AGREEMENT
This Agreement made and entered into this ____ day of March,
1998, by and between COMMERCIAL BUSINESS SYSTEMS, INC., a
Virginia corporation (hereinafter referred to as "Seller") and
XXXXXXX COMPUTER RESOURCES, INC., a Delaware corporation
(hereinafter referred to as "Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is a full-service provider of a variety of
computer service and support solutions to large and medium size
commercial, governmental and other professional customers; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Purchaser have entered into an Asset Purchase
Agreement ("Asset Purchase Agreement") whereby Seller has sold to
Purchaser substantially all of the assets of Seller relating to
the Business; and
WHEREAS, the Purchaser would not have entered into the Asset
Purchase Agreement with Seller without the consent of Seller to
enter into this Covenant Not to Compete Agreement; and
WHEREAS, pursuant to Sections 7.1 and 14.2(d)(vii) of said Asset
Purchase Agreement, Seller agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained and in consideration of the execution
and closing of the Asset Purchase Agreement, the parties hereto
agree as follows:
1. In consideration of the payments to be made by Purchaser to
Seller for its assets, Seller covenants and agrees that for
a period equal to five (5) years from the closing of the
Asset Purchase Agreement of even date, Seller will not, or
with any other person, corporation or entity, directly or
indirectly, by stock or other ownership, investment,
management, employment or otherwise, or in any relationship
whatsoever:
(a) Solicit, divert or take away or attempt to solicit,
divert or take away, any of the business, clients,
customers or patronage of Purchaser or any affiliate or
subsidiary thereof relating to the Business of
Purchaser, as defined below; or
(b) Attempt to seek or cause any clients or customers of
Purchaser or any such affiliate or subsidiary relating
thereto to refrain from continuing their patronage of
the Business of Purchaser; or
(c) Engage in the Business of Purchaser in any state in
which Purchaser or its subsidiaries has an office
during the term of this Agreement. A list of the
states in which Purchaser and its subsidiaries
currently transact business is attached hereto as
Exhibit A; or
(d) Knowingly employ or engage, or attempt to employ or
engage, in any capacity, any person in the employ of
the Purchaser or any affiliate or subsidiary.
(e) Nothing in this Agreement shall prohibit Seller from
owning or purchasing less than five percent (5%) of the
outstanding stock of any publicly-traded company whose
stock is traded on a nationally or regionally
recognized stock exchange or is quoted on NASDAQ or the
OTC bulletin board or from taking any action described
in items 1(b)-(d) above for the benefit of or on behalf
of Purchaser or any of its subsidiaries. In addition,
nothing in this Agreement shall prohibit Seller from
continuing to engage in its depot repair and
refurbishing of products business for the telephone
industry. In addition, the pursuing of a potential
business relationship with Xxxx Atlantic by Seller
which, if effectuated, will be implemented by
Purchaser, shall not be precluded by this Agreement.
For purposes of this Section, the _Business of Purchaser_
shall mean any person, corporation, partnership or other
legal entity engaged, directly or indirectly, through
subsidiaries or affiliates, in the following line of
business:
(i) Distributing of computer hardware, software, peripheral
devices, and related products and services to other
entities or persons engaged in any manner in the
business of the distribution, sale, resale or
servicing, whether at the wholesale or retail level, or
leasing or renting, of computer hardware, software,
peripheral devices or related products;
(ii) Sale or servicing, whether at the wholesale or retail
level, or leasing or renting, of computer hardware,
software, peripheral devices or related products;
(iii) Sale, servicing, or supporting of microcomputer
products, microcomputer support solutions and computer
integration products, peripheral devices and related
products and the sale of networking services; and
(iv) Any other business activity which can reasonably be
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determined to be competitive with the principal
business activity being engaged in by Purchaser or any
of its subsidiaries.
Seller has carefully read all the terms and conditions of
this Paragraph 1 and has given careful consideration to the
covenants and restrictions imposed upon Seller herein, and
agrees that the same are necessary for the reasonable and
proper protection of Seller's Business acquired by Purchaser
and have been separately bargained for and agrees that
Purchaser has been induced to enter into the Asset Purchase
Agreement and pay the consideration described in Paragraph 2
by the representation of Seller that it will abide by and be
bound by each of the covenants and restrictions herein; and
Seller agrees that Purchaser is entitled to injunctive
relief in the event of any breach of any covenant or
restriction contained herein in addition to all other
remedies provided by law or equity. Seller hereby
acknowledges that each and every one of said covenants and
restrictions is reasonable with respect to the subject
matter, the length of time and geographic area embraced
therein, and agrees that irrespective of when or in what
manner this agreement may be terminated, said covenants and
restrictions shall be operative during the full period or
periods hereinbefore mentioned and throughout the area
hereinbefore described.
The parties acknowledge that this Agreement, which Agreement
is ancillary to the main thrust of the Asset Purchase
Agreement, is being entered into to protect the legitimate
business interests of Purchaser, including, but not limited
to, (i) trade secrets; (ii) valuable confidential business
or professional information that otherwise does not qualify
as trade secrets; (iii) substantial relationships with
specific prospective or existing customers or clients; (iv)
client or customer good will associated with an on-going
business by way of trade name, trademark, or service xxxx, a
specific geographic location, or a specific marketing or
trade area; and (v) extraordinary or specialized training.
In the event that any provision or portion of Paragraph 1
shall for any reason be held invalid or unenforceable, it is
agreed that the same shall not affect the validity or
enforceability of any other provision of Paragraph 1 of this
Agreement, but the remaining provisions of Paragraph 1 of
this Agreement shall continue in force and effect; and that
if such invalidity or unenforceability is due to the reason-
ableness of the line of business, time or geographical area
covered by certain covenants and restrictions contained in
Paragraph 1, said covenants and restrictions shall
nevertheless be effective for such line of business, period
of time and for such area as may be determined by
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arbitration or by a Court of competent jurisdiction to be
reasonable.
2. The consideration for Seller's covenant not to compete shall
be One Dollar ($1.00) and other valuable consideration,
including the consideration paid by the Purchaser to Seller
pursuant to an Asset Purchase Agreement to which Seller and
Purchaser are parties of even date herewith.
3. The terms and conditions of this Agreement shall be binding
upon the Seller and Purchaser, and their successors, heirs
and assigns.
4. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Kentucky, which
is the state in which the corporate headquarters of Xxxxxxx
are located.
IN WITNESS WHEREOF, the parties hereto have executed this Agree-
ment on the day and year first above written.
SELLER
:
COMMERCIAL BUSINESS SYSTEMS, INC.
By:
__________________________________
Xxxxxx X. Xxxxxxx, President
PURCHASER
:
XXXXXXX COMPUTER RESOURCES, INC.
By:
___________________________________
Xxxxxxx X. Xxxxxxx, Chief
Financial Officer
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EXHIBIT A
STATES IN WHICH XXXXXXX
AND/OR ITS PARENT CORPORATION
AND/OR SUBSIDIARIES TRANSACT BUSINESS
1. Alabama
2. Florida
3. Georgia
4. Indiana
5. Illinois
6. Iowa
7. Kentucky
8. North Carolina
9. Ohio
10. Oklahoma
11. South Carolina
12. Tennessee
13. Texas
14. Virginia
15 West Virginia