1
Exhibit 10.61
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 18, 1997, by and among Xxxx X. Xxxxxxx ("X. Xxxxxxx"), Xxxxxxx Xxxxxxx
("X. Xxxxxxx"), Xxxxxxx Xxxxxxx Brevard ("Brevard"), Xxxxx Xxx Xxxxxx
("Xxxxxx"), and Xxxxxx Xxxxxxx ("Xxxxxxx," collectively with Brevard, Hughes,
X. Xxxxxxx and X. Xxxxxxx, the "Executives" and individually, an "Executive")
and National Equipment Services, Inc., a Delaware corporation (the "Company").
The Company and the Executives are sometimes collectively referred to herein as
the "Parties" and individually as a "Party."
WHEREAS, each Executive has been an employee, officer, director and/or
stockholder of MST Enterprises, Inc. (d/b/a Equipco Sales & Rentals), a
Virginia corporation ("Equipco"), and as such, possesses special knowledge,
abilities and experience regarding the business of Equipco.
WHEREAS, the Company, Equipco and the stockholders of Equipco are parties
to a Stock Purchase Agreement, dated as of July 18, 1997 (the "Purchase
Agreement"), whereby the Company shall purchase all of the outstanding stock of
Equipco.
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Purchase Agreement, the Company desires to obtain, and,
subject to the terms and conditions hereof, the Executives agree to provide,
certain representations, warranties and covenants as more fully set forth
below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the Parties agree as follows:
1. Noncompete Payment; Authorization of Stock. As a condition to the
Executives' obligations hereunder, the Company shall pay to the Executives an
aggregate of $50,001 in cash and authorize the issuance to the Executives of
145.5 shares of the Company's Class A Common Stock, par value $.01 per share
(the "Class A Common Stock") (which Class A Common Stock, for purposes of this
Agreement, shall be deemed to have a fair market value of $1,000 per share and
$145,500 in the aggregate) and 450 shares of the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common Stock") (which Class B
Common Stock, for purposes of this Agreement, shall be deemed to have a fair
market value of $10 per share and $4,500 in the aggregate). The shares of
Class A Common Stock and Class B Common Stock being issued to the Executives
hereunder are collectively referred to herein as the "Shares." On the date
hereof, the Company shall deliver to each Executive (i) the amount of cash set
forth next to such Executive's name on the Noncompete Payment Schedule attached
hereto and (ii) the number of each class of Shares set forth next to such
Executive's name on the Noncompete Payment Schedule attached hereto
(collectively, the "Noncompete Payment"). The closing of the cash payments
hereunder and the issuance of the Shares hereunder (the "Closing") will take
place at the offices of Xxxxxxxx &
2
Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 on the date hereof.
At the Closing, the Company will deliver to each Executive (i) the cash portion
of such Executive's Noncompete Payment by company check and (ii) the stock
portion of such Executive's Noncompete Payment by delivery of certificates
evidencing the number and class of Shares to be issued to such Executive,
issued in the name of such Executive.
2. Confidential Information. Each Executive acknowledges that the
information, observations and data obtained by him or her while employed by
Equipco or the Company and its affiliates concerning the business or affairs of
Equipco and/or the Company or any of its affiliates ("Confidential
Information") are the property of the Company or such affiliate. Therefore,
each Executive agrees that he or she shall not disclose to any unauthorized
person or use for his or her own purposes, except in connection with the
Purchase Agreement, any Confidential Information without the prior written
consent of the Chief Executive Officer of the Company (the "CEO"), unless and
to the extent that (i) the aforementioned matters are publicly available other
than as a result of such Executive's acts or omissions, (ii) are readily
ascertainable by proper means by the public, or (iii) any Executive is required
by law to disclose such information. Each Executive shall deliver to the
Company at any time the Company may request, all memoranda, notes, plans,
records, reports, computer tapes, printouts and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product (as defined below) or the business of Equipco and/or the Company or any
of its affiliates which he or she may then possess or have under his control;
provided, however, that the Company shall continue to comply with Section 11.9
of the Purchase Agreement with regard to such documents and data. Officers,
directors, stockholders, employees, affiliates, agents, and representatives of
Equipco or of the Company shall not be deemed "unauthorized persons" for
purposes of this Agreement.
3. Inventions and Patents. Each Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether or
not patentable) which relate to Equipco's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by such Executive while employed by Equipco or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Each
Executive shall promptly disclose such Work Product to the CEO and perform all
actions reasonably requested by the CEO (regardless of when requested) to
establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
4. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment to be paid to each
Executive hereunder, such Executive acknowledges that in the course of his or
her employment with Equipco he or she has become familiar with, and in the
course of his or her employment with the Company he or she shall become
familiar with, Equipco's and the Company's trade secrets and with other
Confidential Information concerning Equipco and the Company and its affiliates
and that his or her
- 2 -
3
services have been and shall be of special, unique and extraordinary value to
Equipco and/or the Company and its affiliates. Therefore, in order to induce
the Company to consummate the transaction contemplated by the Purchase
Agreement, each Executive agrees that, during the five-year period commencing
on the date hereof (the "Noncompete Period"), he or she shall not directly or
indirectly own any interest in, manage, control, participate in, consult with
or render services for any equipment rental or maintenance business within a
100-mile radius of Equipco's business premises at 000 Xxxxxxxx Xxxxxx Xxxx,
Xxxxxxxxxxxx, Xxxxxxxx (other than on behalf of, and at the direction of, the
Company). Nothing herein shall prohibit any Executive from being a passive
owner of not more than five percent (5%) of the outstanding stock of any class
of a corporation which is publicly traded, so long as such Executive has no
active participation in the business of such corporation.
(b) During the Noncompete Period, each Executive shall not directly or
indirectly through another entity (i) knowingly induce or attempt to induce any
employee of the Company or any of its affiliates to leave the employ of the
Company or such affiliate when the Company or any of its affiliates desire to
retain that person's services or (ii) knowingly induce or attempt to induce any
customer, supplier, licensee, licensor, franchisee or other business relation
of the Company or any of its affiliates to cease doing business with the
Company or such affiliate, or in any way interfere intentionally or in bad
faith with the relationship between any such customer, supplier, licensee or
business relation and the Company or any of its affiliates (including, without
limitation, making any negative statements or communications about the Company
or its affiliates intentionally or in bad faith).
(c) If, upon or in contemplation of a Sale of the Company (as defined in
the Stock Transfer Agreement, dated as of the date hereof, among the Company,
the Executives, and others signatories thereto) with respect to the Company or
Equipco, the employment of Brevard, Xxxxxx or Xxxxxxx by Equipco is terminated
or, if after such Sale of the Company, the employment of Brevard, Xxxxxx or
Xxxxxxx is terminated in connection with a refusal to relocate from
Harrisonburg, then, for such terminated Executive, the Noncompete Period shall
also terminate at the time of such termination of employment.
5. Securities Act Legend. The certificates representing the Shares
will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF JULY 18, 1997, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER."
- 3 -
4
No holder of Shares may sell, transfer, assign pledge or otherwise dispose of
any interest in any Shares (except pursuant to an effective registration
statement under the Securities Act of 1933, as amended) without first
delivering to the Company an opinion of counsel (reasonably acceptable in form
and substance to the Company) that neither registration nor qualification under
the Securities Act of 1933, as amended and applicable state securities laws is
required in connection with such transfer.
6. Executives' Representations and Warranties. Each Executive hereby
represents and warrants to and covenants and agrees with the Company that:
(a) such Executive is acquiring the Shares issued hereunder or acquired
pursuant hereto for his or her own account with the present intention of
holding such securities for investment purposes and that he or she has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws;
(b) such Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the securities issued hereunder
and has had full access to such other information concerning the Company as
such Executive may have requested and that in making his or her decision to
invest in the securities being issued hereunder he or she is not in any way
relying on the fact that any other Person has decided to invest in the
securities;
(c) such Executive (i) is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933, as amended or (ii) by reason of his
or her business and financial experience, and the business and financial
experience of those retained by him or her to advise him or her with respect to
his or her investment in the securities being issued hereunder, he or she,
together with such advisors, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of his or her prospective investment in such securities, is able to
bear the economic risk of such investment and, at the present time, is able to
afford a complete loss of such investment;
(d) such Executive (i) understands that the Shares have not been, and will
not be, registered under the Securities Act of 1933, as amended, or under any
state securities laws, and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (ii)
understands that the Shares are not transferable, and (iii) is able to bear the
economic risk and lack of liquidity inherent in holding the Shares; and
(e) such Executive's 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 such
Executive is a party or by which such Executive is bound, such Executive is not
a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company, and
upon the execution and delivery of this Agreement, this Agreement shall be the
valid and binding obligation of such Executive, enforceable in accordance with
its terms.
- 4 -
5
7. Enforcement. If, at the time of enforcement of Section 2, 3 or 4 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because each Executive's services have been and/or are unique and because each
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would not be an adequate remedy for any breach
of this Agreement. Therefore, in the event a breach or threatened breach of
this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their 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
as may be reasonably necessary to protect the interests of the Company in this
Agreement. Each Executive agrees that the restrictions contained in Section 4
of this Agreement are reasonable.
8. 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 each Executive and such
Executive's legal representatives and assigns. The Company may assign or
transfer its rights hereunder to any of its affiliates or to a successor entity
in the event of merger, consolidation or transfer or sale of all or
substantially all of the stock or assets of Equipco or the Company.
9. 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 which 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
any Executive 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 such Executive 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.
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Illinois,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Illinois.
11. 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
- 5 -
6
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.
12. 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.
13. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
Notices to the Company:
National Equipment Services, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Xxxxxxxx and Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Perl
Notices to an Executive:
To the address set forth below
such Executive's name on the
signature pages hereto
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
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.
- 6 -
7
15. 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 agreement.
16. Attorney's Fees. In the event of any litigation between the parties
arising out of this Agreement, the prevailing party shall be entitled to
recover all costs incurred and a reasonable attorneys' fee, including
attorneys' fees on appeal.
* * * *
- 7 -
8
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Its: CEO
-----------------------------------
/s/ Xxxx X. Xxxxxxx
-----------------------------------------
XXXX X. XXXXXXX
Address: 0000 Xxxx xx Xxxxxx Xxxxx
Xxxxxxxx Xxx, Xxxxxxx 00000
/s/ Xxxxxxx Xxxxxxx
-----------------------------------------
XXXXXXX XXXXXXX
Address: 0000 Xxxx xx Xxxxxx Xxxxx
Xxxxxxxx Xxx, Xxxxxxx 00000
/s/ Xxxxxxx Xxxxxxx Brevard
-----------------------------------------
Xxxxxxx Xxxxxxx Brevard
Address: 000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
/s/ Xxxxx Xxx Xxxxxx
-----------------------------------------
Xxxxx Xxx Xxxxxx
Address: Xxxxx 0, Xxx 000X
Xxxxxxxxxxxx, Xxxxxxxx 00000
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxx
Address: 000 Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
9
NONCOMPETE PAYMENT SCHEDULE
SHARES
CLASS A COMMON CLASS B COMMON
EXECUTIVE CASH NUMBER VALUE NUMBER VALUE TOTAL VALUE
Xxxx X. Xxxxxxx $ 0 48.500 $ 48,500 150 $1,500 $50,000
Xxxxxxx Xxxxxxx 0 48.500 48,500 150 1,500 50,000
Xxxxxxx Xxxxxxx Brevard 16,667 16.167 16,167 50 500 33,334
Xxxxx Xxx Xxxxxx 16,667 16.167 16,167 50 500 33,333
Xxxxxx Xxxxxxx 16,667 16.166 16,166 50 500 33,333
TOTAL $50,001 145.500 $145,500 450 $4,500 $200,000
- 9 -
