<PAGE> 1
As filed with the Securities and Exchange Commission on January 8, 1998
Registration No. 333 - _____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
COMPUWARE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------
<TABLE>
<S><C>
MICHIGAN 7371, 7372 38-2007430
(State or other jurisdiction (Primary standard industrial (I.R.S. Employer
of incorporation or organization) classification code numbers) Identification No.)
</TABLE>
31440 NORTHWESTERN HIGHWAY, FARMINGTON HILLS, MICHIGAN 48334-2564,
(248) 737-7300
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------
PETER KARMANOS, JR., CHAIRMAN
COMPUWARE CORPORATION
31440 NORTHWESTERN HIGHWAY, FARMINGTON HILLS, MICHIGAN 48334-2564,
(248) 737-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service for Registrant)
Copies to:
DONALD J. KUNZ, ESQ.
HONIGMAN MILLER SCHWARTZ AND COHN
2290 FIRST NATIONAL BUILDING
DETROIT, MICHIGAN 48226
(313) 256-7800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
---------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE> 2
2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Number of Maximum Maximum
Shares to Offering Price Aggregate Amount of
Title of Each Class of Securities be Per Offering Registration
to be Registered Registered Share (1) Price (1) Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 3,341,603 $31.75 $106,095,895.25 $31,298.29
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee.
In accordance with Rule 457(c) under the Securities Act of 1933, the
above calculation is based on the average of the high and low sale
prices reported in the consolidated reporting system of the Nasdaq
National Market on January 2, 1998.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICIATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
COMPUWARE CORPORATION
3,341,603 SHARES
COMMON STOCK
The 4,200,000 shares of Common Stock offered hereby are being offered
by the Selling Shareholders described in this Prospectus under "Selling
Shareholders." Compuware Corporation ("Compuware" or the "Company") will not
receive any of the proceeds from the offering. The Common Stock is quoted on
the Nasdaq National Market under the symbol "CPWR". On January 7, 1998, the
last reported sale price for the Common Stock, as reported on the Nasdaq
National Market was $36.25 per share.
After completion of this offering, Peter Karmanos, Jr., the Chairman
of the Board and Chief Executive Officer of the Company, will control
approximately 12.0% of the vote of the Common Stock.
-------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
Underwriting Proceeds to
Discounts and Selling
Price to Public Commissions Shareholders
- --------------------------------------------------------------------------------
[S] [C] [C] [C]
Market (1) Customary(2) Net (3)(4)
================================================================================
(1) The shares of Common Stock offered hereby may be sold from time to
time by the Selling Shareholders, or by pledges, donees, transferees
or other successors in interest of the Selling Shareholders. Such
sales may be made on the Nasdaq National Market, or otherwise, at
prices and on terms then prevailing or at prices related to the
then-current market prices, or in negotiated transactions at
negotiated prices; therefore, the price to the public cannot be
determined at this time.
(2) The shares may be sold by one or a combination of the following: (a) a
block trade in which the broker or dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for
its account pursuant to this Prospectus; and (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers.
Brokers or dealers will receive commissions or discounts from Selling
Shareholders in amounts to be negotiated immediately prior to the
sale. The amount of any such commissions or discounts, which will be
paid by the Selling Shareholders, cannot be determined at this time.
(3) These securities are offered on behalf of the Selling Shareholders,
and, therefore, no proceeds from the offering of such securities
will be paid to the Company.
(4) All proceeds are before deduction of the total expenses of this
offering, including legal, accounting, and printing expenses, which are
estimated to be approximately $70,000 and will be borne by the
Company.
The date of this Prospectus is January 8, 1998
<PAGE> 4
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY SELLING SHAREHOLDER. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF
COMMON STOCK TO WHICH IT RELATES, OR AN OFFER OR SOLICITATION TO ANY PERSON IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission") relating to its business, financial position, results of
operations and other matters. Such reports and other information can be
inspected and copied at the Public Reference Section maintained by the
Commission at Room 1024 Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and its Regional Offices located at Citicorp Center, 500 West
Madison Street, 14th Floor, Suite 1400, Chicago, Illinois 60661, and 7 World
Trade Center, 13th Floor, Suite 1300 New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-3 under the Securities Act of 1933 (the
"Securities Act") with respect to the securities offered hereby. As permitted
by the rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement. For further information
with respect to the Company and the securities offered hereby, reference is
hereby made to the Registration Statement and to the exhibits and schedules
filed therewith. Statements contained in this Prospectus regarding the contents
of any documents filed with, or incorporated by reference in, the Registration
Statement as exhibits are not necessarily complete, and each such statement is
qualified in all respects by reference to the copy of the applicable documents
filed with the Commission. The Registration Statement, including the exhibits
and schedules thereto, may be inspected at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of all or any part thereof may be obtained from such
office upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
(File No. 0-20900) pursuant to the Exchange Act are incorporated by reference
in this Prospectus:
(1) Registration Statement on Form 8-A dated November 27, 1992;
(2) Annual Report on Form 10-K for the fiscal year ended March 31,
1997;
(3) Proxy Statement with respect to Annual Meeting of Shareholders
held August 26, 1997; and
(4) Quarterly Reports on Form 10-Q for the quarters ended June 30,
1997 and September 30, 1997.
Also incorporated by reference in this Prospectus is the Company's
Registration Statement, dated September 21, 1994, filed with the Commission
(File No. 33-82734) pursuant to the Securities Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of the documents incorporated herein by reference (excluding exhibits
unless such exhibits are specifically incorporated by reference into such
documents) may be obtained upon written or oral request without charge by
persons,
2
<PAGE> 5
including beneficial owners, to whom this Prospectus is delivered. Requests
should be made to Christopher M.F. Norris, Director, Corporate Communications,
31440 Northwestern Hwy., Farmington Hills, MI 48334-2564, (248) 737-7300.
THE COMPANY
Compuware provides software products and professional services
designed to increase the productivity of the information systems departments of
the 15,000 largest users worldwide deploying data processing technology. The
Company focuses on the run-time, application development and system management
environments for the mainframe and client/server markets where it has extensive
experience and has established long-term customer relationships and where its
products and services yield the most benefit.
Compuware's integrated line of run-time software products improve
programmer productivity in testing, debugging and maintaining large-scale
application software. The Company's target market for its current run-time
products includes users of all major IBM and IBM-compatible mainframe
programming environments, including the MVS and VSE operating systems, the CICS
communications system and the IMS and DB2 database management systems.
The Company also develops, markets and supports client/server
application development and system management products that assist software
developers in creating, deploying and maintaining client/server applications,
as well as managing these complex environments. Compuware's application
development software toolset, UNIFACE, enables software developers to create
applications that are not tied to any specific hardware platform, operating
system, database management system or graphical user interface. The Company's
client/server system management products help diagnose and correct system
problems as they occur, optimize system performance and manage various hardware
and software configurations across the network from a single location.
The Company also offers a broad range of data processing professional
services including business systems analysis, design and programming, software
conversion and systems planning and consulting. The increase in the adoption
of client/server systems has accelerated the growth of the market for
professional services and consulting to assist customers in application
development and systems management. Compuware has trained its professional
services staff in UNIFACE technology so that it can assign a significant
portion of such personnel to fulfill client/server-oriented consulting and
implementation requirements.
The Company was incorporated in Michigan in 1973. Unless the context
otherwise requires, references in this Prospectus to the "Company" and
"Compuware" refer to Compuware Corporation and its consolidated subsidiaries.
The Company's executive offices are located at 31440 Northwestern Highway,
Farmington Hills, Michigan 48334-2564, and its telephone number is (248)
737-7300.
3
<PAGE> 6
RISK FACTORS
The following risk factors should be considered carefully in
evaluating the Company and its business before purchasing shares of the Common
Stock offered hereby.
FLUCTUATIONS IN QUARTERLY PERFORMANCE
The Company's revenues vary from quarter to quarter, with the largest
portion of revenues historically recognized in the third and fourth quarters of
each fiscal year. The Company believes that these quarterly patterns are partly
attributable to the Company's sales commission policies on its software
products, which compensate sales personnel for meeting or exceeding annual
quotas, and to the budgeting and purchasing cycles of customers. The Company
typically does not have a material backlog of unfilled orders, and revenues in
any quarter are substantially dependent on orders booked in the quarter. The
Company's professional services revenues may fluctuate quarterly due to the
completion or commencement of significant assignments, the number of working
days in a quarter and the utilization rate of professional services personnel.
The Company's quarterly operating results may fluctuate due to
numerous factors, including the demand for the Company's products and
professional services, the size and timing of customers' orders, the
introduction of new products and product enhancements by the Company or its
competitors, price changes by the Company, changes in the proportion of
revenues attributable to licenses versus service fees, product mix,
commencement or conclusion of significant services contracts, changes in
foreign currency exchange rates, timing of acquisitions and associated costs,
and competitive conditions in the industry. Net income may be
disproportionately affected by a reduction in revenues because only a small
portion of the Company's expenses varies with revenues.
The Company's operating plan has traditionally been based on products
and professional services for the mainframe market. If the proportion of the
Company's revenues derived from the client/server market increases, the
Company's operating margins could be lower as a percentage of total revenues.
Professional services have traditionally been less profitable than products,
with professional services generally more profitable in the client/server
market than in the mainframe market. On the other hand, the market for
client/server products is more competitive than the Company's traditional
mainframe product market and, therefore, may not be as profitable. Although
the proportion of the Company's net income derived from the client/server
market has remained relatively constant over the past three years, the
proportion of net income derived from the client/server and mainframe markets
may change in the immediate future. The Company cannot predict the extent to
which the above factors will lead to changes in its overall operating results.
TECHNOLOGICAL CHANGE
The Company's success will depend in part on its ability to develop
product enhancements and new products which keep pace with continuing changes
in technology and customer preferences. There can be no assurance that the
Company will be successful in developing product enhancements or new products
to address changing technologies adequately, that it can introduce such
products on a timely basis, or that any such products or enhancements will be
successful in the marketplace. The Company's failure to develop technological
improvements or to adapt its products to technological change may, over time,
have a material adverse effect on the Company's business. In addition, the
majority of the Company's products are purchased by customers using IBM and
IBM-compatible mainframe computing platforms and, to a much lesser extent,
workstations and personal computers. Worldwide, computing power is increasingly
provided by alternative computing platforms, including mid-range computers,
client/server networks, workstations and personal computers ("PCs"). A
significant shift in the way the Company's customers use computing platforms
may have a material adverse effect on the Company's business.
INTERNATIONAL SALES
The Company derived approximately $253.8 million, $208.8 million and
$189.6 million of revenues from foreign operations and export sales in fiscal
1997, 1996 and 1995, respectively, which constituted approximately 31.2%, 34.0%
and 35.5% of total revenues for those periods. The Company expects that such
sales will continue to generate a significant percentage of its total revenues.
Products are priced in the currency of the country in which they are sold.
Although the Company seeks to reduce this risk by hedging, changes in the
exchange rates of foreign currencies or exchange controls may adversely affect
the Company's results of operations. The international business is also subject
to other risks, including
4
<PAGE> 7
the need to comply with foreign and U.S. export laws and the greater difficulty
of managing business overseas. In addition, the Company's foreign operations
are affected by general economic conditions in the international markets in
which the Company does business. A prolonged economic downturn in Europe or
Asia Pacific may have a material adverse effect on the Company's business.
RELIANCE ON ACQUISITIONS
Substantially all of the Company's products have been developed from
acquired technology and products. To date, the Company has been successful in
developing acquired products and technologies into marketable software suitable
for its distribution channels. The Company believes that its future growth
lies, in part, in continuing to identify, acquire and then develop promising
technologies and products. While the Company is continually searching for
acquisition opportunities, there are presently no agreements, arrangements or
understandings with respect to any material acquisition and there can be no
assurance that the Company will continue to be successful in identifying,
acquiring and developing products and technology. If any potential acquisition
opportunities are identified, there can be no assurance that the Company will
consummate and successfully integrate any such acquisitions and there can be no
assurance as to the timing or effect on the business of the Company of any such
acquisitions.
IBM MAINFRAME DEPENDENCE
The Company's currently available run-time software products, which
comprise the majority of the Company's revenues for software products, are
designed for use with IBM and IBM-compatible mainframe computers. Specifically,
these software products target users of the MVS and VSE operating systems, the
CICS communications subsystem and the IMS and DB2 database management systems.
As a result, future sales of the Company's existing run-time products and
associated recurring maintenance revenues are dependent upon continued use of
IBM and IBM-compatible mainframes and their related systems software. In
addition, because the Company's run-time products operate in conjunction with
IBM systems software, changes to IBM systems software may require the Company
to adapt its run-time products to these changes. An inability to do so, or any
delay in doing so, may adversely affect the Company's operating results.
COMPETITION
The markets for Compuware's software products are highly competitive
and characterized by continual change and improvement in technology.
Compuware's competitors include BMC Software, Inc., Computer Associates
International, Inc., Centura Software Corporation, Forte Software, Inc.,
Informix Corporation, Oracle Corporation, PLATINUM Technology, Inc., Sybase,
Inc., and VIASOFT, Inc. None of the competitors competes in all of the same
product lines as Compuware. In addition, although Compuware believes its
products are generally complementary to those marketed by IBM, IBM does offer
some products that are directly competitive and there can be no assurance that
IBM will not choose to offer significant competing products in the future. The
principal competitive factors affecting the market for the Company's software
products include: responsiveness to customer needs, functionality, performance,
reliability, ease of use, quality of customer support, vendor reputation and
price. The Company believes, based on its current market position, that it has
competed effectively in the software products marketplace to date.
Nevertheless, a variety of external and internal events and circumstances could
adversely affect the Company's competitive capacity. The Company's ability to
remain competitive will depend, to a great extent, upon its performance in
product development and customer support. To be successful in the future, the
Company must respond promptly and effectively to the challenges of
technological change and its competitors' innovations by continually enhancing
its own product offerings.
The market for data processing professional services is highly
competitive, fragmented and characterized by low barriers to entry.
Compuware's principal competitors in professional services include Andersen
Consulting, Electronic Data Systems Corporation, IBM's Integrated Systems
Solutions Corp. and numerous small regional and local firms in the markets in
which Compuware has professional services offices. Several of these
competitors have substantially greater financial, marketing, recruiting and
training resources than Compuware. The principal competitive factors
affecting the market for Compuware's professional services include
responsiveness to customer needs, breadth and depth of technical skills
offered, availability and productivity of personnel, ability to demonstrate
achievement of results and price. Due to the continued increase in revenues in
professional services, Compuware believes that it has competed effectively to
date in all these areas. There is no assurance that the Company will be able
to compete as successfully in the future.
5
<PAGE> 8
PROFESSIONAL SERVICES CUSTOMER CONCENTRATION
A substantial portion of the Company's data processing professional
services revenues in any one year has historically been derived from a small
number of clients. In fiscal 1997, 1996 and 1995, approximately 9.4%, 9.0% and
11.4%, respectively, of the Company's professional services revenues were
attributable to The Ford Motor Company ("Ford"). The Company believes that
Ford will continue to represent a significant portion of the revenues of the
professional services business for at least the next twelve months. The loss
of, or reduced demand for services from, any of the Company's major services
clients could have an adverse effect on the results of operations.
PROPRIETARY RIGHTS
The Company regards its software as proprietary and attempts to
protect it with copyrights, trademarks, trade secret laws and restrictions on
disclosure, copying and transferring title. Despite these precautions, it may
be possible for unauthorized third parties to copy certain portions of the
Company's products or to obtain and use information that the Company regards as
proprietary. The Company has no patents, and existing copyright laws afford
only limited practical protection. In addition, the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. Furthermore, as the number of software
products in the industry increases and the functionality of these products
further overlaps, the Company believes that software developers will become
increasingly subject to infringement claims. Any such claims, with or without
merit, can be time consuming and expensive to defend.
During the due diligence stage of any software acquisition, the
Company researches and investigates the title to the software it will be
acquiring from the seller. This investigation generally includes without
limitation, litigation searches, copyright and trademark searches, review of
development documents and interviews with key employees of the seller regarding
development, title and ownership of the software products being acquired. The
acquisition document itself generally contains representations, warranties and
covenants concerning the title and ownership of the software products as well
as indemnification and remedy provisions in the event the representations,
warranties and covenants are breached by the seller. New hires of the Company
sign an offer letter which states that the new employee is being hired for his
or her talent and skill rather than for any trade secrets or proprietary
information of others of which he or she may have knowledge. Further,
employees of the Company execute an employee agreement that provides that work
developed for the Company or clients of the Company belong to the Company or
its clients, respectively. Although Compuware has not received any claims that
its products infringe on the proprietary rights of third parties, there can be
no assurance that third parties will not assert infringement claims against
Compuware in the future with respect to current and future products or that any
such assertion may not require Compuware to enter into royalty arrangements or
result in costly litigation.
DEPENDENCE ON KEY EMPLOYEES AND TECHNICAL PERSONNEL
The Company's success will depend in part upon the continued service
of its key senior management and technical personnel. All executive officers
are subject to employment contracts and the Company maintains key man life
insurance on all such personnel in amounts ranging from $0.5 million to $7.2
million. The Company's future success also depends on its continuing ability to
attract and retain highly qualified technical, managerial and marketing
personnel. The market for professional services and software products personnel
has historically been, and the Company expects that it will continue to be,
intensely competitive. To date, the Company has been successful in attracting
and retaining qualified technical personnel. There can be no assurance,
however, that the Company will continue to be successful in attracting or
retaining such personnel. The loss of certain key employees or the Company's
inability to attract and retain other qualified employees could have a material
adverse effect on the Company's business.
CONTROL BY CERTAIN PRINCIPAL SHAREHOLDERS
As of the date of this Prospectus, Peter Karmanos, Jr., Chairman of
the Board, Chief Executive Officer and a Director of the Company, had the power
to vote 12.0% of the outstanding shares of Common Stock of the Company.
Certain shareholders who had owned, as of the date of this Prospectus, an
aggregate of 18,927,586 shares of Common Stock (not including 1,758,600 shares
subject to options) have granted Mr. Karmanos proxies, expiring in November
2002, to vote their shares, including shares subject to such options, in all
matters coming before the shareholders. A proxy granted by Mr. Karmanos' wife,
Debra Glendening Karmanos, does not bear an expiration date. Such shareholders
are permitted to sell their shares free of the proxies in bona fide open market
transactions. Except for the proxy granted by
6
<PAGE> 9
Debra Glendening Karmanos, the proxies will be exercisable by Thomas Thewes, if
he survives Mr. Karmanos. As a result, Mr. Karmanos has and, in the future, Mr.
Thewes may have, significant influence over the affairs of the Company,
including any merger, consolidation, or sale of all or substantially all of the
Company's assets.
MICHIGAN LAW; ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS
Certain provisions of the Company's Restated Articles of Incorporation
and Bylaws and of Michigan law could delay or make more difficult a merger,
tender offer or proxy contest involving the Company. Michigan law provides that
certain business combinations between covered Michigan corporations and a
holder of 10% or more of the corporation's stock can only be consummated if
approved by a 90% shareholder vote and by a two-thirds vote of unaffiliated
shareholders, unless five years have elapsed since the acquisition by the 10%
shareholder of its stock and unless certain other conditions are satisfied.
Although such provisions are not applicable to the Company at this time,
Michigan law allows the Board of Directors to choose to be subject to such
provisions at any time. As a result, these provisions could discourage a third
party from paying to the shareholders a premium in a tender offer or other
change of control transaction. In addition, the Board of Directors has
authority to issue up to 5,000,000 shares of Class A Preferred Stock and to fix
the rights, preferences, privileges and restrictions, including voting rights,
of those shares without any further vote or action by the shareholders. The
rights of the holders of the Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any Preferred Stock that
may be issued in the future. While the Company believes that the ability to
issue Preferred Stock provides desirable flexibility in connection with
possible acquisitions and other corporate purposes, the issuance of Preferred
Stock could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company.
POTENTIAL VOLATILITY OF STOCK PRICE
The Company believes that factors such as quarterly fluctuations in
results of operations and announcements of acquisitions or new products by the
Company or by its competitors may cause the market price of the Common Stock to
fluctuate. Moreover, in recent years the stock market in general, and the
shares of technology companies in particular, have experienced extreme price
fluctuations. These broad market and industry fluctuations may adversely
affect the market price of the Company's Common Stock.
7
<PAGE> 10
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock offered hereby by the Selling Shareholders.
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock since
fiscal 1986. The Company's loan agreement expressly prohibits the payment of
any cash dividends on Common Stock. The Company currently expects that it will
retain any earnings for use in the operation and expansion of its business and
does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future.
DETERMINATION OF OFFERING PRICE
The offering price of the securities offered hereby by Selling
Shareholders may be based either on the market price of such securities on the
Nasdaq National Market as it may exist from day to day during the offering
period or may reflect a negotiated price.
SELLING SHAREHOLDERS
The persons listed in the first column of the table below are the
"Selling Shareholders." The Selling Shareholders are the former shareholders
of Nu-Mega Technologies, Inc. a New Hampshire corporation ("NuMega"), acquired
by Compuware pursuant to an Agreement and Plan of Merger, dated as of December
2, 1997 (the "Merger Agreement"). In connection with the acquisition of NuMega
by Compuware, the Selling Shareholders received an aggregate of 3,341,603
shares of Compuware Common Stock for their stock in NuMega. Of the 3,341,603
shares received by the Selling Shareholders,up to 334,150 may be held in escrow
to secure the indemnification obligations of the Selling Shareholders as
provided in the Merger Agreement.
The following table shows for each Selling Shareholder, as of the date
of this Prospectus, certain information with regard to beneficial ownership of
Common Stock of the Company:
<TABLE>
<CAPTION>
Amount and Percent
Amount of Beneficial Amount of of Beneficial
Ownership of Common Common Stock Ownership of Common
Name Stock Prior to Offering Hereby Offered Stock after Offering (1)
---- ----------------------- -------------- ------------------------
<S> <C> <C> <C>
Franklin C. Grossman (2) 1,419,264 1,419,264 0 (0%)
Jonathan Jesse Irrevocable 3,593 3,593 0 (0%)
Trust of 1996
Suzi M. Grossman 3,804 3,804 0 (0%)
Irrevocable Trust
Jennny R. Grossman 3,804 3,804 0 (0%)
Irrevocable Trust
Thomas Guinther 950 950 0 (0%)
Thomas A. Herring (2)(3) 256,814 30,437 226,377(*)
Henry L. Hillman Trust 63,200 63,200 0 (0%)
William Talbott Hillman 11,849 11,849 0 (0%)
Trust
Audrey Hilliard Hillman 11,849 11,849 0 (0%)
Trust
Henry Lea Hillman, Jr. 11,849 11,849 0 (0%)
Trust
Juliet Lea Hillman Trust 11,849 11,849 0 (0%)
Mercury Investments 31,600 31,600 0 (0%)
L.L.C
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
James P. Moskun (2) 1,224,761 1,224,761 0 (0%)
Meghan A. Moskun 3,593 3,593 0 (0%)
Irrevocable Trust of
1996
Lucas J. Moskun 3,593 3,593 0 (0%)
Irrevocable Trust of
1996
Catherine Moskun 3,593 3,593 0 (0%)
Irrevocable Trust of
1996
Paul J. Moskun 3,593 3,593 0 (0%)
Irrevocable Trust of
1996
Patricia A. Jesse 3,593 3,593 0 (0%)
Irrevocable Trust of
1996
Linda Jesse Irrevocable 3,593 3,593 0 (0%)
Trust of 1996
P. Matthew Pietrek (2)(4) 16,966 760 16,206(*)
Rho Management 189,600 189,600 0 (0%)
Company, Inc.
TCV II, V.O.F. (5) 8,380 3,928 4,452(*)
TCV II (Q), L.P. (5) 198,381 92,975 105,406(*)
TCV II Strategic 35,206 16,500 18,706(*)
Partners, L.P. (5)
Technology Crossover 39,398 18,464 20,934(*)
Ventures II, C.V. (5)
Technology Crossover 258,037 120,933 137,104(*)
Ventures II, L.P. (5)
Venhill Limited 47,400 47,400 0 (0%)
Partnership
William Wong 676 676 0 (0%)
</TABLE>
-----------------------
* Represents less than 1% of outstanding Common Stock.
(1) Based on the number of shares outstanding at the date of this Prospectus;
assumes all of the shares offered hereby are sold by the Selling Shareholders.
(2) Employed by NuMega prior to the NuMega merger and currently employed by the
Company.
(3) "Beneficial Ownership" includes 226,377 shares of Common Stock subject to
options which may be exercised within 60 days of the date of this Prospectus.
(4) "Beneficial Ownership" includes 16,206 shares of Common Stock subject to
options which may be exercised within 60 days of the date of this Prospectus.
(5) Technology Crossover Management II, L.L.C. ("TCM II"), is the sole General
Partner of Technology Crossover Ventures II, L.P., TCV II(Q), L.P. and TCV II
Strategic Partners, L.P., and the sole Investment General Partner of TCV II,
V.O.F. and Technology Crossover Ventures II, C.V. As such, TCM II has sole
investment control with respect to 539,404 shares of the Common Stock owned in
the aggregate by these partnerships.
PLAN OF DISTRIBUTION
The shares offered hereby may be sold from time to time by the Selling
Shareholders, or by pledgees, donees, transferees or other successors in
interest of the Selling Shareholders. Such sales may be made on the Nasdaq
National Market, or otherwise, at prices and on terms then prevailing or at
prices related to the then-current market prices, or in negotiated transactions
at negotiated prices. The shares may be sold by one or a combination of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Selling Shareholders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from Selling Shareholders in amounts to be negotiated immediately
prior to the sale. The Selling Shareholders and any broker-dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Acts, and any commission received by
them and any profit on the resale of shares sold by them may be deemed to be
underwriting discounts and commissions.
9
<PAGE> 12
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Honigman Miller Schwartz and Cohn, Detroit,
Michigan.
EXPERTS
The consolidated financial statements and related financial statement
schedules of Compuware Corporation and subsidiaries incorporated by reference
from the Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1997, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports which are incorporated herein by reference, and have
been so incorporated in reliance upon such reports given upon the authority of
that firm as experts in accounting and auditing.
10
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents By Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
11
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Company in connection with the issuance
and distribution of the securities being registered are estimated to be as
follows:
<TABLE>
<CAPTION>
TOTAL
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,298
Printing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Nasdaq Listing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,000
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VI of the Bylaws of the Registrant provides for the indemnification
of the officers and directors of the Registrant in the manner authorized by the
Michigan Business Corporation Act. The Michigan Business Corporation Act
authorities a corporation, under certain circumstances, to indemnify its
directors and officers (including reimbursement for expenses incurred).
Reference is made to Exhibit 3.4 to this Registration Statement for the
complete text of Article VI of the Bylaws.
For provisions regarding the indemnification of the Registrant by the
Selling Shareholders, and the indemnification of the Selling Shareholders by
the Registrant, against certain liabilities, including liabilities under the
Securities Act of 1933, reference is made to Section 8 of the Registration
Rights Agreement, a form of which is filed as Exhibit 4.8 to this Registration
Statement.
ITEM 16. EXHIBITS
(a) Exhibits
2.1 Stock Exchange Agreement, dated as of March 16, 1994, by and
among Compuware Corporation, Uniface Holding B.V., the Sellers
therein and the Sellers' Agent (incorporated by reference to
the corresponding exhibit to the Registration Statement on
Form S-4, as amended, Registration No. 33-78822)
3.4 Certificate of Restated Bylaws of Compuware, as amended
(incorporated by reference to the corresponding exhibit to the
Registration Statement on Form S-1, as amended, Registration
No. 33-53652)
4.7 Certificate of Amendment to the Restated Articles of
Incorporation (incorporated by reference to the corresponding
exhibit to the Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1997)
4.8 Registration Rights Agreement dated December 12, 1997, by and
among Compuware Corporation, the former shareholders of
Nu-Mega Technologies, Inc., and Thomas Herring.
5.1 Opinion of Honigman Miller Schwartz and Cohn concerning the
legality of the securities being offered
23.1 Independent Auditors' Consent
23.2 Consent of Honigman Miller Schwartz and Cohn (contained in
their opinion filed as Exhibit 5.1)
24.1 Power of Attorney (included after the signature of the
Registrant contained on page II-3 of this Registration
Statement)
II-1
<PAGE> 15
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective data of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-2
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Farmington Hills, State of Michigan, on January
7, 1998.
COMPUWARE CORPORATION
By: /s/ Thomas Costello, Jr.
------------------------------
Thomas Costello, Jr.
Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Thomas Costello, Jr. and W. James
Prowse or either of them, his/her true and lawful attorneys-in-fact and agents,
each with full power of substitution for him/her and in his/her name, place and
stead, in any and all capacities, to sign any or all amendments (including
without limitation post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto each of said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he/she might or
could do in person, hereby ratifying and confirming all that any said
attorneys-in-fact and agents, or his/her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Peter Karmanos, Jr. Chairman of the Board, Chief Executive January 7, 1998
- ------------------------------------- Officer and Director (Principal Executive
Peter Karmanos, Jr. Officer
/s/ Thomas Thewes Vice Chairman of the Board January 7, 1998
- ------------------------------------- and Director
Thomas Thewes
/s/ Joseph A. Nathan President, Chief Operating Officer January 7, 1998
- ------------------------------------- and Director
Joseph A. Nathan
/s/ W. James Prowse Senior Vice President and Director January 7, 1998
- -------------------------------------
W. James Prowse
/s/ Ralph A. Caponigro Senior Vice President and Chief Financial January 6, 1998
- ------------------------------------- Officer (Principal Financial Officer and
Ralph A. Caponigro Principal Accounting Officer)
Director January __, 1998
- -------------------------------------
Bernard M. Goldsmith
</TABLE>
II-3
<PAGE> 17
<TABLE>
<S> <C> <C>
Director January __, 1998
- -------------------------------------
William O. Grabe
/s/ William R. Halling Director January 7, 1998
- -------------------------------------
William R. Halling
/s/ G. Scott Romney Director January 8, 1998
- -------------------------------------
G. Scott Romney
Director January __, 1998
- -------------------------------------
Lowell Weicker, Jr.
Director January __, 1998
- -------------------------------------
Elaine K. Didier
Director January __, 1998
- -------------------------------------
Elizabeth A. Chappell
</TABLE>
II-4
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<Capiton>
EXHIBIT
NUMBER EXHIBIT PAGE NO.
- ------ ------- --------
<S> <C> <C>
2.1 Stock Exchange Agreement, dated as of March 16, 1994,
by and among Compuware Corporation, Uniface Holding
B.V., the Sellers therein and the Sellers' Agent (incorporated
by reference to the corresponding exhibit to the Registration
Statement on Form S-4, as amended, Registration No. 33-78822)
3.4 Certificate of Restated Bylaws of Compuware, as amended
(incorporated by reference to the corresponding exhibit to the
Registration Statement on Form S-1, as amended, Registration
No. 33-53652)
4.7 Certificate of Amendment to the Restated Articles of
Incorporation (incorporated by reference to the corresponding
exhibit to the Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1997)
4.8 Registration Rights Agreement dated December 12, 1997, by and among Compuware
Corporation, the former shareholders of Nu-Mega Technologies, Inc., and Thomas
Herring.
5.1 Opinion of Honigman Miller Schwartz and Cohn concerning the
legality of the securities being offered.
23.1 Independent Auditors' Consent.
23.2 Consent of Honigman Miller Schwartz and Cohn (contained in
their opinion filed as Exhibit 5.1).
24.1 Power of Attorney (included after the signature of
the Registrant contained on page II-3 of this Registration Statement).
</TABLE>
II-5
<PAGE> 1
Exhibit 4.8
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of this 12 day of December,
1997 (this "Agreement"), is by and among (i) Compuware Corporation, a Michigan
corporation ("Parent"), (ii) the former shareholders of Nu-Mega Technologies,
Inc. listed on Schedule A hereto (collectively, the "Shareholders"), and (iii)
Thomas Herring, as agent for the Shareholders (the "Shareholders'
Representative").
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of December
2, 1997, by and among Parent, NuSub Acquisition, Inc., a New Hampshire
corporation and a subsidiary of Parent ("Merger Sub"), Nu-Mega Technologies,
Inc., a New Hampshire corporation (the "Company"), and certain other parties
thereto (the "Merger Agreement"), the parties thereto have agreed, subject to
the terms and conditions set forth therein, to merge Merger Sub with and into
the Company (the "Merger") and thereby to convert all shares of NuMega Stock
(as such term is defined in the Merger Agreement) then outstanding into shares
of Compuware Stock (as such term is defined in the Merger Agreement);
WHEREAS, the Shareholders desire to have liquidity with respect to the
shares of Compuware Stock they receive in the Merger;
WHEREAS, Parent desires to grant each of the Shareholders registration
rights as provided herein; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties agree as follows:
1. DEFINITIONS OF CERTAIN TERMS. As used herein, the following terms shall
have the following meanings:
Exchange Act: the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC issued thereunder, as they may, from time
to time, be in effect.
Holder: any Shareholder holding Registerable Shares and any other person
or entity holding Registerable Shares to whom the registration rights
granted in this Agreement have been transferred pursuant to Section 9
hereof.
Registerable Shares: the shares of Compuware Stock issued to the
Shareholders pursuant to the Merger, and any other securities issued by
Parent as a dividend or other distribution with respect to, or in exchange
for or in replacement of, such shares; provided, however, Registerable
Shares shall not include shares of Compuware Stock that (a) have been
registered under the Securities Act and disposed of pursuant to the
registration statement used to effect such registration or (b) have been
sold in the public securities markets in the United States of America.
<PAGE> 2
SEC: the United States Securities and Exchange Commission, or any
governmental agency succeeding to its functions.
Securities Act: the Securities Act of 1933, as amended, and the rules and
regulations of the SEC issued thereunder, as they may, from time to time,
be in effect.
Capitalized terms used, but not otherwise defined, in this Agreement shall
have the meanings given to them in the Merger Agreement.
Where this Agreement requires Parent to use "best efforts" to satisfy an
obligation or requirement under this Agreement, the parties agree that this
shall not require Parent to make any payment that would not ordinarily be made
in the course of filing, and seeking and maintaining the effectiveness of, a
registration statement similar to the Shelf Registration (as hereinafter
defined).
2. SHELF REGISTRATION. Parent agrees that, within twenty-five (25) days
of the Closing of the Merger, it shall cause to be filed a registration
statement (a "Shelf Registration") on Form S-3 under the Securities Act for an
offering to be made on a delayed or continuous basis pursuant to Rule 415
thereunder or any similar rule that may be adopted by the SEC and permitting
sales in ordinary course brokerage or dealer transactions not involving
any underwritten public offering covering all of the Registerable Shares. Parent
shall use best efforts thereafter (a) to cause the Shelf Registration to be
declared effective by the SEC and (b) subject to Section 3 hereof, to keep the
Shelf Registration continuously effective until the earlier to occur of (i) the
first anniversary of the Closing of the Merger and (ii) the first date on which
no Registrable Shares originally covered by the Shelf Registration shall
constitute Registrable Shares (such period during which the Shelf Registration
is effective is referred to herein as the "Registration Period").
3. REGISTRATION PROCEDURES. After Parent commences the registration of
the Registrable Shares pursuant to the Shelf Registration, Parent shall:
(a) furnish to a Holder such number of copies of the prospectus
included in the Shelf Registration (including any preliminary
prospectus), any amendment or supplement thereto, and such other documents as a
Holder may reasonably request in order to facilitate the disposition of the
Registrable Shares owned by the Holders;
(b) use best efforts to register or qualify such Registrable
Shares under such other securities or "blue sky" laws of such
jurisdictions within the United States as a Holder reasonably requests in
writing; provided, however, that Parent shall not be required (i) to qualify to
do business in any jurisdiction where it is not then so qualified or (ii) to
consent to general service of process in any jurisdiction where it is not then
so subject to service of process; and
(c) use best efforts to cause all Registrable Shares covered by
the Shelf Registration to be listed on each securities exchange or
market, if any, on which similar securities issued by Parent are then listed,
provided that the applicable listing requirements are satisfied.
-2-
<PAGE> 3
4. STOP ORDER; SUPPLEMENT TO THE PROSPECTUS; PARENT'S INSIDER TRADING
POLICIES.
(a) Parent will notify the Holders promptly of (i) the issuance
of any stop order suspending the effectiveness of the Shelf Registration or
the institution or threatening of any proceeding for such purpose or (ii)
the receipt by Parent of any notification with respect to the suspension
of the qualification of the Registrable Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose. Immediately
upon receipt of any such notice, the Holders shall cease to offer and sell any
Registrable Shares pursuant to the Shelf Registration in the jurisdiction to
which such stop order or suspension relates. Parent shall use best efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if any such stop order is issued or any such qualification
is suspended, to obtain as soon as possible the withdrawal or revocation
thereof, and will notify the Holders at the earliest practicable date of the
date on which the Holders may offer and sell Registrable Shares pursuant to the
Shelf Registration.
(b) Parent will notify the Holders promptly of the occurrence of
any event or the existence of any state of facts that, in the judgment
of Parent, should be set forth in the prospectus used in connection with the
Shelf Registration (the "Prospectus"). Immediately upon receipt of such notice,
the Holders shall cease to offer or sell any Registrable Shares pursuant to
such Prospectus, cease to deliver or use such Prospectus and, if so requested
by Parent, return to Parent, at its expense, all copies (other than permanent
file copies) of such Prospectus. Parent will, as soon as the information
becomes available in a form such that it may be included in an amendment or
supplement to the Prospectus, use best efforts to amend or supplement such
Prospectus in order to set forth or reflect such event or state of facts; it
being understood that in the event that Parent determines in good faith that
the disclosure of such information would be seriously detrimental to Parent or
its shareholders, Parent shall file such an amendment or supplement to the
Prospectus as soon as reasonably practicable, and in any event within sixty
(60) days. Parent will furnish copies of such amendment or supplement to the
Prospectus to the Holders.
(c) Each Holder agrees, if and for so long as the Holder is an
employee of Parent or any of Parent's Subsidiaries, to comply with any Parent
policy concerning the purchase and sale of securities of Parent.
(d) Notwithstanding Section 4(a) or 4(b) hereof, in no event
shall the Holders be prevented from making sales of Registrable Shares
pursuant to the Shelf Registration by reason of the application of Section 4(a)
or 4(b) hereof for more than ninety (90) days during the Registration Period.
5. INFORMATION CONCERNING THE SELLERS.
(a) The obligations of Parent to take actions contemplated by
Sections 2, 3 and 4 hereof with respect to an offering of Registrable Shares
shall be subject to the condition that each Holder shall (i) conform to all
applicable requirements of the Securities Act and the
-3-
<PAGE> 4
Exchange Act with respect to the offering and sale of securities and (ii)
advise each underwriter, broker or dealer through which any of such Registrable
Shares are offered that such Registrable Shares are part of a distribution that
is subject to the prospectus delivery requirements of the Securities Act, and
such Holder shall furnish to Parent in writing such information and furnish
such documents as may be reasonably required by Parent in the preparation of
(A) the Prospectus (or any amendment or supplement thereto) with respect to
such offering and (B) any qualification of such Registrable Shares under state
securities or "blue sky" laws pursuant to Section 3(b) hereof, and shall
promptly notify Parent of the occurrence, from the date on which such
information or documents are furnished to the date of the closing for the sale
of such Registrable Shares, of any event relating to such Holder that is
required under the Securities Act to be set forth in the Prospectus (or any
amendment or supplement thereto).
(b) At the end of the Registration Period the Holders shall
discontinue sales of Registrable Shares pursuant to the Shelf Registration
after Parent has given notice to the Holders of its intention to remove from
registration the securities covered by the Registration Statement which remain
unsold, and the Holders shall notify Parent immediately upon receipt of such
notice from Parent of the number of shares of the Holders that are registered
but remain unsold.
6. EXPENSES OF REGISTRATION. Parent shall pay all reasonable expenses
incident to its performance of or compliance with this Agreement and
registration of Registrable Shares in connection herewith, including (a) all
SEC, stock exchange or market and National Association of Securities Dealers,
Inc. registration and filing fees, (b) all fees and expenses incurred in
complying with securities or "blue sky" laws, (c) all printing, messenger and
delivery expenses, (d) all fees and disbursements of Parent's independent
public accountants and counsel, and (e) the reasonable fees and expenses of one
counsel to the Holders, not to exceed $15,000 (all of such expenses herein
referred to as "Registration Expenses"). The Registration Expenses shall not
include any sales or underwriting discounts, commissions or fees attributable
to the sale of the Registrable Shares, which shall be borne by the Holders.
7. DISCLOSURE. With a view to making available registration on Form S-3
and the benefits of Rule 144 under the Securities Act, Parent agrees, for a
period of three years following the date of this Agreement, to:
(a) Make and keep current public information available within the
meaning of Rule 144(c).
(b) File with the SEC in a timely manner all reports and other
documents and information required of Parent under the Exchange Act, and
take such other actions as may be necessary to assure the availability of Form
S-3 for use in connection with the registration rights provided in this
Agreement.
(c) Furnish to a holder forthwith upon request a written
statement as to Parent's compliance with the reporting requirements of Rule
144 and the Exchange Act, a copy
-4-
<PAGE> 5
of Parent's most recent annual and quarterly reports, and such other reports,
documents and other information in the possession of or reasonably obtainable
by Parent as the Holder may reasonably request in availing itself of Rule 144.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Parent agrees to indemnify, to the extent permitted by law
and subject to the terms of this Agreement, each Holder and each person,
if any, who controls such Holder (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in the Shelf Registration (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto) or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein in the light of
the circumstances under which they were made not misleading; provided, however,
that Parent shall not be liable to any Holder and each person, if any, who
controls such Holder (within the meaning of the Securities Act) to the extent
that any such loss, claim, damage, liability or expense arises out of, or is
based upon (i) any untrue or alleged untrue statement, or any omission, if such
statement or omission shall have been made in reliance upon and in conformity
with information relating to such Holder or person furnished in writing to
Parent by any such Holder or person expressly for use in the preparation of the
Shelf Registration (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) or (ii) any failure of the Holders to deliver a
copy of the Prospectus (or any amendment or supplement thereto) as required by
the Securities Act.
(b) In connection with the Shelf Registration, each Holder
agrees to indemnify, to the extent permitted by law and subject to the
terms of this Agreement, Parent, its directors, officers, employees and agents
and each person who controls Parent (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees) arising out of or based upon (i) any untrue or
alleged untrue statement of a material fact contained in the Shelf Registration
(or any amendment thereto) or the Prospectus (or any amendment or supplement
thereto) or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein
in the light of the circumstances under which they were made not misleading, to
the extent that such untrue statement or omission was made in reliance upon and
in conformity with information furnished in writing to Parent by such Holder
expressly for use in the preparation of the Shelf Registration (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto)
or any failure of such Holder to deliver a copy of the Prospectus (or any
amendment or supplement thereto) as required by the Securities Act.
(c) Each party entitled to indemnification under this Section 8
shall give notice to the party required to provide indemnification promptly
after such indemnified party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the indemnifying party to assume the
defense of any such claim or any litigation resulting therefrom; provided that
the delay or failure of any indemnified party to give notice as provided herein
shall
-5-
<PAGE> 6
not relieve the indemnifying party of its obligations under this Section 8,
except to the extent that the indemnifying party shall have been materially
adversely affected by such delay or failure. The indemnified party may
participate in such defense at such party's expense; provided, however, that
the indemnifying party shall pay such expense if the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such claim or litigation resulting therefrom. No indemnified party shall
consent to entry of any judgment or settle any claim or litigation without the
prior written consent of the indemnifying party.
(d) If the indemnification provided for in this Section 8 from
the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
therein as a result of a judicial determination that such indemnification may
not be enforced in such case notwithstanding this Agreement, the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and indemnified parties
in connection with the actions which resulted in such losses, claims, damages,
liabilities or expense, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
9. TRANSFER OF REGISTRATION RIGHTS. The registration rights of any Holder
(and of any transferee of any Holder or its transferees) under this Agreement
with respect to any Registrable Shares may be transferred to any transferee of
such Registrable Shares; provided that Parent is given written notice by the
Holder at the time of such transfer stating the name and address of the
transferee and identifying the Registrable Shares with respect to which the
rights under this Agreement are being assigned and such transferee executes and
delivers such agreements as Parent may reasonably require in order to confirm
that such transferee agrees to be bound by this Agreement.
10. AMENDMENTS AND SUPPLEMENTS. This Agreement may not be amended,
modified or supplemented by the parties hereto in any manner, except by an
instrument in writing signed by Parent and the Shareholders' Representatives.
11. NO WAIVER. The terms and conditions of this Agreement may be waived
only by a written instrument signed by (a) the Shareholders' Representatives in
the case where a Shareholder or the Shareholders' Representatives are waiving
compliance and (b) by Parent in the case where Parent is waiving compliance.
The failure of any party hereto to enforce at any time
-6-
<PAGE> 7
any of the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to enforce
each and every such provision. No waiver of any breach of or non-compliance
with this Agreement shall be held to be a waiver of any other or subsequent
breach or non-compliance. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
12. GOVERNING LAW. This Agreement and all disputes arising hereunder shall
be governed by, and construed and enforced in accordance with, the substantive
laws of Michigan, without regard to its principles of conflicts of laws.
13. NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered by hand, sent by facsimile
transmission with confirmation of receipt, sent via a reputable overnight
courier service with confirmation of receipt requested, or mailed by registered
or certified mail (postage prepaid and return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice), and shall be deemed given on the date on which
delivered by hand or otherwise on the date of receipt as confirmed:
To Parent:
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, MI 48334-2564
Facsimile: (313) 737-1822
Attention: President
With a copy to:
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, MI 48334-2564
Facsimile: (313) 737-7690
Attention: General Counsel
To any Holder or the Shareholders' Representative:
Thomas Herring
Nu-Mega Technologies, Inc.
9 Townsend West
Nashua, NH 03063
Facsimile: (603) 889-1135
-7-
<PAGE> 8
With a copy to:
Robert L. Birnbaum, Esq.
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, MA 02109-2170
14. CONSTRUCTION OF AGREEMENT. A reference to a Section shall mean a
Section in this Agreement unless otherwise expressly stated. The titles and
headings herein are for reference purposes only and shall not in any manner
limit the construction of this Agreement which shall be considered as a whole.
The words "include," "includes" and "including" when used herein shall be
deemed in each case to be followed by the words "without limitation."
15. MERGERS, ETC. During the Registration Period, Parent shall not,
directly or indirectly, enter into any merger, consolidation or reorganization
in which Parent shall not be the surviving corporation unless the proposed
surviving corporation shall, prior to such merger, consolidation or
reorganization, agree in writing to assume the obligations of Parent under this
Agreement, and for that purpose references hereunder to "Registrable Shares"
shall be deemed reference to the securities that the Holders would be entitled
to receive in exchange for Registrable Shares under any such merger,
consolidation or reorganization, provided, however, that the provisions of this
Agreement shall not apply in the event of any merger, consolidation or
reorganization in which Parent is not the surviving corporation if the Holders
of Registrable Shares are entitled to receive in exchange therefor (a) cash or
(b) securities of the acquiring corporation that may be immediately sold to the
public without registration under the Securities Act.
16. ENTIRE AGREEMENT, ASSIGNABILITY, ETC. This Agreement and the Merger
Agreement and the documents and other agreements among the parties hereto and
thereto as contemplated by or referred to herein or therein constitute the
entire agreement among the parties with respect to the subject matter hereof
and supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder, except as otherwise expressly provided herein and shall not
be assignable by operation of law or otherwise, except as provided in Section 9
or 15 hereof.
17. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
-8-
<PAGE> 9
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
Agreement.
* * * * * * * * * * *
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed as an agreement under seal as of the date first
written above.
SHAREHOLDERS' REPRESENTATIVE COMPUWARE CORPORATION
/s/ Thomas A. Herring By: /s/ Eliot R. Stark
- --------------------------------- --------------------------------
Thomas A. Herring Title: Sr. Vice President
/s/ Franklin C. Grossman /s/ James P. Moskun
- --------------------------------- -----------------------------------
Franklin C. Grossman James P. Moskun
/s/ Franklin C. Grossman /s/ Franklin C. Grossman
- --------------------------------- -----------------------------------
Suzi M. Grossman Irrevocable Trust Jenny R. Grossman Irrevocable Trust
/s/ Jonathan Jesse /s/ Jonathan Jesse
- --------------------------------- -----------------------------------
Meghan A. Moskun Irrevocable Trust Lucas J. Moskun Irrevocable Trust
of 1996, Jonathan Jesse Trustee of 1996, Jonathan Jesse Trustee
/s/ Jonathan Jesse /s/ Jonathan Jesse
- --------------------------------- -----------------------------------
Catherine Moskun Irrevocable Trust Paul J. Moskun Irrevocable Trust
of 1996, Jonathan Jesse Trustee of 1996, Jonathan Jesse Trustee
/s/ Jonathan Jesse /s/ Jonathan Jesse
- --------------------------------- -----------------------------------
Patrucia A. Jesse Irrevocable Trust Linda Jesse Irrevocable Trust
of 1996, Jonathan Jesse Trustee of 1996, Jonathan Jesse Trustee
/s/ Franklin C. Grossman /s/ Thomas A. Herring
- --------------------------------- -----------------------------------
Jonathan Jesse Irrevocable Trust Thomas A. Herring
of 1996, Katherine Grossman Trustee
/s/ P. Matthew Pietrek /s/ William Wong
- --------------------------------- -----------------------------------
P. Matthew Pietrek William Wong
/s/ Thomas Guinther
- ---------------------------------
Thomas Guinther
-9-
<PAGE> 10
TECHNOLOGY CROSSOVER VENTURES II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
--------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/ Robert C. Bensky
--------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
--------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/ Robert C. Bensky
--------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
-10-
<PAGE> 11
TCV II (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ Robert C. Bensky
--------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
RHO MANAGEMENT TRUST I
By: Rho Management Company, Inc.
as Investment Advisor
By: /s/ Habib Kairouz
--------------------------------
Name: Habib Kairouz
Title: Managing Director
C.G. GREFENSTETTE and THOMAS G. BIGLEY
TRUSTEES U/A/T DATED AUGUST 28,1968 FOR
HENRY LEA HILLMAN, JR.
By: /s/ C. G. Grefenstette
--------------------------------
Name: C. G. Grefenstette, Trustee
By: /s/ T. G. Bigley
--------------------------------
Name: T. G. Bigley, Trustee
C.G. GREFENSTETTE and THOMAS G. BIGLEY
TRUSTEES U/A/T DATED AUGUST 28,1968 FOR
WILLIAM TALBOTT HILLMAN
By: /s/ C. G. Grefenstette
--------------------------------
Name: C. G. Grefenstette, Trustee
By: /s/ T. G. Bigley
--------------------------------
Name: T. G. Bigley, Trustee
C.G. GREFENSTETTE and THOMAS G. BIGLEY
TRUSTEES U/A/T DATED AUGUST 28,1968 FOR
AUDREY HILLIARD HILLMAN
By: /s/ C. G. Grefenstette
--------------------------------
Name: C. G. Grefenstette, Trustee
By: /s/ T. G. Bigley
--------------------------------
Name: T. G. Bigley, Trustee
-11-
<PAGE> 12
C.G. GREFENSTETTE and THOMAS G. BIGLEY
TRUSTEES U/A/T DATED AUGUST 28,1968 FOR
JULIET LEA HILLMAN
By: /s/ C. G. Grefenstette
--------------------------------
Name: C. G. Grefenstette, Trustee
By: /s/ T. G. Bigley
--------------------------------
Name: T. G. Bigley, Trustee
HENRY L. HILLMAN, ELSIE HILLIARD
HILLMAN
and C.G. GREFENSTETTE TRUSTEES OF THE
HENRY L. HILLMAN TRUST U/A/T DATED
NOVEMBER 18,1985
By: /s/ C. G. Grefenstette
--------------------------------
Name: C. G. Grefenstette, Trustee
VENHILL LIMITED PARTNERSHIP
c/o Howard B. Hillman, General Partner
Autotrol Technology
By: /s/ Howard B. Hillman
--------------------------------
Name:
Title:
MERCURY INVESTMENTS L.L.C.
By: /s/ Andrew S. Martzloff
--------------------------------
Name: Andrew S. Martzloff
Title: Manager
-12-
<PAGE> 1
EXHIBIT 5.1
January 8, 1998
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan 48334
Gentlemen:
We have represented Compuware Corporation, a Michigan corporation (the
"Company"), in connection with the preparation and filing of a Registration
Statement on Form S-3 (the "Registration Statement"), for the registration
under the Securities Act of 1933, as amended, of 3,341,614 shares of the common
stock, par value $.01 (the "Common Stock"), of the Company issued to the
Selling Shareholders pursuant to the Agreement and Plan of Merger, dated
December 2, 1997, by and among the Company, NuMega Technologies, Inc., and
certain others (the "Agreement"). We have examined the proceedings taken by
the Company in connection with the Agreement and the sale and issuance of the
Common Stock pursuant thereto and such other records, documents and matters as
we have deemed necessary or advisable in order to enable us to render this
opinion.
Based upon the above and taking into account such legal considerations as we
have deemed relevant, we are of the opinion that the shares of Common Stock
covered by the Registration Statement to be sold by the Selling Shareholders
have been duly authorized and legally and validly issued by the
Company and are fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Honigman Miller Schwartz and Cohn
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Compuware Corporation on Form S-3 of our report dated May 5, 1997,
appearing in the Annual Report on Form 10-K of Compuware Corporation for the
year ended March 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche, LLP
Detroit, Michigan
January 7, 1998
