Exhibit 10.6.1
CONFIDENTIALITY, NON-COMPETITION AND
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NON-SOLICITATION AGREEMENT
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THIS CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION AGREEMENT
(this "Agreement") is entered into effective as of May 23, 2006 (the "Effective
Date"), by and between XXXXXXXX X. XXXXXXXX, XX. a resident of the State of
Texas (the "Shareholder"); and TRADESTAR SERVICES, INC., a Nevada corporation
(the "Parent"). The Parent and the Shareholder are sometimes collectively
referred to herein as the "parties" and each individually as a "party."
WITNESSETH
WHEREAS, the Shareholder has been an employee, officer and shareholder of
THE CYMRI CORPORATION, a Texas corporation (the "Company"), and as such,
possesses special knowledge, abilities and experience regarding the business of
the Company;
WHEREAS, concurrent with the execution hereof, the Company is merging with
and into TRADESTAR ACQUISITION SUB, L.L.C., a Nevada limited liability company
and wholly-owned subsidiary of the Parent (the "Buyer"), with the Buyer as the
surviving corporation in the merger, all pursuant to the terms and conditions of
that certain Agreement and Plan of Merger, dated as of even date herewith (the
"Merger Agreement"), by and among the Buyer, the Shareholder, the other
shareholders of the Company, the Parent and the Company;
WHEREAS, as an inducement to the Parent and the Buyer to enter into the
Merger Agreement and as a condition to the Parent's and the Buyer's consummation
of transactions contemplated in the Merger Agreement (the "Transactions"), the
Shareholder has agreed to enter into and deliver this Agreement; and
WHEREAS, any capitalized terms not defined herein shall have the meanings
assigned such terms in the Merger Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the Transactions, the mutual covenants
and agreements set forth herein, the significant consideration payable to the
Shareholder under the Merger Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Acknowledgments. The Shareholder acknowledges that:
(a) The Shareholder has occupied positions of trust and confidence
with the Company prior to the date hereof and has become familiar with the
Confidential Information (as defined below);
(b) The Parent Group conducts business in the States of Nevada, Texas,
Arizona, Louisiana and New Mexico;
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(c) The Parent Group's services and products are marketed throughout
the States of Nevada, Texas, Arizona, Louisiana and New Mexico;
(d) Prior to the closing of the Transactions, the Company did business
in and marketed its services and products throughout the Territory (as
defined below);
(e) The Parent Group competes with other businesses that are or could
be located in any part of the Territory;
(f) The Parent has required that the Shareholder make the covenants
set forth in Sections 3 and 4 of this Agreement as a condition to the
Parent's purchase of the Stock;
(g) The provisions of Sections 3 and 4 of this Agreement are
reasonable and necessary to protect and preserve the Parent Group's
business following the consummation of the Transactions; and
(h) The Parent Group would be irreparably damaged if the Shareholder
were to breach the covenants set forth in Sections 3 and 4 of this
Agreement.
2. Term and Termination. The term of this Agreement begins upon the
Effective Date and ends upon the third (3rd) anniversary of the Effective Date
(the "Term"). This Agreement is not subject to early termination for any reason
whatsoever. This Agreement can only be terminated in writing signed by both
parties hereto.
3. Confidential Information. The Shareholder recognizes and acknowledges
that he had access to Confidential Information (as defined below) during his
prior employment with and as a shareholder of the Company and that all such
information is confidential and constitutes valuable, special and unique
property of the Parent Group. As used herein "Parent Group" means the Company,
the Parent, and any entity that directly or indirectly controls, is controlled
by, or is under common control with, the Parent or the Company, and for purposes
of this definition "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such entity, whether through the ownership of voting securities, by contract or
otherwise. The Shareholder shall not at any time, either during or subsequent to
the Term, disclose to others, use, copy or permit to be copied, any Confidential
Information of any member of the Parent Group (regardless of whether developed
by the Shareholder and including but not limited to any Confidential Information
obtained by the Shareholder as a result of his prior employment with or as a
shareholder of the Company) without the prior written consent of the Parent. The
term "Confidential Information" with respect to any Person means any secret or
confidential information or know-how and shall include, but shall not be limited
to, the plans, customers, costs, prices, uses, and applications of products and
services, results of investigations, studies or experiments owned or used by
such Person, and all apparatus, products, processes, compositions, samples,
formulas, computer programs, computer hardware designs, computer firmware
designs, and servicing, marketing or manufacturing methods and techniques at any
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time used, developed, investigated, made or sold by such Person, before or
during the Term, that are not readily available to the public or that are
maintained as confidential by such Person. The Shareholder shall maintain in
confidence any Confidential Information of third parties received as a result of
his prior employment with or as a shareholder of the Company in accordance with
the Company's obligations to such third parties and the policies established by
the Parent.
4. Non-Competition; Non-Solicitation. In further consideration of the
Parent's consummation of the Transactions and the significant consideration
payable to the Shareholder under the Merger Agreement, the Shareholder agrees
that:
(a) During the Term, the Shareholder shall not, anywhere in the
Territory, directly or indirectly own any interest in, manage, control,
participate in (whether as an officer, director, employee, partner,
shareholder, member, manager, agent, representative or otherwise), consult
with, render services for, or in any other manner engage in the business of
providing engineering and technical staffing services for drilling,
completion, production, construction and workover of oil and gas xxxxx or
any other business in which any member of the Parent Group as of the date
hereof directly or indirectly engages during the Term (a "Competing
Business"). Nothing herein shall prohibit the Shareholder from being a
passive owner of not more than five percent (5%) of the outstanding
securities of any class of a corporation which is publicly traded, so long
as the Shareholder has no active participation in the business of any such
corporation. For purposes of this Agreement, the term "Territory" shall
mean the reasonable and limited geographic area consisting of any state in
which any member of the Parent Group has offices, operations, or customers,
or otherwise conducts business. Nothing herein shall prevent the
Shareholder from conducting his business as currently conducted, including
his current business relationship with Sabine Operating Company, Sabine Gas
Transmission Company, Sabine Resources, Inc. and Sabine Storage &
Operations, Inc. or from performing his duties to the Parent Group.
(b) During the Term, the Shareholder shall not directly or indirectly
through another person (i) induce or attempt to induce any employee of the
Parent Group to leave the employ of such member of the Parent Group, or in
any way interfere with the relationship between a member of the Parent
Group and any employee thereof; (ii) hire or employ any person who is or
was an employee of any member of the Parent Group; (iii) call on, solicit
or service any customer, supplier, licensee, licensor, franchisee or other
business relation of the Parent Group with respect to, in connection with
or for any Competing Business; or (iv) in any way interfere with the
relationship between any such customer, supplier, licensee or business
relation and the Parent Group (including, without limitation, making any
negative statements or communications about any member of the Parent
Group).
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(c) If, at the time of enforcement of this Section 4, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree
that the maximum period, scope or geographic area reasonable under such
circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed and directed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted by
law. The Parent and the Shareholder recognize and affirm that in the event
of breach by the Shareholder of any of the provisions of this Section 4,
money damages would not be an adequate remedy. Accordingly, the Parent or
its successors or assigns may, in addition to other rights and remedies
existing in their favor, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond
or other security). The Shareholder agrees that the restrictions contained
in this Section 4 are reasonable and that the Shareholder has received
consideration in exchange therefor.
5. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Parent and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of the Shareholder and his legal
representatives and assigns. The Parent may assign or transfer its rights
hereunder to any of its affiliates or to a successor corporation in the event of
merger, consolidation or transfer or sale of all or substantially all of the
assets of the Parent.
6. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against who enforcement of such amendment,
modification or waiver is sought. No course of dealing between the parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of any party in the
exercise of any of their respective rights or remedies shall operate as a waiver
thereof, and no single or partial exercise by any party of any such right or
remedy shall preclude other or further exercises thereof. A waiver of right or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right or remedy on any other occasion.
7. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Texas, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas. The parties hereby irrevocably consent to, and
waive any objection to the exercise of, personal jurisdiction by the state and
federal courts of the State of Texas with respect to any action or proceeding
arising out of this Agreement and agree that all disputes arising out of this
Agreement shall be adjudicated in such courts.
8. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then such provision or
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term shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
9. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
10. Shareholder's Representations. The Shareholder represents and warrants
to the Parent that (i) his execution, delivery and performance of this Agreement
does not and shall not conflict with, or result in the breach of or violation
of, any other agreement, instrument, order, judgment or decree to which he is a
party or by which he is bound; (ii) he is not a party to or bound by any
employment agreement, noncompete agreement or confidentiality agreement with any
other person or entity; and (iii) upon the execution and delivery of this
Agreement by the Parent, this Agreement shall be the valid and binding
obligation of his, enforceable in accordance with its terms.
11. Notice. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed properly given if delivered
personally, mailed by certified mail, postage prepaid and return receipt
requested, sent by facsimile, or sent by Express Mail or Federal Express or
other nationally recognized express deliver services, as follows
If to the Parent:
Tradestar Services, Inc.
0000 Xxxxxxxxxx XX
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx and Xxxxx, LLP
One Houston Center
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxx, Esq. or Xxx Xxxx, Esq.
Facsimile: (000) 000-0000 or (000) 000-0000
If to the Shareholder:
Xxxxxxxx X. Xxxxxxxx, Xx.
0000 Xxx Xxxxx Xxxxx
Xxxxx 0000 Xxxxxxx, Xxxxx 00000-0000
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With a copy to:
Xxxxxx & Westheimer, P.C.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq. or Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
and
Beyt & Beyt
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
Facsimile: (000) 000-0000
or at such other address as such party may designate by ten (10) days advance
written notice to the other party.
12. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement. Any capitalized terms not
defined herein shall have the meanings assigned such terms in the Merger
Agreement
13. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
14. Attorneys' Fees. In the event that any party finds it necessary to
bring an action at law or other proceedings against the other party to enforce
any of the terms hereof, the party prevailing in any such action or other
proceeding shall be paid by the other party its reasonable attorneys' fees as
well as court costs.
15. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be resolved by binding arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules in effect on the date of this Agreement (herein the "AAA
Rules"), and judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitrator shall be selected pursuant
to the AAA Rules and shall be a neutral and impartial lawyer with excellent
academic and professional credentials (i) who is or has been practicing law for
at least fifteen (15) years, specializing in general commercial litigation or
general corporate and commercial matters and (ii) who has both training and
experience as an arbitrator and is generally available to serve as an
arbitrator. The arbitration shall be governed by the arbitration law of the
Federal Arbitration Act and shall be held in Houston, Texas.
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16. Survival of Covenants. The covenants, representations and agreements of
Sections 1, 3, 4, 7, 11, 14, 15 and 16 are of a continuing nature and shall
survive the expiration, termination or cancellation of this Agreement regardless
of reason.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the Effective Date.
PARENT
TRADESTAR SERVICES, INC.
By: /s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
SHAREHOLDER
/s/ Xxxxxxxx X. Xxxxxxxx, Xx.
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Xxxxxxxx X. Xxxxxxxx, Xx.
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