NON-COMPETITION, NON-DISCLOSURE
AND NON-SOLICITATION AGREEMENT
This Non-Competition, Non-Disclosure and Non-Solicitation Agreement
("Agreement") is entered into this ____ day of March 1998, by and among PETALS,
INC., a Delaware corporation (the "Company") and _____________ CORELLI
("Corelli"), residing at ____________________.
W I T N E S S E T H :
WHEREAS, prior to the date hereof, Corelli and certain members of his
family were the owners of twenty eight (28%) of the issued and outstanding
shares of capital stock of the Company;
WHEREAS, pursuant to the provisions of a settlement agreement, dated March
__, 1999 (the "Settlement Agreement") by and among Interiors, Inc., a Delaware
corporation ("Interiors"), DMB Property Ventures Limited Partnership, a Delaware
limited partnership, Xxxx X. Xxxxx, Xxxx X. Xxxxx, the Xxxxxxx Xxxxxxxx Trust,
the Xxxxxxx Xxxxxxxx Jr. Trust, the Xxxxxx Xxxxxxxx Trust, and the Xxxxxxxx 1995
Issue Trust, Xxxx X. Xxxxxxx, Xxxxxxxxxxx Xxxxxxx and the Company and the
related "Interiors Purchase Agreement" (as defined in the Settlement Agreement),
Interiors has purchased on the date hereof, 100% of the shares of capital stock
of the Company from the "Majority Stockholders" and the "Minority Stockholders"
(as those terms are defined in the Settlement Agreement); and
WHEREAS, as part of the transactions contemplated by the Settlement
Agreement, Corelli has (a) sold to the Company, and the Company has purchased
and paid Corelli for, all of his shares of capital stock of the Company, and (b)
received from the Company and Interiors a severance agreement, dated of even
date herewith (the "Severance Agreement") in connection with his resignation as
an officer, employee and member of the board of directors of the Company; and
WHEREAS, in consideration of the payments made to Corelli under the
Settlement Agreement and to be made to Corelli under the Severance Agreement,
Corelli has agreed to enter into this Agreement with the Company.
NOW THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties contained in the Settlement Agreement
and those contained herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
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ARTICLE I
Covenants of Corelli
1.1. Non-Competition.
For a period equal to the earlier of (i) two (2) years from and after the
date of this Agreement, or a (ii) occurrence and continuation of a "Default
Event" (as defined in Section 1.4 below), Corelli hereby covenants and agrees
that he shall not:
(a) enter, directly or indirectly, into the employ of or render directly
or indirectly, any services to any person, firm or corporation (i) that owns or
operates a direct mail retail catalog business that sells in North America (A) a
substantial number of items consisting of artificial flowers, plants or trees,
(B) a commercially recognized line of products or product category ("Products")
from which the Company derived 10% or more of its net sales during the twelve
(12) months ending on the date of this Agreement and during the twelve (12)
months ending on the date such person, firm or corporation with which you are
involved purposes to sell such Products, or (C) any Products actively under
consideration to be sold by the Company at any time during the three (3) months
prior to the date of this Agreement and reasonably anticipated by the Company at
that time to become Products from which the Company will derive 10% or more of
its net sales during the twelve (12) moth period after such Products are first
sold by the Company through its catalog or retail stores, if such Products are
being sold by the Company at the time such person, firm or corporation with
which Corelli is involved proposes to sell such Products, or (ii) that is
engaged in the sale of any of the Products identified in subclauses (A), (B) and
(C) above, through its own retail stores located within the commercially
recognized marketing areas in which the Company has, as at the date of this
Agreement, either an existing retail store or a complete detailed marketing plan
approved by the Board of Directors which includes a plan to open a retail store
in such marketing area;
(b) engage, directly or indirectly, in any such business for Corelli's own
account; or
(c) become interested, directly or indirectly, in any such business as a
general partner, shareholder, director, officer, principal, agent, employee,
trustee, consultant, advisor, or in any other relationship or capacity.
Nothing contained in this Section 1.1 shall preclude Corelli from owning as an
investment, publicly traded securities of any corporation so long as such
securities do not, in the aggregate, constitute more than one (1%) percent of
any class of outstanding securities of such corporation.
1.2 Non-Solicitation. For a period equal to the earlier to occur of (i) two (2)
years from and after the date of this Agreement, or a (ii) "Default Event" (as
defined in Section 1.4 below), Corelli shall not, directly or indirectly, employ
or attempt to employ any individual employed by the Company during the term of
Corelli's employment agreement
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with the Company (from July 22, 1993 to the date this Agreement), other than
Xxxx X. Xxxxxxx or Xxxxxxxxxxx Xxxxxxx (as applicable) or other members of
Corelli's "immediate family" (defined as Corelli's parents, children, siblings
or the spouses of any of the defined family members) who have not been employed
by the Company for at least six months prior to the date hereof.
1.3 Confidential and Proprietary Information.
(a) Corelli hereby agrees that he will not, at any time after the date of
this Agreement disclose, communicate or divulge to any person (other than to
officers or employees of the Company whose duties require such knowledge or to
officers or employees of other entities if the purpose of such disclosure is to
further the Company's business with such entities and is reasonably required
therefor) or use for your personal benefit or the benefit of anyone other than
the Company, any trade secrets, sales or marketing plans, customer lists or
other similar confidential information employed in or proposed to be employed in
the Company's business which come to or came to Corelli's knowledge during the
course of or by reason of his prior employment by the Company and which is not
otherwise in the public domain.
(b) Corelli shall promptly deliver to the Company all memoranda, records,
reports, and other documents, including without limitation all customer lists
and catalog files, and all copies thereof, relating to the Company's business,
which you may then possess or have under your control, and Corelli agrees not to
remove from the premises of the Company any of the foregoing.
1.4 Default Event. As used in this Agreement, the term "Default Event" shall
mean the failure or refusal of either the Company or Interiors to pay, within
ten (10) days after the same shall become due and payable, either (a) the three
(3) installments constituting the "Severance Payment," as provided in the
Severance Agreement between the Company and Corelli, or (b) the monthly
installments of the Fixed Rent provided in Article 3 of the lease dated as of
June 22, 1993, as amended, by and between Cafco LP, as landlord, and the
Company, as tenant (the "Lease").
1.5 Equitable Relief. Corelli acknowledges and agrees that:
(a) the provisions of this Agreement are essential to the Company and
Interiors and Corelli is entering into the foregoing covenants to assure
Interiors of the transfer of the goodwill of the Company, and in order to induce
Interiors to consummate the transactions contemplated by the Settlement
Agreement and the Interiors Purchase Agreement
(b) Interiors would not consummate the transactions contemplated by the
Settlement Agreement (including payment of the purchase price for the shares of
Corelli's stock in the Company) if Corelli did not agree to the covenant not to
compete and confidentiality covenants contained in this Agreement;
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(c) that any damages that would be sustained by the Company and/or
Interiors as a result of a breach of the covenant not to compete and
confidentiality covenants cannot be adequately remedied by damages, and
(d) in addition to any other remedy it or they may have under this
Agreement or at law, either or both of the Company and Interiors shall be
entitled to seek and obtain injunctive and/or other equitable relief to prevent
or curtail any actual or threatened breach of this Agreement.
ARTICLE II
Miscellaneous
2.1 Validity.
(a) The covenants of Corelli contained in this Agreement shall be
construed as an agreement of Corelli independent of any other provisions
contained in any other agreement or instrument to which Corelli may be a party,
including without limitation, the Settlement Agreement and any severance
agreement between the Company and Corelli.
(b) All parties hereto hereby expressly agree that it is not the intention
of any party to violate any public policy, statutory or common law, and that if
any sentence, paragraph, clause or combination of the same of this Agreement
shall violate the laws of any State or other jurisdiction where applicable, such
sentence, paragraph, clause or combination of the same shall be void in the
jurisdictions where it is unlawful, and the remainder of such paragraph and this
Agreement shall remain binding on the parties hereto. It is the intention of all
parties to make the covenants contained in this Agreement binding only to the
extent that it may be lawfully done under existing applicable laws. If the scope
of any covenant is too broad to permit enforcement of such covenant to its full
extent then such covenant shall be enforced to the maximum extent permitted by
law, and Corelli hereby agrees that such scope may be so judicially modified and
that as so modified the covenant shall be as fully enforceable as if set forth
herein by the parties themselves in the modified form.
2.2 Benefit of Agreement. This Agreement shall inure to the benefit of and be
binding upon the Company and Interiors and their successors and assigns,
including, without limitation, any corporation or person which may acquire all
or substantially all of Interior's or the Company's assets or business, or with
or into which Interiors or the Company may be consolidated or merged. This
Agreement shall also inure to the benefit of, and be enforceable by Corelli and
his personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
2.3 Notices. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered or if sent by telegram,
facsimile or telex or by
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registered or certified mail, postage prepaid, with return receipt requested, or
by a nationally recognized overnight courier service to the respective party
addressed:
(i) in the case of the Company, to the principal business office of
the Company, or to such other address and/or to the attention of such other
person as the Company shall designate by written notice to Principal; and
(ii) in the case of Corelli to such address as set forth above or to
such other address as Corelli shall designate by written notice to the Company.
Any notice given hereunder shall be deemed to have been given at the time of
receipt thereof by the person to whom such notice is given.
(iii) any notice required to be given to the Company hereunder must
also be simultaneously given to and received by Interiors at:
Interiors, Inc.
000 Xxxxxxxxxx Xxxxxxxxx
Xx. Xxxxxx, Xxx Xxxx 00000
Attn: President
for said notice to be effective hereunder.
2.4 Entire Agreement; Amendment. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior agreements and understandings, whether written or oral, between
the parties hereto or their Affiliates.
2.5 Definitions. Unless otherwise separately defined herein, all capitalized
terms used in this Non-Competition Agreement shall have the same meaning as is
defined in the Settlement Agreement.
2.6 Headings. The Article and Section headings herein are for convenience of
reference only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
2.7 Resolution of Disputes. All disputes relating to or arising out of this
Agreement or the interpretation or application of this Agreement shall be
resolved by final and binding arbitration before an arbitrator selected by the
Company from among the list of arbitrators set forth on Exhibit A. Any
arbitration before the selected arbitrator shall be administrated by JAMS
Endispute or the American Arbitration Association in New York. If such
arbitration shall be commenced by The Company it shall, with its demand for
arbitration, select the arbitrator and two alternatives in its demand. If such
arbitration shall be commenced by either Employee, then the Company shall select
an arbitrator and two alternatives within 5 days of being served with a copy of
the demand for arbitration. Each of the parties hereto do hereby consent to the
jurisdiction of the courts of the State
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of New York and the United States District Court for the Southern District of
New York, as well as to the jurisdiction of all courts from which an appeal may
be taken from such courts, for the purpose of enforcing the award of the
arbitrator, or any suit, action or other proceeding arising out of or with
respect to this Agreement, or any of the transactions contemplated hereby or
thereby. The parties hereto hereby expressly waive any and all objections which
any of them may have as to venue in any of such courts, and also waives trial by
jury in any such suit, action or proceeding. If any proceeding is brought by a
party to this Agreement or its successors or assigns for the enforcement of this
Agreement, or as a result of any alleged dispute, breach, default or
misrepresentation by any other party of any of the provisions of the Agreement,
the party which is successful in such proceeding shall be entitled to recover
its reasonable attorneys' fees and other costs incurred in pursuing such
proceeding, in addition to such other relief to which it may be entitled.
2.8 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of New York without reference to the
principles of conflict of laws.
2.9 Venue; Waiver of Trial by Jury. Each of the parties consents and submits to
the jurisdiction of the state and federal courts located in the States of New
York in connection with any suits or other actions arising between the parties
under this Agreement, and consents and waives any objections to the venue of
such action or proceeding in the state or federal courts located in New York,
and hereby waives trial by jury in any such action or proceeding.
2.10 Survivorship. The respective rights and obligations of the parties under
this Agreement shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
2.11 Validity. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
2.12 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, Interiors, the Company and Corelli have each duly
executed this Agreement as of the date first above written.
PETALS, INC.
By:
------------------------------------
Xxx Xxxx, President
CORELLI:
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___________ CORELLI
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