EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated this ___ day of
October, 2000, and is entered into by and between Xxxxx X. Xxxxxxxxxx, Xx.
("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 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000-0000 ("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. Executive, in conjunction with the other executive
officers of the Corporation, shall have the responsibility and the authority to
manage and direct the day-to-day operations of the Corporation, including, but
not limited to, the hiring and termination of all employees. So long as this
Agreement is in effect, Executive shall be elected as the Chief Executive
Officer and President and a member of the Board of Directors. Failure of
Executive to be elected as the Chief Executive Officer and President and a
member of the Board of Directors shall be deemed to be a breach of this
Agreement by the Corporation. Executive shall report directly to the Board of
Directors of the Corporation.
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 each year promptly (and not
later than January 31) following the close of the Corporation's fiscal year.
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 the Corporation (the "Equity Interests"). Executive will be entitled,
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
will be contributed to CHC in return for shares in CHC. 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.
(b) SALE OF CORPORATION SHARES. Executive shall have the right and
option, in his sole discretion, to sell up to an aggregate of 665,019 shares of
Common Stock of the Corporation, either on behalf of Executive or Executive's
children, 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. 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 among CHC, STC, Cinergy Ventures, LLC and the Management
Investors named therein dated as of October __, 2000, in return for shares of
CHC.
(c) GRANT OF ADDITIONAL OPTIONS. As of the Effective Date, CHC shall
grant Executive, pursuant to the CHC 2000 Stock Option/Stock Issuance Plan,
options to acquire to acquire 500,000 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 exercise period of such options shall be ten
years from the date of grant. 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.
Such 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.
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(d) PROCEED TO REPAY PROMISSORY NOTE. Proceeds from the sale of
shares of Common Stock of the Corporation by Executive pursuant to Sections 4(b)
and 4(c) shall first be applied to the repayment of principal and interest under
that certain Promissory Note dated August 13, 1999 issued by Executive as
"Maker" to the Corporation as "Payee" in the original principal amount of
$2,000,000. Remaining proceeds from such sale(s), once the Promissory Note has
been repaid in full, shall be paid to Executive.
5. COMPENSATION AND BENEFITS.
(a) BASE SALARY. Executive's current annual base salary, $225,000,
will continue through the Effective Date. Commencing as of the day following the
Effective Date, Executive's annual base salary shall be adjusted, upward but not
downward, to an amount to be determined by the then Compensation Committee of
the Board of Directors of CHC, which Committee shall include for the purposes of
making the initial adjustment pursuant to this Section 5(a) the Director
nominated by Executive who is not Executive, provided that such Director is not
related to and is therefore disinterested with respect to Executive. Such
adjustment shall be made based upon (i) Executive's performance over the period
since Executive's last compensation adjustment, and (ii) the findings of a
compensation study performed by a nationally recognized firm of compensation
consultants and commissioned by the Corporation. It is the intention of the
parties that solely for the purposes of making the initial adjustment pursuant
to this Section 5(a), Executive's base salary shall remain comparable to the
salaries of executives who are within the upper quartile, as ranked by salary,
of executives holding similar positions in companies of similar size within the
Corporation's industry. The annual base salary that goes into effect on the day
following the Effective Date shall remain in effect through December 31, 2001.
Commencing on January 1, 2002, Executive's base salary shall be reviewed
annually in conjunction with Executive's annual performance review and shall be
adjusted, upward but not downward, using the same procedure and based upon the
same criteria as set forth above, provided that the Compensation Committee shall
be the Compensation Committee then in effect, with no requirement that the
Director nominated by Executive who is not Executive be a member of such
Committee at such time. Such adjustments shall be determined no later than
January 15 of each year and shall take effect retroactive to January 1 of such
year. The Board of Directors may make such further increases in Executive's base
salary as the Board of Directors shall deem appropriate given Executive's
performance. Executive's annual base salary shall be paid in twenty-four (24)
semi-monthly payments during each annual period.
(b) INCENTIVE BONUS. Commencing with calendar year 2000, 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 bonus for
calendar year 2000 shall be $50,000, less all appropriate deductions, which
amount shall be paid in immediately available funds on the Effective Date. The
targeted annual Incentive Bonus for calendar years after calendar year 2000
shall be determined using the same
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procedure and based upon the same criteria as described in Section 5(a) (the
"Target Bonus"). The amount of the Target Bonus which is earned shall be
dependent upon the attainment of Executive's annual performance plan and other
mutually agreed upon objectives, which plan shall be established for each year
on or before January 15 of such year by mutual agreement between Executive and
the Corporation (the "Annual Performance Plan"). Exceeding the goals of the
Annual Performance Plan may result in additional compensation to be determined
by the Corporation in its sole discretion. 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,
results of financial performance of the Corporation shall be based upon the
Corporation's audited financial statements, which shall be conclusive. In the
event of the termination of Executive's employment by the Corporation for Cause
(as defined in Section 19(a)) or by Executive without Good Reason (as defined in
Section 19(c)), Executive shall be entitled to receive the Incentive Bonus for
any calendar year concluded prior to such termination of employment but shall
not be entitled to receive the Incentive Bonus for the calendar year in which
such termination of employment occurs. In the event of the termination of
Executive's employment for any reason other than by the Corporation for Cause or
by Executive without Good Reason, including without limitation Executive's death
or disability, Executive shall be entitled to receive the Incentive Bonus both
with respect to any calendar year concluded prior to such termination of
employment and with respect to the calendar year in which such termination of
employment occurs. The amount of the Incentive Bonus for a year in which a
termination occurs shall be prorated based upon results during the portion of
the year during which Executive was employed by the Corporation, through either
the end of the calendar month in which the termination occurs or the end of the
preceding calendar month, whichever is more favorable to Executive.
(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"). In addition, the Corporation shall pay all
reasonably appropriate and necessary premiums on life insurance owned by the
Corporation on the life of Executive, and shall reimburse Executive for
insurance premiums paid by Executive for a policy providing a death benefit of
four million dollars ($4,000,000) to Executive's estate or designated
beneficiary. Such reimbursement shall be "grossed-up" based upon the highest
combined federal and applicable state marginal tax rate in effect (assuming that
Executive is married and filing a joint return) on the date of payment.
Executive's vacation leave shall accrue at the rate of six (6) weeks per year.
Any unused vacation leave time accumulated during the year shall carry over to
subsequent years; provided, however, that the Corporation may, in its sole
discretion, cancel all or any portion of Executive's unused vacation leave time
remaining at the end of any calendar year by paying Executive an amount in cash
equal to the equivalent cash value, based upon
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Executive's base salary as then in effect, of the vacation leave time to be
cancelled. Such election by the Corporation and such payment shall be made
within thirty (30) days of the end of each year.
6. 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) HOME OFFICE. Executive's principal office shall be located at the
Executive's principal residence, currently in Keystone, Colorado (the "Home
Office"). The Corporation shall reimburse Executive for the reasonable expenses
of maintaining the Home Office, up to $1,000 per month; provided, however, that
Executive shall make himself available at the Corporation's main office in
Denver, Colorado, and/or at other corporate offices of STC or the Corporation
globally, trade shows, investor meetings or other similar locations at such
times as are reasonably necessary for the satisfactory performance of
Executive's duties pursuant to this Agreement. The Corporation shall pay per
diem travel expenses, based upon the Corporation's standard practices, for costs
of commuting to the Corporation's main office and/or customer premises. The
Corporation shall also provide a furnished apartment in the vicinity of the
Corporation's main office for Executive's use.
(c) AUTOMOBILE. The Corporation shall 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).
(d) 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. The Corporation shall also pay Executive's dues
and fees for attending professional meetings and institutes, costs of
professional books and periodicals and promotion, entertainment and travel
expenses reasonably related to the business of the Corporation. The Corporation
shall also pay Executive's business-related legal, accounting and financial
planning fees, up to a maximum of $20,000 per calendar year. All payments made
by the Corporation pursuant to this Section 6(d) shall be made in a manner
consistent with the Corporation's practices in years prior to the execution of
this Agreement. Unusual and extraordinary expenses incurred by Executive and not
approved in advance by the Corporation may not be reimbursed.
7. 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
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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.
8. MATERIALS REMAIN ON PREMISES. Executive shall have no right, title or
interest in any material referenced in Section 7. 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, provided, however, that this Agreement shall serve as the prior
written consent of the Corporation for Executive to keep any such material
and/or any copies thereof as are necessary to perform Executive's duties for the
Corporation at the Home Office. 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.
9. 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 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 11) 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.
10. CUSTOMERS. In furtherance of and not in limitation of Section 9,
Executive acknowledges that the lists of the Corporation and its parents',
subsidiaries' or 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
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for the benefit or purposes of any business with which Executive may become
associated.
11. 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.
12. 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, 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.
13. 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.
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14. 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.
15. 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 15 are reasonable and necessary for the
protection of the immediate interests of the Corporation and its parents,
subsidiaries, 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
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):
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(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 15(d)(3) shall not apply to work which is completely
unrelated to any of the lines of business described in Section 15(b).
(e) SEVERABILITY. If any court shall determine that the duration,
geographic limitations, subject or scope of any restriction contained in this
Section 15 is unenforceable, it is the intention of the Parties that this
Section 15 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 15 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 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.
16. 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
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injunctive and other equitable relief to prevent or curtail any breach of any
provision of this Agreement. In the event a 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.
17. 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.
18. DISABILITY. The Corporation may terminate this Agreement upon written
notice to Executive if Executive is physically or mentally incapacitated and
unable to perform his duties under this Agreement for a period of (i) any one
hundred eighty (180) days out of any three hundred sixty (360) days, if the
Common Stock of the Corporation is not then publicly traded, or (ii) ninety (90)
out of any one hundred eighty (180) days if the Common Stock of the Corporation
is then publicly traded. If at any time a question arises as to the incapacity
of Executive, then the Corporation shall promptly employ one physician who is a
member of the American Medical Association and who is mutually agreeable to the
Corporation and Executive to examine Executive and determine if his physical
and/or mental condition is such as to render him unable to perform his duties
under this Agreement. The decision of the physician shall be certified in
writing to the Corporation, shall be sent by the Corporation to Executive or his
representative and shall be conclusive for purposes of this Agreement. Any
compensation payments payable to Executive hereunder shall be reduced by the
amount of any disability payments Executive receives as a result of disability
policies on which the Corporation has paid the premiums.
19. 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; provided, however, that neither
Executive nor the Corporation may terminate this Agreement pursuant to this
Section 19 prior to January 1, 2002, except for a termination by the Corporation
for Cause as provided in Section 19(a) or a termination by Executive for Good
Reason as provided in Section 19(c).
(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
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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 is materially
harmful to the Corporation; or
(4) Committed an act of gross insubordination by refusing to
obey written directions of the Corporation's Board of Directors (so long as such
directions do not involve illegal or immoral acts), which refusal continues for
a period of twenty (20) days after Actual Receipt of written notice to Executive
by the Corporation which notice references such refusal and this Section 19(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 Actual Receipt of written notice to Executive by the Corporation
which notice references such acts and this Section 19(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 in writing by the Corporation's Board of Directors, which failure
continues for a period of twenty (20) days after Actual Receipt of written
notice by Executive from the Corporation which notice references such failure
and this Section 19(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 in
writing by the Corporation's Board of Directors, provided that Executive must
first be given written notice of any alleged performance failure, which notice
references such failure and this Section 19(a), and an adequate period after
Actual Receipt of such notice (not less than twenty (20) days) to correct any
such failure which he thereafter fails to do.
For purposes of this Agreement, "Actual Receipt" of notice shall mean
actual physical receipt (or refusal of acceptance) of notice by Executive;
provided, however, that in the event Executive has been away from the office for
more than two weeks and either Executive's whereabouts are unknown to the
Corporation or Executive is at a location where the Corporation cannot
reasonably communicate with him, Executive will be deemed to have refused
delivery of notice one week after the day such notice is delivered (or delivery
is attempted) to Executive's last known residence. In such event,
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the Corporation shall nonetheless provide a copy of the notice to Executive as
soon as it is reasonably possible to do so.
(b) BY CORPORATION WITHOUT CAUSE. The Corporation shall have the
right to terminate this Agreement without Cause at any time upon Executive's
Actual Receipt of thirty (30) days' advance written notice from the Corporation;
provided, however, that the Corporation shall not be entitled to terminate this
Agreement without Cause prior to the first anniversary of the Effective Date.
The foregoing notwithstanding, termination by Executive With Good Reason or by
Executive Without Good Reason prior to the first anniversary of the Effective
Date shall not be deemed to be a breach of this Section 19(b) by the Corporation
for any reason. Non-renewal of this Agreement shall not be deemed to be a
termination of employment for purposes of this Agreement.
(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 19(c).
(2) The Corporation's requiring Executive to be based at any
office or location other than Keystone, Colorado without Executive's approval,
except for required travel on the Corporation's business consistent with
Executive's practice prior to the Effective Date, 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
19(c).
(3) A material reduction in the character of the duties assigned
to Executive or in Executive's level of work responsibility, unless such
reduction has been approved by each of Executive and the Board of Directors of
the Corporation; provided that the Corporation has the opportunity 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
19(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.
12
20. 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.
(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, plus (iii) any amounts contributed by the Corporation to a
qualified pension, profit sharing or retirement plan or other deferred
compensation arrangement (each a "Retirement Plan") for the benefit of Executive
(excluding salary deferrals or similar contributions made by Executive which
offset amounts included in this calculation pursuant to clauses (i) or (ii)
above) during the one year period immediately preceding the date of termination.
Any Severance Pay due to Executive shall be paid in cash in a single lump sum
within sixty (60) days after the termination of employment.
(3) "Put Option" shall mean that Executive shall be entitled to
exercise the Put Option in accordance with the terms of Section 21.
(c) EXECUTIVE REFERENCE. Upon termination of this Agreement for any
reason other than by the Corporation other than for Cause pursuant to Section
19(a), the Corporation shall, both verbally and in writing, acknowledge that
Executive performed the services provided under this Agreement in a good and
proficient manner and shall provide a positive reference to any person or entity
that may request a reference with regard to Executive; provided, however, that
if the Executive voluntarily terminates his employment with the Corporation, the
Corporation may provide a neutral reference, stating only the name of the
Executive, his title and his dates of employment.
13
(d) 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. Notwithstanding the previous sentence, upon the termination of
Executive's employment with the Corporation for any reason other than by the
Corporation for Cause pursuant to Section 19(a), Executive shall be entitled to
keep, free and clear of any liens and encumbrances and any claim of title by the
Corporation, (i) equipment owned by the Corporation and used by Executive in the
Home Office, to the extent that the value of such equipment does not exceed
$20,000, and (ii) the automobile, if any, provided by the Corporation for
Executive's use.
(e) 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.
21. 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
of Common Stock of CHC owned by Executive under the terms and conditions
provided in this Section 21(a). For purposes of this Section 21, "Shares" means
the shares of Common Stock of CHC owned by Executive on the Effective Date,
including without limitation 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 21(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
14
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 21(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 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
15
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.
22. MITIGATION. Executive shall not be required to mitigate the
Corporation's obligations with respect to the provision of Continuation Benefits
or the payment of any amount described in this Agreement by seeking or accepting
any offer of employment or otherwise, nor shall the amount of any payment
hereunder be reduced by any compensation earned by Executive as a result of
employment by another employer. Continuation Benefits shall be subject to
mitigation under the limited circumstances described in EXHIBIT B if and only if
Executive, in his sole discretion, has accepted employment with a third party
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.
23. ALLOCATION OF OVER-ALLOTMENT OPTION. Executive shall be entitled to
allocate, in his sole discretion, among one or more of the senior management of
the Corporation, including without limitation Executive, 50% of any shares of
CHC or any successor to CHC to be sold in connection with any over-allotment or
similar option granted to any underwriter in connection with any underwritten
public offering of shares of CHC or any successor to CHC. The Corporation shall
use best efforts to support the creation of an over-allotment option in such
amount which is then customary in connection with any underwritten public
offering of shares of CHC or any successor to CHC.
[ALTERNATIVE: Executive shall be entitled to allocate, in his sole
discretion, among one or more of the senior management of the Corporation,
including without limitation Executive, 50% of any shares of CHC or any
successor to CHC to be sold in connection with any over-allotment or similar
option granted to any underwriter in connection with any underwritten public
offering of shares of CHC or any successor to CHC. Executive recognizes that an
over-allotment option will be created only with the advice and consent of the
underwriters in such public offering. Executive shall be entitled to approve, in
his sole discretion, any such underwriter engaged for any such public offering.
Subject to such underwriter's advice and consent, the Corporation shall use all
reasonable efforts to support the creation of an over-allotment option in such
amount which is then customary in connection with any underwritten public
offering of shares of CHC or any successor to CHC.]
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
16
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 7 through 15 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. Subject to the provisions of Section 19, 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.
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
17
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; TERMINATION OF EXISTING 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, and all other communications relating to the subject matter hereof,
including without limitation the Employment Agreement between Executive and the
Corporation dated August 13, 1999 (the "Prior Employment Agreement"), which is
hereby terminated in its entirety, 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. In consideration of the termination of
the Prior Employment Agreement, Executive shall receive a one-time payment of
$500,000. Such payment shall be paid by the Corporation in immediately available
funds at the Closing of the Merger Agreement.
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.
18
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.
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.
19
Signed by the Parties on the day and year first above written.
"CORPORATION"
CONVERGENT GROUP CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Its: Executive Vice President, Secretary
--------------------------------------
"EXECUTIVE"
/s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.
CONVERGENT HOLDING CORPORATION
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------------
Its: President
-------------------------------------
The following party, Schlumberger Technology Corp., is executing this Agreement
in order to acknowledge and accept its obligations as set forth in Section 21(c)
as well as the provisions of Sections 24 through and including 33.
SCHLUMBERGER TECHNOLOGY CORP.
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------------
Its: Attorney-In-Fact
-------------------------------------
20
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX X. XXXXXXXXXX, XX.
AND
CONVERGENT GROUP CORPORATION
TABLE OF SEVERANCE BENEFITS
Additional
Months of Additional
Continuation Months of
Event of Termination Benefits Severance Pay Put Option
-------------------- ------------ ------------- ----------
By the Corporation 0* 0* No
for Cause
By the Corporation 6* 6* Yes
without Cause
By Executive without 0 0 No
Good Reason
By Executive with 6 6 Yes
Good Reason
Disability 6 6 No
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 19(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
