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EXHIBIT 10.7
AGREEMENT
This Agreement (this "Agreement") is made this 13th day of August,
1999, by Xxxxx X. Xxxxxxxxxx, Xx. ("Xxxxxxxxxx"), GMJM Stock Partnership, Ltd.,
a Colorado limited partnership ("GMJM" and, together with Xxxxxxxxxx, the
"Xxxxxxxxxx Entities"), InSight Capital Partners III, L.P., a Delaware limited
partnership ("InSight") and Convergent Group Corporation, a Delaware corporation
("Convergent").
RECITALS
The parties wish to document certain agreements relating to the shares
of capital stock of Convergent, including without limitation amendments to that
certain Shareholders' Agreement (the "Shareholders' Agreement") of even date
herewith by and among Convergent, the "Company Shareholders" and the
"Investors", which amendments shall take effect upon approval by a "Shareholder
Majority" and an "Investor Majority" (as such terms are defined in the
Shareholders Agreement), as required by Section 16(a) of the Shareholders'
Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants herein, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereby agree as
follows:
1. SALE OF SHARES IN MEZZANINE OFFERING.
1.1 Introductions to Mezzanine Purchasers. InSight shall use
commercially reasonable efforts to introduce the Xxxxxxxxxx Entities to one or
more persons or entities, including without limitation Integral Partners, X.
Xxxxx and Amerendo, who have an interest in acquiring shares of Series A
Preferred Stock ("Preferred Stock") and/or Common Stock ("Common Stock") of
Convergent and to support a sale by the Xxxxxxxxxx Entities of Preferred Stock
and Common Stock to such persons and entities. Provided that InSight has
complied with its obligations as set forth in the preceding sentence and Section
1.3, InSight shall have no liability whatsoever with respect to a failure by the
Xxxxxxxxxx Entities to conclude a sale of Preferred Stock and/or Common Stock.
1.2 Terms of Purchase and Sale. Persons or entities interested in
acquiring Preferred Stock and/or Common Stock from the Xxxxxxxxxx Entities are
referred to hereinafter as the "Mezzanine Purchasers". It is the intention of
the parties that the Xxxxxxxxxx Entities shall sell, and the Mezzanine
Purchasers shall purchase, not less than $2,000,000 of Preferred Stock and
Common Stock
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(based upon the purchase and sale price with the Mezzanine Purchasers) from the
Xxxxxxxxxx Entities in a private placement to be concluded as soon as reasonably
possible, but not later than six months from the date of this Agreement. The
purchase price per share for the Preferred Stock shall be not less than $1.085
per share. The net proceeds of a sale of Preferred Stock or Common Stock to the
Mezzanine Purchasers shall be applied by the Xxxxxxxxxx Entities to repay any
outstanding obligations under that certain Promissory Note of even date herewith
issued by Xxxxxxxxxx, as Maker, in favor of Convergent, as Payee (the
"Xxxxxxxxxx Note").
1.3 Right of Co-Sale. If InSight or any of its affiliates wish to sell,
transfer, assign or otherwise dispose of (each a "Transfer") any of their shares
of Preferred Stock or any interest therein other than to an affilitate,
including without limitation shares of Common Stock acquired upon conversion of
the Preferred Stock (a "Preferred Interest"), InSight shall give at least 40
days prior written notice (a "Co-Sale Notice") to the Xxxxxxxxxx Entities, which
notice shall include the terms and conditions of such proposed Transfer
including the identity of each prospective transferee. The Xxxxxxxxxx Entities
may, within 30 days of the receipt of the Co-Sale Notice, give written notice (a
"Tag-Along Notice") to InSight that they or either of them wish to participate
in such proposed Transfer and specifying the number of shares of Preferred Stock
or Common Stock (to the extent that GMJM has sold all of its interest in the
original 509,012 shares of Common Stock held by it on the date of this
Agreement) they desire to include in such proposed Transfer. The number of
shares which may be included by the Xxxxxxxxxx Entities shall be (i) up to the
initial $2,000,000 of shares proposed to be Transferred (based upon the purchase
and sale price specified in the Co-Sale Notice), and (ii) up to one-third of the
total number of shares subject to the Tag-Along Notice over and above the
initial $2,000,000. Notwithstanding anything herein to the contrary, the
$2,000,000 referred to in the preceding sentence shall be reduced by the amount
of gross proceeds realized by the Xxxxxxxxxx entities in any prior sale of
Preferred Stock or Common Stock, and the aggregate amount which may be sold by
the Xxxxxxxxxx entities in one or more transactions pursuant to clause (ii) of
the preceding sentence shall not exceed $3,333,333. If the Xxxxxxxxxx Entities
fail to provide a timely Tag-Along Notice with respect to any Transfer proposed
in a Co-Sale Notice, InSight may Transfer the Preferred Interest specified in
the Co-Sale Notice to the proposed transferree(s) specified in the Co-Sale
Notice for a period of 90 days thereafter upon terms and conditions no more
favorable than those set forth in the Co-Sale Notice. This Section 1.3 shall
then apply to subsequent Transfers by InSight and its affiliates to persons
other than their affiliates. If the Xxxxxxxxxx Entities give InSight a timely
Tag-Along Notice, then InSight shall include shares of Preferred Stock and
Common Stock specified by the Xxxxxxxxxx Entities in the proposed Transfer upon
at least the same terms and conditions as set forth in the Co-Sale Notice (but
substituting Common Stock for Preferred Stock on a share-for-share basis without
any other change in terms
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to the extent GMJM has sold all of its interest in the original 509,012 shares
of Common Stock held by it on the date of this Agreement).
1.4 Conversion of Shares. In order to facilitate the sale of shares of
Common Stock by GMJM, Convergent, upon request from GMJM, shall exchange, on a
share for share basis, each of the 509,012 shares of Common Stock held by GMJM
on the date of this Agreement for Preferred Stock, provided that such shares
must be sold to a Mezzanine Purchaser within ten (10) days after the date of
such exchange, or such exchange shall be null and void and GMJM shall return any
shares of Preferred Stock received by it to Convergent in return for the shares
of Common Stock tendered by GMJM.
1.5 Termination. This Article 1 shall terminate upon a "Qualified
Public Offering," as that term is defined in the Shareholders' Agreement.
2. SHAREHOLDERS' AGREEMENT.
2.1 Mezzanine Transfer. Any Transfer of shares of capital stock of
Convergent by the Xxxxxxxxxx Entities as described in Article 1 of this
Agreement shall be considered to be an "Exempt Transfer" for purposes of the
Shareholders' Agreement. As an Exempt Transfer, such Transfer shall (i) be
deemed to not be in violation of Section 1(a); (ii) not be subject to a right of
first refusal by Convergent, the Investors and the Executive Shareholders
pursuant to Section 1(c); and (iii) not be subject to the co-sale provisions
specified in Section 2. In addition, Section 12 of the Shareholders' Agreement
shall not apply to the Mezzanine Purchasers with respect to the Xxxxxxxxxx
Entities' shares. Such Mezzanine Purchasers shall, as a condition to the
Transfer of the Xxxxxxxxxx Entities' Shares, become Investors for purposes of
the Shareholders' Agreement with respect to all of the Xxxxxxxxxx Entities'
shares, and will be required to execute and deliver to Convergent an Investor
Joinder with respect to such shares.
2.2 Promissory Note and Stock Pledge Agreements. Any Transfer of shares
of capital stock of Convergent by the Xxxxxxxxxx Entities in connection with the
Xxxxxxxxxx Note, including without limitation Transfers in payment of
obligations owed pursuant to the Note, the pledge of shares made pursuant to the
Stock Pledge Agreement of even date herewith between Xxxxxxxxxx and Convergent
and the Stock Pledge Agreement of even date herewith between GMJM and Convergent
(collectively, the "Stock Pledge Agreements"), and any subsequent Transfer of
shares in accordance with the terms of the Stock Pledge Agreements, shall be
considered an Exempt Transfer for purposes of the Shareholders' Agreement. As an
Exempt Transfer, such Transfer shall (i) be deemed to not be in violation of
Section 1(a); (ii) not be subject to a right of first refusal by Convergent, the
Investors and the Executive Shareholders pursuant to Section 1(c); and (iii) not
be subject to the co-sale provisions specified in Section 2. In addition, the
pledges pursuant to the Stock Pledge Agreements will be
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excepted from Section 6(d), which requires the approval of the Board of
Directors of Convergent for certain stock pledges.
2.3 Employment Agreement. Any Transfer of shares of capital stock of
Convergent by the Xxxxxxxxxx Entities in connection with the Employment
Agreement of even date herewith between Xxxxxxxxxx and Convergent (the
"Employment Agreement") shall be considered an Exempt Transfer for purposes of
the Shareholders' Agreement. As an Exempt Transfer, such Transfer shall (i) be
deemed to not be in violation of Section 1(a); (ii) not be subject to a right of
first refusal by Convergent, the Investors and the Executive Shareholders
pursuant to Section 1(c); and (iii) not be subject to the co-sale provisions
specified in Section 2. In addition, should Convergent exercise its right to
reacquire shares of Convergent's capital stock pursuant to Section 3 of the
Shareholders' Agreement following a termination of Xxxxxxxxxx'x employment for
any reason whatsoever, including without limitation by Convergent with or
without "Cause", by Xxxxxxxxxx with or without "Good Reason" and as a result of
Xxxxxxxxxx'x death or disability, the amount to be paid for the shares and the
terms and conditions applicable to the purchase and sale shall be the price and
the terms and conditions applicable as if Xxxxxxxxxx had exercised the "Put
Option" pursuant to Section 22 of the Employment Agreement, whether or not
Xxxxxxxxxx would have had the right to exercise such Put Option under such
circumstances in accordance with the Employment Agreement.
3. XXXXXXXXXX NOTE.
In the event that Xxxxxxxxxx is required to prepay all or any portion
of the Xxxxxxxxxx Note in accordance with Section 3 thereof, InSight shall
purchase from the Xxxxxxxxxx Entities a sufficient number of shares of Common
Stock to enable Xxxxxxxxxx to repay the outstanding balance, including both
principal and accrued interest, on the Xxxxxxxxxx Note in full; provided,
however, that InSight shall not be obligated to make such purchase unless, as of
the end of the month prior to the month in which such prepayment requirement
arises, Convergent had achieved at least eighty percent (80%) of each of
targeted revenues, bookings, and EBITDA (each as set forth in the Annual
Operating Plan approved by the Board of Directors of Convergent in the manner
described in the Employment Agreement), which targeted amounts shall be prorated
for that portion of the year for which such determination is made. The purchase
price of any shares transferred pursuant to this Section 3 shall be $1.085 per
share.
4. ASSIGNMENT.
Neither Xxxxxxxxxx nor GMJM may assign or delegate this Agreement or
any of its rights, duties or obligations hereunder to any person or entity
without the prior written approval of InSight, which shall not be unreasonably
withheld.
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5. MISCELLANEOUS.
5.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, oral or written, and all other communications relating to the
subject matter hereof. No amendment or modification of any provision of this
Agreement will be effective unless set forth in a document that is executed by
both parties.
5.2 Waivers. The forbearance, neglect or failure of either party to
enforce any or all of the terms of this Agreement or to insist upon strict
compliance by the other party of its terms shall not be construed as a waiver of
any of such party's rights hereunder.
5.3 Governing Law. The validity, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Colorado,
without reference to the conflicts of laws principles thereof.
5.4 Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be contrary to law, the remaining provisions of
this Agreement shall remain in full force and effect.
5.5 Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be an original, and all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CONVERGENT GROUP CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
/s/ XXXXX X. XXXXXXXXXX, XX.
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XXXXX X. XXXXXXXXXX, XX.
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GMJM STOCK PARTNERSHIP, LTD.,
a Colorado limited partnership
By: /s/ XXXXX X. XXXXXXXXXX, XX.
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Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: General Partner
INSIGHT CAPITAL PARTNERS III, L.P.,
a Delaware limited partnership
By: InSight Venture Associates, III,
L.L.C., its General Partner
By: /s/ XXXXX XXXXXXX
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Name:
Title:
The undersigned, as the Company or as Company Shareholders or
Investors, as the case may be, under the Shareholders' Agreement, hereby approve
the foregoing Agreement as an amendment to the Shareholders' Agreement as
required under Section 16(a) of the Shareholders' Agreement. Such approval is
given solely for purposes of Section 16(a) of the Shareholders' Agreement, and
in no event shall any of the undersigned Company Shareholders or Investors,
other than the Xxxxxxxxxx Entities and InSight, be considered for any purpose to
be a party to the Agreement or have any obligation or liability whatsoever under
the Agreement other than as an amendment to the Shareholders' Agreement.
CONVERGENT GROUP CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
/s/ XXXXX X. XXXXXXXXXX, XX.
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XXXXX X. XXXXXXXXXX, XX.
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GMJM STOCK PARTNERSHIP, LTD.,
a Colorado limited partnership
By: /s/ XXXXX X. XXXXXXXXXX, XX.
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Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: General Partner
LEHE FAMILY PARTNERS, LTD.,
a Colorado limited partnership
By: /s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
Title: General Partner
By: /s/ XXXXX X. XXXXX-XXXXXXXX
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Name: Xxxxx X. Xxxxx-Xxxxxxxx
Title: General Partner
XXXX X. XXXXXXX TRUST
By: /s/ XXXXX X. XXXXXXXXXX, XX.
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Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: Trustee
By: /s/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
Title: Trustee
/s/ XXXXX X. XXXXXX
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XXXXX X. XXXXXX
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INSIGHT CAPITAL PARTNERS III, L.P.
a Delaware limited partnership
By: InSight Venture Associates III,
L.L.C., its General Partner
By: /s/ XXXXX XXXXXXX
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Name:
------------------------
Title:
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INSIGHT CAPITAL PARTNERS III
(CAYMAN), L.P.
By: InSight Venture Associates III,
L.L.C., its General Partner
By: /s/ XXXXX XXXXXXX
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Name:
------------------------
Title:
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INSIGHT CAPITAL PARTNERS III
(CO-INVESTORS), L.P.,
By: InSight Venture Associates III,
L.L.C., its General Partner
By: /s/ XXXXX XXXXXXX
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Name:
------------------------
Title:
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UBS CAPITAL II LLC
By: /s/ XXXXXX XXXXXXXXX
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Name: Xxxxxx Xxxxxxxxx
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Title:
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By: /s/ [ILLEGIBLE]
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Name:
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Title:
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WI SOFTWARE INVESTORS LLC
By: Wexferd Management LLC, its
investment manager
By: /s/
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Name:
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Title:
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IMPRIMIS SB LP
By: Imprimis GP LLC, its General
Partner
By: /s/
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Name:
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Title:
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GS PRIVATE EQUITY PARTNERS II, L.P.
By: GS PEP II Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Director
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GS PRIVATE EQUITY PARTNERS II
OFFSHORE, L.P.
By: GS PEP II Offshore Advisors,
Inc., its General Partner
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Director
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GS PRIVATE EQUITY PARTNERS III, L.P.
By: GS PEP III Advisors, L.L.C.,
its General Partner
By: GSAM Gen-Par, L.L.C.,
its Managing Member
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Director
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GS PRIVATE EQUITY PARTNERS III
OFFSHORE, L.P.
By: GS PEP III Offshore Advisors,
Inc., its General Partner
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Director
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NBK/GS PRIVATE EQUITY PARTNERS, L.P.
By: GS PEP Offshore Advisors (NBK),
Inc., its General Partner
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Director
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XXXXXXX XXXXXXXX
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XXXXXXX X. XXXXX
DENVER:0935402.05
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