Document:

EX-10.9

 Exhibit 10.9 
 SEVERANCE AGREEMENT 
 THIS AGREEMENT, dated March 15, 2013, is made by
and between Compuware Corporation, a Michigan corporation (the “Company”), and David A. McGuffie (the “Executive”). 
 WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and 

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists
and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and 

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as
follows: 
 1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section
hereof. 
 2. Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in
effect through December 31, 2014; provided, however, that commencing on January 1, 2014 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall
expire twenty-four (24) months following the date on which such Change in Control occurred. 
 3. Company’s
Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein,
to pay the Executive the Severance Payments and the other payments and benefits described herein. No Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of
Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an express or implied
contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 

  
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 4. The Executive’s Covenants. The Executive agrees that, subject to the terms
and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such
Potential Change in Control, (ii) the date of a Change in Control, or (iii) the date of termination of the Executive’s employment for any reason. 
 5. Compensation Other Than Severance Payments. 
 5.1 Following a Change in
Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full
salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the
Company during such period (other than any disability plan), until the Executive experiences a separation from service from the Company by reason of the Executive’s Disability. 

5.2 If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company
shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason. 

5.3 If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company
shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s
compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance
constituting Good Reason. 

  
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 6. Severance Payments. 

6.1 Subject to Section 6.2 hereof, if (i) the Executive’s employment is terminated following a Change in Control and
during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits,
described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive’s employment shall be
deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (but
only if a Change in Control occurs no later than six (6) months following the Executive’s termination of employment) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (but only if a Change in Control occurs no later than six (6) months following the
Executive’s termination of employment) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by
the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (but only if a Change in Control occurs no later than six
(6) months following the Executive’s termination of employment). 
 (A) In lieu of any further salary
payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to one times the
sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the
Executive’s target annual bonus under any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination or, if higher, the fiscal year in which occurs the first event or
circumstance constituting Good Reason. 
 (B) For the twelve month period immediately following the Date of
Termination, the Company shall arrange to provide the Executive and his dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of
Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after-tax cost to the Executive than
the after-tax cost to the Executive immediately prior to such date or occurrence. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made
available to the Executive during the twelve month period 

  
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following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided,
however, that the Company shall reimburse the Executive for the excess, if any, of the after tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the
first occurrence of an event or circumstance constituting Good Reason. 
 (C) Notwithstanding any provision of
any annual incentive plan to the contrary, the Company shall pay to the Executive an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year
preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of
the Amount the Executive would have earned with respect to the year in which the Date of Termination occurs, calculated by multiplying the award that the Executive would have earned for such year, based upon the actual level of achievement of the
performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such year through the Date of Termination by twelve (12). 

6.2(A) Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the
Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such
payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments
provided by reason of section 280G of the Code in such other plan, arrangement or agreement, the portion of the Total Payments that does not constitute deferred compensation within the meaning of section 409A of the Code shall first be reduced and
the portion of the Total Payments that does constitute deferred compensation within the meaning of section 409A of the Code shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax
but only if (A) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized
deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (B) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local
income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments). 

  
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 (B) For purposes of determining whether and the extent to which the Total
Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of
section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive, does not
constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into
account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, and
(iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined in accordance with the principles of sections 280G(d)(3) and (4) of the Code. 

(C) At the time that payments are made under this Agreement, the Company shall provide the Executive with a written
statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel or other advisors or consultants (and
any such opinions or advice which are in writing shall be attached to the statement). If the Executive objects to the Company’s calculations, the Company shall pay to the Executive such portion of the Severance Payments (up to 100% thereof) as
the Executive determines is necessary to result in the proper application of subsection A of this Section 6.2. 
 6.3
Subject to the provisions of Section 15 hereof, the payment provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth day following the Date of Termination. Notwithstanding the above, to the
extent the Executive is terminated (i) following a Change in Control but prior to a change in ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of section
409A of the Code) or (ii) prior to a Change in Control in a manner described in Section 6.1, to the extent required to avoid accelerated or additional tax under section 409A of the Code, amounts payable to the Executive hereunder, to the
extent not in excess of the amount that the Executive would have received under any other pre-Change in Control severance plan or arrangement with the Company had such plan or arrangement been applicable, shall be paid at the time and in the manner
provided by such plan or arrangement and the remainder shall be paid to the Executive in accordance with the provisions of this Section 6.3. 
 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive’s
employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made 

  
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within five (5) business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may
require; provided that in no event will payment be made for requests that are submitted later than
December 15th of the year following the year in which
the expense is incurred. 
 7. Termination Procedures and Compensation During Dispute. 

7.1 Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s
employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel,
to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

 7.2 Date of Termination. “Date of Termination,” with respect to any purported termination of the
Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen
(15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). 
 8. No
Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive
by the Company pursuant to Section 6 hereof. Further, except as specifically provided in Section 6.1(B) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 

  
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 9. Successors; Binding Agreement. 

9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place. 
 9.2 This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement
to the executors, personal representatives or administrators of the Executive’s estate. 
 10. Notices. For the
purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, addressed, if to the Executive, to the most recent address shown in the personnel records of the Company and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: 
 To the Company: 
 Compuware Corporation 

One Campus Martius 
 Detroit, MI 48226 
 Attention: Chief Executive Officer

 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of
compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes
any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement
setting 

  
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forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change
in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Michigan. All references to sections of
the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including,
without limitation, those under Sections 6 hereof) shall survive such expiration. 
 12. Validity. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 

13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument. 
 14. Settlement of Disputes; Arbitration. 

14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that
the Executive’s claim has been denied. Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the arbitrator. 

14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in
the city and state of the Executive’s principal residence as of the date of the Change in Control, in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary
standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. 
 15. Section 409A. The intent of the parties is that payments and benefits under this Agreement comply with section 409A of the Code to the extent subject thereto or be exempt therefrom, and,
accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, to the extent

  
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required to avoid the application of an accelerated or additional tax under section 409A of the Code, the Executive shall not be considered to have terminated employment with the Company for
purposes of this Agreement until such time as the Executive is considered to have incurred a “separation from service” from the Company within the meaning of section 409A of the Code. Each amount to be paid or benefit to be provided under
this Agreement shall be construed as a separately identified payment for purposes of section 409A of the Code, and any payments that are due within the “short term deferral period” as defined in section 409A of the Code shall not be
treated as deferred compensation unless applicable law requires otherwise. To the extent required to avoid the application of an accelerated or additional tax under section 409A of the Code, amounts that would otherwise be payable and benefits that
would otherwise be provided pursuant to this Agreement during the six-month period immediately following the Executive’s termination of employment shall instead be paid on the first business day after the date that is six months following the
Executive’s termination of employment (or upon the Executive’s death, if earlier). To the extent required to avoid an accelerated or additional tax under section 409A of the Code, amounts reimbursable to Executive under this Agreement
shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Executive) during any one year may not
affect amounts reimbursable or provided in any subsequent year. 
 16. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below: 
 (A) “Affiliate” shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act. 
 (B) “Base Amount” shall have the meaning set forth in
section 280G(b)(3) of the Code. 
 (C) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act. 
 (D) “Board” shall mean the Board of Directors of the Company. 

(E) “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued
failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of 

  
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clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company. 
 (F) A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred: 

(I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 35% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (III) below; or 
 (II) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other
than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or recommended; or 
 (III) there is
consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent
thereof, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 35% or more of the combined voting power of the Company’s then outstanding securities; or

  
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 (IV) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of
the Company’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent
thereof. 
 Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. 
 (G) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. 
 (H) “Company” shall mean Compuware Corporation and, except in determining under Section 15(F) hereof whether or not any Change in Control of the Company has occurred, shall include any
successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. Where appropriate in the context, “Company” shall also include any subsidiary of Compuware. 

(I) “Date of Termination” shall have the meaning set forth in Section 7.2 hereof. 

(J) “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a
result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the
Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s
duties. 
 (K) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 (L) “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code. 

(M) “Executive” shall mean the individual named in the first paragraph of this Agreement. 

  
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 (N) “Good Reason” for termination by the Executive of the Executive’s
employment shall mean the occurrence (without the Executive’s express written consent which specifically references this Agreement) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses
(ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (I) through (VII) below to a “Change in Control” as references to a “Potential Change in Control”), of any one
of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (I), (V), (VI), (VII) or (VIII) below, such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination given in respect thereof: 
 (I) the assignment to the
Executive of any duties materially inconsistent with the Executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect
immediately prior to the Change in Control including, without limitation, if the Executive was, immediately prior to the Change in Control, an executive officer of a public company, any such alteration attributable to the Executive ceasing to be an
executive officer of a public company; 
 (II) a reduction by the Company in the Executive’s annual base
salary as in effect on the date hereof or as the same may be increased from time to time; 
 (III) the
relocation of the Executive’s principal place of employment to a location more than 25 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be
based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel
obligations; 
 (IV) the failure by the Company to pay to the Executive any portion of the Executive’s
current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due; 

(V) the failure by the Company to continue in effect any compensation plan in which the Executive participates
immediately prior to the Change in Control which is material to the Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure
by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the
Executive’s participation relative to other participants, as existed immediately prior to the Change in Control; 

  
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 (VI) the failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, disability or other plans in which the Executive was participating immediately prior to
the Change in Control and which are material to the Executive’s total compensation (except for across the board changes similarly affecting all executives of the Company and all executives of any Person in control of the Company) or the taking
of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control; 

(VII) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective. The Executive’s right to terminate the Executive’s employment for Good Reason shall not
be affected by the Executive’s incapacity due to physical or mental illness; 
 (VIII) Failure of the
Company to obtain assumption and agreement by a successor of the Company to perform this Agreement as provided in Section 9.1. 
 The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder; provided that the Executive
provides the Company with a written Notice of Termination within ninety (90) days following the occurrence of the event constituting Good Reason. In no event will the Executive have Good Reason to terminate employment unless such act or failure
to act results in a material negative change to the Executive’s employment that has not been cured within 30 days after a Notice of Termination is delivered by the Executive to the Company. 

(O) “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof. 

(P) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company. 

  
 13 of 15

 (Q) “Potential Change in Control” shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred: 
 (I) the Company enters into an
agreement, the consummation of which would result in the occurrence of a Change in Control; 
 (II) the Company
or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; 
 (III) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of either the then outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or 

(IV) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has
occurred. 
 (R) “Severance Payments” shall have the meaning set forth in Section 6.1 hereof. 

(S) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof. 

(T) “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or
termination described therein). 
 (U) “Total Payments” shall mean those payments so described in Section 6.2
hereof. 

  
 14 of 15

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written. 
  

			
	COMPUWARE CORPORATION
		
	By:	 	/s/ Robert C. Paul
		 	 Robert C. Paul
 Its: Chief
Executive Officer

  

			
		
	By:	 	/s/ David A. McGuffie
		 	David A. McGuffie

  
 15 of 15Unassociated Document

 

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (this “Agreement”) dated as of June 3, 2013, is by and between Converted Organics, Inc., a Delaware corporation (“Parent”), Hudson Bay Master Fund Ltd., a Cayman Islands company ("Hudson Bay"), and Iroquois Master Fund Ltd., a Cayman Islands company ("Iroquois" and, collectively with Hudson Bay, the "Investors").

 

RECITALS:

 

WHEREAS, pursuant to the Agreement and Plan of Merger (as amended from time to time in accordance with its terms, the “Merger Agreement”), dated as of the date hereof, by and among Parent, FINJAN, Inc., a Delaware corporation (the “Company”) and COIN Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), among other things, at the Effective Time, the Company will be merged with and into the Merger Sub, with the Merger Sub surviving the Merger on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”);

 

WHEREAS, Hudson Bay owns $300,100 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on March 13, 2012, $187,000 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on February 5, 2013, $7,150 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on April 1, 2013, $41,700 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on May 1, 2013, $15,000 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on May 8, 2013and $45,300 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on May 30, 2013 (collectively, the "Hudson Bay Convertible Notes"), warrants issued by Parent on May 27, 2009 to purchase 33.33 shares of Parent Common Stock, warrants issued by Parent on February 5, 2013 to purchase 77,916,666 shares of Parent Common Stock, warrants issued by Parent on April 1, 2013 to purchase 1,191,667 shares of Parent Common Stock, warrants issued by Parent on May 1, 2013 to purchase 11,583,333 shares of Parent Common Stock, warrants issued by Parent on March 13, 2012 to purchase 213,125,000 shares of Parent Common Stock, Warrants to purchase 3,409,091 shares of Parent Common Stock issued by Parent on May 8, 2013 and Warrants to purchase 9,437,500 shares of Parent Common Stock issued by Parent on May 30, 2013 (collectively, the "Hudson Bay Warrants") and 6,640 shares of 1% Series A Convertible Preferred Stock, $0.0001 par value per share of Parent (the “Hudson Bay Preferred Stock”, and together with the Hudson Bay Convertible Notes and the Hudson Bay Warrants, the "Hudson Bay Securities") and Iroquois owns $41,700 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on March 1, 2012, $7,150 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on April 1, 2013, $87,600 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on March 12, 2012, $86,900 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on March 13, 2012, $125,600 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on April 11, 2012, $187,000 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on February 1, 2013, $15,000 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on May 8, 2013 and $45,300 aggregate principal amount of Senior Secured Convertible Notes issued by Parent on May 30, 2013 (collectively, the "Iroquois Convertible Notes"), warrants issued by Parent on May 1, 2013 to purchase 11,583,333 shares of Parent Common Stock, warrants issued by Parent on April 1, 2013 to purchase 1,191,667 shares of Parent Common Stock, warrants issued by Parent on March 12, 2012 to purchase 135,000,000 shares of Parent Common Stock, warrants issued by Parent on April 11, 2012 to purchase 70,000,000 shares of Parent Common Stock, warrants issued by Parent on February 1, 2013 to purchase 77,916,666 shares of Parent Common Stock warrants issued by Parent on January 31, 2013 to purchase 8,125,000 shares of Parent Common Stock, warrants issued by Parent on May 8, 2013 to purchase 3,409,091 shares of Parent Common Stock and Warrants to purchase 9,437,500 shares of Parent Common Stock issued by Parent on May 30, 2013 (collectively, the "Iroquois Warrants") and 1,898 shares of 1% Series A Convertible Preferred Stock, $0.0001 par value per share of Parent (the “Iroquois Preferred Stock”, together with the Iroquois Notes and the Iroquois Warrants, the "Iroquois Securities", and the Hudson Bay Securities and the Iroquois Securities, collectively, the "Investor Securities"); and

 

  

  

  

 

WHEREAS, immediately following the Effective Time, pursuant to this Agreement, among other things, Parent and each Investor shall exchange all of such Investor's Investor Securities for the issuance of 10,736,814 shares of Parent Common Stock to Hudson Bay (the "Hudson Bay Exchange Shares") and 10,736,814 shares of Parent Common Stock to Iroquois (the "Iroquois Exchange Shares", and together with the Hudson Bay Exchange Shares, the “Exchange Shares”); and

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto and certain shareholders of the Company are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit A (the "Registration Rights Agreement"), pursuant to which the Parent has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), including, without limitation, the Exchange Shares, under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

ARTICLE I.

DEFINITIONS

 

Section 1.01.                      Definitions.  Capitalized terms used in this Agreement and not defined herein have the meanings ascribed to such terms in the Merger Agreement.

 

  

  

  

 

ARTICLE II.

EXCHANGE

 

Section 2.01.                      Investor Exchange.  Subject to the terms and conditions hereof, each Investor and the Parent are exchanging such Investor's Investor Securities, as follows (the “Exchange”, and the date of the Exchange, the "Exchange Date"):

 

(a)           Closing.  The consummation of the Exchange shall occur effective immediately following the Effective Time.

 

(b)           Consideration.  Pursuant to the Exchange, the applicable Exchange Shares shall be issued to each Investor in exchange for such Investor's Investor Securities.  Notwithstanding anything herein to the contrary, each Investor hereby agrees that, upon and subject to the consummation of the Exchange, all of the Parent’s obligations and liabilities under such Investor's Investor Securities shall be automatically terminated and cancelled in full without any further action, and that this Agreement shall constitute an instrument of termination and cancellation of such Investor Securities.

 

(c)           Delivery.  The Parent and each of the Investors are, in connection with the execution and delivery of this Agreement, irrevocably instructing the Company’s transfer agent (together with any subsequent transfer agent, the “Transfer Agent”), to issue, as soon as practicable following the date on which the Investors have delivered to the Company original certificates representing the Investor Securities for cancellation, the Exchange Shares to each of the Investors, against receipt by the Parent of such Investor's Investor Securities.  For the avoidance of doubt, as of the Exchange (i) each Investor’s rights under its Investor Securities shall be extinguished and (ii) each Investor shall be deemed for all corporate purposes to have become the holder of record of its Exchange Shares without any further action by any party.

 

Section 2.02.                      Release.  In exchange for the consideration, undertakings, and covenants undertaken by the Parent in this Agreement, from and after the consummation of the Exchange, each of the Investors, severally and not jointly, and each of their respective parents, subsidiaries, affiliates, directors, officers, partners, successors and assigns (each, an “Investor Releasing Party”), hereby releases, discharges and covenants not to sue the Parent, each of its subsidiaries, affiliates, and related companies, and each of their respective past and present employees, directors, officers, attorneys, representative, insurers, agents, successors, and assigns (collectively, the “Parent Releasees”), from any and all debts, actions, causes of action, suits, liabilities, claims, and each of them, whether known or unknown, held as of the date hereof or acquired by the Investors on a later date from another party but existing as of the Effective Time, which the Investor Releasing Party has, had, or hereafter may claim to have, against the Parent Releasees, except as may be based upon or related to any breach of this Agreement, the Registration Rights Agreement or the Closing Agreement (as defined in the Merger Agreement) (each released claim, an “Investor Claim”).  The Parent and the Investor intend such Investor Releasing Party’s release of Investor Claims to be general and comprehensive in nature to the maximum extent permitted by law.

 

  

  

  

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

Section 3.01.                      Representations and Warranties of the Investors.  Each Investor, severally and not jointly, hereby represents and warrants to Parent as of the date of this Agreement and immediately prior to the Effective Time with respect to only itself, as follows:

 

(a)           Organization and Good Standing.  Such Investor is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, with all requisite power and authority required to conduct its business as presently conducted.

 

(b)           Authority.  Such Investor has all requisite power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.  The execution and delivery by such Investor of this Agreement and the performance by such Investor of its obligations hereunder have been duly authorized by all requisite action of such Investor and no other action on the part of such Investor or its securityholders is necessary to authorize the execution, delivery or performance by such Investor of this Agreement.

 

(c)           Valid and Binding Agreement.  This Agreement has been duly executed and delivered by such Investor and, assuming that this Agreement has been duly authorized, executed and delivered by the Parent, constitutes the legal, valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity.

 

(d)           Non-Contravention.  The execution and delivery of this Agreement by such Investor and the performance by such Investor of its obligations hereunder does not and will not (i) violate any provision of the Organizational Documents of such Investor, (ii) conflict with or violate any Law or order of any Governmental Authority applicable to such Investor or its assets or properties, (iii) require any permit, authorization, consent, approval, exemption or other action by, notice to or filing with, any Person or Governmental Authority (other than filings by such Investor with the SEC under Section 13 of the Exchange Act), (iv) violate, conflict with, result in a material breach of, or constitute (with or without notice or lapse of time or both) a material default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under any permit or Contract to which such Investor is a party or by which any of its properties or assets are bound, or (v) result in the creation or imposition of any Lien on any part of the properties or assets of such Investor (including such Investor's Investor Securities and the Exchange Shares).

 

(e)           Exemption.  Such Investor understands that the Exchange Shares are being offered, sold, issued and delivered to it in reliance upon specific provisions of federal and applicable state securities laws, and that the Parent is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Investors set forth herein for purposes of qualifying for exemptions from registration under the Securities Act and applicable state securities laws.

 

  

  

  

 

(f)           No Advertisement.  To such Investor's knowledge, such Investor is not acquiring the Exchange Shares as a result of any advertisement, article, notice or other communication regarding the Exchange Shares published in any newspaper, magazine or similar media or on the internet or broadcast over television, radio or the internet or presented at any seminar or any other general advertisement.

 

(g)           Knowledge; Sophistication.  Such Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the investment in the Exchange Shares, and has so evaluated the merits and risks of such investment.  Such Investor is able to bear the economic risk of their investment in the Exchange Shares and, at the present time, is able to afford a complete loss of such investment.

 

(h)           Compliance.  Such Investor has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the investment of the Exchange Shares, and has so evaluated the merits and risks of such investment.  Such Investor is able to bear the economic risk of their investment in the Exchange Shares and, at the present time, is able to afford a complete loss of such investment.

 

(i)           Ownership of the Investor Securities and Exchange Shares.  As of the date hereof, such Investor is, and immediately prior to the Effective Time such Investor will be, the record and beneficial owner of, and has, and as of immediately prior to the Effective Time will have, good and valid title to, such Investor's Investor Securities, free and clear of all Liens (except for restrictions or limitations on transfer imposed by applicable federal or state securities laws that do not affect or prohibit the transactions contemplated hereby), and has, and as of immediately prior to the Effective Time will have, full and unrestricted power to dispose of and to exercise all rights thereunder (other than as restricted by this Agreement), without the consent or approval of, or any other action on the part of, any other Person.  As of immediately following the Exchange, such Investor will (i) be the beneficial owner and the sole record owner of the Exchange Shares free and clear of all Liens (except for restrictions or limitations on transfer imposed by applicable federal or state securities laws that do not affect or prohibit the transactions contemplated hereby), (ii) have good and valid title to the Exchange Shares, and (iii) will have full and unrestricted power to dispose of and vote all of the Exchange Shares without the consent or approval of, or any other action on the part of, any other Person.  None of such Investor's Investor Securities are, and none of the Exchange Shares will be, held by such Investor subject to any proxy, voting agreement, voting trust, power of attorney, consent or other agreement, arrangement or instrument with respect to the voting of such Investor Securities or Exchange Shares, as the case may be.   Such Investor's Investor Securities constitute, and as of immediately prior to the Effective Time will constitute, all of the securities of Parent that are owned beneficially or of record by such Investor and neither such Investor nor any of its Affiliates own, nor as of immediately prior to the Effective Time will own, beneficially or of record, or have any right to acquire (whether currently, upon lapse of time, following the satisfaction of any conditions, upon the occurrence of any event or any combination of the foregoing) any securities of Parent other than the ownership of such Investor's Investor Securities until consummation of the Exchange and the right to acquire the Exchange Shares upon consummation of the Exchange. Other than the transactions contemplated by the Exchange Agreement, there is no outstanding Contract, vote, plan, pending proposal, or other right of any person to acquire all or any of such Investor's Investor Securities or the Exchange Shares.

 

  

  

  

 

(j)           No Assignment.  Such Investor has not assigned or transferred to any third party and they have not filed with any agency or court any Investor Claim to be released pursuant to Article 2 of this Agreement.

 

(k)           No Distribution. Such Investor is acquiring the Exchange Shares for its own account for investment and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, such Investor does not agree to hold any of the Exchange Shares for any minimum or other specific term and reserves the right to dispose of the Exchange Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.

 

(l)           Accredited Investor Status.  Such Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(m)           Transfer or Resale.  Such Investor understands that except as provided in the Registration Rights Agreement: (i) the Exchange Shares have not been and are not being registered under the Securities Act or any state Exchange Shares laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Investor shall have delivered to the Parent an opinion of counsel, in a form reasonably acceptable to the Parent, to the effect that such Exchange Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Investor provides the Parent with reasonable assurance that such Exchange Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (“Rule 144”); (ii) any sale of the Exchange Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Exchange Shares under circumstances in which the seller (the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder; and (iii) neither the Parent nor any other Person is under any obligation to register the Exchange Shares under the Securities Act or any state Exchange Shares laws or to comply with the terms and conditions of any exemption thereunder.

 

(n)           Legends.  Such Investor understands that the certificates or other instruments representing the Exchange Shares, until such time as the resale of the Exchange Shares have been registered under the Securities Act as contemplated by the Registration Rights Agreement, except as set forth below, shall bear any legend as required by the  “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

  

  

  

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

The legend set forth above shall be removed and the Parent shall issue a certificate without such legend to the holder of the Exchange Shares upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Exchange Shares are registered for resale under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Parent with an opinion of a law firm reasonably acceptable to the Parent, in a form reasonably acceptable to the Parent, to the effect that such sale, assignment or transfer of the Exchange Shares may be made without registration under the applicable requirements of the Securities Act, or (iii) such holder provides the Parent with reasonable assurance that the Exchange Shares are eligible to be sold, assigned or transferred without volume restriction pursuant to Rule 144 or Rule 144A.  Such Investor agrees that the removal of the restrictive legend from the Exchange Shares and any certificates representing securities as set forth in the immediately preceding sentence is predicated upon the Parent’s reliance that such Investor will sell the Exchange Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if such securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.

 

Section 3.02.                      Representations and Warranties of Parent.  Parent hereby represents and warrants to the Investors as follows:

 

(a)           Organization and Good Standing.  Parent is duly incorporated, validly existing and in good standing under the Laws of the State of Delaware, with all requisite power and authority required to conduct its business as presently conducted.

 

(b)           Authority.  Parent has all requisite corporate power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.  The execution and delivery by the Parent of this Agreement and the performance by the Parent of its obligations hereunder have been duly authorized by all requisite corporate action of Parent and no other action on the part of Parent or its stockholders is necessary to authorize the execution, delivery or performance by the Parent of this Agreement.

 

  

  

  

 

(c)           Valid and Binding Agreement.  This Agreement has been duly executed and delivered by the Parent and, assuming that this Agreement has been duly authorized, executed and delivered by the Investors, constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity.

 

(d)           Non-Contravention.  The execution and delivery of this Agreement by the Parent and the performance by the Parent of its obligations hereunder does not and will not (i) violate any provision of the Organizational Documents of Parent, (ii) conflict with or violate any Law or order of any Governmental Authority applicable to Parent or its assets or properties, (iii) violate, conflict with, result in a material breach of, or constitute (with or without notice or lapse of time or both) a material default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, any permit or Contract to which Parent is a party or by which any of its properties or assets are bound or (v) result in the creation or imposition of any Lien on any part of the properties or assets of Parent.

 

(e)           Valid Issuance of Exchange Shares; Securities Act Compliance.  The Exchange Shares, when issued, sold and delivered in accordance with the terms and conditions of this Agreement will be duly and validly issued, fully paid and nonassessable.

 

ARTICLE IV.

COVENANTS

 

Section 4.01.                      Released Claims.  Each Investor hereby irrevocably covenants to refrain from, directly or indirectly, asserting any Investor Claim, or commencing, instituting or causing to be commenced, any proceeding of any kind against any of the Parent Releasees, based upon any Investor Claims released by it pursuant to Article 2 of this Agreement.

 

Section 4.02.                      Certain Fees.  The Parent shall be responsible for the fees of its Transfer Agent associated with the issuance of the Exchange Shares to the Investors hereunder.

 

Section 4.03.                      Disclosure; Confidentiality.  The Investors hereby acknowledge that they are in possession of material, nonpublic information about the Parent, the Investor Securities and the Parent Common Stock, consisting, without limitation, of the transactions contemplated by this Agreement and the other Transaction Documents, including the Parent’s intention to commence the Merger, and the Investors hereby agree that, except for the Exchange, they may not disclose any such information or purchase or sell any securities of the Parent while in possession of such information until the Parent files a Form 8-K with the SEC disclosing these matters (the "8-K Filing").  From and after the filing of the 8-K Filing with the SEC, the Parent acknowledges and agrees that no Investor shall be in possession of any material, nonpublic information received from the Company, the Parent, the Merger Sub, any of their respective subsidiaries or any of their respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing.  The Company, the Parent and the Merger Sub shall not, and shall cause each of their respective subsidiaries and each of their respective officers, directors, employees and agents, not to, provide any Investor with any material, nonpublic information regarding the Company, the Parent, the Merger Sub, any of their respective subsidiaries, the Investor Securities or the Common Stock from and after the filing of the 8-K Filing with the SEC without the express prior written consent of such Investor.  To the extent that the Company, the Parent, the Merger Sub, any of their respective subsidiaries or any of their respective officers, directors, employees or agents delivers any material, non-public information to an Investor without such Investor's consent, the Parent hereby covenants and agrees that such Investor shall not have any obligation of confidentiality or any obligation not to trade with respect to, or a duty not to trade on the basis of, such material, non-public information.

 

  

  

  

 

Section 4.04.                      Lock-Up Agreements.  On or prior to the Effective Time, the Parent shall enter into a lock-up agreement with each of the parties that are being issued shares of Common Stock at the Effective Time pursuant to the Merger Agreement, in the form attached hereto as Exhibit B (the "Lock Up-Agreements").  The Parent shall not amend, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms.  If any party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Parent shall promptly use its reasonable best efforts to seek specific performance of the terms of such Lock-Up Agreement.

 

Section 4.05.                      Capitalization.  As soon as practicable following each time that True-Up Shares shall become issuable pursuant to Section 1.10 of the Merger Agreement, a number of shares of Parent Common Stock shall be issued to each Investor equal to 4% of the Total True-Up Amount under said Section 1.10 (the “Investor True-Up Shares”). For the avoidance of doubt, for purposes hereunder the calculation of the Total True-Up Amount shall not reflect the existence of any Carved Out Securities described in Section 1.10 of the Merger Agreement.  The Investor True-Up Shares shall be deemed to be Exchange Shares for all purposes.  For purposes of Rule 144, the Parent acknowledges and agrees that the holding period of the Exchange Shares (including any Investor True-Up Shares) shall be deemed to have started at the time of the Exchange and agrees not to take any position contrary to the forgoing.  If at any time the number of shares of Parent Common Stock authorized and reserved for issuance is below the number of shares sufficient for the issuance of any Investor True Up Shares (a “Share Authorization Failure”), Parent will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders (or soliciting written consents of stockholders) to authorize additional shares to meet Parent’s obligations under this Section 4.05, in the case of an insufficient number of authorized shares, and using its reasonable best efforts to obtain stockholder approval of an increase in such authorized number of shares. Parent covenants and agrees that any and all Investor True Up Shares issued pursuant to this Section 4.05 shall be duly and validly issued, fully paid and nonassessable and not subject to preemptive rights, rights of first refusal or similar rights of any Person.

 

Section 4.06.                      Further Documentation.  The Parent and the Investors shall execute and/or deliver such other documents and agreements as are reasonably necessary to effectuate the Exchange pursuant to the terms of this Agreement.

 

  

  

  

 

ARTICLE V.

MISCELLANEOUS

 

Section 5.01.                      Entire Agreement.  This Agreement and the other Transaction Documents constitute the entire agreement, and supersedes all other prior and contemporaneous agreements and understandings, both oral and written, between the Investors and the Parent with respect to the subject matter hereof.

 

Section 5.02.                      Amendments.  This Agreement may only be amended with the written consent of the Investors and the Parent.

 

Section 5.03.                      Successors.  All of the covenants and provisions of this Agreement by or for the benefit of the Investors or the Parent shall bind and inure to the benefit of their respective successors and assigns.

 

Section 5.04.                      Notices.  Any notice to be given by any party to this Agreement shall be given in writing and may be effected by facsimile, personal delivery, overnight courier, e-mail or sent by certified, United States Mail, postage prepaid, addressed to the relevant party hereto at the address, e-mail or facsimile number set forth on the signature page hereto.  The date of service for any notice sent in compliance with the requirements of this Section 5.04 shall be (i) the date such notice is personally delivered, (ii) three days after the date of mailing if sent by certified or registered mail, (iii) one day after date of delivery to the overnight courier if sent by overnight courier or (iv) the next succeeding Business Day after transmission by e-mail or facsimile.

 

Section 5.05.                       Applicable Law; Consent to Jurisdiction.  (a)  As part of the consideration and mutual promises being exchanged and given in connection with this Agreement, the parties hereto agree that all claims, controversies and disputes of any kind or nature arising under or relating in any way to the enforcement or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, including disputes relating to the negotiations for, inducements to enter into, or execution of, this Agreement, and disputes concerning the interpretation, enforceability, performance, breach, termination or validity of all or any portion of this Agreement shall be governed by the laws of the State of New York without regard to its choice or conflicts of laws principles.

 

(a)           The Parties agree that all claims, controversies and disputes of any kind or nature relating in any way to the enforcement or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, shall be brought exclusively in the state and federal courts sitting in The City of New York, Borough of Manhattan.  With respect to any such claims, controversies or disputes, each of the Parties hereby irrevocably:

 

(i)         submits itself and its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action in any court or tribunal other than the aforesaid courts;

 

  

  

  

 

(ii)         waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding (A) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 5.05, (B) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) to the fullest extent permitted by the applicable Law, any claim that (1) the suit, action or proceeding in such court is brought in an inconvenient forum, (2) the venue of such suit, action or proceeding is improper or (3) this Agreement, or the subject matter hereof, may not be enforced in or by such courts; and

 

(iii)         WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (II) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.05.

 

(iv)         Notwithstanding the foregoing in this Section 5.05, a party may commence any action or proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.

 

Section 5.06.                      Counterparts; Effectiveness.  This Agreement and any amendment hereto may be executed and delivered in two or more identical counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.  In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.  No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and each party hereto forever waives any such defense.

 

Section 5.07.                      No Third Party Beneficiaries.  Except as to Section 2.02 of this Agreement, with respect to any Parent Releasees (who are intended to be express third party beneficiaries of Section 2.02), nothing in this Agreement, express or implied, is intended to or shall confer upon the Person (other than the parties to this Agreement) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

  

  

  

 

Section 5.08.                      Specific Performance.  The parties to this Agreement agree that irreparable damage would occur and that the parties to this Agreement would not have any adequate remedy at law 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 to this Agreement 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 each case without the necessity of posting bond or other security or showing actual damages, and this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 5.09.                      Effect of Headings.  The section and subsection headings herein are for convenience only and not part of this Agreement and shall not affect the interpretation thereof.

 

Section 5.10.                      Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

Section 5.11.                      No Commissions.  Neither the Parent nor any Investor has paid or given, or will pay or give, to any person, any commission, fee or other remuneration, directly or indirectly, in connection with the transactions contemplated by this Agreement.

 

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IN WITNESS WHEREOF, each party hereto has caused this Exchange Agreement to be duly executed as of the date first written above.

 

	  	
PARENT:

	 	 
	  	
CONVERTED ORGANICS, INC.

	 	 
	  	
By:   /s/ Edward Gildea

	  	
Name: Edward Gildea                                                                   

	  	
Title: President                                                                   

	 	 
	  	
Address: c/o Finjan Holdings, Inc.

   261 Madison Avenue

   New York, NY  10016

   Facsimile:  (917) 591-4351

   E-mail:  shimon@finjan.com

 

	  	
INVESTORS:

	 	 
	  	
HUDSON BAY MASTER FUND LTD.

By: Hudson Bay Capital Management LP, as its Investment Manager

	 	 
	  	
By:  /s/ Yoav Roth

	  	
Name:  Yoav Roth

	  	
Title:  Authorized Signatory

	 	 
	  	
Address:

c/o Hudson Bay Capital management LP

777 Third Avenue, 30th Floor

New York, NY 10017

	  	
Facsimile: 646-214-7946

	  	
Email:

investments@hudsonbaycapital.com

operations@hudsonbaycapital.com

	  	  
	  	  
	  	
IROQUOIS MASTER FUND LTD.

	  	  
	  	
By:  /s/ Joshua Silverman

	  	
Name:  Joshua Silverman

	  	
Title:  Authorized Signatory

	 	 
	  	
Address:

c/o Iroquois Capital Management, LLC

641 Lexington Avenue, 26th Floor

New York, NY  10022

	  	
Facsimile: 212-207-3452

	  	
Email: JSilverman@icfund.com

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