Exhibit 99.1
STOCK PURCHASE AGREEMENT
among
HLM DESIGN, INC.
BL&P ENGINEERS, INC.
and
▇▇▇▇▇ ▇. ▇▇▇▇▇, PE
Dated as of April 28, 2000
TABLE OF CONTENTS
ARTICLE I
PURCHASE OF STOCK......................................................2
Section 1.1 Purchase and Sale...................................2
Section 1.2 Purchase Price......................................2
Section 1.3 Excluded Assets and Liabilities.....................3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER...........3
Section 2.1 Corporate Organization..............................4
Section 2.2 Authorization.......................................4
Section 2.3 No Violation........................................5
Section 2.4 Subsidiaries, Joint Ventures and Investments .......6
Section 2.5 Stock Records.......................................6
Section 2.6 Corporate Books.....................................6
Section 2.7 Title to Stock......................................7
Section 2.8 Options and Rights..................................8
Section 2.9 Financial Statements................................8
Section 2.10 Employees..........................................9
Section 2.11 Absence of Certain Changes........................12
Section 2.12 Contracts.........................................13
(a) Generally.....................................13
(b) Compliance....................................16
Section 2.13 True and Complete Copies..........................17
Section 2.14 Title and Related Matters.........................17
(a) Owned Property................................17
(b) Leased Property...............................17
(c) Compliance with Laws..........................18
Section 2.15 Litigation........................................19
Section 2.16 Tax Matters.......................................20
(a) Generally.....................................20
(b) Good Faith....................................22
(c) Claims........................................22
(d) Course of Business............................23
(e) Withholdings..................................23
(f) Partnerships..................................23
(g) Accounting Method Adjustments.................23
(h) Power of Attorney.............................24
(i) True and Complete Copies......................24
Section 2.17 Bank and Brokerage Accounts.......................24
Section 2.18 Compliance with Applicable Laws,
Regulations and Orders............................24
Section 2.19 Employee Benefit Plans............................25
Section 2.20 Intellectual Property.............................25
Section 2.21 Environmental Matters.............................26
Section 2.22 Capital Expenditures and Investments..............26
Section 2.23 Insurance.........................................27
Section 2.24 Commissions.......................................28
Section 2.25 Permits...........................................28
Section 2.26 Absence of Undisclosed Liabilities................29
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Section 2.27 Accounts Receivable...............................30
Section 2.28 Accounts Payable..................................31
Section 2.29 Work in Progress and Backlog......................32
Section 2.30 Customers.........................................32
Section 2.31 Securities Laws Matters...........................33
Section 2.32 Disclosure........................................35
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................35
Section 3.1 Corporate Organization.............................35
Section 3.2 Authorization......................................36
Section 3.3 No Violation.......................................36
Section 3.4 Investment Intent..................................37
Section 3.5 Stock Payment......................................37
ARTICLE IV
OTHER AGREEMENTS......................................................38
Section 4.1 Further Assurances.................................38
Section 4.2 Consents...........................................38
Section 4.3 No Termination of the Obligations by
Subsequent Dissolution.............................39
Section 4.4 Insurance Policies and Claims Administration.......39
Section 4.5 Tax Matters........................................40
(a) Tax Returns...................................40
(b) Information...................................42
(c) Amended Returns...............................42
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER........................43
Section 5.1 Representations and Warranties.....................43
Section 5.2 Consents and Approvals.............................44
Section 5.3 No Material Adverse Change.........................44
Section 5.4 No Proceeding or Litigation........................45
Section 5.5 Secretary's Certificate............................45
Section 5.6 Certificates of Good Standing......................45
Section 5.7 Employment Agreement...............................46
Section 5.8 Resignations.......................................46
Section 5.9 Opinion of Seller's and Company's Counsel..........47
Section 5.10 Delivery of Minute Books and Share Certificates....47
Section 5.11 Regulatory Compliance..............................47
Section 5.12 Seller Subordination Agreement.....................47
Section 5.13 Goodwill Purchase Agreement........................48
Section 5.14 Seller's Consent to Assignment of
Acquisition Rights.................................48
Section 5.15 Landlord's Waivers and Consents....................48
Section 5.16 Other Documents....................................48
Section 5.17 Liens..............................................49
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE SELLER...........................49
Section 6.1 Representations and Warranties.....................49
Section 6.2 Consents and Approvals.............................50
Section 6.3 No Proceeding or Litigation........................50
Section 6.4 Secretary's Certificate............................50
Section 6.5 Employment Agreement...............................51
Section 6.6 Opinion of the Purchaser's Counsel.................51
ARTICLE VII
CLOSING...............................................................51
Section 7.1 Closing............................................51
Section 7.2 Payment of Purchase Price and Receipt of Shares....51
(a) Deliveries at Closing.........................51
(b) Installment Payments; Subordinated
Promissory Note...............................52
(c) Delayed Delivery Stock........................53
Section 7.3 Reservation of Shares..............................54
ARTICLE VIII
SURVIVAL OF TERMS; INDEMNIFICATION....................................54
Section 8.1 Survival...........................................54
Section 8.2 Indemnification by the Seller......................55
(a) Misrepresentation or Breach...................55
(b) Taxes.........................................56
(c) Pre-Closing Claims............................56
(d) ▇▇▇▇▇▇ Related Matters........................57
(e) Related Expenses..............................57
Section 8.3 Indemnification by the Purchaser...................57
(a) Misrepresentation or Breach...................57
(b) Taxes.........................................58
(c) Post-Closing Claims...........................58
(d) Goodwill Purchase Agreement...................58
(e) Related Expenses..............................58
Section 8.4 Setoff.............................................58
Section 8.5 Third Party Claims.................................59
ARTICLE IX
GENERAL PROVISIONS....................................................60
Section 9.1 Amendment and Modification.........................60
Section 9.2 Waiver.............................................60
Section 9.3 Notices............................................61
Section 9.4 Assignment.........................................62
Section 9.5 Governing Law......................................62
Section 9.6 Counterparts.......................................62
Section 9.7 Headings...........................................63
Section 9.8 Entire Agreement...................................63
Section 9.9 No Benefit.........................................63
Section 9.10 Delays or Omissions................................63
Section 9.11 Severability.......................................64
Section 9.12 Expenses...........................................64
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SCHEDULES
1.3 Excluded Assets and Liabilities
2.5 Stock Records
2.7 Title to Stock
2.10 Officers, Directors, Employees, Consultants and
Independent Contractors
2.11 Absence of Certain Changes
2.12(a) Contracts - Generally
2.12(b) Compliance with Contracts
2.14(a) Owned Property, Liens
2.14(b) Leased Property
2.15 Litigation
2.16 Taxes
2.17 Bank Accounts
2.19 Employee Benefit Plans
2.20 Intellectual Property
2.22 Capital Expenditures and Investments
2.23 Insurance
2.25 Permits
2.26 Undisclosed Liabilities
2.27 Accounts Receivable
2.28 Accounts Payable
2.29 Work in Progress and Backlog
2.30 Material Customers
EXHIBITS
A Employment Agreement
B Opinion of Seller's and Company's Counsel
C Opinion of Purchaser's Counsel
D Subordinated Promissory Note
E Registration Rights Agreement
F Seller Subordination Agreement
G Goodwill Purchase Agreement
H Seller's Consent to Assignment of Acquisition Rights
I Landlord's Waiver and Consent
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THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of the
28th day of April, 2000, between and among HLM DESIGN, INC., a Delaware
corporation (the "PURCHASER" or "HLM"), BL&P ENGINEERS, INC., a Texas
corporation (the "COMPANY"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇, PE, a resident of Texas, owner
of all of the capital stock of the Company ("SELLER").
RECITALS
WHEREAS, the Seller owns 4,900 shares of common stock, $1.00 par value,
and 3,553 shares of preferred stock, $.01 par value, of the Company, such shares
of common and preferred stock constituting all of the issued and outstanding
shares of capital stock of the Company (the "SHARES");
WHEREAS, the Company is an operating engineering firm that provides
engineering services (the business of the Company is hereinafter referred to as
the "BUSINESS" or the "BUSINESS"); and
WHEREAS, the Seller desires to sell, and the Purchaser desires to
purchase, on the terms and subject to the conditions set forth in this
Agreement, the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
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ARTICLE I
PURCHASE OF STOCK
Section 1.1 Purchase and Sale. At the Closing Date (as defined in Section
7.1 hereof), on the terms and subject to the conditions set forth in this
Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees
to purchase from the Seller, the Shares.
Section 1.2 Purchase Price. In consideration for the conveyance of the
Shares, the Purchaser shall pay to the Seller an aggregate amount equal to Two
Million Two Hundred Forty-Four Thousand and No/100 Dollars ($2,244,000) (the
"PURCHASE PRICE"). The Purchase Price shall consist of three elements, all as
more particularly provided in Section 7.2 hereof, and shall be paid to the
Seller as follows:
(1) a cash payment in the amount of $1,460,000 (the
"CASH PAYMENT");
(2) a subordinated promissory note in the original
principal amount of $484,000 (the "NOTE PAYMENT"); and
(3) an aggregate of 50,000 shares of the
Purchaser's delayed delivery common stock having an
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agreed upon aggregate value at the Closing Date of $300,000 (the
"STOCK PAYMENT").
Section 1.3 Excluded Assets and Liabilities. Notwithstanding that this
Agreement relates to the purchase of capital stock from the Seller by the
Purchaser, which results in the Company retaining any and all of its assets and
liabilities, it is understood and agreed that the Seller shall remove and/or
cause the Company to remove from the Company's premises prior to Closing and/or,
as appropriate, remove from the Company's books and records, only those
particular assets set forth on Schedule 1.3 hereto (the "EXCLUDED ASSETS").
Further, the Seller shall assume any and all liabilities set forth on Schedule
1.3 hereto (the "EXCLUDED LIABILITIES"). The Purchaser agrees that it shall
cause the Company to execute, and the Seller agrees to execute, any and all such
bills of sale, deeds, assignments and/or agreements as may be necessary to
transfer title to the Excluded Assets to the Seller or to others as directed by
Seller and to assign and/or transfer title to the Excluded Liabilities to the
Seller or to others as appropriate.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER
The Company and the Seller (each acting jointly and severally) hereby
represent and warrant to the Purchaser as follows with respect to the Company
(to the extent a representation is modified
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by a knowledge requirement, it shall speak to the best knowledge of
each of the Seller and of the Company):
Section 2.1 Corporate Organization. The Company is a corporation duly
organized, validly authorized and existing and in good standing under the laws
of the State of Texas, with full corporate power and authority to own, operate
and lease its properties and to conduct its business as presently conducted. The
Seller is a resident of the State of Texas. The Company is qualified to do
business and is in good standing in every jurisdiction in which the conduct of
its business, the ownership or lease of its properties, or the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby requires it to be so qualified. True, complete and correct copies of the
Company's charter, bylaws and Certificates of Authority and Foreign Authority as
presently in effect have been or shall be, prior to the Closing, delivered to
the Purchaser.
Section 2.2 Authorization. The Seller and the Company have full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors and the sole
stockholder of the Company have duly authorized the execution, delivery and
performance of this Agreement, and no other corporate proceedings on the
Company's part are necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
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contemplated hereby. This Agreement constitutes the legal, valid and binding
obligation of the Seller and the Company enforceable against each such party in
accordance with its terms, subject to equitable considerations and the effect of
bankruptcy and other laws affecting the rights of creditors generally. The
Seller will, at the Closing, have full power and authority to deliver good and
valid title to the Shares and to deliver the certificates evidencing the Shares
to the Purchaser as provided for herein, free and clear of all liens of every
kind.
Section 2.3 No Violation. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Seller and the Company do not and will not (a) conflict with or result in a
breach of the terms, conditions or provisions of, (b) constitute a default or
event of default under (with due notice, lapse of time or both), (c) result in
the creation of any lien upon the Company or its capital stock or assets
pursuant to, (d) give any third party the right to accelerate any obligation
under, (e) result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action by, or notice to, any person pursuant to (i)
the charter or bylaws of the Company, (ii) any applicable regulation, (iii) any
order to which the Seller or the Company is subject, or (iv) any contract to
which the Seller or the Company or any of their properties is subject. The
Seller and the Company have complied with all applicable regulations and orders
in connection
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with the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 2.4 Subsidiaries, Joint Ventures and Investments. The Company has
no subsidiaries, joint ventures or investments in or with any person or entity
of any kind, nor any affiliated companies or entities.
Section 2.5 Stock Records. The stock record book of the Company is
complete and correct in all material respects. No shares of capital stock of the
Company are currently reserved for issuance for any purpose or upon the
occurrence of any event or condition. The Shares constitute all of the
outstanding capital stock of the Company. The Seller is the true and lawful
owner of the Shares, both beneficially and of record. Schedule 2.5 sets forth
the total number of authorized shares of capital stock for the Company and the
number of Shares held of record and/or beneficially by the Seller.
Section 2.6 Corporate Books. The corporate minute books of the Company are
complete and correct in all respects and contain minutes of all of the
proceedings of the stockholders and directors of the Company since
incorporation. A true, complete and correct copy of the Company's corporate
minute books have been or shall be, prior to the Closing (as defined in Section
7.1 hereof) provided to
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the Purchaser. The Company does not operate with an Executive Committee.
Section 2.7 Title to Stock. The Shares, which constitute all of the issued
and outstanding shares of capital stock of the Company, are owned of record and
beneficially solely by the Seller, and are free and clear of all liens of every
kind. Except as set forth on Schedule 2.5, no shares of preferred stock or other
class of capital stock are authorized, issued or outstanding with respect to the
Company. The Shares have been duly authorized and validly issued and are fully
paid and nonassessable. The Shares were issued pursuant to applicable exemptions
from registration under Federal securities laws and the securities laws of the
State of Texas, and the Shares are owned of record by the Seller and will be
sold pursuant hereto free and clear of all liens. Upon payment of the Purchase
Price to the Seller in accordance with this Agreement, the Seller will convey to
the Purchaser good and marketable title to the Shares, free and clear of all
liens whatsoever. The assignments, endorsements, stock powers and other
instruments of transfer delivered by the Seller to the Purchaser at the Closing
will be sufficient to transfer the Seller's entire interest, and all of the
interests, legal and beneficial, of the Seller and of all other persons in and
to the Shares. Except as set forth on Schedule 2.7 hereto, no dividends or other
distributions are owed by the Company in connection with any of the Shares and
none have
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been paid or made to any stockholder of the Company since at least December 31,
1995.
Section 2.8 Options and Rights. There are no outstanding subscriptions,
commitments, options, warrants, rights, puts, calls or other contracts by which
the Company is bound to issue or to repurchase or otherwise acquire shares of
its capital stock, or pursuant to which any person has a right to purchase or to
acquire, through conversion or otherwise, shares of the Company's capital stock.
Section 2.9 Financial Statements. The Seller has delivered to the
Purchaser correct and complete copies of audited balance sheet of the Company as
of December 31, 1999 and the related statement of income for the fiscal year
then ended (the "AUDITED FINANCIAL STATEMENTS"). The Audited Financial
Statements (a) have been prepared in accordance with the books and records of
the Company, and (b) fairly present the financial condition and results of
operations and cash flows of the Company as of, and for the respective periods
ended on, such dates, all in conformity with GAAP (generally accepted accounting
principles) consistently applied, in a format in accordance with Regulation S-X
of the Securities and Exchange Commission, utilizing the accrual basis of
accounting and the percent complete method of accounting for projects in
progress (the "ACCOUNTING REQUIREMENTS"). Additionally, for each month end,
commencing January 31, 2000 and
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continuing until the Closing, the Seller shall deliver to the Purchaser, within
thirty (30) days of each such month end, interim unaudited financial statements
consisting of balance sheets and the related statements of income, prepared in
accordance with the Accounting Requirements, except for normal adjustments and
notes that would result from an audit (the "INTERIM FINANCIAL STATEMENTS")(the
Audited Financial Statements and the Interim Financial Statements referred to
collectively hereinafter as the "FINANCIAL STATEMENTS"). Since December 31,
1999, except as fully set forth in the Interim Financial Statements, the Company
has no liabilities, other than those incurred or arising in the ordinary course
of business, whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted, arising out of transactions or events entered into, on or prior to
Closing, or any action or inaction or state of facts existing, with respect to,
or based upon transactions or events occurring on or prior to Closing.
Section 2.10 Employees.
(a) Schedule 2.10 sets forth a list of all of the Company's
officers, directors, employees, consultants and independent contractors
(other than those which are serving as subconsultants pursuant to the
Company's engineering services contracts), together with a description of
any contract or agreement regarding the terms of service and the rate and
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basis for total compensation of such persons or any restrictions upon any
person's right to compete with the Company or with any other person or
entity. No employee of the Company is, to the Seller's or the Company's
knowledge, a party to any agreement with a former employer in any way
restricting his or her employment activities. The Company has provided
Purchaser with a true and complete copy of any and all contracts and/or
agreements set forth on Schedule 2.10 hereto.
(b) Except as shown on Schedule 2.10 hereto, the Company has paid or
made provisions for the payment of all salaries and accrued wages,
bonuses, accrued vacation and sick leave, and any other form of accrued,
but unpaid, compensation, and the Company has complied in all respects
with all applicable laws, rules and regulations relating to the employment
of labor, including those relating to wages, hours, collective bargaining
and the payment and withholding of taxes, and has withheld and paid to the
appropriate governmental authority, or is holding for payment not yet due
to such authority, all amounts required by law or agreement to be withheld
from the wages or salaries of its employees.
(c) Except as set forth on Schedule 2.12 hereto, the Company is not
a party to any written or oral (i) outstanding employment agreements or
contracts with officers, directors,
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consultants, independent contractors or employees that are not terminable
at will, or that provide for payment of any bonus or commission, (ii)
agreement, policy or practice that requires the Company to pay termination
or severance pay to salaried, non-exempt or hourly employees or to any
other person, or (iii) collective bargaining agreement or other labor
union contract applicable to persons employed by the Company, nor do the
Seller or the Company know of any activities or proceedings of any labor
union to organize any such employees. Attached hereto are complete and
correct copies of all such agreements, if any ("EMPLOYMENT AND LABOR
AGREEMENTS"). The Company has not breached or otherwise failed to comply
with any provisions of any Employment or Labor Agreement.
(d) There are no charges with respect to or relating to the Company
pending before the Equal Employment Opportunity Commission or any state,
local or foreign agency responsible for the prevention of unlawful
employment practices, and the Company has not received formal notice from
any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws of an intention to conduct an
investigation of the Company and, to the best knowledge of the Seller and
Company, no such investigation is in progress or threatened.
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Section 2.11 Absence of Certain Changes. Except as set forth on Schedule
2.11, since December 31, 1999, the Company's business has been operated in the
ordinary course, and there has been no: (a) Material Adverse Change (as
hereinafter defined) in the business, properties, financial statements, business
prospects, customers, condition (financial or otherwise) or results of
operations of the Company, and no event has occurred which is likely,
individually or in the aggregate, to result in any such Material Adverse Change;
(b) damage, destruction or loss, whether covered by insurance or not, having a
Material Adverse Effect; (c) declaration, setting aside or payment of any
dividend or distribution (whether in cash, capital stock or property) in respect
of the Shares or any redemption of shares of capital stock by the Company; (d)
increase in the compensation payable or paid to or to become payable by the
Company to any of its employees, officers, directors, stockholders, consultants
or independent contractors; (e) entry by the Company into any contract not in
the ordinary course of business, including, without limitation, any borrowing or
capital expenditure; (f) change in accounting methods or principles used by the
Company, except for any such change which is necessitated by a change in GAAP;
(g) sale, assignment, lease, distribution, disposal or transfer of any assets or
properties of the Company except in the ordinary course of business, or any
theft, damage, removal or destruction of such assets or properties or any
casualty loss affecting the Company or its business; (h) amendment or
termination of any of the Company's permits, licenses
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or material contracts; (i) waiver or release of any material right or claim of
the Company; (j) labor dispute or union activity which affects the operation of
the Company; (k) proposal or bid still outstanding for work at less than full
fair market value (provided that this representation does not constitute a
guarantee of profitability on all other contracts for the performance by the
Company for engineering services); or (l) agreement by the Seller or the Company
to take any of the actions described in the preceding clauses (a) through (k),
except as contemplated by this Agreement. As used in this Agreement, the term
"MATERIAL ADVERSE CHANGE" shall mean any developments or changes which would
have a Material Adverse Effect and "MATERIAL ADVERSE EFFECT" shall mean any
circumstances, state of facts or matters which could reasonably be expected,
either individually or in conjunction with any other circumstance, state of
facts or matter, to have a material adverse effect in respect of the Company's
business, business prospects, financial statements, revenues, accounts
receivable, accounts payable, Work in Progress and Backlog, properties, assets,
customers, condition (financial or otherwise) or results of operations.
Section 2.12 Contracts.
(a) Generally. Except as listed on Schedule 2.12(a),
and except for personal matters of the Seller which do not in
any manner involve, pertain to or otherwise affect the Company
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or its Business, and excluding all contracts for the performance by the
Company of engineering services, the Company and the Seller are not a
party to any agreement, contract, commitment, instrument or other binding
arrangement or understanding, whether written or oral (a "CONTRACT"),
relating to:
(1) Bonus, pension, profit sharing, retirement, stock option,
employee stock ownership, employee stock purchase or other plans
providing for deferred compensation or death benefits;
(2) Collective bargaining agreements or any other
Contract with any labor union;
(3) Hospitalization or life insurance or other
welfare benefit plans or practices;
(4) Loans to its employees, officers, directors,
consultants, independent contractors, stockholders or
affiliates;
(5) The borrowing or loaning of money to or from any person or
the mortgaging, pledging or otherwise placing a lien on any asset or
property of the Company;
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(6) A guarantee of any obligation;
(7) The ownership, lease (whether as lessee or
lessor) or operation of any property, real or personal;
(8) Intangible property (including proprietary rights) and
software or hardware license agreements or source code escrow
agreements;
(9) Warranties with respect to its services
rendered;
(10) Registration or preemptive rights with respect
to any securities;
(11) Prohibitions preventing it from freely engaging
in any business;
(12) The purchase, acquisition, disposition or
supply of inventory and other property and assets;
(13) Employees, independent contractors,
consultants, or other agents;
(14) Sales, commissions, advertising or marketing;
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(15) Unconditional purchase or payment obligations;
(16) Any investment or joint venture by the Company;
(17) Restricting in any way the sale of the Shares;
or
(18) Any other contract not of the type covered by any of the
foregoing items of this Section 2.12(a) requiring total payments by
the Company in excess of five thousand dollars ($5,000).
(b) Compliance. Except as shown on Schedule 2.12(b), the Company has
performed all obligations required to be performed by it, and is not in
receipt of any claim of default or breach or notice of audit, under any
Contract to which it is subject (including, without limitation, those
required to be disclosed on Schedule 2.12(a)). No event has occurred which
with the passage of time or the giving of notice or both would result in a
material default, breach or event of non- compliance by the Company under
any Contract to which it is subject. The Company has no present
expectation or intention of not fully performing all of its obligations
under any Contract to which it is subject and has no knowledge of any
breach or anticipated breach by any other party to any Contract to which
it is subject.
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Section 2.13 True and Complete Copies. The Seller and the Company have
delivered to the Purchaser true and complete copies of all Contracts and
documents listed in the Schedules to this Agreement. Further, the Seller and the
Company have delivered to Purchaser all contracts for the performance of
engineering services and all contracts with consultants, subconsultants and
independent contractors entered into by the Company in connection with its
engineering services contracts.
Section 2.14 Title and Related Matters.
(a) Owned Property. The Company owns no real property. With respect
to all personal property owned by the Company, the Company has valid and
marketable title to all such property, free and clear of all liens, except
as expressly noted on Schedule 2.14(a) hereto. All such properties owned
by the Company as of December 31, 1999 are reflected in the Audited
Financial Statements in accordance with and to the extent required by GAAP
and with particularity on the books and records of the Company. Schedule
2.14(a) hereto contains a true, complete and accurate listing of any and
all personal property owned by the Company.
(b) Leased Property. Set forth in Schedule 2.14(b) is
a description of all real and personal property leased by the
Company. Except as otherwise set forth in Schedule 2.14(b),
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the Company's leases are in full force and effect and are valid and
enforceable in accordance with their respective terms. There exists no
event of default or event which constitutes or would constitute (with
notice or lapse of time or both) a default by the Company or any other
person under any such lease, and neither the Seller nor the Company has
received notice of such default or event. All rent and other amounts due
and payable with respect to each of the Company's leases have been or
shall be paid by the Company through the Closing Date. Except as set forth
in Schedule 2.14(b), neither the Seller nor the Company have received
notice that the landlord with respect to any real property or personal
property lease would refuse to renew such lease upon expiration of the
period thereof upon substantially the same terms, except for rent
increases consistent with past experience or market rentals. Attached to
Schedule 2.14(b) hereto are copies of any and all UCC filings or lease
memoranda filed with respect to real or personal property leased by the
Company.
(c) Compliance with Laws. The Company has complied, with respect to
its leased real property, with all applicable restrictions, building
ordinances and zoning ordinances and all regulations of the applicable
health and fire departments. No alteration, repair, improvement or other
work which could give rise to a lien has been performed by, for or on
behalf of
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the Company within the last one hundred twenty (120) days. The Company's
leased real property and its continued use, occupancy and operation as
currently used, occupied and operated does not constitute a nonconforming
use under any regulation or order affecting such real property, and the
continued existence, use, occupancy and operation of such improvements is
not dependent on any special permit, exception, approval or variance.
There is no pending or, to the Seller's or Company's best knowledge,
threatened or proposed action or proceeding by any authority to modify the
zoning classification of, to condemn or take by the power of eminent
domain (or to purchase in lieu thereof), to classify as a landmark, to
impose special assessments on or otherwise to take or restrict in any way
the right to use, develop or alter all or any part of the Company's leased
real property.
Section 2.15 Litigation. Except as set forth in Schedule
----------
2.15:
(a) Neither the Seller nor the Company are engaged in or a party to,
or threatened with, any claim, controversy, investigation, legal action or
other proceeding, relating to or which may relate to the Business, whether
or not before any court, governmental or regulatory authority or
administrative agency;
-19-
(b) Neither the Seller nor the Company are in default under or in
violation of any contracts, commitments or restrictions to which the
Company is a party or by which the Company is bound, or of any statute or
law or judgment, order, decree, regulation or rule of any court or
governmental or regulatory authority or administrative agency applicable
to the Company;
(c) Neither the Seller nor the Company are a party to or subject to
any judgment, decree or order entered in any lawsuit or proceeding brought
by any governmental or regulatory authority or any administrative agency
or by any other person against the Seller or the Company relating to or
which may relate to the Company or the Business; and
(d) Neither the Seller nor the Company know of any valid
basis for any of the foregoing.
Section 2.16 Tax Matters.
(a) Generally. As used herein, the term "TAX" or "TAXES" means any
income, gross receipt, net proceeds, alternative or add-on minimum, ad
valorem, value added, estimated, turnover, sales, use, property, personal
property (tangible and intangible), stamp, leasing, lease, user, excise,
duty, franchise, transfer, license, withholding,
-20-
payroll, employment, foreign, fuel, excess profits, occupational and
interest equalization, windfall profits, severance and other taxes,
charges, fees, levies or other assessments of any kind whatsoever
(including interest, penalties, fines and additions thereto) imposed by
any taxing authority, federal, state, local or foreign. The Company has
timely filed all federal, state, local and foreign Tax reports, returns,
information returns and any other documents required to be filed by it
(collectively, "TAX RETURNS") and has duly paid all Taxes shown to be due
and payable on such Tax Returns and all estimated or advance payments
required by law. All Taxes for periods through the Closing Date have been
fully paid or reserved against on the Financial Statements and on the
books of the Company in accordance with GAAP. All Taxes which are required
to be withheld or collected by the Company have been duly withheld or
collected and, to the extent required, have been paid to the proper
federal, state, local or foreign authorities or properly segregated or
deposited as required by applicable regulations. There are no liens for
Taxes upon any property or assets of the Company, except for liens for
Taxes not yet due and payable or for Taxes being contested in a manner
permitted by applicable law (which contest shall be described on Schedule
2.16 hereto). The Company has not requested an extension of time within
which to file any Tax Return (except with respect to income Tax Returns
relating to 1999) and has not waived the statute
-21-
of limitations on the right of the Internal Revenue Service ("IRS") or any
other taxing authority to assess or collect additional Taxes or to contest
the information reported on any Tax Return. The Company is not currently
and has never been a member or part of a group which is or was treated as
an affiliated group for federal income tax purposes.
(b) Good Faith. All Tax Returns described in Section 2.16(a) have
been prepared in good faith and are correct and complete in all respects,
and there is no basis for assessment of any addition to the Taxes shown
thereon.
(c) Claims. With respect to all Taxes and Tax Returns described in
Section 2.16(a): (i) there are no proceedings, examinations or claims
currently pending by any taxing authority in connection with any Tax
Returns nor with respect to the periods to which such Tax Returns relate;
and (ii) there are no unresolved issues or unpaid deficiencies or
outstanding or proposed assessments relating to any such proceedings,
examinations, claims or Tax Returns. None of the Tax Returns described in
Section 2.16(a) currently is under audit or has been audited. The items
relating to the Business, properties and operations of the Company on the
Tax Returns filed by the Company (including the supporting schedules filed
therewith), true, correct and complete copies of which have been supplied
to the Purchaser, state
-22-
accurately, in all respects, the information requested with respect to the
Company, which information was derived from the books and records of the
Company.
(d) Course of Business. The Company has not taken any action in
anticipation of the Closing that would have the effect of deferring any
liability for Taxes of the Company to any period (or portion thereof)
ending after the Closing Date.
(e) Withholdings. All payments for withholding Taxes, unemployment
insurance, sales and use Taxes and other amounts required to be withheld
and deposited or paid to any relevant taxing authorities have been so
withheld, deposited or paid by or on behalf of the Company.
(f) Partnerships. The Company is not subject to any tax-sharing
agreement, joint venture, partnership or other arrangement or Contract
which is treated as a partnership for federal income tax purposes.
(g) Accounting Method Adjustments. The Company will not be required
to recognize after the Closing Date any taxable income in respect of
accounting method adjustments made before the Closing Date required to be
made under any regulation relating to Taxes, including without limitation,
the Tax Reform Act of 1986 and the Revenue Act of 1987.
-23-
(h) Power of Attorney. No power of attorney has been granted by the
Company with respect to any matter, including, without limitation, the
payment of Taxes, which is currently in force.
(i) True and Complete Copies. The Seller and the Company have
delivered to the Purchaser true and complete copies of all Tax Returns
filed by the Company with respect to its years ended December 31, 1997 and
1998 and have provided Purchaser with a draft of the 1999 Tax Return.
Section 2.17 Bank and Brokerage Accounts. Set forth in Schedule 2.17
hereto is a list of the bank and brokerage accounts maintained by the Company
and the authorized signatories for each such account. The Company shall further
provide on Schedule 2.17, for each such account, the name and address of the
bank or brokerage firm, the contact person and telephone number thereof, the
account number and the account balance as of a specifically recited date.
Section 2.18 Compliance with Applicable Laws, Regulations and Orders. The
Company has been and is presently in compliance with all laws, ordinances,
codes, rules, regulations and orders applicable to the conduct of its Business,
including, without limitation, all regulations relating to employment, health,
-24-
sanitation, fire, zoning, building, occupational safety, and the
practice of engineering.
Section 2.19 Employee Benefit Plans. Except for the Company's 401(k) plan
and any other plans listed and described in Schedule 2.19, true and complete
documentation of which has been provided to the Purchaser, and except as shown
on Schedule 2.19, the Company does not currently have, has never had, and as of
the Closing Date will not have, any: (i) "employee pension benefit plans" and
"employee benefit plans" as defined respectively in Sections 3(2) and 3(3) of
the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
including without limitation multiemployer plans as defined in Section 3(37) of
ERISA; nor (ii) any other pension, profit sharing, retirement, deferred
compensation, welfare, stock purchase, stock option, phantom stock, incentive,
bonus, vacation, severance, disability, hospitalization, medical insurance or
other employee benefit plan or program which the Company or any subsidiary or
any other entity which constitutes a controlled group (within the meaning of
Section 4001(b) of ERISA and/or Sections 414(b)-(n) of the Internal Revenue Code
of 1986, as amended (the "Code")) maintains or to which the Company has any
present or future obligation to contribute. The Company has timely filed all IRS
Form 5500s (or 5500-Cs or 5500-Rs).
Section 2.20 Intellectual Property. The Company does not own
or use any proprietary rights, including any and all software and
-25-
computer licenses (other than off-the-shelf software) and agreements and source
code escrow agreements. If necessary, the Company owns or holds valid licenses
to use all proprietary rights used in the operation of its Business as presently
conducted and proposed to be conducted, including, without way of limitation,
all applicable licenses and rights (including source code access) pertaining to
hardware and software used in any aspect of the Business' operations.
Section 2.21 Environmental Matters. To the best of Seller's and Company's
knowledge and belief, every premise which the Company currently occupies is free
from any and all hazardous materials, or soil or other geological conditions,
which would adversely affect the Purchaser's use of or further improvements to
the premises, or which would or could impose any burden, cost or public or
private liability upon the Purchaser. Further, the Company's existing and prior
uses of and activities on the premises it currently occupies, and all other
premises which the Company has ever occupied, comply and have at all times
complied with all applicable environmental laws.
Section 2.22 Capital Expenditures and Investments. Except as set forth on
Schedule 2.22 hereto, the Company has no outstanding Contracts or commitments
for capital expenditures and investments, and has undertaken no capital
expenditures, whether completed or not, since December 31, 1999.
-26-
Section 2.23 Insurance. The Company (including any and all joint ventures
to which it is a party) currently is covered by insurance policies which provide
for coverages that are usual and customary as to amount and scope in the
Business, descriptions of which policies, including the names of the insurer and
the insured, the amount of annual premiums, and the types and amounts of
coverage, are set forth on Schedule 2.23. All of such policies are in full force
and effect, all premiums with respect thereto have been paid or accrued
therefor, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for compliance with (i)
all applicable regulations and (ii) all contracts to which the Company is a
party. The Company has not breached or otherwise failed to perform its
obligations under any of such policies, nor has the Company received any adverse
notice from any of the insurers party to such policies with respect to any
alleged breach or failure in connection with any of such policies. Such policies
will not terminate or lapse by reason of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby. Except as
set forth on Schedule 2.23, there are no pending or, to the Seller's or
Company's best knowledge, threatened claims under any policy relating to the
Company. Also set forth on Schedule 2.23 is a true and complete listing of any
and all claims (excluding claims made with respect to the Company's health
insurance policy) made by the Company under any such policy since
-27-
December 31, 1995. Correct and complete copies of all such policies have been
provided to the Purchaser.
Section 2.24 Commissions. There are and will be no claims for brokerage
commissions, finder's fees, fees for fairness opinions or financial advisory
services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Seller, the Company or any of their affiliates.
Section 2.25 Permits. The Company holds all permits, licenses,
registrations, certificates, orders, approvals or other authorizations from any
authority or other person including, without limitation, the Texas Board of
Professional Engineers ("PERMITS"), issued to or held by the Company or any of
its employees in connection with the Company's operations. Such Permits are the
only Permits that are required for the Company to conduct its business as
presently conducted. Each such Permit is in full force and effect, and the
Seller and the Company have not received notice that any suspension,
cancellation or modification of the terms of any such Permit is threatened. The
Company is in full compliance with the terms of each such Permit, and the Seller
and the Company are not aware of any reason not set forth in said Permit why any
such Permit would not be renewed upon substantially the same terms as currently
exist, upon expiration of such Permit. No authorization, consent or notification
of or filing with any
-28-
authority is necessary in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and each
Permit issued to or held by the Company will continue in full force and effect
following the Closing Date. All returns, reports, applications, statements and
other documents required to be filed by the Company with any applicable
regulatory or governmental authority or municipality (including taxing
authorities) with respect to the Business on or before the Closing Date has been
duly filed or properly extended as permitted by law, and are true and complete
in all respects, and all reporting requirements of all applicable regulatory or
governmental authorities or municipalities (including taxing authorities) having
jurisdiction thereof have been complied with in all respects. True and complete
copies of all returns, reports, applications, statements and other documents
filed by the Company within the past three (3) years with any applicable
regulatory or governmental authority (including taxing authorities) or
municipality have been previously provided to the Purchaser by the Seller and
the Company. Correct and complete copies of all Permits currently held by the
Company and/or the Seller are attached to Schedule 2.25 hereto.
Section 2.26 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.26, the Company does not have any liability of any nature whatsoever
(whether known or unknown, due or to become due, accrued, absolute, contingent
or otherwise), except for
-29-
(i) liabilities fully stated or fully reserved against in the Audited Financial
Statements, and (ii) current liabilities incurred in the ordinary course of
business and consistent with past practice after the date of the Audited
Financial Statements which, individually and in the aggregate, do not have, and
cannot reasonably be expected to have, a Material Adverse Effect. The Company is
not a party to any contract, or subject to any articles of incorporation or
bylaw provision, any other corporate limitation or any legal requirement which
has, or can reasonably be expected to have, a Material Adverse Effect.
Section 2.27 Accounts Receivable. Schedule 2.27 hereto sets forth a
correct and complete listing of all accounts receivable of the Company as of the
Closing Date. All accounts receivable of the Company as of the Closing Date: (i)
have arisen from bona fide sales transactions in the ordinary course of business
of the Company on ordinary terms, consistent with past practices; (ii) represent
valid and binding obligations due to the Company, enforceable in accordance with
their terms; (iii) are fully and accurately recorded in the December 31, 1999
Financial Statements or have arisen subsequent to December 31, 1999 in the
ordinary course; and (iv) are collectible in the ordinary course of business,
within ninety (90) days following the Closing Date, in the aggregate recorded
amounts thereof in accordance with their terms without setoff or counterclaim,
except as otherwise expressly reserved in the December 31, 1999 Financial
Statements or
-30-
subsequent Interim Financial Statements. This representation and warranty is
limited and qualified, however, as follows: In the event any such account
receivable of the Company is not collected within ninety (90) days following the
Closing Date, and as a result thereof the Seller is called upon to indemnify the
Purchaser with respect thereto under the provisions of Article VIII hereof,
either through direct payments to the Purchaser or through the Purchaser's
exercise of its right of setoff under the provisions of Section 8.4 hereof or
under the provisions of the subordinated promissory note executed of even date
herewith, then in the event the Company thereafter collects such account
receivable, in whole or in part, the Company shall tender such amount as is
collected to the Seller, pro rata in proportion to the amounts so paid by the
Seller to the Purchaser therefor.
Section 2.28 Accounts Payable. Schedule 2.28 hereto sets forth a correct
and complete listing of all accounts payable of the Company as of the Closing
Date. All accounts payable of the Company as of the Closing Date: (i) have
arisen from bona fide services contracted and performed in the ordinary course
of business of the Company on ordinary terms, consistent with past practices;
and (ii) are fully and accurately recorded in the December 31, 1999 Financial
Statements or have arisen subsequent to December 31, 1999 and are fully and
accurately recorded in the subsequent Interim Financial Statements.
-31-
Section 2.29 Work in Progress and Backlog. Attached hereto is full,
accurate and complete financial data and other documentation with respect to the
Company's work currently in progress ("WORK IN PROGRESS AND BACKLOG"). Except as
listed on Schedule 2.29, each item of the Company's Work in Progress and Backlog
which is in excess of five thousand dollars ($5,000), either individually with
respect to such item or in the aggregate with respect to the applicable client,
is subject to a binding contract, either estimated, bid, or based upon a fee
schedule, but in any event entered into and performed by the Company in good
faith, consistent in all events with past practices. Without limiting the
foregoing, all data and documentation provided to the Purchaser with respect to
the Work in Progress and Backlog setting forth percentages or breakdowns to date
and estimated to completion of revenues, costs, fees, expenses, time or other
factors, fully, completely and accurately disclose the current status of each
listed project and the Seller's and the Company's best good faith estimate with
respect to such factors over the life of each such project.
Section 2.30 Customers. Except as shown on Schedule 2.30 hereto, neither
the Seller nor the Company are involved in any material dispute with any of the
Company's customers, and neither the Seller nor the Company have received notice
(whether oral or written) or have any knowledge of the current intention of any
-32-
customer to discontinue or decrease in any way the customer's
business with the Company.
Section 2.31 Securities Laws Matters.
(a) The Seller acknowledges that the HLM Stock (as defined in
Section 7.2(c) hereof) to be delivered with respect to the Stock Payment
will not be registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or under any state securities laws and may not be
transferred except in a transaction which either is registered under the
Securities Act and any such state securities laws or is exempt from such
registrations. Further, the HLM Stock shall be subject to other
agreements, including but not limited to the Stockholders' Agreement
referred to in Article VII hereof restricting their transferability and
setting forth certain other restrictions.
(b) The Seller represents and warrants that his residence and
principal place of business is located in the State of Texas and that the
Purchaser has not communicated with the Seller with respect to the offer
or sale of the HLM Stock at any time the Seller was located in any other
State.
(c) The Seller represents and warrants that:
-33-
(1) The Seller is well versed in financial matters and has
substantial knowledge and experience in financial and business
matters and that he is fully capable of understanding the merits and
risks of the investment being made in the HLM Stock and the risks
involved in connection therewith;
(2) The Seller is acting herein for the Seller's own account
and is acquiring the HLM Stock for investment without a view to the
resale or other distribution thereof. The Seller is financially able
to hold the HLM Stock for long-term investment, believes that the
nature and amount of the HLM Stock to be acquired hereunder is
consistent with the Seller's overall investment program and
financial position, and recognizes that there are substantial risks
involved in an investment in the HLM Stock; and
(3) The Seller has received and reviewed the Purchaser's
annual report on Form 10-K for the fiscal year ended April 30, 1999,
and its quarterly report on Form 10-Q for the fiscal quarter ended
January 28, 2000.
(d) Seller acknowledges and agrees that the Purchaser may, if it so
desires, permit transfers, or authorize its transfer agent to permit
transfers, of the HLM Stock only when
-34-
such HLM Stock has been registered under the Securities Act and/or
applicable state securities laws and/or when the request for transfer is
accompanied by satisfactory assurances (including, if requested, an
opinion of counsel acceptable to the Purchaser) that the sale or proposed
transfer does not require registration under the Securities Act and
applicable state securities laws, and the Seller agrees that a legend to
such effect will be placed on the HLM Stock.
Section 2.32 Disclosure. Neither this Agreement nor any of the attachments
or certificates prepared for or supplied to the Purchaser by or on behalf of the
Seller or the Company with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit any material fact
necessary to make each statement contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
Section 3.1 Corporate Organization. The Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power
-35-
and authority to own, operate and lease its properties and to
conduct its business as presently conducted.
Section 3.2 Authorization. The Purchaser has full power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Board of Directors of the Purchaser has duly authorized
the execution, delivery and performance of this Agreement, and no other
corporate proceedings on the Purchaser's part are necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms, subject to equitable considerations and the effect
of bankruptcy and other laws affecting the rights of creditors generally.
Section 3.3 No Violation. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Purchaser do not and will not (a) conflict with or result in a breach of the
terms, conditions or provisions of, (b) constitute a default or event of default
under (with due notice, lapse of time or both), (c) result in the creation of
any lien upon the Purchaser or its assets pursuant to, (d) give any third party
the right to accelerate any obligation under, (e) result in a violation of, or
(f) require any authorization, consent, approval, exemption or other action by,
or
-36-
notice to, any person pursuant to (i) the charter or bylaws of the Purchaser,
(ii) any applicable regulation, (iii) any order to which the Purchaser is
subject, or (iv) any contract to which the Purchaser or any of its properties is
subject. The Purchaser has complied with all applicable regulations and orders
in connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 3.4 Investment Intent. The Purchaser represents and warrants to
the Seller that it is purchasing the Shares for investment purposes and not with
a view to distribution thereof and agrees that it shall not make any sale,
transfer, or other disposition of the Shares in violation of the Securities Act
of 1933, as amended, or the regulations thereunder or under any other applicable
securities laws.
Section 3.5 Stock Payment. Upon issuance and delivery of the HLM Stock to
the Seller, the HLM Stock shall be duly authorized, validly issued, fully paid
and nonassessable and the Seller will have acquired good and marketable title
thereto, free and clear of all liens of every kind, except as may have been
created by the Seller.
-37-
ARTICLE IV
OTHER AGREEMENTS
The parties hereto further agree as follows:
Section 4.1 Further Assurances. On the terms and subject to the conditions
of this Agreement, the parties hereto shall use all reasonable efforts at their
own expense to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable regulations to
consummate and make effective as promptly as possible the transactions
contemplated by this Agreement and to cooperate with each other in connection
with the foregoing, including, without limitation, using all reasonable efforts
(a) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, leases, mortgages and other Contracts, (b) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any regulations or in connection with any permits, (c) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, and
(d) to fulfill all conditions to the obligations of the parties under this
Agreement.
Section 4.2 Consents. Without limiting the generality of
Section 4.1, each of the parties hereto shall use all reasonable
-38-
efforts to obtain all waivers, permits, authorizations, consents and approvals
of all persons and authorities necessary, proper or advisable in connection with
the consummation of the transactions contemplated by this Agreement prior to the
Closing Date.
Section 4.3 No Termination of the Obligations by Subsequent Dissolution.
Each of the parties hereto specifically agrees that its obligations hereunder,
including, without limitation, obligations pursuant to this Article IV, shall
not be terminated by the dissolution of such party, whether by operation of law
or otherwise.
Section 4.4 Insurance Policies and Claims Administration. The Seller and
the Company, with the Purchaser's cooperation as necessary, shall be responsible
for the administration of all claims made under the Company's insurance policies
prior to the Closing Date. If any claim is made or asserted against the Company
prior to the Closing Date, the Company and the Seller shall promptly assert and
pursue coverage and payment for such claim with the appropriate insurance
carrier. With respect to such claims which arise prior to the Closing Date, but
require administration after the Closing Date, the Seller shall provide the
Company and the Purchaser with reasonable cooperation and assistance in
asserting and pursuing such coverage or, at the Seller's election, the Seller
may continue to pursue administration of such claims. In particular, the Seller
shall, upon request by the Purchaser,
-39-
assist the Company with the filing of all necessary claims and take all such
other action as may reasonably be requested by the Purchaser to pursue such
coverage. As between the Seller, on the one hand, and the Purchaser and the
Company, on the other hand, the Purchaser and the Company shall be entitled to
recover all insurance proceeds with respect to any claim, except for health
insurance claims and except to the extent the Seller has previously provided
indemnification therefor to the Purchaser or the Company under this Agreement.
Section 4.5 Tax Matters.
(a) Tax Returns. The Purchaser, the Seller, the Company and their
successors shall cooperate in the preparation of all Tax Returns and
reports and shall make available all necessary records and timely take all
action necessary to allow for the preparation and filing of all Tax
Returns and reports. Within ten (10) days following the Closing, the
Seller and the Company shall deliver or shall cause to be delivered to the
Purchaser all books, records, returns, schedules, work papers, and other
documents (including without limitation, appraisals and other background
information) which are in the possession of the Seller or the Company but
not on the Company's premises and which relate to any Taxes of the Company
for any taxable period. Prior to the delivery of the materials described
in the preceding sentence, the Seller shall cooperate with the
-40-
Purchaser in providing access to such materials as is reasonably required
by the Purchaser.
Seller shall cause the Company to prepare or have prepared, and pay
prior to the Closing all Taxes arising therefrom, all Tax Returns for the
Company for the periods ended on or before December 31, 1999. With respect
to the Company's 1999 Federal income Tax Return, the Company shall have
prepared such return and shall provide it to Purchaser for filing by the
Company after the Closing. The Seller shall have no liability therefor, so
long as the Seller shall have caused the Company to have fully and
properly reserved for all Taxes shown due and owing on such Tax Return on
the books and records of the Company as of December 31, 1999. The
Purchaser shall prepare and file all Tax Returns for the Company for the
periods commencing after December 31, 1999. Further, the Company shall pay
all Taxes arising from the Company's operations after the Closing. With
respect to any Taxes of the Company for the 2000 calendar year commencing
January 1, 2000 and continuing through the Closing, the Company shall pay
all such Taxes, and the Seller shall have no liability therefor, so long
as the Seller shall have caused the Company to have fully and properly
reserved for all such Taxes on the books and records of the Company
through the Closing Date.
-41-
(b) Information. The Purchaser and the Seller agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information (including access to books and records) and assistance
relating to the Company as is reasonably requested for the filing of any
Tax Return, in determining a Tax liability or right to refund, for the
preparation of any audit or other proceeding, and for the prosecution of
any claim, suit or proceeding relating to a proposed Tax adjustment. The
Purchaser and the Seller shall cooperate with each other in the conduct of
any Tax audit or other Tax proceedings involving the Company. The parties
shall execute and deliver such powers of attorney and other documents as
are reasonably requested to carry out the administration of the Tax
provisions of this Agreement. Further, the Purchaser shall preserve and
maintain the Company's books and records for such period after Closing as
is required by law.
(c) Amended Returns. From and after the Closing Date, the Purchaser
may file an amended Tax Return for any period prior to the Closing Date
without the consent of the Seller. Any additional Taxes resulting from
such an amended Tax Return shall be the responsibility of and shall be
paid solely by (i) the Seller (through indemnification pursuant to Article
VIII hereof), to the extent such Taxes result from an amended Tax Return
filed to correct any "understatement," as such term is
-42-
defined in Section 6662 of the Internal Revenue Code of 1986, as amended,
by the Seller or the Company with respect to any or all reporting periods
prior to the Closing Date, and (ii) the Company in all other events. The
Purchaser shall provide the Seller with notice of and a reasonable
opportunity to participate in the preparation of any such amended Tax
Return and the Seller agrees to provide the Purchaser with reasonable
cooperation and assistance in connection therewith. Notwithstanding the
foregoing, any and all determinations regarding any and all such Tax
Returns shall ultimately be made by the Purchaser, in its sole discretion.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser under this Agreement shall be subject to
the satisfaction of each of the following conditions at or prior to the Closing
unless waived in writing by the Purchaser:
Section 5.1 Representations and Warranties. The representations and
warranties of the Seller and the Company contained in Article II hereof and
elsewhere in this Agreement and all information contained in any Exhibit,
Schedule or attachment hereto shall be true and correct in all material respects
when made and on the Closing Date as though then made. The Seller and the
Company shall have performed and complied in all material respects
-43-
with all agreements, covenants and conditions required by this Agreement to be
performed and complied with by them prior to the Closing Date. The Seller and
the Company shall have delivered to the Purchaser a certificate, dated the
Closing Date, in a form reasonably satisfactory to the Purchaser, certifying to
the foregoing.
Section 5.2 Consents and Approvals. The Seller, the Company and the
Purchaser shall have obtained all consents, approvals, orders, qualifications,
licenses, Permits or other authorizations, required by all applicable
regulations, orders and contracts binding on the Seller, the Company or the
Purchaser or any of their respective properties and assets, with respect to the
execution, delivery and performance of this Agreement, the financing and
consummation of the transactions contemplated herein and the conduct of the
business of the Company in the same manner after the Closing Date as before the
Closing Date.
Section 5.3 No Material Adverse Change. There shall have been no Material
Adverse Change (as defined in Section 2.11 hereof) since December 31, 1999,
including, without limitation, the payment of any bonuses, any amendment to the
Company's charter or bylaws, any borrowings, the purchase of real or personal
property at an aggregate purchase price of over $5,000, any increase in
compensation of the Company's employees, or the distribution or declaration of
dividends or distributions, any extension of leases,
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or the commitment to do any of the foregoing (unless the Purchaser shall have
first consented thereto in writing or except as shown on Schedule 2.11 hereto).
The Seller and the Company shall have delivered to the Purchaser a certificate,
dated the Closing Date, in a form reasonably satisfactory to the Purchaser,
certifying to the foregoing.
Section 5.4 No Proceeding or Litigation. No order or regulation shall be
in effect which would prevent the consummation of the transactions contemplated
hereby.
Section 5.5 Secretary's Certificate. The Purchaser shall have received a
duly executed original of the approvals referenced in Sections 2.2 and 5.2
hereof, together with a certificate, executed by the Secretary of the Company,
dated the Closing Date, as to the charter and bylaws of the Company and the
resolutions adopted by the stockholders and directors of the Company in
connection with this Agreement in a form reasonably satisfactory to the
Purchaser and its counsel.
Section 5.6 Certificates of Good Standing. At the Closing, the Company
shall have delivered to the Purchaser certificates issued by the appropriate
governmental authorities evidencing the good standing of the Company in the
State of Texas and in each jurisdiction in which the Company is qualified to do
business, such
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certificates dated as of a date not more than thirty (30) days prior to the
Closing Date.
Section 5.7 Employment Agreement. Seller shall have entered into an
Employment Agreement substantially in the form attached hereto as Exhibit A (the
"EMPLOYMENT AGREEMENT"). Further, the Purchaser shall have received such
assurances as it deems necessary, in its reasonable discretion (and the Seller
and the Company shall assist the Purchaser in obtaining such assurances), that
key personnel of the Company (as determined by the Purchaser and Seller prior to
the Closing) shall remain in the Company's employ following the consummation of
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
the Purchaser shall not be deemed to be obligated by reason of this Agreement or
consummation of the transactions contemplated hereby to retain in employment any
particular employee of the Company. Seller shall keep Purchaser informed if it
shall come to his attention at any time that any employee may not be planning to
remain in the Company's employment after the Closing.
Section 5.8 Resignations. The Seller shall have caused all directors and
officers of the Company to have resigned, using such form of resignation as is
satisfactory to the Purchaser and its counsel.
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Section 5.9 Opinion of Seller's and Company's Counsel. The Seller shall
deliver at the Closing an opinion of counsel to the Seller and the Company
addressed to the Purchaser in substantially the form attached hereto as Exhibit
B.
Section 5.10 Delivery of Minute Books and Share Certificates. The Seller
shall deliver at the Closing all original minute books, corporate seals and
stock transfer records of the Company, together with any and all original
certificates evidencing the Shares and any shares of the Company's capital stock
which have been canceled of record or which were held in the form of treasury
stock, all in the manner set forth in Section 7.2 hereof. Any and all shares of
treasury stock shall be canceled by the Company prior to Closing, as provided by
appropriate actions of the Company's Board of Directors and any and all filings
necessary with the State of Texas in connection therewith shall be made prior to
Closing.
Section 5.11 Regulatory Compliance. Counsel for the Purchaser shall have
determined to its satisfaction that the transactions contemplated by this
Agreement are in compliance with all applicable federal and state laws and
regulations, including, without way of limitation, those pertaining to the
practice of engineering.
Section 5.12 Seller Subordination Agreement. The Seller
shall have executed and delivered the Seller Subordination
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Agreement substantially in the form attached hereto as Exhibit F or otherwise;
provided that the form is satisfactory and acceptable to Purchaser's lender.
Section 5.13 Goodwill Purchase Agreement. The Seller shall have executed
and delivered the Goodwill Purchase Agreement substantially in the form attached
hereto as Exhibit G.
Section 5.14 Seller's Consent to Assignment of Acquisition Rights. The
Seller shall have executed and delivered his consent to the Purchaser's
assignment of its acquisition rights under this Agreement to the Purchaser's
lender substantially in the form attached hereto as Exhibit H.
Section 5.15 Landlord's Waivers and Consents. Seller shall cause to be
executed and delivered to Purchaser's lender by and from any landlord of space
or property leased by Seller in the operation of its business, and the
mortgagee(s) of any such landlords having a lien against such leased space or
property, a Landlord's Waiver and Consent form, substantially in the form
attached hereto as Exhibit I or otherwise; provided that the form is
satisfactory and acceptable to Purchaser's lender.
Section 5.16 Other Documents. The Purchaser shall have been
furnished with such other and further documents and certificates,
including certificates of the Seller and/or the Company's officers,
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directors and others, as the Purchaser and/or its lender shall reasonably
request to evidence compliance with the conditions set forth in this Agreement
or as the Purchaser and/or its lender shall otherwise reasonably require.
Section 5.17 Liens. The Seller shall have removed all liens on the Shares
and on the assets and properties of the Company.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement shall be subject to the
satisfaction of each of the following conditions on or prior to the Closing
unless waived in writing by the Seller:
Section 6.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Article III hereof and elsewhere in
this Agreement and all information contained in any Exhibit, Schedule or
attachment hereto shall be true and correct in all material respects when made
and on the Closing Date as though then made. The Purchaser shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and complied with by it
prior to the Closing Date. The Purchaser shall have delivered to the Seller a
certificate,
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dated the Closing Date, in a form reasonably satisfactory to the Seller,
certifying to the foregoing.
Section 6.2 Consents and Approvals. The Purchaser, the Seller and the
Company shall have obtained all consents, approvals, orders, qualifications,
licenses, Permits or other authorizations required by all applicable
regulations, orders and contracts binding on the Purchaser, the Seller or the
Company or any of their respective properties and assets, with respect to the
execution, delivery and performance of this Agreement and consummation of the
transactions contemplated herein.
Section 6.3 No Proceeding or Litigation. No order or regulation shall be
in effect which would prevent the consummation of the transactions contemplated
hereby.
Section 6.4 Secretary's Certificate. The Seller shall have received a duly
executed original of the approvals referenced in Sections 3.2 and 6.2 hereof,
together with a certificate, executed by the Secretary of the Purchaser, dated
the Closing Date, as to the charter and bylaws of the Purchaser and the
resolutions adopted by the directors of Purchaser in connection with this
Agreement in a form reasonably satisfactory to the Seller and his counsel.
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Section 6.5 Employment Agreement. The Purchaser shall have entered into or
caused the Company to enter into the Employment Agreement.
Section 6.6 Opinion of the Purchaser's Counsel. The Purchaser shall
deliver at the Closing an opinion of its counsel addressed to the Seller in
substantially the form attached hereto as Exhibit C.
ARTICLE VII
CLOSING
Section 7.1 Closing. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Articles V or VI hereof, a closing of
the transactions contemplated by this Agreement (the "CLOSING") shall be held on
or before April 28, 2000 (or such date either prior or subsequent thereto as the
parties hereto shall mutually agree) (the "CLOSING DATE") in the offices of the
Company in Dallas, Texas (or at such other place as the parties hereto shall
mutually agree).
Section 7.2 Payment of Purchase Price and Receipt of Shares.
(a) Deliveries at Closing. On the Closing Date, (i) the Seller will
assign and transfer to the Purchaser good and valid title in and to the
Shares, free and clear of all liens, by delivering to the Purchaser stock
certificates representing
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the Shares, duly endorsed for transfer or accompanied by duly executed
stock powers endorsed in blank with requisite stock transfer tax stamps,
if any, attached; (ii) the Purchaser shall, by wire transfer of same-day
funds, pay to the Seller the Cash Payment; (iii) the Purchaser shall make
the Note Payment by delivering to the Seller the subordinated promissory
note, as more particularly described in Section 7.2(b) below; and (iv) the
parties shall deliver to each other the documents required under this
Agreement to be delivered at or prior to the Closing. In addition, the
Purchaser shall make the Stock Payment by delivering to the Seller the HLM
Stock, at the times and as more particularly described in Section 7.2 (c)
hereto.
(b) Installment Payments; Subordinated Promissory Note. The Seller
shall receive a subordinated promissory note substantially in the form
attached hereto as Exhibit D. Thirty percent (30%) of the principal amount
of the subordinated promissory note will be paid on each of the dates
which are eighteen months and three years after the Closing Date and forty
percent (40%) of the principal amount of the subordinated promissory note
will be paid on the fourth anniversary of the Closing Date, all as
provided in Seller's subordinated promissory note. Interest shall accrue
on the subordinated promissory note at the rate of seven percent (7%) per
annum and accrued interest shall be paid on each of the
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dates which are twelve, eighteen, twenty-four, thirty-six and forty-eight
months after the Closing Date. The Purchaser's obligation to make any and
all payments otherwise due and payable under the terms of the subordinated
promissory note, however, shall be subject to the Purchaser's right of
setoff as provided in Section 8.4 below. Seller shall, as a condition of
Closing, execute and deliver the Seller Subordination Agreement in the
form attached hereto as Exhibit F.
(c) Delayed Delivery Stock. In addition to the forms of Purchase
Price provided to Seller in Sections 7(a) and (b) above, the Seller shall
receive from the Purchaser, at such times following the Closing as
hereinafter set forth, an aggregate of 50,000 shares of the Purchaser's
"delayed delivery stock," constituting shares of the Purchaser's Common
Stock, $.001 par value, having an agreed upon value at the Closing Date of
$300,000 (such "delayed delivery stock" to be hereinafter referred to as
the "HLM STOCK"). Such shares shall be restricted, shall not be registered
under the Securities Act or any state securities laws and shall bear an
appropriate registration legend. Thirty percent (30%) of Seller's HLM
Stock shall be delivered on each of the second and third anniversaries of
the Closing Date and Forty percent (40%) of Seller's HLM Stock shall be
delivered on the fourth anniversary of the Closing Date. Notwithstanding
the
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foregoing, prior to delivery of the first installment of HLM Stock, the
Seller shall be required to execute a Registration Rights Agreement, which
shall be substantially in the form attached hereto as Exhibit E. The
Purchaser's obligations to deliver the HLM Stock shall be subject to the
Purchaser's right of setoff as provided in Section 8.4 below.
Section 7.3 Reservation of Shares. The Purchaser shall reserve on its
books for future issuance any and all shares of the Purchaser's Common Stock,
$.001 par value, as shall be required to fulfill its obligations set forth in
Section 7.2(c) hereof.
ARTICLE VIII
SURVIVAL OF TERMS; INDEMNIFICATION
Section 8.1 Survival. All of the terms and conditions of this Agreement,
together with the representations, warranties, covenants and obligations
contained herein or in any instrument or document delivered or to be delivered
pursuant to this Agreement and the agreements of the parties to indemnify,
defend and hold harmless each other as set forth in this Article VIII shall
survive the execution of this Agreement and the Closing Date notwithstanding any
investigation heretofore or hereafter made by or on behalf of any party hereto
and shall continue until the expiration of the applicable statute of limitations
with respect to any and all claims in connection therewith.
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Section 8.2 Indemnification by the Seller. After the Closing Date, the
Purchaser and the Company shall be indemnified, defended and held harmless as
hereinafter provided by the Seller against and in respect of any and all damage,
loss, liability, cost or expense (including, unless otherwise provided herein,
the reasonable fees and expenses of counsel and any Tax liability resulting from
any indemnity payment made hereunder) resulting from, or in respect of, any of
the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Seller or the Company, or nonfulfillment of any obligation
on the part of either the Company (to be performed on or prior to the
Closing) or the Seller under this Agreement, or contained in any Schedule
or Exhibit to this Agreement delivered by the Seller or Company or from
any misrepresentation in or omission from any certificate, Schedule,
Exhibit, related agreement, financial statement, or instrument delivered
by or on behalf of the Seller or the Company hereunder. By way of example
and not limitation, the Seller shall indemnify the Purchaser and the
Company to the extent the Company's accounts receivable set forth on
Schedule 2.27 hereto are not collected as provided in Section 2.27 hereof
and/or to the extent the Company's accounts payable are not fully and
accurately set forth on Schedule 2.28 hereto.
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(b) Taxes. All Taxes of the Company attributable to any
period through the Closing Date.
(c) Pre-Closing Claims. Any claim arising out of or relating to the
business or operations of the Company through the Closing Date or any
claim relating to the Excluded Liabilities or Excluded Assets either prior
to or after the Closing Date or any claim resulting from or arising out of
the ownership, management or use of the Shares or the administration or
governance of the business of the Company through the Closing Date. With
respect to any claim arising out of or relating to the business or
operations of the Company prior to or through the Closing Date for a
project with respect to which a certificate of occupancy has been issued
prior to the Closing Date which is covered by the Company's professional
liability insurance, Seller shall be required to indemnify and pay the
Purchaser and the Company only for the first Forty Thousand Dollars of any
costs to resolve, settle or compromise such claim. The parties hereto
agree that the foregoing limitation shall not apply to the ▇▇▇▇▇▇ matter
set forth in Section 8.2(d) hereof.
(d) ▇▇▇▇▇▇ Related Matters. Any claim in excess of applicable
insurance proceeds in any way related or relating to or arising from the
death of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and/or Rey
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or the personal injury or property damage arising in
connection with the occurrence, including, without limitation Court of
Action DV99-07257 situated in the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇.
(e) Related Expenses. All expenses and costs, including
but not limited to legal fees, reasonably paid or incurred in
connection with any of the foregoing.
Section 8.3 Indemnification by the Purchaser. After the Closing Date, the
Seller shall be indemnified, defended and held harmless as hereinafter provided
by the Purchaser against and in respect of any and all damage, loss, liability,
cost or expense (including, unless otherwise provided herein, the reasonable
fees and expenses of counsel and any Tax liability resulting from any indemnity
payment made hereunder) resulting from, or in respect of, any of the following:
(a) Misrepresentation or Breach. Any misrepresentation or breach of
warranty of the Purchaser, or nonfulfillment of any obligation on the part
of the Company (to be performed after the Closing) or the Purchaser under
this Agreement, or contained in any Schedule or Exhibit to this Agreement
delivered by Purchaser or from any misrepresentation in or omission from
any certificate, Schedule, Exhibit, related
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agreement or instrument delivered by or on behalf of the
Purchaser hereunder.
(b) Taxes. All Taxes of the Company attributable to any
period after the Closing Date.
(c) Post-Closing Claims. Any claim of a third party
arising out of the business or operations of the Company after
the Closing Date.
(d) Goodwill Purchase Agreement. Notwithstanding anything in the
Goodwill Purchase Agreement to the contrary, any claim, expenses, costs or
Taxes in excess of what Seller would have incurred or paid if any amount
payable pursuant to the Goodwill Purchase Agreement had instead been paid
as part of the Purchase Price set forth in Section 1.2 hereof.
(e) Related Expenses. All expenses and costs, including
but not limited to legal fees, reasonably paid or incurred in
connection with any of the foregoing.
Section 8.4 Setoff. Without limiting its other rights and remedies
hereunder, and in addition to its rights and remedies in this Agreement
provided, the Purchaser and/or the Company shall have the right to withhold and
setoff against payments otherwise due and payable to the Seller hereunder,
including but not limited
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to the Note Payment, the Stock Payment (valuing each share of common stock at
$6.00 per share for this purpose), and the Goodwill Purchase Note, the amount of
any damages either suffers as a result of any breach by the Seller of any
representation, warranty, agreement or term hereof (including Seller's
continuing obligations under his Employment Agreement) and for any and all
amounts with respect to which the Purchaser is entitled to indemnification as
provided in Section 8.2 hereof. In the event the subject of such indemnification
is a third party claim, as provided in Section 8.5 below, the Purchaser shall be
entitled, in its sole discretion, to make direct payments to any such third
party creditor or claimant in satisfaction of its claim if, within twenty (20)
days after giving written notice of such claim to the Seller, such claim has not
been paid or settled or the Seller has not assumed the defense of such action to
the reasonable satisfaction of the Purchaser. The Purchaser shall notify the
Seller of any such sums to be set off, specifying the basis for such set off and
the amount thereof.
Section 8.5 Third Party Claims. In the event a party seeking
indemnification hereunder (the "INDEMNITEE") shall receive written notice of any
claim or proceeding against it that, if successful, might result in an
indemnifiable claim under this Article VIII, then the Indemnitee shall give the
party which may be liable for such indemnification hereunder (the "INDEMNITOR")
prompt written notice of such claim or proceeding and shall permit the
Indemnitor to participate in the defense of such claim or proceeding by
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counsel of the Indemnitor's own choosing and at the Indemnitor's expense. In
addition, the Indemnitor, upon written request, and upon the Indemnitee's
written consent, which shall be in its sole discretion, may assume the defense
of any such claim or proceeding, provided that the Indemnitee may participate in
any such defense as it may deem necessary or appropriate to protect its
interests and the Indemnitor shall assume the cost thereof.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Amendment and Modification. This Agreement may be amended,
modified and supplemented at any time with respect to any of the terms contained
herein, by a written agreement signed by all of the parties hereto.
Section 9.2 Waiver. The failure of any party hereto to comply with any
obligation, covenant, agreement or condition herein may be waived in writing by
the other party or parties hereto affected thereby, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent waiver or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing.
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Section 9.3 Notices. All notices, claims, requests, demands or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, by first class certified
mail, return receipt requested, with postage paid, or by receipted overnight
courier service to the intended recipient at the address specified below or at
such other address as shall be designated by such party in any notice delivered
as above provided to the other parties hereto.
NOTICES TO PURCHASER: WITH A COPY TO:
HLM Design, Inc. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Suite 2950 ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Senior Vice President ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
NOTICES TO SELLER: WITH A COPY TO:
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
NOTICES TO COMPANY:
BL&P Engineers, Inc.
▇/▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
Section 9.4 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of
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the parties hereto and their respective heirs, successors and permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties
hereto; provided, that the Purchaser may, without the prior written consent of
the Seller and the Company, assign its rights hereunder and under any other
contracts or documents executed or delivered in connection herewith to (i) an
affiliate of the Purchaser, or (ii) its lenders as collateral in connection with
the financing of the transactions contemplated hereby; provided, further that in
any such event the Purchaser shall remain liable with respect to all of the
Purchaser's obligations under this Agreement or such other contracts or
documents notwithstanding Purchaser's assignment pursuant hereto.
Section 9.5 Governing Law. This Agreement shall be governed by the laws of
the State of North Carolina, without regard to its principles of conflict of
laws.
Section 9.6 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 9.7 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and
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shall not affect in any way the meaning or interpretation of this Agreement.
Section 9.8 Entire Agreement. This Agreement, with all Schedules and
Exhibits thereto, embodies the entire agreement and understanding of the parties
hereto with regard to the subject matter hereof and supersedes all prior
agreements, representations, warranties, promises, covenants, arrangements and
understandings, oral or written, express or implied, among the parties with
respect to such subject matter, including, but not limited to, the letter of
intent dated October 26, 1999. There are no agreements, representations,
warranties, promises, covenants, arrangements or understandings among the
parties hereto with respect to such subject matter other than those expressly
set forth or referred to herein.
Section 9.9 No Benefit. This Agreement shall not be construed so as to
confer any right or benefit upon any person other than the signatories to this
Agreement and each of their respective heirs, successors and permitted assigns.
Section 9.10 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party hereto upon any breach or default
of another party hereto under this Agreement shall be construed to be a waiver
of any such breach or default or an acquiescence therein or of or in any similar
breach
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or default thereafter occurring. Subject to the limitations set forth in Article
VIII hereof, all remedies, whether under this Agreement, by law or otherwise,
afforded to any party shall be cumulative and not alternative.
Section 9.11 Severability. The provisions of this Agreement shall be
separable and a determination that any provision of this Agreement is either
unenforceable or void shall not affect the validity of any other provision of
this Agreement. Wherever possible all provisions shall be interpreted so as not
to be unenforceable and any court of competent jurisdiction is authorized and
directed by the parties to enforce any otherwise unenforceable provision in
part, to modify it, to enforce it only to a degree and not fully, or otherwise
to enforce that provision only in a manner and to an extent, or for a shorter
period of time, that renders the provision valid or enforceable. The intent of
the parties is that this Agreement be enforceable and enforced to the maximum
extent possible after excising (or deeming excised) all invalid or unenforceable
provisions, whether or not the remaining provisions are grammatically correct.
Section 9.12 Expenses. The Company (for both itself and the Seller as such
expenses for the Seller shall relate to the transactions to be consummated
pursuant to this Agreement) shall bear all expenses with respect to this
Agreement and the transactions contemplated hereby; provided, however, that the
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Company shall only pay for legal fees in connection with this transaction in an
amount not to exceed Twenty Thousand Dollars ($20,000). Seller will bear and
shall pay any amounts in excess of Twenty Thousand Dollars ($20,000) of such
legal fees.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
HLM DESIGN, INC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President
Attest:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Secretary
(Corporate Seal)
BL&P ENGINEERS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Attest:
/s/ ▇▇▇▇ ▇▇▇▇▇
----------------------
Secretary
(Corporate Seal)
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, PE
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