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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________________
Commission File Number: 0-29292
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HAGLER BAILLY, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization)
54-1759180
I.R.S. Employer Identification Number
1530 Wilson Boulevard, Suite 400, Arlington, VA 22209
(Address of principal executive offices) (Zip Code)
703-351-0300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
As of October 31, 1998, the Registrant had 16,212,602 shares of its common stock
outstanding.
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TABLE OF CONTENTS
PART I
Item 1. Financial Statements..................................................1
CONSOLIDATED BALANCE SHEETS (RESTATED UNAUDITED)............................1
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)...........................2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)...........................3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................4
PART II
Item 1. Legal Proceedings....................................................12
Item 2. Changes in Securities................................................12
Item 4. Submission of Matters to a Vote of Security Holders...................12
Item 6. Exhibits and Reports on Form 8-K......................................13
SIGNATURES....................................................................17
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<TABLE>
<CAPTION>
PART I
Item 1. Financial Statements
Hagler Bailly, Inc.
Consolidated Balance Sheets
September 30, December 31,
1998 1997
---------------------------------------
<S> <C> <C>
(restated
Assets (unaudited) unaudited)
Current assets:
Cash & cash equivalents $ 7,560,450 $ 11,813,067
Accounts receivable, net of allowance of $3,247,015 and $3,872,703
in 1998 and 1997, respectively 66,805,838 51,856,553
Prepaid expenses 6,458,801 1,501,447
Other current assets 4,781,593 2,867,444
---------------------------------------
Total current assets 85,606,682 68,038,511
Property and equipment, net of accumulated depreciation of $12,823,124
and $11,063,142, respectively 6,640,658 5,512,634
Software development costs, net of accumulated amortization of $515,648
and $49,000, respectively 1,399,929 2,463,173
Intangible assets, net of accumulated amortization of $2,333,100
and $1,752,712, respectively 9,045,270 6,925,960
Deferred taxes 24,355 1,269,684
Other assets 1,333,845 1,598,410
---------------------------------------
Total assets $ 104,050,739 $ 85,808,372
=======================================
Liabilities and stockholders' equity
Current liabilities:
Bank line of credit $ 4,700,000 $ 1,500,000
Accounts payable and accrued expenses 7,837,460 9,555,716
Accrued compensation and benefits 11,918,217 17,033,297
Billings in excess of cost 2,584,733 3,125,738
Current portion of long-term debt 249,647 947,367
Income taxes currently payable 4,360,804 3,107,946
Deferred taxes 887,210 -
------------------- -------------------
Total current liabilities 32,538,071 35,270,064
Long-term debt, net of current portion - 305,424
Deferred income taxes - 1,383,688
------------------- -------------------
Total liabilities 32,538,071 36,959,176
Stockholders' equity:
Common stock, $0.01 par value, 50,000,000 shares authorized;
16,210,102 and 15,473,735 issued and outstanding 162,101 154,737
Additional capital 70,701,275 53,837,452
Retained earnings (deficit) 841,669 (5,161,356)
Foreign currency translation (192,377) 18,363
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Total stockholders' equity 71,512,668 48,849,196
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Total liabilities and stockholders' equity $ 104,050,739 $ 85,808,372
=================== ===================
See accompanying notes.
</TABLE>
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<TABLE>
<CAPTION>
Hagler Bailly, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
(restated) (restated)
----------------- ----------------- ----------------- -------------------
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Revenues:
Consulting revenues $ 44,201,405 $42,441,400 $ 127,339,475 $ 119,665,349
Other revenues 2,288,712 910,954 4,742,949 1,696,475
----------------- ----------------- ----------------- -------------------
Total revenues 46,490,117 43,352,354 132,082,424 121,361,824
Cost of services 33,130,823 33,445,979 94,812,408 92,647,211
----------------- ----------------- ----------------- -------------------
Gross profit 13,359,294 9,906,375 37,270,016 28,714,613
Merger and related costs 2,493,213 - 4,212,143 -
Selling, general and administrative expenses 6,905,116 6,790,595 18,297,979 18,596,898
Stock and stock option compensation - - 2,595,200 64,869
----------------- ----------------- ----------------- -------------------
Income from operations 3,960,965 3,115,780 12,164,694 10,052,846
Other income (expenses), net 258,230 217,033 179,684 (409,075)
----------------- ----------------- ----------------- -------------------
Income before income tax expense 4,219,195 3,332,813 12,344,378 9,643,771
Income tax expense 1,713,593 1,150,187 6,008,042 3,992,671
----------------- ----------------- ----------------- -------------------
Net income before extraordinary gain 2,505,602 2,182,626 6,336,336 5,651,100
Extraordinary gain, net of income tax expense of
$1,739 and $57,645 for the three and nine months
ended September 30, 1997 - 22,943 - 760,652
----------------- ----------------- ----------------- -------------------
Net income $ 2,505,602 $ 2,205,569 $6,336,336 $ 6,411,752
================= ================= ================= ===================
Net income per share:
Basic:
Net income before extraordinary gain $ 0.15 $ 0.15 $ 0.38 $ 0.44
Extraordinary gain, net of income tax expense $ - $ - $ - $ 0.06
Net income $ 0.15 $ 0.15 $ 0.38 $ 0.50
Diluted:
Net income before extraordinary gain $ 0.15 $ 0.14 $ 0.36 $ 0.41
Extraordinary gain, net of income tax expense $ - $ - $ - $ 0.06
Net income $ 0.15 $ 0.14 $ 0.36 $ 0.47
Weighted average shares outstanding:
Basic 16,195,462 14,611,447 16,635,737 12,790,923
================= ================= ================= ===================
Diluted 16,939,346 15,439,613 17,427,411 13,715,075
================= ================= ================= ===================
Comprehensive income:
Net Income $2,505,602 $ 2,205,569 $ 6,336,336 $ 6,411,752
Foreign currency translation adjustment, net of tax
expense (benefit) of ($12,292) and $82,199 for the
three and nine months in 1998, and $6,084 and
$7,772 for the three and nine months in 1997 19,227 (9,517) (128,551) (12,156)
----------------- ----------------- ----------------- -------------------
================= ================= ================= ===================
Comprehensive income $ 2,524,829 $ 2,196,052 $ 6,207,785 $ 6,399,596
================= ================= ================= ===================
See accompanying notes.
</TABLE>
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<TABLE>
<CAPTION>
Hagler Bailly, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended September 30,
1998 1997
(restated)
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Operating activities
Net income $ 6,336,336 $ 6,411,752
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 2,864,637 1,981,391
Amortization of software development costs 615,798 -
Extraordinary gain - (22,943)
Provision for deferred income taxes 748,850 1,502,494
Provision for accounts receivable (625,689) (553,718)
Disposal of fixed assets 174,650 -
Asset impairment 456,493 -
Amortization of deferred stock compensation 2,595,200 64,869
Changes in operating assets and liabilities:
Accounts receivable (14,323,597) (9,831,411)
Prepaid expenses (4,957,354) (1,294,315)
Other current assets (1,914,149) (1,007,626)
Other assets - non current 264,562 (179,519)
Accounts payable and accrued expenses (1,718,250) 644,900
Accrued compensation and benefits (5,115,080) 8,094,547
Billings in excess of cost (541,005) (918,295)
Income taxes payable 1,252,858 124,065
------------------- --------------------
Net cash (used in) provided by operating activities (13,885,740) 5,016,191
Investing activities
Acquisition of property and equipment (3,595,971) (1,841,659)
Investment in common stock of subsidiaries (1,099,765) -
------------------- --------------------
Net Cash used in investing activities (4,695,736) (1,841,659)
Financing activities
Issuance of common stock, net of offering costs - 30,579,973
Sale of common stock 12,676,054 -
Dividends paid by foreign subsidiary (333,311) (233,333)
Net borrowings (payments) from bank line of credit 3,200,000 (3,750,000)
Principal payments on debt (1,003,144) (10,696,818)
------------------- --------------------
Net cash provided by financing activities 14,539,599 15,899,822
Net (decrease) increase in cash and cash equivalents (4,041,877) 19,074,354
Foreign currency loss (210,740) (19,928)
Cash and cash equivalents, beginning of period 11,813,067 3,218,708
------------------- --------------------
Cash and cash equivalents, end of period $ 7,560,450 $ 22,273,134
=================== ====================
See accompanying notes.
</TABLE>
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HAGLER BAILLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited interim consolidated financial statements of
Hagler Bailly, Inc. (the "Company") have been prepared pursuant to the rules of
the Securities and Exchange Commission ("SEC") for quarterly reports on Form
10-Q and do not include all of the information and note disclosures required by
generally accepted accounting principles. The information furnished herein
reflects all adjustments, of a normal recurring nature, which are, in the
opinion of management, necessary for a fair presentation of results for these
interim periods.
The interim results of operations are not necessarily indicative of the
results to be expected for the entire fiscal year ending December 31, 1998.
As a result of a business combination completed in the third quarter which
was accounted for as a pooling of interests as described in Note 3 below, all
consolidated financial statements presented for the three-month and nine-month
periods ended September 30, 1998 and 1997 and as of December 31, 1997 have been
restated to include the results of operations and financial position of Putnam,
Hayes & Bartlett, Inc. ("PHB"). These financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
notes thereto for the year ended December 31, 1997, included in the Company's
Proxy Statement for its Special Meeting of Stockholders dated July 24, 1998 and
the Form 8-K filed on November 13, 1998.
Note 2. Earnings per Share
Basic earnings per share is computed based on the weighted average number
of shares of common stock outstanding during the respective periods. Diluted
earnings per share is inclusive of the dilutive effect of unexercised stock
options using the treasury stock method.
Note 3. Pooling of Interests
On August 28, 1998, the Company exchanged 6,548,953 shares of the Company's
common stock for all of the stock of PHB. The transaction was accounted for as a
pooling of interests. Accordingly, the Company's financial statements have been
restated to include the results of PHB for all periods presented.
Note 4. Cash Dividend
Retained earnings for 1998 were reduced by the payment of the annual cash
dividend of $333,311 paid to shareholders by Izsak, Grapin et Associes ("IGA")
consistent with IGA's historical practice and prior to its merger with the
Company. The acquisition was accounted for as a pooling of interests transaction
in the second quarter.
Note 5. Merger and Related Costs
Cost of effecting mergers and subsequently integrating the operations of
the various merged companies are recorded as merger and related costs when
incurred. These costs consist primarily of direct merger costs such as
investment banking, legal, accounting and filing fees, as well as related costs
incurred to realign corporate, administrative, and personnel functions,
implement efficiencies with regard to information systems and offices, change
the corporate identity for the acquired companies, and other expenses incurred
to integrate operations. Also included were non-recurring charges including
certain asset impairments relating to software development costs as a result of
the Company's evaluation of the fair value of these assets.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature, are
intended to be, and are hereby identified as, "forward looking statements" for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934, as amended by Public Law 104-67. Forward-looking statements may be
identified by words including "anticipate," "believe," "estimate," "expect" and
similar expressions. The Company cautions readers that forward-looking
statements, including without limitation, those relating to the Company's future
business prospects, revenues, working capital, liquidity, and income, are
subject to certain risks and uncertainties that would cause actual results to
differ materially from those indicated in the forward-looking statements, due to
several important factors such as concentration of the Company's revenues from a
relatively limited number of public and private clients involved in the energy
and network industries, the Company's ability to attract, retain and manage
professional and administrative staff, fluctuations in quarterly results, risks
related to acquisitions, and the fact that historical operations and performance
are not necessarily indicative of future operations and performance, among
others, and other risks and factors identified from time to time in the
Company's reports filed with the SEC, including the risk factors identified in
the Company's Registration Statement (No. 333-22207) on Form S-1, the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, and the
Company's Proxy Statement for its Special Meeting of Stockholders dated July 24,
1998.
The Company, together with its wholly owned subsidiaries Hagler Bailly
Services, Inc., Hagler Bailly Consulting, Inc., HB Capital, Inc., Apogee
Research, Inc. ("Apogee"), TB&A Group, Inc. ("TB&A"), and as of August 28, 1998,
PHB, and several of its foreign wholly owned subsidiaries, is a worldwide
provider of consulting, research and other professional services to corporations
and governments on energy, telecommunication, transportation, and the
environment. As of September 1, 1998, Hagler Bailly employed a staff of 700, of
which over two-thirds were consulting and technical professionals. The Company's
common stock is quoted on the NASDAQ National Market under the symbol, "HBIX".
The Company's revenues consist of consulting revenues and other revenues.
Consulting revenues represent revenues associated with professional staff,
subcontractors and independent consultants, and client reimbursable expenses and
are associated with the Company's primary business of offering corporate clients
strategy and business operations consulting, economic counsel and litigation
support, and market research and survey analysis. Other revenues include those
derived from information-based product and services, and financial advisory
services. The Company's client base includes both the public and private sector.
Revenue from the private sector is typically characterized by higher gross
margins than the public sector, yet generally requires a higher relative level
of infrastructure support. Consequently, the Company's operating performance is
affected by its public sector / private sector business mix. Through strategic
acquisitions and internal growth, the Company has increased its private sector
client base, and will continue to pursue such opportunities in the future.
On February 23, 1998, the Company issued 454,994 shares of its common stock
in exchange for all the stock of TB&A. The transaction was accounted for as a
pooling of interests.
On June 16, 1998, the Company and Cap Gemini S.A. and its wholly owned
subsidiary Cap Gemini America, Inc. entered into an exclusive joint venture to
deliver information technology consulting services and solutions to electric,
gas and water utilities, and service providers in the U.S. and Canada. The
Company expects the joint venture to turn profitable sometime late in the fiscal
year ending December 31, 1999.
On June 30, 1998, the Company issued 183,550 shares of its common stock in
exchange for all of the stock of IGA. The transaction was accounted for as a
pooling of interests.
On August 28, 1998, the Company issued 6,548,953 shares of its common stock
in exchange for all of the stock of PHB. The transaction was accounted for as a
pooling of interests.
On September 30, 1998, the Company exited from certain public sector
environmental consulting business.
<PAGE>
Results of Operations
The following table presents for the periods indicated the percentage of
revenues represented by certain income and expense items, and the percentage
period-to-period increase (decrease) in such items:
<TABLE>
<CAPTION>
% Period-to-Period
Percentage of Revenues Increase (Decrease) of Dollars
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Three months Nine months
ended Sept. ended Sept.
Three months ended Nine months ended 30, 1998 30, 1998
September 30, September 30, compared to compared to
------------------------ -------------------- three months nine months
1998 1997 1998 1997 ended Sept ended Sept
30, 1998 30, 1997
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<S> <C> <C> <C> <C> <C> <C>
Revenues:
Consulting 95.1 97.9 96.4 98.6 4.1 6.4
Other 4.9 2.1 3.6 1.4 151.2 179.6
Total revenues 100.0 100.0 100.0 100.0 7.2 8.8
Cost of services 71.3 77.2 71.8 76.3 (0.9) 2.3
Merger and related costs 5.4 - 3.2 - 100.0 100.0
Selling, general, and administrative
expenses 14.9 15.7 13.9 15.3 1.7 (1.6)
Compensation in connection with
subscriptions for common stock - - 2.0 0.1 - -
Income from operations 8.5 7.2 9.2 8.3 27.1 21.0
Other income (expenses), net 0.6 0.5 0.1 (0.3) 19.0 100.0
Income before income taxes 9.1 7.7 9.3 8.0 26.6 28.0
Income tax expense 3.7 2.7 4.5 3.3 49.0 50.5
Net income before extraordinary gain 5.4 5.0 4.8 4.7 14.8 12.1
Extraordinary gain - 0.1 - 0.6 (100.0) (100.0)
Net income 5.4 5.1 4.8 5.3 13.6 (1.2)
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1997
Revenues for the three months ended September 30, 1998 increased by $3.1
million, or 7.2%, to $46.5 million from the three months ended September 30,
1997. Of this increase, $1.8 million is attributable to consulting revenues, and
$1.3 million is attributable to other revenues. Consulting revenues increased
4.1% for the three months ended September 30, 1998, as compared to the
comparable period of the prior year. This increase was primarily the result of
internal growth. Other revenues increased by 151.2% for the three months ended
September 30, 1998, as compared to the comparable period of the prior year. This
increase was attributable to increased revenues from information-based products
and services associated with a contract the Company was awarded in the current
fiscal year. In the three months ended September 30, 1998, approximately 95.1%
of the Company's revenues were derived from consulting revenues, as compared
with 97.9% in the three months ended September 30, 1997.
Cost of services for the three months ended September 30, 1998 decreased by
approximately $315,000, or 0.9%, to $33.1 million from the three months ended
September 30, 1997. Cost of services as a percentage of revenue decreased from
77.2% in the three months ending September 30, 1997, to 71.3% in the three
months ending September 30, 1998, primarily the result of cost savings
associated with integration of the Company's and PHB's operations, and the
diversion of direct billable professional staff to support the merger.
Selling, general and administrative expenses ("SG&A") for the three months
ended September 30, 1998 increased by approximately $115,000, or 1.7%, to $6.9
million from the three months ended September 30, 1997. The increase was due an
increase in the overall volume of business as compared to the comparable period
of the prior year. Expressed as a percentage of total revenues, SG&A expenses
decreased from 15.7% in the three months ended September 30, 1997 to 14.9% in
the three months ended September 30, 1998. This decrease is reflective of cost
savings resulting from the integration of the Company and PHB.
Merger and related costs for the three months ended September 30, 1998 were
$2.5 million, or 5.4% expressed as a percentage of revenues. There were no
merger and related costs for the three months ended September 30, 1997. The
majority of these costs were associated with PHB, as well as residual expenses
associated with the business combinations of TB&A, Apogee, and IGA.
Other income (expenses), net includes interest expense, interest income,
and other non-operating income, including the proceeds from exiting certain
environmental consulting business. For the three months ended September 30, 1998
other income (expenses), net increased approximately $40,000, or 19.0%, to
approximately $255,000 from the three months ended September 30, 1997.
The Company's effective tax rate increased to 40.6% in the three months
ended September 30, 1998 from 34.5% in the three months ended September 30,
1997. Historically, the Company has accrued income tax at 39% of income before
tax expense. The three months ended September 30, 1997 had a decreased effective
tax rate due to a tax credit.
Net income for the three months ended September 30, 1998 increased by
approximately $300,000, or 13.6%, to $2.5 million, from the three months ended
September 30, 1997, due to reasons discussed above.
Nine months ended September 30, 1998 compared with nine months ended September
30, 1997
Revenues for the nine months ended September 30, 1998 increased by $10.7
million, or 8.8%, to $132.1 million from the nine months ended September 30,
1997. Of this increase, $7.7 million is attributable to consulting revenues, and
$3.0 million is attributable to other revenues. Consulting revenues increased
6.4% for the nine months ended September 30, 1998, as compared to the comparable
period of the prior year. This increase was primarily the result of the
Company's focus on the growth of international private sector engagements by
increasing capacity through the purchase of Estudio Q, Ingenieros Asociados
S.R.L ("Estudio Q"), an Argentinean company, and the merger with IGA, a French
company. Other revenues increased by 179.6% for the nine months ended September
30, 1998, as compared to the comparable period of the prior year. The increase
in other revenues was primarily driven by information-based products and
services associated with a contract the Company was awarded in the current
fiscal year, as well as an increase in financial advisory services. In the nine
months ended September 30, 1998, approximately 96.4% of the Company's revenues
were derived from consulting revenues, as compared with 98.6% in the nine months
ended September 30, 1997.
Cost of services for the nine months ended September 30, 1998 increased by
$2.2 million, or 2.3%, to $94.8 million from the nine months ended September 30,
1997. Cost of services as a percentage of revenue decreased from 76.3% in the
nine months ending September 30, 1997, to 71.8% in the nine months ending
September 30, 1998, primarily the result of cost savings associated with
integration of the Company's and PHB's operations, and the diversion of direct
billable professional staff to support the merger.
SG&A for the nine months ended September 30, 1998 decreased by
approximately $300,000 or 1.6%, to $18.3 million from the nine months ended
September 30, 1997. Expressed as a percentage of total revenues, SG&A expenses
decreased from 15.3% in the three months ended September 30, 1997 to 13.9% in
the nine months ended September 30, 1998. This decrease is reflective of cost
savings resulting from the integration of the Company and PHB.
Merger and related costs for the nine months ended September 30, 1998 were
$4.2 million, or 3.2% expressed as a percentage of revenues. There were no
merger and related costs for the nine months ended September 30, 1997. The
majority of these costs were associated with PHB, as well as expenses associated
with the business combinations of TB&A, Apogee, and IGA.
Stock and stock option compensation for the nine months ended September 30,
1998 increased by $2.5 million, from the nine months ended September 30, 1997,
to $2.6 million. Substantially all of these costs were related to PHB and
include non-cash, non-tax deductible compensation based on the difference
between the fair market and book values of PHB common stock issuable under
subscriptions within one year of the merger's close.
Other income (expenses), net increased by approximately $590,000, to
approximately $180,000 in the nine months ended September 30, 1998 from the
comparable prior period. The primary reasons for this increase were proceeds
from exiting certain environmental consulting business, as well as an increase
in interest income from the nine months ended September 30, 1997.
The Company's effective tax rate increased to 48.7% in the nine months
ended September 30, 1998 from 41.4% in the nine months ended September 30, 1997.
This increase in effective tax rate for the nine months ended September 30, 1998
is primarily attributable to PHB non-cash, non-tax deductible compensation.
Net income before extraordinary gains for the nine months ended September
30, 1998 increased by approximately $685,000, or 12.1%, to $6.3 million, from
the nine months ended September 30, 1997, due to reasons discussed above.
In the nine months ended September 30, 1998, there were no extraordinary
gains, compared to approximately $760,000 in extraordinary gains, net of income
tax expense, for the nine months ended September 30, 1997.
Liquidity and Capital Resources
As of September 30, 1998, working capital was $53.1 million as compared to
$32.8 million, at December 31, 1997. The increase was primarily due to an
increase in the volume of business in the nine months ended September 30, 1998,
which resulted in significantly higher accounts receivable balances, as well as
a decrease in accrued compensation and benefits.
Net cash of approximately $13.9 million was used in operating activities
during the nine months ended September 30, 1997. The net use of funds is largely
attributable to a significant increase in accounts receivable, along with
increases in prepaid expenses, distribution of bonuses, and funding of 401(k)
matching and profit sharing benefits, for the nine months of 1998.
Investment activities used $4.7 million during the nine months ended
September 30, 1998. The Company invested $3.6 million in the purchase of office
and computer related equipment, leasehold improvements, and other resources
necessary for the growth of the Company, as well as $1.1 million to purchase the
stock of Estudio Q and the balance of the company's interest in a previously
majority owned foreign subsidiary PT Hagler Bailly Indonesia.
Financing activities provided $14.5 million for the nine months ended
September 30, 1998. Cash provided by the issuance of 470,975 shares of the
Company's common stock, for consideration of $12.5 million to Cap Gemini
America, Inc. in connection with the formation of a joint venture and an
increase in net borrowings from the Company's line of credit, partially offset
by principal payments on debt. Net proceeds from equity financing are invested
in short-term, interest-bearing investment grade securities.
The Company's primary source of liquidity for the past 12 months has been
cash flows from equity sources, periodically supplemented by borrowings under a
bank line of credit. During the year ended December 31, 1997, the Company,
through its subsidiaries, established $19 million in revolving credit facilities
through two sources and began borrowing under the facilities. The balance under
the line of credit at September 30, 1998 was $4.7 million. Currently, the
Company is evaluating proposals to increase its bank line of credit to $50
million. The Company believes that current projected levels of cash flows and
the availability of financing, including borrowings under the Company's current
and proposed credit facility, will be adequate to fund its anticipated cash
needs, which may include future acquisitions of complementary businesses, for at
least the next 12 months. The Company, depending on market conditions, may
consider other sources of financing, including equity financing.
Prior to its acquisition by Hagler Bailly and consistent with its
historical dividend policy, IGA paid cash dividends of $333,311 in 1998.
The Company currently anticipates that it will retain all of its earnings
for development of the Company's business and does not anticipate paying any
cash dividends in the foreseeable future.
YEAR 2000
The Year 2000 ("Y2K") issue is a result of certain information systems and
programs using a two-digit format, as opposed to four digits, to indicate the
years. Such systems and programs will be unable to correctly interpret dates
beyond the year 1999, which could lead to system failure or certain other
problems, leading to disruption in operations.
The Company is currently developing a formal, phased plan for Y2K
information systems compliance. Detailed below are the status of progress and
timetables for each of the phases of the plan.
<TABLE>
<CAPTION>
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ASSESSMENT REMEDIATION TESTING IMPLEMENTATION
<S> <C> <C> <C> <C>
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IT - Domestic Completed Current Current By 2nd quarter 1999
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
IT - International By 1st quarter 1999 During 2nd quarter 1999 During 2nd quarter 1999 By 3rd quarter 1999
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
Accounting Completed By year end 1998 By year end 1998 By year end 1998
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
Embedded By year end 1998 1st - 3rd quarter 1999 1st - 3rd quarter 1999 1st - 3rd quarter
1999
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
3rd Party By year end 1998 By 1st quarter 1999 1st - 3rd quarter 1999 1st - 3rd quarter
1999
- ----------------------- --------------------- ------------------------- -------------------------- ----------------------
</TABLE>
The Company plans to implement a Y2K compliant upgrade to its current core
financial and reporting systems software by the end of the year.
At the present time, the Company's management believes that the costs
associated with Y2K compliance should not have a material adverse effect on the
results of operations or financial position of the Company in future periods.
Historical and estimated costs are, at this time deemed immaterial.
Nevertheless, the Company is not certain that it has fully identified all
potential impacts or effects on it that could result from Y2K non-compliance,
either internally or with respect to the various third-party enterprises with
which it interacts. Implementation of Y2K solutions will not have an impact on
other IT projects. The Company plans to evaluate the status of the Y2K
compliance plan in the first quarter of 1999 to determine risks and whether or
not a contingency plan is necessary.
PART II
Item 1. Legal Proceedings
The Company's indirect subsidiary, Theodore Barry & Associates, is a
defendant in a lawsuit brought in the United States District Court for the
Northern District of Illinois, Michael A. Laros v. Theodore Barry & Associates,
No. 95-C4175, by one of its former executives seeking payment of a bonus and
salary allegedly due him and payment of principal and interest on a subordinated
note of TB&A Group, Inc. ("TB&A") held by Mr. Laros, prejudgment interest and
costs and fees. Theodore Barry & Associates is defending the suit. Hagler Bailly
does not believe that the resolution of this lawsuit will have a material
adverse effect on its business, financial condition or results of operations.
Apogee has received a subpoena from the Office of the Inspector General of
the Environmental Protection Agency (the "EPA") requesting records from April
1993 through October 1995 pertaining to a contract between Apogee and the EPA.
Apogee has provided records in response to the subpoena. The work under this
contract has been completed. The subpoena was served in connection with an EPA
investigation relating to the submission of potential false statements and false
claims under the contract. Hagler Bailly is unable to determine at this time
what effect, if any, the investigation will have on its business, financial
condition or results of operations.
The Company and its subsidiaries are from time to time parties to
litigation arising in the ordinary course of business. Neither the Company nor
any of its subsidiaries is a party to any pending material litigation nor are
any of them aware of any pending or threatened litigation that would have a
material adverse effect on the Company or its business, financial condition or
results of operations.
Item 2. Changes in Securities
On August 28, 1998, the Company acquired PHB, a Massachusetts corporation,
for stock. The Company issued an aggregate of 6,548,953 shares of its common
stock to the shareholders of PHB. The shares of common stock issued in
connection with the acquisition were exempt from registration pursuant to Rule
506 of the Securities and Exchange Commission's Regulation D and Section 4(2) of
the Securities Act of 1933.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Special Meeting of Stockholders on August 27, 1998
stockholders approved the issuance of additional shares of the Company's common
stock to stockholders of PHB as part of the Company's acquisition of PHB as
follows:
For Against Abstain Broker Non-Vote
7,531,736 11,000 2,500 309,096
At the meeting, stockholders also approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Hagler Bailly's common stock from 20,000,000 to 50,000,000 as follows:
For Against Abstain Broker Non-Vote
6,918,461 933,471 2,500 0
At the meeting, the stockholders also approved an amendment to the
Company's Employee Incentive and Non-Qualified Stock Option and Restricted Stock
Plan to increase the number of shares authorized to be issued under the plan
from 3,200,000 to 5,000,000 as follows:
For Against Abstain Broker Non-Vote
4,914,902 2,614,266 14,200 311,064
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
(a) Exhibits
Exhibit
No. Description
<S> <C>
2 Sale Agreement between RCG International, Inc., and Hagler Bailly Consulting, Inc. (1)
2.1 Agreement and Plan of Merger by and among Hagler Bailly, Inc., Hagler Bailly Acquisition Corp. 1997-1 and Apogee
Research, Inc., dated as of November 18, 1997. (3)
2.2 Agreement and Plan of Merger by and among Hagler Bailly, Inc., PHB Acquisition Corp. and Putnam, Hayes and
Bartlett, Inc., dated as of June 11, 1998. (5)
3.1 Amended and Restated Certificate of Incorporation of the Company. (1)
3.2 By-Laws of the Company, as amended. (6)
3.3 Amended Certificate of Incorporation of the Company.
4 Specimen Stock Certificates. (1)
4.1 Escrow Agreement dated December 1, 1997 by and among Hagler Bailly, Inc., Hagler Bailly Acquisition Corp.
1997-1, Richard R. Mudge as Stockholders' Representative and State Street Bank and Trust Company, as Escrow
Agent. (3)
4.2 Registration Rights Agreement dated November 18, 1997 by and between Hagler Bailly, Inc. and Richard R. Mudge, acting as
Stockholders' Representation. (3)
4.3 Form of Escrow Agreement by and among the Company, PHB Acquisition Corp., William E. Dickenson as Stockholders'
Representative and State Street Bank and Trust Company, as Escrow Agent. (5)
4.4 Form of Registration Rights Agreement between the Company and certain PHB Stockholders. (5)
10.1 Hagler Bailly, Inc. Amended and Restated 1996 Employee Incentive and Non-Qualified Stock Option and Restricted Stock Plan
(including forms of option agreements). (1)
10.2 Form of Non-Compete, Confidentiality and Registration Rights
Agreement between the Company and each stockholder. (1)
10.3 Form of Amended and Restated Employment Agreement between the Company and Henri-Claude A. Bailly. (1)
10.4 Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly, Inc. dated October 25, 1991. (1)
10.5 First Amendment to Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly, Inc., dated February 26,
1993. (1)
10.6 Second Amendment to Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly, Inc., dated December
12, 1994. (1)
10.7 Lease by and between Bresta Futura V.B.V. and Hagler Bailly Consulting, Inc. dated May 8, 1996. (1)
10.8 Lease by and between L.C. Fulenwider, Inc., and RCG/Hagler Bailly, Inc. dated December 14, 1994. (1)
10.9 Lease by and between University of Research Park Facilities Corp. and RCG/Hagler Bailly, Inc., dated April 1,
1995. (1)
10.10 Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust Company, dated
May 17, 1995. (1)
10.11 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust
Company, dated as of June 20, 1996. (1)
10.12 Extension Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust Company, dated
as of August 1, 1996. (1)
10.13 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust
Company, dated as of November 12, 1996. (1)
10.14 Term Note by and between Hagler Bailly Consulting, Inc., and State Street Bank and Trust Company, dated May 26,
1995. (1)
10.15 Revolving Credit Note by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust Company
dated May 26, 1995. (1)
10.16 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc., and State Street Bank and Trust
Company, dated as of June 12, 1997. (1)
10.17 Credit Agreement by and among Hagler Bailly Consulting, Inc., Hagler Bailly Services, Inc. and State Street Bank
and Trust Company, dated as of September 30, 1997. (2)
10.18 Promissory Note by Hagler Bailly Consulting, Inc. and Hagler Bailly Services, Inc. to State Street Bank and
Trust Company, dated September 30, 1997. (2)
10.19 Security Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust Company, dated
as of September 30, 1997. (2)
10.20 Security Agreement by and between Hagler Bailly Services, Inc. and State Street Bank and Trust Company, dated as
of September 30, 1997. (2)
10.21 Guaranties by Hagler Bailly, Inc. to State Street Bank and Trust Company, dated September 30, 1997. (2)
10.22 Guaranties by HB Capital, Inc. to State Street Bank and Trust Company, dated September 30, 1997. (2)
10.23 Subordination Agreement and Negative Pledge/Sale Agreement by and between Hagler Bailly, Inc. and State Street
Bank and Trust Company for Hagler Bailly Consulting, Inc., dated September 30, 1997. (2)
10.24 Subordination Agreement and Negative Pledge/Sale Agreement by and between Hagler Bailly, Inc. and State Street
Bank and Trust Company for Hagler Bailly Services, Inc., dated September 30, 1997. (2)
10.25 Guaranty of Monetary Obligations to Bresta Futura V.B.V. by Hagler Bailly, Inc., dated July 23, 1997. (2)
10.26 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and Trust
Company dated May 18, 1998. (6)
10.27 Sublease Agreement by and between Coopers and Lybrand L.L.P. and Hagler Bailly, Inc. dated December 5, 1997. (6)
10.28 Employment Agreement between the Company and Henri-Claude A. Bailly, dated June 10, 1998.
10.29 Employment Agreement between the Company and William E. Dickenson, dated June 10, 1998.
10.30 Employment Agreement between the Company and Howard W. Pifer III, dated June 10, 1998.
10.31 Hagler Bailly, Inc. Amended and Restated Employee Incentive and Non-Qualified Stock Option and Restricted Stock Plan.
21 Subsidiaries (4)
24 Powers of Attorney (included on Signature Pages) (1)
27.1 Financial Data Schedule - September 30, 1998
27.2 Restated Financial Data Schedule - June 30, 1998
27.3 Restated Financial Data Schedule - March 31, 1998
27.4 Restated Financial Data Schedule - December 31, 1997
27.5 Restated Financial Data Schedule - September 30, 1997
27.6 Restated Financial Data Schedule - June 30, 1997
27.7 Restated Financial Data Schedule - March 31, 1997
27.8 Restated Financial Data Schedule - December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Included in the Company's Registration Statement on Form S-1 (No. 333-22207)
(2) Included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
(3) Included in the Company's Current Report on Form 8-K filed on December 16, 1997.
(4) Included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
(5) Included in the Company's Proxy Statement for Special Meeting of Stockholders dated July 24, 1998 on Form DEF 14A.
(6) Included in the Company Quarterly Report on Form 10Q for the quarter ended June 30, 1998.
(b) Reports on Form 8-K
On September 14, 1998 the Company filed a current report on Form 8-K. On
November 13, 1998 the Company filed an amendment to the current report on
Form 8-K that was filed on September 14, 1998.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ Henri-Claude Bailly
----------------------------------------------------
Date: November 14, 1998 Henri-Claude Bailly
President, Chief Executive Officer and
Chairman of the Board
/s/ Glenn J. Dozier
----------------------------------------------------
Date: November 14, 1998 Glenn J. Dozier
Senior Vice President, Chief Financial Officer
and Treasurer
<PAGE>
Exhibit 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
HAGLER BAILLY, INC.
Hagler Bailly, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Corporation, declaring such amendment to be
advisable and calling for such resolutions to be considered at a special meeting
of the shareholders of the Corporation. The resolution setting forth the
proposed amendment is as follows:
RESOLVED FURTHER, that the Board of Directors of the Company hereby
approves and adopt the following amendment (the "Certificate Amendment") to
the relevant part of Article 4 of the Company's Amended and Restated
Certificate of Incorporation;
"4. Capital Stock. The total number of shares of all classes of the capital
stock which the Corporation shall have authority to issue is:
50,000,000 shares, par value one cent ($0.01) per share of Common Stock"
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the special meeting of shareholders of the Corporation was duly called and held,
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which the necessary number of shares as required by
statute was voted in favor of the amendment.
THIRD: That the amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Henri-Claude A. Bailly, its President and Chief
Executive Officer, and attested by Stephen V.R. Whitman, its Vice President and
General Counsel, this 11th day of September 1998.
HAGLER BAILLY
By: /s/ Henri-Claude Bailly
Henri-Claude A. Bailly
President and Chief
Executive Officer
ATTEST: /s/ Stephen V.R. Whitman
Stephen V.R. Whitman
Vice President and
General Counsel
Exhibit 10.28
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated June 10, 1998 between HAGLER BAILLY, INC., a
Delaware corporation ("Company"), and HENRI-CLAUDE BAILLY ("Executive").
WHEREAS, Executive is currently the Chairman of the Board, President and
Chief Executive Officer of the Company;
WHEREAS, Executive is currently a party to an Amended and Restated
Employment Agreement dated July 3, 1997 ("Amended and Restated Agreement") with
the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated as of the date hereof among PUTNAM, HAYES & BARTLETT, INC., a
Massachusetts corporation ("PHB"), the Company and PHB MERGER CORP., a
Massachusetts corporation and wholly-owned subsidiary of the Company ("Merger
Sub"), Merger Sub will merge with and into PHB (the "Merger"), PHB will be
renamed PHB Hagler Bailly, Inc. ("PHB Hagler Bailly") and the common stock of
PHB, including the common stock of PHB owned by the Executive, will be converted
into shares of common stock of the Company ("Common Stock");
WHEREAS, as a result of the Merger, the Company anticipates changes in
the management of the Company which are inconsistent with certain terms in the
Amended and Restated Agreement;
WHEREAS, in consideration of the compensation and benefits to be afforded
to Executive pursuant to this Agreement, Executive has agreed to execute and
deliver this Agreement and to terminate, effective as of the effective time of
the Merger, any prior employment agreements or arrangements with the Company;
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, from the day after the effective time of the Merger,
on the terms and conditions set forth herein.
Whereas, Executive agrees to be bound by the confidentiality, non-compete
and non-solicitation provisions herein;
WHEREAS, the Board of Directors of the Company has approved the terms of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and Executive, intending to be legally bound, agree as
follows:
1. Employment, Term, Duties and Responsibilities.
a. During the Term (as hereinafter defined) of this Agreement, the Company
agrees to employ Executive and Executive agrees to serve as President and Chief
Executive Officer of the Company through December 31, 1999. As of January 1,
2000, Executive shall become Chairman of the Board of the Company and will
perform such other duties assigned to him by the Chief Executive Officer and the
Board of Directors of the Company (the "Company Board") and agreed to by
Executive. In the event that Executive shall elect to resign from the Company
Board, Executive shall continue as a full-time executive officer of the Company
performing such duties as the Chief Executive Officer, the Company Board and
Executive shall mutually agree. As of January 1, 2000, in his capacity as an
executive officer of the Company, Executive will report directly to the Chief
Executive Officer of the Company.
During the Term, Executive agrees to serve Company faithfully and to the
best of his ability; to devote his entire time, energy and skill during regular
business hours (except for illness or incapacity and except for vacation time as
provided herein) to such employment; to use his best efforts, skills and ability
to promote its interests; if elected, to serve as a director of Company and its
subsidiaries or affiliated corporations or entities; and to perform such duties
as from time to time may be assigned to him, subject to the preceding paragraph
hereof.
Notwithstanding the foregoing, Executive may engage in charitable, academic
and public and industry service activities so long as such activities do not
materially interfere with the performance of his duties and responsibilities
under this Agreement.
b. Subject to the provisions of this Agreement to the contrary, the Term
shall commence on the closing date of the Merger (the "Effective Time"), and end
on July 3, 2000.
2. Compensation.
The Company agrees to pay Executive as compensation for all duties
performed by him in any capacity during the period of his employment under this
Agreement:
a. An annual base salary ("Base Salary") payable in equal bi-monthly
installments at an initial annual rate of $393,750 commencing at the Effective
Time. On January 1 of each year during the Term commencing January 1, 1999, the
annual rate of Base Salary shall be increased by no less than the greater of (i)
five percent (5%) over the annual rate of Base Salary in effect for the
preceding year, and (ii) the increase in the CPI National Index for the year. b.
An annual bonus payment ("Bonus"), in an amount, if any, determined by the
Compensation Committee of the Company Board.
c. From time to time, Executive shall also be eligible to receive options
to purchase Common Stock of the Company pursuant to the terms of the Hagler
Bailly Employee Incentive and Non-Qualified Stock Option and Restricted Stock
Plan or any successor Plan, and in the amounts determined by, and subject to the
terms and conditions of, the Stock Option Committee of the Company Board. d.
During the Term, for so long as Executive is a member of the Company Board or
the board of directors of any of the Company's subsidiaries or affiliated
companies, Executive shall receive such compensation and other benefits
(including insurance coverage and indemnification) as other similarly situated
members of such board of directors receive for their service in such capacity.
3. Benefits; Reimbursement of Expenses; Annual Physical.
Executive shall also be entitled to:
a. participate in all of the benefit programs which are provided by
the Company;
b. reimbursement by the Company of all expenses reasonably incurred by
him in connection with the performance of his duties, including,
without limitation, travel and entertainment expenses reasonably
related to the business or interests of the Company, upon submission
by him of written documentation of such expenses; and
c. a fully-paid annual physical examination.
4. Disability or Death.
a. If, during the Term of this Agreement, Executive becomes disabled or
incapacitated for a period of twelve (12) consecutive months to such an extent
that he is unable to perform his duties hereunder ("Permanently Disabled"), the
Company shall have the right at any time thereafter, so long as Executive is
then still Permanently Disabled, to terminate this Agreement. If the Company
elects to terminate this Agreement by reason of Executive becoming Permanently
Disabled, the Company, for the unexpired Term of this Agreement, shall continue
to pay:
(1) to Executive, sixty percent (60%) of his Base Salary (whether through
insurance or otherwise) at the rate in effect on the date of such termination,
such payments to be made as set forth in Section 2 plus, within thirty (30) days
of such termination, a lump sum payment in the amount of the Executive's Base
Salary at the date of such termination; or
(2) in the event of Executive's death after such termination for Permanent
Disability, then to the persons and in the manner set forth in subparagraph (c)
of this Section 4, an amount per annum equal to sixty percent (60%) of
Executive's Base Salary (whether through insurance or otherwise) at the rate in
effect on the date this Agreement is terminated by the Company, such payments to
be made as set forth in Section 2.
If, and so long as, the Company does not elect to terminate this Agreement
as a result of Executive's Permanent Disability, this Agreement shall continue
in full force and effect and Executive shall be entitled to all benefits
provided under this Agreement including, without limitation, compensation as set
forth in Section 2.
b. If the Executive dies during the Term, this Agreement shall
automatically terminate, except that (i) for the unexpired portion of the Term,
the Company shall continue to pay to the persons and in the manner set forth in
subparagraph (c) of this Section 4, an amount per annum equal to sixty percent
(60%) of Executive's Base Salary in effect on the date of Executive's death,
such payments to be made as set forth in Section 2, and (ii) within thirty (30)
days of such termination, the Company shall pay such persons a lump sum payment
Section 4a(2)) in the amount of the Executive's Base Salary at the date of
termination.
c. Any payments to be made pursuant to subparagraph (a) or (b) of this
Section 4 to persons other than Executive in the event of the death of Executive
shall be made to Executive's designated beneficiaries or, if no such designation
has been made and Executive's spouse survives Executive, then the payments shall
be made to Executive's spouse, and if such spouse subsequently dies before all
such payments are made, the remaining payments shall be made to the estate of
Executive's spouse. If Executive is not survived by a spouse, then the payments
shall be made among Executive's issue who survive Executive, per stirpes, and if
any individual who is issue of Executive and who as of the date of death of
Executive is entitled to receive payments dies after Executive's death, the
payments which such issue would have been entitled to receive shall be made to
his or her estate. If at the date of Executive's death Executive is not survived
by any spouse, or any issue, then the payments shall be made to Executive's
estate.
5. Termination.
This Agreement shall terminate prior to the expiration of its Term as
follows:
a. Automatically upon Executive's death, in which event the provisions
of Section 4 shall continue to be applicable;
b. By the Company, upon notice from the Company, in the event Company
elects to terminate Executive's employment due to Executive's
Permanent Disability pursuant to the provisions of Section 4;
c. By the Company, for "cause," which for purposes of this Agreement
shall mean:
(i) failure to comply with material rules, standards or
procedures reasonably promulgated by the Company in accordance
with ordinary and usual business standards, or dereliction of
assigned responsibilities consistent with Section 1 above, such
failure or dereliction remaining uncured by Executive for thirty
(30) days after receiving written notice from the Company of such
failure or dereliction that specifically describes the nature of
such alleged failures;
(ii) substandard performance of assigned responsibilities
measured in accordance with performance standards agreed upon
from time to time by Executive and the Company;
(iii) material violation by Executive, or any other person acting
upon his specific directions, of a federal, state or local
statute, rule or regulation applicable to the Company, to its
management, or to the operation of the Company's business;
(iv) material breach of the terms of this Agreement;
(v) knowing falsification of the Company's records or documents;
(vi) gross negligence;
(vii) conviction by Executive, or any other person acting upon
Executive's specific directions, of any misdemeanor that involves
fraud or a material loss to the Company or of a felony; or
(viii) any act of dishonesty or moral turpitude.
The refusal to permanently relocate from Executive's current place of work
will not constitute a "cause" for termination of employment by the Company.
d. By Executive, upon the Company's failure to perform or observe any of
the material terms or provisions of this Agreement, and the continued failure of
the Company to cure such default within thirty (30) days after written demand
for performance has been given to the Company by Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions. Without limiting the foregoing, it is
acknowledged and agreed that Sections 1, 2, 3, and 4 of this Agreement are
material provisions of this Agreement.
e. By Executive, upon notice from Executive after Company's failure to pay
Executive amounts under Sections 2 and 3 when due and the continued failure of
the Company to make such payment within ten (10) days after written demand for
such payment is made by Executive.
f. By Executive, upon notice from Executive following a "change in control"
(as defined in Section 17).
6. Effect of Termination.
a. In the event of the termination of this Agreement by Company pursuant to
paragraph (c) of Section 5, the Company shall be under no obligation to
Executive, except to pay his accrued and unpaid Base Salary, Bonus, and paid
leave entitlements to the date of termination, and to permit exercise pursuant
to the Plan of any vested but unexercised options Executive shall not be
entitled to receive any Base Salary or Bonus after the date of termination, or
to exercise any unvested options under the Plan.
b. In the event of the termination of this Agreement by Executive pursuant
to paragraphs (d), (e) or (f) of Section 5, or in the event of the termination
of this Agreement by the Company other than pursuant to a notice of termination
under paragraph (b) or (c) of Section 5, Executive shall receive from Company
(i) payments at an annual rate equal to his Base Salary in effect on the date of
such termination in equal bimonthly installments until thirty-six (36) months
from the effective date of such termination; and (ii) a lump-sum payment in
amount equal to four (4) times his Base Salary on the date of termination
payable within thirty (30) days thereof.
If the Company and Executive shall become involved in a dispute relating to
any alleged breach of this Agreement by the Company or Executive, and if
Executive prevails (by judgment, settlement or otherwise) in such dispute, the
Company shall reimburse Executive for all reasonable costs (including reasonable
fees and disbursements of counsel) incurred by him in connection with such
dispute upon presentation to the Company of evidence of such costs.
7. Termination of Prior Agreements.
This Agreement expressly supersedes all agreements and understandings
between the parties regarding the subject matter hereof and any such agreement
is terminated as of the closing date of the Merger.
8. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective legal representatives and to any successor of
the Company, which successor shall be deemed substituted for the Company under
the terms of this Agreement. As used in this Agreement, the term "successor"
shall include any person, firm, corporation or other business entity which at
any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of the Company.
9. Waiver of Breach.
The waiver by the Company of a breach of any provision of this Agreement by
Executive shall not operate or be construed as a waiver of any subsequent
breach.
10. Notices.
Any notice required or permitted to be given hereunder shall be sufficient,
upon acknowledgement of receipt, if in writing and if sent by facsimile message
or by recognized courier to Executive at each of his residences or to the
Company at its principal place of business.
11. Entire Agreement.
This document contains the entire agreement of the parties and may not be
changed except in a writing signed by both parties.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia as applied to contracts executed and
performed wholly within the Commonwealth of Virginia.
13. Confidentiality.
a. From and after the Effective Time, Executive shall not, without the
prior written consent of the Company Board, for any reason, either directly or
indirectly, divulge to any third-party or use for his or her own benefit, or for
any purpose other than the exclusive benefit of the Company, any confidential,
proprietary, business and technical information or trade secrets (the
"Proprietary Information") of the Company or any of its subsidiaries whether
learned prior to or after the date hereof.
Proprietary Information shall include, but shall not be limited to, any
information relating to computer codes or instructions (including source and
object code listings, logic algorithms, subroutines, modules or other subparts
of computer programs and related documentation, including program notation);
computer processing systems and techniques; concepts; layouts; flowcharts;
specifications; know-how; any associated programmer, user or other manuals or
other like textual materials; all computer inputs and outputs (regardless of the
media on which it is stored or located); hardware and software configurations;
designs; interfaces; research; processes; inventions; products; methods;
marketing, sales and distribution data, plans and efforts; relationships with
actual and prospective customers and suppliers; and any other materials prepared
by Executive in the course of Executive's employment with the Company or
prepared by any other employee or contractor of the Company or any of its
subsidiaries for their customers, and any other materials that have not been
made available to the general public.
Furthermore, nothing contained herein shall restrict Executive from
divulging or using for his own benefit or for any other purpose any Proprietary
Information that is readily available to the general public so long as such
information did not become available to the general public as a direct or
indirect result of Executive's breach of this Agreement.
b. All right, title and interest in and to Proprietary Information shall be
and remain the sole and exclusive property of the Company. Executive will not
remove from the Company's offices or premises any documents, records, notebooks,
files, correspondence, reports, memoranda or similar materials of or containing
Proprietary Information, or other materials or property of any kind belonging to
the Company unless necessary or appropriate in connection with the ongoing
business of the Company or its subsidiaries and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose.
Executive shall not make, retain, remove and/or distribute any copies of
any of the Proprietary Information for any reason whatsoever except as may be
necessary in the performance of Executive's obligations as an officer or
employee of the Company or any of its subsidiaries. Executive shall not divulge
to any third person the nature of and/or contents of any of the Proprietary
Information to which Executive may have access or with which for any reason
Executive became familiar in the course of Executive's employment hereunder,
except as disclosure shall be necessary for the purposes of conducting the
ongoing business of the Company. Upon Executive's termination as an employee,
officer or director of the Company or any of its subsidiaries, Executive shall
return to the Company all originals and copies of the Proprietary Information
then in Executive's possession.
c. Nothing contained herein shall restrict Executive's ability to make any
disclosures as may be required by law; provided, however, that Executive shall
(i) deliver to the Company reasonably prompt prior written notice of the nature
and justification for such disclosures; and (ii) cooperate reasonably with the
Company prior to any such disclosure in any actions which the Company shall take
in order to obtain a protective order or similar relief with respect to the
Proprietary Information sought to be disclosed.
14. Non-Compete and Non-Solicitation Covenants.
a. Except (i) in furtherance of the Company's business or otherwise on
behalf of the Company, (ii) after the Company's termination of this Agreement
without Cause (as defined in Section 5 (c)), (iii) after Executive's termination
of this Agreement pursuant to paragraphs (d), (e) or (f) of Section 5 or (iv)
upon the occurrence of a Material Adverse Event (as defined below), Executive
will not do any of the following, directly or indirectly, during the period
beginning with the Effective Time and ending on the third anniversary thereof
("Covenant Period") without the prior written consent of the Company Board
(which consent shall not be unreasonably withheld):
(1) engage or participate, directly or indirectly, in any
business activity competitive with the business conducted by the
Company or any of its subsidiaries as of the Effective Time or
thereafter (collectively, the "Business");
(2) become interested (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or
otherwise) in any person, firm, corporation, association or other
entity engaged in any business that is competitive with the
Business, or become interested in (as owner, stockholder, lender,
partner, co-venturer, director, officer, employee, agent,
consultant or otherwise) any portion of the business of any
person, firm, corporation, association or other entity if such
portion of such business is competitive with the Business.
Notwithstanding the foregoing, Executive may hold not more than
one percent (1%) of the outstanding securities of any class of
any publicly-traded securities of a company that is engaged in
activities competitive with the Business.
b. Except in furtherance of the Company's Business or otherwise on behalf
of the Company, Executive will not do any of the following, directly or
indirectly, during the Covenant Period without the prior written consent of the
Company Board (which consent shall not be unreasonably withheld):
(1) solicit or call on, either directly or indirectly, any
customer or supplier with whom the Company or any of its
subsidiaries shall have dealt with (x) in the two year period
preceding the Effective Time or (y) any time after the Effective
Time;
(2) influence or attempt to influence any supplier, customer or
potential customer of the Company to terminate or modify any
written or oral agreement or course of dealing with the Company
or any of its subsidiaries; or
(3) influence or attempt to influence any person either (i) to
terminate or modify his or her employment, consulting, agency,
distributorship or other arrangement with the Company or any of
its subsidiaries, or (ii) to employ or retain, or arrange to have
any other person or entity employ or retain, any person who has
been employed or retained by the Company or any of its
subsidiaries as an employee, consultant, agent or distributor of
the Company or any of its subsidiaries at any time during (x) the
one (1) year period immediately preceding the Effective Time or
(y) any time after the Effective Time.
c. Definition
The term "Material Adverse Event" shall mean
(i) a bankruptcy petition filed against the Company under
and pursuant to Chapter 7 of the United States Bankruptcy
Code;
(ii) the dissolution of the Company;
(iii) the assignment of Executive without his consent, to
responsibilities or duties of a materially lesser status or
degree of responsibility than Executive's responsibilities
or duties as of the Effective Time; or
(iv) the requirement by the Company that the Executive,
without his consent, be based anywhere other than the place
where Executive is based as of the Effective Time.
d. Executive acknowledges that (i) he has carefully read and considered the
provisions of this Section 14, and (ii) has obtained legal counsel in
determining whether to enter into this Agreement. Executive acknowledges that
the foregoing restrictions may limit his ability to earn a livelihood in a
business similar to the Business, but Executive nevertheless believes that he
has received and will receive sufficient consideration and other benefits in
connection with the Agreement to justify such restrictions, which restrictions
Executive does not believe would prevent him or her from earning a living in
businesses that are not competitive with the Business and without otherwise
violating the restrictions set forth herein.
e. The terms of the covenants contained in this Section 14 shall be
construed as separable and shall be independent and shall be interpreted and
applied consistently with the requirements of reasonableness and equity. Except
as otherwise provided in Section 14 a, these covenants shall survive the
termination of this Agreement during the Covenant Period but not thereafter.
15. Specific Enforcement; Extension of Covenant Period.
a. Executive acknowledges that the restrictions contained in Section 14
hereof are reasonable and necessary to protect the legitimate interest of the
Company. Executive also acknowledges that any breach by him or her of such
sections will cause continuing and irreparable injury to the Company for which
monetary damages would not be an adequate remedy. Executive agrees that he shall
not, in any action or proceeding to enforce Section 14 of this Agreement, assert
the claim or defense that an adequate remedy at law exists. In the event of such
breach by Executive, the Company shall have the right to enforce the provisions
of Section 14 of this Agreement by seeking injunctive or other relief in any
court and this Agreement shall not in any way limit remedies of law or in equity
otherwise available to the Company with respect to such section.
b. The Covenant Period set forth in Section 14 hereof shall not include,
and shall be deemed extended by, any time required for litigation to enforce the
relevant covenants; provided, that the Company is successful on the merits in
any such litigation. The "time required for litigation" is herein defined to
mean the period of time from service of process upon Executive through the
expiration of all appeals related to such litigation.
16. Registration Expenses of Executive.
The Company agrees to pay reasonable attorney's fees of Executive in
connection with Executive's participation in a Demand Registration, Piggyback
Registration or Tag-Along transaction on the same basis and in the same amount
made available to other selling stockholders in such registrations and
transactions.
17. Change of Control
For purposes hereof, the term "change in control" shall mean any of
the following events:
a. if any "Person" (as the term person is used for purposes of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934 ("1934 Act") shall have
"Beneficial Ownership" (as the term beneficial ownership is used for purposes of
Rule 13d-3 promulgated under the 1934 Act) of thirty three percent (33%) or more
of the combined voting power of Company's then outstanding voting securities
("Voting Securities"), at any time that the Beneficial Ownership of Voting
Securities of the Company by such Person exceeds Executive's Beneficial
Ownership of Voting Securities of the Company;
b. the approval by stockholders of the Company of (i) a merger,
reorganization or consolidation involving the Company if the stockholders of
Company immediately before such merger, reorganization or consolidation, do not
or will not own directly or indirectly immediately following such merger,
reorganization or consolidation more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from or surviving such merger, reorganization or consolidation in substantially
the same proportion as their ownership of the Voting Securities of the Company
immediately before such merger, reorganization or consolidation, (ii) a complete
liquidation or dissolution of the Company or (iii) an agreement for the sale or
other disposition of all or substantially all of the assets of the Company; or
c. the acceptance by stockholders of Company of shares in a share exchange
if the stockholders of Company immediately before such share exchange, do not or
will not own directly or indirectly immediately following such share exchange
more than fifty percent (50%) of the combined voting power of the outstanding
voting securities of the corporation resulting from or surviving such share
exchange in substantially the same proportion as the ownership of the Voting
Securities of the Company outstanding immediately before such share exchange.
d. if William E. Dickenson shall cease to serve as Chief Executive Officer
of PHB Hagler Bailly or as Executive Vice President and Chief Operating Officer
of the Company before January 1, 2000, or after January 1, 2000, as Chief
Executive Officer of the Company or as a Director of the Company other than as a
result of death or disability or termination for cause pursuant to Section 5(c);
e. if Howard W. Pifer III shall cease to serve as Chairman of the Company Board
before January 1, 2000, or as a member of the Company Board other than as a
result of death or disability or termination for cause pursuant to Section 5(c);
f. if Executive shall cease to serve as Chief Executive Officer of the
Company before January 1, 2000, or after January 1, 2000, as Chairman of the
Company Board, other than as a result of death, disability, electing to resign
or termination for cause pursuant to Section 5(c).
18. Arbitration
Except as otherwise provided in Section 15, in the event of any dispute
between the parties under or relating to this Agreement or otherwise relating to
Executive's employment by the Company, such dispute shall be submitted to and
settled by arbitration in Arlington, Virginia, in accordance with the rules and
regulations of the American Arbitration Association then in effect. The
arbitrators shall have the right and authority to determine how their award or
decision as to each issue and matter in dispute may be implemented or enforced.
Any decision or award shall be final and conclusive on the parties; judgment
upon any award or decision may be entered in any court or competent jurisdiction
in the Commonwealth of Virginia or elsewhere; and the parties hereto consent to
the application by any party in interest to any court of competent jurisdiction
for confirmation or enforcement of such award.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
HAGLER BAILLY, INC.
By:/s/ Daniel M. Rouse
-----------------------
Name: Daniel M. Rouse Title:
Vice President and Chief Financial Officer
HENRI-CLAUDE BAILLY
/s/ Henri-Claude Bailly
------------------------
Exhibit 10.29
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated June 10, 1998 between HAGLER BAILLY, INC., a
Delaware corporation ("Company"), and WILLIAM E. DICKENSON ("Executive").
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated as of the date hereof among PUTNAM, HAYES & BARTLETT, INC., a
Massachusetts corporation ("PHB"), the Company and PHB MERGER CORP., a
Massachusetts corporation and wholly-owned subsidiary of the Company ("Merger
Sub"), Merger Sub will merge with and into PHB (the "Merger"), PHB will be
renamed PHB Hagler Bailly, Inc. ("PHB Hagler Bailly") and the common stock of
PHB, including the common stock of PHB owned by the Executive, will be converted
into shares of common stock of the Company ("Common Stock");
WHEREAS, as an inducement to the Company to enter into the Merger Agreement
and as a condition precedent to the Company's obligations under the Merger
Agreement, Executive has agreed to execute and deliver this Agreement and to
terminate, effective as of the effective time of the Merger, any prior
employment agreements or arrangements with PHB;
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, from the day after the effective time of the Merger
on the terms and conditions set forth herein.
Whereas, effective as of the effective time of the Merger, Executive will
become the owner of shares of Common Stock;
Whereas, Executive agrees to be bound by the confidentiality, non-compete
and non-solicitation provisions herein; and
WHEREAS, the Board of Directors of the Company has approved the terms of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and Executive, intending to be legally bound, agree as
follows:
1. Employment, Term, Duties and Responsibilities.
a. During the Term (as hereinafter defined) of this Agreement, the Company
agrees to employ Executive and Executive agrees to serve the Company as
Executive Vice President and Chief Operating Officer through December 31, 1999.
Executive shall be responsible for all U.S. and Canadian operations of the
Company and PHB. In Executive's capacity as an executive officer of the Company,
Executive will report directly to the Chief Executive Officer of the Company. As
of January 1, 2000 Executive shall become President and Chief Executive Officer
of the Company and will perform such other duties assigned to him by the Company
Board and agreed to by Executive.
Following consummation of the Merger, Executive shall also serve as Chief
Executive Officer of PHB, and upon PHB's changed name, of PHB Hagler Bailly and
shall become a member of the Management Committee of Hagler Bailly Consulting,
Inc. ("Consulting"). Upon the full integration and merger of PHB and Consulting,
which shall occur between January 1, 1999 and April 1, 1999, Executive shall
become Chief Executive Officer of PHB Hagler Bailly, Inc. The Company will use
its best efforts to ensure that Executive is elected to the Board of Directors
of the Company to fill any vacancy that arises and Executive shall be nominated
by the Board of Directors of the Company for election to the Board not later
than the 1999 Annual Meeting of Stockholders of the Company to serve in that
class of directors whose term expires in 2002.
During the Term, Executive agrees to serve Company faithfully and to the
best of his ability; to devote his entire time, energy and skill during regular
business hours (except for illness or incapacity and except for vacation time as
provided herein) to such employment; to use his best efforts, skills and ability
to promote its interests; if elected, to serve as a director of Company and its
subsidiaries or affiliated corporations or entities; and to perform such duties
as from time to time may be assigned to him, subject to the preceding paragraph
hereof.
Notwithstanding the foregoing, Executive may engage in charitable,
academic and public and industry service activities so long as such activities
do not materially interfere with the performance of his duties and
responsibilities under this Agreement.
b. Subject to the provisions of this Agreement to the contrary, the Term
shall commence on the day after the closing date of the Merger (the "Effective
Time"), and end on the date which is the third-year anniversary thereof.
2. Compensation.
The Company agrees to pay Executive as compensation for all duties
performed by him in any capacity during the period of his employment under this
Agreement:
a. An annual base salary ("Base Salary") payable in equal bi-monthly
installments at an initial annual rate of $345,592 commencing at the Effective
Time. On January 1 of each year during the Term commencing January 1, 1999, the
annual rate of Base Salary shall be increased by no less than the greater of (i)
five percent (5%) over the annual rate of Base Salary in effect for the
preceding year, and (ii) the increase in the CPI National Index for the year.
b. An annual bonus payment ("Bonus"), in an amount, if any, determined for
the calendar year 1998, by management of PHB based on the target bonus
applicable to Executive's position at PHB and approved by the Compensation
Committee of the Company Board, and thereafter during the Term (including the
1999 calendar year) by the Compensation Committee of the Company Board.
c. The Company agrees to grant Executive options to purchase 92,000 shares
of Common Stock at the Effective Time, with an exercise price at the fair market
value on such date and a term of ten (10) years, vesting over three years in
equal amounts commencing on the first anniversary date of the Effective Time,
and subject to the terms and conditions of the Hagler Bailly Employee Incentive
and Non-Qualified Stock Option and Restricted Stock Plan or any successor plan
(the "Plan").
d. From time to time, Executive shall also be eligible to receive options
to purchase Common Stock of the Company pursuant to the terms of the Plan, and
in the amounts determined by, and subject to the terms and conditions of, the
Stock Option Committee of the Company Board.
e. During the Term, for so long as Executive is a member of the Company
Board or the board of directors of any of the Company's subsidiaries or
affiliated companies, Executive shall receive such compensation and other
benefits (including insurance coverage and indemnification) as other similarly
situated members of such board of directors receive for their service in such
capacity.
3. Benefits; Reimbursement of Expenses; Annual Physical.
Executive shall also be entitled to:
a. for the calendar year 1998, continue to participate, in all of the
benefit programs which are currently provided by PHB, including, without
limitation, all vacation, retirement, health, life and disability insurance
programs ("benefit programs"). For the calendar year 1999 and thereafter,
Executive shall be entitled to participate in all of the benefit programs which
are then provided by the Company. For purposes of Executive's participation in
the benefit programs, the Company shall treat the full period of Executive's
service with PHB as if it had been service with the Company;
b. reimbursement by the Company of all expenses reasonably incurred by him
in connection with the performance of his duties, including, without limitation,
travel and entertainment expenses reasonably related to the business or
interests of the Company, upon submission by him of written documentation of
such expenses; and
c. a fully-paid annual physical examination.
4. Disability or Death.
a. If, during the Term of this Agreement, Executive becomes disabled or
incapacitated for a period of twelve (12) consecutive months to such an extent
that he is unable to perform his duties hereunder ("Permanently Disabled"), the
Company shall have the right at any time thereafter, so long as Executive is
then still Permanently Disabled, to terminate this Agreement. If the Company
elects to terminate this Agreement by reason of Executive becoming Permanently
Disabled, the Company, for the unexpired Term of this Agreement, shall continue
to pay:
(1) to Executive, sixty percent (60%) of his Base Salary (whether through
insurance or otherwise) at the rate in effect on the date of such termination,
such payments to be made as set forth in Section 2 plus, within thirty (30) days
of such termination, a lump sum payment in the amount of the Executive's Base
Salary in effect on the date of such termination; or
(2) in the event of Executive's death after such termination for Permanent
Disability, then to the persons and in the manner set forth in subparagraph (c)
of this Section 4, an amount per annum equal to sixty percent (60%) of
Executive's Base Salary (whether through insurance or otherwise) at the rate in
effect on the date this Agreement is terminated by the Company, such payments to
be made as set forth in Section 2.
If, and so long as, the Company does not elect to terminate this Agreement
as a result of Executive's Permanent Disability, this Agreement shall continue
in full force and effect and Executive shall be entitled to all benefits
provided under this Agreement, including, without limitation, compensation as
set forth in Section 2.
b. If the Executive dies during the Term, this Agreement shall
automatically terminate, except that (i) for the unexpired portion of the Term,
the Company shall continue to pay to the persons and in the manner set forth in
subparagraph (c) of this Section 4, an amount per annum equal to sixty percent
(60%) of Executive's Base Salary in effect on the date of Executive's death,
such payments to be made as set forth in Section 2, and (ii) within thirty (30)
days of such termination, the Company shall pay a lump sum payment in the amount
of the Executive's Base Salary in effect on the date of termination.
c. Any payments to be made pursuant to subparagraph (a) or (b) of this
Section 4 to persons other than Executive in the event of the death of Executive
shall be made to Executive's designated beneficiaries or, if no such designation
has been made and Executive's spouse survives Executive, then the payments shall
be made to Executive's spouse, and if such spouse subsequently dies before all
such payments are made, the remaining payments shall be made to the estate of
Executive's spouse. If Executive is not survived by a spouse, then the payments
shall be made among Executive's issue who survive Executive, per stirpes, and if
any individual who is issue of Executive and who as of the date of death of
Executive is entitled to receive payments dies after Executive's death, the
payments which such issue would have been entitled to receive shall be made to
his or her estate. If at the date of Executive's death Executive is not survived
by any spouse, or any issue, then the payments shall be made to Executive's
estate.
5. Termination.
This Agreement shall terminate prior to the expiration of its Term as follows:
a. Automatically upon Executive's death, in which event the provisions of
Section 4 shall continue to be applicable;
b. By the Company, upon notice from the Company, in the event Company
elects to terminate Executive's employment due to Executive's Permanent
Disability pursuant to the provisions of Section 4;
c. By the Company, for "cause," which for purposes of this Agreement shall
mean:
(i) failure to comply with material rules, standards or procedures
reasonably promulgated by the Company in accordance with ordinary and
usual business standards, or dereliction of assigned responsibilities
consistent with Section 1 above, such failure or dereliction remaining
uncured by Executive for thirty (30) days after receiving written
notice from the Company of such failure or dereliction that
specifically describes the nature of such alleged failures;
(ii) substandard performance of assigned responsibilities measured in
accordance with performance standards agreed upon from time to time by
Executive and the Company;
(iii) material violation by Executive, or any other person acting upon
his specific directions, of a federal, state or local statute, rule or
regulation applicable to the Company, to its management, or to the
operation of the Company's business;
(iv) material breach of the terms of this Agreement;
(v) knowing falsification of the Company's records or documents;
(vi) gross negligence;
(vii) conviction by Executive, or any other person acting upon
Executive's specific directions, of any misdemeanor that involves
fraud or a material loss to the Company or of a felony; or
(viii) any act of dishonesty or moral turpitude.
The refusal to permanently relocate from Executive's current place of work
will not constitute a "cause" for termination of employment by the Company.
d. By Executive, upon the Company's failure to perform or observe any of
the material terms or provisions of this Agreement, and the continued failure of
the Company to cure such default within thirty (30) days after written demand
for performance has been given to the Company by Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions. Without limiting the foregoing, it is
acknowledged and agreed that Sections 1, 2, 3, and 4 of this Agreement are
material provisions of this Agreement.
e. By Executive, upon notice from Executive after Company's failure to pay
Executive amounts under Sections 2 and 3 when due and the continued failure of
the Company to make such payment within ten (10) days after written demand for
such payment is made by Executive.
f. By Executive, upon notice from Executive following a "change in control"
(as defined in Section 17).
6. Effect of Termination.
a. In the event of the termination of this Agreement by Company pursuant to
paragraph (c) of Section 5, the Company shall be under no obligation to
Executive, except to pay his accrued and unpaid Base Salary, Bonus, and paid
leave entitlements to the date of termination, and to permit exercise pursuant
to the Plan of any vested but unexercised options. Executive shall not be
entitled to receive any Base Salary or Bonus after the date of termination, or
to exercise any unvested options under the Plan.
b. In the event of the termination of this Agreement by Executive pursuant
to paragraphs (d), (e) or (f) of Section 5, or in the event of the termination
of this Agreement by the Company other than pursuant to a notice of termination
under paragraph (b) or (c) of Section 5, Executive shall receive from Company
(i) payments at an annual rate equal to his Base Salary in effect on the date of
such termination in equal bi-monthly installments until thirty-six (36) months
from the effective date of such termination; and (ii) a lump-sum payment in an
amount equal to four (4) times his Base Salary on the date of termination
payable within thirty (30) days thereof.
If the Company and Executive shall become involved in a dispute relating to
any alleged breach of this Agreement by the Company or Executive, and if
Executive prevails (by judgment, settlement or otherwise) in such dispute, the
Company shall reimburse Executive for all reasonable costs (including reasonable
fees and disbursements of counsel) incurred by him in connection with such
dispute upon presentation to the Company of evidence of such costs.
7. Termination of Prior Agreements.
This Agreement expressly supersedes all agreements and understandings
between the parties regarding the subject matter hereof and any such agreement
is terminated as of the closing date of the Merger.
8. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective legal representatives and to any successor of
the Company, which successor shall be deemed substituted for the Company under
the terms of this Agreement. As used in this Agreement, the term "successor"
shall include any person, firm, corporation or other business entity which at
any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of the Company.
9. Waiver of Breach.
The waiver by the Company of a breach of any provision of this Agreement by
Executive shall not operate or be construed as a waiver of any subsequent
breach.
10. Notices.
Any notice required or permitted to be given hereunder shall be sufficient,
upon acknowledgement of receipt, if in writing and if sent by facsimile message
or by recognized courier to Executive at each of his residences or to the
Company at its principal place of business.
11. Entire Agreement.
This document contains the entire agreement of the parties and may not be
changed except in a writing signed by both parties.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia as applied to contracts executed and
performed wholly within the Commonwealth of Virginia.
13. Confidentiality.
a. From and after the Effective Time, Executive shall not, without the
prior written consent of the Company Board, for any reason, either directly or
indirectly, divulge to any third-party or use for his or her own benefit, or for
any purpose other than the exclusive benefit of the Company, any confidential,
proprietary, business and technical information or trade secrets (the
"Proprietary Information") of the Company or any of its subsidiaries whether
learned prior to or after the date hereof.
Proprietary Information shall include, but shall not be limited to, any
information relating to computer codes or instructions (including source and
object code listings, logic algorithms, subroutines, modules or other subparts
of computer programs and related documentation, including program notation);
computer processing systems and techniques; concepts; layouts; flowcharts;
specifications; know-how; any associated programmer, user or other manuals or
other like textual materials; all computer inputs and outputs (regardless of the
media on which it is stored or located); hardware and software configurations;
designs; interfaces; research; processes; inventions; products; methods;
marketing, sales and distribution data, plans and efforts; relationships with
actual and prospective customers and suppliers; and any other materials prepared
by Executive in the course of Executive's employment with the Company or
prepared by any other employee or contractor of the Company or any of its
subsidiaries for their customers, and any other materials that have not been
made available to the general public.
Furthermore, nothing contained herein shall restrict Executive from
divulging or using for his own benefit or for any other purpose any Proprietary
Information that is readily available to the general public so long as such
information did not become available to the general public as a direct or
indirect result of Executive's breach of this Agreement.
b. All right, title and interest in and to Proprietary Information shall be
and remain the sole and exclusive property of the Company. Executive will not
remove from the Company's offices or premises any documents, records, notebooks,
files, correspondence, reports, memoranda or similar materials of or containing
Proprietary Information, or other materials or property of any kind belonging to
the Company unless necessary or appropriate in connection with the ongoing
business of the Company or its subsidiaries and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose.
Executive shall not make, retain, remove and/or distribute any copies of
any of the Proprietary Information for any reason whatsoever except as may be
necessary in the performance of Executive's obligations as an officer or
employee of the Company or any of its subsidiaries. Executive shall not divulge
to any third person the nature of and/or contents of any of the Proprietary
Information to which Executive may have access or with which for any reason
Executive became familiar in the course of Executive's employment hereunder,
except as disclosure shall be necessary for the purposes of conducting the
ongoing business of the Company. Upon Executive's termination as an employee,
officer or director of the Company or any of its subsidiaries, Executive shall
return to the Company all originals and copies of the Proprietary Information
then in Executive's possession.
c. Nothing contained herein shall restrict Executive's ability to make any
disclosures as may be required by law; provided, however, that Executive shall
(i) deliver to the Company reasonably prompt prior written notice of the nature
and justification for such disclosures; and (ii) cooperate reasonably with the
Company prior to any such disclosure in any actions which the Company shall take
in order to obtain a protective order or similar relief with respect to the
Proprietary Information sought to be disclosed.
14. Non-Compete and Non-Solicitation Covenants.
a. Except (i) in furtherance of the Company's business or otherwise on
behalf of the Company, (ii) after the Company's termination of this Agreement
without Cause (as defined in Section 5 (c)), (iii) after Executive's termination
of this Agreement pursuant to paragraphs (d), (e) or (f) of Section 5 or (iv)
upon the occurrence of a Material Adverse Event (as defined below), Executive
will not do any of the following, directly or indirectly, during the period
beginning with the Effective Time and ending on the third anniversary thereof
("Covenant Period") without the prior written consent of the Company Board
(which consent shall not be unreasonably withheld):
(1) engage or participate, directly or indirectly, in any business activity
competitive with the business conducted by the Company or any of its
subsidiaries as of the Effective Time or thereafter (collectively, the
"Business");
(2) become interested (as owner, stockholder, lender, partner, co-venturer,
director, officer, employee, agent, consultant or otherwise) in any person,
firm, corporation, association or other entity engaged in any business that
is competitive with the Business, or become interested in (as owner,
stockholder, lender, partner, co-venturer, director, officer, employee,
agent, consultant or otherwise) any portion of the business of any person,
firm, corporation, association or other entity if such portion of such
business is competitive with the Business. Notwithstanding the foregoing,
Executive may hold not more than one percent (1%) of the outstanding
securities of any class of any publicly-traded securities of a company that
is engaged in activities competitive with the Business.
b. Except in furtherance of the Company's Business or otherwise on behalf
of the Company, Executive will not do any of the following, directly or
indirectly, during the Covenant Period without the prior written consent of the
Company Board (which consent shall not be unreasonably withheld):
(1) solicit or call on, either directly or indirectly, any customer or
supplier with whom the Company or any of its subsidiaries shall have
dealt with (x) in the two year period preceding the Effective Time or
(y) any time after the Effective Time;
(2) influence or attempt to influence any supplier, customer or
potential customer of the Company to terminate or modify any written
or oral agreement or course of dealing with the Company or any of its
subsidiaries; or
(3) influence or attempt to influence any person either (i) to
terminate or modify his or her employment, consulting, agency,
distributorship or other arrangement with the Company or any of its
subsidiaries, or (ii) to employ or retain, or arrange to have any
other person or entity employ or retain, any person who has been
employed or retained by the Company or any of its subsidiaries as an
employee, consultant, agent or distributor of the Company or any of
its subsidiaries at any time during (x) the one (1) year period
immediately preceding the Effective Time or (y) any time after the
Effective Time.
c. Definition
The term "Material Adverse Event" shall mean
(i) a bankruptcy petition filed against the Company under and pursuant
to Chapter 7 of the United States Bankruptcy Code;
(ii) the dissolution of the Company;
(iii) the assignment of Executive without his consent, to
responsibilities or duties of a materially lesser status or degree of
responsibility than Executive's responsibilities or duties as of the
Effective Time;
(iv) the requirement by the Company that the Executive, without his
consent, be based anywhere other than the place where Executive is
based as of the Effective Time.
d. Executive acknowledges that (i) he has carefully read and considered the
provisions of this Section 14, and (ii) has obtained legal counsel in
determining whether to enter into this Agreement. Executive acknowledges that
the foregoing restrictions may limit his ability to earn a livelihood in a
business similar to the Business, but Executive nevertheless believes that he
has received and will receive sufficient consideration and other benefits in
connection with the Agreement to justify such restrictions, which restrictions
Executive does not believe would prevent him or her from earning a living in
businesses that are not competitive with the Business and without otherwise
violating the restrictions set forth herein.
e. The terms of the covenants contained in this Section 14 shall be
construed as separable and shall be independent and shall be interpreted and
applied consistently with the requirements of reasonableness and equity. Except
as otherwise provided in Section 14 a, these covenants shall survive the
termination of this Agreement during the Covenant Period but not thereafter.
15. Specific Enforcement; Extension of Covenant Period.
a. Executive acknowledges that the restrictions contained in Section 14
hereof are reasonable and necessary to protect the legitimate interest of the
Company. Executive also acknowledges that any breach by him or her of such
sections will cause continuing and irreparable injury to the Company for which
monetary damages would not be an adequate remedy. Executive agrees that he shall
not, in any action or proceeding Section 14 of this Agreement, assert the claim
or defense that an adequate remedy at law exists. In the event of such breach by
Executive, the Company shall have the right to enforce the provisions of Section
14 of this Agreement by seeking injunctive or other relief in any court and this
Agreement shall not in any way limit remedies of law or in equity otherwise
available to the Company with respect to such section.
b. The Covenant Period set forth in Section 14 hereof shall not include,
and shall be deemed extended by, any time required for litigation to enforce the
relevant covenants; provided, that the Company is successful on the merits in
any such litigation. The "time required for litigation" is herein defined to
mean the period of time from service of process upon Executive through the
expiration of all appeals related to such litigation.
16. Registration Expenses of Executive.
The Company agrees to pay reasonable attorney's fees of Executive in
connection with Executive's participation in a Demand Registration, Piggyback
Registration or Tag-Along transaction on the same basis and in the same amount
made available to other selling stockholders in such registrations and
transactions.
17. Change of Control
For purposes hereof, the term "change in control" shall mean any of the
following events:
a. if any "Person" (as the term person is used for purposes of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934 ("1934 Act") shall have
"Beneficial Ownership" (as the term beneficial ownership is used for purposes of
Rule 13d-3 promulgated under the 1934 Act) of thirty three percent (33%) or more
of the combined voting power of Company's then outstanding voting securities
("Voting Securities"), at any time that the Beneficial Ownership of Voting
Securities of the Company by such Person exceeds Executive's Beneficial
Ownership of Voting Securities of the Company;
b. the approval by stockholders of the Company of (i) a merger,
reorganization or consolidation involving the Company if the stockholders of
Company immediately before such merger, reorganization or consolidation, do not
or will not own directly or indirectly immediately following such merger,
reorganization or consolidation more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from or surviving such merger, reorganization or consolidation in substantially
the same proportion as their ownership of the Voting Securities of the Company
immediately before such merger, reorganization or consolidation (ii) a complete
liquidation or dissolution of the Company or (iii) an agreement for the sale or
other disposition of all or substantially all of the assets of the Company; or
c. the acceptance by stockholders of Company of shares in a share exchange
if the stockholders of Company immediately before such share exchange, do not or
will not own directly or indirectly immediately following such share exchange
more than fifty percent (50%) of the combined voting power of the outstanding
voting securities of the corporation resulting from or surviving such share
exchange in substantially the same proportion as the ownership of the Voting
Securities of the Company outstanding immediately before such share exchange.
d. if Henri-Claude Bailly shall cease to serve as Chief Executive Officer
of the Company before January 1, 2000, or after January 1, 2000, as Chairman of
the Company Board other than as a result of death or disability or termination
for cause pursuant to Section 5(c);
e. if Howard W. Pifer III shall cease to serve as Chairman of the Company
Board before January 1, 2000, or as a member of the Company Board other than a
result of death or disability or termination for cause pursuant to Section 5(c);
f. if Executive shall cease to serve as Chief Executive Officer of PHB
Hagler Bailly or as Executive Vice President and Chief Operating Officer of the
Company before January 1, 2000, or after January 1, 2000, as Chief Executive
Officer of the Company or as a Director of the Company, other than as a result
of death, disability, electing to resign or termination for cause pursuant to
Section 5(c).
18. Arbitration
Except as otherwise provided in Section 15, in the event of any dispute
between the parties under or relating to this Agreement or otherwise relating to
Executive's employment by the Company, such dispute shall be submitted to and
settled by arbitration in Arlington, Virginia, in accordance with the rules and
regulations of the American Arbitration Association then in effect. The
arbitrators shall have the right and authority to determine how their award or
decision as to each issue and matter in dispute may be implemented or enforced.
Any decision or award shall be final and conclusive on the parties; judgment
upon any award or decision may be entered in any court or competent jurisdiction
in the Commonwealth of Virginia or elsewhere; and the parties hereto consent to
the application by any party in interest to any court of competent jurisdiction
for confirmation or enforcement of such award.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
HAGLER BAILLY, INC.
By: /s/ Henri-Claude Bailly
-----------------------
Name: Henri-Claude Bailly
Title: President, Chief Executive Officer and
Chairman
WILLIAM E. DICKENSON
/s/ William E. Dickenson
------------------------
Exhibit 10.30
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT June 10, 1998 between HAGLER BAILLY, INC., a Delaware
corporation ("Company"), and HOWARD W. PIFER III
("Executive").
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated as of the date hereof among PUTNAM, HAYES & BARTLETT, INC., a
Massachusetts corporation ("PHB"), the Company and PHB MERGER CORP., a
Massachusetts corporation and wholly-owned subsidiary of the Company ("Merger
Sub"), Merger Sub will merge with and into PHB (the "Merger"), PHB will be
renamed PHB Hagler Bailly, Inc. ("PHB Hagler Bailly") and the common stock of
PHB, including the common stock of PHB owned by the Executive, will be converted
into shares of common stock of the Company ("Common Stock");
WHEREAS, as an inducement to the Company to enter into the Merger Agreement
and as a condition precedent to the Company's obligations under the Merger
Agreement, Executive has agreed to execute and deliver this Agreement and to
terminate, effective as of the effective time of the Merger, any prior
employment agreements or arrangements with PHB;
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, from the day after the effective time of the Merger
on the terms and conditions set forth herein.
Whereas, effective as of the effective time of the Merger, Executive will
become the owner of shares of Common Stock;
Whereas, Executive agrees to be bound by the confidentiality, non-compete
and non-solicitation provisions herein; and
WHEREAS, the Board of Directors of the Company has approved the terms of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Company and Executive, intending to be legally bound, agree as
follows:
1. Employment, Term, Duties and Responsibilities.
a. During the Term (as hereinafter defined) of this Agreement, the Company
agrees to employ Executive and Executive agrees to serve Company as Chairman of
the Board of Directors of the Company (the "Company Board") until December 31,
1999, and as a member of the Company Board for a term expiring in 2001. During
the Term, Executive will also hold the position of Chairman of PHB and, upon the
change of name of PHB, of PHB Hagler Bailly, Inc., and as a full time executive
officer of the Company, will perform such other duties assigned to him by the
Chief Executive Officer and the Company Board and agreed to by Executive. In the
event that Executive shall elect to resign from the Company Board or the Board
of Directors of PHB or PHB Hagler Bailly, Executive shall continue as a
full-time executive officer of the Company, performing such duties as the Chief
Executive Officer, the Company Board and Executive shall mutually agree. In
Executive's capacity as an executive officer of the Company, Executive will
report directly to the Chief Executive Officer of the Company.
During the Term, Executive agrees to serve Company faithfully and to the
best of his ability; to devote his entire time, energy and skill during regular
business hours (except for illness or incapacity and except for vacation time as
provided herein) to such employment; to use his best efforts, skills and ability
to promote its interests; and to perform such duties as from time to time may be
assigned to him, subject to the preceding paragraph hereof.
Notwithstanding the foregoing, Executive may engage in charitable, academic
and public and industry service activities so long as such activities do not
materially interfere with the performance of his duties and responsibilities
under this Agreement.
b. Subject to the provisions of this Agreement to the contrary, the Term
shall commence on the day after the closing date of the Merger (the "Effective
Time"), and end on the date which is the third-year anniversary thereof.
2. Compensation.
The Company agrees to pay Executive as compensation for all duties
performed by him in any capacity during the period of his employment under this
Agreement:
a. An annual base salary ("Base Salary") payable in equal bi-monthly
installments at an initial annual rate of $345,592 commencing at the Effective
Time. On January 1 of each year during the Term commencing January 1, 1999, the
annual rate of Base Salary shall be increased by no less than the greater of (i)
five percent (5%) over the annual rate of Base Salary in effect for the
preceding year, and (ii) the increase in the CPI National Index for the year.
b. An annual bonus payment ("Bonus"), in an amount, if any, determined, for
the calendar year 1998, by management of PHB based on the target bonus
applicable to Executive's position at PHB and approved by the Compensation
Committee of the Company Board, and thereafter during the Term (including the
1999 calendar year) by the Compensation Committee of the Company Board.
c. The Company agrees to grant Executive options to purchase 92,000 shares
of Common Stock at the Effective Time, with an exercise price at the fair market
value on such date and a term of ten (10) years, vesting over three (3) years in
equal amounts commencing on the first anniversary date of the Effective Time,
and subject to the terms and conditions of the Hagler Bailly Employee Incentive
and Non-Qualified Stock Option and Restricted Stock Plan or any successor plan
(the "Plan").
d. From time to time, Executive shall also be eligible to receive options
to purchase Common Stock of the Company pursuant to the terms of the Plan, and
in the amounts determined by, and subject to the terms and conditions of, the
Stock Option Committee of the Company Board.
e. During the Term, for so long as Executive is a member of the Company
Board or the board of directors of any of the Company's subsidiaries or
affiliated companies, Executive shall receive such compensation and other
benefits (including insurance coverage and indemnification) as other similarly
situated members of such board of directors receive for their service in such
capacity.
3. Benefits; Reimbursement of Expenses; Annual Physical.
Executive shall also be entitled to:
a. for the calendar year 1998, continue to participate, in all of the
benefit programs which are currently provided by PHB, including, without
limitation, all vacation, retirement, health, life and disability insurance
programs ("benefit programs"). For the calendar year 1999 and thereafter,
Executive shall be entitled to participate in all of the benefit programs which
are then provided by the Company. For purposes of Executive's participation in
the benefit programs, the Company shall treat the full period of Executive's
service with PHB as if it had been service with the Company;
b. reimbursement by the Company of all expenses reasonably incurred by him
in connection with the performance of his duties, including, without limitation,
travel and entertainment expenses reasonably related to the business or
interests of the Company, upon submission by him of written documentation of
such expenses; and
c. a fully-paid annual physical examination.
4. Disability or Death.
a. If, during the Term of this Agreement, Executive becomes disabled or
incapacitated for a period of twelve (12) consecutive months to such an extent
that he is unable to perform his duties hereunder ("Permanently Disabled"), the
Company shall have the right at any time thereafter, so long as Executive is
then still Permanently Disabled, to terminate this Agreement. If the Company
elects to terminate this Agreement by reason of Executive becoming Permanently
Disabled, the Company, for the unexpired Term of this Agreement, shall continue
to pay:
(1) to Executive, sixty percent (60%) of his Base Salary (whether through
insurance or otherwise) at the rate in effect on the date of such termination,
such payments to be made as set forth in Section 2 plus, within thirty (30) days
of such termination, a lump sum payment in the amount of the Executive's Base
Salary in effect on the date of such termination; or
(2) in the event of Executive's death after such termination for Permanent
Disability, then to the persons and in the manner set forth in subparagraph (c)
of this Section 4, an amount per annum equal to sixty percent (60%) of
Executive's Base Salary (whether through insurance or otherwise) at the rate in
effect on the date this Agreement is terminated by the Company, such payments to
be made as set forth in Section 2.
If, and so long as, the Company does not elect to terminate this Agreement
as a result of Executive's Permanent Disability, this Agreement shall continue
in full force and effect and Executive shall be entitled to all benefits
provided under this Agreement, including, without limitation, compensation as
set forth in Section 2.
b. If the Executive dies during the Term, this Agreement shall
automatically terminate, except that (i) for the unexpired portion of the Term,
the Company shall continue to pay to the persons and in the manner set forth in
subparagraph (c) of this Section 4, an amount per annum equal to sixty percent
(60%) of Executive's Base Salary in effect on the date of Executive's death,
such payments to be made as set forth in Section 2, and (ii) within thirty (30)
days of such termination, the Company shall pay such persons a lump sum payment
in the amount of the Executive's Base Salary in effect on the date of
termination.
c. Any payments to be made pursuant to subparagraph (a) or (b) of this
Section 4 to persons other than Executive in the event of the death of Executive
shall be made to Executive's designated beneficiaries or, if no such designation
has been made and Executive's spouse survives Executive, then the payments shall
be made to Executive's spouse, and if such spouse subsequently dies before all
such payments are made, the remaining payments shall be made to the estate of
Executive's spouse. If Executive is not survived by a spouse, then the payments
shall be made among Executive's issue who survive Executive, per stirpes, and if
any individual who is issue of Executive and who as of the date of death of
Executive is entitled to receive payments dies after Executive's death, the
payments which such issue would have been entitled to receive shall be made to
his or her estate. If at the date of Executive's death Executive is not survived
by any spouse, or any issue, then the payments shall be made to Executive's
estate.
5. Termination.
This Agreement shall terminate prior to the expiration of its Term as follows:
a. Automatically upon Executive's death, in which event the provisions of
Section 4 shall continue to be applicable;
b. By the Company, upon notice from the Company, in the event Company
elects to terminate Executive's employment due to Executive's Permanent
Disability pursuant to the provisions of Section 4;
c. By the Company, for "cause," which for purposes of this Agreement shall
mean:
(i) failure to comply with material rules, standards or procedures
reasonably promulgated by the Company in accordance with ordinary and
usual business standards, or dereliction of assigned responsibilities
consistent with Section 1 above, such failure or dereliction remaining
uncured by Executive for thirty (30) days after receiving written
notice from the Company of such failure or dereliction that
specifically describes the nature of such alleged failures;
(ii) substandard performance of assigned responsibilities measured in
accordance with performance standards agreed upon from time to time by
Executive and the Company;
(iii) material violation by Executive, or any other person acting upon
his specific directions, of a federal, state or local statute, rule or
regulation applicable to the Company, to its management, or to the
operation of the Company's business;
(iv) material breach of the terms of this Agreement;
(v) knowing falsification of the Company's records or documents;
(vi) gross negligence;
(vii) conviction by Executive, or any other person acting upon
Executive's specific directions, of any misdemeanor that involves
fraud or a material loss to the Company or of a felony; or
(viii) any act of dishonesty or moral turpitude.
The refusal to permanently relocate from Executive's current place of work
will not constitute a "cause" for termination of employment by the Company.
d. By Executive, upon the Company's failure to perform or observe any of
the material terms or provisions of this Agreement, and the continued failure of
the Company to cure such default within thirty (30) days after written demand
for performance has been given to the Company by Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions. Without limiting the foregoing, it is
acknowledged and agreed that Sections 1, 2, 3, and 4 of this Agreement are
material provisions of this Agreement.
e. By Executive, upon notice from Executive after Company's failure to pay
Executive amounts under Sections 2 and 3 when due and the continued failure of
the Company to make such payment within ten (10) days after written demand for
such payment is made by Executive.
f. By Executive, upon notice from Executive following a "change in control"
(as defined in Section 17).
6. Effect of Termination.
a. In the event of the termination of this Agreement by Company pursuant to
paragraph (c) of Section 5, the Company shall be under no obligation to
Executive, except to pay his accrued and unpaid Base Salary, Bonus, and paid
leave entitlements to the date of termination, and to permit exercise pursuant
to the Plan of any vested but unexercised options. Executive shall not be
entitled to receive any Base Salary or Bonus after the date of termination, or
to exercise any unvested options under the Plan.
b. In the event of the termination of this Agreement by Executive pursuant
to paragraphs (d), (e) or (f) of Section 5, or in the event of the termination
of this Agreement by the Company other than pursuant to a notice of termination
under paragraph (b) or (c) of Section 5, Executive shall receive from Company
(i) payments at an annual rate equal to his Base Salary in effect on the date of
such termination in equal bimonthly installments until thirty-six (36) months
from the effective date of such termination; and (ii) a lump-sum payment in an
amount equal to four (4) times his Base Salary on the date of termination
payable within thirty (30) days thereof.
If the Company and Executive shall become involved in a dispute relating to
any alleged breach of this Agreement by the Company or Executive, and if
Executive prevails (by judgment, settlement or otherwise) in such dispute, the
Company shall reimburse Executive for all reasonable costs (including reasonable
fees and disbursements of counsel) incurred by him in connection with such
dispute upon presentation to the Company of evidence of such costs.
7. Termination of Prior Agreements.
This Agreement expressly supersedes all agreements and understandings
between the parties regarding the subject matter hereof and any such agreement
is terminated as of the closing date of the Merger.
8. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective legal representatives and to any successor of
the Company, which successor shall be deemed substituted for the Company under
the terms of this Agreement. As used in this Agreement, the term "successor"
shall include any person, firm, corporation or other business entity which at
any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of the Company.
9. Waiver of Breach.
The waiver by the Company of a breach of any provision of this Agreement by
Executive shall not operate or be construed as a waiver of any subsequent
breach.
10. Notices.
Any notice required or permitted to be given hereunder shall be sufficient,
upon acknowledgement of receipt, if in writing and if sent by facsimile message
or by recognized courier to Executive at each of his residences or to the
Company at its principal place of business.
11. Entire Agreement.
This document contains the entire agreement of the parties and may not
be changed except in a writing signed by both parties.
12. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia as applied to contracts executed and
performed wholly within the Commonwealth of Virginia.
13. Confidentiality.
a. From and after the Effective Time, Executive shall not, without the
prior written consent of the Chief Executive Officer of the Company, for any
reason, either directly or indirectly, divulge to any third-party or use for his
or her own benefit, or for any purpose other than the exclusive benefit of the
Company, any confidential, proprietary, business and technical information or
trade secrets (the "Proprietary Information") of the Company or any of its
subsidiaries whether learned prior to or after the date hereof.
Proprietary Information shall include, but shall not be limited to, any
information relating to computer codes or instructions (including source and
object code listings, logic algorithms, subroutines, modules or other subparts
of computer programs and related documentation, including program notation);
computer processing systems and techniques; concepts; layouts; flowcharts;
specifications; know-how; any associated programmer, user or other manuals or
other like textual materials; all computer inputs and outputs (regardless of the
media on which it is stored or located); hardware and software configurations;
designs; interfaces; research; processes; inventions; products; methods;
marketing, sales and distribution data, plans and efforts; relationships with
actual and prospective customers and suppliers; and any other materials prepared
by Executive in the course of Executive's employment with the Company or
prepared by any other employee or contractor of the Company or any of its
subsidiaries for their customers, and any other materials that have not been
made available to the general public.
Furthermore, nothing contained herein shall restrict Executive from
divulging or using for his own benefit or for any other purpose any Proprietary
Information that is readily available to the general public so long as such
information did not become available to the general public as a direct or
indirect result of Executive's breach of this Agreement.
b. All right, title and interest in and to Proprietary Information shall be
and remain the sole and exclusive property of the Company. Executive will not
remove from the Company's offices or premises any documents, records, notebooks,
files, correspondence, reports, memoranda or similar materials of or containing
Proprietary Information, or other materials or property of any kind belonging to
the Company unless necessary or appropriate in connection with the ongoing
business of the Company or its subsidiaries and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose.
Executive shall not make, retain, remove and/or distribute any copies of
any of the Proprietary Information for any reason whatsoever except as may be
necessary in the performance of Executive's obligations as an officer or
employee of the Company or any of its subsidiaries. Executive shall not divulge
to any third person the nature of and/or contents of any of the Proprietary
Information to which Executive may have access or with which for any reason
Executive became familiar in the course of Executive's employment hereunder,
except as disclosure shall be necessary for the purposes of conducting the
ongoing business of the Company. Upon Executive's termination as an employee,
officer or director of the Company or any of its subsidiaries, Executive shall
return to the Company all originals and copies of the Proprietary Information
then in Executive's possession.
c. Nothing contained herein shall restrict Executive's ability to make any
disclosures as may be required by law; provided, however, that Executive shall
(i) deliver to the Company reasonably prompt prior written notice of the nature
and justification for such disclosures; and (ii) cooperate reasonably with the
Company prior to any such disclosure in any actions which the Company shall take
in order to obtain a protective order or similar relief with respect to the
Proprietary Information sought to be disclosed.
14. Non-Compete and Non-Solicitation Covenants.
a. Except (i) in furtherance of the Company's business or otherwise on
behalf of the Company, (ii) after the Company's termination of this Agreement
without Cause (as defined in Section 5 (c), (iii) after Executive's termination
of this Agreement pursuant to paragraphs (d), (e) or (f) of Section 5 or (iv)
upon the occurrence of a Material Adverse Event (as defined below), Executive
will not do any of the following, directly or indirectly, during the period
beginning with the Effective Time and ending on the third anniversary thereof
("Covenant Period") without the prior written consent of the Chief Executive
Officer of the Company (which consent shall not be unreasonably withheld):
(1) engage or participate, directly or indirectly, in any business activity
competitive with the business conducted by the Company or any of its
subsidiaries as of the Effective Time or thereafter (collectively, the
"Business");
(2) become interested (as owner, stockholder, lender, partner, co-venturer,
director, officer, employee, agent, consultant or otherwise) in any person,
firm, corporation, association or other entity engaged in any business that
is competitive with the Business, or become interested in (as owner,
stockholder, lender, partner, co-venturer, director, officer, employee,
agent, consultant or otherwise) any portion of the business of any person,
firm, corporation, association or other entity if such portion of such
business is competitive with the Business. Notwithstanding the foregoing,
Executive may hold not more than one percent (1%) of the outstanding
securities of any class of any publicly-traded securities of a company that
is engaged in activities competitive with the Business.
b. Except in furtherance of the Company's Business or otherwise on behalf
of the Company, Executive will not do any of the following, directly or
indirectly, during the Covenant Period without the prior written consent of the
Chief Executive Officer of the Company (which consent shall not be unreasonably
withheld):
(1) solicit or call on, either directly or indirectly, any customer or supplier
with whom the Company or any of its subsidiaries shall have dealt with (x)
in the two year period preceding the Effective Time or (y) any time after
the Effective Time;
(2) influence or attempt to influence any supplier, customer or potential
customer of the Company to terminate or modify any written or oral
agreement or course of dealing with the Company or any of its subsidiaries;
or
(3) influence or attempt to influence any person either (i) to terminate or
modify his or her employment, consulting, agency, distributorship or other
arrangement with the Company or any of its subsidiaries, or (ii) to employ
or retain, or arrange to have any other person or entity employ or retain,
any person who has been employed or retained by the Company or any of its
subsidiaries as an employee, consultant, agent or distributor of the
Company or any of its subsidiaries at any time during (x) the one (1) year
period immediately preceding the Effective Time or (y) any time after the
Effective Time.
c. Definition
The term "Material Adverse Event" shall mean
(i) a bankruptcy petition filed against the Company under and pursuant to
Chapter 7 of the United States Bankruptcy Code;
(ii) the dissolution of the Company;
(iii)the assignment of Executive without his consent, to responsibilities
or duties of a materially lesser status or degree of responsibility than
Executive's responsibilities or duties as of the Effective Time; or
(iv) the requirement by the Company that the Executive, without his
consent, be based anywhere other than in the place where Executive is
based as of the Effective Time.
d. Executive acknowledges that (i) he has carefully read and considered the
provisions of this Section 14, and (ii) has obtained legal counsel in
determining whether to enter into this Agreement. Executive acknowledges that
the foregoing restrictions may limit his ability to earn a livelihood in a
business similar to the Business, but Executive nevertheless believes that he
has received and will receive sufficient consideration and other benefits in
connection with the Agreement to justify such restrictions, which restrictions
Executive does not believe would prevent him or her from earning a living in
businesses that are not competitive with the Business and without otherwise
violating the restrictions set forth herein.
e. The terms of the covenants contained in this Section 14 shall be
construed as separable and shall be independent and shall be interpreted and
applied consistently with the requirements of reasonableness and equity. Except
as otherwise provided in Section 14 a, these covenants shall survive the
termination of this Agreement during the Covenant Period but not thereafter.
15. Specific Enforcement; Extension of Covenant Period.
a. Executive acknowledges that the restrictions contained in Section 14
hereof are reasonable and necessary to protect the legitimate interest of the
Company. Executive also acknowledges that any breach by him or her of such
sections will cause continuing and irreparable injury to the Company for which
monetary damages would not be an adequate remedy. Executive agrees that he shall
not, in any action or proceeding to enforce Section 14 of this Agreement, assert
the claim or defense that an adequate remedy at law exists. In the event of such
breach by Executive, the Company shall have the right to enforce the provisions
of Section 14 of this Agreement by seeking injunctive or other relief in any
court and this Agreement shall not in any way limit remedies of law or in equity
otherwise available to the Company with respect to such section.
b. The Covenant Period set forth in Section 14 hereof shall not include,
and shall be deemed extended by, any time required for litigation to enforce the
relevant covenants; provided, that the Company is successful on the merits in
any such litigation. The "time required for litigation" is herein defined to
mean the period of time from service of process upon Executive through the
expiration of all appeals related to such litigation.
16. Registration Expenses of Executive.
The Company agrees to pay reasonable attorney's fees of Executive in
connection with Executive's participation in a Demand Registration, Piggyback
Registration or Tag-Along transaction on the same basis and in the same amount
made available to other selling stockholders in such registrations and
transactions.
17. Change of Control
For purposes hereof, the term "change in control" shall mean any of the
following events:
a. if any "Person" (as the term person is used for purposes of Sections
13(d) or 14(d) of the Securities Exchange Act of 1934 ("1934 Act") shall have
"Beneficial Ownership" (as the term beneficial ownership is used for purposes of
Rule 13d-3 promulgated under the 1934 Act) of thirty three percent (33%) or more
of the combined voting power of Company's then outstanding voting securities
("Voting Securities"), at any time that the Beneficial Ownership of Voting
Securities of the Company by such Person exceeds Executive's Beneficial
Ownership of Voting Securities of the Company;
b. the approval by stockholders of the Company of (i) a merger,
reorganization or consolidation involving the Company if the stockholders of
Company immediately before such merger, reorganization or consolidation, do not
or will not own directly or indirectly immediately following such merger,
reorganization or consolidation more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from or surviving such merger, reorganization or consolidation in substantially
the same proportion as their ownership of the Voting Securities of the Company
immediately before such merger, reorganization or consolidation; (ii) a complete
liquidation or dissolution of the Company; or (iii) an agreement for the sale or
other disposition of all or substantially all of the assets of the Company; or
c. the acceptance by stockholders of Company of shares in a share exchange
if the stockholders of Company immediately before such share exchange, do not or
will not own directly or indirectly immediately following such share exchange
more than fifty percent (50%) of the combined voting power of the outstanding
voting securities of the corporation resulting from or surviving such share
exchange in substantially the same proportion as the ownership of the Voting
Securities of the Company outstanding immediately before such share exchange.
d. if Henri-Claude Bailly shall cease to serve as Chief Executive Officer
of the Company before January 1, 2000, or after January 1, 2000, as Chairman of
the Company Board, other than as a result of death or disability or termination
for cause pursuant to Section 5(c);
e. if William E. Dickenson shall cease to serve as Chief Executive Officer
of PHB Hagler Bailly or as Executive Vice President and Chief Operating Officer
of the Company before January 1, 2000, or after January 1, 2000, as Chief
Executive Officer of the Company or as a Director of the Company, other than as
a result of death or disability or termination for cause pursuant to Section
5(c);
f. if Executive shall cease to serve as Chairman of the Company Board
before January 1, 2000, or as a member of the Company Board, other than a result
of death, disability, electing to resign or termination for cause pursuant to
Section 5(c).
18. Arbitration
Except as otherwise provided in Section 15, in the event of any dispute
between the parties under or relating to this Agreement or otherwise relating to
Executive's employment by the Company, such dispute shall be submitted to and
settled by arbitration in Arlington, Virginia, in accordance with the rules and
regulations of the American Arbitration Association then in effect. The
arbitrators shall have the right and authority to determine how their award or
decision as to each issue and matter in dispute may be implemented or enforced.
Any decision or award shall be final and conclusive on the parties; judgment
upon any award or decision may be entered in any court or competent jurisdiction
in the Commonwealth of Virginia or elsewhere; and the parties hereto consent to
the application by any party in interest to any court of competent jurisdiction
for confirmation or enforcement of such award.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
HAGLER BAILLY, INC.
By:/s/ Henri-Claude Bailly
-----------------------
Name: Henri-Claude Bailly
Title: President, Chief Executive Officer
and Chairman
HOWARD W. PIFER III
/s/ Howard W. Pifer III
-----------------------
Exhibit 10.30
HAGLER BAILLY, INC.
EMPLOYEE INCENTIVE AND NON-QUALIFIED STOCK
OPTION AND RESTRICTED STOCK PLAN
Originally Adopted May 17, 1995
Amended and Restated, Effective as of December 31, 1996
Amended March 11, 1997
Amended July 22, 1998
<PAGE>
TABLE OF CONTENTS
HAGLER BAILLY, INC.
EMPLOYEE INCENTIVE AND NON-QUALIFIED STOCK
OPTION AND RESTRICTED STOCK PLAN
Section 1. Purposes. .........................................................1
Section 2. Definitions. ......................................................1
Section 3. Participation......................................................4
Section 4. Administration. ...................................................5
Section 5. Eligibility. ......................................................6
Section 6. Stock Subject to the Plan. ........................................6
Section 7. Terms and Conditions of Options. ..................................6
Section 8. Restricted Stock. ................................................10
Section 9. Determination of Fair Market Value Per Share of Common Stock......10
Section 10. Adjustments......................................................11
Section 11. Rights as a Stockholder..........................................11
Section 12. Time of Awarding Options. .......................................12
Section 13. Modification, Extension and Renewal of Option. ..................12
Section 14. Purchase for Investment and Other Restrictions. .................12
Section 15. Transferability. ................................................13
Section 16. Other Provisions. ...............................................13
Section 17. Power of Board in Case of Change of Control. ....................13
Section 18. Amendment of the Plan. ..........................................14
Section 19. Application of Funds. ...........................................14
Section 20. No Obligation to Exercise Option. ...............................14
Section 21. Approval of Stockholders. .......................................14
Section 22. Conditions Upon Issuance of Shares. .............................14
Section 23. Reservation of Shares. ..........................................15
Section 24. Stock Option and Stock Purchase Agreements. .....................15
Section 25. Taxes, Fees, Expenses and Withholding of Taxes. .................15
Section 26. Notice. .........................................................16
Section 27. No Enlargement of Awardee Rights.................................16
Section 28. Information to Awardees. ........................................16
Section 29. Availability of Plan. ...........................................16
Section 30. Invalid Provisions. .............................................16
Section 3 1. Applicable Law. ................................................17
Section 32. Board Action. ...................................................17
<PAGE>
17
HAGLER BAILLY, INC.
EMPLOYEE INCENTIVE AND NON-QUALIFIED STOCK
OPTION AND RESTRICTED STOCK PLAN
Section 1. Purposes.
The Hagler Bailly, Inc. Employee Incentive and Non-Qualified Stock Option
and Restricted Stock Plan (the "Plan") was originally adopted on May 17, 1995.
The Plan was amended and restated, effective December 31, 1996. The plan was
amended further on March 11, 1997 and on July 22, 1998. The purposes of the Plan
are (a) to recognize and compensate selected key Employees of Hagler Bailly,
Inc. (the "Company") and its Subsidiaries who contribute to the development and
success of the Company and its Subsidiaries; (b) to maintain the competitive
position of the Company and its Subsidiaries by attracting and retaining key
Employees; and (c) to provide incentive compensation to such key Employees based
upon the Company's performance, as measured by the appreciation in Common Stock.
The Options granted pursuant to the Plan are intended to constitute either
Incentive Stock Options within the meaning of section 422 of the Code, or
non-qualified stock options, as determined by the Committee, or the Board if no
Committee has been appointed, at the time of Award. The type of Options awarded
will be specified in the Option Agreement between the Company and the Optionee.
The terms of this Plan shall be incorporated in the Option Agreement to be
executed by the Optionee.
Section 2. Definitions.
(a) "Affiliate" shall mean, with respect to a Person, a Person that
directly or indirectly controls, or is controlled by, or is under common control
with such Person.
(b) "Award" shall mean a grant of an Option or Options or an award of
Restricted Stock to an Employee pursuant to the provisions of this Plan. Each
separate grant of an Option or Options to an Employee, and each separate award
of Restricted Stock, and each group of Options which matures on a separate date,
is treated as a separate Award.
(c) "Awardee" shall mean an Employee to whom an Award is made.
(d) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
(e) "Change of Control" shall mean a change in the control of the Company
which shall be deemed to have occurred upon the earliest to occur of the
following: (i) the date the stockholders of the Company (or the Board, if
stockholder action is not required) approve a plan or other arrangement pursuant
to which the Company will be dissolved or liquidated, or (ii) the date the
stockholders of the Company approve a definitive agreement to sell or otherwise
dispose of all or substantially all of the assets of the Company, or (iii) the
date the stockholders of the Company and the stockholders of the other
constituent corporations (or their respective boards of directors, if and to the
extent that stockholder action is not required) have approved a definitive
agreement to merge or consolidate the Company with or into another corporation,
other than, in either case, a merger or consolidation of the Company in which
the Company is the surviving entity, and in which shares of the Company's voting
capital stock outstanding immediately before such merger or consolidation are
exchanged or converted into shares which represent more than 50% of the
Company's voting capital stock after such merger or consolidation, as such
holders' ownership of voting capital stock of the Company immediately before the
merger or consolidation, or (iv) the date any Person, other than (A) the
Company, or (B) any of its Subsidiaries, or (C) any of the holders of the
capital stock of the Company, as determined on the date that this Plan is
adopted by the Board, or (D) any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its Subsidiaries or (E) any
Affiliate of any of the foregoing, shall have acquired beneficial ownership of,
or shall have acquired voting control over more than 50% of the outstanding
shares of the Company's voting capital stock (on a fully diluted basis), unless
the transaction pursuant to which such Person acquired such beneficial ownership
or control resulted from the original issuance by the Company of shares of its
voting capital stock and was approved by at least a majority of the directors
then in office.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4(a) of the Plan, if one is appointed, in which event in
connection with this Plan, the Committee shall possess all of the power and
authority of, and shall be authorized to take any and all actions required to be
taken hereunder by, and make any and all determinations required taken hereunder
by, the Board.
(h) "Common Stock" shall mean common stock of the Company, $.01 par value
per Share.
(i) "Company" shall mean Hagler Bailly, Inc., a Delaware corporation.
(j) "Covenant Not to Compete" shall mean the noncompetition covenant set
forth in Section 10 of the Stockholders Agreement or (if an Awardee is not a
party thereto) otherwise applicable to the Awardee and the Company or its
Subsidiaries.
(k) "Disability" shall mean a disability of an employee, officer or a
director which renders such employee, officer or director unable to perform the
full extent of his duties and responsibilities by reason of his illness or
incapacity which would entitle that employee, officer or director to receive
Social Security Disability Income under the Social Security Act, as amended, and
the regulations promulgated thereunder. "Disabled" shall mean having a
Disability. The determination of whether an Optionee is Disabled shall be made
by the Board, whose determination shall be conclusive; provided that, (i) if an
Optionee is bound by the terms of an Employment Agreement between the Optionee
and the Company, whether the Optionee is "Disabled" for purposes of the Plan
shall be determined in accordance with the procedures set forth in said
Employment Agreement, if such procedures are therein provided; and (ii) an
Optionee bound by such an Employment Agreement shall not be determined to be
Disabled under the Plan any earlier than he would be determined to be disabled
under his Employment Agreement.
(l) "Employee" shall mean any person employed by the Company or any of its
Subsidiaries on whose behalf wages are reported on IRS Form W-2. Additionally,
solely for purposes of deter-mining those persons eligible under the Plan to be
recipients of Awards of Options, which Options shall be limited to non-qualified
stock options or Restricted Stock, and not for the purpose of affecting the
status of the relationship between such person and the Company, the term
"Employee" shall include independent contractors of and consultants to the
Company, as well as members of the Board or of the board of directors of a
Subsidiary.
(m) "Exchange Act" shall mean The Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value Per Share" shall mean the fair market value of a
share of Common Stock, as determined pursuant to Section 9 hereof.
(o) "Grant Date" means (i) the effective date of registration under Section
12 of the Exchange Act of a class of equity securities of the Company and (ii)
each date thereafter prescribed under the Company's Articles of Incorporation
and By-laws for the election of directors which falls before the earlier of (A)
the date six months after the termination of such registration, or (B) the tenth
anniversary of the date on which this Plan is adopted by the Board.
(p) "Incentive Stock Option" shall mean an Option which is an incentive
stock option as described in Section 422 of the Code.
(q) "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission.
(r) "Option(s)" shall mean an Incentive Stock Option or a non-qualified
stock option to purchase Shares that is Awarded pursuant to the Plan.
(s) "Option Agreement" shall mean a written agreement or such other form or
forms as the Board or Committee (subject to the terms and conditions of this
Plan) may from time to time approve evidencing and reflecting the terms of an
Option.
(t) "Optionee" shall mean an Employee to whom an Option is awarded.
(u) "Participant" shall mean each Employee of the Company or a Subsidiary
to whom an Award is granted pursuant to the Plan.
(v) "Person" shall mean an individual, partnership, corporation, limited
liability company, trust, joint venture, unincorporated association, or other
entity or association.
(w) "Plan" shall mean the Hagler Bailly, Inc. Employee Incentive and
Non-Qualified Stock Option and Restricted Stock Plan, as amended from time to
time.
(x) "Pool" shall mean the pool of Shares of Common Stock subject to the
Plan, as described in Section 6 hereof.
(y) "Restricted Stock" shall mean an Award of Shares of Common Stock that
is subject to restrictions pursuant to Section 8 hereof.
(z) "Securities Act" shall mean The Securities Act of 1933, as
amended.
(aa) "Shares" shall mean shares of Common Stock contained in the Pool, as
adjusted in accordance with Section 10 of the Plan.
(bb) "Stock Purchase Agreement" shall mean an agreement substantially in
the form attached hereto as Exhibit B, or such other form as the Board or
Committee (subject to the terms and conditions of this Plan) may from time to
time approve, which an Optionee shall be required to execute as a condition of
purchasing Shares upon the exercise of an Option.
(cc) "Stockholders Agreement" shall mean the Stockholders Agreement dated
as of May 15, 1995 by and among the Company and its stockholders, as amended
from time to time.
(dd) "Subsidiary" shall mean a subsidiary corporation, whether now or
hereafter existing, as defined in sections 424(f) and (g) of the Code.
Section 3. Participation.
(a) In General. Participants in the Plan shall be selected by the Board
from the Employees. The Board may make Awards at any time and from time to time
to Employees. Any Award may include or exclude any Employee, as the Board shall
determine in its sole discretion.
(b) Non-Employee Directors. In the event the Company has a class of equity
securities registered under Section 12 of the Exchange Act, from the effective
date of such registration until six months after the termination of such
registration, no Awards of Options shall be made under the Plan to any director
of the Company who is a Non-Employee Director except pursuant to this Section
3(b).
(i) Automatic Award. Awards of Options to directors of the Company who are
Non-Employee Directors shall be granted, without any further action by the Board
or Committee. as follows. Upon the effective date of the Company's registration
of a class of equity securities under Section 12 of the Exchange Act, and on
each Grant Date thereafter, each director of the Company who is a Non-Employee
Director shall receive an Award of a nonqualified stock Option to purchase 3,000
Shares.
(ii) Option Price. The price per Share payable upon the exercise of any
Option granted under this Section 3(b) shall be 100% of the Fair Market Value of
such Share on the Grant Date,
Section 4. Administration.
(a) Procedure. The Plan shall be administered by the Board. The Board may
at any time by a unanimous vote, with each Member voting, appoint a Committee
consisting of not less than two persons, each of whom is a Non-Employee
Director, to administer the Plan on behalf of the Board, subject to such terms
and conditions as the Board may prescribe. Members of the Committee shall serve
for such period of time as the Board may determine. Members of the Board or the
Committee who are eligible for Options or have been Awarded Options may vote on
any matters affecting the administration of the Plan or the Award of any Options
pursuant to the Plan, except that no such member shall act upon the Award of an
Option to himself or herself, but any such member may be counted in determining
the existence of a quorum at any meeting of the Board or Committee during which
action is taken with respect to the Award of Options to himself or herself
From time to time the Board may increase the size of the Committee and
appoint additional members thereto, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused, or
remove all members of the Committee and thereafter directly administer the Plan.
(b) Powers of the Board and the Committee. Subject to the provisions of the
Plan, the Board or its Committee shall have the authority, in its discretion:
(i) to make Awards; (ii) to deter-mine the Fair Market Value Per Share; (iii) to
determine the exercise price of the Options to be Awarded in accordance with
Sections 7 and 8 of the Plan; (iv) to determine the Employees to whom, and the
time or times at which, Awards shall be made, and the number of Shares to be
subject to each Award; (v) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vi) to determine the terms and provisions of each Award
under the Plan, each Option Agreement and each Stock Purchase Agreement (which
need not be identical with the terms of other Awards, Option Agreements and
Stock Purchase Agreements) and, with the consent of the Optionee, to modify or
amend an outstanding Option, Option Agreement or Stock Purchase Agreement; (vii)
to accelerate the vesting or exercise date of any Award; (viii) to interpret the
Plan or any agreement entered into with respect to an Award or exercise of
Options, (ix) to authorize any person to execute on behalf of the Company any
instrument required to effectuate an Award or to take such other actions as may
be necessary or appropriate with respect to the Company's rights pursuant to
Awards or agreements relating to the Award or exercise thereof; and (x) to make
such other determinations and establish such other procedures as it deems
necessary or advisable for the administration of the Plan.
(c) Effect of the Board's or Committee's Decision. All decisions,
determinations and interpretations of the Board or the Committee shall be final
and binding with respect to all Awards under the Plan.
(d) Limitation of Liability. Notwithstanding anything herein to the
contrary (with the exception of Section 32 hereof), no member of the Board or of
the Committee shall be liable for any good faith determination, act or failure
to act in connection with the Plan or any Award hereunder.
Section 5. Eligibility.
Awards may be made only to Employees. An Employee who has received an
Award, if he or she is otherwise eligible, may receive additional Awards.
Section 6. Stock Subject to the Plan.
Subject to the provisions of this Section 6 and the provisions of Section
10 of the Plan, the maximum aggregate number of Shares which may be Awarded and
sold under the Plan is 5,000,000 Shares of Common Stock (collectively, the
"Pool"). Options Awarded from the Pool may be either Incentive Stock Options or
non-qualified stock options, as determined by the Board. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, or if a Restricted Stock Award shall fail to become vested, or if Shares
are subsequently repurchased by the Company, the unpurchased or repurchased
Shares which were subject thereto shall, unless the Plan shall have been
terminated, be returned to the Plan and become available for future Award under
the Plan.
Section 7. Terms and Conditions of Options.
Each Option Awarded pursuant to the Plan shall be authorized by the Board
and shall be evidenced by an Option Agreement in such form as the Board may from
time to time determine. Each Option Agreement shall incorporate by reference all
other terms and conditions of the Plan, including the following terms and
conditions:
(a) Number of Shares. The number of Shares subject to the Option, which may
include fractional Shares.
(b) Option Price. The price per Share payable on the exercise of any Option
which is an Incentive Stock Option shall be stated in the Option Agreement and
shall be no less than the Fair Market Value Per Share of the Common Stock on the
date such Option is Awarded, without regard to any restriction other than a
restriction which will never lapse. Notwithstanding the foregoing, if an Option
which is an Incentive Stock Option shall be Awarded under this Plan to any
person who, at the time of the Award of such Option, owns stock possessing more
than 10% of the total combined voting power of all classes of the Company's
stock, the price per Share payable upon exercise of such Incentive Stock Option
shall be no less than 110 percent (110%) of the Fair Market Value Per Share of
the Common Stock on the date such Option is Awarded. The price per Share payable
on the exercise of an Option which is a non-qualified stock option shall be at
least $.01 per Share and shall be stated in the Option Agreement.
(c) Consideration. The consideration to be paid for the Shares to be issued
upon the exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of cash, check, promissory
notes or Shares of Common Stock having an aggregate Fair Market Value Per Share
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment permitted under any
laws to which the Company is subject and which is approved by the Board. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
(i) if the consideration for the exercise of an Option is a promissory
note, it may, in the discretion of the Board, be either full recourse or
nonrecourse and shall bear interest at a per annum rate which is not less than
the applicable federal rate determined in accordance with section 1274(d) of the
Code as of the date of exercise. In such an instance the Company may, in its
sole discretion, retain the Shares purchased upon exercise of the Option in
escrow as security for payment of the promissory note.
(ii) if the consideration for the exercise of an Option is the surrender of
previously acquired and owned shares of Common Stock, the Optionee will be
required to make representations and warranties satisfactory to the Company
regarding his title to the shares of Common Stock used to effect the purchase
(the "Payment Shares"), including without limitation, representations and
warranties that the Optionee has good and marketable title to such Payment
Shares free and clear of any and all liens, encumbrances, charges, equities,
claims, security interests., options or restrictions, and has full power to
deliver such Payment Shares without obtaining the consent or approval of any
person or governmental authority other than those which have already given
consent or approval in a manner satisfactory to the Company. The per Share value
of the Payment Shares shall be the Fair Market Value Per Share of such Payment
Shares on the date of exercise as determined by the Board in its sole
discretion, exercised in good faith. If such Payment Shares were acquired upon
previous exercise of Incentive Stock Options granted within two years prior to
the exercise of the Option or acquired by the Optionee within one year prior to
the exercise of the Option, such Optionee shall be required. as a condition to
using the Payment Shares in payment of the exercise price of the Option, to
acknowledge the tax consequences of doing so, In that such previously exercised
Incentive Stock Options may have, by such action, lost their status as Incentive
Stock- Options, and the Optionee may have to recognize ordinary income for tax
purposes as a result.
(d) Form of Option. The Option Agreement will state whether the Option
Awarded is an Incentive Stock Option or a non-qualified stock option, and will
constitute a binding determination as to the form of Option Awarded.
(e) Exercise of Options. Any Option Awarded hereunder shall be exercisable
at such times and under such conditions as shall be set forth in the Option
Agreement (as may be determined by the Board and as shall be permissible under
the terms of the Plan), which may include performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan. Notwithstanding the foregoing, any Option awarded under Section 3(b)
hereunder shall be immediately exercisable in full
An Option may be exercised in accordance with the provisions of this Plan
as to all or any portion of the Shares then exercisable under an Option from
time to time during the term of the Option. An Option may not be exercised for a
fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company at its principal executive office in
accordance with the terms of the Option Agreement by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company, accompanied by any
agreements required by the terms of the Plan and/or Option Agreement, including
an executed Stock Purchase Agreement. Full payment may consist of such
consideration and method of payment allowable under Section 7 of the Plan. No
adjustment shall be made for a dividend or other right for which the record date
is prior to the date the Option is exercised, except as provided in Section 10
of the Plan.
As soon as practicable after any proper exercise of an Option in accordance
with the provisions of the Plan, the Company shall, without transfer or issue
tax to the Optionee, deliver to the Optionee at the principal executive office
of the Company or such other place as shall be mutually agreed upon between the
Company and the Optionee, a certificate or certificates representing the Shares
for which the Option shall have been exercised.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised,
(f) Term and Vesting of Options.
(i) Notwithstanding any other provision of this Plan, no Option shall be
(A) Awarded under this Plan after ten (10) years from the date on which this
Plan is adopted by the Board, or (B) exercisable more than ten (10) years from
the date of Award; provided, however, that if an Option that is intended to be
an Incentive Stock Option shall be Awarded under this Plan to any person who, at
the time of the Award of such Option, owns stock possessing more than 10% of the
total combined voting power for all classes of the Company's stock, the
foregoing clause (B) shall be deemed modified by substituting "five (5) years"
for the term "ten (10) years" that appears therein.
(ii) No Option Awarded to any Optionee shall be treated as an Incentive
Stock Option, to the extent such Option would cause the aggregate Fair Market
Value Per Share (determined as of the date of Award of each such Option) of the
Shares with respect to which Incentive Stock Options are exercisable by such
Optionee for the first time during any calendar year to exceed $100,000. For
purposes of determining-whether Incentive Stock Option would cause such
aggregate Fair Market Value Per Share to exceed the $100,000 limitation, such
Incentive Stock Options shall be taken into account in the order Awarded. For
proposes of this subsection, Incentive Stock Options include all Incentive Stock
Options under all plans of the Company that are Incentive Stock Option plans
within the meaning of section 422 of the Code.
Except as provided in Section 7(g)(iv), Options Awarded hereunder shall
mature and become exercisable in whole or in part, in accordance with such
vesting schedule as the Board shall determine, which schedule shall be stated in
the Option Agreement. Notwithstanding the preceding sentence, Options awarded
pursuant to Section 3(b) hereunder shall be fully vested at grant. Options may
be exercised in any order elected by the Optionee whether or not the Optionee
holds any unexercised Options under this Plan or any other plan of the Company.
(g) Termination of Options.
(i) Unless sooner terminated as provided in this Plan, each Option shall be
exercisable for such period of time as shall be determined by the Board and set
forth in the Option Agreement, and shall be void and unexercisable thereafter.
(ii) Except as otherwise provided herein or by the terms of any Award, no
Option shall be exercisable after termination of the Optionee's employment with
or other engagement by the Company for any reason.
(iii) Except as otherwise provided herein of by the terms of any Award,
upon the Disability or death of an Optionee while in the employ of the Company,
Options held by such Optionee which arc exercisable oil the date of Disability
or death shall be exercisable for a period of twelve (12) months commencing on
the date of the Optionee's Disability or death. by the Optionee or his legal
guardian or representative or. in the case of death, by his executor(s) or
administrator(s),
(iv) Options may be terminated at any time by agreement between the Company
and the Optionee.
(h) Forfeiture. Notwithstanding any other provision of this Plan, if an
Optionee shall engage in any activity in breach of the Covenant Not to Compete,
all Options held by such Optionee which have not yet been exercised shall
terminate immediately upon the commencement thereof. Notwithstanding any other
provision of this Plan, if the Optionee's employment or engagement is terminated
for "cause" (as such term is defined in the Optionee's employment agreement or
non-disclosure agreement with the Company, if any) or if the Board makes a
determination that the Optionee:
(i) has engaged in any type of disloyalty to the Company, including without
limitation, fraud, embezzlement, theft, or dishonesty in the course of his
employment or engagement, or has otherwise breached any fiduciary duty owed to
the Company;
(ii) has been convicted of a felony;
(iii) has disclosed trade secrets or confidential information of the
Company;
(iv) has breached any agreement with or duty to the Company in respect of
confidentiality, non-disclosure, non-competition or otherwise, all unexercised
Options shall terminate upon the date of such a finding, or, if earlier, the
date of termination of employment or engagement for "cause."
In the event of such a finding, in addition to immediate termination of all
unexercised Options, the Optionee shall forfeit all Shares for which the Company
has not yet delivered share certificates to the Optionee and the Company shall
refund to the Optionee the Option purchase price paid to it, if any, in the same
form as it was paid (or in cash at the Company's discretion). Notwithstanding
anything herein to the contrary, the Company may withhold delivery of share
certificates pending the resolution of any inquiry that could lead to a finding
resulting in forfeiture.
Section 8. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan. The Board shall determine
the persons to whom, and the time or times at which, grants of Restricted Stock
will be made, the number of Shares to be Awarded. the price (if any) to be paid
by the recipient of Restricted Stock, the time or times within which such Awards
may be subject to forfeiture, and all other conditions of the Awards.
The Board may condition the vesting of Restricted Stock upon the attainment
of specified performance goals or Such other factors as the Board may determine,
in its sole discretion, at the time of the Award.
The provisions of Restricted Stock Awards need not be the same with respect
to each recipient.
(b) Awards. The prospective recipient of a Restricted Stock Award shall not
have any rights with respect to such Award, unless and until such recipient has
executed an agreement evidencing the Award and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the applicable
terms and conditions of such Award. The purchase price for shares of Restricted
Stock may be zero.
Each Employee receiving a Restricted Stock Award shall be required, as a
condition precedent to receipt of such Award, to execute a joinder or other
counterpart to the Stockholders Agreement.
(c) Restrictions and Conditions. Except as provided in this Section 8(c),
the Employee shall have, with respect to the Shares of Restricted Stock, all of
the rights of a shareholder of the Company, including the right to vote the
shares, and the right to receive any cash dividends. The Board, in its sole
discretion, as deter-mined at the time of Award, may permit or require the
payment of cash dividends in respect of Shares of Restricted Stock Awarded under
the Plan to be deferred and, if the Board so determines, reinvested in
additional Shares of Restricted Stock to the extent Shares are available under
Section 6 of the Plan.
Section 9. Determination of Fair Market Value Per Share of Common Stock.
(a) Except to the extent otherwise provided in this Section 9, the Fair
Market Value Per Share of Common Stock shall be determined by the Board in its
sole discretion.
(b) Notwithstanding the provisions of Section 9(a), in the event that
shares of Common Stock are traded in the over-the-counter market, the Fair
Market Value Per Share of Common Stock shall be the mean of the bid and asked
prices for a share of Common Stock on the relevant valuation date as reported in
The Wall Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotations ("NASDAQ")
System), as applicable or, if there is no trading on such date, on the next
trading date. In the event shares of Common Stock are listed on a national or
regional securities exchange or traded through the NASDAQ National Market, the
Fair Market Value of a share of Common Stock shall be the closing price for a
share of Common Stock on the exchange or on the NASDAQ National Market. as
reported in The Wall Street Journal on the relevant valuation date, or if there
is no trading on that date, on the next trading date.
Section 10. Adjustments.
(a) Subject to required action by the stockholders, If any, the number of
Shares as to which Awards may be made under this Plan and the number of Shares
subject to outstanding Options and the Option prices thereof shall be adjusted
proportionately for any increase or decrease in the number of outstanding Shares
of Common Stock of the Company resulting from stock splits, reverse stock
splits. stock dividends, reclassifications and recapitalizations, merger,
consolidation, exchange of shares, or rights offered to purchase shares of
Common Stock at a price substantially below Fair Market Value Per Share or any
similar change affecting Common Stock.
(b) No fractional Shares shall be issuable on account of any action
mentioned in Section 10(a), and the aggregate number of Shares into which Shares
then covered by the Award, when changed as the result of such action, shall be
reduced to the number of whole Shares resulting from such action, unless the
Board, in its sole discretion, shall determine to issue scrip certificates with
respect to any fractional Shares, which scrip certificates, in such event, shall
be in a form and have such terms and conditions as the Board in its discretion
shall prescribe.
Section 11. Rights as a Stockholder.
A recipient of an Option Award shall have no rights as a stockholder of the
Company and shall neither have the right to vote nor receive dividends with
respect to any Shares subject to an Option until such Option has been exercised
and a certificate with respect to the Shares purchased upon such exercise has
been issued to him. A recipient of a Restricted Stock Award shall have all
rights as a stockholder with respect to the Shares of Restricted Stock Awarded
from and after the later to occur of (i) the date of the Award (as determined
under Section 12 hereof) or (ii) the date the Awardee makes payment of the
purchase price, if any, designated by the Board as a condition of such Award.
Section 12. Time of Awarding Options.
The date of an Award shall, for all purposes, be the date which the Board
specifies when the Board makes its determination that an Award is made or if
none is specified, then the date of the Board's determination. Notice of the
determination shall be given to each Employee to whom an Award is made within a
reasonable time after the date of such Award.
Section 13. Modification, Extension and Renewal of Option.
Subject to the terms and conditions of the Plan, the Board may modify,
extend or renew an Award, or accept the surrender of an Award (to the extent not
theretofore exercised). Notwithstanding the foregoing, (a) no modification of an
Award which adversely affects the Awardee shall be made without the consent of
the Awardee, and (b) no Incentive Stock Option may be modified, extended or
renewed if such action would cause it to cease to be an "Incentive Stock Option"
within the meaning of section 422 of the Code, unless the Optionee specifically
acknowledges and consents to the tax consequences of such action.
Section 14. Purchase for Investment and Other Restrictions.
(a) The obligation of the Company to issue Shares to an Awardee upon the
exercise of an Option or as part of a Restricted Stock Award granted under the
Plan is conditioned upon (i) the Company obtaining any required permit or order
from appropriate governmental agencies, authorizing the Company to issue such
Shares. and (ii) such issuance complying with all relevant provisions of the
law, including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder.
(b) At the option of the Board, the obligation of the Company to issue
Shares to an Awardee upon the exercise of an Option granted, or upon a
Restricted Stock Award made, under the Plan may be conditioned upon obtaining
appropriate representations, warranties, restrictions and agreements of the
Awardee as set forth in the applicable Stock Purchase Agreement. Among other
representations, warranties, restrictions and agreements, the Awardee may be
required to represent and agree that the purchase of Shares shall be for
investment, and not with a view to the public resale or distribution thereof,
unless the Shares are registered under the Securities Act and the issuance and
sale of the Shares complies with all other laws, rules and regulations
applicable thereto. Unless the issuance of such Shares is registered under the
Securities Act, the Awardee shall acknowledge that the Shares purchased are not
registered under the Securities Act and may not be sold or otherwise transferred
unless the Shares have been registered under the Securities Act in connection
with the sale or other transfer thereof, or that counsel satisfactory to the
Company has issued an opinion satisfactory to the Company that the sale or other
transfer of such Shares is exempt from registration under the Securities Act,
and unless said sale or transfer is in compliance with all other applicable
laws, rules and regulations, including all applicable federal and state
securities laws, rules and regulations. Additionally, the Shares, when issued,
shall be subject to other transfer restrictions, rights of first refusal and
rights of repurchase as set forth in Stockholders Agreement. Unless the Shares
subject to an Award are registered under the Securities Act, the certificates
representing such Shares issued shall contain the following legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION OR RESALE, AND
MAY NOT BE SOLD, ASSIGNED. EXCHANGED, MORTGAGED. PLEDGED. HYPOTHECATED OR
OTHERWISE TRANSFERRED OR DISPOSED OF. BY GIFT OR OTHERWISE. OR IN ANY WAY
ENCUMBER-ED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES
LAWS, OR A SATISFACTORY OPINION OF COUNSEL SATISFACTORY TO HAGLER BAILLY, INC.
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS.
Section 15. Transferability.
No Option shall be assignable or transferable otherwise than by will or by
the laws of descent and distribution. During the lifetime of the Optionee, his
Options shall be exercisable only by such Optionee, or, in the event of his or
her legal incapacity or Disability, then by the Optionee's legal guardian or
representative.
Section 16. Other Provisions.
The Option Agreement and Stock Purchase Agreement may contain such other
provisions as the Board in its discretion deems advisable and which are not
inconsistent with the provisions of this Plan, including, without limitation,
restrictions upon or conditions precedent to the exercise of the Option.
Section 17. Power of Board in Case of Change of Control.
Notwithstanding anything to the contrary set forth in this Plan (with the
exception of Section 32 hereof), in the event of a Change of Control, the Board
shall have the right to accelerate the vesting of all unmatured Options or
Restricted Stock Awards. In addition, in the event of a Change of Control of the
Company by reason of a merger, consolidation or tax free reorganization or sale
of all or substantially all of the assets of the Company, the Board shall have
the right to terminate this Plan and to (a) exchange all Options or Restricted
Stock Awards for options to purchase common stock in the successor corporation
or (b) distribute to each Awardee cash and/or other property in an amount equal
to and in the same form as the Optionee would have received from the successor
corporation if the Optionee had owned the Shares subject to the Option rather
than the Option at the time of the Change of Control, The form of payment or
distribution to the Optionee pursuant to this Section shall be determined by the
Board.
Section 18. Amendment of the Plan.
Insofar as permitted by law and the Plan, the Board may from time to time
suspend, terminate or discontinue the Plan or revise or amend it in any respect
whatsoever, with respect to any Shares at the time not subject to an Option;
provided, however, that without approval of the stockholders, no such revision
or amendment may change the aggregate number of Shares for which Options may be
awarded hereunder, change the designation of the class of Employees eligible to
receive Options or decrease the price at which Options may be awarded.
Any other provision of this Section 18 notwithstanding, the Board
specifically is authorized to adopt any amendment to this Plan deemed by the
Board to be necessary or advisable to assure that the Incentive Stock Options or
the non-qualified stock options available under the Plan continue to be treated
as such, respectively, under all applicable laws.
Section 19. Application of Funds.
The proceeds received by the Company from the sale of Shares pursuant to
the exercise of Options or the purchase of Restricted Stock shall be used for
general corporate purposes or such other purpose as may be determined by the
Board.
Section 20. No Obligation to Exercise Option.
The Awarding of an Option shall impose no obligation upon the Optionee to
exercise such Option.
Section 21. Approval of Stockholders.
This Plan shall become effective on the date that It is adopted by the
Board; provided, however, that it shall become limited to a non-qualified stock
option plan if it is not approved by the holders of a majority of the Company's
outstanding voting stock within one year (365 days) of its adoption by the
Board. The Board may make Awards hereunder prior to approval of the Plan or any
material amendments thereto by the holders of a majority of the Company's
outstanding voting stock; provided, however, that any and all Options so Awarded
automatically shall be converted into non-qualified stock options if the Plan is
not approved by such stockholders within 365 days of its adoption or material
amendment.
Section 22. Conditions Upon Issuance of Shares.
Shares shall not be issued pursuant to the exercise of an Option or Award
of Restricted Stock unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto or the issuance of Restricted Stock
shall comply with all relevant provisions of law, including, without limitation,
the Securities Act, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, arid shall be further subject to the approval of counsel for the
Company with respect to such compliance.
Section 23. Reservation of Shares.
The Company, during the term of this Plan, shall at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
The Company, during the term of this Plan, shall use its best efforts to
seek to obtain from appropriate regulatory agencies any requisite authorization
in order to issue and sell such number of Shares as shall be sufficient to
satisfy the requirements of the Plan. The inability of the Company to obtain
from any such regulatory agency having jurisdiction the requisite authorizations
deemed by the Company's counsel to be necessary for the lawful issuance and sale
of any Shares hereunder, or the inability of the Company to confirm to its
satisfaction that any issuance and sale of any Shares hereunder will meet
applicable legal requirements, shall relieve the Company of any liability in
respect to the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
Section 24. Stock Option and Stock Purchase Agreements.
Options shall be evidenced by an Option Agreement in such form or forms as
the Board shall approve from time to time. Upon the exercise of an Option, the
Optionee shall sign and deliver to the Company a Stock Purchase Agreement in
such form or forms as the Board shall approve from time to time.
Section 25. Taxes, Fees, Expenses and Withholding of Taxes.
(a) The Company shall pay all original issue and transfer taxes (but not
income taxes, if any) with respect to the Award of Options and/or the issue and
transfer of Shares pursuant to the exercise thereof, and all other fees arid
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.
(b) The Award of Options or Restricted Stock hereunder and the issuance of
Shares pursuant to the exercise of Options is conditioned upon the Company's
reservation of the right to withhold in accordance with any applicable law, from
any compensation or other amounts payable to the Awardee, any taxes required to
be withheld under federal, state or local law as a result of the Award or
exercise of such Option or the sale of the Shares issued upon exercise thereof.
To the extent that compensation or other amounts, if any, payable to the Awardee
is insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Awardee (or such other person entitled herein
to exercise the Option), as a condition of the exercise of an Option, to pay in
cash to the Company an amount sufficient to cover such tax liability or
otherwise to make adequate provision for the Company's satisfaction of its
withholding obligations under federal, state and local law.
Section 26. Notice.
Any notice to be given to the Company pursuant to the provisions of this
Plan shall be addressed to the Company in care of its Secretary (or such other
person as the Company may designate from time to time) at its principal
executive office, and any notice to be given to an Awardee shall be delivered
personally or addressed to him or her at the address given beneath his or her
signature on his or her Option Agreement, or at such other address as such
Awardee or his or her permitted transferee (upon the transfer of the Shares) may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given on the date and at the time delivered via personal, courier or
recognized overnight delivery service or, if sent via telecopier, on the date
and at the time telecopied with confirmation of delivery or, if mailed, on the
date five (5) days after the date of the mailing (which shall be by regular,
registered or certified mail). Delivery of a notice by telecopy (with
confirmation) shall be permitted and shall be considered delivery of a notice
notwithstanding that it is not an original that is received. It shall be the
obligation of each Optionee and each permitted transferee holding Shares
purchased upon exercise of an Option to provide the Secretary of the Company, by
letter mailed as provided herein, with written notice of his or her direct
mailing address.
Section 27. No Enlargement of Awardee Rights.
This Plan is purely voluntary on the part of the Company, and the
continuance of the Plan shall not be deemed to constitute a contract between the
Company and any Awardee, or to be consideration for or a condition of the
employment or service of any Awardee. Nothing contained in this Plan shall be
deemed to give any Awardee the right to be retained in the employ or service of
the Company or any Subsidiary, or to interfere with the right of the Company or
any such corporation to discharge or retire any Awardee thereof at any time
subject to applicable law. No Awardee shall have any right to or interest in
Awards authorized hereunder prior to the Award thereof to such Awardee, and upon
such Award he shall have only such rights and interests as are expressly
provided herein, subject, however, to all applicable provisions of the Company's
Certificate of Incorporation, as the same may be amended from time to time.
Section 28. Information to Awardees.
The Company, upon request, shall provide without charge to each Awardee
copies of such annual and periodic reports as are provided by the Company to its
stockholders generally.
Section 29. Availability of Plan.
A copy of this Plan shall be delivered to the Secretary of the Company and
shall be shown by him to any eligible person making reasonable inquiry
concerning it.
Section 30. Invalid Provisions.
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
Section 3 1. Applicable Law.
This Plan shall be governed by and construed in accordance with the laws of
the State of Delaware.
Section 32. Board Action.
Notwithstanding anything to the contrary set forth in this Plan, any and
all actions of the Board or Committee, as the case may be, taken under or in
connection with this Plan and any agreements, instruments, documents,
certificates or other writings entered into, executed, granted, issued and/or
delivered pursuant to the terms hereof, shall be subject to and limited by any
and all votes, consents, approvals, waivers or other actions of all or certain
stockholders of the Company or other persons required pursuant to (i) the
Company's Certificate of Incorporation (as the same may be amended and/or
restated from time to time), (ii) the Company's Bylaws (as the same may be
amended and/or restated from time to time), and (iii) any other agreement,
instrument, document or writing now or hereafter existing, between or among the
Company and its stockholders or other persons (as the same may be amended from
time to time).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 7,560,450
<SECURITIES> 0
<RECEIVABLES> 70,052,853
<ALLOWANCES> 3,247,015
<INVENTORY> 0
<CURRENT-ASSETS> 85,606,682
<PP&E> 19,463,782
<DEPRECIATION> 12,823,124
<TOTAL-ASSETS> 104,050,739
<CURRENT-LIABILITIES> 32,538,071
<BONDS> 0
0
0
<COMMON> 162,101
<OTHER-SE> 71,350,567
<TOTAL-LIABILITY-AND-EQUITY> 104,050,739
<SALES> 132,082,424
<TOTAL-REVENUES> 132,082,424
<CGS> 94,812,408
<TOTAL-COSTS> 94,812,408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 321,106
<INCOME-PRETAX> 12,344,378
<INCOME-TAX> 6,008,042
<INCOME-CONTINUING> 6,336,336
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,336,336
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,402,401
<SECURITIES> 0
<RECEIVABLES> 65,903,523
<ALLOWANCES> 3,658,233
<INVENTORY> 0
<CURRENT-ASSETS> 83,715,979
<PP&E> 18,637,226
<DEPRECIATION> 12,182,079
<TOTAL-ASSETS> 103,357,433
<CURRENT-LIABILITIES> 28,013,447
<BONDS> 0
0
0
<COMMON> 161,556
<OTHER-SE> 68,351,965
<TOTAL-LIABILITY-AND-EQUITY> 103,357,433
<SALES> 85,592,307
<TOTAL-REVENUES> 85,592,307
<CGS> 61,681,586
<TOTAL-COSTS> 61,681,586
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 239,091
<INCOME-PRETAX> 8,125,182
<INCOME-TAX> 4,294,449
<INCOME-CONTINUING> 3,830,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,830,733
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.23
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,998,725
<SECURITIES> 0
<RECEIVABLES> 58,587,957
<ALLOWANCES> 3,646,204
<INVENTORY> 0
<CURRENT-ASSETS> 67,918,218
<PP&E> 16,193,474
<DEPRECIATION> 10,928,500
<TOTAL-ASSETS> 84,854,783
<CURRENT-LIABILITIES> 26,002,971
<BONDS> 0
0
0
<COMMON> 156,421
<OTHER-SE> 51,332,696
<TOTAL-LIABILITY-AND-EQUITY> 84,854,783
<SALES> 39,246,095
<TOTAL-REVENUES> 39,246,095
<CGS> 28,767,744
<TOTAL-COSTS> 28,767,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 92,098
<INCOME-PRETAX> 3,014,744
<INCOME-TAX> 2,073,689
<INCOME-CONTINUING> 941,055
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 941,055
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,813,067
<SECURITIES> 0
<RECEIVABLES> 56,729,256
<ALLOWANCES> 3,872,703
<INVENTORY> 0
<CURRENT-ASSETS> 68,038,511
<PP&E> 16,576,776
<DEPRECIATION> 11,063,142
<TOTAL-ASSETS> 85,808,372
<CURRENT-LIABILITIES> 35,270,064
<BONDS> 0
0
0
<COMMON> 154,737
<OTHER-SE> 48,694,459
<TOTAL-LIABILITY-AND-EQUITY> 85,808,372
<SALES> 160,615,385
<TOTAL-REVENUES> 160,615,385
<CGS> 120,585,654
<TOTAL-COSTS> 120,585,654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,301,256
<INCOME-PRETAX> 1,233,594
<INCOME-TAX> 5,459,294
<INCOME-CONTINUING> (4,225,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,335,598
<CHANGES> 0
<NET-INCOME> (1,890,102)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.13)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 22,273,134
<SECURITIES> 0
<RECEIVABLES> 50,142,401
<ALLOWANCES> 2,346,998
<INVENTORY> 0
<CURRENT-ASSETS> 73,784,227
<PP&E> 15,285,362
<DEPRECIATION> 10,375,245
<TOTAL-ASSETS> 86,979,440
<CURRENT-LIABILITIES> 39,600,627
<BONDS> 0
0
0
<COMMON> 148,144
<OTHER-SE> 46,613,808
<TOTAL-LIABILITY-AND-EQUITY> 86,979,440
<SALES> 121,361,824
<TOTAL-REVENUES> 121,361,824
<CGS> 92,647,211
<TOTAL-COSTS> 92,647,211
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 922,270
<INCOME-PRETAX> 9,643,771
<INCOME-TAX> 3,992,671
<INCOME-CONTINUING> 5,651,100
<DISCONTINUED> 0
<EXTRAORDINARY> 760,652
<CHANGES> 0
<NET-INCOME> 6,411,752
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.47
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,384,678
<SECURITIES> 0
<RECEIVABLES> 46,119,368
<ALLOWANCES> 2,542,618
<INVENTORY> 0
<CURRENT-ASSETS> 56,723,279
<PP&E> 14,143,520
<DEPRECIATION> 9,799,445
<TOTAL-ASSETS> 70,197,029
<CURRENT-LIABILITIES> 45,472,656
<BONDS> 0
0
0
<COMMON> 120,892
<OTHER-SE> 13,942,256
<TOTAL-LIABILITY-AND-EQUITY> 70,197,029
<SALES> 78,009,470
<TOTAL-REVENUES> 78,009,470
<CGS> 59,201,232
<TOTAL-COSTS> 59,201,232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 391,754
<INCOME-PRETAX> 6,310,957
<INCOME-TAX> 2,842,484
<INCOME-CONTINUING> 3,468,473
<DISCONTINUED> 0
<EXTRAORDINARY> 737,709
<CHANGES> 0
<NET-INCOME> 4,206,182
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,625,431
<SECURITIES> 0
<RECEIVABLES> 46,116,906
<ALLOWANCES> 2,549,578
<INVENTORY> 0
<CURRENT-ASSETS> 48,834,057
<PP&E> 13,701,220
<DEPRECIATION> 9,347,265
<TOTAL-ASSETS> 62,933,819
<CURRENT-LIABILITIES> 38,133,696
<BONDS> 0
0
0
<COMMON> 120,827
<OTHER-SE> 11,596,313
<TOTAL-LIABILITY-AND-EQUITY> 62,933,819
<SALES> 37,367,180
<TOTAL-REVENUES> 37,367,180
<CGS> 28,683,826
<TOTAL-COSTS> 28,683,826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 302,874
<INCOME-PRETAX> 2,745,410
<INCOME-TAX> 1,124,832
<INCOME-CONTINUING> 1,620,578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,620,578
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HAGLER
BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,218,708
<SECURITIES> 0
<RECEIVABLES> 40,310,991
<ALLOWANCES> 2,900,716
<INVENTORY> 0
<CURRENT-ASSETS> 42,042,733
<PP&E> 13,443,703
<DEPRECIATION> 8,945,203
<TOTAL-ASSETS> 55,872,441
<CURRENT-LIABILITIES> 36,665,592
<BONDS> 0
0
0
<COMMON> 116,123
<OTHER-SE> 9,842,496
<TOTAL-LIABILITY-AND-EQUITY> 55,842,441
<SALES> 143,140,876
<TOTAL-REVENUES> 143,140,876
<CGS> 110,499,762
<TOTAL-COSTS> 110,499,762
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,450,747
<INCOME-PRETAX> (1,093,511)
<INCOME-TAX> 1,785,912
<INCOME-CONTINUING> (2,879,423)
<DISCONTINUED> 0
<EXTRAORDINARY> 145,904
<CHANGES> 0
<NET-INCOME> (2,733,519)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
