NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "Agreement") is made and entered
into as of the 18th day of February 1998, by and between OutSource
International of America, Inc., a Florida corporation ("OutSource"), and Louis
J. Morelli ("Covenantor").
W I T N E S S E T H:
WHEREAS, Covenantor is a principal shareholder of L.M. Investors, Inc.,
an Illinois corporation ("LM"); and
WHEREAS, pursuant to the terms of Franchise Agreements dated November
1, 1994 between LM ("Seller") and Louis J. Morelli, and OutSource Franchising,
Inc. ("OutSource Franchising"), an affiliate of OutSource (as assigned from
Labor World of America, Inc.) (The "Franchise Agreements"), the Seller operates
a "Labor World" Business (as such term is defined in the Franchise Agreements)
in and around Joliet and Aurora, Illinois areas, including the Greater Chicago
Metropolitan Marketplace; and
WHEREAS, Seller is selling substantially all of its assets to OutSource
pursuant to the Asset Purchase Agreement among OutSource, Covenantor, and Seller
of even date herewith (the "Asset Purchase Agreement"); and
WHEREAS, this Agreement is required to be executed and delivered by
Covenantor pursuant to Section 2 of the Asset Purchase Agreement; and
WHEREAS, all terms in this Agreement which are not otherwise defined
herein are used herein with the meanings assigned to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Asset Purchase Agreement, the parties hereto
agree as follows:
1. COVENANT NOT TO COMPETE. Covenantor agrees that from the date of
this Agreement through and including February 16, 2003, without the prior
written consent of OutSource, Covenantor shall not:
1.1 engage in a Competitive Business (as hereafter defined) or
perform services, directly or indirectly, on behalf of itself or in
connection with any other person, or as an employee, proprietor, owner,
partner, director, officer, associate, shareholder, agent, contractor,
employer, consultant, consultant, affiliate or as a director, officer
or associate or as a stockholder of any entity within the State of
Illinois (the "Territory"). The Covenantor further agrees that from the
date of this Agreement, he shall not:
1.2 have any direct or indirect interest, as a disclosed or
beneficial owner, in any Competitive Business within the Territory;
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1.3 perform services as a director, officer, manager,
employee, consultant, representative, agent, independent contractor or
otherwise for any Competitive Business within the Territory;
1.4 have any direct or indirect interest in any entity which
is granted or is granting franchises or licenses to others to operate a
Competitive Business within the Territory;
2.0 COVENANT NOT TO SOLICIT OR RECRUIT
2.1 Covenantor agrees that from the date of this
Agreement through and including August 16, 1999,
without the prior written consent of OutSource, he
shall not solicit, recruit or hire any employee of LM
Investors, Inc., or any employee of OutSource, its
affiliates or franchise associates, whom as of the
effective date of the Asset Purchase Agreement
resided in the Territory, or whom at the time of the
contemplated solicitation or hire, reside within the
Territory. Notwithstanding the restrictions stated in
the paragraph, Covenantor may solicit the following
individuals, under the conditions stated:
(a) Daniel CERVANTES, but only after March 17, 1999.
(b) Michael Deleon, but only on the condition that Mr.
Deleon remains employed by OutSource through March
17, 1998, and Mr. Deleon in fact moves to the State
of Michigan and is solicited for employment by Temp
Aid, Inc. in Michigan.
(c) JOHN JANISCH; and
(D) GEORGE DE LA FUENTES
2.2 Covenantor agrees that from the date of this Agreement
through and including February 16, 1999, without the prior consent of
OutSource, he shall not, directly or indirectly, on behalf of himself
or any other person, or as an employee, proprietor, consultant, agent,
contractor, employer, affiliate, partner, owner, officer, director or
associate, or stockholder of any other person or entity, or in any
other capacity, solicit, divert, take away or interfere with any of the
business, customers, clients, contractors, trade or patronage of LM
Investors, Inc. or OutSource, its affiliates or franchise associates,
located within the Territory. Subject to the restrictions stated in
paragraph 1.1, it shall not be a violation of this clause for
Covenantor to solicit or do business with an entity outside of the
Territory if the entity is also a customer or client of LM Investors,
Inc or Outsource, its affiliates, or franchises, within the Territory.
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In the event that any provisions of Sections 1 or 2 should be deemed to exceed
the time or geographic limitations permitted under any applicable law, or
otherwise be overbroad, then such provision shall be, and hereby is, reformed to
the maximum time or geographic limitations permitted under such applicable law.
3. COMPETITIVE BUSINESS. "Competitive Business" means any business
operating, or granting franchises or licenses to others to operate, any
temporary personnel business in the LIGHT INDUSTRIAL MARKET, or any other
business that provides the same or similar services as are customarily offered
by Labor World Businesses in the LIGHT INDUSTRIAL MARKET. Morelli shall not be
restricted from providing legal advice to a Competitive Business.
4. MATERIALITY. Covenantor recognizes and hereby agrees that the
purchase price paid by OutSource for Seller's business exceeds the fair market
value of Seller's business. This difference in value represents the approximate
value that the parties have attributed to the execution and delivery of this
Agreement by Covenantor and related agreements by certain other individuals.
Covenantor further recognizes and agrees that the execution and delivery of this
Agreement by Covenantor and the representations, warranties, covenants and
agreements of Covenantor set forth in Section 1 hereof are material and
substantial parts of the transactions contemplated by the Asset Purchase
Agreement.
5. PAYMENT. In consideration of the noncompetition agreement set forth
in Section 1 hereof, upon execution of this Agreement, OutSource will deliver or
cause to be delivered to the Seller the amount set forth in Section 1 of the
Asset Purchase Agreement pursuant to the terms of the Asset Purchase Agreement.
6. SEVERABILITY. If for any reason any provision of this Agreement
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provisions shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision which, together with all other provisions of this
Agreement, shall likewise to the full extent consistent with law continue in
full force and effect.
7. SUCCESSORS AND ASSIGNS. The obligations of the Covenantor under this
Agreement are personal and may not be assigned or delegated to any other person.
The rights and obligations of Covenantor under this Agreement shall, however,
inure to the benefit of and be binding upon the respective successors and
assigns of OutSource.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing and is signed by the parties hereto. No waiver by any other party
hereto at any time of any breach by any other party hereto of, or compliance
with, any provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions at the same or at any
prior or subsequent time.
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9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. The sole venue for any action
arising hereunder shall be Kane County, Illinois.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall constitute an original and all of which
together shall constitute one and the same Agreement. Facsimile signatures shall
have the same effect as original signatures.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first written above.
OUTSOURCE:
Witness:
OutSource International of America, Inc.
/s/ Anita M. Dazzo
- ------------------------------- /s/ David Sparkman
By:-------------------------------------
Zone Vice President
Title: -------------------------------
COVENANTOR:
Witness:
/s/ Anita M. Dazzo /s/ Louis J. Morelli
- ------------------------------- ----------------------------------------
Louis J. Morelli