward-Looking Statements."
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Vincam selected
Goldman Sachs as its financial advisor because it is an internationally
recognized investment banking firm that has substantial experience in
transactions similar to the merger.
Goldman Sachs provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of Vincam or ADP for its own account and for the accounts of customers.
Vincam engaged Goldman Sachs on September 3, 1998 to act as its financial
advisor in connection with the merger. Vincam has paid Goldman Sachs aggregate
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<PAGE>
fees equal to $3 million and has agreed to reimburse Goldman Sachs for any
sales, use or similar taxes and to indemnify Goldman Sachs against liabilities
under the federal securities laws.
FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF VINCAM COMMON STOCK
GENERAL
The following describes the material federal income tax consequences of
the merger to you. However, this discussion does not address all aspects of
taxation that may be relevant to particular shareholders in light of their
personal investment or tax circumstances. Nor does this discussion address all
the tax consequences for shareholders subject to special treatment under the
federal income tax laws, such as insurance companies, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States. In addition, this discussion does not give a
detailed discussion of any state, local or foreign tax considerations. This
discussion may not be applicable to holders who acquired Vincam common stock
pursuant to the exercise of options or warrants or otherwise as compensation.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES
OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES TO YOU OF THE MERGER.
This discussion is based on the Internal Revenue Code of 1986, applicable
Department of Treasury regulations, judicial authority, and administrative
rulings and practice, all as of the date of this proxy statement/prospectus.
Future legislative, judicial, or administrative changes or interpretations may
adversely affect the accuracy of the statements and conclusions described in
this document. Any such changes or interpretations could be applied
retroactively and could affect the tax consequences of the merger to you.
MATERIAL TAX CONSEQUENCES OF THE MERGER
The material federal income tax consequences of the merger will be as
follows:
(a) The merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code for United States
federal income tax purposes, and ADP, the ADP subsidiary
participating in the merger and Vincam will each be a party to such
reorganization within the meaning of Section 368(b) of the Internal
Revenue Code;
(b) No gain or loss will be recognized by ADP, ADP's subsidiary or
Vincam as a result of the merger;
(c) No gain or loss will be recognized by you upon your receipt of ADP
common stock in exchange for your Vincam common stock, except with
respect to cash received instead of fractional shares of ADP common
stock;
(d) The aggregate tax basis of the shares of ADP common stock received
in exchange for your Vincam common stock, in the merger, including
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<PAGE>
fractional shares for which cash is received, will be the same as
the aggregate tax basis of your Vincam common stock exchanged;
(e) The holding period for shares of ADP common stock received in the
merger will include the holding period of the Vincam common stock
exchanged, but only if you held the Vincam common stock as a
capital asset at the time we complete the merger; and
(f) If you receive cash instead of a fractional share of ADP common
stock, you will recognize gain or loss equal to the difference, if
any, between your tax basis in the fractional share (as described
in (d) above) and the amount of cash received.
Vincam's obligation to complete the merger is conditioned upon its receipt
of an opinion from Steel Hector & Davis LLP that the merger will be treated as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. This opinion of counsel will be based in part upon representations, made
as of the effective time of the merger by Vincam and ADP, which counsel will
assume to be true, correct and complete. If the representations are inaccurate,
the opinion of counsel could be adversely affected. No ruling has been sought
from the Internal Revenue Service as to the United States federal income tax
consequences of the merger, and the opinion of counsel will not be binding upon
the Internal Revenue Service or any court.
BACKUP WITHHOLDING
Noncorporate holders of Vincam common stock may be subject to backup
withholding at a rate of 31% on cash payments received instead of a fractional
share interest in ADP common stock. Backup withholding will not apply, however,
to a shareholder who (a) furnishes a correct taxpayer identification number and
certifies, under penalties of perjury, that he or she is not subject to backup
withholding on a Form W-9, (b) provides a certificate of foreign status on Form
W-8 or (c) is otherwise exempt from backup withholding. A shareholder who fails
to provide the correct taxpayer identification number on Form W-9 may be
subject to a $50 penalty imposed by the Internal Revenue Service. We will
provide a Form W-9 to you after the merger.
REPORTING REQUIREMENTS
You will be required to attach a statement to your tax returns for the
taxable year in which the merger is completed that contains the information set
forth in Section 1.368-3(b) of the Department of Treasury regulations. The
statement must include your tax basis in the Vincam common stock surrendered
and a description of the ADP common stock received in the merger.
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<PAGE>
ACCOUNTING TREATMENT
The merger is expected to qualify for the pooling-of-interests method of
accounting under generally accepted accounting principles. This means the
assets and liabilities of Vincam and ADP will be carried forward at their
recorded amounts to the combined company, income or loss of the combined
company will include income or loss of Vincam and ADP for the entire fiscal
year in which the merger occurred and the reported income or loss of Vincam and
ADP for prior periods will be combined and restated as income or loss of the
combined company.
DIVIDEND POLICY
ADP currently expects to pay quarterly dividends consistent with its
current dividend policy. Future dividends will be at the discretion of ADP and
will be determined after consideration of a number of factors including, among
others, ADP's earnings, financial condition, cash flows from operations,
current and anticipated cash needs and expansion plans.
Vincam has agreed not to declare, set aside, make or pay any dividend on
its common stock until the completion of the merger.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER
GENERAL
Members of the board and Vincam management may be deemed to have interests
in the merger that are in addition to their interests as Vincam shareholders.
The board recognized these interests and determined that these interests
neither supported nor detracted from the fairness of the transaction to you.
EMPLOYMENT AGREEMENTS
Messrs. Carlos Saladrigas and Jose Sanchez will be employed by Vincam for
a period of three years after the effective time of the merger. For a
discussion of the terms of these employment agreements, see "Related
Agreements-- Employment Agreements."
INDEMNIFICATION AGREEMENTS
ADP has agreed to provide indemnification rights to the present and former
directors and officers of Vincam and has agreed to maintain directors' and
officers' liability insurance for such individuals. For further detail
regarding these arrangements, see "The Merger Agreement--Indemnification and
Insurance."
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<PAGE>
CONTINUATION OF CURRENT DIRECTORS OF VINCAM FOLLOWING THE MERGER
ADP has agreed that Messrs. Howard E. Cox, Jr., Charles M. Hazard, Jr. and
Dr. John H. McArthur will remain as directors of Vincam following the merger
until March 31, 2001. If Messrs. Cox, Hazard and McArthur are removed from
office prior to March 31, 2001, all previously unvested options held by these
directors will immediately vest.
ACCELERATED VESTING OF OPTIONS
The Vincam 1998 long term incentive plan provides, subject to exceptions,
for the accelerated vesting of 50% of the options granted under the plan upon a
change of control of Vincam. The merger will be a change of control of Vincam.
In addition, an agreement between Vincam and John T. Carlen requires the
accelerated vesting of some options granted to Mr. Carlen. The following table
discloses for each Vincam executive officer the number of options that will be
subject to accelerated vesting upon the merger:
<TABLE>
<CAPTION>
NUMBER OF
NAME AND TITLE NON-VESTED OPTIONS EXERCISE PRICES
- -------------- -------------------- ----------------
<S> <C> <C>
John T. Carlen, President 225,000 $ 22.17
20,000 $ 13.125
Steven R. Light, Senior Vice 5,000 $ 13.125
President-Strategic Initiatives/
Special Projects
Elizabeth J. Marston, Secretary and 5,000 $ 13.125
General Counsel
Carlos A. Rodriguez, Chief Financial 15,000 $ 13.125
Officer
</TABLE>
REGULATORY APPROVALS
Federal antitrust laws prohibit us from completing the merger until a
required notification and report form is filed and a required waiting period
has expired or been terminated. On January 9, 1999, we filed the required
notification and report forms. The waiting period for the filings terminated on
January 25, 1999. Even though the waiting period was terminated, the Antitrust
Division of the Department of Justice or the Federal Trade Commission could
take action under the antitrust laws that could adversely affect the merger.
However, we do not believe that the completion of the merger will result in the
violation of any applicable antitrust laws.
In addition, the completion of the merger will require the consent of
state regulatory authorities in a number of states that license professional
employer organizations. We believe that we will be able to obtain the necessary
consents on a timely basis. We do not believe that any additional material
governmental filings in
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<PAGE>
the United States are required with respect to the merger, other than the
filing of the articles of merger with the Florida Secretary of State.
STOCK EXCHANGE LISTING
The ADP common stock to be issued to you in the merger will be listed on
the New York Stock Exchange, subject to official notice of issuance. The
completion of the merger is conditioned upon the authorization for listing on
the New York Stock Exchange of such ADP common stock.
FEDERAL SECURITIES LAWS CONSEQUENCES
All shares of ADP common stock received by Vincam shareholders in the
merger will be freely transferable under the Federal securities laws, except
for shares received by persons who are deemed to be "affiliates" of Vincam
prior to the completion of the merger. These shares may be resold by them only
in transactions permitted by the resale provisions of Rule 145 of the
Securities Act of 1933 (or Rule 144 in the case of persons who become
affiliates of ADP) or as otherwise permitted under the Securities Act of 1933.
Persons who may be deemed to be affiliates of ADP or Vincam generally include
individuals or entities that control, are controlled by, or are under common
control with, such parties. ADP has agreed to file a registration statement
with respect to the shares of ADP common stock to be received by the Vincam
shareholders who have entered into the voting agreement.
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<PAGE>
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the merger
agreement. A copy of the merger agreement is attached as Appendix A to this
document and is incorporated in this document by reference. WE URGE YOU TO READ
THE MERGER AGREEMENT CAREFULLY AND IN ITS ENTIRETY.
TERMS OF THE MERGER
GENERAL
The merger agreement contemplates the merger of an ADP subsidiary into
Vincam. After the merger, Vincam will survive as a wholly owned subsidiary of
ADP. The merger will be completed once we file the articles of merger with the
Florida Secretary of State. We believe that this filing will occur at the same
time as the closing under the merger agreement which, unless we otherwise
agree, will occur on the first business day after the satisfaction or waiver of
the conditions set forth in the merger agreement.
CONVERSION OF SECURITIES
Once we complete the merger, the following will occur:
Unless described differently below in the sections labeled "--Fractional
Shares," "--Dividends and Distributions" and "--Withholding Rights," each of
your shares will be converted into a number of shares of ADP common stock equal
to an exchange ratio. That exchange ratio will be determined as follows:
<TABLE>
<S> <C>
AVERAGE ADP STOCK PRICE: WHAT YOU WILL RECEIVE:
Equal to or greater than $34.3905 and 0.4580 shares of ADP common stock
less than or equal to $42.0325 per Vincam share
Greater than $42.0325 and less than or ADP shares with a value of $19.25 per
equal to $45.8540 Vincam share
Equal to or greater than $30.5690 and ADP shares with a value of $15.75 per
less than $34.3905 Vincam share
Greater than $45.8540 0.4198 shares of ADP common stock
per Vincam share
Less than $30.5690 At Vincam's option, (a) 0.5152 shares
of ADP common stock per Vincam
share or (b) Vincam may request that
ADP issue ADP shares with a value of
$15.75 per Vincam share. If ADP
declines this request, Vincam can
terminate the merger agreement.
</TABLE>
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<PAGE>
If Vincam issues additional shares or options prior to the special
meeting, the exchange ratio will be adjusted downward to reflect the additional
shares or options.
FRACTIONAL SHARES
ADP will not issue any fractional shares of its stock in the merger. As
promptly as practicable after we complete the merger, Chase Mellon Shareholder
Services, as your exchange agent in the merger, will determine the aggregate
number of fractional shares which would be issued to all Vincam shareholders.
Chase Mellon will then sell the excess shares at then prevailing prices on the
New York Stock Exchange.
Until the net proceeds of such sales have been distributed to you, Chase
Mellon will hold such proceeds in trust for your benefit. ADP will pay the
costs of the sale of such excess shares. Chase Mellon will determine the
portion of the proceeds to which each of you will be entitled, if any, by
multiplying the amount of the aggregate net proceeds from the sale by your
proportionate interest in the proceeds, which will depend on your Vincam stock
ownership. Instead of the foregoing, however, ADP may satisfy payment for such
excess shares by delivering cash (without interest) to Chase Mellon in an
amount equal to the aggregate amount of all such excess shares multiplied by
the closing price of ADP common stock on the New York Stock Exchange on the
trading day immediately prior to the date we complete the merger.
STOCK OPTIONS AND OTHER STOCK RIGHTS
Once we complete the merger, each option to purchase shares of Vincam
common stock issued under Vincam's stock option plans will be assumed by ADP.
This means that each Vincam stock option will be converted into an option to
acquire shares of ADP common stock. The number of shares of ADP common stock to
be subject to the option will be equal to the product of (a) the number of
shares of Vincam common stock subject to the original option and (b) the
exchange ratio. The exercise price per share of ADP common stock under the
option will be equal to the (a) the exercise price per share of Vincam common
stock under the original option divided by (b) the exchange ratio. After we
complete the merger, ADP will deliver to the holders of Vincam stock options
notices setting forth these adjustments.
EXCHANGE OF NEW STOCK CERTIFICATES
EXCHANGE AGENT
Once we complete the merger, ADP will deposit with Chase Mellon, for your
benefit, the certificates representing the shares of ADP common stock, and any
related dividends or distributions, issuable pursuant to the merger in exchange
for outstanding shares of Vincam common stock. For this purpose, the number of
shares of ADP common stock issuable means the product of (a) the exchange ratio
and (b) the number of outstanding shares of Vincam common stock as of the time
we complete the merger.
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<PAGE>
After we complete the merger, Chase Mellon will mail to each of you a
letter of transmittal and instructions for use in surrendering your Vincam
shares in exchange for certificate(s) representing shares of ADP common stock.
Upon surrender of your Vincam stock certificate to Chase Mellon, you will be
entitled to receive a certificate representing that number of whole shares of
ADP common stock and cash instead of any fractional share of ADP common stock,
plus any dividends, which you have the right to receive in the merger. Your
Vincam stock certificate(s) will then be cancelled.
DIVIDENDS AND DISTRIBUTIONS
NO DIVIDENDS OR OTHER DISTRIBUTIONS DECLARED OR MADE AFTER THE MERGER WITH
RESPECT TO ADP COMMON STOCK WITH A RECORD DATE AFTER THE DATE WE COMPLETE THE
MERGER WILL BE PAID TO YOU UNTIL YOU SURRENDER YOUR VINCAM STOCK
CERTIFICATE(S). NO CASH PAYMENT INSTEAD OF FRACTIONAL SHARES WILL BE PAID TO
YOU UNTIL YOU SURRENDER SUCH CERTIFICATE(S).
Following your surrender to Chase Mellon of any such certificate(s), as a
record holder of certificates representing whole shares of ADP common stock,
you will be paid, without interest:
/bullet/ the amount of any cash payable instead of a fractional share of
ADP common stock to which you are entitled;
/bullet/ the amount of dividends or other distributions with a record date
after the date we complete the merger already paid with respect to your
whole shares of ADP common stock; and
/bullet/ at the appropriate payment date, the amount of dividends or other
distributions with a record date after the date we complete the merger
but prior to surrender and a payment date subsequent to surrender payable
with respect to your whole shares of ADP common stock.
TRANSFERS
As soon as we complete the merger, the stock transfer books of Vincam will
be closed, and there will be no further registration of transfers of Vincam
common stock.
TERMINATION OF EXCHANGE FUND
ADP will receive any portion of ADP common stock or the proceeds from the
sale of any excess ADP shares which remains undistributed to Vincam
shareholders six months after the date we complete the merger. Any Vincam
shareholder who has not previously complied with the exchange procedures may
then look only to ADP for payment.
NO LIABILITY
We will not be liable to any Vincam shareholder or ADP stockholder for any
undistributed ADP common stock or cash from the proceeds of the sale of any
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<PAGE>
excess ADP shares which is delivered to a public official pursuant to any
applicable abandoned property or similar laws.
NO INTEREST
No interest will be paid or accrued on cash paid to Vincam shareholders
instead of fractional shares. In addition, no interest will be paid or accrued
on unpaid dividends and distributions, if any, which may be payable upon
surrender of Vincam stock certificates.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties of
Vincam relating to, among other things:
/bullet/ its organization and qualification and its subsidiaries;
/bullet/ capitalization;
/bullet/ its authority relative to the merger agreement;
/bullet/ filings with the Securities and Exchange Commission and its
financial statements;
/bullet/ no violation of laws or other agreements;
/bullet/ receipt of consents and approvals required for the merger;
/bullet/ absence of litigation;
/bullet/ taxes;
/bullet/ employee benefit plans;
/bullet/ labor matters;
/bullet/ identity and enforceability of material agreements;
/bullet/ environmental matters;
/bullet/ absence of changes or events which would have a material
adverse affect on Vincam;
/bullet/ the accuracy of information supplied by Vincam in connection
with this document;
/bullet/ real property;
/bullet/ intellectual property;
/bullet/ accounts receivable;
/bullet/ client relationships;
/bullet/ the lack of any requirement to be registered under the
Investment Company Act of 1940;
/bullet/ brokers;
/bullet/ the opinion rendered by Goldman Sachs with respect to the
fairness of the exchange ratio;
/bullet/ accounting treatment of the merger;
/bullet/ ownership of ADP common stock by Vincam shareholders;
/bullet/ the absence of appraisal or dissenters' rights;
/bullet/ "Year 2000" compliance; and
/bullet/ insurance.
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<PAGE>
The merger agreement also contains customary representations and
warranties made by ADP and its merger subsidiary as to, among other things:
/bullet/ their organization and qualification;
/bullet/ capitalization;
/bullet/ their authority relative to the merger agreement;
/bullet/ filings with the Securities and Exchange Commission and their
financial statements;
/bullet/ receipt of consents and approvals requiredfor the merger;
/bullet/ no violation of laws or other agreements;
/bullet/ the accuracy of information supplied for inclusion or
incorporation by reference in this document;
/bullet/ brokers;
/bullet/ accounting treatment of the merger; and
/bullet/ absence of changes or events which will have a material
adverse effect on ADP or its merger subsidiary.
COVENANTS
Each of us has agreed to:
/bullet/ cooperate with the other in the preparation and dissemination of
public information;
/bullet/ not take any action that would result in any of its
representations or warranties in the merger agreement being materially
untrue or any of the conditions not to be satisfied; and
/bullet/ advise the other of any material notice or other communication
from any third party which relates to the completion of the merger.
Vincam also has agreed it will:
/bullet/ conduct its business in the ordinary course of business and
consistent with past practice;
/bullet/ not (a) pay any dividends on its common stock, (b) reclassify its
common stock in any way or issue any other securities instead of its
common stock or (c) acquire any shares of its common stock;
/bullet/ not issue, pledge or otherwise encumber any shares of its common
stock;
/bullet/ except for activities in the ordinary course of business, not
sell, lease, license, mortgage or otherwise encumber or dispose of any of
its material properties or assets;
/bullet/ except for borrowings under current credit facilities or other
agreements, not incur any debt, guarantee any debt securities of another
person make any loans or capital contributions to any other person;
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<PAGE>
/bullet/ with respect to the board, except as set forth below under "No
Solicitation of Transactions," recommend that Vincam's shareholders vote
for the merger agreement and the board will not withdraw its
recommendation to approve the merger; and
/bullet/ use its reasonable efforts to cause PricewaterhouseCoopers LLP to
deliver a letter stating that Vincam is a "poolable" entity for
accounting purposes and Vincam will deliver a letter addressed to
Deloitte & Touche LLP to the same effect.
NO SOLICITATION OF TRANSACTIONS
Vincam has agreed that until we complete the merger, it will not: (a) take
any action which could cause a third party to make a proposal to acquire an
interest in Vincam or (b) propose, enter into or participate in any discussions
or negotiations regarding any such proposal.
However, this does not prohibit Vincam from, prior to the special meeting:
/bullet/ furnishing information based on a confidentiality letter
concerning Vincam to a third party which has made an unsolicited proposal
that the Vincam board determines such party is capable of financing;
/bullet/ engaging in discussions or negotiations with the third party
which has made such an unsolicited proposal; or
/bullet/ following receipt of the unsolicited proposal, taking and
disclosing to its shareholders a position with respect to such proposal.
However, in each case referred to above, the Vincam board must conclude in
good faith, following receipt of a written opinion addressed to Vincam from
outside counsel, that such action is necessary for the board to satisfy its
fiduciary obligations to its shareholders. The board must also conclude that
the third party which made the unsolicited proposal has the ability and the
financial wherewithal to complete an acquisition of Vincam.
If the board receives such a proposal, then Vincam will immediately inform
ADP of the material terms and conditions of such proposal and the identity of
the person making it and will keep ADP fully informed regarding any significant
details or developments with respect to any such proposal and of all
significant steps it is taking in response to such proposal.
Vincam has agreed that neither its board nor any committee thereof will
(a) propose to withdraw or modify its recommendation to approve the merger
agreement or (b) propose to approve or recommend any third-party proposal to
acquire an interest in Vincam which it determines is reasonably capable of
being financed. However, the board, to the extent it concludes in good faith,
following receipt of a written opinion addressed to Vincam from outside
counsel, that such
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<PAGE>
action is necessary for the board to comply with its fiduciary obligations to
its shareholders, may approve or recommend a written proposal made by a third
party to acquire Vincam on terms which a majority of the members of the board
determines in their good faith judgment (after consultation with independent
financial advisors) to be more favorable to Vincam's shareholders 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.
EMPLOYMENT MATTERS
Prior to the completion of the merger, Vincam will enter into employment
agreements with Carlos Saladrigas and Jose Sanchez to lead ADP's professional
employer organization activities. See "Related Agreements-- Employment
Agreements."
To the extent that any Vincam employee who was employed prior to the
merger is moved to any ADP employee benefit plan, ADP will give such employee
full credit solely for the purposes of eligibility and vesting under such
employee benefit plan for the employee's service with ADP, Vincam or any
affiliate thereof to the same extent recognized immediately prior to the
completion of the merger. In addition, such employee will not be constrained by
any limitations regarding preexisting conditions under any such employee
benefit plan, except that the entry dates into such employee benefit plan for
the employee will be in the normal course of such plan's administration, which
may be the beginning of the plan year.
After the merger and until the date ADP moves Vincam employees who were
employed prior to the merger to ADP employee health and welfare benefit plans,
Vincam will maintain employee health and welfare plans that are substantially
comparable to the health and welfare plans it maintained on the date of the
merger agreement.
INDEMNIFICATION AND INSURANCE
After the merger, we will indemnify all current and former directors,
officers and employees of Vincam against all liabilities or any claim arising
out of their positions at Vincam or merger agreement. Following the merger, ADP
has agreed to keep in effect provisions in Vincam's articles of incorporation
and by-laws with respect to indemnification no less favorable to the current
and former Vincam directors and officers than those in effect in Vincam's
current articles of incorporation and by-laws.
For six years after the date we complete the merger, we will obtain
directors' and officers' liability insurance for acts or omissions occurring
prior to the merger covering each person now covered by Vincam's directors' and
officers' liability insurance. However, we will not be required to pay more
than 200% of the current annual premiums Vincam pays for such insurance.
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CONDITIONS TO THE MERGER
Our respective obligations to complete the merger depend on the
fulfillment of each of the following conditions:
/bullet/ the approval of the merger by a majority of Vincam's
shareholders;
/bullet/ the New York Stock Exchange listing of the shares of ADP common
stock to be issued in the merger, subject to official notice of issuance;
/bullet/ the effectiveness of the Registration Statement on Form S-4 to
register the ADP common stock to be issued to Vincam shareholders in the
merger;
/bullet/ the lack of any order issued by any court or any other legal
restraint hindering the completion of the merger or subjecting us to
substantial damages as a result of the completion of the merger; and
/bullet/ the making of all material filings required to be made with, and
the procurement of all consents and authorizations required to be
obtained from, governmental entities in order to complete the merger.
Our respective obligations to complete the merger also depend on the
satisfaction or waiver by the other party of the following conditions:
/bullet/ the representations and warranties made by the other party will
have been true and correct as of the date of the merger agreement and at
and as of the date the merger is completed;
/bullet/ the other party will have performed the obligations required to
be performed by it under the merger agreement prior to the time the
merger is completed; and
/bullet/ Carlos Saladrigas and Jose Sanchez will have executed and
delivered employment agreements with Vincam.
The obligation of ADP to complete the merger also depends on the
satisfaction or waiver of the following conditions:
/bullet/ there will not have occurred any event likely to result in a
materially adverse change in Vincam's condition;
/bullet/ Deloitte & Touche LLP will have delivered a letter to ADP stating
that in their opinion ADP may treat the merger as a pooling-of-interests
for accounting purposes;
/bullet/ Vincam will have delivered to ADP the required letters from all
persons who may be deemed to be "affiliates" under the Securities Act of
1933; and
/bullet/ all material consents, approvals or actions of, or filings with,
or notices to any person (other than a governmental entity) required in
connection with the
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execution and delivery by Vincam of the merger agreement or compliance by
Vincam with the provisions of the merger agreement will have been
obtained and be in full force and effect.
The obligation of Vincam to complete the merger also depends on the
satisfaction or waiver of the following conditions:
/bullet/ Vincam will have received an opinion from Goldman Sachs, as of
the date this document is mailed to you, stating that the exchange ratio
is fair to you from a financial point of view; and
/bullet/ Vincam will have received an opinion from Steel Hector & Davis
LLP, counsel to Vincam, dated as of the date we complete the merger,
stating that the merger will constitute a reorganization for U.S. federal
income tax purposes within the meaning of Section 368(a) of the Internal
Revenue Code.
TERMINATION
The merger may be abandoned, at any time before we complete the merger and
before or after you approve the merger, in the following circumstances:
(a) by our mutual written consent;
(b) by either one of us, if the other has materially breached any
representation or agreement which, if not a wilful breach, has not
been cured within 15 business days following receipt by the breaching
party of notice of such breach, but only if the terminating party is
not then itself in material breach of any representation or agreement;
(c) by either one of us, if we do not complete the merger before June 30,
1999. However, neither one of us may terminate the merger agreement
under these circumstances if the failure has been caused by such
party's material breach of the merger agreement;
(d) by either one of us, if a majority of Vincam's shareholders do not
vote for the merger agreement;
(e) by Vincam, in the manner described under "--Terms of the Merger--
Conversion of Securities" if the average ADP stock price is less than
$30.5690 and ADP does not agree to increase the exchange ratio;
(f) by either one of us, if a governmental entity has taken any action
hindering the completion of the merger and such action has become final
and nonappealable; and
(g) by ADP, if
(1) the Vincam board withdraws or modifies its recommendation to adopt
the merger in a manner adverse to ADP;
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(2) the Vincam board recommends to you an acquisition proposal made by a
third party;
(3) Vincam enters into any agreement with respect to a proposal made by
a third party (other than a confidentiality agreement);
(4) an offer which would result in the beneficial ownership by any
person or any group of persons of more than 30% of the outstanding
shares of Vincam common stock is commenced, and the board recommends
that you tender your shares in such offer; or
(5) any person or group of persons acquires beneficial ownership of more
than 30% of the outstanding shares Vincam common stock.
TERMINATION FEES AND EXPENSES
Except as otherwise stated in the merger agreement, all expenses incurred
in the merger will be paid by the party incurring such expenses.
Vincam has agreed to pay ADP $8.5 million if the merger agreement is
terminated by virtue of:
(a) the provisions outlined above in clause (b) under the section
"--Termination" and:
/bullet/ such termination is the result of a material breach by Vincam
of any representation it made in the merger agreement or a wilful and
material breach by Vincam of the merger agreement, which, in either
case is not cured; and
/bullet/ within 12 months after the termination of the merger agreement,
Vincam has entered into an agreement providing for a combination of
Vincam with, or the sale of a significant portion of Vincam to, a
third party;
(b) the provisions outlined above in clause (d) under the section
"--Termination" and:
/bullet/ the board on or before the date of the special meeting
withdraws or changes its recommendation to adopt the merger agreement
in a manner adverse to ADP; or
/bullet/ any of the Vincam shareholders that are a party to the voting
agreement have not voted in favor of the merger at the special
meeting; or
(c) the provisions outlined above in clause (g) under the section
"--Termination";
The $8.5 million payment will generally be ADP's sole remedy under the
merger agreement.
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RELATED AGREEMENTS
VOTING AGREEMENT
Carlos A. Saladrigas, Saladrigas Family Limited Partnership, Jose M.
Sanchez, Michael J. Gatsas, Theodore L. Gatsas and Gatsas Family Limited
Partnership, all of whom are Vincam shareholders, have entered into a voting
agreement with ADP. Together, these Vincam shareholders hold approximately 45%
of Vincam's outstanding common stock. As part of the voting agreement, they
agreed to vote for the merger at the special meeting. The Vincam shareholders
listed above also agreed that they will not sell, pledge or otherwise dispose
of any shares of Vincam common stock. Their obligation to vote for the merger
will end if the merger agreement is terminated.
ADP has agreed to enter into a registration rights agreement with these
Vincam shareholders. ADP has also agreed to file and have the Securities and
Exchange Commission declare effective on or prior to the completion of the
merger a Registration Statement on Form S-3 covering the shares of ADP common
stock to be received by the above shareholders in the merger in exchange for
their Vincam shares.
EMPLOYMENT AGREEMENTS
Vincam as a subsidiary of ADP will employ each of Messrs. Saladrigas and
Sanchez for a period of three years after the date we complete the merger. Each
employee's base salary is $265,000 per year, except that Vincam will review the
employee's performance annually to determine if the salary should be increased.
In addition, each employee will be granted fringe benefits including an auto
allowance (or leased automobile) and participation in ADP's then current
benefit plans. In addition, each employee will be entitled to an annual cash
performance bonus which is targeted at $90,000 per year. Vincam is also
required to recommend to ADP's stock option committee that each of Messrs.
Saladrigas and Sanchez be granted an option to purchase 40,000 shares of ADP
common stock which shall vest upon the third anniversary of the date we
complete the merger, subject to accelerated vesting.
Each of Messrs. Saladrigas and Sanchez will receive 20,000 shares of ADP
common stock, with restrictions lapsing in increments on the third, fourth and
fifth anniversaries of the date we complete the merger. In addition, upon the
termination of Messrs. Saladrigas' or Sanchez's employment, such employee may
be entitled to receive severance benefits, including the continuation of his
salary, acceleration of option vesting and lapsing of restrictions on
restricted stock, and the continuation of employee benefits, depending upon the
circumstances of the termination.
If Vincam terminates either of Messrs. Saladrigas or Sanchez, he will be
prohibited from competing with Vincam in its business for a period of three
years. During any such three-year period, the terminated party will not be
permitted to disclose to any person any proprietary information relating to the
business of Vincam that he learned during his association with Vincam.
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BUSINESS OF ADP
ADP, incorporated in Delaware in 1961, is engaged in the computer services
business. With over 425,000 clients, ADP is one of the largest companies in the
world dedicated to providing computerized transaction processing, data
communications and information services. Its services include:
/bullet/ payroll, payroll tax and human resource management;
/bullet/ securities transaction processing and investor communication
services;
/bullet/ industry-specific computing and consulting services for auto and
truck dealers; and
/bullet/ computerized auto repair estimating, auto parts availability
services and fee and utilization audits of bodily injury claims.
ADP's executive offices are located at One ADP Boulevard, Roseland, New Jersey
07068.
BUSINESS OF VINCAM
Vincam provides small and medium-sized businesses with an outsourcing
solution to the complexities and costs related to employment and human
resources. According to Staffing Industry Analysts, Inc., Vincam was one of the
ten largest professional employer organizations in the industry in 1996, based
on 1996 revenues. Vincam's employee leasing services consist of human resources
administration, employment regulatory compliance management, workers'
compensation coverage, health care and other employee benefits.
Vincam establishes a co-employer relationship with its clients and
contractually assumes substantial employer responsibilities with respect to
worksite employees. Vincam believes its services assist business owners in:
/bullet/ managing costs associated with workers' compensation, health
insurance coverage, workplace safety programs and employee-related
litigation;
/bullet/ providing employees with competitive health care and related
benefits that are more characteristic of large employers; and
/bullet/ reducing the time and effort required by business owners and
executives to deal with the increasingly complex legal and regulatory
environment affecting employment.
As of September 30, 1998, Vincam provided professional employer services
to approximately 2,150 client organizations with over 45,000 worksite
employees, primarily in Florida, Georgia, Colorado, Michigan and New England.
Vincam was
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incorporated in Florida in September 1984 as Human Power Resources, Inc., and
changed its name to The Vincam Group, Inc. in 1989. Its executive offices are
located at 10200 Sunset Drive, Miami, Florida 33173.
DESCRIPTION OF ADP ACQUISITION CORP. (FLORIDA)
ADP Acquisition Corp. (Florida) is a wholly-owned subsidiary of ADP
organized under the laws of the State of Florida. It was incorporated in
December 1998 solely for use in the merger, and is engaged in no other
business. Its executive offices are located at One ADP Boulevard, Roseland, New
Jersey 07068.
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COMPARISON OF RIGHTS OF HOLDERS OF
ADP COMMON STOCK AND VINCAM COMMON STOCK
GENERAL
At the time we complete the merger, you will become stockholders of ADP.
As shareholders of Vincam, your rights are currently governed by Florida law
and by Vincam's amended and restated articles of incorporation and Vincam's
amended and restated by-laws. As stockholders of ADP, your rights will be
governed by Delaware law and by ADP's amended and restated certificate of
incorporation and ADP's amended and restated by-laws. The following discussion
summarizes the material differences between your rights and those of ADP
stockholders and differences between the Vincam articles and the ADP
certificate and between the Vincam by-laws and the ADP by-laws. This summary is
qualified in its entirety by reference to Vincam's articles and by-laws, ADP's
certificate and by-laws and the relevant provisions of Florida and Delaware
law.
CHARTER AMENDMENTS
A Delaware corporation's certificate of incorporation generally may only
be amended by a majority in voting power of the outstanding stock entitled to
vote.
An amendment to a Florida corporation's articles of incorporation must be
approved by the corporation's shareholders, except that immaterial amendments
specified under Florida law may be made by the board of directors. Unless
Florida law or a Florida corporation's articles of incorporation require a
greater vote, an amendment to a Florida corporation's articles of incorporation
generally must be approved by a majority of the votes entitled to be cast on
the amendment. There are amendments to the Vincam articles which require the
affirmative vote of the holders of at least 80% of the issued and outstanding
common stock, unless such amendments are unanimously recommended by the board.
BY-LAW AMENDMENTS
Delaware vests the power to amend a company's by-laws in the stockholders
unless a company's certificate of incorporation confers such power upon the
directors. Conferring such power on the directors, however, will not divest the
stockholders of such power. ADP may amend its by-laws by resolution of a
majority of its board of directors at any meeting of the board of directors or
at any meeting of the stockholders, provided that any amendment by the board of
directors may be amended or repealed by the stockholders of ADP.
Florida law provides that a corporation's board of directors may amend the
corporation's by-laws, unless the articles of incorporation reserve such power
to the shareholders. A corporation's shareholders may amend or repeal the
corporation's by-laws even though the by-laws may also be amended by the board
of directors. The Vincam articles provide that the board may amend Vincam's
by-laws. You may amend the Vincam by-laws, including by-laws adopted by the
board, without
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approval of the board, but only if such action is approved by holders of at
least 80% of the outstanding shares of Vincam.
SPECIAL MEETINGS OF STOCKHOLDERS
Special meetings of the stockholders of a Delaware corporation may be
called by the board of directors or by the persons authorized in the
corporation's certificate of incorporation or by-laws. The ADP by-laws provide
that the board of directors, the chief executive officer or the secretary may
call a special meeting of stockholders at any time.
Special meetings of a Florida corporation's shareholders may be called by
its board of directors, by the persons authorized to do so in the corporation's
articles of incorporation or by-laws or by the holders of not less than 10% of
all votes entitled to be cast on any issue proposed to be considered at the
special meeting, unless a greater percentage, not to exceed 50%, is required by
the articles of incorporation. The Vincam articles and by-laws provide that the
board, the chairman of the board or the president may call a special meeting of
shareholders at any time and require that the chairman of the board or the
secretary call a special meeting upon the written request of the holders of not
less than 50% of the outstanding shares of Vincam entitled to vote on each
issue proposed to be considered at such meeting.
QUORUM FOR STOCKHOLDER MEETINGS
Under Delaware law, a majority in voting power of shares entitled to vote
on a matter constitutes a quorum at a meeting of stockholders, unless otherwise
provided in a corporation's certificate of incorporation or by-laws. A quorum,
however, must consist of at least one-third of the voting power of the shares
entitled to vote on a matter. The ADP certificate and by-laws do not alter the
quorum requirements.
Florida law is similar to Delaware law, except that the shareholder quorum
requirement may be altered by a provision in the articles of incorporation of a
corporation, but not its by-laws. The Vincam articles do not alter the quorum
requirements.
STOCKHOLDER VOTING REQUIREMENTS
Under both Delaware and Florida law, directors are generally elected at a
stockholders' meeting if they receive more votes favoring their election than
opposing it, unless a greater number of votes is required by the certificate of
incorporation or by-laws (in the case of a Delaware corporation) or the
articles of incorporation (in the case of a Florida corporation). The
appropriate charter documents of ADP and Vincam do not alter the voting
requirements.
If a quorum exists, matters other than the election of directors unless
otherwise provided by Delaware law or a Delaware corporation's certificate of
incorporation or by-laws, can be approved by the vote of a majority of the
shares represented at a meeting and entitled to vote on the matter.
Accordingly, under the Delaware law,
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abstentions have the same effect as votes against a matter. ADP's certificate
and by-laws do not require a greater vote on any matter than that required by
Delaware law.
Under Florida law, unless otherwise provided by a corporation's articles
of incorporation, if a quorum exists, action on any matter can be approved by
the shareholders if the votes cast favoring the action exceed the votes cast
opposing the action. Accordingly, under Florida law, abstentions generally have
no impact on the outcome of a vote. Vincam's articles do not require a greater
vote on any matter than that required by Florida law.
VOTE REQUIRED FOR MERGERS
Florida law provides that the sale, lease, exchange or disposal of all, or
substantially all, of the assets of a Florida corporation not in the ordinary
course of business, as well as any merger, consolidation or share exchange,
generally must be recommended by the board of directors and approved by a
majority of each class of shares entitled to vote on the action.
Under Florida law, the vote of the shareholders of a corporation surviving
a merger is not required if: (a) the articles of incorporation of the surviving
corporation will not substantially differ from its articles of incorporation
before the merger; and (b) each shareholder of the surviving corporation before
the effective date will hold the same number of shares, with identical
designations, preferences, limitations and relative rights immediately after
the merger.
Delaware law has a similar provision requiring stockholder approval in the
case of the disposition of assets or a merger or a share exchange. However,
with respect to mergers which do not require the vote of the corporation's
stockholders, Delaware law, unlike Florida law, also requires that either:
/bullet/ the surviving corporation does not issue any shares or securities
or obligations convertible into shares under the plan of merger; or
/bullet/ the shares of the surviving corporation to be issued under the
plan of merger, plus the shares initially issuable upon conversion of any
other shares, securities or obligations to be issued under such plan, do
not exceed 20% of the shares of the surviving corporation outstanding
immediately prior to the merger.
PROXIES
Under Delaware law, a proxy executed by a stockholder will remain valid
for a period of three years unless the proxy provides for a longer period.
Under Florida law, a proxy is effective only for a period of 11 months unless
otherwise provided in the proxy.
ACTION BY WRITTEN CONSENT OF STOCKHOLDERS
Unless otherwise provided for in a corporation's charter, Delaware and
Florida law provide that actions which can be taken at an annual or special
meeting of
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stockholders can be taken by the written consent of the holders of shares
having not less than the minimum number of votes that would be necessary to
take such action at a meeting of stockholders at which all shares entitled to
vote were present. Delaware law requires that notice of action taken by written
consent be given to stockholders who have not given a written consent. Florida
law has a similar notice provision which requires that the notice be sent
within 10 days of obtaining the written consent. The ADP certificate and
by-laws provide for stockholder action by written consent. The Vincam articles
do not allow for shareholder action by written consent, but require that all
actions required or permitted to be taken by the shareholders be taken only at
an annual or special meeting of shareholders.
BOARD RECOMMENDATIONS REGARDING MERGER
Both Delaware and Florida law generally provide that the stockholders of a
corporation must approve a merger. In order to obtain stockholder approval, the
board of directors of a Florida corporation must "recommend" the plan of merger
and, in Delaware, the board of directors must make a declaration of the
merger's "advisability." Delaware law, however, permits the board of directors
to change its recommendation without withdrawing the merger agreement from
stockholder consideration. Further, Delaware law provides that the terms of the
merger agreement may require that the merger agreement be submitted to the
stockholders whether or not the board of directors subsequently determines that
the agreement is no longer advisable. Under Florida law, the board of directors
may condition its submission of the proposed merger on any basis.
MERGER WITH SUBSIDIARY
Under Delaware law, a parent corporation may merge with its subsidiary,
without stockholder approval, where the parent corporation owns at least 90% of
the outstanding shares of each class of capital stock of its subsidiary.
Florida law permits such a merger with a subsidiary without shareholder
approval if 80% of each class of capital stock of the subsidiary is owned by
the parent corporation.
CONSIDERATION FOR STOCK
Under Delaware law, shares cannot be issued for less than par value. The
par value must be paid in a combination of cash, property or past services. The
balance may be paid by a secured promissory note or other binding obligation.
Under Florida law, a corporation may only issue its capital stock in return for
tangible or intangible property or benefit to the corporation. Shares may be
issued for less than par value.
BOARD VACANCIES
Delaware law provides that, unless otherwise provided in the certificate
of incorporation or by-laws of a company, a vacancy or newly created
directorship on the board of directors may be filled by a majority of the
remaining directors, even though less than a quorum. The ADP certificate and
by-laws do not alter this provision. Under Florida law, a vacancy on the board
of directors may be filled by an
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affirmative vote of a majority of the remaining directors or by the
shareholders, unless the articles of incorporation provide otherwise. The
Vincam articles do not provide otherwise.
REMOVAL OF DIRECTORS
Delaware law provides that, except with respect to corporations with
classified boards or cumulative voting, a director may be removed, with or
without cause, by the holders of the majority in voting power of the shares
entitled to vote at an election of directors. In the event the corporation's
board of directors is classified, stockholders may effect such removal only for
cause, unless the certificate of incorporation otherwise provides. ADP's board
of directors is not classified and there is no cumulative voting.
Florida law provides that, except with respect to corporations with
directors elected by a voting group of shareholders or by cumulative voting,
shareholders may remove one or more directors with or without cause unless the
articles of incorporation provide that directors may be removed only for cause.
None of Vincam's directors are elected by a voting group and there is no
cumulative voting.
COMMITTEES OF THE BOARD OF DIRECTORS
Florida and Delaware law both provide that the board of directors of a
company may delegate many of its duties to one or more committees elected by a
majority of the board. A Delaware corporation can delegate to a committee of
the board of directors, among other things, the responsibility of nominating
candidates for election to the office of director, to fill vacancies on the
board of directors, and to reduce earned or capital surplus and authorize the
acquisition of the corporation's own stock. Moreover, if either the
corporation's certificate of incorporation or by-laws or the resolution of the
board of directors creating the committee so permits, a committee of the board
of directors may declare dividends and authorize the issuance of stock. The ADP
by-laws provide for:
/bullet/ an executive committee which may exercise all the powers and
authority of the board of directors in the management of the property,
affairs and business of ADP, including the power to declare dividends and
to authorize the issuance of stock;
/bullet/ an audit committee which reviews senior management's
recommendations with respect to ADP's independent auditors, reviews the
scope of ADP's audits, accounting policies and annual financial
statements, reviews ADP's administration controls, procedures and
practices, reviews the fees of and services performed by ADP's auditors
and, with some exceptions, performs any other duties established by the
board of directors; and
/bullet/ a compensation committee which reviews officer and director
compensation, establishes criteria for granting options to officers and
employees, develops managerial succession of ADP, serves as nominating
committee for the board
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of directors; reviews staffing matters and, with some exceptions,
performs any other duties established by the board of directors.
Florida law places more limitations on the types of activities that can be
delegated to committees of the board. Under Florida law, a committee of the
board of directors may not approve or recommend to shareholders actions or
proposals required to be approved by the shareholders, fill a vacancy on the
board, adopt, amend or repeal the by-laws, authorize the issuance of stock, or
authorize the reacquisition of the corporation's own stock. The Vincam by-laws
provide for a nominating committee and allow for the establishment of an
executive committee.
AFFILIATED TRANSACTIONS
Delaware law generally prohibits an interested stockholder, which is a
stockholder owning 15% or more of a Delaware corporation's outstanding voting
stock, from engaging in business combinations involving the corporation during
the three years after the date the person became an interested stockholder
unless, among other things:
/bullet/ prior to such date, the board of directors approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder;
/bullet/ upon the completion of the transaction which resulted in the
stockholder becoming an interested stockholder, the stockholder owned at
least 85% of the voting stock outstanding at the time the transaction
commenced; or
/bullet/ at or after such time, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by at least two-thirds of the
outstanding voting stock which is not owned by the interested
stockholder. Such prohibition, however, does not apply to a corporation
if, among other things:
/bullet/ the corporation's original certificate of incorporation
provides that the corporation shall not be governed by the interested
stockholder statute;
/bullet/ a majority of shares entitled to vote to approve an amendment
to the corporation's certificate of incorporation or by-laws
expressly electing not to be governed by the statute. Such amendment
may not be effective until one year after it was adopted and may not
apply to any business combination between the corporation and any
person who became an interested stockholder on or before adoption; or
/bullet/ a stockholder becomes an interested stockholder inadvertently
and as soon as practicable divests itself of ownership of sufficient
shares so that the stockholder ceases to be an interested
stockholder.
These business combinations include mergers, consolidations, sales of
assets and transactions benefitting the interested stockholder. ADP has not
opted out of the affiliated transaction statute in the ADP certificate.
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Florida law contains an affiliated transactions statute which provides
that transactions involving a corporation and an affiliated shareholder, which
is a shareholder owning 10% or more of a corporation's outstanding voting
shares, must generally be approved by the affirmative vote of the holders of
two-thirds of the voting shares other than those owned by the affiliated
shareholder. The transactions covered by the statute include:
/bullet/ mergers and consolidations to which the corporation and the
affiliated shareholder are parties;
/bullet/ sales or other dispositions of substantial amounts of the
corporation's assets to the affiliated shareholder;
/bullet/ issuances by the corporation of substantial amounts of its
securities to the affiliated shareholder;
/bullet/ the adoption of any plan for the liquidation or dissolution of
the corporation proposed by or pursuant to an arrangement with the
affiliated shareholder;
/bullet/ any reclassification of the corporation's securities which has
the effect of substantially increasing the percentage of the outstanding
voting shares of the corporation beneficially owned by the affiliated
shareholder; and
/bullet/ the receipt by the affiliated shareholder of loans or other
financial assistance from the corporation.
These special voting requirements do not apply in any of the following
circumstances:
/bullet/ if the transaction was approved by a majority of the
corporation's disinterested directors;
/bullet/ if the corporation did not have more than 300 shareholders of
record at any time during the preceding three years;
/bullet/ if the affiliated shareholder has been the beneficial owner of at
least 80% of the corporation's outstanding voting shares for the past
five years;
/bullet/ if the affiliated shareholder is the beneficial owner of at least
90% of the corporation's outstanding voting shares, exclusive of those
acquired in a transaction not approved by a majority of disinterested
directors; or
/bullet/ if the consideration received by each shareholder in connection
with the transaction satisfies the "fair price" provisions of the
statute.
This statute applies to any corporation governed by Florida law unless the
articles of incorporation or by-laws contain a provision expressly electing not
to be governed by this statute. Such an amendment to the articles of
incorporation or by-laws must be approved by the affirmative vote of a majority
of disinterested
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shareholders and is not effective until 18 months after approval. Vincam has
not opted out of the affiliated transaction statute in its articles or by-laws.
CONTROL SHARE ACQUISITIONS
Florida law also contains a control share acquisition statute which
provides that a person who acquires shares in an issuing public corporation in
excess of specified thresholds will generally not have any voting rights with
respect to such shares unless the voting rights are approved by a majority of
the shares entitled to vote, excluding interested shares. In the event that
such shares are accorded full voting rights by the shareholders of the
corporation and the acquiring shareholder acquires a majority of the voting
power of the corporation, all shareholders who did not vote in favor of
according voting rights to such acquired shares are entitled to dissenters'
rights. This statute also permits a corporation to adopt a provision in its
articles of incorporation or by-laws providing for the redemption by the
corporation of such acquired shares.
The control share acquisition statute does not apply to acquisitions of
shares of a corporation if, prior to the pertinent acquisition of shares, the
corporation's articles of incorporation or by-laws provide that the corporation
shall not be governed by the statute. Vincam has not opted out of the control
share acquisition statute in its articles or by-laws.
Delaware does not have any provision comparable to Florida's control share
acquisition statute.
OTHER CONSTITUENCIES
Florida law provides that directors of a Florida corporation, in
discharging their duties to the corporation and in determining what they
believe to be in the best interests of the corporation, may, in addition to
considering the effects of any corporate action on the shareholders and the
corporation, consider the effects of the corporate action on employees,
suppliers and customers of the corporation or its subsidiaries and the
communities in which the corporation and its subsidiaries operate. Delaware
does not have a comparable statutory provision.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under both Florida and Delaware law, a corporation may generally indemnify
its officers, directors, employees and agents against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement of any
proceedings (other than derivative actions), if they acted in good faith and in
a manner they reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe their conduct was unlawful. A similar standard
is applicable in derivative actions, except that under Delaware law
indemnification may be made only for expenses (including attorneys' fees),
provided that in the event the person seeking indemnification has been
adjudicated liable, such indemnification shall only be for amounts deemed
proper, fair and reasonable by the court.
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In addition, Delaware and Florida law provide that to the extent that
present or former directors or officers under Delaware law and present or
former directors, officers, employees or agents under Florida law, have been
successful in the defense of any proceeding, they must be indemnified by the
corporation against expenses actually and reasonably incurred. Florida law
further provides that, unless a corporation's articles of incorporation provide
otherwise, if a corporation does not indemnify such persons, a court may order,
indemnification even if the board of directors or shareholders of the
corporation have determined that the persons are not entitled to
indemnification. The ADP certificate and the ADP by-laws provide that ADP will
indemnify its directors and officers to the fullest extent permitted by law.
The Vincam articles provide that Vincam will indemnify directors and those
officers specifically granted indemnification rights to the fullest extent
permitted by law.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Delaware law provides that a corporation's certificate of incorporation
may include a provision limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. The ADP charter includes such a provision. However, no such
provision may limit the liability of a director for:
/bullet/ any breach of the director's duty of loyalty to the corporation
or its stockholders;
/bullet/ acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law;
/bullet/ violation of provisions of Delaware law relating to unlawful
dividends and other distributions;
/bullet/ any transaction from which the director derived an improper
personal benefit; or
/bullet/ any act or omission prior to the adoption of such a provision in
the certificate of incorporation.
Florida law provides that a director is not personally liable for monetary
damages to the corporation or any other person for any act or omission as a
director unless the director breached or failed to perform his statutory duties
as a director and such breach or failure:
/bullet/ constitutes a violation of criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful;
/bullet/ constitutes a transaction from which the director derived an
improper personal benefit;
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/bullet/ results in an unlawful distribution;
/bullet/ in a derivative action or an action by a shareholder, constitutes
conscious disregard for the best interests of the corporation or willful
misconduct; or
/bullet/ in a proceeding other than a derivative action or an action by a
shareholder, constitutes recklessness or an act or omission which was
committed in bad faith or with malicious purpose or in a manner
exhibiting wanton and wilful disregard of human rights, safety or
property.
DERIVATIVE ACTIONS
Delaware law provides that:
/bullet/ a person may not bring a derivative action unless the person was
a stockholder of the corporation at the time of the challenged
transaction or unless the stock thereafter devolved on such person by
operation of law;
/bullet/ a complaint in a derivative proceeding must set out the efforts
made by a person, if any, to obtain the desired action from the directors
or comparable authority and the reason for the failure to obtain such
action or for not making the effort; and
/bullet/ a derivative proceeding may be settled or discontinued only with
court approval.
In addition, under Delaware law, a court may dismiss a derivative
proceeding if:
/bullet/ the court finds that a committee of independent directors has
determined in good faith after conducting a reasonable investigation that
the maintenance of the action is not in the best interests of the
corporation; and
/bullet/ the court determines in its own business judgment that the action
should be dismissed.
Florida law provides for similar requirements, except that:
/bullet/ a complaint in a derivative proceeding must be verified and must
allege that a demand was made to obtain action by the board of directors
and that the demand was refused or ignored;
/bullet/ a court may dismiss a derivative proceeding if the court finds
that independent directors (or a committee of independent persons
appointed by such directors) have determined in good faith after
conducting a reasonable investigation that the maintenance of the action
is not in the best interests of the corporation; and
/bullet/ if an action was brought without reasonable cause, the court may
require the plaintiff to pay the corporation's reasonable expenses.
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APPRAISAL AND DISSENTERS' RIGHTS
A stockholder of a Delaware corporation generally is entitled to
dissenters' rights in the event that the corporation is a party to a merger or
consolidation to which the stockholder did not consent. A Delaware
corporation's certificate of incorporation may also provide that dissenters'
rights are available with respect to any amendment to the certificate of
incorporation or any sale of all or substantially all of the corporation's
assets. The ADP certificate does not contain such a provision.
Dissenters' rights are not available to a stockholder of a Delaware
corporation if his shares, at the relevant record date, were:
/bullet/ listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc.; or
/bullet/ held of record by more than 2,000 stockholders.
However, under Delaware law, a stockholder does have dissenters' rights
with respect to such shares if the stockholder is required by the terms of the
agreement of merger or consolidation to accept anything for his shares other
than:
/bullet/ shares of stock of the corporation surviving or resulting from
the merger or consolidation;
/bullet/ shares of stock of any other corporation which is listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the NASD or held of record
by more than 2,000 stockholders;
/bullet/ cash instead of fractional shares; or
/bullet/ any combination of the foregoing.
ADP common stock is listed on the New York Stock Exchange.
A shareholder of a Florida corporation generally has the right to dissent
from, and obtain payment of the fair value of his shares in the event of:
/bullet/ a merger or consolidation to which the corporation is a party;
/bullet/ a sale or exchange of all or substantially all of the
corporation's property other than in the usual and ordinary course of
business;
/bullet/ the approval of a control share acquisition;
/bullet/ a statutory share exchange to which the corporation is a party as
the corporation whose shares will be acquired;
/bullet/ an amendment to the articles of incorporation if the shareholder
is entitled to vote on the amendment and the amendment would adversely
affect the shareholder; and
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/bullet/ any corporate action taken to the extent that the articles of
incorporation provide for dissenters' rights with respect to such action.
The Vincam articles do not provide dissenters' rights with respect to any
other such action. Florida law provides that, unless a corporation's articles
of incorporation otherwise provide, a shareholder does not have dissenters'
rights with respect to a plan of merger, share exchange or proposed sale or
exchange of property if the shares held by the shareholder are either:
/bullet/ registered on a national securities exchange;
/bullet/ designated as a national market system security on an interdealer
quotation system by the NASD; or
/bullet/ held of record by 2,000 or more shareholders.
The Vincam articles do not contain such a provision and Vincam common stock is
traded on the Nasdaq National Market.
DISTRIBUTIONS AND REDEMPTIONS
A Delaware corporation may pay dividends out of surplus or, if there is no
surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. A Delaware corporation is generally
prohibited from redeeming any of its common stock if the redemption would
result in an impairment of the corporation's capital.
A Florida corporation may make distributions to shareholders as long as,
after giving effect to such distribution:
/bullet/ the corporation would be able to pay its debts as they become due
in the usual course of business; and
/bullet/ the corporation's total assets would not be less than the sum of
its (a) total liabilities plus (b) unless the articles of incorporation
permit otherwise, which the Vincam articles do not, the amount that would
be needed if the corporation were to be dissolved at the time of the
distribution to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving
the distribution.
Under Florida law, a corporation's redemption of its own common stock is
deemed to be a distribution. Vincam has no shares outstanding with preferential
rights.
Both Florida and Delaware law allow a corporation to redeem shares of its
common stock designated as redeemable by the board of directors at the time
such common stock was authorized. Delaware law requires that immediately
following any such redemption, the corporation shall have outstanding one or
more shares with full voting powers. Under Florida law, at all times that
shares of a corporation's common
55
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stock are outstanding, one or more shares together must have full voting rights
and one or more shares together must be entitled to receive the net assets of
the corporation upon dissolution.
INSPECTION OF BOOKS AND RECORDS
Delaware law permits any stockholder the right, during usual business
hours, to inspect and copy the corporation's stock ledger, stockholder list and
other books and records for any proper purpose upon written demand under oath
stating his or her purpose thereof.
Under Florida law, a shareholder is entitled to inspect and copy the
articles of incorporation, by-laws, specified board and shareholder resolutions
and written communications to shareholders, a list of the names and business
addressees of the corporation's directors and officers and the corporation's
most recent annual report, during regular business hours if the shareholder
gives at least five business days' prior written demand to the corporation.
In addition, a shareholder of a Florida corporation is generally entitled
to inspect and copy other books and records of the corporation during regular
business hours if the shareholder gives at least five business days' prior
written demand to the corporation and:
/bullet/ the shareholder's demand is made in good faith and for a proper
purpose;
/bullet/ the demand describes its purpose and the records to be inspected
or copied; and
/bullet/ the requested records are directly connected with such purpose.
Florida law also provides that a corporation may deny a demand for
inspection if such demand was made for an improper purpose or if the demanding
shareholder has, within two years preceding such demand, sold or offered for
sale any list of shareholders of the corporation or any other corporation, has
aided or abetted any person in procuring a list of shareholders for such
purpose or has improperly used any information secured through any prior
examination of the records of the corporation or any other corporation.
LEGAL MATTERS
James B. Benson, Esq., Vice President, Secretary and General Counsel of
ADP, will issue an opinion about the legality of the ADP common stock to be
issued in the merger. As of February 9, 1999, Mr. Benson beneficially owned
37,254 shares of ADP common stock. Steel Hector & Davis LLP will issue an
opinion about the material federal income tax consequences of the merger for
Vincam.
EXPERTS
The consolidated financial statements and the related financial statement
schedules of ADP incorporated in this document by reference from ADP's most
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recent Form 10-K have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are incorporated in this document
by reference, and have been so incorporated in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements incorporated in this proxy
statement/prospectus by reference to (a) Vincam's Form 10-K for the year ended
December 31, 1997, (b) its Form 10-K/A for the year ended December 31, 1997 and
(c) its Amendment No. 1 to the Current Report on Form 8-K, dated December 1,
1997, have been incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent certified public accountants, given on
their authority as experts in auditing and accounting.
The financial statements of Staffing Network, Inc. at December 31, 1996
and 1995 and for the years then ended, incorporated in this proxy
statement/prospectus by reference to Vincam's Amendment No. 1 to the Current
Report on Form 8-K, dated December 1, 1997, have been audited by Ernst & Young
LLP, independent auditors, as stated in their report and incorporated in this
document by reference in reliance upon their report given upon their authority
as experts in auditing and accounting.
The financial statements of Staffing Network, Inc. for the year ended
December 31, 1994 incorporated in this proxy statement/prospectus by reference
to Vincam's Amendment No. 1 to the Current Report on Form 8-K, dated December
1, 1997, have been incorporated in reliance, in part, on the report of Howe,
Riley & Howe Professional Corporation, given on their authority as experts in
auditing and accounting.
The report of Plante & Moran, LLP relating to the consolidated financial
statements of Amstaff, Inc. for the two-year period ended December 31, 1996
incorporated in this proxy statement/prospectus by reference to Vincam's most
recent Form 10-K have been incorporated in reliance on the report of Plante &
Moran, LLP, independent certified public accountants, given upon their
authority as experts in auditing and accounting.
The report of Ehrhardt Keefe Steiner & Hottman PC relating to the
consolidated financial statements of Staff Administrators, Inc. for the
two-year period ended December 31, 1996 incorporated in this proxy
statement/prospectus by reference to Vincam's most recent Form 10-K have been
incorporated in reliance on the report of Ehrhardt Keefe Steiner & Hottman PC,
given upon their authority as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We each file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document that we file at the Securities and Exchange Commission's
Public
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Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. Please call
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. Reports, proxy statements and other information regarding issuers that
file electronically with the Securities and Exchange Commission, including our
filings, are also available to the public from the Securities and Exchange
Commission's Web site at "http://www.sec.gov."
ADP has filed with the Securities and Exchange Commission a registration
statement on Form S-4. This proxy statement/prospectus is a part of the
registration statement and constitutes a prospectus of ADP for the ADP common
stock to be issued to you in the merger. As allowed by the Securities and
Exchange Commission rules, this proxy statement/ prospectus does not contain
all the information you can find in the registration statement or the exhibits
to the registration statement.
THE SECURITIES AND EXCHANGE COMMISSION ALLOWS US TO "INCORPORATE BY
REFERENCE" THE INFORMATION WE FILE WITH THEM, WHICH MEANS THAT WE CAN DISCLOSE
IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT US TO YOU THAT IS NOT
INCLUDED IN OR DELIVERED WITH THIS PROXY STATEMENT/PROSPECTUS BY REFERRING YOU
TO THOSE DOCUMENTS.
The information incorporated by reference is considered to be part of this
proxy statement/prospectus. Information that we file later with the Securities
and Exchange Commission will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
filing we will make with the Securities and Exchange Commission under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 following the
date of this proxy statement/prospectus and prior to the date of the special
meeting:
ADP
1. Annual Report on Form 10-K of ADP for the fiscal year ended June 30,
1998.
2. Quarterly Report on Form 10-Q filed by ADP for the fiscal quarter ended
September 30, 1998; and
3. The description of ADP common stock contained in ADP's registration
statement on Form 8-A.
Vincam
1. Annual Report on Form 10-K and 10-K/A of Vincam for the fiscal year
ended December 31, 1997;
2. Quarterly Reports on Form 10-Q filed by Vincam for the period ended
September 30, 1998 (and the related Quarterly Report on Form 10-Q/A),
June 30, 1998 and March 31, 1998;
3. Current Report on Form 8-K/A, dated December 1, 1997 and Current Report
on Form 8-K, dated December 3, 1998; and
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4. The description of Vincam common stock in Vincam's registration
statement on Form 8-A.
YOU MAY REQUEST A COPY OF THESE FILINGS, AT NO COST, BY WRITING OR
TELEPHONING US AT THE FOLLOWING ADDRESS:
IN THE CASE OF ADP, TO:
JAMES B. BENSON, ESQ.,
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
AUTOMATIC DATA PROCESSING, INC.
ONE ADP BOULEVARD
ROSELAND, NEW JERSEY 07068
TELEPHONE REQUESTS MAY BE DIRECTED TO (973) 994-5000.
IN THE CASE OF VINCAM, TO:
CARLOS A. RODRIGUEZ, CHIEF FINANCIAL OFFICER
THE VINCAM GROUP, INC.
10200 SUNSET DRIVE
MIAMI, FLORIDA 33173
TELEPHONE REQUESTS MAY BE DIRECTED TO (800) 962-4404
IN ORDER TO ENSURE TIMELY DELIVERY OF THESE DOCUMENTS, YOU SHOULD MAKE
SUCH REQUEST BY FEBRUARY 25, 1999.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ABOUT THE MERGER OR ABOUT US THAT DIFFERS FROM OR ADDS TO THE
INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS OR IN OUR DOCUMENTS OR THE
DOCUMENTS THAT WE PUBLICLY FILE WITH THE SECURITIES AND EXCHANGE COMMISSION.
THEREFORE, IF ANYONE DOES GIVE YOU DIFFERENT OR ADDITIONAL INFORMATION, YOU
SHOULD NOT RELY ON IT.
IF YOU ARE IN A JURISDICTION WHERE IT IS UNLAWFUL TO OFFER TO EXCHANGE OR
SELL, OR TO ASK FOR OFFERS TO EXCHANGE OR BUY, THE SECURITIES OFFERED BY THIS
PROXY STATEMENT/PROSPECTUS OR TO ASK FOR PROXIES, OR IF YOU ARE A PERSON TO WHOM
IT IS UNLAWFUL TO DIRECT SUCH ACTIVITIES, THEN THE OFFER PRESENTED BY THIS PROXY
STATEMENT/PROSPECTUS DOES NOT EXTEND TO YOU.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS SPEAKS ONLY
AS OF ITS DATE UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE
APPLIES.
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APPENDIX A
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
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C> <C>
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 ..................................................... 4
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 ...................................... 6
(f) Termination of Exchange Fund .............................. 7
(g) No Liability .............................................. 7
(h) Withholding Rights ........................................ 7
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 .................. 9
(c) Capitalization ............................................ 10
(d) SEC Documents; Financial Statements ....................... 11
(e) Authority ................................................. 11
(f) Compliance with Applicable Laws ........................... 11
(g) Government Approvals; Required Consents ................... 12
(h) Non-Contravention ......................................... 12
(i) Litigation ................................................ 13
(j) Taxes and Related Tax Matters ............................. 13
(k) Certain Agreements ........................................ 14
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C> <C>
(l) Employee Benefits .......................................... 15
(m) Contracts .................................................. 18
(n) Environmental Matters ...................................... 19
(o) Absence of Certain Changes or Events ....................... 19
(p) Information Supplied ....................................... 20
(q) Real Estate ................................................ 20
(r) Intellectual Property ...................................... 21
(s) Accounts Receivable ........................................ 22
(t) Clients .................................................... 22
(u) Investment Company Act ..................................... 22
(v) Brokers or Finders ......................................... 23
(w) Vote Required .............................................. 23
(x) Opinion of Financial Advisor ............................... 23
(y) Accounting Matters ......................................... 23
(z) Ownership of ADP Common Stock .............................. 23
(aa) Appraisal Rights and Dissenters' Rights .................... 23
(bb) Year 2000 Compliance ....................................... 23
(cc) Insurance .................................................. 24
(dd) Full Disclosure ............................................ 26
3.2 Representations and Warranties of ADP and Sub .................... 26
(a) Organization, Standing and Corporate Power;
Subsidiaries ............................................... 26
(b) Certificate of Incorporation and By-laws ................... 26
(c) Capitalization ............................................. 26
(d) SEC Documents; Financial Statements ........................ 26
(e) Authority .................................................. 27
(f) Government Approvals; Required Consents .................... 27
(g) Non-Contravention .......................................... 28
(h) Information Supplied ....................................... 28
(i) Brokers or Finders ......................................... 28
(j) Material Adverse Change .................................... 29
(k) Accounting Matters ......................................... 29
(l) Tax Matters ................................................ 29
ARTICLE IV COVENANTS ........................................................ 29
4.1 Mutual Covenants of ADP and VCAM ................................. 29
(a) Confidentiality ............................................ 29
(b) Publicity .................................................. 30
(c) Preparation of the Proxy Statement and the
Registration Statement ..................................... 30
(d) Satisfaction of Conditions; Additional Agreements .......... 30
(e) Other Actions .............................................. 31
(f) Advice of Changes; SEC Documents ........................... 31
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C> <C>
(g) Legal Conditions to Merger .......................... 31
4.2 Covenants of VCAM ......................................... 31
(a) Access to Information ............................... 31
(b) Ordinary Course ..................................... 32
(c) Meetings; Fiduciary Duties .......................... 34
(d) No Solicitation ..................................... 34
(e) Superior Acquisition Proposal ....................... 35
(f) Affiliates .......................................... 36
(g) Compliance with Laws ................................ 36
(h) Advice of Changes ................................... 36
(i) Pooling Letters ..................................... 36
4.3 Listing ................................................... 36
ARTICLE V ADDITIONAL AGREEMENTS ..................................... 36
5.1 Indemnification; Directors' and Officers' Insurance ....... 36
5.2 Additional Agreements; Reasonable Efforts ................. 38
5.3 Accounting Treatment ...................................... 38
5.4 Tax Treatment ............................................. 39
5.5 Employee Matters .......................................... 39
ARTICLE VI CONDITIONS PRECEDENT ...................................... 39
6.1 Conditions to the Obligations of ADP and VCAM to Effect
the Merger ................................................ 39
(a) Stockholder Approval ................................ 39
(b) Registration Statement .............................. 39
(c) Blue Sky Laws ....................................... 40
(d) Listing ............................................. 40
(e) No Injunctions or Restraints ........................ 40
(f) HSR Act ............................................. 40
(g) Governmental and Regulatory Consents ................ 40
6.2 Conditions to the Obligations of ADP ...................... 40
(a) Accuracy of Representations and Warranties .......... 40
(b) Performance of Agreements ........................... 41
(c) No Material Adverse Change .......................... 41
(d) Auditors' Letter .................................... 41
(e) Affiliate Letters ................................... 41
(f) VCAM Required Consents .............................. 41
(g) Employment Agreements ............................... 41
6.3 Conditions to the Obligations of VCAM ..................... 41
(a) Accuracy of Representations and Warranties .......... 41
(b) Performance of Agreements ........................... 41
(c) Fairness Opinions ................................... 42
(d) Tax Opinion ......................................... 42
(e) Employment Agreements ............................... 42
</TABLE>
A-iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
ARTICLE VII TERMINATION AND AMENDMENT ................... 42
7.1 Termination ................................. 42
7.2 Effect of Termination ....................... 43
ARTICLE VIII GENERAL PROVISIONS .......................... 44
8.1 Certain Definitions ......................... 44
8.2 Notices ..................................... 49
8.3 Interpretation .............................. 50
8.4 Waivers and Amendments ...................... 50
8.5 Expenses and Other Payments ................. 50
8.6 Assignment .................................. 51
8.7 Entire Agreement; No Third Party Beneficiaries 51
8.8 Representations and Warranties .............. 52
8.9 Governing Law ............................... 52
8.10 Counterparts ................................ 52
</TABLE>
<TABLE>
<S> <C>
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
</TABLE>
A-iv
<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");
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:
A-1
<PAGE>
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").
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.
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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 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
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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
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.
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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 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
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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 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
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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 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.
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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 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
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reasonable commercial efforts 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 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
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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 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
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the circumstances under which they were made, not misleading. The historical
financial statements 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
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
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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").
(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
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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.
(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
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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.
(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
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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 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
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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 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.
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(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.
(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.
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(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.
(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
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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
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
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ordinary course of business) in excess of $500,000 individually or $2,000,000
in the aggregate; or (v) 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.
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(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, 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)
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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 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.
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(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.
(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
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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;
(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
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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.
(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
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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:
(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
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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 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,
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(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").
(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.
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(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 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
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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 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
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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 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,
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access, during normal business hours during the period prior to the Closing
Date, to 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 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
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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 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.
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(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, 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
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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.
(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
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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 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
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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 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
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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 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.
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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 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.
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(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.
(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 received a certificate dated the Closing Date
signed by an executive officer of VCAM certifying to the fulfillment of this
condition.
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(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 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
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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:
(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);
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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
(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.
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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).
"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.
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"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, 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).
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"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.
"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 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.
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"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).
"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).
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"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).
"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.
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"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).
"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
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(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
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
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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 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.
8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the Confidentiality Agreement (including the documents and the instruments
referred to
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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.
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
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EXHIBIT A
FORM OF CARLOS SALADRIGAS EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated [the Closing Date] between The Vincam Group,
Inc., a Florida corporation (the "Company") with its principal office at 10200
Sunset Drive, Miami, Florida 33173, and Carlos Saladrigas (the "Employee"),
residing at 1100 South West 83rd Avenue, Miami, Florida 33156.
WITNESSETH:
WHEREAS, in connection with the consummation of the transactions
contemplated by the Agreement and Plan of Merger, dated December , 1998,
between the Company and Automatic Data Processing, Inc. ("ADP"), (the "Merger
Agreement"), the Company wishes to secure the continued employment of the
Employee and the Employee desires to accept such continued employment in
accordance with the terms of this Employment Agreement;
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated under the Merger Agreement that the parties hereto
shall have entered into this Employment Agreement; and
WHEREAS, the Employee and the Company will terminate any prior employment,
whether written or verbal, between the Company and the Employee (the "Prior
Employment Agreement").
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, the parties hereto agree as follows:
1. PRIOR EMPLOYMENT AGREEMENT. The Employee and the Company agree that
any and all Prior Employment Agreements are hereby terminated effective the
date hereof.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES. (a) The Company
hereby employs the Employee and the Employee hereby agrees to enter into the
employ of the Company, pursuant to the terms and conditions of this Employment
Agreement, effective from the date hereof through the third anniversary of the
date of this Employment Agreement unless this Employment Agreement shall be
earlier terminated as provided in Section 5 hereof (the "Employment Period").
During the Employment Period, the Employee's duties will be to lead ADP's
professional employer organization ("PEO") activities.
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and will use his full business time, energy
and skill to promote the business and interests of the Company.
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3. BASE SALARY AND BENEFITS. (a) The Company shall pay to the Employee as
compensation for the services to be provided by the Employee hereunder a salary
of $265,000 per annum (the "Base Salary"), payable monthly. The Company shall
review the Employee's performance annually to determine if the Employee shall
be granted an annual increase in the Base Salary.
(b) During the Employment Period, commencing as soon as practicable
following the date hereof subject to the transition policies of ADP in
accordance with its benefit plans, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
401(k), medical and health, life, accident and disability insurance, stock
purchase and stock option plans, pursuant to the terms and conditions of such
plans and arrangements and in accordance with applicable law and ADP's then
current policies. The level and extent of the Employee's participation in and
benefits under any plans and arrangements shall be equivalent to that of other
executives of ADP of equivalent position and seniority, taking into account,
solely for eligibility and vesting purposes, the Employee's prior service with
the Company.
(c) During the Employment Period, the Company will provide the Employee
with a leased automobile, or at the Company's option, an automobile allowance,
in accordance with ADP's policies applicable to other executives of ADP of
equivalent position and seniority.
4. BONUS; STOCK OPTIONS; RESTRICTED SHARES. (a) In addition to the Base
Salary described in Section 3(a) hereof, the Employee shall be eligible to
receive an annual cash bonus based upon the Employee's achievement of
performance objectives to be determined by the Employee and the Company each
year (the "Annual Cash Bonus"). The targeted Annual Cash Bonus shall be
$90,000. If the Annual Cash Bonus, if any, becomes payable, it will be paid
within 90 days after the end of the Company's applicable fiscal year (if
December 31, but in the event such fiscal year becomes a year end prior to
December 31 then such Annual Cash Bonus shall be pro-rated for such partial
year) provided that the Employee is an employee of the Company on the last day
of such fiscal year.
(b) As soon as practicable after the date of this Employment Agreement,
the Company shall recommend to ADP's stock option committee that the Employee
be granted an option to purchase 40,000 shares of ADP's common stock(1) (the
"Option Grant") subject to the terms and conditions of such option grant and
vesting schedule. The option exercise price for all such shares shall be the
fair market value thereof at the time the option is granted. The option
agreement for the Option Grant shall provide that 100% of the shares of ADP
common stock subject to the Option Grant shall vest upon the third anniversary
of this Employment Agreement, subject to accelerated vesting for a portion of
such Option Grant under certain circumstances as set forth in Section 5 hereof.
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(1) After giving effect to ADP's December stock split
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(c) (i) As soon as practicable after the date hereof, the Employee shall
be awarded 20,000 shares of ADP's common stock(2) pursuant to the terms of a
Restricted Stock Purchase Agreement to be executed by ADP and the Employee, in
substantially the form attached hereto as Exhibit A (the "RSPA"). Subject to
the acceleration of the cessation of the restrictions on sales applicable to
the shares identified in clause (A) below in certain circumstances as set forth
in Section 5 hereof, the restrictions on sales and other voluntary or
involuntary transfers of such restricted common stock shall cease to apply in
accordance with the following schedule:
(A) on the third anniversary of the date of this Employment Agreement,
with respect to 6,667 of such shares;
(B) on the fourth anniversary of the date of this Employment Agreement,
with respect to 6,667 of such shares; and
(C) on the fifth anniversary of the date of this Employment Agreement,
with respect to 6,666 of such shares.
(ii) In the event of any inconsistency or conflict between the terms of
this Employment Agreement and the RSPA, the terms of this Employment Agreement
shall prevail.
5. TERMINATION OF EMPLOYMENT. (a) The Company may terminate the
Employee's employment hereunder for any reason whatsoever. The Employee's
employment with the Company shall cease and terminate upon the earlier to occur
of the following dates (the "Employment Termination Date"): (i) the date of
death of the Employee or, in the event the Employee shall be unable by reason
of physical or mental disability to continue the proper performance of his
duties hereunder and such disability shall have continued for a period of at
least four months (such circumstances are referred to herein as "Disability"),
the date of Disability, (ii) the date that the Company terminates the
Employee's employment hereunder in accordance with Section 5(d) hereof, (iii)
the date that the Employee terminates his employment hereunder in accordance
with Section 5(e) or 5(f) hereof, and (iv) in the event that the Employee shall
(x) be convicted of a criminal act, or fail or refuse to perform any obligation
hereunder and such failure or refusal shall continue during the 20 day period
following the receipt by the Employee of written notice from the Company of
such failure or refusal, (y) commit any act of negligence in the performance of
his duties hereunder and fail to take appropriate corrective action during the
20 day period following the receipt by the Employee of written notice from the
Company of such negligence, or (z) commit any act of willful misconduct (such
circumstances set forth in this subsection (iv) are referred to herein as
"Cause"), and the Company shall elect to terminate the Employee's employment
hereunder for Cause, in each such case, the date on which the Company shall
give written notice to the Employee of such election.
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(2) After giving effect to ADP's December stock split
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(b) In the event of the termination of the Employee's employment for death
or Disability, the Employee (or his beneficiary or estate in the event of death
of the Employee) shall only be entitled to receive in addition to any other
benefits to which the Employee is entitled pursuant to the terms of the
employee benefit plans of the Company applicable to the Employee, within thirty
days of such termination, (i) all salary accrued to the Employment Termination
Date, (ii) a pro-rata share of the Annual Cash Bonus accrued to the Employment
Termination Date for the fiscal year in which the Employment Termination Date
occurred (based upon the targeted Annual Cash Bonus for such fiscal year), and
(iii) all disability or death benefits payable in accordance with the employee
benefit plans of the Company in which the Employee is entitled to participate.
(c) If the Company terminates the Employee's employment hereunder for
Cause, the Employee shall only be entitled to receive, within thirty days of
such termination, in addition to any other benefits to which the Employee is
entitled pursuant to the terms of any employee benefit plans of the Company
applicable to the Employee, all salary accrued to the Employment Termination
Date.
(d) If the Company terminates the Employee's employment hereunder during
the Employment Period for any reason other than as provided in Section 5(a)(iv)
hereof, the Employee shall only be entitled to receive, in addition to any
other benefits to which the Employee is entitled pursuant to the terms of any
employee benefit plans of the Company applicable to the Employee, (i) his
salary payable when such salary would otherwise have been paid to the Employee
until the earlier of (x) the third anniversary hereof and (y) the date which is
six months following the Employment Termination Date, (ii) the targeted Annual
Cash Bonus which would otherwise be payable to the Employee for the fiscal year
in which the Employment Termination Date occurred, payable when such bonus
would otherwise have been paid to the Employee, (iii) an accelerated vesting of
a pro-rata portion of the Option Grant representing (I) the term of the
Employee's employment from the date hereof through the Employment Termination
Date divided by (II) three years, and (iv) all of the restrictions on sales or
transfers of a pro-rata portion of the ADP common stock referred to in Section
4(c)(i)(A) hereof shall cease representing (I) the term of the Employee's
employment from the date hereof through the Employment Termination Date divided
by (II) three years. Any payments or grants made to the Employee pursuant to
this Section 5(d) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company and its affiliates.
(e) If the Employee voluntarily terminates his employment hereunder during
the Employment Period for any reason other than as provided in Section 5(f)
hereof, the Employee shall only be entitled to receive, within thirty days of
such termination, in addition to any other benefits to which the Employee is
entitled pursuant to the terms of any employee benefit plans of the Company
applicable to the Employee, all salary accrued and unused accrued vacation to
the Employment Termination Date.
(f) If the Employee voluntarily terminates his employment hereunder during
the Employment Period because, without the Employee's prior consent, (i) the
Employee is required to relocate to an office that is more than 50 miles from
the Company's
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current office located at 10200 Sunset Drive, Miami, Florida 33173 or (ii)
there is a change of control of ADP's PEO business, then such voluntary
termination shall be treated as a constructive termination by the Company under
this Section 5(f) and the Employee shall be entitled to receive, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of the Company applicable to the Employee, (w) his
salary payable when such salary would otherwise have been paid to the Employee
until the earlier of (I) the third anniversary hereof and (II) the date which
is six months following the Employment Termination Date, (x) the targeted
Annual Cash Bonus which would otherwise be payable to the Employee for the
fiscal year in which the Employment Termination Date occurred, payable when
such bonus would otherwise have been paid to the Employee, and (y) an
accelerated vesting of a pro-rata portion of the Option Grant representing (I)
the term of the Employee's employment from the date hereof through the
Employment Termination Date divided by (II) three years, and (z) all of the
restrictions on sales or transfers of a pro-rata portion of the ADP common
stock referred to in Section 4(c)(i)(A) hereof shall cease representing (I) the
term of the Employee's employment from the date hereof through the Employment
Termination Date divided by (II) three years.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE. (a) NON-COMPETITION. The
Employee agrees that during the period commencing on the date hereof and ending
three years after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or any of its
affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
that are competitive with the businesses of the Company, or promote, market, or
acquire an interest in, or associate in a business relationship with, any other
person, corporation, firm, partnership or other entity whatsoever whose
business or services are competitive with the businesses or services of the
Company, or (ii) solicit or refer, directly or indirectly, any client or
prospective clients of any services and/or products that are similar to those
offered by the Company to another provider of such services, or (iii) promote,
market or participate in the sale, lease or licensing of any equipment or
software by which services and/or products similar to those provided by the
Company can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever.
(b) NON-DISCLOSURE. The Employee agrees that he will not, during the Non-
Competition Period, disclose, furnish or make accessible to any person,
corporation, firm, partnership or other entity whatsoever (except ADP or any of
its affiliates), or to any officer, director, stockholder, partner, associate,
employee, agent or representative of any such entity, any proprietary
information which is not in the public domain (including, without limitation,
any customer lists, business methods, procedures, pricing and marketing
structure and strategy, source or object codes, experimental or research work,
names and addresses of current, former and prospective clients or employees, or
any other trade secrets, technical data, or know-how of any kind) relating to
the businesses of the Company or any of its affiliates that was learned by the
Employee at any time during his association with the
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Company or after the date hereof. Upon termination of the Employee's employment
with the Company for any reason whatsoever, the Employee shall immediately
return to the Company all documents and notes (including all copies thereof) of
any and all information and materials belonging or relating to the businesses
of the Company or any of its affiliates (whether or not such materials were
prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the Non-
Competition Period, directly or indirectly, hire or employ, or encourage to
leave the employ of ADP or any of its affiliates, any person who is now or
hereafter becomes an employee of ADP or any of its affiliates until such person
has ceased to be an employee of any of such companies for a period of at least
one year.
(d) INJUNCTIVE RELIEF. The Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose and not to hire contained
herein will cause irreparable injury to the Company and any of its affiliates,
and that the Company and its affiliates shall be entitled, in addition to any
other rights and remedies they may have, at law or in equity, to an injunction
enjoining and restraining the Employee from doing or continuing to do any such
act and any other violations or threatened violations of this Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement, for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and
6 above, which shall survive such termination).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company as to the manner in which the business of the Company shall be run.
9. EMPLOYMENT FORMS. At the Company's request, the Employee shall
complete and execute such other customary employment applications and other
similar forms that the Company generally requires of all of its employees,
provided, however, that, except with respect to the terms and conditions
pursuant to which stock options may be granted to the Employee, in the event of
a conflict between the terms and conditions of this Employment Agreement and
the terms and conditions of any such other employment applications or other
forms, during the Employment Period the terms of this Employment Agreement
shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the Employee's employment by the
Company and there are no representations, agreements or understandings between
the parties except as set forth or specifically referred to herein.
12. NOTICES. All notices shall be sent to the parties by hand delivery or
by certified or registered mail at the addresses set forth above or to any
changed
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address which may be given in writing hereafter. All notices to the Company
shall include copies to the Company c/o Automatic Data Processing, Inc., One
ADP Boulevard, Roseland, NJ 07068, Attention: Russ Fradin and to Automatic Data
Processing, Inc., One ADP Boulevard, Roseland, NJ 07068 to the attention of the
General Counsel. Unless hand delivered, notices shall be deemed given three
business days following the date deposited in any general or branch United
States Post Office or one business day following the date of delivery to a
nationally recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission or arbitrator(s) having jurisdiction over the subject matter
hereof, neither party hereto shall have any cause of action or claim against
the other by reason of such declaration of invalidity, unenforceability or
illegality; and any such declaration concerning any provision hereof shall not
affect, impair or invalidate the remainder of this Employment Agreement, but
shall be confined in its operation to that provision hereof only and the
remainder of this Employment Agreement shall remain in full force and effect.
The parties hereto agree to substitute the invalid, unenforceable or illegal
provision by a valid, enforceable or legal one which corresponds to the spirit
and purpose of the invalid, unenforceable or illegal provision to the greatest
extent possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified or
amended in any manner except by an instrument in writing signed by all parties
hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of such party's
rights or obligations hereunder without first obtaining the written consent of
the other party hereto; PROVIDED, HOWEVER, that no consent shall be required
hereunder in the event that the Company assigns this Employment Agreement to
any other affiliate of the Company.
16. HEADINGS. The headings contained in this Employment Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof
or of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by another party
shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of Florida.
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
THE VINCAM GROUP, INC.
By
--------------------------------------
Name:
Title:
CARLOS SALADRIGAS
--------------------------------------
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RESTRICTED STOCK PURCHASE AGREEMENT DATED THIS DAY OF , 199 ,
BETWEEN AUTOMATIC DATA PROCESSING, INC., ONE ADP BOULEVARD, ROSELAND. NEW
JERSEY 07068 ("ADP"), AND ("PURCHASER").
Purchaser is a key employee of ADP or one of its subsidiaries.
ADP wishes to provide Purchaser with an additional incentive to exert maximum
efforts on behalf of ADP and its business.
ADP and Purchaser agree as follows:
1. ADP is selling to Purchaser shares of ADP common stock, par value
$.10 per share, at a price of $.10 per share. Purchaser agrees to hold
such shares subject to all the terms and conditions of this agreement.
Certificates representing the shares are being delivered to Purchaser and
in exchange for their full purchase price.
2. Purchaser represents that all such ADP shares are being purchased for
his/her own account for investment and not with a view to the resale or
other distribution thereof and agrees not to dispose of any of such
shares in violation of the applicable securities laws.
3. All of such shares shall be held by Purchaser under the following
further restrictions and agreements:
(a) Purchaser will not at any time prior to the release dates specified
in Paragraph 3(e) below sell, assign, pledge, encumber or otherwise
transfer any or all of such shares, voluntarily or involuntarily, to
anyone other than ADP.
(b) If at any time hereafter, but before Purchaser wishes to sell
or otherwise transfer any such shares in excess of the number, if any,
then released from restrictions pursuant to Paragraph 3(e) below, such
shares will be first offered to ADP at a price of $.10 per share, plus
6% per annum interest calculated from the date of this agreement. ADP
shall have the option, but not the obligation, exercisable by notice
given within 60 days after Purchasers notice, to buy all of such
offered shares. If ADP does not exercise such option Purchaser shall
be free to sell such offered shares during a period of 30 days
thereafter.
(c) If Purchasers employment by ADP or any subsidiary thereof, or any
successor thereto, shall terminate for any reason prior to , ADP
shall buy from Purchaser all of the shares sold to Purchaser hereunder
in excess of the number, if any, then released from restrictions
pursuant to Paragraph 3(e) below at the purchase price of $.10 per
share, plus 6% per annum interest calculated from the date of this
agreement.
(d) If at any time hereafter but before , Purchaser should make or
attempt to make any transfer of such shares in excess of the number,
if
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any, then released from restrictions pursuant to Paragraph 3(e)
below, whether or not for value, or if any involuntary transfer of
such shares shall be made or attempted in violation of the provisions
of Paragraph 3(a) above the making of, or the attempt to make, any
such voluntary or involuntary transfer shall be deemed instead to be
an offer for sale of such excess number of shares to ADP by Purchaser
or his assigns or legal representatives, at the purchase price of
$.10 per share, plus 6% per annum interest calculated from the date
of this agreement. An offer for sale to ADP deemed made under this
Paragraph 3(d) shall be deemed made on the date on which ADP receives
notice of the making of, or the attempt to make, such voluntary or
involuntary transfer.
(e) The restrictions on sales and other voluntary or involuntary
transfers contained in this Paragraph 3(e) shall cease to apply:
(i) on with respect to of the shares delivered to
Purchaser hereunder;
(ii) on with respect to of the shares delivered to
Purchaser hereunder;
(iii) on with respect to of the shares delivered to
Purchaser hereunder.
4. Nothing in this agreement shall confer upon Purchaser any right to
continue in the employ of ADP or any of its subsidiaries or shall affect
ADP's right to terminate Purchaser's employment as would exist in the
absence of this agreement.
5. All of the certificates representing ADP shares transferred to
Purchaser pursuant to this agreement shall bear the following legend:
"The stock represented by this certificate is issued, accepted and held
subject to the terms of an agreement dated 199 between the
registered holder and Automatic Data Processing, Inc. A copy of such
agreement has been filed with the Secretary of the Corporation. Neither
this certificate nor the stock represented hereby may be sold,
assigned, transferred or otherwise disposed of or encumbered except as
provided in such agreement; to all of which the holder hereof, by the
acceptance hereof, agrees."
6. This agreement shall apply also to any shares of capital stock of ADP
of any class or series received in respect of shares sold pursuant to
this agreement as a result of any stock split, stock dividend,
reclassification, or recapitalization and the number of shares and
purchase prices herein shall be appropriately adjusted. This agreement
shall not, however, be deemed to prevent the exchange of the shares of
ADP common stock (purchased pursuant to Paragraph 1 above, or received
pursuant to any stock split, stock dividend,
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reclassification or recapitalization) in a tax-free reorganization
exchange to which ADP is a party, provided that the representations and
restrictions of this agreement shall continue to apply to the shares into
which the shares of ADP common stock covered by this agreement are
converted or exchanged.
7. This agreement shall bind and benefit Purchaser and his/her heirs,
legal representatives and assigns, and ADP, its legal representatives,
successors and assigns.
8. All notices and other communications required or permitted to be given
under this agreement or necessary or convenient in connection herewith
shall be in writing and shall be deemed to have been duly given if
delivered or mailed first class, postage prepaid or certified mail, as
follows:
If to ADP:
Automatic Data Processing, Inc.
One ADP Boulevard
Roseland, New Jersey 07068
Attention: General Counsel
If to Purchaser:
or to such other address as any of the parties hereto shall designate
by notice to the other party given as provided in this paragraph 8.
IN WITNESS WHEREOF, ADP and Purchaser have signed this agreement as of the date
first above written.
AUTOMATIC DATA PROCESSING, INC.
BY:
----------------------------------
- --------------------- -------------------------------------
Social Security No. Purchaser:
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EXHIBIT B
FORM OF JOSE SANCHEZ EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated [the Closing Date] between The Vincam Group,
Inc., a Florida corporation (the "Company") with its principal office at 10200
Sunset Drive, Miami, Florida 33173, and Jose Sandhez (the "Employee"), residing
at [ ].
WITNESSETH:
WHEREAS, in connection with the consummation of the transactions
contemplated by the Agreement and Plan of Merger, dated December , 1998,
between the Company and Automatic Data Processing, Inc. ("ADP"), (the "Merger
Agreement"), the Company wishes to secure the continued employment of the
Employee and the Employee desires to accept such continued employment in
accordance with the terms of this Employment Agreement;
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated under the Merger Agreement that the parties hereto
shall have entered into this Employment Agreement; and
WHEREAS, the Employee and the Company will terminate any prior employment,
whether written or verbal, between the Company and the Employee (the "Prior
Employment Agreement").
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, the parties hereto agree as follows:
1. PRIOR EMPLOYMENT AGREEMENT. The Employee and the Company agree that
any and all Prior Employment Agreements are hereby terminated effective the
date hereof.
2. EMPLOYMENT; EMPLOYEE'S TITLE AND RESPONSIBILITIES. (a) The Company
hereby employs the Employee and the Employee hereby agrees to enter into the
employ of the Company, pursuant to the terms and conditions of this Employment
Agreement, effective from the date hereof through the third anniversary of the
date of this Employment Agreement unless this Employment Agreement shall be
earlier terminated as provided in Section 5 hereof (the "Employment Period").
During the Employment Period, the Employee's duties will be to lead ADP's
professional employer organization ("PEO") activities in South Florida.
(b) During the Employment Period, the Employee shall devote his full
business time, energy and skill, on a best efforts and exclusive basis, to the
business and affairs of the Company and will use his full business time, energy
and skill to promote the business and interests of the Company.
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3. BASE SALARY AND BENEFITS. (a) The Company shall pay to the Employee as
compensation for the services to be provided by the Employee hereunder a salary
of $265,000 per annum (the "Base Salary"), payable monthly. The Company shall
review the Employee's performance annually to determine if the Employee shall
be granted an annual increase in the Base Salary.
(b) During the Employment Period, commencing as soon as practicable
following the date hereof subject to the transition policies of ADP in
accordance with its benefit plans, the Employee shall be entitled to
participate in and shall be a beneficiary of all of ADP's then current pension,
401(k), medical and health, life, accident and disability insurance, stock
purchase and stock option plans, pursuant to the terms and conditions of such
plans and arrangements and in accordance with applicable law and ADP's then
current policies. The level and extent of the Employee's participation in and
benefits under any plans and arrangements shall be equivalent to that of other
executives of ADP of equivalent position and seniority, taking into account,
solely for eligibility and vesting purposes, the Employee's prior service with
the Company.
(c) During the Employment Period, the Company will provide the Employee
with a leased automobile, or at the Company's option, an automobile allowance,
in accordance with ADP's policies applicable to other executives of ADP of
equivalent position and seniority.
4. BONUS; STOCK OPTIONS; RESTRICTED SHARES. (a) In addition to the Base
Salary described in Section 3(a) hereof, the Employee shall be eligible to
receive an annual cash bonus based upon the Employee's achievement of
performance objectives to be determined by the Employee and the Company each
year (the "Annual Cash Bonus"). The targeted Annual Cash Bonus shall be
$90,000. If the Annual Cash Bonus, if any, becomes payable, it will be paid
within 90 days after the end of the Company's applicable fiscal year (if
December 31, but in the event such fiscal year becomes a year end prior to
December 31 then such Annual Cash Bonus shall be pro-rated for such partial
year) provided that the Employee is an employee of the Company on the last day
of such fiscal year.
(b) As soon as practicable after the date of this Employment Agreement,
the Company shall recommend to ADP's stock option committee that the Employee
be granted an option to purchase 40,000 shares of ADP's common stock(1) (the
"Option Grant") subject to the terms and conditions of such option grant and
vesting schedule. The option exercise price for all such shares shall be the
fair market value thereof at the time the option is granted. The option
agreement for the Option Grant shall provide that 100% of the shares of ADP
common stock subject to the Option Grant shall vest upon the third anniversary
of this Employment Agreement, subject to accelerated vesting for a portion of
such Option Grant under certain circumstances as set forth in Section 5 hereof.
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(1) After giving effect to ADP's December stock split
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(c) (i) As soon as practicable after the date hereof, the Employee shall
be awarded 20,000 shares of ADP's common stock(2) pursuant to the terms of a
Restricted Stock Purchase Agreement to be executed by ADP and the Employee, in
substantially the form attached hereto as Exhibit A (the "RSPA"). Subject to
the acceleration of the cessation of the restrictions on sales applicable to
the shares identified in clause (A) below in certain circumstances as set forth
in Section 5 hereof, the restrictions on sales and other voluntary or
involuntary transfers of such restricted common stock shall cease to apply in
accordance with the following schedule:
(A) on the third anniversary of the date of this Employment Agreement,
with respect to 6,667 of such shares;
(B) on the fourth anniversary of the date of this Employment Agreement,
with respect to 6,667 of such shares; and
(C) on the fifth anniversary of the date of this Employment Agreement,
with respect to 6,666 of such shares.
(ii) In the event of any inconsistency or conflict between the terms of
this Employment Agreement and the RSPA, the terms of this Employment Agreement
shall prevail.
5. TERMINATION OF EMPLOYMENT. (a) The Company may terminate the
Employee's employment hereunder for any reason whatsoever. The Employee's
employment with the Company shall cease and terminate upon the earlier to occur
of the following dates (the "Employment Termination Date"): (i) the date of
death of the Employee or, in the event the Employee shall be unable by reason
of physical or mental disability to continue the proper performance of his
duties hereunder and such disability shall have continued for a period of at
least four months (such circumstances are referred to herein as "Disability"),
the date of Disability, (ii) the date that the Company terminates the
Employee's employment hereunder in accordance with Section 5(d) hereof, (iii)
the date that the Employee terminates his employment hereunder in accordance
with Section 5(e) or 5(f) hereof, and (iv) in the event that the Employee shall
(x) be convicted of a criminal act, or fail or refuse to perform any obligation
hereunder and such failure or refusal shall continue during the 20 day period
following the receipt by the Employee of written notice from the Company of
such failure or refusal, (y) commit any act of negligence in the performance of
his duties hereunder and fail to take appropriate corrective action during the
20 day period following the receipt by the Employee of written notice from the
Company of such negligence, or (z) commit any act of willful misconduct (such
circumstances set forth in this subsection (iv) are referred to herein as
"Cause"), and the Company shall elect to terminate the Employee's employment
hereunder for Cause, in each such case, the date on which the Company shall
give written notice to the Employee of such election.
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(2) After giving effect to ADP's December stock split
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(b) In the event of the termination of the Employee's employment for death
or Disability, the Employee (or his beneficiary or estate in the event of death
of the Employee) shall only be entitled to receive in addition to any other
benefits to which the Employee is entitled pursuant to the terms of the
employee benefit plans of the Company applicable to the Employee, within thirty
days of such termination, (i) all salary accrued to the Employment Termination
Date, (ii) a pro-rata share of the Annual Cash Bonus accrued to the Employment
Termination Date for the fiscal year in which the Employment Termination Date
occurred (based upon the targeted Annual Cash Bonus for such fiscal year), and
(iii) all disability or death benefits payable in accordance with the employee
benefit plans of the Company in which the Employee is entitled to participate.
(c) If the Company terminates the Employee's employment hereunder for
Cause, the Employee shall only be entitled to receive, within thirty days of
such termination, in addition to any other benefits to which the Employee is
entitled pursuant to the terms of any employee benefit plans of the Company
applicable to the Employee, all salary accrued to the Employment Termination
Date.
(d) If the Company terminates the Employee's employment hereunder during
the Employment Period for any reason other than as provided in Section 5(a)(iv)
hereof, the Employee shall only be entitled to receive, in addition to any
other benefits to which the Employee is entitled pursuant to the terms of any
employee benefit plans of the Company applicable to the Employee, (i) his
salary payable when such salary would otherwise have been paid to the Employee
until the earlier of (x) the third anniversary hereof and (y) the date which is
six months following the Employment Termination Date, (ii) the targeted Annual
Cash Bonus which would otherwise be payable to the Employee for the fiscal year
in which the Employment Termination Date occurred, payable when such bonus
would otherwise have been paid to the Employee, (iii) an accelerated vesting of
a pro-rata portion of the Option Grant representing (I) the term of the
Employee's employment from the date hereof through the Employment Termination
Date divided by (II) three years, and (iv) all of the restrictions on sales or
transfers of a pro-rata portion of the ADP common stock referred to in Section
4(c)(i)(A) hereof shall cease representing (I) the term of the Employee's
employment from the date hereof through the Employment Termination Date divided
by (II) three years. Any payments or grants made to the Employee pursuant to
this Section 5(d) are expressly conditioned upon the Employee's execution of a
general release in favor of the Company and its affiliates.
(e) If the Employee voluntarily terminates his employment hereunder during
the Employment Period for any reason other than as provided in Section 5(f)
hereof, the Employee shall only be entitled to receive, within thirty days of
such termination, in addition to any other benefits to which the Employee is
entitled pursuant to the terms of any employee benefit plans of the Company
applicable to the Employee, all salary accrued and unused accrued vacation to
the Employment Termination Date.
(f) If the Employee voluntarily terminates his employment hereunder during
the Employment Period because, without the Employee's prior consent, (i) the
Employee is required to relocate to an office that is more than 50 miles from
the Company's
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current office located at 10200 Sunset Drive, Miami, Florida 33173 or (ii)
there is a change of control of ADP's PEO business, then such voluntary
termination shall be treated as a constructive termination by the Company under
this Section 5(f) and the Employee shall be entitled to receive, in addition to
any other benefits to which the Employee is entitled pursuant to the terms of
any employee benefit plans of the Company applicable to the Employee, (w) his
salary payable when such salary would otherwise have been paid to the Employee
until the earlier of (I) the third anniversary hereof and (II) the date which
is six months following the Employment Termination Date, (x) the targeted
Annual Cash Bonus which would otherwise be payable to the Employee for the
fiscal year in which the Employment Termination Date occurred, payable when
such bonus would otherwise have been paid to the Employee, and (y) an
accelerated vesting of a pro-rata portion of the Option Grant representing (I)
the term of the Employee's employment from the date hereof through the
Employment Termination Date divided by (II) three years, and (z) all of the
restrictions on sales or transfers of a pro-rata portion of the ADP common
stock referred to in Section 4(c)(i)(A) hereof shall cease representing (I) the
term of the Employee's employment from the date hereof through the Employment
Termination Date divided by (II) three years.
6. NON-COMPETITION; NON-DISCLOSURE; NON-HIRE. (a) NON-COMPETITION. The
Employee agrees that during the period commencing on the date hereof and ending
three years after the Employment Termination Date (the "Non-Competition
Period"), he will not, except on behalf of the Company or any of its
affiliates, directly or indirectly, whether as an officer, director,
stockholder, investor, partner, proprietor, business associate, employee,
representative or otherwise, do any of the following acts: (i) provide services
that are competitive with the businesses of the Company, or promote, market, or
acquire an interest in, or associate in a business relationship with, any other
person, corporation, firm, partnership or other entity whatsoever whose
business or services are competitive with the businesses or services of the
Company, or (ii) solicit or refer, directly or indirectly, any client or
prospective clients of any services and/or products that are similar to those
offered by the Company to another provider of such services, or (iii) promote,
market or participate in the sale, lease or licensing of any equipment or
software by which services and/or products similar to those provided by the
Company can be performed, to, for or with any person, corporation, firm,
partnership or other entity whatsoever.
(b) NON-DISCLOSURE. The Employee agrees that he will not, during the Non-
Competition Period, disclose, furnish or make accessible to any person,
corporation, firm, partnership or other entity whatsoever (except ADP or any of
its affiliates), or to any officer, director, stockholder, partner, associate,
employee, agent or representative of any such entity, any proprietary
information which is not in the public domain (including, without limitation,
any customer lists, business methods, procedures, pricing and marketing
structure and strategy, source or object codes, experimental or research work,
names and addresses of current, former and prospective clients or employees, or
any other trade secrets, technical data, or know-how of any kind) relating to
the businesses of the Company or any of its affiliates that was learned by the
Employee at any time during his association with the
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Company or after the date hereof. Upon termination of the Employee's employment
with the Company for any reason whatsoever, the Employee shall immediately
return to the Company all documents and notes (including all copies thereof) of
any and all information and materials belonging or relating to the businesses
of the Company or any of its affiliates (whether or not such materials were
prepared by the Employee or another person).
(c) NON-HIRE. The Employee agrees that he will not, during the Non-
Competition Period, directly or indirectly, hire or employ, or encourage to
leave the employ of ADP or any of its affiliates, any person who is now or
hereafter becomes an employee of ADP or any of its affiliates until such person
has ceased to be an employee of any of such companies for a period of at least
one year.
(d) INJUNCTIVE RELIEF. The Employee agrees that a violation of the
foregoing covenants not to compete, not to disclose and not to hire contained
herein will cause irreparable injury to the Company and any of its affiliates,
and that the Company and its affiliates shall be entitled, in addition to any
other rights and remedies they may have, at law or in equity, to an injunction
enjoining and restraining the Employee from doing or continuing to do any such
act and any other violations or threatened violations of this Section 6.
7. TERMINATION OF AGREEMENT. Upon termination of this Employment
Agreement, for any reason whatsoever, all rights and obligations of the parties
hereunder shall cease (with the exception of those set forth in Sections 5 and
6 above, which shall survive such termination).
8. BUSINESS JUDGMENT. Nothing contained herein shall in any way limit,
restrict or interfere with the determination of the officers and directors of
the Company as to the manner in which the business of the Company shall be run.
9. EMPLOYMENT FORMS. At the Company's request, the Employee shall
complete and execute such other customary employment applications and other
similar forms that the Company generally requires of all of its employees,
provided, however, that, except with respect to the terms and conditions
pursuant to which stock options may be granted to the Employee, in the event of
a conflict between the terms and conditions of this Employment Agreement and
the terms and conditions of any such other employment applications or other
forms, during the Employment Period the terms of this Employment Agreement
shall take precedence.
10. COUNTERPARTS. This Employment Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
agreement among the parties relating to the Employee's employment by the
Company and there are no representations, agreements or understandings between
the parties except as set forth or specifically referred to herein.
12. NOTICES. All notices shall be sent to the parties by hand delivery or
by certified or registered mail at the addresses set forth above or to any
changed
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address which may be given in writing hereafter. All notices to the Company
shall include copies to the Company c/o Automatic Data Processing, Inc., One
ADP Boulevard, Roseland, NJ 07068, Attention: Russ Fradin and to Automatic Data
Processing, Inc., One ADP Boulevard, Roseland, NJ 07068 to the attention of the
General Counsel. Unless hand delivered, notices shall be deemed given three
business days following the date deposited in any general or branch United
States Post Office or one business day following the date of delivery to a
nationally recognized overnight courier service.
13. SEVERABILITY. In the event that this Employment Agreement or any
provision hereof is declared invalid, unenforceable or illegal by any court,
agency, commission or arbitrator(s) having jurisdiction over the subject matter
hereof, neither party hereto shall have any cause of action or claim against
the other by reason of such declaration of invalidity, unenforceability or
illegality; and any such declaration concerning any provision hereof shall not
affect, impair or invalidate the remainder of this Employment Agreement, but
shall be confined in its operation to that provision hereof only and the
remainder of this Employment Agreement shall remain in full force and effect.
The parties hereto agree to substitute the invalid, unenforceable or illegal
provision by a valid, enforceable or legal one which corresponds to the spirit
and purpose of the invalid, unenforceable or illegal provision to the greatest
extent possible.
14. AMENDMENT. This Employment Agreement may not be changed, modified or
amended in any manner except by an instrument in writing signed by all parties
hereto.
15. ASSIGNMENT. This Employment Agreement is personal to each of the
parties hereto and no party hereto may assign or delegate any of such party's
rights or obligations hereunder without first obtaining the written consent of
the other party hereto; PROVIDED, HOWEVER, that no consent shall be required
hereunder in the event that the Company assigns this Employment Agreement to
any other affiliate of the Company.
16. HEADINGS. The headings contained in this Employment Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Employment Agreement.
17. WAIVER. No failure or delay on the part of any party hereto in the
exercise of any right hereunder in enforcing or requiring the compliance or
performance by the other party of any of the terms and conditions of this
Employment Agreement shall operate as a waiver of any such right, or constitute
a waiver of a breach of any such terms and conditions, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof
or of any other right, nor shall any of the aforementioned failures or delays
affect or impair such rights generally in any way. The waiver by any party of a
breach of any term or condition of this Employment Agreement by another party
shall not operate as nor be construed as a waiver of any subsequent breach
thereof.
18. GOVERNING LAW. This Employment Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the State of Florida.
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IN WITNESS WHEREOF, the parties hereto have signed this Employment
Agreement as of the date first above written.
THE VINCAM GROUP, INC.
By
-------------------------------------
Name:
Title:
JOSE SANCHEZ
---------------------------------------
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RESTRICTED STOCK PURCHASE AGREEMENT DATED THIS DAY OF , 199 ,
BETWEEN AUTOMATIC DATA PROCESSING, INC., ONE ADP BOULEVARD, ROSELAND. NEW
JERSEY 07068 ("ADP"), AND ("PURCHASER").
Purchaser is a key employee of ADP or one of its subsidiaries.
ADP wishes to provide Purchaser with an additional incentive to exert maximum
efforts on behalf of ADP and its business.
ADP and Purchaser agree as follows:
1. ADP is selling to Purchaser shares of ADP common stock, par value
$.10 per share, at a price of $.10 per share. Purchaser agrees to hold
such shares subject to all the terms and conditions of this agreement.
Certificates representing the shares are being delivered to Purchaser and
in exchange for their full purchase price.
2. Purchaser represents that all such ADP shares are being purchased for
his/her own account for investment and not with a view to the resale or
other distribution thereof and agrees not to dispose of any of such
shares in violation of the applicable securities laws.
3. All of such shares shall be held by Purchaser under the following
further restrictions and agreements:
(a) Purchaser will not at any time prior to the release dates specified
in Paragraph 3(e) below sell, assign, pledge, encumber or otherwise
transfer any or all of such shares, voluntarily or involuntarily, to
anyone other than ADP.
(b) If at any time hereafter, but before Purchaser wishes to sell
or otherwise transfer any such shares in excess of the number, if any,
then released from restrictions pursuant to Paragraph 3(e) below, such
shares will be first offered to ADP at a price of $.10 per share, plus
6% per annum interest calculated from the date of this agreement.
ADP shall have the option, but not the obligation, exercisable by
notice given within 60 days after Purchasers notice, to buy all of
such offered shares. If ADP does not exercise such option Purchaser
shall be free to sell such offered shares during a period of 30 days
thereafter.
(c) If Purchasers employment by ADP or any subsidiary thereof, or any
successor thereto, shall terminate for any reason prior to , ADP
shall buy from Purchaser all of the shares sold to Purchaser
hereunder in excess of the number, if any, then released from
restrictions pursuant to Paragraph 3(e) below at the purchase price
of $.10 per share, plus 6% per annum interest calculated from the
date of this agreement.
(d) If at any time hereafter but before , Purchaser should make or
attempt to make any transfer of such shares in excess of the number,
if
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any, then released from restrictions pursuant to Paragraph 3(e)
below, whether or not for value, or if any involuntary transfer of
such shares shall be made or attempted in violation of the provisions
of Paragraph 3(a) above the making of, or the attempt to make, any
such voluntary or involuntary transfer shall be deemed instead to be
an offer for sale of such excess number of shares to ADP by Purchaser
or his assigns or legal representatives, at the purchase price of
$.10 per share, plus 6% per annum interest calculated from the date
of this agreement. An offer for sale to ADP deemed made under this
Paragraph 3(d) shall be deemed made on the date on which ADP receives
notice of the making of, or the attempt to make, such voluntary or
involuntary transfer.
(e) The restrictions on sales and other voluntary or involuntary
transfers contained in this Paragraph 3(e) shall cease to apply:
(i) on with respect to of the shares delivered to
Purchaser hereunder;
(ii) on with respect to of the shares delivered to
Purchaser hereunder;
(iii) on with respect to of the shares delivered to
Purchaser hereunder.
4. Nothing in this agreement shall confer upon Purchaser any right to
continue in the employ of ADP or any of its subsidiaries or shall affect
ADP's right to terminate Purchaser's employment as would exist in the
absence of this agreement.
5. All of the certificates representing ADP shares transferred to
Purchaser pursuant to this agreement shall bear the following legend:
"The stock represented by this certificate is issued, accepted and held
subject to the terms of an agreement dated 199 between the
registered holder and Automatic Data Processing, Inc. A copy of such
agreement has been filed with the Secretary of the Corporation. Neither
this certificate nor the stock represented hereby may be sold,
assigned, transferred or otherwise disposed of or encumbered except as
provided in such agreement; to all of which the holder hereof, by the
acceptance hereof, agrees."
6. This agreement shall apply also to any shares of capital stock of ADP
of any class or series received in respect of shares sold pursuant to
this agreement as a result of any stock split, stock dividend,
reclassification, or recapitalization and the number of shares and
purchase prices herein shall be appropriately adjusted. This agreement
shall not, however, be deemed to prevent the exchange of the shares of
ADP common stock (purchased pursuant to Paragraph 1 above, or received
pursuant to any stock split, stock dividend,
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reclassification or recapitalization) in a tax-free reorganization
exchange to which ADP is a party, provided that the representations and
restrictions of this agreement shall continue to apply to the shares into
which the shares of ADP common stock covered by this agreement are
converted or exchanged.
7. This agreement shall bind and benefit Purchaser and his/her heirs,
legal representatives and assigns, and ADP, its legal representatives,
successors and assigns.
8. All notices and other communications required or permitted to be given
under this agreement or necessary or convenient in connection herewith
shall be in writing and shall be deemed to have been duly given if
delivered or mailed first class, postage prepaid or certified mail, as
follows:
If to ADP:
Automatic Data Processing, Inc.
One ADP Boulevard
Roseland, New Jersey 07068
Attention: General Counsel
If to Purchaser:
or to such other address as any of the parties hereto shall designate
by notice to the other party given as provided in this paragraph 8.
IN WITNESS WHEREOF, ADP and Purchaser have signed this agreement as of the date
first above written.
AUTOMATIC DATA PROCESSING, INC.
BY:
-------------------------------------
- --------------------------------- -------------------------------------
Social Security No. Purchaser:
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EXHIBIT C
APPLE TAX CERTIFICATE
In connection with the tax opinion of Steel Hector & Davis LLP dated
, 199 , regarding certain federal income tax consequences of the merger
(the "Merger") of Apple Sub Inc., a Florida corporation ("Apple Sub"), with and
into Orange, a Florida corporation ("Orange"), pursuant to the Agreement and
Plan of Merger, dated as of November, 1998, as amended (the "Merger
Agreement"), among Apple, a Delaware corporation ("Apple"), Apple Sub, and
Orange, and recognizing that you will rely on this Tax Certificate in
delivering said opinion, the undersigned officer of Apple hereby represents on
behalf of Apple and Apple Sub that to the best knowledge and belief of such
officer, after due inquiry and investigation, the facts relating to the Merger,
as such facts are described in the Registration Statement on Form S-4, File No.
, filed by [Apple] with the Securities and Exchange Commission (the
"Commission"), and all amendments thereto, are, insofar as such facts pertain
to Apple and Apple Sub, true, correct, and complete in all material respects in
accordance with applicable rules of the Commission.
The undersigned further represents on behalf of Apple and Apple Sub to the
best of his knowledge the following:
1. The fair market value of Apple stock and other consideration received
by each Orange shareholder will be approximately equal to the fair market value
of the Orange stock surrendered in the exchange.
2. Following the Merger, Orange will hold at least 90 percent of the fair
market value of Orange's net assets and at least 70 percent of the fair market
value of Orange's gross assets and at least 90 percent of the fair market value
of Apple Sub's net assets and at least 70 percent of the fair market value of
Apple Sub's gross assets held immediately prior to the Merger. For purposes of
this representation, amounts paid by Orange or Apple Sub to shareholders who
receive cash or other property, amounts used by Orange or Apple Sub to pay
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by Orange will be included as assets of Orange
or Apple Sub, respectively, immediately prior to the Merger
3. Prior to the Merger, Apple will be in control of Apple Sub within the
meaning of section 368(c) of the Internal Revenue Code of 1986, as amended (the
"Code").
4. Apple Sub was formed solely for the purpose of effecting this
transaction and has not conducted any business since incorporation other than
matters incident to its organization and matters incident to the Plan of
Merger.
5. Apple has no plan or intention, prior to and in connection with the
plan of Merger to reacquire any Apple stock issued in the Merger. In addition,
Apple will cause all persons related to Apple (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) not to redeem, purchase, exchange or
otherwise acquire, directly or indirectly, a number of Apple shares to be
received by Orange shareholders in connection with the Merger that would reduce
the Orange
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shareholders' ownership of Apple stock to a number of shares having a value, as
of the Effective Time, of less than 50 percent of the value of Orange stock
immediately prior to the Effective Time.
6. Apple has no plan or intention to liquidate Orange; to merge Orange
with or into another corporation; to sell or otherwise dispose of the stock of
Orange except for transfers of stock to corporations controlled by Apple; or to
cause Orange to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Apple Sub, except for dispositions made in the ordinary
course of business or transfers of assets to a corporation controlled by
Orange.
7. Apple Sub will have no liabilities assumed by Orange, and will not
transfer any assets subject to liabilities, in the Merger.
8. Following the Merger, Orange will continue its historic business or use
a significant portion of its historic business assets in a business.
9. Apple and Apple Sub will pay their expenses, if any, incurred in
connection with the Merger.
10. There is no intercorporate indebtedness existing between Apple and
Orange, or between Apple Sub and Orange, that was issued, acquired, or will be
settled at a discount.
11. In the Merger, shares of Orange stock representing control of Orange,
as defined in section 368(c) of the Code, will be exchanged solely for voting
stock of Apple; for purposes of this representation, shares of Orange stock
exchanged for cash or other property originating with Apple will be treated as
outstanding Orange stock on the date of the Merger.
12. Apple does not own, directly or indirectly, nor has it owned during
the last 5 years, directly or indirectly, any shares of the stock of Orange.
13. Neither Apple nor Apple Sub is an "investment company" as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
14. The payment of cash in lieu of fractional shares of Orange common
stock is solely for the purpose of avoiding the expense and inconvenience to
Apple of issuing fractional shares and does not represent separately bargained
for consideration.
15. The Merger Agreement represents the full and complete agreement among
Apple, Apple Sub, and Orange regarding the Merger, and there are no other
written or oral agreements regarding the Merger other than those expressly
referred to in the Merger Agreement.
IN WITNESS WHEREOF, I have, on behalf of Apple and Apple Sub, signed this
Tax Certificate on this day of , 199 .
APPLE AND APPLE SUB
By:
-------------------------------------
Name:
Title:
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APPENDIX B
[GOLDMAN SACHS LETTERHEAD]
PERSONAL AND CONFIDENTIAL
February 8, 1999
Board of Directors
The Vincam Group, Inc.
10200 Sunset Drive
Miami, FL 33173
Gentlemen:
You have requested our opinion as to the fairness from a financial point
of view to the holders of the outstanding shares of Common Stock, par value
$0.001 per share (the "Shares"), of The Vincam Group, Inc. (the "Company") of
the Exchange Ratio (as defined below) pursuant to the Agreement and Plan of
Merger, dated as of December 3, 1998, among Automatic Data Processing, Inc.
("Buyer"), ADP Acquisition Corp. (Florida) ("Sub"), a wholly owned subsidiary
of Buyer, and the Company (the "Agreement"). Pursuant to the Agreement, Sub
will be merged with and into the Company and each outstanding Share will be
converted into and exchangeable for the right to receive a certain number (the
"Exchange Ratio") of shares of Common Stock, par value $0.10 per share, of
Buyer (the "Buyer Common Stock") as follows (after giving effect to the
two-for-one stock split of Buyer Common Stock effective January 1, 1999): in
the event that the Average ADP Stock Price (as defined in the Agreement) is
equal to or greater than $34.3905 and less than or equal to $42.0325, the
Exchange Ratio shall be equal to 0.458; in the event that the Average ADP Stock
Price is greater than $42.0325 but less than or equal to $45.854, the Exchange
Ratio shall be equal to $19.25 divided by the Average ADP Stock Price; in the
event that the Average ADP Stock Price is greater than $45.854, the Exchange
Ratio shall be equal to 0.4198; in the event that the Average ADP Stock Price
is greater than or equal to $30.569 but less than $34.3905, the Exchange Ratio
shall be equal to $15.75 divided by the Average ADP Stock Price; and if the
Average ADP Stock Price is less than $30.569, then the Exchange Ratio shall be
equal to 0.5152, provided, however, that in such circumstance the Company has
the right to request that Buyer increase the Exchange Ratio to such a number
that, when multiplied by the Average ADP Stock Price, would equal $15.75, and
should Buyer not so increase the Exchange Ratio, the Company will have the
right to terminate the Agreement.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers
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and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. We are familiar with the
Company having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. Goldman,
Sachs & Co. provides a full range of financial advisory and securities services
and, in the course of its normal trading activities, may from time to time
effect transactions and hold securities, including derivative securities, of
the Company or Buyer for its own account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Voting Agreement, dated as of December 3, 1998, among Buyer and
the shareholders listed on Schedule 1 thereto; the Registration Statement on
Form S-1 of the Company relating to the initial public offering of the Shares
in May 1996, including the related Prospectus; Annual Reports to Shareholders
and Annual Reports on Form 10-K of the Company for the two years ended December
31, 1997; Annual Reports to Shareholders and Annual Reports on Form 10-K of
Buyer for the five fiscal years ended June 30, 1998; certain interim reports to
shareholders and Quarterly Reports on Form 10-Q of the Company and Buyer;
certain other communications from the Company and Buyer to their respective
shareholders; and certain internal financial analyses and forecasts for the
Company prepared by its management. We have also held discussions with members
of the senior management of the Company and Buyer regarding the strategic
rationale for, and the potential benefits of, the transaction contemplated by
the Agreement and the past and current business operations, financial condition
and future prospects of their respective companies. In addition, we have
reviewed the reported price and trading activity for the Shares and the Buyer
Common Stock, compared certain financial and stock market information for the
Company and Buyer with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the professional employer organization
industry specifically and in other industries generally and performed such
other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. As you are aware, Buyer
did not make available to us its projections of expected future performance.
Accordingly, our review of such information for purposes of rendering our
opinion was limited to discussions with management of Buyer of certain research
analysts' estimates of Buyer for fiscal years 1999 and 2000. We have assumed
with your consent that the transaction contemplated by the Agreement will be
accounted for as a pooling-of-interests under generally accepted accounting
principles. In addition, we have not made an independent evaluation or
appraisal of the assets and liabilities of the Company or Buyer or any of their
respective subsidiaries and we have not been furnished with any such evaluation
or appraisal. Our advisory services and the opinion expressed herein are
provided for the information and assistance of the Board of Directors of the
Company in connection with its consideration of the
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transaction contemplated by the Agreement and such opinion does not constitute
a recommendation as to how any holder of Shares should vote with respect to
such transaction.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair from a financial point of view
to the holders of Shares.
Very truly yours,
/s/ Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
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VOTING FORM
THE VINCAM GROUP, INC.
10200 SUNSET DRIVE
MIAMI, FLORIDA 33173
SOLICITED BY THE BOARD OF DIRECTORS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO
BE HELD ON MARCH 11, 1999.
The undersigned hereby appoints Carlos A. Saladrigas and Carlos A.
Rodriguez, and each of them, each with full power of substitution, as proxies
or proxy of the undersigned and hereby authorizes them to represent and vote as
designated below all shares of Common Stock, par value $.001 per share, of The
Vincam Group, Inc. (the "Corporation") held of record by the undersigned at the
close of business on January 20, 1999 at the Special Meeting of Shareholders
(the "Special Meeting") to be held on March 11, 1999 at the Corporation's
principal executive offices located at 10200 Sunset Drive, Miami, Florida
33173, or any adjournment or postponement thereof, and, in their discretion,
upon all matters incident to the conduct of the Special Meeting and such other
matters as may properly be brought before the Special Meeting.
This signed Voting Form revokes all proxies previously given by the
undersigned to vote at the Special Meeting of Shareholders or any adjournment
or postponement thereof. The undersigned hereby acknowledges receipt of the
Notice of Special Meeting of Shareholders and the Proxy Statement/Prospectus
relating to the Special Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.
To approve the Agreement and Plan of Merger, dated as of December 3, 1998,
among Automatic Data Processing, Inc., ADP Acquisition Corp. (Florida) and the
Corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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WHEN PROPERLY EXECUTED, THIS VOTING FORM WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN, THIS VOTING FORM WILL BE VOTED FOR THE FOREGOING PROPOSAL.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
Dated________________ 1999
__________________________
Signature
_________________________
Signature, if held jointly
Please sign exactly as
your name appears on this
Voting Form. If shares
are registered in more
than one name, the
signatures of all such
persons are required. A
corporation should sign
in its full corporate
name by a duly authorized
officer, stating such
officer's title.
Trustees, guardians,
executors and
administrators should
sign in their official
capacity giving their
full title as such. A
partnership should sign
in the partnership name
by an authorized person,
stating such person's
title and relationship to
the partnership.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS VOTING FORM PROMPTLY, USING THE
ENCLOSED ENVELOPE.
[ ] I HAVE READ THE ABOVE AND WOULD LIKE TO ATTEND THE SPECIAL MEETING IN
PERSON. PLEASE SEND ME A TICKET FOR ADMISSION TO THE MEETING.
