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EXHIBIT 2.6
NONCOMPETITION, CONFIDENTIALITY, AND
NONSOLICITATION AGREEMENT
This Noncompetition, Confidentiality, and Nonsolicitation Agreement
("Noncompetition Agreement"), is made this 2nd day of December, 1998, by and
between Children's Comprehensive Services of California, Inc., a California
corporation, ("Purchaser") and Xxxxxx X. XxXxx, an individual resident of
California ("XxXxx").
RECITALS
A. Pursuant to that certain Stock Purchase Agreement, dated
concurrently herewith, (the "Stock Purchase Agreement"),
Purchaser has, on the date hereof, purchased from XxXxx,
Xxxxxxx X. Xxxxx, and Xxxxxx X. Xxxxx all of the issued and
outstanding capital stock of Somerset, Incorporated, a
California corporation (the "Company").
B. Prior to the consummation of such transactions, XxXxx was a
shareholder, Director, Officer, and employee of Company, and
in such capacity, had access to proprietary and confidential
information relating to financial and business operations of
Company.
C. Sections 6.2(j) and 6.3(e) of the Stock Purchase Agreement
provide that, as a condition to the consummation of the
transactions contemplated therein, XxXxx execute a
Noncompetition, Confidentiality, and Nonsolicitation Agreement
providing for certain obligations of XxXxx to refrain from
competing with Purchaser, its parent corporation and
affiliates, including but not limited to Purchaser or Company
(collectively, the "Companies"), within a certain geographical
area, soliciting employees or clients of the Companies, or
disclosing confidential information relating to the Companies.
X. XxXxx recognizes that in connection with the closing of the
transactions contemplated in the Stock Purchase Agreement that
it is in Purchaser's interests to restrict XxXxx'x ability to
compete with, solicit employees or clients from and disclose
confidential information regarding the Companies.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants hereinafter set forth and in the Stock Purchase Agreement, the
parties hereto agree as follows:
1. Covenant Not to Compete and Engage in Solicitation. XxXxx agrees that for a
period of five (5) years following the later of (x) the date hereof and (y) the
last date of employment of XxXxx by any of the Companies, he shall not, directly
or indirectly:
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A. own, manage, operate, join, have an interest in, control or
participate in the ownership, management, operation or control of, be employed
by, assist in, act as a consultant to, or be connected with, directly or
indirectly, as an officer, director, shareholder, member, partner, proprietor,
employee, agent, independent contractor, or otherwise be connected in any manner
with, or have any direct or indirect financial interest, including, without
limitation, an interest as a creditor, in any form of business activity which is
directly or indirectly in competition with the business activity conducted by or
on behalf of any of the Companies (the "Business") throughout the State of
California (the "Territory");
B. hire, or promote to others, the hiring of any of the
Companies' employees, during and for a period of one (1) year following
termination of the respective employee's employment with any of the Companies;
or
C. solicit, or promote to others, the solicitation of clients
or customers of any of the Companies.
Notwithstanding the foregoing, XxXxx shall not be in violation of the
foregoing covenant not to compete and engage in solicitation with respect to any
of the activities prohibited by subparagraphs A (in its entirety) and B (but not
to include the promotion to others) to the extent (i) such activities are
conducted by or on behalf of Children's Therapeutic Communities, a California
nonprofit corporation ("CTC"), and (ii) XxXxx is, at each such time, either a
director, officer, or employee of CTC.
2. Covenant Not to Disclose Confidential Information. At any time following the
date hereof, XxXxx will not, directly or indirectly, disclose or use or
otherwise exploit for his own benefit, or the benefit of any other person, any
Confidential Information (as defined below). For purposes of this Noncompetition
Agreement, the term "Confidential Information" shall mean any business or
financial information relating to any of the Companies or to the Business of the
Companies (whether or not constituting a trade secret), which is not in the
public domain. Without limiting the generality of the foregoing, so long as such
information is not generally known in the Business or ascertainable by proper
means and is treated by any of the Companies as proprietary and confidential,
Confidential Information shall include, but shall not be limited to, the
following information regarding any of the Companies:
A. any patent, patent application, copyright, trademark, trade
name, service xxxx, service name, "know-how" or trade secrets;
B. customer lists and information relating to (i) any client
of any Company or (ii) any client of the operations of any other person or
entity for which operations any Company provides management services;
C. supplier lists, pricing policies, consulting contracts and
competitive bid information;
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D. company records, operational methods and company policies
and procedures, including manuals and forms;
E. marketing data, plans and strategies;
F. business acquisition, development, expansion or capital
investment plan or activities;
G. software and any other confidential technical programs;
H. personnel information, employee payroll and benefits data;
I. accounts receivable and accounts payable;
J. other financial information, including financial
statements, budgets, projections, earnings and any unpublished financial
information; and
K. company correspondence and communications with outside
parties.
As used in this Section 2, the term "person" shall mean an individual,
a partnership, an association, a corporation, a trust, an unincorporated
organization, a limited liability company, a registered limited liability
partnership or any other business entity or enterprise. Notwithstanding the
provisions of this Section 2 to the contrary, XxXxx shall not be prohibited
hereunder from making any disclosure required by law.
3. Injunctive Relief; Invalidity of Any Provision. XxXxx acknowledges that (a)
his ownership of and positions as a shareholder, a director, an officer and an
employee of Company afforded his access to Confidential Information regarding
the Business of Company, (b) he will benefit from the consummation of the
transactions contemplated by the Stock Purchase Agreement, including but not
limited to by reason of the consideration received by him thereby, (c) the
nature and periods of restrictions imposed by the covenants contained in
Sections 1 and 2 hereof are fair, reasonable and necessary to protect the
Companies, (d) the Companies would sustain irreparable loss and damage if XxXxx
were to breach any of such covenants, (e) the Companies actively conduct the
Business and are actively expanding the Business throughout the Territory, and
(f) the Companies' remedy at law for such a breach will be inadequate.
Accordingly, XxXxx agrees and consents that the Companies, in addition to all
other remedies available to any of them, at law or in equity, shall be entitled
to:
A. seek both preliminary and permanent injunctions to prevent
or halt a breach or threatened breach by XxXxx of any covenant contained in
either Sections 1 or 2 hereof; and
B. set-off the entire amount of any Damages arising by such
breach or threatened breach against the amounts, if any, then due under the Real
Estate Note.
If any provision of either of Sections 1 or 2 of this Noncompetition
Agreement is determined by a court of competent jurisdiction to be invalid in
whole or in part, it shall be deemed to have been
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amended, whether as to time, area covered or otherwise, as and to the extent
required for its validity by such court, and as so amended, shall be
enforceable. The parties further agree to execute all documents necessary to
evidence such amendment.
4. Notices. All notices, requests, demands and other communications required or
permitted to be given or made under this Noncompetition Agreement shall be in
writing and shall be given to Purchaser or to XxXxx in accordance with the
provisions of Section 11.8 of the Stock Purchase Agreement.
5. Construction of Agreement.
5.1 Written Changes Only. This Noncompetition Agreement may not be
changed or terminated orally, and no modification, termination or attempted
waiver shall be valid unless in writing and signed by the party against whom
enforcement is sought (other than as provided in the last sentence of Section 4
hereof).
5.2 Tense; Captions. In construing this Noncompetition Agreement,
whenever appropriate, the singular tense shall also be deemed to mean the
plural, and vice versa, and the captions contained in this Noncompetition
Agreement shall be ignored.
5.3 Governing Law and Severability. This Noncompetition Agreement shall
be governed by, construed and enforced in accordance with, the laws of the State
of California. If any court holds any provision of this Noncompetition Agreement
or the application of the provision to any person or circumstance invalid, the
remaining provisions of this Noncompetition Agreement, and the application of
the provision to persons or circumstances other than those to which it is held
invalid, shall not be affected.
5.4 Assignment Prohibited. XxXxx'x obligations hereunder shall not be
assignable to any other person or entity.
5.5 Binding Effect; Benefit. Except as otherwise specifically provided
herein, this Noncompetition Agreement shall be binding upon, and shall inure to
the benefit of, the Companies and their respective successors and assigns.
5.6 Integrated Agreement. This Noncompetition Agreement constitutes the
entire agreement between the parties by which they agreed to be bound and
supersede all prior and contemporaneous agreements, correspondence, arrangements
and understanding (whether written or oral) relating to its subject matter and
the transactions contemplated by it.
5.7 Execution in Counterparts. This Noncompetition Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
5.8 Third Party Beneficiaries. With respect to the provisions of
Sections 1 and 2 hereof, the parent corporation of Purchaser, the Company and
all current and any future direct or indirect
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Affiliates (as defined below) of such parent corporation, are hereby made
third-party beneficiaries of this Noncompetition Agreement. As used herein, the
term "Affiliates" refers to any corporation or entity that controls, is
controlled by or is under common control with either Purchaser or any successor
or assignee of such parent corporation.
5.9 Recovery of Attorneys' Fees. If either party brings an action
against the other to enforce any condition or covenant of this Noncompetition
Agreement, the prevailing party in such action shall be entitled to recover its
court costs and reasonable attorneys' fees in the judgment rendered through such
action.
IN WITNESS WHEREOF, the parties have executed this Noncompetition
Agreement as of the date first written above.
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XXXXXX X. XXXXX
CHILDREN'S COMPREHENSIVE SERVICES OF
CALIFORNIA, INC., A CALIFORNIA CORPORATION
By:
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Name:
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Title:
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