-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SD6NwIREySoAT1oSBWh034YZiWd8C/OImiChy32bBRCFUHH9xIghycRSHyq1yn6i HfY4eHV7TdBnIVskKGXoRw== 0000891618-99-002956.txt : 19990701 0000891618-99-002956.hdr.sgml : 19990701 ACCESSION NUMBER: 0000891618-99-002956 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19990630 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DATA PROCESSING RESOURCES CORP CENTRAL INDEX KEY: 0001005700 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 953931443 STATE OF INCORPORATION: CA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-48251 FILM NUMBER: 99656285 BUSINESS ADDRESS: STREET 1: 18301 VON KARMAN STREET 2: STE 600 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9495531102 MAIL ADDRESS: STREET 1: 18301 VON KARMAN STREET 2: STE 600 CITY: IRVINE STATE: CA ZIP: 92612 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUWARE CORPORATION CENTRAL INDEX KEY: 0000859014 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 382007430 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 31440 NORTHWESTERN HWY CITY: FARMINGTON HILLS STATE: MI ZIP: 48334-2564 BUSINESS PHONE: 8107377300 MAIL ADDRESS: STREET 1: 31440 NORTHWESTERN HIGHWAY CITY: FARMINGTON HILLS STATE: MI ZIP: 48334-2564 SC 14D1 1 SC 14D1 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ 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
- ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ TRANSACTION VALUATION* AMOUNT OF FILING** - ------------------------------------------------------------------------------------------------------------ $354,297,984 $70,860 - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------
* 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. Amount Previously Paid: None. Form or Registration No.: Not applicable. Filing Party: Not applicable. Date Filed: Not applicable.
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 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. 2 3 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. 3 4 (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. 4 5 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 6 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT NAME - ------- ------------ (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.
6 EX-99.(A).(1) 2 EXHIBIT 99.(A).(1) 1 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 2 TABLE OF CONTENTS
PAGE ---- 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
2 3 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 3 4 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 4 5 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 6 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 6 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 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 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. 9 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.
HIGH LOW ---- ---- 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
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 10 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)
THREE MONTHS NINE MONTHS ENDED FISCAL YEAR ENDED JULY 31, ENDED APRIL 30, APRIL 30, ----------------------------- ----------------- ------------------- 1998 1997 1996 1999 1998 1999 1998 -------- -------- ------- ------- ------- -------- -------- (UNAUDITED) 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
AT JULY 31, -------------------- 1998 1997 AT APRIL 30, 1999 -------- -------- ----------------- (UNAUDITED) 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
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 11 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 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, 13 14 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 14 15 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 15 16 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 16 17 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 17 18 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 18 19 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. 19 20 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. 20 21 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 21 22 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 22 23 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 23 24 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. 24 25 - 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 25 26 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. 26 27 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 27 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, 28 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 29 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. 30 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 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 32 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 33 34 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:
NAME POSITION WITH PURCHASER - ---- ----------------------- Eliot R. Stark......... President and Director Thomas Costello, Vice President, Secretary, Treasurer and Director Jr. .................
2. Directors and Executive Officers of Compuware:
NAME POSITION WITH COMPUWARE - ---- ----------------------- 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
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 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 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 37 The Depositary for the Offer is: EQUISERVE 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
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 EX-99.(A).(2) 3 EXHIBIT 99.(A).(2) 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 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
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.
- ------------------------------------------------------------------------------------------------------------------------ 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) - ------------------------------------------------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------------------------------------------------
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 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 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 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 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 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 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 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 10 PAYER'S NAME: EQUISERVE - ------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------
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 EX-99.(A).(3) 4 EXHIBIT 99.(A).(3) 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 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
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. 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 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. Name of Firm: -------------------------------------- --------------------------------------------- AUTHORIZED SIGNATURE Address: - --------------------------------------------- --------------------------------------------- PLEASE TYPE OR PRINT: Title: - --------------------------------------------- --------------------------------------------- Zip Code Area Code and Dated: --------- , 1999 Telephone Number: ---------------------------------
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.(A).(4) 5 EXHIBIT 99.(A).(4) 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; 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 EX-99.(A).(5) 6 EXHIBIT 99.(A).(5) 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. 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 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 EX-99.(A).(6) 7 EXHIBIT 99.(A).(6) 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. - ------------------------------------------------------ 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
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(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. 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. EX-99.(A).(7) 8 EXHIBIT 99.(A).(7) 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 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 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 EX-99.(A).(8) 9 EXHIBIT 99.(A).(8) 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. 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 EX-99.(C).(1) 10 EXHIBIT 99.(C).(1) 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 ================================================================================ 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: 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- 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- 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- 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.". -5- 7 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 -6- 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 -7- 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 -8- 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. -9- 11 (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, -10- 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. -11- 13 (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 -12- 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. -13- 15 (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. -14- 16 (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, -15- 17 "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. -16- 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 -17- 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 -18- 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 -19- 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. -20- 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") -21- 23 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. -22- 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; -23- 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 -24- 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 -25- 27 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. -26- 28 (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 -27- 29 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 -28- 30 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). -29- 31 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; -30- 32 (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 -31- 33 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, -32- 34 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 -33- 35 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 -34- 36 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 -35- 37 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 -36- 38 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. -37- 39 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 -38- 40 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. -39- 41 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: -40- 42 (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 -41- 43 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). -42- 44 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 -43- 45 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 -44- 46 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 -45- 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 -46- 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 -47- 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) -48- 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 -49- 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 -50- 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) -51- 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; -52- 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 -53- 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 -54- EX-99.(C).(2) 11 EXHIBIT 99.(C).(2) 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 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 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 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 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 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. 2 7 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 3 8 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. 4 9 (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 5 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 6 11 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 7 12 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 8 13 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 9 14 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. 10 15 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. 11 16 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 12 17 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 13 18 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 14 19 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 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 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 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. 2 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. 3 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 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. 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 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: 3 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 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 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. 6 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. 7 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; 8 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 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 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 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 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. 13 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. 14 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 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 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 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. 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 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 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 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 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. 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 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 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. 4 51 (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 5 52 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 6 53 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 7 54 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; 8 55 (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 9 56 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 10 57 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 11 58 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. 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 13 60 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. 14 61 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. 15 62 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 63 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. 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 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 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. 4 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 EX-99.(C).(3) 12 EXHIBIT 99.(C).(3) 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. 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 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 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 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 EX-99.(C).(4) 13 EXHIBIT 99.(C).(4) 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) 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 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 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 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 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 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 EX-99.(C).(5) 14 EXHIBIT 99.(C).(5) 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. 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 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 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 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] 5 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 -----END PRIVACY-ENHANCED MESSAGE-----