EXHIBIT 7
EXECUTION COPY
AMENDMENT AND ACKNOWLEDGEMENT
This Amendment and Acknowledgement, dated as of August 17, 2004, is entered into
by and among Fidelity Information Services, Inc., an Arkansas corporation
("FIS"), Covansys Corporation, a Michigan corporation ("Covansys"), CDR-Cookie
Acquisition, L.L.C., a Delaware limited liability company ("CDR"), Xxxxxxxx X.
Xxxxxxxxx ("Xxxxxxxxx"), 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 "Xxxxxxxxx Trust" and, collectively
with Xxxxxxxxx, the "Xxxxxxxxx Entities").
RECITALS
A. This Amendment and Acknowledgment is executed and delivered in
connection with the following agreements and transactions:
1. A Stock Purchase Agreement, dated as of April 26, 2004, by and
between FIS and Covansys (the "Stock Purchase Agreement"), pursuant
to which FIS has agreed to purchase from Covansys, and Covansys has
agreed to sell to FIS (i) 8,700,000 shares (the "Shares") of
Covansys' common stock (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 "Warrants").
2. A Master Services Agreement, dated as of April 26, 2004, by and
between Covansys and FIS, pursuant to which Covansys has agreed to
provide to FIS 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.
3. A Recapitalization Agreement (the "Recapitalization Agreement"),
dated as of April 26, 2004, by and between CDR and Covansys,
pursuant to which CDR has agreed to exchange, among other things,
200,000 shares of Covansys' Series A Voting Convertible Preferred
Stock and warrants to purchase 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 Covansys of $180 million in cash, promissory notes in
the aggregate amount of $15,000,000 (the "Promissory Notes"),
2,000,000 shares of Common Stock, and warrants to purchase an
aggregate of 5,000,000 shares of Common Stock at an exercise price
of $18 per share.
4. A Registration Rights Agreement, to be entered at the date of the
simultaneous Closings under the Stock Purchase Agreement and the
Recapitalization Agreement (the "Closing"), by and among CDR, FIS
and Covansys, conferring certain rights upon FIS and CDR to have
shares of Covansys' securities registered under the Securities Act
of 1933.
5. A Common Stock Purchase Agreement (the "Xxxxxxxxx Stock Purchase
Agreement"), dated as of April 26, 2004, by and among FIS, and the
Xxxxxxxxx Entities, pursuant to which FIS has agreed to purchase
from the Xxxxxxxxx Entities, and the Xxxxxxxxx Entities have agreed
to sell to FIS, an aggregate of 2,300,000 shares of Common Stock.
6. A Shareholders' Agreement, dated April 26, 2004, by and among FIS
and the Xxxxxxxxx Entities.
B. As a result of the delay in Closing caused by the late filing of
Covansys' Form 10-Q for the first quarter of 2004 and other factors, the parties
have agreed to reduce the aggregate purchase price that FIS will pay for the
shares of Common Stock and Warrants under the Stock Purchase Agreement by
$8,700,000 and under the Xxxxxxxxx Stock Purchase Agreement by $1,150,000.
C. As a result of the reduction in purchase price referenced in recital B
above, Covansys and CDR have agreed to reallocate the amounts payable in cash
and in the Promissory Notes such that the amount payable in cash is reduced to
$177,500,000 and the aggregate principal amount of the Promissory Notes is
increased to $17,500,000.
D. Each party also desires to acknowledge that at the present time, it
intends to complete the transactions set forth in each document referenced in
Recital A (collectively the "Transaction Documents") above in accordance with
the terms of such document as amended by this Amendment and Acknowledgement.
NOW THEREFORE, in consideration of the premises and intending to be legally
bound, the parties agree as follows:
1. AMENDMENT OF STOCK PURCHASE AGREEMENT. Covansys and FIS hereby amend the
definition of "Purchase Price" in Section 1.1 of the Stock Purchase Agreement
from "$104,400,000" to "$95,700,000."
2. AMENDMENT OF XXXXXXXXX STOCK PURCHASE AGREEMENT. The Xxxxxxxxx Entities and
FIS hereby amend the definition of "Purchase Price" in Section 2.2 of the
Xxxxxxxxx Stock Purchase Agreement from "$26,450,000" to "$25,300,000."
3. AMENDMENT OF RECAPITALIZATION AGREEMENT. Covansys and CDR hereby amend
Sections 1(a), 1(b), 1(c), 2(b) and 2(c) of the Recapitalization Agreement so
that the monetary consideration to be received by CDR is allocated as follows:
SECTION CASH PROMISSORY NOTE
------- ---- ---------------
1(a) $172,129,000 (clause (i)) $16,970,000 (clause (iv))
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1(b) $2,617,000 (clause (i)) $258,000 (clause (iv))
1(c) $2,754,000 (clause (i)) $272,000 (clause (iv))
2(b) $177,500,000 (clause (i))
2(c) $177,500,000 (clause (i))
For the avoidance of doubt Covansys and CDR agree that the values set
forth in Section 1(d) of the Recapitalization Agreement will be adjusted as of
the closing thereunder to take into account the aforementioned amendments to
Sections 1(a), 1(b), 1(c), 2(b) and 2(c) of the Recapitalization Agreement.
4. OTHER AMENDMENTS; FURTHER ASSURANCES. In addition to the specific amendments
contained in Sections 1, 2 and 3 above, each party to this Amendment and
Acknowledgement, hereby amends all Transaction Documents to which it is a party
and any other agreements contemplated by the Transaction Documents to which it
is a party to the extent necessary to conform such agreements to the foregoing
amendments to the Stock Purchase Agreement, the Xxxxxxxxx Stock Purchase
Agreement and the Recapitalization Agreement, and each such party agrees to take
all necessary actions, provide all necessary signatures and provide all
necessary consents to effectuate the foregoing amendments.
5. ACKNOWLEDGMENT. Each party acknowledges that no state of facts, event, change
or effect, known to such party and which existed or occurred prior to the date
hereof (collectively, the "Developments"), including without limitation the
information disclosed in Covansys' periodic filings with the Securities and
Exchange Commission and the information made available by Covansys, has caused
any of the conditions to closing contained in any Transaction Document to which
it is a party or any other document contemplated by the Transaction Documents to
which it is a party not to be satisfied or will constitute a basis for asserting
that any such condition has not been satisfied. Each party further acknowledges
that none of the representations and warranties of any of the parties in the
Transaction Documents or any other document contemplated by the Transaction
Documents will be deemed incorrect as a result of the Developments.
6. PROXY APPROVAL. In accordance with Section 4.3(d) of the Stock Purchase
Agreement, FIS hereby consents to the filing of the Definitive Proxy Statement
("Proxy") related to the transactions set forth in the Transaction Documents and
all other documents contemplated by the Transaction Documents.
7. COUNTERPARTS. This Amendment and Acknowledgment may be executed in
counterparts which, taken together, shall constitute a single binding agreement.
IN WITNESS WHEREOF, Covansys, FIS, CDR, Xxxxxxxxx and the Xxxxxxxxx
Trust have caused this Amendment and Acknowledgment to be duly executed as of
the day and year first above written.
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COVANSYS CORPORATION THE XXXXXXXX X. XXXXXXXXX TRUST
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxx Xxxxxxxx X. Xxxxxxxxx, Trustee
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Title: President / CEO
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FIDELITY INFORMATION SERVICES, INC. /s/ Xxxxxxxx X. Xxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxx
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Executive Vice President
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CDR-COOKIE ACQUISITION, L.L.C.
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
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Title: Vice President
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