UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
THE VINCAM GROUP, INC.
----------------------
(Name of Issuer)
Common Stock, Par Value $.001 Per Share
---------------------------------------
(Title of Class of Securities)
92719B104
---------
(CUSIP Number)
Richard S. Borisoff, Esq.
Douglas A. Cifu, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
----------------------------------------
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
December 3, 1998
---------------------------------------
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
This document consists of 12 pages
<PAGE>
CUSIP NO. 92719B104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Automatic Data Processing, Inc.
(22-1467904)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 7,084,906 (1)
WITH
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,084,906
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45%
14 TYPE OF REPORTING PERSON
CO
- ------------------
(1) No shares of common stock, par value $.001 per share, of The Vincam Group,
Inc. have been purchased, directly or indirectly, by the reporting person.
Rather, the reporting person may be deemed to have beneficial ownership of
the shares reported herein pursuant to a voting agreement (as described in
the Introduction and in Items 3 and 4 of this Statement), entered into in
connection with the proposed acquisition by the reporting person of all of
the outstanding shares of The Vincam Group, Inc. Any such beneficial
ownership is expressly denied by the reporting person.
Page 2 of 12
<PAGE>
INTRODUCTION
No shares of common stock, par value $.001 per share (the "Common
Stock"), of The Vincam Group, Inc., a Florida corporation (the "Issuer"), have
been purchased, directly or indirectly, by the reporting person. Automatic Data
Processing, Inc., a Delaware corporation ("ADP"), is making this filing solely
because it may be deemed to have beneficial ownership of the shares reported
herein pursuant to the Voting Agreement (as defined below).
On December 3, 1998, the Issuer, ADP and ADP Acquisition Corp.
(Florida), a Florida corporation and wholly owned subsidiary of ADP ("Sub"),
entered into an Agreement and Plan of Merger, in the form attached hereto as
Exhibit 1 (the "Merger Agreement"), which is incorporated herein by reference.
Under the terms of the Merger Agreement, Sub will be merged with and into the
Issuer (the "Merger"), and in connection therewith each outstanding share of
Common Stock will be exchanged for .229 shares of common stock, par value $.10
per share (the "ADP Common Stock"), of ADP, provided that the average price of
ADP Common Stock for the 10 trading days ending three business days prior to the
shareholders meeting to be held to approve the Merger Agreement is between
$68.781 and $84.065. For average prices of ADP Common Stock of between $61.138
and $68.781, the exchange ratio adjusts to keep the value constant at $15.25 per
share of Common Stock. Similarly, between $84.065 and $91.708, the exchange
ratio adjusts to keep the value constant at $19.25 per share of Common Stock.
Above $91.708, the exchange ratio remains fixed at .2099 shares of ADP Common
Stock for each share of Common Stock. Should the average price of ADP Common
Stock fall below $61.138, the Issuer has the option to accept an exchange ratio
of .2576 shares of ADP Common Stock for each share of Common Stock or it may
request that ADP issue additional shares of ADP Common Stock to keep the value
constant at $15.75. If ADP does not issue additional shares, the Issuer can
terminate the agreement. The exchange ratios described above are subject to
certain additional adjustments set forth in the Merger Agreement.
Completion of the Merger is subject to the satisfaction of a number of
conditions, including the approval of the Merger Agreement by the holders of
shares of Common Stock of the Issuer. In connection therewith, ADP and certain
shareholders of the Issuer (each a "Shareholder" and, collectively, the
"Shareholders") have entered into a Voting Agreement, dated as of December 3,
1998, in the form attached hereto as Exhibit 2 (the "Voting Agreement"), which
is incorporated herein by reference, whereby each Shareholder has agreed that,
at any meeting of the shareholders of the Issuer, however called, and in any
action by consent of the shareholders of the Issuer, such Shareholder will vote
(or cause to be voted) the shares of Common Stock held of record (to the extent
such person also has the right to vote such shares) or beneficially owned (to
the extent such person also has the right to vote such shares) by such
Shareholder in favor of the Merger, the Merger Agreement (as amended from time
to time) and the transactions contemplated by the Merger Agreement.
Each Shareholder further agreed that, (i) such Shareholder will not, or
permit any person under such Shareholder's control to, enter into any voting
agreement or grant a proxy or power of attorney with respect to the shares of
Common Stock held of record or beneficially owned by such Shareholder or form
any "group" for purposes of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules promulgated thereunder, in each such case, which
is inconsistent with the Voting Agreement, and (ii) except as set forth in the
Merger Agreement, such Shareholder will not (x) solicit, initiate, encourage
(including by way of furnishing information or assistance) or take any other
action to facilitate, any inquiry or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Transaction Proposals
(as defined in the Merger Agreement) or agree to or endorse any Transaction
Proposal or (y) propose, enter into or participate in any discussions or
Page 3 of 12
<PAGE>
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.
Each Shareholder further agreed that, except as set forth in the Voting
Agreement, such Shareholder will not (i) tender any shares of Common Stock, (ii)
sell, assign or transfer record or beneficial ownership of any of the shares of
Common Stock, or (iii) further pledge, hypothecate or otherwise dispose of any
shares of Common Stock.
The Voting Agreement terminates upon the earlier to occur of (i) the
closing of the transactions contemplated by the Merger Agreement and (ii) the
date the Merger Agreement is terminated in accordance with its terms.
Under the terms of the Voting Agreement, if a Shareholder acquires the
right to vote any additional shares of Common Stock, the Voting Agreement shall
be applicable to such additional shares.
ADP has agreed, prior to the closing of the transactions contemplated
by the Merger Agreement, to enter into a registration rights agreement with the
Shareholders and, as contemplated thereby, to (i) file promptly after the
registration statement relating to the shares of ADP Common Stock to be issued
in connection with the Merger is declared effective and (ii) use its reasonable
commercial efforts to have declared effective by the SEC on or prior to
effective time of the Merger a registration statement on Form S-3 covering the
shares of ADP Common Stock to be received by the Shareholders in the Merger in
exchange for their shares of Common Stock of the Issuer and use its reasonable
commercial efforts to maintain the effectiveness of such registration statement
until the earlier of (x) the date all such shares are disposed of and (y) one
year from the date of effectiveness.
The description of the transactions summarized above are qualified in
their entirety by reference to the Exhibits attached hereto.
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement on Schedule 13D
(the "Statement") relates is the common stock, par value $.001 per share
(defined above as the "Common Stock"), of The Vincam Group, Inc., a Florida
corporation (defined above as the "Issuer"). The principal executive offices of
the Issuer are located at 10200 Sunset Drive, Miami, Florida 33173.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f). This Statement is filed by Automatic Data Processing,
Inc., a Delaware corporation (defined above as "ADP"). The principal business of
ADP is computing services. The address of the principal business and principal
office of ADP is One ADP Boulevard, Roseland, New Jersey 07068.
The name, residence or business address, present principal occupation
or employment and the name, principal business and address of any corporation or
other organization in which such employment is conducted and citizenship of each
executive officer and director of ADP are set forth in Schedule 1 hereto, which
is incorporated herein by reference.
Page 4 of 12
<PAGE>
(d) During the last five years, neither ADP nor, to the best of its
knowledge, any of the persons listed on Schedule 1 hereto has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither ADP nor, to the best of its
knowledge, any of the persons listed on Schedule 1 hereto has been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
No shares of the Issuer's Common Stock have been purchased, directly or
indirectly, by ADP. Rather, as an inducement and a condition to its entering
into the Merger Agreement, ADP and the Shareholders have entered into the Voting
Agreement, pursuant to which the Shareholders have agreed to vote their
respective shares of Common Stock in favor of the Merger Agreement (as more
fully described in the Introduction of this Statement, which is incorporated by
reference herein).
ITEM 4. PURPOSE OF TRANSACTION.
No shares of the Issuer's Common Stock have been purchased, directly or
indirectly, by ADP. ADP could be deemed to have "acquired" beneficial ownership
of the shares of Common Stock to which this Statement relates only in the sense
that it and the Shareholders have entered into the Voting Agreement (as
described in the Introduction of this Statement, which is incorporated by
reference herein) in order to facilitate the Merger pursuant to the Merger
Agreement. Except as specifically set forth herein, ADP disclaims beneficial
ownership over any shares of the Common Stock, including the power to vote, to
direct the voting of, to dispose, or to direct the disposition of, any shares of
the Common Stock.
Each of Paragraphs (a) through (j) of Item 4 may be applicable to the
transactions contemplated by the Merger Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) ADP may be deemed to beneficially own 7,084,906 shares of Common
Stock as a result of entering into the Voting Agreement, which, based on
calculations made in accordance with Rule 13d-3 promulgated under the Exchange
Act and there being 15,733,031 shares of Common Stock outstanding on December 3,
1998 (as represented to ADP by the Issuer in the Merger Agreement), represents
approximately 45% of the outstanding Common Stock. To the knowledge of ADP, none
of the persons identified in Schedule 1 beneficially owns any securities of the
Issuer. Except as specifically set forth herein, ADP disclaims beneficial
ownership over any shares of the Common Stock, including the power to vote, to
direct the voting of, to dispose, or to direct the disposition of, any shares of
the Common Stock. ADP disclaims membership in any group with respect to the
Common Stock, by virtue of ADP's execution of the Voting Agreement or otherwise.
(b) As a result of entering into the Voting Agreement, ADP may be
deemed to have shared power to vote or to direct the vote of the shares of
Common Stock herein reported as beneficially owned by it.
Page 5 of 12
<PAGE>
The Shareholders share the power to vote the shares of Common Stock
herein reported as beneficially owned by ADP. The following paragraphs provide
the applicable information required by Item 2 with respect to each of the
Shareholders, which information is based on information disclosed by the Issuer
and the Shareholders in their respective public filings with the Securities and
Exchange Commission and on information provided by the Shareholders to ADP:
Carlos A. Saladrigas ("Saladrigas") is a citizen of the United States
whose principal business address is 10200 Sunset Drive, Miami, Florida 33173.
Mr. Saladrigas' principal occupation is serving as Chairman and Chief Executive
Officer of the Issuer.
The Saladrigas Family Limited Partnership is a limited partnership
formed under the laws of the State of Florida, and is an estate planning vehicle
for Saladrigas and his family whose principal business address is 10200 Sunset
Drive, Miami, Florida 33173. Saladrigas Heritage Investments, Inc., a
corporation formed under the laws of the State of Florida, is the general
partner of the Saladrigas Family Limited Partnership, and each of Carlos A.
Saladrigas and his spouse, Olga M. Saladrigas ("Mrs. Saladrigas"), is the holder
of record of 50% of the voting securities of Saladrigas Heritage Investments,
Inc. The principal business address of Saladrigas Heritage Investments, Inc. is
10200 Sunset Drive, Miami, Florida 33173, and the residence of Mrs. Saladrigas
is 11000 S.W. 83rd Avenue, Miami, Florida 33156. Saladrigas, Mrs. Saladrigas and
Jose M. Sanchez are the directors of Saladrigas Heritage Investments, Inc. and
Saladrigas is its President and Mrs. Saladrigas is its Secretary and Treasurer.
Jose M. Sanchez is a citizen of the United States whose principal
business address is 10200 Sunset Drive, Miami, Florida 33173. Mr. Sanchez is
Vice Chairman of the Board and Area President -- South Florida of the Issuer.
Michael J. Gatsas is a citizen of the United States whose principal
business address is c/o Vincam/Staffing Network, Inc., 111 Charles Way, P.O. Box
6430, Manchester, New Hampshire 03108- 6430. Mr. Gatsas serves as Area President
for the Issuer.
The Gatsas Family Limited Partnership is a limited partnership
incorporated in the State of Delaware whose principal place of business is c/o
Vincam/Staffing Network, Inc., 111 Charles Way, P.O. Box 6430, Manchester, New
Hampshire 03108-6430. MJG Investments, LLC, a Delaware limited liability
company, is the general partner of the Gatsas Family Limited Partnership and
Michael J. Gatsas is its sole member. The principal place of business of MJG
Investments, LLC is c/o Vincam/Staffing Network, Inc., 111 Charles Way, P.O. Box
6430, Manchester, New Hampshire 03108-6430.
Theodore L. Gatsas is a citizen of the United States whose principal
business address is c/o Vincam/Staffing Network, Inc., 111 Charles Way, P.O. Box
6430, Manchester, New Hampshire 03108-6430. Mr. Gatsas serves as Area Vice
President for the Issuer.
To the knowledge of ADP, none of the persons or entities listed in
response to this Item 5(b) nor any executive officer, director or controlling
person of any of them, has, during the last five years, been convicted in any
criminal proceeding excluding traffic violations or similar misdemeanors.
To the knowledge of ADP, none of the persons or entities listed in
response to this Item 5(b) nor any executive officer, director or controlling
person of any of them, has, during the last five years, been a party to a civil
proceeding or a judicial or administrative body of competent jurisdiction as a
result of which it was or is subject to a judgment, decree or final order
enjoining violations of, or
Page 6 of 12
<PAGE>
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
(c) Neither ADP nor, to its knowledge, any of the persons identified on
Schedule 1, has effected any transactions in the Issuer's Common Stock during
the past 60 days, except as set forth herein.
(d) To the knowledge of ADP, only the Shareholders have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of Common Stock of the Issuer reported herein as
beneficially owned by ADP.
(e) Paragraph (e) of Item 5 is inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Reference is made to the Introduction and Item 5 of this Statement,
which are incorporated by reference herein, for the description of the
contracts, arrangements, understandings or relationships (legal or otherwise)
among the persons named in Item 2 of this Statement and between such persons and
any person with respect to any securities of the Issuer, including but not
limited to the transfer or voting of any of the securities, finder fees, joint
ventures, loan or option agreements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Agreement and Plan of Merger, dated as of December 3, 1998, among
the Issuer, ADP and Sub
Exhibit 2 Voting Agreement, dated as of Decemer 3, 1998, among ADP,
Carlos A. Saladrigas, the Saladrigas, the Saladrigas Family
Limited Partnership, Jose M. Sanchez, Michael J. Gatsas, Theodore
L. Gatsas and the Gatsas Family Limited Partnership.
Page 7 of 12
<PAGE>
SIGNATURE
After reasonable inquiry and to my best knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: December 14, 1998
AUTOMATIC DATA PROCESSING, INC.
By: /s/ James B. Benson
------------------------------
James B. Benson
Vice President
Page 8 of 12
<PAGE>
SCHEDULE 1
----------
INFORMATION WITH RESPECT TO DIRECTORS
AND EXECUTIVE OFFICERS AND DIRECTORS OF ADP
-------------------------------------------
The following information sets forth the name, business address and
present principal occupation of each of the directors and executive officers of
ADP. Except as indicated below, the business address of each director and
executive officer of ADP is One ADP Boulevard, Roseland, New Jersey 07068-1728.
Each of the directors and executive officers of ADP is a citizen of the United
States.
BUSINESS ADDRESS AND PRESENT
NAME PRINCIPAL OCCUPATION
- ---- --------------------------------------------------
Directors of ADP
- ----------------
Gary C. Butler President and Chief Operating Officer of ADP
Joseph A. Califano, Jr. Chairman of the Board and President, National
Center on Addiction and Substance Abuse at
Columbia University
152 West 57th Street, 12th Floor
New York, New York 10019
Leon G. Cooperman Chairman and Chief Executive Officer of Omega
Advisors, Inc., an investment partnership
Wall Street Plaza
88 Pine Street, 31st Floor
New York, New York 10004
George H. Heilmeier President and Chief Executive Officer of Bellcore
(Bell Communication Research), a research and
engineering consortium
445 South Street
Morristown, New Jersey 07960
Ann Dibble Jordan Consultant
2940 Benton Place, N.W.
Washington, DC 20008
Harvey M. Krueger Vice Chairman of Lehman Brothers,
an investment banking firm
American Express Tower, 17th Floor
New York, NY 10285
Page 9 of 12
<PAGE>
BUSINESS ADDRESS AND PRESENT
NAME PRINCIPAL OCCUPATION
- ---- --------------------------------------------------
Frederic V. Malek Chairman of Thayer Capital Partners,
a merchant banking firm
1455 Pennsylvania Avenue, N.W.
Suite 350
Washington, DC 20004
Henry Taub Honorary Chairman and Chairman of the
Executive Committee of the Board of ADP
300 Frank W. Burr Blvd., 7th Floor
Teaneck, NJ 07666
Laurence A. Tisch Co-Chairman and Co-Chief Executive Officer of
Loews Corporation, which is engaged in the
consumer products, hotel and insurance business
667 Madison Avenue, 7th Floor
New York, New York 10021
Arthur F. Weinbach Chairman of the Board and Chief Executive
Officer of ADP
Josh S. Weston Honorary Chairman of the Board of ADP
Executive Officers of ADP
- -------------------------
James B. Benson Vice President, General Counsel
and Secretary of ADP
Richard C. Berke Vice President, Human Resources of ADP
Gary C. Butler President and Chief Operating Officer of ADP
Raymond L. Colotti Vice President and Treasurer of ADP
Richard J. Daly Group President, Brokerage Services of ADP
G. Harry Durity Vice President, Worldwide Development of ADP
Russel Fradin Group President, Employer Services of ADP
Eugene A. Hall Senior Vice President of ADP
Richard J. Haviland Vice President and Chief Financial Officer of
ADP
John P. Hogan Group President, Brokerage Services of ADP
S. Michael Martone Group President, Dealer Services of ADP
Page 10 of 12
<PAGE>
BUSINESS ADDRESS AND PRESENT
NAME PRINCIPAL OCCUPATION
- ---- --------------------------------------------------
Arthur F. Weinbach Chairman and Chief Executive Officer of ADP
Page 11 of 12
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
--- -----------
1 Agreement and Plan of Merger, dated as of December 3, 1998,
among the Issuer, ADP and Sub.
2 Voting Agreement, dated as of December 3, 1998, among ADP,
Carlos A. Saladrigas, the Saladrigas Family Limited
Partnership, Jose M. Sanchez, Michael J. Gatsas, Theodore L.
Gatsas and the Gatsas Family Limited Partnership.
Page 12 of 12
================================================================================
AGREEMENT AND PLAN OF MERGER
among
AUTOMATIC DATA PROCESSING, INC.,
ADP ACQUISITION CORP. (FLORIDA)
and
THE VINCAM GROUP, INC.
Dated as of December 3, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER........................................................2
1.1 The Merger........................................................2
1.2 Closing...........................................................2
1.3 Effective Time....................................................2
1.4 Certificate of Incorporation and By-laws..........................2
1.5 Officers and Directors............................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES............................3
2.1 Effect on Capital Stock...........................................3
(a) Capital Stock of Sub........................................3
(b) Exchange Ratio for VCAM Common Stock........................3
(c) Cancellation of Treasury Stock and ADP-Owned Stock..........5
2.2 Exchange of Certificates..........................................5
(a) Exchange Agent..............................................5
(b) Exchange Procedures.........................................5
(c) Distributions with Respect to Unexchanged Shares............6
(d) No Further Ownership Rights in VCAM Common Stock............6
(e) No Fractional Shares........................................7
(f) Termination of Exchange Fund................................7
(g) No Liability................................................8
(h) Withholding Rights..........................................8
2.3 Stock Options.....................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF VCAM AND ADP....................9
3.1 Representations and Warranties of VCAM............................9
(a) Organization, Standing and Corporate Power; Subsidiaries....9
(b) Certificate of Incorporation and By-laws...................10
(c) Capitalization.............................................10
(d) SEC Documents; Financial Statements........................11
(e) Authority..................................................11
(f) Compliance with Applicable Laws............................12
(g) Government Approvals; Required Consents....................13
(h) Non-Contravention..........................................13
(i) Litigation.................................................14
(j) Taxes and Related Tax Matters..............................14
(k) Certain Agreements.........................................15
(l) Employee Benefits..........................................16
(m) Contracts..................................................19
(n) Environmental Matters......................................20
(o) Absence of Certain Changes or Events.......................21
i
<PAGE>
Page
----
(p) Information Supplied.......................................21
(q) Real Estate................................................21
(r) Intellectual Property......................................22
(s) Accounts Receivable........................................23
(t) Clients....................................................24
(u) Investment Company Act.....................................24
(v) Brokers or Finders.........................................24
(w) Vote Required..............................................24
(x) Opinion of Financial Advisor...............................24
(y) Accounting Matters.........................................25
(z) Ownership of ADP Common Stock..............................25
(aa) Appraisal Rights and Dissenters' Rights....................25
3.2 Representations and Warranties of ADP and Sub....................28
(a) Organization, Standing and Corporate Power; Subsidiaries...28
(b) Certificate of Incorporation and By-laws...................28
(c) Capitalization.............................................28
(d) SEC Documents; Financial Statements........................28
(e) Authority..................................................29
(f) Government Approvals; Required Consents....................29
(g) Non-Contravention..........................................30
(h) Information Supplied.......................................30
(i) Brokers or Finders.........................................30
(j) Material Adverse Change....................................31
(k) Accounting Matters.........................................31
ARTICLE IV COVENANTS........................................................31
4.1 Mutual Covenants of ADP and VCAM.................................31
(a) Confidentiality............................................31
(b) Publicity..................................................32
(c) Preparation of the Proxy Statement and the Registration
Statement..................................................32
(d) Satisfaction of Conditions; Additional Agreements..........32
(e) Other Actions..............................................33
(f) Advice of Changes; SEC Documents...........................33
(g) Legal Conditions to Merger.................................33
4.2 Covenants of VCAM................................................34
(a) Access to Information......................................34
(b) Ordinary Course............................................34
(c) Meetings; Fiduciary Duties.................................36
(d) No Solicitation............................................37
(e) Superior Acquisition Proposal..............................38
(f) Affiliates.................................................38
(g) Compliance with Laws.......................................39
(h) Advice of Changes..........................................39
4.3 Listing..........................................................39
ii
<PAGE>
Page
----
ARTICLE V ADDITIONAL AGREEMENTS............................................39
5.1 Indemnification; Directors' and Officers' Insurance..............39
5.2 Additional Agreements; Reasonable Efforts........................41
5.3 Accounting Treatment.............................................41
5.4 Tax Treatment....................................................41
5.5 Employee Matters.................................................42
ARTICLE VI CONDITIONS PRECEDENT.............................................42
6.1 Conditions to the Obligations of ADP and VCAM to Effect
the Merger.......................................................42
(a) Stockholder Approval.......................................42
(b) Registration Statement.....................................42
(c) Blue Sky Laws..............................................43
(d) Listing....................................................43
(e) No Injunctions or Restraints...............................43
(f) HSR Act....................................................43
(g) Governmental and Regulatory Consents.......................43
6.2 Conditions to the Obligations of ADP.............................43
(a) Accuracy of Representations and Warranties.................43
(b) Performance of Agreements..................................44
(c) No Material Adverse Change.................................44
(d) Auditors' Letter...........................................44
(e) Affiliate Letters..........................................44
(f) VCAM Required Consents.....................................44
6.3 Conditions to the Obligations of VCAM............................44
(a) Accuracy of Representations and Warranties.................44
(b) Performance of Agreements..................................45
(c) Fairness Opinions..........................................45
(d) Tax Opinion................................................45
ARTICLE VII TERMINATION AND AMENDMENT........................................45
7.1 Termination......................................................45
7.2 Effect of Termination............................................47
ARTICLE VIII GENERAL PROVISIONS...............................................47
8.1 Certain Definitions..............................................47
8.2 Notices..........................................................53
8.3 Interpretation...................................................54
8.4 Waivers and Amendments...........................................55
8.5 Expenses and Other Payments......................................55
8.6 Assignment.......................................................56
8.7 Entire Agreement; No Third Party Beneficiaries...................56
8.8 Representations and Warranties...................................56
8.9 Governing Law....................................................57
8.10 Counterparts.....................................................57
iii
<PAGE>
VCAM Disclosure Schedule
- ------------------------
Section 1.5 Directors
Section 3.1(a) Subsidiaries
Section 3.1(c) Stock Options and Warrants
Section 3.1(f) Compliance with Applicable Laws
Section 3.1(g) Government Approvals; Required Consents
Section 3.1(i) Litigation
Section 3.1(j) Taxes and Related Tax Matters
Section 3.1(k) Certain Agreements
Section 3.1(l) Employee Benefits
Section 3.1(m) Contracts
Section 3.1(n) Environmental Matters
Section 3.1(o) Absence of Certain Changes or Events
Section 3.1(q) Real Estate
Section 3.1(s) Accounts Receivable
Section 3.1(t) Clients
Section 3.1(cc) Insurance
Section 4.2(b)(iii) Bonuses
Section 4.2(b)(v) Sale of Property or Assets
Section 4.2(b)(vi) Incurrence of Indebtedness
Section 4.2(b)(ix) Forms of Client Contracts
ADP Disclosure Schedule
- -----------------------
Section 3.2(f) Government Approvals; Required Consents
Exhibits
- --------
Exhibit A Form of Employment Agreement for Carlos Saladrigas
Exhibit B Form of Employment Agreement for Jose Sanchez
Exhibit C ADP Tax Certificate
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
contem plated 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 representa tions,
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.
<PAGE>
2
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowl
edged, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Florida Business Corporation Act
(the "FBCA"), Sub shall be merged with and into VCAM at the Effective Time. Upon
and after the Effective Time, the separate corporate existence of Sub shall
cease and VCAM shall be the surviving corporation in the Merger (the "Surviving
Corpo ration"). 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
<PAGE>
3
directors and officers of the Surviving Corporation and shall hold office until
their respective successors are duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Certificate
of Incorporation and By-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of VCAM
Common Stock or capital stock of Sub:
(a) Capital Stock of Sub. Each share of common stock, par
value $.01 per share ("Sub Common Stock"), of Sub issued and outstanding
immediately prior to the Effective time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation;
(b) Exchange Ratio for VCAM Common Stock. Each share of VCAM
Common Stock issued and outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.2, be converted by virtue of
the Merger and without any action on the part of the holder thereof into and
exchangeable for the right to receive a number of fully paid and non-assessable
shares of common stock, par value $.10 per share (the "ADP Common Stock"), of
ADP equal to the "Exchange Ratio," determined in the manner set forth below:
(i) If the Average ADP Stock Price is equal to or
greater than $68.781 and less than or equal to $84.065, then the Exchange Ratio
shall be .229; provided, that, if the Outstanding Diluted VCAM Stock Amount
exceeds 16,190,804, then the Exchange 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;
<PAGE>
4
(iii) If the Average ADP Stock Price is greater than
$84.065 and less than or equal to $91.708, then the "Exchange Ratio" shall be
equal to the quotient (rounded to four decimal points) obtained by dividing
19.25 by the Average ADP Stock Price; provided, that if the Outstanding Diluted
VCAM Stock Amount exceeds 16,190,804, then the Exchange Ratio shall be equal to
the quotient (rounded to four decimal points) obtained by dividing (x) the
quotient obtained by dividing (1) $311,687,306 by (2) the Average ADP Stock
Price by (y) the Outstanding Diluted VCAM Stock Amount;
(iv) If the Average ADP Stock Price is greater than
$91.708, then the "Exchange Ratio" shall be .2099; provided, that if the
Outstanding Diluted VCAM Stock Amount exceeds 16,190,804, then the Exchange
Ratio shall be equal to the quotient (rounded to four decimal points) obtained
by dividing (x) 3,398,693 by (y) the Outstanding Diluted VCAM Stock Amount;
(v) If the Average ADP Stock Price is less than
$61.138, then the "Exchange Ratio" shall be .2576; provided, that if the
Outstanding Diluted VCAM Stock Amount exceeds 16,190,804, then the Exchange
Ratio shall be equal to the quotient obtained by dividing (x) 4,171,201 by (y)
the Outstanding Diluted VCAM Stock Amount; provided, further, that VCAM shall
have the right to give written notice to ADP (the "Top-Up Request Notice")
requesting that the Exchange Ratio be increased to equal to the quotient
(rounded to four decimal points) obtained by dividing (x) the quotient obtained
by dividing (1) $255,018,909 by (2) the Average ADP Stock Price by (y) the
Outstanding Diluted VCAM Stock Amount (the "Topped-Up Exchange Ratio"). The
Top-Up Request Notice shall be delivered to and received by ADP no later than
2:00 p.m. on the second Business Day prior to the Stockholders' Meeting. ADP,
may, in its sole discretion, agree or not agree to increase the Exchange Ratio
to the Topped-Up Exchange Ratio. Within 24 hours of receiving the Top-Up Request
Notice, ADP shall provide VCAM written notice of its determination with respect
thereto. If ADP agrees to increase the Exchange Ratio to the Topped-Up Exchange
Ratio, the Exchange Ratio shall be equal to the Topped-Up Exchange Ratio for
purposes of this Agreement. If ADP does not agree in its sole discretion that
the Exchange Ratio shall be 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);
<PAGE>
5
(vi) If, between the date of this Agreement and the
Effective Time, the outstanding shares of VCAM Common Stock or ADP Common Stock
are changed into a different number or class of shares by reason of any stock
split, division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction, then the provisions of this Section 2.1(b) shall be appropriately
adjusted; and
(c) Cancellation of Treasury Stock and ADP-Owned Stock. Each
outstanding share of VCAM Common Stock, held by VCAM as treasury stock or owned
by ADP or any Subsidiary of ADP immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto.
2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, ADP shall
deposit with Chase Mellon Shareholder Services or such other bank or trust
company designated by ADP (and reasonably acceptable to VCAM) (the "Exchange
Agent"), for the benefit of the holders of shares of VCAM Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent,
certificates representing the shares of ADP Common Stock (such shares of ADP
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.1 in exchange for outstanding shares of VCAM Common Stock. For this
purpose, the number of shares of ADP Common Stock issuable under Section 2.1
shall mean the product of (i) the Exchange Ratio multiplied by (ii) the number
of outstanding shares of VCAM Common Stock as of the Effective Time, rounded up
to the nearest whole number.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, ADP shall instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented 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
<PAGE>
6
this Article II, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of VCAM Common Stock which is not
registered in the transfer records of VCAM, a certificate representing the
proper number of shares of ADP Common Stock may be issued to a transferee if the
Certificate representing such VCAM Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of ADP Common
Stock and cash in lieu of any fractional shares of ADP Common Stock as
contemplated by Section 2.2(e). Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of ADP Common Stock issued
in exchange therefor, without interest, (x) at the time of such surrender (or as
soon thereafter as the cash from the sale of the Excess Shares referred to in
Section 2.2(e) is obtained by the Exchange Agent), the amount of any cash
payable in lieu of a fractional share of ADP Common Stock to which such holder
is entitled pursuant to Section 2.2(e), (y) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of ADP Common
Stock and (z) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of ADP Common Stock.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to ADP Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the shares
of ADP Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder 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.
<PAGE>
7
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional
shares of ADP Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of ADP.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (x) the number
of full shares of ADP Common Stock in the Exchange Fund over (y) the aggregate
number of full shares of ADP Common Stock to be distributed to holders of VCAM
Common Stock pursuant to Section 2.2(b) (such excess being herein called the
"Excess Shares"). As soon after the Effective Time as practicable, the Exchange
Agent, as agent for the holders of VCAM Common Stock, shall sell the Excess
Shares at then prevailing prices on the NYSE, all in the manner provided in
paragraph (iii) of this Section.
(iii) The sale of the Excess Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of the NYSE
and shall be executed in round lots to the extent practicable. Until the net
proceeds of such sale or sales have been distributed to the holders of VCAM
Common Stock, the Exchange Agent will hold such proceeds in trust for the
holders of VCAM Common Stock (the "Common Shares Trust"). All commissions,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such sale of
the Excess Shares shall be paid by ADP. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each holder of VCAM Common Stock
shall be entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Common Shares Trust by a fraction, the numerator of
which is the amount of the fractional share interest to which such holder of
VCAM Common Stock is entitled and the denominator of which is the 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
<PAGE>
8
stockholders of VCAM for six months after the Effective Time shall, upon demand,
be delivered to ADP, and any stockholders of VCAM who have not theretofore
complied with this Article II shall thereafter look only to ADP for payment of
their claim for ADP Common Stock, cash in lieu of fractional shares and any
dividends or distributions with respect to ADP Common Stock.
(g) No Liability. Neither ADP nor VCAM shall be liable to any
holder of shares of VCAM Common Stock or ADP Common Stock, as the case may be,
for such shares (or dividends or distributions with respect thereto) or cash
from the Common Shares Trust delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Withholding Rights. ADP or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of VCAM Common Stock such
amounts as ADP or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by ADP or
the Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of VCAM Common
Stock in respect of which such deduction and withholding was made by ADP or the
Exchange Agent.
2.3 Stock Options. (a) At the Effective Time, each outstanding option
to purchase shares of VCAM Common Stock (a "VCAM Stock Option") issued pursuant
to the VCAM Stock Plans, whether vested or unvested, shall be assumed by ADP.
Each VCAM Stock Option shall be deemed, without further action on the part of
ADP or the holders of such VCAM Stock Options, to constitute an option to
acquire, on the same terms and conditions as 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
<PAGE>
9
(iii) in accordance with the terms of the VCAM Stock
Option Plan under which the VCAM Stock Options were issued, fractional shares of
any assumed VCAM Stock Options resulting from the adjustments set forth in this
Section 2.3(a) shall be eliminated.
In the case of any option to which section 421 of the Code applies by
reason of its qualification under any of sections 422-424 of the Code, the
exercise price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be effected in a manner
consistent with the requirements of section 424(a) of the Code.
(b) As soon as practicable after the Effective Time, ADP shall
deliver to the holders of VCAM Stock Options appropriate notices setting forth
such holders' rights pursuant to the respective VCAM Stock Plans and the
agreements evidencing the grants of such VCAM Stock Options and that such
options and the related option agreements shall be assumed by ADP and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 2.3 after giving effect to the Merger).
(c) ADP shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of ADP Common Stock for delivery upon
exercise of the VCAM Stock Options assumed in accordance with this Section 2.3.
No later than the Effective Time, ADP shall prepare and file a registration
statement on Form S-8 (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of ADP Common Stock subject to such
options and shall use its reasonable commercial efforts 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
<PAGE>
10
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
organiza tional 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 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,
<PAGE>
11
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 Agree
ment 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 docu ments
(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 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
<PAGE>
12
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 neces sary 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 enforce able 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 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
<PAGE>
13
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 Govern
mental 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 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
<PAGE>
14
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 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
(herein-
<PAGE>
15
after "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 exten sion 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 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
<PAGE>
16
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 the Employee Benefit Plans have complied in all
material respects with
<PAGE>
17
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
<PAGE>
18
benefits) by, on behalf of or against any of the Employee Benefit Plans
or any trust related thereto or, to the knowledge of VCAM, by, on
behalf of or against any fiduciary of such plans.
(vi) Except as set forth in Section 3.1(l) of the
VCAM Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement will not, with respect to employees or former employees of VCAM
or any of its Subsidiaries: (A) entitle any individual to severance pay; (B)
accelerate the time of payment or vesting of, increase the amount of, or satisfy
a condition to the com pensation 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.
<PAGE>
19
(xii) None of VCAM or any of its Subsidiaries, or any
of their respective ERISA Affiliates, or any organization with respect to which
any such entity is a successor or parent corporation, within the meaning of
Section 4069(b) of ERISA, has engaged in any transaction described in Section
4069 of ERISA.
(xiii) No liability under any Employee Benefit Plan
has been funded or satisfied with the purchase of a contract from an insurance
company that is not rated AA by Standard & Poor's Corporation or the equivalent
by each other nationally recognized rating agency.
(xiv) To VCAM's knowledge, there has been no "mass
layoff" or "plant closing," as each such term is defined in the WARN, with
respect to the employees of VCAM or any of its Subsidiaries, with respect to
which there could be any future liability to such employees under WARN.
(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 under
standing 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
<PAGE>
20
understanding nor to VCAM's knowledge is any other party to any such contract,
agreement or understanding in violation, breach or default thereof except for
any violations, breaches or defaults which could not reasonably be expected to
have a Material Adverse Effect with respect to VCAM. With respect to any
professional employer organization agreement to which VCAM or any of its
Subsidiaries is a party, whether or not such agreement is currently in effect,
Section 3.1(m) of the VCAM Disclosure Schedule sets forth as of the date hereof
(i) each pending claim in writing for breach of contract or failure of
performance in excess of $25,000 which was made against VCAM or any of its
Subsidiaries from January 1, 1996 through the date hereof and (ii) each claim
for breach of contract or failure of performance made in writing against VCAM or
any of its Subsidiaries from January 1, 1996 through the date hereof which was
settled and in connection with such settlement, VCAM or any of its Subsidiaries
were required to pay an amount in excess of $25,000. None of VCAM or any VCAM
Subsidiary has any indebtedness for money borrowed except for (i) amounts that
are reflected on the consolidated balance sheet of VCAM as of September 30, 1998
or reflected in the notes thereto or in the notes to VCAM's 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 Subsid iaries
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)
<PAGE>
21
address only those matters that would have a Material Adverse Effect with
respect to VCAM.
(o) Absence of Certain Changes or Events. Except as set forth
in Section 3.1(o) of the VCAM Disclosure Schedule, as disclosed in the VCAM SEC
Documents, or except as contemplated by this Agreement, since January 1, 1998,
VCAM and its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course, and, as of the date of this Agreement, there has not
been (i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of VCAM's
capital stock; (ii) any return of any capital or other distribution of assets to
stockholders of VCAM; (iii) any material investment by VCAM or any of its
Subsidiaries either by the purchase of any property or assets or by any
acquisition (by merger, consolidation or acquisition of stock or assets) of any
corporation, partnership or other business organization or division thereof;
(iv) any sale, disposition or other transfer of assets or properties of VCAM or
its Subsidiaries (other than the sale of inventory in the ordinary course of
business) in excess of $500,000 individually or $2,000,000 in the aggregate; or
(v) 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,
<PAGE>
22
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.
(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,
trade marks, 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.
<PAGE>
23
(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) 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
<PAGE>
24
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.
(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.
<PAGE>
25
(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 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.
<PAGE>
26
(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 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,
<PAGE>
27
(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 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
<PAGE>
28
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
Incorpora tion and By-laws of ADP and Sub are in full force and effect. Neither
ADP nor Sub is in violation of any provision of its Certificate of Incorporation
or By-laws.
(c) Capitalization. As of the date hereof, (i) the authorized
capital stock of ADP consists of (A) 1,000,000,000 shares of ADP Common Stock,
302,102,291 of which are issued and outstanding as of October 31, 1998, and are
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights and (B) 300,000 shares of preferred stock, par value $1.00 per
share of ADP, none of which are issued and outstanding and (ii) the authorized
capital stock of Sub consists of 1,000 shares of Sub Common Stock, 1,000 shares
of which are issued and outstanding and are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
(d) SEC Documents; Financial Statements. ADP has made
available to VCAM a true and complete copy of each form, report, schedule and
registration statement filed with the SEC by ADP since June 30, 1997 (as such
documents have since the time of their filing been amended or supplemented, the
"ADP SEC Documents"), which are all the documents (other than preliminary
material) that ADP or its respective Subsidiaries was required to file with the
SEC since such date. As of their respective dates, the ADP SEC Documents (other
than preliminary material) complied in all material respects with the
requirements of the Securities Act or the Exchange Act as applicable, and the
rules and regulations of the
<PAGE>
29
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 circum stances 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 accord ance 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, (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
<PAGE>
30
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, cancella tions, 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
Registra tion 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.
<PAGE>
31
(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) informa tion 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 infor mation
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 pursu ant 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
<PAGE>
32
be disclosed; and (iv) disclosures made by any party as shall be reasonably
necessary in connection with obtaining the ADP Required Consents and/or the VCAM
Required Consents. Notwithstanding the foregoing, ADP and VCAM agree that the
Confidentiality Agreement, dated as of October 5, 1998 (the "Confidentiality
Agreement"), between ADP and VCAM shall remain in full force and effect and
shall control to the extent of any conflict between the terms of this Section
4.1(a) and the Confidentiality Agreement.
(b) Publicity. Except as otherwise required by applicable law
or the rules or regulations of any securities exchange on which the securities
of such party or any Affiliate of such party are listed or traded as determined
in the good faith opinion of the disclosing person's counsel, until the earlier
of (i) the date on which this Agreement ceases to be in effect and (ii) the
Closing Date, no party shall issue or cause the publication of any press 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
<PAGE>
33
regulations to consummate and make effective as promptly as practicable the
transac tions contemplated by this Agreement consistent with a desired Effective
Time of on or prior to February 28, 1999, including obtaining any VCAM Required
Consents or VCAM Governmental Approvals and cooperating fully with the other
party, including by provision of information and making of all necessary filings
in connection with, among other things, the HSR Act; provided, that the failure
of the Effective Time to have occurred on or prior to February 28, 1999 shall
not be considered to be a breach of this Agreement. In case at any time after
the Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, each party shall take all such necessary action.
(e) Other Actions. From the date hereof through the Closing
Date, each of ADP and VCAM shall not, and shall cause its Subsidiaries not to,
take any action that would or is reasonably likely to result in any of the
represen tations 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, consul tant,
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,
<PAGE>
34
any Governmental Entity or other public or private third party, required to be
obtained or made by ADP, Sub or VCAM or any of its Subsidiaries in connection
with the Merger or the taking of any action contemplated thereby or by this
Agreement or the Stock Option Agreement.
4.2 Covenants of VCAM. During the period from the date of this
Agreement and continuing until the Closing Date, VCAM agrees that, except as
expressly contemplated or permitted by this Agreement, or to the extent that ADP
shall otherwise consent in writing (which consent may be withheld in its sole
discretion):
(a) Access to Information. Subject to Section 4.1(a), upon
reasonable notice, VCAM shall, and shall cause its Subsidiaries to, afford to
ADP and its Agents, access, during normal business hours during the period prior
to the Closing Date, to 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;
<PAGE>
35
(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 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,
reorganiza tion, 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,
<PAGE>
36
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.
(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
<PAGE>
37
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 confiden tiality letter concerning VCAM and its
businesses, properties or assets to a third party which has made an unsolicited
Qualified Transaction Proposal (as defined below), (B) engaging in discussions
or negotiations with such a third party which has made an unsolicited Qualified
Transaction Proposal or (C) following receipt of an unsolicited Qualified
Transaction Proposal, taking and disclosing to its shareholders a position with
respect to such Qualified Transaction Proposal, but in each case referred to in
the foregoing clauses (A) through (C) only after the Board of Directors of VCAM
concludes in good faith, following receipt of a written opinion addressed to
VCAM from outside counsel, that such action is necessary for the Board of
Directors of VCAM to comply with its fiduciary obligations to stockholders under
applicable law and that the third party which made the unsolicited Qualified
Transaction Proposal has the ability and the financial wherewithal to consummate
a Superior Acquisition Proposal (as defined below). If the Board of Directors of
VCAM receives a Trans action 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 Transac tion Proposal that the
Board of Directors of VCAM determines in good faith after consultation with its
outside financial advisors, is reasonably capable of being
<PAGE>
38
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 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").
<PAGE>
39
(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 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;
<PAGE>
40
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 satis factory to such
Indemnified Party; provided, however, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense. Notwithstanding
the foregoing, in any action or proceeding in which both the Indemnifying Party
and an Indemnified Party is, or is reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel at the
Indemnifying Party's expense and to control its own defense of such action or
proceeding if, in the reasonable written opinion of counsel to such Indemnified
Party, (a) there are or may be legal defenses available to such Indemnified
Party or to other Indemnified Parties that are different from or additional to
those available to the Indemnifying Party or (b) any conflict or potential
conflict exists between the Indemnifying Party and such Indemnified Party that
would make such separate representation advisable; provided, however, that in no
event shall the Indemnifying Party be required to pay fees and expenses under
this Section 5.1 for more than one firm of attorneys in any jurisdiction in any
one legal action or group of related legal actions. The Indemnifying Party shall
not, without the consent of the Indemnified Party (which consent shall not be
unreasonably withheld), consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release
<PAGE>
41
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.
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.
<PAGE>
42
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.
<PAGE>
43
(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
<PAGE>
44
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.
(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 Con sents 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
<PAGE>
45
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 covenants and conditions contained in this Agreement to be
performed and complied with by it at or prior to the Closing Date. VCAM shall
have received a certificate dated the Closing Date signed by an executive
officer of ADP certifying to the fulfillment of this condition.
(c) Fairness Opinions. VCAM shall have received the opinion of
Goldman, Sachs & Co., as of the date the Proxy Statement is mailed to VCAM
stockholders, to the effect that the Exchange Ratio (as determined pursuant to
Section 2.1(b)) is fair to the VCAM stockholders from a financial point of view.
(d) Tax Opinion. VCAM shall have received an opinion from
Steel Hector & Davis LLP, counsel to VCAM, dated as of the Closing Date, in form
and substance reasonably satisfactory to VCAM, substantially to the effect that
the Merger will constitute a reorganization for U.S. federal income tax purposes
within the meaning of Section 368(a) of the Code. In rendering such opinion,
counsel to VCAM shall be entitled to rely upon representations contained in a
certificate of VCAM substantially in the form of the VCAM Tax Certificate
attached to the VCAM Disclosure Schedule, a certificate of ADP substantially in
the form of the ADP Tax Certificate attached hereto as Exhibit C and
representations contained in other appropriate certificates of VCAM, ADP,
certain shareholders of VCAM, and others.
(e) Employment Agreements. VCAM shall have executed and
delivered the employment agreements with Carlos Saladrigas and Jose Sanchez, in
substantially the form attached hereto as Exhibits A and B.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time
whether before or after approval by the stockholders of ADP or VCAM:
<PAGE>
46
(a) by mutual written consent of ADP and VCAM;
(b) (x) by ADP if there has been a material breach of any
representation, warranty, covenant or agreement on the part of VCAM, set forth
in this Agreement which breach, if not a wilful breach, has not been cured
within fifteen (15) Business Days following receipt by the breaching party of
notice of such breach or (y) by VCAM if there has been a material breach of any
representation, warranty, covenant or agreement on the part of ADP set forth in
this Agreement which breach, if not a wilful breach, has not been cured within
fifteen (15) Business Days following receipt by the breaching party of notice of
such breach, but in the case of either (x) or (y), only if the terminating party
is not then itself in material breach of any representation, warranty, covenant
or agreement hereunder.
(c) by either ADP or VCAM if the Merger shall not have been
consummated before June 30, 1999 (or such later date as may be agreed to by ADP
and VCAM); provided, however, that neither party may terminate this Agreement
under this Section 7.1(c) if the failure has been caused by such party's
material breach of this Agreement;
(d) by either ADP or VCAM, if this Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of VCAM
at the Stockholders' Meetings;
(e) by VCAM, in the manner specified in Section 2.1(b)(v);
(f) by ADP, if (i) the Board of Directors of VCAM shall
withdraw, modify, condition or change the Recommendation in a manner adverse to
ADP or shall have resolved to do any of the foregoing; (ii) the Board of
Directors of VCAM shall have recommended to the stockholders of VCAM a Superior
Transaction Proposal; (iii) VCAM shall have entered into any agreement with
respect to a Qualified Transaction Proposal (other than a confidentiality
agreement as contemplated hereby); (iv) a tender offer (including a self-tender
offer) or exchange offer for shares of capital stock of VCAM, which would result
in the beneficial ownership by any Person or any "group" (as defined in Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
of more than 30% of the outstanding shares of any class of capital stock of
VCAM, is commenced, and the Board of Directors of VCAM recommends that the
stockholders of VCAM tender their shares in such tender or exchange offer; or
(v) any Person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or, except in connection with the execution and
delivery of the Voting Agreement, any "group" shall have been formed which
beneficially owns, or has the right to acquire "beneficial ownership" of, more
than 30% of the then outstanding shares of any class of capital stock of VCAM;
and
<PAGE>
47
(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 Sec
tions 4.1(a) and 4.1(b), this Section 7.2 and Section 8.5 shall survive;
provided that, if this Agreement is so terminated by a party because one or more
of the conditions to such party's obligations hereunder is not satisfied as a
result of the other party's willful or knowing failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies for breach of contract or otherwise, including, without
limitation, damages relating thereto, shall also survive such termination
unimpaired.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth in this Section:
"Affected Employee" has the meaning set forth in Section 5.5(a).
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"Affiliate Letters" has the meaning set forth in Section 4.2(f).
"Agent" means, with respect to any Person, such Person's officers,
directors, employees, attorneys, accountants, investment bankers, financial
advisors or other representatives or agents.
"Agreement" has the meaning set forth in the introductory paragraph.
"ADP" has the meaning set forth in the introductory paragraph.
"ADP Common Stock" has the meaning set forth in Section 2.1(b).
"ADP Disclosure Schedule" has the meaning set forth in Section 3.2(f).
<PAGE>
48
"ADP Governmental Approvals " has the meaning set forth in Section
3.1(f)(i).
"ADP Required Consents " has the meaning set forth in Section
3.1(f)(ii).
"ADP SEC Documents" has the meaning set forth in Section 3.2.
"Articles of Merger" has the meaning set forth in Section 1.3.
"Average ADP Stock Price" means the average of the daily closing sale
prices of the ADP Common Stock as reported on the NYSE Composite Transactions
Tape (as reported by The Wall Street Journal (national edition) or, if not
reported thereby, as reported by another authoritative source as mutually agreed
by ADP and VCAM) for the 10 consecutive trading days ending on the third
Business Day (including such third Business Day) immediately prior to the
Stockholders Meeting.
"Business Combination" has the meaning set forth in Section 8.5(d).
"Business Day" means any day other than a day on which (i) banks in the
State of New York are authorized or obligated to be closed or (ii) the NYSE is
closed.
"Certificates" has the meaning set forth in Section 2.2(b).
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"COBRA" has the meaning set forth in Section 3.1(l)(viii).
"Code" has the meaning set forth in the fourth Whereas clause of this
Agreement.
"Common Shares Trust" has the meaning set forth in Section 2.2(e)(iii)
"Confidentially Agreement" has the meaning set forth in Section 4.1(a).
"Contracts" has the meaning set forth in Section 3.1(h).
"Debt" of any Person means, without duplication, (A) all indebtedness
of such Person for borrowed money; (B) all obligations of such Person evidenced
by notes, bonds, debentures or other similar instruments; (C) all obligations of
such
<PAGE>
49
Person as lessees under leases that have been or should be, in accordance with
GAAP, recorded as capital leases; (D) all obligations, contingent or otherwise,
of such Person under acceptance, letter of credit or similar facilities; (E) all
Debt of others referred to in clauses (i) through (iv) above guaranteed directly
or indirectly in any manner by such Person; and (F) all Debt of others referred
to in clauses (i) through (v) above secured by (or for which the holder of such
Debt has an existing right, contingent or otherwise, to be secured by) any Lien
on property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
"Documents" has the meaning set forth in Section 3.1(dd).
"Effective Time" has the meaning set forth in Section 1.3.
"Employee Benefit Plans has the meaning set forth in Section 3.1(l)(i).
"Environmental Laws" has the meaning set forth in Section 3.1(n).
"ERISA" has the meaning set forth in Section 3.1(l)(i).
"ERISA Affiliates " has the meaning set forth in Section 3.1(l)(iii).
"Excess Shares" has the meaning set forth in Section 2.2(e)(ii).
"Exchange Act" has the meaning set forth in Section 3.1(d).
"Exchange Agent" has the meaning set forth in Section 2.2(a).
"Exchange Fund" has the meaning set forth in Section 2.2(a).
"Exchange Ratio" has the meaning set forth in Section 2.1.
"FBCA" has the meaning set forth in Section 1.1.
"Fleet" has the meaning set forth in Section 3.1(q)(iii).
"GAAP" has the meaning set forth in Section 3.1(d).
"Governmental Entity" means any foreign, federal, state, municipal or
other governmental or regulatory department, commission, board, bureau, agency
or instrumentality.
"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
<PAGE>
50
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.
"Merger" has the meaning set forth in the first Whereas clause of this
Agreement.
<PAGE>
51
"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,
asso ciation, 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).
<PAGE>
52
"Sub" has the meaning set forth in the introductory paragraph.
"Sub Common Stock" has the meaning set forth in Section 2.1(a).
"Subsidiary" of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either directly or through
or together with any other Subsidiary of such Person), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or similar governing body of such corporation, partnership, joint venture or
other legal entity.
"Superior Acquisition Proposal" has the meaning set forth in Section
4.2(e).
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Taxes" has the meaning set forth in Section 3.1(j)(i).
"Tax Return" has the meaning set forth in Section 3.1(j)(ii).
"Tax Sharing Agreement Amounts" has the meaning set forth in Section
3.1(j)(i).
"Technology Systems" has the meaning set forth in Section 3.1(bb).
"Termination Notice" has the meaning set forth in Section 2.1(v).
"Third Party Intellectual Property Rights " has the meaning set forth
in Section 3.1(r)(i).
"Topped-Up Exchange Ratio" has the meaning set forth in Section 2.1(v).
"Top-Up Request Notice" has the meaning set forth in Section 2.1(v).
"Transaction Proposals " has the meaning set forth in Section 4.2(f).
"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).
<PAGE>
53
"VCAM Financial Statements" has the meaning set forth in Section
3.1(s).
"VCAM Governmental Approvals" has the meaning set forth in Section
3.1(g)(i).
"VCAM Intellectual Property Rights " has the meaning set forth in
Section 3.1(r)(ii).
"VCAM Permits" means all permits, registrations, licenses (including,
without limitation, all licenses or registrations required as professional
employer organizations and/or as control persons thereof), variances,
exemptions, orders and approvals of all Governmental Entities that are necessary
or appropriate to the operation of the business of VCAM and its Subsidiaries or
which are required as a result of the activities of VCAM and its Subsidiaries
other than those by the absence of which would not have a Material Adverse
Effect on VCAM.
"VCAM Real Property Leases" has the meaning set forth in Section
3.1(q)(ii).
"VCAM Required Consents" has the meaning set forth in Section
3.1(g)(ii).
"VCAM SEC Documents" has the meaning set forth in Section 3.1(d).
"VCAM Stock Option" has the meaning set forth in Section 2.3(a).
"VCAM Stock Plans" means, collectively, The Vincam Group, Inc. 1995
Stock Option Plan, The Vincam Group, Inc. 1996 Long Term Incentive Plan and The
Vincam Group, Inc. 1998 Long Term Incentive Plan.
"Voting Agreement" has the meaning set forth in the sixth Whereas
clause of this Agreement.
"WARN" has the meaning set forth in Section 3.1(f).
"Year 2000 Compliance" has the meaning set forth in Section 3.1(bb).
"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
<PAGE>
54
such other address or facsimile number for a party as shall be specified by like
notice):
(a) If to The Vincam Group, Inc., to:
The Vincam Group, Inc.
10200 Sunset Drive
Attention: General Counsel
Facsimile: 305-630-3010
with a copy to:
Steel Hector & Davis LLP
200 S. Biscayne Blvd.
Miami, FL 33131-2398
Attention: Ira N. Rosner, P.A.
Facsimile: (305) 577-7001
(b) If to Automatic Data Processing, Inc. or ADP
Acquisition Corp. (FLORIDA):
Automatic Data Processing, Inc.
One ADP Blvd.
Roseland, N.J. 07068
Attention: General Counsel
Facsimile: 973-535-6199
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Richard S. Borisoff, Esq.
Facsimile: (212) 757-3990
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.
<PAGE>
55
8.4 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by
written instruments signed by the parties to this Agreement, or in the case of a
waiver, by the party waiving compliance. Except where a specific period for
action or inaction is provided herein, no delay on the part of a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Neither any waiver on the part of a party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, shall preclude any further exercise thereof or the exercise of any
other such right, power or privilege.
8.5 Expenses and Other Payments.
(a) The parties to this Agreement shall, except as otherwise
specifically provided herein, bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, without limitation, all fees
and expenses of their respective Agents.
(b) VCAM agrees that if this Agreement shall be terminated
pursuant to:
(i) Section 7.1(b) and (A) such termination is the
result of (x) a material breach by VCAM of any representation or warranty
contained herein or (y) a willful and material breach by VCAM of any covenant or
agreement contained herein, which, in the case of (x) or (y), is not cured, and
(B) within 12 months after the date of termination of this Agreement, a Business
Combination (as hereinafter defined) shall have occurred or VCAM shall have
entered into a definitive agreement providing for a Business Combination;
(ii) Section 7.1(d) and the Board of Directors of
VCAM shall have on or prior to the date of the Stockholders' Meeting withdrawn,
modified or changed the Recommendation in a manner adverse to ADP or shall have
resolved to do any of the 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
<PAGE>
56
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 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.
<PAGE>
57
8.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such state, except to the extent that the
laws of the State of Florida mandatorily apply.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
<PAGE>
58
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
VOTING AGREEMENT
VOTING AGREEMENT, dated as of December 3, 1998 (this "Agreement"), by
and among Automatic Data Processing, Inc., a Delaware corporation ("ADP"), and
the Persons listed on Schedule 1 hereto (each, a "Shareholder" and,
collectively, the "Shareholders").
WHEREAS, The Vincam Group, Inc., a Florida corporation (the "Company"),
and ADP propose to enter into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), which provides for, among other things,
the merger of a wholly owned subsidiary of ADP with and into the Company (the
"Merger");
WHEREAS, as of the date hereof, the Shareholders are holders of record
or Beneficially Own (as defined herein) shares of common stock, par value $.001
per share ("Company Common Stock"), of the Company; and
WHEREAS, as a condition to the willingness of ADP to enter into the
Merger Agreement, ADP has required that each Shareholder agree, and in order to
induce ADP to enter into the Merger Agreement, each Shareholder has agreed, to
enter into this Agreement with respect to all of the shares of Company Common
Stock now held of record or Beneficially Owned and which may hereafter be
acquired by such Shareholder (collectively, the "Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 General. Capitalized terms used and not defined herein have
the respective meanings ascribed to them in the Merger Agreement.
Section 1.2 Beneficial Ownership. For purposes of this Agreement,
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including pursuant to any agreement, arrangement or understanding,
whether or not in writing. Without duplicative counting of the same securities
by the same holder, securities Beneficially Owned by a Shareholder shall include
securities Beneficially Owned by all other Persons (as defined in the Merger
Agreement) with whom such
<PAGE>
2
Person would constitute a "group" within the meaning of Section 13(d) of the
Exchange Act other than parties to this Agreement.
ARTICLE II
Section 2.1 Voting Agreement. Each of the Shareholders hereby
irrevocably and unconditionally agrees that during the term of this Agreement as
specified in Section 5.1, at any meeting of the shareholders of the Company,
however called, and in any action by consent of the shareholders of the Company,
each of the Shareholders shall vote (or cause to be voted) the Shares held of
record (to the extent such Person also has the right to vote such Shares) or
Beneficially Owned (to the extent such Person also has the right to vote such
Shares) by such Shareholder in favor of the Merger, the Merger Agreement (as
amended from time to time) and the transactions contemplated by the Merger
Agreement. Each of the Shareholders acknowledges receipt and review of a copy of
the Merger Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
Each of the Shareholders hereby represents and warrants, severally and
not jointly, to ADP as follows:
Section 3.1 Authority Relative to This Agreement. Such Shareholder has
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Where such Shareholder is a corporation, partnership or
other entity, the execution and delivery of this Agreement by such Shareholder
and the consummation by such Shareholder of the transactions contemplated hereby
have been duly and validly authorized by the board of directors or other
governing body of such Shareholder, and no other proceedings on the part of such
Shareholder are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly and validly executed and delivered by
such Shareholder and, assuming the due authorization, execution and delivery by
the other parties hereto, constitutes a legal, valid and binding obligation of
such Shareholder, enforceable against such Shareholder in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws affecting creditors' rights generally or by
general principles governing the availability of equitable remedies.
Section 3.2 No Conflict. (a) The execution and delivery of this
Agreement by such Shareholder does not, and the performance of this Agreement by
such Shareholder shall not, (i) where such Shareholder is a corporation,
partnership or
<PAGE>
3
other entity, conflict with or violate the organizational documents of such
Shareholder, (ii) conflict with or violate any agreement, arrangement, law,
rule, regulation, order, judgment or decree to which such Shareholder is a party
or by which such Shareholder (or the Shares held of record or Beneficially Owned
by such Shareholder) is bound or affected or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse or time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the Shares held of record or Beneficially Owned by such
Shareholder pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such Shareholder is a party or by which such Shareholder (or the Shares
held of record or Beneficially Owned by such Shareholder) is bound or affected,
except, in the case of clauses (ii) and (iii) of this Section 3.2, for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or delay the performance by such Shareholder of its obligations under
this Agreement.
(b) The execution and delivery of this Agreement by such
Shareholder does not, and the performance of this Agreement by such Shareholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental entity except for applicable
requirements, if any, of the Exchange Act, and except where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay the performance by such
Shareholder of its obligations under this Agreement.
Section 3.3 Title to the Shares. As of the date hereof, such
Shareholder is the record or Beneficial Owner of the Shares listed opposite the
name of such Shareholder on Schedule 1 hereto. The Shares listed opposite the
name of such Shareholder on Schedule 1 hereto are all the securities of the
Company either held of record or Beneficially Owned by such Shareholder. Such
Shareholder has not appointed or granted any proxy, which appointment or grant
is still effective, with respect to the Shares held of record or Beneficially
Owned by such Shareholder. Each Shareholder has the right to vote or cause to be
voted each of the Shares listed opposite the name of such Shareholder on
Schedule 1 hereto and the Shares listed opposite the name of such Shareholder on
Schedule 1 hereto are owned free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
such Shareholder's voting rights, charges and other encumbrances of any nature
whatsoever.
<PAGE>
4
ARTICLE IV
COVENANTS OF THE STOCKHOLDER
Section 4.1 No Inconsistent Agreement or Action. Each of the
Shareholders hereby covenants and agrees that, except as contemplated by this
Agreement, and the Merger Agreement, such Shareholder shall not, or permit any
Person under such Shareholder's control to, enter into any voting agreement or
grant a proxy or power of attorney with respect to the Shares held of record or
Beneficially Owned by such Shareholder or form any "group" for purposes of the
Exchange Act or the rules promulgated thereunder, in each such case, which is
inconsistent with this Agreement. Except as set forth in the Merger Agreement,
no Shareholder shall (i) solicit, initiate, encourage (including by way of
furnishing information or assistance) or take any other action to facilitate,
any inquiry or the making of any proposal which constitutes, or may reasonably
be expected to lead to, any Transaction Proposals (as defined in the Merger
Agreement) or agree to or endorse any Transac tion 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 forego ing
Section 4.2 Transfer of Title. Each of the Shareholders hereby
covenants and agrees that such Shareholder shall not (i) tender any Shares, (ii)
sell, assign or transfer record or Beneficial Ownership of any of the Shares, or
(iii) further pledge, hypothecate or otherwise dispose of any Shares; provided,
that a Shareholder may transfer record ownership of any of the Shares so long as
such Shareholder maintains Beneficial Ownership of such Shares (including,
without limitation, the unfettered right to vote such Shares in the manner set
forth in Section 2.1). Notwithstanding anything to the contrary contained
herein, Michael J. Gatsas, or Gatsas Family Limited Partnership and Theodore
Gatsas may each sell and transfer record and Beneficial Ownership of a number of
Shares such that immediately after giving effect to such sale and transfer each
of Michael J. Gatsas and Theodore Gatsas shall maintain Beneficial Ownership of
at least 784,766 shares of Company Common Stock.
<PAGE>
5
ARTICLE V
MISCELLANEOUS
Section 5.1 Termination. This Agreement shall be effective as of the
date of this Agreement and shall terminate upon the earlier to occur of (i) the
closing of the transactions contemplated by the Merger Agreement and (ii) the
date the Merger Agreement is terminated in accordance with its terms.
Section 5.2 Additional Shares. If, after the date hereof, a Shareholder
acquires the right to vote any additional shares of Company Common Stock (any
such shares shall be referred to herein as "Additional Shares"), including,
without limitation, upon exercise of any option, warrant or right to acquire
shares of Company Common Stock or through any stock dividend or stock split, the
provisions of this Agreement applicable to the Shares shall be applicable to
such Additional Shares as if such Additional Shares had been Shares as of the
date hereof. The provisions of the immediately preceding sentence shall be
effective with respect to Additional Shares without action by any Person
immediately upon the acquisition by a Shareholder of record or Beneficial
Ownership of such Additional Shares.
Section 5.3 S-3. Prior to the closing of the transactions contemplated
by the Merger Agreement, ADP shall enter into a registration rights agreement
with the Shareholders (which registration rights agreement will provide that the
Company will pay the applicable SEC registration fee for the registration
statement contemplated by such agreement) and, as contemplated thereby, agrees
to file promptly after the Registration Statement (as defined in the Merger
Agreement) is declared effective and use its reasonable commercial efforts to
have declared effective by the SEC on or prior to Effective Time a registration
statement on Form S-3 (the "Form S-3") covering the shares of ADP Common Stock
to be received by the Shareholders in the Merger in exchange for their Shares
and use its reasonable commercial efforts to maintain the effectiveness of such
registration statement until the earlier of (x) the date all such shares are
disposed of and (y) one year from the date of effectiveness.
Section 5.4 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 5.5 Entire Agreement. This Agreement constitutes the entire
agreement between ADP and the Shareholders with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between ADP and the Shareholders with respect to the subject matter
hereof.
<PAGE>
6
Section 5.6 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 5.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereby shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in a mutually acceptable manner in order that the terms of this Agreement remain
as originally contemplated.
Section 5.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state, except to the
extent that the laws of the State of Florida mandatorily apply.
Section 5.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
<PAGE>
7
IN WITNESS WHEREOF, each of the Shareholders and ADP have caused this
Agreement to be duly executed on the date hereof.
AUTOMATIC DATA PROCESSING, INC.
By: /s/ James B. Benson
-----------------------
Name: James B. Benson
Title: Vice President
/s/ Carlos A. Saladrigas
------------------------
Carlos A. Saladrigas
SALADRIGAS FAMILY LIMITED PARTNERSHIP
By: Saladrigas Heritage Investments, Inc.,
the General Partner of Saladrigas Family
Limited Partnership
By: /s/ Carlos A. Saladrigas
----------------------------
Name: Carlos A. Saladrigas
Title: President
/s/ Jose M. Sanchez
-------------------
Jose M. Sanchez
/s/ Michael J. Gatsas
---------------------
Michael J. Gatsas
/s/ Theodore L. Gatsas
----------------------
Theodore L. Gatsas
GATSAS FAMILY LIMITED PARTNERSHIP
By: /s/ Michael J. Gatsas
-------------------------
Name: Michael J. Gatsas
Title: Member
<PAGE>
SCHEDULE 1
----------
Name of Shareholder Number of Shares
- ------------------- ----------------
Carlos S. Saladrigas 1,194,328
Saladrigas Family Limited Partnership 1,437,075
Jose M. Sanchez 2,653,503
Michael J. Gatsas 81,900
Gatsas Family Limited Partnership 818,100
Theodore L. Gatsas 900,000
