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Exhibit 10.5
NONCOMPETITION AND NONDISCLOSURE
AGREEMENT
THIS NONCOMPETITION AND NONDISCLOSURE AGREEMENT ("Agreement") dated to be
effective the 29th day of May, 1998, is entered into by and between MARKETING
PROJECTS, INC., a California corporation ("MPI"), DAVID APPELL, ROBERT BOURDON,
RANDOLPH COMMANS and PHYLLIS HOOKER (MPI and said individuals collectively,
"Covenantor"), and FLORAFAX INTERNATIONAL, INC., a Delaware corporation, and its
successors and assigns ("Purchaser").
W I T N E S S E T H :
WHEREAS, MPI and Purchaser have entered into an Asset Purchase and Sale
Agreement dated to be effective May 1, 1998 (the "Purchase Agreement"), under
the terms of which Purchaser has agreed to purchase from Covenantor, and
Covenantor has agreed to sell to Purchaser, all of the Acquired Assets (as
defined therein) of Seller's business associated therewith; and
WHEREAS, Purchaser would not agree to purchase the Acquired Assets from
Covenantor unless Covenantor agreed to enter into this Agreement, and as an
inducement to Purchaser to enter into and consummate the transactions
contemplated by the Purchase Agreement, Covenantor agreed to enter into this
Agreement; and
WHEREAS, it is acknowledged and agreed that if Covenantor could compete
with Purchaser with respect to any Soliciting Entity (as such term is defined in
that certain Servicing Agreement, dated July 29, 1994, by and between MPI,
Purchaser and The Flower Club, Inc., predecessor-in-interest to The Flower Club
International, Inc.), it would materially and adversely affect the benefits to
be accorded to Purchaser pursuant to the Purchase Agreement. A list of all
Soliciting Entities is attached hereto and incorporated herein as EXHIBIT "A".
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual promises,
covenants and representations set forth herein, the parties hereto agree as
follows:
ARTICLE I
NON-COMPETE AND NONDISCLOSURE
1.01 DEFINITION OF BUSINESS. For purposes of this Agreement, the term
"Business" shall mean the solicitation of floral and gift orders from any
Soliciting Entity.
1.02 COVENANTS AND NONCOMPETITION.
(a) During the period commencing with the Closing Date (as
such term is defined in the Purchase Agreement) and continuing
thereafter until the second (2nd) anniversary of the Closing Date (the
"Term"), Covenantor shall not, directly or indirectly, for itself or
himself, or on behalf of any other person, firm, partnership,
association, corporation, trust or any other entity (whether, as
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example only, and not limited to, an individual, creditor, agent,
servant, employee, employer, officer, director, shareholder, surety,
guarantor, investor, principal, consultant, advisor, beneficiary or in
any other capacity), or permit anyone, directly or indirectly, on its
or his behalf to, engage in or participate in any aspect of the
Business wherever any Soliciting Entity conducts its respective
business; provided however, nothing herein shall prohibit Covenantor
from owning stock or other securities of the Purchaser or not more than
five percent (5%) of the issued and outstanding securities of any other
publicly traded corporation or other entity or from engaging or
participating with any Soliciting Entity or otherwise in any business
other than the Business.
(b) During the Term, Covenantor shall not, directly or
indirectly, for itself or himself, or on behalf of any other person,
firm, partnership, association, corporation, trust or any other entity
(whether, as example only, and not limited to, an individual, creditor,
agent, servant, employee, employer, officer, director, shareholder,
surety, guarantor, investor, principal, consultant, advisor,
beneficiary or in any other capacity), or permit anyone, directly or
indirectly, on its or his behalf to, disclose to any person or entity
any confidential information of Purchaser including, but not limited
to, customer lists, trade secrets, proprietary information, prices,
advertising or marketing plans, methods, systems, procedures or
processes used by Purchaser in the Business, which disclosure would
have a material adverse effect on the Business. As used in this
subsection (b), confidential information shall mean information which
is not generally available to the public and provides Purchaser with a
competitive advantage in the Business.
1.03 CONSIDERATION. In consideration of Covenantor's performance of
their obligations under this Agreement, Purchaser agrees to pay to MPI the
amounts specified in the Purchase Agreement. Covenantor acknowledges the
sufficiency of such consideration and further acknowledges that Purchaser would
not enter into the Purchase Agreement but for Covenantor's entering into this
Agreement. Nothing contained herein shall be construed to limit Purchaser's
right to recover damages for Covenantor's breach of any obligation contained
herein except as herein provided.
ARTICLE II
REMEDIES AVAILABLE
2.01 REMEDIES AVAILABLE. In the event of default, breach or
noncompliance by either party of any of the terms, provisions, covenants,
representations or warranties contained in this Agreement, the aggrieved party
shall have the right to (i) recover from the other party all loss, damage, cost
or expense, including court costs and reasonable attorneys' fees, which result
from, arise out of or are incidental to the occurrence of such default, breach
or noncompliance and/or (ii) pursue such other rights and/or remedies, including
specific performance, that the aggrieved party may have hereunder and/or at law
or in equity.
Covenantor acknowledges that its and his expertise in the Business is
of a special, unique, unusual, extraordinary, and intellectual character, which
gives said expertise a peculiar value, and that a breach by Covenantor of the
provisions of this
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Agreement cannot reasonably or adequately be compensated in damages in an action
at law; and a breach of any of the provisions contained in this Agreement will
cause Purchaser irreparable injury and damage. Covenantor further acknowledges
that it and he possess unique skills, knowledge and ability and that competition
in violation of this Agreement or any other breach of the provisions of this
Agreement would be extremely detrimental to the Purchaser. By reason thereof,
Covenantor agrees that Purchaser shall be entitled, in addition to any other
remedies it may have under this Agreement or otherwise, to preliminary and
permanent injunctive and other equitable relief to prevent or curtail any breach
of this Agreement; provided, however, that no specification in this Agreement of
a specific legal or equitable remedy shall be construed as a waiver or
prohibition against the pursuing of other legal or equitable remedies in the
event of such a breach.
ARTICLE III
EARLY TERMINATION
3.01 EARLY TERMINATION. In the event Purchaser exercises its
cancellation right, as provided by Section 7 of the Purchase Agreement, then as
of such cancellation date, this Agreement automatically shall terminate and be
of no further force and effect.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.01 SEVERABILITY, REFORMATION. If, for any reason, any provision
contained in this Agreement should be held invalid in part by a court of
competent jurisdiction, then it is the intent of the parties hereto that the
balance of the Agreement be enforced to the fullest extent permitted by
applicable law. Further, it is the intent of the parties that this Agreement be
enforced to the fullest extent permitted by law or in equity. Accordingly,
should a court of competent jurisdiction determine that the scope of the
covenant not to compete, nondisclosure covenant or any other provision contained
herein is too broad to be enforced as set forth herein, it is the intent of the
parties that the court should reform such covenant or provision to such narrower
scope as it determines enforceable.
4.02 FUNDAMENTAL AGREEMENT; REASONABLE RESTRICTION. The parties hereto
recognize and agree that this Agreement is necessary and essential to the
protection of the Business and the consummation of the obligations of Purchaser
under the Purchase Agreement, that the area and duration of the covenant not to
compete and nondisclosure covenant contained herein are reasonable, and that
good and valuable consideration exists for Covenantor agreeing to be bound by
such covenants.
4.03 BINDING EFFECT. This Agreement shall inure to the benefit of
Purchaser, its successors and assigns and shall be binding upon Covenantor and
its, his or her heirs, executors, administrators, successors, representatives
and assigns.
4.04 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
4.05 CLOSING DATES. The "Closing Date" hereunder shall have the same
meaning as in the Purchase Agreement. Consequently, the closing hereunder shall
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occur concurrently with, and be conditioned upon, the closing of the
transactions contemplated in the Purchase Agreement on the same closing date
thereunder.
4.06 CANCELLATION OF AGREEMENT. In the event Buyer exercises its
cancellation right described in Section 7 of the Purchase Agreement, then as of
June 30, 1998, this Agreement automatically will be canceled ab initio and of no
further force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective on the day and year first above written.
COVENANTOR:
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DAVID APPELL
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ROBERT BOURDON
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RANDOLPH COMMANS
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PHYLLIS HOOKER
MARKETING PROJECTS, INC.,
A CALIFORNIA CORPORATION
BY:
---------------------------------
DAVID APPELL, PRESIDENT
PURCHASER:
FLORAFAX INTERNATIONAL, INC.,
A DELAWARE CORPORATION
BY:
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JAMES H. WEST, PRESIDENT
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EXHIBIT "A"
[insert list of Soliciting Entities]