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Lc Strategic Realty / Lorissa Naugle Non-competition Agreement

NonCompetition Agreement

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 This NonCompetition Agreement involves

CAPSTONE FINANCIAL GROUP, INC. | Capstone Financial Group, Inc | LC Strategic Realty, LLC

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Governing Law: New York     Date: 11/20/2015
Industry: Conglomerates     Sector: Conglomerates

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THIS NON-COMPETITION AGREEMENT (this “ Agreement ”) is made and entered into as of July 24, 2015 (the “ Effective Date ”), by and among LC Strategic Realty, LLC, a New York limited liability company (“ Company ”), Lorissa Naugle (“ Naugle ”), and Capstone Financial Group, Inc., a Nevada corporation (“ Capstone ”).

W I T N E S S E T H :

WHEREAS, Naugle is a principal of Company;

WHEREAS, Company and Capstone are parties to that certain Securities Purchase Agreement, dated as of the Effective Date (the “ Purchase Agreement ”);

WHEREAS, pursuant to the transactions contemplated in the Purchase Agreement, Capstone is acquiring a 20% ownership interest in Company and providing substantial financing to Company, thereby benefiting Company and the prospects of Naugle’s ownership interest in Company;

WHEREAS, Naugle will obtain a substantial indirect financial benefit from the consummation of the transactions under the Purchase Agreement; and

WHEREAS, the execution and delivery of this Agreement by Naugle is a condition to Company’s consummation of the transactions under the Purchase Agreement and is necessary to preserve the value of Company and of the ownership interests being acquired by Capstone pursuant to the Purchase Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, Company and Naugle and Capstone hereby agree as follows:

Section 1.                 DEFINITIONS. In addition to terms defined elsewhere in this Agreement, the following terms have the following meanings:

Affiliate ” means, with respect to any Person, (a) a Person directly or indirectly controlling, controlled by or under common control with such Person; (b) a Person owning or controlling 10% or more of the outstanding voting securities of such Person; (c) an officer, director, member, or partner, or member of the immediate family of an officer, director, member, or partner, of such Person; or (d) a member or ex-member of a Person’s immediate family. When the Affiliate is an officer, director, member, or partner or member of the immediate family of an officer, director, member, or partner, of such Person, any other Person for which the Affiliate acts in that capacity shall also be considered an Affiliate. For purposes of this Agreement, “control” means, as to any Person, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise (and the terms “controlled by” and “under common control with” shall have correlative meanings).

Business ” means any business or division of any business with a primary focus on (a) real


estate, (b) media/entertainment/show business, or (c) endorsements/advertisements/personal appearances/use of likeness/monetization of celebrity. However, it is specially agreed that the term “Business” shall not include the real estate activities for a property at 37 Bridgman Street, Buffalo, New York, the Fillmore Creek Townhouses project in Ellicottville, New York and/or a property at 22 Somerton Avenue, Kenmore, New York.

Person ” means any entity, corporation, company, limited liability company, association, joint venture, joint stock company, partnership, trust, organization, individual (including personal representatives, executors, administrators, legatees and heirs of a deceased individual), nation, state, government (including agencies, departments, bureaus, boards, divisions and instrumentalities thereof), trustee, receiver or liquidator, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

Restricted Period ” means the period commencing on the Effective Date of this Agreement and ending on the earlier to occur of (a) six years after the Effective Date, and (b) two years following the last date on which Naugle is associated with Company.

Restrictive Covenants ” means the covenants contained in Section 2 .

Section 2.                 COVENANT NOT TO COMPETE.

2.1.       Covenant Not to Compete . Naugle shall not at any time during the Restricted Period have any ownership interest (of record or beneficial) in or have any interest as an employee, salesman, consultant, advisor, manager, officer or director in, or otherwise aid or assist in any manner, any firm, corporation, limited liability company, partnership, proprietorship or other business that engages in any market or geographic area within the United States in the Business, so long as Company, or any successor in interest to the business and goodwill of Company, remains engaged in such Business (or would have remained engaged in such Business but for the nonparticipation of Naugle and/or Naugle’s Affiliates) in such market or geographic area or continues to solicit customers or Future Customers (as defined below) therein, in each case other than on behalf of (x) Company, (y) a wholly-owned subsidiary of Company, or (z) a Person in which Capstone holds an equity interest of 20% or more; provided, however, that Naugle may own, directly or indirectly, solely as an investment, securities of any person which are traded on any national securities exchange if Naugle does not, directly or indirectly own one percent or more of any class of securities of such person.

2.2.       Solicitation of Business/Other Injurious Activities . During the Restricted Period, Naugle shall not solicit or assist any other person to directly or indirectly solicit any business (other than for Company) from any present or Past Customer of Company or any of its Affiliates; or request or advise any present or Future Customer of Company or any of its Affiliates to withdraw, curtail or cancel its business dealings with Company or any of its Affiliates; or commit any other act or assist others to commit any other act which could reasonably be expected to injure the business of Company or any of its Affiliates. For purposes of this Agreement, “Past Customer” shall mean a Person who was a customer of Company during the two years preceding the purported solicitation; and “Future Customer” shall mean a prospective customer with whom Company conducted discussions about becoming a customer during the six months preceding the purported solicitation.

2.3.       Solicitation of Employees, Etc . During the Restricted Period, Naugle shall not


directly or indirectly solicit or encourage any manager, employee, consultant or agent of Company or any of its Affiliates to leave or reduce his/her level of services to any such entity; provided that the foregoing shall not apply with respect to any manager, employee, consultant or agent who (without having previously been contacted) responds to a general solicitation not targeted at such individual.

2.4        Rights and Remedies Upon Breach . If Naugle breaches (or, for the purposes of Sections 2.4(a) and 2.4(c) only, threatens) to commit a breach of, any of the Restrictive Covenants, Company shall have the following rights and remedies, each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to Company under law or in equity:

(a)        Specific Performance . The right and remedy to have the Restrictive Covenants specifically enforced by any court having equity jurisdiction, all without the need to post a bond or any other security or to prove any amount of actual damage or that money damages would not provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Company and that monetary damages may not provide adequat

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