ex10_1.htm


Exhibit 10.1


EXECUTION COPY







SETTLEMENT AND STANDSTILL AGREEMENT







This SETTLEMENT AND STANDSTILL AGREEMENT dated as of February 27, 2012 (the “Agreement”) is by and among Comverge, Inc. (the “Company”), the persons identified on Schedule A (collectively, the “Ardsley Group” and each individually a “member” of the Ardsley Group) and, solely for purposes of Sections 4(g), 7, 8 and 9, the persons identified on Schedule B (collectively, the “Designee Directors” and each individually a “Designee Director”).







WHEREAS, the Company and the Ardsley Group have engaged in various discussions and communications concerning the Company’s business;







WHEREAS, the Ardsley Group previously provided notice to the Company of its intention to nominate certain individuals for election as directors to the Board of Directors of the Company (the “Board”) at the Company’s 2012 annual meeting of stockholders (the “2012 Annual Meeting”); and







WHEREAS, each of the Company and the Ardsley Group has determined that it is in each party’s best interests to come to an agreement with respect to certain matters relating to the composition of the Board, the election of directors at the 2012 Annual Meeting and certain related matters.







NOW, THEREFORE, in consideration of and reliance upon the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:







1.           Definitions.  For purposes of this Agreement:







“Affiliate” shall have the meaning set forth in Rule 12b-2 under the Exchange Act.







"Associate" shall have the meaning set forth in Rule 12b-2 under the Exchange Act.







“beneficial owner” and “beneficial ownership” shall have the meanings set forth in Rule 13d-3 under the Exchange Act.







“Common Stock” means the common stock of the Company, par value $0.001 per share.







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







“person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature.







“SEC” means the United States Securities and Exchange Commission.







“Standstill Period” means the period from the date hereof until the earliest of the following: (i) 10 days prior to the last date (the "2014 Notification Deadline") upon which a notice to the Secretary of the Company of nominations of directors for election to the Board or the proposal of business at the Company's 2014 Annual Meeting would be considered timely under the certificate of incorporation and bylaws of the Company, if by 30 days prior to the 2014 Notification Deadline either (A) the Company has not notified the Ardsley Group pursuant to Section 13(g) below that the Board has resolved
to nominate both David R. Kuzma and James J. Moore, Jr. (or their replacements designated by the Ardsley Group) for reelection to the Board at the Company's 2014 annual meeting (the "2014 Annual Meeting"), or (B) the Company has so notified the Ardsley Group that it has resolved to nominate Mr. Kuzma and Mr. Moore but the Ardsley Group has declined to have Mr. Kuzma and Mr. Moore (or their replacements designated by the Ardsley Group) stand for re-election to the Board as Company nominees and has notified the Company of same; (ii) 10 days prior to the last date upon which a notice to the Secretary of the Company of nominations of directors for election to the Board or the proposal of business at the Company's 2015 annual meeting (the “2015 Annual Meeting”) would be considered timely under the certificate of incorporation and by-laws of the Company; (iii) such date, if any,
as the Company has materially breached any of its covenants or obligations under this Agreement, which such breach remains uncured (if capable of being cured) for a period of twenty (20) days following written notice by the Ardsley Group and (iv) the date upon which no Designee Director remains as a member of the Board.







2.           Representations and Warranties of the Company.  The Company represents and warrants to the Ardsley Group, as of the date hereof, that (a) the Company has the corporate power and authority to execute, deliver and perform the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors and subject to general equity principles and (c) the execution, delivery and performance of this Agreement by the Company does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree, in each case that is applicable to the Company, (ii) result in any material breach or material violation of, or constitute a material default (or an event which with notice or lapse of time or both could become a material default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any agreement, contract, commitment, understanding or arrangement, in each case to which the Company is a party or by which it is
bound and which is material to the Company’s business or operations or (iii) violate or conflict with the Company’s certificate of incorporation or by-laws.







3.           Representations and Warranties of the Ardsley Group.  Each member of the Ardsley Group severally, and not jointly, represents and warrants to the Company, with respect to itself or himself, as the case may be, as of the date hereof, that (a) such member, in the case of an individual, has the power and authority to execute, deliver and perform the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, (b) such member, in the case of an entity, has the corporate, limited partnership or limited liability company power and authority, as
applicable, to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, (c) this Agreement has been duly and validly authorized, executed, and delivered by such member, constitutes a valid and binding obligation and agreement of such member, and is enforceable against such member in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors and subject to general equity principles, (d) the execution, delivery and performance of this Agreement by such member does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to it or him, (ii) result in any material breach or material violation of, or constitute a
material default (or an event which with notice or lapse of time or both could become a material default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any agreement, contract, commitment, understanding or arrangement, in each case to which one or more members of the Ardsley Group is a party or by which it or he is bound and which is material to the Ardsley Group’s business or operations or (iii) in the case of any entity, violate or conflict with its certificate of incorporation or by-laws or other organizational document or documents, (e) such member is the beneficial owner of the number of shares of Common Stock set forth with respect to such member in the report of beneficial ownership of the Company’s Common Stock on Amendment No. 2 to Schedule 13D filed by the
Ardsley Group with the SEC on January 6, 2012 (the “Schedule 13D”) and (f) except as set forth in such Schedule 13D, no  Affiliate or Associate of any member of the Ardsley Group owns any shares of Company Common Stock.







4.           Agreement Regarding Board Composition; Appointment and Nomination of Designee Directors.








	
(a)  

	
Solely to facilitate the settlement and to create vacancies on the Board for the Ardsley Nominees, two existing directors have agreed to resign from the Board and (i) effective with the execution of this agreement by the Company and Ardsley,  Scott Ungerer will resign as a Class I director and (ii) Joseph O’Donnell, currently a Class II director, has informed the Company that he does not intend to stand for re-election at the Company’s 2012 Annual Meeting.












(b)           Concurrently herewith, the Board is appointing David R. Kuzma and James J. Moore, Jr. as directors in Class I with terms to expire at the Company’s 2014 Annual Meeting, and Rudolph J. Hoefling as a director in Class II with a term to expire at the Company’s 2012 Annual Meeting.  The Company shall (i) nominate Mr. Hoefling for election as a Class II director in connection with the 2012 Annual Meeting, (ii) recommend that the Company’s stockholders vote in favor of the election of Mr. Hoefling at the Company’s 2012 Annual Meeting and (iii) solicit proxies in favor of
such election at such Annual Meeting and otherwise support Mr. Hoefling for election in a manner no less favorable than the manner in which the Company supports other nominees for election as director in connection with the 2012 Annual Meeting.  The Company shall nominate only two other nominees for election as Class II directors in connection with the 2012 Annual Meeting, such that there will be a total of three nominees for election as director in Class II in connection with the 2012 Annual Meeting.







(c)           In furtherance of the foregoing, concurrently herewith, the Board has:







(i)           adopted a resolution, in accordance with the Company’s certificate of incorporation and by-laws, increasing the size of the Board by two directors, such that the Board is now comprised of ten directors in the aggregate, and has designated one such director to be a Class I director (with term expiring in 2014) and one such director to be a Class II director (with term expiring in 2012);







(ii)           appointed Mr. Kuzma as a Class I director to fill the vacancy in Class I resulting from the increase in the size of the Board as specified in Section 4(c)(i) (with term expiring in 2014);







(iii)           appointed Mr. Moore as a Class I director (with term expiring in 2014) to fill the vacancy resulting from the resignation of Mr. Ungerer;







(iv)           appointed Mr. Hoefling as a Class II director (with term expiring at the 2012 Annual Meeting) to fill the vacancy in Class II resulting from the increase in the size of the Board as specified in Section 4(c)(i);







(v)           appointed Mr. Kuzma to the Compensation Committee of the Board and as chairman thereof;







(vi)           appointed Mr. Hoefling to the Audit Committee of the Board (which shall have no more than four members), with the Audit Committee having authority during the Standstill Period, in addition to its other duties and authority, to examine Company-wide cost reduction measures and to make recommendations to the Board regarding budget approval; and







(vii)           appointed Mr. Moore to the ad hoc Transaction Committee of the Board (which shall have no more than four members and which shall be re-named the “Strategy Committee”), which Committee shall continue in existence during the Standstill Period and be charged by the Board during the Standstill Period with responsibility for examining all shareholder value-enhancing alternatives, provided that such responsibilities do not conflict with the responsibilities of the Audit Committee as specified in such Committee’s
charter.







(d)           Promptly following the 2012 Annual Meeting, the Board shall adopt a resolution, in accordance with the Company’s certificate of incorporation and by-laws, decreasing the size of the Board by one director, such that the Board is then comprised of nine directors in the aggregate, with such action reducing the number of directors in Class II from four to three.







(e)           The Company shall not increase or decrease the size of the Board during the Standstill Period unless such increase or decrease shall have been approved by the majority of the Designee Directors; provided, however, that this Section 4(e) shall not apply to the reduction in the number of directors from ten directors to nine directors following the Company’s 2012 Annual Meeting, as contemplated by Sections 4(a) and 4(d).  In addition, if the Board forms any
additional Committees (including an Executive Committee) during the Standstill Period, a Designee Director shall be appointed to each such Committee.







(f)           The Company shall have no further obligations hereunder in the event of any material breach of any covenant or obligation of the Ardsley Group, or any member thereof, which such breach remains uncured (if capable of being cured) for a period of twenty (20) days following written notice of such breach by the Company.







(g)           Each of the Designee Directors hereby irrevocably tenders his resignation as a director of the Company effective as of the date, if any, of the termination of the Company’s obligations as specified in Section 4(f), and the Board, in its sole discretion, may accept any or all of such resignations, by a majority vote of the directors (excluding the Designee Directors).







5.           Voting.  At all meetings of Company stockholders during the Standstill Period, each member of the Ardsley Group shall cause all shares of Company’s Common Stock beneficially owned by it or him or by its or his respective Affiliates to be present for quorum purposes and to be voted in favor of all directors nominated by the Board for election.


 


6.            Standstill.  Each member of the Ardsley Group agrees that other than as may be required by applicable law, order or regulation, during the Standstill Period, it or he will not, and it or he will cause each of its or his Affiliates or agents or other persons acting on its or his behalf not to:







(a)           without the prior written agreement of the Company (as authorized by the Board by a majority vote, excluding the Designee Directors), acquire, offer to acquire or agree to acquire, alone or in concert with any other individual or entity, by purchase, tender offer, exchange offer, agreement or business combination or any other manner, beneficial ownership of any securities of the Company, if, after completion of such acquisition or proposed acquisition, such party would beneficially own more than 14.99% of the outstanding Common Stock (calculated based on the Company’s latest annual or quarterly
report with the SEC pursuant to Section 13 or 15(d) of the Exchange Act); provided, however, that such limitation shall not apply to shares acquired in connection with stock dividends or similar distributions or offerings of Company Common Stock made available generally on a pro rata basis to holders of Company Common Stock;







(b)           submit any stockholder proposal (pursuant to Rule 14a-8 under the Exchange Act or otherwise) or any notice of nomination or other business for consideration, or nominate any candidate for election to the Board or oppose the director candidates nominated by the Board, other than as expressly permitted by this Agreement;


 


(c)           form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common Stock or deposit any shares of Common Stock in a voting trust or similar arrangement or subject any shares of Common Stock to any voting agreement or pooling arrangement, other than solely with other members of the Ardsley Group or one or more Affiliates of a member of the Ardsley Group with respect to the Common Stock currently owned as set forth in the Ardsley Group’s latest amendment to
its Schedule 13D or Common Stock acquired in the future (subject to the limitations set forth in Section 6(a) hereof) or to the extent such a group may be deemed to result with the Company or any of its Affiliates as a result of this Agreement;


 


(d)           solicit proxies or written consents of stockholders, or engage in or conduct any binding or  nonbinding referendum with respect to the Common Stock, or make, or in any way participate in, any “solicitation” of any “proxy” within the meaning of Rule 14a-1 under the Exchange Act to vote, or advise, encourage or influence any person with respect to voting, any shares of Common Stock with respect to any matter, or become a “participant” in any contested “solicitation” for the election of directors with respect to the Company (as such terms are
defined or used under the Exchange Act), other than a “solicitation” or acting as a “participant” in support of all of the nominees of the Board at any stockholder meeting, provided that the foregoing shall not be deemed to restrict such actions in connection with a proposed merger or sale of the Company, change in control of the Company, recapitalization or liquidation of the Company, acquisition or disposition by the Company;


 


(e)           call, seek to call, or to request the calling of, a special meeting of the stockholders of the Company, or seek to make, or make, a stockholder proposal at any meeting of the stockholders of the Company or make a request for a list of the Company’s stockholders (or otherwise induce, encourage or assist any other person to initiate or pursue such a proposal or request) or otherwise acting alone, or in concert with others, seek to control or influence the governance or policies of the Company, except as expressly permitted by this Agreement, provided that the foregoing shall not be deemed to
restrict such actions in connection with a proposed merger or sale of the Company, change in control of the Company, recapitalization or liquidation of the Company, acquisition or disposition by the Company;







(f)           vote for any nominee or nominees for election as directors other than those nominated by or supported by the Board or seek the removal of any member of the Board;







(g)           without the prior written agreement of the Company (as authorized by the Board by a majority vote, excluding the Director Designees), effect, offer or propose (i) any acquisition of any material assets or businesses of the Company or any of its subsidiaries by the Ardsley Group, (ii) any tender offer or exchange offer, merger, acquisition or other business combination involving the Company or any of its subsidiaries and the Ardsley Group, or (iii) any recapitalization, restructuring, liquidation, dissolution or other similar extraordinary transaction with respect to the Company or any of its
subsidiaries; provided, however, that limitations in this Section 6(g) shall not prohibit (A) the tender of shares of Company Common Stock in response to a bona fide tender offer made in compliance with the Exchange Act, (B) the voluntary exchange of shares of Company Common Stock in response to a bona fide exchange offer made in compliance with the Securities Act of 1933, as amended, Exchange Act, (C) the voting of shares of Company Common Stock in connection with a bona fide merger proposal, sale of material assets, recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction for which stockholder approval is solicited pursuant to the Company’s certificate of incorporation and/or applicable law or (D) purchases or sales
of Company Common Stock in the open market (subject to the limitations described in Section 6(a)); provided, further, that the limitations in this Section 6(g) shall not apply in the event that a third party unrelated to the Ardsley Group signs an agreement with the Company effectuating any of the transactions described in clauses (i) through (iii) above;







(h)           publicly disclose, or cause or facilitate the public disclosure (including without limitation the filing of any document or report with the SEC or any other governmental agency or any disclosure to any journalist, member of the media or securities analyst) of, any intent, purpose, plan or proposal to obtain any waiver, or consent under, or any amendment of, any of the provisions of this Section 6, or otherwise seek, in any manner that would require public disclosure by any of the members of the Ardsley Group or their Affiliates or Associates, to obtain any waiver, consent under, or amendment of, any
provision of this Agreement;







(i)           engage in any short sale or any purchase, sale or grant of any option, warrant, convertible security, stock appreciation right, or other similar right (including, without limitation, any put or call option or “swap” transaction) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from a decline in the market price or value of the Company’s securities;







(j)           enter into any arrangements, understandings or agreements (whether written or oral) with, or advise, finance, assist or encourage, any other person that engages, or offers or proposes to engage, in any of the foregoing; provided, that the provisions of this subsection 6(j) shall not be deemed to prohibit any action with respect to a proposed transaction described in Section 6(g) above except to the extent such transaction involves a member of the Ardsley Group as a party; or







(k)      take or cause or induce or assist others to take any action inconsistent with any of the foregoing; provided, that the provisions of this subsection 6(k) shall not be deemed to prohibit any action with respect to a proposed transaction described in Section 6(g) above except to the extent such transaction involves a member of the Ardsley Group as a party.


 


The foregoing shall not be deemed to prohibit the Designee Directors from engaging in any lawful act in their capacities as directors of the Company.







7.      Confidential Information.  The Designee Directors, in their capacity as directors, will be provided with Confidential Information.  Each Designee Director acknowledges the confidential and proprietary nature of the Confidential Information and agrees that he will (i) keep the Confidential Information strictly confidential and (ii) not disclose the Confidential Information to any person, including any member of the Ardsley Group or any Affiliate of any such member, except (X) with the specific prior written consent of the Company or (Y) to the extent required by applicable legal process or
requested by applicable legal authority or stock exchange. Notwithstanding the foregoing, it is understood and agreed that this Agreement shall not be deemed to prohibit the Designee Directors from engaging in any lawful act in their capacity as directors of the Company.







As used in this Agreement, the term “Confidential Information” means and includes any and all of the information concerning the business and affairs of the Company that may hereafter be disclosed to a Designee Director by the Company or by the directors, officers, employees, agents, consultants, advisors or other representatives, including legal counsel, accountants and financial advisors (collectively, “Representatives”) of the Company; provided, however, that “Confidential Information” shall not include
information that is or was (i) in the public domain or was or becomes generally available to the public other than as a result of disclosure by a Designee Director, (ii) independently acquired by a Designee Director without violating any of their obligations under this Agreement or under any other contractual, legal, fiduciary or other binding obligation of a Designee Director with or to the Company, or (iii) was available, or becomes available, to a Designee Director on a non-confidential basis other than as a result of its disclosure to a Designee Director by the Company or any Representative of the Company.







The Company represents and warrants to the Ardsley Group that each of the other directors of the Company are subject to substantially equivalent confidentiality obligations with respect to Confidential Information.







8.      Company Policies.  The Designee Directors each agree to abide by the provisions of the Company policies identified on Exhibit A applicable to members of the Board during his service as a director of the Company. The Company acknowledges that this Agreement will not be deemed to constitute an agreement or representation by any person or entity that the Designee Directors will not seek to change any of the policies or requirements referred to or incorporated herein.


 


9.           Compensation; Directors’ and Officers’ Insurance; Indemnification.  Each of the Designee Directors shall be (i) compensated for his service as a director and shall be reimbursed for his expenses on the same basis as all other non-employee directors of the Company and shall be eligible to be granted equity-based compensation on the same basis as all other non-employee directors of the Company, (ii) entitled to the same rights of indemnification as the other directors of the Company as such rights may exist from time to time and (iii) added to the Company’s
directors’ and officers’ liability insurance policy as insured persons thereunder, with such rights to compensation, indemnification and insurance coverage beginning on the date hereof.







10.           Withdrawal of Proposed Nominations.  On or promptly following the date hereof (but in no event later than the filing of the amendment to the Ardsley Group’s Schedule 13D and the filing of the current report on Form 8-K by the Company, as contemplated by Section 11 and Section 12, respectively) the Company and the Ardsley Group shall issue a joint press release in the form annexed hereto as Exhibit B (the “Joint Press Release”), including the statement that, pursuant to this Agreement, the
Ardsley Group has withdrawn its letter to the Company dated December 13, 2011 providing notice of its intent to nominate persons for election as directors at the 2012 Annual Meeting (the “Nominating Notice”).  The members of the Ardsley Group hereby withdraw the Nominating Notice. Neither the Company nor any member of the Ardsley Group shall make any public statements with respect to the matters covered by this Agreement that are inconsistent with, or otherwise contrary to, this Agreement or the statements in the Joint Press Release.







11.           Ardsley Group SEC Filing.  The members of the Ardsley Group shall promptly file with the SEC an amendment to the Ardsley Group’s Schedule 13D, as amended to date, which amendment shall (i) report entry into this Agreement, (ii) announce the withdrawal of the Ardsley Group’s intent to nominate directors, as contemplated by Section 10 and (iii) otherwise comply with the requirements of Schedule 13D. The Ardsley Group shall provide the Company and its counsel with a reasonable opportunity to review and comment on such amendment in advance of filing with the SEC, and
shall accept any such reasonable and timely comments of the Company and its counsel.







12.           Company SEC Filing.  The Company shall promptly file with the SEC a current report on Form 8-K, which filing shall (i) report entry into this Agreement and (ii) otherwise comply with the requirements of Form 8-K. The Company shall provide the Ardsley Group and its counsel with a reasonable opportunity to review and comment on such Form 8-K in advance of filing with the SEC, and shall accept any such reasonable and timely comments of the Ardsley Group and its counsel.







13.           Other Agreements.  







(a)           During the Standstill Period, the Company shall not publicly disparage any member of the Ardsley Group or any Affiliate thereof; provided, however, that this provision shall not apply to compelled testimony, either by legal process, subpoena or otherwise, or to communications that are required by an applicable legal obligation and are subject to contractual provisions providing for confidential disclosure.







(b)           During the Standstill Period, no member of the Ardsley Group shall, nor shall any member of the Ardsley Group permit any Affiliate of such member to, publicly disparage the Company or any director (including Ungerer and O’Donnell), officer, employee, Affiliate or Associate of the Company or privately disparage Ungerer or O’Donnell; provided, however, that this provision shall not apply to compelled testimony, either by legal process, subpoena or otherwise, or to
communications that are required by an applicable legal obligation and are subject to contractual provisions providing for confidential disclosure.







(c)           At a meeting of the Compensation Committee of the Board to be held promptly following the execution and delivery of this Agreement, the Compensation Committee shall (A) adopt a Board compensation plan providing for total yearly compensation for each non-employee member of the Board (other than compensation relating to service on a Board committee or as Chairman) of (i) $40,000 in cash (with the directors having the option to receive such amount instead in the form of restricted Common Stock, subject to any restrictions thereon included in the Company’s equity compensation plans) and (ii)
equity-based compensation of $85,000 in the form of restricted Common Stock, and the Board, at its next regularly-scheduled meeting, shall adopt and approve such plan, subject, if required by law or Nasdaq corporate governance requirements, to Company stockholder approval; and (B) provide that each Committee Chair (other than the Audit Committee Chair) shall receive $10,000 in additional cash compensation.







(d)           Promptly following the execution and delivery of this Agreement, the Ardsley Group shall take reasonable steps to inform those Company stockholders reasonably agreed by the Company and the Ardsley Group that the Ardsley Group (i) has withdrawn its Nominating Notice and (ii) will be voting its shares at the Company’s 2012 Annual Meeting in favor of the Board’s nominees for election as directors; provided, however, that in no event will any member of the Ardsley
Group be required to take any action that would constitute a “solicitation” (as such term is defined in Regulation 14A under the Exchange Act) or require any member of the Ardsley Group to file with the SEC proxy solicitation materials pursuant to such Regulation 14A.







(e)           Except with the approval of a majority of the Designee Directors, the Company shall not award, modify or renew any employment agreement with the Company’s Chief Executive Officer, Chief Operating Officer or Chief Financial Officer for a period of 180 days following the date of this Agreement.







(f)           The Company shall not award or authorize any discretionary bonuses to the Company's Chief Executive Officer, Chief Operating Officer or Chief Financial Officer in respect of fiscal year 2011 without the approval of a majority of the Designee Directors.







(g)           At least 30 days prior to 2014 Nomination Deadline, the Company shall notify the Ardsley Group whether the Board has resolved to recommend Mr. Kuzma and Mr. Moore (or their replacements designated by the Ardsley Group) for re-election to the Board at the 2014 Annual Meeting.  If the Board has so resolved and agrees, then (i) the Board shall nominate Mr. Kuzma and Mr. Moore (or any such replacement) for election as directors at the 2014 Annual Meeting and (ii) the Board shall recommend that the Company’s stockholders vote, and shall solicit proxies, in favor of their election at such
meeting and otherwise support Mr. Kuzma and Mr. Moore for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees.







(h)           In the event any of the Designee Directors resign from the Board, or die or become disabled prior to the end of their term as directors, the Ardsley Group shall have the right to designate a replacement director to serve in the Class of such director, provided that such replacement director is reasonably acceptable to the Company and shall qualify as an independent director under the Nasdaq Stock Market Rules.







14.           Releases.







(a)           Each member of the Ardsley Group hereby agrees for the benefit of the Company, and each controlling person, officer, director (including Ungerer and O’Donnell), stockholder, agent, Affiliate, employee, partner, attorney, heir, assign, executor, administrator, predecessor and successor, past and present, of the Company (the Company and each such person, a “Company Released Person”) as follows:







(i)           Each member of the Ardsley Group, for itself or himself and for its or his members, officers, directors, assigns, agents and successors, past and present, hereby agrees and confirms that, effective from and after the date of this Agreement, hereby acknowledges full and complete satisfaction of, and covenants not to sue, and forever fully releases and discharges each Company Released Person of, and holds each Company Released Person harmless from, any and all rights, claims, warranties, demands, debts, obligations, liabilities, costs, attorneys’ fees, expenses, suits, losses and causes of action
of any nature whatsoever, whether known or unknown, suspected or unsuspected (collectively, “Claims”) that the Ardsley Group or any member or members thereof may have against the Company Released Persons, in each case with respect to events occurring prior to the date of the execution of this Agreement.







(ii)           Each member of the Ardsley Group understands and agrees that the Claims released by the Ardsley Group and each of its members above include not only those Claims presently known but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the Claims as described above. Each member of the Ardsley Group understands and agrees that it or he may hereafter discover facts different from or in addition to what it or he now believes to be true, which if known, could have
materially affected this release of Claims, but each member nevertheless waives any claims or rights based on different or additional facts.







(iii)           Each member of the Ardsley Group agrees that, during the term of the Agreement, (A) it or he shall not, without the consent of the Company, instigate, solicit, assist, intervene in, or otherwise voluntarily participate in any litigation or arbitration in which the Company or any of Company Released Persons are named as parties with respect to events occurring prior to the date of execution of this Agreement; provided, however, the foregoing shall not (x) include any
litigation or arbitration arising out of or related to any obligations under, or breach of, this Agreement, and does not extend to any acts which are criminal, or (y) prevent any member of the Ardsley Group from responding to a validly issued legal process; and (B) the Ardsley Group agrees to give the Company at least five (5) business days notice of the receipt of any legal process requesting information regarding the Company or any of the Company Released Persons, to the extent that such notice is legally permissible.  Notwithstanding the foregoing, the Ardsley Group shall not be prohibited from receiving proceeds in any class action lawsuit initiated by a person unaffiliated with the Ardsley Group on the same basis as the Company's other non-initiating stockholders within such class.







(iv)           The Company agrees that, during the term of the Agreement, (A) it shall not, without the consent of the Ardsley Group, instigate, solicit, assist, intervene in, or otherwise voluntarily participate in any litigation or arbitration in which any member of the Ardsley Group is named as a party with respect to events occurring prior to the date of execution of this Agreement; provided, however, the foregoing shall not (x) include any litigation or arbitration arising out of or
related to any obligations under, or breach of, this Agreement, and does not extend to any acts which are criminal, or (y) prevent the Company from responding to a validly issued legal process; and (B) the Company agrees to give the Ardsley Group at least five (5) business days notice of the receipt of any legal process requesting information regarding any member of the Ardsley Group, to the extent that such notice is legally permissible.







(b)           The Company hereby agrees for the benefit of the Ardsley Group, each member thereof, and each controlling person, officer, director, stockholder, agent, Affiliate, employee, partner, attorney, heir, assign, executor, administrator, predecessor and successor, past and present, thereof, (the Ardsley Group, each member of the Ardsley Group and each such other person, an “Ardsley Released Person”) as follows:







(i)           The Company, for itself and for its Affiliates, officers, directors, assigns, agents and successors, past and present, hereby agrees and confirms that, effective from and after the date of this Agreement, it hereby acknowledges full and complete satisfaction of, and covenants not to sue, and forever fully releases and discharges each Ardsley Released Person of, and holds each Ardsley Released Person harmless from, any and all Claims of any nature whatsoever, whether known or unknown, suspected or unsuspected, that the Company may have against the Ardsley Released Persons, in each case with respect to
events occurring prior to the date of the execution of this Agreement.







(ii)           The Company understands and agrees that the Claims released by the Company above include not only those Claims presently known but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the Claims as described above. The Company understands that it may hereafter discover facts different from or in addition to what it now believes to be true, which if known, could have materially affected this release of Claims, but it nevertheless waives any claims or rights
based on different or additional facts.







(c)           The Parties intend that the foregoing release be broad with respect to the matters released; provided, however, this release of Claims shall not include claims to enforce the terms of this Agreement; and provided further that nothing in the foregoing release shall be deemed or construed, now or hereafter, as limiting in any manner any right of
indemnification inuring to the benefit of any director or former director of the Company arising under the Company’s certificate of incorporation, by-laws or otherwise.







15.           Fees and Expenses.  All fees and expenses incurred in connection with this Agreement and all matters relating hereto shall be paid by the party incurring such fees or expenses; provided, however, that the Company concurrently herewith is shall reimbursing the Ardsley Group’s reasonable attorneys fees and out-of-pocket expenses incurred in connection with its Nominating Notice, this Agreement and the matters relating thereto and hereto
(including its preparation of proxy materials) in the amount of $40,000.







16.           Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given when received if delivered personally; when transmitted if transmitted by facsimile (with written confirmation of transmission) or by electronic mail; the business day after it is sent, if sent for next day delivery to a domestic address by overnight courier (providing proof of delivery), in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):







If to the Ardsley Group:







Ardsley Advisory Partners


262 Harbor Drive, 4th Floor


Stamford, CT 06902


Attention:                      Steven Napoli


Facsimile:                      (203) 564-4250


E-mail:                            steve@ardsley.com







with a copy (which shall not constitute notice) to:







Schulte Roth & Zabel LLP


919 Third Avenue


New York, New York 10022


Attention:                      David E. Rosewater, Esq. and Marc Weingarten, Esq.


Facsimile:                      (212) 593-5955


E-mail:                            david.rosewater@srz.com; marc.weingarten@srz.com







If to the Company:







Comverge, Inc.


5390 Triangle Parkway, Suite 300


Norcross, Georgia 30092


Attention:                      Matthew H. Smith, General Counsel


Facsimile:                      (770) 696-7665


E-mail:                            msmith@comverge.com







with a copy (which shall not constitute notice) to each of:







SNR Denton US LLP


1301 K Street, N.W.,


Suite 600, East Tower


Washington, DC 20005


Attention:                      Thomas L. Hanley, Esq.


Facsimile:                      (202) 408-6399


E-mail:                            tom.hanley@snrdenton.com







17.           Entire Agreement; Amendment and Waiver.







(a)           This Agreement contains the entire understanding of the parties hereto with respect to and supersedes all prior agreements, both written and oral, between the parties, or any of them, relating to, the subject matter hereof.







(b)           This Agreement may be amended only by a written instrument duly executed by the parties hereto or their respective successors or assigns. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.







18.           Governing Law.  This Agreement and any action, claim or legal proceeding directly or indirectly based upon, relating to arising out of this Agreement or the negotiation, execution or performance hereof, shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.







19.           Jurisdiction; Service of Process; Waiver of Jury Trial.







(a)           Each of the parties irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if such court lacks subject matter jurisdiction, the United States District Court sitting in New Castle County in the State of Delaware, for the purpose of any action, claim or legal proceeding directly or indirectly based upon, relating to arising out of this Agreement or the negotiation, execution or performance hereof, and each of the parties hereby irrevocably agrees that all claims in respect to such action, claim or legal proceeding shall be brought in, and may be heard and
determined, exclusively in such state or federal courts. Each of the parties irrevocably and unconditionally waives any objection to the laying of venue in, and any defense of inconvenient forum to the maintenance of, any action or proceeding so brought. Each of the parties agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.







(b)           Each of the parties irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated by this Agreement, on behalf of itself or its property, by personal delivery of copies of such process to such party at the addresses set forth in Section 16. Nothing in this Section 19 shall affect the right of any party to serve legal process in any other manner permitted by law.







           (c)           EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION DIRECTLY OR INDIRECTLY BASED UPON, RELATING TO ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF OR THEREOF.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATION OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.







20.           Specific Performance.  Each party hereto acknowledges and agrees, on behalf of itself and its Affiliates, that irreparable harm would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties will be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any state or federal
court in the State of Delaware, in addition to any other remedy to which they may be entitled at law or in equity.  Each party hereto agrees, on behalf of itself or himself and its or his Affiliates and Associates, that any requirements for the securing or posting of any bond with such remedy are hereby waived.







21.           Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other parties.  No assignment by any party shall relieve such party of any of its obligations hereunder.  Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns







22.           No Third-Party Beneficiaries.  Nothing in this Agreement is intended to confer on any person other than the parties hereto or their respective successors and assigns, and their respective Affiliates to the extent provided herein, any rights, remedies, obligations or liabilities under or by reason of this Agreement.







23.           Mutual Drafting.  Each party has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive negotiations between the parties.  Accordingly, the parties agree that in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.







24.           Counterparts; Facsimile or Electronic Signatures. This Agreement may be executed in one or more counterparts, and by the different parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  This Agreement or any counterpart may be executed and delivered by facsimile copies or delivered by electronic communications by portable document format (.pdf), each of which shall be deemed an original.







IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized signatories of the parties as of the date first written above.












Signature Page Follows











  





  











  








Signature Page - Settlement and Standstill Agreement


 


                      COMVERGE,INC.







By:           /s/ R. Blake Young                                           


President & CEO                                                      


(Name and Title)







ARDSLEY PARTNERS FUND II, L.P.


By:           ARDSLEY PARTNERS I,


                        GENERAL PARTNER







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







ARDSLEY PARTNERS INSTITUTIONAL FUND, L.P.


By:           ARDSLEY PARTNERS I,


GENERAL PARTNER







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







ARDSLEY OFFSHORE FUND, LTD.







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







ARDSLEY PARTNERS RENEWABLE ENERGY FUND, L.P.


By:           ARDSLEY PARTNERS I,


GENERAL PARTNER







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







ARDSLEY RENEWABLE ENERGY OFFSHORE FUND, LTD.







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







ARDSLEY ADVISORY PARTNERS







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







-  -




  





  











  








Signature Page - Settlement and Standstill Agreement












ARDSLEY PARTNERS I







By:           /s/ Steve Napoli                                                      


General Partner                                                      


(Name and Title)







PHILIP J. HEMPLEMAN







/s/ Phillip J. Hempleman                                                      







SPENCER HEMPLEMAN







/s/ Spencer Hempleman                                                      







BENJAMIN IAN BLOCK







/s/ Benjamin Ian Block                                                      







STEVEN NAPOLI







/s/ Steve Napoli                                                      







AS TO SECTIONS 4(g), 7, 8 AND 9 ONLY:







RUDOLF JOACHIM HOEFLING







/s/ Rudolf J. Hoefling                                                      







DAVID R. KUZMA







/s/ David R. Kuzma                                           







JAMES J. MOORE, JR.







/s/ James J. Moore, Jr.                                                      

















-  -




  





  











  








Schedule A







Ardsley Partners Fund II, L.P.


Ardsley Partners Institutional Fund, L.P.


Ardsley Offshore Fund, Ltd.


Ardsley Partners Renewable Energy Fund, L.P.


Ardsley Renewable Energy Offshore Fund, Ltd.


Ardsley Advisory Partners


Ardsley Partners I


Philip J. Hempleman


Spencer Hempleman


Benjamin Ian Block


Steven Napoli






  





  











  








Schedule B







Rudolf Joachim Hoefling


David R. Kuzma


James J. Moore, Jr.











  





  











  








Exhibit A







Code of Business Conduct and Ethics


Insider Trading Policy


Related Party Transaction Policy


Whistleblower Policy


8-K Compliance Policy


Stockholder Communication Procedures


Corporate Governance Guidelines


Audit Committee Charter


Compensation Committee Charter


Nominating/Corporate Governance Committee Charter


Stock Ownership Guidelines
















  





  











  








Exhibit B







[attached]