EXHIBIT 10.5
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
THIS NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement") is
made and entered into as of the 30th day of October, 2001, by and among Enviroq
Corporation, a Florida corporation, its affiliates, shareholders, directors,
officers and employees ("Enviroq"), and Replico Development Company, Inc., a
Pennsylvania corporation, its affiliates, shareholders, directors, officers and
employees ("Replico") (collectively, Enviroq and Replico are hereinafter
referred to as the "Sellers"), and Sprayroq, Inc., with a principal place of
business at 0000 Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (the "Company"), and
Sprayroq of Ohio, Inc., an Ohio corporation, with a principal place of business
at The Carnegie Building, 00 Xxxx Xxxxxx Xxxxxx, Xxxxx, Xxxx 00000 ("Buyer").
WITNESSETH:
WHEREAS, Sellers and Buyer are parties to a Stock Purchase Agreement
dated September 19, 2001 (the "Purchase Agreement"), pursuant to which Buyer
purchased all of the Company's issued and outstanding capital stock from
Sellers.
WHEREAS, prior to the consummation of the transaction provided for in
the Purchase Agreement, Sellers were the only and equal shareholders of the
Company.
WHEREAS, Sellers were instrumental in the growth and development of the
Company and its business of supplying state-of-the-art spray-applied resinous
materials and related equipment for rehabilitation, repair and reconstruction of
pipes, pipelines, manholes, wetwells, drains, wastewater treatment facilities,
manholes and other underground infrastructure (the "Business"). (the
"Business").
WHEREAS, as an additional inducement for Buyer to enter into the
Purchase Agreement, the Buyer requires that Sellers covenant that they each will
refrain from competing or interfering with the Company in the Company's
operation of the Business.
NOW, THEREFORE, in consideration of the premises, the mutual covenants,
and agreements set forth in this Agreement, and for other good and valuable
consideration, the parties agree as follows:
1. Acknowledgement. Sellers acknowledge that: (i) they each have
knowledge of proprietary information which has been developed by and/or for the
Company, representing a key feature of the value of the Company to the Buyer,
including, but not limited to, information relating to the Company's methods of
operation, mixtures and formulae, and its customers and suppliers; (ii) for the
Company they have developed favorable relationships with the Business'
employees, customers, suppliers and others; (iii) this information and these
relationships are not generally known as held by the Company's competitors,
particularly in the form possessed by
1
Sellers; (iv) these relationships are proprietary and valuable and provide the
Company with a competitive advantage, although they may not be "trade secrets"
in all respects under prevailing judicial interpretations; and (v) that the
Company would suffer severe injury to its Business which would be difficult or
impossible to calculate in amount if this information and these relationships
were known, possessed and used by a competitor or other third-party.
2. Non-Competition and Non-Solicitation. Therefore, in view of
the foregoing and in consideration of other benefits provided to Sellers and
otherwise, Sellers hereby agree that commencing on the date of this Agreement
and continuing for a period of ten (10) years thereafter, Sellers will not and
none of their respective affiliates will, (A) directly or indirectly, as an
employer, guarantor, principal, agent, consultant, partner, stockholder (except
for investments in publicly traded entities, so long as such investments do not
exceed three percent (3%) of the entity's issued and outstanding voting
securities), joint venturer, investor, lender or otherwise, compete with the
Buyer or the Company in the Business; or (B) solicit, hire or actively seek to
hire any employee of the Company or any affiliate of the Company, or solicit any
personnel employed by the Company or any affiliate of the Company to terminate
his or her relationship with Company, any affiliate of Company, or the Business.
The period of time set forth in this Section 2 will be extended by the amount of
time that either or both of the Sellers engage in activity in violation of this
Agreement and while the Company seeks enforcement of this Agreement.
3. Confidential Information. Sellers acknowledge that while the
Company was owned by Sellers, Sellers had access to and acquired confidential
and proprietary information directly relating to the Business, including, but
not limited to, lists of customers and potential customers, policy manuals,
price lists, business contracts, inventions, discoveries, secret processes,
plans, methods of doing business, special needs of customers, manufacturing
methods, formulations, records, and other confidential information relating to
the Business (collectively referred to herein as the "Confidential
Information"). Sellers hereby acknowledge that the Confidential Information is
solely the property of the Company and constitutes trade secrets of the Company,
and that Sellers knowledge of the Confidential Information would enable them or
each of them to compete with the Company and the Business in a manner likely to
cause the Company and the Business irreparable harm upon the disclosure or use
of such information. Accordingly, Sellers irrevocably covenant that they will
not use or disclose, directly or indirectly, any of the Confidential Information
to any individual, firm, company or other entity or person.
4. Sellers' Response to Legal Process Seeking Access to
Information. In the event that Sellers become legally compelled (by oral
questions, interrogatories, requests for information or documents, subpoena,
investigative demand or similar process) to disclose any of the Confidential
Information, each of the Sellers covenants to use its reasonable best efforts to
provide the Company with prompt written notice (not less than seventy-two (72)
hours) so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement. In the
event that such protective order or other remedy is not obtained, or that the
Company waives compliance with the provisions of this Agreement, Sellers
covenant to furnish only that portion of the Confidential Information which they
are legally required to disclose and will exercise their reasonable best efforts
to obtain reliable assurance that confidential treatment will be accorded the
Confidential Information.
2
5. Covenant of the Company. In full consideration of Seller's
covenants in this Agreement, the Buyer is herewith collectively paying Sellers
the sum of Two Hundred Thousand and No/100 Dollars ($200,000.00).
6. Injunctive Relief. The parties hereto acknowledge that a
breach by the Sellers of any of the provisions of this Agreement would cause
irreparable damage to the Company and the Business, the extent of which may be
difficult to ascertain, and that the award of damages for such a breach may not
be adequate relief. Consequently, Sellers hereby agree that the Company shall be
entitled to injunctive relief to compel the specific performance of the
covenants set forth in this Agreement. Such a remedy shall be cumulative, not
exclusive, and shall be in addition to any other remedy available to the Company
at law or equity, including, but not limited to, the right of the Company to
obtain its attorneys' fees and other costs in enforcing this Agreement.
7. Reasonableness of Provisions. In the event that any provision
of this Agreement is determined by any court of competent jurisdiction to be
unenforceable by reason of it being extended over too great a period of time or
too large a geographic area or range of activities, it should be interpreted to
extend only over the maximum period of time, geographic area, or range of
activities as to which it may be enforceable.
8. Remittance of Profits. Sellers will promptly remit to the
Company the amount of any profits which may be received by them or by any other
person, firm, or corporation as a result of any violation of this Agreement, but
this shall not be the exclusive remedy of the Company.
9. Disclosure to Future Employer(s). Sellers agree that the
Company may disclose the terms of this Agreement to any future affiliates,
owners or business associates of Sellers.
10. Representations and Warranties of Sellers. Each of the Sellers
severally and not jointly represents and warrants to the Company that:
A. Such Seller is free to enter into this Agreement and that
it has no commitment, understanding, or arrangement to or with any
party which restrains or is in conflict with such Seller's obligations
under this Agreement; and
B. Such Seller fully understands its obligations under this
Agreement, and such Seller's experience and capabilities are such that
the obligations of this Agreement will not prevent such Seller from
conducting its business.
11. Miscellaneous.
A. Waiver of Breach. The waiver by any party to this Agreement
of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party to this
Agreement.
B. Binding Effect: Assignment. This Agreement shall be binding
upon and
3
shall inure to the benefit of the parties to this Agreement and their
respective heirs, personal representatives, successors, and permitted
assigns.
C. Amendments. No amendment or variation of the terms and
conditions of this Agreement shall be valid unless the same is in
writing and signed by all the parties to this Agreement.
D. Notices. All notices required to be given pursuant to this
Agreement shall be deemed given when personally delivered or
seventy-two (72) hours after mailing by first class mail to the
addresses set forth above or to such other address as a party may
provide to the other parties by written notice.
E. Headings. The section headings contained in this Agreement
are for convenience only and shall not in any way affect the
interpretation or enforceability of any provision of this Agreement.
F. Severability. Subject to Section 7 of this Agreement, in
case any one or more of the provisions contained in this Agreement
shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement, and this Agreement
(unless it otherwise fails of its essential purposes) shall be
construed as if such invalid, illegal or unenforceable provision had
never been a part of this Agreement.
G. Governing Law. This Agreement shall be construed and
enforced pursuant to the laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
H. Continuation of Obligations. Sellers' obligations under
this Agreement and the Buyer and Company's rights with respect thereto
will survive any termination of this Agreement to the extent of the
original term of such respective obligations and rights of the parties.
I. Cost of Litigation. The parties agree that the prevailing
party in any action or litigation brought with respect to or to enforce
any right or remedy under this Agreement shall be entitled to recover
from the other party or parties reasonable costs and expenses incurred
by the prevailing party in connection with such action or litigation,
including, without limitation, reasonable attorney's fees and costs.
J. Replacement. This Agreement supersedes and replaces in its
entirety the Joint Venture Agreement, by and between Enviroq Resin
Development, Inc. (nka Company) and Replico dated January 30, 1991, and
the Stockholder Agreement, by and between the Company, Enviroq and
Replico, dated March 25, 1992.
(Signatures intentionally appear on next page.)
4
INTENDING TO BE LEGALLY BOUND, the Parties hereto do execute the
Agreement through their respective duly authorized officers as of the date first
above written.
ENVIROQ CORPORATION
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Its: President
------------------------------------
REPLICO DEVELOPMENT COMPANY, INC.
By: /s/ XXXXXX X. XXXXXX
--------------------------------------
Its: CEO
------------------------------------
SPRAYROQ OF OHIO, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Its: President
------------------------------------
SPRAYROQ, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Its: President
------------------------------------
5
