EXHIBIT 10.10
NONCOMPETITION AGREEMENT
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This NONCOMPETITION AGREEMENT is made as of April 17, 1997 by and between
Mac-Gray II, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X.
Xxxxxxx ("Executive"). Reference is made to that certain Agreement and Plan of
Merger dated as of the date of this Agreement (the "Merger Agreement") by and
among the Company, Xxx-Xxxx Co., Inc., Xxx-Xxxx Acquisition Corp. ("Acquisition
Corp."), Executive, Sun Services of America, Inc., a Florida corporation
("SSA"), and X. Xxxxxx Coin-Op-Laundry, Inc. ("Xxxxxx"). Capitalized terms used
in this Agreement and not defined herein shall have the respective meanings
given to them in the Merger Agreement.
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties are consummating the transactions contemplated by the Merger
Agreement, pursuant to which Acquisition Corp. will merge with and into Xxxxxx,
SSA will merge with and into the Company and Executive will receive in exchange
for the capital stock of SSA and Xxxxxx cash and shares of Company Stock (the
"Mergers");
WHEREAS, prior to the Mergers, Executive was the sole stockholder of, and
was principally involved in the management of the business of, each of SSA and
Xxxxxx; and
WHEREAS, as a material inducement to the Company and Executive to
consummate the transactions contemplated by the Merger Agreement, the Company
and Executive are executing and delivering this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. NONCOMPETITION.
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(a) Executive covenants and agrees that, for a period beginning on the
date of this Agreement and expiring on the third anniversary of the later of (i)
the date on which the Consulting Period (as defined in the Consulting Agreement)
expires and (ii) the date on which Executive ceases to serve as a director of
the Company (such later date is referred to herein as the "Termination Date"),
he shall not, without the express prior written consent of the Company, directly
or indirectly, anywhere in the Restricted Area (as defined below) (A) engage in
any activity in the Designated Industry (as defined below) or (B) engage,
participate or invest in or assist (whether as owner, part-owner, shareholder,
partner, member, director, officer, trustee, employee, agent or consultant, or
in any other capacity) any business organization whose activities, products or
services are in the Designated Industry; provided, however, that Executive may
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make passive investments in a competitive enterprise, the shares of which are
publicly traded, if Executive's aggregate investment in such enterprise
constitutes less than one percent (1%) of the equity ownership of such
enterprise. Without implied limitation, the foregoing noncompetition covenant
shall prohibit Executive from (i) hiring, attempting to hire or otherwise
soliciting, for or on behalf of any entity or person, any officer or other
employee of the Company or any of its Affiliates (as defined below), or
authorizing or approving any such action by any other person, (ii) encouraging
for or on behalf of any entity or person any officer or other employee to
terminate his or her relationship or employment
with the Company or any of its Affiliates, (iii) soliciting for or on behalf of
any entity or person any customer of the Company or any of its Affiliates and
(iv) diverting to any entity or person any customer of the Company or any of its
Affiliates. Notwithstanding the foregoing, the provisions of this Section 1(a)
shall cease to be in effect if and for so long as both (A) the Company is either
(x) in default in the payment of any amount due to Executive pursuant to Section
3 of the Consulting Agreement or (y) in material breach of any of its
obligations to Executive under the Stockholders' Agreement or the Merger
Agreement and (B) Executive is not then in material breach of any of his
obligations under the Consulting Agreement, the Stockholders' Agreement or the
Merger Agreement.
(b) For purposes of this Agreement, the following terms shall have
the following meanings:
(i) "Restricted Area" means each state of the United States (A) in
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which SSA is, as of the date of this Agreement, conducting any
business activities, (B) in which Xxxxxx is, as of the date of this
Agreement, conducting any business activities, and (C) in which the
Company or any of its Affiliates are, as of the date of this Agreement
or at any time prior to the Termination Date, conducting any business
activities.
(ii) "Designated Industry" means the business of SSA and Xxxxxx as
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of the date of this Agreement, including the business of owning,
selling, leasing, operating or servicing card or coin-operated laundry
machines.
(iii) "Affiliate" shall mean, with respect to any person or entity
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(herein the "first party"), any other person or entity that directly
or indirectly controls, or is controlled by, or is under common
control with, such first party (the term "control" as used herein
(including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to (A) vote
twenty-five percent (25%) or more of the outstanding voting securities
of such person or entity, or (B) otherwise direct the management or
policies of such person or entity by contract or otherwise).
2. CONFIDENTIALITY. Executive agrees that, for the benefit of the
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Company and each of its Affiliates, for a period beginning on the date of this
Agreement and expiring on the tenth anniversary of the date of this Agreement,
he shall not (nor shall Executive assist any other person to) directly or
indirectly furnish, divulge, reveal, report, publish or disclose (other than as
may be required under applicable law) any Confidential Information (as
hereinafter defined) to any person, firm, corporation or other entity, or
hereafter use (or assist any person to use) such Confidential Information,
except as expressly permitted by the terms of the Consulting Agreement. For
purposes of this Agreement, the term "Confidential Information" means all
information or material not generally known to the public, which gives the
Company or any of its Affiliates some competitive business advantage or the
opportunity of obtaining such advantage or the disclosure of which could be
detrimental to
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the interests of the Company or any of its Affiliates, including, without
limitation, trade secrets, inventions, drawings, file data, documentation,
diagrams, specifications, know how, processes, formulas, models, subscriber
lists, sales representative lists, proprietary information, research and
development procedures, research or development and test results, marketing
techniques and materials, marketing and development plans, price lists, pricing
policies, business plans, information relating to customers and/or suppliers'
identities, characteristics and agreements, financial information and
projections, and employee files. "Confidential Information" also includes any
information described above which the Company or any of its Affiliates obtains
from another party and which the Company or such Affiliate treats as proprietary
or designates as Confidential Information, whether or not owned or developed by
the Company or such Affiliate.
3. PAYMENT. In consideration of the covenants contained in Section 1
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hereof, the Company shall pay to Executive on the date hereof a total of five
thousand dollars ($5,000) in immediately available funds.
4. SCOPE OF AGREEMENT. The parties acknowledge that the time, scope,
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geographic area and other provisions of this Agreement have been specifically
negotiated by sophisticated commercial parties and agree that (a) all such
provisions are reasonable under the circumstances of the transactions
contemplated by the Merger Agreement, (b) are given as an integral and essential
part of the transactions contemplated by the Merger Agreement and (c) but for
the covenants of Executive contained in this Agreement, the Company would not
enter into the Merger Agreement or consummate the transactions contemplated
thereby. Executive has independently consulted with his counsel and has been
advised in all respects concerning the reasonableness and propriety of the
covenants contained herein, with specific regard to the businesses conducted by
the Company and its Affiliates.
5. SPECIFIC PERFORMANCE; SEVERABILITY. It is specifically understood and
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agreed by the parties hereto that the breach by Executive of any provision of
this Agreement will result in irreparable injury to the Company and its
Affiliates, that the remedy at law alone will be an inadequate remedy for such
breach and that, in addition to any other remedy they may have, the Company and
each of its Affiliates shall be entitled to enforce the specific performance of
this Agreement by Executive through both temporary and permanent injunctive
relief without the necessity of proving actual damages. If the Company is
required to post a bond in connection with obtaining any temporary or permanent
injunctive relief, the parties hereto agree that such bond shall be limited in
amount to $10,000 and that such amount is reasonable and adequate for such bond.
In the event that any covenant or provision contained in this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too long a period of time or over too large a geographical
area or by reason of its being too extensive in any other respect, such covenant
or provision shall not be construed to be null, void and of no effect, but
rather shall be interpreted to extend only over the maximum period of time for
which it may be enforceable, and/or over the maximum geographical area as to
which it may be enforceable, and/or to the maximum extent in all other respects
as to which it may be enforceable, all as determined by such court in such
action. The existence of any claim or cause of action which Executive may have
against the Company or any of its Affiliates shall
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not constitute a defense or bar to the enforcement of any of the provisions of
this Agreement and shall be pursued through separate court action by Executive.
6. GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Florida, without regard to the
conflicts or choice of law provisions thereof.
7. ATTORNEYS' FEES. If any suit or action is instituted by either party
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to enforce or in connection with any dispute relating to this Agreement, the
prevailing party in such suit or action shall be entitled to have all court
costs and attorneys' fees paid by the non-prevailing party.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of,
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and be binding upon, the successors of the Company and its Affiliates by way of
merger, consolidation or transfer of all or substantially all of the assets of
the Company, and may not be assigned by Executive.
9. NO CONFLICTING OBLIGATIONS. Executive hereby represents and warrants
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to the Company that he is not now under, or bound to be under in the future, any
obligation to any person, firm or corporation which is or would be inconsistent
or in conflict with this Agreement or would prevent, limit or impair in any way
the full and absolute performance by Executive of his obligations hereunder. In
addition, Executive covenants that he will not enter into or discuss entering
into any such agreement.
10. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, the Merger
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Agreement, the Consulting Agreement and the Stockholders' Agreement constitute
the entire agreement between the parties pertaining to their subject matter and
supersede all prior and contemporaneous agreements, representations,
negotiations and understandings of the parties, whether oral or written. No
supplement, modification or amendment to this Agreement shall be binding unless
executed in writing by all the parties hereto.
11. WAIVERS. The failure of any party to require the performance or
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satisfaction of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent subsequent enforcement
of such term or obligation or be deemed a waiver of any subsequent failure or
breach.
12. COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
13. NOTICES. All notices and other communications under this Agreement
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shall be in writing and shall be delivered in accordance with the provisions of
the Merger Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Noncompetition
Agreement as of the date and year first written above.
COMPANY:
MAC-GRAY II, INC., a Delaware
corporation
/s/
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Name:
Title:
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
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