EXHIBIT 5
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT (this "Agreement"),
dated as of October 16, 1995, between PhoneTel
Technologies, Inc., an Ohio corporation ("PhoneTel"),
PhoneTel II, Inc., and Ohio corporation and wholly owned
subsidiary of PhoneTel ("Sub"), and Xxxxx X. Xxxxxx
("Xxxxxx").
W I T N E S S E T H:
WHEREAS, Xxxxxx has heretofore served as
Executive Vice President and CFO of Public Telephone
Corporation, an Indiana Corporation ("Public");
WHEREAS, PhoneTel, Sub and Public have entered
into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of the date hereof, pursuant to
which, at the "Closing Date" (as such term is defined in
the Merger Agreement), Sub will be merged with and into
Public;
WHEREAS, Public and PhoneTel are in the
business of owning, leasing, operating and maintaining
pay telephones;
WHEREAS, PhoneTel recognizes that Xxxxxx
possesses trade secrets and confidential business
information relating to Public as well as knowledge and
experience relating to the pay telephone industry and
desires to prevent Xxxxxx xxxx (1) competing with the
business operated by PhoneTel (or any subsidiary thereof)
or (2) soliciting the former, current or future customers
or employees of Public or PhoneTel (or any subsidiary
thereof);
WHEREAS, in connection with the transactions
contemplated in the Merger Agreement, Xxxxxx will receive
shares of PhoneTel common stock, $.01 par value
("PhoneTel Common Stock"), in exchange for his shares of
Public common stock, no par value ("Public Common
Stock"); and
WHEREAS, Xxxxxx is agreeable to restrictions on
his ability to compete against and solicit from PhoneTel
in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the
execution, delivery and performance of the Merger
Agreement, and mutual premises and covenants herein and
therein contained and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, PhoneTel and Xxxxxx hereby agree as
follows:
1. Term. The term of this agreement shall
commence at the Closing Date and continue for a period of
five (5) years thereafter (the "Term").
2. Non-Competition. (a) For a period of two
years commencing at the Closing Date, Xxxxxx shall not,
without the prior written consent of PhoneTel, directly
or indirectly, own, operate, manage, be employed by, be
an agent of, act as a consultant for, advise, financially
support, lease property to or from, have a proprietary
interest in or support in any other way, any enterprise
or business which sells, leases, maintains, owns or
operates pay telephones in any part of the United States
of America in which PhoneTel is conducting or will
conduct its pay telephone business. Xxxxxx acknowledges
that the business of PhoneTel will be conducted on a
national basis and agrees that such geographic scope is
reasonable.
(b) Notwithstanding any provision to the
contrary contained herein, Xxxxxx shall not be prohibited
from (i) leasing, owning or operating pay telephones on
real property of which he is the sole owner or which is
owned by any corporation of which Xxxxxx or his spouse
collectively own at least 51% of the outstanding shares,
(ii) owning less than 2% of the outstanding equity
securities of any publicly-held corporation or (iii)
being employed by or participating on pay telephone
industry commissions and associations, including, but not
limited to, Michigan Public Telecommunication
Association, Illinois Public Telecommunication
Association and IPTA, L.L.C.
3. Non-Solicitation. Xxxxxx agrees that,
during the Term of this agreement, he will not, directly
or indirectly, (i) solicit, entice or persuade, or
attempt to solicit, entice or persuade, any employee of
PhoneTel or its affiliates, or any client then under
contract with PhoneTel or any of its affiliates to
terminate his employment by or contractual relationship
with PhoneTel or its affiliates or to become employed by
or to enter into contractual relations with a competitor
of PhoneTel or its affiliates or (ii) persuade or attempt
to persuade customers, potential customers, suppliers or
potential suppliers of PhoneTel and its affiliates to
divert their business to any other entity or individual.
4. Confidentiality. Xxxxxx acknowledges that
Public and PhoneTel would be irreparably damaged if
confidential information about Public were disclosed to
or utilized on behalf of any person, firm, corporation or
other business organization which is in competition in
any respect with Public or PhoneTel. Xxxxxx covenants
and agrees that he will not at any time, and will cause
his agents, affiliates and associates not to at any time,
without the prior written consent of PhoneTel, disclose
any such confidential information, except to employees
and authorized representatives of PhoneTel.
5. Compensation; Taxes. In consideration for
the agreements of Xxxxxx contained herein, PhoneTel
agrees to pay Xxxxxx a total of $129,239.50, $27,500 of
which shall be payable in cash upon the Closing (as
defined in the Merger Agreement) and the other
$101,739.50 of which shall be payable in the form of a
note (the "Note"), the terms of which shall govern the
payment of such amount. A copy of the Note is attached
hereto as Exhibit 1. In addition, and in further
consideration for the agreements of Xxxxxx contained
herein, PhoneTel agrees to pay Xxxxxx 205,000 shares of
PhoneTel Common Stock, payable six months from the date
hereof.
Xxxxxx hereby acknowledges that by virtue of
this Agreement he is not and will not become an employee
of PhoneTel. Xxxxxx further acknowledges his separate
responsibility for all federal and state withholding
taxes, Federal Insurance Contribution Act taxes and
workers' compensation and unemployment compensation
taxes, if applicable, and agrees to indemnify and hold
the Company harmless from any claim or liability
therefor.
6. Necessity. Xxxxxx acknowledges that due
to the uniqueness of his skills and abilities and the
uniqueness of the trade secrets, confidential business
lists, customer requirements and preferences, records and
information he possesses, the covenants set forth herein
are reasonable and necessary for the protection of
PhoneTel. Xxxxxx further acknowledges that enforcement
of the covenants herein will not deprive him of his
ability to earn a livelihood.
7. Specific Performance. Xxxxxx acknowledges
that the rights and privileges granted to PhoneTel herein
are of a special and unique character, which gives them a
peculiar value, the loss of which may not be reasonably
or adequately compensated for by damages in an action at
law, and that a breach by Xxxxxx of this Agreement will
cause PhoneTel irreparable injury and damage.
Accordingly, Xxxxxx hereby agrees that PhoneTel shall be
entitled to remedies of injunction, specific performance
or other equitable relief, to prevent or cure a breach of
this Agreement. This provision shall not be construed as
a waiver of any other rights or remedies PhoneTel may
have for damages or otherwise.
8. Partial Invalidity. The parties have
entered into this Agreement in good faith and for the
reasons set forth in the recitals hereto and assume and
intend that this Agreement is legally binding. If, for
any reason, this Agreement is not binding because of its
geographical scope or because of its term, then the
parties agree that this Agreement shall be deemed
effective for the widest geographical area and/or the
longest period of time as may be legally enforceable, it
being understood that the compensation payable hereunder
is for the full Term and geographic area stated herein,
and for all the covenants of Xxxxxx. Any provision of
this Agreement which is determined to be invalid or
unenforceable shall be ineffective only to the extent of
such invalidity or unenforceability without affecting the
validity or enforceability of any other provisions
hereof. The provisions of this Section 8 shall not be
construed as a waiver of any other rights or remedies
PhoneTel may have for damages or otherwise.
9. Binding Effect; Modifications. This
Agreement shall be binding upon and shall inure to the
benefit of the personal representatives, executors,
administrators, successors and assigns of the parties to
this Agreement. This Agreement contains the entire
agreement of the parties and supersedes any and all prior
written agreements between the parties, and all prior and
contemporaneous oral statements with respect to the
transactions contemplated hereby. This Agreement may not
be changed or terminated orally, but may only be changed
by an agreement in writing signed by each of the parties
hereto.
10. Section Captions; Counterparts. Section
and other captions contained in this Agreement are for
reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof. This
Agreement may be executed in counterparts, each of which,
when so executed, shall be deemed to be an original, and
such counterparts shall, together, constitute and be one
and the same instrument.
11. Governing Law. This Agreement shall be
governed by and construed under the laws of the State of
New York, applied without giving effect to any conflict
of laws principles.
12. No Rule of Construction. The parties
acknowledge and agree that no rule of construction shall
apply to this Agreement which construes any language,
whether ambiguous, unclear or otherwise, in favor of or
against any party by reason of that party's role in
drafting this Agreement.
13. Notices. For the purposes of this
Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or
(unless otherwise specified) mailed by United States
certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to PhoneTel or PhoneTel II:
PhoneTel Technologies, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: President
Telephone: (000) 000-0000
If to Xxxxxx:
Xxxxx X. Xxxxxx
0000 Xxxxx Xxxxx, Xxx. #0
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
or to such other address as each party may have furnished
to the others in writing in accordance herewith, except
that notices of change of address shall be effective only
upon receipt.
IN WITNESS WHEREOF, the undersigned parties
have hereunto set their hands as of the day and year
first above written.
PHONETEL TECHNOLOGIES, INC.
By:
Name:
Title:
PHONETEL II, INC.
By: ___________________________
Name:
Title:
_______________________________
XXXXX XXXXXX
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT (this "Agreement"),
dated as of October 16, 1995, between PhoneTel
Technologies, Inc., an Ohio corporation ("PhoneTel"),
PhoneTel II, Inc., and Ohio corporation and wholly owned
subsidiary of PhoneTel ("Sub"), and Xxxxxx X. Xxxxxx
("Xxxxxx").
W I T N E S S E T H:
WHEREAS, Xxxxxx has heretofore served as
President, Chairman and CEO of Public Telephone
Corporation, an Indiana Corporation ("Public");
WHEREAS, PhoneTel, Sub and Public have entered
into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of the date hereof, pursuant to
which, at the "Closing Date" (as such term is defined in
the Merger Agreement), Sub will be merged with and into
Public;
WHEREAS, Public and PhoneTel are in the
business of owning, leasing, operating and maintaining
pay telephones;
WHEREAS, PhoneTel recognizes that Xxxxxx
possesses trade secrets and confidential business
information relating to Public as well as knowledge and
experience relating to the pay telephone industry and
desires to prevent Xxxxxx xxxx (1) competing with the
business operated by PhoneTel (or any subsidiary thereof)
or (2) soliciting the former, current or future customers
or employees of Public or PhoneTel (or any subsidiary
thereof);
WHEREAS, in connection with the transactions
contemplated in the Merger Agreement, Xxxxxx will receive
shares of PhoneTel common stock, $.01 par value
("PhoneTel Common Stock"), in exchange for his shares of
Public common stock, no par value ("Public Common
Stock"); and
WHEREAS, Xxxxxx is agreeable to restrictions on
his ability to compete against and solicit from PhoneTel
in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the
execution, delivery and performance of the Merger
Agreement, and mutual premises and covenants herein and
therein contained and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, PhoneTel and Xxxxxx hereby agree as
follows:
1. Term. The term of this agreement shall
commence at the Closing Date and continue for a period of
five (5) years thereafter (the "Term").
2. Non-Competition. (a) For a period of two
years commencing at the Closing Date, Xxxxxx shall not,
without the prior written consent of PhoneTel, directly
or indirectly, own, operate, manage, be employed by, be
an agent of, act as a consultant for, advise, financially
support, lease property to or from, have a proprietary
interest in or support in any other way, any enterprise
or business which sells, leases, maintains, owns or
operates pay telephones in any part of the United States
of America in which PhoneTel is conducting or will
conduct its pay telephone business. Xxxxxx acknowledges
that the business of PhoneTel will be conducted on a
national basis and agrees that such geographic scope is
reasonable.
(b) Notwithstanding any provision to the
contrary contained herein, Xxxxxx shall not be prohibited
from owning less than 2% of the outstanding equity
securities of any publicly-held corporation.
3. Non-Solicitation. Xxxxxx agrees that,
during the Term of this agreement, he will not, directly
or indirectly, (i) solicit, entice or persuade, or
attempt to solicit, entice or persuade, any employee of
PhoneTel or its affiliates, or any client then under
contract with PhoneTel or any of its affiliates to
terminate his employment by or contractual relationship
with PhoneTel or its affiliates or to become employed by
or to enter into contractual relations with a competitor
of PhoneTel or its affiliates or (ii) persuade or attempt
to persuade customers, potential customers, suppliers or
potential suppliers of PhoneTel and its affiliates to
divert their business to any other entity or individual.
4. Confidentiality. Xxxxxx acknowledges that
Public and PhoneTel would be irreparably damaged if
confidential information about Public were disclosed to
or utilized on behalf of any person, firm, corporation or
other business organization which is in competition in
any respect with Public or PhoneTel. Xxxxxx covenants
and agrees that he will not at any time, and will cause
his agents, affiliates and associates not to at any time,
without the prior written consent of PhoneTel, disclose
any such confidential information, except to employees
and authorized representatives of PhoneTel.
5. Compensation; Taxes. In consideration for
the agreements of Xxxxxx contained herein, PhoneTel
agrees to pay Xxxxxx a total of $129,239.50, $27,500 of
which shall be payable in cash upon the Closing (as
defined in the Merger Agreement) and the other
$101,739.50 of which shall be payable in the form of a
note (the "Note"), the terms of which shall govern the
payment of such amount. A copy of the Note is attached
hereto as Exhibit 1. In addition, and in further
consideration for the agreements of Xxxxxx contained
herein, PhoneTel agrees to pay Xxxxxx 275,000 shares of
PhoneTel Common Stock, payable six months from the date
hereof.
Xxxxxx hereby acknowledges that by virtue of
this Agreement he is not and will not become an employee
of PhoneTel. Xxxxxx further acknowledges his separate
responsibility for all federal and state withholding
taxes, Federal Insurance Contribution Act taxes and
workers' compensation and unemployment compensation
taxes, if applicable, and agrees to indemnify and hold
the Company harmless from any claim or liability
therefor.
6. Necessity. Xxxxxx acknowledges that due
to the uniqueness of his skills and abilities and the
uniqueness of the trade secrets, confidential business
lists, customer requirements and preferences, records and
information he possesses, the covenants set forth herein
are reasonable and necessary for the protection of
PhoneTel. Xxxxxx further acknowledges that enforcement
of the covenants herein will not deprive him of his
ability to earn a livelihood.
7. Specific Performance. Xxxxxx acknowledges
that the rights and privileges granted to PhoneTel herein
are of a special and unique character, which gives them a
peculiar value, the loss of which may not be reasonably
or adequately compensated for by damages in an action at
law, and that a breach by Xxxxxx of this Agreement will
cause PhoneTel irreparable injury and damage.
Accordingly, Xxxxxx hereby agrees that PhoneTel shall be
entitled to remedies of injunction, specific performance
or other equitable relief, to prevent or cure a breach of
this Agreement. This provision shall not be construed as
a waiver of any other rights or remedies PhoneTel may
have for damages or otherwise.
8. Partial Invalidity. The parties have
entered into this Agreement in good faith and for the
reasons set forth in the recitals hereto and assume and
intend that this Agreement is legally binding. If, for
any reason, this Agreement is not binding because of its
geographical scope or because of its term, then the
parties agree that this Agreement shall be deemed
effective for the widest geographical area and/or the
longest period of time as may be legally enforceable, it
being understood that the compensation payable hereunder
is for the full Term and geographic area stated herein,
and for all the covenants of Xxxxxx. Any provision of
this Agreement which is determined to be invalid or
unenforceable shall be ineffective only to the extent of
such invalidity or unenforceability without affecting the
validity or enforceability of any other provisions
hereof. The provisions of this Section 8 shall not be
construed as a waiver of any other rights or remedies
PhoneTel may have for damages or otherwise.
9. Binding Effect; Modifications. This
Agreement shall be binding upon and shall inure to the
benefit of the personal representatives, executors,
administrators, successors and assigns of the parties to
this Agreement. This Agreement contains the entire
agreement of the parties and supersedes any and all prior
written agreements between the parties, and all prior and
contemporaneous oral statements with respect to the
transactions contemplated hereby. This Agreement may not
be changed or terminated orally, but may only be changed
by an agreement in writing signed by each of the parties
hereto.
10. Section Captions; Counterparts. Section
and other captions contained in this Agreement are for
reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof. This
Agreement may be executed in counterparts, each of which,
when so executed, shall be deemed to be an original, and
such counterparts shall, together, constitute and be one
and the same instrument.
11. Governing Law. This Agreement shall be
governed by and construed under the laws of the State of
New York, applied without giving effect to any conflict
of laws principles.
12. No Rule of Construction. The parties
acknowledge and agree that no rule of construction shall
apply to this Agreement which construes any language,
whether ambiguous, unclear or otherwise, in favor of or
against any party by reason of that party's role in
drafting this Agreement.
13. Notices. For the purposes of this
Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or
(unless otherwise specified) mailed by United States
certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to PhoneTel or PhoneTel II:
PhoneTel Technologies, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: President
Telephone: (000) 000-0000
If to Xxxxxx:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
or to such other address as each party may have furnished
to the others in writing in accordance herewith, except
that notices of change of address shall be effective only
upon receipt.
IN WITNESS WHEREOF, the undersigned parties
have hereunto set their hands as of the day and year
first above written.
PHONETEL TECHNOLOGIES, INC.
By:
Name:
Title:
PHONETEL II, INC.
By: ___________________________
Name:
Title:
_______________________________
XXXXXX XXXXXX
