SECTION II NONCOMPETE AND NONSOLICITATION COVENANTS EMPLOYMENT CONTRACT RULES OF LITIGATION I “Construction of a contract is ordinarily a question of law for the trial court provided t by icc69644

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									SECTION II: NONCOMPETE AND NONSOLICITATION COVENANTS,
      EMPLOYMENT CONTRACT RULES OF LITIGATION
I      “Construction of a contract is ordinarily a question of law for the trial court, provided that
the terms used are unequivocal, clear, undisputed and not subject to conflicting inferences.”
Campaniello v. Amici Partnership, 832 So.2d 870, 872 (Fla. 4th DCA 2002).

        “It is axiomatic that the clear and unambiguous words of a contract are the best evidence
of the intent of the parties.” Khosrow Maleki P.A. v. M.A. Hajianpour, M.D. P.A., 771 So.2d
628, 631 (Fla. 4th DCA 2000), citing Murry v. Zynx Mktg. Communications, Inc., 774 So.2d 714,
715 (Fla. 3d DCA 2000).

        A        Where the contract contains a definition, the court should determine if the
definition, as applied to the facts of the case, can clearly and without dispute determine the
parties‟ rights and obligations.

       B       Additionally, the law in effect at the time the agreement was entered into
determines enforceability of a covenant not to compete. North American Products Corp. v.
Moore, 196 F.Supp.2d 1217, 1228 (M.D. FL 2002)(following Gupton v. Village Key & Saw
Shop, Inc. 656 So.2d 475, 477-79 (Fla. 1995).

II NON-SOLICITATION COVENANTS AND AGREEMENTS:

II     NON-COMPETE CLAUSES: The enforceability of a restrictive covenant is governed

by Fla. Stat. § 542.335. The statute requires that any restrictive covenant must be in writing, be

signed by the party charged, be reasonable in time, area and line of business, and be reasonably

necessary to protect a legitimate business interest. See Fla. Stat. § 542.335.

       A Enforcement Requirements:

               1   in writing
               2   signed by party charged
               3   reasonable in time,
               4   area, and
               5   line of business
               6   Reasonably necessary to protect a legitimate business interest.

Ex: extraordinary or specialized training provided by the employer as a legitimate business
interest.

               7   The contract must have consideration to support the agreement.

**Practice Tip:        Make the interests narrow in the contract.


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**Practice Tip:       Define the scope of the restrictions; describe the conduct prohibited, a
reasonable temporal restriction and reasonable geographic restrictions.


       B       Cases of importance discussing the enforcement of non-compete clauses:

           1   Hapney v Central Garage
           2   Dyer v Pioneer Concepts
           3   Balasco v. Gulf Auto Holding inc: 707 so.2d 858 1998
           4   Austin v. Mid State Fire Equipment of Central Florida 727 so.2d 1097 1999
           5   Aero Kool Corp v Oosthuizen,736 so.2d 25 1999.
           6   North American Products corp v. Moore, 196 F.Supp.2d 12317 (MD Fla 2002)
               where an employee gains substantial knowledge of his former employer‟s
               customers, their purchasing history and their needs and specifications, the
               employer has legitimate business interest under the statute.


       *****Fla. Stat. 542.335 (restrictive covenants) controlling statutory authority applicable

to the non-solicitation covenant of Employment Agreements.

        Ex: In Kraft v. Mason, the Court was presented with a loan agreement that provided for
payment to the lender upon “recovery” in an ongoing antitrust lawsuit. See Kraft v. Mason, 668
So.2d 679, 685 (Fla. 4th DCA 1992). The contract also set out percentages to be paid to the
lender depending on the amount of “recovery.” Id. at 685. The agreement defined “recovery” in
its language, adding that the amount due to the lender upon recovery would be calculated as
follows, “Any payment made to lender by (borrower‟s attorneys) in accordance with the
provisions of this paragraph shall be made from the net proceeds of any settlement and/or
judgment payable to Borrowers, and not from the portion payable to (borrower‟s attorneys).” Id

        The 4th District Court of Appeals disagreed, and found that the above-cited contractual
language is specific in that it refers to how payment to the lender should be made, and not
calculation of payment. Id. The court held that the trial court erred in finding ambiguity and in
interpreting the agreement based on evidence taken at trial, adding, “To do so would be to
rewrite a contractual provision or vary a party‟s obligations under a clearly written contract.” .

               2       Wolf v. Barrie: In Wolf, the employer, Barrie, P.A., owned by one person,
Barrie, operated veterinary medical clinics, including The Animal Eye Clinic, a division of his
company, and hired Wolf, a veterinary ophthalmologist as a direct employee of Barrie, P.A. See
Wolf, 858 So.2d at 1084. The business of Barrie was Barrie‟s personal services as a veterinarian
physician. Id. Wolf signed an employment agreement with Barrie, P.A., which contained a
non-compete provision. Id. Barrie sold the assets of his Animal Eye Clinic division to Florida
Veterinary Specialists, another veterinary practice and left the business veterinary
ophthalmology. Id. Wolf continued to work for the new owner as an independent contractor,
not an employee without a new contract. Id. A few months later, Wolf opened his own



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veterinary ophthalmology clinic in the same county. Id. Barrie, P.A. then filed suit for
injunctive relief against Wolf and the circuit court granted the injunction. The court, in reversing
the circuit court‟s enforcement of the non-compete covenant of the employment agreement
between Barrie, P.A. and Wolf, noted that “Wolf‟s relationship with Barrie, P.A., terminated
when Barrie, P.A., sold its assets to FVS, and went out of the ophthalmology business.” Id. at
1086. Maintains a legitimate business purpose in enforcing the terms of its non-solicitation
agreement under Fla. Stat. § 542.334(1) (b).


       C        LEGITIMATE BUSINESS INTERESTS:

        Fla. Stat. § 542.335(1) (b) specifically identifies a number of interests that qualify as
“legitimate business interests” that justify the existence of the restrictive covenant in the
employment agreement. See Fla. Stat. § 542.335(1) (b).

        These legitimate business interests include, but are not limited to the follo wing:
                 a)        trade secrets as defined by the Uniform Trade Secrets Act, Fla. Stat. §
                           688.002(4);
                 b)        b) valuable confidential business or professional information that does
                           not otherwise qualify as a trade secret;
                 c)        c) substantial relationships with prospective or existing customers,
                           patients or clients; and
                 d)        d) Customer goodwill associated with practice, location, area of
                           practice or training, geographic area, specific marketing or trade area.
                           See Fla. Stat. § 542.335(1) (b).
                 e)
“There is little question under Florida law that an employer has a legitimate business interest in
prohibiting solicitation of its customers with whom the employee has a substantial relationship.
Where an employee, as here, gains substantial knowledge of his former employer‟s customers,
their purchasing history and their needs and specifications, it follows that the employer has a
legitimate business interest under the statute.” North American Products Corporation v. Moore,
196 F.Supp.2d 1217, 1228 (M.D. Fla. 2002). (Jones, Mag. J., report adopted by Hodges, J.)
citing Hapney v. Central Garage, 579 So.2d 127, 134 (Fla. 1st DCA 1991), Merrill Lynch,
Pierce, Fenner and Smith, Inc., v. Hagerty, 808 F.Supp. 1555, 1558 (S.D. Fla. 1992).

Black‟s Law Dictionary defines “solicitation”: as “asking or enticing” and “any action which the
relation of the parties justifies in construing into a serious request.” See Black’s Law Dictionary.

       A        Fla. Stat. § 542.335 applies to contracts “that restrict or prohibit competition
during or after the term of restrictive covenants.” See Fla. Stat. §542.335.

III SUCCESSOR COMPANIES AND SUBSIDIARIES INVOLVING NON-COMPETE
AND NON-SOLICITATION COVENANTS: (enforcement by successors or assignees)

       A        Contracts should contain language of binding affect upon employee and employer
upon a sale of the company or an all situations contemplated where the successor company might



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be harmed if the employee at issue can set up a competing business and cause financial harm or
otherwise destroy the possibilities for the financial transaction or sale to occur.

              1       When defining Employer within the agreement or covenant, be sure to
                      define the employer to include all parents, subsidiaries and affiliated
                      companies in existence now or in the future. Employer” in the contract is
                      defined to mean “ABC Company” together with her subsidiaries and
                      affiliates.

       B      Fla. Stat. §542.335(1) (f) 2 provides that:
              The court shall not refuse enforcement of a restrictive covenant on the ground
              that the person seeking enforcement is a third-party beneficiary of such contract
              or is an assignee or successor to a party to such contract, provided: In the case
              of an assignee or successor, the restrictive covenant expressly authorized
              enforcement by a party's assignee or successor.

       C       Florida Courts have not resolved the question of whether or not a subsidiary may
enforce a non-compete or non-solicitation clause executed by its parent company. Since this is a
question of first impression, secondary authority and cases from other jurisdictions should be
considered.

        Supplies for Industry v. Christensen, 659 P.2d 660 (Ariz. App. Ct. 1983): In Supplies for
Industry v. Christensen, the Court of Appeals of Arizona ruled that an assignment of a non-
compete clause in an Employment Agreement had occurred based o n the language of the
contract. The employee, Christensen, was the president of a subsidiary corporation, SFI, and had
a non-compete agreement with the parent corporation, IMC. See id. at 661. IMC then sold its
shares of the subsidiary, SFI, to Bennett Investments. See id. Christensen went to work for one
of SFI‟s competitors, and Bennett asserted that it had been assigned the employment contract,
including the non-compete agreement. See id. SFI sued to enforce the non-compete agreement.
See id. The Court held, “Although the employment agreement was never expressly assigned,
when IMC sold its SFI stock to Bennett in 1979, an equitable assignment of the employment
agreement took place. By entering into the employment agreement, which contained a clause
stating, „this agreement shall inure to the benefit of and be binding upon the company, its
successor and assigns . . .‟ Christensen consented to the assignment.” See id. at 662. Thus, by
signing the agreement that indicated that successors and assigns would be bound, the employee,
Christensen consented to assignment. The Court continued, “Furthermore, by continuing to
work for and accept compensation from SFI after the sale of stock, Christensen obviously had
notice of and apparently acquiesced in the assignment.” See id.

              Public Policy Argument of Enforcement of Non-compete/Nonsolicitation
              covenants against employee by subsidiary Allowing employees with the ability to
              inflict substantial and possibly irreparable financial harm to such subsidiaries,
              successors or assignees would set bad precedent. Public policy should ensure that
              such people cannot create havoc in the corporate world by setting up competing
              companies or soliciting away all of the business of the company at issue. Such
              actions may result in the closure of businesses and the loss of income and



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               employment for many individuals within the successor, assignee or subsidiary
               company.

       D       Although an employee‟s duty to perform under an employment contract generally
is not delegable, the right to enforce a covenant not to compete generally is assignable in
connection with the sale of a business. In the case of a merger, and arguably in the instant case,
where there is a business reorganization under Internal Revenue Code Section 721 (see Affidavit
of Mike Custer, CPA, Exhibit E), the surviving corporation automatically succeeds to enforce
employees‟ covenants not to compete. See Restatement (Second) of Contracts Section 316
comment c, Section 317 comment d, illustration 6. (1981). See also, Equifax Services Inc. v.
Hitz, 905 F.2d 1355, 1361 (10th Cir. 1990)(citing Alexander & Alexander, Inc. v. Koelz, 722
S.W.2d 311, 313 (Mo.Ct.App. 1986); 6 W. Fletcher, Fletcher Encyclopedia of the Law of Private
Corporations Section 2579.3 at 739 (IJ Reinholtz & M. Wasiunec rev. ed. 198). Neither a 100%
purchase of corporate stock nor a corporate merger affects the enforceability of a noncompete
agreement. See Corporate Express Office Products, Inc. v. Phillips, 847 So.2d 406 (2003).

               1              Mergers and Sale of Stock no assignment of employee required:
                              the surviving corporation has the right to enforce non-compete
                              agreements without assignment.         Corporate Express Office
                              Products, Inc. v. Phillips, 847 So.2d 406 (Fla. 2003). Mergers do
                              not abrogate the contract of employment or alter the liability of the
                              parties one to the other.
               2              Written Assignment by employee required: Only where a
                              complete sale of the company‟s assets occurs, does the acquiring
                              corporation require an assignment of the employment agreement
                              from the employee at issue. See Corporate Express Office
                              Products, Inc., 847 So.2d at 413.

        E      Corporate Express Office Products, Inc., holds that in a merger, no assignment is
necessary by the employee for the surviving corporation to enforce the terms of the noncompete
agreement. The holding in Corporate Express Office Products, Inc. applies only to situations
involving the sale of all company assets. See Corporate Express Office Products, Inc., 847
So.2d at 413 (Fla. 2003). Moreover, in Corporate Express Office Products, Inc., the sale was to
a completely unaffiliated, third party.

               1              Why? Because the court stated that Fla. Stat. §607.1106 and the
                              holdings Barnes and Celotex are controlling. Id. at 414. Fla.Stat
                              §607.1106 specifically states that the surviving corporation shall
                              thenceforth be responsible and liable for all the liabilities and
                              obligations of each corporation party to the merger. The prior
                              statute, Fla. Stat. §607.231 stated that the surviving corporation of
                              a merger shall have all the rights, privileges, immunities and
                              powers, and shall be subject to all of the duties and liabilities of the
                              merged corporation.




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        Court followed the reasoning as to why no assignment is necessary, because a “merger is
like the uniting of two or more rivers, neither stream is annihilated, but all continue in
existence.” Id. at 413 (citing Atlanta Newspapers, Inc. v. Doyal, 84 Ga. App. 122, 128, (1951),
and Coulter Corp v. Leinart, 869 F.Supp 732, 734 (ED Mo. 1994)(noting that under Florida law,
the rights and liabilities of merging corporations are retained by the surviving corporation).

              2       an employee‟s consent is unnecessary in a corporate merger situation or
       where there is a 100% sale of stock, no assignment was necessary in our case. See Also
       Sears Termite & Pest Control, Inc. v. Arnold, 745 So.2d 485 (Fla. 1st DCA 1999).

         F       Liability of Successor Corporation for Employment Contract (determining the
liability of a successor corporation for the breach of contract by a predecessor ): Florida does
not automatically impose the liabilities of a predecessor corporation upon a successor
corporation unless: 1) the successor expressly or impliedly assumes obligations of the
predecessor; 2) the transaction is a de facto merger; 3) the successor is a mere continuation of the
predecessor, or 4) the transaction is a fraudulent effort to avoid the liabilities of the predecessor.
See Amjad Munim, M.D., P.A. v. Azar, M.D., 648 So.2d 145 (Fla. 4th DCA 1994).
         the court, in examining the mere continuation theory, found the successor corporation
liable for the breach of the employment contract, because there was a change in corporate form,
but not in substance, as evidenced by the common identity of officers, directors and stockholders
in selling and purchasing the corporation. Id.

               1               Mere Continuation Theory: the mere continuation theory of a
                               business arises where a successor corporation is merely a
                               continuation or reincarnation of the predecessor corporation under
                               a different name. Id. at 154, see also, Chicago Title Insurance
                               Company v. Alday-Donaldson Title Company of Florida, 832
                               So.2d 810 (Fla. 2d DCA 2002).
               2               Although the mere continuation theory has not been applied in
                               cases where a successor corporation seeks to enforce a contract of
                               a predecessor, the reasoning is the same. Just as a successor
                               corporation is held liable for contracts entered into by a
                               predecessor under the mere continuation theory, a successor
                               corporation should have the same ability to enforce contracts
                               entered into by the predecessor.
               3               To hold otherwise would contravene public policy by punishing
                               successor corporations for acts of predecessors, but not allowing
                               them to garner the fruits of the same contracts.
               4               “Accordingly, the change from „All America Termite and Pest
                               Control‟ to „Sears Termite and Pest Control, Inc.‟ was merely a
                               name change, and did not affect the employer‟s corporate
                               identity.” Id., citing Stewart v. Preston, 86 So.2d 348, 349 (Fla.
                               1920) (“The change in the name of a corporation has no effect
                               whatever upon its property, rights, or liabilities . . . The change in
                               the name of a corporation has no more effect upon its identity, as a
                               corporation, than the change in the name of a natural person has



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                              upon his identity.”) This same reasoning follows and parallels the
                              “mere continuation theory” under which one company just
                              emerges or reforms as another such that it cannot escape its
                              obligations to other parties in contract or tort. See Amjad Munim,
                              M.D., P.A. v. Azar, M.D., 648 So.2d 145 (Fla. 4th DCA 1994)
               5              “the fact that there is a change in ownership of corporate stock
                              does not affect the corporation‟s existence or its contract rights, or
                              its liabilities.” Sears Termite and Pest Control Inc. v. Arnold, 745
                              So.2d 485, 486 (Fla. 1st DCA 1999).

        G       MERGERS: written assignment still not resolved in Florida: In analyzing the
same issue of enforcement of a noncompete covenant in an employment agreement regarding
mergers, the U.S. District Court in the Southern District of Florida pointed out that a number of
jurisdictions have held that the surviving company in a merger need not obtain assignments. See
Allegiance Healthcare Assn. v. Coleman, 232 F.Supp.2d 1329, 1333 (S.D. Fla. 2002), citing
Equifax Services, Inc. v. Hitz, 905 F.2d 1355, 1361 (10th Cir. 1990), Standard Reg. Co. v.
Cleaver, 30 F.Supp. 1084, 1093 (D. Ind. 1998), UARCO Inc. v. Lam, 18 F.Supp.2d 1116, 1122
(D. Haw. 1998). In this case, we are not dealing with a merger, stock sale or a sale of assets, so
Phillips is not controlling authority. The Florida Courts have yet to rule on whether the creation
of a subsidiary requires written consent to assignment for non-compete agreements to pass from
parent to a subsidiary corporation.

       1              Arguments against needing written assignment by employee: “the blood
                      of the old corporation into the veins of the new, the old living in the new.”
                      Moe v. Transamerica Title Insurance Co., 98 Cal.Rptr. 547, 556-57 (Cal.
                      App. 1 Dist. 1971).
       2              The Georgia Appeals Court utilized another comparison, stating that
                      merger “is like the uniting of two or more rivers, neither stream is
                      annihilated, but all continue in existence.” Atlanta Newspapers, Inc. v.
                      Doyal, 65 S.E. 432, 437 (Ga. App. 1951). The Supreme Court of Florida
                      used these colorful descriptions to decide that liability for the reckless
                      misconduct of a predecessor corporation continues to exist with the
                      merged entity. See Celotex Corporation v. Pickett, 490 So.2d 35, 38 (Fla.
                      1986), citing Fla. Stat. § 607.231(3) (1983).

       I       EQUITABLE ASSIGNMENT: No need for assignment approval etc in 100%
stock purchase: Equitable assignment to new owners Supplies for Industry v. Christensen, 659
P.2d 660 (Aria 1993)

         J        F.S. 607.1106: the surviving corp shall thenceforth be responsible and liable for
all the liabilities and obligations of each corporation party to the merger.


       K      DAMAGES: use of economists: results of interviews with jurors say that
economists can have a very significant impact on the outcome of the case. Best and worst case
scenarios. What discovery to look for in preparing for deposition of opposing expert.



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       L       RISKS IN MERGERS AND ACQUISITIONS :

WARN: workers adjustment and retaining notification act: 29 USC 2101-2109 (1994) Any
employer with 100 or more employee must provide 60 days written notice of a planned plant
closing, mass layoff or an actual employment termination by sale to a purchaser.

Liability is for EACH employee who suffers a job loss due to the violation.

Penalties damages: back pay, benefits, med insurance, penalties for each day of th4e violation
period up to max of 60 days. A sale of the business itself does not trigger notice requirement.
Divides labiality between seller and buyer in WARN obligations. Absent loss of employment.

Ambiguous as to whether non traditional sales apply such as an asset sale only.

        M      SUCCESSORSHIP DOCTRINE: US Supreme Court. Labor related
obligations from the seller of a company to the buyer transfer if the employees are repped by a
union. Otherwise, at will doctrine applies.


       N       Assignability of individual employment agreements and covenants not to compete:
the covenant is transferable to the buyer, and enforceable by a transferee: but see: Fl Sup court
case*



APPENDIX A: 542.332 RESTRICTIVE COVENANTS:

   1) Notwithstanding s. 542.18 and subsection (2), enforcement of contracts that restrict or
      prohibit competition during or after the term of restrictive covenants, so long as such
      contracts are reasonable in time, area, and line of business, is not prohibited. In any
      action concerning enforcement of a restrictive covenant:

       (a) A court shall not enforce a restrictive covenant unless it is set forth in a writing signed
       by the person against whom enforcement is sought.

       (b) The person seeking enforcement of a restrictive covenant shall plead and prove the
       existence of one or more legitimate business interests justifying the restrictive covenant.
       The term "legitimate business interest" includes, but is not limited to:

       1. Trade secrets, as defined in s. 688.002(4).

       2. Valuable confidential business or professional information that otherwise does not
       qualify as trade secrets.

       3. Substantial relationships with specific prospective or existing customers, patients, or



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clients.


4. Customer, patient, or client goodwill associated with:

a. An ongoing business or professional practice, by way of trade name, trademark,
service mark, or "trade dress";

b. A specific geographic location; or

c. A specific marketing or trade area.

5. Extraordinary or specialized training.

Any restrictive covenant not supported by a legitimate business interest is unlawful and is
void and unenforceable.

(c) A person seeking enforcement of a restrictive covenant also shall plead and prove that
the contractually specified restraint is reasonably necessary to protect the legitimate
business interest or interests justifying the restriction. If a person seeking enforcement of
the restrictive covenant establishes prima facie that the restraint is reasonably necessary,
the person opposing enforcement has the burden of establishing that the contractually
specified restraint is overbroad, overlong, or otherwise not reaso nably necessary to
protect the established legitimate business interest or interests. If a contractually specified
restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the
legitimate business interest or interests, a court shall modify the restraint and grant only
the relief reasonably necessary to protect such interest or interests.

(d) In determining the reasonableness in time of a postterm restrictive covenant not
predicated upon the protection of trade secrets, a court sha ll apply the following
rebuttable presumptions:

1. In the case of a restrictive covenant sought to be enforced against a former employee,
agent, or independent contractor, and not associated with the sale of all or a part of:

a. The assets of a business or professional practice, or

b. The shares of a corporation, or

c. A partnership interest, or

d. A limited liability company membership, or

e. An equity interest, of any other type, in a business or professional practice,

a court shall presume reasonable in time any restraint 6 months or less in duration and



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shall presume unreasonable in time any restraint more than 2 years in duration.

2. In the case of a restrictive covenant sought to be enforced against a former distributor,
dealer, franchisee, or licensee of a trademark or service mark and not associated with the
sale of all or a part of:

a. The assets of a business or professional practice, or

c. A partnership interest, or

d. A limited liability company membership, or

e. An equity interest, of any other type, in a business or professional practice,

a court shall presume reasonable in time any restraint 1 year or less in duration and shall
presume unreasonable in time any restraint more than 3 years in duration.

3. In the case of a restrictive covenant sought to be enforced against the seller of all or a
part of:

a. The assets of a business or professional practice, or

b. The shares of a corporation, or

c. A partnership interest, or

d. A limited liability company membership, or

e. An equity interest, of any other type, in a business or professional practice,
a court shall presume reasonable in time any restraint 3 years or less in duration and shall
presume unreasonable in time any restraint more than 7 years in duration.

f. In determining the reasonableness in time of a postterm restrictive covenant predicated
upon the protection of trade secrets, a court shall presume reasonable in time any restraint
of 5 years or less and shall presume unreasonable in time any restraint of more than 10
years. All such presumptions shall be rebuttable presumptions.

g The court shall not refuse enforcement of a restrictive covenant on the ground that the
person seeking enforcement is a third-party beneficiary of such contract or is an assignee
or successor to a party to such contract, provided:


1. In the case of a third-party beneficiary, the restrictive covenant expressly identified the
person as a third-party beneficiary of the contract and expressly stated that the restrictive
covenant was intended for the benefit of such person.




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2. In the case of an assignee or successor, the restrictive covenant expressly authorized
enforcement by a party's assignee or successor.

(g) In determining the enforceability of a restrictive covenant, a court:

1. Shall not consider any individualized economic or other hardship that might be caused
to the person against whom enforcement is sought. consider all other pertinent legal and
equitable defenses.

4. Shall consider the effect of enforcement upon the public health, safety, and welfare.

(h) A court shall construe a restrictive covenant in favor of providing reasonable
protection to all legitimate business interests established by the person seeking
enforcement. A court shall not employ any rule of contract construction that requires the
court to construe a restrictive covenant narrowly, against the restraint, or against the
drafter of the contract.

(i) No court may refuse enforcement of an otherwise enforceable restrictive covenant on
the ground that the contract violates public policy unless such public policy is articulated
specifically by the court and the court finds that the specified public policy requirements
substantially outweigh the need to protect the legitimate business interest or interests
established by the person seeking enforcement of the restraint.

(j) A court shall enforce a restrictive covenant by any appropriate and effective remedy,
including, but not limited to, temporary and permanent injunctions. The violation of an
enforceable restrictive covenant creates a presumption of irreparable injury to the person
seeking enforcement of a restrictive covenant. No temporary injunction shall be entered
unless the person seeking enforcement of a restrictive covenant gives a proper bond, and
the court shall not enforce any contractual provision waiving the requirement of an
injunction bond or limiting the amount of such bond.

(k) In the absence of a contractual provision authorizing an award of attorney's fees and
costs to the prevailing party, a court may award attorney's fees and costs to the prevailing
party in any action seeking enforcement of, or challenging the enforceability of, a
restrictive covenant. A court shall not enforce any contractual provision limiting the
court's authority under this section.

(2) Nothing in this section shall be construed or interpreted to legalize or make
enforceable any restraint of trade or commerce otherwise illegal or unenforceable under
the laws of the United States or of this state.
(3) This act shall apply prospectively, and it shall not apply in actions determining the
enforceability of restrictive covenants entered into before July 1, 1996.




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