Exhibit 99.5
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT - XXXXXX
This Confidentiality and Non-Competition Agreement (the "AGREEMENT") is
entered into as of December 14, 2001 by and between XCEL Healthcare, Inc., a
California corporation ("XCEL"), whose address is 0000 Xxxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 and Xxxxxx X. Xxxxxx, an individual
("EXECUTIVE"), whose address is _______________________________, California
________, with reference to the following facts:
RECITALS:
WHEREAS, Executive is a shareholder of XCEL, which is engaged in the
homecare pharmacy business (the "Business");
WHEREAS, Executive is one of the founders of the Business and has been
instrumental in managing and controlling the Business and, as a result of his
long association with the Business, has certain confidential and proprietary
information concerning the Business and belonging to it;
WHEREAS, pursuant to that certain Stock Purchase and Share Exchange
Agreement of even date herewith (the "Exchange Agreement") entered into by and
among Health Sciences Group, Inc. ("HESG), Xxxx Xxxxxxx, Xxxx Xxxxxx, XCEL,
BioSelect Innovations, Inc. ("BioSelect") and the Shareholders (as defined in
the Agreement), the Shareholders will transfer all of their equity securities in
XCEL and BioSelect to HESG to be used in connection with the continuation of the
Business; and
WHEREAS, as a condition to the purchase of the equity securities by
Health Sciences Group, Inc., the parties desire to set forth in this Agreement
certain covenants to be made by Executive for the benefit of XCEL, BioSelect and
Health Sciences Group, Inc., including, without limitation, covenants by
Executive that he will not: (i) compete with XCEL in connection with the
Business; or (ii) divulge confidential information of the Business; or (iii)
engage in other practices which are competitive with or adverse to XCEL as it
relates to the Business.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for valuable consideration, the receipt and sufficiency of
which are hereby mutually acknowledged, the parties to this Agreement
(collectively "PARTIES" and individually a "PARTY") agree as follows:
AGREEMENT:
1. DEFINITIONS
All capitalized terms used but not defined herein have the
meanings ascribed to them in the Exchange Agreement. Set forth below are
definitions of capitalized words or terms which are generally used throughout
this Agreement:
(a) "AGREEMENT" means this Confidentiality and Non-Competition
Agreement, as originally executed and as it may be amended, modified,
supplemented and/or restated from time to time or renewed or extended.
(b) "COMPETITIVE BUSINESS" shall mean any business that is or
may be competitive with, similar to, or adverse to the Business, whether such
competing business is conducted, directly or indirectly, individually or by a
proprietorship, partnership, corporation or other form of entity or venture.
(c) "CONFIDENTIAL INFORMATION" shall mean any information,
matter or thing which, as to the Business, is of a secret, confidential or
private nature, whether or not so denominated, and which (i) is connected with
the methods of operation of the Business, or concerns any of its suppliers,
customers, licensors, licensees or others with whom XCEL has or has had a
business relationship within the past 3 years; and (ii) has current or potential
value to XCEL, or the unauthorized disclosure of which could be detrimental to
the Business and/or to XCEL. "Confidential Information" shall be broadly defined
and shall include but not be limited to: (1) business matters known or available
only to management and owners of XCEL, such as (A) information concerning
customers, vendors and suppliers, including their names, addresses, credit or
financial status, buying or selling habits, practices or requirements; (B) any
arrangements or contracts that XCEL has or may have with such parties; (C) the
marketing methods, plans and/or strategies of XCEL for development of the
Business; and (D) the terms of any contracts or agreements XCEL has entered
into; and (2) other matters including, but not limited to, product information,
trade secrets, know-how, formulae, innovations, inventions, technologies,
devices, discoveries, techniques, formats, processes, methods, specifications,
designs, patterns, schematics, data, compilation of information, test results
and research and/or development projects undertaken by XCEL. For purposes of
this Agreement, the term "trade secrets" shall mean the broadest and most
inclusive interpretation of "trade secrets" as defined by applicable law.
Confidential Information shall not include any information in the public domain,
provided, however, specific information shall not be deemed to be in the public
domain merely because it is encompassed by some general information that is
published or in the public domain.
(d) "NONCOMPETITION COVENANT" shall mean the covenant
described in section 2 entitled "Covenant Not to Compete".
(e) "NONINTERFERENCE COVENANT" shall mean the covenant
described in section 4 entitled "Covenant Not to Interfere".
(g) "TERRITORY" shall encompass the United States of America.
2. COVENANT NOT TO COMPETE
Executive hereby covenants and agrees that for a period of 3
years, Executive shall not, without the prior written consent of XCEL (which
consent may be withheld in the sole and absolute discretion of XCEL), within the
boundaries of the Territory, directly or indirectly, whether with or through any
person, firm, partnership, corporation or other entity, whether now existing or
hereafter created: (i) be or become engaged in any Competitive Business
including, without limitation, being or becoming an organizer, partner,
joint-venturer, stockholder, officer, director, employee, manager, independent
sales representative, associate, consultant, agent, or lender to any Competitive
Business or acting as a supplier, vendor, vendee, lessor or lessee to any
Competitive Business for less than full and adequate consideration; and/or (ii)
in any manner associate with, aid or assist or give information or financial
assistance to any Competitive Business; and/or (iii) use or permit the use of
his name or any part thereof to be used or employed in connection with any
Competitive Business (collectively, the "NONCOMPETITION COVENANTS"). The
provisions of these Noncompetition Covenants shall not be deemed to prevent (i)
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the purchase or ownership by Executive of a passive investment of not more than
4% of the outstanding capital shares of any business company which has a class
of securities registered pursuant to the Securities and Exchange Act of 1934, as
amended (i.e., a so-called "publicly held" company), or (ii) Executive from
becoming employed as a practicing pharmacist by a pharmacological organization.
The provisions of these Noncompetition Covenants shall cease to be of any force
or effect upon the occurrence of the Repurchase Option Exercise Date, if any, or
if HESG wrongfully fails to provide the severance compensation contemplated by
Sections 10(d) and 10(e) of that certain Employment Agreement of even date
herewith by and between XCEL and Executive.
3. COVENANT NOT TO INTERFERE
Executive hereby covenants and agrees that for a period of 3
years, Executive shall not solicit the business of any person, firm or business
entity which is or has been during the two (2) year period preceding such
solicitation a customer, client, contractor, joint venturer, supplier or vendor
of XCEL if, either directly or indirectly, whether with or through any person,
firm, partnership, corporation or other entity now existing or hereafter
created, the solicitation is done: (i) on behalf of, directly or indirectly, any
Competitive Business; or (ii) for the purpose of or with the reasonably
foreseeable effect of harming or adversely affecting the business of XCEL (the
"NONINTERFERENCE COVENANT").
4. AGREEMENT NOT TO USE OR DIVULGE CONFIDENTIAL INFORMATION;
ACKNOWLEDGMENT OF SECRECY
Executive hereby acknowledges that, by reason of his
relationship with XCEL, he has had access to and become acquainted with the
Confidential Information. Executive hereby covenants and agrees that he shall
not, in any fashion, form or manner, unless previously and specifically
consented to in writing by XCEL, either directly or indirectly use, divulge,
transmit or otherwise disclose or cause to be used, divulged, transmitted or
otherwise disclosed to any person, firm, partnership, corporation or other
entity now existing or hereafter created, in any manner whatsoever (other than
as required by law), any Confidential Information of any kind, nature or
description. Executive hereby further acknowledges and agrees that the sale or
unauthorized use, transmission or other disclosure of any of the Confidential
Information which is in his possession constitutes unfair competition and
Executive covenants and agrees that he shall not engage in any unfair
competition with XCEL. The foregoing provisions shall not be construed to
prevent Executive from making use of or disclosing information which is in the
public domain through no fault of Executive's; PROVIDED, HOWEVER, specific
information shall not be deemed to be in the public domain merely because it is
encompassed by some general information that is published or in the public
domain.
Executive hereby acknowledges that the Confidential
Information is not generally known to the public or to other persons outside of
XCEL who are able to obtain economic value from its use, transmission or other
disclosure, and that the Confidential Information derives independent economic
value thereby. Executive hereby covenants and agrees that he shall take all
efforts reasonably necessary to maintain the secrecy and confidentiality of the
Confidential Information and to otherwise comply with the terms of this
Agreement.
5. ACKNOWLEDGMENT OF NECESSITY OF COVENANTS AND PROTECTIONS
Executive hereby acknowledges and agrees that: (i) the
covenants and the restrictions contained in this Agreement including the
Noncompetition Covenant and the Noninterference Covenant (collectively and
severally, the "COVENANTS OR RESTRICTIONS") are necessary, fundamental and
required for the protection of the Business as it has been transferred to XCEL,
(ii) the Covenants or Restrictions relate to matters which are of a special,
unique and extraordinary value; and (iii) a breach of any of the Covenants or
Restrictions will result in irreparable harm and damages to XCEL which cannot be
adequately compensated by a monetary award.
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6. JUDICIAL LIMITATION
Notwithstanding the foregoing, if at any time a court of
competent jurisdiction holds that any of the Covenants or Restrictions or any
portion thereof is unenforceable by reason of its extending for too long a
period of time or over too large a geographical area, or by reason of its being
too extensive in any other respect, such Covenants or Restrictions or portion
thereof shall be interpreted to extend only over the maximum period of time,
maximum geographical area, and/or maximum extent in all other respects as to
which it may be enforceable, all as determined by the court in such action.
7. REPRESENTATIONS AND WARRANTIES
Executive hereby represents and warrants to XCEL, each of
which is deemed to be a separate representation and warranty, as follows:
(a) VALIDITY. This Agreement has been duly executed and
delivered by Executive and is valid and binding upon him in accordance with its
terms, except as limited by: (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to creditor
rights generally; and (2) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
(b) LEGAL REPRESENTATION. Executive: (1) has had the advice,
or sufficient opportunity to obtain the advice, of legal counsel separate and
independent from legal counsel for any other party hereto; and (2) Executive was
not represented by the legal counsel of any other party hereto in connection
with the transactions contemplated by this Agreement, nor was he under any
belief or understanding that such legal counsel was representing his interests.
(c) FAIRNESS. The terms and conditions of the transactions
contemplated by this Agreement are fair and reasonable based upon all of the
facts and circumstances existing at the time this Agreement is entered into; and
Executive has voluntarily entered into the transactions contemplated by this
Agreement, without duress or coercion.
8. INTERPRETATION AND CONSTRUCTION
(a) PREPARATION OF AGREEMENT. The parties have participated
jointly in the negotiation and drafting of this Agreement and each provision
hereof. In the event any ambiguity, conflict, omission or other question of
intent or interpretation arises, this Agreement shall be construed as if jointly
drafted by the parties, and no presumption or burden of proof shall be presumed,
implied or otherwise construed favoring or disfavoring any party by virtue of
the authorship of this Agreement or of any provision hereof.
(b) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by any party in connection with any
transaction contemplated by this Agreement shall, irrespective of any
investigation made by or on behalf of any other party hereto, survive the
execution and delivery of this Agreement and the performance or consummation of
any transaction described in this Agreement, and shall continue in full force
and effect forever thereafter.
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(c) ENTIRE AGREEMENT; NO COLLATERAL REPRESENTATIONS. Each
party expressly acknowledges and agrees that this Agreement, and the agreements
and documents referenced herein: (i) are the final, complete and exclusive
statement of the agreement of the parties with respect to the subject matter
hereof; (ii) supersede any prior or contemporaneous agreements, memorandums,
proposals, commitments, guaranties, assurances, communications, discussions,
promises, representations, understandings, conduct, acts, courses of dealing,
warranties, interpretations or terms of any kind, whether oral or written
(collectively and severally, the "PRIOR AGREEMENTS"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(iii) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements. No prior drafts of
this Agreement, and no words or phrases from any prior drafts, shall be
admissible into evidence in any action or suit involving this Agreement.
(d) AMENDMENT; WAIVER; FORBEARANCE. Except as expressly
provided herein, neither this Agreement nor any of the terms, provisions,
obligations or rights contained herein, may be amended, modified, supplemented,
augmented, rescinded, discharged or terminated (other than by performance),
except by a written instrument or instruments signed by all of the parties to
this Agreement. No waiver of: (i) any breach of any term, provision or
agreement; (ii) the performance of any act or obligation under this Agreement;
and/or (iii) any right granted under this Agreement, shall be effective and
binding unless such waiver shall be in a written instrument or instruments
signed by each party claimed to have given or consented to such waiver. Except
to the extent that the party or parties may have otherwise agreed in writing, no
waiver shall be deemed a waiver or relinquishment of any other term, provision,
agreement, act, obligation or right under this Agreement, or of any preceding or
subsequent breach thereof. No forbearance by a party in seeking a remedy for any
noncompliance or breach by another party hereto shall be deemed to be a waiver
by such forbearing party of its rights and remedies with respect to such
noncompliance or breach, unless such waiver shall be in a written instrument or
instruments signed by the forbearing party.
(e) REMEDIES CUMULATIVE. The remedies of each party under this
Agreement are cumulative and shall not exclude any other remedies to which such
party may be lawfully entitled.
(f) SEVERABILITY. If any term or provision of this Agreement,
or the application thereof to any person or circumstance, shall to any extent be
determined to be invalid, illegal or unenforceable under present or future laws,
then, and in such event: (i) the performance of the offending term or provision
(but only to the extent its application is invalid, illegal or unenforceable)
shall be excused as if it had never been incorporated into this Agreement, and,
in lieu of such excused provision, there shall be added a provision as similar
in terms and amount to such excused provision as may be possible and still be
legal, valid and enforceable; and (ii) the remaining part of this Agreement
(including the application of the offending term or provision to persons or
circumstances other than those as to which it is held invalid, illegal or
unenforceable) shall not be affected thereby, and shall continue in full force
and effect to the fullest legal extent.
(g) NO RELIANCE UPON PRIOR REPRESENTATIONS. Each party
acknowledges that: (1) no other party has made any oral representation or
promise which would induce such party, prior to executing this Agreement, to
change such party's position to his or its detriment, to partially perform, or
to part with value in reliance upon such representation or promise; and (2) such
party has not so changed his or its position, performed or parted with value
prior to the time of the execution of this Agreement, or such party has taken
such action at its own risk.
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9. ENFORCEMENT
(a) APPLICABLE LAW. This Agreement and the rights and remedies
of each party arising out of or relating to this Agreement (including equitable
remedies) shall be solely governed by, interpreted under, and construed and
enforced in accordance with the laws (without regard to the conflicts of law
principles) of the State of California.
(b) CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS. Any
"action or proceeding" (as such term is defined below) arising out of or
relating to this Agreement shall be filed in and litigated solely before the
state courts of California located within the County of Los Angeles, or the
United States District Court for the Southern District of California. By
execution and delivery of this Agreement, each party: (i) generally and
unconditionally accepts the exclusive jurisdiction of the aforesaid courts and
venue therein, and waives to the fullest extent provided by law any defense or
objection to such jurisdiction and venue based upon the doctrine of "FORUM NON
CONVENIENS;" and (ii) consents to service of process in any such action or
proceeding by delivery of certified or registered mailing of the summons and
complaint in accordance with the notice provisions of this Agreement. The term
"ACTION OR PROCEEDING" is defined as any and all claims, suits, actions,
hearings, arbitrations or other similar proceedings, including appeals and
petitions therefrom, whether formal or informal, governmental or
non-governmental, or civil or criminal.
(c) CONSENT TO INJUNCTIVE RELIEF; WAIVER OF BOND OR SECURITY.
Executive acknowledges that XCEL may, if Executive breaches his covenants and
obligations under this Agreement, sustain immediate and long-term substantial
and irreparable injury and damage which cannot be reasonably or adequately
compensated by damages at law. Consequently, Executive agrees that XCEL shall be
entitled, in the event of his breach or threatened breach of the covenants and
obligations hereunder, to obtain equitable relief from a court of competent
jurisdiction, including enforcement of each provision of this Agreement by
temporary, preliminary and/or permanent injunctions enforcing XCEL's rights or
enjoining any breach by Executive, all without proof of any actual damages that
have been or may be caused to XCEL by such breach or threatened breach and
without the posting of bond or other security in connection therewith.
(Likewise, XCEL waives any obligation of Executive to the posting of bond or
other security in connection with an appeal of the grant of any such temporary,
preliminary and/or permanent injunction.) Executive waives the claim or defense
that XCEL has an adequate remedy at law. Executive agrees and acknowledges that:
(i) the terms of this subsection (c) are fair, reasonable and necessary to
protect the legitimate interests of XCEL; (ii) this waiver is a material
inducement to XCEL to enter into the transactions contemplated hereby; and (iii)
XCEL relied upon this waiver in entering into this Agreement. Executive warrants
and represents that he has reviewed this provision with his legal counsel, and
that he has knowingly and voluntarily waived his rights following consultation
with such legal counsel.
(d) RECOVERY OF FEES AND COSTS. If any party institutes, or
should any party otherwise become a party to, any action or proceeding based
upon or arising out of this Agreement, including the enforcement or
interpretation of this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the "PREVAILING PARTY" (as such term
is defined below) in any such action or proceeding, whether or not such action
or proceeding proceeds to final judgment or determination, shall be entitled to
receive from the non-prevailing party as a cost of suit, and not as damages, all
fees, costs and expenses of enforcing any right of the prevailing party,
including reasonable attorneys' fees. The term "PREVAILING PARTY" is defined as
the party who is determined to prevail by the court after its consideration of
all damages and equities in the action or proceeding (the court shall retain the
discretion to determine that no party is the prevailing party, in which case no
party shall be entitled to recover its fees and costs under this subsection
(d)).
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10. SUCCESSORS AND ASSIGNS.
Each and every representation, warranty, covenant, condition
and provision of this Agreement as it relates to each party hereto shall be
binding upon and shall inure to the benefit of such party and his or its
respective successors and permitted assigns, spouses, heirs, executors,
administrators and personal and legal representatives, including any successor
(whether direct or indirect, or by merger, consolidation, conversion, purchase
of assets, purchase of securities or otherwise).
11. MISCELLANEOUS
(a) COSTS AND EXPENSES. Except as expressly set forth in this
Agreement, each party shall pay all legal and other fees, costs and expenses
incurred or to be incurred by such party in negotiating and preparing this
Agreement; in performing due diligence or retaining professional advisors; and
in complying with such party's covenants, agreements and conditions contained
herein.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things, and to execute and deliver any documents that may be reasonably
necessary or otherwise reasonably required to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay and at no expense to Executive.
(c) NOTICES. All notices, demands, requests, consents,
approvals or other communications ("Notices") given hereunder shall be in
writing, and shall be given by personal delivery or by express mail, Federal
Express, DHL or other similar form of recognized airborne/overnight delivery
service (which forms of Notice shall be deemed to have been given upon delivery)
or by mailing in the mail by registered or certified mail, return receipt
requested, postage prepaid (which forms of Notice shall be deemed to have been
given upon the fifth (5th) business day following the date mailed). Notices
shall be addressed to the addresses stated below:
In the case of Executive:
Xx. Xxxxxx X. Xxxxxx
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with a copy to:
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or in the case of XCEL:
XCEL Healthcare, Inc.
c/o Xx. Xxxx X. Xxxxxxx
Xxxxxx Xxxxxx Center
0000 Xxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
with a copy to:
Xxxxxx & Xxxxxxxxxx
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
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(d) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto.
WHEREFORE, the parties hereto have, for purposes of this Agreement,
executed this Agreement in the City of Los Angeles, State of California, as of
December 14, 2001.
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
XCEL HEALTHCARE, INC.,
a California corporation
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxx, Director
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