mis_8k1130ex1012.htm


    Exhibit
      10.12

     

    

      MAGNETECH
        EMBRESCIA NON-COMPETE AGREEMENT

       

      This
Non-Compete
        Agreement (“Agreement”) is made and
        entered into this 30th day of November, 2007 (“Effective Date”), by and between
        Magnetech Industrial Services, Inc., an Indiana corporation (“Magnetech” or
“Company”) and Thomas J. Embrescia (“Embrescia”).

       

      Recitals:

       

      A.           Since
        March 1, 2002, 3-D Service, Ltd. (“3-D”) has been engaged in the business of
        selling, repairing, remanufacturing and maintaining industrial electrical
        and
        mechanical equipment from its locations at 800 Nave Road SE in Massillon,
        Ohio,
        and at 870 Crescentville Road in Cincinnati, Ohio (“the Business”).

       

      B.           Embrescia
        has been the Chairman of Board of 3-D since its
        inception.  Through XGen III, Ltd., an Ohio limited liability company
        owned 90% by XGEN Ltd. and 10% by Venture Equity & Derivative Investment,
        LLC (“XGen”), Embrescia has also had an ownership or beneficial interest in 3-D
        since its inception.

       

      C.           Embrescia
        is intimately familiar with the Business, including its operations, employees,
        suppliers and customers.

       

      D.           Pursuant
        to the 3-D Membership Interest Purchase Agreement (the “Membership Interest
        Purchase Agreement”), executed November 30, 2007, Magnetech has purchased
        substantially all of the Membership Interests of 3-D.

       

      E.           Magnetech
        would not have been willing to enter into the Membership Interest Purchase
        Agreement without the agreement of Embrescia to execute this Agreement, along
        with the execution of a similar agreement by Bernard L. DeWees
        (“DeWees”).

       

      F.           The
        consummation by Magnetech of the transactions contemplated by the Membership
        Interest Purchase Agreement is in reliance upon the assurance of Embrescia
        that
        he will comply fully with all of the terms and conditions of this
        Agreement.

       

      G.           3-D,
        now a wholly-owned subsidiary of Magnetech, has entered into a lease for
        facilities in Massillon, Ohio in accordance with Article 6.01(d) of the
        Membership Interest Purchase Agreement (“Lease”).

       

      H.           Magnetech
        has delivered its Promissory Note to XGen III, Ltd. in the amount of
        $2,000,000.00 in accordance with Section 3.04 of the Membership Interest
        Purchase Agreement (“Note”)

       

      NOW,
        THEREFORE, in consideration of the promises and covenants herein
        exchanged and for other good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, the parties hereto agree as
        follows:

       

      1.           Consideration.  Embrescia
        hereby acknowledges and
        agrees
        that his execution of this Agreement is
        a material inducement to Magnetech
        to consummate the transactions
        contemplated by the Membership Interest
        Purchase Agreement. Embrescia
        further
        acknowledges

       


      
        
          
          

        

        
          Page
            1 of
            5

          
            

          

        

        
          
          

        

      


      and
        agrees that the consummation by
Magnetech
        of the transactions contemplated by the
Membership Interest
        Purchase Agreement, with
        the resulting significant benefits to the Embrescia,
        constitutes sufficient consideration
        to support the covenants set forth in this Agreement.

       

      2.           Term.  This
        Agreement shall commence on the Effective Date and continue for a period
        of two
        (2) years.

       

      3.           Covenants
        of Embrescia.

       

       (a)           Covenants
        Against Competition and Solicitation.  Embrescia agrees that he
        will not, for the Prohibited Period (as defined below), without the express
        written consent of Company, unless there has been a default by the Company
        under
        the Lease or Note that has not been cured in the period of time allowed for
        cure
        in the Lease:

       

      (i)           Directly
        or indirectly, as a proprietor, officer, employee, partner, stockholder,
        consultant, agent, owner or otherwise, work for, render assistance or services
        to or otherwise participate in any business that competes with or engages
        in
        business substantially similar to the Business anywhere within the Prohibited
        Territory (as defined below);

      


      (ii)           Directly
        or indirectly, induce, hire or solicit or seek to induce, hire or solicit
        any
        person who was engaged with 3-D as an employee, agent, independent contractor
        or
        otherwise at any time within one year before the Closing Date to end his
        or her
        engagement or employment with Company; or

      


      (iii)           Either
        for himself or for any other person, firm, corporation or entity, solicit,
        divert or accept, or attempt to solicit, divert or accept any persons or
        entities which were customers or suppliers of 3-D at any time within one
        year
        before the Closing Date.

      


      For
        purposes of this Agreement, the “Prohibited Territory” means anywhere within a
        one thousand (1000) mile radius of each of 3-D’s locations (in Massillon and
        Cincinnati), unless that geographic restriction is deemed to be of unreasonably
        broad scope, and therefore unenforceable, by a court of competent jurisdiction,
        in which case the next sentence shall define the Prohibited
        Territory.  The Prohibited Territory means anywhere within a
        five-hundred (500) mile radius of each of 3-D’s locations (in Massillon and
        Cincinnati), unless that geographic restriction is deemed to be of unreasonably
        broad scope, and therefore unenforceable, by a court of competent jurisdiction,
        in which case the next sentence shall define the Prohibited
        Territory.  The Prohibited Territory means anywhere within a
        two-hundred-fifty (250) mile radius of each of 3-D’s locations (in Massillon and
        Cincinnati).

      


      The
        term
“Prohibited Period” shall be defined as a period of two (2) years from and after
        the Closing Date as defined in the Membership Interest Purchase
        Agreement.


      
        
          
          

        

        
          Page
            2 of
            5

          
            

          

        

        
          
          

        

      


      (b)           Reasonableness
        of Covenants.  Embrescia acknowledges and agrees that the
        temporal, geographic and other limitations contained in this Section 3 are
        reasonable and necessary for the proper protection of Magnetech’s investment in
        the Membership Interests of 3-D and shall be enforceable to
        the fullest
        extent permitted by law.

      


      (c)           Modification.  In
        the event that any term, provision or covenant contained in this Section
        3 is
        found to be unreasonable, and therefore unenforceable, by a court of competent
        jurisdiction, but would be valid and enforceable if any part thereof were
        deleted or otherwise modified, then the parties expressly agree that a court
        may
        limit the application of, or modify any such term, provision or covenant
        and
        proceed to enforce such term, provision or covenant as so limited or
        modified.

      


      4.           Remedies
        for Breach.  Embrescia acknowledges that Company’s remedy at
        law for any breach of Embrescia’ obligations under Section 3 would be inadequate
        and specifically agrees that Company shall be entitled to injunctive relief
        against him, without the necessity of proof of actual damage or the posting
        of a
        bond, in addition to any other remedies available at law or in equity, including
        compensatory damages incurred by Company as a result of such violation and
        including costs, expenses and reasonable attorneys’ fees in enforcing any of its
        rights under Section 3.    The rights and remedies set forth
        in this Agreement shall be cumulative and not exclusive.

       

      5.           Miscellaneous.

       

      (a)           Notices.   Any
        notice
        required or permitted to be given under this Agreement shall be in writing
        and
        shall be deemed to have been duly given on the date delivered, if delivered
        in
        person, or on the date mailed, if mailed first-class, postage prepaid, certified
        mail, return receipt requested, at the address set forth below (or such other
        address as may be given by like notice):

       

      
        	 	
                If
                  to Company:

              	 	 
	 	 	
                Magnetech
                  Industrial Services, Inc.

              
	 	 	
                1125
                  South Walnut Street

              
	 	 	
                South
                  Bend, Indiana  46619

              
	 	 	
                Attn:

              	
                John
                  A. Martell

              
	 	 	
                and

              	
                James
                  M. Lewis

              
	 	 	 	 
	 	 	 	
                with
                  a copy to:

              
	 	 	 	 
	 	 	 	
                Barnes
                  & Thornburg LLP

              
	 	 	 	
                600
                  1st Source Bank Center

              
	 	 	 	
                100
                  North Michigan

              
	 	 	 	
                South
                  Bend, Indiana 46601

              
	 	 	 	
                Attn:  Richard
                  L. Mintz, Esq.

              
	 	 	 	 
	 	
                If
                  to Embrescia:

              	
                Thomas
                  J. Embrescia

              
	 	 	
                3029
                  Prospect Ave

              
	 	 	
                Cleveland
                  Ohio 44115

              


      

       

       

       

      
        
          
          

        

        
          Page
            3 of
            5

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 	 
	 	 	 	
                with
                  a copy to:

              


      

       

      
        	 	 	 	
                DAY
                  KETTERER LTD.

              
	 	 	 	
                Millennium
                  Centre, Ste. 300

              
	 	 	 	
                200
                  Market Avenue North

              
	 	 	 	
                Canton,
                  Ohio 44702

              
	 	 	 	
                Attn:  Daniel
                  A. Minkler

              


      

      


      


      (b)           Assignment;
        Binding Effect. No party to this Agreement may assign this Agreement or
        such party’s right, duties and obligations hereunder without the prior written
        consent of the other party hereto; provided, that Company shall have
        the right to assign its rights hereunder to an Affiliate of
        Company.  Subject to the foregoing, this Agreement shall be binding
        upon and inure to the benefit of the parties to this Agreement and their
        heirs,
        personal and legal representatives, successors and assigns.  For
        purposes of this Agreement, “Affiliate” means a person or entity that directly
        or indirectly, through one or more intermediaries, controls, is controlled
        by,
        or is under common control with, another person or entity or which any person
        or
        entity owns or controls directly or indirectly 50% or more of the voting
        shares
        or of the value of such person or entity or has the ability to control the
        management or affairs of such person or entity.

       

      (c)           Severability.  If
        any provision of this Agreement shall be held invalid or unenforceable by
        any
        court of competent jurisdiction or as a result of legislative or administrative
        action, such holding or action shall be strictly construed and shall not
        affect
        the validity or affect any other provision of this Agreement.

       

      (d)    Governing
        Law; Venue.  This
        Agreement shall be construed, interpreted and enforced in accordance with
        the
        laws of the State of Ohio, without giving effect to principles of conflicts
        of
        laws. The parties expressly consent to exclusive personal jurisdiction and
        venue
        in the federal and state courts of the State of Ohio.

      


      (e)           Waiver. The
        failure of any party to enforce at
        any time or for any period of time any of the provisions of this Agreement
        shall
        not be construed as a waiver of such provision or of the right of the party
        to
        enforce such provision.  The waiver of any breach or default or the
        failure to exercise any right shall not be deemed a waiver of any subsequent
        breach or default or waiver of the right to exercise any other
        right.

       

      (f)           Entire
        Agreement and Amendment. This Agreement sets forth the entire understanding
        of the parties, there being no oral or other written agreements or
        understandings between them relating to the subject matter hereof, and
        supersedes and replaces all other prior agreements, understandings or letters
        of
        intent between the parties with regard to the subject matter of this
        Agreement.  No modification, amendment, waiver or release of any
        provision of this Agreement or of any right, obligation, claim or cause of
        action arising under this Agreement shall be valid or binding for any purpose
        unless in writing and duly executed by the party against whom the same is
        sought
        to be asserted.

       

      [Remainder
        of Page Intentionally Blank]


      
        
          
          

        

        
          Page
            4 of
            5

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, Company has caused this Non-Compete Agreement to be executed
        on
        its behalf by its authorized officer and Embrescia has executed this Non-Compete
        Agreement on the date or dates indicated below, effective as of the Effective
        Date.

      


      
        	
                Thomas
                  J. Embrescia

              	 	
                Magnetech
                  Industrial Services, Inc.

              
	 	 	 	 	 
	 	 	 	 	 
	/s/
                Thomas
                J. Embrescia 	 	/s/
                John A. Martell 
	
                Thomas
                  J. Embrescia

              	 	
                John
                  A. Martell, President and CEO

              
	 	 	 	 	 
	
                Date:

              	November
                30, 2007	 	
                Date:

              	November
                30, 2007


      

       

       

       

       

       

      Page
        5 of
        5