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Exhibit 10.5
NON-COMPETITION AGREEMENT
Pursuant to a Purchase Agreement executed on June 1, 1997 (the
"Purchase Agreement"), XxxxxXxxx, Inc., a Maryland corporation ("Purchaser"),
agreed to purchase the Business (as defined in the Purchase Agreement) of Prom
Management Group, Inc., a California corporation doing business as Maxim
Property Management and Prom X, Inc., a California corporation doing business as
The Corporate Living Network (collectively referred to herein as "Seller")
relating to certain properties managed by Seller in the Northern California
area. As a material inducement to the Purchaser to enter into the Purchase
Agreement, Seller agreed to enter into this Non-Competition Agreement pursuant
to which certain restrictions are to be placed on Seller's ability to compete
with the Business of Purchaser (as defined in Section 6, below). This covenant
not to compete is given in partial consideration of Purchaser's purchase
pursuant to the Purchase Agreement of the Business of Seller.
NOW, THEREFORE, in consideration of the mutual promises of the parties
each to the other made in the Purchase Agreement and for other good and valuable
consideration acknowledged by each party to have been received from the other,
Seller and Purchaser agree to certain restrictive covenants as follows:
1. NON-COMPETITION. Seller agrees that it shall not, at any
time for a period of eight (8) years after the execution date of this
Agreement (the "Restricted Period"), anywhere in Northern California
enter into the Business of Purchaser. Said agreement not to compete
shall not prevent Seller from renting to other corporate housing
providers at properties not shown on Schedule 1.1 to the Purchase
Agreement, at a property as to which Purchaser has lost the right of
exclusivity granted to Purchaser by Seller pursuant to the Purchase
Agreement or at a property fee managed by Seller and not owned by
Seller, or from renting to Corporate Apartment Rentals no more than
thirty (30) units at Park Place.
2. NON-SOLICITATION. Seller agrees that it shall not, during
the Restricted Period (i) solicit, obtain, service, directly or
indirectly, or accept, whether or not solicited by Seller, any business
relating to corporate housing services provided by Purchaser from any
person or entity known to Seller to be a client, customer, or account
of Purchaser or Purchaser's affiliated entities, Executive Furniture
Center, Inc. and Executive Amenities, Inc. (the "Affiliates") or (ii)
knowingly assist any other person, firm, association, partnership,
corporation, or other business to solicit, obtain or service any such
business from any person or entity known to Seller to be a client,
customer, or account of Purchaser or Affiliates. Said agreement not to
solicit shall not prevent Seller from renting to other corporate
housing providers at
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properties not shown on Schedule 1.1 to the Purchase Agreement, at a
property as to which Purchaser has lost the right of exclusivity
granted to Purchaser by Seller pursuant to the Purchase Agreement or at
a property fee managed by Seller and not owned by Seller, or from
renting to Corporate Apartment Rentals no more than thirty (30) units
at Park Place.
3. NON-SOLICITATION OF EMPLOYEES. Except for Xxxxxx Xxxxxxx,
Seller agrees that it shall not, during the Restrictive Period,
directly or indirectly, induce, cause, persuade, or attempt to do any
act or thing which would cause or induce any representative or employee
of Purchaser or Affiliates known to Seller to be such representative or
employee to terminate his/her representation of or employment with
Purchaser or Affiliates or to violate the terms of any agreement
between said representative or employee and Purchaser or Affiliates.
4. CONFIDENTIAL INFORMATION. Seller recognizes that it may
occupy a position of trust with respect to information regarding the
Business of Purchaser of a secret or confidential nature which is the
property of Purchaser and which has been or will be used by or imparted
to Seller from time to time ("Confidential Information"). As used
herein, "Confidential Information" shall mean information of any nature
and in any form which at the time or times concerned is not generally
known to those persons engaged in businesses similar to that conducted
or contemplated by Purchaser or Affiliates and which relates to any one
or more of the aspects of the present or past Business of Purchaser or
Affiliates, including, but not limited to, patents and patent
applications, inventions and improvements, whether patentable or not,
business development projects, products, product designs and materials
for products, internal business policies, processes, techniques,
know-how, advertising plans, financial matters, customer and customer
lists, leases, and sub-leases. Seller agrees that it shall not, so long
as such Confidential Information remains secret or confidential, use or
disclose, directly or indirectly, to any person outside of Purchaser
any of such Confidential Information without the prior written consent
of Purchaser.
5. REASONABLENESS OF RESTRICTION. Seller acknowledges that the
covenants and restrictions contained in this Agreement are reasonable
as to the time and geographic scope to which Seller's activities are to
be restricted. Further, Seller understands said restrictions and agrees
to be fully bound with respect thereto. In addition, Seller represents
that it has and will be adequately compensated for providing such
restrictive covenants, that Purchaser has paid additional consideration
for such restrictive covenants pursuant to the Purchase Agreement, and
that such limitations on Seller's activities for the time and the areas
designated shall not prevent Seller from engaging in any other
businesses during the Restricted Period.
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6. BUSINESS OF PURCHASER. For purposes of this Agreement, the
term "Business of Purchaser" shall mean the business of providing
temporary corporate housing through leasing and sub-leasing commercial
rental properties and residential rental properties, appropriately
furnishing said properties and providing all amenities with respect
thereto, including utilities, household goods, health and entertainment
facilities and the like.
7. REMEDIES FOR BREACH OF COVENANT. In the event of a
threatened breach by Seller of any of the provisions of this Agreement,
it is agreed that Purchaser shall be entitled to injunctive and other
equitable relief, in whole or in part and from time to time, as more
fully described in Section 8 below. In the event of a breach by Seller
of any of the provisions of this Agreement, Purchaser shall be entitled
to (a) injunctive and other equitable relief, in whole or in part and
from time to time, as more fully described in Section 8 below, (b) have
the Restricted Period extended to allow Purchaser an uninterrupted
period equal to the full Restricted Period without violation by Seller
and (c) seek actual damages. The parties hereto acknowledge and
stipulate that it is impossible to determine with any reasonable
accuracy the amount of prospective damages to Purchaser upon breach of
any covenant contained in this Agreement, and that the remedies set
forth herein are reasonable based upon the facts and circumstances of
the parties at the time of entering into this Agreement, and with due
regard to future expectations.
8. INJUNCTIVE RELIEF. Seller acknowledges that remedies at law
for any breach or threatened breach of the provisions of this
instrument will be inadequate and, accordingly, that Purchaser shall,
in addition to all other available remedies (including, without
limitation, seeking such monetary damages as can be shown to have been
sustained by reason of such breach), be entitled to injunctive or other
equitable relief without being required to post bond or other security
of any character, and without having to prove or otherwise establish
the inadequacy of available remedies at law for the breach or
threatened breach hereof by Seller. Seller further agrees that it shall
not plead or otherwise defend any claim of breach or threatened breach
thereof on grounds of adequate remedy at law in an action by Purchaser
against Seller for injunctive relief or for specific performance of any
of Seller's obligations pursuant to this Agreement. Such remedies and
those remedies set forth in Section 7 shall be cumulative and
nonexclusive and shall be in addition to any other remedy to which
Purchaser is entitled.
9. GOVERNING LAW; VENUE. This Agreement shall be construed in
accordance with and governed by the laws of the State of Maryland,
without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Maryland or any other jurisdiction)
that would cause the
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application of the laws of any jurisdiction other than the State of
Maryland. The parties hereto further agree that any action brought to
enforce any right or obligation under this Agreement shall be subject
to the exclusive jurisdiction of the courts of the State of California.
10. ATTORNEY'S FEES. In the event either of the parties hereto
shall institute any action or proceeding against the other party
relating to this Agreement, the prevailing party in such action or
proceeding shall be entitled to reimbursement from the other party for
its reasonable disbursements incurred in connection therewith,
including its reasonable attorney fees incurred in connection
therewith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 2nd day of June, 1997.
XXXXXXXXX, INC., a Maryland
corporation
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
President
PROM MANAGEMENT GROUP,
INC., a California corporation dba
Maxim Property Management
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
PROM X, INC., a California
corporation dba The Corporate
Living Network
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Assistant Secretary
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