EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated this ___ day of
October, 2000, and is entered into by and between Xxxxx X. Xxxxxxx
("Executive"), Convergent Group Corporation, a Delaware corporation, having its
principal office at 0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000 (the "Corporation"), Convergent Holding Corporation, a Delaware
corporation, having its principal office at 0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("CHC"), and Schlumberger Technology Corp.,
a Texas corporation, having its principal office at ________________ ("STC").
This Agreement shall be effective as of the "Effective Date", as defined below.
In consideration of the mutual promises and the terms and conditions set
forth below, Executive and the Corporation (together, the "Parties," and each, a
"Party") agree as follows:
1. EMPLOYMENT. The Corporation shall employ Executive as its Chief
Financial Officer, and Executive hereby accepts such employment and agrees to
perform such duties and undertake such responsibilities as are customarily
performed by others holding positions similar to that assigned to Executive in
similar businesses, subject to the general direction and supervision of the
Corporation's President and Chief Executive Officer.
2. FULL-TIME BEST EFFORTS. Executive shall devote his full professional
time and attention to the performance of his obligations under this Agreement,
and will at all times faithfully, industriously and to the best of his ability,
experience and talent, perform all of his obligations hereunder. Executive shall
receive a performance review from the Corporation on or about each anniversary
of Executive's original date of hire.
3. TERM. The term of this Agreement shall begin on the Effective Date (as
defined below) and shall remain in effect for a period of three (3) years after
the Effective Date (the "Initial Term"). After expiration of the Initial Term,
this Agreement will be automatically renewed for additional one-year periods
(each a "Renewal Term") as of each anniversary of the Effective Date (each a
"Renewal Date"); provided neither party has given written notice to the other
party of an intent not to renew at least 90 days prior to any Renewal Date. The
Initial Term and each Renewal Term shall be subject to earlier termination as
set forth herein. The "Effective Date" shall mean the date of "Closing" pursuant
to that certain Agreement and Plan of Merger (the "Merger Agreement") by and
among CHC, Convergent Acquisition Sub, Inc., STC and the Corporation dated as of
October ___, 2000. Notwithstanding anything herein to the contrary, if the
Effective Date has not occurred
on or before March 31, 2001, this Agreement shall be null and void and the
rights and obligations of the parties shall be determined as if this Agreement
had never been entered into.
4. EQUITY INTERESTS.
(a) INTRODUCTION. Executive currently holds certain shares of Common
Stock of and/or options to acquire shares of Common Stock (the "Equity
Interests") in the Corporation. Executive hereby agrees, as described below, to
sell a portion of his Equity Interests in connection with the transactions
contemplated by the Merger Agreement. That portion of Executive's Equity
Interests not sold in connection with the Merger Agreement, including without
limitation any shares acquired after the date of execution of this Agreement but
prior to the Effective Date, will be contributed to CHC in return for shares in
CHC. Any options granted to Executive pursuant to the Corporation's 1999 Stock
Option Plan (the "1999 Option Plan") which remain outstanding as of the
Effective Date will be assumed by CHC in accordance with the Merger Agreement.
(b) SALE OF CORPORATION SHARES. Except as set forth in Section 4(c)
below, Executive agrees to sell an aggregate of 45,000 shares of Common Stock of
the Corporation at a price of $8.00 per share, either in the "Offer" or pursuant
to the "Merger", as those terms are defined in the Merger Agreement. For
purposes of this Section 4, shares of Common Stock owned by Executive shall
include shares held by Executive's spouse; any parent, child, descendant or
sibling of Executive; the spouse of any of the foregoing; or any trust,
partnership, custodian, fiduciary or other person or entity who holds such
shares for the benefit of any such person. Any shares of Common Stock owned by
Executive which are not sold in the Offer or pursuant to the Merger shall be
contributed to CHC pursuant to the Subscription and Contribution Agreement (the
"Subscription Agreement") among CHC, STC, Cinergy Ventures, LLC and the
Management Investors named therein dated as of October ___, 2000, in return for
shares of CHC.
(c) PUT RIGHT WITH RESPECT TO INITIAL SHARES. Executive may elect to
exchange any or all of the shares referenced in Section 4(b) for shares of
Common Stock in CHC pursuant to the Subscription Agreement. In that event,
Executive shall have the right and option (the "Subsequent Sale Option"), in his
sole discretion, to cause CHC to purchase up to that number of shares of Common
Stock of CHC which is equal to the difference between the number of shares of
Common Stock of the Corporation sold by Executive in the Offer or pursuant to
the Merger and 45,000 shares. Executive may elect to exercise the Subsequent
Sale Option by delivering written notice to CHC of such election (the
"Subsequent Sale Notice") at any time within one year of the Effective Date,
which notice shall state the number of shares of Common Stock to be sold by
Executive and purchased by CHC. The price of any shares of Common Stock of CHC
to be sold upon exercise of the Subsequent Sale Option shall be $8.00 per share.
The Subsequent Sale Option may be exercised on more than one occasion during
such
2
one year period, provided that in no event shall the aggregate number of shares
to be purchased from Executive pursuant to Sections 4(b) and 4(c) exceed 45,000
shares. CHC shall pay the purchase price in immediately available funds against
delivery of the stock certificates representing the shares (or, in lieu of
delivery of lost, stolen or destroyed certificates, an agreement to indemnify
CHC from any loss incurred by it in connection with such certificates) at a
closing to be held within ten days of the receipt of the Subsequent Sale Notice.
If CHC is prevented from redeeming or making full payment for such shares by any
legal or contractual restriction, CHC shall then redeem the maximum number of
such shares as permitted free from any legal or other restrictions and STC shall
then purchase the remaining such shares under the same terms and conditions
under which CHC was to have made such purchase. This Section 4(c) shall survive
the termination or expiration of this Agreement for any reason.
(d) ACCELERATION OF VESTING. The Corporation acknowledges and agrees
that in accordance with the terms of the 1999 Option Plan, any unvested options
granted to Executive pursuant to the 1999 Option Plan which remain outstanding
as of the Effective Date, and shares of Common Stock owned by Executive which
are subject to an Early Exercise Stock Repurchase Agreement, if any, between
Executive and the Corporation, will be accelerated and will be fully vested as
of the Effective Date.
(e) GRANT OF ADDITIONAL OPTIONS. As of the Effective Date, CHC shall
grant Executive, pursuant to the CHC 2000 Stock Option/Stock Issuance Plan (the
"2000 Option Plan"), options to acquire 135,000 shares of Common Stock in CHC at
an exercise price of $8.00 per share. Such options shall vest and become
exercisable in three equal annual installments on the first, second and third
anniversaries of the Effective Date, provided that Executive remains in the
employ of the Corporation. The options shall be Incentive Stock Options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to the maximum extent permitted by the Code. The terms and conditions
applicable to such grant shall be as set forth in the 2000 Option Plan and the
standard Notice of Grant of Stock Options and the exhibits thereto used pursuant
to the 2000 Option Plan.
5. BASE SALARY AND BENEFITS.
(a) BASE SALARY. Executive's annual base salary, effective as of the
Effective Date is $200,000. Executive's base salary shall be reviewed at least
annually in conjunction with Executive's annual performance review and may be
increased, but not decreased, as appropriate in light of Executive's
performance. Executive's annual base salary shall be paid in twenty-four (24)
semi-monthly payments during each annual period.
3
(b) COST OF LIVING INCREASE. The annual base salary set forth in
Section 5(a) shall be adjusted annually in an amount equal to the increase in
the cost of living during the preceding annual period. At no time shall the
annual base salary be adjusted to an amount lower than the previous year's
annual base salary. The first cost of living adjustment shall be effective as of
January 1, 2001, and shall be based upon the cost of living increase for the
period January 1, 2000 through December 31, 2000. The annual base salary shall
be adjusted annually each year thereafter, effective as of January 1, based upon
the prior calendar year's cost of living change. The cost of living adjustment
shall be determined by reference to the change in the Consumer Price Index -
Cities, all items, figures for urban wage earners and clerical workers,
Denver-Boulder, not seasonally adjusted, as published by the Bureau of Labor
Statistics or a comparable index if this index is discontinued at any time
during the term of this Agreement. If the change in the Consumer Price Index has
not been released as of the time at which an adjusted payment is to be made, the
Corporation shall estimate the amount of the adjustment, and the amount of any
overpayment or underpayment shall be corrected in the first payment in which it
is reasonably practical to do so after the Consumer Price Index is released.
(c) BENEFITS. Executive shall be entitled to participate in such life
insurance, disability, medical, dental, pension, profit sharing and retirement
plans and other programs as may be made generally available from time to time by
the Corporation for the benefit of executives of Executive's level or its
employees generally (the "Benefits"). Executive shall be entitled to receive one
week of sick/personal time and four weeks of vacation during each full year of
employment. Any unused vacation leave time accumulated during such year of
employment shall not carry over to subsequent years without the express written
approval of the Corporation's Chief Executive Officer.
6. BONUS COMPENSATION.
(a) INCENTIVE BONUS. Bonus arrangements for calendar year 2000 which
are in place prior to the execution date of this Agreement shall remain in
effect without change. Commencing with calendar year 2001, Executive shall be
eligible to earn an annual incentive performance bonus for each year (the
"Incentive Bonus") in addition to his annual base salary. The targeted annual
Incentive Bonus amount shall be an amount between 50% and 100% of Executive's
annual base salary as of the beginning of the year under consideration, as
determined by the Corporation (the "Target Bonus"). The payment of any portion
of the Target Bonus shall be dependent upon the attainment by Executive and the
Corporation of their mutually agreed upon objectives (the "Annual Performance
Plan"), which shall be established annually by mutual agreement between
Executive and the Corporation. The Annual Performance Plan for calendar year
2001 shall be established within a reasonably practicable amount of time as
determined by the Chief Executive Officer of the Corporation after the date of
execution of this Agreement. Subsequent Annual Performance Plans shall cover a
calendar year and shall be established for each year on or before January 15 of
such year. If the Corporation
4
and Executive are unable to mutually agree with respect to Executive's Annual
Performance Plan, the Annual Performance Plan shall be determined by the
Corporation, provided that the plan must be reasonably attainable by Executive
based upon conditions existing at the time the Annual Performance Plan is
determined. Exceeding the goals of the Annual Performance Plan may result in
additional compensation to be determined by the Corporation in its sole
discretion. Executive must remain in the employ of the Corporation as of the
last day of the year in order to earn an Incentive Bonus for such year. Any
Incentive Bonus earned pursuant to this Agreement shall be paid no later than
the earlier of (i) ten days after the completion of the Corporation's audited
financial statements for the year for which the Incentive Bonus was earned and
(ii) April 15 of the year following the year for which the Incentive Bonus was
earned. To the extent relevant or necessary, results of financial performance of
the Corporation shall be based upon the Corporation's audited financial
statements, which shall be conclusive.
(b) THIRD YEAR BONUS. Executive shall be eligible to earn a one-time
bonus (the "Third Year Bonus") in addition to his annual base salary if each of
the following conditions have been satisfied:
i. Executive holds any options granted to Executive pursuant to
the 1999 Option Plan which remain outstanding and unexercised as of the
Effective Date;
ii. Executive did not exercise any options granted to Executive
pursuant to the 1999 Option Plan at any time after September 30, 2000 through
and including the second business day following the Effective Date except with
respect to shares acquired upon exercise of options which shares are
subsequently sold in the Offer or pursuant to the Merger in compliance with
Section 4(b) or are subject to the Subsequent Sale Option as described in
Section 4(c);
iii. CHC has failed to successfully consummate an underwritten
public offering under the Securities Act of 1933, as amended, on or before the
third anniversary of the Effective Date; and
iv. There has been no sale of all or substantially all of the
stock or assets of CHC for cash or freely tradable securities of a publicly
traded company on or before the third anniversary of the Effective Date.
The Third Year Bonus amount shall equal Executive's annual base salary in effect
as of the third anniversary of the Effective Date. Executive must remain in the
employ of the Corporation as of the third anniversary of the Effective Date in
order to receive this Third Year Bonus. Any Third Year Bonus earned pursuant to
this Agreement shall be paid as soon as reasonably practicable (but no later
than thirty days) after the third anniversary of the Effective Date.
5
7. FACILITIES AND EXPENSES.
(a) FACILITIES AND EQUIPMENT. The Corporation shall furnish
facilities, equipment, services and assistance suitable to Executive's position
for the performance of Executive's duties.
(b) AUTOMOBILE. The Corporation shall also either provide a company
automobile or reimburse Executive for reasonable expenses of operation of
Executive's personal automobile (such expenses to include insurance,
maintenance, fuel and depreciation, if applicable). The extent to which the
expenses of operation of Executive's personal automobile are reasonable shall be
determined by the Chief Executive Officer of the Corporation.
(c) REIMBURSEMENT OF EXPENSES. In the promotion and execution of the
business of the Corporation, Executive is expected to incur certain reasonable
expenses for entertainment, travel, and business fax and telephone bills which
shall be reimbursed by the Corporation, in accordance with the Corporation's
normal policies and procedures. Unusual and extraordinary expenses incurred by
Executive and not approved in advance by the Chief Executive Officer of the
Corporation may not be reimbursed.
8. NO COPIES OF DOCUMENTS AND MATERIALS. Executive shall not (except in
the performance of his duties in the ordinary course of business for which he is
employed by the Corporation) at any time or in any manner make or cause to be
made any copies, pictures, duplicates, facsimiles or other reproductions or
recordings or any abstracts or summaries of any reports, studies, memoranda,
correspondence, manuals, records, plans or other written, printed, computerized
or otherwise recorded materials of any kind or nature whatsoever belonging to or
in the possession of the Corporation or any of its subsidiaries.
9. MATERIALS REMAIN ON PREMISES. Executive shall have no right, title or
interest in any material referenced in Section 8. Executive agrees that, except
in the performance of his duties in the ordinary course of business for which he
is employed by the Corporation, Executive will not, without the prior written
consent of the Corporation, remove any such material from any premises of the
Corporation. Executive further agrees that, immediately upon the termination of
his employment with the Corporation or upon the termination of this Agreement,
whichever occurs earlier, or at any time prior thereto upon the request of the
Corporation, he shall surrender all such material to the Corporation and execute
a document acknowledging that he has complied with the provisions of this
Agreement.
10. TRADE SECRETS. Executive shall not at any time, whether during or
after the term of this Agreement, use for Executive's own benefit or purposes or
for the benefit or purposes of any other person, firm, partnership, association,
corporation or business organization, entity or enterprise, or disclose (except
in the performance of his duties in the ordinary course of business for which he
is employed by the Corporation) in any
6
manner to any person, firm, partnership, association, corporation or business
organization, entity or enterprise any trade secret, information, data, know how
or knowledge (including, but not limited to, that relating to personnel lists
and files, personnel training and development programs, service techniques,
purchasing organization and methods, sales organization and methods,
inventories, client lists, market development and expansion plans, and client
and supplier relationships) or any other Discoveries (as defined in Section 12)
belonging to or relating to the affairs of the Corporation or any of its
parents, subsidiaries or affiliates or to the clients of the Corporation or any
of its parents, subsidiaries or affiliates; provided, however, that this Section
shall not apply to any trade secret, information, data, know how, knowledge, or
Discovery that is or becomes generally available to the public through no fault
or action of Executive.
11. CUSTOMERS. In furtherance of and not in limitation of Section 9,
Executive acknowledges that the lists of the Corporation and its parents',
subsidiaries' and affiliates' personnel and customers as it may exist from time
to time constitute valuable and unique assets of the Corporation and its
parents, subsidiaries and affiliates and Executive agrees that he shall not,
during or after the term of his employment, disclose such lists or any part
thereof to any person, firm, partnership, association, corporation or business
organization, entity or enterprise for any reason or purpose whatsoever, nor
shall Executive use such personnel or customer lists for his own benefit or
purposes or for the benefit or purposes of any business with which Executive may
become associated.
12. DISCOVERIES. Executive agrees with the Corporation that any and all
inventions, discoveries, improvements, designs, methods, systems, developments,
know how, ideas, suggestions, devices, trade secrets and processes (hereinafter
collectively referred to as "Discoveries"), whether patentable or not, which are
discovered, disclosed to or otherwise obtained by Executive during his
employment with the Corporation are confidential, proprietary information and
are the sole and absolute property of the Corporation. Executive agrees to
disclose promptly to the Corporation all such Discoveries and to assist the
Corporation in making any application in the United States and in foreign
jurisdictions for patents or other intellectual property protection of any kind
with respect thereto.
13. WORKS FOR HIRE. All works and writings of a professional nature which
are produced by Executive during his employment with the Corporation constitute
works made for hire and are the sole and absolute property of the Corporation.
Executive grants the Corporation the exclusive right to copyright all such works
and writings in the United States and in foreign jurisdictions. To the extent
any such works or writings are deemed not to be works for hire, Executive hereby
assigns and agrees to assign all his interests therein to the Corporation or its
nominee. Whenever requested to do so by the Corporation, Executive shall execute
any and all applications, assignments, or other instruments that the Corporation
may deem necessary to protect the Corporation's interest therein. Any assignment
of copyright hereunder includes all rights of paternity,
7
integrity, disclosure and withdrawal and any other rights that may be known as
or referred to as "moral rights" (collectively "Moral Rights"). To the extent
such Moral Rights cannot be assigned under applicable law and to the extent the
following is allowed by the laws in the various countries where Moral Rights
exist, Executive hereby waives such Moral Rights and consents to any action of
the Corporation that would violate such Moral Rights in the absence of such
consent. Executive agrees to confirm any such waivers and consents from time to
time as requested by the Corporation.
14. USE OF CONFIDENTIAL INFORMATION OF OTHER PERSONS. Executive represents
and warrants that he has not brought and will not bring with him to the
Corporation or use at the Corporation any materials or documents or intellectual
property belonging to Executive or to a former employer or any other person that
are not generally available to the public, unless express written authorization
for their possession and use has been obtained from such person and the
Corporation. Executive understands that he is not to breach any obligation of
confidentiality that is owed to any former employer or other person, and
Executive agrees to fulfill all such obligations during the period of his
affiliation with the Corporation.
15. NONDISCLOSURE AGREEMENT. In addition to the obligations set forth
herein, Executive shall execute and deliver to the Corporation a Nondisclosure
Agreement in the Corporation's standard form.
16. NON-COMPETITION.
(a) INTERESTS OF CORPORATION. Executive acknowledges that his
employment as a member of the Corporation's executive management team creates a
relationship of confidence and trust between Executive and the Corporation with
respect to confidential and proprietary information applicable to the business
of the Corporation, its parents, subsidiaries, affiliates and its clients.
Executive further acknowledges the highly competitive nature of the business of
the Corporation. Accordingly, the Corporation and Executive agree that the
restrictions contained in this Section 16 are reasonable and necessary for the
protection of the immediate interests of the Corporation and its parents,
subsidiaries and affiliates and that any violation of these restrictions would
cause substantial injury to the Corporation and its parents, subsidiaries and
affiliates.
(b) COMPETITIVE BUSINESS. For purposes of this Agreement, the term
"Competitive Business" means any person, firm, partnership, association,
corporation, or business organization, entity or enterprise which (1) provides
technical management consulting and/or systems integration services for (A)
electric and gas utilities, water utilities and local government distribution
automation technology projects, and/or (B) utility transmission and distribution
systems, and/or (C) any business or entity in the utility industry or the power
technologies market segment or (2) which directly competes with any other
existing or contemplated line of business of the Corporation or its subsidiaries
(provided that in the case of a contemplated business, such business is
8
referenced in the Corporation's then current Business Plan) in which the
Executive has directly and materially participated within the two (2) year
period immediately preceding the termination of Executive's employment with the
Corporation. The term "Competitive Business" is not intended to include mere
vendors or suppliers of the Corporation.
(c) EXISTING CLIENT. For purposes of this Agreement, the term
"Existing Client" means a client for whom the Corporation or any of its
subsidiaries is performing consulting services as of the date of the termination
of Executive's employment with the Corporation or for whom the Corporation or
any of its subsidiaries performed consulting services within the two (2) year
period immediately preceding the termination of Executive's employment with the
Corporation. The term "Existing Client" is not intended to include mere vendors
or suppliers of the Corporation.
(d) RESTRICTIVE COVENANT. During Executive's employment with the
Corporation and for a period of one (1) year following the termination of
Executive's employment with the Corporation for any reason, Executive shall not
(nor shall Executive cause, or provide assistance to anyone else to):
(1) Employ or otherwise engage, or attempt to employ or
otherwise engage, in or on behalf of Executive or any Competitive Business, any
person who is employed or engaged as an employee, consultant, agent or
representative of the Corporation or any of its parents, subsidiaries or
affiliates as of the date of Executive's termination or at any time during the
one-year period following such termination; or
(2) Solicit directly or indirectly on behalf of Executive or any
Competitive Business, the customer business or account of any Existing Client;
or
(3) Perform any work, whether as an employee, agent, servant,
owner, partner, consultant, independent contractor, representative, stockholder
or in any other capacity whatsoever, for any Competitive Business; provided,
however, that this Section 16(d)(3) shall not apply to work which is completely
unrelated to any of the lines of business described in Section 16(b).
(e) SEVERABILITY. If any court shall determine that the duration,
geographic limitations, subject or scope of any restriction contained in this
Section 16 is unenforceable, it is the intention of the Parties that this
Section 16 shall not thereby be terminated but shall be deemed amended to the
extent required to make it valid and enforceable, such amendment to apply only
with respect to the operation of this Section 16 in the jurisdiction of the
court that has made the adjudication.
(f) ABILITY TO GAIN ALTERNATIVE EMPLOYMENT. Executive recognizes and
acknowledges that he has sufficient abilities and talents to be able to obtain,
upon the termination of this Agreement, comparable employment from another
business organization or entity while fully honoring and complying with the
above covenants concerning confidential information and contacts with the
Corporation's or any of its
9
subsidiaries' existing customers or employees. Executive recognizes and
acknowledges the importance to the Corporation and its subsidiaries of the above
covenants and, therefore, agrees that, for a period of one (1) year following
the termination of Executive's employment with the Corporation and upon the
Corporation's reasonable request of Executive, he will advise the Corporation of
the identity of his new employer and will provide a general description, in
reasonable detail, of his new duties and responsibilities sufficient to inform
the Corporation of its need to request a court order to enforce the above
covenants.
17. REMEDIES. Executive acknowledges and agrees that the provisions of
this Agreement are essential to the Corporation and are reasonable and necessary
to protect the legitimate interests of the Corporation and its subsidiaries and
that the damages sustained by the Corporation or its subsidiaries as a result of
a breach of the agreements contained herein will subject the Corporation or its
subsidiaries to immediate, irreparable harm and damage, the amount of which,
although substantial, cannot be reasonably ascertained, and that recovery of
damages at law will not be an adequate remedy. Executive therefore agrees that
the Corporation and its subsidiaries, in addition to any other remedy they may
have under this Agreement or at law, shall be entitled to injunctive and other
equitable relief to prevent or curtail any breach of any portion of Sections 8
through 16 of this Agreement. In the event suit or action is instituted to
enforce this Agreement or any of the terms and conditions hereof, including, but
not limited to, suit for preliminary injunction, the prevailing Party shall be
entitled to costs and reasonable attorneys' fees. Executive waives any right to
the posting of a bond in the event of an issuance of a temporary restraining
order, preliminary injunction or permanent injunction upon the issuance of said
order by a court of competent jurisdiction.
18. DEATH DURING EMPLOYMENT. This Agreement shall terminate upon
Executive's death. In such event, the Corporation shall pay a death benefit
equal to Executive's base monthly salary for the balance of the month of
Executive's death and for the month following his death. Any amounts payable
under this Agreement following Executive's death shall be paid to the
beneficiary named in writing by Executive, or if none, to Executive's surviving
spouse, or if none, to the executors and administrators of Executive's estate
and shall be paid within sixty (60) days of Executive's death.
19. DISABILITY. The Company may terminate Executive's employment
hereunder, upon written notice to Executive, in the event that Executive becomes
disabled during the Term through any condition of either a physical or
psychological nature and, as a result, is, with or without reasonable
accommodation, unable to perform the essential functions of the services
contemplated hereunder for (a) a period of ninety (90) consecutive days, or (b)
for shorter periods aggregating one hundred twenty (120) days during any twelve
(12) month period during the Term.
10
20. TERMINATION OTHER THAN FOR DISABILITY OR DEATH. This Agreement may
terminate for reasons other than Executive's death or disability upon the
occurrence of any of the following events:
(a) CAUSE. The Corporation, at its option, may terminate Executive
for Cause (as defined below) upon written notice by the Corporation to Executive
fully setting forth such Cause, which notice of termination may be appealed to
the Board of Directors of the Corporation. "Cause" shall be limited to a
situation in which Executive has:
(1) Committed a criminal offense that, if committed in the State
of Colorado, would have constituted a felony under the laws of the State of
Colorado or the United States (other than a traffic offense or other similar
violation); or
(2) Committed a fraudulent act which is materially harmful to
the Corporation; or
(3) Committed an act of willful misconduct which subjects the
Corporation to material harm; or
(4) Committed an act of gross insubordination by refusing to
obey written directions of the Corporation's Board of Directors and/or President
and Chief Executive Officer (so long as such directions do not involve illegal
or immoral acts), which refusal continues for a period of twenty (20) days after
written notice to Executive by the Corporation which notice references such
refusal and this Section 20(a); or
(5) Committed repeated acts of alcohol or illegal drug abuse,
and has failed to take reasonable steps to address such issues within twenty
(20) days after written notice to Executive by the Corporation which notice
references such acts and this Section 20(a); or
(6) Except during periods of vacation leave permitted pursuant
to Section 5, failed to devote substantially all of his professional time and
attention to the performance of his obligations under this Agreement, as
determined by the Board of Directors of the Corporation, which failure continues
for a period of twenty (20) days after receipt of written notice by Executive
from the Corporation which notice references such failure and this Section
20(a); or
(7) Failure of Executive to adequately perform material
responsibilities and duties in a professionally-reasonable manner or in
accordance with Corporation's professional work standards, as determined by the
Board of Directors of the Corporation, provided that Executive must first be
given written notice of any alleged performance failure, which notice references
such failure and this Section 20(a), and an adequate period thereafter (not less
than twenty (20) days) to correct any such failure which he thereafter fails to
do.
11
(b) BY CORPORATION WITHOUT CAUSE. The Corporation shall have the
right to terminate this Agreement without Cause at any time upon thirty (30)
days' advance written notice to Executive.
(c) BY EXECUTIVE WITH GOOD REASON. Executive, at his option, may
terminate employment for Good Reason (as defined below) upon written notice by
Executive to the Corporation fully setting forth such Good Reason. For this
purpose, Executive shall be deemed to have "Good Reason" following the
occurrence of any of the following events:
(1) A material breach of this Agreement by the Corporation which
the Corporation fails to cure within twenty (20) days of receipt of written
notice from Executive which describes the breach in reasonable detail and makes
reference to this Section 20(c); or
(2) The Corporation's requiring Executive to be based at any
office or location other than a location within the Denver, Colorado Standard
Metropolitan Statistical Area (as determined by the Bureau of Labor Statistics)
without Executive's approval, except for required travel on the Corporation's
business, which the Corporation fails to cure within twenty (20) days of receipt
of written notice from Executive which describes the breach in reasonable detail
and makes reference to this Section 20(c); or
(3) A change in Executive's job title (other than as a result of
a promotion), a reduction in Executive's base salary, or a change in Executive's
reporting responsibilities such that Executive no longer reports to the
Corporation's Chief Executive Officer, in each case which the Corporation fails
to cure within twenty (20) days of receipt of written notice from Executive
which describes the matter in reasonable detail and makes reference to this
Section 20(c).
(d) BY EXECUTIVE WITHOUT GOOD REASON. Executive shall have the right
to terminate this Agreement without Good Reason at any time upon thirty (30)
days' advance written notice to the Corporation.
(e) BY MUTUAL AGREEMENT. This Agreement may be terminated at any time
upon the mutual agreement of the Parties.
21. RIGHTS UPON TERMINATION.
(a) OBLIGATIONS OF CORPORATION. Upon termination of Executive's
employment with the Corporation, the Corporation shall have no further
obligation to Executive except as specifically provided under this Agreement.
Termination of Executive's employment shall not affect Executive's right to
receive any compensation or bonuses which have accrued but have not been paid
through the date of termination.
12
(b) SEVERANCE BENEFITS. In addition to any accrued compensation or
bonuses, and depending upon the circumstances of Executive's termination of
employment, the Corporation shall pay or provide certain severance benefits (the
"Severance Benefits"). The nature and extent of the Severance Benefits to be
provided shall be determined in accordance with the table set forth in EXHIBIT A
attached hereto. For purposes of EXHIBIT A, the following terms shall have the
following meanings:
(1) "Continuation Benefits" shall mean the continuation of the
Benefits, including any Benefits which cover Executive's family, but excluding
any contribution to any qualified or nonqualified pension, profit sharing or
retirement plan or other deferred compensation arrangement (each a "Retirement
Plan").
(2) "Severance Pay" shall be expressed as a monthly amount and
shall mean one-twelfth of (i) Executive's annual base salary pursuant to Section
5 at the rate in effect immediately prior to the termination of employment plus
(ii) Executive's aggregate Incentive Bonus, pro-rated on a straight-line basis
for any partial year periods, for the one-year period immediately preceding the
date of termination. Any Severance Pay due to Executive shall be paid in cash at
the same times at which Executive would have received such payments had
Executive's employment continued under this Agreement.
(3) "Put Option" shall mean that Executive shall be entitled to
exercise the Put Option in accordance with the terms of Section 22.
(c) RETURN OF CORPORATE PROPERTY. Upon the termination of Executive's
employment with the Corporation for any reason, Executive shall return to the
Corporation any and all equipment owned by the Corporation and used by
Executive.
(d) SUBSTITUTION OF BENEFITS. If any portion of the Benefits
(excluding any contributions to any Retirement Plan) cannot reasonably be made
available to Executive as required following a termination of employment, then
the Corporation shall pay to Executive an amount in cash equal to 150% of the
cost which must be incurred by Executive to acquire benefits equivalent to any
tax-exempt Benefits previously provided by the Corporation and 100% of the cost
which must be incurred by Executive to acquire benefits equivalent to any
taxable Benefits previously provided by the Corporation. The Corporation shall
determine the cost to Executive of such Benefits in good faith and shall provide
reasonable documentation to support its findings to Executive.
22. PUT OPTION.
(a) PUT OPTION. Upon the termination of Executive's employment under
those circumstances designated in EXHIBIT A as entitling Executive to receive
the Put Option, Executive shall have the right and option (the "Put Option"), in
his sole discretion, to cause CHC to purchase all or any portion of any "Shares"
(as defined herein) of CHC owned by Executive under the terms and conditions
provided in this
13
Section 22(a). For purposes of this Section 22, "Shares" means the shares of
Common Stock of CHC owned by Executive on the Effective Date and any shares of
Common Stock of CHC acquired by Executive through the exercise of any option
that exists on the date of the Merger Agreement (including options to acquire
Common Stock of the Corporation which are assumed by CHC pursuant to the Merger
Agreement) which exercise occurs between the Effective Date and the date that is
two Business Days after the Effective Date. "Shares" shall also include any
shares of Common Stock of CHC which would otherwise meet the preceding
definition which are held by Executive's spouse; any parent, child, descendant
or sibling of Executive; the spouse of any of the foregoing; or any trust,
partnership, custodian, fiduciary or other person or entity who holds such
shares for the benefit of any such person.
(b) PUT NOTICE. Executive may elect to exercise the Put Option by
delivering written notice to CHC of such election (the "Put Notice") within 180
days of termination of Executive's employment, which notice shall state the
number of Shares of Common Stock of CHC offered for sale (the "Offered Shares").
Within 90 days following the receipt by CHC of the Put Notice, CHC shall
purchase the Offered Shares as requested in the Put Notice for a per share
purchase price (the "Put Price") equal to the Fair Market Value (as determined
in accordance with Section 22(d) hereof). The closing of such purchase and sale
shall occur at the offices of CHC on such business day reasonably selected by
CHC during such 90 day period upon not less than ten days prior written notice
to Executive (the "Redemption Date"). From and after the Redemption Date, the
rights of Executive and any other person holding the Offered Shares as a
stockholder of CHC, with respect to the Offered Shares shall cease and the
certificates representing the Offered Shares shall thereafter represent only the
right to receive the applicable Put Price upon surrender of such certificates to
CHC.
(c) CLOSING. CHC shall pay the applicable Put Price in immediately
available funds against delivery of the stock certificates representing the
Offered Shares (or, in lieu of delivery of lost, stolen or destroyed
certificates, an agreement to indemnify CHC from any loss incurred by it in
connection with such certificates). If CHC is prevented from redeeming or making
full payment for the Offered Shares by any legal or contractual restriction, CHC
shall then redeem the maximum number of the Offered Shares as permitted free
from any legal or other restrictions and STC shall the purchase the remaining
Offered Shares under the same terms and conditions under which CHC was to have
made such purchase.
(d) DETERMINATION OF FAIR MARKET VALUE. The Fair Market Value of the
Offered Shares shall be determined in accordance with the procedures set forth
in this Section 22(d).
(1) The Fair Market Value of the Offered Shares shall be equal
to that price that would be payable as of the end of the calendar quarter
immediately preceding the termination of Executive's employment assuming the
sale of 100% of the equity of CHC in a cash transaction on such date, after
appropriate consideration of all
14
CHC'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 following the Put Notice, CHC and Executive shall
negotiate in good faith in an effort to reach mutual agreement as to the Fair
Market Value of the Offered Shares.
(2) If CHC and Executive are unable to reach agreement as to the
Fair Market Value of the Offered Shares within such 30 day period, the Fair
Market Value of the Offered Shares shall be determined by an appraisal process
as set forth herein. Each of CHC and Executive shall designate, within 15 days
after the conclusion of the 30 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 Offered Shares by no later than
30 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 10 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 Offered Shares within 30 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 by CHC.
23. MITIGATION. Executive shall inform the Corporation if he should assume
any position, whether as proprietor, partner, employee, principal, agent,
consultant, director, officer, or in any other capacity, in any other firm or
business. To the extent Executive shall accrue compensation from such other firm
or business (whether such compensation shall be payable immediately or on a
deferred basis), any Severance Pay payable by the Corporation shall be reduced
on a dollar for dollar basis for each dollar earned by Executive during the
period in which such Severance Pay is to be paid. Continuation Benefits shall be
subject to mitigation under the limited circumstances described in EXHIBIT A if
and only if Executive, in his sole discretion, has accepted employment with
another firm or business and is eligible to receive benefits which are
equivalent in all material respects to the Continuation Benefits. In determining
benefit equivalence, the parties shall consider all factors, including the level
of coverage, the cost, if any, to Executive, and the effect, if any, of
provisions limiting coverage for pre-existing conditions. Notwithstanding
anything herein to the contrary, this Section shall not apply, and there shall
be no mitigation, following a termination of Executive's employment pursuant to
Section 20(b) or 20(c).
15
24. ARBITRATION. Any controversy or claim arising out of or related to
this Agreement shall be settled by arbitration in Denver, Colorado, under the
Commercial Rules of the American Arbitration Association in effect at the time
such controversy or claim arises (the "Rules") by one arbitrator appointed by
the American Arbitration Association in accordance with the Rules, the
arbitrator also apportioning the costs of arbitration. The award of the
arbitrator shall be in writing, shall be final and binding upon the Parties,
shall not be appealed from or contested in any court and may, in appropriate
circumstances, include injunctive relief. Should any Party fail to appear or be
represented at the arbitration proceedings after due notice in accordance with
the Rules, then the arbitrator may nevertheless render a decision in the absence
of said Party, and such decision shall have the same force and effect as if the
absent Party had been present, whether or not it shall be adverse to the
interests of that Party. Any award rendered hereunder may be entered for
enforcement, if necessary, in any court of competent jurisdiction, and the Party
against whom enforcement is sought shall bear the expenses, including attorneys'
fees, of enforcement. Notwithstanding the foregoing, the Corporation shall be
entitled to seek injunctive or other equitable relief to enforce any of the
provisions in Sections 8 through 16 from any court of competent jurisdiction
without the need to resort to arbitration.
25. SURVIVAL. The covenants contained in this Agreement shall survive any
termination of Executive's employment with the Corporation and shall survive any
termination of this Agreement. The existence of any claim or cause of action of
Executive against the Corporation, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Corporation
of any of the covenants contained in this Agreement.
26. SEVERABILITY. If the scope of any restriction contained in this
Agreement is too broad to permit enforcement of such restriction to its fullest
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and Executive and the Corporation hereby consent and agree that the
scope of such restriction may be judicially modified in any proceeding brought
to enforce such restriction. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted from this Agreement
and the remainder of this Agreement shall remain in full force and effect.
27. NOTICE. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered by personal delivery
or air courier, or if mailed by registered or certified first-class mail, return
receipt requested, to the residence of Executive as it appears in the corporate
records for notice to Executive, or to the principal office of the Corporation
for notice to the Corporation. All notices delivered in accordance with this
Section shall be deemed to have been received and shall be deemed effective if
delivered in person or by air courier, upon actual receipt by the intended
recipient, or if mailed, upon the date of delivery or refusal to accept delivery
as shown by the return receipt therefor.
16
28. NO WAIVER. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel to enforce any provision of
this Agreement, except by a statement in writing signed by the Party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, and shall operate
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other than that
specifically waived.
29. AMENDMENTS. No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by the Parties hereto.
30. ASSIGNMENT. The rights and obligations of the Corporation under this
Agreement shall, without the prior written consent of Executive, inure to the
benefit of and be binding upon the successors and assigns of the Corporation. If
the Corporation shall at any time be merged or consolidated with any other
corporation or shall sell or otherwise transfer a substantial portion of its
assets to another corporation or entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the corporation or entity surviving
or resulting from such merger or consolidation or to which such assets have been
sold or transferred. Upon Executive's request, the Corporation shall obtain a
written agreement to expressly assume this Agreement from any such successor.
This is a personal service contract and may not be assigned by Executive.
31. ENTIRE AGREEMENT. Subject to the last sentence of Section 3, this
instrument contains the entire agreement of the Parties relating to the subject
matter hereof and supersedes all prior agreements and understandings with
respect to such subject matter, whether oral or written, excluding the Agreement
between the Parties dated March 10, 2000, regarding a tax bonus payable to
Executive, but including without further limitation the Employment Agreement
between the Parties dated January 7, 2000, and all other communications relating
to the subject matter hereof, and the Parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth herein.
32. GOVERNING LAW. This Agreement is made under and shall be governed by
and construed in accordance with the internal laws of the State of Colorado
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State. Both parties
agree that the exclusive venue for the enforcement of any arbitration award with
respect to any action, demand, claim or counterclaim relating to the terms and
provisions of this Agreement, or to their breach, shall be in the state or
federal courts located in the State of Colorado and that such courts shall have
personal jurisdiction over the parties to this Agreement.
33. HEADINGS. The headings of sections in this Agreement are solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
17
34. EXPENSES. The Corporation shall pay its own expenses and the
reasonable expenses of Executive, including without limitation attorneys' fees,
in connection with the preparation, negotiation and execution of this Agreement.
18
Signed by the Parties on the day and year first above written.
"CORPORATION"
CONVERGENT GROUP CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
--------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.
President and Chief Executive Officer
"EXECUTIVE"
/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx
Executive
"CHC"
CONVERGENT HOLDING CORPORATION
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------------
President
--------------------------------------
--------------------------------------
The following party, Schlumberger Technology Corp., is executing this Agreement
in order to acknowledge and accept its obligations as set forth in Sections 4(c)
and 22(c) as well as the provisions of Sections 24 through and including 33.
SCHLUMBERGER TECHNOLOGY CORP.
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------------
Attorney-In-Fact
--------------------------------------
--------------------------------------
19
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX X. XXXXXXX
AND
CONVERGENT GROUP CORPORATION
TABLE OF SEVERANCE BENEFITS
Additional
Months of Additional
Continuation Months of
Event of Termination Benefits Severance Pay Put Option
------------------------- ------------ ------------- ----------
1. By the Corporation 0* 0* No
for Cause
2. By the Corporation 6* 6* Yes
without Cause
3. By Executive without 0 0 No
Good Reason
4. By Executive with 6 6 Yes
Good Reason
5. Disability 6 3 No
6. Death 6 0 No
*Solely for purposes of determining Executive's entitlement to Continuation
Benefits and Severance Pay under this Table, a termination by the Corporation
for Cause pursuant to Section 20(a)(7) shall be deemed to be a termination by
the Corporation without Cause entitling the Executive to one month of
Continuation Benefits and one month of Severance Pay.
A-1
