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EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
DATED FEBRUARY 23, 1999
AMONG
COMPUWARE CORPORATION,
CPWRT1, INC.,
CPWRT2, INC.,
M.I.S. INTERNATIONAL, INC.,
SIMCO INTERNATIONAL, INC.,
AUTOFLEX, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ REVOCABLE TRUST DATED JANUARY 23, 1995,
▇▇▇▇ ▇. ▇▇▇▇ REVOCABLE TRUST DATED JANUARY 23, 1995,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1999 QUALIFIED ANNUITY TRUST, AND
▇▇▇▇ ▇. ▇▇▇▇ 1999 QUALIFIED ANNUITY TRUST
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TABLE OF CONTENTS
1. Definitions 2
2. The Merger 6
2.1 The Merger 6
2.2 Effectiveness of the Merger 7
3. Conversion of Shares 7
3.1 Conversion of Shares 7
3.2 Issuance of Compuware Stock; Escrow of Compuware Stock 8
3.3 Exchange of Shares 8
3.4 Closing of Corporation's Transfer Books 9
3.5. Fractional Share 9
4. Closing 9
4.1 Closing Date 9
4.2 Actions to be Taken at the Closing 9
5. Corporation's and the Principals' Representations and Warranties 11
5.1 Organization; Power and Authority; Authorization; Due Execution; No Conflicts 11
5.2 Title 12
5.3 Properties and Improvements 12
5.4 Other Assets of MIS, Simco and Autoflex 12
5.5 Claims; Litigation; Compliance with Laws; Approvals 13
5.6 Agreements; Contracts; Warranties 14
5.7 Proprietary Rights 15
5.8 Employees; Employee Benefits 16
5.9 Insurance 18
5.10 Financial Statements 19
5.11 Undisclosed Liabilities 19
5.12 Taxes 20
5.13 Absence of Changes or Events 22
5.14 Environmental and Occupational Matters 24
5.15 Subsidiaries 24
5.16 Capitalization 25
5.17 Bank Accounts 25
5.18 Guarantees 25
5.19 Related Parties 25
5.20 Accounts Receivable 26
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5.21 Brokers 26
5.22 Year 2000 Compliance 26
5.23 Disclosure 26
6. Additional Representations and Warranties of Shareholders 27
7. Compuware's Representations and Warranties 28
7.1 Organization; Power and Authority 28
7.2 Authorization; Due Execution; No Conflicts 28
7.3 SEC Statements, Reports and Documents 28
7.4 Brokers 29
7.5 No Material Adverse Changes 29
8. Covenants Pending the Closing 30
8.1 Conduct Through the Closing Date 30
8.2 Approvals and Consents 31
8.3 Advice of Changes 31
8.4 Notice of Litigation 31
8.5 Access to Properties and Records; Inspection 31
8.6 Supplemental Information and Documents 31
8.7 Affiliate Agreements 32
8.8 Blue Sky Laws 32
8.9 Tax-Free Reorganization 32
8.10 Tax Matters 33
8.11 Pooling Accounting 34
8.12 Filings 34
8.13 Benefit Plans 34
8.14 Restrictions on Resale 34
8.15 Non-Disclosure Agreement 34
8.16. Registration Agreement 34
8.17 Escrow Agreement 34
8.18 Other Actions 34
8.19 Expenses 35
9. Conditions Precedent to the Parties' Obligations to Close 35
9.1 Conditions Precedent of Compuware 35
9.2 Conditions Precedent of MIS, Simco, Autoflex and the Shareholders 36
9.3 Mutual Condition Precedent 36
10. Default; Termination of Agreement 37
10.1 Default 37
10.2 Termination 37
11. Indemnification 37
11.1 Indemnification by the Shareholders 37
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11.2 Indemnification by Compuware 38
11.3 Claims for Indemnification 38
11.4 Third Party Claims 39
11.5 Limits on Indemnification 40
11.6 Representative 41
11.7 Tax Indemnification Procedure 42
11.8 Consideration 44
12. Miscellaneous 44
12.1 Notices 44
12.2 No Waiver 45
12.3 Successors and Assigns 45
12.4 Severability 45
12.5 Entire Agreement; Amendment 45
12.6 Cost of Litigation 46
12.7 Interpretation 46
12.8 Legend 46
12.9 Counterparts 47
12.10 Applicable Law 47
12.11 Expenses 47
12.12 Press Releases 47
12.13 Further Assurances 47
12.14 Transfer Taxes 47
12.15 Benefit Matters 48
Exhibits and Schedules
Schedules
Schedule 2.1(d) - Directors and Officers of Surviving Corporation
Schedule 3.1 - Conversion of Shares
Schedule 3.2 - Share Ownership/Payment Instructions
Schedule 5.1 - Jurisdictions Where Qualified
Schedule 5.3 - Properties & Improvements
Schedule 5.4 - Assets
Schedule 5.5 - Claims; Litigation; Compliance with Laws; Approvals
Schedule 5.6 - Agreements; Contracts; Warranties
Schedule 5.7 - Proprietary Rights
Schedule 5.8 - Employees; Employee Benefits
Schedule 5.9 - Insurance
Schedule 5.13 - Absence of Changes or Events
Schedule 5.14 - Environmental & Occupational Matters
Schedule 5.15 - Subsidiaries
Schedule 5.16 - Capitalization
Schedule 5.17 - Bank Accounts
Schedule 5.18 - Guaranties
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Schedule 5.19 - Related Parties
Schedule 5.20 - Accounts Receivable
Schedule 5.21 - Brokers (MIS, Simco, Autoflex, Shareholders)
Schedule 5.22 - Year 2000 Compliance
Schedule 7.3 - Brokers (Compuware)
Schedule 9.7 - Affiliate Agreements
Exhibits
Exhibit A - Transmittal Letter
Exhibit B Escrow Agreement
Exhibit C - Noncompetition Agreement
Exhibit D Officer's Certificate - Compuware
Exhibit E Opinion of General Counsel of Compuware
Exhibit F - Registration Rights Agreement
Exhibit G - Compuware Affiliate Agreement
Exhibit H Officers' Certificates - MIS, Simco and Autoflex
Exhibit I Opinion of Jaffe, Raitt, Heuer & ▇▇▇▇▇
Exhibit J - MIS Affiliate Agreement and Simco Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER
This Agreement is made on February 23, 1999, among Compuware
Corporation, a Michigan corporation ("Compuware"), CPWRT1, Inc., a Michigan
corporation and wholly-owned subsidiary of Compuware ("CPWRT1"), CPWRT2, Inc., a
Michigan corporation and wholly-owned subsidiary of Compuware ("CPWRT2"), M.I.S.
International, Inc., a Michigan corporation ("MIS"), Simco International, Inc.,
a Michigan corporation ("Simco"), Autoflex, Inc., a Michigan corporation and
wholly-owned subsidiary of MIS ("Autoflex") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇
1999 Qualified Annuity Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Revocable Trust Dated January 23,
1995, ▇▇▇▇ ▇. ▇▇▇▇ Revocable Trust Dated January 23, 1995, (each, a "Principal"
and collectively, the "Principals"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ 1999 Qualified Annuity Trust, (including the Principals, each,
individually, a "Shareholder", and collectively, the "Shareholders"). All
capitalized terms used in this Agreement are either defined or referenced in
Section 1 below.
RECITALS
A. MIS is engaged in the business of providing engineering and
information technology professionals to manufacturers. Simco is engaged in the
business of recruiting such engineering and information technology professionals
for employment by MIS.
B. One or more of the Shareholders are the owners of 100,000
shares of common stock, $1.00 par value, of MIS (the "MIS Shares"), which
constitute all of the issued and outstanding capital stock of MIS, and 100
shares of common stock, $1.00 par value, of Simco (the "Simco Shares"), which
constitute all of the issued and outstanding capital stock of Simco (the MIS
Shares and Simco Shares are sometimes collectively referred to as the "Shares").
Each Shareholder owns the number of Shares which are set forth opposite such
Shareholder's name on Schedule 3.2 to this Agreement.
C. The Parties intend for CPWRT1 to be merged with and into MIS,
with MIS being the survivor, and for CPWRT2 to be merged with and into Simco,
with Simco being the survivor (each, a "Merger" and collectively, the
"Mergers").
D. The respective Boards of Directors of Compuware, MIS and Simco
have approved the Mergers upon the terms of this Agreement.
E. In connection with the Mergers, certain of the Shareholders
have agreed to execute and deliver the Noncompetition Agreement to Compuware and
the parties have agreed to take certain other actions, all as described in this
Agreement and in the Related Agreements.
F. The parties intend for the Mergers to be treated as a pooling
of interests for accounting purposes and as a tax-free reorganization.
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Therefore, the parties agree as follows:
1. Definitions. As used in this Agreement:
"Affiliated Group" means any affiliated group within the
meaning of Code ss.1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
"Agreement" is this Agreement and Plan of Merger.
"Autoflex" is defined in the introductory paragraph of this
Agreement.
"Autoflex Shares" means all of the outstanding shares of
capital stock of Autoflex.
"Claimant" is defined in Section 11.3(a) of this Agreement.
"Closing" is defined in Section 4.1 of this Agreement.
"Closing Date" is the date on which the Closing takes place.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Companies" means MIS, SIMCO, Autoflex and any predecessors of
the foregoing.
"Compuware" is defined in the introductory paragraph of this
Agreement.
"Compuware Balance Sheet" is defined in Section 7.3 of this
Agreement.
"Compuware Reports" is defined in Section 7.3 of this
Agreement.
"Compuware Stock" means the common shares of Compuware, par
value $0.01 per share.
"Deferred Intercompany Transaction" has the meaning set forth
in Treasury Regulation ss.1.1502-13 in effect before July 12, 1995.
"Effective Date" means the date on which the Effective Time
occurs.
"Effective Time" is the time at which the Merger becomes
effective pursuant to Section 2.2 of this Agreement.
"Environmental Laws" means any Law which relates to pollution
(or the clean up of the environment), or the protection of air, surface water,
groundwater, drinking water, land (surface or subsurface), human health, the
environment or any other natural resource or the use,
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storage, recycling, treatment, generation, processing, handling, production or
disposal of Hazardous Materials, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 USC ss.ss.9601
et seq. and 40 CFR ss.ss.302.1 et seq., and regulations thereunder; the Federal
Clean Air Act, as amended, 42 USC ss.ss.7401 et seq., and regulations
thereunder; the Resource Conservation and Recovery Act, 42 USC ss.ss.6901 et
seq., as amended, and regulations thereunder; and the Federal Water Pollution
Control Act, 33 USC ss.ss.1251 et seq., as amended, and regulations thereunder.
"EquiServe" means EquiServe, Inc., the transfer agent for
Compuware.
"Escrow Agent" means NBD Bank, a Michigan banking corporation.
"Escrow Agreement" is defined in Section 3.2(b) of this
Agreement.
"Escrow Shares" is defined in Section 3.2(b) of this Agreement
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fees and Costs" means reasonable legal (including attorneys'
and legal assistants') fees, disbursements and costs; reasonable fees,
disbursements and costs of third party consultants and experts; court costs; and
similar items.
"Final Determination" with respect to a Proceeding shall mean
(a) a final decision with respect to the proposed adjustment by an IRS appeals
officer, as evidenced by the issuance of a 90-day letter, IRS Form 870-AD or
like notice, unless judicial proceedings are initiated, (b) a final decision
with respect to the proposed adjustment by the United States Tax Court, Court of
Federal Claims or the appropriate Federal District Court, unless such decision
is appealed, (c) a final non-appealable decision of the United States Supreme
Court or (d) the settlement of the proposed adjustment with the consent of the
Indemnifying Party and the Claimant.
"Financial Statements" is defined in Section 5.10 of this
Agreement.
"GAAP" means generally accepted accounting principles,
consistently applied.
"Governmental Entity" is defined in Section 5.1(c).
"Hazardous Materials" means asbestos-containing materials,
mono- and polychlorinated biphenyls, urea formaldehyde products, radon,
radioactive materials, any "hazardous substance", "hazardous waste",
"pollutant", "Toxic Pollutant", "oil" or "contaminant" as used in, or defined
pursuant to any Environmental Law, and any other substance, waste, pollutant,
contaminant or material, including petroleum products and derivatives, the use,
transport, disposal, storage, treatment, recycling, handling, discharge,
Release, threatened Release, discharge or emission of which is regulated or
governed by any Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
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"Indemnifying Party" is defined in Section 11.3(a) of this
Agreement.
"Independent Public Accountants" means a firm of independent
nationally recognized accountants mutually selected by Compuware and the
Shareholders.
"Intercompany Transaction" has the meaning set forth in
Treasury Regulations ss.1.1502-13 in effect on or after July 12, 1995.
"IRS" means the Internal Revenue Service and any
successor federal agency.
"Laws" means all applicable federal, state or local laws,
zoning and other ordinances, rules, regulations, building and other codes, and
court or administrative orders, judgments or decrees.
"Liens" is defined in Section 5.2 of this Agreement.
"Loss" shall mean and include any damage, liability, loss,
claim, cost, debt, expense, obligation, tax, assessment, lawsuit or deficiency
of any kind or nature, fixed, actual, accrued or contingent, liquidated or
unliquidated, including, without limitation Fees and Costs incident to
proceedings or investigations or the defense of any of the foregoing, whether or
not litigation has commenced (each, a "Loss").
"MBCA" means the Michigan Business Corporation Act.
"Merger" is defined in Recital C of this Agreement.
"MIS" is defined in the introductory paragraph of this
Agreement.
"MIS Shares" is defined in Recital B of this Agreement.
"Nasdaq" means The Nasdaq Stock Market.
"Noncompetition Agreement" means the Confidentiality and
Non-competition Agreement among Compuware, ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ in the
form attached to this Agreement as Exhibit C.
"Proceeding" is defined in Section 11.7(b)(ii) below.
"Properties" is defined in Section 5.3 of this Agreement.
"Proprietary Rights" are all know-how, marks, symbols,
trademarks, trade names, service marks, copyrights, patents, trade secrets,
licenses, source codes, object codes, inventions, logos and other intellectual
property owned or used by each of MIS, Simco and Autoflex.
"Registration Rights Agreement" means the Registration Rights
Agreement
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among Compuware and the Shareholders in the form attached hereto as Exhibit F.
"Related Agreements" are all written agreements, other than
this Agreement, which are executed and delivered by Compuware, MIS, Simco,
Autoflex or any Shareholder pursuant to this Agreement in connection with the
Mergers or the other transactions contemplated by this Agreement (including the
Noncompetition Agreement and the other agreements contemplated thereunder).
"Release" means spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposal,
depositing and placing, including the abandonment or discarding of barrels,
containers, and other closed receptacles containing any Hazardous Material.
"Ruling" means a formal ruling, a determination letter, a
change in method of accounting letter or any similar announcement issued by the
IRS.
"Representative" is defined in Section 11.6.
"SEC" is defined in Section 7.3 of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholders" is defined in the introductory paragraph of
this Agreement.
"Shares" is defined in Recital A of this Agreement.
"Simco" is defined in the introductory paragraph of this
Agreement.
"Simco Shares" is defined in Recital B of this Agreement.
"Surviving Corporation" means MIS or Simco, as the context
requires.
"Taxes" means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or foreign government
or any agency or political subdivision of any such government, which taxes will
include, without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes and state income
taxes), single business taxes, real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security taxes, sales
and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation,
Pension Benefit Guaranty Corporation premiums and other governmental charges,
and other obligations of the same or of a similar nature to any of the
foregoing, which MIS, Simco or Autoflex is required to pay, withhold or collect,
whether disputed or not, and will include any transferee or secondary liability
in respect of any or all of the above and any liability in respect of any tax as
a result of being a member of any affiliated, consolidated, combined, unitary or
similar group.
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"Tax Authority" includes the IRS and any state, local, foreign
or other governmental authority (domestic or foreign) responsible for the
administration of any Taxes.
"Tax Liability Issue" is defined in Section 11.7(b)(i) below.
"Tax Loss" means any Loss arising out of, resulting from or
relating to a breach of any representation, warranty or covenant contained in
Section 5.12, 8.9, 8.10, 11.7 or 12.14 of this Agreement (relating specifically
to Taxes).
"Tax Return" or "Tax Returns" means any return, declaration,
report, claim for refund, or information return or statement (including any
schedule or attachment thereto) and any amendment thereof required to be filed
with, or where none is required to be filed with a Tax Authority, the statement
or other document issued by, a Tax Authority in connection with any Tax.
"Third-Party Claim" is defined in Section 11.4 of this
Agreement.
"Transactions" means any of the transactions contemplated by
this Agreement or the Related Agreements.
"Transmittal Letter" is defined in Section 3.2(a).
"Treasury Regulation" or "Treasury Regulations" means any
regulation promulgated under the Code including any amendments or any substitute
or successor provisions thereto.
"Underground Storage Tank" means any container and any related
piping and material handling equipment of which any portion is located below the
level of the soil at any Property, unless all piping and related material
handling equipment is fully exposed and located in the basement of a building at
such Property.
2. The Merger.
2.1 The Merger.
(a) Subject to the terms and conditions of this Agreement
and the MBCA, at the Effective Time, (1) CPWRT1 will be merged with and into MIS
and the separate existence of CPWRT1 will cease and MIS will continue as the
Surviving Corporation and (2) CPWRT2 will be merged with and into Simco and the
separate existence of CPWRT2 will cease and Simco will continue as the Surviving
Corporation.
(b) Upon the effectiveness of the Merger:
(1) the Surviving Corporations will continue
their corporate existence under the laws of the State of
Michigan and will possess all of the rights, privileges,
immunities, powers, franchises and purposes of the constituent
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corporations;
(2) all property of the constituent corporations
will be the property of the Surviving Corporations (the title
to any real estate vested by deed or otherwise in any of the
constituent corporations will not revert or be in any way
impaired by reason of the Mergers); and
(3) the Surviving Corporations will by operation
of law assume all of the liabilities and duties of the
constituent corporations.
(c) The Articles of Incorporation and Bylaws of the
Surviving Corporations will be the Articles of Incorporation and Bylaws of
CPWRT1 in the case of the merger of MIS and CPWRT1 and of CPWRT2 in the case of
the merger of Simco and CPWRT2, and will remain such until amended.
(d) The directors and officers of CPWRT1 and CPWRT2
immediately prior to the Effective Time will be the directors and officers of
the Surviving Corporations, and will serve as such until their respective
successors are duly elected and qualified in the manner provided in the Articles
of Incorporation and Bylaws of the respective Surviving Corporations, or their
earlier death, resignation or removal. Prior to the Effective Time, CPWRT1 or
CPWRT2 will have the right, in each such corporation's sole discretion, to add
to or delete from the directors and officers of each.
2.2 Effectiveness of the Merger. Appropriate Certificates
of Merger will be filed with the Michigan Department of Consumer and Industry
Services Corporation, Securities and Land Development Bureau simultaneously with
the Closing. The Mergers will become effective at the time at which the
Certificates of Merger are so filed. The Shareholders who are signatories to
this Agreement, by execution of this Agreement, consent to the Mergers and waive
their rights to appraisal under the MBCA.
3. Conversion of Shares.
3.1 Conversion of Shares. At the Effective Time, by
virtue of the Mergers and without any action on the part of any holder of
Shares, each MIS Share and each Simco Share will be converted into and represent
the right to receive that number of shares of Compuware Stock determined by (a)
dividing $31,100,000 by the average of the closing sales prices of Compuware
Stock on Nasdaq for the ten trading days immediately preceding the Closing Date,
and (b) allocating such shares of Compuware Stock among the MIS Shares and Simco
Shares with the appropriate conversion factors as shown on Schedule 3.1 to this
Agreement. Each outstanding share of CPWRT1 and of CPWRT2 shall continue to be
outstanding and shall each represent one share of the applicable Surviving
Corporation. The number of shares of Compuware Stock to be issued to the
Shareholders in the Mergers pursuant to this Section 3.1 will be appropriately
adjusted to reflect fully the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Compuware Stock), reorganization, recapitalization, or other like change
with respect to Compuware Stock as to which the record date occurs after the
date hereof and prior to the Effective Time.
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3.2 Issuance of Compuware Stock; Escrow of Compuware Stock.
(a) At and after the Effective Time, upon surrender, in accordance
with the terms and conditions of the "Transmittal Letter", the form of which is
attached as Exhibit A, to Compuware by each of the Shareholders of certificates
for the number of MIS Shares and/or Simco Shares set forth opposite such
Shareholder's name on Schedule 3.2 hereto, representing all of the MIS Shares
and/or Simco Shares owned by such Shareholder, Compuware shall promptly issue
and deliver directly to each such Shareholder a certificate, registered in the
name of such Shareholder and representing approximately ninety (90%) percent of
the total number of shares of Compuware Stock into which such Shareholder's MIS
Shares and Simco Shares have been converted, rounded up to the nearest whole
share, as set forth opposite such Shareholder's name on Schedule 3.2 (subject to
adjustment as set forth in Section 3.1 hereof).
(b) In order to provide for the indemnity obligations of the
Shareholders hereunder, Compuware shall deliver to the Escrow Agent a
certificate representing the number of shares of Compuware Stock as provided
below. The Compuware Stock placed in escrow by Compuware shall represent ten
percent (10%) of the total number of shares of Compuware Stock into which the
MIS Shares and Simco Shares have been converted, rounded down to the nearest
whole share, (subject to adjustments as set forth in Section 3.1 hereof),
(together with the Dividend Account (as defined in the Escrow Agreement) and any
Dividend Shares (as defined in the Escrow Agreement (such shares, the Dividend
Account and the Dividend Shares are collectively the "Escrow Shares")). The
Escrow Agent shall hold and administer the Escrow Shares in accordance with the
terms of an escrow agreement dated as of the Effective Date among Compuware, the
Shareholders and the Escrow Agent (the "Escrow Agreement") in the form of
Exhibit B attached hereto. The parties acknowledge and agree that, for
convenience purposes only, Compuware will issue the certificate evidencing the
Escrow Shares in the name of the Escrow Agent, as escrow agent under the Escrow
Agreement. The parties further acknowledge and agree that the Shareholders are
the beneficial owners of the Escrow Shares, subject to the terms and conditions
of the Escrow Agreement.
3.3 Exchange of Shares. After the Effective Time, EquiServe will
act as transfer agent for and on behalf of Compuware, in effecting the exchange
of shares of Compuware Stock for certificates that, before the Effective Time,
represented Shares entitled to be exchanged for Compuware Stock pursuant to
Sections 3.1 and 3.2 above. Upon the surrender and exchange of such holder's
Share certificates, and delivery to EquiServe of executed Transmittal Letters,
the holder will receive, without interest, that number of shares of Compuware
Stock to which such holder is entitled at such time under this Agreement, and
each such certificate will be immediately cancelled. Until so surrendered and
exchanged, (1) each such certificate will be deemed converted, and will
represent solely the right to receive the Compuware Stock with respect to such
certificate pursuant to Sections 3.1 and 3.2 above; and (2) holders of such
certificates will not receive the shares of Compuware Stock to which they would
otherwise be entitled.
3.4 Closing of Corporation's Transfer Books. At the Effective
Time, each holder of a certificate or certificates that represents Shares will
cease to have any rights as a shareholder of either of MIS or Simco, except for
the right to surrender such holder's certificate or certificates in exchange for
Compuware Stock provided pursuant to Sections 3.1 and 3.2 above. The stock
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transfer books of each of MIS and Simco will be closed and no transfer of Shares
will thereafter be made. If, after the Effective Time, certificates representing
Shares are presented to either of the Surviving Corporations or EquiServe, they
will be cancelled and exchanged for shares of Compuware Stock as provided in
Sections 3.1 and 3.2 above.
3.5. Fractional Share. No fraction of a share of Compuware Stock
will be issued by virtue of the Mergers, but in lieu thereof each holder of MIS
Shares or Simco Shares who would otherwise be entitled to a fraction of a share
of Compuware Stock (after aggregating all fractional shares of Compuware Stock
to be received by such holder) will receive from Compuware an amount of cash
(rounded to the nearest whole cent) equal to the product of (a) such fractional
share, multiplied by (b) the average closing sales price of a share of Compuware
Stock on Nasdaq for the ten trading days immediately preceding the Closing Date.
4. Closing.
4.1 Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ at 10:00 a.m. on February 26, 1999 or such earlier day as mutually
agreed.
4.2 Actions to be Taken at the Closing.
(a) At the Closing, Compuware will execute and/or deliver
or cause to be executed and/or delivered the following documents:
(1) Certificates of Merger to be filed in
respect of the Merger;
(2) officers' certificates as provided in
Exhibit D;
(3) an opinion of general counsel as provided in
Exhibit E;
(4) the Escrow Agreement;
(5) the Registration Rights Agreement as
provided in Exhibit F;
(6) the Compuware Affiliate Agreement as
provided in Exhibit G; and
(7) such other documents as may be reasonably
requested by the Shareholders, MIS or Simco.
(b) At the Closing, each of MIS and Simco, and the
Shareholders, as appropriate, will deliver the following
documents:
(1) certified resolutions of its Board of
Directors and shareholders authorizing the execution and
delivery of this Agreement and each Related Agreement to which
it is a party and the consummation of the Merger;
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(2) a copy of the Articles of Incorporation
(certified by an appropriate state official as of a date
within 30 days of the Closing Date) and a good standing
certificate from its state of incorporation and each
jurisdiction in which it is qualified to do business;
(3) a certificate of the Secretary or an
Assistant Secretary of such corporation in such form and
substance as Compuware may reasonably request attesting as to
the incumbency of each officer of such corporation who
executes this Agreement or a Related Agreement, bylaws,
resolutions and such other matters as Compuware may reasonably
request;
(4) the written resignations of the officers and
directors of such corporation as requested by Compuware before
the Closing Date, or documentation and indemnities in form and
substance satisfactory to Compuware as to the removal,
consistent with law, of any non-resigning officer or director;
(5) Certificates of Merger to be filed in
respect of the Merger;
(6) officers' certificates as provided in
Exhibit H;
(7) an opinion of Jaffe, Raitt, Heuer & ▇▇▇▇▇ as
provided in Exhibit I;
(8) the Escrow Agreement;
(9) the Registration Rights Agreements; and
(10) such additional information and materials as
Compuware may reasonably request.
(c) Each of MIS, Simco and Compuware will cause
certificates of merger to be filed in accordance with Section 2.2 above and will
use commercially reasonable efforts to take any and all other lawful actions and
do any and all other lawful things necessary to effect the Mergers and to enable
the Mergers to become effective.
(d) Compuware and each of ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ will
execute and deliver a confidentiality and noncompetition agreement in the form
of Exhibit C to this Agreement (the "Noncompetition Agreement").
(e) The Shareholders will execute and deliver to
Compuware the MIS Affiliate Agreement and the Simco Affiliate Agreement, as
provided in Exhibit J, respectively.
(f) MIS, Simco, the Shareholders and Compuware will use
commercially reasonable efforts to execute and deliver such other documents and
certificates as are required by the terms of this Agreement and the Related
Agreements (including all governmental and third party consents required to be
delivered by MIS, Simco or the Shareholders) or as may be reasonably requested
by the other party.
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(g) At the Closing, Compuware will cause to be paid in
full the indebtedness of MIS to First Federal as set forth in Schedule 4.2(g)
and the indebtedness of Autoflex to Michigan National Bank as set forth in
Schedule 4.2(g).
5. Corporation's and the Principals' Representations and
Warranties. Each of MIS, Simco and Autoflex and each Principal, jointly and
severally, represent and warrant to Compuware as follows, as of the date of this
Agreement and as of the Closing Date:
5.1 Organization; Power and Authority; Authorization; Due
Execution; No Conflicts.
(a) One or more of the Shareholders are the sole
shareholders of each of MIS and Simco and MIS is the sole shareholder of
Autoflex, each of which (1) is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Michigan, and (2) has the
corporate power and authority to (A) own, operate and lease the properties it
owns, operates and leases, (B) carry on its business as it is now being
conducted, (C) enter into this Agreement and the Related Agreements to which it
is a party and, (D) consummate the transactions contemplated by this Agreement
and the Related Agreements, and (3) is duly qualified or licensed and is in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it has made its qualification or licensing a legal requirement,
except for those jurisdictions where the failure to be so qualified would not
have a material adverse effect on MIS or Simco. Each of MIS, Simco and Autoflex
has delivered to Compuware true and correct copies of its Articles of
Incorporation and Bylaws.
(b) This Agreement and each Related Agreement to which
any of MIS, Simco and Autoflex are parties have been duly authorized by all
necessary corporate action on the part of MIS, Simco and Autoflex and the
Shareholders, as appropriate. Upon the execution and delivery of this Agreement
and the Related Agreements, this Agreement and each Related Agreement will
constitute the legal, valid and binding obligation of the Shareholders and each
of MIS, Simco and Autoflex (as applicable), enforceable against the Shareholders
and each of MIS, Simco and Autoflex (as applicable), in accordance with their
respective terms, subject to judicial discretion regarding specific performance
or other equitable remedies, and except as may be limited by bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or affecting
the enforcement of creditors' rights and remedies generally. No other corporate
authorizations or proceedings on the part of any of MIS, Simco or Autoflex are
necessary to consummate the Merger or any of the other transactions contemplated
by this Agreement.
(c) Except as set forth in Schedule 5.1(c) to this
Agreement, the execution, delivery and performance of this Agreement and the
Related Agreements by the Shareholders and each of MIS, Simco and Autoflex will
not, with respect to MIS, Simco or Autoflex (l) constitute a breach or violation
of (A) such corporation's Articles of Incorporation or Bylaws, (B) any Law, or
(C) any material agreement, right, license, franchise, lease, indenture, deed of
trust, mortgage, loan agreement or other material instrument to which such
corporation is a party or by which such corporation is bound; (2) constitute a
violation of any order, judgment or decree to which such corporation is a party
or by which such corporation's assets or properties are bound or affected; (3)
result in the acceleration of any material debt owed by such corporation; (4)
result in the creation of any lien, charge or encumbrance upon the Shares or any
of such corporation's
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properties or assets; or (5) require any consent, approval, authorization or
permit of or from, or filing with or notification to, any court, government,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign (each, a "Governmental Entity"), except filing
the Certificate of Merger pursuant to the laws of the State of Michigan and
except obtaining approval under the HSR Act.
(d) Schedule 5.1(d) to this Agreement is a true and
complete list of each jurisdiction in which each of MIS, Simco and Autoflex is
qualified or licensed to do business.
5.2 Title. Each of MIS, Simco and Autoflex has good and
marketable title to, and the right to use, all of each such corporation's assets
reflected in the most recent Financial Statement, as defined in Section 5.10, or
acquired since the date of such Financial Statement, free and clear of all
security interests, mortgages, liens, pledges, charges or encumbrances of any
nature ("Liens"), except as set forth in Schedule 5.2 to this Agreement. There
are no special assessments against any of each such corporation's assets.
5.3 Properties and Improvements. Schedule 5.3 to this
Agreement truly and completely lists all of the real property owned or leased by
any of MIS, Simco or Autoflex (the "Properties"). Schedule 5.3 to this Agreement
lists all options or any other right that any of MIS, Simco or Autoflex has to
acquire any real property.
5.4 Other Assets of MIS, Simco and Autoflex.
(a) All of the furniture, fixtures and equipment owned or
leased by MIS, Simco or Autoflex is in good operating condition, subject only to
ordinary wear and tear, and are fit for their intended purpose.
(b) All of the assets of each of MIS, Simco and Autoflex
are owned by each such corporation and, except as set forth on Schedule 5.4 to
this Agreement, none of MIS, Simco and Autoflex is leasing or holding on
consignment, any equipment, furniture, fixtures or other personal property.
5.5 Claims; Litigation; Compliance with Laws; Approvals.
(a) There are no persons holding any claims of any nature
against any of MIS, Simco or Autoflex, including claims arising out of or in
connection with the operation of the business or of any of the properties of any
of MIS, Simco or Autoflex except (1) for such claims arising from goods sold or
services rendered by any of MIS, Simco or Autoflex in the ordinary course of its
business which do not exceed in the aggregate $25,000 or (2) as set forth on
Schedule 5.5 to this Agreement.
(b) Except as disclosed in Schedule 5.5 to this
Agreement, (1) none of MIS, Simco or Autoflex is: (A) a party to any litigation,
proceeding or administrative investigation, and none is pending or, to the best
knowledge of the Shareholders, MIS, Simco and Autoflex, threatened in writing
against or by any of MIS, Simco or Autoflex or (B) subject to any outstanding
order, writ, injunction or decree of any court, government or governmental
authority or arbitration against or affecting it; and (2) to the best knowledge
of the Shareholders, MIS,
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Simco and Autoflex, there is not any reasonable basis for any litigation,
proceeding or investigation of the nature described in clause (1)(A) above.
(c) None of MIS, Simco and Autoflex is in violation of,
or were in violation of during the past five years, and each such corporation's
actions in the consummation of the Transactions do not violate or infringe, any
Law, including any Law relating to each such corporation's employment or
employment practices or environmental or occupational safety or health, or any
right or concession, copyright, trademark, trade name, patent, trade secret,
know-how or other proprietary right of others, except where noncompliance or
violation would not have a material adverse effect on MIS or Simco. The business
and activities of MIS, Simco and Autoflex (a) are presently being conducted in
material compliance with all requirements of Law, including the filing with any
Governmental Entity or other third party any statement, report, information or
form required by Law, and all requirements of any Governmental Entities having
jurisdiction over the business or activities of any such corporation and (b)
were not conducted in violation of any of such laws or such requirements within
the past five (5) years. Except as set forth in Schedule 5.8, none of MIS, Simco
or Autoflex has, within the past five (5) years, received a notice of violation
of, been threatened in writing with a charge of violating, or, to the best
knowledge of the Shareholders, MIS, Simco and Autoflex, been under investigation
with respect to a possible violation of, any provision of any requirement, law,
regulation, order or decree of any Governmental Entity which has not been
complied with, rescinded or resolved.
(d) Each of MIS, Simco and Autoflex has maintained all
licenses and permits and has filed all registrations, reports and other
documents required by local, state and federal authorities and regulating bodies
in connection with its business, except where the failure to maintain or file
such licenses, permits, registrations or reports would not have a material
adverse effect on MIS or Simco. All such licenses and permits will remain in
full force and effect (without imposition of any material adverse condition,
restriction, limitation, cost or penalty) notwithstanding the Merger. Each of
MIS, Simco and Autoflex is in material compliance with all such licenses,
permits and approvals, and there are no proceedings pending or, to the best
knowledge of the Shareholders, MIS, Simco and Autoflex, threatened in writing to
MIS, Simco or Autoflex, respectively, which may result in the material
limitation, termination, cancellation or suspension, or any adverse modification
of, any such license, permit or approval. Schedule 5.5 to this Agreement
contains a full and complete list of all such licenses, permits and approvals.
5.6 Agreements; Contracts; Warranties.
(a) Except as set forth on Schedule 5.6 to this
Agreement, (1) none of MIS, Simco or Autoflex is obligated under any contract or
agreement (written or otherwise) which may not be terminated without cost or
penalty to such corporation or its shareholders upon 30 days' notice of a desire
to terminate; and (2) none of MIS, Simco or Autoflex is a party to any agreement
or commitment of any nature pursuant to which it will be required to spend more
than $25,000 in any 12 month period or $50,000 in the aggregate.
(b) With respect to the agreements and understandings
identified on Schedule 5.6 to this Agreement:
(l) none of MIS, Simco or Autoflex (as
appropriate), nor, to the best
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knowledge of the Shareholders, MIS, Simco and Autoflex, the
third parties to such agreements, are in material default nor
has such default been asserted by any party, and there has not
occurred any event which, with or without the passage of time
or giving of notice (or both), would constitute such a
default;
(2) except as set forth on Schedule 5.6 to this
Agreement, each such agreement will remain in full force and
effect (without imposition of any material restriction,
limitation, cost or penalty to any of MIS, Simco, Autoflex or
Compuware) notwithstanding the Mergers;
(3) each of MIS, Simco and Autoflex (as
appropriate) has performed in all material respects all of its
obligations to the extent that such obligations can be
determined as of the date of this Agreement and each of MIS,
Simco and Autoflex (as appropriate) will perform in all
material respects all remaining obligations prior to the
Effective Time;
(4) none of MIS, Simco or Autoflex (as
appropriate) nor, to the best knowledge of the Shareholders,
MIS, Simco and Autoflex, the third parties to such agreements,
has repudiated any provision of any such agreement;
(5) except as set forth in Schedule 5.6 to the
Agreement, failure to renew, cancellation, expiration or
termination of any of the agreements identified on Schedule
5.6 to this Agreement in accordance with its terms would not
materially adversely affect the business, properties,
operations, assets, liabilities or condition (financial or
otherwise) of MIS, Simco or Autoflex; and
(6) each outstanding bid and proposal to provide
goods and to perform services and each agreement identified on
Schedule 5.6 to this Agreement in force as of the Effective
Date of the Mergers was bid and entered into in contemplation
of profitability in accordance with the ordinary course of
business of MIS and Simco.
(c) Other than the agreements identified on Schedule 5.6
to this Agreement, there are no agreements necessary for the operation of the
business of any of MIS, Simco or Autoflex as presently conducted and in
accordance with applicable Law and sound business practice.
(d) MIS, Simco and Autoflex have delivered to Compuware a
true and complete copy of each written instrument or document (including all
amendments thereto), and a true and complete written summary of each unwritten
understanding, which is identified on Schedule 5.6 to this Agreement. Schedule
5.6 includes true and correct copies of all forms of customer agreements which
are representative of those used by MIS, Simco and Autoflex (as appropriate).
5.7 Proprietary Rights. All of the Proprietary Rights are
listed or described on Schedule 5.7 to this Agreement and, except as disclosed
in Schedule 5.7 to this Agreement:
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(a) All of the Proprietary Rights are valid and in full
force and effect.
(b) MIS, Simco or Autoflex is the sole owner of, or
licensee under a valid license for, free from any liens, all of the Proprietary
Rights. Schedule 5.7 to this Agreement lists any Proprietary Rights licensed by
any of MIS, Simco or Autoflex from any third parties. MIS, Simco or Autoflex
owns or has the right to use all proprietary rights that are necessary for the
operation of its business as presently conducted or as proposed to be conducted,
except where the failure to own or have the right to use such Proprietary Rights
does not have a material adverse effect on MIS or Simco.
(c) Schedule 5.7 to this Agreement contains a true and
complete list or description of all contracts, oral or written, pursuant to
which any of MIS, Simco or Autoflex has authorized any person or entity to use,
or pursuant to which any person or entity has the right to use, any of the
Proprietary Rights, including, without limitation, on a temporary or trial
basis.
(d) Schedule 5.7 to this Agreement contains a true and
complete list and description of all royalty or contingent compensation
arrangements or other contracts, oral or written, regarding or pertaining to any
Proprietary Rights.
(e) To the best knowledge of the Shareholders, MIS, Simco
and Autoflex, no Proprietary Right presently being used, licensed or sold, or
contemplated to be used, licensed or sold, by any of MIS, Simco or Autoflex
violates or infringes on any rights owned or held by any other person or entity,
enforceable in the United States, United Kingdom or Japan, and, to the best
knowledge of the Shareholders, MIS, Simco and Autoflex, none of MIS, Simco,
Autoflex or the Shareholders have any knowledge of any claim of any of the
foregoing.
(f) There is no pending or, to the best knowledge of the
Shareholders, MIS, Simco and Autoflex, threatened (in writing) claim or
litigation against MIS, Simco, Autoflex or any other person or entity contesting
or, if decided adversely, affecting the right of any of MIS, Simco or Autoflex
to use, license or sell any Proprietary Right.
(g) To the best knowledge of the Shareholders, MIS, Simco
and Autoflex, no patent, trademark, service ▇▇▇▇, trade name, copyright,
license, trade secret, invention, intellectual property right, know-how or other
right presently being licensed, sold or employed, by any person or entity
violates or infringes on, or may violate or infringe on, any Proprietary Rights,
nor, to the best knowledge of the Shareholders, MIS, Simco and Autoflex, is
there any pending or proposed statute, law, rule, regulation, standard or code
that may materially adversely affect any Proprietary Right presently being used,
licensed or sold, or proposed to be used, licensed or sold by any of MIS, Simco
and Autoflex.
(h) MIS, Simco and Autoflex use and have used their
reasonable efforts to secure and maintain their rights in the Proprietary
Rights. Without limiting the generality of the foregoing, each of MIS's, Simco's
and Autoflex's employees and independent contractors have executed, as
appropriate, agreements protecting the confidentiality of the Proprietary Rights
in substantially the forms provided to Compuware by MIS, Simco and Autoflex.
Each such agreement is valid and enforceable and in full force and effect,
subject to judicial discretion regarding specific performance or other equitable
remedies, and except as may be limited by bankruptcy, reorganization,
insolvency, moratorium or other laws relating to or affecting the enforcement of
creditors' rights and remedies generally, and, to the best knowledge of the
Shareholders, MIS, Simco and Autoflex, none has been violated by any signatory
employee or
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independent contractor. True and complete copies of each such agreement,
including, without limitation, all amendments or modifications thereof have been
delivered to Compuware prior to the date of this Agreement.
(i) Neither MIS, Simco nor Autoflex has granted to any
person or entity any license to use any software products. The software products
currently licensed by MIS, Simco or Autoflex to customers, are in substantial
conformance with the current documentation, whether electronically embedded,
written or otherwise, shipped with such software products, except for errors and
bugs of the time, type, scope and nature generally acceptable in the software
industry for similar types of software products.
5.8 Employees; Employee Benefits.
(a) Attached as Schedule 5.8 to this Agreement is a list,
as of the date of this Agreement, of all employees of each of MIS, Simco and
Autoflex, and their dates of hire, positions, base salary and commission
schedule (if applicable). Except as set forth on Schedule 5.8 to this Agreement
and except as provided in the next sentence, none of such employees has any
employment agreement with any of MIS, Simco or Autoflex. None of MIS, Simco or
Autoflex has any collective bargaining or union contracts or agreements. There
have not been any unfair labor practice complaints, material labor difficulties
or work stoppages, or threats thereof, affecting any of the employees or
activities of MIS, Simco or Autoflex. To the best knowledge of the Shareholders,
MIS, Simco and Autoflex, there is no union campaign presently being conducted to
solicit employees to authorize a union to request a national labor relations
board certification election with respect to the employees of MIS, Simco or
Autoflex. Except as set forth in Schedule 5.8, any employees of MIS, Simco or
Autoflex may be terminated at will, with or without cause, without any material
severance obligation.
(b) Each of MIS, Simco and Autoflex, as appropriate, has
deducted and remitted to the relevant Governmental Entities all income taxes,
unemployment insurance contributions and other taxes and amounts which it is
required to deduct and remit to such governmental entity, and each of MIS, Simco
and Autoflex has made all required filings in respect thereof, except to the
extent that any failure to deduct or remit is not reasonably expected to result
in any material liability.
(c) Except as set forth on Schedule 5.8 to this
Agreement, the consummation of the transactions contemplated by this Agreement
will not in and of themselves (i) entitle any current or former employee of any
of MIS, Simco or Autoflex to severance pay, unemployment compensation or any
other similar payment, or (ii) accelerate the time of payment or vesting or
increase the amount of compensation due to any such employee or former employee.
(d) Schedule 5.8 lists all "employee benefit plans" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), and all other bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, stock bonus, phantom stock, retirement, vacation, severance, disability,
death benefit, welfare, holiday bonus, hospitalization, medical or other plan or
arrangement, providing benefits to any current or former employee, officer or
director of MIS and/or Simco, or maintained or contributed to by MIS, Simco
and/or Autoflex or by any member
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of their controlled group(s) as defined in Code Sections 414(b), (c), (m), or
(o) for the benefit of any employee, officer or director of MIS, Simco and
Autoflex (collectively, "Benefit Plans").
(e) Except as set forth on Schedule 5.8, each Benefit
Plan set forth in Schedule 5.8 which is intended by MIS, Simco or Autoflex to be
tax qualified under Section 401(a) of the Code has received a determination
letter to that effect from the Internal Revenue Service and a copy of the most
recent determination letter for each such Benefit Plan has been delivered to
Compuware.
(f) On or prior to the date of this Agreement MIS, Simco
and Autoflex has delivered to Compuware true and complete copies of (i) each
Benefit Plan or, in the case of any unwritten Benefit Plans, descriptions
thereof, (ii) the most recent annual report filed with the appropriate
Governmental Entity with respect to each Benefit Plan, if any such report was
required, (iii) the most recent summary plan description for each Benefit Plan
for which such summary plan description is required, (iv) each trust agreement,
group annuity contract or insurance contract relating to any Benefit Plan, and
(v) the most recent actuarial report, if any, relating to any Benefit Plan.
(g) To the best knowledge of the Shareholders, MIS, Simco
and Autoflex, none of MIS, Simco or Autoflex, any officer of MIS, Simco or
Autoflex or any of the Benefit Plans, or any trusts created thereunder, or any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
defined in Code Section 4975 or ERISA Section 406) or any other breach of
fiduciary responsibility that would subject MIS, Simco and/or Autoflex or any
officer of MIS, Simco and/or Autoflex to a material tax or penalty on prohibited
transactions or to any liability under ERISA.
(h) Except as disclosed on Schedule 5.8, no such Benefit
Plan that is an employee welfare benefit plan (as defined in ERISA Section 3(1)
provides benefits to current or future retirees or current or future former
employees and their dependents, except as required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or applicable state continuation
coverage law.
(i) Each Benefit Plan and all related trust or other
agreements conform in form and operation to, and comply with, all applicable
laws and regulations, including, without limitation, ERISA and the Code, and all
reports or information relating to each such Benefit Plan required to be filed
with any Governmental Entity or disclosed to participants has been timely filed
and disclosed.
(j) Except as disclosed in Schedule 5.8, MIS, Simco
and/or Autoflex has not announced a plan to create, nor does it have any legally
binding commitment to create, any new arrangement which would, when established,
constitute an employee benefit plan, as defined in Section 3(3) of ERISA.
(k) All insurance premiums or contributions required,
with respect to any Benefit Plan, have been paid in full and there exist no
funding deficiencies within the meaning of Code Section 412 with respect to any
Benefit Plan. Except as disclosed on Schedule 5.8, there are no known material
retrospective adjustments provided for under any insurance contracts
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maintained pursuant to any Benefit Plan with regard to policy years or other
periods ending on or before the Effective Time of the Merger.
(l) Except as disclosed on Schedule 5.8, no Benefit Plan,
or the deduction of any contributions thereto by MIS, Simco and/orAutoflex, is
the subject of a current or pending audit by any Governmental Entity, and no
litigation or asserted claims exist against MIS, Simco and/or Autoflex or any
Benefit Plan or fiduciary with respect thereto, other than such benefit claims
as are made in the normal operation of a Benefit Plan. There are no known facts
which are reasonably expected to give rise to any action, suit, grievance,
arbitration or other claim in connection with any Benefit Plan.
5.9 Insurance. Schedule 5.9 to this Agreement contains a
true and complete list of all policies of fire, liability, workers' compensation
and other forms of insurance owned or held by each of MIS, Simco and Autoflex
(including coverages), and each of MIS, Simco and Autoflex has made available
for inspection by Compuware true and complete copies of all such policies. All
such policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date have been paid, and no
notice of cancellation or termination has been received by the Principals, MIS,
Simco or Autoflex with respect to any such policy. Such policies (a) are
sufficient for material compliance with all requirements of Law and all
agreements to which each of MIS, Simco and Autoflex is a party; (b) are valid,
outstanding and enforceable policies; (c) will remain in full force and effect
through the Closing Date without the payment of additional premiums; and (d)
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Schedule 5.9 to this Agreement
identifies all risks which each of MIS, Simco and Autoflex has designated as
being self-insured.
5.10 Financial Statements. MIS has delivered to Compuware
(1) complete copies of its audited consolidated financial statements for the
year ended May 31, 1998, (2) complete copies of its audited consolidated balance
sheet as of May 31, 1997, (3) complete copies of its consolidated reviewed
financial statements for the year ended May 31, 1997, (4) complete copies of its
reviewed consolidated financial statement for the year ended May 31, 1996,
respectively, with, as to (1), (2), (3) and (4) above the corresponding
accountants reports, including balance sheets and accompanying statements of
profit and loss and related schedules of cost and expense for the covered
periods, as applicable, and (5) unaudited financial statements for the months
ended after May 31, 1998 through December 31, 1998. Simco has delivered to
Compuware (1) complete copies of its compiled financial statements for the three
years ended August 31, 1998, August 31, 1997 and August 31, 1996, respectively,
with the corresponding accountants reports, including balance sheets and
accompanying statements of profit and loss and related schedules of cost and
expense for the covered periods, and (2) unaudited financial statements for the
months ended after August 31, 1998 through December 31, 1998. Autoflex has
delivered to Compuware (1) complete copies of its reviewed financial statements
for the three years ended May 31, 1998, May 31, 1997 and May 31, 1996,
respectively, with the corresponding accountants reports, including balance
sheets and accompanying statements of profit and loss and related schedules of
cost and expense for the covered periods, and (2) unaudited financial statements
for the months ended after May 31, 1998 through December 31, 1998. All of the
foregoing, are referred to as the "Financial Statements." Each of the Financial
Statements presents fairly and accurately the financial condition, assets and
liabilities, results of
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operations and related costs and expenses of each of MIS, Simco and Autoflex as
of such dates and for the period then ended, and all of such statements were
prepared in accordance with GAAP (except, that certain Financial Statements
reference an incorrect number of issued and outstanding shares of MIS and except
with respect to interim financial statements, for normal, non-material year-end
adjustments and lack of footnotes). None of MIS, Simco or Autoflex has received
any "management letter" in connection with any audit.
5.11 Undisclosed Liabilities. Except for trade payables
incurred by MIS, Simco and/or Autoflex in the ordinary course of business since
the date of the most recent Financial Statements, and except as set forth in
Schedule 5.11 to this Agreement, none of MIS, Simco and Autoflex has any
liability or obligation of any kind (contingent or otherwise) not reflected on
the most recent Financial Statements. There is no reasonable basis for the
assertion of any claim or liability against any of MIS, Simco or Autoflex which
is not fully reserved against, as required by GAAP, in the Financial Statements.
5.12 Taxes
(a) Each of the Companies has timely filed (or has
caused, or will cause, to be timely filed on its behalf either separately or as
a member of a consolidated group of companies) all Tax Returns required to be
filed by it with any Tax Authority with respect to Taxes for any period ending
on or before the Effective Date, taking into account any valid and proper
extension of time to file granted to or obtained on behalf of the Company, and
all such Tax Returns are or, if not yet filed, will be, to the best knowledge of
the Shareholders, MIS, Simco and Autoflex true, correct and complete in all
material respects at the time of filing. All Taxes (whether or not shown on such
Tax Returns) owed by any of the Companies have been timely paid in full. No
deficiency for any amount of Taxes has been asserted or assessed or, to the best
knowledge of the Shareholders, MIS, Simco and Autoflex, has been threatened or
is likely to be assessed by a Tax Authority against any of the Companies. No
claim has ever been made by a Tax Authority in a jurisdiction where any of the
Companies do not file Tax Returns that any of the Companies is or may be subject
to taxation by that jurisdiction. None of the Companies has any liability for
the Taxes of any person under Treasury Regulation ss.1.1502-6 (or any similar
provision of state, local, or foreign law) as a transferee or successor, by
contract, or otherwise. Except as set forth on Schedule 5.12(i), there are no
excess loss accounts, gains or losses from Deferred Intercompany Transactions or
Intercompany Transactions pertaining to any of the Companies (whether or not
they are taken into account as a result of the Mergers). None of the Companies
currently is the beneficiary of any extension of time within which to file any
Tax Return. To the best knowledge of the Shareholders, MIS, Simco and Autoflex,
there are no Liens or security interests on any of the assets of the Companies
that arose in connection with any failure (or alleged failure) to pay Taxes.
(b) The Companies have accrued, adequately reserved and
shown on their Financial Statements as a liability, all Taxes for any taxable
period (or portions thereof) which ends on or before the Effective Date. If any
of the Companies is a partner in a partnership whose taxable year does not end
on the Effective Date, all Taxes of such Companies attributable to the portion
of such partnership's taxable year which ends on the Effective Date have been
accrued in the Financial Statements. Any Tax Return for any taxable period
ending on or before the Effective Date shall be prepared in a manner consistent
with the accrual of Taxes in the Financial
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Statements previously delivered to Compuware.
(c) Each of the Companies has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder, or other third
party, and has otherwise complied with applicable laws relating thereto.
(d) To the best knowledge of the Shareholders, MIS, Simco
and Autoflex, there is no audit dispute, claim or other proceeding concerning
any Taxes or Tax Return of any of the Companies either (i) claimed or raised by
any Tax Authority or (ii) as to which any director, officer or employee
responsible for Tax matters of any of the Companies has knowledge. Schedule
5.12(c) lists all federal, state, local, and foreign income Tax Returns filed by
the Companies for taxable periods ended on or after December 31, 1993 that have
been audited by a Tax Authority, and indicates those Tax Returns that currently
are the subject of audit by a Tax Authority. Each of the Companies has delivered
or made available to Compuware true, correct and complete copies of all Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Shareholders (with respect to the Companies) and/or any of the
Companies since December 31, 1993.
(e) None of the Companies has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(f) Except as set forth on Schedule 5.12(f), each of the
Companies has disclosed on their respective Tax Returns all positions taken
therein, the nondisclosure of which could give rise to a substantial
understatement penalty within the meaning of Code ss.6662 or any similar
provision of state, local or foreign law.
(g) None of the Companies: (i) has filed a consent under
Code ss.341(f) concerning collapsible corporations; (ii) has made any payment,
is obligated to make any payment, or is a party to any agreement that under
certain circumstances could obligate it to make any payment that will not be
deductible under Code ss.280G; (iii) has been a United States real property
holding corporation within the meaning of Code ss.897(c)(2) during the
applicable period specified in Code ss.897(c)(1)(A)(ii); (iv) is a party to any
Tax allocation or sharing agreement; (v) has been a member of an Affiliated
Group filing a consolidated federal income Tax Return; (vi) has any liability
for the Taxes of any person under Treasury Regulation ss.1.1502-6 (or any
similar provision of state, local, or foreign law) as a transferee or successor,
by contract, or otherwise; (vii) has granted a power of attorney with respect to
any matter relating to Taxes of the Shareholders (with respect to the Companies)
or any of the Companies; (viii) has participated in an international boycott
under Code ss.999; (ix) is a party to any safe harbor lease within the meaning
of Code ss.168(f)(8) as in effect prior to amendment by the Tax Equity and
Responsibility Act of 1982; (x) has had any permanent establishments in any
foreign country as defined in any applicable treaty or convention between the
United States and such foreign countries; (xi) is a party to any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes; (xii) has made or is bound by any
election under Code ss.197; (xiii) has any debt the interest on which is tax
exempt under existing or prior law; (xiv) has any property that is tax exempt
use property within the meaning of Code ss.168(h); (xv) is bound by any closing
agreement within the meaning of Code ss. 7121;
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and (xvi) has agreed to or is required to make any adjustments under Code
ss.481(a) or any similar provision of state, local or foreign law.
(h) The transaction contemplated by this Agreement is not
subject to the tax withholding provisions of Code ss.3406 or any similar
provision of law.
(i) There are no Rulings from, or requests for Rulings
with, any Tax Authority addressed to the Shareholders (with respect to the
Companies) or any of the Companies that are, or if issued would be, binding on
any of the Companies.
(j) Schedule 5.12(i) sets forth the following information
with respect to each of the Companies as of the most recent practicable date as
well as on an estimated pro forma basis as of the Effective Date giving effect
to the consummation of the transaction contemplated by this Agreement: (i) the
basis of each of the Companies in its assets; (ii) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax credit, or excess charitable contribution allocable to each of such
Companies; (iii) excess loss accounts in the Affiliated Group or Groups of which
any of the Companies is a member; (iv) the amount of any deferred gain or loss
allocable to any of the Companies arising out of any Deferred Intercompany
Transaction; (v) the amount of any gain or loss allocable to any of the
Companies arising out of any Deferred Intercompany Transaction or Intercompany
Transaction; and (vi) all material federal income tax elections for each of the
Companies. None of the Companies has a net operating loss or other tax
attributes presently subject to limitation under Code ss.ss.382, 383, or 384 or
the underlying Treasury Regulations.
5.13 Absence of Changes or Events. Except as disclosed on
Schedule 5.13 to this Agreement or as disclosed in the Financial Statements,
each of MIS, Simco and Autoflex has operated its business only in the ordinary
course and, since November 30, 1998:
(a) None of MIS, Simco or Autoflex has made any change in
its Articles of Incorporation or Bylaws; adjusted, split, combined or
reclassified any capital stock or securities of any of MIS, Simco or Autoflex;
entered into any arrangement or contract with respect to the issuing of any
shares of the capital stock or securities of any of MIS, Simco or Autoflex in a
public offering; or made any other changes in the capital structure of any of
MIS, Simco or Autoflex.
(b) None of MIS, Simco or Autoflex has borrowed any
amount or incurred, assumed, become subject to or guaranteed any liability,
whether absolute or contingent, other than trade payables incurred in the
ordinary course of business.
(c) None of MIS, Simco or Autoflex has made any material
changes in its practices or methods of accounting.
(d) None of MIS, Simco or Autoflex has made any material
change in or introduced any pension, retirement, profit sharing or bonus
arrangement or other employee welfare or benefit arrangement or other benefit
plan.
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(e) None of MIS, Simco or Autoflex has suffered any
material adverse change in its business, prospects, operations, operating
results, properties, assets, liabilities or condition (financial or otherwise).
(f) None of MIS, Simco or Autoflex has suffered any event
or condition of any character which, either individually or in the aggregate, is
reasonably likely to materially adversely affect its business, prospects,
operations, operating results, properties, assets, liabilities or condition
(financial or otherwise).
(g) None of MIS, Simco or Autoflex has suffered any
damage, destruction or loss, whether covered by insurance or not, which is
reasonably likely to materially adversely affect its business, prospects,
operations, operating results, properties, assets, liabilities or condition
(financial or otherwise).
(h) None of MIS, Simco or Autoflex has declared, set
aside, made or paid any dividend, distribution or payment, whether in cash,
stock, property or any combination thereof with respect to any of its securities
or MIS Shares, Simco Shares or Autoflex Shares, nor has it reclassified any of
such securities.
(i) None of MIS, Simco or Autoflex has instituted any
change with respect to the supervisory personnel of any of MIS, Simco or
Autoflex. Each of MIS, Simco and Autoflex has used its reasonable efforts to
preserve intact all of its business organizations and to retain the services of
its officers and key employees.
(j) None of MIS, Simco or Autoflex has increased any
salary, wages, compensation or fringe or other benefits payable or to become
payable to its officers, directors or employees, except for any such increases
that are required by applicable minimum wage laws.
(k) Each of MIS, Simco and Autoflex has exercised its
commercially reasonable efforts to maintain the good will of suppliers,
customers and employees of, and others having material business relationships
with, MIS, Simco and Autoflex.
(l) The Boards of Directors of each of MIS and Simco have
not adopted any resolution giving to any holder of MIS Shares or Simco Shares
appraisal, dissenters' or similar rights.
(m) None of MIS, Simco or Autoflex has made any tax
election nor has it settled or compromised any income or other tax liability or
refund.
(n) None of MIS, Simco or Autoflex has paid, discharged
or satisfied any claim, liability or obligation, whether absolute, accrued,
asserted or unasserted, contingent or otherwise, other than the payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practices or in accordance with their terms, of liabilities reflected or
reserved against in the Financial Statements and trade payables incurred since
the date of the most recent
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Financial Statement.
(o) None of MIS, Simco or Autoflex has entered into,
amended, modified or terminated any material agreement, commitment or
transaction.
(p) None of MIS, Simco or Autoflex has made any provision
for material price discounts or other special considerations in respect of its
goods or services not in the ordinary course of business consistent with past
practices.
(q) None of MIS, Simco or Autoflex has sold, transferred,
leased, mortgaged, pledged, subjected to any lien or otherwise disposed of any
of its properties or assets, real, personal or mixed, tangible or intangible,
except in the ordinary course of business consistent with past practices.
(r) None of MIS, Simco or Autoflex has entered into any
agreement or understanding to do any of the foregoing.
5.14 Environmental and Occupational Matters.
(a) Except as disclosed on Schedule 5.14 to this Agreement, to
the best knowledge of the Shareholders, MIS, Simco and Autoflex, there are no
Hazardous Materials or Underground Storage Tanks present at any Property other
than those quantities of such Hazardous Materials as occur naturally in the
native and uncontaminated natural soils and waters at such Property. To the best
knowledge of the Shareholders, MIS, Simco and Autoflex, there exists no
condition at any Property that would require investigations, studies, sampling,
testing, removal, response, remediation or clean-up with respect to any
Hazardous Materials pursuant to any Environmental Laws. None of MIS, Simco or
Autoflex has generated, used, stored, treated, transferred, transported,
processed, manufactured, refined, handled, produced or disposed of Hazardous
Materials at, or affecting such Property in any manner which violates any
Environmental Law. None of MIS, Simco or Autoflex has: (1) caused or permitted
any Property to be used to generate, manufacture, refine, transport, treat,
dispose of, transfer, produce or process Hazardous Materials in violation of any
Environmental Laws or in a manner which gives rise to an investigatory, remedial
or other duty under any Environmental Laws, or (2) caused or permitted any
Release or threatened Release of Hazardous Materials at, from or affecting any
Property, whether by any of MIS, Simco, Autoflex, any of their tenants,
sub-tenants or occupants of any Property or any other person or entity or their
respective contractors, agents, employees or invitees, in violation of
Environmental Laws or which gives rise to any investigatory, remedial or other
duty under Environmental Laws.
(b) None of MIS, Simco or Autoflex has ever received any
notice, claim or allegation of any violation of, or of any duty to investigate
or remediate any condition under, any Environmental Law at any Property.
5.15 Subsidiaries Except for the fact that MIS owns all of
the issued and outstanding capital stock of Autoflex, none of MIS, Simco or
Autoflex has or has had any equity interest, or right to acquire any equity
interest, whether direct or indirect, in any corporation, joint
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venture, partnership, limited liability company, firm or other entity.
5.16 Capitalization.
(a) The MIS Shares, Simco Shares and Autoflex Shares (1)
constitute all of the issued and outstanding capital stock of each such
corporation and (2) are validly authorized and issued, fully paid, nonassessable
and free of preemptive rights.
(b) Schedule 5.16 to this Agreement is a correct and
complete description of the capitalization of each of MIS, Simco and Autoflex.
(c) One or more of the Shareholders own all of the
Shares, in each case free and clear of any lien, claim, security interest,
pledge, charge, encumbrance or restriction of any kind.
(d) There are no (1) options, warrants or other rights,
agreements, arrangements or commitments of any character to which any of MIS,
Simco or Autoflex is a party relating to the issued or unissued capital stock of
MIS, Simco or Autoflex or obligating MIS, Simco or Autoflex to grant, issue or
sell any shares of stock or other equity interest in MIS, Simco or Autoflex; (2)
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any person is or may be entitled to receive any
payment based on revenues or earnings of MIS, Simco or Autoflex; (3) voting
trusts, proxies or other agreements or understandings to which MIS, Simco or
Autoflex is a party or by which MIS, Simco or Autoflex is bound with respect to
the voting of shares of MIS, Simco or Autoflex; or (4) preemptive rights or any
agreements granting any Shareholders any other anti-dilution protection.
5.17 Bank Accounts. Schedule 5.17 to this Agreement is a
full and complete list of all of bank accounts and the names of the persons
authorized to draw thereon of each of MIS, Simco and Autoflex.
5.18 Guarantees. Except as disclosed on Schedule 5.18 to
this Agreement, none of MIS, Simco and Autoflex has guaranteed any debt or
obligation of any third party and none of the debts or obligations of MIS, Simco
or Autoflex is guaranteed by any third parties.
5.19 Related Parties. Schedule 5.19 to this Agreement is a
true and complete list and brief description of all contracts and agreements or
other transactions entered into or agreed to within the past three years
(including, without limitation, all oral contracts and outstanding bids or
offers for the foregoing) involving amounts in excess of $25,000, and all
currently effective contracts and other transactions to which any of MIS, Simco
or Autoflex is or was a party, with respect to which any officer, director,
shareholder, Shareholder or, to the best knowledge of the Shareholders, MIS,
Simco and Autoflex, any employee of any of MIS, Simco or Autoflex, or any person
related to any of the foregoing by blood or marriage, is a party. True and
complete copies of all such contracts and all documentation relating to such
transactions, including, without limitation, all amendments thereto and
modifications thereof, have been delivered to Compuware prior to the date of
this Agreement. No Shareholders, directors, officers and/or employees of MIS,
Simco and/or Autoflex is indebted to MIS, Simco and/or Autoflex in excess of
$25,000 for any one person or, in excess of $100,000 in the aggregate for all
persons.
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5.20 Accounts Receivable. The accounts receivable which are
shown on Schedule 5.20 to this Agreement arose in the ordinary course of
business, are valid and collectible in the ordinary course (which, unless
otherwise set forth with respect to a particular account on Schedule 5.20, is no
more than 30 days from invoice date), subject to no counterclaims or setoffs, at
the aggregate recorded amount thereof as shown on the records of MIS, Simco and
Autoflex, as appropriate.
5.21 Brokers. Except as set forth on Schedule 5.21 to this
Agreement:
(a) None of MIS, Simco and Autoflex, nor any Shareholder (1)
has dealt with any broker or finder in connection with this transaction; (2) has
caused or created any liability to any broker or finder in connection with this
transaction; or (3) is aware of any claim from any third party that it is
entitled to brokerage, finders or other similar fees in connection with this
transaction.
(b) None of MIS, Simco and Autoflex nor any Shareholder is
aware of any broker or finder which was instrumental or had any part in bringing
about this transaction.
5.22 Year 2000 Compliance. Except as disclosed in Schedule
5.22 to this Agreement, the software products currently offered for license by
any of MIS, Simco and Autoflex or previously licensed by any of MIS, Simco and
Autoflex to customers are Year 2000 Compliant. For purposes of this Agreement,
"Year 2000 Compliant" will mean that neither the performance nor the
functionality of such products is affected by dates prior to, during and after
the Year 2000. Year 2000 Compliant will include, but will not be limited to, the
following requirements: (a) no value for a current date will cause any material
interruption in operation of any such product; (b) date-based functionality must
perform consistently for dates prior to, during and after Year 2000; and (c) the
century in any date must be specified either explicitly or by unambiguous
algorithms or interfacing rules in all interfaces and data storage.
5.23 Disclosure. No statement, representation or warranty made
by any Shareholder or MIS, Simco or Autoflex in this Agreement or any Related
Agreement, and none of the schedules, attachments or exhibits to this Agreement
or any Related Agreement, contains any untrue statement of any material fact or
omits a material fact necessary to make the statements contained in this
Agreement, the Related Agreements or such schedules, attachments or exhibits, in
light of the circumstances in which they were made, not misleading. Except for
the effects of general economic conditions and general industry conditions, to
the best knowledge of the Shareholders, MIS, Simco and Autoflex, there is no
fact or circumstance which will materially adversely affect the business,
prospects, operations, operating results, properties, assets, liabilities, or
financial condition of any MIS, Simco and Autoflex, which fact or circumstance
has not been set forth in this Agreement or the Schedules hereto. To the best
knowledge of the Shareholders, MIS, Simco and Autoflex, MIS, Simco and Autoflex
have disclosed to Compuware. all transactions, events, facts and circumstances
relevant to the Mergers qualifying for the accounting and tax treatment set
forth in Sections 8.11 and 8.9 below.
6. Additional Representations and Warranties of Shareholders. In
addition to the
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representations and warranties set forth in Section 5 above, each Shareholder
represents and warrants to Compuware as follows, as of the date of this
Agreement and as of the Closing Date:
(a) Upon the execution and delivery of this Agreement and each
Related Agreement to which such Shareholder is a party, this Agreement and each
such Related Agreement will constitute the legal, valid and binding obligation
of such Shareholder, enforceable against such Shareholder in accordance with
their respective terms, subject to judicial discretion regarding specific
performance or other equitable remedies, and except as may be limited by
bankruptcy, reorganization, insolvency, moratorium or other laws relating to or
affecting the enforcement of creditors' rights and remedies generally.
(b) Such Shareholder's execution, delivery and performance of
this Agreement and the Related Agreements to which such Shareholder is a party
will not (1) constitute a breach or violation of (A) any Law or (B) any material
agreement, indenture, deed of trust, mortgage loan agreement or other material
instrument to which such Shareholder is a party or is bound or affected; (2)
constitute a violation of any order, judgment or decree to which such
Shareholder is a party or by which such Shareholder is bound; or (3) result in
the acceleration of any material debt owed by such Shareholder.
(c) Such Shareholder understands and agrees that the shares of
Compuware Stock to be received by such Shareholder upon conversion of such
Shareholder's shares of MIS Shares or Simco Shares in the Mergers have not been
registered under the Securities Act and other than pursuant to its obligations
under the Registration Rights Agreement, Compuware is not nor will it be under
any obligation to register such shares of Compuware Stock under the Securities
Act. Such Shareholder further understands and agrees that such shares of
Compuware Stock will constitute "restricted securities" within the meaning of
Rule 144 promulgated under the Securities Act and that, as such, such shares of
Compuware Stock must be held indefinitely unless they are subsequently
registered under the Securities Act or unless an exemption from the registration
requirements thereof is available. Such Shareholder is acquiring the shares of
Compuware Stock to be received by such Shareholder upon conversion of such
Shareholder's shares of stock in the Merger for such Shareholder's own account
for investment and not for, with a view to or in connection with any resale or
distribution thereof that would be in violation of the registration requirements
of the securities laws of the United States of America or any state thereof.
(d) Except as set forth in this Agreement or in the schedules
attached hereto, there are no obligations of MIS, Simco or Autoflex to any of
the Shareholders, and by approval of the Mergers, each Shareholder releases MIS,
Simco, Autoflex, the Surviving Corporations and Compuware from any such claim,
obligation or liability.
(e) The MIS Shares, Simco Shares and Autoflex Shares (1)
constitute all of the issued and outstanding capital stock of each such
corporation and (2) are validly authorized and issued, fully paid, nonassessable
and free of preemptive rights.
(f) Schedule 5.16 to this Agreement is a correct and complete
description of the capitalization of each of MIS, Simco, Autoflex.
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(g) One or more of the Shareholders own all of the Shares free
and clear of any lien, claim, security interest, pledge, charge, encumbrance or
restriction of any kind.
7. Compuware's Representations and Warranties. Compuware represents and
warrants to each of MIS, Simco and the Shareholders as follows, as of the date
of this Agreement and as of the Closing Date:
7.1 Organization; Power and Authority. Compuware is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Michigan, and has the corporate power and authority to
enter into this Agreement and the Related Agreements and to consummate the
transactions contemplated by this Agreement and the Related Agreements.
7.2 Authorization; Due Execution; No Conflicts.
(a) This Agreement and each Related Agreement has been duly
authorized by all necessary corporate action on the part of Compuware. Upon the
execution and delivery by Compuware of this Agreement and the Related
Agreements, this Agreement and the Related Agreements will each constitute the
legal, valid and binding obligation of Compuware, enforceable against Compuware
in accordance with their respective terms.
(b) Compuware's execution, delivery and performance of this
Agreement and the Related Agreements will not (1) constitute a breach or
violation of (A) Compuware's Articles of Incorporation or Bylaws, (B) any Law or
(C) any material agreement, indenture, deed of trust, mortgage, loan agreement
or other material instrument to which Compuware is a party or by which Compuware
is bound; or (2) constitute a violation of any order, judgment or decree to
which Compuware is a party or by which any of Compuware's assets are bound or
affected.
7.3 SEC Statements, Reports and Documents. Other than the
proxy statement relating to Compuware's meeting of stockholders held August 25,
1998, Compuware has timely filed all required forms, reports, statements and
documents with the Securities and Exchange Commission ("SEC") since the date
Compuware became a reporting company under the Securities Exchange Act of 1934,
as amended ("Exchange Act"). Compuware heretofore has delivered or made
available to counsel for the Shareholders: (a) its Annual Reports on Form 10-K
for the fiscal years ended March 31, 1996, 1997 and 1998, respectively; (b) its
Quarterly Reports on Form 10-Q for the fiscal quarters ended, June 30, 1998,
September 30, 1998 and December 31, 1998; (c) all proxy statements relating to
Compuware's meetings of stockholders (whether annual or special) held since
▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) all other forms, reports, statements and documents filed or
required to be filed by it with the SEC since March 31, 1998, and (e) all
amendments and supplements to all such reports and registration statements filed
by Compuware with the SEC (the documents referred to in clauses (a), (b), (c),
(d) and (e) being hereinafter referred to as the "Compuware Reports"). As of
their respective dates, other than the proxy statement relating to Compuware's
meeting of stockholders held August 25, 1998, the Compuware Reports complied in
all material respects with all applicable requirements of the Exchange Act and
the rules and regulations promulgated thereunder, and did not contain any 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
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made, not misleading. The financial statements (including any related notes) of
Compuware included in the Compuware Reports were prepared in accordance with
GAAP (except as otherwise stated in the financial statements), and present
fairly the consolidated financial position, results of operations and changes in
financial position of Compuware and its consolidated subsidiaries as of the
dates and for the periods indicated, subject, in the case of unaudited interim
consolidated financial statements, to (i) the absence of certain notes thereto
and (ii) normal year-end audit adjustments which are not in the aggregate
material. The consolidated balance sheet of Compuware and its subsidiaries as at
December 31, 1998, including the notes thereto, is hereinafter referred to as
the "Compuware Balance Sheet." Compuware has heretofore furnished or made
available to MIS a correct and complete copy of any amendments or modifications,
which have not yet been filed with the SEC but which are required to be filed,
to agreements, documents or other instruments which previously had been filed by
Compuware with the SEC pursuant to the Securities Act or the Exchange Act.
7.4 Brokers. Except as set forth on Schedule 7.4 to this
Agreement:
(a) Compuware (1) has not dealt with any broker or finder in
connection with this transaction; (2) has not caused or created any liability to
any broker or finder in connection with this transaction; and (3) is not aware
of any claim from any third party that it is entitled to brokerage, finders or
other similar fees in connection with this transaction.
(b) Compuware is not aware of any broker or finder which was
instrumental or had any part in bringing about this transaction.
7.5 No Material Adverse Changes. Since December 31, 1998,
Compuware has not suffered any material adverse change in its business,
prospects, operations, operating results, properties, assets, liabilities or
condition (financial or otherwise).
7.6 Shares of Compuware Stock. The issuance of shares of
Compuware Stock as provided for in Sections 3.1 and 3.2 has been duly authorized
and, upon receipt of the consideration therefor as provided herein, will be
validly issued, fully paid and non-assessable.
8. Covenants Pending the Closing.
8.1 Conduct Through the Closing Date. From and after the date
of this Agreement and prior to the Closing Date, each of MIS, Simco, Autoflex
and the Shareholders will (except as otherwise consented to in writing by
Compuware which consent shall not be unreasonably withheld, conditioned or
delayed):
(a) Operate their respective businesses in the ordinary course
as historically conducted.
(b) Not enter into any transaction, take any action, or fail
to take any action, which would result in, or could reasonably be expected to
result in, any of the representations, warranties, disclosures or agreements of
any of the Shareholders, MIS, Simco or Autoflex in this Agreement or the Related
Agreements or the exhibits or schedules to this Agreement and the
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Related Agreements or in connection with the consummation of the transactions
contemplated by this Agreement or the Related Agreements, to not be true and
complete immediately after the occurrence of such transaction. Without limiting
the obligations of MIS, Simco, Autoflex and the Shareholders under this Section
8.1(b), each of MIS, Simco and Autoflex will: (1) maintain such corporation's
assets and properties in good operating condition, subject to ordinary wear and
tear; (2) maintain such corporation's present insurance in force; and (3) comply
in all material respects with the provisions of all agreements, leases, laws and
regulations applicable to such corporation or its assets.
(c) Not allow such corporation to enter into any agreements,
contracts, purchases or sales other than in the ordinary course of its business
without the written consent of Compuware, including any agreements that would
dispose of or encumber any of any such corporation's assets other than in the
ordinary course of business.
(d) Use commercially reasonable efforts to preserve its
present business organization and goodwill intact, including the present
business relationships and goodwill with customers, suppliers and others having
material business dealings with each such corporation.
(e) Cause each such corporation to pay all costs, expenses,
liabilities and obligations of such corporation in the ordinary course when due,
regardless of whether any such items are to be reimbursed by Compuware under
this Agreement.
(f) Not make any material Tax election, file any material Tax
Return, settle or compromise any material Tax liability or agree to an extension
of a statute of limitation with respect to any material amount of Tax (other
than extensions for filing Tax Returns) except to the extent that the amount of
any such Tax, settlement or compromise has been reserved for in the Financial
Statements for periods prior to the date of this Agreement.
(g) Except as provided by Section 8.1(f) above, prepare and
file on or before the due date therefor all Tax Returns required to be filed by
the Companies (except for any Tax Return for which an extension has been
properly and timely granted) on or before the Effective Date, and pay all Taxes
(including estimated Taxes) due on such Tax Returns (or due with respect to Tax
Returns for which an extension has been properly and timely granted) or which
are otherwise required to be paid at any time prior to or during such period.
(h) To the extent the Shareholders or the Companies receive
notice of the commencement or scheduling of any Tax audit, the assessment of any
Tax, the issuance of any notice of Tax due or any ▇▇▇▇ for collection of any Tax
due for Taxes, or the commencement or scheduling of any other administrative or
judicial proceeding with respect to the determination, assessment or collection
of any Tax for any of the Companies, provide prompt written notice to Compuware
of such matter, setting forth information (to the extent known) describing any
asserted Tax liability in reasonable detail and including copies of any notice
or other documentation received from the applicable Tax Authority with respect
to such matter.
8.2 Approvals and Consents. Each of MIS, Simco, Autoflex and
Compuware will use commercially reasonable efforts to obtain, in writing, all
necessary governmental and third party approvals and consents required in order
to authorize and approve this Agreement and
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the Related Agreements and to consummate the Mergers pursuant to this Agreement.
8.3 Advice of Changes. Between the date of this Agreement and
the Closing Date, each of MIS, Simco and Autoflex will promptly notify Compuware
in writing of any fact which, if existing or known at the date of this
Agreement, would have been required to be set forth in this Agreement or
disclosed pursuant to this Agreement or a Related Agreement or which would
affect or change any of the information set forth in the exhibits or schedules
of this Agreement or any Related Agreement.
8.4 Notice of Litigation Compuware, on the one hand, and each
of MIS, Simco, Autoflex and the Shareholders, on the other hand, will promptly
notify the other in writing if it (or they) receives any notice, or otherwise
becomes aware, of any action or proceeding instituted or threatened before any
court or governmental agency by any third party to restrain or prohibit, or
obtain substantial damages in respect of, this Agreement or any Related
Agreement or the consummation of the transactions contemplated by this Agreement
or the Related Agreements.
8.5 Access to Properties and Records; Inspection. From the
date of this Agreement through the Closing Date, Compuware and its counsel,
accountants and other representatives will be given full access during normal
business hours to all of the properties, personnel, financial and operating
data, books, tax returns, contracts, commitments and records of each of MIS,
Simco and Autoflex, including such access as is needed to conduct a physical
inspection of the properties of each of MIS, Simco and Autoflex satisfactory to
Compuware.
8.6 Supplemental Information and Documents. From time to time
prior to the Effective Time of the Merger, MIS, Simco, Autoflex and the
Shareholders will deliver to Compuware supplemental or other information and
documents, including, without limitation, concerning events, facts or
circumstances subsequent to the date of this Agreement which could render any
statement, representation, warranty, covenant or other agreement in any of the
Agreement or any information contained in any exhibit or schedule inaccurate or
incomplete or which documents would have been required to have been delivered if
existing prior to the date of this Agreement. The obligations of MIS, Simco and
Autoflex pursuant to this Section 8.6 will not limit or affect any right or
remedy Compuware might otherwise have under the Agreement or otherwise with
respect to any such supplemental or other information or documents. MIS will
cooperate, and will cause its employees to cooperate, in all reasonable
respects, with Compuware and all of its representatives with respect to making
available all information reasonably requested by Compuware and its
representatives.
8.7 Affiliate Agreements. Set forth on Schedule 8.7 to this
Agreement is a list of those persons who are, in Compuware's or MIS's reasonable
judgment, as the case may be, Affiliates of Compuware or MIS, as the case may
be. Each of Compuware and MIS will provide the other such information and
documents as the other reasonably requests for purposes of reviewing such list.
MIS and Simco will cause to be delivered to Compuware prior to the Closing from
each of the Affiliates of MIS and Simco, respectively, an executed MIS Affiliate
Agreement and Simco Affiliate Agreement in the form attached hereto as Exhibit J
(each an "MIS Affiliate Agreement" or Simco Affiliate Agreement, collectively,
the "MIS/Simco Affiliate Agreements"). Compuware will cause to be delivered to
MIS prior to the Closing from each of
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the Affiliates of Compuware, an executed Affiliate Agreement in the form
attached hereto as Exhibit G (each a "Compuware Affiliate Agreement",
collectively, the "Compuware Affiliate Agreements"). Compuware will be entitled
to place appropriate legends on the certificates evidencing any shares of
Compuware Stock to be received by such Affiliates of MIS pursuant to the terms
of this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for Compuware Stock, consistent with the terms of the MIS/Simco
Affiliate Agreements.
8.8 Blue Sky Laws. Compuware will take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of shares of Compuware Stock pursuant
hereto and the Transactions.
8.9 Tax-Free Reorganization. Compuware and MIS will each use
all reasonable efforts to cause the Mergers to be treated as tax-free
reorganizations within the meaning of Section 368 of the Code. Compuware does
not have any present plan or intent to (a) sell or otherwise dispose of the
stock of the Surviving Corporations except for (i) transfers of stock to
corporations controlled (within the meaning of Section 368(c) of the Code) by
Compuware or (ii) other transfers which would not disqualify the Mergers as
reorganizations within the meaning of Section 368(a) of the Code, (b) reacquire
any of its stock issued in connection with the Mergers, (c) cause the Surviving
Corporations to issue shares of stock of the Surviving Corporations that would
result in Compuware losing control (within the meaning of Section 368(c) of the
Code) of the Surviving Corporations, or (d) discontinue both (i) the historic
businesses of the Companies and (ii) use in a business of a significant portion
of the historic business assets of the Companies. Notwithstanding the foregoing,
Compuware shall not be responsible for any adverse Tax effect (on the Mergers'
qualification as a tax free reorganization or otherwise) from the payment of
expenses under Section 8.19 below whether such adverse effect results from such
payment alone or from such payment together with any other act of any party to
this Agreement before, on or after the Closing.
8.10 Tax Matters.
(a) The Shareholders shall be responsible for causing the
Companies to prepare and file any Tax Returns of the Companies that are due on
or before the Effective Date. Compuware shall have a reasonable opportunity to
review and comment on all such Tax Returns and amendments thereto prior to
filing and the Shareholders shall make such revisions to such Tax Returns as are
reasonably requested by Compuware. Compuware will be responsible for the
preparation and filing of all Tax Returns of any of MIS, Simco and Autoflex that
are due after the Effective Date.
(b) The parties will cooperate in all reasonable respects with
each other in a timely manner in the preparation and filing of any Tax Returns,
payment of any Taxes in accordance with this Agreement, and the conduct of any
audit or other proceeding. Each party will execute and deliver such powers of
attorney and make available such other documents as are necessary to carry out
the intent of this Section 8.10(b). Each party agrees to notify the other party
of any audit adjustments that do not result in tax liability but can reasonably
be expected to affect Tax Returns of the other party.
(c) The parties shall (i) retain records, documents,
accounting data and other information (including computer data) necessary for
the preparation and filing of all Tax Returns or the completion of the audit of
such returns for the applicable period of limitations on
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assessment of Taxes covered by such returns and (ii) give to the other
reasonable access during normal business hours to such records, documents,
accounting data and other information (including computer data), for the purpose
of the review or audit of such returns to the extent relevant to an obligation
or liability of a party under this Agreement. Compuware, on the one hand, and
the Shareholders, on the other hand shall not destroy or otherwise dispose of
any such records without first providing the other party with a reasonable
opportunity to review and copy the same.
(d) All tax sharing agreements or similar arrangements with
respect to or involving the Companies shall be terminated with respect to the
Companies prior to the Effective Date and, after the Effective Date, the
Companies shall not be bound thereby or have any liability thereunder for
amounts due in respect of periods prior to, on or after the Effective Date.
(e) The Shareholders and the Companies shall, upon request,
furnish Compuware and its affiliates with an affidavit, stating, under penalty
of perjury, the transferor's United States taxpayer identification number and
that the transferor is not a foreign person pursuant to Code ss.1445(b)(2).
(f) Upon request, each of the parties will use their
reasonable efforts to obtain any certificate or other document from any Tax
Authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the matters contemplated by this Agreement or the transaction
contemplated by this Agreement).
(g) Upon request, each of the parties will provide the other
with all information that either party may be required to report pursuant to
Code ss.6043 and the underlying Treasury Regulations.
8.11 Pooling Accounting. Compuware and each of MIS and Simco
will each use its reasonable efforts to cause the business combination to be
effected by the Mergers to be accounted for as a pooling of interests under
GAAP. Each of Compuware, MIS and Simco will use its reasonable efforts to cause
its Affiliates not to take any action that would adversely affect the ability of
Compuware to account for the business combination to be effected by the Mergers
as a pooling of interests under GAAP.
8.12 Filings. The parties will prepare and give or make any
necessary notices or filings under any other federal, state, local, foreign or
other laws, rules and regulations which may be required in connection with this
Agreement and all of the Transactions.
8.13 Benefit Plans. It is the intention of the parties that
benefits then currently available to other Compuware employees will be made
available to the former employees of MIS, Simco and Autoflex when reasonable and
practicable.
8.14 Restrictions on Resale. Except as provided in the
MIS/Simco Affiliate Agreements, each Affiliate, identified in Schedule 8.7 to
this Agreement, will not sell, transfer, pledge or otherwise dispose of any
shares of Compuware Stock prior to the date on which financial results covering
at least thirty (30) days of post-Closing combined operations of Compuware and
MIS and Simco have been published by Compuware. Compuware shall publish
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financial results covering at least thirty (30) days of post-Closing combined
operations of Compuware and MIS and Simco as soon as practicable, but, in any
event, not later than within the time period required for the timely publication
of such financial results as required under the Exchange Act.
8.15 Non-Disclosure Agreement. MIS and Compuware agree that
each party's non-disclosure obligations contained in any non-disclosure
agreement signed by MIS and Compuware will remain in full force and effect in
accordance with the terms of the same.
8.16. Registration Agreement. At the Closing, Compuware and
the Shareholders will enter into a Registration Rights Agreement in the form of
Exhibit F.
8.17 Escrow Agreement. At the Effective Time, Compuware, the
Shareholders and the Representative shall enter into the Escrow Agreement with
the Escrow Agent.
8.18 Other Actions. Compuware, on the one hand, and MIS,
Simco, Autoflex and the Shareholders, on the other hand, will take all such
other and further actions, consistent with this Agreement and the Related
Agreements, as the other may reasonably request.
8.19 Expenses. Notwithstanding anything to the contrary
contained in Section 12.11 or any Schedule, the Surviving Corporation shall pay,
or cause to be paid: (a) up to (but not in excess of) $200,000 in the aggregate
of the fees and expenses of Jaffe, Raitt, Heuer & ▇▇▇▇▇, P.C., ▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, brokers, financial advisors, attorneys and accountants incurred by MIS and
Simco in connection with the transactions contemplated by this Agreement, and
the negotiation and documentation thereof, and (b) those fees and expenses of R.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇▇▇▇, Holland & ▇▇▇▇▇ and Standpipe Studios, LLC, as
disclosed in Schedules 5.6, 5.11, 5.13 and 5.19, respectively. Any other fees
and expenses of any brokers, financial advisors, attorneys and accountants
incurred by MIS and Simco in connection with the transactions contemplated by
this Agreement and the negotiation and documentation thereof shall be paid, or
caused to be paid, by the Shareholders.
9. Conditions Precedent to the Parties' Obligations to Close.
9.1 Conditions Precedent of Compuware. Compuware's obligations
under this Agreement are subject to the satisfaction at or before the Closing
Date of each of the following conditions (the fulfillment of any of which may be
waived in writing by Compuware):
(a) All terms, covenants and conditions of this Agreement and
the Related Agreements to be complied with or performed by MIS, Simco, Autoflex
or the Shareholders prior to or on the Closing Date will have been fully
complied with and performed by MIS, Simco, Autoflex or the Shareholders (as
applicable), including MIS's, Simco's Autoflex's and the Shareholders' timely
taking of all actions and delivery of all documents required to be taken and
delivered by them under this Agreement and the Related Agreements.
(b) All representations, warranties, disclosures and
statements of each of MIS, Simco, Autoflex and the Shareholders contained in
this Agreement and the Related Agreements will be true and complete in all
material respects as of the date of this Agreement and the Closing Date. Any
amendments to the exhibits and schedules to this Agreement and the Related
Agreements which are proposed to be delivered after the date of this Agreement
must be
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satisfactory to Compuware, in its sole discretion.
(c) There will not have been any material adverse change in
the financial condition, business or future business prospects of MIS, Simco or
Autoflex.
(d) Compuware will have received from Jaffe, Raitt, Heuer &
▇▇▇▇▇, an opinion substantially in the form of Exhibit I.
(e) Compuware will have received a favorable confirmation from
Deloitte & Touche, accountants to Compuware, of the accounting treatment of the
Merger as contemplated in Section 8.11.
(f) MIS, Simco and Autoflex will have received a favorable
confirmation from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, accountants to MIS, Simco and Autoflex,
that no event or transaction has occurred with respect to MIS, Simco and
Autoflex, and there are no facts or circumstances with respect to MIS, Simco and
Autoflex, which would prevent the Merger from meeting the accounting standards
for a pooling of interests.
(g) All courts of law, Governmental Entities and other third
parties, the consent, authorization or approval of which is necessary under any
applicable law, rule, order or regulation or under any contract, commitment or
other agreement of MIS, Simco or Autoflex, for the consummation of the
Transactions, will have consented to, authorized, permitted or approved such
Transactions, including the expiration or early termination of any applicable
waiting period under the HSR Act, except where the failure to obtain such
consent, authorization or approval will not have a material adverse effect on
MIS or Simco.
(i) MIS, Simco and Autoflex shall each have furnished
Compuware with a certificate of its officers in the form of Exhibit H.
9.2 Conditions Precedent of MIS, Simco, Autoflex and the
Shareholders. The obligations of MIS, Simco, Autoflex and the Shareholders under
this Agreement are subject to the satisfaction at, or prior to, the Closing Date
of the following conditions precedent (the fulfillment of any of which may be
waived in writing by MIS):
(a) All terms, covenants and conditions of this Agreement and
the Related Agreements to be complied with or performed by Compuware prior to or
on the Closing Date will have been fully complied with and performed by
Compuware, including Compuware's timely taking of all actions and delivery of
all documents required to be taken and delivered by it under this Agreement and
the Related Agreements.
(b) The representations, warranties, disclosures and
statements of Compuware contained in this Agreement and the Related Agreements
will be true and complete as of the date of this Agreement and on the Closing
Date.
(c) MIS and Simco will have received from the General Counsel
of Compuware, an opinion in the form of Exhibit E attached hereto.
(d) Compuware will have furnished MIS and Simco with a
certificate of its
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officers in the form attached hereto as Exhibit D.
9.3 Mutual Condition Precedent. Unless waived in writing by
each party, it will be a further condition to the consummation of this
transaction that no litigation will have been commenced or threatened to
challenge the right of any party to consummate the transactions contemplated
under this Agreement and the Related Agreements.
10. Default; Termination of Agreement.
10.1 Default. Compuware's, on the one hand, and MIS's,
Simco's, Autoflex's and the Shareholders', on the other hand, obligations under
this Agreement are of a special and unique character and Compuware's, on the one
hand, or MIS's, Simco's, Autoflex's or the Shareholder's, on the other hand,
failure to perform its obligations will cause irreparable injury to the other
party, the amount of which would be extremely difficult, if not impossible, to
estimate or determine and which may not be adequately compensable by monetary
damages alone. Therefore, the injured party will be entitled, as a matter of
course, to an injunction, restraining order, writ of mandamus or other equitable
relief from any court of competent jurisdiction, including specific performance,
restraining any violation or threatened violation of any term of this Agreement
or any Related Agreement, or requiring compliance with or performance of any
obligation under this Agreement or such Related Agreement, by the violating
party or parties, or such other persons as the court may order. The parties'
rights under this Section 10.1 are cumulative and are in addition to the rights
and remedies otherwise available to them under Section 10.2 below, any other
provision of this Agreement and any other agreement or applicable law.
10.2 Termination. This Agreement may be terminated at any time
before the Closing as follows:
(a) At the election of Compuware, by notice to the
Shareholders, at any time if any of Compuware's conditions precedent to Closing,
as specified in Section 9.1 or 9.3 above, has not been satisfied, other than as
a result of Compuware's breach of this Agreement, as of the Closing Date or has
at any time become incapable of being satisfied by the Closing Date.
(b) At the election of MIS and Simco, by notice to Compuware,
if any of conditions precedent to Closing, as specified in Section 9.2 or 9.3
above, has not been satisfied, other than as a result of MIS's, Simco's,
Autoflex's or the Shareholders' breach of this Agreement, as of the Closing Date
or has at any time become incapable of being satisfied, by the Closing Date.
(c) If this Agreement terminates in accordance with this
Section 10.2, it will be null and void and have no further force or effect. Any
termination will not affect the terminating party's rights arising from any
breach or misrepresentation of any non-terminating parties. The parties' rights
under this Section 10.2 are cumulative and are in addition to the other rights
and remedies available to the parties under Section 10.1 above, any other
provision of this Agreement, any other agreement or applicable law.
11. Indemnification.
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11.1 Indemnification by the Shareholders.
(a) The Shareholders will jointly and severally indemnify and
hold Compuware and the Surviving Corporation harmless against any Loss which may
be incurred by Compuware and the Surviving Corporation as a result of:
(1) any breach by MIS, Simco, Autoflex or the Shareholders of
any of their representations and warranties under Section 5 above, or
MIS's, Simco's, Autoflex's, or the Shareholders' breach of any
agreements made in this Agreement or any Related Agreement or the
exhibits or schedules to this Agreement or any Related Agreement; or
(2) any action, suit, proceeding, investigation, assessment or
judgment relating to any of the matters indemnified against in this
Section 11.1(a), including Fees and Costs (whether prior to or at trial
or in appellate proceedings).
(b) Each Shareholder, on a several basis, will also indemnify
and hold Compuware and the Surviving Corporation harmless against any Loss which
may be incurred by Compuware and the Surviving Corporation as a result of:
(1) any breach by such Shareholder of any of such
Shareholder's representations or warranties under Section 6 above or
any of such Shareholder's agreements made in this Agreement or any
Related Agreement or the exhibits or schedules to this Agreement or any
Related Agreement;
(2) any action, suit, proceeding, investigation, assessment or
judgment relating to any of the matters indemnified against in this
Section 11.1(b), including Fees and Costs (whether prior to or at trial
or in appellate proceedings).
11.2 Indemnification by Compuware. Compuware will indemnify
and hold MIS, Simco and the Shareholders harmless against any Loss which may be
incurred by the Shareholders as a result of:
(a) any breach by Compuware of any of Compuware's
representations, warranties, covenants or agreements made in this Agreement or
any Related Agreement or the exhibits or schedules to this Agreement or any
Related Agreement; or
(b) any action, suit, proceeding, assessment or judgment
relating to any of the matters indemnified against in this Section 11.2,
including Fees and Costs (whether prior to or at trial or in appellate
proceedings).
11.3 Claims for Indemnification.
(a) Whenever any claim is made for indemnification under this
Article 11, the person claiming such indemnification (the "Claimant") will give
notice to the party against whom indemnification is sought (the "Indemnifying
Party") promptly after the Claimant has actual knowledge of any event which
might give rise to a claim for indemnification under this
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Agreement; provided that if the Claimant receives a complaint, petition or any
other pleading in connection with a claim which requires the filing of an answer
or other responsive pleading, it will furnish the Indemnifying Party with a copy
of such pleading as soon as possible after receipt.
(b) The failure by the Claimant to give notice of a claim as
required in Section 11.3(a) above or a delay in giving such notice will not
affect the validity or amount of such claim and the indemnification obligations
of the Indemnifying Party will remain in effect as to such claim, except to the
extent that the Indemnifying Party can demonstrate that it has been materially
prejudiced or materially and adversely affected thereby.
(c) If, after the amount of the claim of loss is specified by
Claimant, and Claimant gives notice with respect thereto to the Indemnifying
Party (the "Claim Notice"), the Indemnifying Party objects to any such claim or
amount set forth in the Claim Notice, it may give notice to Claimant advising
Claimant of its objection within twenty (20) days of the Indemnifying Party's
receipt of the Claim Notice. If no such notice is timely given by the
Indemnifying Party to Claimant, Claimant will be entitled to payment from the
Indemnifying Party pursuant to this Agreement and the Escrow Agreement in the
amount of the Loss arising out of the claim as adjusted pursuant to the terms of
the Escrow Agreement. If the Indemnifying Party advises Claimant within such
period that it objects to the claim, Claimant and the Indemnifying Party will
promptly meet and use their reasonable best efforts to settle the dispute in
writing. If Claimant and the Indemnifying Party are unable to reach agreement
within thirty (30) days after the Indemnifying Party objects to the claim, then
either party may bring an action to determine the disputed portion of such claim
of Loss, with the undisputed portion to be recovered pursuant to the Escrow
Agreement, if applicable, or this Agreement.
(d) The giving of the notice by Compuware to the
Representative in accordance with Section 11.3 within the period of survival of
any representations or warranties shall toll said survival period (but only with
respect to such claim) until any liability under said notice is finally resolved
and determined.
11.4 Third Party Claims. If the facts giving rise to the right
of indemnification under Sections 11.1 or 11.2 above involve any actual or
threatened claim or demand by any third party against the Claimant or any
possible claim by the Claimant against any third party ("Third-Party Claim"),
and if, within 20 days after receipt of notice of the claim, the Indemnifying
Party gives the Claimant an agreement in writing, in form and substance
reasonably satisfactory to the Claimant, agreeing to indemnify and hold harmless
Claimant from all costs and liability arising from such Third Party Claim (and
including, if required by the Claimant, assurances reasonably satisfactory to
Claimant, of the Indemnifying Party's ability to meet its obligations under this
Section 11), the Indemnifying Party may at its own expense undertake full
responsibility for the defense or prosecution of such Third-Party Claim. So long
as the Indemnifying Party has assumed and is conducting the defense of the Third
Party Claim in accordance with this Section the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of Claimant (which
consent shall not be unreasonably withheld, conditioned or delayed) unless the
judgment or proposed settlement involves only the payment of money damages by
the Indemnifying Party and does not impose an injunction or other equitable
relief upon Claimant. If the Indemnifying Party fails to deliver such an
agreement of indemnity to the Claimant, (1) the Claimant will be entitled
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to defend or prosecute such Third Party Claim with counsel of its own choice
(the Fees and Costs of such defense or prosecution being indemnified under this
Section 11), (2) the Indemnifying Party at its own expense may nevertheless
participate with the Claimant in the defense or prosecution of such Third-Party
Claim and any settlement negotiations with respect thereto, and (3) except as
provided herein, the Claimant may settle the Third Party Claim on such terms as
it may choose, although it will not reach such a settlement until it has
consulted in good faith with the Indemnifying Party. An Indemnifying Party's
defense or prosecution of, or participation in, a Third Party Claim will not in
any manner relieve the Indemnifying Party of its obligations to indemnify the
Claimant under this Section 11. The Indemnifying Party and the Claimant shall
cooperate in good faith with each other in connection with the defense or
settlement or any Third Party Claim and shall make available to each other all
information necessary or useful to the defense or settlement of such matter.
11.5Limits on Indemnification.
The representations and warranties of MIS, Simco, Autoflex and/or the
Shareholders set forth in this Agreement shall survive only for a period of one
calendar year from the Effective Date, and any claim for indemnification under
Section 11.1 must be asserted by notice to the Representative within one
calendar year of the Effective Date, or the same will be null and void,
provided, however, that the representations, warranties and covenants made by
the Shareholders under Sections 5.12, 8.9, 8.10, 11.7 or 12.14 of this Agreement
(which specifically relate to Taxes) shall survive until thirty days after the
expiration of the applicable statutes of limitations (including any waivers or
extensions) on assessment and collection of the Tax to which such
representation, warranty or covenant relates. If any claims for indemnification
have been made pursuant to Section 11.1 and the same are still pending or
unresolved at the expiration of the survival period, such claims shall continue
to be subject to the indemnification provisions of this Agreement. This Section
11.5 shall not limit any covenant or agreement by the parties hereto which by
its terms contemplates performance after the Effective Time, which in each case
shall survive the Effective Time. Notwithstanding anything herein to the
contrary, (i) the Shareholders shall not be obligated to indemnify Compuware
and/or the Surviving Corporations under this Article 11 unless and until the
aggregate of Losses for which indemnity is provided under this Article 11
reaches Two Hundred Thousand Dollars ($200,000), in which event the Shareholders
shall be obligated to indemnify Compuware and/or the Surviving Corporations for
all applicable Losses in excess of the first One Hundred Thousand Dollars
($100,000) of all aggregate Losses; and (ii) all Losses (other than Tax Losses)
payable to Compuware and/or the Surviving Corporations under this Agreement
shall be paid with, and shall not exceed, the Escrow Shares under the Escrow
Agreement, except for claims of fraud; (iii) the aggregate amount of Tax Losses
payable to Compuware and/or the Surviving Corporations under this Agreement
shall not exceed Seven Million Dollars ($7,000,000) less the amount of other
Losses paid to Compuware and/or the Surviving Corporations under this Agreement
and the Escrow Agreement, except for claims of fraud; and (iv) the aggregate
amount of Losses (whether Tax Losses or other Losses) payable to Compuware
and/or the Surviving Corporations under this Agreement shall never exceed Seven
Million Dollars ($7,000,000), except for claims of fraud. Each party hereby
acknowledges and agrees that, from and after the Effective Time, its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification provisions set
forth in this Article 11, except for claims of fraud. In furtherance of the
foregoing, each party hereby waives, from and after the Effective Time, to
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the fullest extent permitted under applicable law, any and all claims, rights
and causes of action (other than claims of fraud and claims arising under this
Article 11 and except for claims pursuant to that certain Indemnification
Agreement among the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Revocable Trust Dated January 23, 1995, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and Compuware) it may have relating to the subject matter of
this Agreement arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation or otherwise. Subject to the
foregoing, Compuware or the Surviving Corporations may recover Tax Losses
directly from the Shareholders or under the Escrow Agreement. In determining the
Shareholders' obligation to indemnify Compuware or the Surviving Corporations
pursuant to this Article 11, all references in the Agreement or in any
certificates delivered in connection with this Agreement to the terms
"material", "materiality" or variants thereof shall be disregarded for the
purpose of determining whether there has been any misrepresentation or breach of
warranty, except for the representations and warranties contained in Section
5.23.
11.6 Representative. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall, by virtue of the
Merger and the resolutions to be adopted by the Shareholders, be irrevocably
appointed attorney-in-fact and authorized and empowered to act, for and on
behalf of any or all of the Shareholders (with full power of substitution in the
premises) in connection with the indemnity provisions of Article 11 as they
relate to the Shareholders generally, the Escrow Agreement, the notice provision
of this Agreement, and such other matters as are reasonably necessary for the
consummation of the Transactions including, without limitation, to act as the
representative of such Shareholders to review and authorize all set-offs, claims
and other payments authorized or directed by the Escrow Agreement and dispute or
question the accuracy thereof, to compromise on their behalf with Compuware any
claims asserted thereunder and to authorize payments to be made with respect
thereto and to take such further actions as are authorized in this Agreement
(the above named representative, as well as any subsequent representative of
such Shareholders appointed by him or, after his death or incapacity, elected by
vote of holders of a majority of the shares Compuware Stock received by such
Shareholders pursuant to the Merger, being referred to herein as the
"Representative"). The Representative shall not be liable, in his capacity as
representative of such Shareholders, to any Shareholders and their respective
affiliates or any other person with respect to any action taken or omitted to be
taken by the Representative under or in connection with this Agreement or the
Escrow Agreement in his capacity as representative of such Shareholders unless
such action or omission results from or arises out of fraud, gross negligence,
willful misconduct or bad faith on the part of the Representative. Compuware and
the Surviving Corporations and each of their respective affiliates shall be
entitled to rely on such appointment and treat such Representative as the duly
appointed attorney-in-fact of each Shareholder. Each Shareholder who votes in
favor of the Merger pursuant to the terms hereof, by such vote, without any
further action, and each Shareholder who receives any shares of Compuware Stock
in connection with the Merger, by acceptance thereof and without any further
action, confirms such appointment and authority and acknowledges and agrees that
such appointment is irrevocable and coupled with an interest, it being
understood that the willingness of Compuware to enter into this Agreement is
based, in part, on the appointment of a representative to act on behalf of the
Shareholders.
11.7 Tax Indemnification Procedure. Notwithstanding anything else in
this Agreement to the contrary:
(a) Compuware will, as to any Taxes in respect of which the
Shareholders
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have agreed to indemnify Compuware, its affiliates and/or the Companies,
promptly inform the Representative of, and permit the participation of the
Representative in, any investigation, audit and other proceeding by or with a
Tax Authority empowered to administer or enforce such Tax and will not consent
to the settlement or final determination in such proceeding without the prior
written consent of the Representative, which shall not be unreasonably withheld,
conditioned or delayed.
(b) (i) Compuware, on the one hand, and the Representative, on
the other hand, will (A) use reasonable efforts to keep the other advised as to
the status of Tax audits and litigation involving any Taxes that could give rise
to a liability of the Shareholders to Compuware, its affiliates and/or any of
the Companies under this Agreement (a "Tax Liability Issue"), (B) promptly
furnish to the others copies of any inquiries or requests for information from
any Tax Authority concerning any Tax Liability Issue, (C) timely notify the
others regarding any proposed written communication (i.e., communications not
relating to inquiries or requests for information) to any such Tax Authority
with respect to such Tax Liability Issue, (D) promptly furnish to the other upon
receipt copies of any information or document requests, notices of proposed
adjustment, revenue agent's reports or similar reports or notices of
deficiencies together with all relevant documents, Tax Returns and memos related
to the foregoing documents, notices or reports, relating to any Tax Liability
Issue, (E) give the other and its or their accountants and counsel the
reasonable opportunity to review and comment in advance on all written
submissions, filings and any other information relevant to any Tax Liability
Issue, and (F) consider in good faith any suggestions made by the other and its
or their accountants and counsel to submit documentation or attend those
portions of any meetings and proceedings that relate to such proposed
adjustment; provided, however, that the failure of one party to so notify the
other party of any such audit or Tax controversy shall not affect the other
party's obligations under this Agreement. Notwithstanding the foregoing,
Compuware, on the one hand, and the Representative, on the other hand, may make
appropriate redactions in the submissions, filings and any other information
provided to the other to preserve the confidentiality of such information as to
issues that are not Tax Liability Issues.
(ii) Subject to the cooperation provisions of subsection
(b)(i) above, Compuware will have full responsibility for and discretion in
handling any Tax controversy, including, without limitation, an audit, a protest
to the Appeals Division of the IRS, and litigation in Tax Court or any other
court of competent jurisdiction involving the Companies (a "Proceeding"), unless
the Representative elects to assume the defense of such Proceeding by (i) giving
Compuware written notice of such election within five (5) business days after
the Representative's receipt of notice of such claim as set forth in Section
11.7(c) and (ii) providing Compuware with financial assurances reasonably
satisfactory to Compuware that the Shareholders will meet their obligation to
indemnify Compuware for the Taxes in controversy. If the Representative assumes
the defense of such Proceeding, Representative shall do so at its sole cost and
expense, through legal counsel reasonably acceptable to Compuware, and Compuware
shall nonetheless have the right to participate in the defense or settlement of
such Proceeding, at its sole cost and expense, through its own legal counsel. In
the event that the Representative assumes the defense or prosecution of a
Proceeding, it shall not settle or compromise such claim or consent to the entry
of any judgment without the prior written consent of Compuware, which consent
shall not be unreasonably withheld, conditioned or delayed. If, in Compuware's
reasonable judgment, the Representative fails to diligently defend or prosecute
such Proceeding,
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Compuware may assume sole control of the defense or prosecution of such
Proceeding. Any of the foregoing to the contrary notwithstanding, Representative
shall not have the right, and Compuware shall not be required, to contest any
Tax Liability Issue unless the Representative provides to Compuware, at
Compuware's written request, an opinion in form and content reasonably
acceptable to Compuware from counsel reasonably acceptable to Compuware that
there is substantial authority for the position that has or will be claimed with
respect to such action, and Compuware need not take such action until such
opinion is delivered to Compuware. In the event that Compuware, its affiliates
or any of the Companies are required to pay any Tax, file any bond or deposit
any amount in order to undertake (or for the Representative to assume the
defense or prosecution of) a Proceeding, the Shareholders will loan to Compuware
no later than three business days before such payment is required to be made,
without interest and until a final determination with respect to such Tax has
occurred, one hundred percent of the amount required to be paid. Within three
business days of the receipt by Compuware, its affiliate and/or the Companies of
a refund of any amount loaned to it by the Shareholders (including any interest
received by Compuware, affiliate and/or the Companies, as the case may be),
Compuware, affiliate and/or the Companies will pay such refunded amount to the
Shareholders net of any Tax cost incurred by them as a result of such refund.
(c) Whenever any claim is made for indemnification of any Tax
under this Agreement, the Claimant shall notify the Indemnifying Party promptly
after the Claimant has actual knowledge of any event which might give rise to a
claim for indemnification under this Agreement. The failure by the Claimant to
give notice of a claim as required in this Section 11.7(c) or a delay in giving
such notice shall not affect the validity or amount of such claim and the
indemnification obligations of the Indemnifying Party shall remain in effect as
to such claim, except to the extent that the Indemnifying Party can demonstrate
that it has been materially prejudiced or materially and adversely affected
thereby.
(d) Within 60 days of any Final Determination of Tax in a
Proceeding, the Claimant shall provide a written notice to the Indemnifying
Party explaining the calculation of the amount of such Tax for which
indemnification is claimed. The Indemnifying Party shall pay such amount of Tax
to the Claimant within five (5) business days after receipt of such notice,
unless the Indemnifying Party disagrees with such calculation and invokes the
verification procedure set forth in Section 11.7(e) below, in which case the
Indemnifying Party shall pay to Claimant, within five (5) business days of
verification of the amount of such Tax owed to Claimant, the amount so verified
by the Independent Public Accountants pursuant to Section 11.7(e) below.
(e) If the Indemnifying Party shall disagree with the
Claimant's calculation of the Tax owed to Claimant and within ten (10) days
after receipt of such calculation requests in writing verification of such
amount, such amount shall be verified by a firm of Independent Public
Accountants. Within 15 days after the Indemnifying Party's request, the
Independent Public Accountants shall either (i) confirm the accuracy of the
Claimant's computation or (ii) notify the Claimant that such computation is
inaccurate. In the case of (ii) above, the Independent Public Accountants shall
recompute the amount of Tax owed to Claimant in such manner as the Independent
Public Accountants determine and verify to be accurate. The costs of such
verification shall be borne by the Indemnifying Party unless such verification
shall result in an adjustment in the Indemnifying Party's favor of the Tax owed
to Claimant as computed by the
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Claimant, in which case such costs shall be borne by the Claimant. The Claimant
agrees to cooperate with such Independent Public Accountants and, subject to a
confidentiality agreement reasonably satisfactory to the Claimant, to supply
them with all information reasonably necessary to permit them to accomplish such
review and determination. Such information shall be for the confidential use of
the Independent Public Accountants and shall not be disclosed to the
Indemnifying Party or to any other person. The Indemnifying Party and Claimant
agree that the sole responsibility of the Independent Public Accountants shall
be to determine and verify the amount of the amount of Tax owed to Claimant
pursuant to this Section 11.7(e) and the matters of interpretation of this
Agreement are not within the scope of the Independent Public Accountant's
responsibility.
(f) If any party for any reason fails or refuses to perform
fully its obligations or indemnifications under this Section 11.7, the Claimant
shall have the right of offset with respect to any payments which are due or
shall become due under this Agreement or any Related Agreement. The foregoing
provisions of this Section 11.7(f) are permissive, and a failure by a Claimant
to exercise its rights under this Section 11.7 shall not affect its right to
indemnification under this Agreement.
(g) Except as otherwise specifically provided in this
Agreement, each party shall bear its own Fees and Costs incurred in connection
with a Tax Liability Issue for which such party and its affiliates are liable
under this Agreement.
11.8 Consideration. Any indemnification payments made by the
Shareholders pursuant to this Article shall be deemed adjustments to the
consideration for the Merger.
12. Miscellaneous.
12.1 Notices. Any notice required or permitted to be given
under this Agreement must be in writing and sent by recognized overnight courier
(such as Airborne or Federal Express) or by certified or registered mail,
postage prepaid, or delivered by hand, addressed as follows:
(a) To Compuware: Compuware Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
with a copy to Compuware Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
(b) To MIS, Simco, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Autoflex, the ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or any Shareholder:
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With a copy to: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Jaffe, Raitt, Heuer & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Addresses for notices may be changed by notice given pursuant to this Section
12.1. Notice shall be deemed given on the date delivered if delivered by hand.
Notice sent by recognized overnight courier shall be deemed given on the
business day following delivery to such recognized overnight courier. Notice
mailed as provided herein shall be deemed given on the third (3rd) business day
following the date so mailed.
12.2 No Waiver. No waiver of any breach of any provision of
this Agreement will be deemed a waiver of any preceding or succeeding breach or
of any other provision of this Agreement. No extension of time for performance
of any obligations or acts will be deemed an extension of the time for
performance of any other obligations or acts.
12.3 Successors and Assigns. This Agreement will bind and
inure to the benefit of the parties and their successors and assigns; provided
that (a) none of MIS, Simco nor any Shareholder will assign this Agreement, any
Related Agreement or any rights under this Agreement or any Related Agreement to
any other person without the prior written consent of Compuware and (b) CPWRT1
and CPWRT2 will have the right to assign this Agreement and the Related
Agreements to any direct or indirect wholly-owned subsidiary of Compuware.
12.4 Severability. The provisions of this Agreement will be
deemed severable, and if any provision or part of this Agreement is held
illegal, void or invalid under applicable Laws, such provision or part may be
changed to the extent reasonably necessary to make the provision or part, as so
changed, legal, valid and binding. If any provision of this Agreement is held
illegal, void or invalid in its entirety, the remaining provisions of this
Agreement will not in any way be affected or impaired but will remain binding in
accordance with their terms.
12.5 Entire Agreement; Amendment.
(a) This Agreement, the Related Agreements and the schedules
and the exhibits attached to this Agreement and the Related Agreements contain
the entire agreement of the parties with respect to the Mergers and the other
transactions contemplated by this Agreement and the Related Agreements, and no
representations made by any party may be relied on unless set forth in this
Agreement, the Related Agreements or in the exhibits and schedules to this
Agreement and the Related Agreements.
(b) Subject to applicable law, at any time prior to the
consummation of the Merger, whether before or after approval of the Transactions
by the Shareholders, MIS, Simco and Compuware may, by action authorized by their
respective Boards of Directors, (a) mutually amend this Agreement, (b) extend
the time for the performance of any of the obligations or other acts of any
other person or entity, (c) waive any inaccuracies in the representations or
warranties contained in the Agreement, or (d) waive compliance with any of the
agreements or conditions contained herein. Notwithstanding the foregoing, after
any approval of the Merger by the Shareholders, there will not be, without
further approval of such Shareholders, any amendment,
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extension or waiver of this Agreement which reduces the amount or changes the
form of Compuware Stock to be delivered to the Shareholders. This Agreement may
not be amended except by a writing signed by all of the parties by persons
authorized to execute such writing. Any agreement of a party to any extension or
waiver will be valid only if set forth in a writing signed on behalf of such
party by a person authorized to execute such writing, but any waiver or failure
to insist on strict compliance with any obligation, covenant, agreement or
condition will not operate as a waiver of or estoppel with respect to, any
subsequent or other failure.
12.6 Cost of Litigation. If any party breaches this Agreement
or any Related Agreement and if counsel is employed to enforce this Agreement or
a Related Agreement, the successful party will be entitled to Fees and Costs
associated with such enforcement.
12.7 Interpretation.
(a) This Agreement and the Related Agreements are being
entered into among competent and experienced business persons, represented by
counsel, and have been reviewed by the parties and their counsel. Therefore, any
ambiguous language in this Agreement or any Related Agreement will not
necessarily be construed against any particular party as the drafter of such
language. The headings contained in this Agreement are solely for the purposes
of reference, are not part of the agreement of the parties and will not in any
way affect the meaning or interpretation of this Merger Agreement.
(b) Any statement under this Agreement made "to the best
knowledge" of a party will be deemed to have been made to the actual knowledge
of such party after such party has made reasonable investigation and inquiry of
the circumstances relating to such statement. A statement under this Agreement
made to the best knowledge of the Shareholders, MIS, Simco and Autoflex means to
the actual knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ after
such person has made reasonable investigation and inquiry of the circumstances
relating to such statement.
12.8 Legend. In addition to any legends pursuant to Section
8.7, each certificate for the shares of Compuware Stock to be delivered to the
Shareholders pursuant to the Mergers will be imprinted with a legend in
substantially the following form, together with any legend permitted pursuant to
this Agreement:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO SUCH EFFECT.
12.9 Counterparts. This Agreement may be executed in
counterparts each of which, when taken together, will be deemed an original of
this Agreement.
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12.10 Applicable Law. This Agreement and any dispute arising
hereunder or related hereto will be construed in accordance with and governed by
the laws of the State of Michigan, without giving effect to the choice of law
provisions thereof.
12.11 Expenses. Except as provided in Section 8.19 above, each
party will bear its own expenses in connection with the transactions
contemplated by this Agreement, including costs of their respective brokers,
financial advisors, attorneys and accountants, regardless of whether any of the
Transactions are consummated.
12.12 Press Releases. On or before the Effective Time of the
Merger, no party will issue or authorize to be issued any press release or
similar announcement concerning the Agreement or any of the Transactions without
the prior approval of the other party; provided, however, that Compuware will be
permitted to make such disclosures as necessary to comply with any applicable
securities laws or stock exchange or NASDAQ/National Market policies.
12.13 Further Assurances. At any time and from time to time
after the Effective Time, the parties agree to cooperate in all reasonable
respects with each other, to execute and deliver such other documents,
instruments of assignment, books and records, and so all such further acts and
things as may be reasonably required to carry out the transactions contemplated
hereby.
12.14 Transfer Taxes. All transfer, documentary, stamp and
other such taxes and fees (including any penalties and interest) incurred in
connection with this Agreement and/or the Mergers (including any taxes imposed
by any state or subdivision) will be paid by the Shareholders when due, and the
Shareholders will, at their own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, stamp and
other such taxes and fees and, if Compuware or its affiliates are required by
applicable law to execute such Tax Returns, Compuware will, and will cause its
affiliates to, join upon the Shareholders' written request, in the execution of
any such Tax Returns.
12.15. Benefit Matters.
(a) From and after the Effective Time, Global Electronics
Limited ("Global") shall cease to have any liability whatsoever (and
MIS shall retain, bear and discharge all liabilities) under or with
respect to the employment agreements covering employees of MIS, Simco
and/or Autoflex. The parties hereto shall take such actions as are
reasonably necessary (including, without limitation, the preparation
and execution of any amendment to any such employment agreement) to
remove Global as a party to any such employment agreements.
(b) Effective as of or prior to the Effective Time, MIS shall
take such actions as are reasonably necessary (including, without
limitation, the preparation and execution of any Board of Directors
resolutions or plan amendments) to transfer the sponsorship of M.I.S.
International, Inc. Savings and Profit Sharing Plan (the "Profit
Sharing Plan") and M.I.S. International, Inc. Employee Savings and
Retirement Plan (the "401(k) Plan") (collectively, the "Plans") to
Global, such that, from and after the effective date of such transfer
(the "Plan Transfer Date"), Global shall be the sponsor for purposes of
such Plans
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and each of MIS, Simco and Autoflex shall cease to be a participating
employer in such Plans. Effective as of the Plan Transfer Date, those
employees of MIS, Simco, and Autoflex (collectively, the "MIS
Employees") who immediately prior to the Plan Transfer Date were
participants in one or more of such Plans shall cease to be active
participants in such Plans and shall cease to make contributions to
such Plans, and no further employer contributions shall be made to such
Plans on behalf of such MIS Employees with respect to any period
commencing after the Plan Transfer Date. The account balances in the
Plans of each MIS Employee shall be fully vested effective as of the
Plan Transfer Date. Each MIS Employee who has one or more loans
outstanding from the Plans shall be permitted to continue repayment of
such loans in accordance with the loan terms until the earliest of the
date such MIS Employee fails to make any loan repayment properly and
timely, the date such MIS Employee's employment with MIS, Simco or
Autoflex (or any successor thereto) terminates, the date as of which
there is otherwise a default with respect to such loan or the date as
of which the applicable Plan terminates. From and after the Plan
Transfer Date, no new loans (or modifications of existing loans) shall
be granted to any MIS Employee. Compuware shall facilitate such loan
repayments by establishing a payroll deduction system for deducting
such loan repayments from MIS Employees' pay and by remitting such
withheld amounts on a timely basis to the plan administrator of the
applicable Plan. Compuware shall cause all records pertinent to the
maintenance, administration and funding of the Plans to be transferred
to Global within a reasonable period (but in no event more than 15
days) after the Effective Time.
(c) Compuware shall retain, bear and discharge all liabilities
with respect to the provision of notices and benefits required to be
provided pursuant to Code Section 4980B and/or Part 6 of Subtitle B of
Title I of ERISA ("COBRA") with respect to all individuals who, as of
the Effective Time under the Benefit Plans that are subject to COBRA,
are COBRA recipients or who are entitled to receive COBRA notices
and/or COBRA benefits, including, without limitation, (i) such COBRA
recipients and other individuals entitled to COBRA notices and/or
benefits who are former employees (or their eligible spouses and
dependents) of Global and/or Millennium Strategic Services 2000, Inc.
and (ii) each employee identified on Schedule 12.15(c) (and his/her
eligible spouse and dependents).
(d) Effective as of the Effective Time, Compuware shall cause
its tax-qualified ESOP and/or 401(k) plans to cover the MIS Employees
in accordance with the terms of such plans; provided, however, that
each such MIS Employee shall receive credit for service performed for
MIS, Simco and Autoflex prior to the Effective Time for purposes of
eligibility to participate, vesting and eligibility to receive benefits
but not for purposes or benefit accrual.
(e) Effective as of or prior to the Effective Time, MIS shall
take such actions as are reasonably necessary (including, without
limitation, the preparation and execution of any Board of Directors
resolutions or plan amendments) to terminate participation in those
Benefit Plans that are "employee welfare benefit plans" (within the
meaning of Section 3(i) of ERISA) (the "MIS Welfare Plans") of all
participating employers other than MIS, Simco, and Autoflex such that,
as of the Effective Time, the sole participating employers in the MIS
Welfare Plans shall be MIS, Simco and Autoflex; provided,
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however, that the incurred-but-not-reported eligible claims of the
employees (and their eligible spouses and dependents) of such employers
who cease to be participating employers that are reported after the
Effective Time shall continue to be paid pursuant to the MIS Welfare
Plans in accordance with the terms of such plans. From and after the
Effective Time, Compuware, shall continue to cover the MIS Employees
under the MIS Welfare Plans that covered such MIS Employees immediately
prior to the Effective Time in accordance with the terms of such MIS
Welfare Plans (as such MIS Welfare Plans may be amended from time to
time) or under new or existing employee welfare benefit plans of
Compuware (the "Compuware Welfare Plans"); provided, however, that,
with respect to coverage under the Compuware Welfare Plans, each such
MIS Employee shall receive credit for service performed for MIS, Simco
and Autoflex prior to the Effective Time for purposes of eligibility to
participate, eligibility to receive benefits and all waiting,
eliminating and pre-existing condition limitation periods, and further
provided that each such MIS Employee shall receive credit for his/her
year-to-date deductibles, co-payments and other out-of-pocket
expenditures paid pursuant to the MIS Welfare Plans toward meeting the
deductible, co-payment and maximum out-of-pocket expenditure
requirements under the Compuware Welfare Plans.
(f) Global shall assume, bear and discharge all liability with
respect to delinquent Forms 5500 for those MIS Welfare Plans for which
Form 5500 was for any year required to be filed but was not filed.
Global shall use its best efforts to cause such delinquent Forms 5500
to be filed pursuant to the U.S. Department of Labor's Delinquent Filer
Voluntary Compliance Program. Compuware shall cause any and all records
in its possession that are pertinent to the filing of such Forms 5500
to be made available, with reasonable notice, at such times as Global
(or their agents, representatives or other designated
service-providers) may reasonably request.
[Signatures appear on the next three pages]
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In Witness Whereof, the parties have executed this Agreement on the
date set forth in the introductory paragraph of this Agreement.
COMPUWARE CORPORATION,
a Michigan corporation
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
CPWRT1, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
CPWRT2, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
M.I.S. INTERNATIONAL, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
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SIMCO INTERNATIONAL, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
AUTOFLEX, INC.,
a Michigan corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ REVOCABLE TRUST
DATED JANUARY 23, 1995
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Trustee
▇▇▇▇ ▇. ▇▇▇▇ REVOCABLE TRUST
DATED JANUARY 23, 1995
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------
▇▇▇▇ ▇. ▇▇▇▇, Trustee
54
55
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1999
QUALIFIED ANNUITY TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇ ▇. ▇▇▇▇ 1999
QUALIFIED ANNUITY TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Trustee
55