LOANOUT AGREEMENT
This LOANOUT AGREEMENT is entered into as of November 15, 2001 (the
"Agreement"), by and between Covansys Corporation, a Michigan corporation (the
"Company"), and Xxxxxxx, Dubilier & Rice, Inc., a Delaware corporation ("CD&R").
R E C I T A L S:
A. The Company and CD&R are parties to a Consulting Agreement, dated as
of March 17, 2000 (the "Consulting Agreement"), between the Company and CD&R,
and an Indemnification Agreement, dated as of April 20, 2000 (the
"Indemnification Agreement"), among the Company, CD&R, CDR-Cookie Acquisition,
L.L.C., a Delaware limited liability company, and CDR-Cookie Acquisition VI-A,
L.L.C., a Delaware limited liability company.
B. The Company desires to obtain the services of Xx. Xxx Xxxxxxxxxx
("Xxxxxxxxxx"), the Co-Chairman of the Company and an employee of CD&R, to
perform, on an interim basis, the functions of Chief Executive Officer of the
Company, and CD&R is willing to make such services available to the Company upon
and subject to the terms and conditions hereof.
C. This Agreement has been approved by the Board of Directors of the
Company (the "Board"), including by a majority of its disinterested directors.
NOW, THEREFORE, the parties hereby agree as follows:
1. Services, etc.
CD&R will make available the services of Xxxxxxxxxx to the Company and
the Company will make use of the services of Xxxxxxxxxx (i) to serve, on an
interim basis, as Chief Executive Officer of the Company, commencing and
effective as of the date hereof, until the expiration of the Term (as defined in
Section 3 below) and (ii) to identify a suitable permanent replacement President
and Chief Executive Officer for the Company and to negotiate employment
arrangements with an identified candidate, which employment arrangements will be
subject to the approval of the Executive Committee of the Board and such
candidate. Xxxxxxxxxx will be available to render such services on a part-time
basis mutually agreeable to the Company, CD&R and Xxxxxxxxxx. Without limiting
the foregoing, Xxxxxxxxxx will continue to serve as an employee of CD&R and may
serve as an officer or director of CD&R or other corporations or entities and
devote such time to performing such services as Xxxxxxxxxx, in his sole
discretion, deems necessary or appropriate. The services of Xxxxxxxxxx to be
made available to the
Company and its subsidiaries hereunder will be deemed part of the services
provided by CD&R pursuant to the Consulting Agreement.
2. Compensation.
The Company agrees to pay to CD&R, as compensation for the services to
be rendered by Xxxxxxxxxx hereunder, a fee of $500,000 per year in addition to
the Services Fee payable under the Consulting Agreement, but otherwise payable
in accordance with the terms of the Consulting Agreement. In the event
Xxxxxxxxxx serves only a portion of a year as Chief Executive Officer, the fee
shall be pro rated.
3. Term.
(a) The term of this Agreement (the "Term") will commence as of the
date hereof and will terminate on the earliest to occur of (i) the date that is
ten business days following delivery of written notice of such termination by
either party to the other party hereto, (iii) the election of a successor Chief
Executive Officer of the Company by the Board or the Executive Committee of the
Board in accordance with the Company's by-laws, (ii) the termination of the
Consulting Agreement, and (iv) Lautenbach's death, permanent disability or
resignation from his employment with CD&R.
(b) The expiration of the Term will not affect the continuing
effectiveness of the Consulting Agreement or the Indemnification Agreement, each
of which will continue to be in full force and effect and enforceable in
accordance with their respective terms. Without limiting the foregoing, the
Company will continue to pay and reimburse all fees, expenses and other amounts
as and when due under the Consulting Agreement and the Indemnification Agreement
and perform all of its other obligations thereunder.
4. Indemnification.
All performance by, and all actions or omissions of, CD&R or Lautenbach
under or in respect of this Agreement will be deemed to be pursuant to the
Consulting Agreement, and each of CD&R and Xxxxxxxxxx will be entitled to the
benefits of the indemnification and other provisions of the Consulting Agreement
and the Indemnification Agreement.
5. Independent Contractor Status.
Each of CD&R and the Company agree that the furnishing of Lautenbach's
services hereunder by CD&R is solely as an independent contractor, with CD&R
retaining control over and responsibility for its own operations and personnel,
including Xxxxxxxxxx. Neither CD&R nor any of its directors, officers, employees
or agents (including Xxxxxxxxxx) shall, solely by virtue of this Agreement or
the arrangements
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hereunder, be considered employees, principals, partners, co-venturers or agents
of the Company.
6. Notices.
Any notice or other communication required or permitted to be given or
made under this Agreement by one party to the other parties will be in writing
and shall be deemed to have been duly given and to be effective (i) on the date
of delivery if delivered personally or (ii) when sent if sent by prepaid
telegram, or mailed first-class, postage prepaid, by registered or certified
mail or confirmed facsimile transmission, as follows (or to such other address
as shall be given in writing by one party to the other parties in accordance
herewith):
If to the Company to:
Covansys Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to CD&R to:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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7. General.
(a) Entire Agreement. This Agreement together with the Consulting
Agreement and the Indemnification Agreement (i) contain the complete and entire
understanding and agreement of CD&R and the Company with respect to the subject
matter hereof, and (ii) supersede all prior and contemporaneous understandings,
conditions and agreements, oral or written, express or implied, in respect of
the subject matter hereof, including the furnishing of the services by
Xxxxxxxxxx hereunder. There are no representations or warranties of Xxxxxxxxxx
or CD&R in connection with this Agreement or the services to be made available
hereunder, except as expressly made and contained in this Agreement.
(b) Headings. The headings contained in this Agreement are for purposes
of convenience only and shall not affect the meaning or interpretation of this
Agreement.
(c) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
(d) Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns, provided that neither CD&R nor the Company may assign
any of its rights or obligations under this Agreement without the express
written consent of the other party hereto.
(e) Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER, AND IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS LAWS THAT WOULD REQUIRE
THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION. EACH OF THE COMPANY AND CD&R
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 XXX XXXXX, XXXX XXX XXXXXX XX XXX XXXX SOLELY IN RESPECT OF THE
INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT, AND THE
PARTIES HERETO HEREBY IRREVOCABLY AGREE THAT (i) THE SOLE AND EXCLUSIVE
APPROPRIATE VENUE FOR ANY ACTION, SUIT OR PROCEEDING RELATING TO SUCH
INTERPRETATION AND ENFORCEMENT SHALL BE IN SUCH A COURT, (ii) ALL CLAIMS WITH
RESPECT TO SUCH PROVISIONS SHALL BE HEARD AND DETERMINED EXCLUSIVELY IN SUCH A
COURT, (iii) ANY SUCH COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER THE PERSON OF
SUCH PARTIES AND OVER THE
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SUBJECT MATTER OF ANY DISPUTE RELATING TO SUCH PROVISIONS AND (iv) EACH HEREBY
WAIVES, AND AGREES NOT TO ASSERT, ANY AND ALL OBJECTIONS AND DEFENSES BASED ON
FORUM, VENUE OR PERSONAL OR SUBJECT MATTER JURISDICTION AS THEY MAY RELATE TO
SUCH AN ACTION, SUIT OR PROCEEDING BEFORE SUCH A COURT IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION 7(e), PROVIDED THAT ENFORCEMENT OF A JUDGMENT
RENDERED BY SUCH A COURT MAY BE SOUGHT IN ANY COURT OF COMPETENT JURISDICTION
FOR THE ENFORCEMENT THEREOF. THE COMPANY AND CD&R 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
6, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND
SUFFICIENT SERVICE THEREOF.
(f) Waiver of Jury Trial. Each party acknowledges and agrees that any
controversy that may arise under this Agreement is likely to involve complicated
and difficult issues, and therefore it hereby irrevocably and unconditionally
waives any right it 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) it understands and has
considered the implications of this waiver, (iii) it makes this waiver
voluntarily, and (iv) it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications contained in this Section
7(f).
(g) Amendment; Waivers. No amendment, modification, supplement or
discharge of this Agreement, and no waiver hereunder, will be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, supplement, discharge or waiver is
sought (and in the case of and the Company, approved by resolution of the Board
of Directors of the Company). Any such waiver will constitute a waiver only with
respect to the specific matter described in such writing and will 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 party hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any
party, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, will be construed as
a waiver of any other breach or default of a similar nature, or as a waiver of
any of such
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provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity or otherwise.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
COVANSYS CORPORATION
By /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Co-Chairman
XXXXXXX, DUBILIER & RICE, INC.
By /s/ Xxxxxx X. Xxxx, III
-------------------------------------
Name: Xxxxxx X. Xxxx, III
Title: Chairman
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