EXECUTION COPY
SUBSCRIPTION AND CONTRIBUTION AGREEMENT
SUBSCRIPTION AND CONTRIBUTION AGREEMENT, dated as of October
13, 2000 (this "AGREEMENT"), by and among Convergent Holding Corporation, a
Delaware corporation, ("PARENT"), Schlumberger Technology Corp., a Texas
corporation ("STC"), Cinergy Ventures, LLC, a Delaware limited liability company
("CINERGY"), and the parties listed on the signature pages hereto as Management
Investors (the "MANAGEMENT INVESTORS"). STC, Cinergy and each Management
Investor are individually referred to herein as an "INVESTOR" and, collectively,
as the "INVESTORS"). Capitalized terms used herein and not defined shall have
the respective meanings given to them in the Agreement and Plan of Merger, dated
as of the date of this Agreement (the "MERGER AGREEMENT"), by and among Parent,
Purchaser, STC and Convergent Group Corporation, a Delaware corporation (the
"COMPANY").
WHEREAS, the Management Investors and Cinergy (the "CONTRIBUTING
STOCKHOLDERS") wish to contribute certain shares (the "EXCHANGE SHARES") of
common stock, par value $0.001 per share (the "COMPANY COMMON STOCK"), of the
Company in exchange for shares of Parent's Common Stock, par value $0.001 per
share (the "PARENT SHARES");
WHEREAS, STC wishes to contribute a certain amount of cash to Parent in
exchange for Parent Shares; and
WHEREAS, the parties intend that, for federal income tax purposes, the
contributions contemplated by this Agreement will constitute transfers of
property in exchange for Parent Shares that qualify for nonrecognition under
Section 351 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements in this Agreement, the
parties hereto, intending to be legally bound, agree as follows:
Section 1. PURCHASE AND SALE OF SHARES.
(a) Subject to the terms and conditions hereof, Parent shall issue to
STC (or one or more designated subsidiaries or affiliates of STC, the "CASH
INVESTORS"), a number of Parent Shares, in consideration of the Cash Investors'
contribution to Parent of the amount of cash per Parent Share set forth on
Schedule I hereto. STC shall subscribe for that number of Parent Shares such
that the proceeds from its purchase equals (i) the purchase price for all shares
of Company Common Stock accepted for purchase in the Offer, (ii) the Merger
Consideration payable pursuant to the Merger Agreement, (iii) the purchase price
for all Parent Shares purchased by Parent pursuant to any of Parent's agreements
with the Company's employees dated as of October 13, 2000, and (iv) the purchase
price for all Parent Shares to be purchased pursuant to the Stockholders'
Agreement (as defined below).
(b) Subject to the terms and conditions hereof, Parent shall issue to
each of the Contributing Stockholders the number of Parent Shares set forth
opposite its name on Schedule II hereto, in consideration of each Contributing
Stockholder's contribution to Parent of
the number of Exchange Shares set forth on Schedule II hereto. The value per
share of such Exchange Shares transferred by each Contributing Stockholder to
Parent is set forth opposite its name on Schedule II hereto. Notwithstanding
anything herein to the contrary, Parent reserves the right to reject any
Contributing Stockholder's subscription for Exchange Shares in order to comply
with the provisions of Rule 506 under the Securities Act of 1933, as amended.
(c) The issuances and sales referred to in Sections 1(a) and 1(b)
hereof shall be effected by Parent executing and delivering to each Investor
duly executed certificates evidencing the Parent Shares to be subscribed by such
Investor, duly registered in such Investor's name against delivery by such
Investor to Parent of the consideration set forth opposite such Investor's name
on Schedule I or II. Any cash payment shall be made by wire transfer.
(d) The initial closing of the contribution (the "CLOSING") shall take
place upon the earlier of (i) one business day after the date on which
Convergent Acquisition Sub, Inc., a Delaware corporation and a wholly owned
Subsidiary of Parent ("PURCHASER"), shall have accepted for payment the shares
of Company Common Stock tendered in the Offer or (ii) April 30, 2001; PROVIDED,
HOWEVER that if the Closing occurs, STC may purchase Parent Shares pursuant to
SECTION 1(A)(II) AND (III) at any time after the Closing and prior to or on the
first anniversary of such date. The date of the closing is herein referred to as
the "CLOSING DATE."
(e) In order to facilitate the contribution of the Exchange Shares by
the Contributing Stockholders, each Contributing Stockholder shall deliver
within fifteen business days of the date hereof one or more certificates
representing all of the Exchange Shares to be contributed by such Contributing
Stockholder to Parent, together with stock powers or other instruments duly
endorsed or otherwise sufficient for transfer (the "EXCHANGE INSTRUMENTS").
Parent shall hold the Exchange Instruments in escrow pending the Closing Date.
Each Contributing Stockholder hereby authorizes the Parent, on the Closing Date,
to present the Exchange Instruments to the transfer agent for the Company and
instruct the transfer agent to register the Exchange Shares in the name of
Parent or its designee.
(f) Each Investor agrees for US federal income tax purposes to treat
its purchase of the Parent Shares as described herein as a transaction described
in Section 351 of the Internal Revenue Code of 1986, as amended ("SECTION 351");
it being understood that nothing herein shall constitute a representation or
warranty by any of the parties as to the tax consequences to any other party of
the transactions hereunder.
Section 2. RESTRICTIONS ON STOCK. None of the Parent Shares (including
any shares received as a result of dividends, splits or any other forms of
recapitalization in respect of such Shares) shall be Transferred (as hereinafter
defined), either voluntarily or involuntarily, directly or indirectly, except
(a) pursuant to an effective registration under the Securities Act (as
hereinafter defined), (b) in a transaction which, in the opinion of counsel
reasonably satisfactory to Parent, qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder and (c) in
accordance with the terms of the Stockholders Agreement, dated as of the Closing
Date, by and among Parent and the Investors (as amended from time to time, the
"STOCKHOLDERS AGREEMENT"), such agreement to initially be substantially in the
form attached hereto as EXHIBIT A.
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Section 3. WARRANTIES AND REPRESENTATIONS OF PARENT AND STC.
Parent and STC, jointly and severally, represent and warrant that:
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of its incorporation. Attached hereto as EXHIBITS B
and C, respectively, are true and complete copies of the certificate of
incorporation and the bylaws of Parent, each as in effect on the date hereof.
(b) Parent has been formed to enter into the Merger Agreement,
including the documents and the instruments referred to therein, and to
consummate the transactions contemplated thereby and has not conducted any
business other than in connection therewith and certain start-up activities. As
of the Closing Date, Parent will have no material assets or material liabilities
other than those incurred in connection with Parent's incorporation and Parent's
start-up activities, and those acquired or assumed pursuant to this Agreement,
the Merger Agreement and those acquired or incurred in connection with the
transactions contemplated hereby and thereby.
(c) The execution, delivery and performance by Parent and STC of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated hereby and thereby are within the corporate powers of Parent and
STC. The board of directors of Parent (the "BOARD") has authorized the
execution, delivery, and performance of this Agreement and the Merger Agreement,
and each of the transactions contemplated hereby and thereby. No other corporate
action is necessary to authorize such execution, delivery and performance, and
upon such execution and delivery, each of this Agreement and the Merger
Agreement shall constitute a valid and binding obligation of Parent and STC,
enforceable against Parent and STC in accordance with its terms. The board of
directors of Parent has authorized the issuance and delivery of the Parent
Shares in accordance with this Agreement.
(d) The Parent Shares to be issued and sold by Parent pursuant to this
Agreement, when issued in accordance with the provisions hereof, will be validly
issued by Parent, fully paid and nonassessable shares of Parent, upon delivery
thereof, the Investors will acquire title to the Parent Shares, free and clear
of any lien or claim of any kind, other than as contemplated by this Agreement
and the Stockholders Agreement or any liens incurred by the Investors, and no
stockholder of Parent has any preemptive rights to subscribe for any such Parent
Shares.
(e) Except for filings by the Investors, if any, under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, the creation,
authorization, issuance, offer and sale of the Parent Shares do not require any
consent, approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of STC and Parent, or the vote,
consent or approval in any manner of the holders of any Security (as hereinafter
defined) of Parent or STC as a condition to the execution and delivery of this
Agreement or the creation, authorization, issuance, offer and sale of the Parent
Shares. The execution and delivery by Parent of this Agreement and the Merger
Agreement and the performance by STC and Parent of their obligations hereunder
and thereunder will not violate (i) the terms and conditions of the certificate
of incorporation or the bylaws of Parent or STC, or any agreement or instrument
to
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which Parent is a party or by which it is bound or (ii) subject to the accuracy
of the Investors' representations and warranties contained in Section 4 hereof,
any federal or state law.
(f) Immediately prior to the Closing, the outstanding capital stock of
Parent will consist of one Parent Share. Immediately after the Closing, the
outstanding capital stock of Parent will consist of such Parent Share and the
Parent Shares issued pursuant to this Agreement. Except as set forth in this
Section 3(f) or the certificate of incorporation of Parent and except for
options to be made available to the employees of Parent or the Surviving
Corporation after the Closing, there are, and immediately after the Closing
there will be, no outstanding (i) shares of capital stock or voting securities
of Parent, (ii) securities of Parent convertible into or exchangeable for shares
of capital stock or voting securities of Parent, (iii) options or other rights
to acquire from Parent, or other obligations of Parent to issue any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent or (iv) except for obligations of
Parent pursuant to any agreements with its employees, obligations of Parent to
repurchase or otherwise acquire or retire any shares of capital stock or any
convertible securities, rights or options of the type described in clause (i),
(ii), or (iii).
(g) Other than this Agreement, the Merger Agreement, the Stockholders
Agreement, the Investor Rights Agreement and the Voting Agreement, including the
documents and the instruments referred to herein and therein, and except for
obligations of Parent pursuant to any agreements with its employees, no
agreement or other arrangement regarding any class of capital stock of Parent
exists between Parent, or any of its affiliates and any Person. Except for
obligations of Parent pursuant to any agreements with its employees, Parent is
not a party to, has not agreed to be a party to, and does not plan to become a
party to any agreement or arrangement with any affiliate, stockholder or other
person or entity who will become a stockholder of Parent in connection with the
transactions contemplated by the Merger Agreement, including the documents and
the instruments referred to therein, and this Agreement, which has not been
disclosed to each Investor.
Section 4. INVESTOR REPRESENTATIONS.
Each Investor severally (and not jointly) represents and warrants that:
(a) OFFERING EXEMPTION. The Investor understands that the Parent Shares
have not been registered under the Securities Act, nor qualified under any state
securities laws, and that they are being offered and sold pursuant to an
exemption from such registration and qualification based in part upon such
Investor's representations contained herein.
(b) KNOWLEDGE OF OFFER. The Investor is familiar with the business and
operations of Parent and has been given the opportunity to obtain from Parent
all information that such Investor has requested regarding its business plans
and prospects.
(c) KNOWLEDGE AND EXPERIENCE; ABILITY TO BEAR ECONOMIC RISKS. The
Investor is either (i) an "accredited investor" within the meaning of SEC Rule
501 of Regulation D, as presently in effect or (ii) has such knowledge and
experience in financial and business matters that the Investor is capable of
evaluating the merits and risks of the investment contemplated by this
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Agreement; and the Investor is able to bear the economic risk of this investment
in Parent (including a complete loss of this investment).
(d) LIMITATIONS ON DISPOSITION. The Investor recognizes that no public
market exists for the Parent Shares, and there can be no assurance that any will
exist in the future. The Investor understands that the Investor must bear the
economic risk of this investment indefinitely unless the Parent Shares are
registered pursuant to the Securities Act or an exemption from such registration
is available, and unless the disposition of such Parent Shares is qualified
under applicable state securities laws or an exemption from such qualification
is available, and that Parent has no obligation or present intention of so
registering the Parent Shares. The Investor further understands that there is no
assurance that any exemption from the Securities Act will be available, or, if
available, that such exemption will allow the Investor to Transfer any or all
the Parent Shares, in the amounts, or at the times the Investor might propose.
The Investor understands at the present time Rule 144 promulgated under the
Securities Act by the SEC ("RULE 144") is not applicable to sales of the Parent
Shares because they are not registered under Section 12 of the Exchange Act (as
herein defined) and there is not publicly available the information concerning
Parent specified in Rule 144. The Investor further acknowledges that Parent is
not presently under any obligation to register under Section 12 of the Exchange
Act or to make publicly available the information specified in Rule 144 and that
it may never be required to do so. The Investor further acknowledges the
restrictions on disposition and other terms set forth in the Stockholders
Agreement.
(e) INVESTMENT PURPOSE. The Investor is acquiring the Parent Shares
solely for its own account for investment and not with a view toward the resale,
Transfer, or distribution thereof, nor with any present intention of
distributing the Parent Shares. No other Person (as herein defined) has any
right with respect to or interest in the Parent Shares to be purchased by the
Investor, nor has the Investor agreed to give any Person any such interest or
right in the future.
(f) CAPACITY. The Investor has full power and legal right to execute
and deliver this Agreement and to perform its obligations hereunder.
(g) EXCHANGE SHARES. SCHEDULE 4(g) sets forth all shares of Company
Common Stock and options to purchase shares of Company Common Stock beneficially
owned by such Contributing Stockholder. Each Contributing Stockholder represents
that, except as set forth on SCHEDULE 4(g), it is or, in the case of Exchange
Shares acquired by exercise of options after the date hereof, will be the sole
beneficial owner of its Exchange Shares, free and clear of any pledge, lien,
security interest, mortgage, charge, claim, equity, option, proxy, voting
restriction, voting trust or agreement, understanding, arrangement, right of
first refusal, limitation on disposition, adverse claim of ownership,
restriction on transfer, or use or encumbrance of any kind, other than
restrictions imposed by the securities laws or pursuant to this Agreement, the
Stockholders Agreement, the Voting Agreement and the Merger Agreement, including
the documents and the instruments referred to herein and therein.
(h) Each Contributing Stockholder represents that no broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
such Contributing Stockholder. Such Contributing
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Stockholder, on behalf of itself and its affiliates, hereby acknowledges that it
is not entitled to receive any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby or by the Merger Agreement.
Section 5. SECURITIES ACT RESTRICTIONS. The certificates evidencing the
Parent Shares will bear the following legends reflecting the restrictions on the
transfer of such securities contained in this Agreement:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT
WHICH INCLUDES, AMONG OTHER RESTRICTIONS, A MARKET STAND-OFF
AGREEMENT, TAG-ALONG RIGHTS AND DRAG-ALONG RIGHTS. COPIES OF
THE AGREEMENT AND ANY AMENDMENTS OR MODIFICATIONS THERETO MAY
BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION."
Section 6. OTHER AGREEMENTS.
(a) STOCKHOLDERS AGREEMENT. On the Closing Date, Parent and each of the
Investors shall execute and mutually deliver a counterpart of the Stockholders
Agreement.
(b) OFFER. The Parent shall take all actions required to make the Offer
pursuant to the Merger Agreement, and shall give an opportunity to review the
Offer Documents prior to filing with the SEC to counsel for the Management
Investors and to counsel for Cinergy.
(c) NO AMENDMENT. Parent agrees that it will not amend, and STC agrees
that it will not cause the Merger Agreement to be amended, in any manner which
would (i) reduce the Offer Price, (ii) amend or modify the tax treatment of the
transaction in a manner which would be adverse to the Investors or (iii) amend
or modify the treatment of the Company Options.
(d) SECTION 351 TREATMENT. Each of the parties to this Agreement shall
take all actions necessary or required to maintain the treatment of the
transactions contemplated hereby as described in Section 351, and shall refrain
from taking any actions that would interfere with such treatment.
(e) TENDER OF SHARES. Except as set forth on SCHEDULE 6(E), (i) Each
Contributing Stockholder hereby agrees, pursuant to the terms and subject to the
conditions set forth herein, to tender (or cause the record owner of such Shares
to validly tender) for payment in the Offer
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(which must be made pursuant to the terms and subject to the conditions set
forth in the Merger Agreement) all Shares currently owned by such Contributing
Stockholder and any Shares acquired prior to the Expiration Date, which are not
being contributed pursuant to Section 1(b), (ii) Not later than two (2) days
prior to the initial Expiration Date of the Offer, each Contributing Stockholder
shall, as appropriate, deliver to the Exchange Agent designated in the Offer (i)
a letter of transmittal with respect to such Contributing Stockholder's Shares
complying with the terms of the Offer together with instructions directing the
Exchange Agent to make payment for such Shares directly to the Contributing
Stockholder, (ii) a certificate or certificates representing such Contributing
Stockholder's Shares (iii) all other documents or instruments required to be
delivered pursuant to the terms of the Offer, and/or (y) instruct its broker or
such other person who is the holder of record of any Shares by such Contributing
Stockholder to tender such Shares for exchange in the Offer pursuant to the
terms and conditions of the Offer, and (iv) no Contributing Stockholder shall
withdraw any tender effected in accordance with Section 6(c)(ii).
(f) INVESTOR RIGHTS AGREEMENT. On the Closing Date, Parent and Cinergy
shall execute and mutually deliver a counterpart of the Investor Rights
Agreement substantially in the form attached hereto as EXHIBIT B.
Section 7. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used in this Agreement, the following terms have
the respective meaning set forth below:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means United States generally accepted accounting
principles.
"LAW" means all international, European Union, national,
federal, state or local laws (both common and statute law and civil and criminal
law) and all subordinated legislation and regulatory codes of practice
(including without limitation, statutory instruments, guidance notes, circulars,
directives, decisions, rules, regulations, treaties and conventions) or Order of
any Governmental Entity.
"ORDERS" means judgments, writs, decrees, compliance
agreements, injunctions or orders of any Governmental Entity or arbitrator.
"PERSON" means a natural Person, partnership (general or
limited), corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, Governmental Entity
or other entity or organization.
"SEC" means the United States Securities and Exchange
Commission and any successor agency performing similar functions.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" or "SECURITIES" has the meaning set forth in
Section 2(1) of the Securities Act.
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"TRANSFER" (including with correlative meanings the terms
"TRANSFERRED," "TRANSFEREE" and "TRANSFEROR") means any transfer, sale,
assignment, bequest, pledge, encumbrance or other disposition of capital stock
or any portion of the ownership interest therein, irrespective of whether any of
the foregoing are effected voluntarily or involuntarily, by operation of law or
otherwise, or whether INTER VIVOS or upon death.
(b) DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(c) GOVERNING LAW. (i) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
(ii) 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
Delaware or in a Delaware 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 (a) consents to submit itself to the personal jurisdiction of any
Federal court in the State of Delaware or any Delaware state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by the Merger Agreement, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction 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 the Merger Agreement in any
court other than a Federal court sitting in the State of Delaware or a Delaware
state court.
(iii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUR OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (a) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (c) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (d) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
(d) SECTION HEADINGS. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
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(e) PREPARATION OF AGREEMENT. Counsel for the parties have participated
in the preparation and review of this Agreement, and have negotiated it on
behalf of their respective clients. For purposes of construction, this Agreement
shall be deemed to have been drafted by all parties, and no ambiguity shall be
resolved against any party by virtue of his, hers or its participation in the
drafting of this Agreement.
Section 8. TERMINATION.
(a) In the event the Closing has not occurred on or prior to
April 30, 2001 this Agreement will terminate automatically and shall have no
further force or effect.
(b) Upon a termination of this Agreement pursuant to Section
8(a), Parent shall promptly return any Exchange Instruments delivered to it
pursuant to Section 1(e) to the Contributing Stockholders.
Section 9. MISCELLANEOUS.
(a) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by an internationally recognized overnight courier service,
such as Federal Express, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
1. if to Parent or STC, to:
Convergent Holding Corporation
c/o Schlumberger Technology Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
2. if to Cinergy, to:
Cinergy Ventures, LLC
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Cinergy Corp.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
3. if to any of the Management Investors, at the address set forth
below such Management Investor's name on Schedule II hereto.
with a copy (which shall not constitute notice) to:
Holland & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) SURVIVAL. All warranties, representations, and covenants made by
the Investors and Parent herein or in any certificate or other instrument
delivered by any Investor or Parent under this Agreement shall be considered to
have been relied upon by Parent or the Investors, as the case may be, and shall
survive all deliveries to the Investors of the Parent Shares, or payment to
Parent for such Parent Shares, regardless of any investigation made by Parent or
any of the Investors, as the case may be, or on Parent's or the Investor's
behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by Parent hereunder.
(c) SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Parent may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
direct or indirect wholly owned subsidiary of Parent and such assignment shall
not relieve Parent of any obligation under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by the parties and their respective successors and
assigns.
(d) SEVERABILITY. Any term or provision of this Agreement that is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the invalid, void or unenforceable term or
10
provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction or other authority declares that
any term or provision hereof is invalid, void or unenforceable, the parties
agree that the court making such determination shall have the power to and
shall, subject to the discretion of such court, reduce the scope, duration, area
or applicability of the term or provision, to delete specific words or phrases,
or to replace any invalid, void or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
(e) OBLIGATIONS SEVERAL. Notwithstanding anything to the contrary
contained in this Agreement, and except as otherwise provided in Section 3, the
representations and warranties, covenants and other agreements under this
Agreement shall be several, but not joint.
(f) EXPENSES. The Company shall reimburse the Management Investors for
their reasonable out-of-pocket expenses reasonably incurred in connection with
the transactions contemplated hereby, including, but not limited to, the
preparation and negotiation of this Agreement, the Voting Agreement, the
Stockholders Agreement, the Merger Agreement, any employment, consulting or
other agreements between the Company and any of the Management Investors and all
other documents evidencing the transactions contemplated herein, and including
the reasonable fees and expenses of Holland & ▇▇▇▇ LLP. Except as otherwise
expressly set forth herein, all fees, costs and expenses incurred in connection
with this Agreement or the Merger Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees, costs and expenses.
(g) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Merger
Agreement, including the documents and the instruments referred to herein and
therein, constitute the entire agreement and supersede all prior agreements,
negotiations, arrangements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof. Nothing in this
Agreement shall be construed to give any person other than the parties to this
Agreement or their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
(h) SPECIFIC PERFORMANCE. Each Investor acknowledges that if such
Investor fails to perform any of its obligations under this Agreement immediate
and irreparable harm or injury would be caused to Parent for which money damages
would not be an adequate remedy. In such event, each Investor agrees that Parent
shall have the right, in addition to any other rights it may have, to specific
performance of this Agreement. Accordingly, if Parent should institute an action
or proceeding seeking specific enforcement of the provisions hereof, each
Investor hereby waives the claim or defense that Parent has an adequate remedy
at law and hereby agrees not to assert in any such action or proceeding the
claim or defense that such a remedy at law exists. Each Investor further agrees
to waive any requirements for the securing or posting of any bond in connection
with obtaining any such equitable relief.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts (whether delivered by facsimile or otherwise), each of which shall
be considered one and the
11
same agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties.
12
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
CONVERGENT HOLDING CORPORATION SCHLUMBERGER TECHNOLOGY CORP.
By: By:
-------------------------- ---------------------------
Name: Name:
------------------------ -------------------------
Title: Title:
----------------------- ------------------------
CINERGY VENTURES, LLC
By:
---------------------------
Name:
-------------------------
Title:
------------------------
MANAGEMENT INVESTORS:
------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
-------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
----------------------------
----------------------------
----------------------------
------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
----------------------------
----------------------------
----------------------------
------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇. ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ----------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ LIMITED
PARTNERSHIP,
By: a Colorado Limited Partnership
---------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ Consultants, Inc.
Title: Trustee a Colorado corporation, General Partner
By: By:
--------------------------- ---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee Title: President
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
THE ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ISSUE SUB-TRUST
By:
---------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
By:
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
Address:
----------------------------
----------------------------
----------------------------
THE ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 1999 TRUST THE ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 1999 TRUST
By: By:
--------------------------- ---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee Title: Trustee
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
THE ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ THE ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 TRUST
1999 TRUST
By: By:
--------------------------- ---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee Title: Trustee
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
THE ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 THE ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999
TRUST TRUST
By: By:
--------------------------- ---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee Title: Trustee
Address: Address:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
BKUK FAMILY PARTNERSHIP LLLP ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇▇▇
By:
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Address:
Title: Partner
----------------------------
By: ----------------------------
--------------------------- ----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Partner
Address:
----------------------------
----------------------------
----------------------------
SCHEDULE I
CASH INVESTOR
Name/Address/Fax No. of Subscriber: Price Per Share of Common Stock
----------------------------------- -------------------------------
Schlumberger Technology Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE II
CONTRIBUTING STOCKHOLDERS
Name of Subscriber: Number of Shares of Number of Shares of Value per Share of
Common Stock(1) Exchange Shares(1) Exchange Shares
----------------------------------- ------------------- ------------------- ------------------
Cinergy Ventures, LLC 1,083,280 1,083,280 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ 2,610,074 2,610,074 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,004,915 1,004,915 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇▇▇ 1,108,993 1,108,993 $ 8.00
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 108,695 $ 8.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 108,695 $ 8.00
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 108,695 $ 8.00
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 108,695 $ 8.00
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 1999 Trust 108,695 108,695 $ 8.00
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 1999 Trust 108,695 108,695 $ 8.00
-------------------
(1) Includes all shares of Common Stock and those options exercisable in
accordance with the definition of "Shares" as set forth in the
Stockholders' Agreement for shares of Common Stock currently held by the
individual or entity noted.
SCHEDULE II
CONTRIBUTING STOCKHOLDERS
(Continued)
Name of Subscriber: Number of Shares of Number of Shares of Value per Share of
Common Stock(1) Exchange Shares(1) Exchange Shares
-------------------------------------------- ------------------- ------------------- ------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 97,125 97,125 $ 8.00
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust(2) 1,638,669 1,638,669 $ 8.00
The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Limited Partnership 557,143 557,143 $ 8.00
The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Issue Sub-Trust 514,286 514,286 $ 8.00
▇▇▇▇▇ ▇▇▇▇▇▇ 336,412 336,412 $ 8.00
▇▇▇ ▇▇▇▇▇ 365,210 365,210 $ 8.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 204,950 204,950 $ 8.00
BKUK Family Partnership LLLP (▇▇▇▇▇ ▇▇▇▇▇▇) 142,611 142,611 $ 8.00
-------------------
(1) Includes all shares of Common Stock and those options exercisable in
accordance with the definition of "Shares" as set forth in the
Stockholders' Agreement for shares of Common Stock currently held by the
individual or entity noted.
(2) Number of shares to be sold by entities beneficially owned by ▇▇▇▇ ▇▇▇▇▇▇▇
assumes sale in Offer by each entity of pro rata share of 100% of all
shares ▇▇. ▇▇▇▇▇▇▇ is permitted to sell. The exact number of shares to be
sold by each entity will be designated by ▇▇. ▇▇▇▇▇▇▇.
SCHEDULE II
CONTRIBUTING STOCKHOLDERS
(Continued)
Name of Subscriber: Number of Shares of Number of Shares of Value per Share of
Common Stock(1) Exchange Shares(1) Exchange Shares
------------------------ ------------------- -------------------- ------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 250,000 250,000 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 250,001 250,001 $ 8.00
▇▇▇▇▇ ▇▇▇▇ 365,210 365,210 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 204,950 204,950 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 787,427 787,427 $ 8.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 60,000 60,000 $ 8.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ 71,811 71,811 $ 8.00
▇. ▇. ▇▇▇▇▇ 120,000 120,000 $ 8.00
▇▇▇▇ ▇. ▇▇▇▇▇ 63,800 63,800 $ 8.00
▇▇▇ ▇▇▇▇ 6,000 6,000 $ 8.00
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 125,702 125,702 $ 8.00
-------------------
(1) Includes all shares of Common Stock and those options exercisable in
accordance with the definition of "Shares" as set forth in the
Stockholders' Agreement for shares of Common Stock currently held by the
individual or entity noted.
SCHEDULE II
CONTRIBUTING STOCKHOLDERS
(Continued)
Name of Subscriber: Number of Shares of Number of Shares of Value per Share of
Common Stock(1) Exchange Shares(1) Exchange Shares
------------------------ ------------------- -------------------- ------------------
▇▇▇▇▇▇ ▇. ▇▇▇ 16,000 16,000 $ 8.00
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 44,040 44,040 $ 8.00
▇▇▇▇▇▇ ▇. ▇▇▇▇ 35,262 35,262 $ 8.00
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 29,301 29,301 $ 8.00
▇▇▇▇▇ ▇▇▇▇▇▇ 23,200 23,200 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 20,000 20,000 $ 8.00
▇▇▇▇▇▇ ▇. ▇▇▇▇ 20,000 20,000 $ 8.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 61,245 61,245 $ 8.00
▇▇▇▇▇▇▇ ▇▇▇ 45,746 45,746 $ 8.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 50,462 50,462 $ 8.00
-------------------
(1) Includes all shares of Common Stock and those options exercisable in
accordance with the definition of "Shares" as set forth in the
Stockholders' Agreement for shares of Common Stock currently held by the
individual or entity noted.
SCHEDULE II
CONTRIBUTING STOCKHOLDERS
(Continued)
Name of Subscriber: Number of Shares of Number of Shares of Value per Share of
Common Stock(1) Exchange Shares(1) Exchange Shares
------------------------ ------------------- -------------------- ------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 180,922 180,922 $ 8.00
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 120,000 120,000 $ 8.00
▇▇▇▇ ▇. ▇▇▇▇▇ 48,706 48,706 $ 8.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 227,614 227,614 $ 8.00
▇▇▇ ▇▇▇▇▇▇▇ 4,800 4,800 $ 8.00
-------------------
(1) Includes all shares of Common Stock and those options exercisable in
accordance with the definition of "Shares" as set forth in the
Stockholders' Agreement for shares of Common Stock currently held by the
individual or entity noted.
Exhibit A
Stockholders Agreement
Exhibit B
Certificate of Incorporation
of
Convergent Holding Corporation
Exhibit C
ByLaws
Schedule 4(g)
Current Stock Options Granted Total Stock &
Contributing Stockholder Holdings UnExercised Options
------------------------ ------------- --------------- -------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (CO) 75,000 75,000
▇▇▇▇▇▇, ▇▇▇▇▇▇ (CO) 64,775 33,739 98,514
▇▇▇▇▇▇, ▇▇▇▇▇ (MA) 375,000 375,000
▇▇▇▇▇, ▇. ▇. (FL) 150,000 150,000
▇▇▇▇▇, ▇▇▇▇ ▇. (MA) 5,000 68,500 73,500
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (MA) 94,428 155,522 249,950
▇▇▇▇, ▇▇▇ (AUS) 6,000 6,000
▇▇▇▇▇, ▇▇▇ (AUS) 377,710 377,710
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. (CO) 125,496 31,631 157,127
▇▇▇, ▇▇▇▇▇▇ ▇. (CO) 20,000 20,000
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 1,004,915 0 1,004,915
▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇▇▇ 1,108,993 0 1,108,993
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 0 108,695
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 0 108,695
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 0 108,695
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 Trust 108,695 0 108,695
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 1999 Trust 108,695 0 108,695
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 1999 Trust 108,695 0 108,695
Current Stock Options Granted Total Stock &
Contributing Stockholder Holdings UnExercised Options
------------------------ ------------- --------------- -------------
▇▇▇▇▇▇▇, ▇▇▇▇ 113,313 0 113,313
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust 1,911,780 0 1,911,780
The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Limited Partnership 650,000 0 650,000
The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Issue Sub Trust 600,000 0 600,000
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. (CO) 11,004 44,046 55,050
▇▇▇▇, ▇▇▇▇▇▇ ▇. (CO) 17,606 26,472 44,078
BKUK Family Partnership (▇▇▇▇▇▇, ▇▇▇▇▇ ▇.) (CO) 132,820 24,791 157,611
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (CO) 6,542 30,084 36,626
▇▇▇▇▇▇, ▇▇▇▇▇ (MA) 0 29,000 29,000
Maizes, ▇▇▇▇▇▇ ▇. (FL) 50,500 199,500 250,000
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. (CO) 188,855 61,146 250,001
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 3,275,093 0 3,275,093
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. (GA) 25,000 25,000
▇▇▇▇, ▇▇▇▇▇▇ ▇. (CA) 25,000 25,000
Peach, ▇▇▇▇▇▇▇ ▇. (CO) 39,321 37,235 76,556
▇▇▇▇, ▇▇▇▇▇ (UK) 377,710 377,710
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. (MA) 94,428 155,522 249,950
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. (CO) 847,427 0 847,427
▇▇▇, ▇▇▇▇▇▇▇ (IL) 15,650 41,532 57,182
▇▇▇▇, ▇▇▇▇▇▇▇ ▇. (CO) 52,196 10,882 63,078
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (CO) 163,139 63,013 226,152
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. (CO) 150,000 150,000
▇▇▇▇▇, ▇▇▇▇ ▇. (CO) 13,694 47,189 60,883
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. (CO) 275,636 8,882 284,518
▇▇▇▇▇▇▇, ▇▇▇ (AUS) 6,000 6,000
Schedule 6(e)
The following individual(s) will not be subject to the requirements of Section
6(e) of this Subscription and Contribution Agreement:
▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT A TO SUBSCRIPTION AND CONTRIBUTION AGREEMENT
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of ______ __, 2000 (this "AGREEMENT"), by
and among Convergent Holding Corporation, a Delaware corporation ("PARENT"),
Schlumberger Technology Corp., a Texas corporation ("STC"), Cinergy Ventures,
LLC ("CINERGY") and the parties listed on the signature pages hereto as
Management Investors (the "MANAGEMENT INVESTORS"). STC, Cinergy and each
Management Investor shall be individually referred to herein as a "STOCKHOLDER"
and, collectively, as the "STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, the Stockholders desire to enter into certain arrangements
concerning the transfer and registration of the Shares (as hereafter defined),
operation and governance of Parent and other related matters; and
WHEREAS, Parent, STC, Cinergy and each of the Management Investors have
entered into a Subscription and Contribution Agreement providing for the initial
capitalization of Parent (the "SUBSCRIPTION AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements in this Agreement, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings. All capitalized terms not defined in this Article 1 shall
have the meanings assigned to them in other parts of this Agreement.
"AFFILIATE" means, with respect to any Person, any of (a) a director,
officer, member, trustee or partner of such Person, (b) a spouse, parent,
sibling or descendant of such Person or a spouse, parent, sibling or descendant
of a director, officer, or partner of such Person and (c) any other Person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, another Person. The term
"control" includes, without limitation, the possession, directly or indirectly,
of the power to direct the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"COMMON STOCK" means the common stock of Parent, par value $0.001 per
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means the value determined pursuant to Section 2.6.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any similar or successor registration form under the Securities
Act subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by Parent with the
SEC.
"FULLY DILUTED BASIS" means, without duplication, with respect to any
Person, the determination of the capitalization of such Person after giving pro
forma effect to: (a) all shares of such Person's common stock outstanding as of
the time of determination plus (b) the issuance of all shares of such Person's
common stock issuable upon the conversion of any convertible preferred stock or
other securities (including debt securities) outstanding as of the time of
determination or the exercise of any option, warrant or similar right (whether
or not presently exercisable) to acquire shares of such Person's capital stock
outstanding as of the time of determination.
"GROUP" means:
(i) in the case of any Stockholder which is a partnership, (a) such
partnership and any of its limited or general partners, (b) any corporation or
other business organization to which such partnership shall sell all or
substantially all of its assets or with which it shall be merged and (c) any
Affiliate of such partnership;
(ii) in the case of any Stockholder which is a corporation or limited
liability company, (a) such corporation or limited liability company, (b) any
corporation or limited liability company or other business organization to which
such corporation or limited liability company shall sell or Transfer all or
substantially all of its assets or with which it shall be merged and (c) any
Affiliate of such corporation or limited liability company; and
(iii) in the case of any Stockholder which is an individual, such
Stockholder's spouse and descendants (whether natural or adopted) and any trust
solely for the benefit of such individual and/or the individual's spouse or
descendants.
"INDEPENDENT THIRD PARTY" means any Person who, immediately prior to the
contemplated transaction, individually and with its Group, does not own in
excess of five percent of the Registrable Securities on a Fully Diluted Basis.
"PERSON" means any natural person, corporation, limited liability company,
partnership, association, governmental entity or other artificial person.
"PROSPECTUS" means that prospectus included in a Registration Statement,
including any prospectus subject to completion, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities and, in each case,
by all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"PUBLIC OFFERING" means the closing of a public offering of the Common
Stock pursuant to a Registration Statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering of
securities to be issued as consideration in
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connection with a business acquisition or an offering of securities issuable
pursuant to an employee benefit plan.
"REGISTRABLE SECURITIES" means (i) the Shares, (ii) any capital stock
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of the Shares, excluding in all cases
any Registrable Securities sold by a Person in a transaction in which such
Person's rights under this Agreement are not assigned, and (iii) any shares of
Common Stock that are acquired by any Management Investor upon the exercise of
any option that exists on the Effective Date of the Merger Agreement. Any
Registrable Securities that are transferred pursuant to (x) an effective
registration statement under the Securities Act or (y) in an open-market
transaction under Rule 144, shall cease to be Registrable Securities.
"REGISTRATION DATE" means the date upon which a Registration Statement
pursuant to which the Parent shall have initially registered shares of Common
Stock under the Securities Act for sale in a Public Offering shall have been
declared effective by the Commission.
"REGISTRATION STATEMENT" means any registration statement of the Parent
which covers any of the Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"SEC" means the Securities and Exchange Commission or any other successor
agency performing similar functions.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock owned by the parties hereto on
the Effective Date and any shares of Common Stock acquired by any Management
Investor through the exercise of any option that exists on the date of the
Merger Agreement, which exercise occurs between the Effective Date and the date
that is two Business Days after the Effective Date.
"TRANSFER" (including with correlative meanings the terms "TRANSFERRED,"
"TRANSFEREE" and "TRANSFEROR") means any transfer, sale, assignment, bequest,
pledge, encumbrance or other disposition of capital stock or any portion of the
ownership interest therein, irrespective of whether any of the foregoing are
effected voluntarily or involuntarily, by operation of law or otherwise, or
whether INTER VIVOS or upon death.
ARTICLE II.
TRANSFER OF PARENT CAPITAL STOCK
Section 2.1 General Restrictions on Transfer of Stock; Shares Subject to
Agreement.
(a) Except as set forth on SCHEDULE 2.1, no Stockholder shall
Transfer such Stockholder's Shares or any part of, or interest in, them or the
certificates representing them
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except as provided by the express terms of this Agreement; PROVIDED, HOWEVER,
that the board of directors of the Parent shall in good faith consider requests
to permit Transfers if such request is unrelated to the Company's performance.
As a condition precedent to any Transfer that is permitted by this Agreement,
any Transferee that is a party to such permitted Transfer shall as a condition
precedent to such Transfer become a signatory to this Agreement and shall agree
to be bound by the terms and conditions hereof. Upon becoming a signatory to
this Agreement, such Transferee shall be considered a "STOCKHOLDER" as that term
is used herein.
(b) The term "STOCKHOLDER," when used with reference to the Shares,
shall mean a legal or beneficial owner of such Shares and includes, without
limitation, the legal representative of a deceased or incompetent natural person
and a voluntary or involuntary transferee.
(c) The stock certificates for the Shares shall be endorsed with the
following restrictive legends:
(i) "THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER."
(ii) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS'
AGREEMENT WHICH INCLUDES, AMONG OTHER RESTRICTIONS, A MARKET
STAND-OFF AGREEMENT, A TAG-ALONG RIGHT AND A DRAG-ALONG
RIGHT. COPIES OF THE AGREEMENT AND ANY AMENDMENTS OR
MODIFICATIONS THERETO MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE CORPORATION."
Section 2.2 DRAG-ALONG RIGHT.
(a) In the event that STC and all of its Affiliates (the "DRAG-ALONG
SELLER") elect to Transfer all of their Shares to any Independent Third Party or
affiliated group of Independent Third Parties (an "INDEPENDENT THIRD PARTY
PURCHASER") for cash or securities of a publicly traded company (including any
Transfer of Shares by the Drag-Along Seller that is being effected by a merger
or consolidation of Parent with another entity) (collectively, a "SALE OF THE
PARENT"), the Drag-Along Seller shall have the right (the "DRAG-ALONG RIGHT") to
cause the other Stockholders to Transfer their respective Shares to the
Independent Third Party Purchaser (or to exchange such Shares pursuant to the
terms of such Sale of the Parent) at the same price and on the same terms and
conditions as the Drag-Along Seller proposes to Transfer its Shares.
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(b) The Drag-Along Seller may elect to exercise the Drag-Along Right
by delivering written notice to the other Stockholders at least twenty days
prior to the consummation of the Sale of the Parent. The notice delivered
pursuant to this Section 2.2(b) will contain a copy of the definitive
documentation or an executed term sheet pursuant to which the Sale of the Parent
shall occur and will state (i) the bona fide intention of the Drag-Along Seller
to effect the Sale of the Parent, (ii) the name and address of the Independent
Third Party Purchaser and (iii) the expected closing date of such Sale of the
Parent.
(c) Each of the Stockholders participating in the Sale of the Parent
shall deliver to the Independent Third Party Purchaser at a closing to be held
at the offices of Parent (or such other place as the parties agree), one or more
certificates, properly endorsed for transfer, which represent all the Shares
owned by such Stockholder, and each such Stockholder shall make such
representations and warranties, and shall enter into such agreements, as are
customary and reasonable given each such Stockholder's percentage ownership in
the Parent in the context of the proposed sale, including, without limitation,
representations and warranties (and indemnities with respect thereto) that the
transferee of the Shares (or interests therein) is receiving title to such
Shares (or interests therein), free and clear of all pledges, security
interests, claims, other liens or restrictions on transfer (other than
restrictions on transfer imposed pursuant to applicable securities laws). In
addition, each of the Stockholders shall reasonably cooperate and consult with
each other in order to effect the Sale of the Parent, and provide reasonable
assistance to the Drag Along Seller in connection with the preparation of
disclosure schedules relating to representations and warranties to be made to
the Independent Third Party Purchaser involved in such Sale of the Parent and in
the determination of the appropriate exceptions to such representations and
warranties.
(d) The obligations of Cinergy and the Management Investors pursuant
to this Section 2.2 are subject to the satisfaction of the following conditions:
(i) the per share consideration payable to the Stockholders in
the Sale of Parent (whether through the direct or indirect
Transfer of their shares in the Parent or through a
liquidation of the Parent following a sale of all or
substantially all of the Parent's assets) must be equal to
or greater than at least ninety percent (90%) of the then
fair market value of such shares, as the same may be
determined in accordance with the procedures set forth in
Section 2.6.
(ii) upon the consummation of the Sale of the Parent following
the exercise of the Drag-Along Right, all of the
Stockholders shall receive the same proportion of the
aggregate consideration from such Sale of the Parent that
such Stockholder would have received if such aggregate
consideration had been distributed by the Parent in complete
liquidation pursuant to the rights and preferences set forth
in the certificate of incorporation of the Parent (as in
effect immediately prior to such Sale of the Parent)
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(giving effect to applicable orders of priority and the
exercise price of any warrants or options);
(iii) no Stockholder shall be obligated to make any out-of-pocket
expenditure prior to the consummation of the Sale of the
Parent and no Stockholder shall be obligated to pay more
than its, his or her pro rata share (based upon the amount
of consideration received) of reasonable expenses incurred
in connection with a consummated Sale of the Parent to the
extent such costs are incurred for the benefit of all
Stockholders and are not otherwise paid by the Parent or
the acquiring party (costs incurred by or on behalf of a
Stockholder for its or his sole benefit will not be
considered costs of the transaction hereunder); and
(iv) at least fifteen days prior notice of a Sale of the Parent
shall be provided to the Stockholders.
Section 2.3 TAG-ALONG RIGHT.
(a) If STC and its Affiliates (the "TAG-ALONG-SELLER") elect to
Transfer all or a portion of their Shares to a purchaser that is not an
Affiliate of STC (a "THIRD PARTY PURCHASER") (including any transfer of Shares
by the Tag-Along Seller that is being effected by a merger or consolidation of
Parent with another entity), the Tag-Along Seller shall notify the other
Stockholders of such intention (the "TAG-ALONG NOTICE") at least twenty days
prior to the closing of the proposed Transfer, and the other Stockholders shall
have the right (the "TAG-ALONG RIGHT") to cause the Tag-Along Seller to transfer
(by means of an increase in the number of Shares transferred, a reduction in the
number of Shares sold or transferred by the Tag Along Seller or otherwise) the
other Stockholders' respective Shares to the Third Party Purchaser (or to
exchange such Shares pursuant to the terms of such merger or consolidation) at
the same price and on the same terms and conditions as the Tag-Along Seller
proposes to transfer its Shares.
(b) The Tag-Along Notice shall include the number of Shares proposed
to be sold by the Tag-Along-Seller, the price and the terms upon which the
proposed sale is to be made, the name and address of the Third Party Purchaser
and a copy of the third party offer. Each Stockholder (each a "CO-SELLER") may
elect to Transfer in such contemplated Transfer up to that number of Shares
(referred to herein as "TAG-ALONG SHARES") that is equal to the product of (a)
the number of Shares proposed to be sold by the Tag-Along-Seller multiplied by
(b) a fraction, (i) the numerator of which is the total number of Shares owned
by such Co-Seller and (ii) the denominator of which is the total number of
Shares held by the Tag-Along-Seller and all Co-Sellers. If any Stockholder fails
to deliver an election notice by the close of business on the 10th day after
receipt of a Tag-Along Notice, such Stockholder shall be deemed to have elected
not to participate in the Transfer covered by such Tag-Along Notice.
(c) Each of the Co-Sellers shall deliver to the Third Party Purchaser
at a closing to be held at the offices of Parent (or such other place as the
parties agree), one or more certificates, properly endorsed for transfer, which
represent all the Tag-Along Shares of such Co-
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Seller, and each such Co-Seller shall make such representations and warranties,
and shall enter into such agreements, as are customary and reasonable given each
such Stockholder's percentage ownership in the Parent in the context of the
proposed sale, including, without limitation, representations and warranties
(and indemnities with respect thereto) that the transferee of the Shares (or
interests therein) is receiving title to such Shares (or interests therein),
free and clear of all pledges, security interests, adverse claims, other liens
or restrictions on transfer (other than restrictions on transfer imposed
pursuant to applicable securities laws). In addition, each of the Stockholders
shall reasonably cooperate and consult with each other in order to effect the
transfer described in this Section 2.3, and provide reasonable assistance to the
Tag Along Seller and Co-Sellers in connection with the preparation of disclosure
schedules relating to representations and warranties to be made to the Third
Party Purchaser involved in such transfer and in the determination of the
appropriate exceptions to, such representations and warranties.
Section 2.4 PERMITTED TRANSFERS. Notwithstanding the provisions of Section
2.1 of this Agreement, each Stockholder may sell or otherwise assign, with or
without consideration, an unlimited amount of such Stockholder's Shares to any
spouse or member of his immediate family, or to a custodian, trustee (including
a trustee of a voting trust), executor or other fiduciary for the account of his
spouse or members of his immediate family, or to a trust for himself, or to a
charitable remainder trust, or any affiliate, member or limited or general
partner of such Stockholder, or to any entity that is wholly owned by members of
the Stockholder's immediate family; provided that each such transferee or
assignee, prior to the completion of the sale, transfer or assignment shall have
executed documents assuming the obligations of the Stockholder under this
Agreement with respect to the transferred securities.
Section 2.5 REDEMPTION.
(a) Parent shall cause the Fair Market Value per Share to be
determined as of the third anniversary of the date hereof in accordance with
Section 2.6. When the Fair Market Value per Share has been determined, Parent
shall promptly notify (the "REDEMPTION NOTICE") Cinergy and the Management
Investors of such Fair Market Value. Cinergy and each Management Investor shall
have thirty days following the receipt of the Redemption Notice in which to
deliver to Parent a written redemption demand (a "REDEMPTION DEMAND") that
Parent shall redeem all, or any portion of, the Shares (as requested in the
Redemption Demand), for a per share purchase price (the "REDEMPTION PRICE")
equal to the Fair Market Value. The closing of such purchase and sale shall
occur at the offices of Parent on such business day reasonably selected by
Parent, but not on a date less than forty nor more than ninety days after
delivery of the Redemption Notice (the "REDEMPTION DATE"). From and after the
Redemption Date, the rights of the Redeeming Stockholders as stockholders of
Parent, with respect to any Shares redeemed, shall cease and the certificates
representing the redeemed Shares shall thereafter represent only the right to
receive the applicable Redemption Price upon surrender of such certificates to
Parent.
(b) Parent shall pay the applicable Redemption Price in immediately
available funds against delivery of the stock certificates representing the
applicable Shares (or, in lieu of delivery of lost, stolen or destroyed
certificates, an agreement to indemnify Parent from any loss incurred by it in
connection with such certificates). If Parent is prevented from redeeming or
making full payment for the Common Stock by any legal or contractual
restriction,
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Parent shall then redeem the maximum number of Shares pro rata from the
Redeeming Stockholders as permitted free from any legal or other restrictions,
and STC shall purchase the remaining Shares included in Redemption Demands for
the Redemption Price.
(c) This Section 2.5 shall not be available when the Drag-Along Right
pursuant to Section 2.2 has been initiated prior to the receipt of any
Redemption Demand.
(d) STC shall cause Parent to fully, faithfully and timely perform
the Parent's obligations under this Section 2.5.
Section 2.6 DETERMINATION OF FAIR MARKET VALUE; PAYMENT FOR SHARES.
(a) For purposes of Section 2.5, pertaining to the purchase and sale
of Shares in connection with a Redemption Demand or a Sale of the Parent, the
Fair Market Value of the Shares which are included in the Redemption Demand
pursuant to Section 2.5 (the "REDEEMED SHARES") shall be determined in
accordance with the procedures set forth in this Section 2.6.
(b) The Fair Market Value of the Redeemed Shares shall be equal to
that price that would be payable as of the third anniversary of the date hereof
with respect to the Redeemed Shares assuming the sale of 100% of the equity of
Parent in a cash transaction, after appropriate consideration of all Parent's
liabilities (including borrowings and preferred, common and contingent equity
claims, and without application of any assumptions regarding synergies that
might be achieved by any particular buyer, liquidity discount, or minority
discount. Within 30 days prior to the third anniversary of the date hereof,
Parent, Cinergy and the Management Investors shall negotiate in good faith in an
effort to reach mutual agreement as to the Fair Market Value of the Redeemed
Shares.
(c) If Parent, Cinergy and the Management Investors are unable to
reach agreement as to the Fair Market Value of the Redeemed Shares within such
30 day period, the Fair Market Value of the Redeemed Shares shall be determined
by an appraisal process as set forth herein. Each of Parent, on the one hand,
and Cinergy and the Management Investors on the other hand shall designate,
within fifteen days after the conclusion of the thirty day negotiation period
referred to above, an independent and experienced appraiser (each individually
an "APPRAISER" and collectively the "APPRAISERS"). The Appraisers shall be
instructed to complete their appraisals of the Fair Market Value of the Redeemed
Shares by no later than thirty days after their appointment. If the
determination of the Appraiser with the higher determination is not greater than
110% of the determination of the other Appraiser, the Fair Market Value shall be
equal to the average of the determinations of the two Appraisers; PROVIDED,
HOWEVER, if the higher determination is greater than 110% of the lower
determination, then the two Appraisers shall jointly select a third Appraiser
within ten days after the first date on which both of such two Appraisers have
delivered their reports. Such third Appraiser shall deliver its report of its
good faith determination of the Fair Market Value of the Redeemed Shares within
thirty days after such appointment, and in such case the Fair Market Value shall
be equal to the average of the closest determinations; PROVIDED, HOWEVER that if
the highest and lowest of such three determinations differ from the middle
determination by an equal amount, the Fair Market Value shall be equal to such
middle determination. The cost of all such appraisals shall be borne one-
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half by Parent and one-half by the Redeeming Stockholders (pro rata in
accordance with such Redeeming Stockholder's ownership of Redeemed Shares) and
the Redeeming Stockholders' share of such costs shall be withheld from the
Redemption Price distributed to the Redeeming Stockholders.
Section 2.7 PUT OPTION.
(a) The Company and STC hereby jointly and severally agree to
purchase any Shares owned by Cinergy or any Management Investor if (a) the
transactions contemplated by the Subscription Agreement are consummated after
termination of the Merger Agreement and (b) such Stockholder shall have given
notice of its intent to exercise its put rights under this Section 2.7 within
twenty business days of the date the transactions contemplated by the
Subscription Agreement are consummated.
(b) Parent or STC, as the case may be, shall pay to the Stockholder
exercising put rights under this Section 2.7, by wire transfer of immediately
available funds, against delivery of the certificates representing the put
Common Stock, (x) $8.00 plus (y) an amount equal to the difference between $8.00
and such Stockholder's adjusted tax basis (certified in the notice of intent
delivered pursuant to Section 2.7(a)) in the put Shares multiplied by the
highest applicable U.S. federal and state income tax rate applicable to such
Stockholder (plus in each case a full gross-up to account for the additional
amount equal to the taxes payable at such highest applicable rate on the amounts
payable under this clause (y) including this parenthetical phrase).
(c) Each Stockholder exercising their put rights under this Section
2.7 shall deliver to Parent or STC, as the case may be, at a closing to be held
at the offices of Parent on the fifth business day following Parent's receipt of
notice of such Stockholder's exercise of its put rights under this Section 2.7
(or such other date and place as the parties agree), one or more certificates,
properly endorsed for transfer, which represent all the Shares owned by such
Stockholder, and each such Stockholder shall make such representations and
warranties, and shall enter into such agreements, as are customary and
reasonable given each such Stockholder's percentage ownership in the Parent in
the context of the proposed sale, including without limitation representations
and warranties (and indemnities with respect thereto) that the transferee of the
Shares (or interests therein) is receiving title to such Shares (or interests
therein), free and clear of all pledges, security interests, adverse claims,
other liens or restrictions on transfer (other than restrictions on transfer
under applicable securities laws).
ARTICLE III.
MARKET STAND-OFF; REGISTRATION RIGHTS
Section 3.1 MARKET STAND-OFF.
(a) In connection with any offering to the public pursuant to a
registration statement filed with the SEC and declared effective under the
Securities Act, the Stockholders shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option
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for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any Shares
without the prior written consent of Parent and its underwriters. Such
restriction (the "MARKET STAND-OFF") shall be in effect for such period of time
from and after the effective date of the final prospectus for the offering as
may be requested by Parent or the underwriters. In no event, however, shall such
period exceed one hundred eighty days and the Market Stand-Off shall in all
events terminate two (2) years after the effective date of Parent's initial
public offering.
(b) The Stockholders shall be subject to the Market Stand-Off
provided and only if the officers and directors of Parent, STC and STC's
Affiliates are also subject to similar restrictions.
(c) Any additional Common Stock or other capital stock of Parent
received by any Stockholder shall be immediately subject to the Market
Stand-Off.
(d) In order to enforce the Market Stand-Off, Parent may impose
stop-transfer instructions with respect to the shares until the end of the
applicable stand-off period.
Section 3.2 FORM S-3 REGISTRATION. In case Parent shall receive from any
Stockholder or group of Stockholders a written request or requests that Parent
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such
Stockholder or Stockholders (and such Stockholders initiating the request meet
the requirements set forth in Section 3.3(b)), Parent will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Stockholders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Stockholder's or Stockholders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Stockholder or Stockholders joining in such request as are specified in a
written request given within fifteen days after receipt of such written notice
from Parent; PROVIDED, HOWEVER, that Parent shall not be obligated to effect any
such registration, qualification or compliance, pursuant to this Section 3.2:
(1) if Form S-3, or any equivalent form, is not available for such offering by
the Stockholder or Stockholders; (2) if the Stockholder or Stockholders,
together with the holders of any other securities of Parent entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than
$10,000,000; (3) if Parent shall furnish to the Stockholder or Stockholders a
certificate signed by the President of Parent stating that in the good faith
judgment of the board of directors of Parent, it would have a material adverse
effect on Parent for such Form S-3 Registration to be effected at such time, in
which event Parent shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than sixty days after receipt of
the request of the Stockholder or Stockholders under this Section 3.2; PROVIDED,
HOWEVER, that Parent shall not utilize this right more than once in any twelve
month period; (4) if Parent has, preceding the date of such request, already
effected five registrations on Form S-3 for Cinergy or any Management Investor
pursuant to this Section 3.2;
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or (5) in any particular jurisdiction Parent would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, Parent shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Stockholders. All expenses incurred in connection with a registration
requested pursuant to this Section 3.2, including, without limitation, all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of one counsel for the selling Stockholders
and counsel for Parent, but excluding any underwriters' discounts or commissions
associated with Registrable Securities, shall be borne by Parent.
Section 3.3 PARENT REGISTRATION. If (but without any obligation to do so)
Parent proposes to register (including for this purpose a registration effected
by Parent for stockholders other than the Stockholders) any of its equity
securities under the Securities Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Parent stock plan, a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), Parent shall, at such time, promptly give each
Stockholder written notice of such registration. Upon the written request of
each Stockholder given within twenty days after mailing of such notice by Parent
in accordance with Section 6.5, Parent shall, subject to the provisions of
Section 3.4, cause to be registered under the Securities Act all of the
Registrable Securities that each such Stockholder has requested to be
registered. Notwithstanding the foregoing, Parent has no obligation to initiate
the registration of any Shares pursuant to this Section 3.3 and may withdraw any
such registration at any time.
Section 3.4 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of Parent's capital stock, Parent shall not
be required under Sections 3.2 and 3.3 to include any of the Stockholders'
securities in such underwriting unless such Stockholders accept the terms of the
underwriting as agreed upon between Parent and the underwriters selected by it
(or by other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by Parent. If the total amount of
securities, including Registrable Securities, requested by Stockholders to be
included in such offering pursuant to Sections 3.2 and 3.3 exceeds the amount of
securities (other than by Parent in the case of a registration under Section
3.3) that the underwriters determine in their sole discretion is compatible with
the success of the offering, then Parent shall exclude from such registration
first, securities held by any Person who does not have any contractual rights
granted in this Agreement to cause Parent to register such securities prior to
restricting Shares held by any Stockholder with such contractual rights granted
in this Agreement, pro rata among the Stockholders of such Shares on the basis
of the respective numbers of Shares requested to be included in such
registration, but in no event shall the amount of securities of the selling
Stockholders included in the offering be reduced below thirty percent of the
total amount of securities included in such offering, unless such offering is
the initial public offering of Parent's securities.
-11-
Section 3.5 PREPARATION AND FILING.
(a) If and whenever the Parent is under an obligation pursuant to the
provisions of this Agreement to effect the registration of, and keep effective a
Registration Statement for, any Registrable Securities, the Parent shall, as
expeditiously as practicable:
(i) use its best efforts to cause a Registration Statement that
registers such Registrable Securities to become and remain
effective for a period of ninety days (extended for such
period of time as the Stockholders are required to
discontinue disposition of Registrable Securities pursuant
to Section 3.5(b) below) or until all of such Registrable
Securities have been disposed of (if earlier);
(ii) use its best efforts to furnish, at least five business days
before filing a Registration Statement that relates to the
registration of such Registrable Securities, a Prospectus
relating thereto or any amendments or supplements relating
to such a Registration Statement or Prospectus, to one
counsel (the "STOCKHOLDERS' COUNSEL") selected by the
holders of a majority of the outstanding Common Stock that
is held by the Management Investors and Cinergy, voting as a
class, copies of all such documents proposed to be filed;
(iii) notify in writing the Stockholders' Counsel, and the
Stockholders whose Registrable Securities may be included in
such Registration Statement, promptly of (A) the receipt by
the Parent of any notification with respect to any comments
by the SEC with respect to such Registration Statement or
Prospectus or any amendment or supplement thereto or any
request by the SEC for the amending or supplementing thereof
or for additional information with respect thereto, (B) the
receipt by the Parent of any notification or written
information with respect to the issuance or threatened
issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement or Prospectus
or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose (and the
Parent shall use its best efforts to prevent the issuance
thereof or, if issued, to obtain its withdrawal) and (C) the
receipt by the Parent of any notification with respect to
the suspension of the qualification of such Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes;
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(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of
such jurisdictions as the Stockholders holding such
Registrable Securities reasonably request and do any and all
other acts and things which may be reasonably necessary or
advisable to enable the Stockholders to consummate the
disposition in such jurisdictions of the Registrable
Securities owned by the Stockholders; PROVIDED, HOWEVER,
that the Parent will not be required to qualify generally to
do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it
would not otherwise be required to do so but for this clause
(iv);
(v) furnish to the Stockholders holding such Registrable
Securities such number of copies of the Prospectus in
conformity with the requirements of the Securities Act, and
such other documents as such Stockholders may reasonably
request in order to facilitate the public sale or other
disposition of such Registrable Securities;
(vi) use its best efforts to cause such Registrable Securities to
be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the
business and operations of the Parent to enable the
Stockholders holding such Registrable Securities to
consummate the disposition of such Registrable Securities;
(vii) notify the Stockholders holding such Registrable Securities
on a timely basis at any time when a Prospectus relating to
such Registrable Securities is required to be delivered
under the Securities Act within the appropriate period
mentioned in clause (i) of this Section 3.5(a), of the
happening of any event as a result of which the Prospectus
related to such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading,
and prepare and furnish to such Stockholders a reasonable
number of copies of, and file with the SEC, a supplement to
or an amendment of such Prospectus as may be necessary so
that, as thereafter delivered to the offerees of such
shares, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
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statements therein, in light of the circumstances under
which they were made, not misleading;
(viii) subject to the execution of confidentiality agreements in
form and substance reasonably satisfactory to the Parent,
make available upon reasonable notice and during normal
business hours, for inspection by the Stockholders holding
Registrable Securities requested to be included in such
registration, any underwriter participating in any
disposition pursuant to such Registration Statement and any
attorney, accountant or other agent retained by the
Stockholders or underwriter (collectively, the
"Inspectors"), all reasonably requested financial and other
records, reasonably requested corporate documents and
properties of the Parent (collectively, the "Records"), and
cause the Parent's officers, directors and employees to
supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector,
in each case as shall be reasonably necessary to enable them
to exercise their due diligence responsibility in a
customary fashion in connection with such Registration
Statement; PROVIDED, HOWEVER, that any of the Information
that the Parent determines in good faith to be confidential,
and of which determination the Inspectors are so notified,
shall not be disclosed by the Inspectors unless (A) the
disclosure of such Information is necessary to avoid or
correct a material misstatement or omission in the
Registration Statement or Prospectus, (B) the release of
such Information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or, upon the
written advice of counsel, is otherwise required by law, or
(C) such Information has been made generally available to
the public, and the Stockholders agree that they will, upon
learning that disclosure of such Information is sought in a
court of competent jurisdiction, give notice to the Parent
and allow the Parent, at the Parent's expense, to undertake
appropriate action to prevent disclosure of the Information
deemed confidential;
(ix) use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in
customary form and at customary times and covering matters
of the type customarily covered by cold comfort letters;
(x) use its best efforts to obtain from its counsel an opinion
or opinions in customary form naming the Stockholders as
additional addressees or parties who may rely thereon;
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(xi) provide a transfer agent and registrar (which may be the
same entity and which may be the Parent) for such
Registrable Securities;
(xii) issue to any underwriter to which the Stockholders holding
such Registrable Securities may sell Shares in such offering
certificates evidencing such Registrable Securities;
(xiii) list such Registrable Securities on any national
securities exchange on which any shares of the Common Stock
are listed or, if the Common Stock is not listed on a
national securities exchange, use its best efforts to
qualify such Registrable Securities for inclusion on the
Nasdaq National Market;
(xiv) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make
available to its securityholders, as soon as reasonably
practicable, earning statements (which need not be audited)
covering a period of 12 months beginning within three months
after the effective date of the Registration Statement,
which earning statements shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(xv) use its best efforts to take all other steps necessary to
effect the registration of, and maintain an effective
Registration Statement with respect to, such Registrable
Securities contemplated hereby.
(b) Each holder of the Registrable Securities, upon receipt of any
notice from the Parent of any event of the kind described in Section
3.5(a)(vii), shall forthwith discontinue disposition of the Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3.5(a)(vii) hereof, and, if so
directed by the Parent, such holder shall deliver to the Parent all copies,
other than permanent file copies then in such holders possession, of the most
recent Prospectus covering such Registrable Securities at the time of receipt of
such notice.
Section 3.6 INDEMNIFICATION.
(a) In connection with any registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Parent shall indemnify
and hold harmless, to the fullest extent permitted by law, each holder of
Registrable Securities, each underwriter, broker or any other Person acting on
behalf of the holders of Registrable Securities and each other Person, if any,
who controls any of the foregoing Persons within the meaning of the Securities
Act (each such indemnified Person being referred to herein as an "INDEMNIFIED
PERSON") against any losses, claims, damages or liabilities, joint or several
(or actions in respect
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thereof), to which any of the foregoing Persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or allegedly untrue statement of a material fact contained in
or incorporated by reference in the Registration Statement under which such
Registrable Securities were registered under the Securities Act, Prospectus
contained therein or otherwise filed with the SEC, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Securities, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or, with respect to
any Prospectus, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or any violation by
the Parent of the Securities Act or state securities or blue sky laws applicable
to the Parent and relating to action or inaction required of the Parent in
connection with such registration or qualification under such state securities
or blue sky laws; and shall promptly reimburse the Indemnified Persons for any
legal or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Parent shall not be liable in any such case to any
such Indemnified Person to the extent that any such loss, claim, damage,
liability or action (including any legal or other expenses incurred) arises out
of or is based upon: (i) an untrue statement or allegedly untrue statement or
omission or alleged omission made in said Registration Statement, Prospectus or
document incident to registration or qualification of any Registrable Securities
in reliance upon and in conformity with written information furnished to the
Parent through an instrument duly executed by such Indemnified Person
specifically for use in the preparation thereof or (ii) any Indemnified Person's
failure to deliver a copy of the Prospectus (including any amendment or
supplement thereto) after the Parent has delivered to such Indemnified Person a
sufficient number of copies of the same.
(b) In connection with any registration of Registrable Securities
under the Securities Act pursuant to this Agreement, each holder of Registrable
Securities being registered shall, severally and not jointly, to the fullest
extent permitted by law, indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 3.7(a) above) the Parent, each director
of the Parent, each officer of the Parent who shall have signed such
Registration Statement, each other holder of Registrable Securities, each agent,
underwriter, broker or other Person acting on behalf of the Parent, each other
holder of Registrable Securities and each Person who controls any of the
foregoing Persons within the meaning of the Securities Act with respect to any
statement or omission from such Registration Statement, any Prospectus contained
therein or otherwise filed with the SEC or any document incident to registration
or qualification of any Registrable Securities, if such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Parent or such underwriter through an instrument duly executed by such
holder specifically for use in connection with the preparation of such
Registration Statement, Prospectus or document; PROVIDED, HOWEVER, that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each seller of Registrable Securities, to an amount equal to the
net proceeds actually received by such seller from the sale of Registrable
Securities effected pursuant to such registration.
(c) Promptly after receipt by an Indemnified Person of notice of the
commencement of any action involving a claim referred to in Section 3.7(a) or
Section 3.7(b), such Indemnified Person will, if a claim in respect thereof is
made against an indemnifying
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party, give written notice to the latter of the commencement of such action;
PROVIDED, HOWEVER, that the Indemnified Person's failure to give such notice
shall not release, relieve or in any way affect the indemnifying party's
obligation hereunder to indemnify the Indemnified Person unless and to the
extent that the rights of the indemnifying party are prejudiced thereby. In case
any such action is brought against an Indemnified Person, the indemnifying party
will be entitled to participate in and to assume and control the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that he, she, or it may wish, with counsel reasonably satisfactory to
such Indemnified Person, and after notice from the indemnifying party to such
Indemnified Person of his, her or its election so to assume the defense thereof,
the indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the Indemnified Person in connection with the defense
thereof, PROVIDED, HOWEVER, that if any Indemnified Person shall have reasonably
concluded (based on the written advice of counsel) that there may be one or more
legal or equitable defenses available to such Indemnified Person which are
additional to or conflict with those available to the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party and such indemnifying party shall reimburse
such Indemnified Person for that portion of the reasonable fees and expenses of
any counsel retained by the indemnified party which is reasonably incurred in
connection with the matters covered by the indemnity agreement provided in this
Section 3.7.
(d) If the indemnification provided for in this Section 3.7 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim, damage, liability or action referred to herein
(other than as a result of the applicability of the proviso in Section 3.7(a)),
then the indemnifying party, in lieu of indemnifying such Indemnified Person
hereunder, shall contribute to the amounts paid or payable by such Indemnified
Person as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the Indemnified Person on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Section 3.7 UNDERWRITING AGREEMENT.
(a) If any registration pursuant to Section 3.2 is requested to be an
underwritten offering, Parent shall negotiate in good faith to enter into a
reasonable and customary underwriting agreement with the underwriters thereof.
Parent shall be entitled to receive indemnities from lead institutions,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement and to
the extent customary given their role in such distribution.
-17-
(b) No Stockholder may participate in any registration hereunder that
is underwritten unless such Stockholder agrees to (i) sell such Stockholder's
Registrable Securities proposed to be included therein on the basis provided in
any underwriting arrangements approved by the Parent and a majority of the
Registrable Securities being included in such registration and (ii) as
expeditiously as possible, notify the Parent of the occurrence of any event
concerning such Stockholder as a result of which the Prospectus relating to such
registration contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 3.8 EXCHANGE ACT COMPLIANCE. From the Registration Date or such
earlier date as a Registration Statement filed by the Parent pursuant to the
Exchange Act relating to any class of the Parent's securities shall have become
effective, Parent shall comply with all of the reporting requirements of the
Exchange Act applicable to it (whether or not it shall be required to do so) and
shall comply with all other public information reporting requirements of the SEC
which are conditions to the availability of Rule 144 promulgated under the
Securities Act or any successor rule thereto or any complementary rule thereto
("RULE 144") for the sale of the Common Stock. Parent shall cooperate with the
Stockholders in supplying such information as may be necessary for the
Stockholders to complete and file any information reporting forms presently or
hereafter required by the SEC as a condition to the availability of Rule 144.
Section 3.9 MERGERS, ETC. Parent shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Parent shall not
be the surviving corporation unless the surviving corporation shall, prior to
such merger, consolidation or reorganization, agree in writing to assume the
obligations of Parent under this Agreement, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to include the shares of
common stock, if any, or other securities that the Stockholders would be
entitled to receive in exchange for Common Stock under any such merger,
consolidation or reorganization; PROVIDED, HOWEVER, that, to the extent the
Stockholders receive securities that are by their terms convertible into shares
of common stock of the issuer thereof, then any such shares of common stock as
are issued or issuable upon conversion of said convertible securities shall be
included within the definition of "Registrable Securities."
Section 3.10 NO CONFLICT OF RIGHTS; SELECTION OF UNDERWRITER. The Parent
shall not, at any time after the date hereof, grant any registration rights that
conflict with or impair, or have any parity with or priority over, the
registration rights granted hereby. In any Public Offering, the managing
underwriters shall be nationally recognized investment banking firms chosen by
the board of directors of the Parent.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND PARENT
Each of the parties hereto (each, a "REPRESENTING PARTY") hereby severally
represents and warrants to each other Representing Party as follows:
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Section 4.1 ORGANIZATION, QUALIFICATION AND POWER. Each Representing Party
(other than any Representing Party which is an individual) is a corporation or
limited partnership, as the case may be, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and it has
the requisite corporate or partnership power and authority, as the case may be,
to own and hold its properties, and to carry on its business as conducted or
proposed to be conducted. Each Representing Party (other than any Representing
Party which is an individual) has requisite corporate or partnership power and
authority to execute, deliver and perform this Agreement.
Section 4.2 AUTHORIZATION OF AGREEMENT; NO CONFLICT. The execution,
delivery and performance by each Representing Party of this Agreement have been
duly authorized by all requisite corporate, partnership and individual action,
as the case may be, of the Representing Party, if any, and will not violate any
provision of law, any order of any court or other agency of government, any of
such Representing Party's organizational documents, if any, or any provision of
any indenture, agreement or the instrument to which such Representing Party or
any of such Representing Party's properties or assets is bound, or conflict,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any such indenture, agreement or other instrument.
Section 4.3 VALIDITY. This Agreement has been duly executed and delivered
by each Representing Party and constitutes a legal, valid and binding obligation
of such Representing Party, enforceable against such Representing Party in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and except as to the extent the
availability of equitable remedies may be limited to general principles of
equity.
Section 4.4 RESTRICTED SECURITIES. Each Representing Party hereby confirms
that such Representing Party has been informed that the Shares are restricted
securities under the Securities Act and may not be resold or transferred unless
such Shares are first registered under the Securities Act or unless an exemption
from such registration is available. Accordingly, each Representing Party hereby
acknowledges that such Representing Party is prepared to hold the Shares for an
indefinite period and that such Representing Party is aware that SEC Rule 144
issued under the Securities Act which exempts certain resales of unrestricted
securities is not presently available to exempt the resale of the Shares from
the registration requirements of the Securities Act.
ARTICLE V.
BOARD OF DIRECTORS
Section 5.1 COMPOSITION. The Stockholders agree that, in any election of
directors of Parent (or action by written consent in lieu thereof), they shall
vote all Shares owned or controlled by them (or act by written consent) to elect
a Board of Directors comprised of seven members designated as follows:
(a) two directors (the "MANAGEMENT DIRECTORS"), who shall be
designated by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., so long as he is an employee of Parent
or its Affiliates;
-19-
PROVIDED that, until the next annual meeting of the directors of Parent, one of
the Management Directors shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.; PROVIDED FURTHER
that if ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. is unavailable or unable to designate the
Management Directors, the Management Directors shall be designated by the
holders of a majority of the then outstanding Common Stock that is held by the
Management Investors;
(b) one director (the "CINERGY DIRECTOR"), which shall be designated
by Cinergy so long as such Stockholder holds at least 500,000 Shares of Common
Stock of Parent, subject to adjustment for any stock dividends, combinations or
splits with respect to such Shares of Common Stock of Parent;
(c) four directors (the "STC DIRECTORS"), each of whom shall be
designated by STC one of whom shall be the Chairman of the Board.
The obligation to vote Shares in accordance with this Section shall be
specifically applicable to and enforceable against any transferees of the
parties hereto.
Section 5.2 VACANCIES; REMOVAL. In the event of any vacancy in the board of
directors of Parent, each of the Stockholders agree to vote all Shares owned or
controlled by them and to otherwise use their best efforts to fill such vacancy
so that the board of directors of Parent will include directors designated as
provided in Section 5.1 above. Each of the Stockholders agrees to vote all
Shares owned by them for the removal of a director whenever (but only whenever)
there shall be presented to the board of directors of Parent the written
direction that such director be removed executed by the person or persons
entitled to designate such director pursuant to Section 5.1.
Section 5.3 MEETINGS. The board of directors of Parent shall hold regularly
scheduled meetings as determined by a majority of the board of directors of
Parent. Parent will give each director notice in advance of all meetings of the
board of directors of Parent and all meetings of committees of the board of
directors of Parent applicable to such director.
Section 5.4 EXPENSES AND INSURANCE. Parent shall reimburse all persons
serving as directors, consistent with Parent's policies for such reimbursement,
if any, for their actual and reasonable out-of-pocket expenses incurred in
attending meetings of the board of directors of Parent and all committees
thereof. In addition, Parent shall maintain directors' and officers' liability
insurance from reputable insurers of sound financial standing.
Section 5.5 AUDITORS. The board of directors of the Parent shall appoint
auditors to perform annual audits of Parent.
Section 5.6 BOARD AND SHAREHOLDER APPROVAL. So long as Cinergy and the
Management Investors, together, hold at least five percent of Common Stock of
Parent the following transactions shall require the approval of the Chief
Executive Officer and a majority of the directors appointed to the board
pursuant to clauses (a) and (b) of Section 5.1:
(a) any agreement or transaction between the Parent or its
subsidiaries and any Affiliate involving the Transfer of any consideration
(whether cash, securities, property or otherwise) between the Parent or its
subsidiaries and such Affiliate with the exception of any
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agreement: (1) on terms which are no less favorable to the Company than would
have been available from an Independent Third Party in an arms-length
transaction or (2) other than any agreement pursuant to (1) which is in excess
of $50 million;
(b) the redemption of any Shares which is not on a pro-rata basis,
except pursuant to this Agreement or stock restriction agreements with
employees, consultants and similar persons, other than pursuant to any
agreements between Parent and its employees;
(c) any amendment or modification of the Parent's Certificate of
Incorporation or Bylaws which would materially adversely affect the Management
Investors and/or Cinergy in a disproportionate manner;
(d) any non pro-rata declaration of dividends or distributions to the
Parent's stockholders; and
(e) any voluntary act of dissolution or other liquidation (but a
merger or other acquisition shall not constitute a dissolution or other
liquidation) of the Parent.
ARTICLE VI.
MISCELLANEOUS
Section 6.1 SURVIVAL. The representations, warranties, and agreements
contained in this Agreement shall survive the execution and delivery of this
Agreement and remain in full force and effect, notwithstanding any investigation
made at any time by or on behalf of any party hereto.
Section 6.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement and supersedes all prior agreements, arrangements,
negotiations, arrangements and understanding, both written and oral, among the
parties with respect to the subject matter hereof. Any provision of this
Agreement may be amended, waived or modified if, but only if, such amendment,
waiver or modification is in writing and is signed by the parties hereto and
thereto; PROVIDED, HOWEVER, that no amendment or modification to this Agreement
which adversely affects the rights of Cinergy shall be made without the written
consent of Cinergy.
Section 6.3 BINDING EFFECT; BENEFITS. This Agreement and all the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and permitted assigns.
Except as expressly provided herein, nothing in this Agreement is intended to
confer on any Persons, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement. Any Transfer in violation of the provisions of
this Agreement shall be null and void.
Section 6.4 FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
-21-
Section 6.5 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an internationally recognized overnight courier
service, such as Federal Express, 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 STC, to:
Convergent Holding Corporation
c/o Schlumberger Technology Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to Cinergy, to:
Cinergy Ventures, LLC
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Cinergy Corp.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to any of the Management Investors, at the address set forth
below such Management Investor's name on the signature pages
hereto.
-22-
Holland & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 6.6 SEVERABILITY. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the invalid, void or unenforceable term or
provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction or other authority declares that
any term or provision hereof is invalid, void or unenforceable, the parties
agree that the court making such determination shall have the power to and
shall, subject to the discretion of such court, reduce the scope, duration, area
or applicability of the term or provision, to delete specific words or phrases,
or to replace any invalid, void or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
Section 6.7 HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement.
Section 6.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 6.9 RIGHTS CUMULATIVE; WAIVER. The rights and remedies of the
Stockholders and Parent under this Agreement shall be cumulative and not
exclusive of any rights or remedies which any party hereto would otherwise have
hereunder or at law or in equity or by statute, and no failure or delay by any
such party in exercising any right or remedy shall impair any such right or
remedy or operate as a waiver of such right or remedy, nor shall any single or
partial exercise of any power or right preclude such party's other or further
exercise or the exercise of any other power or right. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
any party hereto to exercise any right or privilege hereunder shall be deemed a
waiver of such party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any subsequent time or
times hereunder. No waiver by any Stockholder of any right, power or remedy
under any of such investments shall be effective unless given in writing by such
Stockholder.
Section 6.10 TERMINATION. This Agreement may be terminated upon the written
agreement of (a) Parent, (b) STC, (c) Cinergy and (d) Stockholders who hold at
least fifty percent of the total capital stock held by the Management Investors.
Article II and Article V of this Agreement shall automatically terminate and
have no further force or effect on any party hereto in connection with the
effectuation of Parent's initial registered public offering of capital stock
under the Securities Act, effective as of the consummation of such offering.
-23-
Section 6.11 INTERPRETATION. When a reference is made in this Agreement to
a section or article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary. 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 "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, paragraph, exhibit
and schedule references are to the articles, sections, paragraphs, appendix and
schedules of this Agreement unless otherwise specified. The plural of any
defined term shall have a meaning correlative to such defined term, and words
denoting any gender shall include all genders and the neuter. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a
corresponding meaning. A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns. A reference to any legislation or to any provision of any legislation
shall include any modification, amendment or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto. The parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement. No prior draft nor any course of
performance or course of dealing shall be used in the interpretation or
construction this Agreement.
Section 6.12 WAIVER OF JURY TRIAL. Each party acknowledges and agrees that
any controversy which may arise under this agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this agreement or the transactions contemplated by this agreement.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such party understands and has considered the implications of
this waiver, (iii) each such party makes this waiver voluntarily, and (iv) each
such party has been induced to enter into this agreement by, among other things,
the waivers and certifications in this Section 6.12.
Section 6.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (whether delivered by facsimile or otherwise), each of which shall
be considered one and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and delivered to the
other parties.
-24-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
CONVERGENT HOLDING CORPORATION
By:
--------------------------
Name:
------------------------
Title:
-----------------------
SCHLUMBERGER TECHNOLOGY CORP
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Cinergy ventures, LLC
By:
--------------------------
Name:
------------------------
Title:
-----------------------
MANAGEMENT INVESTORS:
---------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
--------------------
--------------------
--------------------
---------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
--------------------
--------------------
--------------------
---------------------------- ----------------------------
▇. ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
---------------------------- ----------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ LIMITED PARTNERSHIP,
a Colorado Limited Partnership
By:
--------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ Consultants, Inc.
Title: Trustee
a Colorado corporation, General Partner
By: By:
-------------------------- --------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee Title: President
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
THE ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ISSUE SUB-TRUST THE ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 1999 TRUST
By: By:
-------------------------- --------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee Title: Trustee
By: Address:
-------------------------- --------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee --------------------
Address: --------------------
--------------------
--------------------
--------------------
THE ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 1999 TRUST THE ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 TRUST
By: By:
-------------------------- --------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee Title: Trustee
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999 THE ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999
TRUST TRUST
By: By:
-------------------------- --------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee Title: Trustee
Address: Address:
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
THE ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1999
TRUST -----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇▇▇
By: Address:
-------------------------- --------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee --------------------
Address: --------------------
--------------------
--------------------
--------------------
BKUK FAMILY PARTNERSHIP LLLP
By:
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Partner
By:
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Partner
Address:
--------------------
--------------------
--------------------
Schedule 2.1
Each of the following individuals may transfer any of his Shares provided
that the transferee complies with the second sentence of Section 2.1(a):
▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT B TO SUBSCRIPTION AND CONTRIBUTION AGREEMENT
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT, dated as of _______ __, 2000 (this "AGREEMENT"),
by and among Convergent Holding Corporation, a Delaware corporation ("PARENT"),
Schlumberger Technology Corp., a Texas corporation ("STC") and Cinergy Ventures,
LLC ("CINERGY").
W I T N E S S E T H:
WHEREAS, Cinergy desires to enter into an arrangement concerning the right
of Cinergy to demand redemption of the shares of Common Stock owned by Cinergy
on the date of this Agreement (the "SHARES"); and
WHEREAS, Parent, Cinergy, STC and certain management investors have entered
into a Stockholders' Agreement governing matters such as the transfer and
registration of the Shares (as hereafter defined), operation and governance of
Parent and other related matters (the "STOCKHOLDERS' AGREEMENT"); and
WHEREAS, Parent, STC, Cinergy and certain management investors have entered
into a Subscription and Contribution Agreement providing for the initial
capitalization of Parent (the "SUBSCRIPTION AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements in this Agreement, the
parties hereto, intending to be legally bound, agree as follows:
Section 1. REDEMPTION. Notwithstanding Section 2.5 of the Stockholders'
Agreement, Cinergy shall be entitled to the following right of redemption.
(a) Parent shall cause the Fair Market Value per Share to be
determined as of the third anniversary of the date hereof in accordance with
Section 2. When the Fair Market Value per Share has been determined, Parent
shall promptly notify (the "REDEMPTION NOTICE") Cinergy of such Fair Market
Value. Cinergy shall have thirty days following the receipt of the Redemption
Notice in which to deliver to Parent a written redemption demand (a "REDEMPTION
DEMAND") that Parent shall redeem all, or any portion of, the Common Stock (as
requested in the Redemption Demand), for a per share purchase price (the
"REDEMPTION PRICE") equal to the greater of (i) the Fair Market Value or (ii)
$8.00. The closing of such purchase and sale shall occur at the offices of
Parent on such business day reasonably selected by Parent, but not on a date
less than forty days nor more than 90 days after delivery of the Redemption
Notice (the "REDEMPTION DATE"). From and after the Redemption Date, the rights
of Cinergy as a stockholder of Parent, with respect to any Shares redeemed,
shall cease and the certificates representing the redeemed Shares shall
thereafter represent only the right to receive the applicable Redemption Price
upon surrender of such certificates to Parent.
(b) Parent shall pay the applicable Redemption Price in immediately
available funds against delivery of the stock certificates representing the
applicable Shares (or, in lieu of delivery of lost, stolen or destroyed
certificates, an agreement to indemnify Parent from
any loss incurred by it in connection with such certificates). If Parent is
prevented from redeeming or making full payment for the Shares by any legal or
contractual restriction, Parent shall then redeem the maximum number of Shares
from Cinergy as permitted free from any legal or other restrictions and STC
shall purchase the remaining Shares included in Redemption Demands for the
Redemption Price.
(c) STC shall cause Parent to fully, faithfully and timely perform
the Parent's obligations under this Section 1.
Section 2. DETERMINATION OF FAIR MARKET VALUE; PAYMENT FOR SHARES. For
purposes of Section 1, Fair Market Value shall be determined in accordance with
the procedures set forth in Section 2.6 of the Stockholders' Agreement.
Section 3. RIGHT IN THE EVENT THE DRAG-ALONG RIGHT IS EXERCISED.
Notwithstanding Section 2.2 (d)(i) of the Stockholders' Agreement, in the event
that the Drag-Along Seller exercises its Drag-Along Right pursuant to Section
2.2 of the Stockholders' Agreement, the per share consideration payable to
Cinergy in the Sale of Parent (whether through the direct or indirect Transfer
of its shares in the Parent or through a liquidation of the Parent following a
sale of all or substantially all of the Parent's assets) must be equal to the
greater of (i) the same price per share as the Drag-Along Seller, (ii) at least
ninety percent (90%) of the then Fair Market Value of such shares, as the same
may be determined in accordance with the procedures set forth in Section 2.6 of
the Stockholders' Agreement, or (iii) $8.00.
Section 4. BINDING EFFECT OF STOCKHOLDERS' AGREEMENT. The parties hereto
acknowledge that they are bound by all provisions of the Stockholders'
Agreement, except for Section 2.2 and Section 2.5 of the Stockholders' Agreement
to the extent modified by the parties to this Agreement. To the extent that
there is a conflict between the provisions of this Agreement and the
Stockholder's Agreement, the provision of this Agreement shall prevail.
Section 5. AMENDMENT. Any provision of this Agreement may be amended,
waived or modified if, but only if, such amendment, waiver or modification is in
writing and is signed by the parties hereto and thereto.
Section 6. BINDING EFFECT; BENEFITS. This Agreement and all the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and permitted assigns.
Except as expressly provided herein, nothing in this Agreement is intended to
confer on any persons or entities, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. Any transfer in violation of
the provisions of this Agreement shall be null and void.
Section 7. FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
-2-
Section 8. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by an internationally recognized overnight courier
service, such as Federal Express, 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 STC, to:
c/o Schlumberger Limited
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.:
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to Cinergy, to:
Cinergy Ventures, LLC
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Cinergy Ventures, LLC
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9. SEVERABILITY. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the invalid, void or unenforceable term
-3-
or provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction or other authority declares that
any term or provision hereof is invalid, void or unenforceable, the parties
agree that the court making such determination shall have the power to and
shall, subject to the discretion of such court, reduce the scope, duration, area
or applicability of the term or provision, to delete specific words or phrases,
or to replace any invalid, void or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
Section 10. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement.
Section 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 12. RIGHTS CUMULATIVE; WAIVER. The rights and remedies of Cinergy,
STC and Parent under this Agreement shall be cumulative and not exclusive of any
rights or remedies which any party hereto would otherwise have hereunder or at
law or in equity or by statute, and no failure or delay by any such party in
exercising any right or remedy shall impair any such right or remedy or operate
as a waiver of such right or remedy, nor shall any single or partial exercise of
any power or right preclude such party's other or further exercise or the
exercise of any other power or right. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any preceding or succeeding breach and no failure by any party hereto to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
No waiver by any party hereto of any right, power or remedy under any of such
investments shall be effective unless given in writing by such party.
Section 13. TERMINATION. This Agreement may be terminated upon the written
agreement of all of the parties hereto. This Agreement shall automatically
terminate and have no further force or effect on any party hereto in connection
with the effectuation of Parent's initial registered public offering of capital
stock under the Securities Act of 1933, as amended, effective as of the
consummation of such offering.
Section 14. INTERPRETATION. When a reference is made in this Agreement to a
section or article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary. 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 "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, paragraph, exhibit
and schedule references are to the articles, sections, paragraphs, appendix and
schedules of this Agreement unless otherwise specified. The plural of any
defined term shall have a meaning correlative to such defined term, and words
denoting any gender shall include all genders and the neuter. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a
-4-
corresponding meaning. A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns. A reference to any legislation or to any provision of any legislation
shall include any modification, amendment or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto. The parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement. No prior draft nor any course of
performance or course of dealing shall be used in the interpretation or
construction this Agreement. Defined terms used herein but not defined shall
have the meaning ascribed to such terms in the Stockholders' Agreement.
Section 15. WAIVER OF JURY TRIAL. Each party acknowledges and agrees that
any controversy which may arise under this agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this agreement or the transactions contemplated by this agreement.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such party understands and has considered the implications of
this waiver, (iii) each such party makes this waiver voluntarily, and (iv) each
such party has been induced to enter into this agreement by, among other things,
the waivers and certifications in this Section 15.
Section 16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts (whether delivered by facsimile or otherwise), each of which shall
be considered one and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and delivered to the
other parties.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
CONVERGENT HOLDING CORPORATION
By:
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Name:
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Title:
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SCHLUMBERGER TECHNOLOGY CORP.
By:
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Name:
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Title:
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CINERGY VENTURES, LLC
By:
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Name:
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Title:
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