Exhibit 10.1

 

STOCK AND WARRANT PURCHASE AGREEMENT

 

by and among

 

COTELLIGENT, INC.

 

and

 

THE PURCHASERS

IDENTIFIED HEREIN

 

Dated as of                     , 2005

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TABLE OF CONTENTS

 

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ARTICLE I.  

DEFINITIONS

   1

1.1

  Defined Terms    1 ARTICLE II.  

SALE AND PURCHASE OF COMMON STOCK AND WARRANTS

   3

2.1

  Sale and Purchase of Common Stock and Warrants    3 ARTICLE III.  

CLOSING

   3

3.1

  Closing    3

3.2

  Deliveries by the Company at the Closing    4

3.3

  Deliveries by the Purchasers at the Closing    4

3.4

  Form of Documents and Instruments    4

3.5

  Additional Closings    4 ARTICLE IV.  

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

   4

4.1

  Organization of the Company    4

4.2

  Capitalization    5

4.3

  Authority Relative to this Agreement    5

4.4

  No Conflicts    6

4.5

  Exemption from Registration    6

4.6

  Litigation    6

4.7

  SEC Reports and Financial Statements    6

4.8

  Governmental and Other Approvals    7

4.9

  No Brokers    7 ARTICLE V.  

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF purchasers

   7

5.1

  Purchase for Investment    7

5.2

  No Brokers    8 ARTICLE VI.  

COVENANTS

   9

6.1

  Legend    9

6.2

  Shares Issuable Upon Exercise    10 ARTICLE VII.  

REGISTRATION RIGHTS

   10

7.1

  Registration    10

7.2

  Temporary Suspension of Use of Registration Statement    10

 

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7.3

  Registration Procedures    11

7.4

  Expenses of Registration    12

7.5

  Indemnification by Company    12

7.6

  Indemnification by Offering Holders    13

7.7

  Notification of Certain Events    13

7.8

  Indemnification Procedures    13

7.9

  Rule 144    14

ARTICLE VIII.

 

MISCELLANEOUS

   14

8.1

  Assignment    14

8.2

  Notices    14

8.3

  Choice of Law    15

8.4

  Counterparts    15

8.5

  Invalidity    15

8.6

  Headings    15

8.7

  Severability    16 SCHEDULES AND EXHIBITS Schedule 1  –   List of Purchasers
Exhibit A    –   Form of Warrant

 

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STOCK AND WARRANT PURCHASE AGREEMENT

 

This Stock and Warrant Purchase Agreement, dated as of                     ,
2005 , is made by and among Cotelligent, Inc., a Delaware corporation (the
“Company”), and each of the persons or entities set forth on Schedule 1 hereto
(each, a “Purchaser” and collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers
desire to purchase from the Company, an aggregate of                      shares
(the “Shares”) of the Company’s common stock, par value $0.01 per share (the
“Common Stock”) and warrants to purchase an additional                     
shares of Common Stock (the “Warrant Shares”).

 

NOW, THEREFORE, in consideration of the mutual covenants and premises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1 Defined Terms. As used herein, the terms below shall have the following
meanings:

 

“Affiliate” shall mean with respect to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, a Person shall be
deemed to be “controlled by” another Person if such latter Person possesses,
directly or indirectly, power either to direct or cause the direction of
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise.

 

“Agreement” means this Purchase Agreement, together with all schedules attached
hereto.

 

“Board of Directors” means the Board of Directors of the Company as of the date
of this Agreement.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on
which banks are required or permitted to close in the State of New York or the
State of California.

 

“Closing” has the meaning set forth in Section 3.1 of this Agreement.

 

“Closing Date” has the meaning set forth in Section 3.1 of this Agreement.

 

“Commission” means the Securities and Exchange Commission.

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“Common Stock” has the meaning set forth in the Recitals.

 

“Company” has the meaning set forth in the Introductory Paragraph.

 

“DGCL” means the Delaware General Corporation Law, as amended from time to time.

 

“Encumbrance” means any claim, lien, pledge, option, charge, easement, security
interest, right-of-way, encumbrance or other rights of third parties, and, with
respect to any securities, any agreements, understandings or restrictions
affecting the voting rights or other incidents of record or beneficial ownership
pertaining to such securities.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
including the rules and regulations promulgated thereunder.

 

“Governmental Authority” shall mean any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States or any foreign
jurisdiction.

 

“Material Adverse Effect” shall mean any event or condition that has had, or
could reasonably be expected to have, a material adverse change or effect on the
business, assets, properties, performance, operations or financial condition of
the Company and its subsidiaries, taken as a whole; provided, however, that in
no event shall any of the following, alone or in combination, be deemed to
constitute, nor shall any of the following be taken into account in determining
whether there has been or will be, a Material Adverse Effect: (i) any change or
effect that results or arises from changes affecting any of the industries in
which the Company operates generally or the United States economy generally; or
(ii) any change or effect that results or arises from changes affecting general
worldwide economic or capital market conditions.

 

“Person” shall mean any natural person, corporation, division of a corporation,
partnership, limited liability partnership, limited liability company, trust,
joint venture, association, company, estate, unincorporated organization or
government or any agency or political subdivision thereof.

 

“Private Placement Legend” has the meaning set forth in Section 6.1 of this
Agreement.

 

“Purchase Price” has the meaning set forth in Section 2.1 of this Agreement.

 

“Purchaser” or “Purchasers” has the meaning set forth in the Introductory
Paragraph.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, including
the rules and regulations promulgated thereunder.

 

“SEC Reports” has the meaning set forth in Section 4.7 of this Agreement.

 

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“Shares” has the meaning set forth in the Recitals.

 

“Transaction” means, taken together, the transactions contemplated under this
Agreement.

 

“Transfer Agent” means the EquiServe Trust Company, N.A..

 

“Warrant” has the meaning set forth in Section 2.1 of this Agreement.

 

“Warrant Shares” has the meaning set forth in the Recitals.

 

ARTICLE II.

SALE AND PURCHASE OF COMMON STOCK AND WARRANTS

 

2.1 Sale and Purchase of Common Stock and Warrants.

 

(a) Subject to the terms and conditions hereof and in reliance upon the
representations and warranties of the Purchasers and the Company contained
herein or made pursuant hereto, the Company agrees to sell to each of the
Purchasers, and each Purchaser severally agrees to purchase from the Company on
the Closing Date, the number of shares of Common Stock set forth opposite such
Purchaser’s name on Schedule 1 hereto at a purchase price of $0.10 per share
(the “Purchase Price”). In connection with the sale by the Company to Purchaser
of the shares of Common Stock set forth opposite such Purchaser’s name on
Schedule 1 hereto, the Company shall issue to each Purchaser a warrant (the
“Warrant”) in the form of Exhibit A hereto to purchase the number of Warrant
Shares set forth opposite such Purchaser’s name on Schedule 1 hereto, it being
agreed and understood that each Purchaser shall receive a Warrant representing
the right to purchase one Warrant Share for every Share purchased hereunder.

 

(b) Upon the issuance of the Shares hereunder, and consistent with, pursuant to
and subject to the Company’s existing Rights Agreement, dated as of September
24, 1997, as amended by Amendment No. 1 to Rights Agreement, dated as of June
13, 2002 (as the same may be amended from time to time, the “Rights Agreement”),
between the Company and EquiServe Trust Company, N.A. (as successor to
BankBoston N.A.), as rights agent, one right issuable pursuant to the Rights
Agreement or any other right issued in substitution thereof (a “Company Right”)
shall be issued together with and shall attach to each Share issued pursuant to
the terms and conditions of this Agreement, unless the Company Rights shall have
expired or been redeemed prior to the Closing Date.

 

ARTICLE III.

CLOSING

 

3.1 Closing. The closing of the transactions contemplated herein (the “Closing”)
shall occur concurrently with the execution of this Agreement (the date on which
the Closing occurs is referred to herein as the “Closing Date”) at the offices
of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178,
unless the parties hereto otherwise agree.

 

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3.2 Deliveries by the Company at the Closing. At the Closing, the Company shall
issue and deliver to the Purchasers:

 

(a) certificates evidencing the Shares and Warrants in the name of the
Purchasers in the respective amounts set forth on Schedule 1 hereto, provided,
that, if a certificate for the Shares is not delivered to any Purchaser at the
Closing, the Company will deliver to such Purchaser evidence of a written
direction to the Transfer Agent instructing the Transfer Agent to deliver such
certificate to such Purchaser within five (5) Business Days of the Closing Date
and such written direction shall satisfy the Company’s obligation under this
Section 3.2(a) with respect to such Purchaser; and

 

(b) all such other documents and instruments as contemplated by this Agreement
as the Purchasers or their counsel shall reasonably request to consummate or
evidence the Transaction.

 

3.3 Deliveries by the Purchasers at the Closing. At the Closing, each Purchaser
shall deliver to the Company:

 

(a) the Purchase Price for the Shares and Warrants being purchased by such
Purchaser, with such payment to be made by check made payable to the Company or
by wire transfer of immediately available funds to the account designated in
writing by the Company to such Purchaser at least one Business Day prior to
Closing; and

 

(b) all such other documents and instruments as contemplated by this Agreement
as the Company or its counsel shall reasonably request to consummate or evidence
the Transaction.

 

3.4 Form of Documents and Instruments. All of the documents and instruments
delivered at the Closing shall be in form and substance, and shall be executed
and delivered, in a manner reasonably satisfactory to the parties’ respective
counsel.

 

3.5 Additional Closings. Each Purchaser acknowledges that the Company may, but
is not obligated, to sell from time to time additional shares of Common Stock
and warrants to purchase additional shares of Common Stock pursuant to stock and
warrant purchase agreements substantially the form of this Agreement. The
closings under any such stock and warrant purchase agreements shall occur from
time to time at the discretion of the Company.

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Purchasers as follows:

 

4.1 Organization of the Company. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business and is in good standing in all jurisdictions
where either (i) the nature of its properties or business so requires or (ii)
the failure to be in good standing could reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and authority to
(a) own,

 

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lease, and operate its properties and to carry on its business as presently
being, or as now intended to be, or as now intended to be, conducted and (b) to
execute, deliver and perform its obligations under this Agreement and any other
documents contemplated hereby to which it is or will be a party.

 

4.2 Capitalization. The authorized capital stock of the Company consists of (i)
100,000,000 shares of Common Stock and (ii) 500,000 shares of preferred stock,
par value $0.01 per share (“Preferred Stock”). As of June 30, 2004, 24,861,621
shares of the Common Stock were issued and outstanding. As of June 30, 2004, no
shares of Preferred Stock were issued or outstanding. As of June 30, 2004,
options to purchase 2,680,170 shares of Common Stock were outstanding pursuant
to the Company’s 1995 Long-Term Incentive Plan, the Company’s 1998 Long-Term
Incentive Plan and the Company’s 2000 Long-Term Incentive Plan (collectively,
the “Incentive Plans”). As of June 30, 2004, warrants to purchase 5,339,803
shares of Common Stock were outstanding. Except as set forth in the immediately
preceding two sentences, no shares of capital stock, options, warrants,
convertible securities or any other equity securities of the Company are issued
or outstanding except as set forth in the SEC Reports and except for the Company
Rights. Under the Rights Agreement, until the distribution date, (a) the Company
Rights will be evidenced (subject to the provisions of Sections 3(b) and 3(c)
thereof) by the certificates for Common Stock registered in the names of the
holders of thereof (which certificates shall also be deemed to be Rights
Certificates, as such term is defined in the Rights Agreement) and not by
separate Rights Certificates and (b) the right to receive Rights Certificates
will be transferable only in connection with the transfer of Common Stock. All
of the outstanding shares of the Company’s respective capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. All
shares of Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall, and the shares of Common Stock to be issued pursuant to this
Agreement will be, duly authorized, and upon payment of the Purchase Price with
respect to the Shares and upon payment of the exercise price with respect to the
Warrant Shares, will be validly issued, fully paid and nonassessable. All of the
outstanding shares of capital stock of each of the Company’s subsidiaries is
duly authorized, validly issued, fully paid and nonassessable and all such
shares are owned by the Company or another subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in the
Company’s voting rights, charges or other encumbrances of any nature whatsoever.
As of the date hereof, other than as set forth above, the Company has no other
securities authorized, reserved for issuance, issued or outstanding.

 

4.3 Authority Relative to this Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby has
been duly and validly authorized by all necessary corporate action on the part
of the Company, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by the Purchasers, constitutes a legal and binding obligation of the
Company, enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting creditors’ rights generally and (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

 

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4.4 No Conflicts. The execution and delivery by the Company of this Agreement
the performance by the Company of its obligations under this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
conflict with, or constitute a default under, any material Contract to which the
Company is a party, (ii) result in a violation of the Company’s organizational
documents, or any order, judgment or decree of any court or Governmental
Authority having jurisdiction over the Company or any of its assets or
properties or (iii) result in, or require, the creation or imposition of any
Encumbrance upon any of the assets or properties of the Company.

 

4.5 Exemption from Registration. Assuming the accuracy on the date hereof and on
the Closing Date of the representations and warranties of each Purchaser set
forth in Article V below, the issuance and the sale of the Shares and the
Warrants to the Purchasers hereunder are exempt from the registration
requirements of the Securities Act.

 

4.6 Litigation. There are no actions, suits, proceedings or investigations
pending, or to the knowledge of the Company, threatened, against or affecting
the Company, except for those that could not reasonably be expected to have
either individually or in the aggregate a Material Adverse Effect on the
Company. The Company is not in default with respect to any order, writ,
injunction, judgment, decree or rule of any Governmental Authority, except for
such defaults that could not reasonably be expected to have either individually
or in the aggregate a Material Adverse Effect on the Company.

 

4.7 SEC Reports and Financial Statements.

 

(a) The Company has filed all forms, reports and documents required to be filed
by it pursuant to Section 13 or Section 15(d) of the Exchange Act within the
last 12 months on a timely basis or has received a valid extension of time for
filing. The Company has made available to the Purchasers the Company’s (i)
Annual Report on Form 10-K for the fiscal year ended December 31, 2003, (ii)
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004 and
(iii) Quarterly Report on Form 10-Q for the quarter ended June 30, 2004
(collectively the “SEC Reports”). The SEC Reports complied as to form in all
material respects with the rules and regulations of the Commission under the
Exchange Act on the date of filing and as of such date (or if amended or
superseded by a filing prior to the date of this Agreement, on the date of such
filing) did not contain any untrue statement of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

(b) Each of the consolidated financial statements (including, in each case, any
related notes thereto) (the “Financial Statements”) contained in the SEC Reports
(i) was prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods involved (except
as may be expressly described in the notes thereto) and (ii) fairly presents in
all material respects the consolidated financial position of the Company as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated.

 

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4.8 Governmental and Other Approvals. All authorizations, approvals, orders,
consents, licenses, registrations or filings from or with any Governmental
Authority required for the execution, delivery and performance by the Company of
this Agreement has been duly obtained or made, and are in full force and effect,
and if any further authorizations, approvals, orders, consents, licenses,
registrations or filings should hereafter become necessary, the Company shall
obtain or make all such authorizations, approvals, orders, consents, licenses,
registrations or filings.

 

4.9 No Brokers. The Company has not employed, and is not subject to the valid
claim of, any broker, finder, consultant or other intermediary in connection
with the transactions contemplated by this Agreement who might be entitled to a
fee or commission from the Company in connection with the transactions
contemplated by this Agreement. However, the Company may pay commissions and
finders fees to those who have assisted it in finding investors for the
transactions contemplated by this Agreement.

 

ARTICLE V.

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

OF PURCHASERS

 

Each Purchaser, severally and not jointly, hereby represents and warrants,
solely as to such Purchaser and not as to any other Purchaser, to the Company as
follows:

 

5.1 Purchase for Investment.

 

(a) Such Purchaser is acquiring the Shares and Warrants and will acquire the
Warrant Shares solely by and for his, her or its own account, for investment
purposes only and not for the purpose of resale or distribution; and such
Purchaser has no contract, undertaking, agreement or arrangement with any Person
to sell, transfer, distribute, fractionalize, pledge, or otherwise dispose of to
such Person or anyone else any Shares, Warrants or Warrant Shares; and such
Purchaser has no present plans or intentions to enter into any such contract,
undertaking or arrangement.

 

(b) Such Purchaser has all necessary power and authority to acquire the Shares
and Warrants and will have all necessary power and authority to acquire the
Warrant Shares and such acquisitions will not contravene any law, rule or
regulation binding on him, her or it or any investment guideline or restriction
applicable to him, her or it.

 

(c) No consent, approval, order or authorization of, or declaration, filing or
registration with, any Government Authority or third party is required to be
obtained or made by such Purchaser in connection with the execution and delivery
by such Purchaser of this Agreement or the consummation of the transactions
contemplated hereby (including, without limitation such Purchaser’s acquisition
of Shares, Warrants or Warrant Shares).

 

(d) Such Purchaser acknowledges that (i) he, she or it is an “accredited
investor” as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act; (ii) he, she or it has such knowledge and experience in
financial and business matters in general that it has the capacity to evaluate
the merits and risks of an investment in the Shares, Warrants and

 

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Warrant Shares and to protect his, her or its own interest in connection with an
investment in the Shares, Warrants and Warrant Shares; (iii) he, she or it is
able to bear the economic risk of his, her or its investment in the Shares,
Warrants and Warrant Shares for an indefinite period of time; (iv) the Company
has made available to him, her or it the opportunity to evaluate the merits and
risks of his, her or its investment in the Company; (v) he, she or it has been
afforded access to information about the Company and the opportunity to ask
questions of, and to receive answers from, officers and directors of the Company
concerning the Company, its business and financial condition and any other
matters relating to the operation of the Company and the offering of the Shares,
Warrants and Warrant Shares; (vi) he, she or it has not purchased the Shares or
Warrants as a result of any general solicitation or advertising (as those terms
are used in Regulation D of the Securities Act), including advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar media or broadcast over radio or television, or seminar or meeting
who’s attendees have been invited by general solicitation or general advertising
and (vii) he, she or it is not relying on any communication (written or oral) of
the Company, other than those written representations in this Agreement, as
investment advice or as a recommendation to purchase the Shares and Warrants.

 

(e) Such Purchaser understands that the Shares, the Warrants and the Warrant
Shares have not been registered under the Securities Act or the securities laws
of any State. Such Purchaser agrees and represents that he, she or it will not
voluntarily sell, assign, pledge or otherwise dispose of any Shares, Warrants,
Warrant Shares or any portion thereof unless, there is delivered to the Company
evidence, satisfactory to the Company, which may include an opinion of counsel
reasonably acceptable to the Company, to confirm that such Shares, Warrants or
Warrant Shares may be legally sold or disposed of without registration or
qualification under the applicable state or federal statutes, or the Shares,
Warrants or Warrant Shares, as the case may be, shall have been so registered or
qualified and an appropriate registration statement shall then be in effect; the
Purchaser understands that the certificates representing the Shares, Warrants
and Warrant Shares will bear a Private Placement Legend (as defined below)
containing the foregoing restriction.

 

(f) Such Purchaser is fully aware that the Shares, Warrants and Warrant Shares
are being issued and sold to the Purchaser in reliance upon the exemption
provided for in Section 4(2) of the Act and Rule 506 promulgated thereunder and
similar exemptions provided under state securities laws on the grounds that no
public offering is involved and that the representations, warranties and
agreements set forth in this Agreement are essential to the claiming of such
exemptions.

 

(g) Nothing in this Article V shall limit or modify the representations and
warranties of the Company in Article IV of this Agreement or the right of the
Purchasers to rely thereon.

 

5.2 No Brokers. Such Purchaser has not employed, and is not subject to the valid
claim of, any broker, finder, consultant or other intermediary in connection
with the transactions contemplated by this Agreement who is entitled to a fee or
commission in connection with the transactions contemplated by this Agreement.

 

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ARTICLE VI.

COVENANTS

 

6.1 Legend. Each Purchaser agrees to the placement on certificates representing
Shares, Warrants and Warrant Shares of a legend (the “Private Placement Legend”)
substantially as set forth below:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

 

(a) The Private Placement Legend shall be removed from any such certificate if
(i) the securities represented thereby are sold pursuant to an effective
registration statement under the Securities Act, (ii) there is delivered to the
Company such satisfactory evidence, which may include an opinion of counsel, as
reasonably may be requested by the Company, to confirm that neither such legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers of such securities will not violate the registration and prospectus
delivery requirements of the Securities Act, or (iii) the securities represented
thereby may be resold pursuant to Rule 144(k) promulgated under the Securities
Act.

 

(b) The certificates representing the Shares shall also bear a legend
substantially as set forth below:

 

THIS CERTIFICATE ALSO EVIDENCES A BENEFICIAL INTEREST IN AND ENTITLES THE HOLDER
HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN
COTELLIGENT, INC. (THE “COMPANY”) AND EQUISERVE TRUST COMPANY, N.A. (AS
SUCCESSOR TO BANKBOSTON, N.A.) (THE “RIGHTS AGENT”), DATED AS OF SEPTEMBER 24,
1997, AS AMENDED BY AMENDMENT NO. 1 TO RIGHTS AGREEMENT, DATED AS OF JUNE 13,
2002 (THE “RIGHTS AGREEMENT”), AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME,
THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND BENEFICIAL INTERESTS THEREIN WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF
THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF

 

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MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

 

(c) No other legends shall be placed on such certificates without the consent of
the Purchasers.

 

6.2 Shares Issuable Upon Exercise. The Company shall reserve and keep available,
out of its authorized and unissued capital stock, solely for the purpose of
effecting the exercise of the Warrants, the full number of shares of Common
Stock as shall from time to time be sufficient to effect the exercise of
Warrants from time to time outstanding.

 

ARTICLE VII.

REGISTRATION RIGHTS

 

7.1 Registration. As promptly as reasonably practicable after the first
anniversary of the Closing Date, the Company shall use its commercially
reasonable efforts to prepare and file with the Commission on one occasion, a
registration statement and such other documents as may be necessary in the
advice of counsel for the Company, and use its commercially reasonable efforts
to have such registration statement declared effective in order to comply with
the provisions of the Securities Act so as to permit (i) the registered resale
of the Warrants and the exercise of the Warrants for Warrant Shares by any
person to whom the Warrants are resold pursuant to such resale registration and
(ii) the registered resale of the Shares and the Warrant Shares for a period of
one (1) year following the date on which the registration statement is declared
effective by each and every holder of Shares and Warrants sold in the Offering
(the “Offering Securities”) who desires to register the resale of their shares.
Within five (5) business days after the first anniversary of the Closing Date,
the Company shall give each holder of Offering Securities notice at the address
of such holder appearing on the register and transfer records of Company of the
Company’s intention to register the resale of such Offering Securities. The
obligations of the Company to give such notice shall be limited to the
Purchasers. Purchasers who desire to register the resale of their shares are
referred to herein as “Offering Holders.”

 

7.2 Temporary Suspension of Use of Registration Statement. Notwithstanding the
foregoing provisions of this Article VII, the Company may voluntarily suspend
the effectiveness of any such registration statement for a limited time, which
in no event shall be longer than 60 consecutive or non-consecutive days in any
12-month period, if the Company has been advised by counsel or underwriters to
the Company that the offering of any Offering Securities pursuant to the
registration statement would materially adversely affect, or would be improper
in view of (or improper without disclosure in a prospectus), a proposed
financing, a reorganization,

 

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recapitalization, merger, consolidation, or similar transaction involving the
Company. If any event occurs that would cause the registration statement to
contain a material misstatement or omission or not to be effective and usable
during the period that such registration statement is required to be effective
and usable, the Company shall promptly file an amendment to the registration
statement and use its commercially reasonable efforts to cause such amendment to
be declared effective as soon as practicable thereafter. Within five (5)
business days after the first anniversary of the Closing Date, the Offering
Holders shall furnish promptly to the Company such information regarding their
holdings and the proposed manner of distribution thereof as shall be required in
connection with any such registration statement and shall continue to furnish
promptly to the Company any subsequent information required to be disclosed in
order to make any previously furnished information not materially misleading.
Notwithstanding any provision contained herein to the contrary, the Company’s
obligation to include, or continue to include, Offering Securities in any such
registration statement under this Article VII shall terminate to the extent such
shares may be freely sold under Rule 144(k) promulgated under the Securities
Act.

 

7.3 Registration Procedures. If and whenever the Company is required by the
provisions of this Agreement to use its commercially reasonable efforts to
effect the registration of the Offering Securities under the Securities Act for
the account of an Offering Holder, the Company will, as promptly as possible:

 

(a) prepare and file with the SEC a registration statement with respect to such
securities and use its commercially reasonable efforts to cause such
registration statement to become and remain effective;

 

(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
requirements of the Securities Act and the rules and regulations promulgated by
the SEC thereunder relating to the sale or other disposition of the securities
covered by such registration statement;

 

(c) furnish to each Offering Holder such numbers of copies of a prospectus
complying with the requirements of the Securities Act, and such other documents
as such Offering Holder may reasonably request in order to facilitate the public
sale or other disposition of the Offering Securities owned by such Offering
Holder, but such Offering Holder shall not be entitled to use any selling
materials other than a prospectus;

 

(d) use its commercially reasonable efforts to register or qualify the
securities covered by such registration statement under the state securities
laws as any Offering Holder shall reasonably request, and do any and all such
other acts and things as may be necessary or advisable to enable such Offering
Holder to consummate the public sale or other disposition of the Offering
Securities owned by such Offering Holder in such states; provided, however, that
the Company shall not be obligated to register or qualify such securities in any
jurisdiction in which such registration or qualification would require the
Company to qualify as a foreign corporation or file any general consent to
service of process where it is not then so qualified or has not theretofore so
consented; and

 

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(e) provide a transfer agent for the Common Stock not later than the effective
date of the applicable registration statement.

 

7.4 Expenses of Registration. Except as provided below in this Article VII, the
expenses incurred by the Company in connection with action taken by the Company
to comply with this Article VII, including, without limitation, all registration
and filing fees, printing and delivery expenses, accounting fees, fees and
disbursements of counsel to the Company, consultant and expert fees, premiums
for liability insurance, if applicable, obtained in connection with a
registration statement filed to effect such compliance, if applicable, and all
expenses, including counsel fees, for complying with state securities laws,
shall be paid by the Company. All fees and disbursements of any counsel,
experts, or consultants employed by any Offering Holder shall be borne by such
Offering Holder. The Company shall not be obligated in any way in connection
with any registration pursuant to this Article VII, for any selling commissions
or discounts payable to any underwriter or broker for securities to be sold by
such Offering Holder. It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Article VII that the Company shall
have received an undertaking satisfactory to it from each Offering Holder to pay
all expenses required to be borne by such Offering Holder and to furnish or
cause to be furnished to the Company, specifically for use in the preparation of
the registration statement and prospectus, written information concerning (i)
the securities held by such Offering Holder and any underwriter of such
securities, (ii) the intended method of disposition thereof and (iii) any
additional information or documentation as the Company shall reasonably request
and as may be required by administrators of the Securities Act or state
securities laws in connection with the action to be taken by the Company
hereunder pursuant to such registration.

 

7.5 Indemnification by Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Offering Holder, its officers, directors and
each underwriter of such securities, and any person who controls such Offering
Holder or underwriter within the meaning of Section 15 of the Securities Act,
against all claims, actions, losses, damages, liabilities and expenses, joint or
several, to which any of such persons may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission to state therein a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and will promptly reimburse such Offering
Holder, its officers, directors and each underwriter of such securities, and
each such controlling person or entity for any legal and any other expenses
reasonably incurred by such Offering Holder, such underwriter, or such
controlling person or entity in connection with investigating or defending any
such loss, action, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or omission made in such registration statement, preliminary
prospectus or prospectus, or such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by such Offering
Holder or such underwriter specifically for use in the preparation thereof, and
provided further, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability or action arises
out of or is based upon an untrue statement or omission made in any preliminary

 

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prospectus or final prospectus if (i) such Offering Holder failed to send or
deliver a copy of the final prospectus or prospectus supplement with or prior to
the delivery of written confirmation of the sale of the Offering Securities and
(ii) the final prospectus or prospectus supplement would have corrected such
untrue statement or omission.

 

7.6 Indemnification by Offering Holders. In the event of any registration of any
securities under the Securities Act pursuant to this Article VII, each Offering
Holder will, or will furnish the written undertaking of such other person or
entity as shall be acceptable to the Company to, indemnify and hold harmless the
Company, its officers, directors and any person who controls the Company within
the meaning of Section 15 of the Securities Act, its agents, counsel and
accountants, against any losses, claims, damages, liabilities, or actions, joint
or several, to which the Company, its officers, directors, such controlling
person or entity or its agents, counsel and accountants, may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities, or actions arise out of or are based upon any untrue statement of
any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent and only
to the extent that any such loss, claim, damage, liability, or action arises out
of or is based upon an untrue statement or omission made in such registration
statement, preliminary prospectus or prospectus or such amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company by such Offering Holder or any underwriter of such Offering Holder’s
securities specifically for use in the preparation thereof, and will promptly
reimburse the Company, its officers, directors and any person who controls the
Company within the meaning of Section 15 of the Securities Act and its agents,
counsel and accountants in connection with investigating or defending any such
loss, action, claim, damage, liability or action; provided, however, that the
aggregate amount which any such Offering Holder shall be required to pay
pursuant to this Section 7.6 shall be limited to the dollar amount of the gross
proceeds received by such Offering Holder upon the sale of the Shares or Warrant
Shares pursuant to the registration statement giving rise to such claim. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company, its officers, directors and any person who
controls the Company within the meaning of Section 15 of the Securities Act, and
shall survive the transfer of the Shares by such Offering Holder.

 

7.7 Notification of Certain Events. At any time when a prospectus relating to
the Offering is required to be delivered under the Securities Act, the Company
will promptly notify the Offering Holder of the happening of any event, upon the
notification or awareness of such event by an executive officer of the Company,
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading.

 

7.8 Indemnification Procedures. Any party entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such

 

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claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (which consent may
not be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim.

 

7.9 Rule 144. With a view to making available to the Offering Holder the
benefits of Rule 144 promulgated under the Securities Act, the Company agrees
that it will use its commercially reasonable efforts to maintain registration of
its shares represented by Common Stock under Section 12 or 15 of the Exchange
Act and to file with the SEC in a timely manner all reports and other documents
required to be filed by an issuer of securities registered under the Exchange
Act so as to maintain the availability of Rule 144 promulgated under the
Securities Act. Upon the request of any record owner, the Company will deliver
to such owner a written statement as to whether it has complied with the
reporting requirements of Rule 144 promulgated under the Securities Act.

 

ARTICLE VIII.

MISCELLANEOUS

 

8.1 Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by (i) the Company without the prior written consent
of each of the Purchasers and (ii) any Purchaser without the prior written
consent of the Company. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their permitted
respective successors and assigns, and no other Person shall have any right,
benefit or obligation hereunder.

 

8.2 Notices. Unless otherwise provided herein, any notice, request, instruction
or other document to be given hereunder by any party to the other shall be in
writing and delivered by hand-delivery, registered first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery, as follows:

 

If to the Company:

 

Cotelligent, Inc.

655 Montgomery Street, Suite 1000

San Francisco, California 94111

Attention: James R. Lavelle

Telephone: (415) 477-9900

Facsimile: (415) 399-0756

 

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With a copy to:

 

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178

Attention: David W. Pollak, Esq.

Telephone: (212) 309-6000

Facsimile: (212) 309-6001

 

If to any Purchaser:

 

At the address set forth below such Purchaser’s name on Schedule 1 hereto.

 

or to such other place and with such other copies as either party may designate
as to itself by written notice to the other.

 

All such notices, requests, instructions or other documents shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
when receipt is acknowledged by addressee, if by telecopier transmission; and on
the next Business Day if timely delivered to a nationally recognized courier
guaranteeing overnight delivery.

 

8.3 Choice of Law. This Agreement shall be construed, interpreted and the rights
of the parties determined in accordance with the internal laws of the State of
New York. Each of the parties to this Agreement hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and the United States of America located in the County
of New York for any action or proceeding arising out of or relating to this
Agreement (and agrees not to commence any action or proceeding relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 8.2 hereof shall be effective service of process for any action or
proceeding brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action or proceeding arising out of this Agreement in the courts of
the State of New York or the United States of America located in the County of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.

 

8.4 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

8.5 Invalidity. In the event that any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein, shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument.

 

8.6 Headings. The headings of the Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

 

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8.7 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable the remainder of such provision in any
other jurisdiction.

 

[Signature Pages to Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.

 

COTELLIGENT, INC. By:  

 

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Name:     Title:     PURCHASERS:

 

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Name:

 

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By:  

 

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Name:     Title:    

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Schedule 1

 

LIST OF PURCHASERS

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Exhibit A

 

Form of Warrant