Exhibit 10.20
COVENANT NOT-TO-COMPETE AGREEMENT
THIS COVENANT NOT-TO-COMPETE AGREEMENT, dated August 13, 1996, is made
between Payco American Corporation, a Wisconsin corporation, with offices at 000
Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000-0000 (the "Company"), and
Xxxxxx X. Punches, an individual residing in the State of Florida ("Punches").
R E C I T A L S
WHEREAS, Punches is a founder and long-time employee of the Company
and is presently serving as Chairman of the Board of Directors of the Company;
WHEREAS, during the term of his employment with the Company, Punches
has actively established and maintained relationships with the Company's key
customers and strategic partners;
WHEREAS, Punches possesses an intimate knowledge of the business and
affairs of the Company and its policies, procedures, methods and personnel;
WHEREAS OSI Holdings Corp., Boxer Acquisition Corp. and the Company
have entered into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), pursuant to which Boxer Acquisition Corp. will be
merged with and into the Company;
WHEREAS, Punches is willing to enter into the Consulting Agreement
dated as of the date hereof pursuant to which the Company will secure the
continued services of Punches on behalf of the Company;
WHEREAS, in order to provide reasonable assurances and to induce the
Company to enter into the Consulting Agreement with Punches, the Company and
Punches have agreed to enter into this Agreement for the consideration called
for hereby.
NOW, THEREFORE, the parties hereto hereby agrees as follows:
1. Covenant Not-to-Compete. (a) Punches covenants and agrees that he
will not:
(i) for a period of three (3) years from the Effective Time (as
defined in the Merger Agreement), within North America (including Canada,
Mexico and Puerto Rico) and any other jurisdiction or marketing area in
which the Company or any of its Affiliates (as defined below) is doing
business or is qualified to do business as of the date of this Agreement,
directly or indirectly own, manage, operate, control, be employed by or
participate in the ownership, management, operation or control of, or be
connected in any manner with, any business of the type and character
engaged in and competitive with that currently conducted by the Company or
any of its Affiliates; provided, however, that Punches shall be permitted
to serve as a member of the Supervisory Board of Intrum Justitia. For these
purposes, ownership of securities of 5% or less of any class of securities
of a public company shall not be considered to be competition with the
Company or any of its Affiliates; or
(ii) other than Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxx, employ, solicit
for employment or otherwise contract for the services of any employee of
the Company or any of its Affiliates at the time of this Agreement or who
shall subsequently become an employee of the Company or any of its
Affiliates.
(b) For the purposes of this Section 1, the term "Affiliate" shall
mean, with respect to the Company, any person or entity which, directly or
indirectly, owns or is owned by, or is under common ownership with, the Company.
The term "own" (including, with correlative meanings, "owned by" and "under
common ownership with") shall mean the ownership of 50% or more of the voting
securities (or their equivalent) of a particular entity.
2. Effectiveness; Consideration for Covenant. This Agreement shall be
effective at the Effective Time. In consideration for Punches' entering into the
foregoing covenant, the Company will pay to Punches $3,000,000 at the Effective
Time.
3. Severability. It is the desire and intent of the parties to this
Agreement that the provisions of Section 1 shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in
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which enforcement is sought. If any particular provision or portion of Section 1
shall be adjudicated to be invalid or unenforceable, Section 1 shall be deemed
amended to delete therefrom such provision or portion adjudicated to be invalid
or unenforceable, such amendment to apply only with respect to the operation of
Section 1 in the particular jurisdiction in which such adjudication is made.
4. General.
(a) Governing Law; Jurisdiction. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York applicable to contracts executed and to be performed
entirely within said State. Any judicial proceeding brought against any of the
parties to this Agreement or any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of New York or
in the United States District Court for the Southern District of New York, and,
by execution and delivery of this Agreement, each of the parties to this
Agreement accepts the jurisdiction of said courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. The
foregoing consent to jurisdiction shall not be deemed to confer rights on any
person other than the respective parties to this Agreement.
(b) Assignability. Notwithstanding anything else in this Agreement to
the contrary, the Company may assign this Agreement to and all rights hereunder
shall inure to the benefit of any person, firm or corporation succeeding to all
or substantially all of the business or assets of the Company by purchase,
merger or consolidation.
(c) Enforcement Costs. In the event that either the Company or Punches
initiates an action or claim to enforce any provision or term of this Agreement,
the costs and expenses (including attorney's fees) of the prevailing party shall
be paid by the other party, such party to be deemed to have prevailed if such
action or claim is concluded pursuant to a court order or final judgment which
is not subject to appeal, a settlement agreement or dismissal of the principle
claims.
(d) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns.
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(e) Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
(f) Duration. This Agreement shall continue for so long as any
obligations remain under this Agreement.
(g) Survival. The covenants set forth in Section 1 of this Agreement
shall survive and shall continue to be binding upon Punches as set forth in such
Section. The existence of any claim or cause of action by Punches against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of any or all covenants.
(h) Remedies. The parties recognize that the performance of the
obligations under Section 1 of this Agreement by Punches is special, unique and
extraordinary in character, and that in the event of the breach by Punches of
the terms and conditions of Section 1 of this Agreement, the Company or any of
its Affiliates shall be entitled to (a) institute and prosecute proceedings in
any court of competent jurisdiction to enforce the specific performance hereof
by Punches or to enjoin Punches from engaging in any activities prohibited
hereunder or (b) pursue any other remedy available at law or in equity.
(i) Notices. The Company shall give Punches written notice of any
default under this Agreement and afford Punches 15 days to cure such default.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto executed this Agreement the day and year first written above.
PAYCO AMERICAN CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
/s/ Xxxxxx X. Punches
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Xxxxxx X. Punches
