EXHIBIT 10.5
PhoneTel Technologies, Inc.
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AGREEMENT is entered into as of June 11, 1998, by and
between Xxxxx Xxxxxx ("Employee") and PhoneTel Technologies, Inc., an Ohio
corporation (the "Company"). The Company and Employee are sometimes
collectively referred to herein as the "Parties" and individually as a
"Party".
Employee has been an employee and officer of the Company, and as
such, possesses special knowledge, abilities and experience regarding the
business of the Company. The Company and PT Merger Corp., an Ohio
corporation ("Acquisition"), are parties to an Agreement and Plan of Merger
and Reorganization, of even date herewith (the "Merger Agreement"), whereby
Acquisition shall merge with and into the Company and the Company shall be
the surviving corporation in the merger (the "Merger"). Upon the Merger
becoming effective, the Company desires to obtain the services of Employee
to consult with and perform services for the Company with respect to its
businesses, and Employee desires to provide services to the Company upon
the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the Parties agree as follows:
1. Services. The Company hereby engages Employee to render
services to the Company as hereinafter provided, and Employee hereby
accepts such engagement for a period commencing on the Closing Date (as
defined in the Merger Agreement) and terminating on the six month
anniversary of the Closing (the "Employment Period"). Employee shall not
have any authority to bind or act on behalf of the Company. During the
Employment Period, Employee shall render such services to the Company in
connection with the Company's business as the Company from time to time
requests, which services may include, but shall not be limited to, those
rendered, or similar to those rendered, to the Company by the Employee
prior to the Closing Date, and which may, at Company's sole discretion,
require Employee's full business time and attention without the
distractions which would be occasioned by Employee's performing services on
behalf of others.
The Parties hereto agree that Employee's responsibilities under
the Agreement shall be primarily conducted in Cleveland, Ohio.
Notwithstanding anything contained herein to the contrary, Employee agrees
to reasonable business travel during the term of this Agreement.
The Parties further agree that Employee shall be entitled to any
vacation benefits that have accrued as of the end of the Employment Period.
2. Compensation; Reimbursement; Non-Competition Payment. In
consideration of Employee's services set forth in paragraph 1 above, the
Company shall pay to Employee the total sum of $100,000.00 ("Compensation")
during the Employment Period payable consistent with the Company's payroll
practices. The Employee shall be eligible for health insurance and other
benefits, consistent with the Company's policies as then in effect. The
Company shall reimburse Employee for all reasonable expenses incurred by
her in the course of performing her duties under this Agreement which are
consistent with the Company's policies in effect from time to time with
respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of
such expenses. During the Employment Period, the Company shall provide
Employee with the use of and provide maintenance and insurance for the
Company-owned vehicle used by Employee prior to the Merger. In
consideration for the agreements and covenants set forth at paragraph 5,
below, the Company shall pay to Employee the sum of $340,000.00 ("Non-
Competition Payment") on the day following the Closing Date.
3. Confidential Information. Employee acknowledges that the
information, observations and data relating to the business of the Company
and its subsidiaries which Employee has obtained as an employee, officer
and stockholder of the Company and its subsidiaries or shall obtain during
the course of her association with the Company and its subsidiaries and her
performance under this Agreement are the property of the Company and its
subsidiaries. Employee agrees that she shall not use for her own purposes
or disclose to any third party any of the Company's Trade Secrets. Trade
Secrets shall include the Company's computer software programs (both custom
generated and designed in-house) for monitoring its pay telephone system,
its customer lists and customer information relating to payments under and
expiration dates of contracts, and any other information maintained by the
Company as secret that derives economic value from not being generally
known and that would be of economic value if disclosed to a competitor.
Employee agrees that, during the term of the Employment Period and for a
period of 5 years following termination of the Employment Period, she shall
not use for her own purposes or disclose to any third party any of the
Company's Confidential Information, observations or data without the prior
written consent of the Board of Directors of the Company (the "Board"),
unless and to the extent that the aforementioned matters become generally
known to and available for use by the public other than as a result of
Employee's acts or omissions. Confidential Information shall include rates
of commissions, amounts of signing bonuses, rates for local and long
distance telephone services, and other data and material maintained as
confidential by the Company. Employee shall deliver to the Company at the
end of the Employment Period or at any other time the Company may request,
all memoranda, notes, plans, records, reports, computer tapes, printouts
and software and other documentation (and copies thereof) relating to the
business of the Company and its subsidiaries which Employee may then
possess or have under her control.
4. Inventions and Patents. Employee acknowledges that all
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether
patentable or not) which relate to the actual or anticipated business,
research and development or existing or future products or services of the
Company and its subsidiaries and which are conceived, developed or made by
her during the Employment Period ("Work Product") belong to the Company.
Employee shall promptly disclose such Work Product to the Company and
perform all actions reasonably requested by the Company (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, powers of attorney and other
instruments).
5. Non-Competition.
(a) In consideration of the payment of $340,000.00 as
recited at paragraph 2 above, Employee agrees that during the period
beginning on the Closing Date and ending on the second anniversary of the
Closing Date (the "Non-Competition Period"), she shall not, either for
herself or for any other person, partnership, corporation or company,
except on behalf of the Company, engage in the business of providing coin
operated customer owned telephones ("COCOT") or COCOT services within the
Territory, which shall include the continental United States. Nothing in
this paragraph, however, shall be construed to prevent ownership of less
than 2% of the stock of a publicly-held corporation whose stock is traded
on a national securities exchange or in the over-the-counter market.
Employee agrees that this covenant is reasonable with respect to its
duration, geographical area and scope. Nothing contained in this Agreement
shall prevent Employee from engaging in the practice of law after the
Employment Period and prior to the termination of the Non-Competition
Period. Furthermore, no provision of this Agreement shall be interpreted
in a manner which would cause the Employee to violate the rules governing
professional ethics for the legal profession.
(b) Employees further agrees that during the Non-
Competition Period, she shall not, except on behalf of the Company, solicit
customers or prospective customers of the Company, with whom she had
material contact, on behalf of the Company during the two years prior to
the termination of the Employment Period, for the purposes of providing
COCOT or COCOT services.
(c) During the Non-Competition Period, Employee shall not
(i) induce or attempt to induce any employee of the Company or any of its
subsidiaries to leave the employ of the Company or in any way interfere
with the relationship between the Company or any of its subsidiaries and
any of their employees, or (ii) induce or attempt to induce any current
supplier, licensee, licensor, franchisee or other business relation of the
Company or any of its subsidiaries to cease doing business with them or in
any way interfere with the relationship between the Company or any of its
subsidiaries and any such person or business relation (including, without
limitation, making any negative statements or communications about the
Company or its subsidiaries). Nothing contained herein shall prevent
Employee from assisting those employees whose employment with the Company
has been terminated from locating job opportunities.
(d) The Parties hereto agree that the Company would suffer
irreparable harm from a breach by Employee of any of the covenants or
agreements contained herein. In the event of breach by Employee of any of
the provisions of this paragraph 5, the Company or its successors or
assigns may, in addition to all other rights and remedies existing in its
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 (including the extension
of the Non-Competition Period by a period equal to the length of the
violation of this paragraph 5). Employee agrees that these restrictions
are reasonable.
(e) Employee agrees that the covenants made in paragraphs
5(a) and 5(b) shall be construed as an agreement independent of any other
provision of this Agreement and shall survive any order of a court of
competent jurisdiction terminating any other provision of this Agreement.
6. Other Remedies. In the event of a breach by the Employee of
any provision set forth in paragraph 5 of this Agreement which is not cured
by Employee within 30 days after notice to him of such breach (the
"Repayment Date"), then, in addition and supplementary to any other rights
and remedies provided herein, Employee shall promptly return to the Company
the full amount of the Non-Competition Payment.
7. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and its affiliates, successors
and assigns and shall be binding upon and inure to the benefit of Employee
and her legal representatives and assigns; provided that in no event shall
Employee's obligations to perform future services for the Company be
delegated or transferred by Employee without the prior written consent of
the Company (which consent may be withheld in its sole discretion). The
Company 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 Company.
8. 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 whom 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 the Company or Employee in the exercise of any of
their respective rights or remedies shall operate as a waiver thereof, and
no single or partial exercise by the Company or Employee 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.
9. 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 OHIO, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE
STATE OF OHIO OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO.
10. 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 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; provided that if a court having
competent jurisdiction shall find that the covenants contained in
paragraphs 5(a) or 5(b) hereof are not reasonable, such court shall have
the power to reduce the duration and/or geographic area and/or scope of
such covenant, and the covenant shall be enforceable in this reduced form.
11. 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.
12. Employee's Representations. Employee represents and
warrants to the Company that (i) her 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 she is a party or by which she is bound, (ii) she is not
a party to or bound by any employment agreement or noncompete agreement
with any other person or entity and (iii) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of her, enforceable in accordance with its terms.
13. Notice. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile, telex or
similar writing) and shall be given,
If to the Company, to:
PhoneTel Technologies, Inc.
c/o Davel Communications Group, Inc.
0000 Xxxxxxx Xxxx.
Xxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: R. Xxxxx Xxxx
Facsimile: (000) 000-0000
If to Employee, to:
Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
or such other address, telecopy or telex number as such party may hereafter
specify for the purpose by notice to the other party hereto. Each such
notice, request or other communication shall be effective (a) if given by
facsimile or telex, upon confirmation of receipt, or (b) if given by any
other means, when delivered at the address specified in this paragraph.
14. 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.
15. Termination Upon Termination of Merger Agreement. This
Agreement is being entered into in connection with the Merger Agreement.
In the event the Merger Agreement is not consummated and the Merger
Agreement is terminated, this Agreement shall terminate effective
immediately upon the termination of the Merger Agreement and shall be void
and unenforceable.
16. 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
PHONETEL TECHNOLOGIES, INC.
By:______________________________
Its: ______________________________
EMPLOYEE
_______________________________
XXXXX XXXXXX
