EXHIBIT 10.34
SUBSCRIPTION AGREEMENT
This Subscription Agreement ("Agreement") is made as of December 31, 1997,
by and among THE KEITH COMPANIES, INC., a California corporation ("Company"),
KEITH ENGINEERING, INC., a California corporation ("Engineering"), ARAM H.
KEITH, an individual ("Keith"), FLOYD S. REID, an individual ("Reid") and the
individuals listed on the signature page hereof ("Purchasers").
In consideration of the agreements and covenants contained herein, the
parties hereby agree as follows:
1. Purchase and Sale of Shares.
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The Company shall sell and issue to Purchasers, and each of the Purchasers
shall purchase from Company, an aggregate of five hundred thirty one thousand
two hundred eleven (531,211) shares of the common stock of Company (the
"Shares"), allocated as set forth on the signature page hereof. The total
purchase price for such Shares shall be Five Hundred Thousand Dollars
($500,000).
2. Closing
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Simultaneously with the execution of this Agreement, Company shall deliver
to Purchasers stock certificate representing each of their ownership of the
Shares, and Purchasers shall deliver to Company the Purchase Price, to the
extent not already previously delivered.
3. Representations and Warranties by Company.
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The Company hereby represents and warrants to Purchasers as follows:
(a) Corporate Existence
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Company and Engineering are corporations duly organized and validly existing
under the laws of the State of California, are in good standing under such laws,
and have the corporate power to own their properties and assets, to carry on
their business and to enter into and carry out the provisions of this Agreement.
(b) Authority
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Company has full power and authority to enter into this Agreement, to
perform its obligations hereunder and to issue the Shares of common stock issued
and sold to Purchasers. All corporate action on the part of Company, its
officers, directors and shareholders necessary for the authorization and
issuance of the Shares being sold hereunder has been taken. This Agreement,
when executed by all parties, shall constitute a valid and legally binding
obligation of Company, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application relating to or
affecting enforcement of creditor's rights.
(c) Issuance
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All of the Shares purchased by Purchasers hereunder shall be validly
issued, fully paid and nonassessable, and good title thereto shall be vested in
Purchasers, free and clear of all liens, claims and encumbrances.
(d) Capitalization
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The total authorized capitalization of Company is one hundred million
(100,000,000) shares of common stock and twenty million (20,000,000) shares of
preferred stock. There are 5,080,000 shares of such common stock of the Company
currently outstanding. No shares of preferred stock of the Company are
outstanding. There are no other shares of stock outstanding or options or rights
to acquire the capital stock of the Company, other than options or rights
excluded from the calculation of the number of shares issuable upon exercise of
that certain option in favor of Cruttenden pursuant to that certain Agreement
for Advisory Services dated April 10, 1997, by and among the Company,
Engineering and Walter W. Cruttenden, III ("Cruttenden"); namely (i) options
granted to employees other than Keith and Reid, and (ii) an obligation to
deliver stock of the company and options to purchase shares of the Company's
common stock in connection with the acquisition of Engineering Services, Inc.
The total authorized capitalization of Engineering is five million
(5,000,000) shares of common stock. There are 3,800,000 shares of such common
stock of Engineering currently outstanding. There are no other shares of stock
outstanding or options or rights to acquire the capital stock of Engineering,
other than a commitment by Keith and Reid, both in their capacity as officers
and directors of the Company and Engineering, and in their capacity as
controlling shareholders (directly and as trustees) of each of the Company and
Engineering to cause the merger of Engineering with and into the Company, with
the Company as the surviving entity and each shareholder of Engineering
receiving one newly issued share of the Company in consideration for the
cancellation of each of their shares in Engineering.
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4. Representations by Purchasers.
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Each of the Purchasers hereby represents to Company as follows:
(a) Documents Received
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Each of the Purchasers has received, reviewed and is familiar with Company's
business plan, the operating plan, financial statements and projections and has
had an opportunity to ask questions and receive answers from Company concerning
those documents.
(b) Risk
----
Each of the Purchasers recognizes and has assessed the risk involved in
investing in the Shares and has determined based on sufficient experience in
business and financial matters that each is capable of bearing that risk. Each
of the Purchasers is aware that Company is a speculative venture and that the
total amount of funds tendered to purchase the Shares may be completely lost.
(c) Competence
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None of the Purchasers are under any disability with respect to entering
into a contractual relationship with company or to executing the subscription
agreement.
(d) Investment Intent
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Each of the Purchasers is purchasing the Shares solely for the purpose of
investment for his or her own account. None of the Purchasers are acquiring the
Shares with a view to distribution in connection with any resale or other
distribution of the Shares.
(e) Accredited Investor
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Each of the Purchasers is an accredited investor within the meaning of
Regulation D promulgated under the Securities Act of 1933, as amended.
(f) Preexisting Relationship
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Each of the Purchasers has a preexisting personal or business relationship
with Company or one or more of its officers, directors or controlling persons.
(g) Legend
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Each of the Purchasers agrees and represents that he or she will make no
disposition of the Shares unless a registration statement under the Securities
Act of 1933, as amended, is in effect with respect to such securities or, in the
alternative, an exemption from registration under said Act is found to be
available
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to the reasonable satisfaction of Company. Each of the Purchasers further
understands that an opinion of counsel with respect thereto may be required by
Company in its sole discretion. Each of the Purchasers further understands and
agrees that the following legend will be placed on the certificates representing
the Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED
UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND REGULATIONS
THEREUNDER.
(h) Stop Transfer Notice
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Each of the Purchasers understands and is aware that, in order to insure
that transfers of the Shares are made in strict accordance with all limitations
upon transfer imposed by the federal securities laws, the books and records of
Company will include a "stop transfer" notation to the effect that no transfer
of any shares shall be effective unless strict compliance with such limitation
has been made, the determination of which will be made at the absolute
discretion of Company.
5. Miscellaneous
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(a) Successors and Assigns.
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The terms of this Agreement shall be binding upon the successors, heirs,
and assigns of the parties hereto.
(b) Notices.
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All notices required or permitted to be given under this Agreement shall be
personally delivered or sent by prepaid registered or certified mail return
receipt requested to the addresses set forth below:
To Company: The Keith Companies
2955 Red Hill Avenue
Costa Mesa, California 92626
Attention: Aram H. Keith
To Purchasers: Walter W. Cruttenden, III
c/o Cruttenden Roth Incorporated
18301 Von Karman
Irvine, California 92715
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Notices personally delivered shall be deemed given upon delivery and
notices sent by mail as described above shall be deemed given five (5) days
after the date of mailing.
(c) Controlling Law.
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This Agreement shall be interpreted and construed in accordance with the
laws of the State of California.
(d) Headings
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The headings in this Agreement are inserted only as a matter of convenience
and for reference and shall not be deemed to define, limit, enlarge, or describe
the scope of this Agreement or the relationship of the parties, and shall not
affect this Agreement or the construction of any provision herein.
(e) Modifications.
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This Agreement may not be amended or modified in any way except by an
instrument in writing signed by all parties hereto.
(f) Entire Agreement.
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This Agreement together with the exhibits referred to herein embodies the
entire understanding between the parties concerning the subject matter hereof
and merges all prior discussions or communications between them. No party shall
be bound by any conditions, obligations, warranties or representations other
than as expressly stated in this Agreement or as set forth in a writing signed
by a fully authorized representative of each of the parties.
(g) Counterparts.
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This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date indicated above.
COMPANY: THE KEITH COMPANIES, INC.,
a California corporation
By: /s/ ARAM H. KEITH
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Aram H. Keith, President
Signatures continued on following page
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ENGINEERING: KEITH ENGINEERING, INC.,
a California corporation
By: /s/ ARAM H. KEITH
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Aram H. Keith, President
KEITH: /s/ ARAM H. KEITH
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Aram H. Keith
REID: /s/ FLOYD S. REID
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Floyd S. Reid
PURCHASERS:
No. of Shares: 424,969 Walter W. Cruttenden, III and Deborah A.
Cruttenden, joint tenants with right of
survivorship:
/s/ WALTER W. CRUTTENDEN, III
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Walter W. Cruttenden, III
/s/ DEBORAH A. CRUTTENDEN
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Deborah A. Cruttenden
No. of Shares: 53,121 /s/ CHRISTOPHER L. CRUTTENDEN
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Christopher L. Cruttenden
No. of Shares: 53,121 /s/ RIAN P. CRUTTENDEN
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Rian P. Cruttenden
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