Exhibit 1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
COVANSYS CORPORATION
AND
FIDELITY INFORMATION SERVICES, INC.
AS PURCHASER
DATED AS OF APRIL 26, 2004
TABLE OF CONTENTS
ARTICLE 1 STOCK PURCHASE......................................................................................... 4
1.1 SALE AND PURCHASE OF THE SHARES.......................................................................... 4
1.2 CLOSING.................................................................................................. 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................... 5
2.1 ORGANIZATION............................................................................................. 5
2.2 CAPITALIZATION........................................................................................... 5
2.3 AUTHORIZATION AND VALIDITY OF AGREEMENT.................................................................. 6
2.4 NO VIOLATIONS; CONSENTS AND APPROVALS.................................................................... 7
2.5 SEC REPORTS AND FINANCIAL STATEMENTS..................................................................... 7
2.6 ABSENCE OF CERTAIN CHANGES............................................................................... 8
2.7 ABSENCE OF UNDISCLOSED LIABILITIES....................................................................... 8
2.8 INFORMATION IN PROXY STATEMENT........................................................................... 8
2.9 EMPLOYEE BENEFIT PLANS; ERISA............................................................................ 8
2.10 LITIGATION; COMPLIANCE WITH LAW......................................................................... 9
2.11 INTELLECTUAL PROPERTY................................................................................... 10
2.12 MATERIAL CONTRACTS; REGISTRATION RIGHTS AGREEMENTS...................................................... 10
2.13 TAXES................................................................................................... 11
2.14 ENVIRONMENTAL MATTERS................................................................................... 12
2.15 SHAREHOLDER APPROVAL.................................................................................... 12
2.16 BROKERS................................................................................................. 12
2.17 INSURANCE............................................................................................... 13
2.18 LABOR MATTERS, ETC...................................................................................... 13
2.19 DISCLOSURE.............................................................................................. 13
2.20 TAKEOVER STATUTES....................................................................................... 13
2.21 CUSTOMERS; LIABILITY FOR DEFECTIVE SERVICES............................................................. 13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................ 14
3.1 ORGANIZATION............................................................................................. 14
3.2 AUTHORIZATION; VALIDITY OF AGREEMENT..................................................................... 14
3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.................................................................... 14
3.4 INFORMATION IN PROXY STATEMENT........................................................................... 15
3.5 FINANCING................................................................................................ 15
3.6 BROKERS.................................................................................................. 15
3.7 LITIGATION; COMPLIANCE WITH LAW.......................................................................... 15
3.8 KNOWLEDGE................................................................................................ 16
ARTICLE 4 COVENANTS OF THE COMPANY............................................................................... 16
4.1 COVENANTS OF THE COMPANY................................................................................. 16
4.2 ACCESS AND INFORMATION................................................................................... 17
4.3 SHAREHOLDERS' MEETING; PROXY STATEMENT................................................................... 17
4.4 NOTIFICATION OF CERTAIN MATTERS.......................................................................... 18
4.5 PRESS RELEASES; INTERIM PUBLIC FILINGS................................................................... 19
4.6 LISTING.................................................................................................. 19
4.7 PERIODIC INFORMATION..................................................................................... 19
4.8 NEW SHAREHOLDERS......................................................................................... 19
4.9 SHAREHOLDER RIGHTS....................................................................................... 19
4.10 NO SOLICITATION BY THE COMPANY.......................................................................... 19
ARTICLE 5 COVENANTS OF THE COMPANY AND THE PURCHASER............................................................. 20
5.1 PUBLIC ANNOUNCEMENTS..................................................................................... 20
5.2 FURTHER ACTIONS.......................................................................................... 21
5.3 FURTHER ASSURANCES....................................................................................... 21
ARTICLE 6 CONDITIONS PRECEDENT................................................................................... 21
6.1 CONDITION TO OBLIGATIONS OF EACH PARTY................................................................... 21
6.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER............................................................... 22
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY................................................................. 23
ARTICLE 7 TERMINATION............................................................................................ 24
7.1 TERMINATION.............................................................................................. 24
7.2 EFFECT OF TERMINATION.................................................................................... 24
ARTICLE 8 INDEMNIFICATION........................................................................................ 25
8.1 INDEMNIFICATION BY THE COMPANY........................................................................... 25
8.2 INDEMNIFICATION BY THE PURCHASER......................................................................... 25
8.3 INDEMNIFICATION PROCEDURES............................................................................... 26
8.4 REMEDIES................................................................................................. 26
8.5 TAX TREATMENT OF ADJUSTMENTS............................................................................. 26
8.6 SURVIVAL................................................................................................. 26
ARTICLE 9 INTERPRETATION; DEFINITIONS............................................................................ 27
9.1 DEFINITIONS.............................................................................................. 27
ARTICLE 10 MISCELLANEOUS......................................................................................... 32
10.1 FEES AND EXPENSES....................................................................................... 32
10.2 SEVERABILITY............................................................................................ 33
10.3 SPECIFIC ENFORCEMENT.................................................................................... 33
10.4 ENTIRE AGREEMENT........................................................................................ 34
10.5 COUNTERPARTS............................................................................................ 34
10.6 NOTICES................................................................................................. 34
10.7 AMENDMENTS; WAIVERS, ETC................................................................................ 35
10.8 COOPERATION............................................................................................. 35
10.9 SUCCESSORS AND ASSIGNS.................................................................................. 36
10.10 TRANSFER OF SHARES; LEGEND ON SHARES, ETC.............................................................. 36
10.11 GOVERNING LAW, ETC..................................................................................... 36
10.12 NO INCONSISTENT AGREEMENTS............................................................................. 37
10.13 NO THIRD PARTY BENEFICIARIES........................................................................... 37
10.14 REPLACEMENT OF SHARE CERTIFICATES...................................................................... 37
Exhibit 1.1(b) Form of Warrants
Exhibits 6.2(c)(i) Registration Rights Agreement
Exhibits 6.2(c)(ii) Standstill Agreement
Exhibits 6.2(c)(iii) Xxxxxxxxx Purchase Agreement
Exhibits 6.2(c)(iv) Xxxxxxxxx Voting Agreement
Exhibits 6.2(c)(v) Xxxxxxxxx Shareholder's Agreement
Exhibit 6.2(d) Matters to be Addressed in Legal Opinion of Butzel Long, P.C.
Exhibit 6.3(c)(i) Matters to be Addressed in Legal Opinion of Xxxxxx, Xxxxx &
Bockius LLP
Exhibit 6.3(c)(ii) Matters to be Addressed in Legal Opinion of the Purchaser's
Michigan Counsel
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April 26,
2004, is entered into by and among Fidelity Information Services, Inc., an
Arkansas corporation, as purchaser (the "Purchaser"), and Covansys Corporation,
a Michigan corporation (the "Company").
R E C I T A L S:
A. Subject to the approval of the Transactions by the holders of a
majority of the shares of the Company's common stock, without par value (the
"Common Stock"), present at an annual or special meeting of the Company's
shareholders at which approval of the Transactions is discussed (the
"Shareholder Meeting") duly convened by the Board of Directors of the Company
(the "Board" and such approval, the "Shareholder Approval") and pursuant to the
terms and conditions hereof, the Company desires to sell to the Purchaser and
the Purchaser desires to purchase from the Company at the Closing an aggregate
of 8,700,000 shares, as adjusted for any combinations, splits or adjustments
thereto between the date of this Agreement and the Closing (the "Shares") of
Common Stock and warrants (the "Warrants") to purchase an additional 4,000,000
shares of Common Stock (the "Warrant Shares") of the Company.
B. The Board, based on the unanimous recommendation of the Special
Committee, has approved, and deems it advisable and in the best interests of the
shareholders of the Company to consummate, the transactions contemplated by this
Agreement, upon the terms and subject to the conditions set forth herein; and
C. The Company has, as of the date hereof, entered into an agreement
(the "Master Services Agreement") with the Purchaser, pursuant to which the
Company has agreed to provide to the Purchaser and its Affiliates outsourced
information technology services as may be requested from time to time in
accordance with the terms of the Master Services Agreement;
D. The Company has entered into a Recapitalization Agreement (the
"Recapitalization Agreement"), dated as of April 26, 2004, by and between
CDR-Cookie Acquisition, L.L.C., a Delaware limited liability company ("CDR") and
the Company, pursuant to which CDR has agreed to exchange 200,000 shares of the
Company's Series A Voting Convertible Preferred Shares and warrants to acquire
3,500,000 million shares of Common Stock at an exercise price of $25 per share
and 1,800,000 million shares of Common Stock at an exercise price of $31 per
share, for receipt from the Company of $180 million in cash, a promissory note
in the amount of $15,000,000, 2,000,000 shares of the Company's Common Stock,
and warrants to purchase an aggregate of 5,000,000 shares of Common Stock at an
exercise price of $18 per share;
E. At the Closing (defined below), the Company, CDR and the Purchaser
will into a Registration Rights Agreement, by and among CDR, the Purchaser and
the Company, conferring certain rights upon the Purchaser and CDR to have shares
of the Company's securities registered under the Securities Act of 1933;
F. The Purchaser, Xx. Xxxxxxxx X. Xxxxxxxxx ("RBV") and the Xxxxxxxx X.
Xxxxxxxxx Trust dated October 19, 1990, as amended and restated on February 1,
1995 (the "RBV Trust"), have entered into a Common Stock Purchase Agreement
dated as of April 26, 2004 (the "Xxxxxxxxx Stock Purchase Agreement"), pursuant
to which the Purchaser has agreed to purchase
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from RBV and the RBV Trust, and RBV and the RBV Trust have agreed to sell to the
Purchaser, an aggregate of 2,300,000 shares of Common Stock;
G. The Purchaser, RBV and the RBV Trust have entered into a
Shareholder's Agreement dated April 26, 2004 by and among the Purchaser, RBV,
and the RBV Trust (the "Xxxxxxxxx Shareholder's Agreement");
H. The Company, RBV and the RBV Trust have entered into a Voting
Agreement dated April 26, 2004 by and among the Company, RBV and the RBV Trust
(the "Xxxxxxxxx Voting Agreement"); and
I. The Company and the Purchaser have entered into a Standstill and
Shareholder Rights Agreement dated April 26, 2004 between the Company and the
Purchaser (the "Standstill Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties agree as follows:
ARTICLE 1
STOCK PURCHASE
1.1 Sale and Purchase of the Shares. Subject to the terms and conditions
hereof, at the Closing, the Company agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Company, for an aggregate purchase price
of $104,400,000.00 (the "Purchase Price"), the Shares and the Warrants.
1.2 Closing.
(a) Time and Place of Closing. Unless this Agreement shall have been
terminated and the transactions contemplated herein shall have been abandoned
pursuant to Article 7 hereof, the closing of the purchase and sale of the Shares
and Warrants (the "Closing") shall take place at the offices of Butzel Long,
P.C., at 10:00 A.M., Eastern Standard Time, on the second Business Day after the
satisfaction or waiver of all of the conditions to the Closing set forth in this
Agreement (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions).
The "Closing Date" shall be the date the Closing occurs.
(b) Transactions at the Closing. At the Closing, subject to the terms
and conditions of this Agreement:
(i) The Company will deliver to the Purchaser one or more
certificates registered in the name of the Purchaser representing the
Shares;
(ii) The Company will deliver to the Purchaser the Warrants in
substantially the form of Exhibit 1.1(b); and
(iii) The Purchaser will pay to the Company the Purchase Price, by
wire transfer of immediately available funds to an account or accounts
which have been designated by the Company to the Purchaser at least five
Business Days prior to the Closing Date.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company disclosure schedule (which shall
set forth with reasonable specificity by reference to Sections of this Agreement
the disclosure matters contained therein) delivered on or prior to the date
hereof (the "Company Disclosure Schedule") or (ii) the Company SEC Documents
filed with the SEC and publicly available prior to the date hereof and in any
amendments filed with respect thereto prior to the date hereof (the "Filed
Company SEC Documents"), the Company represents and warrants to the Purchaser as
of the date hereof and as of the Closing Date that:
2.1 Organization. Each of the Company and its Subsidiaries is a
corporation or other entity duly organized, validly existing, and in good
standing (with respect to jurisdictions that recognize the concept of good
standing) under the laws of the jurisdiction of its incorporation or
organization, and has all requisite corporate power and authority to own, lease,
use and operate its properties and to carry on its business as it is now being
conducted, except where the failure of any Subsidiary to be in good standing
would not have a Material Adverse Effect on the Company. Each of the Company and
its Subsidiaries is qualified or licensed to do business as a foreign
corporation and is in good standing (with respect to jurisdictions that
recognize the concept of good standing) in each jurisdiction in which it owns
real property or in which the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed in the aggregate would not have a Material Adverse Effect
on the Company. None of the Company or any of its Subsidiaries is in breach or
violation of any of its articles or certificate of incorporation, bylaws or
other organizational documents. The Company has previously delivered to the
Purchaser a complete and correct copy of each of its restated articles of
incorporation, as amended (the "Articles of Incorporation") and Bylaws, as
currently in effect. Schedule 2.1 of the Company Disclosure Schedule sets forth
a complete and correct list of the Subsidiaries of the Company and their
respective jurisdictions of incorporation or organization.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists of 200,000,000
shares of Common Stock and 1,000,000 Shares of Preferred Stock. At the close of
business on March 31, 2004: (i) 26,852,244 shares of Common Stock were issued
and outstanding; (ii) 13,247,454 shares of Common Stock were reserved for
issuance pursuant to the 1996 Stock Option Plan and the Employee Stock Purchase
Plan, of which 2,926,752 shares are subject to outstanding options to purchase
Common Stock (the "Company Stock Options"); (iii) 200,000 Shares of Series A
Preferred Stock, the only series of Preferred Stock that has been designated,
were issued and outstanding; and (iv) warrants to purchase 5,300,000 shares of
Common Stock (the "CD&R Warrants") were issued and outstanding. As of the
Closing, there are no outstanding shares of Series A Preferred Stock. All
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. All
shares of Common Stock which may be issued upon exercise of the Company Stock
Options, conversion of the Preferred Stock, exercise of the CD&R Warrants or
exercise of the Warrants will be, when issued in accordance with their terms and
their respective governing documents, duly authorized, validly issued, fully
paid and nonassessable and not subject to any preemptive rights. Except as
expressly provided in this Agreement and except for changes since March 31, 2004
resulting from the issuance of shares of Common Stock upon exercise of Company
Stock
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Options granted prior to the date hereof pursuant to the Plans, (x) there are
not issued, reserved for issuance or outstanding (A) any shares of capital stock
or other Voting Securities of the Company, (B) any securities of the Company or
any of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or Voting Securities of the Company, (C) any warrants,
calls, options or other rights to acquire from the Company or any of its
Subsidiaries or any obligation of the Company or any of its Subsidiaries to
issue, or cause to be issued, any capital stock, Voting Securities or securities
or options convertible into or exchangeable or exercisable for capital stock or
Voting Securities of the Company, (y) there are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any such securities or options other than those described in the second
sentence of this Section 2.2(a) and (z) there are no voting trusts or similar
agreements to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(b) The Shares to be issued at the Closing and the Warrants have been
duly authorized by all necessary corporate action on the part of the Company,
and at the Closing the Shares to be issued at Closing will have been validly
issued and, assuming payment therefor has been made in accordance with this
Agreement, will be fully paid and nonassessable, and the issuance of such Shares
will not be subject to preemptive or subscription rights of any other
shareholder or other holder of securities convertible into capital stock of the
Company. At the Closing, the Warrant Shares shall have been duly authorized by
all necessary corporate action on the part of the Company, and the Company shall
have validly reserved for issuance a number of shares of Common Stock that will
be sufficient to permit the exercise in full of the Warrants. Assuming payment
therefor has been made, upon exercise of the Warrants, the Warrant Shares will
be validly issued and outstanding, fully paid and nonassessable, and will not be
subject to preemptive or subscription rights of any other shareholder of the
Company.
(c) All of the outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of the Company's
Subsidiaries are beneficially owned, directly or indirectly, by the Company and
neither the Company nor any of its Subsidiaries owns any shares of capital stock
or other securities of, or interest in, any other Person (other than any
Subsidiaries of the Company), or is obligated to make any capital contribution
to or other investment in any such Person.
2.3 Authorization and Validity of Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party and to consummate, subject
to the Shareholder Approval as contemplated by Section 6.3 hereof, the
transactions contemplated for the Closing and the transactions contemplated by
the Ancillary Agreements to which it is a party. The execution, delivery and
performance by the Company of this Agreement and the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby have been duly recommended by the Special Committee and duly
authorized by the Board and no other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement
and the Ancillary Agreements to which it is a party by the Company and, except
for the Shareholder Approval, the consummation of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery of this
Agreement by the Purchaser, is a valid and binding obligation of the Company in
accordance with its terms. Each
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Ancillary Agreement to which the Company is a party, when executed and
delivered, assuming due authorization, execution and delivery of such Ancillary
Agreements by the counterparties thereto, will constitute a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
2.4 No Violations; Consents and Approvals.
(a) Neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(i) violate any provision of the Articles of Incorporation or Bylaws of the
Company, (ii) conflict with, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration, or to the
imposition of any Lien) under, or result in the acceleration or trigger of any
payment, time of payment, vesting or increase in the amount of any compensation
or benefit payable pursuant to, the terms, conditions or provisions of any note,
bond, mortgage, indenture, guarantee or other evidence of indebtedness, or any
lease, license, contract, agreement, plan or other instrument or obligation, to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their assets may be bound or (iii) conflict with or violate any Laws
applicable to the Company, any of its Subsidiaries or any of their properties or
assets; except in the case of clause (ii) for such conflicts, violations,
breaches or defaults which in the aggregate would not have a Material Adverse
Effect on the Company.
(b) No filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any federal, state, local or
foreign court, legislative, executive or regulatory authority or agency (a
"Governmental Authority") or any other Person is required in connection with the
execution, delivery and performance of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, except (i)
the Shareholder Approval, (ii) pursuant to applicable requirements under the
Exchange Act, Nasdaq listing requirements and the HSR Act, and (iii) such other
consents, approvals, authorizations, and notifications, of or to any Person,
other than a material consent, approval, authorization and notification of or to
any Governmental Authority, the failure of which to be obtained or made in the
aggregate would not have a Material Adverse Effect on the Company.
2.5 SEC Reports and Financial Statements.
(a) Since December 31, 2001, the Company has timely filed with the SEC
all forms and documents required to be filed by it under the Securities Act and
the Exchange Act (collectively, the "Company SEC Documents"). As of their
respective dates, the Company SEC Documents (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (ii) complied
as to form in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as applicable, and the applicable rules and
regulations of the SEC thereunder.
(b) The consolidated financial statements included in the Company SEC
Documents (such financial statements, including the notes thereto, the
"Financial Statements") have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as otherwise noted therein
and except that the quarterly financial statements are subject to year end
adjustment and do not contain all footnote disclosures required by GAAP) and
fairly present in all material respects the consolidated financial position and
the consolidated results of
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operations and cash flows of the Company and its consolidated Subsidiaries as at
the dates thereof or for the periods presented therein. The Filed Company SEC
Documents contain the consolidated balance sheet of the Company dated as of and
as at December 31, 2003 (the "Balance Sheet") and the consolidated statements of
income, consolidated statements of cash flow and consolidated statements of
stockholders' equity for the year ended December 31, 2003.
2.6 Absence of Certain Changes. Since the date of the Balance Sheet, (i)
no event, occurrence, fact, condition, change, development or effect exists or
has occurred or is threatened that, individually or in the aggregate, has had or
would have a Material Adverse Effect on the Company (other than a Material
Adverse Effect resulting primarily and directly from the announcement of the
transactions contemplated hereby and compliance by the Company with the terms of
this Agreement, or solely from the failure by the Company to meet internal
projections or forecasts due to causes that would not otherwise constitute a
Material Adverse Effect); (ii) the Company and its Subsidiaries have conducted
their respective operations only in the ordinary course consistent with past
practices and (iii) the Company and its Subsidiaries have not taken any action
that if, taken after the date hereof would constitute a breach of any of the
provisions of Article 6.
2.7 Absence of Undisclosed Liabilities. Except for liabilities that
would not in the aggregate have a Material Adverse Effect on the Company, the
Company and its Subsidiaries do not have any liabilities that would be required
to be reflected or reserved against in a consolidated balance sheet of the
Company (or reflected on the notes thereto) prepared in accordance with GAAP
consistently applied with the financial statements and balance sheets contained
in the Filed Company SEC Documents.
2.8 Information in Proxy Statement. The Proxy Statement (and any
amendment thereof or supplement thereto) at the date mailed to Company
shareholders and at the time of the Shareholder Meeting, (i) will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
and (ii) will comply in all material respects with the applicable provisions of
the Exchange Act and the rules and regulations thereunder; except that no
representation is made by the Company with respect to statements made in the
Proxy Statement based on information supplied by the Purchaser specifically for
inclusion in the Proxy Statement.
2.9 Employee Benefit Plans; ERISA.
(a) Each "employee benefit plan" (as defined in Section 3(3) of ERISA)
and each employment agreement, collective bargaining agreement, consulting
agreement, severance agreement, bonus, incentive or deferred compensation, stock
option or other equity based, severance, termination, change in control,
retention, employment, vacation, medical, dental, life, disability, death
benefit, other welfare, profit-sharing, retirement, pension, post-retirement
benefits, or other compensation or benefit plan, agreement, policy or
arrangement in respect of which the Company or any of its Subsidiaries has any
material liability (collectively, the "Plans") has been filed with the Filed
Company SEC Documents. Except as disclosed in the Filed Company SEC Documents,
the Company has not incurred or become subject to any material liability under
Title I or IV of ERISA, the penalty or excise tax provisions of the Code
relating to employee plans or any similar Laws of a foreign jurisdiction. To the
knowledge of
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the Company, no condition exists or event has occurred that presents a risk to
the Company of incurring or becoming subject to any such material liability.
(b) All amounts payable under the Plans are deductible for federal
income tax purposes and none of the Company and its Subsidiaries will, as a
result of the transactions contemplated by this Agreement (either alone or
together with other events), make or become obligated to make any "excess
parachute payment" as defined in Section 280G of the Code. No current or former
employee, director, agent, independent contractor or officer of the Company or
any Subsidiary is or will become entitled to any severance pay or unemployment
compensation, or any additional or new compensation, benefits or other
compensatory payment or an increase in the amount of any compensation, benefits
or other compensatory payment in connection with or as a result of the
consummation of the transactions contemplated by this Agreement. The preceding
sentence shall not apply to agents or independent contractors of the Company or
any Subsidiary who do not perform services for customers of the Company or such
Subsidiary in the ordinary course of the Company's or such Subsidiary's
business. Neither the vesting nor the timing of the payment of any such
compensation, benefit or other compensatory payment in respect of any such
employee or director has been or will be accelerated in connection with or as a
result of the consummation of the transactions contemplated by this Agreement.
2.10 Litigation; Compliance with Law.
(a) There is no suit, claim, action, arbitration, proceeding or
investigation or other Litigation (as defined below) pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries or any of their properties or assets which, individually or in the
aggregate, if determined adversely to the Company or any such Subsidiary, would
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is subject to any settlement or similar agreement with any
Governmental Authority, or to any order, judgment, decree, injunction or award
of any Governmental Authority or arbitrator, that individually or in the
aggregate, would have a Material Adverse Effect on the Company. "Litigation"
means any action, cause of action, claim, demand, suit, proceeding, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or threatened, by or
before any court, tribunal, arbitrator or other Governmental Authority.
(b) The Company and each of its Subsidiaries are in compliance with all
material Laws applicable to them, and neither the Company nor any of its
Subsidiaries has received any notice alleging noncompliance with such Laws. The
Company and each of its Subsidiaries has all material licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of Governmental Authorities or
other Persons (collectively, "Permits") that are required in order to permit
each to carry on its business as it is presently conducted except where failure
to hold such Permits in the aggregate would not have a Material Adverse Effect
on the Company; provided that "Permits" shall not include any consents,
authorizations, waivers, orders, approvals or other actions by any Government
Authorities to which the Company provides services under Contracts in the
ordinary course of its business. All such Permits are in full force and effect
and the Company and each of its Subsidiaries is in compliance in all material
respects with the terms of such Permits, including requirements for
notifications, filing, reporting, posting and maintenance of logs and records.
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(c) There is no Litigation pending or, to the knowledge of the Company,
threatened, that would result in the termination, modification or nonrenewal of
any Permit, and, to the knowledge of the Company, neither the Company nor any of
its Subsidiaries has received notice that any Permit will be terminated or
modified or cannot be renewed in the ordinary course of business, and there is
no reasonable basis for any such termination, modification or nonrenewal, except
for such terminations, modifications or nonrenewals as in the aggregate would
not have a Material Adverse Effect on the Company. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any Permit, or result in any
termination, modification or nonrenewal thereof, except for such violations,
terminations, modifications or nonrenewals thereof as in the aggregate would not
have a Material Adverse Effect on the Company.
2.11 Intellectual Property.
(a) The Company and its Subsidiaries own (beneficially and as of
record), or possess valid and legally enforceable licenses to use all
Intellectual Property used or held for use in connection with, necessary for the
conduct of, or otherwise material to, their business and operations as currently
conducted (the "Company Intellectual Property").
(b) The conduct of the business of the Company and its Subsidiaries as
currently conducted does not infringe any Intellectual Property of any Person.
Neither the Company nor any of its Subsidiaries has actual knowledge of, and, to
the knowledge of the Company, neither the Company nor any of its Subsidiaries
has received notice of, any such current infringement, except, in each case, for
such infringements as in the aggregate would not have a Material Adverse Effect
on the Company. To the knowledge of the Company, no Person is infringing or
allegedly infringing any Intellectual Property of the Company or its
Subsidiaries. As of the date hereof, no claim or demand of any Person has been
made or, to the knowledge of the Company or any Subsidiary, threatened, nor is
there any Litigation that is pending or, to the knowledge of the Company,
threatened, that (i) challenges the rights of the Company or any Subsidiary in
respect of any Company Intellectual Property, or (ii) asserts that the Company
or any Subsidiary is infringing any Intellectual Property, except in each case
for such challenges, assertions or claims that in the aggregate would not have a
Material Adverse Effect on the Company. None of the Company Intellectual
Property is or has been the subject of any Litigation within the last five
years, whether or not resolved in favor of the Company or any Subsidiary.
(c) Except as would not in the aggregate have a Material Adverse Effect
on the Company, all Owned Software, when delivered or made available to
customers does not contain any viruses or defects that would prevent it from
performing in all respects the tasks and functions that it was intended to
perform.
(d) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not result in the loss of, or creation
of any Lien on, the rights of the Company or any Subsidiary with respect to the
Intellectual Property owned or used by them, except where such losses and such
Liens in the aggregate would not have a Material Adverse Effect on the Company.
2.12 Material Contracts; Registration Rights Agreements.
(a) Schedule 2.12(a) of the Disclosure Schedule sets forth a complete
and accurate list of Contracts that would be required to be filed as an exhibit
to the Company's Annual Report
10
on Form 10-K, if such Annual Report were required to be filed on the date
hereof, a copy of each of which Contract has been made available to the
Purchaser (the "Material Contracts").
(b) Each of the Material Contracts is in full force and effect, and
neither the Company nor any of its Subsidiaries, nor, to the knowledge of the
Company, any other Person, is in breach of, or default under, any such Material
Contract, and no event has occurred that with notice or passage of time or both
would constitute such a breach or default thereunder by the Company or any of
its Subsidiaries, or, to the knowledge of the Company, any other Person, except
for such failures to be in full force and effect and such conflicts, violations,
breaches or defaults as in the aggregate would not have a Material Adverse
Effect on the Company.
(c) Schedule 2.12(c) of the Company Disclosure Schedule sets forth a
complete and accurate list of each Contract the Company has entered into with
any Person, pursuant to which Contract such Person has the right to request or
to cause the Company to effect registrations under the Securities Act of Equity
Securities held by such Person (each, a "Registration Rights Agreement") and the
number of demand registration rights outstanding thereunder on the date hereof.
On or prior to the date hereof the Company has provided the Purchaser a complete
and accurate copy of each such Registration Rights Agreement. There are no
agreements between Xxxxxxxx X. Xxxxxxxxx and the Company with respect to
employment, share ownership, indemnification, standstill, equity or voting
matters other than the Employment Agreement dated March 17, 2000, the
Subscription Agreement dated April 20, 2000, the Indemnification Agreement dated
April 20, 2000.
2.13 Taxes.
(a) Each of the Company, its Subsidiaries, and any Consolidated Group
(as defined below) has timely filed all material Tax Returns (as defined below)
required to be filed by it and has timely paid all Taxes shown on such Tax
Returns, and all such Tax Returns are correct and complete in all material
respects. All material Taxes required to be withheld by the Company or any of
its Subsidiaries have been timely withheld and so paid to the proper taxing
authority or properly set aside in accounts for such purpose.
(b) No audits or other administrative proceedings or court proceedings
are presently pending with regard to any material Taxes or Tax Return of any of
the Company, its Subsidiaries or any Consolidated Group. Neither the Company nor
any of its Subsidiaries has received any notice of deficiency or assessment from
any taxing authority with respect to any material liabilities for income or
other Taxes which has not been fully paid or finally settled.
(c) There is no liability for Taxes for which the Company or any of its
Subsidiaries would be held liable solely by reason of Section 1.1502-6 of the
Treasury Regulations or any comparable provisions of any other Tax law or as a
successor or transferee. Neither the Company nor any of its Subsidiaries is a
party to or bound by or has any obligation under any Tax sharing, allocation,
indemnity or other similar agreement or arrangement entered into with any person
(other than the Company and its Subsidiaries).
(d) "Consolidated Group" shall mean any consolidated, combined, unitary
or aggregate group for Tax purposes of which the Company or any of its
Subsidiaries is a member. "Tax Returns" shall mean all federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns, and any amendments to any of the foregoing, relating to
Taxes.
11
2.14 Environmental Matters.
(a) Except as would not have a Material Adverse Effect on the Company:
(i) each of the Company and its Subsidiaries is in compliance in
all respects with all applicable Environmental Laws pertaining to any of the
properties and assets of the Company or any of its Subsidiaries and, to the
knowledge of the Company, no violation by the Company or any of its Subsidiaries
is being alleged of any applicable Environmental Law relating to any of their
respective properties and assets or the use or ownership thereof, or to their
respective businesses and operations;
(ii) to the knowledge of the Company, neither the Company nor any
of its Subsidiaries has caused or taken any action that will result in, and
neither the Company nor any of its Subsidiaries is subject to, any liability or
obligation on the part of the Company or any of its Subsidiaries relating to (x)
the environmental conditions on, under, or about the properties or assets
currently owned, leased, operated or used by the Company or any of its
Subsidiaries, including without limitation, the air, soil and groundwater
conditions at such properties or (y) the past or present use, management,
handling, transport, treatment, generation, storage, disposal, discharge, leak,
emission, or other manner of release of any Hazardous Materials; and
(iii) the Company has disclosed and made available to the Purchaser
all information, including, without limitation, all studies, analyses and test
results, in the possession, custody or control of or otherwise known to the
Company or any of its Subsidiaries relating to (x) the environmental conditions
on, under or about properties or assets currently or formerly owned, leased,
operated or used by the Company or any of its Subsidiaries or any predecessor in
interest thereto at the present time or in the past, and (y) any Hazardous
Materials used, managed, handled, transported, treated, generated, stored,
discharged, leaked, emitted, or otherwise released by the Company or any of its
Subsidiaries or any other Person on, under, about or from any of the properties
currently or formerly owned or leased, or otherwise in connection with the use
or operation of any of the properties and assets of the Company or any of its
Subsidiaries, or their respective businesses and operations.
(b) "Environmental Law" means any foreign, federal, state or local law,
regulation, rule, ordinance or case law relating to pollution or protection of
human health and safety or the environment, including, but not limited to, laws
relating to releases or threatened releases of Hazardous Materials into the
environment and including laws pertaining to the protection of the health and
safety of employees. "Hazardous Materials" means any substance or material that
is classified or regulated as "hazardous" or "toxic" pursuant to any
Environmental Law, including without limitation, asbestos, polychlorinated
biphenyls and petroleum.
2.15 Shareholder Approval. Except for the Shareholder Approval, no vote
of or approval by the Company's shareholders or the Board is required under the
rules of NASDAQ, the MBCA, the Articles of Incorporation or the Bylaws of the
Company to approve this Agreement, the issuance to the Purchaser of the Shares
or the consummation of any of the other transactions contemplated hereby or in
any of the Ancillary Agreements.
2.16 Brokers. Except for Xxxxxxx & Marsal LLC and The Chesapeake Group,
Inc., a complete and accurate copy of each engagement letter, or a complete and
accurate description of the understanding between the Company and each entity if
an engagement letter is unavailable,
12
of which has been provided to the Purchaser, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries,
that is or will be payable by the Company or any of its Subsidiaries.
2.17 Insurance. The Company and its Subsidiaries maintain insurance
policies with reputable carriers with such coverages as are reasonable and
customary for companies engaged in business of the type engaged in by the
Company. Such policies are in full force and effect, and all premiums due
thereon have been paid. The Company and its Subsidiaries have complied in all
material respects with the terms and provisions of such policies.
2.18 Labor Matters, etc. Neither the Company nor any of its Subsidiaries
is a party to or bound by and none of their respective employees is subject to
any collective bargaining agreement, memorandum of understanding or other
written document relating to the terms and conditions of employment for any
group of employees, and there are no labor unions or other organizations
representing or purporting or attempting to represent any employees employed by
any of the Company and its Subsidiaries. Since December 31, 2002, there has not
occurred or been threatened any strike, slowdown, picketing, work stoppage,
concerted refusal to work overtime or other similar labor activity with respect
to any employees of the Company or any of its Subsidiaries. There are no
material labor disputes currently subject to any grievance procedure,
arbitration or litigation with respect to any employee of the Company or any of
its Subsidiaries. The Company and its Subsidiaries have complied with all
applicable Laws pertaining to the employment or termination of employment of
their respective employees, including, without limitation, all such Laws
relating to labor relations, equal employment opportunities, fair employment
practices, prohibited discrimination or distinction and other similar employment
activities, except for any failures so to comply that individually or in the
aggregate would not have a Material Adverse Effect on the Company.
2.19 Disclosure. No representation or warranty by the Company contained
in this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. To the
knowledge of the Company, there is no material information relating to the
Company and its Subsidiaries, taken as a whole, that has not been disclosed to
the Purchaser prior to the date hereof (or after the date hereof, as to any fact
arising or that becomes known after the date hereof).
2.20 Takeover Statutes. Prior to the date hereof, each of the Board and
the Company have taken all necessary action such that no "business combination,"
"Fair price," "Moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation enacted under state or federal laws in the
United States (each, a "Takeover Statute") applicable to the Company or any of
its Subsidiaries, including, without limitation, Chapter 7A and Chapter 7B of
the MBCA, is applicable to the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
2.21 Customers; Liability for Defective Services. Since December 31,
2003, other than in the ordinary course of business, the Company (a) to its
knowledge has not received any notice, and has no reason to believe, that any
material customer of the Company (i) has ceased to purchase, will cease to
purchase, or has terminated or will terminate any contract in respect of the
purchase of, services provided by the Company, or (ii) has materially reduced or
will
13
materially reduce the purchase of services provided by the Company, or (b) has
not adopted any plan or policy or agreed or otherwise made any commitment
(regardless of whether such agreement or commitment would constitute an
enforceable obligation or contract under applicable law) to permit or suffer any
material customer of the Company to materially reduce the price it will pay for
any services of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as disclosed in the Purchaser disclosure schedule (which shall set
forth with reasonable specificity by reference to the Sections of this Agreement
the disclosure matters therein) delivered on or prior to the date hereof (the
"Purchaser Disclosure Schedule"), Purchaser represents and warrants to the
Company as of the date hereof and as of the Closing Date as follows:
3.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of Arkansas, with all requisite
power and authority to own, lease and operate its properties and to conduct its
business as now being conducted. Purchaser is not in breach or violation of any
of its articles of incorporation, Bylaws or other organizational documents.
3.2 Authorization; Validity of Agreement. Purchaser and each of its
Affiliates has the requisite power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to consummate
the transactions contemplated by this Agreement and by the Ancillary Agreements
to which it is a party. The execution, delivery and performance by Purchaser and
each of its Affiliates of this Agreement and the Ancillary Agreements to which
it is a party and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action by Purchaser or such
Affiliate and no other proceedings on the part of the Purchaser or such
Affiliate are necessary to authorize the execution and delivery of this
Agreement by Purchaser or any Ancillary Agreement by Purchaser or any of its
Affiliates, and the consummation of the transactions contemplated hereby or
thereby. This Agreement has been duly executed and delivered by Purchaser and is
Purchaser's valid and binding obligation enforceable against it in accordance
with its terms. Each Ancillary Agreement to which Purchaser or any of its
Affiliates is a party, when executed and delivered, assuming due authorization,
execution and delivery of such Ancillary Agreements by the Affiliate of
Purchaser and the counterparties thereto, will constitute a valid and binding
obligation of such Affiliate of Purchaser enforceable against such Affiliate of
Purchaser in accordance with its terms.
3.3 Consents and Approvals; No Violations.
(a) Neither the execution and delivery by the Purchaser of this
Agreement or the Ancillary Agreements to which the Purchaser or its Affiliates
is a party, nor the consummation by the Purchaser or its Affiliates of the
transactions contemplated hereby or thereby, will (i) violate any provision of
Purchaser's or such Affiliates' articles of incorporation or Bylaws, (ii)
conflict with, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination, amendment, cancellation or acceleration under, any of the terms,
conditions or provisions of any Contract to which Purchaser or such Affiliates
is a party or by which any of Purchaser's or such Affiliates' assets may be
bound or (iii) conflict with or violate any Laws applicable to either Purchaser
or such
14
Affiliates or any of such Purchaser's or such Affiliates' properties or assets;
except in the case of clause (ii) for such conflicts, violations, breaches or
defaults which in the aggregate would not have a Material Adverse Effect on the
Purchaser or such Affiliates.
(b) Assuming that the representation and warranty of the Company set
forth in Section 2.4(b) is true and correct, no filing or registration with,
declaration or notification to, or order, authorization, consent or approval of,
any Governmental Authority is required in connection with the execution and
delivery of this Agreement by the Purchaser or the consummation by the Purchaser
of the transactions contemplated hereby, except (i) pursuant to the applicable
requirements under the HSR Act, (ii) applicable requirements under the Exchange
Act, and (iii) such other consents, approvals, authorizations and notifications
of or to any Person, other than a material consent, approval, authorization and
notification of or to any Governmental Authority, the failure of which to be
obtained or made would not have a Material Adverse Effect on the Purchaser.
3.4 Information in Proxy Statement. None of the information supplied in
writing by the Purchaser specifically for inclusion in the Proxy Statement
(including any amendments or supplements thereto) will, at the date mailed to
shareholders and at the time of the Shareholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
3.5 Financing. Purchaser currently has and will have on the Closing
Date, sufficient immediately available funds to pay (through existing credit
facilities or otherwise) the Purchase Price.
3.6 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser, that is or will be payable by the Company or any of
its Subsidiaries.
3.7 Litigation; Compliance with Law.
(a) There is no suit, claim, action, arbitration, proceeding or
investigation or other Litigation pending or, to the knowledge of the Purchaser
or any of its Affiliates, threatened, against the Purchaser any of its
Affiliates, any of their Subsidiaries or any of their properties or assets
which, individually or in the aggregate, if determined adversely to the
Purchaser or any of its Affiliates, would reasonably have a Material Adverse
Effect on the Purchaser or any of its Affiliates. Neither the Purchaser, nor any
of its Subsidiaries nor any of its Affiliates is subject to any settlement or
similar agreement with any Governmental Authority, or to any order, judgment,
decree, injunction or award of any Governmental Authority or arbitrator, that
individually or in the aggregate, would have a Material Adverse Effect on the
Purchaser or any of its Affiliates.
(b) The Purchaser is in compliance in all material respects with all
Laws applicable to it, and the Purchaser has not received any notice alleging
noncompliance. The Purchaser has all Permits that are required in order to
permit it to carry on its business as it is presently conducted except where
failure to hold such Permits in the aggregate would not have a Material Adverse
Effect on the Purchaser. All such Permits are in full force and effect and the
Purchaser is in
15
compliance in all material respects with the terms of such Permits, including
requirements for notifications, filing, reporting, posting and maintenance of
logs and records.
(c) There is no Litigation pending or, to the knowledge of the
Purchaser, threatened, that would result in the termination, modification or
nonrenewal of any Permit, and, to the knowledge of the Purchaser, it has not
received notice that any Permit will be terminated or modified or cannot be
renewed in the ordinary course of business, and there is no reasonable basis for
any such termination, modification or nonrenewal, except for such terminations,
modifications or nonrenewals as in the aggregate would not have or result in a
Material Adverse Effect on the Purchaser. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any Permit, or result in any
termination, modification or nonrenewal thereof, except for such violations,
terminations, modifications or nonrenewals thereof as in the aggregate would not
have a Material Adverse Effect on the Purchaser.
(d) The Purchaser is purchasing the Shares, the Warrants and the Warrant
Shares solely for investment, with no intention to resell such securities in
contravention of the Securities Act.
3.8 Knowledge. Neither the Purchaser nor, to the knowledge of the
Purchaser, any party acting on its behalf has any information or knowledge that
makes them believe that the Company's representations and warranties set forth
in Article 2 of this Agreement are not true and correct in all material respects
as of the date hereof.
ARTICLE 4
COVENANTS OF THE COMPANY
4.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Closing, the Company agrees as to itself and
its Subsidiaries that, except as (i) set forth in Schedule 4.1, (ii) to the
extent that the Purchaser otherwise consents in writing, (iii) required by Law,
(iv) mandatorily required by any Plan, or (v) specifically required by this
Agreement, the Ancillary Agreements or the Transactions:
(a) Reasonable Efforts. The Company will, and will cause its
Subsidiaries to, use commercially reasonable efforts to preserve the
relationships with customers, suppliers and others having business dealings with
the Company and its Subsidiaries.
(b) Other Transactions. The Company will not, nor will it permit any of
its Subsidiaries to, do any of the following (except as otherwise expressly
provided herein):
(i) amend its Articles of Incorporation, Bylaws or other
organizational documents (except to comply with the terms of this
Agreement and consummate the transactions contemplated herein and for
immaterial amendments to the certificate of incorporation or bylaws of any
of the Company's Subsidiaries, provided such amendments in no way
adversely affect the Purchaser or the rights granted to the Purchaser
hereunder);
(ii) declare or pay any dividend or make any distribution with
respect to the assets of the Company and its Subsidiaries;
(iii) redeem or otherwise acquire any shares of its capital stock or
issue any capital stock (except upon exercise of options issued prior to
the date hereof under a Company Stock Option Plan), or any option or
warrant or right relating thereto;
16
(iv) split, combine or reclassify any shares of its capital stock;
(v) incur any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business consistent
with past practice (except as incurred in connection with acquisitions to
the extent permitted hereby) and in an aggregate amount that would not be
material to the Company and its Subsidiaries, taken as a whole;
(vi) take any action or omit to take any action, which action or
omission would result in a breach of any of the representations and
warranties set forth in Article 2;
(vii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(viii) enter into any agreement or take any action in violation of
the terms of this Agreement or any Contract that would be required to be
set forth on Schedule 2.12 if in effect on the date hereof;
(ix) agree, whether in writing or otherwise, to do any of the
foregoing.
4.2 Access and Information. So long as this Agreement remains in effect,
prior to the Closing, the Company will (and will cause each of its Subsidiaries
and each of their respective accountants, counsel, consultants, officers,
directors, employees, agents and representatives to) give the Purchaser and its
representatives, reasonable access during reasonable business hours to all of
the respective properties, assets, books, contracts, commitments, reports and
records relating to the Company and its Subsidiaries, and furnish to the
Purchaser all such documents, records and information with respect to the
properties, assets and business of the Company and its Subsidiaries and copies
of any work papers relating thereto as the Purchaser shall from time to time
reasonably request. The Company will use reasonable efforts to keep the
Purchaser generally informed as to the affairs of the business of the Company
and its Subsidiaries and shall consult with the representatives of the Purchaser
on material matters pertaining to the Business.
4.3 Shareholders' Meeting; Proxy Statement.
(a) As promptly as practicable after the date hereof, the Company shall
prepare the Proxy Statement, and the Company shall prepare and file with the
SEC, and the Purchaser shall cooperate with the Company in such preparation and
filing, the Schedule 14A in which the Proxy Statement shall be included. The
Company will use its reasonable best efforts, after consultation with the
Purchaser, to respond promptly to any comments made by the SEC with respect to
the Schedule 14A or the Proxy Statement and use its reasonable best efforts to
cause the Proxy Statement to be cleared by the SEC, as promptly as practicable
following such filing. The Company will use its reasonable best efforts to cause
a definitive proxy statement (the "Proxy Statement") to be mailed to its
shareholders as promptly as practicable after the Proxy Statement is cleared by
the SEC. The Company shall include in the Proxy Statement the recommendation of
the Board (acting upon the recommendation of the Special Committee) that
shareholders of the Company approve the Transactions, unless such recommendation
has been withdrawn or modified as permitted by Section 4.10.
(b) The Company shall, as soon as practicable, in accordance with
applicable law and the Articles of Incorporation and the Bylaws of the Company,
duly call, set a record date for, give notice of, convene and hold the
Shareholder Meeting for the purpose of considering and taking action upon this
Agreement and such other matters as may be appropriate at the
17
Shareholder Meeting. The Company shall, through its Board (acting upon the
recommendation of the Special Committee), recommend that its shareholders
approve the Transactions and shall use all reasonable efforts to solicit from
shareholders of the Company proxies in favor of the approval thereof, unless
such recommendation has been withdrawn or modified as permitted by Section 4.10.
(c) If at any time prior to the Closing Date any event relating to the
Company or any of its Affiliates, or its, or its Affiliates', respective
officers, directors or shareholders, is discovered which should be set forth in
an amendment of, or a supplement to such Schedule 14A or the Proxy Statement,
the Company shall promptly so inform the Purchaser and will furnish all
necessary information to the Purchaser relating to such event and an appropriate
amendment or supplement to such Schedule 14A or Proxy Statement will thereafter
be filed with the SEC by the Company. All documents that the Company is
responsible for filing with the SEC in connection with the transactions
contemplated by this Agreement shall comply in all material respects, both as to
form and otherwise, with the Exchange Act and the rules and regulations
thereunder.
(d) The Company will immediately notify the Purchaser of the receipt of
any comments from the SEC concerning any of the filings described in this
Section 4.3. All filings with the SEC and all mailings to the Company's
shareholders in connection with the Purchaser, including the Proxy Statement,
shall be subject to the prior review and comment by the Purchaser, and with
respect to matters pertaining to the Purchaser, the approval of the Purchaser.
No such filing or mailing shall be made without the prior consent of the
Purchaser.
(e) If at any time prior to the Closing Date any event relating to the
Purchaser or any of its Affiliates, or its, or its Affiliates', respective
officers, directors or shareholders is discovered which should be set forth in
an amendment of, or a supplement to, such Schedule 14A or the Proxy Statement,
the Purchaser shall promptly so inform the Company and will furnish all
necessary information to the Company relating to such event and an appropriate
amendment or supplement to such Schedule 14A or Proxy Statement will thereafter
be filed with the SEC by the Company. All documents that the Purchaser is
responsible for filing with the SEC in connection with the transactions
contemplated by this Agreement shall comply in all material respects, both as to
form and otherwise, with the Exchange Act and the rules and regulations
thereunder.
4.4 Notification of Certain Matters. The Company shall give prompt
notice to the Purchaser, and the Purchaser shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty of the
Company, or of the Purchaser, as the case may be, contained in this Agreement to
be untrue or inaccurate in any material respect at the Closing, (ii) any
material failure of the Company, or the Purchaser, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder and (iii) any event, occurrence, fact, condition,
change, development or effect that, individually or in the aggregate, would have
a Material Adverse Effect on the Company or Purchaser or any of its Affiliates,
or cause a breach of Section 4.1; provided, however, that any failure to provide
such notice pursuant to this Section 4.4 shall not constitute a separate breach
of the terms of this Agreement.
18
4.5 Press Releases; Interim Public Filings. The Company shall deliver to
the Purchaser complete and correct copies of all press releases and public
filings made between the date hereof and the Closing Date, and, to the extent
any such press release and public filings refer in any way to the Purchaser or
its Affiliates, they shall be subject to the prior review and comment of the
Purchaser.
4.6 Listing. The Company shall use its reasonable best efforts to cause
the Shares to be listed or otherwise eligible for trading on the Nasdaq National
Market System or another national securities exchange.
4.7 Periodic Information. For so long as the Shares are outstanding, the
Company shall file all reports required to be filed by the Company under Section
13 or 15(d) of the Exchange Act and shall provide the holders of the Shares with
the information specified in Rule 144A(d) under the Securities Act.
4.8 New Shareholders. The Company agrees to use commercially reasonable
efforts to cause any Person or "group" (as defined in the Exchange Act) that
acquires ten percent or more of the Company's Voting Securities from the Company
or an Affiliate in a merger, stock purchase (other than in an underwritten
public offering) or other business combination to, enter into an agreement to
vote their shares of capital stock so as to effectuate the Purchaser's rights
under the Standstill and Shareholder Rights Agreement between the Company and
the Purchaser (the "Purchaser Standstill Agreement").
4.9 Shareholder Rights. The Board shall take all reasonably necessary
action such that, effective immediately after the Closing, the Company shall
have adopted a shareholder rights plan (or "poison pill") in compliance with the
provisions of Section 6.2(g).
4.10 No Solicitation by the Company.
(a) From the date of this Agreement until the Closing Date, the Company
shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any of its directors, officers or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly through another person, (i) solicit or initiate (including by way of
furnishing non-public information), or take any other action designed to solicit
or initiate, any inquiries or the making of any proposal which constitutes
either a Company Takeover Proposal or an Alternative Proposal or (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal or Alternative Proposal. Notwithstanding the foregoing, however, if the
Special Committee determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to act in a manner consistent
with its fiduciary duties to the Company's shareholders under applicable Law,
the Company may, in response to any Company Takeover Proposal that the Special
Committee in good faith believes is reasonably likely to lead to delivery of a
Company Superior Proposal, which Company Superior Proposal was not solicited by
it and does not otherwise result from a breach of this Section 4.10 and, subject
to providing prior notice of any such proposal or any such request for
non-public information and of its decision to take such action to the Purchaser,
(x) furnish information with respect to the Company and its Subsidiaries to any
person inquiring about or making a Company Takeover Proposal pursuant to a
customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in discussions or
negotiations regarding such Company Takeover Proposal, as the case may be.
19
(b) Except as expressly permitted by this Section 4.10, neither the Board,
the Special Committee nor any other committee shall (i) withdraw or modify, in a
manner adverse to the Purchaser, the approval or recommendation by such Board or
such committee of the Transactions or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Company Takeover Proposal or
Alternative Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
related to any Company Takeover Proposal or Alternative Proposal, unless, in the
case of clauses (i) and (ii), the Special Committee determines in good faith,
after consultation with outside counsel, that in light of a Company Superior
Proposal, it is necessary to do so in order to act in a manner consistent with
its fiduciary duties to the Company's shareholders under applicable Law.
Notwithstanding the foregoing provisions of this Section 4.10(b), prior to the
approval of the Transactions by the Company's shareholders at the Shareholder
Meeting, the Special Committee, to the extent that it determines in good faith,
after consultation with outside counsel, that in light H of a Company Superior
Proposal, it is necessary to do so in order to act in a manner consistent with
its fiduciary duties to the Company's shareholders under applicable Law, may
terminate this Agreement solely to enter into a definitive agreement with
respect to any Company Superior Proposal, but only at a time that is after the
fifth Business Day following the Purchaser's receipt of written notice advising
them that the Special Committee is prepared to accept a Company Superior
Proposal, specifying the material terms and conditions of such Company Superior
Proposal (all of which information will be kept confidential by the Purchaser in
accordance with the provisions of Section 4.12 of the Standstill Agreement), and
only if the Company has not received, prior to the end of the fifth Business Day
after the Company has provided such notice, the Purchaser's written undertaking
to consummate a transaction on terms and conditions that are at least as
favorable to the Company as those that are applicable to the Company Superior
Proposal.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 4.10, the Company shall advise the Purchaser of any
request for information or of any Company Takeover Proposal or Alternative
Proposal, within one Business Day after the Company's receipt of such request or
such Company Takeover Proposal or Alternative Proposal, as the case may be, and
the material terms and conditions of such request or such Company Takeover
Proposal or Alternative Proposal.
(d) Nothing contained in this Section 4.10 shall prohibit the Company from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) and 14d-9 promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Special Committee or the Board (acting upon the recommendation of the Special
Committee), after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable Law.
ARTICLE 5
COVENANTS OF THE COMPANY AND THE PURCHASER
5.1 Public Announcements.
(a) On the date hereof, the Company and the Purchaser shall jointly
prepare a press release by the Company, satisfactory in form and substance to
each of them, announcing (i) the general terms of the transactions contemplated
hereby and (ii) the general reasons for the transactions contemplated hereby.
20
(b) Prior to the Closing, except as required by applicable Law or by the
rule and regulation of any applicable stock market or stock exchange, no party
shall, nor shall permit its Affiliates to, make any public announcement in
respect of this Agreement or the transactions contemplated hereby without the
prior consent of the other parties.
5.2 Further Actions. From the date hereof to the Closing, each party
agrees to use its reasonable best efforts to take all actions and to do all
things necessary or appropriate to consummate the transactions contemplated
hereby and by the Ancillary Agreements as promptly as possible, including,
without limitation: (i) filing or supplying all applications, notifications and
information required to be filed or supplied by it pursuant to applicable Law,
(ii) obtaining all Consents and Governmental Approvals necessary or appropriate
to be obtained by it in order to consummate transactions contemplated hereby and
thereby, (iii) obtaining the Shareholder Approval of the Transactions and (iv)
coordinating and cooperating with the other parties in exchanging such
information and supplying such reasonable assistance as may be reasonably
requested by the other parties.
5.3 Further Assurances. Following the Closing, each party shall execute
and deliver such additional instruments, documents, conveyances or assurances
and take such other actions as shall be necessary, or otherwise reasonably
requested by another party hereto, to confirm and assure the rights and
obligations provided for in this Agreement and the Ancillary Agreements, and
render effective the consummation of the transactions contemplated hereby and
thereby. Neither party will alter, revise or amend any of the Ancillary
Agreements to which either of them is a party from the date of this Agreement
through the Closing Date without the express written consent of the other party.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Condition to Obligations of Each Party. The obligation of the parties
to consummate the transactions contemplated hereby and by the Ancillary
Agreements to which each is a party shall be subject to the fulfillment of the
following conditions on or prior to the Closing Date (any or all of which may be
waived, in whole or in part, in writing to the extent permitted by applicable
Law):
(a) No Injunction, etc. Consummation of the transactions contemplated
hereby or by the Ancillary Agreements shall not have been restrained, enjoined
or otherwise prohibited or made illegal by any applicable Law. No Governmental
Authority shall have enacted any applicable Law to make illegal the consummation
of the transactions contemplated hereby or by the Ancillary Agreements, and no
proceeding with respect to the application of any such applicable Law to such
effect shall be pending.
(b) Consents. Any applicable waiting period under the HSR Act with respect
to the purchase of the Shares shall have expired or been terminated, and all
Governmental Approvals and all Consents required to be obtained for the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements shall have been obtained and remain in full force and
effect.
(c) CD&R Transaction. Each of the CD&R Agreements shall remain in full
force and effect and the CD&R Transaction shall have been consummated not later
than the time of the Closing hereunder.
21
(d) Approval of Shareholders. The Transactions shall have been approved by
the requisite vote of the shareholders of the Company in accordance with the
rules of NASDAQ and the applicable provisions of the MBCA.
6.2 Conditions to Obligations of the Purchaser. The obligation of the
Purchaser to consummate the transactions contemplated hereby and by the
Ancillary Agreements shall be subject to the fulfillment on or prior to the
Closing Date (or waiver by the Purchaser) of the following additional
conditions, which the Company agrees to use its reasonable best efforts to cause
to be fulfilled:
(a) Representations, Performance, etc. The representations and warranties
of the Company contained herein and in the Ancillary Agreements to which the
Company is a party shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) at and as of the date hereof and at and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties that are
qualified as to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and the Purchaser shall have received a certificate signed by an
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed or complied in all material respects with all obligations and
covenants required to be performed or complied with prior to the Closing by the
Company under this Agreement and the Purchaser shall have received a certificate
signed by an officer of the Company to such effect.
(c) Ancillary Agreements. Each of the Registration Rights Agreement, the
Standstill Agreement and each of the RBV Agreements shall be in full force and
effect, in substantially the forms attached as Exhibits 6.2(c)(i)-(v)
respectively, except as modified pursuant to Section 5.3 of this Agreement.
(d) Opinions of Counsel. On or prior to the Closing Date, the Purchaser
shall have received an opinion of counsel, dated the Closing Date, from Butzel
Long, counsel to the Company in form and substance reasonably satisfactory to
the Purchaser and its counsel and addressing the items set forth on Exhibit
6.2(d).
(e) Corporate Proceedings. The Purchaser shall have received a
certificate, dated the Closing Date, executed by the Secretary of the Company
certifying as of the Closing Date (i) that attached thereto is (x) a true and
correct copy of the Articles of Incorporation, as amended to that date, (y) a
true and correct copy of the Bylaws of the Company, as amended to that date, (z)
a true and correct copy of resolutions of the Board or a duly authorized
committee thereof authorizing the execution, delivery and performance by the
Company of this Agreement and the Ancillary Agreements to which it is a party
and the consummation of the transactions contemplated hereby and thereby, (ii)
that the documents described in clauses (x), (y) and (z) are in full force and
effect and have not been amended, modified or supplemented, and (iii) as to the
incumbency of the officers of the Company executing this Agreement, any
Ancillary Agreement or any documents or instruments executed in connection
herewith.
22
(f) Other Parties. (i) No Person or "group" (as defined in the Exchange
Act) other than (A) Xxxxxxxx Xxxxxxxxx, (B) CD&R-Cookie Acquisition, L.L.C.,
with respect to the items that will be exchanged in the CD&R Transaction, and
(C) the Purchaser, shall have acquired beneficial ownership (as defined in Rule
13d-3 and 13d-5 of the Exchange Act) of more than 15% of the outstanding Voting
Securities, and (ii) no Person shall have entered into an agreement in principle
or definitive agreement with the Company with respect to a tender or exchange
offer for any shares of Common Stock or a merger, consolidation or other
business combination involving the Company.
(g) Shareholders' Rights Plan. The Company shall have adopted a
Shareholders' Rights Plan, in form and substance that is customary and
reasonable, after consultation in good faith and mutual agreement with the
Purchaser (such agreement not to be unreasonably withheld by the Purchaser) and
taking into account the rights and obligations of the Purchaser under the
Standstill Agreement.
(h) Board of Directors. The Board of Directors shall consist of ten
persons and shall include three designees of the Purchaser.
(i) Transaction Expenses. The Purchaser's reasonable transaction expenses
shall have been paid to the Purchaser in an amount not to exceed $1,850,000 plus
the fees of Michigan counsel to render the legal opinion contemplated by Section
6.3(c)(ii).
(j) Absence of Material Adverse Effect. There shall have been no Material
Adverse Effect on the Company, which, for purposes of this Section 6.2(j), shall
not include any changes in general economic conditions or changes in the
industry in which the Company operates.
6.3 Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated hereby and by the Ancillary
Agreements shall be subject to the fulfillment (or waiver by the Company), on or
prior to the Closing Date, of the following additional conditions, which the
Purchaser agrees to use its reasonable best efforts to cause to be fulfilled:
(a) Representations, Performance, etc. The representations and warranties
of the Purchaser contained herein and in the Ancillary Agreements to which it is
a party shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) at and as of the date hereof and on and as of the
Closing Date with the same effect as though made at and as of such Closing Date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties that are
qualified as to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and the Company shall have received a certificate of the
Purchaser to such effect.
(b) Performance of Obligations of the Purchaser. The Purchaser shall have
performed or complied with all obligations and covenants required to be
performed or complied with prior to the Closing by the Purchaser under this
Agreement and the Company shall have received a certificate of the Purchaser to
such effect.
(c) Opinions of Counsel. On or prior to the Closing Date, the Company
shall have received an opinion of counsel, dated the Closing Date, from Xxxxxx,
Xxxxx & Bockius LLP, counsel to the Purchaser, in form and substance reasonably
satisfactory to the Company and its
23
counsel and addressing the items set forth on Exhibit 6.3(c)(i). On or prior to
the Closing Date, the Company shall also have received an opinion of counsel,
dated the Closing Date, from Michigan counsel selected by the Purchaser and
reasonably satisfactory to the Company, in form and substance reasonably
satisfactory to the Company and its counsel and addressing the items set forth
on Exhibit 6.3(c)(ii).
(d) Funding of Purchase Price. The Purchaser shall have delivered to the
Company the amount of the Purchase Price to be paid at the Closing.
(e) Xxxxxxxxx Voting Agreement. The Xxxxxxxxx Voting Agreement shall
remain in full force and effect, except as modified pursuant to Section 5.3 of
this Agreement.
(f) Ancillary Agreements. Each of the Standstill Agreement and the Master
Services Agreement shall remain in full force and effect, except as modified
pursuant to Section 5.3 of this Agreement.
ARTICLE 7
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by the written agreement of the parties hereto;
(b) by the Purchaser by written notice to the Company if (i) any of the
conditions set forth in Section 6.1 or 6.2 (including with respect to any
representations and warranties) shall not have been, or if it becomes apparent
that any of such conditions will not be, fulfilled by 5:00 p.m. Eastern Standard
Time on October 31, 2004 ("Termination Date"), unless such failure shall be due
to the failure of the Purchaser to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it on or
prior to the Closing or, (ii) the Special Committee, at any time prior to the
consummation of the Closing, withdraws, modifies or changes its recommendation
of the Transaction or this Agreement and the transactions contemplated hereby in
a manner adverse to the Purchaser, or shall have resolved to do any of the
foregoing;
(c) by the Special Committee by written notice to the Purchaser if (i) any
of the conditions set forth in Section 6.1 or 6.3 (including with respect to any
representations and warranties) shall not have been, or if it becomes apparent
that any of such conditions will not be, fulfilled by 5:00 p.m. Eastern Standard
Time on the Termination Date, unless such failure shall be due to the failure of
the Company to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it on or prior to the
Closing, or (ii) the Special Committee, in accordance with the terms of Section
4.10(b), has determined to enter into a definitive agreement with respect to a
Company Superior Proposal concurrently with the termination of this Agreement
pursuant to this Section 7.1(c)(ii); provided, however that the Company may not
terminate this agreement pursuant to this Section 7.1(c)(ii) unless it has paid
to the Purchaser the Termination Fee or the Expenses pursuant to Section 10.1.
(d) by either Purchaser or the Special Committee, if the Transactions
shall not have received Shareholder Approval as required by applicable Laws at
the Shareholder Meeting.
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 7.1, written notice thereof
shall forthwith be given by the terminating
24
party or parties, specifying the provisions hereof pursuant to which such
termination is effected, and this Agreement shall become void and have no
effect, without any liability to any Person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto, or any of its
directors, officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except as specified in Section 10.1 and except for
any liability resulting from such party's breach of this Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by the Company.
(a) The Company covenants and agrees to defend, indemnify and hold the
Purchaser and its Affiliates (the "Purchaser Indemnitees") harmless from and
against, and pay or reimburse Purchaser Indemnitees for, any and all Losses
(whether attributable in whole or in part to the acts or omissions of a
Purchaser Indemnitee, except to the extent resulting from a Purchaser
Indemnitee's willful conduct or gross negligence) incurred by such Purchaser
Indemnitee resulting from or arising out of either:
(i) any breach of any representation or warranty made by the Company
in any provision of this Agreement or under any Ancillary Agreement or in
connection herewith or therewith; or
(ii) any failure of the Company to perform any covenant or agreement
hereunder or under any Ancillary Agreement or to fulfill any other
obligation in respect hereof or thereof.
(b) (i) Except with respect to Losses described by Section 8.1(a)(ii), the
Company shall not be required to indemnify Purchaser Indemnitees unless the
aggregate amount of all claims against the Company under this Section 8.1
exceeds $1.7 million, in which event the Purchaser Indemnitees shall be entitled
to make a claim against the Company for the full amount of any Losses, and (ii)
the liability of the Company under this Section 8.1 shall not exceed the
Purchase Price.
8.2 Indemnification by the Purchaser.
(a) The Purchaser covenants and agrees to defend, indemnify and hold the
Company harmless from and against, and pay or reimburse the Company for, any and
all Losses (whether attributable in whole or in part to the acts or omissions of
the Company, except to the extent resulting from the willful conduct or gross
negligence of the Company) incurred by the Company resulting from or arising out
of:
(i) any breach in any representation or warranty made by the
Purchaser herein or under any Ancillary Agreement, or in connection
herewith or therewith; or
(ii) any failure of the Purchaser to perform any covenant or
agreement hereunder or under any Ancillary Agreement, or fulfill any other
obligation in respect hereof or thereof.
(b) (i) Except with respect to Losses described by Section 8.2(a)(ii), the
Purchaser shall not be required to indemnify the Company unless the aggregate
amount of all claims against the Purchaser under this Section 8.2 exceeds $1.7
million, in which event the Company shall be entitled to make a claim against
the Purchaser for the full amount of any Losses, and (ii) the liability of the
Purchaser under this Section 10.2 shall not exceed the Purchase Price.
25
8.3 Indemnification Procedures. In the case of any claim asserted by a
third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), notice shall be given by the Indemnified Party to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall (at the expense of such
Indemnifying Party) assume the defense of any claim or any litigation resulting
therefrom, provided, that, (i) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably satisfactory
to the Indemnified Party, (ii) the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and (iii) the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its indemnification obligation under this Agreement except
to the extent that such omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is materially damaged as a result
of such failure to give notice. Except with the prior written consent of the
Indemnified Party, no Indemnifying Party, in the defense of any such claim or
litigation, shall consent to entry of any judgment or enter into any settlement
that provides for injunctive or other nonmonetary relief affecting the
Indemnified Party or that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense
of any claim subject to indemnification hereunder or any proposed settlement of
any such claim by the Indemnifying Party might be expected to affect adversely
the Indemnified Party's Tax liability or its ability to conduct its businesses,
or that the Indemnified Party may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times to
take over and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided, that, if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such claim or demand and shall be entitled
to settle or agree to pay in full such claim or demand, at the sole expense of
the Indemnifying Party. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Article 8 and the records of each shall be available to the other with respect
to such defense.
8.4 Remedies. Except in the case of fraud, the remedies provided in this
Article 8 constitute the exclusive remedy of each party indemnified under this
Article 8 for any and all Losses alleged to have been incurred in connection
with this Agreement or any Ancillary Agreement.
8.5 Tax Treatment of Adjustments. The Purchaser and the Company agree to
treat any indemnity payment made pursuant to Section 8.1 or 8.2 as an adjustment
to the Purchase Price for all Tax purposes.
8.6 Survival. The representations and warranties and all indemnification
obligations contained in this Agreement shall survive the execution and delivery
of this Agreement, any
26
examination by or on behalf of the parties hereto and the completion of the
transactions contemplated herein, but only to the extent specified below:
(a) except as set forth in subsections (b) and (c) below, the
representations and warranties contained in Articles 2 and 3 (and the
indemnification obligations in respect thereof under clauses (i) of Section
8.1(a) and 8.2(a)), shall survive for twelve months following the Closing Date
(except with respect to claims for Losses incurred within such period that have
been filed within 30 days of the termination of such period);
(b) the representations and warranties contained in Sections 2.5 shall
continue until the expiration of the statute of limitations applicable to the
matters covered thereby;
(c) the representations and warranties contained in Sections 2.1, 2.2,
2.3, 2.4, 2.20, 3.1, 3.2, 3.3 and 3.6 shall survive without limitation; and
(d) the indemnification obligations under clauses (ii) of Section 8.1(a)
and 8.2(a) shall survive with respect to any covenant covered thereby for the
period such covenant is in force and effect.
ARTICLE 9
INTERPRETATION; DEFINITIONS
9.1 Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
Affiliate: shall have the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement); provided, that for
purposes of this Agreement only, the Company and its directors and executive
officers shall not be deemed to be Affiliates of the Purchaser, Xxxxxxxx
Xxxxxxxxx or any third party conducting a proxy solicitation with respect to the
Company.
Agreement: is defined in the introductory paragraph to this Agreement.
Alternative Proposal: any bona fide third party proposal with respect to a
direct or indirect acquisition or purchase of a business that constitutes 20% of
net revenues, net income or assets of the Company and its Subsidiaries, taken as
a whole, or 20% of any class of equity securities of the Company, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 20% of any class of any equity securities of the Company, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company (or any Subsidiary
whose business constitutes 20% of the net revenues, net income or assets of the
Company and its Subsidiaries taken as a whole), other than the transactions
contemplated by this Agreement.
Ancillary Agreement: any of the Registration Rights Agreement, the Master
Services Agreement, the RBV Agreements, or the Standstill Agreement.
Articles of Incorporation: is defined in Section 2.1.
Balance Sheet: is defined in Section 2.5(b).
Board: is defined in the recitals to this Agreement.
Business: the business of the Company and its Subsidiaries.
27
Business Day: any day on which banking institutions are open in the City
of New York.
CD&R Agreements: the Recapitalization Agreement dated as of April 26, 2004
between the Company and CDR, the Consent and Termination Agreement dated as of
April 26, 2004 by and among RBV, the RBV Trust and CDR-Cookie Acquisition L.L.C.
CD&R Transaction: the transactions contemplated by the CD&R Agreements.
Change of Control Transaction: (i) any direct or indirect acquisition or
purchase by any Person of (A) a business that constitutes 50% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole, or (B) 50% or more of any class of securities of the Company, (ii) any
tender offer or exchange offer that if consummated would result in any Person
beneficially owning 50% or more of any class of any securities of the Company,
or (iii) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company (or any
Subsidiary whose business constitutes 50% or more of the net revenues, net
income or assets of the Company and its Subsidiaries taken as a whole), other
than the transactions contemplated by this Agreement.
Closing: is defined in Section 1.2(a).
Closing Date: is defined in Section 1.2(a).
Code: the Internal Revenue Code of 1986, as amended.
Common Stock: is defined in the recitals to this Agreement.
Company: is defined in the introductory paragraph to this Agreement.
Company Disclosure Schedule: is defined in the introductory paragraph to
Article 2.
Company Intellectual Property: is defined in Section 2.11(a).
Company SEC Documents: is defined in Section 2.5(a).
Company Stock Options: is defined in Section 2.2(a).
Company Superior Proposal: any Company Takeover Proposal otherwise on
terms that the Special Committee determines in its good faith judgment after
consultation with an investment banking firm of national reputation and outside
counsel, is more favorable to the Company's stockholders than the transactions
contemplated by this Agreement, considering all factors including, without
limitation, (i) the overall significance and amount of the Company Takeover
Proposal in absolute terms to the Company, (ii) the services that otherwise
would be rendered by the Company pursuant to the Master Services Agreement and
by the Purchaser Directors, and (iii) the financing, to the extent required, for
the Company Takeover Proposal is then committed or which, in the good faith
judgment of the Special Committee, is reasonably capable of being obtained by
such third party.
Company Takeover Proposal: any bona fide third party proposal that would
result in a Change of Control Transaction.
Consent: any consent, approval, waiver, agreement, license, or report or
notice to, any Person.
Consolidated Group: is defined in Section 2.13(d).
28
Contract: any note, bond, mortgage, indenture, contract, agreement,
obligation, instrument, offer, commitment, understanding or other arrangement.
Environmental Law: is defined in Section 2.14(b).
Equity Security: (i) any Common Stock or other capital stock of the
Company, (ii) any securities of the Company convertible into or exchangeable for
Common Stock or other capital stock of the Company, or (iii) any options, rights
or warrants (or any similar securities) issued by the Company to acquire Common
Stock or other capital stock of the Company.
ERISA: the Employee Retirement Income Security Act, as amended.
Exchange Act: the Securities Exchange Act of 1934, as amended.
Expenses: is defined in Section 10.1(b).
Filed Company SEC Documents: is defined in the first paragraph of Article
2.
Financial Statements: is defined in Section 2.5(b).
GAAP: United States generally accepted accounting principles.
Governmental Approval: any consent, approval, authorization, waiver,
permit, concession, franchise, agreement, license, exemption or order of,
declaration or filing with, or report or notice to, any Governmental Authority.
Governmental Authority: is defined in Section 2.4(b).
Hazardous Materials: is defined in Section 2.14(b).
HSR Act: the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
Indebtedness: of any Person at any date, (a) all indebtedness of the
Person for borrowed money or for the deferred purchase price of property or
services (other than trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices), (b) any other
indebtedness of the Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all leases resulting in obligations of the Person that
are required to be capitalized in accordance with GAAP, (d) all obligations of
the Person in respect of acceptances issued or created for the account of the
Person, and (e) all indebtedness or obligations of the types referred to in the
preceding clauses (a) through (d) secured by any Lien on any property owned by
the Person even though the Person has not assumed or otherwise become liable for
the payment thereof.
Indemnified Party: is defined in Section 8.3.
Indemnifying Party: is defined in Section 8.3.
Intellectual Property: any and all mask works, software, data and
documentation, trademarks, trade names, copyrights and service marks, including
applications to register and registrations for any of the foregoing, United
States and foreign patents, patent applications and patent disclosures,
inventions, processes, designs, formulae, trade secrets, know-how and other
proprietary rights and information, and all similar intellectual property rights
(including moral rights).
Knowledge: qualifications as to the knowledge of any Person with respect
to any matter shall mean the actual knowledge of such Person or senior
management of such Person.
29
Law: all applicable provisions of all (a) constitutions, treaties,
statutes, laws (including the common law), codes, rules, regulations, ordinances
or orders of any Governmental Authority, (b) Governmental Approvals and (c)
orders, decisions, injunctions, judgments, awards and decrees of or agreements
with any Governmental Authority.
Litigation: is defined in Section 2.10(a).
Losses: any and all liabilities, obligations, commitments, losses,
judgments, fines, penalties, sanctions, costs (including court costs), expenses,
interest, royalties, deficiencies or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third-party claims),
including out-of-pocket expenses and reasonable fees and expenses of attorneys,
accountants, consultants and expert witnesses incurred in the investigation or
defense of any of the same, or in asserting any of the respective rights of the
Purchaser or the Company under Article 10 or under any Ancillary Agreement.
Master Services Agreement: is defined in the recitals to this Agreement.
Material Adverse Effect: means:
(a) on or with respect to the Company (including all Affiliates of
the Company, taken as a whole with the Company), any state of facts, event,
change or effect that has had, or would reasonably be expected to have, a
material adverse effect on the business, properties, results of operations or
condition (whether financial or other) of such entity (or, if with respect
thereto, of Affiliates of the Company, taken as a whole with the Company), or
would materially impair or delay the ability of such entity (and/or Affiliates)
to consummate the transactions contemplated hereby or to perform its obligations
hereunder; and
(b) on or with respect to the Purchaser (including all Affiliates of
the Purchaser, taken as a whole with the Purchaser), any state of facts, event,
change or effect that has materially impaired or delayed, or would reasonably be
expected to materially impair or delay, the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements to which the
Purchaser (or any of its Affiliates) is a party.
Material Contracts: is defined in Section 2.12(a).
MBCA: the Michigan Business Corporation Act, as amended.
New Security: any Equity Security issued by the Company after the Closing;
provided that "New Security" shall not include (i) any securities issuable upon
conversion of any convertible Equity Security, (ii) any securities issuable upon
exercise of any option, warrant or other similar Equity Security or (iii) any
securities issuable in connection with any stock split, stock dividend or
recapitalization of the Company where such securities are issued to all
stockholders of the Company on a pro rata basis.
Non-Purchaser Director: any director of the Company not designated by the
Purchaser.
Outstanding Voting Power: at any date, the total number of votes that
would be entitled to be cast on that date in the election of directors of the
Company.
Owned Software: all computer software developed by or for the Company or
any of its Subsidiaries or in connection with the business of the foregoing by
any employee of the Company or any of its Subsidiaries or by an independent
contractor.
Permit: is defined in Section 2.10(b).
30
Person: any individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization, government or department
or agency of a government.
Plans: is defined in Section 2.9(a).
Pro Rata Share: the fraction of an entire issuance of New Securities, the
numerator of which shall be the number of shares of Common Stock owned by
Purchaser and its Affiliates immediately prior to such issuance of such New
Securities and the denominator of which shall be the aggregate number of shares
of Common Stock outstanding immediately prior to such issuance of such New
Securities.
Proxy Statement: is defined in Section 4.3(a).
Purchase Price: is defined in Section 1.1.
Purchaser: is defined in the introductory paragraph to this Agreement.
Purchaser Disclosure Schedule: is defined in the introductory paragraph to
Article 3.
Purchaser Indemnitees: is defined in Section 8.1(a).
RBV Agreements: means the Xxxxxxxxx Purchase Agreement, the Xxxxxxxxx
Voting Agreement and the Xxxxxxxxx Standstill Agreement.
Registration Rights Agreement: is defined in Section 2.12(c).
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended.
Security: at any time, Equity Securities and any shares of any other class
of capital stock of the Company.
Shareholder Approval: is defined in the recitals to this Agreement.
Shareholder Meeting: is defined in the recitals to this Agreement.
Shares: is defined in the recitals to this Agreement.
Special Committee: from the date of this Agreement to the Closing Date,
the Special Committee of the independent directors of the Company and, from and
after the Closing Date, the members of the Board who are "independent" within
the meaning of Nasdaq Rule 4200 and are not designated by any of the Purchaser,
Xxxxxxxx Xxxxxxxxx or CD&R-Cookie Acquisition, L.L.C., and CDR-Cookie
Acquisition VI-A, L.L.C.
Subsidiary: as to any Person, any corporation or other entity at least a
majority of the shares of stock or interest of which having general voting power
under ordinary circumstances to elect a majority of the Board of Directors of
such corporation or others performing similar functions with respect to such
entity is, at the time as of which the determination is being made, owned by
such Person, or one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries, other than any such corporation or other entity that
conducts no business and holds no more than de minimis assets.
Takeover Statute: is defined in Section 2.20.
Tax: any federal, state, provincial, local, foreign or other income,
alternative minimum, accumulated earnings, personal holding company, franchise,
capital stock, net worth, capital,
31
profits, windfall profits, gross receipts, value added, sales (including,
without limitation, bulk sales), use, goods and services, excise, customs
duties, transfer, conveyance, mortgage, registration, stamp, documentary,
recording, premium, severance, environmental (including, without limitation,
taxes under Section 59A of the Code), real property, personal property, ad
valorem, intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care, withholding, estimated or other similar tax, levy, impost,
fee, duty or other governmental charge or assessment or deficiencies thereof
(including all interest and penalties thereon and additions thereto, whether
disputed or not) imposed by any Governmental Authority or other taxing
authority.
Tax Returns: is defined in Section 2.13(d).
Termination Fee: an amount equal to $3,000,000.
Transactions: the sale of the Shares to the Purchaser and the issuance of
the Warrants to the Purchaser hereunder, the CD&R Transaction and the
transactions contemplated by the RBV Agreements.
Xxxxxxxxx Purchase Agreement: the Common Stock Purchase Agreement dated
April 26, 2004, by and among the Purchaser, RBV and the RBV Trust.
Xxxxxxxxx Shareholders' Agreement: the Shareholders' Agreement dated April
26, 2004, by and among the Purchaser, RBV and the RBV Trust.
Xxxxxxxxx Voting Agreement: the Voting Agreement dated April 26, 2004
between the Company, RBV and the TBV Trust.
Voting Securities: at any time, shares of any class of capital stock of
the Company which are then entitled to vote generally in the election of
directors.
Warrants: collectively, the following: a warrant to purchase 1,000,000
shares of Common Stock of the Company, at an exercise price of $15.00 per share
and having a term that expires 5 years and 6 months after the Closing Date; a
warrant to purchase 1,000,000 shares of Common Stock of the Company, at an
exercise price of $17.50 per share and having a term that expires 5 years and 6
months after the Closing Date; a warrant to purchase 1,000,000 shares of Common
Stock of the Company, at an exercise price of $20.50 per share and having a term
that expires 6 years after the Closing Date; and a warrant to purchase 1,000,000
shares of Common Stock of the Company, at an exercise price of $24.00 per share
and having a term that expires 6 years after the Closing Date, each in the form
attached hereto as Exhibit 1.1, to be issued by the Company to the Purchaser at
the Closing.
ARTICLE 10
MISCELLANEOUS
10.1 Fees and Expenses.
(a) Except as contemplated by this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses except that the Company shall bear and pay the costs and expenses
incurred in connection with (i) the preparation, filing, printing and mailing of
the Proxy Statement (including SEC filing fees) and (ii) the filings of the
notification and report forms under the HSR Act (including filings fees).
32
(b) The Company shall promptly pay the Purchaser an amount equal to all
Expenses (as defined below) if this Agreement is terminated for any reason other
than a breach by the Purchaser of this Agreement or an Ancillary Agreement, or a
failure of the condition set forth in Section 6.2(j) to be satisfied on or
before the Closing Date (or waived by the Purchaser). The Company shall promptly
pay to the Purchaser the Termination Fee if prior to the Closing this Agreement
is terminated for any reason other than a breach by the Purchaser of this
Agreement or an Ancillary Agreement, the failure of the applicable waiting
period under the HSR Act to expire or terminate, or a failure of the condition
set forth in Section 6.2(j) to be satisfied on or before the Closing Date (or
waived by the Purchaser). All such payments shall be in immediately available
funds. In the event that the Company pays the Purchaser an amount in respect of
Expenses and such amount subsequently proves to exceed the amount of Expenses
actually incurred, the Purchaser will refund the excess to the Company. The term
"Expenses" means all out-of-pocket fees, costs and other expenses incurred or
assumed by the Purchaser or incurred on its behalf in connection with this
Agreement, the Ancillary Agreements or any of the transactions contemplated
hereby and thereby, including the preparation, execution and delivery of this
Agreement and the Ancillary Agreements, compliance herewith and therewith and
any amendments to or waivers of this Agreement or the Ancillary Agreements in an
amount not to exceed $1,000,000 plus the fees of Michigan counsel to render the
legal opinion contemplated by Section 6.3(c)(ii).
(c) The Company acknowledges that the agreements contained in this Section
10.1 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the Purchaser would not enter into this
Agreement; accordingly, if the Company fails promptly to pay the amount due
pursuant to this Section 10.1, and, in order to obtain such payment, the
Purchaser commences a suit which results in a judgment against the Company for
any of the Termination Fee or Expenses set forth in this Section 10.1, the
Company shall pay to the Purchaser its costs and expenses (including attorneys'
fees and expenses) in connection with such suit, together with interest on the
amount of such Termination Fee and Expenses at the rate on six-month U.S.
Treasury obligations plus 300 basis points in effect on the date such payment
was required to be made.
(d) This Section 10.1 shall survive any termination of this Agreement.
10.2 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
10.3 Specific Enforcement. The Purchaser, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof and thereof in any court of
the United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at law or equity.
33
10.4 Entire Agreement. This Agreement (including the documents set forth
in the Exhibits and Schedules hereto), together with the Ancillary Agreements,
contains the entire understanding of the parties with respect to the
transactions contemplated hereby.
10.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.6 Notices. All notices, consents, requests, instructions, approvals and
other communications provided for herein and all legal process in regard hereto
shall be validly given, made or served, if in writing and delivered personally,
by telecopy (except for legal process) or sent by registered mail, postage
prepaid, if to:
the Company:
Covansys Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: Chief Financial Officer
Attention: General Counsel
Facsimile: 000-000-0000
Telephone: 000-000-0000
with a copy to:
Butzel Long
000 Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx XX, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq. and Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
the Purchaser:
Fidelity National Financial, Inc.
000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
34
Attention: Xxxxxxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx-Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
or to such other address or telex number as any party may, from time to time,
designate in a written notice given in a like manner.
10.7 Amendments; Waivers, etc. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of the Company shall not be affected or
deemed waived by reason of any investigation made by or on behalf of the
Purchaser (including but not limited to by any of its advisors, consultants or
representatives) or by reason of the fact that the Purchaser or any of its
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate. Notwithstanding anything
to the contrary in this Agreement, the Purchaser agrees that any amendment,
waiver or consent taken, given or made by the Company (including the Board) in
respect of this Agreement or the transactions contemplated hereby shall not be
effective unless such amendment, waiver or consent shall have received the prior
approval of a majority of the Special Committee. The Company will provide the
Purchaser with written evidence of the approval of the majority of the Special
Committee in connection with its execution and delivery of any such amendment,
waiver or consent in respect of this Agreement.
10.8 Cooperation. The Purchaser and the Company agree to take, or cause to
be taken, all such further or other actions as shall reasonably be necessary to
make effective and
35
consummate the transactions contemplated by this Agreement, including without
limitation compliance with Section 5.3 of this Agreement.
10.9 Successors and Assigns. All covenants and agreements contained herein
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
10.10 Transfer of Shares; Legend on Shares, etc. The Purchaser understands
and hereby acknowledges that the Shares, the Warrants and the Warrant Shares
have not been and (except under the Registration Rights Agreement) will not be
registered under the Securities Act or the securities laws of any state, and
that they may be sold or otherwise disposed of only in one or more transactions
registered under the Securities Act and, where applicable, such laws or as to
which an exemption from the registration requirements of the Securities Act and,
where applicable, such laws is available. The Purchase understands and hereby
acknowledges that except as provided in the Registration Rights Agreement, the
Purchaser has no right to require the Company to register the Shares, the
Warrants or the Warrant Shares. The Purchaser understands and agrees that each
certificate representing Shares and Warrant Shares (other than Shares which have
been transferred in a transaction registered under the Securities Act or exempt
from the registration requirements of the Securities Act pursuant to Rule 144
thereunder or any similar rule or regulation) shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
and the Purchaser agrees to transfer Shares or Warrant Shares only in accordance
with the provisions of such legend. At the holder's request, the Company shall
exchange any such legended securities for unlegended securities at any time
after (i) such securities have been held, or deemed, by virtue of tacking
holding periods as contemplated by Rule 144, to have been held for a period of
two years by the holder thereof and (ii) such holder is not and has not been an
affiliate (within the meaning of Rule 144) of the Company for three months.
10.11 Governing Law, etc.
(a) EXCEPT TO THE EXTENT THAT THE MICHIGAN BUSINESS CORPORATION ACT, AS
AMENDED, AND CASE LAW INTERPRETING THAT ACT ARE APPLICABLE TO THE COMPANY AND
THE RIGHTS OF ITS SHAREHOLDERS, THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT
OF THE PROVISIONS OF THIS AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS
AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
EACH PARTY HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION,
SUIT OR PROCEEDING FOR THE INTERPRETATION AND ENFORCEMENT HEREOF,
36
OR ANY SUCH DOCUMENT OR IN RESPECT OF ANY SUCH TRANSACTION, THAT SUCH ACTION,
SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR
THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH
DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH PARTY HEREBY CONSENTS TO
AND GRANTS ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER
THE SUBJECT MATTER OF ANY SUCH DISPUTE.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.11(b).
10.12 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement which is inconsistent with the rights granted to the
Purchaser by this Agreement or the Ancillary Agreements.
10.13 No Third Party Beneficiaries. Nothing contained in this Agreement is
intended to confer upon any person or entity other than the parties hereto and
their respective successors and permitted assigns, any benefit, right or
remedies under or by reason of this Agreement; provided, however, that the
parties hereto hereby acknowledge and agree that the Purchaser Indemnitees
(other than the Purchaser) are third party beneficiaries of Article 8 of this
Agreement.
10.14 Replacement of Share Certificates. Upon receipt of an affidavit of
loss with respect to any certificate representing Shares or, in the case of any
mutilation of a certificate, upon surrender of the certificate, the Company at
its expense shall execute and deliver a replacement certificate representing the
Shares.
37
IN WITNESS WHEREOF, each of the Purchaser and the Company have caused
this Agreement to be duly executed as of the day and year first above written.
COVANSYS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Title: President / CEO
---------------------------------
FIDELITY INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx, XX
-----------------------------------
Title: Chairman and Chief Executive Officer
[Signature Page for Stock Purchase Agreement
between Covansys Corporation and Fidelity Information Services, Inc.]
STOCK PURCHASE AGREEMENT
Exhibit 1.1(b)
Form of Warrants
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
Covansys Corporation
Common Stock Purchase Warrant
Expiring [5.5 years after the Closing Date], 2009
-----------, -------.
[_____________], 2004
No. W-00[___]
Covansys Corporation, a Michigan corporation (the "Company"), for
value received, hereby certifies that Fidelity Information Services, Inc., an
Arkansas corporation (the "Purchaser"), or its permitted assigns, is entitled to
purchase from the Company [________](1) duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock, without par value, of the Company
at the purchase price per share determined pursuant to Sections 1.1 and 2
hereof, at any time or from time to time after the date hereof, but prior to
5:00 P.M., New York City time, on the Expiration Date, all subject to the terms,
conditions and adjustments set forth below in this Warrant.
This Warrant (the "Warrant," such term to include all Warrants issued
in substitution therefor), is issued on the date hereof (the "Closing Date")
pursuant to a Stock Purchase Agreement, dated as of April ____, 2004, between
the Company and the Purchaser (the "Stock Purchase Agreement"). This Warrant
evidences rights to purchase __________ duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock, without par value per share,
subject to adjustment as provided herein. Certain capitalized terms used in the
Warrant are defined in Section 12.
--------
(1) There will be a total of four Warrants issued, each covering 1,000,000
shares of Common Stock, with exercise prices (and terms) of $15.00
(51/2yrs.), $17.50 (51/2yrs.), $20.50 (6 yrs.), and $24.00 (6 yrs.),
respectively, which in the aggregate will entitle the Purchaser to purchase
from the Company 4,000,000 shares of Common Stock.
1
1. Exercise of Warrant.
1.1. Manner of Exercise.
(a) The Warrant may be exercised by the holder of the Warrant or any
portion hereof (each, a "Holder"), in whole or in part, during normal
business hours on any Business Day following the date hereof and prior to
the Expiration Date by surrender of the Warrant, with the form of
subscription at the end hereof (or a reasonable facsimile thereof) (the
"Subscription Notice") duly executed by such Holder, to the Company at its
principal office (or, if such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other
Securities) subject to the Warrant, at the location at which the Company
shall have agreed to deliver the shares of Common Stock (or Other
Securities) subject to such offering), accompanied by payment, in cash or
by wire transfer in same-day funds, in the amount (such amount referred to
herein as the "Exercise Price") obtained by multiplying (i) the number of
shares of Common Stock (without giving effect to any adjustment provided
for in Section 2) designated in such Subscription Notice by (ii) $____, and
such Holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) determined as provided in Section 2 hereof.
(b) In lieu of tendering the Exercise Price to the Company, the holder
may elect to perform a "Cashless Exercise" of the Warrant, in whole or in
part, by surrendering the Warrant to the Company, with a duly executed
Subscription Notice marked "Cashless Exercise" and designating the number
of shares of Common Stock desired by the Holder out of the total for which
the Warrant is exercisable (without giving effect to any adjustments
provided for in Section 2). The Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) having a value
(at the Market Price) that is equal to the excess of (i) the then Market
Price per share of Common Stock (or Other Securities) multiplied by the
number of the shares of Common Stock (or Other Securities) (determined as
of the date immediately preceding the date of any such Subscription Notice)
into which the Warrant, or portion thereof designated by the Holder, would
have been exercisable pursuant to Section 1.1(a) upon payment of the
Exercise Price by the Holder over (ii) the Exercise Price the Holder would
have been required to pay under Section 1.1(a) in respect of such an
exercise.
1.2. When Exercise Deemed Effected. Each exercise of the Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which the Warrant shall have been surrendered to the Company
as provided in Section 1.1, and at such time the person or persons in whose name
or names
2
any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in Section 1.1
shall be deemed to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable after
the exercise of the Warrant, in whole or in part, and in any event within five
Business Days thereafter (unless such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other Securities)
subject to the Warrant, in which event, concurrently with such exercise), the
Company at its expense (including the payment by it of any taxes applicable to
an issuer upon the issuance of shares, but excluding transfer taxes) shall cause
to be issued in the name of and delivered to the Holder or, subject to Section
6, as such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such Holder would otherwise
be entitled, cash in an amount equal to the same fraction of the Market
Price per share of such Common Stock (or Other Securities) on the Business
Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment therein) to the number of such shares called for on the face of
the Warrant minus the number of such shares designated by the Holder upon
such exercise as provided in Section 1.1.
1.4. Company to Reaffirm Obligations. The Company shall, at the time
of or at any time after each exercise of the Warrant, upon the request of the
Holder, acknowledge in writing its continuing obligation to afford to such
Holder all rights (including, without limitation, any right of registration of
any shares of Common Stock (or Other Securities) issuable upon exercise of the
Warrant pursuant to Section 7) to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of the Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Company to afford such
rights to such Holder.
2. Adjustment of Common Stock Issuable upon Exercise.
2.1. Number of Shares; Warrant Price. The number of shares of Common
Stock which the Holder shall be entitled to receive upon each exercise hereof
3
shall be determined by multiplying the number of shares of Common Stock which
would otherwise (but for any application of the provisions of this Section 2) be
issuable upon such exercise, as designated by the Holder pursuant to Section
1.1, by a fraction of which (i) the numerator is $_____ and (ii) the denominator
is the Warrant Price (as defined below) in effect on the date of such exercise.
The "Warrant Price," which shall initially be $___ shall be adjusted and
readjusted from time to time as provided in Section 2 hereof and, as so adjusted
or readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by Section 2.
2.2. Stock Dividends, Subdivisions and Combinations. If at any time
the Company shall:
(a) issue or deliver any shares of Common Stock as a result of the
declaration or payment of a dividend of Common Stock payable in, or other
distribution to holders of Common Stock of, shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the Warrant Price then in effect shall be adjusted to equal (i) the Warrant
Price in effect immediately prior to such event multiplied by the number of
shares of Common Stock for which the Warrant is exercisable immediately prior to
the adjustment divided by (ii) the number of shares of Common Stock which a
record holder of the same number of shares of Common Stock for which the Warrant
is exercisable immediately prior to the happening of such event would own or be
entitled to receive after the happening of such event.
2.3. Extraordinary Dividends and Distributions. If at any time the
Company shall distribute to all holders of its outstanding Common Stock
evidences of indebtedness of the Company, cash or assets or securities other
than the Common Stock (any such evidences of indebtedness, cash, assets or
securities, the "Assets"), then, in each case, the Warrant Price then in effect
shall be reduced to a price determined by multiplying such Warrant Price by a
fraction,
(a) the numerator of which shall be the Market Price then in effect
less the value of such Assets applicable to one share of Common Stock, and
(b) the denominator of which shall be such Market Price.
Any adjustment required by this Section 2.3 shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution
4
retroactive to the record date for the determination of shareholders entitled
to receive such distribution.
2.4. Issuance of Additional Shares of Common Stock.
(a) If at any time after the date hereof the Company shall (except as
hereinafter provided) issue or sell any Additional Shares of Common Stock
without consideration or in exchange for consideration in an amount per
Additional Share of Common Stock less than the Market Price of such
securities at the time the Additional Shares of Common Stock are issued,
then the Warrant Price then in effect shall be reduced to a price
determined by multiplying such Warrant Price by a fraction,
(i) the numerator of which shall be (x) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus (y)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at the Market Price, and
(ii) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale.
(b) The provisions of paragraph (a) of this Section 2.4 shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 2.2.
2.5. Issuance of Warrants or Other Rights. If at any time after the
date hereof the Company shall take a record of holders of Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to subscribe
for or purchase any Additional Shares of Common Stock or any Convertible
Securities, whether or not such rights thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such warrants or other rights or upon conversion or exchange of such Convertible
Securities shall be less than the Market Price in effect immediately prior to
the time of such issue or sale, then the Warrant Price shall be adjusted as
provided in Section 2.4 on the basis that the maximum number of shares of Common
Stock issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights. No further adjustments of the Warrant
Price shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon exercise of such warrants or other
5
rights or upon the actual issuance of such Common Stock upon such conversion or
exchange of such Convertible Securities.
2.6. Issuance of Convertible Securities. If at any time the Company
shall take a record of the holders of Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which the Company is the surviving corporation)
issue or sell, any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the Market Price in effect immediately prior to the time of such issue or
sale, then the Warrant Price shall be adjusted as provided in Section 2.4 on the
basis that the maximum number of shares of Common Stock necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the Warrant Price shall be made
under this Section 2.6 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 2.5. No
further adjustments of the Warrant Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible Securities,
and, if any issuance or sale of such Convertible Securities is made upon
exercise of any warrant or other right to subscribe for or to purchase any such
Convertible Securities for which adjustments of the Warrant Price have been or
are to be made pursuant to other provisions of this Section 2, no further
adjustments of the Warrant Price shall be made by reason of such issuance or
sale.
2.7. Superseding Adjustment. If, at any time after any adjustment of
the number of shares of Common Stock for which the Warrant is exercisable shall
have been made pursuant to Section 2.5 or 2.6 as the result of any issuance of
warrants, rights or Convertible Securities,
(a) such warrants or rights, or the right of conversion or exchange in
such other Convertible Securities, shall expire, and all or a portion of
such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the
case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such warrants or rights, or the terms of such other
Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share
upon the occurrence of a specified date or event,
6
then such previous adjustment shall be rescinded and annulled and the shares of
Common Stock which were deemed to have been issued by virtue of the computation
made in connection with the adjustment so rescinded and annulled shall no longer
be deemed to have been issued by virtue of such computation. Thereupon, a
recomputation shall be made of the effect of such rights or options or other
Convertible Securities effective as of the date of such previous adjustment on
the basis of
(i) treating the number of shares of Common Stock or other property,
if any, theretofore actually issued or issuable pursuant to the previous
exercise of any such warrants or rights or any such right of conversion or
exchange, as having been issued on the date or dates of any such exercise
and for the consideration actually received and receivable therefor, and
(ii) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been granted
or issued immediately after the time of such increase of the consideration
per share for which shares of Common Stock or other property are issuable
under such warrants or rights or other Convertible Securities,
whereupon a new adjustment of the number of shares of Common Stock for which the
Warrant is exercisable shall be made effective as of the date of such previous
adjustment, which new adjustment shall supersede the previous adjustment so
rescinded and annulled. Any reduction in the number of shares of Common Stock
for which the Warrant is exercisable as a result of this Section 2.7 shall be
applied in its entirety to the number of shares of Common Stock for which the
Warrant is exercisable as of the date such new adjustment is made.
2.8. Consolidation, Merger, Sale of Assets, Reorganization, etc.
(a) In case at any time the Company shall be a party to any
transaction (including without limitation a merger, consolidation, sale of
all or substantially all of the Company's assets or recapitalization of the
Common Stock) in which the previously outstanding Common Stock shall be
changed into or exchanged for different securities of the Company or
changed into or exchanged for common stock or other securities of another
corporation or interests in a noncorporate entity or other property
(including cash) or any combination of any of the foregoing (each such
transaction being hereinafter referred to as the "Transaction") then, as a
condition to the consummation of the Transaction, lawful and adequate
provisions shall be made so that, upon the basis and terms and in the
manner provided in this Section 2.8, the Holder, upon the exercise of the
Warrant, shall be entitled to receive, in lieu of the Common Stock issuable
upon such exercise prior to such consummation, the stock and other
securities, cash and property to which the Holder would have been entitled
upon the
7
consummation of the Transaction if the Holder had exercised the
Warrant immediately prior thereto, subject to adjustments (subsequent to
such consummation) as nearly equivalent as possible to the adjustments
provided for in Section 2.
(b) Notwithstanding anything contained herein to the contrary, the
Company will not effect any Transaction unless, prior to the consummation
thereof, each corporation or entity (other than the Company) which may be
required to deliver any stock, securities, cash or property upon the
exercise of the Warrant as provided herein shall assume, by written
instrument delivered to the Holder, (i) the obligations of the - Company
hereunder (and if the Company shall survive the consummation of such
Transaction, such assumption shall be in addition to, and shall not release
the Company from, any continuing obligations of the Company hereunder) and
(ii) the obligation to deliver to the Holder such shares of stock, --
securities, cash or property as, in accordance with the foregoing
provisions, the Holder may be entitled to receive, and the terms hereof
(including, without limitation, all of the applicable provisions of Section
2) shall be applicable to the stock, securities, cash or property which
such corporation or entity may be required to deliver upon any conversion
of any Warrants or the exercise of any rights pursuant hereto.
(c) Upon any liquidation, dissolution or winding up of the Company,
the Holder shall receive such cash or property (less the Warrant Price)
which the Holder would have been entitled to receive upon the happening of
such liquidation, dissolution or winding up had the Warrant been exercised
in full and the shares of Common Stock in respect of such exercise issued
immediately prior to the occurrence of such liquidation, dissolution or
winding-up.
2.9. Other Dilutive Events. In case any event shall occur as to which
the provisions of Section 2 are not strictly applicable but as to which the
failure to make any adjustment would not fairly protect the exercise rights with
respect to the Warrant in accordance with the essential intent and principles of
such Section, then, in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in Section 2, necessary to preserve, without dilution,
the exercise rights represented by the Warrant. Upon receipt of such opinion,
the Company will promptly mail a copy thereof to the Holder of the Warrant and
shall make the adjustments, if any, described therein.
2.10. No Dilution or Impairment. The Company will not, by amendment of
its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action,
8
avoid or seek to avoid the observance or performance of any of the terms hereof,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be reasonably necessary or
appropriate in order to protect the rights of the Holders of this Warrant
against dilution in respect of which the Holders are not fully protected by this
Section 2 or other impairment. Without limiting the generality of the foregoing,
the Company
(a) will not permit the par value, if any, of any shares of Common
Stock receivable upon the exercise of the Warrant to exceed the amount
payable therefor upon such exercise,
(b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Warrant from time to
time outstanding,
(c) will not take any action which results in any adjustment of the
Warrant Price if the total number of shares of Common Stock (or Other
Securities) issuable after such action upon the complete exercise of the
Warrant would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's articles of incorporation and
available for the purpose of issue upon such exercise, and
(d) will not (i) issue any equity securities (other than Common Stock
or Convertible Securities) that participate with the shares of Common Stock
in dividends, distributions and/or other rights ("Other Dilutive
Securities"), or (ii) declare or make dividends or distributions (whether
of evidences of indebtedness of the Company, cash, assets or securities,
including, without limitation, options, warrants or other rights to acquire
Common Stock) in respect of any Other Dilutive Securities or Convertible
Securities, unless, in each case, this Section 2 is first amended so as to
provide the Holders of the Warrant with full protection against dilution
caused by or resulting from such issuances, dividends or distributions.
2.11. Other Provisions Applicable to Adjustments under this Section 2.
The following provisions shall be applicable to the making of adjustments to the
number of shares of Common Stock for which the Warrant is exercisable provided
for in this Section 2:
(a) Computation of Consideration. To the extent that any shares of
Common Stock or any Convertible Securities or any warrants or other rights
to subscribe for or purchase any shares of Common Stock or any Convertible
Securities shall be issued for cash consideration, the cash consideration
received by the Company therefor shall be the amount of the cash received
9
by the Company therefor, or, if such shares of Common Stock or Convertible
Securities are offered by the Company for subscription, the subscription
price, or, if such shares of Common Stock or Convertible Securities are
sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting
any amounts paid or receivable for accrued interest or accrued dividends
and taking into account any compensation, discounts or expenses paid or
incurred by the Company for and in the underwriting of, or otherwise in
connection with, the issuance thereof). To the extent that such issuance
shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such non-cash consideration
shall be deemed to be the fair market value of such consideration at the
time of such issuance as determined in accordance with clause (b)(ii) of
the definition of Market Price in Section 12 (their "Fair Value"). In case
any shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase such shares of Common Stock or
Convertible Securities shall be issued in connection with any merger in
which the Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair market value, as determined by an
independent investment banking firm retained by the Company, which firm may
be an independent investment banking firm regularly retained by the
Company, of such portion of the assets and business of the nonsurviving
corporation as such firm shall determine to be attributable to such shares
of Common Stock, Convertible Securities, warrants or other rights, as the
case may be. The consideration for any shares of Common Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase the
same shall be the consideration received by the Company for issuing such
warrants or other rights plus the additional consideration payable to the
Company upon exercise of such warrants or other rights. The consideration
for any shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration, if any, received by the
Company for issuing warrants or other rights to subscribe for or purchase
such Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any shares
of Common Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Company
shall be deemed to have received for such shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend
so paid or satisfied.
(b) Computation of Asset Value. To the extent that any Assets shall be
distributed to all holders of the Company's outstanding Common Stock in
10
cash, the value of such Assets shall be the amount of cash so distributed,
or, if such Assets are securities offered by the Company for subscription,
the subscription price, or if such Assets are securities sold to
underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case adding any
accrued interest or dividends but without taking into account any
compensation, discounts or expenses paid or incurred by the Company in
connection therewith). To the extent that the Company shall so distribute
Assets other than cash, except as herein otherwise expressly provided, then
the value of such Assets shall be deemed to be Fair Value of such Assets at
the time of such distribution.
(c) When Adjustment to Be Made. The adjustments required by this
Section 2 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which the Warrant is exercisable that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 2.2) up to but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock for which the
Warrant is exercisable immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum amount
(except as aforesaid) which is postponed shall be carried forward and made
as soon as such adjustment, together with other adjustments required by
this Section 2 and not previously made, would result in a minimum
adjustment or on the date of exercise. For the purpose of any adjustment,
any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(d) Fractional Interest; Rounding. In computing adjustments under this
Section 2, fractional interests in Common Stock shall be taken into account
to the nearest 1/10th of a share, and adjustments in the Warrant Price
shall be made to the nearest $.01.
(e) When Adjustment Not Required. If the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to
receive subscription or purchase rights and shall, thereafter and before
the distribution to shareholders thereof, legally abandon its plan to
deliver such subscription or purchase rights, then no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(f) Escrow of Warrant Stock. If the Holder exercises the Warrant after
any property becomes distributable by reason of the taking of any record of
11
the holders of Common Stock as described in this Section 2, but prior to
the occurrence of the event for which such record is taken, any shares of
Common Stock issuable upon exercise by reason of any adjustment required by
this Section 2 shall be deemed the last shares of Common Stock for which
the Warrant is exercised (notwithstanding any other provision to the
contrary herein). Such shares or other property shall be held in escrow for
the Holder by the Company to be issued to the Holder upon and to the extent
that the event actually takes place, upon payment of the Exercise Price.
Notwithstanding any other provision to the contrary herein, if the event
for which such record was taken fails to occur or is rescinded, then such
escrowed shares shall be canceled by the Company and escrowed property
returned.
(g) Shareholder Rights Plans. Rights or warrants distributed by the
Company to all holders of Common Stock pursuant to a shareholder rights
plan (or "poison pill") entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock, which rights or warrants,
until the occurrence of a specified event or events (a "Trigger Event"),
(i) are deemed to be transferred with the Common Stock in respect of which
they are issued, (ii) are not exercisable, and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have
been distributed for purposes of Section 2.5 and 2.6 (and no adjustment to
the Warrant Price under those Sections shall be required) until first the
occurrence of a Trigger Event, unless the Trigger Event is rescinded within
15 days. If upon the occurrence of any event such right or warrant becomes
exercisable to purchase different securities, evidences of indebtedness or
other assets or entitles its holder to purchase a different amount of the
foregoing or to purchase any of the foregoing at a different purchase price
(an "Other Trigger Event"), then the occurrence of each such Other Trigger
Event, unless the Other Trigger Event is rescinded within 15 days, shall be
deemed to be the date of issuance and record date with respect to a new
right or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof to the extent not actually
exercised). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or Other Trigger
Event with respect thereto, that resulted in an adjustment of the Warrant
Price under Section 2.5 or 2.6, (x) in the case of any such rights or
warrants which shall have been redeemed or repurchased without exercise by
the holders thereof, the Warrant Price shall be adjusted upon such
redemption or repurchase to give effect to such distribution, Trigger Event
or Other Trigger Event, as the case may be, as though it were an
extraordinary cash distribution equal to the per-share redemption or
repurchase price received by a holder of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights), made to
all holders of Common Stock on the date of such redemption or repurchase,
and (y) in the case of such rights or warrants all of
12
which shall have expired or been terminated without exercise, the Warrant
Price shall be readjusted as if such rights or warrants had never been
issued.
3. Notice of Adjustment. Whenever the number of shares of Common Stock
for which the Warrant is exercisable or the Warrant Price shall be adjusted
pursuant to Section 2, the Company shall forthwith prepare a certificate to be
executed by the chief financial officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment, the method by which the
adjustment was calculated, the number of shares of Common Stock for which the
Warrant is exercisable and the Warrant Price after giving effect to such
adjustment or change. The Company shall promptly cause a signed copy of such
certificate to be delivered to the Holder. The Company shall keep at the office
of the Company copies of all such certificates and cause the same to be
available for inspection during normal business hours by the Holder.
4. Accountants' Report as to Adjustments. In each case of any
adjustment or readjustment to the shares of Common Stock (or Other Securities)
issuable upon the exercise of the Warrant, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms of
the Warrant and cause independent public accountants of recognized national
standing selected by the Company (which may be the regular auditors of the
Company) to verify such computation and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based, including without limitation a statement of (a) the consideration
received or to be received by the Company for any shares of Common Stock issued
or sold or deemed to have been issued, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Warrant Price in effect
immediately prior to such issuance or sale and as adjusted and readjusted (if
required by Section 2) on account thereof. The Company shall forthwith mail a
copy of each such report to each Holder and shall, upon the written request at
any time of any Holder, furnish to such Holder a like report setting forth the
Warrant Price at the time in effect and showing in reasonable detail how it was
calculated. The Company shall also keep copies of all such reports at its
principal office and shall cause the same to be available for inspection at such
office during normal business hours by any Holder or any prospective purchaser
of a Warrant designated by the Holder.
5. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of its Common
Stock for the purpose of determining the holders thereof who are entitled
to receive any dividend payable in, or other distribution of, shares of
Common Stock, or any other dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of Common Stock or
any Convertible Securities, or to receive any other right,
13
(b) any subdivision of outstanding shares of Common Stock into a
larger number of shares of Common Stock, or any combination of such shares
into smaller number of shares of Common Stock,
(c) any capital reorganization of the Company, any reclassification of
the capital stock of the Company or any transfer of all or substantially
all the assets of the Company to any other Person,
(d) any Change of Control Transaction, or
(e) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall mail to each Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, (ii) the date or expected date on which any such
subdivision, combination or issuance is to take place, and the amount of Common
Stock that shall be the subject of such subdivision, combination or issuance and
(iii) the date or expected date on which any such Change of Control Transaction,
reorganization, reclassification, transfer, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed no later than 15 Business Days prior to
the date specified in subdivisions (i), (ii) and (iii) above. This Warrant shall
exp
6. Legend, etc. Except as otherwise permitted by this Section 6, the
Warrant originally issued pursuant to the Stock Purchase Agreement, each Warrant
issued upon direct or indirect transfer or in substitution for any Warrant
pursuant to Section 11 hereof, each certificate for Common Stock (or Other
Securities) issued upon the exercise of any Warrant and each certificate issued
upon the direct or indirect transfer of any such Common Stock (or Other
Securities) (other than shares of Common Stock (or Other Securities) or Warrants
which have been transferred in a transaction registered under the Securities Act
or exempt from the registration requirements of the Securities Act pursuant to
Rule 144 thereunder or any similar rule or regulation) shall bear the following
legend (or a reasonable facsimile):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
14
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
The restrictions imposed by this Section 6 shall cease and terminate
as to any particular securities (a) when such securities shall have been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering such securities, (b) when, in the
opinion of counsel for the Holder (which counsel shall be reasonably acceptable
to the Company), such restrictions are no longer required in order to insure
compliance with the Securities Act, or (c) when such securities have been
beneficially owned, by a Person who has not been an Affiliate of the Company for
at least three months, for a period of at least two years (or such shorter
period as may be applicable under Rule 144(k) under the Securities Act or any
successor thereto), all as determined under Rule 144 under the Securities Act.
Whenever such restrictions shall terminate as to any securities, as soon as
practicable thereafter and in any event within five days, the Holder thereof
shall be entitled to receive from the Company, without expense (other than
transfer taxes, if any), new securities of like tenor not bearing the applicable
legend set forth in this Section 6.
7. Registration Rights. All shares of Common Stock (and Other
Securities) issuable or issued upon the exercise of the Warrant are subject to
and entitled to the benefits of the registration rights and other provisions set
forth in the Registration Rights Agreement, dated as of the date hereof, among
the Company, the Purchaser and ___________ as the same may be amended from time
to time (the "Registration Rights Agreement").
8. Availability of Information. The Company shall comply with the
reporting requirements of sections 13 and 15(d) of the Exchange Act (whether or
not it shall be required to do so pursuant to such sections) and shall comply
with all public information reporting requirements of the Commission (including
Rule 144 promulgated by the Commission under the Securities Act) from time to
time in effect and relating to the availability of an exemption from the
Securities Act for the sale of any Restricted Securities. The Company shall
cooperate with each holder of any Restricted Securities in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of any Restricted Securities. The Company shall furnish to the Holder, or
to any Holder of a portion of the Warrant, promptly upon their becoming
available, copies of all reports on Form 10-K and Form 10-Q and proxy statements
filed by the Company with the Commission, and copies of all regular and periodic
reports and all registration statements and prospectuses filed by the Company
with any securities exchange or with the Commission.
15
9. Reservation of Stock, etc. The Company shall at all times reserve
and keep available, solely for issuance and delivery upon exercise of the
Warrant, the number of shares of Common Stock (or Other Securities) from time to
time issuable upon exercise of the Warrant at the time outstanding. All shares
of Common Stock (or Other Securities) shall be duly authorized and, when issued
upon such exercise, shall be validly issued and, in the case of shares, fully
paid and nonassessable with no liability on the part of the holders thereof.
10. Listing on Securities Exchanges. The Company shall list on each
national securities exchange (or the Nasdaq National Market) on which any Common
Stock may at any time be listed, and shall maintain such listing of, all shares
of Common Stock from time to time issuable upon the exercise of the Warrant,
subject to official notice of issuance upon the exercise of the Warrant. The
Company shall also so list on each national securities exchange or the Nasdaq
National Market, and shall maintain such listing of, any Other Securities, if at
the time any securities of the same class shall be listed on such national
securities exchange or the Nasdaq National Market, as the case may be.
11. Ownership, Transfer and Substitution of the Warrant.
(a) Ownership of Warrant. The Company may treat the Person in whose
name the Warrant, or any Warrant or Warrants issued in substitution
therefor, is registered on the register kept at the principal office of the
Company as the owner and the Holder thereof for all purposes,
notwithstanding any notice to the contrary, except that, if and when any
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Warrant for all
purposes, notwithstanding any notice to the contrary. Subject to Section 6,
a Warrant, if properly assigned, may be exercised by a new Holder without
first having a new Warrant issued.
(b) Transfer and Exchange of the Warrant. Upon the surrender of the
Warrant, properly endorsed, for registration of transfer or for exchange at
the principal office of the Company, the Company at its expense shall
(subject to compliance with Section 6, if applicable) execute and deliver
to or upon the order of the Holder thereof a new Warrant or Warrants of
like tenor, in the name of such Holder or as such Holder (upon payment by
such Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
(c) Replacement of the Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of any Warrant and, in the case of any such loss, theft or destruction of
any Warrant held
16
by a Person other than the Purchaser, upon delivery of indemnity
reasonably satisfactory to the Company in form and amount or, in the case
of any such mutilation, upon surrender of such Warrant for cancellation at
the principal office of the Company, the Company at its expense shall
execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Additional Shares of Common Stock: all shares (including treasury
shares) of Common Stock issued or sold by the Company after the Closing Date,
whether or not subsequently reacquired or retired by the Company, other than (a)
shares of Common Stock issued upon the exercise of the Warrant; (b) shares
issued or sold pursuant to the exercise or conversion of options, granted
pursuant to the Company Stock Option Plans; or (c) shares issued or sold to
Purchaser or its Affiliates.
Affiliate: with respect to any Person, any Person that directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person.
Assets: the meaning specified in Section 2.3.
beneficially own: with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
Business Day: any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in the City of New York are authorized by
law to be closed, provided that, in determining the period within which
certificates or Warrants are to be issued and delivered pursuant to Section 1.3
at a time when shares of Common Stock (or Other Securities) are listed or
admitted to trading on any national securities exchange or in the
over-the-counter market and in determining the Market Price of any securities
listed or admitted to trading on any national securities exchange or in the
over-the-counter market, "Business Day" shall mean any day when the principal
exchange in which securities are then listed or admitted to trading is open for
trading or, if such securities are traded in the over-the-counter market in the
United States, such market is open for trading, and provided further that any
reference to "days" (unless Business Days are specified) shall mean calendar
days.
Change of Control Transaction: (i) any direct or indirect acquisition
or purchase by any Person of (A) a business that constitutes 50% or more of the
net revenues, net income or assets of the Company and its Subsidiaries, taken as
a whole, or
17
(B) 50% or more of any class of securities of the Company, (ii) any tender offer
or exchange offer that if consummated would result in any Person beneficially
owning 50% or more of any class of any securities of the Company, or (iii) any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company (or any Subsidiary
whose business constitutes 50% or more of the net revenues, net income or assets
of the Company and its Subsidiaries taken as a whole).
Closing Date: the meaning specified in the second paragraph of the
Warrant.
Commission: the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
Common Stock: the Company's Common Stock, as constituted on the date
hereof, any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock, and all other
stock of any class or classes (however designated) of the Company the holders of
which have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
Company: the meaning specified in the first paragraph of the Warrant.
Company Stock Option Plans: the Company's Stock Option Plan as such
plan may be amended from time to time, or any other stock option plans adopted
by the Board of Directors of the Company.
Convertible Securities: any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock.
Exchange Act: the Securities Exchange Act of 1934, or any successor
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. Reference to a particular section of the
Securities Exchange Act of 1934 shall include a reference to the comparable
section, if any, of any such successor statute.
Exercise Price: the meaning specified in Section 1.1.
Expiration Date: the earlier of [5.5 years after the Closing Date],
2009 or upon a Change of Control Transaction.
18
Fair Value: the meaning specified in Section 2.11(a).
Holder: the meaning specified in Section 1.1.
Market Price: on any date specified herein, (a) in the case of
securities that have an existing public trading market, the amount per security
equal to (i) the last sale price of such security, regular way, on such date or,
if no such sale takes place on such date, the average of the closing bid and
asked prices thereof on such date, in each case as officially reported on the
principal national securities exchange on which the same are then listed or
admitted to trading, or (ii) if no such security is then listed or admitted to
trading on any national securities exchange but such security is designated as a
national market system security by the NASD, the last trading price of such
security on such date, or if such security is not so designated, the average of
the reported closing bid and asked prices thereof on such date as shown by the
NASD automated quotation system or, if no shares thereof are then quoted in such
system, as published by the National Quotation Bureau, Incorporated or any
successor organization, and in either case as reported by any member firm of the
New York Stock Exchange selected by the Company, and (b) in the case of
securities that do not have an existing public trading market and in the case of
other property, the higher of (i) the book value thereof as determined by
agreement between the Company and the Holder, or if the Company and the Holder
fail to agree, by any firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company, as of the last day
of any month ending within 60 days preceding the date as of which the
determination is to be made and (ii) the fair value thereof (w) determined by an
agreement between the Company and the Holder or (x) if the Company and the
Holder fail to agree, determined jointly by an independent investment banking
firm retained by the Company and by an independent investment banking firm
retained by the Holder, either of which firms may be an independent investment
banking firm regularly retained by the Company or the Holder or (y) if the
Company or the Holder shall fail so to retain an independent investment banking
firm within five Business Days of the retention of such firm by the Holders or
the Company, as the case may be, determined solely by the firm so retained or
(z) if the firms so retained by the Company and by such holders shall be unable
to reach a joint determination within 15 Business Days of the retention of the
last firm so retained, determined by another independent investment banking firm
chosen by the first two such firms and which is not a regular investment banking
firm of the Company or any such holder.
NASD: the National Association of Securities Dealers, Inc.
Other Dilutive Securities: the meaning specified in Section 2.10(d).
Other Securities: any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
19
Holder at any time shall be entitled to receive, or shall have received, upon
the exercise of the Warrant, in lieu of or in addition to Common Stock, or which
at any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or other securities pursuant to Section 2.8 or
otherwise.
Other Trigger Event: the meaning specified in Section 2.11(g).
Person: an individual, a partnership, an association, a joint venture,
a corporation, a limited liability company, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
Public Offering: any offering of Common Stock to the public pursuant
to an effective registration statement under the Securities Act.
Purchaser: the meaning specified in the first paragraph of the
Warrant.
Registration Rights Agreement: the meaning specified in Section 7 of
the Warrant.
Restricted Securities: (a) any Warrants bearing the applicable legend
set forth in Section 6, (b) any shares of Common Stock (or Other Securities)
which have been issued upon the exercise of Warrants and which are evidenced by
a certificate or certificates bearing the applicable legend set forth in such
section, and (c) unless the context otherwise requires, any shares of Common
Stock (or Other Securities) which are at the time issuable upon the exercise of
Warrants and which, when so issued, shall be evidenced by a certificate or
certificates bearing the applicable legend set forth in such section.
Securities Act: the Securities Act of 1933, or any successor statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time. Reference to a particular section of the
Securities Act of 1933 shall include a reference to the comparable section, if
any, of any such successor statute.
Stock Purchase Agreement: the meaning specified in the second
paragraph of the Warrant.
Subscription Notice: the meaning specified in Section 1.1.
Transaction: the meaning specified in Section 2.8.
Trigger Event: the meaning specified in Section 2.11(g).
Warrant: the meaning specified in the second paragraph of the Warrant.
20
Warrant Price: the meaning specified in Section 2.1.
13. Remedies. The Company stipulates that the remedies at law of the
Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of the Warrant are not and
shall not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
14. No Rights or Liabilities as Shareholder. Nothing contained in the
Warrant shall be construed as conferring upon the Holder hereof any rights as a
shareholder of the Company or as imposing any liabilities on such Holder to
purchase any securities or as a shareholder of the Company, whether such
liabilities are asserted by the Company or by creditors or shareholders of the
Company or otherwise.
15. Notices. All notices and other communications under the Warrant,
except notices of the exercise of any Warrant (which shall be effected in the
manner provided in Section 1), shall be in writing and shall be mailed by
registered or certified mail, return receipt requested, addressed as follows or
to such other address as such party may have designated to the other in writing:
(a) if to the Purchaser, to it at:
Fidelity Information Services, Inc..
---------------------------
---------------------------
---------------------------
with a copy to:
---------------------------
---------------------------
---------------------------
Attention: __________________
Telecopy No.: _______________
21
with a copy to:
---------------------------
---------------------------
---------------------------
Attention: __________________
Telecopy No.: _______________
(b) if to any other Holder or any holder of any Common Stock (or Other
Securities), at the registered address of such Holder as set forth in the
register kept at the principal office of the Company,
or
(c) if to the Company, to it at:
Covansys Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention of: General Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Butzel Long
000 Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention of: Xxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
16. Severability. If any term, provision, covenant or restriction of
the Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
17. Miscellaneous. The Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. The agreements of the Company contained in the Warrant other than
those applicable solely to the Warrant and the Holder thereof shall inure to the
benefit of and be enforceable by any Holder or Holders at the time of any shares
of Common Stock (or Other Securities) issued upon the exercise of the Warrant,
whether so expressed or not.
22
THE WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF [NEW YORK] (WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR
RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION). EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF [NEW YORK] AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE STATE OF [NEW YORK] SOLELY IN RESPECT OF THE INTERPRETATION AND
ENFORCEMENT OF THE PROVISIONS OF THIS WARRANT. EACH PARTY HEREBY WAIVES AND
AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE
INTERPRETATION AND ENFORCEMENT HEREOF, THAT SUCH ACTION, SUIT OR PROCEEDING MAY
NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THE VENUE THEREOF
MAY NOT BE APPROPRIATE OR THAT THIS WARRANT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS. EACH PARTY HEREBY CONSENTS TO AND GRANTS ANY SUCH COURT JURISDICTION
OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE
AND AGREES THAT THE MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN ANY MANNER PERMITTED BY LAW, SHALL BE VALID AND
SUFFICIENT SERVICE THEREOF. The section headings in the Warrant are for purposes
of convenience only and shall not constitute a part hereof.
COVANSYS CORPORATION
By:
---------------------------------
Name:
Title:
23
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To: Covansys Corporation (the "Company")
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, _____(1)
shares of Common Stock of the Company, and herewith makes payment [of $_____](2)
[by application, pursuant to Section 1.1(b) of such Warrant, of [a portion of]
the Warrant representing a right to purchase _____(1) shares of Common
Stock],(3) and requests that the certificates for such shares be issued in the
name of, and delivered to _______________ whose address is _______________.
Dated:
---------------------------
[HOLDER](4)
[Address]
By
------------------------------------
Name:
Title:
------------
(1) Insert here the number of shares called for on the face of the Warrant (or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised), in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant, may be delivered upon exercise. In the case of a partial exercise,
a new Warrant or Warrants shall be issued and delivered, representing the
unexercised portion of the Warrant, to the holder surrendering the same.
(2) Delete inapplicable language in brackets.
(3) Delete inapplicable language in brackets.
(4) Signature must conform in all respects to name of holder as specified on
the face of the Warrant.
24
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ________________ the right
represented by such Warrant to purchase ______ shares of Common Stock of
Covansys Corporation (the "Company") to which such Warrant relates, and appoints
___________ Attorney to make such transfer on the books of the Company
maintained for such purpose, with full power of substitution in the premises.
Dated:
---------------------------
[HOLDER](1)
[Address]
By
-----------------------------------
Name:
Title:
Signed in the presence of:
-----------------------------
--------
(1) Signature must conform in all respects to name of holder as specified on
the face of the Warrant.
25
STOCK PURCHASE AGREEMENT
Exhibits 6.2(c)(i)
Registration Rights Agreement
===============================================================================
COVANSYS CORPORATION
REGISTRATION RIGHTS AGREEMENT
Dated as of [_________], 2004
===============================================================================
TABLE OF CONTENTS
1. Background...........................................................1
2. Definitions..........................................................1
3. Registration.........................................................4
3.1 Registration on Request....................................4
3.2 Piggyback Registration.....................................8
3.3 Registration Procedures...................................10
3.4 Underwritten Offerings....................................13
3.5 Preparation; Reasonable Investigation.....................15
3.6 Other Registrations.......................................15
3.7 Indemnification...........................................15
4. Miscellaneous.......................................................18
4.1 Rule 144; Legended Securities; etc........................18
4.2 Amendments and Waivers....................................18
4.3 Nominees for Beneficial Owners............................19
4.4 Successors, Assigns and Transferees.......................19
4.5 Notices...................................................19
4.6 No Inconsistent Agreements................................21
4.7 Remedies..................................................21
4.8 Stock Splits, etc.........................................21
4.9 Term......................................................21
4.10 Severability.............................................21
4.11 Headings.................................................22
4.12 Counterparts.............................................22
4.13 Governing Law............................................22
4.14 Waiver of Jury Trial.....................................22
4.15 No Third Party Beneficiaries.............................22
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
[____________], 2004, is entered into by and among CDR-COOKIE Acquisition,
L.L.C., a Delaware limited liability company ("CDR") , Fidelity Information
Services, Inc., an Arkansas corporation, ("FIS"), and Covansys Corporation, a
Michigan corporation (the "Company").
1. Background.
1.1. Pursuant to a stock purchase agreement, dated as of April 26,
2004, by and between FIS and the Company (the "Company Stock Purchase
Agreement"), FIS agreed to purchase from the Company, and the Company agreed to
sell to FIS: (i) an aggregate of 8,700,000 shares (the "FIS Shares") of the
Company's common stock, without par value (the "Common Stock") and (ii) warrants
to purchase up to 4,000,000 shares of Common Stock at exercise prices ranging
from $15.00 to $24.00 per share (the "FIS Warrants").
1.2. Pursuant to a stock purchase agreement, dated as of April 26,
2004, by and between FIS and Xx. Xxxxxxxx X. Xxxxxxxxx, FIS agreed to purchase
from Xx. Xxxxxxxxx, and Xx. Xxxxxxxxx agreed to sell to FIS, an aggregate of
2,300,000 shares of Common Stock (the "Additional FIS Shares").
1.3. Pursuant to a recapitalization agreement, dated as of April 26,
2004, by and between CDR and the Company, such parties agreed to exchange
200,000 shares of the Company's Series A Voting Convertible Preferred Shares,
without par value, owned by CDR and warrants to acquire 3.5 million shares of
Common Stock at an exercise price of $25 per share and 1.8 million shares of
Common Stock at an exercise price of $31 per share for: (i) an aggregate of 2
million shares of the Common Stock (the "CDR Shares") and (ii) warrants to
purchase an aggregate of 5 million shares of Common Stock at an exercise price
of $18 per share (the "CDR Warrants").
1.4. CDR, the Fund, FIS or any of their respective Affiliates may in
the future acquire Additional Common Stock (as defined in Section 2) from the
Company or other shareholders (subject to certain limitations contained in
agreements between them and the Company).
2. Definitions. For purposes of this Agreement, the following terms
have the following respective meanings:
"Additional Common Stock": Shares of Common Stock, other than CDR
Shares, FIS Shares, Additional FIS Shares and Warrant Shares, acquired by CDR,
the Fund, FIS or any of their Affiliates (but not their transferees).
"Additional FIS Shares": is defined in Section 1.2.
"Affiliate": With respect to any Person, any other Person directly or
indirectly Controlling, Controlled by or under common Control with such first
Person. "Control" means the power to direct the affairs of a Person by reason of
ownership of voting securities, by
contract or otherwise. Any director, member of management or other employee of
the Company or any of its subsidiaries who would not otherwise be an Affiliate
shall not be deemed to be an Affiliate of CDR or FIS.
"Agreement": is defined in the introductory paragraph hereof.
"Board": The Board of Directors of the Company.
"Business Day": A day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York, Detroit, Michigan, or
Jacksonville, Florida, are authorized or required to close.
"CDR": is defined in the introductory paragraph to this Agreement.
"CDR Securities": At any time, the Registrable Securities owned by
CDR, the Fund, their respective Affiliates or any transferee thereof.
"CDR Shares": is defined in Section 1.3.
"CDR Warrants": is defined in Section 1.3.
"Commencement Date": The earlier of (a) March 1, 2005 and (b) the date
upon which the Company files its Annual Report on Form 10-K for the fiscal year
ended December 31, 2004 with the Securities and Exchange Commission.
"Common Stock": is defined in Section 1.1.
"Company": is defined in the introductory paragraph to this Agreement.
"Company Stock Purchase Agreement": is defined in Section 1.1.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
any successor Federal statute, and the rules and regulations thereunder which
shall be in effect at the time. Any reference to a particular section thereof
shall include a reference to the corresponding section, if any, of any such
successor Federal statute, and the rules and regulations thereunder.
"FIS": is defined in the introductory paragraph to this Agreement.
"FIS Securities": At anytime, the Registrable Securities owned by FIS,
any Affiliate of FIS or any transferee thereof.
"FIS Shares": is defined in Section 1.1.
"FIS Warrants": is defined in Section 1.1.
"Fund": Any of Xxxxxxx, Dubilier & Rice Fund VI Limited Partnership, a
Cayman Islands exempted limited partnership, Xxxxxxx, Dubilier & Rice Fund VI-A
Limited Partnership, a Cayman Islands exempted limited partnership, and any
other entity organized or managed by or affiliated with Xxxxxxx, Dubilier &
Rice, Inc., a Delaware corporation.
2
"NASD": The National Association of Securities Dealers, Inc.
"NASDAQ": The NASD Automated Quotation System.
"Person": Any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental entity or other
entity.
"Public Offering": An underwritten public offering of Common Stock led
by at least one underwriter of nationally recognized standing.
"Registrable Securities": (a) (i) the CDR Shares, (ii) the FIS Shares
and the Additional FIS Shares, (iii) the Additional Common Stock and (iv) the
Warrant Shares; and (b) any securities issued or issuable with respect to any
Warrants or with respect to any Common Stock referred to in the foregoing
clauses (w) upon any conversion or exchange thereof, (x) by way of stock
dividend or stock split, (y) in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or (z)
otherwise, in all cases subject to the penultimate paragraph of Section 3.3. As
to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (A) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (B) such securities shall have been
distributed to the public in reliance upon Rule 144, (C) such securities shall
have been otherwise transferred, new certificates for such securities not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of such securities shall not require
registration or qualification of such securities under the Securities Act or any
similar state law then in force, or (D) such securities shall have ceased to be
outstanding.
"Registration Expenses": All expenses incident to the Company's
performance of its obligations under or in compliance with Section 3, including,
but not limited to, all registration and filing fees, all fees and expenses of
complying with securities or blue sky laws, all fees and expenses associated
with listing securities on exchanges or NASDAQ, all fees and other expenses
associated with filings with the NASD (including, if required, the fees and
expenses of any "qualified independent underwriter" and its counsel), all
printing expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants, and the expenses of any special audits made
by such accountants required by or incidental to such performance and compliance
and the fees and disbursements of one (but not more than one) law firm retained
on behalf of the holders of a majority (by number of shares) of the Registrable
Securities to be disposed of, but not including any underwriting discounts or
commissions or any transfer taxes payable in respect of the sale of Registrable
Securities by the holders thereof.
"Requisite Percentage of CDR Securitiesholders": At any time, the
holder or holders of at least 50% (by number of shares) of the CDR Securities
then outstanding; provided that for purposes of the foregoing definition,
Warrant Shares shall be deemed to be CDR Securities only to the extent the
Warrant or Warrants with respect thereto have been duly exercised.
3
"Requisite Percentage of FIS Securitiesholders": At any time,
the holder or holders of at least 50% (by number of shares) of the FIS
Securities then outstanding; provided that for purposes of the foregoing
definition, Warrant Shares shall be deemed to be FIS Securities only to the
extent the Warrant or Warrants with respect thereto have been duly exercised.
"Requisite Percentage of Shareholders": Either (i) the Requisite
Percentage of FIS Securitiesholders or (ii) the Requisite Percentage of CDR
Securitiesholders.
"Rule 144": Rule 144 (or any successor provision) under the Securities
Act.
"Rule 144A": Rule 144A (or any successor provision) under the
Securities Act.
"Rule 145": Rule 145 (or any successor provision) under the Securities
Act.
"Securities Act": The Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations thereunder which shall
be in effect at the time. Any reference to a particular section thereof shall
include a reference to the corresponding section, if any, of any such successor
Federal statute, and the rules and regulations thereunder.
"Securities and Exchange Commission": The Securities and Exchange
Commission or any other Federal agency at the time administering the Securities
Act or the Exchange Act.
"Special Registration": (a) The registration of shares of equity
securities or options or other rights in respect thereof to be offered to
directors, members of management, employees, consultants or sales agents,
distributors or similar representatives of the Company or its direct or indirect
subsidiaries or (b) the registration of equity securities and/or options or
other rights in respect thereof solely on Form S-4 or S-8 or any successor form.
"Termination Date": The tenth anniversary date of this Agreement.
"Warrants": The CDR Warrants and the FIS Warrants.
"Warrant Shares": Shares of Common Stock issuable upon the exercise of
the CDR Warrants and the FIS Warrants.
3. Registration.
3.1. Registration on Request.
(a) Requests. Subject to the provisions of Section 3.6 and clause (z)
below, at any time or from time to time beginning on the Commencement Date and
ending on the Termination Date, the Requisite Percentage of Shareholders shall
have the right to make written requests that the Company effect registrations
under the Securities Act of all or part of the Registrable Securities of the
holder or holders making such request, which requests shall specify the intended
method of disposition thereof by such holder or holders.
4
(b) Obligation to Effect Registration. Upon receipt by the Company
prior to the Termination Date of any request for registration pursuant to
Section 3.1(a), the Company will promptly give written notice of such requested
registration to all holders of Registrable Securities, and thereupon will use
its best efforts to effect the registration under the Securities Act of
(i) the Registrable Securities which the Company has been so requested
to register pursuant to Section 3.1(a), and
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 30 days after the Company has given such written notice
(which request shall specify the intended method of disposition of such
Registrable Securities),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. Notwithstanding the preceding sentence:
(w) the Company shall not be required to effect a registration
requested pursuant to Section 3.1(a) if the Board determines, in its good
faith judgment, after consultation with a firm of nationally recognized
underwriters that the aggregate net proceeds from the disposition of the
Registrable Securities for which registration has been so requested would
be less than $30,000,000 (or $15,000,000 if the Registrable Securities for
which registration has been requested constitutes either (A) all of the
outstanding Registrable Securities then owned by either FIS and its
Affiliates or (B) all of the Registrable Securities then owned by CDR, the
Fund and their respective Affiliates);
(x) if the Board determines in its good faith judgment, after
consultation with a firm of nationally recognized underwriters, that there
will be an adverse effect on a then contemplated Public Offering, the
Requisite Percentage of Shareholders shall be given notice of such fact and
shall be deemed to have withdrawn such request and such registration shall
not be deemed to have been effected or requested pursuant to this Section
3.1;
(y) the Company shall be entitled to postpone for a reasonable period
of time not to exceed 60 days from the date a request pursuant to Section
3.1(a) is received, the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to this Section 3.1, if
the Board (i) in good faith determines that such registration and offering
would materially adversely affect or interfere with any proposed or pending
financing, acquisition, corporate reorganization or other material
transaction or the conduct or outcome of any material litigation involving
the Company or any of its subsidiaries, and (ii) as promptly as practicable
gives the relevant holders of Registrable Securities written notice of such
postponement, setting forth the duration of and reasons for such
postponement; provided, however, that the Company shall not effect such a
postponement more than twice in any 180 day period, for no more than an
aggregate total of 60 days. If the Company shall so postpone the filing of
a registration statement, the holder or holders of Registrable Securities
making the request pursuant to Section 3.1(a)
5
shall within 10 days after receipt of the notice of postponement
advise the Company in writing whether or not it has determined to withdraw
its request for registration. Failure by such holder or holders to timely
notify the Company of its determination shall for all purposes be treated
as a withdrawal of the request for registration. In the event of a
withdrawal, such request for registration shall not be deemed exercised for
purposes of determining whether such holder or holders still have the right
to make a request for registration pursuant to this Section 3.1; and
(z) the Company shall not be required to effect more than two
registrations requested under Section 3.1 by holders of the CDR Securities
(or three such registrations if CDR Warrants for at least 2,000,000 shares
of Common Stock have been exercised) or more than four such registrations
requested by holders of the FIS Securities, in each case including requests
deemed to be made by either pursuant to the provisions of the final
paragraph of Section 3.2.
(c) Registration Statement Form. Each registration required pursuant
to this Section 3.1 shall be effected by the filing of a registration statement
on Form S-1, Form S-2 or Form S-3 (or any other form which includes
substantially the same information as would be required to be included in a
registration statement on such forms as presently constituted), the choice of
such form to be made by holders holding at least a majority (by number of
shares) of the Registrable Securities as to which registration has been
requested pursuant to this Section 3.1, unless the use of a specific or
different form is required by law.
(d) Expenses. The Company will pay all Registration Expenses in
connection with registrations effected pursuant to a request under Section
3.1(a). Notwithstanding the provisions of this Section 3.1(d) or of Section 3.2,
each seller of Registrable Securities shall pay all Registration Expenses to the
extent required to be paid by such seller by applicable law, and will pay all
other expenses attributable to such holder's inclusion of shares in a
registration hereunder and sale of shares pursuant thereto, including any
underwriting discounts or commissions or any transfer taxes payable in respect
of the sale of Registrable Securities by such holder.
(e) Inclusion of Other Securities. The Company shall neither register,
nor enter into any agreement obligating it to register, securities (other than
Registrable Securities) for sale for the account of any Person other than the
Company in any registration requested pursuant to Section 3.1(a) unless
permitted to do so by the written consent of holders holding at least a majority
(by number of shares) of the Registrable Securities proposed to be sold in such
registration, which consent shall not unreasonably be withheld, it being
understood and agreed that such holders shall not be deemed to be unreasonable
if they in their good faith judgment believe that the inclusion of the
securities of any such other Person will adversely affect the price or
marketability of the shares such holders of Registrable Securities or the
Company propose to sell in such registration.
(f) Effective Registration Statement. A registration required under
Section 3.1(a) will not be deemed to have been effected unless it has become
effective for the period specified in Section 3.3(b). Notwithstanding the
preceding sentence, a registration required under Section 3.1(a) that does not
become effective after the Company has filed a
6
registration statement with respect thereto solely by reason of the refusal to
proceed of the holder or holders of Registrable Securities requesting the
registration shall be deemed to have been effected by the Company at the
request of such holder or holders.
(g) Pro Rata Allocation.
(i) If any registration statement made pursuant to Section 3.1(a)
involves an underwritten offering and the managing underwriter of such
offering (or, in connection with an offering that is not underwritten, an
investment banker) shall advise the Company that, in its view, the number
of securities requested to be included in such registration exceeds the
largest number that can be sold in an orderly manner in such offering
without adversely affecting the price range of such offering, the Company
shall include in such registration:
(A) first, all shares of Registrable Securities requested to be
included in such registration pursuant to Section 3.1(a) or Section
3.1(b);
(B) second, to the extent that the number of securities to be
registered pursuant to clause (A) is less than the largest number that
can be sold in an orderly manner in such offering within a price range
acceptable to the selling holders of Registrable Securities,
securities that the Company proposes to register; and
(C) third, if permitted by the holders of Registrable Securities
pursuant to Section 3.1(e), any other holders.
(ii) The securities to be included in any such registration pursuant
to Section 3.1(g)(i)(A) and, except as otherwise contractually required as
of the date hereof, Section 3.1(g)(i) (C) shall be allocated on a pro rata
basis among all holders requesting that securities be included in such
registration pursuant to such clause on the basis of the number of
securities requested to be included by such holders; provided that, insofar
as the requisite holders of CDR Securities request a registration pursuant
to Section 3.1(a) that would otherwise be subject to pro rata allocation in
accordance with this sentence, and unless otherwise consented to by such
holders, the FIS Securities included in such registration shall not exceed
50% of the number of securities included in such registration.
(iii) If a request for registration pursuant to Section 3.1 is made by
the Requisite Percentage of CDR Securitiesholders and
(A) the holder or holders of CDR Securities requesting such
registration are unable to sell at least 75% of the number of
securities they requested to be included therein by virtue of the
inclusion of other holders of the Company's securities included in
such offering; and
(B) the number of FIS Securities included in such registration
exceeds 25% of the number of securities included in such registration;
7
then such request for registration shall not be deemed exercised by
the holders of the CDR Securities for purposes of Section 3.1(b)(z)
but instead shall be deemed exercised by the holders of the FIS
Securities for purposes of Section 3.1(b)(z).
(iv) If a request for registration pursuant to Section 3.1 is made by
the Requisite Percentage of FIS Securitiesholders and
(A) the holder or holders of FIS Securities requesting such
registration are unable to sell at least 50% of the number of
securities they requested to be included therein by virtue of the
inclusion of other holders of the Company's securities included in
such offering; and
(B) the number of CDR Securities included in such registration
exceeds 50% of the number of securities included in such registration;
then such request for registration shall not be deemed exercised by
the holders of the FIS Securities for purposes of Section 3.1(b)(z)
but instead shall be deemed exercised by the holders of the CDR
Securities for purposes of Section 3.1(b)(z).
3.2. Piggyback Registration. If the Company at any time proposes to
register any of its equity securities (as defined in the Exchange Act) under the
Securities Act (other than pursuant to Section 3.1 or pursuant to a Special
Registration), whether or not for sale for its own account, and the registration
form to be used may be used for the registration of Registrable Securities, it
will at such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and, upon the written request of any holder
of Registrable Securities given to the Company within 30 days after the Company
has given any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities that the
Company has been so requested to register by the holders thereof, to the extent
required to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered,
provided that:
(a) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Board shall determine
for any reason not to register such securities, the Company may, at its
election, give written notice of such determination to each holder of
Registrable Securities that was previously notified of such registration and,
thereupon, shall not register any Registrable Securities in connection with such
registration (but shall nevertheless pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Registrable Securities to request that a registration be effected under
Section 3.1; and
(b) if the Company shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not underwritten, by
an investment banker) that in their or its opinion the number of securities
requested to be included in such registration (whether by the Company, pursuant
to this Section 3.2 or pursuant to any other rights granted by the Company to a
holder or holders of its securities to request or demand such registration or
8
inclusion of any such securities in any such registration) exceeds the largest
number that can be sold in an orderly manner in such offering without adversely
affecting the price range of such offering,
(i) The Company shall include in such registration the number of
Registrable Securities equal to the lesser of (x) the total number of
Registrable Securities so requested to be included in such registration,
and (y) 25% of the largest number of securities that in the opinion of such
underwriters or investment bank, as the case may be, can be sold in an
orderly manner in such offering without adversely affecting the price range
of such offering and the Company shall not include in such registration any
securities (other than securities being sold by the Company in accordance
with clause (ii) below) so requested to be included other than Registrable
Securities, unless all Registrable Securities requested to be so included
are included therein; and
(ii) The Company may include in such registration up to the number of
securities proposed to be sold by the Company, less the number of
Registrable Securities to be registered pursuant to clause (i) above.
If, pursuant to clause (i) above, less than all of the Registrable
Securities requested to be included in any Company offering are to be included
in such offering, the number of shares of Registrable Securities included in
such offering shall be allocated 50% among the holders of FIS Securities
requested to be included therein (pro rata among such holders on the basis of
the number of FIS Securities requested to be so included) and 50% among the
holders of CDR Securities requested to be included therein (pro rata among such
holders on the basis of the number of CDR Securities requested to be so
included), provided that, in the case of a registration initially requested or
demanded by a holder or holders of securities other than Registrable Securities,
pursuant to a contractual registration obligation, the holders of the
Registrable Securities requested to be included therein and the holders of such
other securities shall share pro rata (based on the number of shares if the
requested or demanded registration is to cover only Common Stock and, if not,
based on the proposed offering price of the total number of securities included
in such offering requested to be included therein). Any registration agreement
hereinafter entered into by the Company with respect to any of its securities
shall include provisions consistent with the foregoing.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 3.2,
except to the extent payment of such Registration Expenses by Person other than
holders of Registrable Securities is contractually required. No registration
effected under this Section 3.2 shall relieve the Company from its obligation to
effect registrations upon request under Section 3.1.
To the extent that, in any registration to which this Section 3.2(b)
applies in which they have included Registrable Securities, the net proceeds
received by the CDR Securitiesholders equals or exceeds $30 million, then such
registration shall be deemed to have been requested by the CDR Securitiesholders
for purposes of clause (z) of Section 3.1(b). To the extent that, in any
registration to which this Section 3.2(b) applies in which they have included
Registrable Securities, the net proceeds received by the FIS Securitiesholders
equals or exceeds $30 million,
9
then such registration shall be deemed to have been requested by the FIS
Securitiesholders for purposes of clause (z) of Section 3.1(b).
3.3. Registration Procedures. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3.1 and 3.2, the Company will
promptly:
(a) subject to clauses (x), (y) and (z) of Section 3.1(b), prepare and
file with the Securities and Exchange Commission as soon as practicable and in
any event within 90 days, after receipt of a request pursuant to Section 3.1 a
registration statement with respect to such securities, make all required
filings with the NASD and use best efforts to cause such registration statement
to become effective at the nearest practicable date;
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith and such other documents as may be necessary to
keep such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement, but in no event for
a period of more than six months after such registration statement becomes
effective;
(c) furnish to counsel (if any) selected by the holders of a majority
(by number of shares) of the Registrable Securities covered by such registration
statement and to counsel for the underwriters in any underwritten offering
copies of all documents proposed to be filed with the Securities and Exchange
Commission (including all documents to be filed on a confidential basis) in
connection with such registration, which documents will be subject to the review
of such counsel; the Company shall not file any registration statement or
prospectus or any amendments or supplements thereto pursuant to a registration
under Section 3.1(a) if the holders of a majority of the Registrable Securities
covered by such registration statement, their counsel, or the underwriters, if
any, shall reasonably object in writing;
(d) furnish to each seller of such securities, without charge, such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case, including all exhibits and
documents filed therewith (other than those filed on a confidential basis),
except that the Company shall not be obligated to furnish any seller of
securities with more than two copies of such exhibits and documents), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) in conformity
with the requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of the
securities owned by such seller;
(e) use its best efforts to register or qualify the securities covered
by such registration statement under such other securities or blue sky laws of
such jurisdictions as each seller shall request, and do any and all other acts
and things which may be necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be required to
10
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, subject itself to taxation in any jurisdiction
wherein it is not so subject, or take any action which would subject it to
general service of process in any jurisdiction wherein it is not so subject;
(f) furnish to each seller a signed counterpart, addressed to the
sellers, of
(i) an opinion of counsel for the Company experienced in securities
law matters, dated the effective date of the registration statement, and
(ii) a "comfort" letter signed by the independent public accountants
who have issued an audit report on the Company's financial statements
included in the registration statement, subject to such seller having
executed and delivered to the independent public accountants such
certificates and documents as such accountants shall reasonably request,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten Public
Offerings of securities;
(g) (i) notify each seller of any securities covered by such
registration statement if such registration statement, at the time it or any
amendment thereto became effective, contained an 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 not misleading, and, as promptly as
practicable, prepare and file with the Securities and Exchange Commission a
post-effective amendment to such registration statement and use best efforts to
cause such post-effective amendment to become effective such that such
registration statement, as so amended, shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) notify each
holder of Registrable Securities covered by such registration statement, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, if the prospectus included in such registration statement, as
then in effect, includes 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 therein, in light of the circumstances under which they were made,
not misleading, and, as promptly as is practicable, prepare and furnish to such
holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit 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;
(h) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
of the Company complying with the provisions of Section 11(a) of the Securities
Act and Rule 158 under the Securities Act;
11
(i) notify each seller of any securities covered by such registration
statement (i) when such registration statement, or any post-effective amendment
to such registration statement, shall have become effective, or any amendment of
or supplement to the prospectus used in connection therewith shall have been
filed, (ii) of any request by the Securities and Exchange Commission to amend
such registration statement or to amend or supplement such prospectus or for
additional information, (iii) of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of such registration
statement or of any order preventing or suspending the use of any preliminary
prospectus, and (iv) of the suspension of the qualification of such securities
for offering or sale in any jurisdiction, or of the institution of any
proceedings for any of such purposes;
(j) use its best efforts (i) (x) to list such securities on any
securities exchange on which the Common Stock is then listed or, if no Common
Stock is then listed, on an exchange selected by the Company, if such listing is
then permitted under the rules of such exchange or (y) if such listing is not
practicable or the Board determines that quotation as a NASDAQ National Market
System security is preferable, to secure designation of such securities as a
NASDAQ "national market system security" within the meaning of Rule 11Aa2-1
under the Exchange Act or, failing that, to secure NASDAQ authorization for such
securities, and, without limiting the foregoing, to arrange for at least two
market makers to register as such with respect to such securities with the NASD,
(ii) to provide a transfer agent and registrar for such Registrable Securities
not later than the effective date of such registration statement and (iii) to
obtain a CUSIP number for the Registrable Securities; and
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such registration
statement or of any order preventing or suspending the use of any preliminary
prospectus.
The Company may require each seller of any securities as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably withheld, except
that no such consent shall be required for any disclosure that is required by
law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company pursuant to Section 3.3(g), such holder will promptly
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder
shall have received, in the case of clause (i) of Section 3.3(g), notice from
the Company that such registration statement has been amended, as contemplated
by Section 3.3(g),
12
and, in the case of clause (ii) of Section 3.3(g), copies of the supplemented or
amended prospectus contemplated by Section 3.3(g). If so directed by the
Company, each holder of Registrable Securities will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, in such
holder's possession of the prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event that the Company shall give any
such notice, the period mentioned in Section 3.3(b) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 3.3(g).
Notwithstanding any other provision of this Agreement, the parties
hereto acknowledge that the Company shall have no obligation to prepare or file
any registration statement prior to the time that financial information required
to be included therein is available for inclusion therein.
3.4. Underwritten Offerings. The provisions of this Section 3.4 do not
establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 3.1 through 3.3, to any
registration which is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a registration
requested pursuant to Section 3.1 is for an underwritten offering, only
securities which are to be distributed by the underwriters may be included in
the registration.
(b) Underwriting Agreement. If requested by the underwriters for any
underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 3.1, the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the holders of a majority
(by number of shares) of the Registrable Securities to be covered by such
registration and to the underwriters and to contain such representations and
warranties by the Company and such other terms and provisions as are customarily
contained in agreements of this type, including, but not limited to, indemnities
to the effect and to the extent provided in Section 3.7, provisions for the
delivery of officers' certificates, opinions of counsel and accountants'
"comfort" letters and hold-back arrangements. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. If any condition to the obligations
under such underwriting agreement are not met or waived, and such failure to be
met or waived is not attributable to the fault of the holders of Registrable
Securities requesting a demand registration pursuant to Section 3.1(a), such
request for registration shall not be deemed exercised for purposes of
determining whether such registration has been effected for purposes of Section
3.1. No such holder of Registrable Securities shall be required by the Company
to make any representations or warranties to, or agreements with, the Company or
13
the underwriters other than as set forth in Section 3.4(e) and representations,
warranties or agreements regarding such holder and such holder's intended method
of distribution.
(c) Selection of Underwriters. Whenever a registration requested
pursuant to Section 3.1 is for an underwritten offering, the holders of a
majority of the shares requested to be included in such registration will have
the right to select one or more underwriters to administer the offering at least
one of which shall be an underwriter of nationally recognized standing
reasonably satisfactory to the Company. If the Company at any time proposes to
register any of its securities under the Securities Act for sale for its own
account and such securities are to be distributed by or through one or more
underwriters, the Company will have the right to select one or more underwriters
to administer the offering at least one of which shall be an underwriter of
nationally recognized standing.
(d) Incidental Underwritten Offerings. Subject to the provisions of
the proviso to the first sentence of Section 3.2, if the Company at any time
proposes to register any of its equity securities under the Securities Act
(other than pursuant to Section 3.1 or pursuant to a Special Registration),
whether or not for its own account, and such securities are to be distributed by
or through one or more underwriters, the Company will give prompt written notice
to all holders of Registrable Securities of its intention to do so and, if
requested by any holder of Registrable Securities, will arrange for such
underwriters to include the Registrable Securities to be offered and sold by
such holder among those to be distributed by such underwriters. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of the underwriters under such underwriting agreement shall also be
conditions precedent to the obligations of such holders of Registrable
Securities. No such holder of Registrable Securities shall be required by the
Company to make any representations or warranties to, or agreements with, the
Company or the underwriters other than as set forth in Section 3.4(e) and
representations, warranties or agreements regarding such holder and such
holder's intended method of distribution.
(e) Hold Back Agreements. If and whenever the Company proposes to
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 3.1 or 3.2, each holder
of Registrable Securities, if required by the managing underwriter, agrees by
acquisition of such Registrable Securities not to effect (other than pursuant to
such registration) any public sale or distribution, including, but not limited
to, any sale pursuant to Rule 144 or Rule 144A, of any Registrable Securities,
any other equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company during the
20 day period prior to or the 90 day period following the effective date of such
registration, provided that each holder of Registrable Securities further agrees
that, if required by the managing underwriter for such registered offering, such
holder shall not effect any such public sale or distribution during the 180 day
period following the effective date of such registration, or during such lesser
period that is applicable to any securities held by the
14
Company's officers and directors, and the Company agrees to cause each holder of
any equity security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Company purchased or acquired from
the Company at any time other than in a Public Offering to enter into a similar
agreement with the Company.
3.5. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Securities and Exchange Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have issued audit reports on
its financial statements as shall be necessary, in the opinion of such holders'
and such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
3.6. Other Registrations. The Company shall not be required to effect
more than two demand registrations of any Registrable Securities under the
Securities Act pursuant to Section 3.1 (excluding any such registration that is
withdrawn or abandoned) within any 18-month period. The Company agrees not to
effect (other than pursuant to such registration or pursuant to a Special
Registration) any public sale or distribution, or to file any registration
statement (other than such registration or a Special Registration) covering any,
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, for 180 days after, and during the 20 days
prior to, the effective date of any registration effected pursuant to Sections
3.1 or 3.2 hereunder, if so required by the managing underwriter.
3.7. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 3.1
or 3.2, the Company will indemnify and hold harmless the seller of such
securities, its directors, officers, and employees, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls such seller or any such
participating person within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several, to which such seller or any such
director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or related thereto, or
any amendment or supplement thereto, or (ii) any omission or alleged omission to
state a fact required to be stated in any such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement or necessary to make the statements therein not misleading; and the
Company will reimburse such seller and each such director, officer, employee,
participating person and controlling person for any legal or any other expenses
15
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding, provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such seller or participating person expressly for use in the
preparation thereof and provided, further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the prospectus, if such untrue
statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to the prospectus and the
seller of Registrable Securities thereafter fails to deliver such prospectus as
so amended or supplemented prior to or concurrently with the sale of Registrable
Securities to the person asserting such loss, claim, damage, liability or
expense after the Company had furnished such seller with a sufficient number of
copies of the same or if the seller received notice from the Company of the
existence of such untrue statement or alleged untrue statement or omission or
alleged omission and the seller continued to dispose of Registrable Securities
prior to the time of the receipt of either (A) an amended or supplemented
prospectus which completely corrected such untrue statement or omission or (B) a
notice from the Company that the use of the existing prospectus may be resumed.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer,
employee, participating person or controlling person and shall survive the
transfer of such securities by such seller.
(b) Indemnification by the Sellers. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 3.1
or 3.2, each of the prospective sellers of such securities, will indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall sign such registration statement, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls the Company or any such
participating person within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, employee, participating person or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein or related thereto, or any
amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement or (ii) any omission or alleged omission to state a fact
with respect to such seller required to be stated in any such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement or necessary to make the statements therein not
misleading; and the seller will reimburse the Company and each such director,
officer, employee, participating person and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating
16
or defending any such loss, claim, liability, action or proceeding, provided
that the liability of each such seller will be in proportion to and limited to
the net amount received by such seller (after deducting any underwriting
discount and expenses) from the sale of Registrable Securities pursuant to such
registration statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any such
director, officer, participating person or controlling person and shall survive
the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 3.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party hereunder, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided therein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 3.7. In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate therein and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, provided that if such indemnified
party and the indemnifying party reasonably determine, based upon advice of
their respective independent counsel, that a conflict of interest may exist
between the indemnified party and the indemnifying party with respect to such
action and that it is advisable for such indemnified party to be represented by
separate counsel, such indemnified party may retain other counsel, reasonably
satisfactory to the indemnifying party, to represent such indemnified party, and
the indemnifying party shall pay all reasonable fees and expenses of such
counsel. No indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of such indemnified party, which consent shall
not be unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 3.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of such Registrable
Securities under any Federal or state law or regulation of governmental
authority other than the Securities Act.
(e) Other Remedies. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other from
the offering of Registrable Securities (taking into account the portion of the
proceeds of the offering realized by each such party) or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, or
17
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. No party shall be liable for contribution under this Section
3.7(e) except to the extent and under such circumstances as such party would
have been liable to indemnify under this Section 3.7 if such indemnification
were enforceable under applicable law.
(f) Officers and Directors. As used in this Section 3.7, the terms
"officers" and "directors" shall include the partners of the holders of
Registrable Securities which are partnerships and the trustees and beneficiaries
of the holders of Registrable Securities which are trusts.
4. Miscellaneous.
4.1. Rule 144; Legended Securities; etc.
(a) The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder (or, if the Company
is not required to file such reports, it shall, upon the request of any holder
of Registrable Securities, make publicly available such information as necessary
to permit sales pursuant to Rule 144 or Rule 145), and shall take such further
action as any such holder may reasonably request, all to the extent required
from time to time to enable such holder to sell shares of Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 or Rule 145. Upon the request of any holder of
Registrable Securities, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements.
(b) The Company shall issue new certificates for Registrable
Securities without a legend restricting further transfer if (i) such securities
have been sold to the public pursuant to an effective registration statement
under the Securities Act (other than Form S-8 if the holder of such Registrable
Securities is an Affiliate of the Company) or Rule 144, or (ii) (x) such
issuance is otherwise permitted under the Securities Act, (y) the holder of such
shares has delivered to the Company an opinion of counsel to such effect and (z)
the holder of such shares expressly requests the issuance of such certificates
in writing.
4.2. Amendments and Waivers. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of (a) the holder
or holders of a majority (by number of shares) of the FIS Securities at the time
outstanding to the extent such amendment, action or omission to act is likely to
adversely affect the rights or benefits of the holders of the FIS Securities
under this Agreement, and (b) the holder or holders of a majority (by number of
shares) of the CDR Securities at the time outstanding to the extent such
amendment, action or
18
omission to act is likely to adversely affect the rights or benefits of the
holders of the CDR Securities under this Agreement. The Company shall furnish to
FIS and CDR a copy of any amendment or consent prior to the execution thereof,
and the determination by FIS and CDR as to whether such consent is likely to
adversely affect the rights and benefits of the holders of the FIS Securities or
the CDR Securities, respectively, will be conclusive and binding upon the
Company and the holders of all Registrable Securities. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 4.2, whether or not such Registrable
Securities shall have been marked to indicate such consent. No amendment,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless set forth in writing. Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party or parties granting such waiver
in any other respect or at any other time.
4.3. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election and unless notice is otherwise
given to the Company by the record owner, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
4.4. Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities, subject to the provisions respecting the minimum numbers or
percentages of shares of Registrable Securities required in order to be entitled
to certain rights, or take certain actions, contained herein.
4.5. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the Fund or the other
parties hereto, as the case may be, at the following addresses or to such other
address as the Company, the Fund or the other parties hereto, as the case may
be, shall specify by notice to the others:
(i) if to the Company, to it at:
Covansys Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
19
Copy to
Butzel Long
000 Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to CDR, to:
CDR-Cookie Acquisition, L.L.C.
c/o Clayton, Dubilier & Rice Fund VI
Limited Partnership
c/o CD&R Associates VI Limited Partnership
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Copy to
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000-000-0000
and
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(iii) if to FIS, to:
Fidelity Information Services, Inc.
c/o Fidelity National Financial, Inc.
000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
20
Copy to
Xxxxxx, Xxxxx & Bockius LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx-Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
All such notices and communications shall be deemed to have been
received on the date of delivery if delivered personally or on the third
Business Day after the mailing thereof.
4.6. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities by this Agreement.
4.7. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any provision of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
4.8. Stock Splits, etc. Each party hereto agrees that it will vote to
effect a stock split (forward or reverse, as the case may be) with respect to
any Registrable Securities in connection with any registration of such
Registrable Securities hereunder, or otherwise, if the managing underwriter
shall advise the Company in writing (or, in connection with an offering that is
not underwritten, if an investment banker shall advise the Company in writing)
that in their or its opinion such a stock split would facilitate or increase the
likelihood of success of the offering. Each party hereto agrees that any number
of shares of Common Stock referred to in this Agreement shall be equitably
adjusted to reflect any stock split, stock dividend, stock combination,
recapitalization or similar transaction.
4.9. Term. This Agreement shall be effective as of the date hereof and
shall continue in effect thereafter until the earliest of (a) its termination by
the consent of the parties hereto or their respective successors in interest,
(b) the date on which no Registrable Securities remain outstanding, (c) the
dissolution, liquidation or winding up of the Company and (d) the Termination
Date.
4.10. Severability. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever. The
invalidity of any one or more phrases, sentences,
21
clauses, Sections or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
4.11. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not -------- affect the meaning or
interpretation of this Agreement.
4.12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same instrument.
4.13. Governing Law. This agreement shall be governed in all respects,
including as to validity, interpretation and effects, by the laws of the State
of New York, without giving effect to its principles or rules of conflict of
laws to the extent such principles or rules would require or permit the
application of the laws of another jurisdiction. The parties hereto hereby
irrevocably submit to the exclusive jurisdiction of the federal courts of the
United States of America, in each case located in the State, City and County of
New York, solely in respect of the interpretation and enforcement of the
provisions of this agreement, and hereby waive, and agree not to assert, as a
defense in any action, suit or proceeding for the interpretation or enforcement
hereof, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in such courts or that the venue
thereof may not be appropriate or that this agreement may not be enforced in or
by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a New
York federal court. The parties hereto hereby consent to and grant any such
court jurisdiction over the person of such parties and over the subject matter
of any such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
4.5, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
4.14. Waiver of Jury Trial. EACH OF THE PARTIES AGREES AND
ACKNOWLEDGES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS
AGREEMENT.
4.15. No Third Party Beneficiaries. Except as provided in Sections 3.7
and 4.4, nothing in this Agreement shall confer any rights upon any person or
entity other than the parties hereto, each such party's respective successors
and permitted assigns.
[the remainder of this page is intentionally left blank]
22
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
COVANSYS CORPORATION
By:
------------------------------------
Name:
Title:
CDR -COOKIE ACQUISITION, L.L.C.
By:
------------------------------------
Name:
Title:
FIDELITY INFORMATION SERVICES, INC.
By:
------------------------------------
Name:
Title:
23
STOCK PURCHASE AGREEMENT
Exhibits 6.2(c)(ii)
Standstill Agreement
(See Exhibit 4 to the Schedule 13D)
STOCK PURCHASE AGREEMENT
Exhibits 6.2(c)(iii)
Xxxxxxxxx Purchase Agreement
(See Exhibit 2 to the Schedule 13D)
STOCK PURCHASE AGREEMENT
Exhibits 6.2(c)(iv)
Xxxxxxxxx Voting Agreement
Execution Copy
VOTING AGREEMENT
by and among
XXXXXXXX X. XXXXXXXXX
and
THE XXXXXXXX X. XXXXXXXXX TRUST,
and
COVANSYS CORPORATION
Dated as of April 26, 2004
VOTING AGREEMENT
THIS VOTING AGREEMENT, dated as of April 26, 2004 (as amended or
supplemented from time to time, this "Agreement"), is entered into by and among
Xxxxxxxx X. Xxxxxxxxx ("RBV"), and The Xxxxxxxx X. Xxxxxxxxx Trust, established
pursuant to the Second Amendment and Restatement of Revocable Living Trust
Agreement, dated as of February 1, 1995 (the "RBV Trust"), and Covansys
Corporation, a Michigan corporation (the "Corporation"). Each of RBV and the RBV
Trust are sometimes referred to herein as a "Shareholder" and collectively as
the "Shareholders." Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings assigned to such terms in Article 6
hereof.
WITNESSETH
WHEREAS, concurrently with the execution of this Agreement, the
Corporation is entering into a Stock Purchase Agreement of even date herewith
(the "SPA") with Fidelity Information Services, Inc. (the "Purchaser"), pursuant
to which the Purchaser is acquiring the Shares (as defined in the SPA) and
warrants to purchase additional Common Stock of the Corporation;
WHEREAS, concurrently with the execution of this Agreement, the
Shareholders are entering into the Xxxxxxxxx Purchase Agreement and the
Xxxxxxxxx Shareholders' Agreement with the Purchaser;
WHEREAS, after the consummation of the Xxxxxxxxx Purchase Agreement,
the Shareholders will collectively own 6,311,759 shares of common stock, without
par value ("Common Stock"), of the Corporation (such shares of Common Stock,
together with any other shares of voting capital stock of the Corporation
acquired by either Shareholder after the date hereof and during the term of this
Agreement, being collectively referred to herein as the "RBV Shares"); and
WHEREAS, the execution and delivery of this Agreement in form and
substance satisfactory to the Corporation, with respect to certain voting,
standstill and other matters is a condition precedent to the obligations of the
Corporation under the SPA.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
ARTICLE 1
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders represent and warrant to the Corporation as follows:
1.1 Authorization, etc. Each Shareholder has the requisite power,
authority and legal capacity to execute, deliver and perform and to consummate
the transactions
SIGNATURE PAGE FOR VOTING AGREEMENT
contemplated by this Agreement. Each Shareholder has duly executed and delivered
this Agreement. This Agreement constitutes the legal, valid and binding
obligations of each Shareholder enforceable against each Shareholder in
accordance with its terms, assuming the due execution and delivery of this
Agreement by the Corporation and except as such enforcement may be limited by
any applicable bankruptcy, insolvency, moratorium or similar law affecting
creditors' rights generally.
1.2 No Conflicts; Consents.
(a) Subject to the filings, notices and consents set forth on Schedule
1.2(b) hereof, the execution, delivery and performance by each Shareholder of
this Agreement and the consummation of the transactions contemplated by this
Agreement, do not conflict with, contravene, result in a violation or breach of
or default under (with or without the giving of notice or the lapse of time or
both), or give rise to a claim or right of termination, amendment, modification,
vesting, acceleration or cancellation of any right or obligation or loss of any
material benefit under any Law applicable to such Shareholder or any contract,
agreement, or instrument to which such Shareholder is a party.
(b) No Shareholder is required to make any filing with or give any
notice to, or obtain any Consent from, any Governmental Authority or other
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of the transactions contemplated hereby, other than
as set forth on Schedule 1.2(b) hereof.
1.3 The RBV Shares. Each Shareholder has the sole right to vote the RBV
Shares held by it, and none of the RBV Shares is subject to any agreement,
arrangement or restriction with respect to the voting of such RBV Shares, except
as contemplated by (a) the Xxxxxxxxx Shareholders' Agreement, (b) this
Agreement, or (c) the CDR Voting Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to each Shareholder as follows:
2.1 Organization and Good Standing. The Corporation has been duly
organized and validly exists under the laws of the State of Michigan and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. The Corporation is duly
qualified to transact business and is in good standing in the State of Michigan.
2.2 Authorization, etc. The Corporation has the requisite power,
authority and legal capacity and has taken all corporate action necessary to
authorize the Corporation to execute, deliver and perform and to consummate the
transactions contemplated by this Agreement. The Corporation has duly executed
and delivered this Agreement. This Agreement constitutes the legal, valid and
binding obligation of the Corporation,
2
enforceable against the Corporation in accordance with its terms, assuming the
due execution and delivery of this Agreement by the Shareholders and except as
such enforcement may be limited by any applicable bankruptcy, insolvency,
moratorium or similar law affecting creditors' rights generally.
2.3 No Conflicts; Consents. The execution, delivery and performance by
the Corporation of this Agreement and the consummation of the transactions
contemplated by this Agreement do not conflict with, contravene, result in a
violation or breach of or default under (with or without the giving of notice or
the lapse of time or both), or give rise to a claim or right of termination,
amendment, modification, vesting, acceleration or cancellation of any right or
obligation or loss of any material benefit under any Law applicable to the
Corporation or any contract, agreement, or instrument to which the Corporation
is a party.
(b) The Corporation is not required to make any filing with or give any
notice to, or obtain any Consent from, any Governmental Authority or other
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of the transactions contemplated hereby.
ARTICLE 3
COVENANTS OF THE SHAREHOLDERS
3.1 Voting for Directors of the Corporation. From the Closing and
continuing until the date that is five (5) years after the Closing Date (the
"Termination Date"), the Shareholders, solely in their respective capacities as
Shareholders of the Corporation, agree that, at any meeting of the shareholders
of the Corporation, however called, or in connection with any written consent of
the shareholders of the Corporation, subject to the Corporation's compliance
with Section 4.1 hereof:
(a) Each Shareholder shall vote (or cause to be voted) the RBV Shares
owned by it in favor of the directors nominated by the Board of Directors of the
Corporation (the "Board") in any election of directors of the Corporation; and
(b) Each Shareholder shall (i) on matters not involving the election of
directors of the Corporation and subject to the Xxxxxxxxx Shareholders'
Agreement, vote all RBV Shares owned by it in the same proportions as shares of
voting capital stock of the Corporation are voted by the other shareholders of
the Corporation other than the Purchaser, Xxxxxxx, Dubilier & Rice, Inc., their
respective Affiliates, and any other Person initiating, proposing or otherwise
soliciting shareholders of the Corporation for the approval of one or more
shareholder proposals; (ii) not call, or support anyone else in seeking to call,
any special meeting of shareholders of the Corporation; (iii) not seek to
remove, or support anyone else in seeking to remove, without cause, any members
of the Board; and (iv) not publicly announce that it is seeking a waiver of any
of the provisions of this Section 3.1. Each Shareholder will cause its
Affiliates (excluding the Corporation and the Foundation) to be bound by the
provisions of this Section 3.1.
3
3.2 Acting as a Group with the Purchaser. Except as otherwise provided
in the Other Xxxxxxxxx Agreements, from the Closing and continuing until the
Termination Date, the Shareholders, solely in their respective capacities as
shareholders of the Corporation, agree (a) not to enter into any agreement,
option, commitment, or other arrangement (including granting any proxy or
entering into any profit sharing arrangement) with the Purchaser with respect to
the transfer of any of the RBV Shares to any Person (other than the Purchaser),
and (b) with respect to the RBV Shares, not to enter into any binding agreement,
arrangement or understanding to (i) join in or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), pooling agreement, syndicate, voting
trust or other arrangement, or (ii) otherwise act in concert, with any other
Person (including the Purchaser but excluding any Affiliates of either
Shareholder) for the purpose of acquiring, holding, voting or disposing of the
RBV Shares. Except pursuant to the Xxxxxxxxx Voting Agreement and subject to
Section 3.3(b) below, neither Shareholder nor their respective Affiliates will
solicit, obtain, hold or vote the written proxies of any other shareholders of
the Company.
3.3 Further Actions and Assurances.
(a) From the Closing and continuing until the Termination Date, each
Shareholder shall use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
Corporation in doing, all things reasonably necessary to consummate and make
effective the transactions contemplated by this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, nothing
in this Agreement shall be construed in any respect as limiting any action that
RBV might take, or requiring RBV to take any action, as (i) an officer of the
Corporation, (ii) a director of the Corporation, or (iii) as a member of any
committee of the Board, including, without limitation, any action taken at the
direction of the Board or in compliance with or as an exercise of his fiduciary
duties as an officer or director of the Corporation.
3.4 Restrictive Legend. Each Shareholder agrees, within 30 days after
the Closing Date, to surrender to an agent of the Corporation the certificate or
certificates representing the RBV Shares owned by such Shareholder, for the sole
purpose of the agent affixing thereto the following legend:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A VOTING
AGREEMENT, DATED AS OF APRIL 26, 2004."
The Corporation shall, or shall cause its agent to, return the
certificate(s) to the Shareholders within 30 days after their receipt thereof
from the Shareholders. The foregoing legend shall be removed by the Corporation
by the delivery of substitute
4
certificates without such legend within 30 days after the earlier of (a) the
Termination Date and (b) the date on which this Agreement is terminated
pursuant to Section 5.3.
3.5 Continuing Disclosure. Each Shareholder shall promptly advise the
Corporation with respect to any matter hereafter arising and discovered by the
Shareholder that, if existing and known at the date of this Agreement, would
have been required to be set forth or described in a schedule to this Agreement,
or that constitutes a breach of this Agreement.
3.6 Specific Performance. Each Shareholder acknowledges and agrees that
(a) the covenants, obligations and agreements of the Shareholders contained in
this Agreement relate to special, unique and extraordinary matters, (b) the
Corporation is and will be relying on such covenants in connection with entering
into the SPA and the performance by the Corporation of its obligations
thereunder and (c) a violation of any of the terms of such covenants,
obligations or agreements will cause the Corporation irreparable injury for
which adequate remedies are not available at law. Therefore, in the event of a
breach by Shareholders of any obligation in this Agreement, each Shareholder
agrees that the Corporation shall be entitled to seek an injunction, restraining
order or such other equitable relief (without the requirement to post bond) as a
court of competent jurisdiction may deem necessary to restrain such Shareholder
from committing any violation of such covenants, obligations or agreements.
These injunctive remedies are cumulative and in addition to any other rights and
remedies the Corporation may have.
ARTICLE 4
COVENANTS OF THE CORPORATION
4.1 Voting for Directors of the Shareholder. From the Closing and
continuing until the earlier to occur of (a) the date on which RBV and the RBV
Trust collectively cease to own more than ten percent (10%) of the outstanding
voting capital stock of the Corporation, or (b) the Termination Date, the
Corporation hereby agrees to cause the Board to nominate two persons designated
by RBV for election to the Board (each, an "RBV Director") in any election of
directors of the Corporation, one of whom shall be RBV (unless otherwise
designated by RBV). The Corporation shall use its best efforts to cause the RBV
Directors to be elected to the Board. If the RBV Directors are not elected to
the Board, the Corporation shall take all actions permitted by law to appoint
the RBV Directors to the Board. If a vacancy shall exist in the office of an RBV
Director, including, without limitation, upon the death, resignation,
retirement, disqualification or removal (with or without cause) of any RBV
Director, RBV shall be entitled to immediately appoint a successor to fill such
vacancy and the Corporation shall take all actions permitted by law to appoint
such successor to the Board and, in connection with the meeting of the
shareholders of the Corporation next following such appointment, RBV may
designate a successor for election as a director by the shareholders and the
Corporation shall use its best efforts to cause the successor to be so elected.
If such successor RBV Director is not elected to the Board, the Corporation
shall take all actions permitted by law to appoint the successor RBV Director to
the Board.
5
4.2 Further Actions and Assurances. From the Closing until the
Termination Date, the Corporation shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the Shareholders in doing, all things reasonably necessary to
consummate and make effective the transactions contemplated by this Agreement.
4.3 Removal of RBV Directors for Cause. The Corporation shall use its
best efforts to ensure that any RBV Director is not removed without cause unless
RBV expressly agrees in writing. Unless RBV expressly agrees in writing, the
Corporation shall use its best efforts to ensure that no RBV Director is removed
without cause.
4.4 Matters Involving Capital Structure.
(a) After the Closing and continuing until the earlier to occur of (i)
the date on which RBV and the RBV Trust cease to own any RBV Shares or (ii) the
Termination Date, if the Board shall authorize the issuance of any New
Securities, then, prior to any such issuance of New Securities, the Corporation
shall offer to each Shareholder the right to purchase such Shareholder's Pro
Rata Share of the New Securities to be issued. Any offer of New Securities made
to the Shareholders under this Section 4.4 shall be made by notice in writing
(the "Subscription Notice") at least 20 business days prior to the issuance of
such New Securities. The Subscription Notice shall set forth (i) the number of
New Securities proposed to be issued and the terms of such New Securities, (ii)
the consideration (or manner of determining the consideration), if any, for
which such New Securities are proposed to be issued and the terms of payment,
(iii) the number of New Securities offered to each Shareholder in compliance
with the provisions of this Section 4.4 and (iv) the proposed date of issuance
of such New Securities. Not later than 10 business days after its receipt of a
Subscription Notice, each Shareholder shall notify the Corporation in writing
whether it elects to purchase all or any portion of the New Securities offered
to such Shareholder pursuant to the Subscription Notice. If either Shareholder
elects to purchase any such New Securities, the New Securities which it elects
to purchase will be issued and sold to such Shareholder by the Corporation at
the same time and on the same terms and conditions as the New Securities are
issued and sold to other Persons. If, for any reason, the issuance of New
Securities is not consummated, each Shareholder's right to its Pro Rata Share of
such issuance shall lapse, subject to such Shareholder's ongoing subscription
right with respect to issuances of New Securities at later dates or times.
(b) The Corporation represents, warrants and covenants to each
Shareholder that (i) upon issuance, all the shares of New Securities issued to
such Shareholder pursuant to this Article 4 shall be duly authorized, validly
issued, fully paid and nonassessable and will be approved (if outstanding
securities of the Corporation of the same type are at the time already approved)
for listing on the NASDAQ National Market or for quotation or listing on the
principal trading market for the securities of the Corporation at the time of
issuance; (ii) upon delivery of such shares, they shall be free and clear of all
Liens and shall not be subject to any preemptive right of any other
6
shareholder of the Corporation or any other Person; (iii) in connection with any
such issuance, the Corporation shall have taken all necessary actions such that
no Takeover Statute shall be applicable to any such issuance; and (iv) upon
issuance, all the shares of New Securities shall have the voting and other
rights attributable to the Common Stock or preferred stock under the Articles of
Incorporation, as the case may be. Each share certificate representing New
Securities issued or delivered by the Corporation hereunder shall bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
4.5 No Inconsistent Agreements. The Corporation will not hereafter take
any action or enter into any agreement which is inconsistent with the rights
granted to the Shareholders pursuant to the terms of this Agreement.
4.6 Continuing Disclosure. The Corporation shall promptly advise each
Shareholder with respect to any matter hereafter arising or discovered that, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in a schedule to this Agreement, or that constitutes a
breach or prospective breach of this Agreement.
4.7 Specific Performance. The Corporation acknowledges and agrees that
(a) the covenants, obligations and agreements of the Corporation contained in
this Agreement relate to special, unique and extraordinary matters, and (b) a
violation of any of the terms of such covenants, obligations or agreements will
cause each Shareholder irreparable injury for which adequate remedies are not
available at law. Therefore, the Corporation agrees that each Shareholder shall
be entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) as a court of competent jurisdiction may
deem necessary or appropriate to restrain the Corporation from committing any
violation of such covenants, obligations or agreements. These injunctive
remedies are cumulative and in addition to any other rights and remedies each
Shareholder may have.
ARTICLE 5
GENERAL PROVISIONS
5.1 Fees and Expenses. Except as contemplated by this Agreement or any
Other Xxxxxxxxx Agreement, all costs and expenses incurred in connection with
this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses, except that the Corporation
shall pay up to
7
$100,000 of the Expenses (defined below) of the Shareholders incurred in
connection with this Agreement, the SPA, the Other Xxxxxxxxx Agreements and any
other agreements executed and delivered in connection with any of the foregoing.
The term "Expenses" means all out-of-pocket fees, costs and other expenses
incurred or assumed by the Shareholders or incurred on their behalf, including
in connection with the preparation, execution and delivery of this Agreement,
the SPA, the Other Xxxxxxxxx Agreements and any other agreement executed and
delivered in connection with any of the foregoing.
5.2 Severability. In the event that any provision of this Agreement or
the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect, and the parties hereto shall
use best efforts to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent practicable, the economic, business and other purposes of such void or
unenforceable provision.
5.3 Entire Agreement; Termination. This Agreement (including the
documents set forth in the Exhibits and Schedules hereto) and the Other
Xxxxxxxxx Agreements contain the entire understanding of the parties with
respect to the transactions contemplated hereby. This Agreement shall
automatically terminate and the parties shall have no obligations to each other
under this Agreement, if, for any reason, the Closing does not occur or the SPA
is terminated.
5.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
5.5 Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and delivered
personally, by telecopy (except for legal process) or sent by registered mail,
postage prepaid, if to:
the Corporation:
Covansys Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: Chief Financial Officer
Attention: General Counsel
Facsimile: 000-000-0000
Telephone: 000-000-0000
8
with a copy to:
Butzel Long
000 Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx XX, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq. and Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
The Shareholders:
Xxxxxxxx X. Xxxxxxxxx
0000 Xxxxxxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Steptoe & Xxxxxxx, LLP
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Butzel Long
000 Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx XX, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
or to such other address or telex number as any party may, from time to time,
designate in a written notice given in a like manner.
9
5.6 Amendments; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of the Corporation shall not be affected or
deemed waived by reason of any investigation made by or on behalf of the
Shareholder (including but limited to by any of its advisors, consultants or
representatives) or by reason of the fact that the Shareholder or any of its
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate. Notwithstanding anything
to the contrary in this Agreement, the Shareholders agree that any action,
approval, authorization, amendment, waiver or Consent taken, given or made by
the Corporation (including the Board) in respect of this Agreement or the
transactions contemplated hereby shall not be effective unless such action,
approval, authorization, amendment, waiver or consent shall have received the
prior approval of the members of the Special Committee.
5.7 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
5.8 Governing Law. EXCEPT TO THE EXTENT THAT THE MICHIGAN BUSINESS
CORPORATION ACT, AS AMENDED, AND CASE LAW INTERPRETING THAT ACT ARE APPLICABLE
TO THE CORPORATION AND THE RIGHTS OF ITS SHAREHOLDERS, THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT,
BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICT OF
LAWS PRINCIPLES. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF NEW YORK IN RESPECT OF THE INTERPRETATION AND
ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE DOCUMENTS REFERRED TO
10
IN THIS AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY. EACH PARTY HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY
ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION AND ENFORCEMENT HEREOF, OR ANY
SUCH DOCUMENT OR IN RESPECT OF ANY SUCH TRANSACTION, THAT SUCH ACTION, SUIT OR
PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THE
VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT
MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH PARTY HEREBY CONSENTS TO AND
GRANTS ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE
SUBJECT MATTER OF ANY SUCH DISPUTE.
ARTICLE 6
DEFINITIONS
6.1 For purposes of this Agreement, the following terms shall have the
following meanings:
Affiliate: shall have the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement); provided, that for
purposes of this Agreement only, the Corporation and its directors and executive
officers shall not be deemed to be Affiliates of the Purchaser, RBV or any third
party conducting a proxy solicitation with respect to the Corporation.
Agreement: is defined in the introductory paragraph to this Agreement.
Articles of Incorporation: is defined as the Corporation's restated
articles of incorporation, as amended.
Board: is defined in Section 3.1 of this Agreement.
CDR Voting Agreement: is defined as the Voting Agreement, dated as of
March 17, 2000, by and among RBV, the RBV Trust, CDR-Cookie Acquisition L.L.C.
and CDR-Cookie Acquisition VI-A L.L.C.
Closing: has the meaning assigned to such term in the SPA.
Closing Date: has the meaning assigned to such term in the SPA.
Common Stock: is defined in the recitals to this Agreement.
Consent: means any consent, approval, waiver or agreement.
Contract: means any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, warranty, license,
sublicense, insurance policy, benefit plan or legally binding commitment or
undertaking of any nature, whether express or implied.
Corporation: is defined in the introductory paragraph to this
Agreement.
11
Equity Security: means (i) any Common Stock or other voting or
nonvoting capital stock of the Corporation, (ii) any securities of the
Corporation convertible into or exercisable or exchangeable for Common Stock or
other voting or nonvoting capital stock of the Corporation, or (iii) any
options, rights or warrants (or any similar securities) issued by the
Corporation to acquire Common Stock or other capital stock of the Corporation.
Exchange Act: is defined in Section 3.2 of this Agreement.
Foundation: means The Xxxxxxxxx Foundation, a Michigan nonprofit
corporation.
Governmental Approval: means any consent, approval, authorization,
waiver, permit, concession, franchise, agreement, license, exemption or order
of, declaration or filing with, or report or notice to, any Governmental
Authority.
Governmental Authority: means any federal, state, local or foreign
court, legislative, executive or regulatory authority or agency.
Laws: means all applicable provisions of all (a) constitutions,
treaties, statutes, laws (including the common law), codes, rules, regulations,
ordinances or orders of any Governmental Authority, (b) Governmental Approvals
and (c) orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any Governmental Authority.
Legal Requirement: means any national, federal, state, local,
municipal, cantonal, foreign, international, multinational or other
administrative order, constitution, law, rule, ordinance, principle of common
law, regulation, statute or treaty or any rule or policy of any securities
exchange or the National Association of Securities Dealers.
Liens: means any liens, claims, pledges, charges and encumbrances.
New Security: means any Equity Security issued by the Corporation after
the Closing; provided that "New Security" shall not include (i) any securities
issued upon conversion of any convertible Equity Security, (ii) any securities
issued upon exercise of any option, warrant or other similar Equity Security in
accordance with the terms thereof or (iii) any securities issued in connection
with any stock split, stock dividend or recapitalization of the Corporation as
long as the same is fully proportionate for each class of affected security and
entails equal treatment for all shares or units of such class.
Order: means any award, decision, injunction (preliminary or
permanent), temporary restraining order, judgment, order, ruling, subpoena or
verdict entered, issued, made or rendered by any domestic or foreign court,
administrative agency or other Governmental Body or by any arbitrator.
Other Xxxxxxxxx Agreements: means, collectively, the Xxxxxxxxx Purchase
Agreement and the Xxxxxxxxx Shareholders' Agreement.
Person: means any individual, partnership, joint venture, corporation,
limited liability company, trust, unincorporated organization, government or
department or agency of a government.
12
Pro Rata Share: means, with respect to each Shareholder, the fraction
of an entire issuance of New Securities, the numerator of which shall be the
number of shares of Common Stock owned by such Shareholder immediately prior to
such issuance of such New Securities and the denominator of which shall be the
aggregate number of shares of Common Stock outstanding immediately prior to such
issuance of such New Securities.
Purchaser: is defined in the recitals to this Agreement.
RBV: is defined in the introductory paragraph to this Agreement.
RBV Director: is defined in Section 4.1 of this Agreement.
RBV Shares: is defined in the recitals to this Agreement.
RBV Trust: is defined in the introductory paragraph to this Agreement.
Shareholder: is defined in the introductory paragraph of this
Agreement.
SPA: is defined in the recitals to this Agreement.
Special Committee: means from the date hereof to the Closing Date, the
Special Committee of the independent directors of the Company and, from and
after the Closing Date, the members of the Board who are "independent" within
the meaning of NASDAQ Rule 4200 and are not designated by any of the Purchaser,
Xxxxxxxx Xxxxxxxxx or CD&R-Cookie Acquisition, L.L.C.
Subscription Notice: is defined in Section 4.4 of this Agreement.
Takeover Statute: is defined as a "Fair price," "Moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation enacted
under state or federal laws in the United States.
Termination Date: is defined in Section 3.1 of this Agreement.
Xxxxxxxxx Purchase Agreement: is defined as the Common Stock Purchase
Agreement among RBV, the RBV Trust and the Purchaser of even date with this
Agreement, as amended or supplemented from time to time.
Xxxxxxxxx Shareholders' Agreement: is defined as the Shareholders'
Agreement among the Shareholders and the Purchaser of even date with this
Agreement, as amended or supplemented from time to time.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
13
IN WITNESS WHEREOF, each Shareholder and the Corporation have caused
this Agreement to be duly executed with effect from the day and year first above
written.
COVANSYS CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
THE XXXXXXXX X. XXXXXXXXX TRUST
By:
-----------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Trustee
-------------------------------
XXXXXXXX X. XXXXXXXXX
-------------------------
SCHEDULE 1.2(b)
FILINGS, NOTICES, CONSENTS
1. Any applicable requirements of the Exchange Act or any other federal or state
securities laws.
2. Any filings or other requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
3. The consents of:
a. CDR Cookie Acquisition L.L.C. and CDR Cookie Acquisition VI-A L.L.C.
under the CDR Voting Agreement.
b. The Company under the Continuing Pledge Agreement, dated September 28,
2000, executed by RBV in favor of the Company.
c. Bank One, NA.
1
STOCK PURCHASE AGREEMENT
Exhibits 6.2(c)(v)
Xxxxxxxxx Shareholders Agreement
(See Exhibit 3 to the Schedule 13D)
STOCK PURCHASE AGREEMENT
Exhibit 6.2(d)
Matters to be Addressed in Legal Opinion of Butzel Long, P.C.
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Michigan. The Company has the
requisite corporate power and authority to execute and deliver the Stock
Purchase Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated by the Stock Purchase Agreement and the
Ancillary Agreements to which it is a party. The execution, delivery and
performance by the Company of the Stock Purchase Agreement and the Ancillary
Agreements to which it is a party and the consummation of the transactions
contemplated thereby have been duly authorized by the board of directors and the
shareholders of the Company and no other corporate proceedings on the part of
the Company or its shareholders are necessary to authorize the execution and
delivery of the Stock Purchase Agreement and the Ancillary Agreements to which
it is a party by the Company or the consummation of the transactions
contemplated thereby. The Stock Purchase Agreement and each Ancillary Agreement
to which it is a party have been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery of the Stock Purchase
Agreement or such Ancillary Agreement by the other parties thereto, constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as may be limited by (a) bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or similar laws relating to or affecting enforcement of creditor's
rights or remedies generally and (b) general principles of equity (whether such
principles are considered in a proceeding at law or in equity).
2. Neither the execution and delivery by the Company of the Stock Purchase
Agreement and the Ancillary Agreements to which it is a party nor the
consummation by the Company of the transactions contemplated thereby will (i)
conflict with, violate or result in a breach of the articles of incorporation or
bylaws of the Company or (ii) violate any statute, law, rule, regulation, writ,
injunction, judgment, order or decree of any Governmental Entity, applicable to
the Company or any of its subsidiaries, except in the case of the foregoing
clause (ii) for such violations or breaches which would not, individually or in
the aggregate, reasonably be expected to materially adversely affect the ability
of the Company and its subsidiaries to consummate the transactions contemplated
by the Stock Purchase Agreement or the Ancillary Agreements.
3. Assuming the accuracy of the Purchaser's representation set forth in
Section 3.7(d) of the Stock Purchase Agreement, no filing or registration with,
declaration or notification to, or order, authorization, consent or approval of,
any federal or Michigan court, legislative, executive or regulatory authority or
agency (a "Governmental Authority") or, to our knowledge, any other person is
required in connection with the execution, delivery and performance of the Stock
Purchase Agreement and the Ancillary Agreements by the Company or the
consummation by the Company of the transactions contemplated thereby, except
such other consents, approvals, authorizations, and notifications, of or to any
Governmental Authority or other person, the failure of which to be obtained or
made in the aggregate would not have a Material Adverse Effect or materially
impair or delay the consummation of the transactions contemplated hereby.
4. The Shares have been duly authorized by all necessary corporate action
on the part of the Company. Assuming that consideration for the Shares has been
paid by the Shareholder as required by the Stock Purchase Agreement, upon
issuance, the Shares will be duly authorized, validly issued and fully paid and
nonassessable.
5. The Warrants and the Warrant Shares have been duly authorized by all
necessary corporate action on the part of the Company. The Warrant Shares have
been validly reserved for
issuance, and upon exercise of the Warrants in accordance with the terms thereof
and payment of the exercise price as required thereby, the Warrant Shares will
be duly authorized, validly issued and fully paid and nonassessable.
6. Upon their issuance, pursuant to the terms of the Warrants, the Warrant
Shares shall have the voting and other rights attributable to Common Stock set
forth in the articles of incorporation of the Company.
STOCK PURCHASE AGREEMENT
Exhibit 6.3(c)(i)
Matters to be Addressed in Legal Opinion of Xxxxxx Xxxxx & Xxxxxxx LLP
1. The valid authorization, due execution and delivery of the Stock Purchase
Agreement, the Registration Rights Agreement and the Standstill Agreement.
2. The enforceability of the Stock Purchase Agreement and the Registration
Rights Agreement.
3. The absence of conflicts with laws with respect to the Stock Purchase
Agreement, the Registration Rights Agreement and the Standstill Agreement
STOCK PURCHASE AGREEMENT
Exhibit 6.3(c)(ii)
Matters to be Addressed in Legal Opinion of the Purchaser's Michigan Counsel
1. Assuming due authorization, execution and delivery of the Standstill
Agreement by the Company, the Standstill Agreement constitutes the valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as they may be limited by (a) bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or similar laws relating to or affecting enforcement of creditor's
rights or remedies generally and (b) general principles of equity (whether such
principles are considered in a proceeding at law or in equity).
2. Neither the execution and delivery by the Purchaser of the Standstill
Agreement nor the consummation by the Purchaser of the transactions contemplated
thereby will violate any statute, law, rule, regulation, writ, injunction,
judgment, order or decree of any governmental entity in Michigan applicable to
the Purchaser or any of its subsidiaries, except in the case of the foregoing
clause (ii) for such violations or breaches which would not, individually or in
the aggregate, reasonably be expected to materially adversely affect the ability
of the Purchaser and its subsidiaries to consummate the transactions
contemplated by the Standstill Agreement.
