EXHIBIT 10.1
MANAGEMENT AND SERVICES AGREEMENT
This Management and Services Agreement (the "Agreement") is entered
into effective as of May 29, 1997, by and between XXXXXX XXXX XXXXX INC., an
Iowa corporation (hereinafter referred to as "HLM"), and HLM DESIGN, INC., a
Delaware corporation (hereinafter referred to as "Design").
RECITALS
WHEREAS, HLM provides architectural and engineering services through
the services of duly licensed architects and engineers engaged by HLM as
employees or independent contractors;
WHEREAS, Design is in the business of providing comprehensive
management services to architectural and engineering firms, including the
provision of office space and equipment, the recruitment, hiring and employment
of architectural and engineering personnel and support personnel, and the
provision of billing and collection services;
WHEREAS, Design has special expertise and experience in the operation,
management and marketing of the non-architectural and non-engineering aspects of
architectural and engineering firms of the type intended to be operated by HLM;
and
WHEREAS, HLM desires that Design provide the above-described services
to HLM, and Design desires to provide such services to HLM, pursuant to the
provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties hereto and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby agree as follows:
1. Term of Agreement; Termination. Commencing on the effective date
set forth above, and subject to the termination provisions set forth below, this
Agreement shall continue in effect until the fortieth (40th) annual anniversary
of the effective date hereof. Thereafter, this Agreement shall automatically
renew for successive one (1) year terms, unless either party shall provide the
other with written notice of termination at least thirty (30) days prior to the
expiration of the then current term hereof. Notwithstanding the foregoing,
either party hereto may terminate this Agreement at any time upon written notice
to the other in the event of any of the following:
a. The filing of a petition in voluntary bankruptcy or an
assignment for the benefit of creditors by the other, or
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upon other action taken or suffered, voluntarily or involuntarily,
under any federal or state law for the benefit of debtors by the other,
except for the filing of a petition in involuntary bankruptcy against
the other which is dismissed within thirty (30) days thereafter; or
b. In the event the other shall materially default in the
performance of any duty or obligation imposed upon it by this Agreement
and such default shall continue for a period of thirty (30) days after
written notice thereof has been given to the defaulting party by the
non-defaulting party.
2. Obligations of Design.
a. General. HLM hereby appoints Design as its sole and
exclusive manager and administrator of all of HLM's day-to-day business
functions. HLM acknowledges and agrees that the purpose and intent of
this Agreement is to relieve HLM to the maximum extent possible of the
administrative, accounting, personnel and business aspects of HLM's
operations, with Design assuming responsibility and being given any and
all necessary authority to perform these functions. In connection with
the foregoing, HLM hereby agrees that Design shall have the authority,
duties and obligations set forth in Sections
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2.b. through 2.d. below, and HLM agrees to take no actions in
contravention thereof without the express prior written consent of
Design.
b. Financial Planning. Design shall prepare such budgets,
plans and policies as are necessary and appropriate in connection with
the operations of HLM, reflecting the anticipated sources and uses of
capital for HLM, and HLM's anticipated revenues and expenses. All
operations of HLM shall be conducted in accordance with such budgets,
plans and policies, which shall establish, by way of example and not
limitation, the following:
(1) the amounts, purpose and priority of all capital
expenditures;
(2) the amounts and sources of all additional
capital, including without way of limitation the issuance of
any and all additional capital stock and the incurring of any
and all indebtedness;
(3) the amounts, manner of payment and timing of all
dividends; and
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(4) the amount, form and manner of payment of all
employee compensation and benefits, including without way of
limitation all compensation and benefits pertaining to
personnel employed or engaged by HLM, or pertaining to
personnel employed or engaged by Design on HLM's behalf.
c. Facilities, Equipment and Supplies. During the term of
this Agreement, and all renewals and extensions hereof, Design shall
analyze, select and negotiate for the lease and/or purchase by HLM or
Design, as the case may be, of (1) suitable office facilities
("Offices") in which HLM can provide architectural and engineering
services, (2) such architectural and engineering equipment, office
equipment, furniture, fixtures, furnishings and leasehold improvements
(collectively, "Equipment") as necessary for the performance by HLM of
its architectural and engineering services, and (3) business supplies
of every kind, name or nature, which may reasonably be required by HLM
for its operations. Design shall have the authority to negotiate for
the purchase or lease of any or all such items on HLM's behalf, either
in HLM's or Design's name, as shall be deemed appropriate by Design in
its sole discretion, and all such items shall in all events be subject
to, and leased or purchased in accordance
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with, the budgets, plans and policies referenced in Section 2.b. above.
d. Development, Management and Administrative Services. During
the term of this Agreement, and all renewals and extensions hereof,
Design shall furnish to HLM, or assist HLM in obtaining, as deemed
appropriate by Design in its sole discretion, all of the
non-architectural and non-engineering development, management and
administrative services as may be needed by HLM in connection with
HLM's operations. Additionally, Design shall provide HLM with such
advice and supervision regarding all aspects of HLM's architectural and
engineering services as HLM may request from time to time, subject in
all events to the limitations set forth in Section 4 hereof. Such
non-architectural and non-engineering development, management and
administrative services shall include, by way of example and not
limitation, the following:
(1) Bookkeeping and Accounts. Design shall establish
and maintain all bookkeeping and accounting services necessary and
appropriate to support the Offices, including, without limitation,
maintenance, custody and supervision of all business records, papers,
documents, ledgers, journals and reports, and the
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preparation, distribution and recordation of all bills and statements
for professional services rendered by HLM (collectively, "Books and
Records"). Notwithstanding the foregoing, HLM shall be responsible for
maintaining full and accurate accounting records of all services
rendered and such additional information as may be required in order
for HLM to satisfy any and all applicable reporting requirements.
(2) General Administrative Services. Design shall
provide HLM with overall supervision and management, including the
maintenance and repair, of the Offices, and of all Equipment located in
or at the Offices.
(3) Contract Negotiation and Administration. Design
shall negotiate and administer all non- architectural and
non-engineering aspects of all agreements pertaining to the provision
of architectural and engineering services by HLM to third parties
("Architectural and Engineering Agreements"). By way of example and not
limitation, Design shall have the authority to negotiate and administer
the provisions of the Architectural and Engineering Agreements
pertaining to such matters as pricing and scheduling, and shall also
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provide HLM with such advice and supervision regarding all other
aspects of the Architectural and Engineering Agreements as HLM may
request from time to time, subject in all events to the limitations set
forth in Section 4 hereof. Additionally, Design shall negotiate and
administer all aspects of HLM's agreements which do not pertain
directly to the provision of architectural or engineering services by
HLM to third parties ("General Business Contracts").
(4) Personnel. Subject to the provisions of Section 4
hereof, Design shall provide such personnel to HLM as Design shall
determine in its sole discretion to be necessary to enable HLM to
perform all services contemplated under the Architectural and
Engineering Agreements and the General Business Contracts. Design shall
provide such personnel by either (1) engaging such personnel directly
on HLM's behalf (for example, as employees or independent contractors
of HLM), or (2) engaging such personnel directly (for example, as
employees or independent contractors of Design) and then leasing or
subcontracting such personnel to HLM. Design shall have the sole
discretion to determine the manner in which such personnel are provided
to HLM. In no event
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shall Design provide or be required to provide architect or engineer
employees or independent contractors (whether licensed or unlicensed)
to HLM in any manner not in compliance with all applicable codes, rules
and regulations adopted by any authority regulating the licensing of
architects or engineers for the applicable jurisdiction. Design shall
advise HLM with respect to the hiring and termination of all HLM
personnel, and shall determine compensation for all HLM and all Design
personnel, including determination of salaries, fringe benefits,
bonuses, health and disability insurance, workers' compensation
insurance, and any other benefits that each such employee shall
receive. HLM shall compensate all HLM personnel (including those leased
or subcontracted to HLM by Design) and make any and all applicable
withholding filings and payments in connection therewith. Additionally,
Design shall manage and supervise any licensed personnel employed or
engaged by HLM, or employed or engaged by Design on behalf of HLM,
regarding those aspects of their employment that do not involve
performance under the scope of their licensure; provided, however, that
HLM shall manage and supervise all activities of such licensed
personnel performed under the scope of their licensure.
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(5) Security and Maintenance. Design shall advise HLM
with respect to all services and personnel necessary to
provide HLM with proper security, maintenance, and cleanliness
of the Offices and the Equipment.
(6) Architectural and Engineering Recruiting and
Training. Design shall, in its sole discretion, either perform
on HLM's behalf, or assist HLM in performing, all recruiting,
screening and evaluating of prospective architect and engineer
employees and contractors for HLM, and Design shall assist HLM
in training HLM's architects and engineers in the delivery of
architectural and engineering services at the Offices in a
manner consistent with HLM's and Design's established
standards, practices, procedures and policies.
(7) Insurance. Design shall, in its sole discretion,
either provide directly or advise and direct HLM with respect
to selecting and negotiating for the provision of professional
liability, commercial general liability and property insurance
to protect against loss in the nature of fire, other
catastrophe, theft, business
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interruption, general liability, and non-architectural and
non-engineering negligence.
(8) Billing and Collections. In order to relieve HLM
of the administrative burden of handling the billing and
collection of sums due under Architectural and Engineering
Agreements, Design shall be responsible, on behalf of and for
HLM, for billing and collecting the charges made with respect
to Architectural and Engineering Agreements and any or all
other services provided at the Offices; provided that
responsibility for specific accounts may be retained by HLM at
the mutual agreement of HLM and Design. In such event HLM
agrees that it will keep and provide to Design all invoices,
documents, evidence and records necessary for the purpose of
supporting the fees charged for all architectural and
engineering services from time to time. It is expressly
understood that the extent to which Design will endeavor to
collect such charges, the methods of collecting, the settling
of disputes with respect to charges, and the writing off of
charges that may be or appear to be uncollectible shall at all
times be within the sole discretion of Design (but subject to
all applicable governmental regulations and the terms and
conditions
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of applicable agreements), and that Design does not guarantee
the extent to which any charges billed will be collected. At
HLM's request, Design will reassign to HLM for collection by
HLM, any accounts which Design has determined to be
uncollectible.
(9) Bank Accounts and Disbursements. During the term
of this Agreement, Design shall have access to any and all
bank accounts of HLM, and in connection therewith HLM hereby
appoints Design for the term hereof as its lawful
attorney-in-fact to deposit in such accounts fees generated
from HLM's architectural and engineering practice which are
collected by Design, and to make withdrawals from such
accounts for the payment of expenses arising from or relating
to HLM's operations, for Design's compensation hereunder, and
for all other costs, expenses and disbursements which are
required or authorized by this Agreement. Such withdrawals and
payments may be made by Design at any time and from time to
time as Design deems appropriate in its sole discretion. For
administrative convenience, HLM shall not make any
withdrawal(s) from such accounts without the prior written
consent of Design. HLM agrees to execute from time to time any
and all additional documents
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required by the banks at which HLM's accounts are maintained to
effectuate the power of attorney granted above.
(10) Approval of Stock Transfers. Design shall have
the sole authority and discretion to approve or deny on behalf
of HLM any and all proposals by stockholders of HLM to
encumber, sell, pledge, give or otherwise transfer HLM capital
stock.
(11) Marketing Support. Design shall provide HLM
with such marketing support as Design in its sole discretion
deems appropriate to develop, enhance and continue HLM's
practice. Such support may include, by way of example and not
limitation, making available such brochures, literature and
sales aids as Design develops, providing HLM with access to
pertinent economic and market data acquired or developed by
Design, and developing and implementing a comprehensive
marketing plan designed to xxxxxx client relations and enhance
HLM's name recognition as a high quality provider of
professional architectural and engineering services.
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3. Compliance with Architectural and Engineering Agreements. Design
agrees to perform its duties hereunder so as to comply with HLM's obligations
under the Architectural and Engineering Agreements.
4. Conduct of Architectural and Engineering Practice. HLM agrees to
assign a duly licensed architect and, to the extent engineering services are
provided, a duly licensed engineer to assure that its Offices are adequately
staffed with such architectural and engineering personnel as may be necessary to
efficiently perform architectural and engineering services at such Offices.
Notwithstanding any provision in this Agreement to the contrary, Design shall
have no authority, directly or indirectly, to perform, and shall not perform,
any function of HLM's operations pertaining to services ("Professional
Services") which are required to be performed by duly licensed architects and/or
engineers pursuant to any and all applicable codes, or rules or regulations
adopted by any authority regulating the licensing of architects (the
"Architecture Board") or engineers (the "Engineering Board"). Design may,
however, advise HLM as to the relationship between HLM's performance of
Professional Services and the overall administrative and business functions of
HLM's operations. To the extent Design assists HLM in performing Professional
Services, all personnel employed or engaged by HLM or by Design on HLM's behalf
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shall be subject to the professional direction and supervision of HLM, and in
the performance of such Professional Services, such personnel shall not be
subject to any direction or control by, or liability to, Design, except as may
be specifically authorized by HLM in accordance with applicable codes, rules or
regulations.
To the extent any provision of this Agreement is determined to violate
any provision of the applicable codes, or any rule or regulation of the
Architecture Board or of the Engineering Board, then such provision of this
Agreement shall be deemed modified to the minimum extent necessary to cure such
violation.
5. Non-Exclusive Nature of Design's Duties. The parties acknowledge
that Design is in the business of providing services of the nature provided to
HLM hereunder to architectural and engineering firms located throughout the
United States, and that Design may currently be a party to or may at any time
hereafter enter into contracts with other architectural and engineering firms in
that regard. Additionally, Design may also directly or indirectly provide
architectural and engineering services from time to time. No such activities by
Design shall be deemed a breach of or a conflict with the duties of Design
hereunder.
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6. Design's Compensation. As compensation for the provision of its
services hereunder, Design shall be paid, no less frequently than on a quarterly
basis, an estimate of the balance, if any, of HLM's cash flow (as determined in
accordance with generally accepted accounting principles applied on a consistent
basis) following the payment by HLM or by Design on HLM's behalf of all of HLM's
expenses, and the deduction from such cash flow of an amount equal to one
percent (1.00%) of HLM's net profits (as determined in accordance with generally
accepted accounting principles applied on a consistent basis) for such time
period as has elapsed subsequent to the last payment to Design (such deducted
amount to be retained by HLM as compensation for services provided to HLM by HLM
or by HLM's personnel, and to be distributed or retained by HLM as HLM deems
appropriate in its sole discretion).
7. Ownership of Books and Records. The books and records generated and
maintained by each of the parties hereto shall be and remain the property of
each such party. HLM agrees to make all of its books and records (subject to
applicable ethical and legal confidentiality requirements) available for
inspection, examination or copying by duly authorized representatives of Design
from time to time throughout the term hereof, and upon written request by Design
to HLM following the termination hereof, all to enable Design to better perform
its duties hereunder.
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8. Liability and Indemnification. Neither Design nor its stockholders,
directors, officers, employees or agents shall have any liability for action
taken or omitted by such person(s) in the performance of its duties hereunder if
such action or omission is taken in good faith and without negligence. Each
party to this Agreement respectively assumes responsibility for liability,
actual or alleged, arising from its respective activities performed pursuant to
this Agreement. HLM agrees, during the term of this Agreement and thereafter, to
the extent necessary to effectuate the purpose hereof, to indemnify and hold
harmless Design against any claims or liabilities arising under this Agreement
which arise out of or in connection with the Architectural and Engineering
Agreements, the General Business Contracts or the actions of HLM's architect and
engineer employees or contractors (including, without way of limitation, those
employees and contractors employed or engaged by Design on HLM's behalf or
otherwise).
9. Confidentiality. HLM acknowledges that due to the nature of this
Agreement, HLM will have access to information of a proprietary nature owned by
Design including, but not limited to, any and all computer programs (whether or
not completed or in use) and any and all operating manuals or similar materials
which constitute the non-architectural and non-engineering systems,
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policies and procedures, and methods of doing business, developed by Design for
the operation of facilities managed by Design. Consequently, HLM acknowledges
and agrees that Design has a proprietary interest in all such information and
that all such information constitutes confidential and proprietary information
and the trade secret property of Design. HLM hereby waives any and all right,
title and interest in and to such confidential information and trade secrets and
agrees to return all copies of such confidential information and trade secrets
to Design, at HLM's expense, upon the termination of the Agreement.
HLM further acknowledges and agrees that Design is entitled to prevent
its competitors from obtaining and utilizing its confidential information and
trade secrets. Therefore, HLM agrees to hold Design's confidential information
and trade secrets in strictest confidence and not to disclose them to or allow
them to be disclosed to or used by, directly or indirectly, any person or entity
other than those persons or entities who are employed by or affiliated with
Design or HLM, either during the term of this Agreement, or at any time after
the expiration or sooner termination of this Agreement, without the prior
written consent of Design. HLM agrees to require each independent contractor and
employee of HLM, and any such persons or entities to whom such information is
disclosed for the purpose of performance of Design's
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or HLM's obligations under this Agreement, to execute a "Confidentiality
Agreement" in a form acceptable to Design, upon the request of Design.
HLM acknowledges and agrees that a breach of this Section 9 will result
in irreparable harm to Design which cannot be reasonably or adequately
compensated in damages, and therefore Design shall be entitled to injunctive and
equitable relief to prevent a breach and to secure enforcement thereof, in
addition to any other relief or award to which Design may be entitled.
10. Cooperation. HLM and Design agree that they shall at all times
maintain an effective liaison and close cooperation with each other to
facilitate the provision of high quality and cost effective architectural and
engineering services. Each of the parties agrees to cooperate fully with each
other in connection with the performance of their respective obligations under
this Agreement, and both parties agree to employ their best efforts to resolve
any dispute that may arise under or in connection with this Agreement. HLM shall
provide to Design full and complete access to HLM's premises, and to HLM's Books
and Records (as defined in Section 2.d.(1) hereof), in order that Design may
perform its functions hereunder. Notwithstanding any other provisions contained
herein, Design shall not be liable to HLM, and shall not
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be deemed to be in default hereunder, for the failure to perform or provide any
of the supplies, services, personnel, or other obligations to be performed or
provided by Design pursuant to this Agreement if such failure is a result of a
labor dispute, act of God, or any other event which is beyond the reasonable
control of Design.
11. Arbitration. If a dispute or matter in controversy arises between
the parties hereto which they are unable to resolve to their mutual satisfaction
within ten (10) days of written notice from one to the other of the existence of
such dispute, then either party may notify the other party in writing (the
"Notice") that the dispute be submitted to binding arbitration as provided
herein. Such arbitration shall take place in Charlotte, North Carolina, in
accordance with the Rules of Commercial Arbitration of the American Arbitration
Association, or its successor. The provisions of xx.xx. 1-567.1 et seq. of the
General Statutes of North Carolina, or any successor or amended statute or law
containing similar provisions, shall apply in any such arbitration. Any
arbitration pursuant to this Agreement shall be conducted by one (1) arbitrator.
The judgment upon the award rendered in any such arbitration shall be final and
binding upon the parties and may be entered in any court having jurisdiction
over any party.
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12. Waiver of Violation. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as or be
construed as a waiver of any subsequent breach thereof.
13. Miscellaneous.
a. Notices. All notices, offers and acceptances or rejections
thereof required to be given hereunder, shall be given by certified
mail to the parties hereto at the addresses listed below, or at such
other address as may be stated from time to time, and shall be deemed
delivered upon deposit in the United States mail, postage prepaid:
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To HLM: Xxxxxx Xxxx Xxxxx Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
To Design: HLM Design, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
With a Copy to: Xxxxxxx X. Xxxx, Esq.
Xxxxxxxxx Xxxxxx Xxxxxx & Xxxxxx, P.A.
0000 Xxxxxxxxx Xxxxx
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
b. Severability. The provisions of this Agreement shall be
separable and a determination that any provision of this Agreement, or
subpart thereof, is either unenforceable or void shall not affect the
validity of any other provision of this Agreement, or subpart thereof.
Wherever possible all provisions shall be interpreted so as not to be
unenforceable and any court of competent jurisdiction is authorized and
directed by the parties hereto to enforce any otherwise unenforceable
provision in part, to modify it, to enforce it only to a degree and not
fully, or otherwise to enforce that provision only in a manner and to
an extent, that renders the provision valid or enforceable. The intent
of the parties is that this Agreement be enforceable and enforced to
the maximum extent possible after excising (or deeming excised) all
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invalid or unenforceable provisions, whether or not the remaining
provisions are grammatically correct.
c. Amendments or Modifications. This Agreement constitutes the
entire understanding between the parties hereto with respect to the
subject matter hereof, and no changes, amendments or alterations shall
be effective unless agreed to in writing by both parties hereto,
provided that no such amendment shall conflict with applicable laws or
regulations.
d. Relationship of the Parties. The relationship of the
parties hereto shall at all times be that of independent contractors.
Except as expressly provided herein, nothing contained in this
Agreement shall be construed to constitute either party as an agent,
legal representative, partner, joint venturer or employee of the other,
and neither party hereto shall have the power to bind the other with
respect to any obligation to any third party.
e. Assignability. Design may assign this Agreement, and/or
transfer, assign or delegate any or all of its rights, obligations and
responsibilities under this Agreement, without the consent of HLM, to
one or more of Design's Affiliated
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Entities and/or one or more of Pacific Capital, L.P., a Delaware
limited partnership, and/or Equitas, L.P., a Delaware limited
partnership. For purposes of this Agreement, "Affiliated Entities" are
defined to include any and all entities which: (1) are owned by Design,
(2) are under common control with Design, (3) are licensees of Design,
or (4) are otherwise affiliated with Design. Except as expressly
provided above, this Agreement is not transferrable or assignable by
either party.
f. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
HLM DESIGN, INC.
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
President
XXXXXX XXXX XXXXX INC.
By: /s/ Xxxxxx X. Xxxxxxx
_________________________________
Senior Vice President
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