FORM OF
NON-COMPETE, CONFIDENTIALITY
AND REGISTRATION RIGHTS AGREEMENT
TO BE EXECUTED BY EACH STOCKHOLDER
THIS NON-COMPETE, CONFIDENTIALITY AND REGISTRATION RIGHTS AGREEMENT
("Agreement") is executed and delivered this ____ day of February, 1997 between
___________________, a resident of __________________ ("Stockholder") and Hagler
Bailly, Inc., a Delaware corporation ("Company"), and its subsidiaries.
BACKGROUND
Whereas, the undersigned is a stockholder of the Company and an
[employee][director] of [the Company][a subsidiary of the Company, [Hagler
Bailly Services, Inc.][Hagler Bailly Consulting, Inc.][HB Capital, Inc.]]; and
Whereas, this Agreement is delivered to the Company in connection
with the contemplated initial public offering (the "Initial Offering") by the
Company of shares of its Common Stock (as defined below). In consideration for
the undersigned Stockholder's agreement to be bound by the confidentiality,
non-compete and non-solicitation provisions herein, the Company has agreed (i)
to invite the undersigned Stockholder to request registration of certain of such
Stockholder's shares of stock in connection with the Initial Offering and (ii)
subject to Section 4.4 herein, to pay the reasonable attorney's fees of
Stockholder and certain other costs and expenses related to Stockholder's
participation in the Initial Offering pursuant to this Agreement.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
of which is hereby acknowledged and intending to be legally bound hereby,
Stockholder and the Company covenant and agree as follows:
1. Confidentiality.
1.1. From and after the date hereof, Stockholder 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 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 Stockholder in the
course of Stockholder's [employment with][directorship 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 Stockholder from divulging or using for his or her 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 Stockholder's breach of this
Agreement.
1.2. All right, title and interest in and to Proprietary Information shall
be and remain the sole and exclusive property of the Company. Stockholder 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. Stockholder shall not make, retain,
remove and/or distribute any copies of any of the foregoing for any reason
whatsoever except as may be necessary in the performance of Stockholder's
obligations as an officer or employee of the Company or any of its subsidiaries,
and Stockholder shall not divulge to any third person the nature of and/or
contents of any of the foregoing or of any other oral or written information to
which Stockholder may have access or with which for any reason Stockholder
became familiar, except as disclosure shall be necessary for the purposes of
conducting the ongoing business of the Company; and upon Stockholder's
termination as an employee, officer or director of the Company or any of its
subsidiaries, Stockholder shall return to the Company all originals and copies
of the foregoing then in Stockholder's possession.
1.3. Nothing contained herein shall restrict Stockholder's ability to make
any disclosures as may be required by law; provided, however, that Stockholder
shall deliver to Company reasonably prompt prior written notice of the nature
and justifications of such disclosures; and provided, further, that prior to any
such disclosure which may be made, Stockholder reasonably shall cooperate with
the Company, in connection with any actions which the Company shall seek to take
in order to obtain a protective order or similar relief with respect to any
Proprietary Information sought to be disclosed.
[1.4. The covenants relating to Confidentiality set forth in this Section
1 replace the confidentiality provisions set forth in Section 6 of the
Employment Agreement between the
Stockholder and the Company's subsidiary, Hagler Bailly Services, Inc. (formerly
Hagler Bailly Consulting, Inc.), dated May 25, 1995 (the "Employment
Agreement").]
2. Non-Compete and Non-Solicitation Covenants.
2.1. Except (i) in furtherance of the Company's business or otherwise on
behalf of the Company; (ii) after the Company's termination of Stockholder's
[employment][directorship] with [the Company][subsidiary of the Company] without
Cause (as defined below) or (iii) upon the occurrence of a Material Adverse
Event (as defined below), Stockholder will not do any of the following directly
or indirectly without the prior written consent of the Chief Executive Officer
of the Company (which consent shall not be unreasonably withheld):
2.1.1. During the Covenant Period (as defined below), engage or
participate, directly or indirectly, in any business activity competitive with
the business conducted by the Company or any of its subsidiaries at any time
prior to the closing of the Initial Offering (the "Effective Time") or any other
business of the Company conducted at any time during Stockholder's term as an
employee and/or director of the Company or one of its subsidiaries
(collectively, the "Business");
2.1.2. During the Covenant Period, 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 where such portion
of such business is competitive with the Business (notwithstanding the
foregoing, Stockholder 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);
2.2. Except in furtherance of the Company's business or otherwise on
behalf of the Company, Stockholder will not do any of the following directly or
indirectly without the prior written consent of the Chief Executive Officer of
the Company (which consent shall not be unreasonably withheld):
2.2.1. During the Covenant Period, 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 (2) year period preceding
the Effective Time or (y) anytime after the Effective Time;
2.2.2. During the Covenant Period, 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
2.2.3. During the Covenant Period, influence or attempt to influence
any person either (i) to terminate or modify the 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.
2.3. Defined Terms.
2.3.1. The term "Covenant Period" as used herein means the two (2)
year period following the Effective Time. The parties hereto expressly agree
that the Covenant Period applicable to Sections 2.1.1, 2.1.2, 2.2.1, 2.2.2 and
2.2.3 of this Agreement shall not begin until the Effective Time.
2.3.2. The term "Cause" as used herein means: (i) a material failure
by Stockholder to meet annual performance targets determined by the Board of
Directors of the Company or, if no performance targets have been set for
Stockholder, the material failure of Stockholder to perform satisfactorily the
duties required by or appropriate for his or her position as [an employee][a
director] of [the Company][indicate subsidiary], as determined by the Board of
Directors of the Company in its reasonable discretion, (ii) conduct of
Stockholder involving any type of disloyalty to the Company or its subsidiaries
or willful misconduct with respect to the Company or its subsidiaries, including
without limitation fraud, embezzlement, theft or proven dishonesty, (iii)
chronic alcoholism or drug addiction, (iv) a material breach by the Stockholder
of the terms of this Agreement, or (v) the conviction of the Stockholder of any
felony or other serious crime.
2.3.3. The term "Material Adverse Event" shall mean (i) a bankruptcy
petition filed under and pursuant to Chapter 7 of the United States Bankruptcy
Code; (ii) the dissolution of the Company; (iii) the assignment of Stockholder
without his or her consent, to responsibilities or duties of a materially lesser
status or degree of responsibility than Stockholder's responsibilities or duties
as of the date of this Agreement; or (iv) the requirement by the Company that
the Stockholder, without his or her consent, be based anywhere other than in the
country where Stockholder is based as of the date of this Agreement.
2.4. Stockholder acknowledges that (i) he or she has carefully read and
considered the provisions of this Section 2, and (ii) has obtained legal counsel
in determining whether to enter into this Agreement. Stockholder acknowledges
that the foregoing restrictions may limit his or her ability to earn a
livelihood in a business similar to the Business, but Stockholder nevertheless
believes that he or she has received and will receive sufficient consideration
and other benefits in connection with the Initial Offering to justify such
restrictions, which restrictions Stockholder 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.
2.5. The terms of the covenants contained in this Section 2 shall be
construed as separable and shall be independent and shall be interpreted and
applied consistently with the requirements of reasonableness and equity.
3. Specific Enforcement; Extension of Period.
3.1. Stockholder acknowledges that the restrictions contained in Sections
1 and 2 hereof are reasonable and necessary to protect the legitimate interests
of the Company. Stockholder also acknowledges that any breach by him or her of
Sections 1 or 2 hereof will cause continuing and irreparable injury to the
Company for which monetary damages would not be an adequate remedy. Stockholder
agrees that he or she shall not, in any action or proceeding to enforce any of
the provisions of this Agreement, assert the claim or defense that an adequate
remedy at law exists. In the event of such breach by Stockholder, the Company
shall have the right to enforce the provisions of Sections 1 and 2 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.
3.2. The Covenant Period set forth in Section 2 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 Stockholder through the
expiration of all appeals related to such litigation.
4. Registration
4.1. Agreement to Register. In consideration for the covenants of
Stockholder set forth herein, the Company agrees that at the time of filing a
registration statement on Form S-1 under the Securities Act (the "Registration
Statement") to register shares of the Company's common stock, $.01 par value
("Common Stock") in connection with the Initial Offering, it will give written
notice to Stockholder of its intention to do so, and upon the written request of
Stockholder to include his or her Registrable Securities (as defined below) in
such registration, given within five (5) days after the mailing of any such
notice by the Company (a "Holder Request"), the Company will cause those
Registrable Securities held by Stockholder which it requests to be included in
the Registration Statement, to be so included, subject to the provisions of
Section 4.3 below.
Nothing in this Section 4 shall be deemed to require the Company to
proceed with the registration of its securities after giving the notice herein
provided.
4.2. Permitted Delay or Termination of Registration. The Company may
indefinitely delay or terminate the registration or qualification of Registrable
Securities required pursuant to this Section 4.
4.3. Required Reduction or Elimination of Offered Shares. The Company
and/or the Managing Underwriter (as defined below) may, in its or their sole
discretion, round the number of securities to be registered or qualified in
accordance with Section 4 to the nearest 100 shares. In addition, in executing
this document, the undersigned acknowledges that inclusion of any or all of the
Registrable Securities in the Initial Offering is subject, in all respects, to
the discretion of the Company and of Donaldson, Lufkin & Jenrette and Montgomery
Securities (collectively, the "Managing Underwriters") and further that the
Company and the Managing Underwriters may exclude such Registrable Securities
from the Initial Offering, limit the amount of such shares sold in the Initial
Offering, determine if and to what extent such shares will be included in either
the firm offering or in the underwriters' over-allotment option and otherwise
determine whether, to what extent and under what terms and conditions, such
shares and all other outstanding shares (including certain officers and
directors) will be included in the Initial Offering; provided, however, that in
the event that the Company or the Managing Underwriters increase or decrease the
percentage of Registrable Securities referenced in Section 4.5 below with
respect to any stockholder of the Company, the percentage of the Registrable
Securities of the other stockholders of the Company shall be adjusted
accordingly on the same proportionate basis. You acknowledge that based on the
foregoing, you may be limited to selling a smaller percentage of your shares in
the firm offering than in the over-allotment offering. The undersigned further
acknowledges that Registrable Securities included in the over-allotment option
will be eligible for sale only if the Initial Offering is oversubscribed and the
underwriters exercise their over-allotment option. As a result, depending on the
responses from other stockholders, market conditions and whether the Managing
Underwriters exercise their over-allotment option, the undersigned may not be
able to sell all or any of the Registrable Securities in the Initial Offering.
4.4. Expenses.
4.4.1. The Company shall pay all fees and expenses incurred by it in
connection with a registration effected pursuant to this Section 4.
Notwithstanding the foregoing, the stockholders of the Company shall be required
to pay the underwriters' fees, discounts or commissions relating to Registrable
Securities sold by them.
4.4.2. As additional consideration for the covenants set forth in
Sections 1 and 2 of this Agreement, the Company agrees to pay reasonable
attorney's fees of Stockholder in connection with the Stockholder's
participation in the Initial Offering pursuant to this Agreement, so long as
Stockholder is represented by either Smart & Thevenet P.C. or Zuckerman,
Spaeder, Goldstein, Taylor & Kolker, L.L.P.
4.5. Registrable Securities. For purposes of this Agreement, the term
"Registrable Securities" shall mean ten (10%) percent of the shares of Common
Stock of the Company held by Stockholder and each of the other stockholders of
the Company on the date hereof on a fully diluted basis. For purposes of this
Section 4.5, shares of Common Stock of the Company held by
the Stockholder and other stockholders of the Company shall include all shares
underlying outstanding options to purchase shares of Common Stock.
4.6. Obligations of Stockholder. As a condition to including any
Registrable Securities in the Registration Statement pursuant to this Section 4,
Stockholder shall be required to execute and comply with such agreements and
documents as may be reasonably requested by the Company or the underwriters in
connection with the Initial Offering.
5. Termination of Agreement. This Agreement shall automatically terminate
if the Effective Time does not occur on or prior to December 31, 1997.
6. Miscellaneous
6.1. Successors and Assigns. This Agreement shall inure to the benefit of
the Company and its successors and assigns.
6.2. Waiver. The waiver by the Company of the breach of any term or
provision of this Agreement shall not operate as or be construed to be a waiver
of any other provision or subsequent breach of this Agreement.
6.3. Governing Law; Consent to Jurisdiction. This Agreement shall be
construed and enforced in accordance with the substantive laws of the State of
Delaware, without regard to the principles of conflicts of laws of any
jurisdiction. Stockholder irrevocably consents to the exclusive jurisdiction and
venue (and waives any inconvenient forum objection), and submits to the personal
jurisdiction, of the state and federal courts located within the State of
Delaware, and agrees that service of process may be effected by US certified
mail, return receipt requested.
6.4. Invalidity. If any provision of this Agreement shall be determined to
be void, invalid, unenforceable or illegal for any reason, the validity and
enforceability of all of the remaining provisions hereof shall not be affected
thereby. If any particular provision of this Agreement shall be adjudicated to
be invalid or unenforceable, such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
amendment to apply only to the operation of such provision in the particular
jurisdiction in which such adjudication is made; provided that, if any provision
contained in this Agreement shall be adjudicated to be invalid or unenforceable
because such provision is held to be excessively broad as to duration,
geographic scope, activity or subject, such provision shall be deemed amended by
limiting and reducing it so as to be valid and enforceable to the maximum extent
compatible with the applicable laws of such jurisdiction, such amendment only to
apply with respect to the operation of such provision in the applicable
jurisdiction in which the adjudication is made.
6.5. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on
the day first above written.
___________________________________
[Name of Stockholder]
HAGLER BAILLY, INC.
By:________________________________
Name:
Title: