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EXHIBIT 10.6
AGREEMENT NOT TO COMPETE
AGREEMENT NOT TO COMPETE ("Agreement") dated November _____. 1998, by
and between Pharma Labs, LLC, a Colorado limited liability company and Golden
Pharmaceuticals, a Colorado corporation (hereinafter collectively referred to as
"Covenantor") and Xxxxx Equity, Inc. a Nevada corporation ("Xxxxx") and GMP
Laboratories of America, a California corporation (hereinafter collectively
referred to as "Covenantee"):
WITNESSETH:
WHEREAS, on this date Xxxxx has acquired from Pharma Labs substantially
all of the assets of the nutraceutical manufacturing business known as Pharma
Labs, located at 0000 Xxxx Xx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (the
"Business"); and
WHEREAS, Covenantor has for years been actively and prominently engaged
in the nutraceutical manufacturing business and related services in the United
States and during such period has been an owner of the Business; and
WHEREAS, the execution of this Agreement was a condition of and
dependant covenant to the sale of the assets of the Business to Xxxxx;
NOW, THEREFORE, in consideration of the premises and the agreements
herein contained, the parties, intending to be legally bound, hereby agree as
follows:
Section 1. Noncompetition. Covenantor agrees that for a period of 1
(one) year from the date of this Agreement, such period not to include any
period of violation hereof or period to enforce the covenants herein ("Terms of
this Agreement"), Covenantor will not:
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(a) Directly or indirectly, alone or for the account of Covenantor, or
as a partner, member, employee, advisor, or agent of any partnership or joint
venture, or as a trustee, officer, director, shareholder, employee, advisor, or
agent of any corporation, trust, or other business organization or entity, own,
manage, advise, encourage, support, finance, operate, join, control or
participate in the ownership, management, operation or control of, or be
connected in any manner with, any business which (i) is either located within,
or solicits business from within, the continental United States, and (ii) is or
may be in the nutraceutical manufacturing business ("nutraceutical
manufacturing" includes the formulating and tableting of capsules, tablets, and
other like procedures, but excludes the packaging in bottles, strip packs or
blisters of such capsules and/or tablets), or any business related to the above,
other than for bariatic and related products of Physicians Pro Care;
(b) Cause, induce or assist anyone in causing or inducing in any way
any employee of Covenantee or any of its affiliates to resign or sever such
employee's employment or to breach an employment agreement with Covenantee or
any of its affiliates;
(c) Cause, induce or assist any past or present customer of Pharma
Labs, or any other person or. entity for which Parma Labs provided a quotation
in the past 24 months, to have nutraceuticals manufactured by anyone other dm
Covenantee;
(d) Be the owner of more than one percent (1 %) of the outstanding
capital stock of any publicly traded corporation which is in any of the
businesses set forth above; or
(e) Use in any corporate name or the name of any other business venture
operating to any extent within any part of the aforesaid area, the words "Pharma
Labs" or any other trade names presently or at any time during the Term of this
Agreement used by Covenantee, or any word or words or expressions so closely
resembling such words or words as to be likely to be confused therewith.
These covenants shall not be held invalid or unenforceable because of
the scope of the territory or actions subject hereto or restricted hereby, or
the period of time within which such covenants are operative; but the maximum
territory, the actions subject to such covenants and the period of time in which
such covenants are enforceable, respectively, are subject to determination by a
final judgement of any court which has jurisdiction over the parties and subject
matter.
Covenantor recognizes that the foregoing covenants provided substantial
inducement for the acquisition of the Business and (i) are therefore reasonable
and justified, and (ii) provided the essential assurance necessary to induce the
parties hereto to effect such transaction.
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Section 2. Consulting Duties. Also during the Term of this Agreement,
Covenantor agrees to and shall furnish to Covenantee, Covenantor's best advice,
information, judgement and knowledge with respect to the affairs, business,
business methods and practices, history, patrons, customers, employees and
suppliers of the Business, and to generally preserve and increase the Business
and goodwill thereof. Covenantor shall be an independent contractor, and not an
employee of Covenantee, as to these duties. After an initial transition period
of not less than six (6) months, Covenantor's services may be provide wholly by
telephone while he is absent from the Anaheim area, and he agrees to make
himself available by telephone during such absences.
Section 3. Consideration. As consideration for the covenants by
Covenantor herein (separate and apart from any consideration paid for the assets
of the Business on even date herewith), Covenantee agrees to pay to Covenantor
(and, subject to the terms of Section 7 of this Agreement, Covenantor's heirs or
legal representatives), so long as Covenantor is not in default hereunder, the
total sum of Two Hundred and Fifty Thousand Dollars and No/Dollars ($250,000),
to be paid in full to the trust account of Xxxxxx X. Xxxxx, Esq. in accordance
with the Asset Purchase Agreement signed by both parties.
Section 4. Miscellaneous Covenants. Covenantor agrees that at all times
during the Term of this Agreement:
(a) Covenantee shall have the right to display, and may use in its
advertising, the name of "Pharma Labs" in a professional manner;
(b) Covenantee shall have the right to advertise the Business as being
carried on in the manner and tradition and according to the standards
established by Covenantor;
(c) Covenantor will not knowingly or intentionally do or say any act or
thing which will or may damage or destroy the business or the goodwill and
esteem of Covenantee with its suppliers, employees, patrons, customers and
others who may at any time have or have had business relations with the Business
or Covenantee;
(d) Covenantor will not reveal to any third person (other than legal
counsel) any difference of opinion, if there be such at any time, between
Covenantor and Covenantee;
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(e) Covenantor will not knowingly or intentionally do any act of thing
detrimental to Covenantee; and
(f) Covenantor will encourage and recommend the use of Covenantee's
services by all acquaintances.
Section 5. Trade Secrets and Confidential Information. Covenantor
acknowledges that in the course of Covenantor's previous involvement with the
Business, and in the course of Covenantor's association with Covenantee,
Covenantor has received and learned and will receive and learn of trade secrets,
lists of customer and other confidential information which Covenantee desires
and intends to protect. Covenantor acknowledges that, among other things, the
management methods, operating techniques, procedures and methods, customer
lists, prospective acquisitions, employee lists, training manuals and
procedures, personnel evaluation procedures, collection procedures, pricing
structures, and financial reports, including results of operations of the
Business and Covenantee, are confidential. Covenantor agrees not re reveal or
divulge to anyone not affiliated with the Business and Covenantee any such
confidential information or trade secrets so long as the confidential or secret
nature of such information shall continue (which shall be continually presumed
by Covenantor, unless given written directive otherwise by Covenantee), unless
specifically required to do so by law or by order of a court. Covenantor further
agrees not to use any such confidential information or trade secrets in
competing with Covenantee at any time during or after the Term of this
Agreement.
Section 6. Severability and Waiver. In case any term, phrase, clause,
paragraph, restriction. covenant, or agreement herein contained shall be held to
be invalid or unenforceable, it shall be deemed severable and such invalidity or
unenforceability shall not defeat or impair the remaining provisions hereof. A
waiver by Covenantee of any breach by Covenantor of this Agreement or of any
duties imposed upon Covenantor hereunder or by law shall not be construed as a
waiver by Covenantee of any remedy available to it for any subsequent or
continuing breach of this Agreement or of any of the duties, obligations or
agreements herein contained or imposed by law.
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Section 7. Parties in Interest . This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors, heirs
and legal representatives. This Agreement shall not be assigned by either party
hereto without the prior written consent of the other party, provided, however,
that following the execution of this Agreement, Covenantee may assign its rights
hereunder in whole or in part without the consent of Covenantor to a
successor-in-interest to Covenantee in all or in part of the Business (whether
by merger, sale of assets or otherwise), provided that Covenantee shall not
thereby be relieved of its obligations hereunder and the successor-in-interest
to Covenantee expressly assumes the duties and obligations of Covenantee set
forth herein.
Section 8. Remedies. Covenantor agrees that the remedy at law for any
actual or threatened breach of this Agreement would be inadequate and the
Covenantee shall be entitled to specific performance hereof or injunctive
relief, or both, by temporary or permanent injunction or other appropriate
Judicial remedy, writ or order, in addition to any other remedies to which
Covenantee may be legally entitled. It is agreed that in the event of any
dispute or litigation concerning this Agreement or the respective rights and
duties of each party hereunder, each party shall pay its own attorneys fees and
expenses.
Section 9. Dispute Resolution.
(a) Any and all disputes among the parties to this Agreement (defined
for the purpose of this provision to include their principals, agents and/or
affiliates) arising out of or in conjunction with the negotiation, execution,
interpretation, performance or nonperformance of this Agreement and the
transaction contemplated herein shall be solely and finally settled by
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arbitration, which shall be conducted in Orange County, California, by a single
arbitrator selected by the parties. The arbitrator shall be a lawyer (preferably
a former judge) familiar with business transactions of the type contemplated in
this Agreement, shall not have been previously employed or affiliated with any
of the parties hereto, and shall be from a large, reputable firm (such as
Judicial Arbitration & Mediation Services; Inc. Located in Orange County,
California). If the parties fail to agree on the arbitrator within thirty (30)
days of the date one of them invokes this arbitration provision, either party
may make application to the American Arbitration Association to make the
appointment.
(b) The parties hereby renounce all recourse to litigation and agree
that the award of the arbitrator shall be final and subject to no judicial
review. The arbitrator shall conduct the proceedings pursuant to the Commercial
Arbitration Rules of the American Arbitration Association, as now or hereafter
amended (the "Rules").
(c) The arbitrator shall decide the issues submitted (i) in accordance
with the provisions and commercial purposes of this Agreement, and (ii) with all
substantive questions of law determined under the laws of the State of
California (without regard to its principles of conflicts of laws). The
arbitrator shall promptly hear and determine (after giving the parties due
notice and a reasonable opportunity to be heard) the issues submitted and shall
render a decision in writing within sixty (60) days after the appointment of the
arbitrator.
(d) The parties agree to facilitate arbitration by (i) conducting
arbitration hearings to the greatest extent possible on successive days, and
(ii) observing strictly the time periods established by the Rules or by the
arbitrator for submission of evidence and briefs.
(e) Judgement on the award of the arbitrator may be entered in any
court having jurisdiction over the party against which enforcement of the award
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is being sought and the parties hereby irrevocably consent to the jurisdiction
of any such court for the purpose of enforcing any such award. The arbitrator
shall divide all costs (other than fees and expenses of counsel) incurred in
conducting the arbitration in the final award in accordance with what the
arbitrator deems just and equitable under the circumstances.
(f) The parties hereto agree that the provisions of this Section 9
shall not be construed to prohibit any party from obtaining, in the proper case,
specific performance or injunctive relief with respect to the enforcement of any
covenant or agreement of another party to this Agreement.
Section 10. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11. Notices. All notices provided for hereunder shall be in
writing and shall be deemed to be given: (i) when delivered to the individual or
to an officer of the company to which notice is directed; or (ii) three days
after the same has been deposited in the United States mail sent Certified or
Registered mail with Return Receipt Requested, postage prepaid and addressed as
provided in this Section; or (iii) when delivered by an overnight delivery
service (including United States Express Mail) with receipt acknowledged and
with all charges prepaid by the sender addressed as provided in this Section.
Notices shall be directed as follows:
(a) If to Covenantor, addressed to:
Pharma Labs, LLC
c/o Golden Pharmaceuticals, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxxx & Xxxxxxxx, LLP
0000 Xxxxxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx Xxxxxx, XX
00000 Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Covenantee, addressed to:
Xxxxx Equity, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Ure
0000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxx Xxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other place or places or to such other person or persons as shall be
designated by notice by either party hereto.
Section 12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
Section 13. Entire Agreement: Modification. This Agreement contains the
entire agreement between the parties hereto with respect to the subject matter
hereof, and may be modified only by a written instrument Signed by each of the
parties hereto.
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Section 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to its principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
COVENANTOR:
PHARMA LABS, LLC, a Colorado limited
liability company
By
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Its
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COVENANTEE:
XXXXX EQUITY, INC., a Nevada
Corporation
By
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Its
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GMP LABORATORIES OF AMERICA, a
California corporation
By
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Its
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