EXHIBIT 10.7
COVENANT NOT TO COMPETE
This Covenant Not to Compete (the "Agreement") dated as of the 12 day of
August 2004, is between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Seller"), Universal Am-Can, Ltd.
("Buyer") and Universal Truckload Services, Inc. ("UTSI").
WITNESSETH:
WHEREAS, the Seller, as the sole shareholder of AFA Enterprises, Inc.
("AFA"), a Pennsylvania corporation, has sold all of the capital stock in AFA to
Buyer under a Purchase Agreement dated August 12, 2004 between Seller and UTSI
(the "Purchase Agreement"); and
WHEREAS, under the Purchase Agreement, Seller has also sold to Buyer all
of Seller's personal goodwill in the transportation industry ("Seller's Personal
Goodwill"); and
WHEREAS, AFA is the sole shareholder of All Purpose Leasing, Inc.,
Angesco, Inc., FSK Leasing, Inc., Great American Lines, Inc., Great American
Logistics, Inc., and Independent Leasing & Personnel Corp. (hereafter, AFA and
its subsidiaries are sometimes collectively referred to as the "Corporate
Group"); and
WHEREAS, Buyer is a subsidiary of UTSI, and is UTSI's assignee under the
Purchase Agreement; and
WHEREAS, it is possible, as the result of reorganization or other events,
that the Corporate Group could be expanded or reorganized, and, as used in this
Agreement, the term "Corporate Group" shall mean and include the Corporate Group
as described above and as the same may be hereafter reorganized or expanded; and
WHEREAS, UTSI has other subsidiaries in the same business as the Corporate
Group; and
WHEREAS, hereafter Buyer, the members of the Corporate Group, UTSI and the
other subsidiaries of UTSI, whether now existing or hereafter acquired or
formed, shall be collectively referred to as the "Protected Parties" and
individually as a "Protected Party".
WHEREAS, under the Purchase Agreement, Seller has agreed not to compete
with the Protected Parties in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions and mutual covenants appearing in this Agreement, and to induce Buyer
to
EXHIBIT C
consummate the transactions under the Purchase Agreement, the parties hereto
hereby agree as follows:
SECTION 1 - GRANT OF COVENANT
Seller (which term for the purposes of this Agreement shall include Seller
individually and any other person or entity on whose behalf Seller may knowingly
act or in which Seller may have an equity or other interest, except any interest
in any publicly traded company of five percent (5%) or less, hereby, covenants,
agrees and warrants that during the term of this Agreement:
1.1 Seller shall not directly or indirectly compete with any
Protected Party in any motor carrier transportation, transportation brokerage or
logistics business ("the Competing Business") except on behalf of a Protected
Party, offered and conducted by the Protected Parties, or any of them, within
the Territory (as defined below).
1.2 Seller shall not induce or encourage any employee, officer,
director, commission or other agent, or independent contractor (including
owner-operators and fleet owners) to terminate, cease or reduce any position,
agreement, or employment, contractor, or other business relationship with any
Protected Party; nor shall he hire, retain or employ any person who is an
employee, officer, commission or other agent or contractor (including
owner-operators and fleet owners) of any Protected Party.
1.3 Seller shall not, in connection with any Competing Business,
solicit, do business with or provide goods or services to any person or entity
that is or was a customer, client, commission or other agent, owner-operator
(including fleet owners) or contractor of any Protected Party. Seller shall not
interfere with or intervene in any transaction or relationship between Buyer or
any Protected Party, on the one hand, and any such person or entity, on the
other hand. Seller shall not knowingly or intentionally damage or destroy the
reputation or goodwill of any Protected Party or any regard for any Protected
Party among its suppliers, employees, independent contractors (including
owner-operators and fleet owners), commission or other agents, customers or
others that have acquired (or shall hereafter acquire) goods or services from
any Protected Party or that have engaged in any business or other transaction
with any Protected Party.
1.4 Seller acknowledges that each Protected Party possesses and will
continue to develop or acquire certain Proprietary Information (as defined
below) and that they have an important interest in protecting the
confidentiality of such Proprietary Information and providing for the ownership
of proprietary rights in that information.
1.5 Seller agrees, during the term of this Agreement, not to
disclose or use any such Proprietary Information. As used in this Agreement,
"Proprietary Information" shall include all information contained in patents,
patent applications,
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renewals or continuations, or other technical disclosures held or filed by any
Protected Party, business ideas, know-how, copyrights and copyright
applications, trademarks and trademark applications, writings and designs, the
identity of specific customers or potential customers, the identity of specific
current or potential employees or independent contractors (including
owner-operators and fleet owners), the identity of commission and other agents
and the identity of business relationships with specific persons and specific
business organizations, as well as all other information protectable as trade
secrets, including computer programs, know-how, or marketing and business plans,
strategies, business methods, unpublished financial statements, financing,
financial and business plans and reports (whether or not disclosed to a
government agency) budgets, projections, prices, costs, customer and supplier
lists and training and promotional materials. Nothing contained in this Section
is intended to prohibit Seller from using such Proprietary Information
concerning the Corporate Group as may be required for Seller, its accountants
and other representatives to prepare, file and support any tax returns and other
necessary documents applicable to periods on and prior to the Effective Date of
the Purchase Agreement.
1.6 The "Territory" subject to this Agreement shall be the United
States (other than Hawaii and Alaska), Mexico, and Canada.
1.7 Seller acknowledges and agrees that the restrictions, rights and
remedies under this Agreement are reasonable in duration and territory, are
designed and necessary to protect the legitimate business interests of the
Protected Parties in an appropriate manner under all of the circumstances, and
do not confer a benefit on the Protected Parties disproportionate to the benefit
received by the Seller as the result of the Purchase Agreement. Seller
acknowledges and agrees that the Territory is reasonable and appropriate for the
purposes of the parties to this Agreement.
1.8 Seller agrees not to challenge the provisions of this Section 1
as invalid or unenforceable because of (i) the scope of the Territory, (ii)
actions subject hereto or restricted hereby, or (iii) the period of time within
which such provisions are effective; provided that such provisions shall be
subject to the provisions of Section 5 of this Agreement.
SECTION 2 - CONSIDERATION FOR COVENANT
The consideration for this Agreement shall consist of the inducement to
Buyer to close and consummate the transactions under the Purchase Agreement, and
the Purchase Price to be paid to Seller thereunder.
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SECTION 3 - INJUNCTIVE RELIEF
Seller acknowledges that his breach or threatened violation of any of the
restrictive covenants contained in Section 1 hereof will cause irreparable
damage to one or more of the Protected Parties for which remedies at law would
be inadequate. Seller further acknowledges that the restrictive covenants set
forth herein are essential terms and conditions of the Purchase Agreement and to
the decision of Buyer to consummate the transactions contemplated thereby.
Seller, therefore, agrees that Buyer, UTSI and the other Protected Parties shall
each be entitled to a decree or order by any court of competent jurisdiction
enjoining such threatened or actual violation of any of such covenants. Such
decree or order, to the extent appropriate, shall specifically enforce the full
performance of any such covenant by Seller. In the event of a breach of this
Agreement by Seller, Buyer, UTSI and the applicable Protected Parties shall be
entitled to damages for such breach. The entitlement to damages and the amount
of such damages shall be determined pursuant to applicable Michigan law. All of
the foregoing remedies shall be in addition to all other remedies available at
law or equity. If any portion of this Section 3 is adjudicated to be invalid or
unenforceable, this Section 3 shall be deemed amended to delete therefrom the
portion so adjudicated. Seller and Buyer hereby consent and agree to the
jurisdiction of any court of competent jurisdiction in Macomb County, Michigan,
or the Commonwealth of Pennyslvania, located in Alleghany County, Pennsylvania,
or if it has or can acquire jurisidiction, in the United States District Court
located in either Detroit, Michigan or Pittsburgh, Pennsylvania, and that these
courts shall be the exclusive forum for any action relating to this Agreement.
SECTION 4 - CONTINUITY
Subject to Section 6 hereunder, this Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and assigns,
heirs, personal representations, executors, administrators, legatees and legal
representatives.
SECTION 5 - SEVERABILITY
Should any part of this Agreement, for any reason whatsoever, be declared
invalid, illegal or incapable of being enforced in whole or in part, such
decision shall not affect the validity of any remaining portion, which remaining
portion shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any portion which may for
any reason be declared invalid. Notwithstanding this section, should a court of
competent jurisdiction determine that any provision of this covenant is
unreasonable because of geographic scope, duration, type or line of business,
the court may modify the provisions of this Agreement to make it reasonable
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and enforceable, and, as so modified, this Agreement shall remain in full force
and effect.
SECTION 6 - ASSIGNMENT
This Agreement may be assigned, in whole or in part (including on a shared
basis) by Buyer (a) in connection with any whole or partial transfer of the
business operations and assets acquired under the Purchase Agreement and/or (b)
to any entity affiliated with Buyer by common ownership. Any such assignee shall
have the same rights and protections and be subject to all of the liabilities
and obligations hereunder as Buyer. Within five (5) days after any assignment
contemplated by this Section, Buyer will deliver to Seller signed originals of
all documents executed in order to implement the assignment.
SECTION 7 - NOTICES
7.1 All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, by recognized national overnight courier
or by deposit in the United States mail, postage prepaid, by registered or
certified mail, return receipt requested, addressed to the party to be notified
at the addresses set forth below:
If to Seller, to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Protected Party, at: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
7.2 Notices given by mail shall be deemed effective on the earlier
of the date shown on the proof of receipt of such mail or three (3) business
days after the date of mailing thereof. Other notices shall be deemed given on
the date of receipt. Any party hereto may change the address specified in
Section 7.1 by written notice to the other parties hereto.
SECTION 8 - WAIVER
The failure of any party to insist upon the strict performance of any of
the terms, conditions and provisions of this Agreement shall not be construed as
a waiver or relinquishment of future compliance therewith or with any other
term, condition or provision, and said terms, conditions and provisions shall
remain in full force and
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effect. No waiver of any term, condition or provision of this Agreement on the
part of any party shall be effective for any purpose whatsoever unless such
waiver is in writing and signed by such party.
SECTION 9 - TERM
Except as otherwise provided herein, the term of this Agreement shall
begin on the Closing Date of the Purchase Agreement and shall expire on the date
which is the later of the date which is (a) five (5) years after the Closing
Date under the Purchase Agreement or (b) one (1) year after the expiration of
the terms of the Consulting Agreement between Buyer and Seller executed in
connection with the Purchase Agreement. In the event the Stock Purchase
transaction is not consummated, this Agreement shall be of no force and effect.
SECTION 10 - GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Michigan without regard to the conflict of laws principles.
[SIGNATURE PAGE FOLLOWS]
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Executed the date first written above.
"SELLER"
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
"BUYER"
Universal Am-Can, Ltd.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Its: President
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"UTSI"
Universal Truckload Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Its: Vice President
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[SIGNATURE PAGE TO COVENANT NOT TO COMPETE]
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