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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
DATA PROCESSING RESOURCES CORPORATION
(NAME OF SUBJECT COMPANY)
COMP ACQUISITION CO.
COMPUWARE CORPORATION
(BIDDER)
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
237823109
(CUSIP NUMBER OF CLASS OF SECURITIES)
THOMAS COSTELLO, JR., ESQ.
COMP ACQUISITION CO.
COMPUWARE CORPORATION
31440 NORTHWESTERN HIGHWAY
FARMINGTON HILLS, MI 48334-2564
TELEPHONE: (248) 737-7300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPIES TO:
DAVID W. HEALY, ESQ.
DOUGLAS N. COGEN, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CA 94306
TELEPHONE: (650) 494-0600
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING**
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$354,297,984 $70,860
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* Estimated for purposes of calculating the amount of filing fee only. The
amount assumes the purchase of 14,762,416 shares of common stock, no par
value, of Data Processing Resources Corporation, at $24.00 per share in cash.
Such number of shares represents all the shares outstanding as of June 21,
1999.
** The amount of the filing fee was calculated in accordance with Rule 0-11(d)
under the Exchange Act.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or schedule and the date of its filing.
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Amount Previously Paid: None.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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ITEM 1: SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Data Processing Resources
Corporation, a California corporation (the "Company"), which has its principal
executive offices at 18301 Von Karman Avenue, Suite 600, Irvine, California
92612.
(b) This Statement on Schedule 14D-1 relates to the offer by Purchaser
(defined below), to purchase all outstanding shares of Common Stock, no par
value, of the Company (the "Shares"), at $24.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase (the "Offer to Purchase") and in the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2) (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"). The information set forth in the Introduction to and Section 1 ("Terms
of this Offer; Expiration Date") of the Offer to Purchase is incorporated herein
by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in that market set
forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase
is incorporated herein by reference.
ITEM 2: IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by COMP Acquisition Co., a
California corporation ("Purchaser"), and Compuware Corporation, a Michigan
corporation ("Compuware"). Purchaser is a wholly-owned subsidiary of Compuware.
The information concerning the principal businesses and address of the principal
office of Purchaser and Compuware and the information concerning the name,
business address, present principal occupation or employment and the name,
principal business and address of any corporation or other organization in which
such employment or occupation is conducted, material occupations, positions,
offices or employments during the last five years and citizenship of each of the
executive officers and directors of Purchaser and Compuware are set forth in the
Introduction to and Section 8 ("Certain Information Concerning Purchaser and
Compuware") of and Schedule I to the Offer to Purchase and are incorporated
herein by reference.
(e) and (f) During the last five years, neither Purchaser, Compuware nor,
to the best knowledge of Purchaser and Compuware, any of the persons listed in
Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3: PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Compuware"), Section 10 ("Background of this Offer; Contacts with
the Company; and the Merger Agreement") of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser and Compuware"), Section 10 ("Background of this Offer, Contacts with
the Company; and the Merger Agreement") and Section 11 ("Purpose of this Offer;
Plans for the Company After this Offer and the Merger; Appraisal Rights") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
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ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e) The information set forth in the Introduction to and Section 10
("Background of this Offer; Contacts with the Company and the Merger Agreement")
and Section 11 ("Purpose of this Offer; Plans for the Company After this Offer
and the Merger; Appraisal Rights") of the Offer to Purchase is incorporated
herein by reference.
(f) and (g) The information set forth in Section 13 ("Effect of this Offer
on the Market for the Shares, Nasdaq Quotation and Exchange Act Registration")
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) None.
(b) None.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction to and Section 8 ("Certain
Information Concerning Purchaser and Compuware"), Section 10 ("Background of
this Offer, Contacts with the Company; and the Merger Agreement") and Section 11
("Purpose of the Offer; Plans for the Company After this Offer and the Merger;
Appraisal Rights") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The financial statements of Compuware contained in its annual report on
Form 10-K for the fiscal year ended March 31, 1999 are incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 17 ("Employment Agreements") of
the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters: Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
(d) Not applicable.
(e) The information set forth in Section 15 ("Certain Legal Matters:
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Merger Agreement is incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated June 30, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
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(a)(5) Form of Letter to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in the New York Times on June 30,
1999.
(a)(8) Text of Joint Press Release by Compuware and the Company dated June
24, 1999.
(c)(1) Agreement and Plan of Merger, dated as of June 23, 1999, among
Compuware, Purchaser and the Company.
(c)(2) Amendments to Employment Agreements dated as of June 23, 1999, among
the Company, Compuware and Mary Ellen Weaver, Thomas A. Vadnais and David M.
Connell, respectively; and Employment Agreements between the Company and Mary
Ellen Weaver, Thomas A. Vadnais and David M. Connell, respectively, dated May
26, 1999, May 4, 1999 and May 4, 1999, respectively.
(c)(3) Noncompetition Agreements, dated as of June 23, 1999, among the
Company, Compuware and Mary Ellen Weaver and David M. Connell, respectively.
(c)(4) Shareholder Tender and Voting Agreement, dated as of June 23, 1999,
among Purchaser and certain officers, directors and shareholders of the Company.
(c)(5) Confidentiality Agreement, dated as of May 13, 1999, between
Compuware and the Company.
(d) None.
(e) Not applicable.
(f) None.
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SIGNATURE
After due inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certify that the information set forth in this Statement
is true, complete and correct.
June 30, 1999
COMP ACQUISITION CO.
By: /s/ THOMAS COSTELLO, JR.
------------------------------------
Name: Thomas Costello, Jr.
Title: Vice President, Secretary and
Treasurer
COMPUWARE CORPORATION
By: /s/ LAURA FOURNIER
------------------------------------
Name: Laura Fournier
Title: Senior Vice President and
Chief
Financial Officer
5
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EXHIBIT INDEX
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EXHIBIT
NUMBER EXHIBIT NAME
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(a)(1) Form of Offer to Purchase dated June 30, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Form of Letter to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in the New York Times on
June 30, 1999.
(a)(8) Text of Joint Press Release by Compuware and the Company
dated June 24, 1999.
(c)(1) Agreement and Plan of Merger, dated as of June 23, 1999,
among Compuware, Purchaser and the Company.
(c)(2) Amendments to Employment Agreements dated as of June 23,
1999, among the Company, Compuware and Mary Ellen Weaver,
Thomas A. Vadnais and David M. Connell, respectively; and
Employment Agreements between the Company and Mary Ellen
Weaver, Thomas A. Vadnais and David M. Connell,
respectively, dated May 26, 1999, May 4, 1999 and May 4,
1999, respectively.
(c)(3) Noncompetition Agreements, dated as of June 23, 1999, among
the Company, Compuware and Mary Ellen Weaver and David M.
Connell, respectively.
(c)(4) Shareholder Tender and Voting Agreement, dated as of June
23, 1999, among Purchaser and certain officers, directors
and shareholders of the Company.
(c)(5) Confidentiality Agreement, dated as of May 13, 1999, between
Compuware and the Company.
(d) None.
(e) Not applicable.
(f) None.
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6
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EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DATA PROCESSING RESOURCES CORPORATION
AT
$24.00 NET PER SHARE
BY
COMP ACQUISITION CO.
A WHOLLY OWNED SUBSIDIARY OF
COMPUWARE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN TIME, ON WEDNESDAY, JULY 28, 1999,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON (1) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST 91% OF THE SHARES OF
DATA PROCESSING RESOURCES CORPORATION COMMON STOCK OUTSTANDING AT THE CLOSE OF
BUSINESS ON THE LAST BUSINESS DAY BEFORE THE OFFER EXPIRES, (2) THE EXPIRATION
OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976 AND (3) THE OTHER CONDITIONS DESCRIBED
HEREIN.
THE BOARD OF DIRECTORS OF DATA PROCESSING RESOURCES CORPORATION HAS
UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER REFERRED TO HEREIN ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF DATA PROCESSING RESOURCES
CORPORATION AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of common stock, no par value, of Data Processing Resources Corporation
should either: (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) evidencing tendered shares,
and any other required documents, to the Depositary or tender such shares
pursuant to the procedure for book-entry transfer set forth in Section 3 below
or (2) request such shareholder's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for such shareholder. Any shareholder
whose shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such shareholder desires to tender such
shares.
A shareholder who desires to tender shares and whose certificates
evidencing such shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such shares
by following the procedure for guaranteed delivery set forth in Section 3 below.
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
June 30, 1999
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TABLE OF CONTENTS
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PAGE
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Introduction...................................................... 3
1. Terms of this Offer; Expiration Date........................ 4
2. Acceptance for Payment and Payment for Shares............... 5
3. Procedures for Accepting this Offer and Tendering Shares.... 6
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of Shares; Dividends............................ 10
7. Certain Information Concerning the Company.................. 10
8. Certain Information Concerning Purchaser and Compuware...... 11
9. Source and Amount of Funds.................................. 13
10. Background of this Offer; Contacts with the Company; and the 13
Merger Agreement............................................
11. Purpose of this Offer; Plans for the Company After this 25
Offer and the Merger; Appraisal Rights......................
12. Dividends and Distributions................................. 26
13. Effect of this Offer on the Market for the Shares, Nasdaq 26
Quotation and Exchange Act Registration.....................
14. Certain Conditions of the Offer............................. 27
15. Certain Legal Matters and Regulatory Approvals.............. 29
16. Fees and Expenses........................................... 31
17. Employment Agreements....................................... 32
18. Miscellaneous............................................... 33
Schedule I -- Directors and Executive Officers of Purchaser and
Compuware......................................................... I-1
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To the Holders of Common Stock of
DATA PROCESSING RESOURCES CORPORATION
INTRODUCTION
THIS OFFER. A wholly owned subsidiary of Compuware Corporation is offering
to purchase all outstanding shares of Common Stock of Data Processing Resources
Corporation for $24.00 per share, net to the seller in cash (the "OFFER PRICE"),
on the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which together constitute this
"OFFER"). The Offer Price will be payable to you without interest and will be
subject to reduction for any federal back-up taxes or other withholding or stock
transfer taxes that may be applicable.
Compuware is a Michigan corporation. The wholly owned subsidiary of
Compuware that is making this tender offer, COMP Acquisition Co., is a
California corporation ("PURCHASER"). Data Processing Resources Corporation is a
California corporation and is referred to herein as the "COMPANY." Its shares of
Common Stock, no par value, are referred to as the "SHARES."
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to this Offer. Purchaser will pay all charges and expenses of
EquiServe (the "DEPOSITARY") and Innisfree M&A Incorporated (the "INFORMATION
AGENT") incurred in connection with this Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THIS
OFFER AND THE MERGER REFERRED TO HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Thomas Weisel Partners LLC, the Company's financial advisor, has delivered
to the Company's Board of Directors its written opinion dated June 23, 1999 to
the effect that, as of the date of such opinion, the consideration to be
received by holders of the Shares pursuant to this Offer and related merger is
fair to the shareholders of the Company from a financial point of view. This
opinion is set forth in an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 which is being mailed to shareholders of the Company
herewith.
THIS OFFER IS CONDITIONED UPON: (1) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION OF THIS OFFER AT LEAST 91% OF THE SHARES
OUTSTANDING AT THE CLOSE OF BUSINESS ON THE LAST BUSINESS DAY BEFORE THIS OFFER
EXPIRES, (2) THE EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 AND (3) THE OTHER
CONDITIONS DESCRIBED IN SECTION 14 BELOW.
THE MERGER. This Offer is being made pursuant to an Agreement and Plan of
Merger dated as of June 23, 1999 among Purchaser, Compuware and the Company (the
"MERGER AGREEMENT"). Under the Merger Agreement, the parties have agreed that,
following this Offer and upon the satisfaction or waiver of certain conditions
set forth in the Merger Agreement, Purchaser will be merged with the Company in
a merger (the "MERGER") in which the Company will be the surviving corporation
and will become a wholly owned subsidiary of Compuware. When the Merger occurs,
all the outstanding Shares (other than the Shares owned by Purchaser, any Shares
held in the Company's treasury and any Shares as to which shareholders have
exercised appraisal rights under California law) will be automatically canceled
and converted into the right to receive cash in an amount per share equal to the
Offer Price, without interest. The stock options granted by the Company under
the Company's 1994 Stock Option Plan and the Company's Stock Option Plan for the
Employees of Systems & Programming Consultants, Inc. (the "COMPANY'S STOCK
OPTION PLANS") that are outstanding when the Merger occurs will, upon vesting,
due exercise and payment of the exercise price of such option, entitle the
optionee to receive an amount of cash per share equal to the Offer Price,
without interest. Each option will continue the same vesting schedule following
the Merger, with the optionee receiving credit for continuous service with the
Company prior to the Merger. The Company's Employee Stock Purchase Plan will
terminate when the Merger occurs (unless terminated before then in accordance
with its terms). If
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terminated upon the Merger, the Company will cause a final purchase of Shares to
be made under the plan on the last trading day before the Merger.
Under California law, if Purchaser acquires at least 90% of the Company's
then outstanding Shares of Common Stock, Purchaser will be able to approve the
Merger without a vote of the Company's shareholders. Thus, if the condition of
this Offer is met that at least 91% of the outstanding Shares are tendered (as
of the close of business on the last business day before the Offer expires), it
is expected that Purchaser will cause the Merger to occur without a shareholder
vote.
Currently, neither Purchaser nor Compuware anticipate that Purchaser will
purchase any Shares if at least 91% of the outstanding Shares are not tendered.
If following the expiration of this Offer, Purchaser does not own at least 90%
of the Company's outstanding shares of Common Stock, then shareholder approval
of the Merger would be required. The Company has agreed that, in the event
shareholder approval is required, then, as soon as practicable following the
expiration of this Offer (and whether or not Purchaser purchases any Shares
pursuant to this Offer) the Company will call a meeting of its shareholders for
the purpose of obtaining shareholder approval of the Merger and the Merger
Agreement. See Section 10 below.
Purchaser has entered into a Shareholder Tender and Voting Agreement with
all officers and directors of the Company and a greater than 5% shareholder of
the Company. These shareholders own, in the aggregate, approximately 3,889,083
Shares, constituting approximately 26% of all Shares outstanding on June 21,
1999. Under the agreement, each such shareholder agreed (i) to tender pursuant
to this Offer all Shares currently owned or later acquired by the shareholder
and not to withdraw such tender (subject to applicable law) unless and until the
Merger Agreement is terminated in accordance with its terms, (ii) if this Offer
is not consummated and if approval by the Company's shareholders of the Merger
is sought, then, until termination of the Merger Agreement, to vote such Shares
in favor of the Merger and against any competing proposal, merger,
consolidation, sale of assets, reorganization or recapitalization, or any
liquidation or winding up of the Company, (iii) not to sell, transfer, encumber,
pledge, dispose of or grant an option with respect to such Shares until the
earlier of termination of the Merger Agreement or the record date for the
meeting at which shareholders of the Company are asked to vote on the Merger
(other than pursuant to this Offer or with certain other exceptions) and (iv)
from the consummation of this Offer to the closing of the Merger, not to
exercise stock options for Shares or other rights to acquire capital stock of
the Company.
OUTSTANDING SHARES AND STOCK OPTIONS. The Company has advised Purchaser
that, as of June 21, 1999, 14,762,416 Shares were issued and outstanding and a
total of 3,393,040 Shares were reserved for issuance upon exercise of
outstanding employee stock options granted pursuant to the Company's Stock
Option Plans.
GOING PRIVATE RULE. Rule 13e-3 under the Exchange Act requires that, in
the case of a "going private" transaction involving a company, certain financial
information concerning the company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
shareholders in the transaction be filed with the Securities and Exchange
Commission and disclosed to shareholders prior to consummation of the
transaction. Purchaser believes that Rule 13e-3 will not be applicable to this
Offer or the Merger but it cannot assure you that the Securities and Exchange
Commission will agree. The Commission might take the position that Rule 13e-3
applies to this Offer or the Merger and might require Purchaser to provide
additional information pursuant to the rule.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN ITS ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THIS OFFER.
1. TERMS OF THIS OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of this Offer (including, if this Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered and not withdrawn prior to the
expiration of this Offer. This Offer will expire at 12:00 Midnight, Eastern
time, on Wednesday, July 28, 1999 or any later date to which this Offer is
extended in accordance with the Merger Agreement.
Purchaser may extend the expiration of this Offer as required by the
Exchange Act or, if not required by the Exchange Act, only within the following
limitations: (i) Purchaser may not extend this Offer beyond five
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business days after July 28, 1999 unless, in Purchaser's reasonable judgment, it
is reasonably likely that any condition of this Offer which is not satisfied as
of the date on which the extension is made will be satisfied during the
extension and (ii) Purchaser may not extend this Offer beyond 20 business days
following July 28, 1999 without the Company's consent. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to this Offer, except that the Shares may be withdrawn as indicated in Section 4
below.
Subject to the regulations of the Securities and Exchange Commission,
Purchaser expressly reserves the right (subject to the terms and conditions of
the Merger Agreement), (i) to terminate or amend this Offer and not accept for
payment any Shares if the conditions to this Offer are not satisfied upon the
expiration date of this Offer (as it may be extended as described in the
preceding paragraph), (ii) to waive any condition of this Offer, (iii) to
increase the price per share payable in this Offer or to make any other changes
in the terms and conditions of this Offer, except that, without the Company's
consent, no such change may be made which (a) decreases the price per Share
payable pursuant to this Offer, (b) reduces the minimum (including by waiver of
the condition that 91% of the outstanding Shares be tendered) or maximum number
of Shares to be purchased in this Offer, (c) imposes conditions to this Offer in
addition to those set forth in Section 14 below, (d) changes the form of
consideration payable in this Offer or (e) amends any other material terms of
this Offer in a manner materially adverse to the Company's shareholders.
Purchaser acknowledges that Rule 14e-1(c) under the Exchange Act requires
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of this Offer.
If Purchaser makes a material change in the terms of this Offer or the
information concerning this Offer, or if it waives a material condition of this
Offer, Purchaser will extend this Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14(e)-1 under the Exchange Act which require that
material changes be promptly disseminated to shareholders in a manner reasonably
designed to inform them of the changes.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser decides to increase the consideration being offered in this
Offer, such increase in the consideration being offered will be applicable to
all shareholders whose Shares are accepted for payment pursuant to this Offer
and, if at the time notice of any such increase in the consideration being
offered is first published, sent or given to holders of such Shares, this Offer
is scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so published,
sent or given, this Offer will be extended at least until the expiration of such
ten business day period. For purposes of this Offer, a "BUSINESS DAY" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 Midnight, Eastern time.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating this Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list, or, if applicable, who are listed as participants in a
clearing agency's security position listing.
In the event that this Offer is not consummated due to the failure of a
condition referred to in Section 14 below, then, subject to the terms of the
Merger Agreement, the Company, Purchaser and Compuware will take the actions
provided for in the Merger Agreement in order to obtain the approval of the
Company's shareholders required for the Merger and to consummate the Merger as
promptly as practicable.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the satisfaction (or waiver, to the extent permitted by the Merger
Agreement) of conditions of this Offer (including, if this Offer is extended or
amended, the terms and conditions of the extension or amendment), Purchaser will
accept for payment, and will pay for, all Shares validly tendered and not
properly withdrawn as soon as practicable after the expiration of this Offer.
5
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In all cases, payment for Shares tendered and accepted for payment pursuant
to this Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing the Shares (the "SHARE CERTIFICATES") or timely
confirmation of a book-entry transfer (a "BOOK ENTRY CONFIRMATION") of the
Shares into the Depositary's account at The Depository Trust Company (the
"BOOK-ENTRY TRANSFER FACILITY") pursuant to the procedures set forth in Section
3 below, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal. Accordingly,
payment may be made to tendering shareholders at different times if delivery of
the shares and other required documents occurs at different times. See Section 3
below for a description of the procedure for tendering Shares pursuant to this
Offer.
The term "AGENT'S MESSAGE" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
Compuware intends to file with the Federal Trade Commission (the "FTC") and
the Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION") a
Pre-merger Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR ACT") with respect to this Offer.
Accordingly, it is anticipated that the waiting period under the HSR Act
applicable to this Offer will expire fifteen calendar days after the date of
such filing. Prior to the expiration or termination of such waiting period, the
FTC or the Antitrust Division may extend such waiting period by requesting
additional information from Compuware with respect to this Offer. Upon request,
the waiting period under the HSR Act may be terminated prior to its expiration
by the FTC and the Antitrust Division. See Section 15 below.
For purposes of this Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to this
Offer. Upon the terms and subject to the conditions of this Offer, payment for
Shares accepted for payment pursuant to this Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of this Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3 below, such Shares will be credited to an account
maintained at such Book-Entry Transfer Facility), as promptly as practicable
following the expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or in part, to
Compuware or any direct or indirect wholly owned subsidiary of Compuware, the
right to purchase all or any portion of the Shares tendered pursuant to this
Offer, but any such assignment will not relieve Purchaser of its obligations
under this Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to this Offer.
3. PROCEDURES FOR ACCEPTING THIS OFFER AND TENDERING SHARES. To tender
Shares pursuant to this Offer, you must deliver before the expiration of this
Offer to the Depositary at one of its addresses set forth on the back cover of
this Offer to Purchase (i) either (a) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees (and any other documents required by the Letter of
Transmittal) or (b) an Agent's Message in connection with a book-entry delivery
of shares and (ii) either (a) the Share Certificates for the tendered Shares
must be received by the Depositary at
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<PAGE> 7
one of such addresses, (b) the Shares must be tendered pursuant to the procedure
for book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary or (c) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facilities for purposes of this Offer
within two business days after June 30, 1999. Any financial institution that is
a participant in the system of any Book-Entry Transfer Facility may make a
book-entry delivery of Shares by causing such Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at such Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. In addition to delivery of the Shares through book-entry transfer
at a Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the expiration of this Offer. If the shareholder cannot
complete the procedure for delivery by book-entry transfer on a timely basis,
the tendering shareholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities' systems whose name appears on a security
position listing as the owner of the Shares) of the Shares tendered and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (ii) if the Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program (an "ELIGIBLE INSTITUTION"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 to the Letter of Transmittal. If Share
Certificates are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or Share Certificates for
Shares not tendered or not accepted for payment are to be returned to a person
other than the registered holder of the Share Certificates surrendered, the
tendered Share Certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
holders appear on the Share Certificates, with the signatures on the Share
Certificates or stock powers guaranteed as described above. See Instructions 1
and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
this Offer and such shareholder's Share Certificates evidencing the Shares are
not immediately available or the shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
expiration of this Offer, or the shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, the Shares may nevertheless
be tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received by the Depositary prior to the expiration of this Offer; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, together with the Letter
of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message), and any other documents required
by the Letter of Transmittal are
7
<PAGE> 8
received by the Depositary within three Nasdaq trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the form of Notice
of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to this Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of this Offer or any defect or irregularity in the tender of any
Shares of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of other shareholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Purchaser, Compuware, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by Purchaser (and with respect to any and all other shares or other
securities issued or issuable in respect of such Shares on or after June 23,
1999). All such proxies shall be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such shareholder with respect to such Shares
(and such other Shares and securities) will be revoked without further action,
and no subsequent proxies may be given nor any subsequent written consent
executed by such shareholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. The designees of Purchaser will, with
respect to the Shares (and such other Shares and securities) for which the
appointment is effective, be empowered to exercise all voting and other rights
of such shareholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's shareholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares (and such other Shares and securities).
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of this Offer.
BACKUP WITHHOLDING. Under the federal income tax laws, the Depositary will
be required to withhold a portion of the amount of the purchase price paid to
certain shareholders pursuant to this Offer. TO AVOID SUCH BACKUP WITHHOLDING,
EACH SUCH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S
TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT
TO BACKUP WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF
TRANSMITTAL. See Instruction 9 in the Letter of Transmittal.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to this Offer are
irrevocable except that tendered Shares may be withdrawn by the tendering
shareholder at any time prior to the expiration of this
8
<PAGE> 9
Offer and, unless theretofore accepted for payment by Purchaser pursuant to this
Offer, may also be withdrawn by such shareholder at any time after August 23,
1999. If Purchaser extends this Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to this Offer for
any reason, then, without prejudice to Purchaser's rights under this Offer, the
Depositary may, on behalf of Purchaser, retain the tendered Shares, and such
Shares may not be withdrawn except as otherwise provided in this Section 4.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of those Share certificates, the serial numbers shown on
the Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution
(unless the Shares have been tendered for the account of an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer described in Section 3 above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of this Offer. However, withdrawn Shares may be
re-tendered at any time prior to the expiration of this Offer by following one
of the procedures described in Section 3 above.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination will be final and binding. None of Purchaser,
Compuware, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to this Offer or in the Merger will be a taxable transaction for
federal income tax purposes and may also be a taxable transaction under
applicable state, local or foreign tax laws. In general, a shareholder will
recognize gain or loss for federal income tax purposes equal to the difference
between the amount of cash received in exchange for the Shares sold and such
shareholder's adjusted tax basis in the Shares. Assuming the Shares constitute
capital assets in the hands of the shareholder, such gain or loss will be
capital gain or loss. If, at the time of this Offer or the Merger, the Shares
then exchanged have been held for more than 12 months, such gain or loss will be
a long-term capital gain or loss. Under current law, long-term capital gains of
individuals are, under certain circumstances, taxed at lower rates than items of
ordinary income and short-term capital gains.
The foregoing is a summary of the general effect of this Offer and the
Merger under the current federal income tax laws. The summary does not address
state, local or foreign tax laws or the particular situations of specific
shareholders. Special federal income tax consequences may apply to particular
shareholders, including those that are financial institutions, pension funds,
mutual funds, broker-dealers, individuals who are not citizens or residents of
the United States, foreign corporations, foreign partnerships, foreign trusts,
shareholders who acquired the Shares pursuant to the exercise of employee stock
options or otherwise as compensation and persons who receive payments in respect
of options to purchase Shares. ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN
TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF THIS OFFER AND
THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM
TAX AND STATE, LOCAL AND FOREIGN TAX LAWS.
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<PAGE> 10
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the Nasdaq National Market under the symbol "DPRC". The following
table sets forth the high and low sales prices per Share as reported on the
Nasdaq National Market for the quarters indicated.
<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
Fiscal year ending July 31, 1997:
First Quarter............................................. $ 24 7/8 $ 16
Second Quarter............................................ 22 5/8 15 1/2
Third Quarter............................................. 22 3/8 17 1/8
Fourth Quarter............................................ 26 3/4 18
Fiscal year ending July 31, 1998:
First Quarter............................................. $ 28 1/4 $ 19
Second Quarter............................................ 26 3/4 22 1/8
Third Quarter............................................. 33 3/4 23 3/8
Fourth Quarter............................................ 33 3/4 26 5/8
Fiscal year ending July 31, 1999:
First Quarter............................................. 32 11/16 17 1/16
Second Quarter............................................ 33 3/4 19 1/2
Third Quarter............................................. 26 3/8 9 13/16
Fourth Quarter (through June 23, 1999).................... 18 11 3/4
</TABLE>
The Company has never declared or paid cash dividends on its capital stock.
On June 23, 1999, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
this Offer, the closing price per Share as reported on the Nasdaq National
Market was $12.25. On June 28, 1999, the second to last full trading day prior
to the commencement of the Offer, the reported closing price per Share on the
Nasdaq National Market was $23.44. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser, Compuware,
nor any of their respective affiliates assumes any responsibility for the
accuracy or completeness of the information concerning the Company furnished by
the Company or contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser, Compuware or their respective affiliates.
GENERAL. The Company is a California corporation with its principal
executive offices located at 18301 Von Karman Avenue, Suite 600, Irvine,
California 92612. The Company is a leading provider of information technology
professional services to a diverse group of corporate clients. Utilizing
full-time salaried and hourly consultants, the Company offers a wide range of
professional services solutions to meet its clients' enterprisewide information
technology needs. The Company's technical consultants have expertise on multiple
hardware platforms utilizing a wide variety of software solutions and can
provide services covering all aspects of the systems applications development
lifecycle, including planning, design, building and programming, implementation,
maintenance and ongoing management. The Company also provides other specialty
professional services such as year 2000 conversion, fault-tolerant application
development, network management and desktop services, Internet/intranet
development and support, packaged software implementation (including
responsibility for deliverables), software engineering and help desk support.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's annual report on Form 10-K for the fiscal year ended July 31, 1998 as
updated in the Company's current report on Form 8-K dated March 1, 1999 and the
unaudited financial statements contained in the Company's quarterly report on
Form 10-Q for the three months ended April 30, 1999. More
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<PAGE> 11
comprehensive financial information is included in those reports and in other
documents filed by the Company with the Securities and Exchange Commission. The
financial information that follows is qualified in its entirety by reference to
such reports and other documents, including the financial statements and related
notes contained therein. Such reports and other documents may be examined and
copies may be obtained from the offices of the Securities and Exchange
Commission in the manner set forth at the end of this Section 7.
DATA PROCESSING RESOURCES CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS ENDED
FISCAL YEAR ENDED JULY 31, ENDED APRIL 30, APRIL 30,
----------------------------- ----------------- -------------------
1998 1997 1996 1999 1998 1999 1998
-------- -------- ------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $262,948 $147,833 $81,100 $93,229 $70,424 $274,463 $182,901
Operating income.............. 20,851 10,884 5,957 9,980 6,252 25,455 15,360
Net income.................... 11,318 6,928 3,402 5,073 3,191 12,865 8,508
Net income available to common
shareholders................ $ 11,318 $ 6,875 $ 3,364 $ 5,073 $ 3,191 $ 12,865 $ 8,508
Net income per
share -- basic.............. $ 0.84 $ 0.61 $ 0.45 $ 0.35 $ 0.24 $ 0.91 $ 0.64
Net income per
share -- diluted............ $ 0.81 $ 0.59 $ 0.41 $ 0.33 $ 0.23 $ 0.87 $ 0.62
Weighted average common shares
outstanding -- basic........ 13,464 11,312 7,536 14,525 13,566 14,212 13,382
Weighted average common shares
outstanding -- diluted...... 13,918 11,682 8,261 18,323 14,064 17,894 13,826
</TABLE>
<TABLE>
<CAPTION>
AT JULY 31,
--------------------
1998 1997 AT APRIL 30, 1999
-------- -------- -----------------
(UNAUDITED)
<S> <C> <C> <C>
Cash and cash equivalents.............................. $ 40,881 $ 17,816 $ 29,657
Working capital........................................ 119,251 31,155 83,532
Total assets........................................... 275,280 116,163 301,245
Long-term debt......................................... 114,288 -- 111,440
Total shareholders' equity............................. 127,367 116,163 158,397
</TABLE>
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Securities and Exchange Commission relating to its business, financial condition
and other matters. Information as of certain dates concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the
Securities and Exchange Commission. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities maintained by the Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, and also should be available for
inspection at the Securities and Exchange Commission's regional offices located
at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such materials may also be obtained (i) by mail, upon payment of the Securities
and Exchange Commission's customary fees, by writing to its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or (ii) at the
Securities and Exchange Commission's world-wide web site at http://www.sec.gov.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND COMPUWARE. Purchaser is a
newly incorporated California corporation organized in connection with this
Offer and has not carried on any activities other than in connection with this
Offer and the Merger Agreement. Purchaser is a direct wholly owned subsidiary of
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<PAGE> 12
Compuware and its principal offices are located at the same address as
Compuware's principal office: 31440 Northwestern Highway, Farmington Hills,
Michigan 48334-2564.
Until immediately prior to the time that Purchaser purchases Shares
pursuant to this Offer, Purchaser is not expected to have any significant assets
or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by this Offer and
the Merger. Because Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
Compuware is a Michigan corporation, with its principal offices at 31440
Northwestern Highway, Farmington Hills, Michigan 48334-2564. Compuware's Common
Stock is traded on the Nasdaq National Market under the symbol "CPWR." Compuware
provides software products and professional services designed to increase the
productivity of the information systems departments of its target market, the
20,000 largest enterprises worldwide. Compuware has historically focused on the
testing and implementation environment in the mainframe market, where it has
extensive experience and has established long-term customer relationships.
Compuware also operates in the client/server market, with products and
professional services in the application development, testing and implementation
and systems management environments.
Compuware's financial statements contained in its annual report on Form
10-K for the fiscal year ended March 31, 1999 are incorporated herein. This
report is filed with the Securities and Exchange Commission and is available for
inspection and copying as indicated below (see "Available Information" below in
this Section 8).
The name, citizenship, business address, principal occupation or
employment, and five-year employment history for each of the directors and
executive officers of Purchaser and Compuware and certain other information are
set forth in Schedule I hereto.
Neither Purchaser, Compuware nor, to their knowledge, any of the persons
listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Purchaser, Compuware or any of the persons so
listed, beneficially owns or has any right to acquire, directly or indirectly,
any Shares. Neither Purchaser, Compuware nor, to their knowledge, any of the
persons or entities referred to above or any of the respective officers,
directors or subsidiaries of any of the foregoing, has effected any transaction
in the Shares during the past 60 days.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, (i) neither Purchaser, Compuware nor, to their
knowledge, any of their respective subsidiaries or any of the persons listed in
Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, guarantees of
profits, division of profits or loss or the giving or withholding of proxies;
and (ii) neither Purchaser, Compuware nor, to their knowledge, any of the
persons listed on Schedule I hereto, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the Securities and Exchange Commission applicable to the Offer. Set forth below
in Section 10 of this Offer to Purchase is a summary description of the
contacts, negotiations and transactions between Purchaser, Compuware or any of
their respective subsidiaries or any of the persons listed in Schedule I to this
Offer to Purchase, on the one hand, and the Company or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of material assets.
AVAILABLE INFORMATION. Compuware is subject to the information filing
requirements of the Exchange Act and is required to file reports and other
information with the Securities and Exchange Commission relating to its
business, financial condition and other matters. Information, as of certain
dates, concerning Compuware's directors and officers, their remuneration,
options granted to them, the principal holders of Compuware's securities and any
material interest of such persons in transactions with Compuware is required to
be described in proxy statements distributed to Compuware's shareholders and
filed with the Securities and
12
<PAGE> 13
Exchange Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities maintained by the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and also should be available for inspection at the Securities and
Exchange Commission's regional offices located at Seven World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may also
be obtained (i) by mail, upon payment of the Securities and Exchange
Commission's customary fees, by writing to its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or (ii) at the Securities
and Exchange Commission's world-wide web site at http://www.sec.gov.
9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Purchaser to consummate this Offer and the Merger is estimated to be
approximately $354 million (assuming the purchase of all Shares outstanding),
plus approximately $2.5 million to pay related fees and expenses. In addition,
as indicated in Section 10 below under the heading "Convertible Notes," the
Company will be required to offer to repurchase its 5 1/4% Convertible
Subordinated Notes due 2005 (the "Notes") following the earlier of the
consummation of this Offer or the Merger, for the aggregate principal amount of
$115 million plus accrued interest. Purchaser plans to obtain all the funds
needed for this Offer and the Merger, and to repurchase the Notes, from
Compuware. Compuware will provide such funds from its existing funds, from new
credit facilities to be established for this purpose, or a combination of the
foregoing. No decision has been made concerning which of the foregoing sources
Compuware will utilize, or how such funds, if borrowed, will be repaid. Such
decision will be made based on Compuware's review from time to time of the
advisability of particular actions, as well as prevailing interest rates,
financial and other economic conditions and such other factors as Compuware may
deem appropriate. When such decision has been made, Purchaser and Compuware will
promptly file an amendment to their Tender Offer Statement on Schedule 14D-1
(the "SCHEDULE 14D-1"). As of March 31, 1999, Compuware had approximately $193
million in cash and cash equivalents and approximately $310 million in short
term investments. Neither Purchaser nor Compuware has conditioned this Offer or
the Merger on obtaining financing.
10. BACKGROUND OF THIS OFFER; CONTACTS WITH THE COMPANY; AND THE MERGER
AGREEMENT.
BACKGROUND OF THIS OFFER; CONTACTS WITH THE COMPANY
In early April 1999, Bernard M. Goldsmith, Managing Director of Updata
Capital, Compuware's financial advisor, called Richard E. Earley, President of
the Company's Speciality Services Division, to discuss the possibility that one
of Updata Capital's clients might be interested in pursuing a business
combination with the Company. Mr. Earley directed Mr. Goldsmith to contact Mary
Ellen Weaver, Chairman of the Board and Chief Executive Officer of the Company.
During the week of April 12, 1999, Mr. Goldsmith called Ms. Weaver and
expressed Compuware's interest in a potential business combination with the
Company. A meeting was scheduled for April 21, 1999 at the Company's offices.
At the April 21 meeting, Mr. Goldsmith and Eliot R. Stark, Compuware's
Executive Vice President, Finance, discussed with Ms. Weaver and Mr. Earley a
possible business combination between the two companies in broad outline.
On May 13, 1999, Mr. Goldsmith, Mr. Stark, Joseph A. Nathan, Compuware's
President and Chief Operating Officer, and Phyllis Recca, Compuware's Senior
Vice President, Professional Services, met with Ms. Weaver, Thomas A. Vadnais,
the Company's President and Chief Operating Officer, and David M. Connell, the
Company's Executive Vice President, at Compuware's offices. The parties held a
more extensive discussion of the possible benefits of a business combination
between the two companies and the objectives that each company might have
regarding the combination.
At the May 13 meeting, Compuware presented the Company with a
Confidentiality Agreement, providing for, among other things, each party to
treat confidentially the information received from the other. In the
Confidentiality Agreement, the Company also agreed that, until June 30, 1999,
the Company would not without Compuware's prior approval or as otherwise
provided in a definitive agreement between the parties,
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solicit, discuss, negotiate or accept any offer or proposal that would involve
or could result in a sale of the Company (whether by merger, asset sale, stock
sale or otherwise) or of a substantial portion of the Company's common stock to
any party other than Compuware, subject to an exception for an unsolicited offer
or proposal for such a transaction which the Company determines it is required
to discuss and negotiate with the party making such proposal. Compuware agreed
in the Confidentiality Agreement that for one year following the date of the
Confidentiality Agreement, Compuware would not acquire the Company's securities,
propose a merger or other business combination with the Company, or otherwise
act to control or exert influence over the Company, other than pursuant to an
agreement with the Company. The Company countersigned the Confidentiality
Agreement on May 20, 1999.
During the period from May 14, 1999 to May 26, 1999, Mr. Stark and Ms.
Weaver had several telephone conversations about the proposed business
combination in which they discussed the proposal in greater detail, including
the possible structure and timing of the transactions.
On May 26, 1999, Compuware sent to the Company a term sheet outlining the
basic terms on which Compuware would be willing to pursue a business combination
with the Company. On May 27 and 28, 1999, Mr. Stark and Ms. Weaver discussed the
term sheet in several telephone conversations. Although the term sheet was not
agreed upon and material terms remained to be resolved, Compuware elected to
direct its legal counsel to prepare a draft Merger Agreement as a basis for
further discussions.
On June 2, 1999, Compuware delivered to the Company a due diligence
request. On June 4, 1999, Compuware's legal counsel sent copies of a draft
Merger Agreement to the Company's counsel. Also during that week, Compuware's
legal counsel and Mr. Stark contacted the Company's counsel and Ms. Weaver to
make arrangements for holding due diligence meetings during the week of June 7,
1999.
On June 8, 9, and 10, 1999, Mr. Goldsmith, Laura Fournier, Compuware's
Senior Vice President and Chief Financial Officer, and other members of
Compuware's due diligence team, including members of Compuware's legal staff,
met at the offices of the Company's legal counsel in Costa Mesa to conduct a due
diligence investigation of the Company. During the period from June 8, 1999 to
June 22, 1999, legal counsel for both companies continued negotiations regarding
the terms of the Merger Agreement and other transaction agreements, and those
terms were discussed (in meetings at the offices of the Company's legal counsel
as well as in telephone conversations) among Mr. Stark and Mr. Goldsmith, on
behalf of Compuware, and Ms. Weaver, Mr. Vadnais and Mr. Connell, on behalf of
the Company. In addition, Mr. Goldsmith discussed certain financial terms of the
proposed transactions with Owen Hart of Thomas Weisel Partners LLC, the
Company's financial advisor.
At a meeting of Compuware's Board of Directors held on June 17, 1999, the
board reviewed the proposed transaction's legal and financial terms. At the
conclusion of the meeting, the board requested additional information from
Compuware's management before considering whether to approve the acquisition.
Discussions between the parties continued during June 21 and 22, 1999 regarding
certain terms of the Merger Agreement and the terms of proposed amendments to
employment agreements with Ms. Weaver, Mr. Vadnais and Mr. Connell. These
discussions were conducted principally, on behalf of Compuware, by Ms. Recca and
Barry Goldsmith and, on behalf of the Company, by Ms. Weaver, Mr. Vadnais and
Mr. Connell.
On June 23, 1999, final forms of the Merger Agreement, amendments to the
employment agreements of Ms. Weaver, Mr. Vadnais and Mr. Connell, noncompetition
agreements with Ms. Weaver and Mr. Connell and the Shareholder Tender and Voting
Agreement were presented to, and, following discussion, approved by, the
Compuware Board of Directors. Following notification of the approval of the
transactions by the Company's Board of Directors, the parties executed the
agreements on the afternoon of June 23, 1999. The transactions were publicly
announced on the morning of June 24, 1999.
THE MERGER AGREEMENT
A copy of the Merger Agreement is filed as an Exhibit to the Tender Offer
Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") filed by Purchaser and
Compuware with the Securities and Exchange Commission in
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connection with this Offer. Certain portions of the Merger Agreement are
summarized in this Section. This summary is qualified in its entirety by
reference to the Merger Agreement itself.
THIS OFFER. The Merger Agreement provides for the commencement of this
Offer within five business days after the initial public announcement of
Purchaser's intention to commence this Offer. The obligation of Purchaser to
accept for payment Shares tendered pursuant to this Offer is subject to the
satisfaction of the conditions described in Section 14 below. Purchaser and
Compuware have agreed that no change in this Offer may be made which decreases
the price per Share payable in this Offer, reduces the minimum or maximum number
of Shares to be purchased in this Offer, imposes conditions to this Offer in
addition to those set forth in Section 14 below, changes the form of
consideration payable in this Offer, amends any other material terms of this
Offer in a manner materially adverse to the Company's shareholders or extends
the expiration date of this Offer except as indicated in Section 1 above.
THE MERGER. The Merger Agreement provides that, following this Offer and
upon the terms and subject to the conditions in the Merger Agreement and in
accordance with California law, Purchaser will be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the Surviving Corporation
(the "SURVIVING CORPORATION") and will become a wholly owned subsidiary of
Compuware. Alternatively, Compuware may elect to merge the Company into
Purchaser, with Purchaser continuing as the Surviving Corporation and a wholly
owned subsidiary of Compuware. In either case, upon consummation of the Merger,
each issued and then outstanding Share (other than any Shares held in the
treasury of the Company, or owned by Purchaser, Compuware or any other
subsidiary of Compuware and any Shares which are held by shareholders who have
not voted in favor of the Merger or consented thereto in writing and who
exercise their appraisal rights for such Shares in accordance with California
law) shall be automatically converted into, and exchanged for, the right to
receive a cash payment per Share equal to the Offer Price, without interest. All
stock options outstanding at the time of the Merger that were granted by the
Company under the Company's Stock Option Plans will, upon vesting, due exercise
and payment of the exercise price of such option, entitle the optionee to
receive an amount of cash per share equal to the Offer Price, without interest.
Each option will continue the same vesting schedule following the Merger, with
the optionee receiving credit for continuous service with the Company prior to
the Merger. The Company's Employee Stock Purchase Plan will terminate when the
Merger occurs (unless terminated before then in accordance with its terms). If
terminated upon the Merger, the Company will cause a final purchase of Shares to
be made under the plan on the last trading day before the Merger.
SHAREHOLDER APPROVAL. Under California law, if Purchaser acquires at least
90% of the Company's then outstanding Shares of Common Stock, Purchaser will be
able to approve the Merger without a vote of the Company's shareholders. Thus,
if the condition of this Offer is met that at least 91% of the outstanding
Shares are tendered (as of the close of business on the last business day before
the Offer expires), it is expected that Purchaser will cause the Merger to occur
without a shareholder vote (assuming the other conditions for the Merger have
been met). In the Merger Agreement, the Company has granted to Purchaser an
option to purchase such number of Shares as is necessary, following consummation
of this Offer in which Purchaser purchases at least 91% of all the then
outstanding Shares, in order for Purchaser to own 90% of the outstanding Shares
immediately prior to the Merger so that the Merger may be effected without
shareholder approval. The exercise price of the option is $1.00 (or, if greater,
the minimum consideration required by law). The effect of the option would be to
allow Purchaser to maintain its 90% ownership from the date this Offer is
consummated to the date of the Merger, despite any issuances of Shares that
might occur in the interim as a result of stock option exercises. The Company
has agreed not to issue Shares during this period, subject to certain
exceptions, without Compuware's consent.
Currently, neither Purchaser nor Compuware anticipate that Purchaser will
purchase any Shares if at least 91% of the outstanding Shares are not tendered.
If following the expiration of this Offer Purchaser does not own at least 90% of
the Company's outstanding shares of Common Stock, then shareholder approval of
the Merger would be required. The Merger Agreement provides that if, due to a
failure of certain conditions described in Section 14 below, the Offer is not
commenced or is not consummated, then, subject to the terms and conditions of
the Merger Agreement, the Company, Purchaser and Compuware will take the actions
provided for in the Merger Agreement in order to obtain the required approval of
the Company's shareholders
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for the Merger and to consummate the Merger as promptly as practicable. The
Company has agreed that, in the event shareholder approval is required, then, as
soon as practicable following the expiration of this Offer, if the Offer is
commenced, and whether or not Purchaser purchases any Shares pursuant to this
Offer, the Company will call a meeting of its shareholders for the purpose of
obtaining shareholder approval of the Merger, the Merger Agreement and any other
actions contemplated by the Merger Agreement which require the approval of the
Company's shareholders.
Purchaser has entered into a Shareholder Tender and Voting Agreement with
all officers and directors of the Company and a greater than 5% shareholder of
the Company. These shareholders own, in the aggregate, approximately 3,889,083
Shares, constituting approximately 26% of all Shares outstanding on June 21,
1999. Under the agreement, each such shareholder agreed (i) to tender pursuant
to this Offer all Shares currently owned or later acquired by the shareholder
and not to withdraw such tender (subject to applicable law) unless and until the
Merger Agreement is terminated in accordance with its terms, (ii) if this Offer
is not consummated and if approval by the Company's shareholders of the Merger
is sought, then, until termination of the Merger Agreement, to vote such Shares
in favor of the Merger and against any competing proposal, merger,
consolidation, sale of assets, reorganization or recapitalization, or any
liquidation or winding up of the Company, (iii) not to sell, transfer, encumber,
pledge, dispose of or grant an option with respect to such Shares until the
earlier of termination of the Merger Agreement or the record date for the
meeting at which shareholders of the Company are asked to vote on the Merger
(other than pursuant to this Offer or with certain other exceptions) and (iv)
from the consummation of this Offer to the closing of the Merger, not to
exercise stock options for Shares or other rights to acquire capital stock of
the Company. The foregoing summary is qualified in its entirety by reference to
the Shareholder Tender and Voting Agreement which is an exhibit to Compuware's
Schedule 14D-1 filed with the Securities and Exchange Commission in connection
with this Offer.
The Merger Agreement provides that the Company will, if necessary, as soon
as practicable following expiration of this Offer, file with the Securities and
Exchange Commission under the Exchange Act, a proxy statement and related proxy
materials (the "PROXY STATEMENT") with respect to the Company's shareholders
meeting and will use its best efforts to respond to any comments of the
Commission and to cause the Proxy Statement to be mailed to shareholders of the
Company as promptly as practicable after responding to all such comments to the
satisfaction of the staff of the Commission. The Company has agreed, (i) to
recommend to the Company's shareholders, through the Company's Board of
Directors, that the shareholders approve the Merger, the Merger Agreement and
any related actions requiring shareholder approval, (ii) to include such
recommendation in the Proxy Statement and (iii) that neither the Company's Board
of Directors nor any committee of the board will withdraw or change (or propose
or resolve to withdraw or change) in a manner adverse to Compuware, such
recommendation. Notwithstanding the foregoing, the Company's Board of Directors
may withdraw or modify its recommendation in favor of the Merger if all of the
following occur:
- a superior proposal (as defined below) is made to the Company and not
withdrawn;
- the Company shall have notified Compuware in writing of the superior
proposal, specifying all the material terms and conditions and
identifying the person making the proposal;
- Compuware shall not have, within three business days after receipt of the
above notice, made an offer that the Company's Board of Directors by
majority vote determines in its good faith judgment, after consultation
with its financial advisor, to be at least as favorable to the Company's
shareholders as the superior proposal;
- the Company's Board of Directors concludes that the withdrawal or
modification of such recommendation is required for the board to comply
with its fiduciary duties to the Company's shareholders; and
- the Company shall not have violated the no-solicitation provisions of the
Merger Agreement (described below in this Section under the heading "No
Solicitation") or the provisions referred to herein with respect to
shareholder approval.
The Company is required to give Compuware at least three business days' prior
notice (or such lesser notice as the Company provides to the members of its
Board of Directors but in no event less than 24 hours notice) of
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any meetings of the Company's Board of Directors at which the Company's Board of
Directors is reasonably expected to determine whether any takeover proposal
constitutes a "superior proposal." For the purposes of the Merger Agreement a
"SUPERIOR PROPOSAL" means an unsolicited, bona fide written offer made by a
third party to consummate any of the following transactions on terms that the
Company's Board of Directors determines, in its reasonable judgment (based on
the written advice of its financial advisor) to be more favorable to the
Company's shareholders than the terms of the Merger: (i) a merger or
consolidation involving the Company pursuant to which the Shares outstanding
immediately before the transaction will represent less than 50% of the equity
interests of the surviving or resulting entity or (ii) the acquisition by any
person or group (including by way of a tender offer or an exchange offer or a
two step transaction involving a tender offer followed with reasonable
promptness by a merger), directly or indirectly, of ownership of 100% of the
outstanding shares of the Company's capital stock; however, an offer will not be
considered a "superior proposal" if any financing required to consummate the
proposed transaction is not committed and is not likely, in the reasonable
judgment of the Company's Board of Directors (after consultation with its
financial advisor) to be obtained on a timely basis. Nothing in the Merger
Agreement prohibits the Company or its Board of Directors from taking and
disclosing to the Company's shareholders a position contemplated by Rules 14d-9
and 14e-2(a) under the Exchange Act.
The Company's obligations to call and hold a shareholders meeting for the
purpose of obtaining the requisite shareholder approval of the Merger will not
be affected by the commencement of any competing takeover proposal (whether or
not it is a superior proposal) or by the withdrawal or change of the Company's
Board of Director's recommendation in favor of the Merger.
Compuware has agreed to cause all Shares purchased pursuant to this Offer
and all other Shares owned by Purchaser or any other Compuware subsidiary to be
voted in favor of the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement,
the Company has agreed to carry on the business of the Company and its
subsidiaries in the ordinary course and to use its reasonable efforts to
preserve intact their current business organization, to keep available the
services of their current officers and employees and to preserve relations with
distributors, licensors, contractors, customers, suppliers, lenders, employees
and others having business dealings with any of them. The Merger Agreement
provides that, except as permitted by the terms of the Merger Agreement (or as
set forth in a disclosure letter provided in connection with the Merger
Agreement), neither the Company nor any subsidiary will do any of the following,
without the prior written consent of Compuware:
(i) declare or pay any dividends on or make any other distributions in
respect of any of its capital stock (other than by any wholly owned
subsidiary of the Company to its parent or, in the case of less than wholly
owned subsidiaries as required by agreements existing as of the Merger
Agreement) or split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for any of its capital stock or purchase, redeem
or otherwise acquire any shares of its capital stock or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, other than the
issuance of Shares, pursuant to the exercise of stock options outstanding
under the Company's Stock Option Plan as of the date of the Merger
Agreement and in accordance with their present terms, upon conversion of
the Company's Notes and pursuant to the Company's employee stock purchase
plan;
(iii) amend its articles of incorporation, by-laws or other charter
documents;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of the Company
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and its subsidiaries as a whole except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any pledge, claim, charge, encumbrance, security interest or lien or
otherwise dispose of any of its properties or assets (including
intellectual property) except in the ordinary course of business consistent
with past practice;
(vi) incur any indebtedness for borrowed money or draw down on any
credit facility or arrangement (except in the ordinary course of business
under arrangements in effect on the date hereof, provided that such
arrangements will not exceed $1,000,000 in aggregate amount without the
prior written consent of Compuware, which consent will not be unreasonably
withheld) or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or rights to acquire debt securities,
or guarantee any debt securities of others, enter into any "keep well" or
other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any of
the foregoing or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any direct
or indirect wholly owned subsidiary of the Company;
(vii) make or agree to make any new capital expenditure(s) which
individually is in excess of $100,000 or which in the aggregate are in
excess of $500,000;
(viii) make any material tax election or settle or compromise any
income or franchise tax liability;
(ix) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or notes thereto) of the Company included in
documents filed with the Securities and Exchange Commission or incurred
since the date of such financial statements in the ordinary course of
business consistent with past practice in accordance with the terms of the
Merger Agreement;
(x) except as expressly contemplated by the Merger Agreement, waive,
release or assign any rights or claims under any contract or agreement
binding on the Company or any subsidiary, or, except as expressly
contemplated by the Merger Agreement or in the ordinary course of business
consistent with past practice, enter into, modify, amend or terminate any
contract or agreement binding on the Company or any subsidiary, or, in any
event, enter into any contract or agreement binding on the Company or any
subsidiary which would be in conflict with the Merger Agreement or the
transactions contemplated therein, with certain exceptions;
(xi) terminate or lay off more than ten employees, other than for
cause consistent with past practice and Company policy, waive any stock
repurchase rights, accelerate, amend or change the period of exercisability
of any stock options, or otherwise alter or commit to any compensation,
benefit or severance arrangement for or with any officer or employee of the
Company or enter into any related or interested party transaction;
(xii) adopt or amend in any material respect any employee benefit or
employee stock purchase or employee option plan, or enter into any
employment contract, pay any special bonus or special remuneration to any
director or employee, or increase the salaries or wage rates of its
officers or employees other than in the ordinary course of business,
consistent with past practice, or change in any material respect any
management policies or procedures;
(xiii) grant or provide any severance or termination pay as to any
officer or employee (except payments pursuant to written plans or
arrangements outstanding of the date of the Merger Agreement and disclosed
in connection therewith);
(xiv) take any actions (including seeking any corporate approvals)
directed toward seeking to liquidate or dissolve the Company or to take
advantage of bankruptcy or any other creditor protection
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laws or that would or are reasonably likely to render the Company insolvent
or to cause it to become involved in bankruptcy proceedings, including
soliciting creditor arrangements or moratoria;
(xv) except as disclosed in connection with the Merger Agreement,
institute any litigation or other proceeding;
(xvi) take any action that might cause or constitute a breach of any
representation or warranty made by the Company in the Merger Agreement;
(xvii) enter into any "rights agreement," "poison pill" or similar
plan, agreement or any arrangement or take or permit any other action that
could affect the capitalization of the Company or the issuance of capital
stock by the Company which would be triggered by the Offer, the Merger, the
Merger Agreement or any transaction contemplated thereby; or
(xviii) authorize any of, or commit or agree to take any of, the
foregoing actions.
Further, the Company and Compuware have agreed not to, and not to permit
any of their respective subsidiaries to, knowingly and willfully, take
deliberate action (i) that would cause any of their representations and
warranties set forth in the Merger Agreement to become untrue in such a manner,
with respect to the Company, as would have a Material Adverse Effect or to
become untrue, with respect to Compuware, in any material respect as of the date
when made, or (ii) that would cause any of the conditions to the Offer or to the
Merger not being satisfied (subject to the Company's right to take action
consistent with the provisions described below in "No Solicitation"). "MATERIAL
ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" with respect to the Company means
any change or effect that is materially adverse to the Company and its
subsidiaries, taken as a whole, taking into account the business, properties,
assets, employees, financial condition or results of operations of the Company
and its subsidiaries, excluding those changes, effects and developments that
directly result from the announcement of this Offer or the Merger, general
economic conditions or conditions generally affecting the industry in which the
Company competes (provided that such conditions do not adversely affect the
Company disproportionately). In any litigation regarding this definition where
the principal change or effect at issue involves the termination for any reason
of the employees of the Company or any of its subsidiaries, the Company will
have the burden of proving by clear and convincing evidence that the adverse
effect in question directly resulted from announcement of this Offer or the
Merger.
NO SOLICITATION. The Company has agreed that, until the earlier of the
closing of the Merger or termination of the Merger Agreement in accordance with
its terms, the Company will not itself, nor permit any of its subsidiaries to,
and will not authorize or permit any officer, director or employee of the
Company or any of its subsidiaries or any investment banker, attorney or other
adviser or representative of the Company or any of its subsidiaries to, directly
or indirectly, (i) solicit, initiate or encourage submission of any "takeover
proposals" (as defined below), or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public Company
information with respect to, or enter into any agreement with respect to, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any takeover
proposal. Under the Merger Agreement, a "TAKEOVER PROPOSAL" means any offer or
proposal relating to any transaction or series of related transactions (other
than the transactions contemplated by the Merger Agreement) involving (i) any
acquisition from the Company by any person or group of more than a 10% interest
in the total outstanding voting securities of the Company or any of its
subsidiaries or any tender offer or exchange offer that would result in any
person or group owning more than such 10% interest in any merger, consolidation,
business combination or similar transaction involving the Company pursuant to
which the shareholders of the Company immediately before the transactions hold
less than 90% of the equity interest of the surviving or resulting entity; (ii)
any sale, lease (other than in the ordinary course of business), exchange,
transfer, license (other than in the ordinary course of business), acquisition
or disposition of more than 10% of the Company's assets; or (iii) any
liquidation or dissolution of the Company.
The Company has also agreed that the Company, its subsidiaries, officers,
directors, employees, investment bankers, attorneys and other agents and
representatives will immediately cease any existing activities, discussions or
negotiations with any parties conducted previously regarding a takeover
proposal.
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Notwithstanding the foregoing, the Merger Agreement provides that the
Company is not prohibited from furnishing non-public information regarding the
Company and its subsidiaries to, or entering into discussions or negotiations
with, any person or group who has submitted (and not withdrawn) to the Company
an unsolicited, written, bona fide takeover proposal that the Company's Board of
Directors reasonably concludes (after consultation with its financial advisor)
may constitute a superior proposal (as defined above) provided that (i) neither
the Company, its subsidiaries nor any representatives of the Company have
violated the non solicitation provisions of the Merger Agreement, (ii) the
Company's Board of Directors concludes in good faith, after consultation with
its outside legal counsel, that such action is required in order for the
Company's Board of Directors to comply with its fiduciary obligations to the
Company's shareholders under applicable law, (iii) the Company gives Compuware
prior written notice of the identity of the person or group in question, of all
of the material terms and conditions of the takeover proposal and of the
Company's intentions to furnish information to or enter into discussions with
that person or group, (iv) the Company has obtained a signed confidentiality
agreement from the person or group containing terms at least as restrictive as
the Company's confidentiality agreement with Compuware and (v) contemporaneously
with furnishing any information to the person or group, the Company furnishes
the same information to Compuware (unless it has previously done so).
ACCESS. Pursuant to the Merger Agreement, from the date of the Merger
Agreement until the Merger is consummated, the Company will, and will cause its
subsidiaries to, afford Compuware with reasonable access during normal business
hours to their properties, books, contracts, commitments, personnel and records
and shall furnish or promptly make available to Compuware a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws, and all
other information concerning its business, properties and personnel as Compuware
may reasonably request.
INDEMNIFICATION; SHAREHOLDER LITIGATION. Compuware has agreed to fulfill
and honor, and cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and any of its subsidiaries and their respective
directors and officers existing prior to the Merger Agreement. From and after
the Merger, such obligations will be the joint and several obligations of
Compuware and the Surviving Corporation, and Compuware will assume such
obligations. Notwithstanding the foregoing, Compuware and Purchaser will have no
obligation to indemnify the Company, any subsidiary or any of their respective
directors and officers in respect of claims, liabilities or damages arising out
of knowing and willful breach caused by the indemnified party of a
representation or covenant made by the Company in the Merger Agreement. The
articles of incorporation and bylaws of the Surviving Corporation will contain
the same provisions with respect to indemnification and elimination of liability
for monetary damages as are set forth in the articles of incorporation and
bylaws of the Company, which provisions will not be amended, repealed or
otherwise modified after the Merger in any manner that would adversely affect
the rights of the individuals who, on the date of the Merger Agreement or at any
time from that date to the date of the Merger, were directors, officers,
employees or agents of the Company or its subsidiaries, unless required by law.
The indemnification and exculpation obligations described above will
survive the termination of this Agreement and the consummation of the Merger and
will be binding on all successors and assigns of Compuware or the Surviving
Corporation. If Compuware, the Surviving Corporation or any of their successors
or assigns consolidates with or merges into any other person and is not the
surviving corporation, then proper provision must be made so that the successors
or assigns assume the obligations described above.
If any shareholder litigation is brought against the Company and its
directors relating to any of the transactions contemplated by the Merger
Agreement, then (i) until the purchase of Shares pursuant to this Offer is
consummated, the Company will give Compuware the opportunity to participate in
the defense or settlement of the litigation and (ii) thereafter, the Company
will give Compuware the opportunity to direct the defense of the litigation (in
which case, Compuware will give the Company and its directors the opportunity to
participate in the litigation). No settlement of such litigation may be made
without Compuware's consent, which will not be unreasonably withheld. No
settlement of such litigation requiring payment by a director will be agreed
upon without the director's consent.
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REASONABLE EFFORTS, NOTIFICATION. The Merger Agreement provides that,
subject to its terms and conditions, each of the parties thereto agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to use its reasonable efforts to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, this Offer, the Merger and the other transactions contemplated by
the Merger Agreement. Among other things, the Merger Agreement specifies the
following actions: (i) obtaining all necessary waivers, consents and approvals
from third parties, (ii) obtaining all necessary consents, approvals, waivers,
actions and nonactions from any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "GOVERNMENTAL ENTITY"), and the
making of all necessary registrations and filings and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (iii) defending any
lawsuits or other legal proceedings challenging the Merger Agreement or the
consummation of the transactions contemplated thereby and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by the Merger Agreement. In particular, the Company has agreed that
the Company and its Board of Directors will to take all action necessary to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to this Offer, the Merger, the Merger Agreement or any other
transaction contemplated by the Merger Agreement. Further, the Company has
agreed that if any state takeover statute or similar statute or regulation
becomes applicable to such transactions, it and its Board of Directors will take
all action necessary to ensure that such transactions may be consummated as
promptly as practicable on the terms contemplated by the Merger Agreement and
otherwise to minimize the effect of such statute or regulation on such
transactions.
Each of the Company and Compuware is obligated to give prompt notice to the
other of any material representation or warranty made by it in the Merger
Agreement or the failure to comply with or satisfy in any material respect any
covenant, condition or agreement under the Merger Agreement.
CONVERTIBLE NOTES. The Company has informed Compuware that it has
outstanding $115 million of its Notes. The Notes are convertible at any time at
the option of the holders into Shares at a conversion price of $35.50 per Share.
Under the indenture governing the Notes, within 25 business days after the
earlier of the consummation of this Offer or the Merger, the Company must offer
to purchase all or any part of the Notes at a price in cash equal to the
outstanding principal amount plus accrued interest plus any damages to which the
holders may be entitled for any breach by the Company of its obligations under a
registration rights agreement with such holders. The Company has informed
Compuware that, to its knowledge, there has been no such breach. The Company is
required to continue the repurchase offer for 20 business days and to close the
repurchase within 45 business days after the earlier of the consummation of this
Offer or the Merger. Under the Merger Agreement and the indenture, after the
Merger, the Company is required to take action to cause the Notes to be
convertible into cash, instead of Shares, in an amount equal to the Offer Price
per Share.
RIGHTS TO RECEIVE SHARES. The Merger Agreement provides that each right to
receive Shares is automatically converted, upon the Merger, into the right to
receive from the Company a cash payment equal to the Offer Price per Share,
without interest. Pursuant to the agreement under which the Company acquired one
of its subsidiaries, the Company is obligated to make an earnout payment, a
portion of which is to be paid in Shares. This right to receive Shares will,
pursuant to the Merger Agreement, be converted upon the Merger into the right to
receive the Offer Price per Share. The Company has informed Compuware that the
Company is currently negotiating with the seller of such subsidiary to determine
the final amount of this earnout payment.
DIRECTORS. Upon consummation of this Offer, provided that Purchaser has
purchased at least 91% of the then outstanding Shares, Purchaser may designate a
number of persons to be elected or appointed to the Company's Board of Directors
so that the percentage of board members designated by Purchaser (rounded up to
the next whole number) is equal to the percentage of Shares purchased by
Purchaser in connection with the Offer. Thereafter (until the Merger is
consummated), the Company may not amend or terminate the Merger Agreement,
extend or waive Purchaser's or Compuware's performance or obligations under the
Merger Agreement or waive the Company's rights under the Merger Agreement
without a concurrence of a majority
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of the directors then in office who are currently members of the Company's Board
of Directors or who subsequently become members but are not designated by
Purchaser.
EXPENSES. Each party to the Merger Agreement will bear its own expenses in
connection with this Offer, the Merger, the Merger Agreement and the
transactions contemplated by the Merger Agreement, whether or not this Offer is
consummated except that (i) if the Merger Agreement is terminated by Parent in
certain circumstances, the Company will pay all reasonable legal, accounting and
investment banking fees and expenses incurred by Compuware up to $1,000,000 and
(ii) if the agreement is terminated by the Company in certain circumstances,
Compuware will pay all reasonable legal, accounting and investment banking fees
and expenses incurred by the Company up to $1,000,000. See "Termination" below
in this Section 10.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains customary
representations and warranties of the parties thereto including representations
by the Company as to the absence of certain changes or events concerning the
Company's business, compliance with law, taxes, litigation, employee benefit
plans, real property and leases, intellectual property, environmental matters
and material contracts.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver on or prior to the closing of the Merger of the following conditions:
(i) if required by applicable law, the Merger shall have been approved
by the requisite vote of the shareholders of the Company;
(ii) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(iii) no temporary restraining order, preliminary or permanent
injunction, judgment or other order, decree or ruling nor any statute,
rule, regulation or executive order shall be in effect which would (a) make
the acquisition or holding by Compuware or its affiliates of Shares or
shares of Common Stock of the Surviving Corporation illegal or otherwise
prevent the consummation of the Merger, (b) prohibit Compuware's or
Purchaser's ownership or operation of, or compel Compuware or Purchaser to
dispose of or hold separate, all or a material portion of the business or
assets of Purchaser, the Company or any subsidiary thereof, (c) compel
Compuware, Purchaser or the Company to dispose of or hold separate all or a
material portion of the business or assets of Compuware or any of its
subsidiaries or the Company or any of its subsidiaries, (d) impose material
limitations on the ability of Compuware or Purchaser or their affiliates
effectively to exercise full ownership and financial benefits of the
Surviving Corporation, or (e) impose any material condition to the Merger
Agreement or the Merger, which would be adverse to Compuware.
In addition, the obligations of Compuware and Purchaser to effect the
Merger are further subject to:
(i) the accuracy of the Company's representations and warranties in
the Merger Agreement in all material respects as of the closing date of the
Merger;
(ii) the performance in all material respects by the Company of each
of its covenants and obligations under the Merger Agreement;
(iii) the absence of a Material Adverse Change in the Company that has
a Material Adverse Effect or an event that is reasonably likely to result
in a Material Adverse Effect to the Company and its subsidiaries taken as a
whole;
(iv) the absence of any pending or overtly threatened suit, action or
proceeding brought by any Governmental Entity (or recommended by the staff
of the FTC or the Antitrust Division) by any shareholder (but only if
Compuware deems such shareholder suit, action or proceeding to have a
reasonable likelihood of success) or by any other person, directly or
indirectly, (a) challenging Compuware's or Purchaser's acquisition of
Shares, seeking to restrain or prohibit consummation of this Offer, the
Merger or any other transaction contemplated by the Merger Agreement or
alleging that such acquisition or other transaction relates to, involves or
constitutes a breach of fiduciary duty by the
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Company's directors or a breach of the securities laws or corporate law,
(b) seeking to prohibit or limit the Company's, Compuware's or Purchaser's
ownership of a material portion of the business or assets of the Company
and its subsidiaries or of Compuware and its subsidiaries or to compel the
Company or Compuware to dispose of a hold separate any sub material
portion, (c) seeking to impose material limitations on the ability of
Purchaser or Compuware to acquire, hold or exercise full ownership rights
of all the Shares purchased in this Offer, (d) seeking to prohibit
Compuware or any of its subsidiaries from effectively managing or
controlling in any material respect the business or operations of the
Company and its subsidiaries or (e) seeking to impose a material condition
on this Offer, the Merger or the Merger Agreement which would be adverse to
Compuware; and
(v) all third party consents needed to avoid causing a Material
Adverse Effect on the Company having been obtained.
Notwithstanding the foregoing, the only conditions to Compuware's and
Purchaser's obligation to effect the Merger by means of a short-form merger
(which can be effected only if Purchaser owns at least 90% of the Company's then
outstanding Shares and no approval is required of the Company's shareholders)
would be the expiration or termination of any applicable waiting period under
the HSR Act, and that no order or injunction making the Merger illegal or
materially impairing the benefits of the Merger to Compuware shall be in effect.
In addition to the conditions to each party's obligation described above,
the obligation of the Company to effect the Merger is further subject to:
(i) the accuracy of Compuware's and Purchaser's representations and
warranties in the Merger Agreement in all material respects as of the
closing date of the Merger; and
(ii) the performance in all material respects by Compuware and
Purchaser of each of their respective covenants and obligations under the
Merger Agreement.
TERMINATION. The Merger Agreement may be terminated, and the Merger may be
abandoned, at any time prior to the closing of the Merger:
(i) by mutual written consent of Compuware and the Company (duly
authorized by their respective Boards of Directors);
(ii) by Compuware or the Company (a) if the Merger is not consummated
on or before January 31, 2000 (except that a party may not terminate the
Merger Agreement on this basis if that party's action or failure to act is
a principal cause of, or resulting in the failure of, the Merger to occur
on or before January 31, 2000 and such action or failure to act constitutes
a breach of the Merger Agreement, (b) if any Governmental Entity shall have
taken any action permanently enjoining, restraining or otherwise
prohibiting the Merger and such action shall have become final and
nonappealable or (c) if any required approval of the Company's shareholders
is not obtained due to the failure to obtain the required vote at a duly
convened shareholders meeting (except that a party may not terminate the
Merger Agreement on this basis if the failure to obtain such shareholder
approval is caused by that party's action or failure to act in breach of
the Merger Agreement or by a breach of the Shareholder Tender and Voting
Agreement by any party thereto other than Compuware,
(iii) by Compuware if (a) the Company's Board of Directors or any
committee thereof shall have failed to recommend either this Offer or the
approval by the Company's shareholders of the Merger or the Merger
Agreement or shall have failed to reaffirm such recommendation within two
business days after being requested to do so or shall have withdrawn or
modified such recommendation (or resolved to do so) in a manner adverse to
Compuware or Parent, (b) the Company's Board of Directors or a committee
thereof shall have recommended another takeover proposal (or resolved to do
so), (c) the Company shall have entered into a letter of intent, agreement
or commitment with respect to a takeover proposal (or the Company's Board
of Directors or a committee thereof shall have resolved to do so) or (d) a
tender offer or exchange offer for securities of the Company shall have
been commenced (by a person unaffiliated with Compuware) and the Company
shall not have sent a statement to its
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shareholders (pursuant to Rule 14e-2 under the Exchange Act) within ten
business days disclosing that the Company recommends rejection of that
offer;
(iv) by Compuware, if any of the Company's representations and
warranties in the Merger Agreement are not true in any material respect as
of the date of the Merger Agreement or thereafter or if the Company shall
have breached or failed to perform in any material respect any obligation,
agreement or covenant, except that if any such breach or failure (other
than a breach of the non solicitation provisions of the Merger Agreement,
the provisions regarding obtaining shareholder approval, or any other
breach that has caused irreparable harm, which may not be cured) is curable
by the Company through reasonable efforts, then Compuware may not terminate
the Merger Agreement under this subparagraph unless the matter has not been
cured within ten business days after Compuware has given written notice of
the breach or failure to the Company;
(v) by the Company, if any of Compuware's representations and
warranties in the Merger Agreement are not true in any material respect as
of the date of the Merger Agreement or thereafter or if Purchaser or
Compuware shall have breached or failed to perform in any material respect
any obligation, agreement or covenant, except that if any such breach or
failure (other than a breach that caused irreparable harm, which may not be
cured) is curable by Purchaser or Compuware through reasonable efforts,
then the Company may not terminate the Merger Agreement under this
subparagraph unless the matter has not been cured within ten business days
after the Company has given written notice of the breach or failure to
Purchaser and Compuware.
If the Merger Agreement is terminated in accordance with the above
provisions, then no party will have any liability to the others under the
agreement except as indicated below.
- If termination results from a party's willful and material breach of its
representations, warranties, covenants or agreements in the Merger
Agreement, the party may be liable for damages for such breach;
- If Compuware terminates the Merger Agreement as a result of any events
described in (iii) above (regarding certain action or inaction by the
Company's Board of Directors or a committee thereof), the Company must
pay Compuware within two business days after such termination a
$15,000,000 fee and the Company must pay promptly all Compuware's
reasonable legal, accounting and investment banking fees up to
$1,000,000;
- (a) If the Merger Agreement is terminated by Compuware because (w) the
January 31, 2000 deadline referred to in (ii)(a) above is not met, (x)
the required shareholder approval is not obtained as provided in (ii)(c)
above, (y) any of the Company's representations and warranties are
untrue, or because of a breach or failure of the Company to perform, as
described in (iv) above, or (z) if the Company terminates the agreement
because the required shareholder approval is not obtained as provided in
(ii)(c) above, and (b) if before the termination a third party has
publicly announced a takeover proposal which, if consummated, would
constitute an Acquisition Event (as defined below), and (c) if within 12
months after the termination, an Acquisition Event is consummated or the
Company enters into an agreement for an Acquisition Event, then the
Company will be required to pay Compuware a $15,000,000 fee; provided,
however, that the fee would be reduced to $10,000,000 if the Acquisition
Event provides for consideration per Share less than Compuware's Offer
Price but more than $12.25 (the closing price per Share on the last
trading day before the public announcement of the signing of the Merger
Agreement); and, provided, further, that if the Acquisition Event
provides for consideration per Share equal to or less than $12.25, no fee
will be payable. For the purposes of the Merger Agreement, an
"ACQUISITION EVENT" means (1) a merger or other business combination,
recapitalization, liquidation, dissolution or similar transaction
involving the Company pursuant to which the Company's shareholders
immediately before the transaction hold less than 50% of the aggregate
equity interest of the surviving corporation, (2) a sale of assets
representing more than 50% of fair market value of the Company's business
or (3) the acquisition by any person or group, directly or indirectly, of
beneficial ownership or a right to acquire such ownership of shares
representing more than 50% of the voting power of the Company's
outstanding capital stock.
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- If the Merger Agreement is terminated by Compuware because any of the
Company's representations and warranties are untrue, or because of a
breach or failure of the Company to perform its agreements therein, as
described in (iv) above, then the Company must pay promptly Compuware's
reasonable legal, accounting and investment banking fees up to
$1,000,000.
- If the Merger Agreement is terminated by the Company because any of
Compuware's representations or warranties are untrue, or because of a
breach or failure of Purchaser or Compuware to perform its agreements
therein, as described in (v) above, then Compuware must pay promptly the
Company's reasonable legal, accounting and investment banking fees up to
$1,000,000.
Termination of the Merger Agreement will not affect the parties' respective
obligations under a confidentiality agreement with respect to certain
information provided in connection with the matters referred to herein.
AMENDMENT AND WAIVER. The Merger Agreement may be amended at any time
without the approval of the Company's shareholders, unless such approval is
required by law. The Merger Agreement may be amended only by a written
instrument signed by each of the parties.
Before the Merger, the parties may extend the time for the performance of
any party's obligations under the Merger Agreement, may waive any inaccuracies
in the representations or warranties in the Merger Agreement or in any document
delivered in connection with that agreement and, subject to any shareholder
approval required by law, may waive compliance with any covenant or condition in
that agreement. Any such extension or waiver by a party must be set forth in a
written instrument signed by that party.
POST MERGER EMPLOYMENT BENEFITS. Employees of the Company who after the
Merger remain employees of the Company or become employed by Compuware or any
other controlled subsidiary will become eligible to participate in the same
standard employee benefit plans as are generally available to similarly situated
Compuware employees and will receive credit for all service with the Company for
the purposes of any "employee benefit plan" (as defined in Section 3(3) of
ERISA). The Company may, if requested to do so by Compuware, terminate its
employee plans immediately prior to the Merger. Compuware will evaluate the
equity incentive compensation of Company employees who remain employees of the
Company or become employees of Compuware or any of its other subsidiaries after
the Merger. Compuware may grant equity incentive compensation to those
employees, but there can be no assurance it will do so. Compuware has committed
in the Merger Agreement to make all commercially reasonable efforts to induce
each manager of the Company and the employees and consultants of the Company and
its subsidiaries generally to continue to remain employees of the Company
following the Merger.
See Section 17 below for information concerning employment agreements and
noncompetition agreements with certain Company employees that will become
effective in connection with the Merger, as well as additional information
concerning the Company employees.
11. PURPOSE OF THIS OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER; APPRAISAL RIGHTS.
PURPOSE OF THIS OFFER. The purpose of this Offer and the Merger is for
Compuware to acquire control of, and the entire equity interest in, the Company.
The purpose of the Merger is for Compuware to acquire all Shares not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will become
a wholly owned subsidiary of Compuware. This Offer is being made pursuant to the
Merger Agreement.
Compuware is a provider of software products and information technology
professional services to increase the productivity of the information technology
departments of its target market, the 20,000 largest enterprises worldwide. The
Company is a leading provider of technology professional services. Compuware
believes the acquisition of the Company will permit Compuware to enlarge
significantly its presence in the professional services market in the
southeastern, southwestern and western United States.
PLANS FOR THE COMPANY. As soon as practicable and legally permissible
following the Merger, Compuware will begin integrating the Company's
professional staff and in-house operations with those of Compuware. The
integration process will include coordinating the combined company's management,
accounting, human resources and other systems in order to realize expeditiously
and efficiently the anticipated
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synergies of the Merger. As discussed in Section 13 below, following
consummation of the Merger, Compuware intends to cause the delisting of the
Shares by the Nasdaq National Market and the termination of registration of the
Shares pursuant to Rule 12g-4 under the Exchange Act.
Except as indicated in this Offer to Purchase, Compuware does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or its subsidiaries, a sale or transfer of a material
amount of assets of the Company or its subsidiaries or any material change in
the Company's capitalization or dividend policy or any other material changes in
the Company's corporate structure or (except as indicated in Section 10 above)
business, or the composition of the Board of Directors or the Company's
management.
APPRAISAL RIGHTS. No appraisal rights are available in connection with
this Offer. However, if the Merger is consummated, shareholders of the Company
immediately before the Merger will have certain rights under California law to
exercise appraisal rights to receive payment in cash for their shares other than
pursuant to the terms of the Merger. These appraisal rights may be exercised
only with respect to Shares (i) which are outstanding immediately before the
Merger, if the Merger takes place without a shareholder vote, or that are voted
against the Merger if a shareholder vote is sought and obtained, (ii) if the
Shares are listed in the Nasdaq National Market immediately before the Merger,
then the Shares for which appraisal rights apply must have a restriction on
transfer imposed by the Company or by a law or regulation, unless demands for
payment under California's appraisal statutes are made with respect to 5% or
more of the Shares, and (iii) which the shareholder submits for endorsement and
demands that Compuware purchase at fair market value, in accordance with
California law regarding appraisal rights. The exercise of appraisal rights in
accordance with the statutory procedures could lead to a judicial determination
of the fair value of the Shares, as of June 23, 1999 (the day before the first
announcement of the terms of the proposed Merger, excluding any appreciation or
depreciation in consequence of the proposed action), required to be paid in cash
to the dissenting holders for their Shares. In addition, such dissenting
shareholders may under certain circumstances be entitled to receive payment of
interest at the legal rate from the date of the holders' exercise of their
appraisal rights on the amount of the court's judgment.
12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company will not, between the date of the Merger Agreement and the Merger,
without the prior written consent of Compuware, declare or pay any dividends on
or make any other distributions in respect of any capital stock or split,
combine or reclassify any capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for any
capital stock.
13. EFFECT OF THIS OFFER ON THE MARKET FOR THE SHARES, NASDAQ QUOTATION AND
EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to this Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public.
Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to this Offer, the Shares may no longer meet the
standards for continued inclusion in the Nasdaq National Market, which require,
among other things, that an issuer have at least 200,000 publicly held shares
with a market value of $1 million held by at least 400 shareholders or 300
shareholders holding round lots. If these standards are not met, quotations
might continue to be published in the over-the-counter "additional list" or in
one of the "local lists," but if the number of holders of Shares falls below
300, or if the number of publicly held Shares falls below 100,000, or there are
not at least two market makers for the Shares, the National Association of
Securities Dealers rules provide that the securities would no longer be
"authorized" for Nasdaq reporting and Nasdaq would cease to provide any
quotations. Shares held directly or indirectly by an officer or director of the
Company, or by any beneficial owner of more than 10 percent of the Shares,
ordinarily will not be considered as being publicly held for this purpose. In
the event the Shares were no longer eligible for Nasdaq quotation, quotations
might still be available from other sources. The extent of the public market for
the Shares and availability of such quotations would, however, depend upon the
number of holders of Shares remaining at such time, the interest in maintaining
a market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act, as described below, and other factors.
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The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following this Offer, the Shares will no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange or Nasdaq and there are fewer than 300 record holders of the Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
shareholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
shareholders' meetings pursuant to Section 14(a) and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions no
longer applicable to the Company. Furthermore, if Purchaser acquires a
substantial number of Shares or the registration of the Shares under the
Exchange Act were to be terminated, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 under the Securities Act of 1933 may be impaired
or eliminated. If registration of the Shares under the Exchange Act were
terminated prior to the consummation of the Merger, the Shares would no longer
be "margin securities" or be eligible for Nasdaq reporting.
Compuware intends to cause the delisting of the Shares by the Nasdaq
National Market and the termination of registration of this Shares pursuant to
Rule 12g-4 under the Exchange Act following consummation of the Merger.
14. CERTAIN CONDITIONS OF THIS OFFER. The Merger Agreement provides that,
notwithstanding any other provision of this Offer or the Merger Agreement, and
in addition to (and not in limitation of) Purchaser's rights to extend and amend
this Offer (subject to certain limitations), Purchaser will not be required to
accept for payment, purchase or pay for (subject to the rules of the Securities
and Exchange Commission, including Rule 14e-1(c) under the Exchange Act, which
applies to Purchaser's obligation to pay for or return tendered Shares) any
Shares tendered pursuant to this Offer unless at least 91% of the Shares
outstanding at the close of business on the business day immediately preceding
the day on which this Offer expires or terminates have been validly tendered and
not withdrawn or if any waiting period (and any extension thereof) under the HSR
Act applicable to the purchase of Shares pursuant to this Offer shall not have
expired or been terminated.
In addition, notwithstanding any other provision of this Offer or the
Merger Agreement, Purchaser will not be required to accept for payment (subject
to the Securities and Exchange Commission's rules) and pay for any Shares not
theretofore accepted for payment and paid for, and may terminate or amend this
Offer, or if, upon the scheduled expiration date of this Offer (as extended, if
applicable), and before acceptance of the Shares for payment or payment
therefor, any of the following conditions exists and is continuing:
(i) there shall be pending any suit, action or proceeding brought by
or on behalf of any Governmental Entity (or the staff of the FTC or the
Antitrust Division shall have recommended the commencement of such), any
shareholder of the Company or any other person or party (but only if such
shareholder suit, action or proceeding is deemed by Compuware to have a
reasonable likelihood of success), directly or indirectly, (a) challenging
the acquisition by Compuware or Purchaser of any Shares, seeking to
restrain or prohibit the making or consummation of this Offer or the Merger
or the performance of any of the other transactions contemplated by the
Merger Agreement, or alleging that any such acquisition or other
transaction relates to, involves or constitutes a breach of fiduciary duty
by the Company's directors or a violation of federal securities law or
applicable corporate law, (b) seeking to prohibit or limit the ownership or
operation by the Company, Compuware or any of their respective subsidiaries
of a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Compuware and its subsidiaries, taken as
a whole, or to compel the Company or Compuware to dispose of or hold
separate any material portion of the business or assets of the Company and
its
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<PAGE> 28
subsidiaries, taken as a whole, or Compuware and its subsidiaries, taken as
a whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement, (c) seeking to impose material
limitations on the ability of Compuware or Purchaser to acquire or hold, or
to exercise full rights of ownership of, any of the Shares accepted for
payment pursuant to this Offer, (including without limitation the right to
vote any such Shares on all matters properly presented to the shareholders
of the Company), (d) seeking to prohibit Compuware or any of its
subsidiaries from effectively managing or controlling in any material
respect the business or operations of the Company and its subsidiaries
taken as a whole or (e) seeking to impose a material condition to this
Offer, the Merger Agreement or the Merger which would be materially adverse
to Compuware;
(ii) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
this Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court (other than the applicable HSR waiting period
referred to above) that is reasonably likely to result in any of the
consequences referred to in (a) through (e) of paragraph (i) above; or
(iii) there shall have occurred any change in the Company and its
subsidiaries taken as a whole that came within the definition of a Material
Adverse Effect with respect to the Company (as that term is defined in
Section 10 above) or any event that is reasonably likely to result in such
a change;
(iv) (a) the Company's Board of Directors or any committee of the
Board shall have failed to recommend either this Offer or the approval by
the Company's shareholders of the Merger or the Merger Agreement or shall
have failed to reaffirm such recommendation within two business days after
being requested to do so or shall have withdrawn or modified such
recommendation (or resolved to do so) in a manner adverse to Compuware or
Purchaser, (b) the Company's Board of Directors or a committee of the Board
shall have recommended another takeover proposal (or resolved to do so),
(c) the Company shall have entered into a letter of intent, agreement or
commitment with respect to a takeover proposal (or the Company's Board of
Directors or a committee of the Board of Directors shall have resolved to
do so) or (d) a tender offer or exchange offer or securities of the Company
shall have been commended (by a person unaffiliated with Compuware) and the
Company shall not have sent a statement to its securityholders (pursuant to
Rule 14e-2 under the Exchange Act) within ten business days disclosing that
the Company recommends rejection of that offer;
(v) any representation or warranty of the Company in the Merger
Agreement shall have failed to be true and correct, in any material
respect, as of the date of the Merger Agreement or shall have ceased to be
true and correct in any material respect at any time thereafter; or
(vi) the Company shall have breached, or failed to perform, in any
material respect, any obligation or to comply in any material respect with
any agreement or covenant of the Company to be performed or complied with
by it, except that, if any such breach or failure (other than a breach of
the non-solicitation provisions or the provisions for obtaining shareholder
approval referred to in Section 10 or any other breach that has caused
irreparable harm, which may not be cured) is curable by the Company through
the exercise of reasonable efforts, then Compuware may not terminate this
Offer until ten business days after Compuware or Purchaser has given
written notice thereof to the Company and unless at such time the matter
has not been cured;
(vii) the Merger Agreement shall have been terminated in accordance
with its terms;
(viii) there shall have occurred (a) any general suspension of trading
in, or limitation on prices for, securities on the Nasdaq National Market,
(b) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory), (c)
the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States and
having a Material Adverse Effect or materially adversely affecting (or
materially delaying) the consummation of this Offer, (d) any limitation or
proposed limitation (whether or not mandatory) by any U.S. governmental
authority or agency, or any other event, that materially adversely affects
generally the extension of credit by banks or other financial institutions,
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<PAGE> 29
or (e) in the case of any of the situations described in clauses (a)
through (d) inclusive existing at the date of commencement of this Offer, a
material escalation or worsening thereof;
(ix) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act), other than Purchaser, any of its
affiliates or any group of which any of them is a member, (a) shall have
acquired beneficial ownership of more than 10% of the outstanding Shares
(unless Purchaser acquires at least 91% of the Shares outstanding at the
expiration or termination of this Offer, as provided above); (b) shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Shares or
merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries or (c) shall have otherwise announced a
tender offer with respect to Shares of Company Common Stock (unless
Purchaser acquires at least 91% of the Shares outstanding at the expiration
or termination of this Offer, as provided above);
(x) any bankruptcy proceedings shall have been instituted with respect
to the Company and not dismissed;
(xi) any third party consents which if not obtained would have a
Material Adverse Effect on the Company shall not have been obtained;
which, with respect to each condition listed in (i) through (xi) above, in the
sole judgment of Purchaser or Compuware, and regardless of the circumstances
giving rise to any such condition (other than any action or inaction by
Compuware or any of its subsidiaries which constitutes a breach of the Merger
Agreement), such condition makes it inadvisable to proceed with acceptance of
the tendered Shares for payment or payment therefor.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Compuware, Purchaser and their affiliates and may be asserted by
Compuware or Purchaser regardless of the circumstances giving rise to such
condition (other than any action or inaction by Compuware or any of its
subsidiaries which constitutes a breach of the Merger Agreement) and may be
waived by Compuware or Purchaser in whole or in part at any time and from time
to time in the sole discretion of Compuware or Purchaser. The failure by
Compuware or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver of
any such rights with respect to other facts and circumstances; and each right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Based upon publicly available information with respect to the
Company, upon certain information furnished by the Company to Compuware and upon
discussions of representatives of Compuware with representatives of the Company
during Compuware's investigation of the Company (see Section 10 above), neither
Purchaser nor Compuware is aware of any governmental permit that appears to be
material to the business of the Company and the subsidiaries, taken as a whole,
which might be adversely affected by the acquisition of Shares by Purchaser
pursuant to this Offer or, except as set forth below, of any approval or other
action by any domestic (federal or state) or foreign governmental,
administrative or regulatory authority or agency which would be required prior
to the acquisition of Shares by Purchaser pursuant to this Offer. Should any
such approval or other action be required, it is Purchaser's present intention
to seek such approval or action. Purchaser does not currently intend, however,
to delay the purchase of Shares tendered pursuant to this Offer pending the
outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Shares if any of the conditions
referred to in Section 14 above shall have occurred). There can be no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser or Compuware or that certain parts of the
businesses of the Company, Purchaser or Compuware might not have to be disposed
of or held separate or other substantial conditions complied with in order to
obtain such approval or other action or in the event that such approval were not
obtained or such other action were not taken. As indicated in Section 14 above,
Purchaser's obligation under this Offer to accept for
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<PAGE> 30
payment and pay for Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 15.
STATE TAKEOVER LAWS. The Company is incorporated under the law of the
State of California. In general, Section 1203 of the California Corporations
Code provides that, if a tender offer or written proposal for approval of a
merger is made to some or all of a corporation's shareholders by an "interested
party," then (i) an affirmative opinion (by a person unaffiliated with the
offeror who, for compensation, engages in the business of advising others as to
the value of properties, businesses or securities) as to the fairness of the
consideration to the shareholders of that corporation shall be delivered to the
corporation's shareholders and (ii) if a later tender offer or written
reorganization proposal that would require a vote of shareholders is made to the
corporation or its shareholders by any other person at least ten days before the
date for acceptance of the tendered shares or the vote or notice of shareholder
approval with respect to the "interested party's" proposal, then the
shareholders are required to be given certain information about the later,
competing proposal and the reasonable opportunity to withdraw their vote,
consent or proxy or their tendered shares. For the purposes of Section 1203, an
"interested party" means, among other things, a person who is a party to the
transaction and (a) directly or indirectly controls the corporation that is the
subject of the tender offer or proposal or (b) is a corporation in which an
officer or director of the subject corporation holds a material financial
interest (a mere common directorship does not constitute a "material financial
interest" for these purposes). Compuware and Purchaser believe that Section 1203
does not apply to this Offer and will not apply to the Merger as currently
contemplated.
Pursuant to Section 1101 of the California Corporations Code, Compuware and
Purchaser cannot accomplish the Merger if Purchaser or Compuware owns prior to
the Merger, directly or indirectly, more than 50% of the voting power of the
Company, unless Purchaser owns 90% or more of the outstanding Shares immediately
before the Merger or unless all the Company's shareholders consent. Accordingly,
if as a result of this Offer or otherwise Purchaser acquires more than 50% but
less than 90% of the Shares, Purchaser anticipates that, in order to accomplish
the Merger, it will have to dispose of a sufficient number of shares to fall
below the 50% threshold and the approval of the Merger by shareholders holding
at least a majority of the Shares must be obtained.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of shareholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to this Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to this Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to this Offer, Purchaser might be required
to file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to this Offer, or be delayed in continuing
or consummating this Offer, and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 14 above.
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<PAGE> 31
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
until certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to this Offer is subject to such requirements.
See Section 2 above.
Pursuant to the HSR Act, Compuware intends to file a Pre-merger
Notification and Report Form in connection with the purchase of Shares pursuant
to this Offer with the Antitrust Division and the FTC. Under the provision of
the HSR Act applicable to this Offer, the purchase of Shares pursuant to this
Offer may not be consummated until the expiration of a 15-calendar day waiting
period following the filing by Compuware. Accordingly, the waiting period under
the HSR Act applicable to the purchase of Shares pursuant to this Offer will
expire at the end of the fifteenth calendar day after such filing is made,
unless such waiting period is terminated by the FTC and the Antitrust Division
or extended by a request from the FTC or the Antitrust Division for additional
information or documentary material prior to the expiration of the waiting
period. If either the FTC or the Antitrust Division were to request additional
information or documentary material from Compuware and/or the Company with
respect to this Offer, the waiting period with respect to this Offer would
expire at the end of the tenth calendar day after the date of substantial
compliance by Compuware and the Company with such request. Thereafter, the
waiting period could be extended only by court order. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, this
Offer may, but need not, be extended and, in any event, the purchase of and
payment for Shares will be deferred until ten days after the request is
substantially complied with, unless the extended period expires on or before the
date when the initial 15-day period would otherwise have expired, or unless the
waiting period is sooner terminated by the FTC and the Antitrust Division. Only
one extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
expect by court order. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. See
Section 4 above. It is a condition to this Offer that the waiting period
applicable under the HSR Act to this Offer expire or be terminated. See Section
2 and Section 14 above.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to this Offer. At any time before or after the purchase of
Shares pursuant to this Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to this Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Compuware, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Compuware
relating to the businesses in which Compuware, the Company and their respective
subsidiaries are engaged, Compuware and Purchaser believe that this Offer and
the Merger will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to this Offer on antitrust grounds will not be made
or, if such a challenge is made, what the result would be. See Section 14 above
for certain conditions to this Offer.
GOING PRIVATE RULE. Rule 13e-3 under the Exchange Act that, in the case of
a "going private" transaction involving a company, certain financial information
concerning the company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority shareholders in
the transaction be filed with the Securities and Exchange Commission and
disclosed to shareholders prior to consummation of the transaction. Purchaser
believes that Rule 13e-3 will not be applicable to this Offer or the Merger but
it cannot make assurances that the Securities and Exchange Commission will
agree. The Commission might take the position that Rule 13e-3 applies to this
Offer or the Merger and might require Purchaser to provide additional
information pursuant to the rule.
16. FEES AND EXPENSES. Except as set forth below, Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to this Offer.
Updata Capital has been retained to render financial advisory services in
connection with this Offer and the Merger and will be paid approximately $2.1
million in connection with such engagement upon successful
31
<PAGE> 32
completion of the transactions contemplated by the Merger Agreement. Updata
Capital will also be reimbursed for its reasonable fees and expenses and has
been granted customary indemnity. Bernard M. Goldsmith, the Managing Director of
Updata Capital, is a director of Compuware.
Innisfree M & A Incorporated has been retained to serve as the Information
Agent in connection with this Offer. The Information Agent will be paid
reasonable and customary compensation for its services, will be reimbursed for
reasonable out-of-pocket expenses and has been provided with customary
indemnity. The Information Agent may contact holders of Shares by mail,
telephone, telex, telecopy, telegraph or personal interview and may request
banks, brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners.
EquiServe has been retained as the Depositary in connection with this
Offer. The Depositary will be paid reasonable and customary compensation for its
services in connection with this Offer, will be reimbursed for its reasonable
out-of-pocket expenses in connection therewith and has been provided with
customary indemnity for certain liabilities and expenses in connection
therewith. In addition, brokers, dealers, commercial banks and trust companies
will be reimbursed for customary handling and mailing expenses incurred by them
in forwarding material to their customers.
17. EMPLOYMENT AGREEMENTS. Contemporaneously with the execution of the
Merger Agreement, the Company and Compuware entered into amendments to the
employment agreements of three officers of the Company, effective upon the
closing date of the Merger, and two of the officers have entered into
noncompetition agreements with the Company and Compuware, effective on the
Merger. These amendments and noncompetition agreements are summarized below. The
summary is qualified in its entirety by reference to the amendments, the
underlying employment agreements and the noncompetition agreements which are
exhibits to Compuware's and Purchaser's Schedule 14D-1 filed with the Securities
and Exchange Commission in connection with this Offer.
Under the amendments to the employment agreements of Mary Ellen Weaver, the
Company's Chairman of the Board and Chief Executive Officer, and Thomas A.
Vadnais, the Company's President and Chief Operating Officer and a director of
the Company, the term of each officer's employment agreement will be extended
until the third anniversary of the Merger; each officer will serve in a position
equivalent to a senior manager of Compuware; each officer will be eligible to
participate in Compuware's executive bonus plan that is generally provided to
other executives having similar positions with comparable experience and
responsibilities to those of the officer, subject to the determination of
Compuware's Compensation Committee; and, any stock options granted by the
Company to the officer after the Merger will be subject to the vesting and other
terms contained in such option grants. Under each such officer's existing
employment agreement, the outstanding stock options granted by the Company to
the officer prior to the Merger will vest in full on the date of the Merger, and
the officer will be entitled to receive, after any termination or constructive
termination of the officer's employment by the Company, the continuation of the
officer's base salary and certain benefits for up to 24 months, in the case of
Ms. Weaver, and up to 12 months in the case of Mr. Vadnais. These provisions
will not be changed by the amendments.
The amendment to the employment agreement of David M. Connell, the
Company's Executive Vice President and a director of the Company, is
substantially similar to the amendments described above, except that the term of
Mr. Connell's employment agreement will terminate 90 days after the Merger
unless extended by mutual consent for 90 days, and if Mr. Connell remains
employed through the term, his subsequent termination of employment for any
reason will entitle him to receive his severance benefits, which include up to
18 months of his base salary.
According to information provided by the Company, on June 21, 1999, Ms.
Weaver held options to purchase 54,000 Shares, none of which were unvested, Mr.
Vadnais held options to purchase 320,000 Shares, all of which were unvested, and
Mr. Connell held options to purchase 167,200 Shares, of which options for 95,440
Shares were unvested. The unvested options of Mr. Vadnais and Mr. Connell will
vest automatically upon the earlier of the consummation of the Offer or the
Merger. As a result of the acceleration of vesting of those stock options, Mr.
Vadnais and Mr. Connell will be entitled to receive, upon the exercise of such
options, an amount in cash equal to $3,320,000 and $148,663, respectively, in
excess of the aggregate exercise prices of their respective options. Vesting of
the outstanding stock options granted to three other officers of the
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<PAGE> 33
Company will also accelerate on the earlier of consummation of this Offer or the
Merger. The Company has informed Compuware that the Company is currently
negotiating to limit the number of Mr. Vadnais' options subject to accelerated
vesting in order to eliminate any excess parachute payments under Sections 280G
and 4999 of the Internal Revenue Code.
Ms. Weaver and Mr. Connell, as shareholders, have each entered into
noncompetition agreements with the Company and Compuware under which each of
them has agreed that, without Compuware's consent, such shareholder will not
become an officer, director, stockholder, owner, co-owner, affiliate,
salesperson, partner, trustee, promoter, technician, engineer, analyst,
employee, agent, representative, supplier, investor or lender, consultant,
advisor or manager to, or acquire or hold any interest in, or permit such
officer's name to be used in connection with, any person or entity that engages
in any business which is directly competitive with any business of the Company
at the time of the Merger or the professional services business of Compuware at
the time of termination of such officer's employment with Compuware or the
Company, except that the shareholder will not be prohibited from owning a
passive investment of less than 1% of the outstanding shares of capital stock of
any publicly held corporation if such shares are actively traded on a national
securities market in the United States. The term of Ms. Weaver's noncompetition
agreement begins on the date of the Merger and ends on the later of the third
anniversary of the Merger or the first anniversary of the termination of her
employment with the Company or Compuware. The term of Mr. Connell's
noncompetition agreement begins on the date of the Merger and ends on the later
of the first anniversary of the Merger or the first anniversary of the
termination of his employment with the Company or Compuware.
18. MISCELLANEOUS. Purchaser is not aware of any jurisdiction where the
making of this Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statue prohibiting the making of this Offer or the acceptance of Shares
pursuant to this Offer, Purchaser will make a good faith effort to comply with
any such state statute. If, after such good faith effort, Purchaser cannot
comply with any such state statute, this Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Compuware and Purchaser have filed with the Securities and
Exchange Commission the Schedule 14D-1, together with exhibits, furnishing
certain additional information with respect to this Offer. The Schedule 14D-1
and any amendments thereto, including the exhibits, may be inspected at, and
copies may be obtained from, the same places and in the same manner as set forth
in Section 7 above (except that these documents will not be available at the
regional offices of the Securities and Exchange Commission).
COMP ACQUISITION CO.
June 30, 1999
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER AND COMPUWARE
The following tables set forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser and
Compuware. The business address of each such person is 31440 Northwestern
Highway, Farmington Hills, Michigan 48334.
Unless otherwise indicated, each person listed below (i) has held his
principal occupation for the past five years, (ii) has not been convicted in a
criminal proceeding and has not been party to a proceeding related to U.S. state
and federal securities laws, and (iii) is a citizen of the United States.
1. Directors and Executive Officers of Purchaser:
<TABLE>
<CAPTION>
NAME POSITION WITH PURCHASER
- ---- -----------------------
<S> <C>
Eliot R. Stark......... President and Director
Thomas Costello, Vice President, Secretary, Treasurer and Director
Jr. .................
</TABLE>
2. Directors and Executive Officers of Compuware:
<TABLE>
<CAPTION>
NAME POSITION WITH COMPUWARE
- ---- -----------------------
<S> <C>
Peter Karmanos, Jr. ... Chairman of the Board of Directors and Chief Executive
Officer
Joseph A. Nathan....... President and Chief Operating Officer; Director
Eliot R. Stark......... Executive Vice President, Finance
Denise A. Knobblock.... Executive Vice President, Human Resources and Administration
Henry A. Jallos........ Executive Vice President, Products Division
Laura Lawson Senior Vice President, Chief Financial Officer
Fournier.............
Phyllis Recca.......... Senior Vice President, Professional Services Division
Stephen H. Fagan....... Senior Vice President, Strategic Relationships, Europe
John N. Shevillo....... Senior Vice President, Strategic Account Relationships
Thomas Thewes.......... Vice Chairman of the Board of Directors
W. James Prowse........ Director
William O. Grabe....... Director
Bernard M. Goldsmith... Director
G. Scott Romney........ Director
William R. Halling..... Director
Lowell P. Weicker, Director
Jr. .................
Elizabeth A. Director
Chappell.............
Elaine K. Didier....... Director
</TABLE>
Peter Karmanos, Jr., age 56, a founder of Compuware, has served as a
director of Compuware since its inception, as Chairman of the Board since
November 1978, and as Chief Executive Officer since July 1987. From January 1992
until October 1994, Mr. Karmanos served as President of Compuware.
Joseph A. Nathan, age 46, has served as a director of Compuware since
September 1990 and as President and Chief Operating Officer since October 1994.
From December 1990 to October 1994, Mr. Nathan served as Senior Vice President
and Chief Operating Officer -- Products Division.
Eliot R. Stark, age 46, has served as Executive Vice President, Finance,
since February 1998. From June 1995 through January 1998, Mr. Stark served as
Senior Vice President, Mergers & Acquisitions, Strategic Business Planning, and
Corporate Planning. In 1995, Mr. Stark served at Comerica Bank as Senior Vice
President, Corporate Development and Planning. From 1993 to 1995, Mr. Stark
served at Comerica
I-1
<PAGE> 35
Bank, as Director, Information Technology. On June 21, 1999, Mr. Stark was
appointed President and a director of Purchaser.
Denise A. Knobblock, age 43, has served as Executive Vice President, Human
Resources and Administration since February 1998. From January 1995 through
January 1998, Ms. Knobblock served as Senior Vice President, Administration and
from August 1991 through December 1994, as Compuware's Director, Facilities,
Administration.
Laura Lawson Fournier, age 46, has served as Senior Vice President, Chief
Financial Officer since April 1998. From June 1995 through March 1998, Ms.
Fournier served as Corporate Controller and from February 1990 through May 1995,
as Compuware's Director of Internal Audit.
Phyllis Recca, age 45, has served as Senior Vice President, Professional
Services Division, since January 1999. From January 1995 through December 1998,
Ms. Recca served as Vice President, Professional Services, Mideast Region. From
1987 through December 1994, Ms. Recca served as Branch Manager,
Baltimore/Washington.
Stephen H. Fagan, age 44, has served as Senior Vice President, Strategic
Relationships, Europe, since April 1999. From November 1997 through March 1999,
Mr. Fagan served as Senior Vice President, Professional Services. From 1994
through October 1997, Mr. Fagan served as Vice President, Enterprise Products.
Henry A. Jallos, age 50, has served as Executive Vice President, Products
Division, since September 1997. From August 1994 through August 1997, Mr. Jallos
served as Senior Vice President, Worldwide Sales.
John N. Shevillo, age 62, has served as Senior Vice President, Strategic
Account Relationships since June 1999. From April 1997 through May 1999, Mr.
Shevillo served as Senior Vice President, Enterprise Systems. From April 1994
through March 1997, Mr. Shevillo served as Senior Vice President, Professional
Services.
Thomas Thewes, age 67, a founder of Compuware, has served as a director of
Compuware since its inception, and has served as Vice Chairman of the Board
since March 1988. Mr. Thewes served as Treasurer from May 1988 until May 1995.
Mr. Thewes served as Senior Vice President from March 1988 until March 1995 and
as Secretary from April 1973 until May 1995.
W. James Prowse, age 56, has served as a director of Compuware since
December 1986 and served as Executive Vice President from February 1998 through
March 31, 1999. From January 1992 through January 1998, Mr. Prowse served as
Senior Vice President.
William O. Grabe, age 61, has served as a director of Compuware since April
1992. Mr. Grabe is a Managing Member of General Atlantic Partners, LLC and has
been affiliated with General Atlantic Partners, LLC or its predecessor since
April 1992. From 1984 until March 1992, Mr. Grabe was an IBM Vice President. Mr.
Grabe is also a director of Baan Company NV, Gartner Group, Inc., LHS Group,
Inc., and TDS GmbH along with a number of privately held companies in which
General Atlantic Partners, LLC is an investor.
Bernard M. Goldsmith, age 55, has served as a director of Compuware since
July 1992. Mr. Goldsmith has been the Managing Director of Updata Capital, Inc.,
an investment banking firm, since 1986.
G. Scott Romney, age 58, has served as a director of Compuware since
January 1996. Mr. Romney has been a partner at Honigman Miller Schwartz and
Cohn, a law firm, since 1977. The law firm serves as counsel to Compuware.
William R. Halling, age 60, has served as a director of Compuware since
October 1996. Mr. Halling is the President of The Economic Club of Detroit. Mr.
Halling was with KPMG Peat Marwick from 1961 through 1993, where he served as a
Managing Partner and member of the Board of Directors.
I-2
<PAGE> 36
Lowell P. Weicker, Jr., age 68, has served as a director of Compuware since
October 1996. Mr. Weicker is presently a visiting professor at the University of
Virginia in Charlottesville, Virginia, and currently serves on the Board of
Directors of Duty Free International, HPSC, Inc., UST Corporation and Phoenix
Duff & Phelps Mutual Funds. From 1990 through 1994, Mr. Weicker served as the
Governor of Connecticut, and from 1970 through 1988, as a U. S. Senator from
Connecticut. From 1962 through 1968, Mr. Weicker served as a Connecticut State
Representative.
Elizabeth Chappell, age 41, has served as a director of Compuware since
October 1997. Ms. Chappell is the Chief Executive Officer of The Chappell Group,
Inc., a consulting firm. From September 1979 to September 1994, Ms. Chappell
served as a Vice President with ATT. Ms. Chappell is also a director of
Handleman Company.
Elaine K. Didier, age 51, has served as a director of the Company since
October 1997. Effective August 30, 1999, Ms. Didier will serve as Dean of
University Library, and Professor at Oakland University. Ms. Didier served as
the Interim Director of Academic Outreach at the University of Michigan until
March 1999. Prior to her assignment as Interim Director, Ms. Didier held other
positions with the University, including Director of Information Resources.
Thomas Costello, Jr., age 45, has served as General Counsel of Compuware
since January 1985. Mr. Costello has served as Vice President since January 1995
and Secretary since May 1995. On June 21, 1999, Mr. Costello was appointed Vice
President, Secretary, Treasurer and a director of Purchaser.
I-3
<PAGE> 37
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
BY FIRST CLASS MAIL: BY HAND: BY OVERNIGHT COURIER:
EquiServe Securities Transfer & EquiServe
Attn: Corporate Actions Reporting Services, Inc. Attn: Corporate Actions
PO Box 9573 c/o EquiServe 40 Campanelli Drive
Boston, MA 02205-9573 100 Williams St., Galleria Braintree, MA 02184
New York, NY 10038
</TABLE>
<TABLE>
<S> <C>
BY FACSIMILE TRANSMISSION: FOR INFORMATION:
(781) 575-4826 (800) 426-5523
CONFIRM BY TELEPHONE:
(781) 575-4816
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers listed below or to the Compuware
Corporation at its address and telephone numbers listed below. Additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be obtained from the Information Agent. A shareholder
may also contact brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
LOGO
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect: (212) 750-5833
or
All Others Call Toll-Free: (888) 750-5834
June 30, 1999
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
DATA PROCESSING RESOURCES CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 30, 1999
AT
$24.00 NET PER SHARE
BY
COMP ACQUISITION CO.
A WHOLLY OWNED SUBSIDIARY OF
COMPUWARE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON WEDNESDAY, JULY 28, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
EQUISERVE
<TABLE>
<S> <C> <C>
By First Class Mail: By Hand: By Overnight Courier:
EquiServe Securities Transfer & EquiServe
Attn: Corporate Actions Reporting Services, Inc Attn: Corporate Actions
PO Box 9573 c/o EquiServe 40 Campanelli Drive
Boston, MA 02205-9573 100 Williams St., Galleria Braintree, MA 02184
New York, NY 10038
</TABLE>
For Information:
(800) 426-5523
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES
EVIDENCED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)(1) CERTIFICATE(S)* TENDERED(2)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
if delivery of Shares is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company (the "BOOK-ENTRY TRANSFER FACILITY")
pursuant to the book-entry transfer procedure described in Section 3 of the
Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. See
Instruction 2.
Shareholders whose certificates evidencing Shares ("SHARE CERTIFICATES")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution
Account Number
Transaction Code Number
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket No. (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which Guaranteed Delivery
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to COMP Acquisition Co. ("PURCHASER"), a
California corporation and a wholly owned subsidiary of Compuware Corporation, a
Michigan corporation, the above described shares of common stock, no par value
(the "SHARES"), of Data Processing Resources Corporation, a California
corporation (the "COMPANY"), pursuant to Purchaser's offer to purchase all
Shares at $24.00 per Share, net to the seller in cash, without interest thereon,
subject to reduction for any applicable federal back up or other withholding or
stock transfer taxes, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated June 30, 1999 (the "OFFER TO PURCHASE"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "OFFER"). The undersigned understands that Purchaser reserves the
right to transfer or assign, in whole or, from time to time, in part, to one or
more of its affiliates, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after June 23, 1999 (collectively,
"DISTRIBUTIONS"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by the Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Thomas Costello, Jr., Eliot R.
Stark, and Bret Wacker, and each of them, as the attorneys and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his or her substitute shall, in his or her sole
discretion, deem proper and otherwise act (by written consent or otherwise) with
respect to all the Shares tendered hereby which have been accepted for payment
by Purchaser prior to the time of such vote or other action and all Shares and
other securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of shareholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with other
terms of the Offer. Such acceptance for payment shall revoke all other proxies
and powers of attorney granted by the undersigned at any time with respect to
such Shares (and all Shares and other securities issued in Distributions in
respect of such Shares), and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the undersigned with respect thereto. The undersigned understands
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's acceptance of such Shares for payment, Purchaser must be able to
exercise full voting and other rights with respect to such Shares and all
Distributions, including, without limitation, voting at any meeting of the
Company's shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that when such Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed to be
necessary or advisable to complete the sale, the assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
3
<PAGE> 4
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, Purchaser
may not be required to accept for payment any Shares tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered". Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered". In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares or
Share Certificates evidencing Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned, or if Shares
tendered hereby and delivered by book-entry transfer which are not
purchased are to be returned by credit to an account at the Book-Entry
Transfer Facility other than that designated above.
Issue [ ] Check [ ] Share Certificate(s) to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
[ ] Credit shares delivered by book-entry transfer and not purchased to
the account set forth below at The Depository Trust Company.
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail [ ] Check [ ] Share Certificate(s) to:
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
------------------------------------------------------------
5
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 FOLLOWING INSTRUCTIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
- --------------------------- , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5).
Name(s):------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
--------------------------------------------------------
Tax Identification or
Social Security No.:
----------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 FOLLOWING INSTRUCTIONS)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
----------------------------------------------------------------
Name: --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
---------------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-----------------------------------------------------
Date:
- ------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered herewith,
unless such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or (b)
if such Shares are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of a recognized Medallion Signature Guarantee Program (each of the
foregoing being referred to as an "ELIGIBLE INSTITUTION"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three trading days on the
NASDAQ National Market System after the date of execution of such Notice of
Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of
7
<PAGE> 8
the Offer. All Shares evidenced by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such shareholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone numbers set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
8
<PAGE> 9
9. SUBSTITUTE FORM W-9. Under the federal income tax law, a shareholder
whose tendered Shares are accepted for payment is required by law to provide the
Depositary (as Payer) with such shareholder's correct TIN on Substitute Form W-9
below. If such shareholder is an individual, the TIN is such shareholder's
social security number. If the Depositary is not provided with the correct TIN,
the shareholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such shareholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding. If
backup withholding applies, the Depositary is required to withhold 31% of any
payments made to the shareholder. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to such individual's exempt status.
A Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN), and that (i) such
shareholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such shareholder
that such shareholder is no longer subject to backup withholding.
See the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
9
<PAGE> 10
PAYER'S NAME: EQUISERVE
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification Num- --------------------------------------
FORM W-9 ber -- For all accounts, enter taxpayer Social Security Number
DEPARTMENT OF THE TREASURY identification number in the box at right. OR---------------------------------
INTERNAL REVENUE SERVICE (For most individuals, this is your social Employer Identification Number
security number. If you do not have a (If awaiting TIN write
number, see Obtaining a Number in the "Applied For")
enclosed Guidelines.) Certify by signing and
dating below. NOTE: If the account is in
more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup Withholding, see the enclosed Guidelines
IDENTIFICATION NUMBER (TIN) and complete as instructed therein.
- ------------------------------------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or the
IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you received another notification from the IRS
that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
- ------------------------------------------------------------------------------------------------------------------------
SIGNATURE________________________________________________ DATE, 1999
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. FOR ADDITIONAL
DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR FACSIMILE HEREOF, PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect: (212) 750-5833
or
ALL OTHERS CALL TOLL-FREE (888) 750-5834
10
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DATA PROCESSING RESOURCES CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("SHARE CERTIFICATES") evidencing shares of common stock, no par value (the
"SHARES"), of Data Processing Resources Corporation, a California corporation
(the "COMPANY"), are not immediately available, (ii) if Share Certificates and
all other required documents cannot be delivered to EquiServe as Depositary (the
"DEPOSITARY"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by facsimile
transmission to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By First Class Mail: By Hand: By Overnight Courier:
EquiServe Securities Transfer & EquiServe
Attn: Corporate Actions Reporting Services, Inc Attn: Corporate Actions
PO Box 9573 c/o EquiServe 40 Campanelli Drive
Boston, MA 02205-9573 100 Williams St., Galleria Braintree, MA 02184
New York, NY 10038
By Facsimile Transmission: For Information:
(781) 575-4826 (800) 426-5523
Confirm by Telephone:
(781) 575-4816
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to COMP Acquisition Co., a California
corporation and a wholly owned subsidiary of Compuware Corporation, a Michigan
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated June 30, 1999 (the "OFFER TO PURCHASE"), and the related
Letter of Transmittal (which together constitute the "OFFER"), receipt of each
of which is hereby acknowledged, the number of Shares specified below pursuant
to the guaranteed delivery procedure described in Section 3 of the Offer to
Purchase.
------------------------------------------------------
Number of Shares:
---------------------------------
Certificate Nos.
(If Available)
------------------------------------------------------
------------------------------------------------------
[ ] Check box if Shares will be delivered by book-entry transfer to The
Depository Trust Company
Account No.
---------------------------------------
- ------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated:
--------------------------------------, 1999
Name(s) of Holder(s):
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Please Type or Print
------------------------------------------------------
Address
------------------------------------------------------
Zip Code
------------------------------------------------------
Area Code and Telephone No.
- ------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States that is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program, guarantees
to deliver to the Depositary, at one of its addresses set forth above, Share
Certificates evidencing the Shares tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Shares, into the Depositary's
account at The Depository Trust Company, in each case with delivery of a Letter
of Transmittal (or facsimile thereof) properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three NASDAQ Stock Market trading days of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
--------------------------------------
---------------------------------------------
AUTHORIZED SIGNATURE
Address:
- --------------------------------------------- ---------------------------------------------
PLEASE TYPE OR PRINT:
Title:
- --------------------------------------------- ---------------------------------------------
Zip Code
Area Code and Dated: --------- , 1999
Telephone Number:
---------------------------------
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DATA PROCESSING RESOURCES CORPORATION
AT
$24.00 NET PER SHARE
BY
COMP ACQUISITION CO.
A WHOLLY OWNED SUBSIDIARY OF
COMPUWARE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN TIME, ON WEDNESDAY, JULY 28, 1999,
UNLESS THE OFFER IS EXTENDED.
June 30, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are enclosing the material below in connection with COMP Acquisition
Co.'s ("PURCHASER") offer to purchase all outstanding shares of common stock, no
par value (the "SHARES"), of Data Processing Resources Corporation (the
"COMPANY"), a California corporation, at a price of $24.00 per Share, net to the
seller in cash without interest thereon and subject to reduction for any
applicable federal backup or other withholding or stock transfer taxes, upon the
terms and subject to the conditions set forth in Purchaser's Offer to Purchase,
dated June 30, 1999 (the "OFFER TO PURCHASE"), and the related Letter of
Transmittal (which together constitute the "OFFER") enclosed herewith. Please
furnish copies of the enclosed materials to those of your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST 91% OF
THE SHARES OF DATA PROCESSING RESOURCES CORPORATION COMMON STOCK OUTSTANDING AT
THE CLOSE OF BUSINESS ON THE LAST BUSINESS DAY BEFORE THE OFFER EXPIRES, AND (2)
THE EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED.
Enclosed for your information and use are copies of the following documents:
1. Offer to Purchase, dated June 30, 1999;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
the Shares and all other required documents are not immediately available
or cannot be delivered to EquiServe (the "DEPOSITARY") by the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed by the Expiration Date;
<PAGE> 2
4. A letter to shareholders of the Company from Mary Ellen Weaver,
Chairman of the Board and Chief Executive Officer of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON
WEDNESDAY, JULY 28, 1999, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed or an Agent's Message (as defined
in the Offer to Purchase) in connection with a book-entry delivery of Shares and
(iii) any other required documents.
If a holder of Shares wishes to tender, but cannot deliver such holder's
certificates or other required documents, or cannot comply with the procedure
for book-entry transfer, prior to the expiration of the Offer, a tender of
Shares may be effected by following the guaranteed delivery procedure described
in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. However, Purchaser will reimburse you for
reasonable and necessary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any stock transfer taxes payable with respect to the transfer
of Shares to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained by contacting
Innisfree M&A Incorporated (the "INFORMATION AGENT") at its address and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Very truly yours,
COMP ACQUISITION CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF COMPUWARE
CORPORATION, COMP ACQUISITION CO., DATA PROCESSING RESOURCES CORPORATION, OR
INNISFREE M&A INCORPORATED, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND
THE STATEMENTS CONTAINED THEREIN.
1
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DATA PROCESSING RESOURCES CORPORATION
AT
$24.00 NET PER SHARE
BY
COMP ACQUISITION CO.
A WHOLLY OWNED SUBSIDIARY OF
COMPUWARE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN TIME, ON WEDNESDAY, JULY 28, 1999,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated June 30,
1999 (the "OFFER TO PURCHASE") and a related Letter of Transmittal (which
together constitute the "OFFER") in connection with the offer by COMP
Acquisition Co. ("PURCHASER"), a California corporation and a wholly owned
subsidiary of Compuware Corporation, a Michigan corporation, to purchase all
outstanding shares of common stock, no par value (the "SHARES"), of Data
Processing Resources Corporation (the "COMPANY"), a California corporation, at a
price of $24.00 per Share, net to the seller in cash and without interest
thereon, subject to reduction for any applicable federal back up or other
withholding or stock transfer taxes, upon the terms and subject to the
conditions set forth in the Offer. Also enclosed is the letter to shareholders
of the Company from Mary Ellen Weaver, Chairman of the Board and Chief Executive
Officer of the Company, together with a Solicitation/ Recommendation Statement
on Schedule 14D-9 filed with the Securities and Exchange Commission by the
Company.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $24.00 per Share, net to the seller in cash
without interest thereon and subject to reduction for any applicable
federal back up or other withholding or stock transfer taxes.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company unanimously has determined
that each of the Offer and the Merger (as defined in the Offer to
Purchase), is fair to, and in the best interests of, the shareholders of
the Company, and recommends that shareholders accept the Offer and tender
their Shares pursuant to the Offer.
<PAGE> 2
4. The Offer and withdrawal rights will expire at 12:00 Midnight,
Eastern time, on Wednesday, July 28, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer at least that number of Shares that shall constitute ninety-one
percent (91%) of the then outstanding Shares. The Offer is also conditioned
upon, among other things, the expiration or termination of all waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. Shareholders are urged to read the Offer to Purchase in its
entirety for a description of all conditions to the Offer and the other
items set forth therein.
6. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. Your instructions
should be forwarded to us in ample time to permit us to submit a tender on your
behalf prior to the expiration of the Offer. If you do not instruct us to tender
your Shares, they will not be tendered.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state.
2
<PAGE> 3
INSTRUCTIONS
WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF DATA PROCESSING RESOURCES CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated June 30, 1999 and the related Letter of Transmittal
(which together constitute the "OFFER"), in connection with the offer by COMP
Acquisition Co. a California corporation and a wholly owned subsidiary of
Compuware Corporation, a Michigan corporation, to purchase all outstanding
Shares of Common Stock, no par value (the "SHARES") of Data Processing Resources
Corporation, a California corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to be Tendered: Shares*
- ------------------------------
Dated: , 1999
- ---------------------
SIGN HERE
Signature(s):
---------------------------------------------------------------------
Please type or print name(s):
-------------------------------------------------------
Please type or print address:
--------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
-------------------------------------------------
Taxpayer Identification or Social Security Number:
--------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens: i.e.
000-000-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Custodian account of a minor The minor (2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-
savings trust account trustee (1)
(grantor is also trustee)
b. So-called trust account The actual owner
that is not a legal or valid (1)
trust under State law
5. Sole proprietorship account The owner (3)
- ------------------------------------------------------
- ------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------
6. A valid trust, estate or The legal entity
pension trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(4)
7. Corporate account The corporation
8. Religious, charitable or The organization
educational organization
account
9. Partnership The partnership
10. Association, club or other The organization
tax exempt organization
11. A broker or registered The broker or
nominee nominee
12. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district or prison)
that receives agricultural
program payments
</TABLE>
<TABLE>
<C> <S> <C>
- ------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. You may also enter your business name. You may
use your Social Security or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free government bonds under section 1451.
- Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX
ADVISOR OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated June 30,
1999 and the related Letter of Transmittal and any amendments or supplements
thereto and is being made to all holders of Shares. Purchaser is not aware of
any State where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with such state statute. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DATA PROCESSING RESOURCES CORPORATION
AT
$24.00 NET PER SHARE
BY
COMP ACQUISITION CO.
A WHOLLY OWNED SUBSIDIARY OF
COMPUWARE CORPORATION
COMP Acquisition Co., a California corporation ("PURCHASER"), a wholly
owned subsidiary of Compuware Corporation, a Michigan corporation ("COMPUWARE"),
is offering to purchase all outstanding shares of Common Stock, no par value
(the "SHARES"), of Data Processing Resources Corporation, a California
corporation (the "COMPANY"), at a price of $24.00 per Share, net to the seller
in cash and without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 30, 1999 (the "OFFER TO
PURCHASE") and in the related Letter of Transmittal (which together constitute
the "OFFER"). Following the Offer, Purchaser intends to effect the Merger
described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, EASTERN TIME, ON WEDNESDAY, JULY 28, 1999,
UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least that
number of Shares that, when added to the Shares then owned of record by
Compuware or any of its subsidiaries, if any, shall constitute at least 91% of
the then outstanding Shares. The Offer is also conditioned upon, among other
things, the expiration or termination of all waiting periods imposed upon
consummation of the Offer by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations thereunder as well as the other conditions
described in the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 23, 1999 (the "MERGER AGREEMENT"), among Compuware, Purchaser and the
Company. The Merger Agreement provides
<PAGE> 2
that, among other things, as soon as practicable after the purchase of Shares
pursuant to the Offer and the satisfaction of the other conditions set forth in
the Merger Agreement and in accordance with relevant provisions of the
California Corporations Code ("CALIFORNIA LAW"), Purchaser will be merged with
and into the Company (the "MERGER"). Following consummation of the Merger, the
Company will continue as the surviving corporation (the "SURVIVING CORPORATION")
and will become a wholly owned subsidiary of Compuware. At the effective time of
the Merger (the "EFFECTIVE TIME"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company and any Shares owned by Purchaser, Compuware or any direct or indirect
wholly owned subsidiary of Compuware or of the Company, if any, and other than
Shares held by shareholders who shall have demanded and perfected appraisal
rights, if any, under California Law) will be canceled and converted
automatically into the right to receive $24.00 in cash, or any higher price that
may be paid per Share in the Offer, without interest. Purchaser has entered into
Shareholder Tender and Voting Agreements with the directors and certain officers
and shareholders of the Company (the "TENDERING SHAREHOLDERS") holding in the
aggregate 3,889,083 Shares, representing approximately 26% of the issued and
outstanding Shares. Pursuant to these agreements, each Tendering Shareholder has
agreed, provided the Merger Agreement has not been terminated, to tender to
Purchaser substantially all Shares beneficially owned by such Tendering
Shareholder, and vote such Shares in favor of approval of the Merger Agreement
and the transactions contemplated thereby.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE
COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to EquiServe
(the "DEPOSITARY") of Purchaser's acceptance for payment of such Shares pursuant
to the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "SHARE CERTIFICATES") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in Section 2 of the
Offer to Purchase) pursuant to the procedure set forth in Section 3 of the Offer
to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase)) and (iii) any other documents required under the Letter of
Transmittal.
The term "Expiration Date" means 12:00 midnight, Eastern time, on
Wednesday, July 28, 1999, unless and until Purchaser extends the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date on which the Offer, as so extended by Purchaser,
shall expire. Purchaser expressly reserves the right, in its sole discretion
(but subject to the terms and conditions of the Merger Agreement), at any time
and from time to time, to extend for any reason the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary. Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares, whether or not Purchaser extends its right
to extend the Offer. Any such extension will be followed as promptly as
practicable by public announcement thereof, such announcement to be made no
later than 9:00 a.m., Eastern time, on the next business day after the
previously scheduled expiration date of the Offer. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of a tendering shareholder to withdraw such
shareholder's Shares. There can be no assurance that Purchaser will extend the
Offer.
Pursuant to the Merger Agreement, Purchaser may make any changes in the
terms and conditions of the Offer, provided that, without the Company's consent,
Purchaser may not (i) decrease the purchase price,
2
<PAGE> 3
(ii) change the form of consideration payable in the Offer, (iii) reduce the
minimum or maximum number of Shares to be purchased in the Offer, (iv) impose
conditions to the Offer in addition to those set forth in the Merger Agreement,
(v) extend the Expiration Date of the Offer except as permitted by the terms of
the Merger Agreement, or (vi) amend any other material terms of the Offer in a
manner materially adverse to the Company's shareholders.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the expiration of the Offer and, unless theretofore accepted for
payment by Purchaser pursuant to the Offer, may also be withdrawn at any time
after August 28, 1999. For a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of the Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase), unless such Shares have been
tendered by an Eligible Institution. If Shares have been tendered pursuant to
the procedure for book-entry transfer as set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. All questions as to the form and validity (including the time of
receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Companysec.s
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or commissions
will be paid to brokers, dealers or other persons (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect: (212) 750-5833
or
ALL OTHERS CALL TOLL-FREE (888) 750-5834
June 30, 1999
3
<PAGE> 1
EXHIBIT (a)(8)
COMPUWARE TO ACQUIRE DATA PROCESSING RESOURCES CORPORATION
3400 PROFESSIONAL SERVICES PERSONNEL EXPECTED TO JOIN COMPUWARE'S PROFESSIONAL
SERVICES DIVISION
FARMINGTON HILLS, Mich. -- June 24, 1999 -- Compuware Corporation (NASDAQ:
CPWR) and Data Processing Resources Corporation (DPRC) (NASDAQ: DPRC) today
announced they have entered into an agreement for Compuware to acquire DPRC
through a cash tender offer. A wholly owned subsidiary of Compuware will offer
to purchase any and all outstanding shares of DPRC's common stock for $24 per
share. The transaction has been approved by the Boards of Directors of both DPRC
and Compuware.
DPRC is a leading national professional services company focusing on the
Information Technology (IT) sector. DPRC provides IT professional services to a
diverse group of Fortune 1000 clients nationwide. Traditionally providing
support for business applications development projects, DPRC also supports
network management, help desk, internetworking and ERP implementations. Based in
Irvine, California, DPRC represents approximately 3,400 technology professionals
throughout the United States. DPRC reported revenue of $355 million in the 12
months ending April 30, 1999.
"We are very excited to welcome DPRC's top-notch management and
professional services staff to the Compuware family," said Joseph Nathan,
Compuware President and Chief Operating Officer. "Acquiring DPRC will enable us
to accelerate product related solutions and Application Management Services by
immediately expanding our Professional Services Division from 7,000 to more than
10,000 technicians and enabling us to deliver professional services solutions to
27 new cities," he said. "The complementary nature of this acquisition is a big
plus for our clients, business partners, employees and shareholders."
"The DPRC Board of Directors and management team feel that, strategically,
the merger of these two companies is exceptional," said Mary Ellen Weaver, DPRC
founder and CEO. "With a strong presence in the Midwest, Compuware is looking to
DPRC to expand its presence throughout the Western, Southwestern and
Southeastern United States. Since we have so few duplicate offices, this merger
accomplishes that objective." Weaver continued, "We have spent a good deal of
time with the management team at Compuware and truly feel that the integrity of
this company, its values and genuine support for their employees cannot be
matched. This agreement represents a tremendous opportunity for our employees."
In the tender offer, Compuware seeks to purchase no less than 91 percent of
DPRC's outstanding shares. Consummation of the tender offer will be subject to
the expiration or termination of any applicable antitrust waiting period, the
receipt of any required regulatory approvals and customary conditions. Following
completion of the tender offer, the subsidiary of Compuware will be merged into
DPRC, and all of DPRC's shares not owned by Compuware will be converted into the
right to receive $24 per share in cash. In the event the tender offer is not
consummated, Compuware and DPRC will pursue a merger in which DPRC will become a
wholly owned subsidiary of Compuware and DPRC shares will be converted into the
right to receive $24 per share in cash. Thomas Weisel Partners LLC acted as a
financial advisor and provided a fairness opinion to DPRC's Board of Directors.
Updata Capital Inc. acted as a financial advisor to Compuware.
COMPUWARE CORPORATION
Compuware productivity solutions help 14,000 of the world's largest
corporations more efficiently maintain and enhance their most critical business
applications. Providing immediate and measurable return on information
technology investments, Compuware products and services improve quality, lower
costs and increase the speed at which systems can be developed, implemented and
supported. Compuware employs more than 11,000 information technology
professionals worldwide, including more than 7,000 in its professional services
organization. With fiscal 1999 revenues of $1.6 billion, Compuware is the world
leader in client/server development technology. For more information on
Compuware, please contact the corporate offices at 800-521-9353. Compuware also
can be found on the World Wide Web at http://www.compuware.com.
<PAGE> 2
DATA PROCESSING RESOURCES CORPORATION
Data Processing Resources Corporation, established in 1985, is a market
leader in providing information technology professional services through a
network of 33 branch facilities and four international recruiting offices to a
diverse group of corporate clients through a database of highly qualified
technical consultants. Additional information on DPRC is available from the
World Wide Web at http://www.dprc.com.
Statements herein concerning the growth and strategies of Compuware and
DPRC include forward-looking statements. Compuware's and/or DPRC's actual
results may differ materially from those suggested as a result of various
factors, including, without limitation, Compuware's and DPRC's ability to
recruit and retain qualified technical consultants, and, the companies' ability
to consummate the transaction, successfully integrate DPRC's operations and
compete successfully with existing and future competitors. Interested parties
should refer to the disclosure set forth in Compuware's and DPRC's recent public
filings, under the caption "Risk Factors" and elsewhere, for additional
information regarding risks affecting Compuware's or DPRC's financial conditions
and results of operations.
PRESS CONTACTS
Chistopher M.F. Norris, Director, Corporate Communications and Investor
Relations, Compuware Corporation, 248-737-7506.
Thomas Vadnais, President and Chief Operating Officer, Data Processing
Resources Corporation, 949-553-1102.
2
<PAGE> 1
Exhibit (c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of June 23, 1999
among
COMPUWARE CORPORATION,
COMP ACQUISITION CO.
and
DATA PROCESSING RESOURCES CORPORATION
================================================================================
<PAGE> 2
AGREEMENT AND PLAN OF MERGER, dated as of June 23, 1999, among Compuware
Corporation, a Michigan corporation ("Parent"), COMP Acquisition Co., a
California corporation and a wholly owned subsidiary of Parent ("Sub"), and Data
Processing Resources Corporation, a California corporation (the "Company").
WHEREAS, in furtherance of the acquisition of the Company by Parent on
the terms and subject to the conditions set forth in this Agreement, Parent
proposes to cause Sub to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase all the issued
and outstanding shares of Common Stock, no par value, of the Company (the
"Company Common Stock"), at a price per share of the Company Common Stock (a
"Share") of not less than $24.00 net to the seller in cash and without interest
thereon (such price, as may hereafter be increased, the "Offer Price"), subject
to reduction for any applicable federal backup or other applicable withholding
or stock transfer taxes, upon the terms and subject to the conditions set forth
in this Agreement, and the Board of Directors of the Company has approved the
Offer and has resolved to recommend that the Company's shareholders accept the
Offer;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the merger of Sub into the Company, as set
forth below (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding Share, other than
Shares owned directly or indirectly by Parent or the Company and Dissenting
Shares (as defined in Section 3.1(d)), will be converted into the right to
receive the Offer Price;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) Parent and certain shareholders of the Company have entered into a
Shareholder Tender and Voting Agreement, pursuant to which such shareholders
agree to tender their shares of Company Common Stock in the Offer and vote in
favor of the Merger, and (ii) Parent and certain shareholders of the Company
have entered into Employment and Noncompetition Agreements, pursuant to which
such shareholders agree to be employed by the Company or the Surviving
Corporation following the Effective Time, and be bound by certain covenants
regarding non-competition.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
<PAGE> 3
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Subject to the provisions of this Agreement, Sub shall, and
Parent shall cause Sub to, within five business days after the public
announcement (on the date hereof or the following business day) of the execution
of this Agreement, commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer shall
be subject to the conditions set forth in Exhibit A and to the terms and
conditions of this Agreement. Sub expressly reserves the right to waive any
conditions to the Offer, to increase the price per Share payable in the Offer,
to extend the duration of the Offer (subject to the limitations set forth in
this Section), or to make any other changes in the terms and conditions of the
Offer; provided, however, that without the Company's consent, no such change may
be made which (i) decreases the price per Share payable in the Offer, (ii)
reduces the minimum (including by waiver of the Minimum Tender Condition, as
defined in Exhibit A) or maximum number of Shares to be purchased in the Offer,
(iii) imposes conditions to the Offer in addition to those set forth in Exhibit
A, (iv) changes the form of consideration payable in the Offer, (v) extends the
expiration of the Offer (the "Expiration Date") (which will initially be twenty
business days following the commencement of the Offer) except (A) as required by
the Exchange Act or (B) in the case of any extension of the Offer beyond five
business days following the initial expiration of the Offer, unless in Sub's
reasonable judgment, it is reasonably likely that during any such extension, any
condition set forth in Exhibit A (including the Minimum Tender Condition) which
is not satisfied as of the date of such extension will be satisfied during such
extension; provided, that, without the Company's consent, the Expiration Date
may not be extended pursuant to clause (B) of this sentence beyond twenty
business days following the initial expiration of the Offer, or (vi) amends any
other material terms of the Offer in a manner materially adverse to the
Company's shareholders. Subject to the terms and conditions of this Agreement
and the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Sub shall, and Parent shall
cause Sub to, accept for payment, and pay for, all shares of the Company Common
Stock validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer. In the event that (i) the Offer
is not commenced due to the failure of a condition set forth in Exhibit A or
(ii) the Offer is not consummated upon its expiration due to the failure of a
condition set forth in Exhibit A, then, subject to the terms and conditions of
this Agreement (including Articles VII and VIII hereof), the parties agree to
take the actions set forth in this Agreement in order to obtain the Company
Shareholder Approval (as defined in Section 4.1(d)) and effectuate the Merger as
promptly as practicable.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 with respect to the Offer, which shall contain
an offer to purchase and a related letter of transmittal and summary
advertisement (such Schedule 14D-1 and the documents included therein pursuant
to
-2-
<PAGE> 4
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents") and shall mail the Offer Documents to the
shareholders of the Company. Parent and Sub agree that the Offer Documents shall
comply as to form in all material respects with the Exchange Act, and the rules
and regulations promulgated thereunder and the Offer Documents, on the date
first published, sent or given to the Company's shareholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Sub with respect
to information supplied by the Company specifically for inclusion in the Offer
Documents. Each of Parent, Sub and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect, and each of Parent and Sub further agrees to take all steps necessary
to amend or supplement the Offer Documents and to cause the Offer Documents as
so amended or supplemented to be filed with the SEC and to be disseminated to
the Company's shareholders, in each case as and to the extent required by
applicable Federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review the Offer Documents and all amendments and
supplements thereto prior to their filing with the SEC or dissemination to
shareholders of the Company. Parent and Sub agree to provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments including a copy of such comments that are made in writing.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any shares
of the Company Common Stock that Sub becomes obligated to accept for payment,
and pay for, pursuant to the Offer.
1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly and unanimously adopted resolutions approving this Agreement, the
Offer and the Merger, determining that the terms of the Offer and the Merger are
fair to, and in the best interests of, the Company's shareholders and
recommending that the Company's shareholders accept the Offer and tender their
shares pursuant to the Offer and approve and adopt this Agreement and approve
the Merger. The Company represents that its Board of Directors has received the
opinion of Thomas Weisel Partners LLC that the proposed consideration to be
received by the holders of Shares pursuant to the Offer and the Merger is fair
to such holders from a financial point of view, and a complete and correct
signed copy of such opinion has been delivered by the Company to Parent. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Company's Board of Directors described in the first
sentence of this Section 1.2(a) and has obtained the consent of Thomas Weisel
Partners LLC to the inclusion in the Schedule 14D-9 of a copy of the written
opinion referred to in the preceding sentence . The Company has been advised by
each of its directors and executive officers that each such person intends to
tender all Shares (other than Shares, if any, held by such person which if
tendered, could cause such person to incur liability under the provisions of
Section 16(b) of the Exchange Act) held by such person pursuant to the Offer.
-3-
<PAGE> 5
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, together with all exhibits, amendments and supplements thereto as
well as the Information Statement required pursuant to Section 14(f) under the
Exchange Act, collectively the "Schedule 14D-9") containing the recommendation
described in paragraph (a) and shall mail the Schedule 14D-9 to the shareholders
of the Company. The Company agrees that the Schedule 14D-9 shall comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder and, on the date filed with the SEC
and on the date first published, sent or given to the Company's shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Sub specifically for inclusion in
the Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to the
Company's shareholders, in each case as and to the extent required by applicable
Federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review the Schedule 14D-9 and all amendments and supplements
thereto prior to their filing with the SEC or dissemination to shareholders of
the Company. The Company agrees to provide Parent and its counsel any comments
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments including a copy
of such comments that are made in writing.
(c) In connection with the Offer, the Company shall cause its
transfer agent promptly to furnish Sub with mailing labels containing the names
and addresses of the record holders of the Company Common Stock as of a record
date and of those persons becoming record holders subsequent to such date,
together with copies of all lists of shareholders, security position listings
and, to the extent reasonably requested, computer files and other information in
the Company's possession or control regarding the beneficial owners of the
Company Common Stock, and shall furnish to Sub such information and assistance
(including updated lists of shareholders, security position listings and
computer files) as Parent may reasonably request in communicating the Offer to
the Company's shareholders. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Sub and their
agents shall hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
and the Merger and, if this Agreement shall be terminated, will, upon request,
deliver, and will use their best efforts to cause their agents to deliver, to
the Company all copies of such information then in their possession or control.
-4-
<PAGE> 6
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the California Corporations Code (the
"Code"), Sub shall be merged with and into the Company at the Effective Time (as
defined in Section 2.3). Following the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the Code. Notwithstanding
the foregoing, Parent may elect at any time prior to the Merger to merge the
Company with and into Sub instead of merging Sub into the Company as provided
above; provided, however, that the Company shall not be deemed to have breached
any of its representations, warranties, covenants or agreements set forth in
this Agreement solely by reason of such election. In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
the foregoing and, where appropriate, to provide that Sub shall be the Surviving
Corporation and will continue under the name "Data Processing Resources
Corporation." At the election of Parent, any direct or indirect subsidiary (as
defined in Section 9.3) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
2.2 Closing. The closing of the Merger will take place at 10:00 a.m. on
a date to be specified by the parties, which shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in Article
VII (the "Closing Date"), at the Palo Alto, California offices of Fenwick &
West, counsel to Parent and Sub, unless another date or place is agreed to in
writing by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable on or after the Closing Date, the parties shall file a
certificate of ownership or other appropriate documents (in any such case, the
"Certificate of Ownership") executed in accordance with the relevant provisions
of the Code and shall make all other filings or recordings required under the
Code. The Merger shall become effective at such time as the Certificate of
Ownership is duly filed with the California Secretary of State, or at such other
time as Sub and the Company shall agree should be specified in the Certificate
of Ownership (the time the Merger becomes effective being hereinafter referred
to as the "Effective Time").
2.4 Effects of the Merger. The Merger shall have the effects set forth
in Section 1107 of the Code.
2.5 Articles of Incorporation and By-laws. The articles of incorporation
and by-laws of the Sub as in effect at the Effective Time shall be the articles
of incorporation and by-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law; provided, that at
the Effective Time, Article I of the articles of incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation is
Data Processing Resources Corporation.".
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2.6 Directors. The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
2.7 Officers. The officers of the Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
2.8 Merger Without Shareholders Meeting. In the event that Sub (or any
other subsidiary of Parent) shall acquire, and shall maintain through the
effectiveness of the Merger, ownership of at least 90% of the outstanding Shares
sufficient to enable Sub (or such other subsidiary) and the Company to cause the
Merger to become effective without the Company Shareholder Approval in
accordance with Section 1110 of the Code (the "Short-Form Merger"), the parties
hereto shall, subject to the terms and conditions of this Agreement (including
Article VII) and applicable law, take all necessary and appropriate action to
cause the Short-Form Merger to become effective as promptly as practicable.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any Shares or any
shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, no par value, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
Share that is owned by the Company or by any subsidiary of the Company and each
Share that is owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of the Company Common Stock. Subject to Section
3.1(d), each issued and outstanding Share (other than Shares to be canceled in
accordance with Section 3.1(b)) shall be converted into the right to receive
from the Surviving Corporation in cash, without interest, the Offer Price (the
"Merger Consideration"). As of the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, without interest.
(d) Shares of Dissenting Shareholders. Notwithstanding anything
in this Agreement to the contrary, to the extent provided by the Code, any
issued and outstanding Shares
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<PAGE> 8
held by a person (a "Dissenting Shareholder") who objects to the Merger and
complies with all the provisions of the Code concerning the right of holders of
the Company Common Stock to dissent from the Merger and require appraisal of
their Shares ("Dissenting Shares") shall not be converted as described in
Section 3.1(c) but shall become the right to receive such consideration as may
be determined to be due to such Dissenting Shareholder pursuant to the laws of
the State of California. If, after the Effective Time, such Dissenting
Shareholder withdraws his demand for appraisal or fails to perfect or otherwise
loses his right of appraisal, in any case pursuant to the Code, his Shares shall
be deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of any
demands for appraisal of Shares received by the Company and (ii) the opportunity
to participate in and direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or enter into a binding settlement
agreement or make a written offer to settle, any such demands.
(e) Rights to Receive Shares. Each right to receive Shares, other
than pursuant to the terms of securities convertible into or exercisable for
Shares which otherwise provide, or as otherwise provided in this Agreement,
shall be converted into the right to receive from the Surviving Corporation in
cash, without interest, the Merger Consideration.
3.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
select a bank or trust company to act as paying agent (the "Paying Agent") for
the payment of the Merger Consideration upon surrender of certificates
representing the Company Common Stock.
(b) Parent To Provide Funds. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to provide to the Paying
Agent on a timely basis, as and when needed after the Effective Time, funds
necessary to pay for the Shares as part of the Merger pursuant to Section 3.1.
(c) Exchange Procedure. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
into the right to receive the Merger Consideration pursuant to Section 3.1: (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of the Company Common Stock which is not registered in the
transfer records of the Company, payment may be
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<PAGE> 9
made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate.
(d) No Further Ownership Rights in the Company Common Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares previously represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason, they
shall be canceled and exchanged as provided in this Article III.
(e) Failure to Timely Surrender; No Liability. Promptly following
the date that is six months after the Effective Time, the Paying Agent shall
return to the Surviving Corporation all Merger Consideration and other cash,
property and instruments in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration (without interest thereon). Notwithstanding
the foregoing, the Surviving Corporation shall be entitled to receive from time
to time all interest or other amounts earned with respect to any cash deposited
with the Paying Agent as such amounts accrue or become available. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Time (or immediately prior to such earlier date on which any payment
pursuant to this Article III would otherwise escheat to or become the property
of any Governmental Entity (as defined in Section 4.1(d)), the cash payment in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interests of any person previously entitled thereto. None of Parent, Sub, the
Company or the Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Withholding Taxes. The right of any person to receive any
payment or consideration pursuant to this Agreement and the transactions
contemplated herein shall be subject to any applicable requirements with respect
to the withholding of Taxes.
(g) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required pursuant
to Section 3.1, in exchange for such lost, stolen or destroyed certificates,
upon the making of an affidavit of that fact by the holder thereof with such
assurances as the Paying Agent, in its discretion and as a condition precedent
to the payment of the
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<PAGE> 10
Merger Consideration, may reasonably require of the holder of such lost, stolen
or destroyed certificates.
(h) Supplementary Action. If at any time after the Effective
Time, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either the Company
or Sub, or otherwise to carry out the provisions of this Agreement, the officers
and directors of the Surviving Corporation are hereby authorized and empowered,
in the name of and on behalf of the Company and Sub, to execute and deliver any
and all things necessary or proper to vest or to perfect or confirm title to
such property or rights in the Surviving Corporation, and otherwise to carry out
the purposes and provisions of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. Except as set forth
in the attachments to the disclosure letter delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Letter"), the
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company and
each of its subsidiaries is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate or partnership power and authority to
carry on its business as now being conducted. The Company and each of its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed individually or in the aggregate would not have a Material Adverse
Effect on the Company. The Company has made available to Parent complete and
correct copies of its certificate of incorporation and by-laws and the articles
of incorporation and by-laws or other organizational documents of its
subsidiaries, in each case as amended to the date of this Agreement.
(b) Subsidiaries. Section 4.1(b) of the Company Disclosure Letter
lists each subsidiary of the Company. All the outstanding shares of capital
stock of each such subsidiary have been validly issued and are fully paid and
nonassessable and (except as may be required by foreign jurisdictions) are owned
by the Company, by another subsidiary of the Company or by the Company and
another such subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever, other than
resale restrictions imposed by applicable securities laws (collectively,
"Liens"). Except for the capital stock of its subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other ownership interest in
any corporation, partnership, joint venture or other entity.
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(c) Capital Structure. The authorized capital stock of the
Company consists of 60,000,000 shares of Company Common Stock and 2,001,480
shares of preferred stock, no par value ("Company Preferred Stock"). At the
close of business on June 21, 1999, (i) 14,762,416 shares of Company Common
Stock and no shares of Company Preferred Stock were issued and outstanding, (ii)
no shares of Company Common Stock were held by the Company in its treasury,
(iii) 3,393,040 shares of the Company Common Stock were reserved for issuance
upon exercise of outstanding Options (as defined in Section 6.4). The only plans
or arrangements pursuant to which the Company is obligated to issue Shares or
pursuant to which Options are outstanding are the Company's 1994 Stock Option
Plan, as amended, and the Company Stock Option Plan for the Employees of Systems
& Programming Consultants, Inc. (together, the "Company Option Plans"), the
Company's Employee Stock Purchase Plan (the "Stock Purchase Plan"), and Shares
issuable upon conversion of the Company's 5 1/4% Convertible Subordinated Notes
due 2005 (the "Convertible Notes"). Except as set forth above, at the close of
business on June 21, 1999, no shares of capital stock or other voting securities
of the Company were issued, reserved for issuance or outstanding. There are no
outstanding stock appreciation rights. All outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by the Company's articles of
incorporation, bylaws or any agreement to which the Company is a party. Except
as set forth in Section 4.1(c) of the Company Disclosure Letter, there are no
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which shareholders of the Company may vote. Except as
set forth above or in Section 4.1(c) of the Company Disclosure Letter , as of
the date of this Agreement, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual obligations (i) of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its subsidiaries or (ii) of the
Company to vote or to dispose of any shares of the capital stock of any of its
subsidiaries.
(d) Authority; Noncontravention. The Company has all the
requisite corporate power and authority to enter into this Agreement and,
subject to, if required by law, adoption and approval of the Merger Agreement
and approval of the Merger by an affirmative vote of the holders of a majority
of the outstanding shares of the Company Common Stock (the "Company Shareholder
Approval"), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company, subject
to the Company Shareholder Approval, if such approval is required by law. This
Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms (except as enforcement hereof may be limited by (i)
bankruptcy,
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<PAGE> 12
insolvency, reorganization, moratorium and similar laws, both state and federal,
affecting the enforcement of creditors' rights or remedies in general as from
time to time in effect or (ii) the exercise by courts of equity powers). The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any of its subsidiaries under (i)
the articles of incorporation or by-laws of the Company or the comparable
charter or organizational documents of any of its subsidiaries, (ii) except as
set forth Section 4.1(d) of the Company Disclosure Letter (including change of
control or acceleration rights under the Company Option Plans or other
agreements disclosed therein), any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its subsidiaries or
their respective properties or assets or (iii) any governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its subsidiaries or their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) have a
Material Adverse Effect on the Company, (y) materially impair the ability of the
Company to perform its obligations under this Agreement, (z) prevent the
consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (1) the filing of a
pre merger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (2) the
filing with the SEC and the National Association of Securities Dealers, Inc. of
(A) the Schedule 14D-9, (B) a proxy statement relating to the Company
Shareholder Approval, if such approval is required by law (as amended or
supplemented from time to time, the "Proxy Statement"), and (C) such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (3) the
filing of the Certificate of Ownership with the California Secretary of State
and appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business and (4) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as would not
individually or in the aggregate (A) have a Material Adverse Effect on the
Company, (B) materially impair the ability of the Company to perform its
obligations under this Agreement or (C) prevent or have a material adverse
effect on the ability of the parties to consummate any of the transactions
contemplated by this Agreement. Section 4.1(d) of the Company Disclosure Letter
lists all consents, waivers and approvals under any of the Company's or any of
its subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby, which if, individually or in the aggregate, were not obtained, would
result in a Material Adverse Effect on the Company.
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(e) SEC Documents; Financial Statements. The Company has filed in
a timely manner all required reports, schedules, forms, statements and other
documents with the SEC since December 31, 1996. All such required reports,
schedules, forms, statements and other documents filed by the Company with the
SEC (including those that the Company may file subsequent to the date hereof)
are referred to herein as the "SEC Documents". As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later Filed SEC Document (as
defined in Section 4.1(g)), none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents, including those filed
after the date hereof until the Closing, comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the SEC Documents or as contemplated by
this Agreement, since the date of the most recent consolidated balance sheet
included in the SEC Documents neither the Company nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles
("GAAP") to be set forth on a consolidated balance sheet of the Company and its
consolidated subsidiaries or in the related notes to the consolidated financial
statements prepared in accordance with GAAP which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of the Company and its subsidiaries taken as a whole, except
liabilities (i) provided for in the most recent consolidated balance sheet
included in the SEC Documents, or (ii) incurred since the date of such balance
sheet in the ordinary course of business consistent with past practices.
(f) Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the Proxy Statement, will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's
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<PAGE> 14
shareholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting (as defined in Section 6.1(a)), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-9,
the Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub specifically for inclusion or
incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents"), since the date of the most recently
audited financial statements included in the Filed SEC Documents, the Company
has conducted its business only in the ordinary course, and there has not been
(i) any Material Adverse Change affecting the Company, (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock, (iii) any
split, combination or reclassification of any of its capital stock or any
issuance or authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv)(x) any
granting by the Company or any of its subsidiaries to any executive officer of
the Company or any of its subsidiaries of any increase in excess of $10,000 per
annum in compensation, except in the ordinary course of business consistent with
prior practice or as was required under employment agreements in effect as of
the date of the most recent audited financial statements included in the Filed
SEC Documents, (y) any granting by the Company or any of its subsidiaries to any
executive officer of any increase in excess of $10,000 per annum in severance or
termination pay, except as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents, or (z) except as set
forth in Section 4.1(g)(iv) of the Company Disclosure Letter, any entry by the
Company or any of its subsidiaries into any employment, severance or termination
agreement with any executive officer, (v) any damage, destruction or loss,
whether or not covered by insurance, that has or could reasonably be expected to
have a Material Adverse Effect on the Company, (vi) any change in accounting
methods, principles or practices by the Company materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles and SEC rules and regulations, (vii)
any material revaluation of any of the Company's assets, including, without
limitation, writing down the value of capitalized inventory or writing off
accounts receivable, other than in the ordinary course consistent with past
practice, or (viii) any executive officer or other key employee who has
terminated such person's employment with the Company, or threatened to do so,
nor has the Company been informed that any such person plans to do so because of
the pendency of the Offer or Merger.
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(h) Intellectual Property.
(i) The Company and its subsidiaries own, or are licensed
or otherwise possess legally enforceable rights to use all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are material to the business of the Company and its subsidiaries as currently
conducted or as proposed to be conducted by the Company and its subsidiaries.
(ii) Section 4.1(h)(ii) of the Company Disclosure Letter
lists (i) all patents and patent applications and all registered and
unregistered trademarks, trade names and service marks, registered copyrights,
which the Company considers to be material to its business and included in the
Intellectual Property, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) all material
licenses, sublicenses, and other agreements as to which the Company is a party
and pursuant to which any person other than the Company is authorized to use any
Intellectual Property (other than end-user licenses in the Company's current
standard form provided to Parent's counsel), and (iii) all material licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company is authorized to use any third party patents, trademarks or
copyrights, including software ("Third Party Intellectual Property Rights")
which are incorporated in, are, or form a part of any Company product that is
material to its business.
(iii) To the Company's knowledge, there is no material
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of the Company or any of its subsidiaries, any
trade secret material to the Company or any of its subsidiaries, or any
Intellectual Property right of any third party to the extent licensed by or
through the Company or any of its subsidiaries, by any third party, including
any employee or former employee of the Company or any of its subsidiaries. To
the Company's knowledge, no Company Intellectual Property or product or service
of the Company is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by the Company, or which may affect the validity, use or
enforceability of such Company Intellectual Property. Neither the Company nor
any of its subsidiaries has entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property, other
than indemnification provisions contained in purchase, service or work orders or
other agreements arising in the ordinary course of business.
(iv) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in material breach of any license, sublicense or other
agreement relating to Company Intellectual Property or Third Party Intellectual
Property Rights, the Company's service offerings or its ability to exploit its
products which could reasonably be expected to result in a material loss or
liability to the Company.
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(v) No suit, action or proceeding involving the Company
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right,
or breach of any license or agreement involving Intellectual Property is
currently pending or, to the knowledge of the Company, is threatened, nor, to
the knowledge of the Company, is there any reasonable basis therefor. The
manufacture, marketing, licensing or sale of the Company's products and the
provision of the Company's services does not, to the Company's knowledge after
due inquiry of each of the Company's executive officers, directors and officers
in charge of the Company's corporate functions, infringe any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party.
(vi) The Company has not received notice from any third
party that the operation of the business of the Company or any act, product or
service of the Company, infringes or misappropriates any Third Party
Intellectual Property Rights or constitutes unfair competition or trade
practices under the laws of any jurisdiction.
(vii) Except as set forth in Section 4.1(h)(vii) of the
Company Disclosure Letter, to the knowledge of the Company, no Person has
previously infringed or misappropriated or is infringing or misappropriating any
Intellectual Property material to the Company.
(viii) Except as set forth in Section 4.1(h)(viii) of the
Company Disclosure Letter, all current and former employees and consultants of
the Company have signed a confidentiality/nondisclosure agreement in the form
attached to the Company Disclosure Letter. All current and former employees and
consultants of the Company involved in product development work have signed an
invention assignment agreement in the form attached to the Company Disclosure
Letter. To the Company's knowledge, no such current or former employees or
consultants of the Company have violated any such agreement or otherwise
misappropriated any trade secrets of the Company or of any third party. The
Company does not believe it is or will be necessary to utilize any inventions,
trade secrets or proprietary information of any of its employees made prior to
their employment by the Company, except for inventions, trade secrets or
proprietary information that have been assigned to the Company.
(ix) The Company has taken all reasonable and appropriate
steps to protect and preserve the confidentiality of all Intellectual Property
not otherwise protected by patents, or patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by the Company by or to a third party has been
pursuant to the terms of a written agreement between the Company and such third
party. All use, disclosure or appropriation of the Company of Confidential
Information not owned by the Company has been pursuant to the terms of a written
agreement between the Company and the owner of such Confidential Information, or
is otherwise lawful.
(x) None of the Company's operating codes, programs,
utilities, development tools and other software, as well as all hardware and
systems, utilized by the Company or any of its subsidiaries internally or to
develop products or to provide services to customers, as well as all products of
the Company or any of its subsidiaries sold to customers (collectively,
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"Systems") will, as a result of processing data containing dates in the year
2000 and any preceding or following years, fail to initiate or operate, or to
correctly store, represent and process all dates or abnormally terminate such
processing. The Company's Systems operate and will operate substantially in
accordance with their specifications prior to, during and after the calendar
year 2000 or any leap years. Since January 1, 1998, neither Company nor any of
its subsidiaries has given to customers any written representations or
warranties or indemnities with respect to year 2000 compliance or conformity,
except (A) where the Company's liability is limited to amounts paid to the
Company pursuant to the contract in which such representation, warranty or
indemnity appears and lost profits and consequential damages are expressly
excluded, (B) pursuant to the Company's standard form services agreement
attached as Exhibit 4.1(h)(x) to the Company Disclosure Letter or (C) as
disclosed in Section 4.1(h)(x) of the Company Disclosure Letter.
(i) Litigation. Except as disclosed in the Filed SEC Documents,
as of the date of this Agreement, there is no suit, action or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries, nor, to the knowledge of the Company, is their any reasonable
basis therefor, that individually or in the aggregate could reasonably be
expected to (i) have a Material Adverse Effect on the Company, (ii) challenge or
seek to enjoin or seek damages with respect to the Company's entering into and
performing this Agreement or that impair the ability of the Company to perform
its obligations under this Agreement or (iii) prevent the consummation of any of
the transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries having, or which is
reasonably likely to have, any effect referred to in the foregoing clause (i),
(ii) or (iii) above.
(j) Absence of Changes in Benefit Plans. Except as disclosed in
the Filed SEC Documents or Section 4.1(j) of the Company Disclosure Letter,
since the date of the most recent audited financial statements included in the
Filed SEC Documents, there has not been any adoption or amendment in any
material respect by the Company or any of its subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any of its subsidiaries. Except
as disclosed in the Filed SEC Documents or Section 4.1(j) of the Company
Disclosure Letter, there exist no employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or former employee, officer
or director of the Company or any of its subsidiaries as to which there is or
could be aggregate liability on the part of the Company or any of its
subsidiaries in excess of $100,000.
(k) ERISA Compliance.
(i) The Company is in compliance in all material respects with
all applicable laws, agreements and contracts relating to employment, employment
practices, wages, hours, and terms and conditions of employment, including, but
not limited to, employee compensation matters.
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<PAGE> 18
Except as set forth in Section 4.1(k) of the Company Disclosure Letter, the
Company does not have any employment contracts or consulting agreements
currently in effect that are not terminable at will (other than agreements with
the sole purpose of providing for the confidentiality of proprietary information
or assignment of inventions).
(ii) The Company (a) has never been and is not now subject to a
union organizing effort, (b) is not subject to any collective bargaining
agreement with respect to any of its employees, (c) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization and (d) does not have any current labor disputes. The
Company has good labor relations, has not been informed of any facts indicating
that the consummation of the transactions contemplated hereby will have a
material adverse effect on such labor relations, and has not been informed that
any of its key employees intends to leave its employ.
(iii) Neither the Company nor any trade or business (a "Company
Affiliate") which is under common control with the Company within the meaning of
Section 414 of the Internal Revenue Code of 1986, as amended (the "Revenue
Code") has a pension plan which is subject to Section 412 of the Revenue Code or
subject to Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and does not maintain a "multiemployer plan" as defined in
Section 3(37) of ERISA. The Company has made available to Parent a true and
complete copy of, to the extent applicable, (i) such Company Employee Plan (as
defined below), (ii) the most recent annual report (Form 5500), (iii) each trust
agreement related to such Company Employee Plan (as defined below), (iv) the
most recent summary plan description for each Company Employee Plan (as defined
below) for which such a description is required and (v) the most recent United
States Internal Revenue Service ("IRS") determination letter issued with respect
to any Company Employee Plan (as defined below).
(iv) Each employment, severance or other similar contract,
arrangement or policy, each "employee benefit plan" as defined in Section 3(3)
of ERISA and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' benefits, vacation
benefits, severance benefits, disability benefits, death benefits,
hospitalization benefits, retirement benefits, deferred compensation,
profit-sharing, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits for employees, consultants or directors
which is entered into, maintained or contributed to by the Company or any
Company Affiliate and covers any employee or former employee of the Company or
any Company Affiliate. Such contracts are hereinafter collectively referred to
as "Company Employee Plans." Each Company Employee Plan has been maintained in
compliance in all material respects with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that are
applicable to such Company Employee Plan. All contributions to any Company
Employee Plan for all periods prior to the Effective Time have been timely made
or are accrued on the Company's financial statements.
(v) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change in
employee participation or coverage under, any Company Employee Plan that would
increase materially the expense of
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<PAGE> 19
maintaining such Company Employee Plan above the level of the expense incurred
in respect thereof for the Company's fiscal year ended December 31, 1998.
(vi) All of the Company Employee Plans, to the extent applicable,
are in compliance, in all material respects, with (a) the continuation coverage
requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA,
(b) the Americans with Disabilities Act of 1990, as amended, and (c) the Family
Medical and Leave Act of 1993, as amended, and the regulations thereunder.
(vii) No benefit payable or which may become payable by the
Company or any of its subsidiaries pursuant to any Company Employee Plan or as a
result of or arising under this Agreement or the Agreement of Merger will
constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of
the Revenue Code) which is subject to the imposition of an excise Tax under
Section 4999 of the Revenue Code or which would not be deductible by reason of
Section 280G of the Revenue Code. Except as set forth in Section 4.1(k)(vii) of
the Company Disclosure Letter, neither the Company nor its subsidiaries is a
party to any: (a) agreement (other than as described in (b) below) with any
executive officer or other key employee thereof (i) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Company or its subsidiaries in the nature of any of
the transactions contemplated by this Agreement or the consummation of the
transactions contemplated hereby, (ii) providing any term of employment or
compensation guarantee, or (iii) providing severance benefits or other benefits
after the termination of employment of such employee regardless of the reason
for such termination of employment, or (b) agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be materially increased, or the
vesting of benefits of which will be materially accelerated, by the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(viii) The Company has made available to Parent a list of the
names of all employees of the Company and of any of its subsidiaries and their
salaries as of the most recent practicable date.
(l) Taxes.
(i) The Company and each of its subsidiaries has duly
filed on a timely basis all material Tax Returns required to be filed by it. All
such Returns are true, complete and correct in all material respects. Neither
the Company nor any of its subsidiaries has been delinquent in the payment of
any material Tax nor is there any material Tax deficiency outstanding, proposed
or assessed against Parent or any of its subsidiaries, nor has Company or any of
its subsidiaries executed any unexpired waiver of any statute of limitations on
or extending the period for the assessment or collection of any Tax. Neither the
Company nor any of its subsidiaries has any liability for any material unpaid
Taxes which has not been accrued for or reserved on the balance sheet of the
Company contained in the most recent financial statements contained in the Filed
SEC Documents (the "Company Balance Sheet") in accordance with GAAP, whether
asserted or unasserted, contingent or otherwise, which is material to Company,
other than any liability for
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<PAGE> 20
unpaid Taxes that may have accrued since the date of the Company Balance Sheet
in connection with the operation of the business of Company and its subsidiaries
in the ordinary course. The most recent financial statements contained in the
Filed SEC Documents properly reflect in accordance with generally accepted
accounting principles all Taxes payable by or properly accruable by the Company
and its subsidiaries for all taxable periods and portions thereof through the
date of such financial statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries that are not
properly reflected in accordance with generally accepted accounting principles
in the most recent financial statements contained in the Filed SEC Documents,
and no requests for waivers of the time to assess any such Taxes are pending.
The Company and/or any of its subsidiaries have not agreed with any Tax
authority to extend the time to assess any Taxes beyond the date of this
Agreement. None of the Federal income tax returns of the Company and each of its
subsidiaries consolidated in such returns have been examined by the Internal
Revenue Service for any taxable period. The Company and/or any of its
subsidiaries have not entered into any closing agreement with respect to any
taxable year. The Company and/or any of its subsidiaries is neither a party to
any action or proceeding for assessment or collection of Taxes, nor has such
event been asserted or threatened in writing against the Company or any of its
subsidiaries or any of their assets. The Company and each of its subsidiaries
have disclosed on their federal income tax returns all positions taken therein
that could give rise to a substantial understatement penalty within the meaning
of Revenue Code Section 6662. Neither the Company nor any of its subsidiaries is
(nor has ever been) a party to any Tax sharing agreement with any party other
than the Company or its subsidiaries.
(iii) Neither the Company nor any subsidiary is a party
to any safe harbor lease within the meaning of Section 168(f)(8) of the Revenue
Code, as in effect prior to amendment by the Tax Equity and Fiscal
Responsibility Act of 1982. The Company is not and has not been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Revenue Code during the applicable period specified in Section 897(c)(l)(A)(ii)
of the Code. Neither the Company nor any subsidiary has participated in an
international boycott as defined in Revenue Code Section 999. Neither the
Company nor any subsidiary is a member of, a partner in, or otherwise owns an
interest in a partnership, limited liability or other "pass through" entity.
Neither the Company nor any subsidiary has agreed, nor is it required to make,
any adjustment under Revenue Code Section 481(a) by reason of a change in
accounting method or otherwise. Neither the Company nor any of its subsidiaries
own any interest in any controlled foreign corporation (as defined in Section
957 of the Revenue Code), passive foreign investment company (as defined in
Section 1296 of the Revenue Code) or other entity, the income of which is
required to be included in the income of the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries has been a "distributing" or
"controlled" corporation as defined in Section 355 of the Revenue Code in a
transaction intended to qualify under Section 355 and Section 368(a)(1)(D) of
the Revenue Code within the two years immediately prior to the signing of this
Agreement.
(iv) Neither the Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Revenue Code or agreed
to have Section 341(f)(2) of the
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<PAGE> 21
Revenue Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Revenue Code) owned by Company or any of its
subsidiaries.
(v) As used in this Agreement, "Tax" or "Taxes" shall mean
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 shall 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),
payroll and employee withholding taxes, unemployment insurance, 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 the Company or any of its subsidiaries is
required to pay, withhold or collect. As used in this Agreement, "Returns" shall
mean all reports, estimates, declarations of estimated tax, information
statements and returns relating to, or required to be filed in connection with,
any Taxes, including information returns or reports with respect to withholding
and other payments to third parties.
(m) No Excess Parachute Payments. Any amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Revenue Code). There is no agreement, contract or
arrangement to which the Company or any of its subsidiaries is a party that may
result in the payment of any amount that would not be deductible pursuant to
Sections 280G, 162 or 404 of the Revenue Code.
(n) Compliance with Applicable Laws.
(i) The Company and each of its subsidiaries has in effect
all Federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its properties and assets
and to carry on its business as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits and for defaults under
Permits which individually or in the aggregate would not have a Material Adverse
Effect on the Company. Except as disclosed in Section 4.1(n) of the Company
Disclosure Letter, the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, except for noncompliance which individually or in the
aggregate would not have a Material Adverse Effect on the Company.
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<PAGE> 22
(ii) The Company and its subsidiaries are, and have been,
and each of the Company's former subsidiaries, while subsidiaries of the
Company, was in compliance with all applicable Environmental Laws except for
noncompliance which individually or in the aggregate would not have a Material
Adverse Effect on the Company. The term "Environmental Laws" means any Federal,
state or local statute, code, ordinance, rule, regulation, policy, guideline,
permit, consent, approval, license, judgment, order, writ, decree, directive,
injunction or other authorization, including the requirement to register
underground storage tanks, relating to: (A) Releases (as defined below) or
threatened Releases of Hazardous Material (as defined below) into the
environment, including into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, ground water, publicly-owned
treatment works, septic systems or land; or (B) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material.
(iii) During the period of ownership or operation by the
Company and its subsidiaries of any of their respective current or previously
owned or leased properties, there have been no Releases of Hazardous Material by
the Company or its subsidiaries, or, to the Company's knowledge, any other
party, in violation of Environmental Laws in, on, under or affecting such
properties or, to the knowledge of the Company, any surrounding site, and none
of the Company or its subsidiaries have disposed of any Hazardous Material or
any other substance in a manner that could reasonably be anticipated to lead to
a Release in violation of Environmental Laws, except in each case for those
which individually or in the aggregate would not have a Material Adverse Effect
on the Company. Prior to the period of ownership or operation by the Company and
its subsidiaries of any of their respective currently or previously owned or
leased properties, to the knowledge of the Company, there were no Releases of
Hazardous Material in, on, under or affecting any such property or any
surrounding site, except in each case for those which individually or in the
aggregate would not have a Material Adverse Effect on the Company. The term
"Release" has the meaning set forth in 42 U.S.C. Section 9601(22). The term
"Hazardous Material" means (1) hazardous materials, pollutants, contaminants,
constituents, medical or infectious wastes, hazardous wastes and hazardous
substances as those terms are defined in the following statutes and their
implementing regulations: the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act,
42 U.S.C. Section 9601 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., and the
Clean Air Act, 42 U.S.C. Section 7401 et seq., (2) petroleum, including crude
oil and any fractions thereof, (3) natural gas, synthetic gas and any mixtures
thereof, (4) asbestos and/or asbestos containing material, (5) radon and (6)
PCBs, or materials or fluids containing PCBs.
(o) State Takeover Statutes; Rights Agreement. Except for
Sections 1101 and 1203 of the Code (which will not apply if the Merger is a
short form merger), no California takeover statute or similar statute or
regulation applies to the Offer, the Merger, this Agreement, or any of the
transactions contemplated by this Agreement. The Company is not a party to, nor
affected by, any "rights agreement", "poison pill" or similar plan, agreement or
arrangement (a "Rights Plan")
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affecting the capitalization of, or issuance of capital stock by, the Company,
which would be triggered by the Offer, the Merger, this Agreement or any other
transaction contemplated hereby.
(p) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Thomas Weisel Partners
LLC, the fees and expenses of which will be paid by the Company (and a copy of
whose engagement letter has been provided to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission, nor
to any fee that is contingent on closing of the transactions contemplated hereby
or that is based on a percentage of the transaction value, in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company. Assuming consummation of the Merger, no such
engagement letter obligates the Company to continue to use their services or pay
fees or expenses in connection with any future transaction.
(q) Opinion of Financial Advisor. The Company has received the
opinion of Thomas Weisel Partners LLC, dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the Offer and
the Merger by the Company's shareholders is fair to the Company's shareholders
(other than Parent and Sub) from a financial point of view, and a signed copy of
such opinion has been delivered to Parent.
(r) Contracts, Debt Instruments.
(i) Set forth on the Company Disclosure Letter is (x) a
list of all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any indebtedness of the
Company or any of its subsidiaries in an aggregate principal amount in excess of
$250,000 is outstanding or may be incurred and (y) the respective principal
amounts currently outstanding thereunder. For purposes of this Agreement,
"indebtedness" shall mean, with respect to any person, without duplication, (A)
all obligations of such person for borrowed money, or with respect to deposits
or advances of any kind to such person, (B) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments, (C) all
obligations of such person upon which interest charges are customarily paid, (D)
all obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person, (E) all obligations of
such person issued or assumed as the deferred purchase price of property or
services (excluding obligations of such person to creditors for raw materials,
inventory, services and supplies incurred in the ordinary course of such
person's business), (F) all capitalized lease obligations of such person, (G)
all obligations of others secured by any lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
hedging transactions (valued at the termination value thereof), (I) all letters
of credit issued for the account of such person (excluding letters of credit
issued for the benefit of suppliers to support accounts payable to suppliers
incurred in the ordinary course of business) and (J) all guarantees and
arrangements having the economic effect of a guarantee of such person of any
indebtedness of any other person.
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<PAGE> 24
(ii) Neither the Company nor any of its subsidiaries is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under): (i) its articles of incorporation or bylaws, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding to which it is a party or by which it or any of its properties or
assets is bound, (iii) any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its subsidiaries, except for
violations or defaults that individually or in the aggregate would not have a
Material Adverse Effect on the Company.
(iii) Neither the Company nor any of its subsidiaries is
a party to or is bound by: (A) any agreement of indemnification or guaranty not
entered into in the ordinary course of business other than indemnification
agreements between the Company or any of its subsidiaries and any of its
officers or directors; (B) any agreement, contract or commitment currently in
force relating to the disposition or acquisition of assets not in the ordinary
course of business or any ownership interest in any corporation, partnership,
joint venture or other business enterprise; or (C) any material joint marketing
or development agreement.
(s) Certain Agreements. Except as set forth in Section 4.1(s) of
the Company Disclosure Letter, the Company and its subsidiaries are not parties
to or subject to any agreement which falls within any of the following
classifications:
(i) any employment, deferred compensation, bonus or
consulting contract (other than with a technical consultant) requiring payments
in excess of $125,000 by the Company or any subsidiary;
(ii) any distributorship, sales, marketing, advertising,
brokerage, licensing, dealership, representative or agency relationship
requiring payment by the Company or any subsidiary;
(iii) any contract or agreement that materially restricts
or materially impairs the Company or any of its subsidiaries or employees from
carrying on such person's business as now conducted or any part thereof or from
competing in any line of business with any person, corporation or other entity
or that grants any exclusive license or distribution rights;
(iv) any collective bargaining agreement or other such
contract or agreement with any labor organization;
(v) any lease of personal property requiring rental
payments of $250,000 or more throughout its term and having a term of one year
or more, whether as lessor or lessee;
(vi) any mortgage, pledge, conditional sales contract,
security agreement, option, or any other similar agreement with respect to any
interest of the Company or any subsidiary in personal property;
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<PAGE> 25
(vii) any stock purchase, stock option, stock bonus, stock
ownership, profit sharing, group insurance, bonus, deferred compensation,
severance pay, pension, retirement, savings or other incentive, change in
control, welfare or employee plan or material agreement providing benefits to
any present or former employees, officers or directors of the Company or any of
its subsidiaries;
(viii) any agreement to acquire equipment or commitment to
make capital expenditures by the Company or any subsidiary of $100,000 or more;
(ix) any agreement for the sale of any material properties
or assets, or for the grant of any preferential right to purchase any such
material properties or assets or which requires the consent of any third party
to the transfer and assignment of any such material properties or assets, other
than in the ordinary course of business in connection with the Company sale of
properties or assets;
(x) any agreement requiring the Company to indemnify any
current or former officer, director, employee or agent;
(xi) except in the ordinary course of business, any other
agreement of any other kind which involves future payments or receipts or
performance of services or delivery of items, requiring payments of $100,000 or
more to or by the Company or any subsidiary; or
(xii) any agreement with a customer of the Company
providing for services to be performed for such customer for a fixed or capped
fee or payment structure.
Neither the Company nor any subsidiary is in default under
any contract or agreement, nor, to the knowledge of the Company, are any other
parties to such agreements in default, and to the Company's knowledge, no act or
omission has occurred which, with notice or lapse of time or both, would
constitute a default under any term or provision of any contract or agreement,
except for such defaults which, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. Each agreement disclosed in items (i)
through (xii) of this Section is in full force and effect and true and correct
copies of all such agreements have been provided to Parent or its
representatives.
(t) Title to Properties.
(i) Section 4.1(t) of the Company Disclosure Letter lists
all real property interests owned or leased by the Company or its subsidiaries.
The Company and each of its subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets except for
such as are no longer used or useful in the conduct of its businesses or as have
been disposed of in the ordinary course of business and except for defects in
title, easements, restrictive covenants and similar encumbrances or impediments
that individually or in the aggregate would not materially interfere with its
ability to conduct its business as currently conducted. All
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<PAGE> 26
such material properties and assets, other than properties and assets in which
the Company or any of its subsidiaries has leasehold interests, are free and
clear of all Liens, except for Liens that individually or in the aggregate would
not materially interfere with the ability of the Company and its subsidiaries to
conduct business as currently conducted.
(ii) The Company and each of its subsidiaries has complied
in all material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all such leases are in full force
and effect. The Company and each of its subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
(u) Labor Matters. Except as set forth in the Company Disclosure
Letter, or as would not have a Material Adverse Effect on the Company (a) the
Company and its subsidiaries are operating and have operated the business in
compliance in all material respects with all applicable laws relating to the
business respecting employment and employment practices, terms and conditions of
employment and wages and hours, including the Immigration Reform and Control Act
("IRCA"), the Worker Adjustment and Retraining Notification Act of 1988 ("WARN
Act"), any such applicable laws respecting employment of foreign nationals,
employment discrimination, equal opportunity, affirmative action, employee
privacy, wrongful or unlawful termination, workers' compensation, occupational
safety and health requirements, labor/management relations and unemployment
insurance, the Family and Medical Leave Act or related matters, and the Company
and its subsidiaries are not engaged in and have not engaged in any unlawful
practice relating to the business under such applicable laws, or in any unfair
labor practice relating to the business; (b) no Governmental Entity has given
the Company or any of its subsidiaries written notice regarding any pending
charge, audit, claim, complaint, investigation or review by or before any
Governmental Entity concerning or requesting in writing to explain any conflicts
with or violations of any such laws relating to the business by the Company or
such subsidiary or in connection with the operation of the business, nor, to the
knowledge of the Company, is any such investigation threatened or
pending, nor, to the knowledge of the Company, has any such investigation
occurred during the last two years; (c) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of Company,
threatened against or affecting the business, and neither the Company nor any
subsidiary has experienced any work stoppage or other material labor difficulty
relating to the business in the last two years; (d) to the knowledge of the
Company, no union representation question or union organizational activity
exists respecting employees and, to the Company's knowledge, no one has
petitioned within the last two years, and no one is now petitioning, for union
representation of any employees; (e) there exists no collective bargaining
agreement or other contract or agreement relating to the business with any labor
union or association representing any employee, and no collective bargaining
agreement affecting employees is currently being negotiated; and (f) the Company
and its subsidiaries are in material compliance with all obligations under all
Company Employee Plans and all employment contracts and are not delinquent in
payments to any employees for any wages, salaries, commissions, bonuses or other
compensation for any services performed by them relating to the business or
amounts required to be reimbursed to such employees. Except as set forth in the
Company Disclosure Letter, there are no pending or, to the knowledge of the
Company, threatened proceedings, actions or suits of any nature (i) under or
alleging violation of IRCA, WARN or any law respecting employment of foreign
nationals, employment discrimination, equal
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opportunity, affirmative action, employee privacy, wrongful or unlawful
termination or demotion, sexual and other harassment, workers' compensation,
occupational safety and health requirements, labor/management relations
(including any grievances or arbitration proceeding arising out of or under any
collective bargaining agreements) and unemployment insurance, or matters
involving any employee; (ii) relating to alleged unlawful employment practices
or unfair labor practices involving any employee (or the equivalent thereof
under any law); or (iii) relating to alleged breaches of any of the Company
Employee Plans. To the Company's knowledge, no employee of the Company has in
any material respect violated any employment contract, confidentiality
agreement, patent disclosure agreement or noncompetition agreement between such
employee and any former employer of such employee due to such employee being
employed by the Company or any of its subsidiaries or disclosing to the Company
or any of its subsidiaries trade secrets or proprietary information of any such
employer. No employee of the Company or any of its subsidiaries has given notice
to the Company or any of its subsidiaries, nor is the Company otherwise aware,
that any employee intends to terminate his or her employment with the Company or
any of its subsidiaries.
(v) Government Contracts. All representations, certifications and
disclosures made by the Company or any subsidiary to any Government Contract
Party (as defined below) have been in all material respects current, complete
and accurate at the times they were made. There have been no acts, omissions or
noncompliance with regard to any applicable public contracting statute,
regulation or contract requirement (whether express or incorporated by
reference) relating to any contracts of Company or any subsidiary with any
Government Contract Party (as defined below) in either case that have led to or
is reasonably likely to lead to, either before or after the Closing Date, (a)
any material claim or dispute involving Company or any subsidiary and/or Parent
or Sub as successor in interest to Company and any Government Contract Party or
(b) any suspension, debarment or contract termination, or proceeding related
thereto. There has been no act or omission that relates to the marketing,
licensing or selling to any Government Contract Party (as defined below) of any
of the Company's technical data, computer software, products and services and
that has led to or is reasonably likely to lead to, either before or after the
Closing Date, any cloud on any of the Company's or its subsidiaries' rights in
and to its technical data, computer software, products and services. There is
currently no dispute between the Company or any of its subsidiaries and any
Government Contract Party. For purposes of this Section, the term "Government
Contract Party" means any independent or executive agency, division,
subdivision, audit group or procuring office of the federal, state, county,
local or municipal government, including any prime contractor of the federal
government and any higher level subcontractor of a prime contractor of the
federal government, and including any employees or agents thereof, in each case
acting in such capacity.
(w) Warranties, Guarantees and Indemnities. Except as disclosed
in Section 4.1(w) of the Company Disclosure Letter, neither the Company nor any
of its subsidiaries has provided to its customers rights to obtain refunds or
made any other warranties, guarantees or indemnities with respect to the
services it provides to such customers except where the Company's liability is
limited to (1) amounts paid to the Company pursuant to the contract in which
such right, warranty, guaranty or indemnity appears and lost profits and
consequential damages are expressly excluded, and (2) the Company's obligation
to remedy a deficiency under such contract without further charge to the
customer.
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(x) Customer Relationships. Each of the Company and each of its
subsidiaries has reasonably good commercial working relationships with its
customers and suppliers. None of the Company's top twenty-five customers (based
on the Company's consolidated revenues for the fiscal year ended July 31, 1998
(each, a "Material Customer") has, from August 1, 1998 to the date of this
Agreement, canceled or otherwise terminated its relationship with the Company or
any subsidiary thereof, decreased or limited materially the amount of product or
services ordered from the Company or any subsidiary thereof, or threatened to
take any such action other than in the ordinary course upon completion of
customer projects.
(y) Product and Service Quality. All products manufactured, sold,
licensed, leased or delivered by the Company and its subsidiaries and all
services provided by the Company and its subsidiaries, to customers on or prior
to the Closing Date conform to applicable contractual commitments, express and
implied warranties, product specifications and quality standards in all material
respects, and none of the Company or its subsidiaries has any material liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the Company
or its subsidiaries giving rise to any liability) for replacement or repair
thereof or other damages in connection therewith. Neither the Company nor its
subsidiaries has received a complaint from a Material Customer regarding the
Company's or its subsidiaries' services pursuant to which such Material Customer
is withholding payment of any material amounts payable to the Company or such
subsidiary, or which is the subject of an ongoing dispute or correspondence
between the Company and such customer.
(z) Disclosure. Nothing in the Company Disclosure Letter shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the disclosure identifies the exception with particularity and
describes the relevant facts in reasonable detail; provided, that a particular
matter need only be disclosed once in such manner so long as it is
cross-referenced wherever else applicable in the Company Disclosure Letter in a
manner sufficiently clear to identify to which representation or warranty an
exception is being made.
4.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Parent and Sub is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate would not have a material
adverse effect on Parent.
(b) Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated
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by this Agreement. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub. This Agreement has been duly executed and delivered
by Parent and Sub and constitutes a valid and binding obligation of each such
party, enforceable against each such party in accordance with its terms (except
as enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws, both state and federal, affecting
the enforcement of creditors' rights or remedies in general as from time to time
in effect or (ii) the exercise by courts of equity powers). The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or Sub under (i) the articles of incorporation or
by-laws of Parent or Sub, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or Sub or their respective properties
or assets or (iii) any governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent or Sub or their respective properties or
assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Parent and its subsidiaries,
taken as a whole, (y) materially impair the ability of Parent or Sub to perform
their obligations under this Agreement, (z) prevent the consummation of any of
the transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement or the consummation by Parent or Sub,
as the case may be, of any of the transactions contemplated by this Agreement,
except for (1) the filing of a pre-merger notification and report form under the
HSR Act, (2) the filing with the SEC and the National Association of Securities
Dealers of (A) the Offer Documents and (B) such reports under Sections 13(a),
13(d) and 16(a) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (3) the filing of
the Certificate of Ownership or an agreement of merger with the California
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (4) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as would not individually or in the aggregate (A) have a material
adverse effect on Parent and its subsidiaries, taken as a whole, (B) impair the
ability of Parent and Sub to perform their respective obligations under this
Agreement or (C) prevent the consummation of any of the transactions
contemplated by this Agreement.
(c) Information Supplied. None of the information supplied or to
be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9, the Information Statement
or the Proxy Statement will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's shareholders, or, in the
case of the Proxy Statement, at the
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date the Proxy Statement is first mailed to the Company's shareholders or at the
time of the Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Offer Documents will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation or
warranty is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
(d) Brokers. No broker, investment banker, financial advisor or
other person, other than Updata Capital, the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent or Sub.
(e) Financing. At the expiration of the Offer and the Effective
Time, Parent and Sub will have available all the funds necessary for the
acquisition of all Shares pursuant to the Offer or Merger and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all Shares validly tendered or outstanding at the Effective
Time.
(f) Litigation. Except as disclosed in documents filed with the
SEC by Parent, as of the date of this Agreement, there is no suit, action or
proceeding pending or, to the knowledge of Parent, threatened against Parent or
any of its subsidiaries that individually or in the aggregate could reasonably
be expected to (i) impair the ability of Parent or Sub to perform their
obligations under this Agreement or (ii) prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Parent or any of its subsidiaries having, or which is reasonably likely
to have, any effect referred to in the foregoing clause (i) or (ii) above.
(g) Financial Statements. The financial statements of Parent
included in the required reports, schedules, forms, statements and other
documents filed with the SEC since December 31, 1996, including those filed
after the date hereof until the Closing, comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business.
(a) Conduct of Business by the Company. The Company shall, and
shall cause its subsidiaries to, carry on its and their respective businesses in
the ordinary course consistent with past practice and use all reasonable efforts
to preserve intact their current business organizations, to keep available the
services of their current officers and employees and to preserve their
relationships with distributors, licensors, contractors, customers, suppliers,
lenders and others having business dealings with any of them. Without limiting
the generality of the foregoing, except as may be expressly permitted by other
provisions of this Agreement, as set forth in Section 5.1 of the Company
Disclosure Letter cross-referenced to a subsection of this Section 5.1, or as
may be agreed to in writing by Parent, the Company shall not, and shall not
permit any of its subsidiaries to:
(i)(x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned subsidiary of
the Company to its parent, in the case of less than wholly owned subsidiaries,
as required by agreements existing on the date of this Agreement, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (z) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
the Company Common Stock upon the exercise of Options (as defined in Section
6.4) or upon the conversion of the Convertible Notes outstanding on the date of
this Agreement and in accordance with their present terms) and pursuant to the
Stock Purchase Plan; provided, that, without the prior written consent of Parent
(such consent not to be unreasonably withheld), in no event shall the Company
issue any shares of its capital stock during the period commencing with the
consummation of the Offer and ending at the Effective Time;
(iii) amend its articles of incorporation, by-laws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof or (y)
any assets that individually or in the aggregate are material to the Company and
its subsidiaries taken as a whole, except in the ordinary course of business
consistent with past practice;
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(v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its properties or assets
(including Intellectual Property), except for sales, leases, licenses, or
encumbrances of its properties or assets in the ordinary course of business
consistent with past practice;
(vi) (x) incur any indebtedness for borrowed money or draw
down on any credit facility or arrangement (except in the ordinary course of
business under agreements in effect on the date hereof, not to exceed $1,000,000
in aggregate amount; provided, that such amount may be exceeded with the prior
written consent of Parent, such consent not to be unreasonably withheld) or
guarantee any indebtedness of another person (other than a subsidiary), issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing or (y) make any
loans or advances to, or investments in, any other person, other than any
subsidiary of the Company;
(vii) make or agree to make any new capital expenditure or
expenditures which individually is in excess of $100,000 or which in the
aggregate are in excess of $500,000;
(viii) make any material tax election or settle or
compromise any material income or franchise tax liability;
(ix) pay, discharge, settle or satisfy any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements (or
the notes thereto) of the Company included in the Filed SEC Documents or
incurred since the date of such financial statements in the ordinary course of
business consistent with past practice in accordance with the terms of this
Section 5.1;
(x) except as expressly contemplated hereby, waive,
release or assign any rights or claims under any contract or agreement binding
on the Company or any subsidiary; or, except as expressly contemplated hereby or
in the ordinary course of business consistent with past practice, enter into,
modify, amend or terminate any contract or agreement binding on the Company
or any subsidiary; or, in any event, enter into any contract or agreement
binding on the Company or any subsidiary which would be required to be disclosed
in Section 4.1(d) of the Company Disclosure Letter;
(xi) terminate or lay off more than ten employees, except
for cause consistent with past practice and Company policy;
(xii) adopt or amend in any material respect any employee
benefit or employee stock purchase or employee option plan, or enter into any
employment contract, pay any
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special bonus or special remuneration to any director or employee, or increase
the salaries or wage rates of its officers or employees other than in the
ordinary course of business, consistent with past practice, or change in any
material respect any management policies or procedures, waive any stock
repurchase rights, accelerate, amend or change the period of exercisability of
any Options (as defined in Section 6.4), or authorize cash payments in exchange
for any Options, or otherwise alter or commit to any compensation, benefit or
severance arrangement for or with any officer or employee of the Company or
enter into any related or interested party transaction;
(xiii) grant or provide any severance or termination pay
to any officer or employee except payments pursuant to written plans or
agreements outstanding on the date hereof and described in the Company
Disclosure Letter;
(xiv) take any actions (including seeking or soliciting
corporate approvals) directed towards seeking to liquidate or dissolve the
Company or to take advantage of bankruptcy or other creditor protection laws or
that would or are reasonably likely to render the Company insolvent or to cause
the Company to become involved in bankruptcy proceedings, including soliciting
creditor arrangements or moratoria;
(xv) except as described in Section 5.1(a)(xv) of the
Company Disclosure Letter, institute any litigation or other proceeding;
(xvi) take any action that might cause or constitute a
breach of any representation or warranty made by the Company in this Agreement;
or
(xvii) enter into any Rights Plan, or take or permit any
other action which could have the effect of causing the representation made in
Section 4.1(o) to be untrue in any respect;
(xviii)authorize any of, or commit or agree to take any
of, the foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall
not permit any of their respective subsidiaries to, knowingly and willfully,
take deliberate action that would cause (i) any of the representations and
warranties of such party set forth in this Agreement to become untrue in (x)
such a manner as would have a Material Adverse Effect on the Company (in the
case of the Company) or (y) any material respect (in the case of Parent) as of
the date when made or (ii) any of the conditions to the Offer set forth in
Exhibit A or any of the conditions to the Merger not being satisfied (subject to
the Company's right to take action consistent with Section 5.2).
5.2 No Solicitation.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement in accordance with its terms,
the Company shall not, nor shall it permit any of its subsidiaries to, nor shall
it authorize or permit any officer, director or employee of,
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or any investment banker, attorney or other advisor or representative of, the
Company or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the making, announcement or submission of any takeover
proposal or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or enter into
any agreement with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any takeover proposal; provided, however, that this Section
5.2 shall not prohibit the Company from furnishing non-public information
regarding the Company and its subsidiaries to, or entering into discussions or
negotiations with, any person or group who has submitted (and not withdrawn) to
the Company an unsolicited, written, bona fide takeover proposal (as defined in
this Section 5.2) that the Company's Board of Directors reasonably concludes
(after consultation with its financial adviser) may constitute a superior
proposal (as defined in Section 6.1) if (1) neither Company nor any
representative of Company and its subsidiaries shall have violated any of the
restrictions set forth in this Section 5.2, (2) the Company's Board of Directors
concludes in good faith, after consultation with its outside legal counsel, that
such action is required in order for the Company's Board of Directors to comply
with its fiduciary obligations to Company's shareholders under applicable law,
and (3) prior to furnishing any such nonpublic information to, or entering into
any such discussions with, such person or group, the Company gives Parent
written notice of the identity of such person or group and all of the material
terms and conditions of such takeover proposal and of the Company's intention to
furnish information to, or enter into discussions with, such person or group,
the Company receives from such person or group an executed confidentiality
agreement containing terms at least as restrictive with regard to the Company's
confidential information as the Confidentiality Agreement, and contemporaneously
with furnishing any such information to such person or group, the Company
furnishes such information to Parent (to the extent such information has not
been previously furnished by the Company to Parent). Upon execution of this
Agreement, the Company, its subsidiaries, officers, directors, employees,
investment bankers, attorneys and other agents and representatives will
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted previously regarding a takeover proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding two sentences by any officer or director of the
Company or any investment banker or attorney of the Company or any of its
subsidiaries, shall be deemed to be a breach of this Section 5.2(a) by the
Company. For purposes of this Agreement, "takeover proposal" means any offer or
proposal relating to any transaction or series of related transactions (other
than the transactions contemplated by this Agreement) involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 10% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 10% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the shareholders of the Company immediately preceding such
transaction hold less than 90% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition
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of more than 10% of the assets of the Company; or (C) any liquidation or
dissolution of the Company.
(b) In addition to the obligations of the Company set forth in
paragraph (a) above, the Company shall promptly advise Parent orally and in
writing of any request for information or of any takeover proposal, or any
inquiry with respect to or which is expected to lead to any takeover proposal,
the material terms and conditions of such request, takeover proposal or inquiry,
and the identity of the person making any such takeover proposal or inquiry. The
Company will keep Parent fully informed of the status and details of any such
request, takeover proposal or inquiry.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Shareholder Approval; Preparation of Proxy Statement.
(a) If the Company Shareholder Approval is required by law in
order to effect the Merger, the Company will, as soon as practicable following
the expiration of the Offer, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Shareholders Meeting") for the purpose of
obtaining the Company Shareholder Approval. Subject to the provisions of Section
6.1(c): (i) the Company will, through its Board of Directors, recommend to its
shareholders that the Company Shareholder Approval be given; (ii) the Proxy
Statement shall include a statement to the effect that the Company's Board of
Directors recommends that the Company Shareholder Approval be given at the
Shareholders Meeting; and (iii) neither the Company's Board of Directors nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Parent, the recommendation of
the Company's Board of Directors that the Company Shareholder Approval be given
at the Shareholders Meeting. Notwithstanding the foregoing, if Sub (or any other
subsidiary of Parent) shall acquire and shall maintain through the effectiveness
of the Short-Form Merger, ownership of at least 90% of the outstanding Shares
sufficient to enable Sub (or such other subsidiary) to effect the Short-Form
Merger, the parties shall, at the request of Parent, take all necessary and
appropriate action to cause the Short-Form Merger to become effective as soon as
practicable after the expiration of the Offer without a Shareholders Meeting in
accordance with Section 1110 of the Code, including by filing the Certificate of
Ownership and by the Company's Board giving the approval contemplated by Code
Section 1110(b). Without limiting the generality of the foregoing, the Company
agrees that its obligations pursuant to the first sentence of this Section
6.1(a) shall not be affected by (i) the commencement, public proposal, public
disclosure or communication to the Company of any takeover proposal (including a
superior proposal) or (ii) the withdrawal or modification by the Company's Board
of Directors of its approval or recommendation of the Offer, this Agreement, the
Merger or the Company Shareholder Approval.
(b) If the Company Shareholder Approval is required by law in
order to effect the Merger, the Company will, as soon as practicable following
the expiration of the Offer, prepare and
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file a preliminary Proxy Statement with the SEC and will use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's shareholders as promptly as practicable after
responding to all such comments to the satisfaction of the staff. The Company
will notify Parent promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and will supply Parent with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the Shareholders
Meeting there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company will promptly prepare and mail to
its shareholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
(c) Nothing in this Agreement shall prevent the Company's Board
of Directors from withholding, withdrawing, amending or modifying its
recommendation in favor of the Merger if (i) a superior proposal (as defined
below) is made to the Company and is not withdrawn, (ii) the Company shall have
provided written notice to Parent (a "Notice of Superior Proposal") advising
Parent that the Company has received a superior proposal, specifying all of the
material terms and conditions of such superior proposal and identifying the
person or entity making such superior proposal, (iii) Parent shall not have,
within three business days of Parent's receipt of the Notice of Superior
Proposal, made an offer that the Company's Board by a majority vote determines
in its good faith judgment, after consultation with its financial adviser, to be
at least as favorable to the Company's shareholders as such superior proposal
(it being agreed that the Company's Board of Directors shall convene a meeting
to consider any such offer by Parent promptly following the receipt thereof),
(iv) the Company's Board of Directors concludes in good faith, after
consultation with its outside counsel, that, in light of such superior proposal,
the withholding, withdrawal, amendment or modification of such recommendation is
required in order for the Company's Board of Directors to comply with its
fiduciary obligations to the Company's shareholders under applicable law and (v)
the Company shall not have violated any of the restrictions set forth in Section
5.2 or this Section 6.1. The Company shall provide Parent with at least three
business days prior notice (or such lesser prior notice as provided to the
members of the Company's Board of Directors but in no event less than
twenty-four hours) of any meeting of the Company's Board of Directors at which
the Company's Board of Directors is reasonably expected to consider any takeover
proposal to determine whether such takeover proposal is a superior proposal. For
purposes of this Agreement, "superior proposal" shall mean an unsolicited, bona
fide written offer made by a third party to consummate any of the following
transactions: (i) a merger or consolidation involving the Company pursuant to
which the Shares outstanding immediately preceding such transaction will
represent less than 50% of the equity interest in the surviving or resulting
entity of such transaction or (ii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or a two step
transaction involving a tender offer followed with reasonable promptness by a
merger involving the Company), directly or indirectly, of ownership of 100% of
the then outstanding shares of capital stock of the Company, on terms that the
Company's Board of Directors determines, in its reasonable judgment (based on
the written advice of its financial adviser) to be more favorable to the Company
shareholders than the terms of the Merger; provided, however, that any such
offer shall not be
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deemed to be a "superior proposal" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely in the
reasonable judgment of the Company's Board of Directors (after consultation with
its financial adviser) to be obtained by such third party on a timely basis.
(d) Nothing contained in this Agreement shall prohibit the
Company or its Board of Directors from taking and disclosing to its shareholders
a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act.
(e) Parent agrees to cause all shares of the Company Common Stock
purchased pursuant to the Offer and all other shares of the Company Common Stock
owned by Sub or any other subsidiary of Parent to be voted in favor of the
Company Shareholder Approval.
6.2 Access to Information; Confidentiality. The Company shall, and shall
cause each of its subsidiaries to, afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisers and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each of its subsidiaries to, furnish or make available promptly
to Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Any disclosure that
may be required by law, regulation or rule shall be coordinated by and between
the parties and their advisors prior to such disclosure. Except as required by
law or the rules and regulations of the Nasdaq National Market, Parent will
hold, and will cause its officers, employees, accountants, counsel, financial
advisers and other representatives and affiliates to hold, in confidence any
confidential information in accordance with the Confidentiality Agreement dated
May 17, 1999, between Parent and the Company (the "Confidentiality Agreement").
6.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
use its reasonable efforts to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or non actions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, including but not limited to those set forth in Section 4.1(d) of the
Company Disclosure Letter, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order
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entered by any court or other Governmental Entity vacated or reversed and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, the Company
and its Board of Directors shall (A) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to the Offer, the Merger, this Agreement or any of the other transactions
contemplated by this Agreement and (B) if any state takeover statute or similar
statute or regulation becomes applicable to the Offer, the Merger, this
Agreement, or any other transaction contemplated by this Agreement, take all
action necessary to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger and the other transactions
contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of: (i) the breach of any material
representation or warranty made by it contained in this Agreement or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants, or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
6.4 Stock Plans.
(a) Stock Option Plans. Pursuant to the Company Option Plans,
following the Effective Time, each option to purchase Shares granted pursuant to
the Company Option Plans ("Options") shall, upon vesting, due exercise and
payment of the exercise price of such Option, entitle the optionee to receive
the Merger Consideration per Share subject to such Option. Each Option will
continue the same vesting schedule following the Effective Time, with the
optionee receiving credit for continuous service with the Company prior to the
Effective Time.
(b) Employee Stock Purchase Plan. Unless terminated prior to the
Effective Time in accordance with its terms, the Stock Purchase Plan shall be
terminated as of the Effective Time. Unless the Stock Purchase Plan is
terminated prior to the Effective Time in accordance with its terms, the Company
shall take such actions as are necessary to cause the last day of the then
current "Purchase Right Period" (as such term is used in the Stock Purchase
Plan) to be the last trading day on which the Company Common Stock is traded on
the Nasdaq National Market immediately prior to the Effective Time (the "Final
Company Exercise Date"); provided that such change shall be conditioned on the
consummation of the Merger. On the Final Company Exercise Date, the Company
shall apply the funds credited as of such date under the Stock Purchase Plan
within each participant's payroll withholdings account to the purchase of whole
shares of the Company Common Stock in accordance with the terms of the Stock
Purchase Plan.
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6.5 Post Merger Employment Benefits; Employment and Noncompetition
Agreements.
(a) Employees of the Company who become employed by Parent or any
controlled subsidiary thereof after the Effective Time will become eligible to
participate in the same standard employee benefit plans as are generally
available to similarly situated employees of Parent, and such employees shall
receive credit for all service with the Company for purposes of any "employee
benefit plan" as such term is defined in Section 3(3) of ERISA. Upon the request
of Parent, any Company Employee Plans shall be terminated immediately prior to
the Effective Time.
(b) Concurrently with the execution of this Agreement, (i) Parent
and the Company shall have entered into amendments to the employment agreements
between the Company and Mary Ellen Weaver, Thomas Vadnais and David Connell,
respectively, which amendments shall become effective at the Effective Time, and
(ii) Parent and the Company shall have entered into noncompetition agreements
with Mary Ellen Weaver and David Connell, respectively, which agreements shall
become effective at the Effective Time (collectively, "Employment and
Noncompetition Agreements").
(c) Promptly following the Effective Time, Parent will evaluate
the equity incentive compensation of the employees of the Company who become
employed by Parent or its subsidiaries after the Effective Time, and, if deemed
appropriate in Parent's sole discretion, in light of the equity incentive
compensation provided to similarly situated employees of Parent, Parent will
make grants of equity incentive compensation to such employees.
6.6 Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, the Parent will fulfill
and honor and will cause the Surviving Corporation to fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and any of its subsidiaries and their respective
directors and officers (each, an "Indemnified Party") existing prior to the date
hereof; provided, that Parent and the Surviving Corporation shall have no
obligation to indemnify an Indemnified Party thereunder in respect of claims,
liabilities or damages arising out of a knowing and willful breach of a
representation or covenant made by the Company in this Agreement caused by such
Indemnified Party. From and after the Effective Time, such obligations shall be
the joint and several obligations of Parent and the Surviving Corporation and,
by executing this Agreement, Parent hereby assumes such obligations. The
Articles of Incorporation and Bylaws of the Surviving Corporation will contain
the same provisions with respect to indemnification and elimination of liability
for monetary damages as are set forth in the Articles of Incorporation and
Bylaws of the Company, which provisions will not be amended, repealed or
otherwise modified from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, as of the date hereof or any
time after the date hereof and prior to the Effective Time, were directors,
officers, employees or agents of the Company or its subsidiaries, unless such
modification is required by law.
(b) This Section 6.6 will survive any termination of this
Agreement and the consummation of the Merger at the Effective Time and will be
binding on all successors and assigns
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of the Parent or the Surviving Corporation. In the event that Parent or the
Surviving Corporation or any of their successors or assigns consolidates with or
merges into any other person and shall not be the continuing or surviving
corporations or entities of such consolidation or merger, then and in each such
case, proper provisions shall be made so that the successors and assigns of the
Parent or the Surviving Corporation shall assume the obligations of the Parent
or the Surviving Corporation, as the case may be, set forth in this Section 6.6.
6.7 Directors. Promptly upon the acceptance for payment of, and payment
for, any shares of the Company Common Stock by Sub pursuant to the Offer, and
provided that the Minimum Tender Condition has been satisfied, Sub shall be
entitled to designate for appointment or election to the Company's Board of
Directors, upon written notice to Company, such number of persons so that the
designees of Sub constitute the same percentage (but in no event less than a
majority) of the Company's Board of Directors (rounded up to the next whole
number) as the percentage of Shares acquired in connection with the Offer. The
Company shall, upon Sub's request, promptly increase the size of the Board of
Directors and/or secure the resignations of such number of directors as is
necessary to enable Sub's designees to be elected to the Board of Directors and
shall cause Sub's designees to be so elected. Subject to applicable law, the
Company shall take all action requested by Parent necessary to effect any such
election, including mailing to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). Following the election
or appointment of Sub's designees pursuant to this Section 6.7, and prior to the
Effective Time, any amendment or termination of this Agreement, extension for
the performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights hereunder, shall require the concurrence of a
majority of the Company's directors (including, if Parent so elects, a majority
of the Company's non-employee directors) (or the concurrence of the sole
remaining director, if there is only one remaining) then in office who are
directors of the Company on the date hereof, or are directors (other than
directors designated by Sub in accordance with this Section 6.7) designated by
such persons or person to fill any vacancy (the "Continuing Directors").
6.8 Fees and Expenses. All fees and expenses incurred in connection with
the Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the Offer or the Merger is consummated; provided, however, that (i) the
Company agrees to promptly assume and pay, or reimburse Parent for, all
reasonable legal, accounting and investment banking fees payable and expenses
incurred by Parent in connection with this Agreement and the transactions
contemplated hereby, up to a maximum of $1,000,000, following termination of
this Agreement pursuant to Sections 8.1(c) or 8.1(d) hereof, and (ii) Parent
agrees to promptly assume and pay, or reimburse the Company for, all reasonable
legal, accounting and investment banking fees payable and expenses incurred by
the Company in connection with this Agreement and the transactions contemplated
hereby, up to a maximum of $1,000,000, following termination of this Agreement
pursuant to Section 8.1(e) hereof.
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6.9 Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review, comment upon and concur with, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Offer and the Merger, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with the Nasdaq National Market.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
6.10 Shareholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any of the
transactions contemplated by this Agreement until the purchase of the Company
Common Stock pursuant to the Offer or the prior termination of this Agreement in
accordance with its terms, and thereafter, shall give Parent the opportunity to
direct the defense of such litigation and, if Parent so chooses to direct such
litigation, Parent shall give the Company and its directors an opportunity to
participate in such litigation; provided, however, that no settlement thereof
shall be agreed to without Parent's consent, which consent shall not be
unreasonably withheld, and provided, further that no settlement requiring a
payment by a director shall be agreed to without such director's consent.
6.11 Retention. The Company shall take all commercially reasonable
efforts to induce each manager and the employees and consultants of the Company
and its subsidiaries generally to continue to remain employees of the Company
following the Effective Time.
6.12 Grant of Option. The Company hereby grants an option to Sub (or any
other subsidiary of Parent) to purchase such number of Shares, at an aggregate
exercise price of one dollar (or, if greater, the minimum consideration required
under applicable law) as is necessary following consummation of an Offer in
which the Minimum Tender Condition is satisfied in order for Sub (or such other
subsidiary) to own 90% of the outstanding Shares immediately prior to the
Effective Time so that the Short-Form Merger may be effected.
6.13 Convertible Notes. The Company agrees to take all actions required
by the Indenture of the Convertible Notes, dated as of March 24, 1998, between
the Company and State Street Bank and Trust Company of California, N.A., as
Trustee, in connection with the Merger, including under Sections 5.1, 11.1,
13.6, 13.7 and 13.8 thereof.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Effective Time of the following
conditions:
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(a) Company Shareholder Approval. If required by applicable law,
the Company Shareholder Approval shall have been obtained.
(b) HSR Act. All waiting periods, if any, under the HSR Act
relating to the transactions contemplated hereby will have expired or terminated
early and all material foreign antitrust approvals required to be obtained prior
to the Merger in connection with the transactions contemplated hereby shall have
been obtained.
(c) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction, judgment or other order or ruling issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint or
prohibition shall be in effect which would (i) make the Merger or the
acquisition or holding by Parent or its affiliates of Company Common Stock or
Common Stock of the Surviving Corporation illegal or otherwise prevent the
consummation of the Merger, (ii) prohibit Parent's or Sub's ownership or
operation of, or compel Parent or Sub to dispose of or hold separate, all or a
material portion of the business or assets of Purchaser, the Company or any
subsidiary thereof, (iii) compel Parent, Sub or the Company to dispose of or
hold separate all or a material portion of the business or assets of Parent or
any of its subsidiaries or the Company or any of its subsidiaries, or (iv)
impose material limitations on the ability of Parent or Sub or their affiliates
effectively to exercise full ownership and financial benefits of the Surviving
Corporation, or impose any material condition to the Offer, this Agreement or
the Merger which would be adverse to Parent.
7.2 Conditions to Parent's and Sub's Obligation to Effect the Merger.
The respective obligations of Parent and Sub to effect the Merger are subject to
the satisfaction or waiver on or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company set forth
in this Agreement shall be true and correct in all material respects on the
Closing Date as if made on and as of the Closing Date, and Parent shall have
received a certificate with respect to the foregoing signed by a duly authorized
officer of the Company;
(b) the Company shall have performed in all material respects
each of its covenants and obligations under this Agreement required to be
performed by it at or prior to the Effective Time pursuant to the terms hereof,
and Parent shall have received a certificate with respect to the foregoing
signed by a duly authorized officer of the Company;
(c) there shall not have occurred any Material Adverse Change in
the Company or any event that is reasonably likely to result in a Material
Adverse Effect to the Company and its subsidiaries taken as a whole;
(d) there shall not be pending or overtly threatened any suit,
action or proceeding brought by or on behalf of any Governmental Entity (or the
staff of the Federal Trade Commission or the staff of the Antitrust Division of
the Department of Justice shall have recommended the
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commencement of such), any shareholder of Company or any other person or party
(but only if such shareholder suit, action or proceeding is deemed by Parent to
have a reasonable likelihood of success) directly or indirectly (i) challenging
the acquisition by Parent or Sub of any shares of the Company Common Stock,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, or alleging that any such acquisition or other transaction relates
to, involves or constitutes a breach of fiduciary duty by the Company's
directors or a violation of federal securities law or applicable corporate law,
(ii) seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of a material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or to compel the Company or
Parent to dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose material
limitations on the ability of Parent or Sub to acquire or hold, or exercise full
rights of ownership of, any shares of the Company Common Stock accepted for
payment pursuant to the Offer including without limitation the right to vote the
Company Common Stock accepted for payment by it on all matters properly
presented to the shareholders of the Company, (iv) seeking to prohibit Parent or
any of its subsidiaries from effectively managing or controlling in any material
respect the business or operations of the Company and its subsidiaries taken as
a whole, or (v) seeking to impose a material condition to the Offer, Merger or
Agreement which would be adverse to Parent; and
(e) All third party consents, the failure of which to obtain
would have a Material Adverse Effect on the Company, shall have been obtained.
7.3 Conditions to the Company's Obligation to Effect the Merger. The
obligation of the Company to effect the Merger are subject to the satisfaction
or waiver on or prior to the Effective Time of the following conditions:
(a) the representations and warranties of Parent and Sub set
forth in this Agreement shall be true and correct in all material respects on
the Closing Date as if made on and as of the Closing Date, and the Company shall
have received a certificate with respect to the foregoing signed by duly
authorized officers of Parent and Sub; and
(b) Parent and Sub shall have performed in all material respects
each of its covenants and obligations under this Agreement required to be
performed by it at or prior to the Effective Time pursuant to the terms hereof,
and the Company shall have received a certificate with respect to the foregoing
signed by duly authorized officers of Parent and Sub.
7.4 Conditions to the Short-Form Merger. Notwithstanding the foregoing
provisions of this Article VII, the only conditions to Parent's and Sub's
obligation to effect the Short-Form Merger, if the Short-Form Merger may be
effected pursuant to applicable law, shall be the conditions set forth in
Section 7.1 (b) and (c).
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of matters presented in
connection with the Merger by the shareholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either Parent or the Company,
(i) if the Merger shall not have been consummated on or
prior to January 31, 2000; provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(i) shall not be available to any party whose
action or failure to act has been a principal cause of or resulted in the
failure of the Merger to occur on or before such date and such action or failure
to act constitutes a breach of this Agreement;
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, decree or ruling
or other action shall have become final and nonappealable; or
(iii) if the required approval of the Company's
shareholders contemplated by this Agreement shall not have been obtained by
reason of the failure to obtain the required vote at the Shareholders Meeting
duly convened therefor and at any adjournment thereof; provided, however, that
the right to terminate this Agreement pursuant to this Section 8.1(b)(iii) shall
not be available to the Company where the failure to obtain the Company
Shareholder Approval shall have been caused by (i) the action or failure to act
of the Company and such action or failure to act constitutes a material breach
by the Company of this Agreement or (ii) a breach of the Shareholder Tender and
Voting Agreement by any party thereto other than Parent;
(c) by Parent, in the event that (i) the Company's Board of
Directors or any committee thereof shall have failed to recommend the Offer, the
Merger, this Agreement, or the Company Shareholder Approval, including any
failure to include such recommendation in the Schedule 14D-9 or the Proxy
Statement, or shall have so resolved; (ii) the Company's Board of Directors or
any committee thereof shall have withdrawn or modified (including by amendment
of the Schedule 14D-9 or Proxy Statement) in a manner adverse to Parent or Sub
its approval or recommendation of the Offer, the Merger, this Agreement, or the
Company Shareholder Approval, shall have approved or recommended any takeover
proposal (including a superior proposal), or shall have resolved to do any of
the foregoing; (iii) the Company shall have entered into any letter of intent or
similar document, agreement or commitment with respect to any takeover proposal
(including a superior proposal) or the Company's Board of Directors or any
committee thereof shall have resolved to do so; (iv) the Company's Board of
Directors or any committee thereof upon a
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request to reaffirm the Company's approval or recommendation of the Offer, the
Merger or this Agreement, shall have failed to do so within two business days
after such request is made or shall have so resolved; or (v) a tender or
exchange offer relating to securities of Company shall have been commenced by a
person unaffiliated with Parent, and the Company shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Exchange Act,
within 10 business days after such tender or exchange offer is first published
sent or given, a statement disclosing that Company recommends rejection of such
tender or exchange offer;
(d) by Parent, if any of the representations and warranties of
the Company set forth in this Agreement shall have failed to be true and correct
in any material respect as of the date of the Agreement or shall have ceased to
be true and correct in any material respect at any time thereafter, or if the
Company shall have breached or failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it; provided, that if any
such breach or failure (other than a breach of Sections 5.2 or 6.1 or any other
breach that has caused irreparable harm, which may not be cured) is curable by
the Company through the exercise of its reasonable efforts, then Parent may not
terminate this Agreement under this subsection (d) until ten business days after
written notice thereof has been given to the Company by Parent and unless at
such time the matter has not been cured; or
(e) by the Company, if any of the representations and warranties
of Parent or Sub set forth in this Agreement shall have failed to be true and
correct in any material respect as of the date of the Agreement or shall have
ceased to be true and correct in any material respect at any time thereafter, or
if Parent or Sub shall have breached or failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of Parent or Sub to be performed or complied with by it; provided,
that if any such breach or failure (other than a breach that has caused
irreparable harm, which may not be cured) is curable by Parent or Sub through
the exercise of its reasonable efforts, then the Company may not terminate this
Agreement under this subsection (e) until ten business days after written notice
thereof has been given to Parent and Sub by the Company and unless at such time
the matter has not been cured.
8.2 Effect of Termination. In the event of termination of this Agreement
by either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than the provisions of the last
sentence of Section 6.2, Section 6.8, this Section 8.2 and Article IX; provided,
however, to the extent that such termination results from the willful and
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement, such breaching party may be held
liable for damages for such breach; and, provided, further, that (x) in the
event this Agreement is terminated by Parent pursuant to Section 8.1(c), the
Company shall pay or cause to be paid a fee equal to $15,000,000 in immediately
available funds within two business days of such termination, and (y) in the
event this Agreement is terminated by Parent pursuant to Sections 8.1(b)(i) or
8.1(d), or by Parent or the Company pursuant to Section 8.1(b)(iii), and, prior
to such termination, a third party has publicly announced a takeover proposal,
the consummation of which would constitute an Acquisition Event (as defined
below), and within 12 months following the termination of this Agreement, an
Acquisition Event is consummated or the
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Company enters into an agreement providing for an Acquisition Event, the Company
shall pay or cause to be paid to Parent a fee equal to $15,000,000 in
immediately available funds within two business days after the consummation of
such Acquisition Event or the entry by the Company into such agreement;
provided, that if such Acquisition Event provides for a consideration per Share
less than the Offer Price but greater than the closing price per Share on the
Nasdaq National Market on the trading day immediately prior to the public
announcement of the execution of this Agreement (the "Pre-Offer Price"), the fee
payable by the Company pursuant to this clause (y) shall be $10,000,000, and if
such Acquisition Event provides for a consideration per Share less than or equal
to the Pre-Offer Price, no fee shall be payable by the Company pursuant to this
clause (y). For the purposes of this Agreement, "Acquisition Event" shall mean
any of the following transactions (other than the transactions contemplated by
this Agreement): (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the shareholders of the Company immediately preceding
such transaction hold less than 50% of the aggregate equity interests in the
surviving or resulting entity of such transaction, (ii) a sale or other
disposition by the Company of assets representing in excess of 50% of the
aggregate fair market value of the Company's business immediately prior to such
sale, or (iii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or issuance by the Company), directly or
indirectly, of beneficial ownership or a right to acquire beneficial ownership
of shares representing in excess of 50% of the voting power of the then
outstanding shares of capital stock of the Company. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.
8.3 Amendment. This Agreement may be amended by the parties at any time
before or after obtaining the Company Shareholder Approval, if Company
Shareholder Approval is required by law; provided, however, that after any
required Company Shareholder Approval, there shall not be made any amendment
that by law requires further approval by such shareholders without the further
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.3, waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors; provided, however, that in the event that Sub's designees
are appointed or
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<PAGE> 47
elected to the Board of Directors of the Company as provided in Section 6.7,
after the acceptance for payment of shares of the Company Common Stock pursuant
to the Offer and prior to the Effective Time, the affirmative vote of the
Continuing Directors shall be required by the Company to (i) materially amend or
terminate this Agreement by the Company, (ii) exercise or waive any of the
Company's rights or remedies under this Agreement or (iii) extend the time for
performance of Parent's and Sub's respective obligations under this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan 48334
Attention: President
Facsimile: 248-737-1822
with copies to:
Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan 48334
Attention: General Counsel
Facsimile: 248-737-7690
(b) if to the Company, to
Data Processing Resources Corporation
18301 Von Karman Avenue, Suite 600
Irvine, California 92612
Attention: Chief Executive Officer
Facsimile: 949-752-1190
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<PAGE> 48
with a copy to:
Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, California 92626
Attention: James W. Loss, Esq.
Facsimile: 714-549-3244
9.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company, any change or effect that is or would
be materially adverse to the Company and its subsidiaries, taken as a whole,
taking into account the business, properties, assets, employees, financial
condition or results of operations of the Company and its subsidiaries,
excluding those changes, effects and developments that directly result from (i)
the announcement of the Offer or the Merger, (ii) general economic conditions,
or (iii) conditions generally affecting the industry in which the Company
competes (provided, that such conditions do not adversely affect the Company
disproportionately); provided, that in any litigation regarding this definition
where the principal change or effect at issue involves the termination for any
reason of the employment of the Company's or its subsidiaries' employees, the
Company shall be required to sustain the burden of proving by clear and
convincing evidence that the exclusion set forth in clause (i) of this sentence
is applicable.
(c) "person" means an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity;
(d) a "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person;
(e) "superior proposal" has the meaning assigned thereto in
Section 6.1; and
(f) "takeover proposal" has the meaning assigned thereto in
Section 5.2.
9.4 Interpretation. When a reference is made in this Agreement to an
Article, a Section, Exhibit or Schedule, such reference shall be to an Article
or a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this
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<PAGE> 49
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined herein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. References
to a person are also to its permitted successors and assigns. References to a
law or statute in this Agreement include all amendments and modifications to
such law or statute, and all rules and regulations promulgated thereunder.
References to the Company in this Agreement refer also to the Company's
subsidiaries unless the context would clearly indicate otherwise.
9.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
9.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
exhibits and schedules hereto, the Shareholder Tender and Voting Agreement, the
Employment and Noncompetition Agreements, and the Confidentiality Agreement
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and, other than Section 6.6, are not intended
to confer upon any person other than the parties any rights or remedies
hereunder.
9.7 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of California, regardless of the laws that might
otherwise govern under applicable principles of conflict of laws thereof.
9.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub and Parent of any of its
obligations under this Agreement. This Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
9.9 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Michigan or in the State of California or in Michigan or
California state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
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<PAGE> 50
consents to submit itself to the personal jurisdiction and venue of any Federal
court located in the State of Michigan or the State of California or any
Michigan or California state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction or choice
of venue by motion or other request for leave from any such court and (c) agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a Federal or
state court sitting in the State of Michigan or in the State of California.
REST OF THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE> 51
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
COMPUWARE CORPORATION
By: /s/ Peter Karmanos, Jr.
---------------------------------------
Name: Peter Karmanos, Jr.
Title: Chairman of the Board and Chief
Executive Officer
COMP ACQUISITION CO.
By: /s/ Thomas Costello, Jr.
---------------------------------------
Name: Thomas Costello, Jr.
Title: Vice President
DATA PROCESSING RESOURCES CORPORATION
By: /s/ Mary Ellen Weaver
---------------------------------------
Name: Mary Ellen Weaver
Title: Chairman of the Board and Chief
Executive Officer
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<PAGE> 52
EXHIBIT A
Offer
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of the Company Common
Stock after the termination or withdrawal of the Offer), to pay for any shares
of the Company Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of the Company Common Stock which would
represent at least 91% of the shares of Company Common Stock outstanding at the
close of business on the business day immediately preceding the day on which the
Offer will expire or terminate (the "Minimum Tender Condition") and (ii) any
waiting period under the HSR Act applicable to the purchase of shares of the
Company Common Stock pursuant to the Offer shall have expired or been
terminated. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of the Company Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer, or if,
upon the scheduled expiration date of the Offer (as extended) and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exists and is continuing:
(a) there shall be pending or overtly threatened any suit, action
or proceeding brought by or on behalf of any Governmental Entity (or the staff
of the Federal Trade Commission or the staff of the Antitrust Division of the
Department of Justice shall have recommended the commencement of such), any
shareholder of Company or any other person or party (but only if such
shareholder suit, action or proceeding is deemed by Parent to have a reasonable
likelihood of success) directly or indirectly (i) challenging the acquisition by
Parent or Sub of any shares of the Company Common Stock, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by this Agreement, or
alleging that any such acquisition or other transaction relates to, involves or
constitutes a breach of fiduciary duty by the Company's directors or a violation
of federal securities law or applicable corporate law, (ii) seeking to prohibit
or limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, or to compel the Company or Parent to dispose of or hold
separate any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, as a result of the Offer or any of the other transactions contemplated by
this Agreement, (iii) seeking to impose material limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership of, any
shares of the Company Common Stock accepted for payment pursuant to the Offer
including without limitation the right to vote the Company Common Stock accepted
for payment by it on all matters properly presented to the shareholders of the
Company, (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively managing or controlling in any material respect the business or
operations of the Company and its subsidiaries taken as a whole, or (v)
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<PAGE> 53
seeking to impose a material condition to the Offer, Merger or Agreement which
would be adverse to Parent.
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any Governmental
Entity or court, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any Material Adverse Change in the
Company and its subsidiaries taken as a whole or any event that is reasonably
likely to result in a Material Adverse Change in the Company and its
subsidiaries taken as a whole;
(d) (i) the Company's Board of Directors or any committee thereof
shall have failed to recommend the Offer, the Merger, this Agreement, or the
Company Shareholder Approval, including any failure to include such
recommendation in the Schedule 14D-9 or the Proxy Statement, or shall have so
resolved; (ii) the Company's Board of Directors or any committee thereof shall
have withdrawn or modified (including by amendment of the Schedule 14D-9 or
Proxy Statement) in a manner adverse to Parent or Sub its approval or
recommendation of the Offer, the Merger, this Agreement, or the Company
Shareholder Approval, shall have approved or recommended any takeover proposal
(including a superior proposal), or shall have resolved to do any of the
foregoing; (iii) the Company shall have entered into any letter of intent or
similar document, agreement or commitment with respect to any takeover proposal
(including a superior proposal) or the Company's Board of Directors or any
committee thereof shall have resolved to do so; (iv) the Company's Board of
Directors or any committee thereof upon a request to reaffirm the Company's
approval or recommendation of the Offer, the Merger or this Agreement, shall
have failed to do so within two business days after such request is made or
shall have so resolved; or (v) a tender or exchange offer relating to securities
of Company shall have been commenced by a person unaffiliated with Parent, and
the Company shall not have sent to its securityholders pursuant to Rule 14e-2
promulgated under the Exchange Act, within 10 business days after such tender or
exchange offer is first published sent or given, a statement disclosing that
Company recommends rejection of such tender or exchange offer;
(e) any of the representations and warranties of the Company set
forth in this Agreement shall have failed to be true and correct in any material
respect as of the date of the Agreement or shall have ceased to be true and
correct in any material respect at any time thereafter;
(f) the Company shall have breached or failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it;
provided that if any such breach or failure (other than a breach of Sections 5.2
or 6.1 or any other breach that has caused irreparable harm, which may not be
cured) is curable by the Company through the exercise of its reasonable efforts,
then Parent may not terminate the Offer under this subsection (f) until ten
business days after written notice thereof has been given to the Company by
Parent or Sub and unless at such time the matter has not been cured;
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<PAGE> 54
(g) this Agreement shall have been terminated in accordance with
its terms;
(h) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the Nasdaq National
Market, (2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(3) the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States and having
a Material Adverse Effect or materially adversely affecting (or materially
delaying) the consummation of the Offer, (4) any limitation or proposed
limitation (whether or not mandatory) by any U.S. governmental authority or
agency, or any other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions, or (5) in the case
of any of the situations described in clauses (1) through (4) inclusive existing
at the date of commencement of the Offer, a material escalation or worsening
thereof;
(i) (1) any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Sub, any of its
affiliates, or any group of which any of them is a member, shall have acquired
beneficial ownership of more than 10% of the outstanding shares of Company
Common Stock, (2) shall have entered into a definitive agreement or an agreement
in principle with the Company with respect to a tender offer or exchange offer
for any shares of Company Common Stock or merger, consolidation or other
business combination with or involving the Company or any of its subsidiaries or
(3) shall have otherwise announced a tender offer with respect to shares of
Company Common Stock; provided, that upon satisfaction and maintenance of the
Minimum Tender Condition, this condition (i) shall only consist of clause (2)
hereof;
(j) any bankruptcy proceedings shall have been instituted with
respect to the Company and not dismissed;
(k) any third party consent, the failure of which to obtain would
have a Material Adverse Effect on the Company, shall not have been obtained;
which, in the sole judgment of Sub or Parent, in any such case, and regardless
of the circumstances giving rise to any such condition (other than any action or
inaction by Parent or any of its subsidiaries which constitutes a breach of this
Agreement), makes it inadvisable to proceed with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Sub and Parent and
their respective affiliates and may be asserted by Sub or Parent regardless of
the circumstances giving rise to such condition (other than any action or
inaction by Parent or any of its subsidiaries which constitutes a breach of this
Agreement) or may be waived by Sub and Parent in whole or in part at any time
and from time to time in their sole discretion. The failure by Parent, Sub or
any other affiliate of Parent at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
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<PAGE> 55
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
REST OF THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE> 1
Exhibit (c)(2)
AMENDMENT TO THE AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amendment to the Amended and Restated Employment Agreement (the
"AMENDMENT") is made as of June 23, 1999, to be effective as of the Closing Date
(as defined below) by and between Compuware Corporation, a Michigan corporation
(the "COMPANY"), Data Processing Resources Corporation, a California corporation
("DPRC"), and Mary Ellen Weaver (the "EMPLOYEE").
WHEREAS, DPRC and Employee are parties to that certain Amended and
Restated Employment Agreement dated as of May 26, 1999 (the "EMPLOYMENT
AGREEMENT").
WHEREAS, DPRC and Employee desire to amend the Employment Agreement in
connection with the transactions contemplated by that certain Agreement and Plan
of Merger dated as of the same date as this Amendment among Compuware
Corporation, Comp Acquisition Co. and Data Processing Resources Corporation (the
"MERGER AGREEMENT").
WHEREAS, Employee's employment with DPRC pursuant to the terms of this
Amendment shall serve as a material inducement for the Company to execute the
Merger Agreement and consummation of the transactions contemplated thereby.
WHEREAS, this Amendment shall be effective as of the Closing Date, as
such term is defined in the Merger Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set
forth in this Amendment, the Company, DPRC and Employee agree to amend the
Employment Agreement in the manner as set forth below:
1. Delete and replace Section 1.2 of the Employment Agreement in its
entirety as follows:
This Agreement, as amended, effective as of the Closing Date as
defined in the Agreement and Plan of Merger dated as of June 23,
1999 among Compuware Corporation, Comp Acquisition Co. and Data
Processing Resources Corporation (the "Merger Agreement")
("Effective Date") shall, unless sooner terminated pursuant to
the terms set forth below, terminate on the third anniversary of
the Effective Date. The period during which Employee is employed
hereunder is referred to as the "Term."
2. Delete and replace Section 2.1 of the Employment Agreement in its
entirety as follows:
Employee shall serve in a position with the Company equivalent
to a senior manager of the Company as may be determined by the
Chief Executive Officer of Compuware Corporation, the parent
<PAGE> 2
company of DPRC (the "Company"), or his designee, during the
Term and shall devote the Employee's full-time efforts to such
duties and responsibilities as may be assigned to the Employee
from time to time by, and shall report to such Chief Executive
Officer, or his designee.
3. Delete Section 6.1 of the Employment Agreement in its entirety.
4. Delete and replace the first sentence of Section 12.2 of the Employment
Agreement in its entirety as follows:
It is understood by Employee that Employee shall be considered
to be an employee "at will" and DPRC may terminate Employee's
employment at any time without Cause (as defined below) by
giving Employee thirty (30) days' advance written notice of such
termination.
5. Insert subsection (vi) in Section 12.7(c) of the Employment Agreement as
follows:
(vi) Notwithstanding the foregoing provisions of Section
12.7(c) of the Agreement or any other provisions of the
Agreement to the contrary, the Employee agrees that (A)
if Employee is appointed by DPRC or the Company to a
position equivalent to a senior management position of
the Company following the Effective Date pursuant to
Section 2.1 of the Agreement and any amendment thereto,
it shall not constitute "Good Reason" for termination
under the provisions of the Employment Agreement and any
amendment thereto and (B) any change in Employee's
duties, responsibilities or reporting responsibility
from those in effect prior to the Effective Date, will
not be deemed to constitute "Good Reason" under the
Agreement and any amendment thereto; provided that
Employee shall not be required to report to any person
who reported to Employee prior to the Effective Date.
6. Insert the following sentences at the end of Section 3 of the Exhibit A,
as attached to the Employment Agreement as follows:
Notwithstanding any provision in the Agreement, the Company will
provide medical and life insurance benefits required by the
Agreement only if such benefits can be provided pursuant to any
existing insurance plan or policy (including self insurance
programs). If any such benefit cannot be so provided, the
2
<PAGE> 3
Company will make reasonably comparable benefits available to
Employee (including conversion benefits) at a cost not
substantially higher than the cost of providing such benefits to
an employee of the Company.
7. Delete and replace Section 6 of the Exhibit A, as attached to the
Employment Agreement, in its entirety as follows:
Subject to the determinations of the Compensation Committee of
the Company, Employee shall be eligible to participate in the
Company's executive bonus plan which is generally provided to
other executives in similar employment position as the Employee
and with comparable experience and similar responsibilities with
the Company as the Employee.
8. Delete and replace the first sentence of Section 8 of the Exhibit A, as
attached to the Employment Agreement, in its entirety and insert a new
second sentence prior to the current second sentence as follows:
With respect to any stock option grants by DPRC prior to the
Closing Date, as defined in the Merger Agreement, to the
Employee, such stock options shall vest in full on the Closing
Date as defined in the Merger Agreement. Notwithstanding any
provisions of this Agreement, as amended, to the contrary, any
stock options granted by the Company or DPRC on or after the
Closing Date, as defined in the Merger Agreement, shall be
subject to the terms and conditions of the stock option plan
from which such stock options were granted and in accordance
with the agreement evidencing such stock option grant.
9. To protect the interest of DPRC and the Company, Employee will agree to
sign the Company's standard confidentiality and inventions agreements
that are executed by other employees of the Company as a condition of
employment with the Company.
3
<PAGE> 4
IN WITNESS WHEREOF, the Employee has carefully read and considered the
provisions of this Amendment and agrees that all of the above-stated amendments
are fair and reasonable. The Employee indicates her acceptance of this Amendment
by signing and returning the enclosed copy of the Amendment where indicated
below.
COMPUWARE CORPORATION
By: /s/ Phyllis Recca
---------------------------------
Date: June 23, 1999
-------------------------------
DATA PROCESSING RESOURCES
CORPORATION
By: /s/ Thomas A. Vadnais
---------------------------------
Date: June 23, 1999
-------------------------------
MARY ELLEN WEAVER
/s/ Mary Ellen Weaver
------------------------------------
Mary Ellen Weaver
Date: June 23, 1999
------------------------------
4
<PAGE> 5
DATA PROCESSING RESOURCES CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May
26, 1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and MARY ELLEN WEAVER ("Employee"), with reference to the
following:
A. DPRC and Employee are parties to that certain Employment Agreement
dated August 1, 1995, as amended pursuant to that certain letter of
understanding dated March 11, 1996 (the "Prior Employment Agreement").
B. DPRC and Employee now wish to amend and restate the Prior Employment
Agreement as set forth in this Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set
forth below, DPRC and Employee agree as follows:
1. EMPLOYMENT AND TERM.
1.1 DPRC agrees to continue to employ Employee, and Employee
agrees to continue to be employed by DPRC, on the terms and
conditions described below.
1.2 The Prior Employment Agreement commenced on August 1, 1995 for
a term of four (4) years. This Agreement shall be effective as
of the date first set forth above (the "Effective Date") and
shall, unless sooner terminated pursuant to the terms set
forth below, terminate on the third anniversary of the
Effective Date. The period during which Employee is employed
by DPRC hereunder is referred to as the "Term." The Term shall
be automatically extended for a period of twelve (12)
additional months unless DPRC shall notify Employee in
writing, not less than six (6) months prior to the end of the
initial term or any extension thereof, of DPRC's intention
that the Term not be extended.
2. DUTIES.
2.1 Employee shall serve as the Chief Executive Officer and as
Chairman of the Board of Directors of DPRC during the Term and
shall devote her full-time efforts to such duties and
responsibilities as may be assigned to her from time to time
by, and shall report to, the Board of Directors of DPRC. To
the extent that Employee performs services for or on behalf of
Information Technology Resources, Inc. ("ITR") during the term
of that certain Management Services Agreement between DPRC and
ITR dated as of August 1, 1997, or any extension or renewal
thereof, including but not limited to membership on the Board
of
<PAGE> 6
Directors of ITR, then for the purposes of this Agreement,
such services (the "ITR Services") shall (a) be deemed to
comply with the aforementioned duty of Employee to DPRC, (b)
shall not be deemed to violate any of the covenants of
Employee set forth herein, and (c) shall be deemed to be work
for DPRC and not for any other entity.
2.2 During the Term, DPRC agrees that it will not ask or direct
Employee to relocate her main office or operations outside of
Orange County, California.
2.3 Employee shall serve without additional compensation in one or
more offices, as a Director or as a member of any committee of
the Board of Directors of DPRC or of any direct or indirect
subsidiary of DPRC.
3. COMPENSATION.
3.1 As consideration for the performance of her duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and
incorporated herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as
otherwise set forth in this Agreement, the Compensation will
constitute the full and exclusive consideration to be received
by Employee for all services performed by Employee in
connection with DPRC's employment of Employee, and for the
performance of all her promises and obligations under this
Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in
force, benefit plans for the benefit of its employees or
certain of its employees which may include, but not be limited
to, group life insurance, medical insurance, etc. DPRC may
terminate any or all such plans at any time and may choose not
to adopt any additional or replacement plans. Employee's
rights under any benefit plans now in force or later adopted
by DPRC shall be governed solely by the terms of such plans;
provided, however, that in no event shall Employee's rights
under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. DUTY TO DEVOTE FULL TIME AND AVOID CONFLICT OF INTEREST. During the
Term, Employee shall devote her full-time efforts to her duties as an
employee of DPRC and shall not, directly or indirectly, engage or
participate in any activities which are in conflict with the best
interests of DPRC.
5. COMPLIANCE WITH RULES AND REGULATIONS. During the Term, Employee shall
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may
from time to time be adopted or modified, so long as they are uniformly
applied to all employees.
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6. NON-COMPETITION AND NON-SOLICITATION BY EMPLOYEE.
6.1 During the Term, Employee shall not engage in any activity
competitive with or adverse to DPRC's business or welfare,
whether alone, as a partner, or as an officer, director,
employee or shareholder of any other corporation and shall not
otherwise undertake planning for or the organization of any
business activity competitive with DPRC's business or combine
or conspire with other employees or representatives of DPRC
for the purpose of organizing any such competitive business
activity; provided, however, that Employee may own up to one
percent (1%) of the outstanding stock of any publicly traded
corporation.
6.2 It is understood that Employee will gain knowledge and make
contacts with DPRC's customers and clients (sometimes
collectively referred to in this Agreement as the "Clients"
and individually as a "Client") and prospective clients of
DPRC in the course of his employment. In recognition of this
understanding, Employee agrees as follows:
(a) For a period of two (2) years following the
termination of her employment, Employee shall not
interfere or attempt to interfere in any way with any
existing relationships of DPRC with any Client with
whom DPRC has participated in at least one project or
placement within the two (2) years prior to the
termination of her employment, and shall not solicit,
divert or take away or attempt to solicit, divert or
take away any business of DPRC that is either under
contract or in negotiation at the time of the
termination of her employment.
(b) For a period of two (2) years following the
termination of her employment, Employee shall not
interfere or compete in any way with any proposal
efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed
for a specific Client or potential client of DPRC) at
the time of the termination of her employment.
(c) For a period of two (2) years following the
termination of her employment, Employee shall not
make use, in a manner competitive with the business
of DPRC, of any of her personal relationships or
business contacts developed during her employment or
prior to her employment.
(d) For a period of two (2) years following the
termination of her employment, Employee shall not
induce, solicit or influence or attempt to induce,
solicit or influence any person who is engaged as an
employee or otherwise by DPRC, to terminate his or
her employment or other engagement with DPRC.
7. TRADE SECRETS OF DPRC. Employee acknowledges and understands that
during her employment, she will have access to and will utilize and
review information which constitutes valuable, important and
confidential trade secrets, as that term is interpreted
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under the Uniform Trade Secrets Act (California Civil Code Section 3426
et seq.) and/or confidential and proprietary material and information
of or relating to the business of DPRC necessary for the successful
conduct of DPRC's business. This information includes, but is not
limited to: (a) listings of and data regarding the Clients (past and
current); (b) information regarding potential customers and clients;
(c) data relating to the personnel, supervisory structure and
procedures of the Clients; (d) information regarding specific computer
technician staffing needs of the Clients; (e) information as to the
identity, whereabouts, capabilities and availability of contractors in
DPRC's database; (f) information regarding bidding. billing and pricing
practices; (g) information regarding the nature and type of services
rendered to the Clients; and (h) other methodologies, computer
programs, employee and contractor resumes, employee databases,
processes, compilations of information, results of proposals, job
notes, reports and records (all of which information is sometimes
referred to in this Agreement as the "Secrets"). The foregoing
notwithstanding, Secrets shall not include information or data which is
(i) in the public domain, (ii) generally known in the information
technology staffing services industry, (iii) already known to Employee
as of the date she began her employment with DPRC, or (iv) rightfully
disclosed to Employee outside of the scope of his employment with DPRC
by a third party not under a duty of confidentiality to DPRC. Employee
understands further that the Secrets have been and will be accumulated
by Employee and other personnel at DPRC at considerable expense to DPRC
(including but not limited to compensation paid to DPRC personnel
dealing with the Secrets and the Clients), and that DPRC has and will
continue to expend its resources in order to maintain actively and
vigorously the confidentiality of the Secrets, as such information is
extremely valuable to DPRC, and well worth the expense of enforcement
and preservation of such confidentiality. Accordingly, Employee agrees
as follows:
(a) All of the Secrets shall be safeguarded and treated
as confidential by Employee.
(b) Any and all data, notes, letters, computer programs
and data, reports, telephone records and all other
written documentation relating to the business of
DPRC (including but not limited to the Secrets) that
may be collected, compiled, written, reviewed or
conceived by Employee from or by reason of services
performed by Employee for DPRC shall become the
absolute property of DPRC, and Employee shall not
assert or establish a claim for any statutory or
common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest
confidence and shall not (i) disclose any Secrets to
any person, corporation, firm, or other entity,
either during the Term or thereafter, or (ii) use any
Secrets in Employee's subsequent business or
employment without the prior express written
authorization of DPRC; provided, however, that
Employee may disclose Secrets to the extent required
to do so by a subpoena lawfully issued in a judicial
proceeding or arbitration.
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(d) Employee shall not otherwise commit any act which
shall compromise the confidentiality of any Secrets,
including but not limited to making a copy of such
property (whether electronic, paper or otherwise)
without the prior express written authorization of
DPRC.
8. CONFIDENTIAL INFORMATION OF CLIENTS. All ideas, concepts, information
and written material disclosed to Employee by DPRC, or acquired from
any Client, and all financial, accounting, statistical, personnel, and
business data and plans of the Clients, are and shall remain the sole
and exclusive property and proprietary information of DPRC, or such
Client, as the case may be, and are disclosed in confidence by DPRC or
permitted to be acquired from the Clients in reliance on Employee's
agreement to maintain them in confidence and not to use or disclose
them to any other person except in furtherance of DPRC's business.
9. RETURN OF INFORMATION. At the time of the termination of her
employment, Employee shall deliver promptly to DPRC all notes, books,
electronic data (regardless of storage media), correspondence and other
written or graphical records (including all copies thereof) in
Employee's possession or under Employee's control relating to any
business, work, Clients or any other aspect of DPRC, whether or not
containing any Secrets, including but not limited to each original and
all copies of all or any part thereof.
10. COOPERATION. Both during the Term and thereafter, Employee shall sign
all papers, give evidence and testimony and, at DPRC's expense, perform
all acts which, in DPRC's opinion, are necessary, proper or expedient
to carry out and fulfill the purposes and intents of this Agreement.
11. REMEDIES; INJUNCTIVE RELIEF. Employee acknowledges and agrees that, in
the event of a breach or threatened breach by Employee of any of the
provisions of this Agreement, DPRC shall be entitled to a preliminary
and a permanent injunction in order to prevent or restrain any such
breach by Employee or by Employee's partners, agents, representatives,
servants, employers, employees, and/or any and all persons directly or
indirectly acting for or with Employee, in addition to and not in
limitation of any other rights, remedies, or damages available to DPRC
at law or in equity.
12. TERMINATION OF EMPLOYMENT.
12.1 DPRC may terminate Employee's employment at any time with
"Cause" (as defined below). In the event that DPRC terminates
Employee's employment with Cause, DPRC shall be obligated only
to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise
agreed in writing or as otherwise provided by this Agreement,
DPRC shall have no further obligation to Employee under this
Agreement by way of compensation or otherwise. Notwithstanding
the foregoing, to the extent the grounds for any proposed
termination with Cause are capable of being cured or remedied
by Employee, DPRC shall not terminate Employee with Cause
unless the Board of Directors of DPRC has first counseled
Employee as to how she could effect such
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<PAGE> 10
cure or remedy and Employee is given at least thirty (30) days
to do so. A determination of whether Employee has
satisfactorily effected such cure or remedy shall be promptly
made by a majority of the disinterested directors of the Board
of Directors at the end of the period provided to Employee for
such cure or remedy and such determination shall be final.
12.2 DPRC may terminate Employee's employment at any time without
Cause (as defined below) by giving Employee thirty (30) days'
advance written notice of such termination. Employee may
resign for Good Reason (as defined below) by giving DPRC
thirty (30) days' advance written notice of such resignation.
In the event that DPRC terminates Employee without Cause, or
Employee resigns for Good Reason, DPRC shall pay to Employee
the base salary of the Compensation and provide the same
health and life insurance benefits through the effective date
of such termination or resignation and, thereafter, until the
earlier to occur of (i) the expiration of twenty-four (24)
months after the effective date of such termination, (ii) the
date upon which Employee becomes employed on a full-time basis
(including but not limited to self-employment, but only if
Employee holds herself out to the public as being a
self-employed consultant or other businesswoman), or (iii) the
date upon which Employee violates any of Sections 6 through
10, inclusive. In addition, DPRC shall pay Employee, at such
time following completion of the fiscal year-end audit when
all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which
Employee was entitled during her employment (which proration
shall be based on a fraction, the numerator of which is the
number of calendar days during the fiscal year during which
Employee was employed prior to the effective date of such
termination or resignation and the denominator of which is
365).
12.3 Employee may resign without Good Reason at any time by giving
DPRC forty-five (45) days' advance written notice of such
resignation. In the event that Employee resigns without Good
Reason, DPRC shall be obligated only to pay the base salary of
the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no
further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if
Employee becomes Disabled (as defined below) by giving
Employee thirty (30) days' advance written notice of such
termination. In the event that DPRC terminates Employee's
because Employee has become Disabled, DPRC shall pay to
Employee the base salary of the Compensation and provide the
same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to
occur of (i) the expiration of twenty-four (24) calendar
months after the effective date of such termination of
employment, (ii) the date upon which Employee becomes employed
on a full-time basis (including but not limited to
self-employment, but only if Employee holds herself out to the
public as being a
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self-employed consultant or other businesswoman), or (iii) the
date upon which Employee violates any of Sections 6 through
10, inclusive. In addition, DPRC shall pay Employee, at such
time following completion of the fiscal year-end audit when
all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which
Employee was entitled during her employment (which proration
shall be based on a fraction, the numerator of which is the
number of calendar days during the fiscal year during which
Employee was employed prior to the effective date of such
termination and the denominator of which is 365).
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of
Employee's employment pursuant to Sections 12.1, 12.2, 12.3 or
12.4 of this Agreement.
12.6 This Agreement will terminate immediately upon Employee's
death. In such event, DPRC shall pay to her estate (a) the
base salary of the Compensation through the date of Employee's
death and, thereafter, until the expiration of twenty-four
(24) calendar months after the date of Employee's death, and,
(b) at such time following completion of the fiscal year-end
audit when all other senior executive bonuses are paid, the
pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during her employment (which
proration shall be based on a fraction, the numerator of which
is the number of calendar days during the fiscal year during
which Employee was employed prior to Employee's death and the
denominator of which is 365), and DPRC shall have no further
obligation to Employee's estate under this Agreement by way of
compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee
during her employment (including but not limited to
inactions) which constitute either (i) gross
insubordination, gross negligence, unethical or
criminal behavior constituting a felony under federal
or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer
and/or director of DPRC, or (ii) a violation of any
of Sections 4 through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform
her duties under this Agreement is impaired, due to
sickness, physical or mental impairment or injury by
more than twenty-five (25%) for a period of six (6)
consecutive months or for nine (9) months in any
consecutive twelve (12) month period. In the event
Employee disputes DPRC's determination that she is
Disabled, Employee shall give written notice of such
dispute to DPRC during the thirty (30) day notice
period prior to the proposed effective date
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of such termination, and Employee and DPRC shall
thereupon each select, within ten (10) days of such
notice from Employee, a physician to evaluate whether
Employee is Disabled.
Such physicians shall complete their evaluation and
report to the Board of Directors within ten (10)
days. If such physicians do not agree as to whether
Employee is Disabled, they shall promptly select a
third physician to further evaluate Employee, whose
conclusion on such matter shall be rendered within
ten (10) days of his or her selection and shall be
final and binding on Employee and DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of
duties inconsistent with her position,
duties, responsibilities or status with
DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any
removal of Employee from or any failure to
reelect Employee to the office of Chief
Executive Officer of DPRC, except, in any
such case, with Employee's consent or in
connection with the termination of his
employment pursuant to Section 12.1 (with
Cause), 12.3 (resignation without Good
Reason), 12.4 (disability), 12.6 (death) or
retirement; provided, however, that Good
Reason shall not include the assignment to
Employee of any duties or responsibilities
of one or more management positions within
her competence to the extent that any such
position is not filled at any time and it is
necessary to perform the duties and
responsibilities of such position pending
the hiring of a person to hold such
position, and provided that DPRC is actively
seeking to fill such position during the
period of such assignment;
(ii) a purported reduction by DPRC in the
Compensation in effect on the date hereof or
as the same may be increased from time to
time during the term of this Agreement or
any failure by DPRC to reimburse Employee or
provide any material benefits set forth in
Exhibit A;
(iii) any failure by DPRC to continue in effect
any benefit plan or arrangement (including,
without limitation, DPRC's incentive bonus
plan, profit sharing plan, stock option
plans, medical insurance plans, disability
insurance plans, life insurance plans or
vacation pay plans, with such generally
applicable amendments thereto as may be
approved from time to time in good faith by
DPRC's Board of Directors) in which Employee
is participating or other plans providing
Employee with substantially similar benefits
(each, a "Benefit Plan"), or any action by
DPRC which would
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materially and adversely affect Employee's
participation in or materially reduce
Employee's benefits under any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption
of this Agreement by any successor or assign
of DPRC, if such successor or assign asserts
the position that it is not bound by the
provisions hereof, or
(v) any failure by DPRC to comply with any
material provision of this Agreement;
provided, however, that no such action shall be
considered to constitute Good Reason unless and until
Employee has given DPRC written notice of, and thirty
(30) days' opportunity to cure or remedy the specific
action which Employee alleges would constitute Good
Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall
constitute the exclusive rights and remedies available to
Employee relating to or arising from the termination of his
employment, including claims for breach of contract or in
tort; provided, however, that Employee shall be entitled to
pursue any and all available legal remedies based on any claim
that such termination constituted a violation of applicable
federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by
DPRC, whether oral or written, express or implied, formal or
informal, are intended, nor shall they be construed to limit
the right or ability of DPRC to terminate Employee's
employment or the right or ability of Employee to resign as
set forth above. Except as otherwise agreed in writing or as
otherwise provided by this Agreement, upon termination of
Employee's employment, neither DPRC nor Employee shall have
any further obligation to each other by way of compensation or
otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of
DPRC, by agreement in form and substance reasonably
satisfactory to Employee, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement
in the same manner and to the same extent that DPRC would be
required to perform this Agreement if no such succession or
assignment had taken place. In any such event, the term "DPRC"
as used in this Agreement shall mean any such successor or
assign which executes and delivers the agreement provided for
in the immediately preceding sentence or which otherwise
becomes bound by the terms and provisions of this Agreement by
operation of law.
12.11 Employee shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by
seeking other employment or
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otherwise. Except as expressly provided herein, no payment or
benefit provided for under this Agreement shall be reduced by
any compensation earned by Employee as the result of
employment by another employer after the date of termination
with DPRC. Except as expressly provided herein, the provisions
of this Agreement, and any payment or benefit provided for
hereunder, shall not reduce any amounts otherwise payable, or
in any way diminish Employee's existing rights, or rights
which would accrue solely as a result of the passage of time,
under any DPRC Benefit Plan, employment agreement or other
contract, plan or arrangement.
13. INDEMNIFICATION FOR INCOME TAX DEFICIENCY. In the event that the
deduction for federal income tax purposes is disallowed for any part of
(a) the compensation paid to Employee or to Thomas A. Ballantyne III,
or (b) any part of the management fee paid to Ballantyne Computer
Service, Inc. ("BCSI"), during DPRC's fiscal years ending in 1992,
1993, 1994 or 1995 (the "Relevant Years") and DPRC is thereby required
to pay an income tax deficiency, then Employee agrees to pay to DPRC
(i) the income tax deficiency payable by DPRC with respect to
compensation paid to Employee during the Relevant Years, and (ii)
$200,000 of the income tax deficiency payable by DPRC with respect to
compensation paid by DPRC to BCSI during the Relevant Years. Employee
agrees that any payment due DPRC from Employee pursuant to this
Paragraph 13 shall first be paid by reducing Employee's base salary and
incentive bonus payable under this Agreement, and Employee shall, not
later than one year after DPRC's payment of such income tax
deficiencies, pay DPRC any then unpaid portion of her obligation under
this Paragraph 13. As used herein, the term "income tax deficiency" is
intended by DPRC and Employee to include any and all interest which
shall have accrued and shall be payable with respect to any such
deficiency assessed against DPRC.
14. MISCELLANEOUS PROVISIONS.
14.1 In the event that any of the provisions of this Agreement
shall be held to be invalid or unenforceable, then all other
provisions shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had
not been included in this Agreement. In the event that any
provision relating to the time period of any restriction
imposed by this Agreement shall be declared by a court of
competent jurisdiction to exceed the maximum time period which
such court deems reasonable and enforceable, then the time
period of restriction deemed reasonable and enforceable by the
court shall become and shall thereafter be the maximum time
period. In the event that any of the provisions of this
Agreement shall be determined to cause a disallowance of any
"pooling of interests" accounting treatment for any merger,
acquisition or consolidation of DPRC with another entity, such
provisions shall be deemed to be deleted and of no force and
effect and all other provisions shall nevertheless continue to
be valid and enforceable and read as though the deleted
provisions had not been included in this Agreement.
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14.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties
hereto.
14.3 This Agreement shall be construed and enforced according to
the laws of the State of California, excluding its choice of
law rules.
14.4 This Agreement supersedes all previous correspondence,
promises, representations, and agreements, if any, either
written or oral, between DPRC and Employee. No provision of
this Agreement may be modified except by a writing signed by
Employee and by the President of DPRC (or by such other person
as may be expressly authorized to sign such writing by the
Board of Directors of DPRC).
14.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted
to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served
or deposited in the United States mail, registered or
certified, return receipt requested, postage prepaid,
addressed (i) in the case of notices to DPRC, to the President
of DPRC at DPRC's headquarters office at such time, and (ii)
in the case of notices to Employee, to Employee's home address
as set forth on the employment records of DPRC, or to such
other address as such party shall have specified most recently
by written notice. Notices shall be deemed given on the date
of service if personally served. Notices mailed as provided
herein shall be deemed given on the third business day
following the date so mailed.
14.6 Should any party institute any action or proceeding to enforce
this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any
provision hereof, or for a declaration of rights hereunder,
the prevailing party in any such action or proceeding shall be
entitled to receive from the other party all costs and
expenses, including reasonable attorneys', accountants' and
experts' fees, incurred by the prevailing party in connection
with such action or proceeding.
15. ACKNOWLEDGMENT BY EMPLOYEE. Employee (i) has carefully read and
considered the provisions of this Agreement, (ii) has had an
opportunity to review the terms of this Agreement with legal counsel of
her choosing, (iii) fully understands the extent and impact of the
terms and provisions of this Agreement, and (iv) has executed this
Agreement voluntarily.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By: /s/ Thomas A. Vadnais /s/ Mary Ellen Weaver
-------------------------------- --------------------------------
Thomas A. Vadnais Mary Ellen Weaver
President
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EXHIBIT A
COMPENSATION OF MARY ELLEN WEAVER
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY: Employee's base salary shall be $300,000 per
year, paid in at least bi-weekly installments.
Employee's base annual salary shall be reviewed
and adjusted no less frequently than once per
year. In no event, and under no circumstances,
shall Employee's annual salary be reduced below
the most recent annual salary.
2. VACATION: During the Term, Employee shall be entitled to
six (6) weeks of paid vacation time per
calendar year (plus such other time as may be
permitted by the Board); provided, however,
that any such vacation time, if not used, will
be subject to DPRC's limitations on carrying
forward unused vacation time, pursuant to which
Employee's accrued vacation time may not exceed
ten (10) weeks at any time; and, provided
further, that Employee shall use her best
efforts to coordinate with the Board of
Directors of DPRC the dates upon which she uses
his vacation so as to minimize the negative
impact upon DPRC occasioned by Employee's
absence. Employee shall not be entitled to take
in excess of four (4) weeks vacation at any one
time, except by the written consent of at least
one non-employee member of the Board of
Directors of DPRC, or upon request of DPRC in
connection with Employee's leave of absence for
family, medical or other reasons, as permitted
by law.
3. OTHER BENEFITS: During the Term, Employee shall be entitled to
participate in and receive benefits under all
profit-sharing plans, pension plans, group
medical plans and other benefit plans for the
payment of additional compensation or benefits
to employees of DPRC that DPRC maintains for
senior executive employees. In the event
Employee is terminated without Cause or due to
Disability, or resigns for Good Reason,
Employee shall be entitled to continuation of
health and life insurance coverage for the
period of time set forth in Paragraphs 12.2 and
12.4 of this Agreement (the "DPRC Insurance
Coverage Period"). During the DPRC
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Insurance Coverage Period, DPRC shall pay the
employer portion of the cost of such coverage
at the same levels offered to its senior
executive employees, and Employee shall pay the
employee portion of the cost of such coverage
at the same level paid by its senior executive
employees. Unless Employee was terminated for
Cause, DPRC shall continue, following the DPRC
Insurance Coverage Period, to offer group
medical and life insurance at the same rates
and levels of coverage as are offered to its
then-current senior executive employees, until
such time as Employee reaches age 65 (the
"Employee Insurance Coverage Period."). During
the Employee Insurance Coverage Period, if
Employee accepts insurance coverage from DPRC,
Employee shall pay the full cost of the
premiums for such coverage. During either the
DPRC Insurance Coverage Period or the Employee
Insurance Coverage Period, Employee shall have
the option of choosing Preferred Provider
Organization, Exclusive Provider Organization,
Health Maintenance Organization or such other
types of plans or coverages as are available to
DPRC's then-current senior executive employees.
4. AUTOMOBILE ALLOWANCE: DPRC to pay Employee's automobile lease monthly
payments of not more than $1,500, as well as
all gasoline, insurance premiums, registration
fees and repair and maintenance costs of such
automobile. During the Term, Employee shall be
permitted twice to exchange her leased vehicle
for a new one of equal or comparable value to
that of the then currently leased vehicle to be
replaced, similarly equipped.
5. BUSINESS EXPENDITURES: Employee may be authorized to incur reasonable
expenses for promoting and conducting the
business of DPRC, including but not limited to
expenditures for entertainment and travel, in
such amounts and at such times as shall be
determined and approved by DPRC. DPRC shall
reimburse Employee monthly for all such
approved business expenses upon presentation of
reasonable documentation establishing the
amount, date, place and essential character of
the expenditures.
6. INCENTIVE BONUS: Employee's incentive bonus for each fiscal year
shall provide for a maximum bonus of up to 200%
of his base salary for such year and shall be
subject to such terms and conditions as shall
be determined in good faith by the
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Board of Directors, with the recommendation of
and in consultation with the Compensation
Committee of the Board of Directors. The
incentive bonus may be based on financially
oriented components or upon Employee's
individual accomplishments or both. At the
request of Employee, within ten (10) business
days after the commencement of each fiscal
quarter, DPRC shall advance to Employee up to
one-eighteenth (1/18th) of the maximum bonus
payable by DPRC to Employee hereunder. The
incentive bonus earned for a fiscal year of
DPRC (less the aggregate amount of all advances
made by DPRC to Employee with respect to such
fiscal year) shall be paid not later than
thirty (30) calendar clays following the review
and approval by the Board of Directors of DPRC
of the final financial statement results of the
audit for said fiscal year by DPRC's
independent auditors. In the event that the
aggregate amount of advances made by DPRC to
Employee hereunder during any fiscal year
exceeds the amount of the incentive bonus
earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of
the determination of such amount, shall pay
such excess to DPRC. The current incentive
bonus plan is based on DPRC reaching its
internal target levels of budgeted operating
income for the fiscal year, as it may be
amended as a result of acquisitions for the
year included (the "Target OI"). A total of 50%
of Employee's base salary shall be paid if the
Target OI is achieved by DPRC. For each 5%
above Target OI achieved by DPRC, Employee
shall receive an additional 10% of base salary
up to the maximum 200% of base salary.
7. INDEMNIFICATION: DPRC shall enter into a directors and officers
Indemnification Agreement with Employee
pursuant to which DPRC will he required to
indemnify Employee against personal liability
for acts of DPRC to the maximum extent
permitted by law.
8. STOCK OPTIONS: With respect to all future stock option grants
by DPRC to Employee, such stock options shall
vest in full following a "change of control"
during the Term. For purposes of such stock
option grants, the term "change of control"
shall mean (i) any merger or consolidation
where DPRC is not the continuing or surviving
corporation or pursuant to which all or
substantially all of the shares of DPRC's
Common Stock are converted into cash, other
property or
15
<PAGE> 20
securities of another corporation, other than,
in either case, a merger or consolidation in
which the shares of DPRC's Common Stock
outstanding immediately prior to such merger or
consolidation represent or are converted into
securities representing more than 50% of the
voting power of the surviving corporation in
such merger or consolidation or the parent of
such corporation, (ii) any sale, lease,
exchange or other transfer (in one transaction
or a series of related transactions) of all, or
substantially all, of the assets of DPRC, (iii)
the approval by the shareholders of DPRC of any
plan or proposal for the liquidation or
dissolution of DPRC, (iv) any "person" (as such
term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) shall become the
beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 35% or more of
DPRC's outstanding Common Stock after the date
hereof, or (v) there shall be any change of
control of a nature which would be required to
be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated
under the Exchange Act or any successor
regulation of substantially similar import,
regardless of whether DPRC is subject to such
reporting requirement at such time.
In addition, in the event Employee is
terminated without Cause, as defined in
Paragraph 12.7 of this Agreement, the members
of the Board of Directors who are not directly
involved in terminating Employee shall consider
accelerating vesting of any unvested options
held by Employee based upon all of the facts
and circumstances surrounding the termination,
including Employee's performance and tenure
with DPRC; provided, however, that the
disinterested Directors involved in such
determination shall be under no obligation to
accelerate vesting of options and shall
specifically not do so if such acceleration
would cause a disallowance of "pooling of
interests" accounting in any DPRC merger
transactions.
9. ESTATE PLANNING: DPRC will reimburse Employee for all reasonable
attorney's fees, in an amount not to exceed
$5,000 per calendar year, incurred in
connection with creating, reviewing and/or
revising Employee's will and estate plan.
16
<PAGE> 21
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the Employment Agreement (the "AMENDMENT") is made as
of June 23, 1999, to be effective as of the Closing Date (as defined below) by
and between Compuware Corporation, a Michigan corporation (the "COMPANY"), Data
Processing Resources Corporation, a California corporation ("DPRC"), and Thomas
A. Vadnais (the "EMPLOYEE").
WHEREAS, DPRC and Employee are parties to that certain Employment
Agreement dated as of May 4, 1999 (the "EMPLOYMENT AGREEMENT").
WHEREAS, DPRC and Employee desire to amend the Employment Agreement in
connection with the transactions contemplated by that certain Agreement and Plan
of Merger dated as of the same date as this Amendment among Compuware
Corporation, Comp Acquisition Co. and Data Processing Resources Corporation (the
"MERGER AGREEMENT").
WHEREAS, Employee's employment with DPRC pursuant to the terms of this
Amendment shall serve as a material inducement for the Company to execute the
Merger Agreement and consummation of the transactions contemplated thereby.
WHEREAS, this Amendment shall be effective as of the Closing Date, as
such term is defined in the Merger Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set
forth in this Amendment, the Company, DPRC and Employee agree to amend the
Employment Agreement in the manner as set forth below:
1. Delete and replace Section 1.2 of the Employment Agreement in its
entirety as follows:
This Agreement, as amended, effective as of the Closing Date as
defined in the Agreement and Plan of Merger dated as of June 23,
1999 among Compuware Corporation, Comp Acquisition Co. and Data
Processing Resources Corporation (the "Merger Agreement")
("Effective Date") shall, unless sooner terminated pursuant to
the terms set forth below, terminate on the third anniversary of
the Effective Date. The period during which Employee is employed
hereunder is referred to as the "Term."
2. Delete and replace Section 2.1 of the Employment Agreement in its
entirety as follows:
Employee shall serve in a position with the Company equivalent
to a senior manager of the Company as may be determined by the
Chief Executive Officer of Compuware Corporation, the parent
company of DPRC (the "Company"), or his designee, during the
Term and shall devote the Employee's full-time efforts to such
<PAGE> 22
duties and responsibilities as may be assigned to the Employee
from time to time by, and shall report to such Chief Executive
Officer, or his designee.
3. Delete and replace the first sentence of Section 12.2 of the Employment
Agreement in its entirety as follows:
It is understood by Employee that Employee shall be considered
to be an employee "at will" and DPRC may terminate Employee's
employment at any time without Cause (as defined below) by
giving Employee thirty (30) days' advance written notice of such
termination.
4. Insert subsection (vi) in Section 12.7(c) of the Employment Agreement as
follows:
(vi) Notwithstanding the foregoing provisions of Section 12.7(c) of
the Agreement or any other provisions of the Agreement to the
contrary, the Employee agrees that (A) if Employee is appointed
by DPRC or the Company to a position equivalent to a senior
management position of the Company following the Effective Date
pursuant to Section 2.1 of the Agreement and any amendment
thereto, it shall not constitute "Good Reason" for termination
under the provisions of the Employment Agreement and any
amendment thereto and (B) any change in Employee's duties,
responsibilities or reporting responsibility from those in
effect prior to the Effective Date, will not be deemed to
constitute "Good Reason" under the Agreement and any amendment
thereto; provided that Employee shall not be required to report
to any person who reported to Employee prior to the Effective
Date.
5. Delete and replace Section 6 of the Exhibit A, as attached to the
Employment Agreement, in its entirety as follows:
Subject to the determinations of the Compensation Committee of
the Company, Employee shall be eligible to participate in the
Company's executive bonus plan which is generally provided to
other executives in similar employment position as the Employee
and with comparable experience and similar responsibilities with
the Company as the Employee.
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<PAGE> 23
6. Delete and replace the third sentence of Section 8 of the Exhibit A, as
attached to the Employment Agreement, in its entirety and insert a new
fourth sentence prior to the current fourth sentence as follows:
Such stock option shall be in the form generally approved for
grants to officers of DPRC; provided, however, that such stock
option, granted prior to the Closing Date (as defined in the
Merger Agreement) shall vest in full on the Closing Date (as
defined in the Merger Agreement). Notwithstanding any provisions
of this Agreement, as amended, to the contrary, any stock
options granted by the Company or DPRC on or after the Closing
Date, as defined in the Merger Agreement, shall be subject to
the terms and conditions of the stock option plan from which
such stock options were granted and in accordance with the
agreement evidencing such stock option grant.
7. To protect the interest of DPRC and the Company, Employee will agree to
sign the Company's standard confidentiality and inventions agreements
that are executed by other employees of the Company as a condition of
employment with the Company.
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<PAGE> 24
IN WITNESS WHEREOF, the Employee has carefully read and considered the
provisions of this Amendment and agrees that all of the above-stated amendments
are fair and reasonable. The Employee indicates his acceptance of this Amendment
by signing and returning the enclosed copy of the Amendment where indicated
below.
COMPUWARE CORPORATION
By: /s/ Phyllis Recca
---------------------------------
Date: June 23, 1999
-------------------------------
DATA PROCESSING RESOURCES
CORPORATION
By: /s/ Mary Ellen Weaver
---------------------------------
Date: June 23, 1999
-------------------------------
THOMAS A. VADNAIS
/s/ Thomas A. Vadnais
------------------------------------
Thomas A. Vadnais
Date: June 23, 1999
-------------------------------
4
<PAGE> 25
DATA PROCESSING RESOURCES CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May
4, 1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and THOMAS A. VADNAIS ("Employee").
1. EMPLOYMENT AND TERM.
1.1 DPRC agrees to employ Employee, and Employee agrees to be
employed by DPRC, on the terms and conditions described below.
1.2 The Agreement shall be effective as of May 4, 1999 or such
other date as Employee may commence his employment with DPRC
with the consent of DRPC (the "Effective Date") and shall,
unless sooner terminated pursuant to the terms set forth
below, terminate on the third anniversary of the Effective
Date. The period during which Employee is employed hereunder
is referred to as the "Term." The Term shall be automatically
extended for a period of twelve (12) additional months unless
DPRC shall notify Employee in writing, not less than six (6)
months prior to the end of the initial term or any extension
thereof, of DPRC's intention that the Term not be extended.
2. DUTIES.
2.1 Employee shall serve as the President and Chief Operating
Officer of DPRC during the Term and shall devote his full-time
efforts to such duties and responsibilities as may be assigned
to him from time to time by, and shall report to, the Chief
Executive Officer of DPRC.
2.2 Employee shall serve without additional compensation in one or
more offices, as a Director or as a member of any committee of
the Board of Directors of DPRC or of any direct or indirect
subsidiary of DPRC.
3. COMPENSATION.
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and
incorporated herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as
otherwise set forth in this Agreement, the Compensation will
constitute the full and exclusive consideration to be received
by Employee for all services performed by Employee in
connection with DPRC's employment of Employee, and for the
performance of all his promises and obligations under this
Agreement.
<PAGE> 26
3.3 Aside from the Compensation, DPRC may adopt, or continue in
force, benefit plans for the benefit of its employees or
certain of its employees which may include, but not be limited
to, group life insurance, medical insurance, etc. DPRC may
terminate any or all such plans at any time and may choose not
to adopt any additional or replacement plans. Employee's
rights under any benefit plans now in force or later adopted
by DPRC shall be governed solely by the terms of such plans;
provided, however, that in no event shall Employee's rights
under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. DUTY TO DEVOTE FULL TIME AND AVOID CONFLICT OF INTEREST. During the
Term, Employee shall devote his full-time efforts to his duties as an
employee of DPRC and shall not, directly or indirectly, engage or
participate in any activities which are in conflict with the best
interests of DPRC.
5. COMPLIANCE WITH RULES AND REGULATIONS. During the Term, Employee shall
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may
from time to time be adopted or modified, so long as they are uniformly
applied to all employees.
6. NON-COMPETITION AND NON-SOLICITATION BY EMPLOYEE.
6.1 During the Term, Employee shall not engage in any activity
competitive with or adverse to DPRC's business or welfare,
whether alone, as a partner, or as an officer, director,
employee or shareholder of any other corporation and shall not
otherwise undertake planning for or the organization of any
business activity competitive with DPRC's business or combine
or conspire with other employees or representatives of DPRC
for the purpose of organizing any such competitive business
activity; provided, however, that Employee may own up to one
percent (1 %) of the outstanding stock of any publicly traded
corporation.
6.2 It is understood that Employee will gain knowledge and make
contacts with DPRC's customers and clients (sometimes
collectively referred to in this Agreement as the "Clients"
and individually as a "Client") and prospective clients of
DPRC in the course of his employment. In recognition of this
understanding, Employee agrees as follows:
(a) For a period of two (2) years following the
termination of his employment, Employee shall not
interfere or attempt to interfere in any way with any
existing relationships of DPRC with any Client with
whom DPRC has participated in at least one project or
placement within the two (2) years prior to the
termination of his employment, and shall not solicit,
divert or take away or attempt to solicit, divert or
take away any business of DPRC that is either under
contract or in negotiation at the time of the
termination of his employment.
2
<PAGE> 27
(b) For a period of two (2) years following the
termination of his employment, Employee shall not
interfere or compete in any way with any proposal
efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed
for a specific Client or potential client of DPRC) at
the time of the termination of his employment.
(c) For a period of two (2) years following the
termination of his employment, Employee shall not
make use, in a manner competitive with the business
of DPRC, of any of his personal relationships or
business contacts developed during his employment or
prior to his employment.
(d) For a period of two (2) years following the
termination of his employment, Employee shall not
induce, solicit or influence or attempt to induce,
solicit or influence any person who is engaged as an
employee or otherwise by DPRC, to terminate his or
his employment or other engagement with DPRC.
7. TRADE SECRETS OF DPRC. Employee acknowledges and understands that
during his employment, he will have access to and will utilize and
review information which constitutes valuable, important and
confidential trade secrets, as that term is interpreted under the
Uniform Trade Secrets Act (California Civil Code Section 3426 et seq.)
and/or confidential and proprietary material and information of or
relating to the business of DPRC necessary for the successful conduct
of DPRC's business. This information includes, but is not limited to:
(a) listings of and data regarding the Clients (past and current); (b)
information regarding potential customers and clients; (c) data
relating to the personnel, supervisory structure and procedures of the
Clients; (d) information regarding specific computer technician
staffing needs of the Clients; (e) information as to the identity,
whereabouts, capabilities and availability of contractors in DPRC's
database; (f) information regarding bidding, billing and pricing
practices; (g) information regarding the nature and type of services
rendered to the Clients; and (h) other methodologies, computer
programs, employee and contractor resumes, employee databases,
processes, compilations of information, results of proposals, job
notes, reports and records (all of which information is sometimes
referred to in this Agreement as the "Secrets"). The foregoing
notwithstanding, Secrets shall not include information or data which is
(i) in the public domain, (ii) generally known in the information
technology staffing services industry, (iii) already known to Employee
as of the date he began his employment with DPRC, or (iv) rightfully
disclosed to Employee outside of the scope of his employment with DPRC
by a third party not under a duty of confidentiality to DPRC. Employee
understands further that the Secrets have been and will be accumulated
by Employee and other personnel at DPRC at considerable expense to DPRC
(including but not limited to compensation paid to DPRC personnel
dealing with the Secrets and the Clients), and that DPRC has and will
continue to expend its resources in order to maintain actively and
vigorously the confidentiality of the Secrets, as such information is
extremely valuable to DPRC, and well worth the expense of enforcement
and preservation of such confidentiality. Accordingly, Employee agrees
as follows:
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<PAGE> 28
(a) All of the Secrets shall be safeguarded and treated
as confidential by Employee.
(b) Any and all data, notes, letters, computer programs
and data, reports, telephone records and all other
written documentation relating to the business of
DPRC (including but not limited to the Secrets) that
may be collected, compiled, written, reviewed or
conceived by Employee from or by reason of services
performed by Employee for DPRC shall become the
absolute property of DPRC, and Employee shall not
assert or establish a claim for any statutory or
common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest
confidence and shall not (i) disclose any Secrets to
any person, corporation, firm, or other entity,
either during the Term or thereafter, or (ii) use any
Secrets in Employee's subsequent business or
employment without the prior express written
authorization of DPRC; provided, however, that
Employee may disclose Secrets to the extent required
to do so by a subpoena lawfully issued in a judicial
proceeding or arbitration.
(d) Employee shall not otherwise commit any act which
shall compromise the confidentiality of any Secrets,
including but not limited to making a copy of such
property (whether electronic, paper or otherwise)
without the prior express written authorization of
DPRC.
8. CONFIDENTIAL INFORMATION OF CLIENTS. All ideas, concepts, information
and written material disclosed to Employee by DPRC, or acquired from
any Client, and all financial, accounting, statistical, personnel, and
business data and plans of the Clients, are and shall remain the sole
and exclusive property and proprietary information of DPRC, or such
Client, as the case may be, and are disclosed in confidence by DPRC or
permitted to be acquired from the Clients in reliance on Employee's
agreement to maintain them in confidence and not to use or disclose
them to any other person except in furtherance of DPRC's business.
9. RETURN OF INFORMATION. At the time of the termination of his
employment, Employee shall deliver promptly to DPRC all notes, books,
electronic data (regardless of storage media), correspondence and other
written or graphical records (including all copies thereof) in
Employee's possession or under Employee's control relating to any
business. work, Clients or any other aspect of DPRC, whether or not
containing any Secrets, including but not limited to each original and
all copies of all or any part thereof.
10. COOPERATION. Both during the Term and thereafter, Employee shall sign
all papers, give evidence and testimony and, at DPRC's expense, perform
all acts which, in DPRC's opinion, are necessary, proper or expedient
to carry out and fulfill the purposes and intents of this Agreement.
4
<PAGE> 29
11. REMEDIES; INJUNCTIVE RELIEF. Employee acknowledges and agrees that, in
the event of a breach or threatened breach by Employee of any of the
provisions of this Agreement, DPRC shall be entitled to a preliminary
and a permanent injunction in order to prevent or restrain any such
breach by Employee or by Employee's partners, agents, representatives,
servants, employers, employees, and/or any and all persons directly or
indirectly acting for or with Employee, in addition to and not in
limitation of any other rights, remedies, or damages available to DPRC
at law or in equity.
12. TERMINATION OF EMPLOYMENT.
12.1 DPRC may terminate Employee's employment at any time with
"Cause" (as defined below). In the event that DPRC terminates
Employee's employment with Cause, DPRC shall be obligated only
to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise
agreed in writing or as otherwise provided by this Agreement,
DPRC shall have no further obligation to Employee under this
Agreement by way of compensation or otherwise. Notwithstanding
the foregoing, to the extent the grounds for any proposed
termination with Cause are capable of being cured or remedied
by Employee, DPRC shall not terminate Employee with Cause
unless the Chief Executive Officer of DPRC has first counseled
Employee as to how he could effect such cure or remedy and
Employee is given at least thirty (30) days to do so. A
determination of whether Employee has satisfactorily effected
such cure or remedy shall be promptly made by a majority of
the disinterested directors of the Board of Directors at the
end of the period provided to Employee for such cure or remedy
and such determination shall be final.
12.2 DPRC may terminate Employee's employment at any time without
Cause (as defined below) by giving Employee thirty (30) days'
advance written notice of such termination. Employee may
resign for Good Reason (as defined below) by giving DPRC
thirty (30) days' advance written notice of such resignation.
In the event that DPRC terminates Employee without Cause, or
Employee resigns for Good Reason, DPRC shall pay to Employee
the base salary of the Compensation and provide the same
health and life insurance benefits through the effective date
of such termination or resignation and, thereafter, until the
earlier to occur of (i) the expiration of twelve (12) months
after the effective date of such termination, (ii) the date
upon which Employee becomes employed on a full-time basis
(including but not limited to self-employment, but only if
Employee holds himself out to the public as being a
self-employed consultant or other businessman), or (iii) the
date upon which Employee violates any of Sections 6 through
10, inclusive. In addition, DPRC shall pay Employee, at such
time following completion of the fiscal year-end audit when
all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which
Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the
number of calendar days during the fiscal year during which
Employee was employed prior to the effective date of
5
<PAGE> 30
such termination or resignation and the denominator of which
is 365). If DPRC's medical and/or life insurance plans do not
allow Employee's continued participation in such plan or plans
during the period described above, then DPRC shall pay to
Employee, in monthly installments, from the date on which
Employee's participation in such medical and/or life
insurance, as applicable, is prohibited for the remainder of
the time period described in the third sentence of this
Section 12.2, the monthly premium or premiums which had been
payable by DPRC with respect to Employee for such discontinued
medical and/or life insurance, as applicable.
12.3 Employee may resign without Good Reason at any time by giving
DPRC forty-five (45) days' advance written notice of such
resignation. In the event that Employee resigns without Good
Reason, DPRC shall be obligated only to pay the base salary of
the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no
further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if
Employee becomes Disabled (as defined below) by giving
Employee thirty (30) days' advance written notice of such
termination. In the event that DPRC terminates Employee's
because Employee has become Disabled, DPRC shall pay to
Employee the base salary of the Compensation and provide the
same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to
occur of (i) the expiration of twelve (12) calendar months
after the effective date of such termination of employment,
(ii) the date upon which Employee becomes employed on a
full-time basis (including but not limited to self-employment,
but only if Employee holds himself out to the public as being
a self-employed consultant or other businessman), or (iii) the
date upon which Employee violates any of Sections 6 through
10, inclusive. In addition, DPRC shall pay Employee, at such
time following completion of the fiscal year-end audit when
all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which
Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the
number of calendar days during the fiscal year during which
Employee was employed prior to the effective date of such
termination and the denominator of which is 365). If DPRC's
medical and/or life insurance plans do not allow Employee's
continued participation in such plan or plans during the
period described above, then DPRC shall pay to Employee, in
monthly installments, from the date on which Employee's
participation in such medical and/or life insurance, as
applicable, is prohibited for the remainder of the time period
described in the second sentence of this Section 12.4, the
monthly premium or premiums which had been payable by DPRC
with respect to Employee for such discontinued medical and/or
life insurance, as applicable.
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<PAGE> 31
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of
Employee's employment pursuant to Sections 12.1, 12.2, 12.3 or
12.4 of this Agreement.
12.6 This Agreement will terminate immediately upon Employee's
death. In such event, DPRC shall pay to his estate (a) the
base salary of the Compensation through the date of Employee's
death and, thereafter, until the expiration of twelve (12)
calendar months after the date of Employee's death, and, (b)
at such time following completion of the fiscal year-end audit
when all other senior executive bonuses are paid, the
pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which
proration shall be based on a fraction, the numerator of which
is the number of calendar days during the fiscal year during
which Employee was employed prior to Employee's death and the
denominator of which is 365), and DPRC shall have no further
obligation to Employee's estate under this Agreement by way of
compensation or otherwise.
12.7 As used in this Agreement. the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee
during his employment (including but not limited to
inactions) which constitute either (i) gross
insubordination, gross negligence, unethical or
criminal behavior constituting a felony under federal
or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer
and/or director of DPRC, or (ii) a violation of any
of Sections 4 through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform
his duties under this Agreement is impaired, due to
sickness, physical or mental impairment or injury, by
more than twenty-five (25%) for a period of six (6)
consecutive months or for nine (9) months in any
consecutive twelve (12) month period. In the event
Employee disputes DPRC's determination that he is
Disabled, Employee shall give written notice of such
dispute to DPRC during the thirty (30) day notice
period prior to the proposed effective date of such
termination, and Employee and DPRC shall thereupon
each select, within ten (10) days of such notice from
Employee, a physician to evaluate whether Employee is
Disabled. Such physicians shall complete their
evaluation and report to the Board of Directors
within ten (10) days. If such physicians do not agree
as to whether Employee is Disabled, they shall
promptly select a third physician to further evaluate
Employee, whose conclusion on such matter shall be
rendered within ten (10) days of his or her selection
and shall be final and binding on Employee and DPRC.
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<PAGE> 32
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of
duties inconsistent with his position,
duties, responsibilities or status with
DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any
removal of Employee from or any failure to
reelect Employee to the office of President
and Chief Operating Officer of DPRC, except,
in any such case, with Employee's consent or
in connection with the termination of his
employment pursuant to Section 12.1 (with
Cause), 12.3 (resignation without Good
Reason), 12.4 (disability), 12.6 (death) or
retirement; provided, however, that Good
Reason shall not include the assignment to
Employee of any duties or responsibilities
of one or more management positions within
his competence to the extent that any such
position is not filled at any time and it is
necessary to perform the duties and
responsibilities of such position pending
the hiring of a person to hold such
position, and provided that DPRC is actively
seeking to fill such position during the
period of such assignment;
(ii) a purported reduction by DPRC in the
Compensation in effect on the date hereof or
as the same may be increased from time to
time during the term of this Agreement or
any failure by DPRC to reimburse Employee or
provide any material benefits set forth in
Exhibit A;
(iii) any failure by DPRC to continue in effect
any benefit plan or arrangement (including,
without limitation, DPRC's incentive bonus
plan, profit sharing plan, stock option
plans, medical insurance plans, disability
insurance plans, life insurance plans or
vacation pay plans, with such generally
applicable amendments thereto as may be
approved from time to time in good faith by
DPRC's Board of Directors) in which Employee
is participating or other plans providing
Employee with substantially similar benefits
(each, a "Benefit Plan"), or any action by
DPRC which would materially and adversely
affect Employee's participation in or
materially reduce Employee's benefits under
any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption
of this Agreement by any successor or assign
of DPRC, if such successor or assign asserts
the position that it is not bound by the
provisions hereof; or
(v) any failure by DPRC to comply with any
material provision of this Agreement;
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<PAGE> 33
provided, however, that no such action shall
be considered to constitute Good Reason
unless and until Employee has given DPRC
written notice of, and thirty (30) days'
opportunity to cure or remedy the specific
action which Employee alleges would
constitute Good Reason if not so cured or
remedied and DPRC has failed to effect such
cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall
constitute the exclusive rights and remedies available to
Employee relating to or arising from the termination of his
employment, including claims for breach of contract or in
tort; provided, however, that Employee shall be entitled to
pursue any and all available legal remedies based on any claim
that such termination constituted a violation of applicable
federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by
DPRC, whether oral or written, express or implied, formal or
informal, are intended, nor shall they be construed to limit
the right or ability of DPRC to terminate Employee's
employment or the right or ability of Employee to resign as
set forth above. Except as otherwise agreed in writing or as
otherwise provided by this Agreement, upon termination of
Employee's employment, neither DPRC nor Employee shall have
any further obligation to each other by way of compensation or
otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of
DPRC, by agreement in form and substance reasonably
satisfactory to Employee, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement
in the same manner and to the same extent that DPRC would be
required to perform this Agreement if no such succession or
assignment had taken place. In any such event, the term "DPRC"
as used in this Agreement shall mean any such successor or
assign which executes and delivers the agreement provided for
in the immediately preceding sentence or which otherwise
becomes bound by the terms and provisions of this Agreement by
operation of law.
12.11 Employee shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by
seeking other employment or otherwise. Except as expressly
provided herein, no payment or benefit provided for under this
Agreement shall be reduced by any compensation earned by
Employee as the result of employment by another employer after
the date of termination with DPRC. Except as expressly
provided herein, the provisions of this Agreement, and any
payment or benefit provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish
Employee's existing rights, or rights which would accrue
solely as a result of the passage of time, under any DPRC
Benefit Plan, employment agreement or other contract, plan or
arrangement.
9
<PAGE> 34
13. MISCELLANEOUS PROVISIONS.
13.1 In the event that any of the provisions of this Agreement
shall be held to be invalid or unenforceable, then all other
provisions shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had
not been included in this Agreement. In the event that any
provision relating to the time period of any restriction
imposed by this Agreement shall be declared by a court of
competent jurisdiction to exceed the maximum time period which
such court deems reasonable and enforceable, then the time
period of restriction deemed reasonable and enforceable by the
court shall become and shall thereafter be the maximum time
period.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties
hereto.
13.3 This Agreement shall be construed and enforced according to
the laws of the State of California, excluding its choice of
law rules.
13.4 This Agreement supersedes all previous correspondence,
promises, representations, and agreements, if any, either
written or oral, between DPRC and Employee. No provision of
this Agreement may be modified except by a writing signed by
Employee and by the Chief Executive Officer of DPRC (or by
such other person as may be expressly authorized to sign such
writing by the Board of Directors of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted
to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served
or deposited in the United States mail, registered or
certified, return receipt requested, postage prepaid,
addressed (i) in the case of notices to DPRC, to the Chief
Executive Officer of DPRC at DPRC's headquarters office at
such time, and (ii) in the case of notices to Employee, to
Employee's home address as set forth on the employment records
of DPRC, or to such other address as such party shall have
specified most recently by written notice. Notices shall be
deemed given on the date of service if personally served.
Notices mailed as provided herein shall be deemed given on the
third business day following the date so mailed.
13.6 Should any party institute any action or proceeding to enforce
this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any
provision hereof, or for a declaration of rights hereunder,
the prevailing party in any such action or proceeding shall be
entitled to receive from the other party all costs and
expenses, including reasonable attorneys', accountants' and
experts' fees, incurred by the prevailing party in connection
with such action or proceeding.
10
<PAGE> 35
14. ACKNOWLEDGMENT BY EMPLOYEE. Employee (i) has carefully read and
considered the provisions of this Agreement, (ii) has had an
opportunity to review the terms of this Agreement with legal counsel of
his choosing, (iii) fully understands the extent and impact of the
terms and provisions of this Agreement, and (iv) has executed this
Agreement voluntarily.
11
<PAGE> 36
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By: /s/ Mary Ellen Weaver /s/ Thomas A. Vadnais
-------------------------------- --------------------------------
Mary Ellen Weaver Thomas A. Vadnais
Chief Executive Officer
12
<PAGE> 37
EXHIBIT A
COMPENSATION OF THOMAS A. VADNAIS
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY Employee's base salary shall be $315,000 per
year, paid in at least bi-weekly installments.
Employee's base annual salary shall be reviewed
and adjusted no less frequently than once per
year. In no event, and under no circumstances,
shall Employee's annual salary be reduced below
the most recent annual salary.
2. VACATION During the Term, Employee shall be entitled to
four (4) weeks of paid vacation time per
calendar year (plus such other time as may be
permitted by the Board); provided, however, that
any such vacation time, if not used, will be
subject to DPRC's limitations on carrying
forward unused vacation time, pursuant to which
Employee's accrued vacation time may not exceed
six (6) weeks at any time; and, provided
further, that Employee shall use his best
efforts to coordinate with the Chief Executive
Officer of DPRC the dates upon which he uses his
vacation so as to minimize the negative impact
upon DPRC occasioned by Employee's absence.
Employee shall not be entitled to take in excess
of four (4) weeks vacation at any one time,
except by the written consent of the Chief
Executive Officer of DPRC, or upon request of
DPRC in connection with Employee's leave of
absence for family, medical or other reasons, as
permitted by law.
3. OTHER BENEFITS: Employee shall be entitled to participate in and
receive benefits under all profit-sharing plans,
pension plans, group medical plans and other
benefit plans for the payment of additional
compensation or benefits to employees of DPRC
which DPRC at any time maintains for executive
employees.
4. AUTOMOBILE ALLOWANCE: Employee shall be entitled to an automobile
allowance of $900 per month.
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<PAGE> 38
5. BUSINESS EXPENDITURES: Employee may be authorized to incur reasonable
expenses for promoting and conducting the
business of DPRC, including but not limited to
expenditures for entertainment and travel, in
such amounts and at such times as shall be
determined and approved by the Chief Executive
Officer of DPRC. DPRC shall reimburse Employee
monthly for all such approved business expenses
upon presentation of reasonable documentation
establishing the amount, date, place and
essential character of the expenditures.
6. INCENTIVE BONUS: Employee's incentive bonus for each fiscal year
shall provide for a maximum bonus of up to 200%
of his base salary for such year and shall be
subject to such terms and conditions as shall be
determined in good faith by the Board of
Directors, with the recommendation of and in
consultation with the Compensation Committee of
the Board of Directors. The incentive bonus may
be based on financially oriented components or
upon Employee's individual accomplishments or
both. At the request of Employee, within ten
(10) business days after the commencement of
each fiscal quarter, DPRC shall advance to
Employee up to one-eighteenth (1/18th) of the
maximum bonus payable by DPRC to Employee
hereunder. The incentive bonus earned for a
fiscal year of DPRC (less the aggregate amount
of all advances made by DPRC to Employee with
respect to such fiscal year) shall be paid not
later than thirty (30) calendar days following
the review and approval by the Board of
Directors of DPRC of the final financial
statement results of the audit for said fiscal
year by DPRC's independent auditors. In the
event that the aggregate amount of advances made
by DPRC to Employee hereunder during any fiscal
year exceeds the amount of the incentive bonus
earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of
the determination of such amount, shall pay such
excess to DPRC. The current incentive bonus plan
is based on DPRC reaching its internal target
levels of budgeted operating income for the
fiscal year, as it may be amended as a result of
acquisitions for the year included (the "Target
OI"). A total of 50% of Employee's base salary
shall be paid if the Target OI is achieved by
DPRC. For each 5% above Target OI achieved by
DPRC, Employee shall receive an additional 10%
of base salary up to the maximum 200% of base
salary.
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<PAGE> 39
7. INDEMNIFICATION: DPRC shall enter into a directors and officers
Indemnification Agreement with Employee pursuant
to which DPRC will be required to indemnify
Employee against personal liability for acts of
DPRC to the maximum extent permitted by law.
8. STOCK OPTIONS: Subject to the commencement of employment, the
Board of Directors has approved the grant to
Employee of a stock option under the Company's
1994 Stock Option Plan to purchase up to 320,000
shares of Common Stock. The exercise price of
such stock option shall be equal to the fair
market value of the Common Stock on the
Effective Date and the option shall vest (i.e.,
become exercisable) in four equal annual
installments, commencing on the first
anniversary of the Effective Date. Such stock
option shall be in the form generally approved
for grants to officers of DPRC; provided,
however, that such stock option and all future
stock option grants to Employee shall vest in
full following a "change of control" during the
Term. For the purposes of such stock option
grants, the term "change of control" shall mean
(i) any merger or consolidation where DPRC is
not the continuing or surviving corporation or
pursuant to which all or substantially all of
the shares of DPRC's Common Stock are converted
into cash, other property or securities of
another corporation, other than, in either case,
a merger or consolidation in which the shares of
DPRC's Common Stock outstanding immediately
prior to such merger or consolidation represent
or are converted into securities representing
more than 50% of the voting power of the
surviving corporation in such merger or
consolidation or the parent of such corporation,
(ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related
transactions) of all, or substantially all, of
the assets of DPRC, (iii) the approval by the
shareholders of DPRC of any plan or proposal for
the liquidation or dissolution of DPRC, (iv) any
"person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) shall
become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act) of 35% or
more of DPRC's outstanding Common Stock after
the date hereof, or (v) there shall be any
change of control of a nature which would be
required to be reported in response to Item 6(e)
of Schedule 14A of
15
<PAGE> 40
Regulation 14A promulgated under the Exchange
Act or any successor regulation of substantially
similar import, regardless of whether DPRC is
subject to such reporting requirement at such
time.
In addition, in the event Employee is terminated
without Cause, as defined in Paragraph 12.7 of
this Agreement, the members of the Board of
Directors who are not directly involved in
terminating Employee shall consider accelerating
vesting of any unvested options held by Employee
based upon all of the facts and circumstances
surrounding the termination, including
Employee's performance and tenure with DPRC;
provided, however, that the disinterested
Directors involved in such determination shall
be under no obligation to accelerate vesting of
options and shall specifically not do so if such
acceleration would cause a disallowance of
"pooling of interests" accounting in any DPRC
merger transactions.
9. RELOCATION EXPENSES: In connection with Employee's relocation of his
and his families' personal residence in Atlanta,
Georgia, DPRC shall reimburse Employee for all
of his reasonable and customary expenses with
respect to such relocation, including, without
limitation, the following: (a) all non-recurring
closing costs on the sale of Employee's current
personal residence; (b) all closing costs on the
purchase of Employee's new personal residence in
Southern California, except that points on such
purchase shall not exceed two (2) points; (c)
all reasonable and customary travel related
expenses for Employee and his spouse to find a
replacement residence in Southern California;
(d) all reasonable and customary interim storage
expenses for personal property if Employee
decides to construct a home in Southern
California; and (e) all reasonable and customary
expenses for interim living expenses in Southern
California and related travel expenses until the
earlier of the completion of Employee's
relocation of his family or the first 90 days
during the Term, which 90-day period may be
extended for an additional 60-day period with
the consent of DPRC, which consent shall not be
unreasonably withheld. To the extent that
Employee shall incur any personal federal or
state tax income liability in connection with
DPRC's reimbursement of any of the foregoing to
Employee, DPRC, within thirty (30) calendar days
after Employee's submission to DPRC of his
personal
16
<PAGE> 41
federal and state tax returns demonstrating such
income tax liabilities, shall pay Employee an
amount equal to one and two-thirds (1.67) times
Employee's actual personal tax liability.
10. ESTATE PLANNING: During calendar year 1999, DPRC shall reimburse
Employee for all reasonable attorney's fees (not
to exceed three percent (3%) of the amount of
Employee's then base salary) incurred by
Employee in connection with reviewing and
revising Employee's will and estate plan to
reflect any necessary or desirable changes
resulting from Employee's relocation to Southern
California.
Following calendar year 1999, DPRC will
reimburse Employee for all reasonable attorney's
fees, in an amount not to exceed $5,000 per
calendar year, incurred in connection with
creating, reviewing and/or revising Employee's
will and estate plan.
17
<PAGE> 42
AMENDMENT TO THE AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amendment to the Amended and Restated Employment Agreement (the
"AMENDMENT") is made as of June 23, 1999, to be effective as of the Closing Date
(as defined below) by and between Compuware Corporation, a Michigan corporation
(the "COMPANY"), Data Processing Resources Corporation, a California corporation
("DPRC"), and David M. Connell (the "EMPLOYEE").
WHEREAS, DPRC and Employee are parties to that certain Amended and
Restated Employment Agreement dated as of May 4, 1999 (the "EMPLOYMENT
AGREEMENT").
WHEREAS, DPRC and Employee desire to amend the Employment Agreement in
connection with the transactions contemplated by that certain Agreement and Plan
of Merger dated as of the same date as this Amendment among Compuware
Corporation, Comp Acquisition Co. and Data Processing Resources Corporation (the
"MERGER AGREEMENT").
WHEREAS, Employee's employment with DPRC pursuant to the terms of this
Amendment shall serve as a material inducement for the Company to execute the
Merger Agreement and consummation of the transactions contemplated thereby.
WHEREAS, this Amendment shall be effective as of the Closing Date, as
such term is defined in the Merger Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set
forth in this Amendment, the Company, DPRC and Employee agree to amend the
Employment Agreement in the manner as set forth below:
1. Delete and replace Section 1.2 of the Employment Agreement in its
entirety as follows:
This Agreement, as amended, effective as of the Closing Date as
defined in the Agreement and Plan of Merger dated as of June 23,
1999 among Compuware Corporation, Comp Acquisition Co. and Data
Processing Resources Corporation (the "Merger Agreement")
("Effective Date") shall, unless sooner terminated pursuant to
the terms set forth below, terminate after ninety (90) days from
the Effective Date. The period during which Employee is employed
hereunder is referred to as the "Term." The Term shall be
automatically extended for a period of ninety (90) additional
days with the mutual consent of the Company and Employee prior
to or on the last day of the initial ninety (90) day term of
this Agreement, and during such extended ninety (90) day term
the Employee shall be subject to the same terms and conditions
of this Agreement and any amendment thereto.
<PAGE> 43
2. Delete and replace Section 2.1 of the Employment Agreement in its
entirety as follows:
Employee shall serve in a position with the Company equivalent
to a senior manager of the Company as may be determined by the
Chief Executive Officer of Compuware Corporation, the parent
company of DPRC (the "Company"), or his designee, during the
Term and shall devote the Employee's full-time efforts to such
duties and responsibilities as may be assigned to the Employee
from time to time by, and shall report to such Chief Executive
Officer, or his designee.
3. Delete Section 6.1 of the Employment Agreement in its entirety.
4. Delete and replace the first sentence of Section 12.2 of the Employment
Agreement in its entirety as follows:
It is understood by Employee that Employee shall be considered
to be an employee "at will" and DPRC may terminate Employee's
employment at any time without Cause (as defined below) by
giving Employee thirty (30) days' advance written notice of such
termination.
5. Insert subsection (vi) in Section 12.7(c) of the Employment Agreement as
follows:
(vi) Notwithstanding the foregoing provisions of Section
12.7(c) of the Agreement or any other provisions of the
Agreement to the contrary, the Company and Employee
agree that (A) if Employee is appointed by DPRC or the
Company to a position equivalent to a senior management
position of the Company following the Effective Date
pursuant to Section 2.1 of the Agreement and any
amendment thereto, it shall not constitute "Good Reason"
for termination under the provisions of the Employment
Agreement and any amendment thereto, (B) any change in
Employee's duties, responsibilities or reporting
responsibility from those in effect prior to the
Effective Date, will not be deemed to constitute "Good
Reason" under the Agreement and any amendment thereto;
provided that Employee shall not be required to report
to any person who reported to Employee prior to the
Effective Date and (c) that if Employee remains employed
through the Term, as such Term may be extended pursuant
to Section 1.2, Employee's subsequent termination of
employment for any
2
<PAGE> 44
reason shall be considered to be "Good Reason" for
Employee's termination and Employee shall receive the
benefits Employee would have received pursuant to
Section 12.2 if Employee's employment had terminated on
the day preceding the last day of the Term, as such Term
may have been extended pursuant to Section 1.2.
6. Insert the following sentences at the end of Section 3 of the Exhibit A,
as attached to the Employment Agreement as follows:
Notwithstanding any provision in the Agreement, the Company will
provide medical and life insurance benefits required by the
Agreement only if such benefits can be provided pursuant to any
existing insurance plan or policy (including self insurance
programs). If any such benefit cannot be so provided, the
Company will make reasonably comparable benefits available to
Employee (including conversion benefits) at a cost not
substantially higher than the cost of providing such benefits to
an employee of the Company.
7. Delete and replace Section 6 of the Exhibit A, as attached to the
Employment Agreement, in its entirety as follows:
Subject to the determinations of the Compensation Committee of
the Company, Employee shall be eligible to participate in the
Company's executive bonus plan which is generally provided to
other executives in similar employment position as the Employee
and with comparable experience and similar responsibilities with
the Company as the Employee.
8. Delete and replace the second sentence of Section 8 of the Exhibit A, as
attached to the Employment Agreement, in its entirety as follows:
On the Closing Date (as defined in the Merger Agreement) any and
all stock options granted prior to the Closing Date (as defined
in the Merger Agreement) to Employee by DPRC shall, whether or
not Employee is terminated on such Closing Date, become
immediately vested and exercisable for a period not to exceed
the lesser of (a) two (2) years, or (b) the date on which such
stock options would otherwise have terminated (other than by
reason of the termination of the Employment).
9. Insert the following provision at the end of the first paragraph in
Section 8 of the Exhibit A, as attached to the Employment Agreement:
3
<PAGE> 45
Notwithstanding any of the above provisions to the contrary,
stock options granted by the Company or DPRC on or after the
Closing Date, as defined in the Merger Agreement, shall be
subject to the terms and conditions of the stock option plan
from which such stock options were granted and in accordance
with the agreement evidencing such stock option grant.
10. To protect the interest of DPRC and the Company, Employee will agree to
sign the Company's standard confidentiality and inventions agreements
that are executed by other employees of the Company as a condition of
employment with the Company.
4
<PAGE> 46
IN WITNESS WHEREOF, the Employee has carefully read and considered the
provisions of this Amendment and agrees that all of the above-stated amendments
are fair and reasonable. The Employee indicates his acceptance of this Amendment
by signing and returning the enclosed copy of the Amendment where indicated
below.
COMPUWARE CORPORATION
By: /s/ Phyllis Recca
---------------------------------
Date: June 23, 1999
-------------------------------
DATA PROCESSING RESOURCES
CORPORATION
By: /s/ Mary Ellen Weaver
---------------------------------
Date: June 23, 1999
-------------------------------
DAVID M. CONNELL
/s/ David M. Connell
------------------------------------
David M. Connell
Date: June 23, 1999
-------------------------------
5
<PAGE> 47
DATA PROCESSING RESOURCES CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May
4, 1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and DAVID M. CONNELL ("Employee"), with reference to the
following:
A. DPRC and Employee are parties to that certain Employment Agreement
dated August 1, 1995, as amended pursuant to that letter of understanding dated
September 20, 1996 and that certain Addendum to Employment Agreement dated
September 2, 1997 (the "Prior Employment Agreement").
B. DPRC and Employee now wish to amend and restate the Prior Employment
Agreement as set forth in this Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set
forth below, DPRC and Employee agree as follows:
1. EMPLOYMENT AND TERM.
1.1 DPRC agrees to continue to employ Employee, and Employee agrees
to continue to be employed by DPRC, on the terms and conditions
described below.
1.2 The Prior Employment Agreement commenced on August 1, 1995 for a
term of three (3) years. This Agreement shall be effective as of
May 4, 1999 (the "Effective Date") and shall, unless sooner
terminated pursuant to the terms set forth below, terminate on
the third anniversary of the Effective Date. The period during
which Employee is employed by DPRC hereunder is referred to as
the "Term." The Term shall be automatically extended for a period
of twelve (12) additional months unless DPRC shall notify
Employee in writing, not less than six (6) months prior to the
end of the initial term or any extension thereof, of DPRC's
intention that the Term not be extended.
2. DUTIES.
2.1 Employee shall serve as the Executive Vice President and as a
Director of DPRC during the Term and shall devote his full-time
efforts to such duties and responsibilities as may be assigned to
him from time to time by, and shall report to, the Chairman and
Chief Executive Officer of DPRC. Such duties shall include
strategic planning, mergers and acquisitions and integration
related activities.
<PAGE> 48
2.2 Employee shall serve without additional compensation in one or
more offices, as a member of any committee of the Board of
Directors of DPRC or of any direct or indirect subsidiary of
DPRC.
2.3 DPRC agrees that (i) Employee shall be permitted to work on a
full-time basis from his home office or a DPRC office situated in
or around the San Fernando Valley area of Los Angeles County,
(ii) DPRC will not ask Employee to relocate his home office or
his residence from Camarillo, California, and (iii) that DPRC
will reimburse Employee for, or pay directly, reasonable costs in
connection with Employee's lodging, for not more than three (3)
nights per work week, in the immediate vicinity of the offices of
DPRC's corporate headquarters in the event that Employee chooses
at his option to work at DPRC's corporate offices instead of his
home office or another DPRC office in the San Fernando Valley
area.
3. COMPENSATION.
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and
incorporated herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise
set forth in this Agreement, the Compensation will constitute the
full and exclusive consideration to be received by Employee for
all services performed by Employee in connection with DPRC's
employment of Employee, and for the performance of all his
promises and obligations under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in
force, benefit plans for the benefit of its employees or certain
of its employees which may include, but not be limited to, group
life insurance, medical insurance, etc. DPRC may terminate any or
all such plans at any time and may choose not to adopt any
additional or replacement plans. Employee's rights under any
benefit plans now in force or later adopted by DPRC shall be
governed solely by the terms of such plans; provided, however,
that in no event shall Employee's rights under any such benefit
plans be less than those of any other senior executive officer of
DPRC.
4. DUTY TO DEVOTE FULL TIME AND AVOID CONFLICT OF INTEREST. During the
Term, Employee shall devote his full-time efforts to his duties as an
employee of DPRC and shall not, directly or indirectly, engage or
participate in any activities which are in conflict with the best
interests of DPRC.
5. COMPLIANCE WITH RULES AND REGULATIONS. During the Term, Employee shall
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may
from time to time be adopted or modified, so long as they are uniformly
applied to all employees.
2
<PAGE> 49
6. NON-COMPETITION AND NON-SOLICITATION BY EMPLOYEE.
6.1 During the Term, Employee shall not engage in any activity
competitive with or adverse to DPRC's business or welfare,
whether alone, as a partner, or as an officer, director, employee
or shareholder of any other corporation and shall not otherwise
undertake planning for or the organization of any business
activity competitive with DPRC's business or combine or conspire
with other employees or representatives of DPRC for the purpose
of organizing any such competitive business activity; provided,
however, that Employee may own up to one percent (1%) of the
outstanding stock of any publicly traded corporation.
6.2 It is understood that Employee will gain knowledge and make
contacts with DPRC's customers and clients (sometimes
collectively referred to in this Agreement as the "Clients" and
individually as a "Client") and prospective clients of DPRC in
the course of his employment. In recognition of this
understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination
of his employment, Employee shall not interfere or
attempt to interfere in any way with any existing
relationships of DPRC with any Client with whom DPRC has
participated in at least one project or placement within
the two (2) years prior to the termination of his
employment, and shall not solicit, divert or take away
or attempt to solicit, divert or take away any business
of DPRC that is either under contract or in negotiation
at the time of the termination of his employment.
(b) For a period of two (2) years following the termination of
his employment, Employee shall not interfere or compete in
any way with any proposal efforts of DPRC already in
progress (that is, a proposal sent to or being then
currently developed for a specific Client or potential
client of DPRC) at the time of the termination of his
employment.
(c) For a period of two (2) years following the termination of
his employment, Employee shall not make use, in a manner
competitive with the business of DPRC, of any of his
personal relationships or business contacts developed
during his employment or prior to his employment.
(d) For a period of two (2) years following the termination of
his employment, Employee shall not induce, solicit or
influence or attempt to induce, solicit or influence any
person who is engaged as an employee or otherwise by DPRC,
to terminate his or her employment or other engagement
with DPRC.
7. TRADE SECRETS OF DPRC. Employee acknowledges and understands that during
his employment, he will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term is interpreted
3
<PAGE> 50
under the Uniform Trade Secrets Act (California Civil Code Section 3426 et
seq.) and/or confidential and proprietary material and information of or
relating to the business of DPRC necessary for the successful conduct of
DPRC's business. This information includes, but is not limited to: (a)
listings of and data regarding the Clients (past and current); (b)
information regarding potential customers and clients; (c) data relating to
the personnel, supervisory structure and procedures of the Clients; (d)
information regarding specific computer technician staffing needs of the
Clients; (e) information as to the identity, whereabouts, capabilities and
availability of contractors in DPRC's database; (f) information regarding
bidding, billing and pricing practices; (g) information regarding the
nature and type of services rendered to the Clients; and (h) other
methodologies, computer programs, employee and contractor resumes, employee
databases, processes, compilations of information, results of proposals,
job notes, reports and records (all of which information is sometimes
referred to in this Agreement as the "Secrets"). The foregoing
notwithstanding, Secrets shall not include information or data which is (i)
in the public domain, (ii) generally known in the information technology
staffing services industry, (iii) already known to Employee as of the date
he began his employment with DPRC, or (iv) rightfully disclosed to Employee
outside of the scope of his employment with DPRC by a third party not under
a duty of confidentiality to DPRC. Employee understands further that the
Secrets have been and will be accumulated by Employee and other personnel
at DPRC at considerable expense to DPRC (including but not limited to
compensation paid to DPRC personnel dealing with the Secrets and the
Clients), and that DPRC has and will continue to expend its resources in
order to maintain actively and vigorously the confidentiality of the
Secrets, as such information is extremely valuable to DPRC, and well worth
the expense of enforcement and preservation of such confidentiality.
Accordingly, Employee agrees as follows:
(a) All of the Secrets shall be safeguarded and treated as confidential by
Employee.
(b) Any and all data, notes, letters, computer programs and data, reports,
telephone records and all other written documentation relating to the
business of DPRC (including but not limited to the Secrets) that may
be collected, compiled, written, reviewed or conceived by Employee
from or by reason of services performed by Employee for DPRC shall
become the absolute property of DPRC, and Employee shall not assert or
establish a claim for any statutory or common law right or any other
possessory or proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall not
(i) disclose any Secrets to any person, corporation, firm, or other
entity, either during the Term or thereafter, or (ii) use any Secrets
in Employee's subsequent business or employment without the prior
express written authorization of DPRC; provided, however, that
Employee may disclose Secrets to the extent required to do so by a
subpoena lawfully issued in a judicial proceeding or arbitration.
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(d) Employee shall not otherwise commit any act which shall compromise the
confidentiality of any Secrets, including but not limited to making a
copy of such property (whether electronic, paper or otherwise) without
the prior express written authorization of DPRC.
8. CONFIDENTIAL INFORMATION OF CLIENTS. All ideas, concepts, information and
written material disclosed to Employee by DPRC, or acquired from any Client, and
all financial, accounting, statistical, personnel, and business data and plans
of the Clients, are and shall remain the sole and exclusive property and
proprietary information of DPRC, or such Client, as the case may be, and are
disclosed in confidence by DPRC or permitted to be acquired from the Clients in
reliance on Employee's agreement to maintain them in confidence and not to use
or disclose them to any other person except in furtherance of DPRC's business.
9. RETURN OF INFORMATION. At the time of the termination of his employment,
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or graphical
records (including all copies thereof) in Employee's possession or under
Employee's control relating to any business, work, Clients or any other aspect
of DPRC, whether or not containing any Secrets, including but not limited to
each original and all copies of all or any part thereof.
10. COOPERATION. Both during the Term and thereafter, Employee shall sign all
papers, give evidence and testimony and, at DPRC's expense, perform all acts
which, in DPRC's opinion, are necessary, proper or expedient to carry out and
fulfill the purposes and intents of this Agreement.
11. REMEDIES INJUNCTIVE RELIEF. Employee acknowledges and agrees that, in the
event of a breach or threatened breach by Employee of any of the provisions of
this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or by
Employee's partners, agents, representatives, servants, employers, employees,
and/or any and all persons directly or indirectly acting for or with Employee,
in addition to and not in limitation of any other rights, remedies, or damages
available to DPRC at law or in equity.
12. TERMINATION OF EMPLOYMENT.
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as otherwise
provided by this Agreement, DPRC shall have no further obligation to
Employee under this Agreement by way of compensation or otherwise.
Notwithstanding the foregoing, to the extent the grounds for any
proposed termination with Cause are capable of being cured or remedied
by Employee, DPRC shall not terminate Employee with Cause unless the
Chief Executive Officer of DPRC has first counseled Employee as to how
he could effect such cure or remedy and Employee is given at least
thirty (30) days to do so. A determination of whether Employee has
satisfactorily effected such cure
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or remedy shall be promptly made by a majority of the disinterested
directors of the Board of Directors at the end of the period provided
to Employee for such cure or remedy and such determination shall be
final.
12.2 DPRC may terminate Employee's employment at any time without Cause (as
defined below) by giving Employee thirty (30) days' advance written
notice of such termination. Employee may resign for Good Reason (as
defined below) by giving DPRC thirty (30) days' advance written notice
of such resignation. In the event that DPRC terminates Employee
without Cause, or Employee resigns for Good Reason, DPRC shall pay to
Employee the base salary of the Compensation and provide the same
health and life insurance benefits through the effective date of such
termination or resignation and, thereafter, until the earlier to occur
of (i) the expiration of eighteen (18) months after the effective date
of such termination, (ii) the date upon which Employee becomes
employed on a full-time basis (including but not limited to
self-employment, but only if Employee holds himself out to the public
as being a self-employed consultant or other businessman), or (iii)
the date upon which Employee violates any of Sections 6 through 10,
inclusive. In addition, DPRC shall pay Employee, at such time
following completion of the fiscal year-end audit when all other
senior executive bonuses are paid, the pro-rated Incentive Bonus
described in such Exhibit "A" to which Employee was entitled during
his employment (which proration shall be based on a fraction, the
numerator of which is the number of calendar days during the fiscal
year during which Employee was employed prior to the effective date of
such termination or resignation and the denominator of which is 365).
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have no
further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective date
of such termination and, thereafter, until the earlier to occur of (i)
the expiration of eighteen (18) calendar months after the effective
date of such termination of employment, (ii) the date upon which
Employee becomes employed on a full-time basis (including but not
limited to self-employment, but only if Employee holds himself out to
the public as being a self-employed consultant or other businessman),
or (iii) the date upon which Employee violates any of Sections 6
through 10, inclusive. In addition, DPRC
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shall pay Employee, at such time following completion of the fiscal
year-end audit when all other senior executive bonuses are paid, the
pro-rated Incentive Bonus described in such Exhibit "A" to which
Employee was entitled during his employment (which proration shall be
based on a fraction, the numerator of which is the number of calendar
days during the fiscal year during which Employee was employed prior
to the effective date of such termination and the denominator of which
is 365).
12.5 Employee's agreements, duties and obligations under Sections 6 through
10, inclusive, shall survive the termination of this Agreement and
shall continue after any termination of Employee's employment pursuant
to Sections 12.1, 12.2, 12.3 or 12.4 of this Agreement.
12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to his estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of eighteen (18) calendar months after the date
of Employee's death, and, (b) at such time following completion of the
fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the meanings
indicated:
(a) "Cause" shall mean an action or actions by Employee during his
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform his duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for a
period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that he is Disabled, Employee shall
give written notice of such dispute to DPRC during the thirty
(30) day notice period prior to the proposed effective date of
such termination, and Employee and DPRC shall thereupon each
select, within ten (10) days of such notice from Employee, a
physician to evaluate
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whether Employee is Disabled. Such physicians shall complete their
evaluation and report to the Board of Directors within ten (10) days.
If such physicians do not agree as to whether Employee is Disabled,
they shall promptly select a third physician to further evaluate
Employee, whose conclusion on such matter shall be rendered within ten
(10) days of his or her selection and shall be final and binding on
Employee and DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of duties
inconsistent with his position, duties, responsibilities or
status with DPRC, (B) a change in Employee's titles adverse
to Employee, or (C) any removal of Employee from or any
failure to reelect Employee to the office of Executive Vice
President of DPRC, except, in any such case, with
Employee's consent or in connection with the termination of
his employment pursuant to Section 12.1 (with Cause), 12.3
(resignation without Good Reason), 12.4 (disability), 12.6
(death) or retirement; provided, however, that Good Reason
shall not include the assignment to Employee of any duties
or responsibilities of one or more management positions
within his competence to the extent that any such position
is not filled at any time and it is necessary to perform
the duties and responsibilities of such position pending
the hiring of a person to hold such position, and provided
that DPRC is actively seeking to fill such position during
the period of such assignment;
(ii) a purported reduction by DPRC in the Compensation in effect
on the date hereof or as the same may be increased from
time to time during the term of this Agreement or any
failure by DPRC to reimburse Employee or provide any
material benefits set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance plans,
life insurance plans or vacation pay plans, with such
generally applicable amendments thereto as may be approved
from time to time in good faith by DPRC's Board of
Directors) in which Employee is participating or other
plans providing Employee with substantially similar
benefits (each, a "Benefit Plan"), or any action by DPRC
which would materially and adversely affect Employee's
participation in or materially reduce Employee's benefits
under any Benefit Plan;
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(iv) any failure by DPRC to obtain the assumption of this
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision
of this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would constitute
Good Reason if not so cured or remedied and DPRC has failed to
effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute the
exclusive rights and remedies available to Employee relating to or
arising from the termination of his employment, including claims for
breach of contract or in tort; provided, however, that Employee shall be
entitled to pursue any and all available legal remedies based on any
claim that such termination constituted a violation of applicable federal
or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC, whether
oral or written, express or implied, formal or informal, are intended,
nor shall they be construed to limit the right or ability of DPRC to
terminate Employee's employment or the right or ability of Employee to
resign as set forth above. Except as otherwise agreed in writing or as
otherwise provided by this Agreement, upon termination of Employee's
employment, neither DPRC nor Employee shall have any further obligation
to each other by way of compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of DPRC, by agreement in form and substance
reasonably satisfactory to Employee, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same
manner and to the same extent that DPRC would be required to perform this
Agreement if no such succession or assignment had taken place. In any
such event, the term "DPRC" as used in this Agreement shall mean any such
successor or assign which executes and delivers the agreement provided
for in the immediately preceding sentence or which otherwise becomes
bound by the terms and provisions of this Agreement by operation of law.
12.11 Employee shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise. Except as expressly provided herein, no payment or benefit
provided for under this Agreement shall be reduced by any compensation
earned by Employee as the result of employment by another employer after
the date of
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termination with DPRC. Except as expressly provided herein, the
provisions of this Agreement, and any payment or benefit provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish Employee's existing rights, or rights which would accrue solely
as a result of the passage of time, under any DPRC Benefit Plan,
employment agreement or other contract, plan or arrangement.
13. MISCELLANEOUS PROVISIONS.
13.1 In the event that any of the provisions of this Agreement shall
be held to be invalid or unenforceable, then all other provisions
shall nevertheless continue to be valid and enforceable as though
the invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period of any restriction imposed by this Agreement shall be
declared by a court of competent jurisdiction to exceed the
maximum time period which such court deems reasonable and
enforceable, then the time period of restriction deemed
reasonable and enforceable by the court shall become and shall
thereafter be the maximum time period. In the event that any of
the provisions of this Agreement shall be determined to cause a
disallowance of any "pooling of interests" accounting treatment
for any merger, acquisition or consolidation of DPRC with another
entity, such provisions shall be deemed to be deleted and of no
force and effect and all other provisions shall nevertheless
continue to be valid and enforceable and read as though the
deleted provisions had not been included in this Agreement.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
13.3 This Agreement shall be construed and enforced according to the
laws of the State of California, excluding its choice of law
rules.
13.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the Chief
Executive Officer of DPRC (or by such other person as may be
expressly authorized to sign such writing by the Board of
Directors of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to
be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served or
deposited in the United States mail, registered or certified,
return receipt requested, postage prepaid, addressed (i) in the
case of notices to DPRC, to the Chief Executive Officer of DPRC
at DPRC's headquarters office at such time, and (ii) in the case
of notices to Employee, to Employee's home address as set forth
on the employment records of DPRC, or to such other address as
such party shall
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have specified most recently by written notice. Notices shall be
deemed given on the date of service if personally served. Notices
mailed as provided herein shall be deemed given on the third
business day following the date so mailed.
13.6 Should any party institute any action or proceeding to enforce
this Agreement or any provision hereof, or for damages by reason
of any alleged breach of this Agreement or of any provision
hereof, or for a declaration of rights hereunder, the
prevailing party in any such action or proceeding shall be
entitled to receive from the other party all costs and expenses,
including reasonable attorneys', accountants' and experts' fees,
incurred by the prevailing party in connection with such action or
proceeding.
14. ACKNOWLEDGMENT BY EMPLOYEE. Employee (i) has carefully read and
considered the provisions of this Agreement, (ii) has had an opportunity
to review the terms of this Agreement with legal counsel of his choosing,
(iii) fully understands the extent and impact of the terms and provisions
of this Agreement, and (iv) has executed this Agreement voluntarily.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By: /s/ Mary Ellen Weaver /s/ David M. Connell
----------------------------- ----------------------
Mary Ellen Weaver David M. Connell
Chief Executive Officer
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EXHIBIT A
COMPENSATION OF DAVID M. CONNELL
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY: Employee's base salary shall be $255,000 per year,
paid in at least bi-weekly installments. Employee's
base annual salary shall be reviewed and adjusted no
less frequently than once per year. In no event, and
under no circumstances, shall Employee's annual
salary be reduced below the most recent annual
salary.
2. VACATION: During the Term, Employee shall be entitled to five
(5) weeks of paid vacation time per calendar year
(plus such other time as may be permitted by the
Board); provided, however, that any such vacation
time, if not used, will be subject to DPRC's
limitations on carrying forward unused vacation
time, pursuant to which Employee's accrued vacation
time may not exceed six (6) weeks at any time; and,
provided further, that Employee shall use his best
efforts to coordinate with the Chief Executive
Officer of DPRC the dates upon which he uses his
vacation so as to minimize the negative impact upon
DPRC occasioned by Employee's absence. Employee
shall not be entitled to take in excess of four (4)
weeks vacation at any one time, except by the
written consent of the Chief Executive Officer of
DPRC, or upon request of DPRC in connection with
Employee's leave of absence for family, medical or
other reasons, as permitted by law.
<PAGE> 59
3. OTHER BENEFITS: During the Term, Employee shall be entitled to
participate in and receive benefits under all
profit-sharing plans, pension plans, group medical
plans and other benefit plans for the payment of
additional compensation or benefits to employees of
DPRC that DPRC maintains for senior executive
employees. In the event employee is terminated
without Cause or due to Disability, or resigns for
Good Reason, Employee shall be entitled to
continuation of health and life insurance coverage
for the period of time set forth in Paragraphs 12.2
and 12.4 of this Agreement (the "DPRC Insurance
Coverage Period"). During the DPRC Insurance
Coverage Period, DPRC shall pay the employer portion
of the cost of such coverage at the same levels
offered to its senior executive employees, and
Employee shall pay the employee portion of the cost
of such coverage at the same level paid by its
senior executive employees. Unless Employee was
terminated for Cause, DPRC shall continue, following
the DPRC Insurance Coverage Period, to offer group
medical and life insurance at the same rates and
levels of coverage as are offered to its
then-current senior executive employees, until such
time as Employee reaches age 65 (the "Employee
Insurance Coverage Period"). During the Employee
Insurance Coverage Period, if Employee accepts
insurance coverage from DPRC, Employee shall pay the
full cost of the premiums for such coverage. During
either the DPRC Insurance Coverage Period or the
Employee Insurance Coverage Period, Employee shall
have the option of choosing Preferred Provider
Organization, Exclusive Provider Organization,
Health Maintenance Organization or such other types
of plans or coverages as are available to DPRC's
then-current senior executive employees.
4. AUTOMOBILE DPRC to pay Employee's automobile lease monthly
ALLOWANCE: payments of not more than $1,200, as well as all
gasoline, insurance premiums, registration fees and
repair and maintenance costs of such automobile.
Employee shall be permitted to exchange his leased
vehicle for a new one of equal or comparable value
to that of the then currently leased vehicle to be
replaced, similarly equipped, one time during the
Term.
5. BUSINESS Employee may be authorized to incur reasonable
EXPENDITURES: expenses for promoting and conducting the business
of DPRC, including but not limited to expenditures
for entertainment and travel, in such amounts and at
such times as shall be determined and approved by
the Chief Executive Officer of DPRC. DPRC shall
reimburse Employee monthly for all such approved
business expenses upon presentation of reasonable
documentation establishing the
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amount, date, place and essential character of the
expenditures.
6. INCENTIVE BONUS: Employee's incentive bonus for each fiscal year
shall provide for a maximum bonus of up to 200% of
his base salary for such year and shall be subject
to such terms and conditions as shall be determined
in good faith by the Board of Directors, with the
recommendation of and in consultation with the
Compensation Committee of the Board of Directors.
The incentive bonus may be based on financially
oriented components or upon Employee's individual
accomplishments or both. At the request of Employee,
within ten (10) business days after the commencement
of each fiscal quarter, DPRC shall advance to
Employee up to one-eighteenth (1/18th) of the
maximum bonus payable by DPRC to Employee hereunder.
The incentive bonus earned for a fiscal year of DPRC
(less the aggregate amount of all advances made by
DPRC to Employee with respect to such fiscal year)
shall be paid not later than thirty (30) calendar
days following the review and approval by the Board
of Directors of DPRC of the final financial
statement results of the audit for said fiscal year
by DPRC's independent auditors. In the event that
the aggregate amount of advances made by DPRC to
Employee hereunder during any fiscal year exceeds
the amount of the incentive bonus earned by Employee
for such fiscal year, Employee, within thirty (30)
calendar days of the determination of such amount,
shall pay such excess to DPRC. The current incentive
bonus plan is based on DPRC reaching its internal
target levels of budgeted operating income for the
fiscal year, as it may be amended as a result of
acquisitions for the year included (the "Target
0I"). A total of 50% of Employee's base salary shall
be paid if the Target 0I is achieved by DPRC. For
each 5% above Target 0I achieved by DPRC, Employee
shall receive an additional 10% of base salary up to
the maximum 200% of base salary.
7. INDEMNIFICATION: DPRC shall enter into a directors and officers
Indemnification Agreement with Employee pursuant to
which DPRC will be required to indemnify Employee
against personal liability for acts of DPRC to the
maximum extent permitted by law.
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8. STOCK OPTIONS: Notwithstanding anything to the contrary in any
Stock Option Agreement or Incentive Stock Agreement
previously entered into by DPRC and Employee, DPRC
hereby reaffirms its obligations under and pursuant
to the "Change of Control" provisions set forth in
Paragraph 13 of the Prior Employment Agreement.
Specifically, upon the occurrence of a "change of
control" during the Term, any and all stock options
granted to Employee under DPRC's stock option plans
shall, whether or not Employee is terminated as a
result of such change of control, become immediately
vested and exercisable for a period not to exceed
the lesser of (a) two (2) years, or (b) the date on
which such stock options would otherwise have
terminated (other than by reason of the termination
of the Employment). Notwithstanding the definition
of "change of control" or the two-year time
limitation on accelerated vesting set forth in the
Prior Employment Agreement, for the purpose of the
amendment to all options previously granted to
Employee, as well as all feature options, such stock
options shall vest in full following a "change of
control" during the Term and the term "change of
control" shall mean (i) any merger or consolidation
where DPRC is not the continuing or surviving
corporation or pursuant to which all or
substantially all of the shares of DPRC's Common
Stock are converted into cash, other property or
securities of another corporation, other than, in
either case, a merger or consolidation in which the
shares of DPRC's Common Stock outstanding
immediately prior to such merger or consolidation
represent or are converted into securities
representing more than 50% of the voting power of
the surviving corporation in such merger or
consolidation or the parent of such corporation,
(ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related actions) of
all, or substantially all, of the assets of DPRC,
(iii) the approval by the shareholders of DPRC of
any plan or proposal for the liquidation or
dissolution of DPRC, (iv) any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange
Act) of 35% or more of DPRC's outstanding Common
Stock after the date hereof, or (v) there shall be
any change of control of a nature which would be
required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the
Exchange Act or any successor regulation of
substantially similar import, regardless of whether
DPRC is subject to such reporting requirement at
such time.
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In addition, in the event Employee is terminated
without Cause, as defined in Paragraph 12.7 of this
Agreement, the members of the Board of Directors who
are not directly involved in terminating Employee
shall consider accelerating vesting of any unvested
options held by Employee based upon all of the facts
and circumstances surrounding the termination,
including Employee's performance and tenure with
DPRC; provided, however, that the disinterested
Directors involved in such determination shall be
under no obligation to accelerate vesting of options
and shall specifically not do so if such
acceleration would cause a disallowance of "pooling
of interests" accounting in any DPRC merger
transactions.
9. ESTATE PLANNING: DPRC will reimburse Employee for all reasonable
attorney's fees, in an amount not to exceed $5,000
per calendar year, incurred in connection with
creating, reviewing and/or revising Employee's will
and estate plan.
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Exhibit (c)(3)
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of June
23, 1999 by Mary Ellen Weaver ("Stockholder") in favor of and for the benefit of
COMPUWARE CORPORATION, its subsidiaries and affiliates ("Compuware"), and Data
Processing Resources Corporation ("DPRC").
RECITALS
A. As an employee and Stockholder of DPRC, Stockholder has obtained and
will obtain extensive and valuable knowledge and information concerning the
business of DPRC (including confidential information relating to DPRC and
Compuware and its operations, assets, contracts, customers, personnel, plans and
prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, DPRC is entering into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which it is anticipated that Compuware
will acquire DPRC (the "Acquisition").
C. In connection with the Acquisition and to more fully secure unto
Compuware the benefits of the Acquisition, Compuware has requested that
Stockholder enter into this Noncompetition Agreement.
<PAGE> 64
In consideration of the foregoing, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Compuware's business and Compuware's legitimate interests in its acquisition of
DPRC (including DPRC's goodwill) pursuant to the Merger Agreement.
2. NONCOMPETITION. During the period commencing on the Effective Time
(as defined in the Merger Agreement) and ending on the later of (i) the third
anniversary of the Effective Time or (ii) the first anniversary of the
termination of Stockholder's employment with Compuware or DPRC, as the case may
be (the "Restriction Period"), Stockholder shall not, without Compuware's
consent, be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, investor or lender,
consultant, advisor or manager of or to, acquire or hold any interest in, or
permit Stockholder's name to be used in connection with any person or entity
that engages in any business entity which is directly competitive with any
business of DPRC on the Effective Time or the professional services business of
Compuware at the time of termination of your employment (the "Competitive
Business"); provided, however, that nothing in this Section 2 shall prevent
Stockholder from owning as a passive investment less than 1% of the outstanding
shares of the capital stock of a publicly-held corporation if such shares are
actively traded on an established national securities market in the United
States. Under this Noncompetition Agreement, Stockholder's employment with
Compuware or DPRC, as the case may be, shall be deemed to terminate at such time
that Stockholder is neither a full-time nor a part-time employee of Compuware.
3. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and DPRC or Compuware, on the other.
4. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or other
provision contained in this Noncompetition Agreement, Compuware and DPRC shall
be entitled (in addition to any other remedy that may be available to them) to
the extent permitted by applicable law (a) a decree or order of specific
performance to enforce the observance and performance of such covenant,
obligation or other provision, and (b) an injunction restraining such breach or
threatened breach. Stockholder further agrees that neither Compuware nor any
other person or entity shall be required to provide any bond or other security
in connection with any such decree, order or injunction or in connection with
any related action or proceeding.
5. NON-EXCLUSIVITY. The rights and remedies of Compuware and DPRC
hereunder are not exclusive of or limited by any other rights or remedies which
Compuware or DPRC may have, whether at law, in equity, by contract or otherwise,
all of which shall be cumulative (and not alternative). Without limiting the
generality of the foregoing, the rights and remedies of Compuware and DPRC
hereunder, and the obligations and liabilities of Stockholder hereunder, are in
addition to their respective rights, remedies, obligations and liabilities under
the law of unfair competition, misappropriation of trade secrets and the like.
This Noncompetition Agreement does not limit Stockholder's obligations or the
2
<PAGE> 65
rights of Compuware or DPRC (or any affiliate of Compuware or DPRC) under the
terms of any other agreement between Stockholder and Compuware or DPRC or any
affiliate of Compuware or DPRC.
6. NOTICES. Any notice or other communication required or permitted to
be delivered to Stockholder, DPRC or Compuware under this Noncompetition
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice delivered in accordance with this Section 6):
IF TO COMPUWARE/DPRC: Compuware Corporation
President
31440 Northwestern Highway
Farmington Hills, MI 48334
Facsimile: 248-737-7690
IF TO STOCKHOLDER: Date Processing Resources
Corporation
18301 Von Karman Avenue, Suite 600
Irvine, California 92612
Attention: Mary Ellen Weaver
Facsimile: 949-752-1190
7. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) such
invalidity or enforceability of such provision or part thereof shall not affect
the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
8. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
9. WAIVER. No failure on the part of Compuware or DPRC to exercise any
power, right, privilege or remedy under this Noncompetition Agreement, and no
delay on the part of Compuware or DPRC in exercising any power, right, privilege
or remedy under this Noncompetition Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy. Neither Compuware nor
DPRC shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
3
<PAGE> 66
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
11. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to DPRC and Compuware such instruments and other documents and shall
take such other actions as Corporation and Compuware may reasonably request to
effectuate the intent and purposes of this Noncompetition Agreement.
12. ENTIRE AGREEMENT. This Noncompetition Agreement sets forth the
entire understanding of Stockholder, DPRC and Compuware relating to the subject
matter hereof and thereof and supersede all prior agreements and understandings
between any of such parties relating to the subject matter hereof and thereof.
13. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Compuware and Stockholder.
14. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned by
Stockholder at any time. Either Compuware or DPRC may assign its rights under
this Noncompetition Agreement in whole or in part, without the consent or
approval of the Stockholder or any other person or entity, in connection with
(A) the sale of Compuware or DPRC, or (B) the sale or other transfer of all or a
substantial part of the assets or business of Compuware or DPRC.
15. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
16. EFFECTIVE TIME. This Noncompetition Agreement shall become effective
on the Effective Time and shall have no force or effect if the Effective Time
does not occur.
17. BINDING NATURE; INTERPRETATION OF THIS AGREEMENT. Subject to Section
16, this Noncompetition Agreement will be binding upon Stockholder and
Stockholder's representatives, executors, administrators, estate, heirs,
successors and assigns, and will inure to the benefit of Compuware and DPRC and
their respective successors and assigns. The parties agree that this
Noncompetition Agreement shall not be interpreted against either party solely
because this Noncompetition Agreement was drafted by attorneys for Compuware.
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<PAGE> 67
IN WITNESS WHEREOF, the parties here executed this Noncompetition
Agreement as of the date first above written.
/s/ Mary Ellen Weaver
------------------------------------
MARY ELLEN WEAVER
/s/ Phyllis Recca
------------------------------------
COMPUWARE CORPORATION
/s/ Thomas A. Vadnais
------------------------------------
DPRC
5
<PAGE> 1
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of June
23, 1999 by David M. Connell ("Stockholder") in favor of and for the benefit of
COMPUWARE CORPORATION, its subsidiaries and affiliates ("Compuware"), and Data
Processing Resources Corporation ("DPRC").
RECITALS
A. As an employee and Stockholder of DPRC, Stockholder has obtained and
will obtain extensive and valuable knowledge and information concerning the
business of DPRC (including confidential information relating to DPRC and
Compuware and its operations, assets, contracts, customers, personnel, plans and
prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, DPRC is entering into an Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which it is anticipated that Compuware
will acquire DPRC (the "Acquisition").
C. In connection with the Acquisition and to more fully secure unto
Compuware the benefits of the Acquisition, Compuware has requested that
Stockholder enter into this Noncompetition Agreement.
<PAGE> 2
In consideration of the foregoing, Stockholder agrees as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Compuware's business and Compuware's legitimate interests in its acquisition of
DPRC (including DPRC's goodwill) pursuant to the Merger Agreement.
2. NONCOMPETITION. During the period commencing on the Effective Time
(as defined in the Merger Agreement) and ending on the later of (i) the first
anniversary of the Effective Time or (ii) the first anniversary of the
termination of Stockholder's employment with Compuware or DPRC, as the case may
be (the "Restriction Period"), Stockholder shall not, without Compuware's
consent, be or become an officer, director, stockholder, owner, affiliate,
salesperson, co-owner, partner, trustee, promoter, technician, engineer,
analyst, employee, agent, representative, supplier, investor or lender,
consultant, advisor or manager of or to, acquire or hold any interest in, or
permit Stockholder's name to be used in connection with any person or entity
that engages in any business entity which is directly competitive with any
business of DPRC on the Effective Time or the professional services business of
Compuware at the time of termination of your employment (the "Competitive
Business"); provided, however, that nothing in this Section 2 shall prevent
Stockholder from owning as a passive investment less than 1% of the outstanding
shares of the capital stock of a publicly-held corporation if such shares are
actively traded on an established national securities market in the United
States. Under this Noncompetition Agreement, Stockholder's employment with
Compuware or DPRC, as the case may be, shall be deemed to terminate at such time
that Stockholder is neither a full-time nor a part-time employee of Compuware.
3. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Noncompetition Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and DPRC or Compuware, on the other.
4. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or other
provision contained in this Noncompetition Agreement, Compuware and DPRC shall
be entitled (in addition to any other remedy that may be available to them) to
the extent permitted by applicable law (a) a decree or order of specific
performance to enforce the observance and performance of such covenant,
obligation or other provision, and (b) an injunction restraining such breach or
threatened breach. Stockholder further agrees that neither Compuware nor any
other person or entity shall be required to provide any bond or other security
in connection with any such decree, order or injunction or in connection with
any related action or proceeding.
5. NON-EXCLUSIVITY. The rights and remedies of Compuware and DPRC
hereunder are not exclusive of or limited by any other rights or remedies which
Compuware or DPRC may have, whether at law, in equity, by contract or otherwise,
all of which shall be cumulative (and not alternative). Without limiting the
generality of the foregoing, the rights and remedies of Compuware and DPRC
hereunder, and the obligations and liabilities of Stockholder hereunder, are in
addition to their respective rights, remedies, obligations and liabilities under
the law of unfair competition, misappropriation of trade secrets and the like.
This Noncompetition Agreement does not limit Stockholder's obligations or the
rights of Compuware or DPRC (or any affiliate of Compuware or DPRC) under the
terms of any other agreement between Stockholder and Compuware or DPRC or any
affiliate of Compuware or DPRC.
2
<PAGE> 3
6. NOTICES. Any notice or other communication required or permitted to
be delivered to Stockholder, DPRC or Compuware under this Noncompetition
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice delivered in accordance with this Section 6):
IF TO COMPUWARE/DPRC: Compuware Corporation
President
31440 Northwestern Highway
Farmington Hills, MI 48334
Faxsimile: 248-737-7690
IF TO STOCKHOLDER: Date Processing Resources
Corporation
18301 Von Karman Avenue, Suite 600
Irvine, California 92612
Attention: David M. Connell
Facsimile: 949-752-1190
7. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability or such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) such
invalidity or enforceability of such provision or part thereof shall not affect
the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement is separable from every other part of such provision.
8. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
9. WAIVER. No failure on the part of Compuware or DPRC to exercise any
power, right, privilege or remedy under this Noncompetition Agreement, and no
delay on the part of Compuware or DPRC in exercising any power, right, privilege
or remedy under this Noncompetition Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy. Neither Compuware nor
DPRC shall be deemed to have waived any claim arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy under this Noncompetition
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
3
<PAGE> 4
10. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
11. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to DPRC and Compuware such instruments and other documents and shall
take such other actions as Corporation and Compuware may reasonably request to
effectuate the intent and purposes of this Noncompetition Agreement.
12. ENTIRE AGREEMENT. This Noncompetition Agreement sets forth the
entire understanding of Stockholder, DPRC and Compuware relating to the subject
matter hereof and thereof and supersede all prior agreements and understandings
between any of such parties relating to the subject matter hereof and thereof.
13. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Compuware and Stockholder.
14. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Stockholder and may not be transferred or assigned by
Stockholder at any time. Either Compuware or DPRC may assign its rights under
this Noncompetition Agreement in whole or in part, without the consent or
approval of the Stockholder or any other person or entity, in connection with
(A) the sale of Compuware or DPRC, or (B) the sale or other transfer of all or a
substantial part of the assets or business of Compuware or DPRC.
15. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against any party to this
Noncompetition Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
16. EFFECTIVE TIME. This Noncompetition Agreement shall become effective
on the Effective Time and shall have no force or effect if the Effective Time
does not occur.
17. BINDING NATURE; INTERPRETATION OF THIS AGREEMENT. Subject to Section
16, this Noncompetition Agreement will be binding upon Stockholder and
Stockholder's representatives, executors, administrators, estate, heirs,
successors and assigns, and will inure to the benefit of Compuware and DPRC and
their respective successors and assigns. The parties agree that this
Noncompetition Agreement shall not be interpreted against either party solely
because this Noncompetition Agreement was drafted by attorneys for Compuware.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties here executed this Noncompetition
Agreement as of the date first above written.
/s/ David M. Connell
------------------------------------
DAVID M. CONNELL
/s/ Phyllis Recca
------------------------------------
COMPUWARE CORPORATION
/s/ Mary Ellen Weaver
------------------------------------
DPRC
5
<PAGE> 1
Exhibit (c)(4)
SHAREHOLDER TENDER AND VOTING AGREEMENT
AGREEMENT dated as of June 23, 1999 among COMP Acquisition Co., a
California corporation ("Buyer"), and the holders (the "Shareholders") of the
shares of Common Stock, no par value (the "Shares"), of Data Processing
Resources Corporation, a California corporation (the "Company"), listed on the
signature pages hereof.
In order to induce Buyer and Compuware Corporation, a Michigan
corporation ("Parent") and the owner of 100% of the outstanding capital stock of
Buyer, to enter into an Agreement and Plan of Merger with the Company (the
"Merger Agreement"), Buyer has requested the Shareholders, and the Shareholders
have agreed, to enter into this Agreement. Capitalized terms used and not
defined herein have the meanings given in the Merger Agreement.
The parties hereto agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
SECTION 1.1. Tender of Shares. (a) Each Shareholder hereby agrees,
pursuant to the terms and subject to the conditions set forth herein, to tender
in the Offer all Shares currently owned by such Shareholder as set forth on the
signature pages hereto and any additional Shares acquired by such Shareholder
(whether by purchase or otherwise) after the date of this Agreement (such
"Shareholder's Shares" and, collectively, the "Shareholder Shares").
(b) Within five business days of the commencement of the Offer and
within one business day of any acquisition by each Shareholder of any additional
Shares, each Shareholder shall deliver to the depositary (the "Depositary")
designated in the Offer (i) a letter of transmittal with respect to such
Shareholder's Shares complying with the terms of the Offer together with
instructions directing the Depositary to make payment for such Shares directly
to the Shareholder, (ii) a certificate or certificates representing such
Shareholder's Shares and (iii) all other documents or instruments required to be
delivered pursuant to the terms of the Offer (such documents in clauses (i)
through (iii) collectively being hereinafter referred to as the "Tender
Documents").
(c) Unless and until the Merger Agreement shall have been terminated
pursuant to its terms, no Shareholder shall, subject to applicable law, withdraw
any tender effected in accordance with Section 1.1(b).
SECTION 1.2. Voting of Shares. If the Offer, and Shareholder's tender
pursuant thereto, is not consummated, and the approval by the Company's
shareholders of the Merger Agreement and the Merger is sought, until termination
of the Merger Agreement, at every meeting of the shareholders of Company called
with respect to any of the following, and at every adjournment thereof, and on
every action or approval by written consent of the shareholders of Company with
respect to any of the following, each Shareholder shall cause all Shares owned
of record or beneficially (over which beneficially-owned Shares Shareholder
exercises voting power)
<PAGE> 2
to be voted (i) in favor of adoption and approval of the Merger Agreement and
approval of the Merger and (ii) against approval of (a) any proposal made in
opposition to or in competition with consummation of the Merger, (b) any merger,
consolidation, sale of assets, reorganization or recapitalization with any party
other than Parent or its affiliates or (c) any liquidation or winding up of
Company.
SECTION 1.3. No Transfer. Until the earlier of the termination of this
Agreement or the record date for the meeting at which shareholders of Company
are asked to vote upon adoption and approval of the Merger Agreement and
approval of the Merger, except pursuant to Shareholder's tender in the Offer, or
as may be required by the foreclosure on any encumbrance secured by such
Shareholder's Shares as of the date hereof or court order, each Shareholder
agrees not to sell, pledge, encumber, transfer, dispose of, or grant an option
with respect to, any of such Shareholder's Shares.
SECTION 1.4. No Option Exercise. During the period commencing with the
consummation of the Offer and ending at the Effective Time of the Merger, each
Shareholder agrees not to exercise any stock option issued by the Company, or
any other security exercisable for, or convertible into, Shares or other capital
stock of the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders severally represents and warrants to Buyer
that:
SECTION 2.1. Valid Title. Such Shareholder is the sole, true, lawful and
beneficial owner of such Shareholder's Shares with no restrictions on such
Shareholder's rights of disposition pertaining thereto.
SECTION 2.2. Authority; Noncontravention. Such Shareholder has the
requisite power and authority to enter into this Agreement and to consummate the
transaction contemplated by this Agreement. The execution and delivery of this
Agreement by such Shareholder and the consummation by such Shareholder of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action (including any consultation, approval or other action by or
with any other person). This Agreement has been duly executed and delivered by
such Shareholder and constitutes a valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any lien
upon any of the properties or assets of such Shareholder under, any provision of
applicable law or regulation or of any agreement, judgment, injunction, order,
decree, or other instrument binding on such Shareholder or result in the
imposition of any lien on any asset of such Shareholder. No consent, approval,
order or authorization of, or
2
<PAGE> 3
registration, declaration or filing with or exemption by any Federal, state or
local government or any court, administrative or regulatory agency or commission
or other governmental authority or agency, domestic or foreign, is required by
or with respect to such Shareholder in connection with the execution and
delivery of this Agreement by such Shareholder or the consummation by such
Shareholder of the transactions contemplated by this Agreement, except for
applicable requirements, if any, of Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder. If
this Agreement is being executed in a representative or fiduciary capacity, the
person signing this Agreement has full power and authority to enter into and
perform such Agreement.
SECTION 2.3. Total Shares. The number of Shares set forth on the
signature pages hereto are the only Shares beneficially owned by such
Shareholder and, except as set forth on such signature pages, the beneficial
owner or owners of such Shareholder's Shares owns or own no options to purchase
or rights to subscribe for or otherwise acquire any securities of the Company
and has or have no other interest in or voting rights with respect to any
securities of the Company.
SECTION 2.4. No Brokers. No investment banker, broker or finder is
entitled to a commission or fee from Buyer or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of such
Shareholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to each of the Shareholders that:
SECTION 3.1. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer, enforceable against it in
accordance with its terms.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 4.2. Conduct of Shareholders. Such Shareholder will not (a)
take, agree or commit to take any action that would make any representation and
warranty of such Shareholder hereunder inaccurate in any respect as of any time
prior to the termination of this Agreement or (b) omit, or agree or commit to
omit, to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time.
3
<PAGE> 4
SECTION 4.3. Specific Performance. The parties hereto agree that Buyer
may be irreparably damaged if for any reason any Shareholder failed to tender in
the Offer, and to not withdraw, such Shareholder's Shares in accordance with the
terms of this Agreement or to perform any of its other obligations under this
Agreement, and that Buyer would not have an adequate remedy at law for money
damages in such event. Accordingly, Buyer shall be entitled to specific
performance and injunctive and other equitable relief to enforce the performance
of this Agreement by each Shareholder. This provision is without prejudice to
any other rights that Buyer may have against any Shareholder for any failure to
perform its obligations under this Agreement.
SECTION 4.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
or by telecopy (with copies by overnight courier) to such party at its address
set forth on the signature page hereto or to such other address as such party
may have furnished to the other parties in writing in accordance herewith.
SECTION 4.5. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
may be terminated by any of the parties hereto upon written notice to the other
parties hereto on or after the earlier of (a) the date that Shares are accepted
for payment in the Offer and (b) the date that the Merger Agreement terminates
in accordance with its terms.
SECTION 4.6. Successors and Assigns. The provision of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that Buyer may assign its rights and
obligations to any affiliate of Buyer and provided, further, that no Shareholder
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of Buyer.
SECTION 4.7. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of California without giving effect to
the principles of conflicts of laws thereof.
SECTION 4.8. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
REST OF PAGE INTENTIONALLY LEFT BLANK
4
<PAGE> 5
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
COMP ACQUISITION CO.
By: /s/ Thomas Costello, Jr.
------------------------------------
Title: Vice President
c/o Compuware Corporation
31440 Northwestern Highway
Farmington Hills, Michigan 48334
Attention: General Counsel
Facsimile: 248-737-7690
Shares Owned SHAREHOLDERS:
2,034,150 /s/ Mary Ellen Weaver
------------------------------------
Mary Ellen Weaver
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
90,000 /s/ David M. Connell
------------------------------------
David M. Connell
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
342 /s/ Richard E. Earley
------------------------------------
Richard E. Earley
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
4,000 /s/ Thomas A. Vadnais
------------------------------------
Thomas A. Vadnais
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
5
<PAGE> 6
12.77 /s/ James A. Adams
------------------------------------
James A. Adams
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
0 /s/ Richard D. Tipton
------------------------------------
Richard D. Tipton
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
1,214 /s/ Phoebe Stenton
------------------------------------
Phoebe Stenton
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
0 /s/ Michael Okada
------------------------------------
Michael Okada
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
12,016 /s/ Paulette J. Suiter
------------------------------------
Paulette J. Suiter
c/o Data Processing Resources
Corporation
18301 Von Karman, Suite 600
Irvine, California 92612
[SIGNATURE PAGE TO SHAREHOLDER TENDER AND VOTING AGREEMENT]
6
<PAGE> 7
162,972 /s/ Robert J. Gallagher
------------------------------------
Robert J. Gallagher
c/o Systems & Programming
Consultants
212 Tryon Street, Suite 700
Charlotte, North Carolina 28281
709,576 /s/ Thomas G. Carlisle
------------------------------------
Thomas G. Carlisle
c/o Systems & Programming
Consultants
212 Tryon Street, Suite 700
Charlotte, North Carolina 28281
100,000 /s/ J. Christopher Lewis
------------------------------------
J. Christopher Lewis
c/o Riordan, Lewis and Haden
300 S. Grand Avenue, 29th Floor
Los Angeles, California 90071
74,800 /s/ Patrick C. Haden
------------------------------------
Patrick C. Haden
c/o Riordan, Lewis and Haden
300 S. Grand Avenue, 29th Floor
Los Angeles, California 90071
900,000* /s/ Richard J. Riordan
------------------------------------
Richard J. Riordan*
200 Spring Street
Los Angeles, California 90012
* The representations, warranties and covenants made by Mr. Riordan in
this Agreement are limited to 700,000 Shares currently owned by Mr. Riordan, and
do not include or extend to an additional 200,000 Shares currently owned by Mr.
Riordan. Mr. Riordan's obligation under Section 1.1(b) of this Agreement to
deliver Tender Documents with respect to such 700,000 Shares shall be satisfied
if such Tender Documents are delivered to the Depositary no later than two
business days prior to the initial expiration date of the Offer.
[SIGNATURE PAGE TO SHAREHOLDER TENDER AND VOTING AGREEMENT]
7
<PAGE> 1
Exhibit (c)(5)
May 13, 1999
DATA PROCESSING RESOURCES CORPORATION
4400 MacArthur Boulevard
Suite 610
Newport Beach, CA 92660
Attention: Mary Ellen Weaver
Chief Executive Officer
Dear Ms. Weaver:
DATA PROCESSING RESOURCES CORPORATION, a California corporation ("DPRC") and
Compuware Corporation, a Michigan corporation ("Compuware"), are engaged in
discussions with respect to a possible transaction between DPRC and Compuware (a
"Transaction"), and during the course of such discussions, DPRC and Compuware
may each disclose and make available to the other certain information concerning
its business, financial condition, operations, assets and liabilities
(collectively, the "Confidential Information"). Subject to paragraph 4 below,
the term "Confidential Information" shall include all information concerning
DPRC and Compuware (whether prepared by the disclosing party, its advisors or
otherwise and irrespective of the form of communication, whether written, oral,
electronic or other) which is furnished hereunder to a party or its
Representatives (as defined below) now or in the future by or on behalf of the
disclosing party, and shall also include all notes, analyses, compilations,
studies, interpretations or other documents prepared by each party or its
Representatives which contain, reflect or are based upon, in whole or in part,
the information furnished to such party or its Representatives pursuant hereto.
As a condition to being furnished with the Confidential Information, each of
DPRC and Compuware agree as follows:
Non-Disclosure of Confidential Information. (a) Each of DPRC and Compuware shall
(i) use the Confidential Information obtained from the other solely for the
purpose of evaluating a possible Transaction involving DPRC and Compuware and
for no other competitive or other purpose; (ii) not disclose the Confidential
Information to any third party, except for disclosures to its directors,
executive officers and representatives and advisors (such as independent
accountants and attorneys) acting on its behalf (collectively, its
"Representatives") who need to know such information for the purpose of
evaluating a possible Transaction involving DPRC and Compuware; (iii) inform its
Representatives of the confidential nature of the Confidential Information and
direct its Representatives to treat the Confidential Information confidentially;
(iv) take all additional precautions necessary to prevent the disclosure of the
Confidential Information by its Representatives to any third party; and (v) be
responsible for any breach of this Agreement by its Representatives.
<PAGE> 2
If either party is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information, it is agreed that
such party will provide the other party with prompt notice of such request so
that such other party may seek an appropriate protective order and/or waive the
notifying party's compliance with the provisions of this Agreement. If in the
absence of a protective order, either party is nonetheless compelled to disclose
Confidential Information, such party may disclose without liability hereunder
only that portion of such information that such party is advised by a written
opinion of counsel is legally required; provided, however, that such party gives
to the other party written notice of the information to be disclosed as far in
advance of its disclosure as is practicable and, upon such other party's
request, uses reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
Non-Disclosure of Negotiations or Agreements. Neither DPRC nor Compuware shall,
and each of DPRC and Compuware shall direct its Representatives not to, disclose
to any third party the existence, status or terms of any discussions,
negotiations or agreements between them, without obtaining the prior consent of
the other party, provided that a party may make such disclosure after the
signing of a definitive agreement for a Transaction if, in the reasonable
opinion of outside counsel for such party, such disclosure is required by law,
regulation, exchange rule or Nasdaq National Market requirement.
Ownership of Confidential Information. All written Confidential Information
delivered by one party hereto to the other party pursuant to this Agreement
shall be and remain the property of the delivering party, and upon the written
request of the delivering party, the receiving party shall (i) promptly return
the Confidential Information and shall not retain any copies or other
reproductions or extracts thereof, (ii) destroy or have destroyed all memoranda,
notes, reports and documents and all copies and other reproductions and extracts
thereof prepared by the receiving party or others in connection with its review
of the Confidential Information and (iii) provide a certificate to the
delivering party certifying that the foregoing materials have, in fact, been
destroyed or returned, signed by an authorized offer supervising such
destruction or return.
Information Not Deemed Confidential Information. The term "Confidential
Information" does not include information which (i) becomes generally available
to the public other than as a result of a disclosure by the receiving party or
its Representatives in violation of this Agreement; (ii) was available on a
non-confidential basis prior to disclosure to the receiving party pursuant to
this Agreement; or (iii) becomes available to the receiving party on a
non-confidential basis from a source other than the delivering party or its
Representatives, provided that such source is not known to be bound by a
confidentiality agreement with such delivering party or its Representatives.
No Warranty. Neither DPRC nor Compuware makes any representation or warranty as
to the accuracy and completeness of any Confidential Information provided by it,
and no liability shall result to the delivering party from its use, except as
set forth in a definitive agreement for a Transaction, when, as, and if it is
executed, and subject to such limitations and restrictions as may be specified
therein, shall have any legal effect. It is understood that the Confidential
2
<PAGE> 3
Information is not being furnished for use in an offer or sale of securities of
either party and is not designed to satisfy the requirements of federal or state
securities law in connection with any offer or sale of such securities.
No Agreement. Unless a definitive agreement regarding a Transaction between DPRC
and Compuware has been executed and delivered, neither Compuware nor DPRC will
be under any legal agreement except for the matters specifically agreed to
herein. Each party further acknowledges and agrees that each party reserves the
right, in its sole discretion, to reject any and all proposals made by the other
party or any of its Representatives with regard to a Transaction between DPRC
and Compuware, and to terminate discussions and negotiations with the other
party at any time.
No Solicitation. Without the prior written consent of the other party, and
except as required or permitted by a definitive agreement for the Transaction,
until two years from the date of this agreement, each party shall not initiate
or maintain contact (except in the ordinary course of business) with any
officer, director, employee, distributor or customer of the other party
regarding its business operations, prospects or finances. It is understood that
each party will arrange for appropriate contacts for due diligence purposes.
Unless otherwise agreed by either party, all (i) communications regarding a
possible Transaction, (ii) requests for additional information, (iii) requests
for facility tours or management meetings, or (iv) discussions or questions
regarding procedures, will be submitted or directed solely to the following
designated persons for the other party:
For DPRC: Mary Ellen Weaver
For Compuware: Joseph Nathan
Eliot Stark
Each party further agrees that for a period of three (3) years from the date
hereof, it will not, without the consent of the other party, employ or hire as a
consultant any of the officers of the other party or any other employee of the
other party with whom it has had contact during the period of its due diligence
investigations.
Non-public Information - Trading in Securities. Each of DPRC and Compuware has
outstanding publicly-held securities and acknowledges that (i) the Confidential
Information contains material non-public information, and (ii) the negotiations
and status of negotiations between the parties may constitute material
non-public information. Each of the parties acknowledges that it is (i) aware,
and has advised or will advise its Representatives, that the United States
securities laws prohibit any person in possession of material non-public
information about a company from purchasing or selling securities of such
company and from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person may
purchase or sell such securities and (ii) familiar with the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder, and each of DPRC and Compuware agrees that it will neither use nor
permit any of its Representatives to use any Confidential Information in
violation of such Act or rules or regulations, including without
3
<PAGE> 4
limitation, Rules 10b-5 and 142-3. Each of DPRC and Compuware agrees to take all
reasonable precautions to prevent any trading in securities of DPRC and
Compuware by their respective officers, directors, employees and agents having
knowledge of any proposed transaction between the parties until the proposed
transaction has been sufficiently publicly disclosed.
Standstill. Compuware agrees that, until the expiration of the one-year period
beginning on the date of this Agreement, without the prior written approval of
DPRC and except as otherwise contemplated by any letter of intent or definitive
agreement executed by the parties with respect to the Transaction, it will not
(i) in any manner acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, any securities, assets or property of DPRC or any of its
subsidiaries, whether such agreements or proposals are made with or to DPRC or
any of its subsidiaries, or a third party; (ii) propose to enter into, directly
or indirectly, any merger or other business combination involving DPRC or any of
its subsidiaries; (iii) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" (as such terms are used in the proxy rules of
the Exchange Act) to vote, or seek to advise or influence any person with
respect to the voting of, any voting securities of DPRC or any of its
subsidiaries, (iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of DPRC or any of its subsidiaries; (v) otherwise act, alone or in
concert with others, to seek to control or influence the management, Board of
Directors or policies of DPRC; (vi) disclose any intention, plan or arrangement
inconsistent with the foregoing; or (vii) advise, encourage any intention, plan
or arrangement inconsistent with the foregoing; or (viii) advise, encourage,
provide any information or assistance (including financial assistance) to or
hold discussions with, any other person or entity in connection with any of the
foregoing.
No Shop. In consideration of the time and expense which Compuware will incur
during the period beginning on the date of DPRC's acceptance of this letter and
ending on the date as the parties may terminate discussions concerning a
possible transaction, DPRC agrees that, until June 30, 1999, without the prior
written approval of Compuware and except as otherwise contemplated by any letter
of intent or definitive agreement executed by the parties with respect to a
possible transaction will not, directly or indirectly (by itself or its
representatives), solicit (including furnishing information concerning DPRC),
discuss, negotiate or accept any offer or proposal that would involve or could
result in a sale of DPRC (whether by merger, asset sale, stock sale or
otherwise) or of a substantial portion of DPRC's Common Stock to any party other
than Compuware. The provisions of this paragraph will not apply in the following
circumstance: (i) DPRC receives an unsolicited offer or proposal that would
involve or could result in a sale of DPRC (whether by merger, sale of all or a
substantial portion of DPRC's assets, stock sale, tender offer or otherwise) and
(ii) DPRC determines in its good faith judgment, after consultation with and
based upon the written advice of qualified outside legal counsel, that it is
required to participate in discussions and negotiations with the party making
such proposal. DPRC will promptly notify Compuware of its receipt of any offer
or proposal referred to in the preceding sentence, including the identity of the
party making the offer or proposal and the terms of the offer or proposal. DPRC
will furnish such additional information concerning such offer or proposal to
Compuware as may be requested by Compuware, except to the extent that DPRC is
4
<PAGE> 5
advised in writing by the qualified outside legal counsel that the furnishing of
such information is not lawful.
Purpose and Use of Confidential Information. DPRC and Compuware understand and
agree that the Confidential Information shall be used solely for the purpose of
evaluating a potential business transaction and not to affect, in any way,
either party's competitive position relative to the other party, and that only
information reasonably necessary to evaluate a proposed transaction shall be
disclosed or exchanged.
No Waiver. No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof, or the
exercise of any right, power or privilege hereunder. Any waiver of a breach
hereof shall be in writing and shall not operate or be construed as a waiver of
any other or subsequent breach.
Remedies. It is understood and agreed that money damages would not be a
sufficient remedy for any breach of this Agreement by either party or its
Representatives and that the non-breaching party shall be entitled to equitable
relief, including specific performance and injunction, as a remedy for any such
breach. Such remedies shall not be deemed to be the exclusive remedies for a
breach of this Agreement by either party or its Representatives, but shall be in
addition to all other remedies available at law or in equity to the
non-breaching party.
Governing Law. This Agreement shall be governed by and construed in accordance
with the internal law of, and not the choice of law provisions or law of
conflicts of, the State of Michigan.
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 6
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter to the undersigned, whereupon this letter agreement shall
become a binding agreement between DPRC and Compuware.
COMPUWARE CORPORATION
By: /s/ Eliot R. Stark
-----------------------------
Name: Eliot R. Stark
Title: Executive Vice President
Accepted and agreed:
DATA PROCESSING RESOURCES CORPORATION
By: /s/ David M. Connell
-----------------------------
Name: David M. Connell
Title: Executive Vice President
Dated: May 20, 1999
6
