NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of May
30, 1997, by and between, HLM Design, Inc., a Delaware corporation (the
"Company"), Hansen Lind Meyer, Inc., an Iowa corporation ("HLM") and Joe Harris,
an individual residing at _____________________________________ ("Harris").
WITNESSETH:
WHEREAS, Harris is an employee of the Company and HLM and as such
has access to confidential information about the Company and HLM and their
businesses; and
WHEREAS, the Company has negotiated with Pacific Capital, L.P. and
Equitas, L.P. (the "Lenders") to borrow the sum of $2,000,000, all or a portion
of which will be lent by the Company to BBH Corp., a company that has entered
into a Merger Agreement to merge with and into HLM, and such Lenders have
required as a condition to such loan that Harris enter into a Noncompetition
Agreement with the Company and HLM; and
WHEREAS, in order to protect the Company, HLM, their shareholders
and creditors, Harris has agreed not to compete with the Company or HLM pursuant
to and in accordance with the terms of this Noncompetition Agreement.
NOW, THEREFORE, for and in consideration of the premises set forth
above and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. ACKNOWLEDGMENTS BY Harris
Harris acknowledges that (a) Harris has occupied a position of
trust and confidence with the Company and HLM prior to the date hereof and has
become familiar with the following, any and all of which constitute confidential
information of the Company and HLM, (collectively the "Confidential
Information"): (i) any and all trade secrets concerning the business and affairs
of the Company and HLM, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing and distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code), computer software and database technologies,
systems, structures and architectures (and related processes, formulae,
compositions, improvements, devices, know-how, inventions, discoveries,
concepts, ideas,
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designs, methods and any other information, however documented, of the Company
or HLM that is a trade secret under any applicable law; (ii) any and all
information concerning the business and affairs of the Company or HLM (which
includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, personnel training and techniques and
materials) however documented; and (iii) any and all notes, analysis,
compilations, studies, summaries, and other material prepared by or for the
Company or HLM containing or based, in whole or in part, on any information
included in the foregoing, (b) the business of the Company and HLM is national
in scope, (c) their products and services are marketed throughout the United
States; (d) the Company and HLM compete with other businesses that are or could
be located in any part of the United States; (e) the Company and HLM have
required that Harris make the covenants set forth in Sections 3 and 4 of this
Agreement as a condition to Harris's continued employment with the Company and
HLM and the Lenders have required that Harris make the covenants set forth in
Sections 3 and 4 of this Agreement as a condition to making the loan to the
Company; (f) the provisions of Sections 3 and 4 of this Agreement are reasonable
and necessary to protect and preserve the business of the Company and HLM, and
(g) the Company and HLM would be irreparably damaged if Harris were to breach
the covenants set forth in Sections 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION
Harris acknowledges and agrees that all Confidential Information
known or obtained by Harris, whether before or after the date hereof, is the
property of the Company and HLM. Therefore, Harris agrees that Harris will not,
at any time, disclose to any unauthorized Persons or use for his own account or
for the benefit of any third party any Confidential Information, whether Harris
has such information in Harris's memory or embodied in writing or other physical
form, without written consent from the Company or HLM, as applicable, unless and
to the extent that the Confidential Information is or becomes generally known to
and available for use by the public other than as a result of Harris's fault or
the fault of any other person bound by a duty of confidentiality to the Company
or HLM.
4. NONCOMPETITION
As an inducement for the Company and HLM to continue to employee
Harris and as an inducement for the Lenders to extend credit to the Company,
Harris agrees that:
(a) During the period of Harris's continued employment by the
Company and HLM or any company that the Company owns or manages, and for a
period of three years thereafter (or until his death if the earlier to occur):
(i) Harris will not, directly or indirectly, engage
or invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend Harris's name or
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any similar name to, lend Harris's credit to, or render services or advice to,
any business which provides architectural or engineering services to persons who
were clients of, or directly identified as prospective clients of, the Company
or HLM at any time during the twelve (12) month period immediately prior to such
business providing such architectural or engineering services, anywhere within
the United States; provided, however, that Harris may purchase or otherwise
acquire up to (but not more than) one percent of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934. Harris agrees that this covenant is reasonable with respect to its
duration, geographical area, and scope.
(ii) Harris will not, directly or indirectly, either
for himself or any other Person, (A) induce or attempt to induce any employee of
the Company of HLM to leave the employ of the Company or HLM, as applicable, (B)
in any way interfere with the relationship between the Company or HLM and any of
their respective employees, (C) employ, or otherwise engage as an employee,
independent contractor, or otherwise, any employee of the Company or HLM, or (D)
induce or attempt to induce any customer, supplier, licensee, or business
relation of the Company or HLM to cease doing business with the Company or HLM,
as applicable, or in any way interfere with the relationship between any
customer, supplier, licensee, or business relation of the Company or HLM.
(iii) Harris will not, directly or indirectly, either
for himself or any other person, solicit the business of any person known to
Harris to be a customer of the Company or HLM, whether or not Harris had
personal contact with such person, with respect to products, services or
activities which compete in whole or in part with the products, services or
activities of the Company or HLM;
(b) In the event of a breach by Harris of any covenant set forth in
Subsection 4(a) of this Agreement, the term of such covenant will be extended by
the period of the duration of such breach;
(c) Harris will not, at any time during or after the period of the
noncompetition provided in Subsection 4(a) of this Agreement, disparage the
Company or HLM, or any of their shareholders, directors, officers, employees, or
agents; and
(d) Harris will, for a period of three years after Harris's
termination as an employee of the Company and any company that the Company owns
or manages, within ten days after accepting any employment, advise the Company
of the identity of any employer of Harris. The Company may serve notice upon
each such employer that Harris is bound by this Agreement and furnish each such
employer with a copy of this Agreement or relevant portions thereof.
5. REMEDIES
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Harris shall be considered to be in "default" and an "event of
default" shall be considered to have occurred hereunder if a period of thirty
(30) days has passed since Harris has been notified that he has breached his
obligations under this Agreement, and Harris has failed to cure such breach
within such period of time.
If Harris breaches the covenants set forth in Sections 3 or 4 of
this Agreement and the applicable cure period as set forth above has expired,
the Company and HLM will be entitled to the following remedies:
(a) Damages from Harris; and
(b) In addition to its right to damages and any other rights it may
have, the right to obtain injunctive or other equitable relief to restrain any
breach or threatened breach or otherwise to specifically enforce the provisions
of Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate the Buyer and the Company and would be an
inadequate remedy for such breach.
(c) The rights and remedies of the parties to this Agreement are
cumulative and not alternative.
In addition to the remedies set forth above, if Harris breaches the
covenants set forth in Sections 3 or 4 of this Agreement and the applicable cure
period as set forth above has expired, the Lenders may assert their rights
pursuant to that certain Guaranty Agreement of even date herewith executed by
Harris.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon the Company and HLM and Harris
and will inure to the benefit of the Company and HLM and their affiliates,
successors and assigns and Harris and Harris's assigns, heirs and legal
representatives.
7. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a
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waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement.
8. GOVERNING LAW
This Agreement will be governed by the laws of the State of North
Carolina without regard to conflicts of laws principles.
9. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Sections 3 or 4 of this Agreement are held to be
unreasonable, arbitrary, against public policy or otherwise invalid, such
covenants will be considered divisible with respect to scope, time, and
geographic area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against Harris.
10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the
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appropriate addresses and facsimile numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):
Harris:
Joe Harris
__________________
__________________
The Company:
HLM Design, Inc.
Suite 2950
121 West Trade Street
Charlotte, NC 28202
HLM:
Hansen Lind Meyer Inc.
Suite 2950
121 West Trade Street
Charlotte, NC 28202
13. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement and supersede all prior
written and oral agreements and understandings between the Company, HLM and
Harris with respect to the subject matter of this Agreement. This Agreement may
not be amended except by a written agreement executed by the party to be charged
with the amendment.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Noncompetition Agreement as of the date first above written.
/s/ Joseph Harris
JOE HARRIS
HLM DESIGN, INC.
By: /s/ Vernon B. Brannon
Its: Vice President
HANSEN LIND MEYER INC.
By: /s/ Vernon B. Brannon
Its: Vice President
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