EXHIBIT 10.5
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
August __, 1996, by and between Teletouch Communications, Inc., a Delaware
corporation ("Teletouch") and the former shareholders of AACS Communications,
Inc., a Texas corporation ("AACS"), listed on the signature pages hereof
(individually, a "Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, Teletouch and the Shareholders are parties to that certain
Stock Purchase Agreement dated as of April 4, 1996, (the "Stock Purchase
Agreement") pursuant to which Teletouch will purchase all of the issued and
outstanding capital stock of AACS; and
WHEREAS, prior to the date hereof, the Shareholders owned all of the
issued and outstanding capital stock of AACS; and
WHEREAS, pursuant to the Stock Purchase Agreement, the execution and
delivery of this Agreement are to occur contemporaneously with the consummation
of the trans actions contemplated by the Stock Purchase Agreement;
NOW, THEREFORE, in connection with the consummation of the transactions
contemplated by the Stock Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereby agree as follows:
1. Agreement Not to Compete.
------------------------
1.1. Business of Company; Shareholders' Knowledge. In connection
--------------------------------------------
business plans and procedures, marketing plans and techniques and other
procedures, methods, and processes used in connection with its business, and has
also developed a list of clients and customers with significant repeat business,
all of which are critical to the financial success of AACS in part because of
the specialized nature of the business and the locales and markets serviced by
AACS. During each Shareholder's association with AACS as an officer, director,
shareholder and/or employee, each Shareholder has become familiar with the
nature of
AACS' business, its customers, and with the special techniques, procedures and
methods previously referenced.
1.2. Term and Restricted Activities.
------------------------------
(a) In consideration of the foregoing and the purchase of the
stock of AACS by Teletouch, each Shareholder hereby agrees that for the
three (3) year period beginning on the date hereof (the "Term"), each
Shareholder shall not, directly or indirectly, for his or her own account
or for the account of others, as an officer, director, stockholder, owner,
partner, employee, promoter, consultant, manager, advisor or otherwise,
participate in the promotion, financing, ownership, or management of, any
business which offers any of the same products or services presently
offered by, or pursues any activities constituting or resembling the
business of AACS within the area indicated within the bold border on the
map attached hereto as Annex "A" (the "Restricted Area"); provided,
however, that the Shareholders may own collectively up to five percent (5%)
of the outstanding publicly-held securities of a publicly-held corporation
which offers such products or services as a passive investment so long as
no Shareholder participates in the management or control of such
corporation; and provided, further, that Xxxxxxx X. Xxxxx may be retained
as an outside consultant or advisor for engineering services by a third
party which third party may be considered a competitor of AACS and/or
Teletouch.
(b) Each Shareholder agrees during the Term not to solicit
in any manner any business from any person or entity that was a
customer of AACS or is now or becomes a customer of Teletouch if such
business involves providing any of the same or similar products or
services in the Restricted Area as constituted the business of AACS.
Each Shareholder specifically acknowledges that AACS business is
regional in scope and is contained in the Restricted Area. For a
period of two (2) years, the Shareholders agree not to solicit the
full-time employment of the current employees of Teletouch or those
employees of AACS who became employed by Teletouch after the purchase
of the stock of AACS by Teletouch in accordance with the Stock
Purchase Agreement.
2. Payments to the Shareholders. At the Closing (as such term is
----------------------------
defined in the Stock Purchase Agreement) of the transactions contemplated in the
Stock Purchase Agreement, and on the date hereof, Teletouch has paid and the
Shareholders have accepted as full compensation for all covenants contained
herein, the sum of $100,000 paid by wire transfer to an account designated by
AACS which funds are hereby allocated as set forth on the signature pages
hereto.
3. Remedies. In the event of a breach of a Shareholder's
--------
covenant not to compete, it is understood and agreed that Teletouch shall be
entitled to injunctive relief as well as any and all other applicable remedies
at law and in equity available to such party. The Shareholders are the
recipients of consideration under the Stock Purchase Agreement substantially in
excess of the consideration hereunder; the Shareholders therefore acknowledge
that any damages that Teletouch suffers due to a breach of this Agreement shall
not be limited to the consideration received hereunder. If a court of competent
jurisdiction should declare this covenant not to compete unenforceable, in whole
or in part, due to any unreasonable restriction of duration and/or geographical
area, then the parties hereto ack nowledge and agree that such a court of law or
equity shall have the express authority of the parties to this Agreement to
reform this covenant not to compete to a reasonable restriction and/or to grant
Teletouch any and all other relief, at law or in equity, reasonably necessary to
protect their respective interests. Each Shareholder expressly covenants and
acknowledges that he or she considers this restrictive covenant reasonable.
4. Notices. Any notice, request, instruction,
-------
correspondence or other document to be given hereunder by either party to the
other (herein collectively called "Notice") shall be in writing and delivered in
person or by courier service requiring acknowledgment of receipt of delivery or
mailed by certified mail, postage prepaid and return receipt requested, or by
telecopier, as follows:
If to the Shareholders: to the addresses set forth on the signature
pages hereto.
If to Teletouch:
Teletouch Communications, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. XxXxxxxx
Telecopy: (000) 000-0000
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at
-3-
the beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by telecopier shall be
confirmed promptly after transmission in writing by certified mail or personal
delivery. Any party may change any address to which Notice is to be given to it
by giving Notice as provided above of such change of address.
5. Governing Law. The provisions of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Texas.
6. Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
and the Stock Purchase Agreement constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof
except as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise
any right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
7. Binding Effect and Assignment. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party; provided, however, that it
is agreed that (i) each Shareholder may assign the economic benefits, but not
his or her obligations, under this Agreement, and (ii) Teletouch may assign its
rights hereunder in whole to any party which acquires all of the former assets
and business of AACS or in pertinent part to any party which acquires a portion
of the former assets and business of AACS in any discrete area. Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than the parties hereto and their respective permitted successors and
assigns, any rights, benefits or obligations hereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
-4-
as of the date first above written.
TELETOUCH COMMUNICATIONS, INC.
By: ____________________________________
Xxxxxx X. XxXxxxxx
Chairman and Chief Executive Officer
SHAREHOLDERS:
________________________________________
Xxxxx X. Xxxxx, Xx.
$33,333.34
Address: _______________________________
_______________________________
Telecopy:_______________________________
________________________________________
Xxxxxxx X. Xxxxx
$33,333.33
Address:________________________________
________________________________
Telecopy:_______________________________
-5-
Estate of Xxxxx Xxxxxx Xxxx
By:_____________________________________
Name:___________________________________
Title: Independent Executor
$33,333.33
Address:________________________________
________________________________
Telecopy:_______________________________
-6-
