NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (this “Agreement”) is being entered into on
September 20, 2009, between H. Xxxx Xxxxx, an individual (the “Restricted Party”), Dell
Inc., a Delaware corporation (“Parent”), DII – Holdings, Inc., a Delaware corporation
(“Merger Sub”), and Xxxxx Systems Corporation, a Delaware corporation (“Company”,
and together with its Subsidiaries (as hereinafter defined), the “Xxxxx Companies”), and
shall be effective from and after the Acceptance Date (as hereinafter defined) without any further
action by either party.
RECITALS:
WHEREAS, concurrently herewith, Parent, Merger Sub and Company are entering into an Agreement
and Plan of Merger (as such agreement may hereafter be amended from time to time, the “Merger
Agreement), pursuant to which Merger Sub will be merged with and into the Company (the
“Merger”);
WHEREAS, the Restricted Party is Chairman Emeritus of the Board of Directors of Company and a
stockholder of Company with special expertise and name recognition in the business conducted by
Company and its Subsidiaries, as well as with in-depth knowledge of the Confidential Information of
the Xxxxx Companies. As a result, the goodwill of the Xxxxx Companies is inextricably intertwined
with the Restricted Party, and as a condition and material inducement to entering into the Merger
Agreement, Parent and Merger Sub have required that Restricted Party agrees, and Restricted Party
has agreed, to enter into this Agreement; and
WHEREAS, the Restricted Party has agreed to execute, deliver and perform his obligations under
this Agreement (i) in connection with the sale of Company by means of the Merger, (ii) to protect
the goodwill and Confidential Information to be acquired by Parent and Merger Sub under the Merger
Agreement and (iii) as a condition and material inducement to Parent and Merger Sub entering into
the Merger Agreement, pursuant to which the Restricted Party will receive consideration for his
Equity Interest in Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Defined Terms. When used in this Agreement, the capitalized terms defined in Annex
I hereto shall have the meanings assigned to them therein.
2. Consideration. The Restricted Party has entered into this Agreement and made the
covenants hereinafter set forth (i) in connection with the sale of Company by means of the Merger,
(ii) to protect the goodwill and Confidential Information to be acquired by Parent and Merger Sub
under the Merger Agreement and (iii) to induce Parent and Merger Sub to enter into the Merger
Agreement and consummate the transactions contemplated thereby, pursuant to which the Restricted
Party will receive consideration for his Equity Interest in Company.
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3. Restriction on Activities.
(a) From the Acceptance Date until the Termination Date (the “Restricted Period”), the
Restricted Party shall not, without the prior written consent of Parent, directly or indirectly
(through a Related Business Enterprise or otherwise):
(i) control or actively play a role in the management of a Competing Business;
(ii) solicit for any Competing Business any person who is or was (during the twelve
months prior to the Acceptance Date) a customer or prospective customer of any of the Xxxxx
Companies with whom the Restricted Party had contact or about whom the Restricted Party had
Confidential Information, in either case while employed by or on behalf of any of the Xxxxx
Companies; or
(iii) hire or solicit for employment any person who was an employee of Xxxxx Companies
on the date hereof except in the case of any such employee (A) whose employment has been
terminated by Xxxxx Companies, or (B) (other than one of the 50 most highly compensated
employees of the Xxxxx Companies as of the date hereof) who is identified by the Restricted
Party in a written notice to Parent given within one year after the date of this Agreement
provided however that the Restricted Party may not hire more than three such employees
pursuant to this clause (iii)(B).
(b) Notwithstanding the foregoing, nothing in this Section 3 shall prohibit activities
by the Restricted Party in connection with employment or consulting services provided to Parent,
Merger Sub or the Xxxxx Companies or positions as an officer or director with Parent, Merger Sub or
the Xxxxx Companies, or activities undertaken on behalf of, and at the request of, Parent, Merger
Sub or the Xxxxx Companies.
(c) The Restricted Party acknowledges that each of the covenants of Sections 3(a)(i)
through 3(a)(iii) are in addition to, and shall not be construed as a limitation upon, any
other covenant provided in Section 3(a). The Restricted Party agrees that the geographic
boundaries, scope of prohibited activities and time duration of each of the covenants set forth in
Sections 3(a)(i) through 3(a)(iii) are reasonable in nature and are no broader than
are necessary to maintain and protect the goodwill of the Xxxxx Companies, the Confidential
Information and the Equity Interests and related assets in and of the Xxxxx Companies, all of
which are being acquired by Parent indirectly through the Merger of Merger Sub with and into
Company, including without limitation any goodwill developed by the Restricted Party with the Xxxxx
Companies’ customers, suppliers, licensees, employees, contractors, consultants and business
partners, and to protect the other legitimate business interests of the Xxxxx Companies. The
Restricted Party acknowledges that the transactions contemplated by the Merger Agreement would not
be consummated in the absence of the Restricted Party’s covenants and agreements hereunder.
(d) The parties hereto intend that each covenant contained in Sections 3(a)(i) through
3(a)(iii) be construed as a series of separate covenants, one for each county, parish or
other defined province in each geographic area within the Territory. Except for geographic
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coverage, each such separate covenant shall be deemed identical in terms to the applicable
covenant contained in Sections 3(a)(i) through
3(a)(iii). Furthermore, each of the
covenants in Sections 3(a)(i) through
3(a)(iii) hereof shall be deemed a separate
and independent covenant, each being enforceable irrespective of the enforceability (with or
without reformation) of the other covenants contained in Sections 3(a)(i) through
3(a)(iii) hereof.
4. Confidentiality. The Restricted Party hereby acknowledges that, during the term of
the Restricted Party’s relationship with the Xxxxx Companies, the Restricted Party has developed
and had access to Confidential Information and Derivative Information. The Restricted Party hereby
agrees as follows with respect to all Confidential Information and Derivative Information:
(a) At any time from time to time after the Acceptance Date, at the request of Parent, the
Restricted Party will, and will cause each member of the Restricted Party Group to, at Parent’s
option, immediately deliver to Parent or destroy all Confidential Information and Derivative
Information in the possession of the Restricted Party Group, in each case as identified with
reasonable specificity by Parent.
(b) During the Restricted Period, the Restricted Party will keep all Confidential Information
and Derivative Information strictly confidential and will not use (other than in the performance of
duties (i) specified in the Merger Agreement or (ii) for or on behalf of the Parent Companies) any
of such data, information or results or disclose any such data, information or results to any
Person unless otherwise required by law or regulation, and then only after prior written notice to
Parent of the Restricted Party’s determination of the need for disclosure. To the extent that the
Restricted Party has control to direct the actions of a Restricted Party Group, the Restricted
Party will direct the Restricted Party Group to not use or disclose any Confidential Information or
Derivative Information.
(c) In the event that the Restricted Party becomes, or to the actual or constructive knowledge
of the Restricted Party any Restricted Party Group becomes, legally compelled to disclose any
Confidential Information and/or Derivative Information, the Restricted Party will provide Parent
with prompt notice so that Parent may seek a protective order or other appropriate remedy and/or
waive the Restricted Party’s compliance with the confidentiality and non-disclosure provisions of
this Agreement, and the Restricted Party will cooperate with Parent to obtain such protective order
or other remedy. In the event that such protective order or other remedy is not obtained, the
Restricted Party will furnish only that portion of the Confidential Information and/or Derivative
Information which the Restricted Party is advised by the Restricted Party’s counsel to be legally
required.
5. Non-Disparagement. During the Restricted Period, the Restricted Party shall not,
directly or indirectly, knowingly make or knowingly cause to be made to any Person any disparaging,
derogatory or other negative or false statement about Parent, Merger Sub, the Xxxxx Companies, or
any of their respective Affiliates (including their products, services, policies, practices,
operations, employees, sales representatives, agents, officers, members, managers, partners or
directors). During the Restricted Period, each of Parent, Merger Sub, and the Xxxxx Companies
shall not, directly or indirectly, and shall use commercially reasonable efforts to cause their
respective controlled Affiliates not to, knowingly make or knowingly cause to be
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made to any Person any disparaging, derogatory or other negative or false statements about
Restricted Party. Nothing in this Section 5 shall limit the rights of a party hereto in
any legal proceedings by, against or involving such party pertaining to such party’s rights,
remedies or obligations under this Agreement or the Merger Agreement or other agreements relating
to the transactions contemplated by the Merger Agreement.
6. Effectiveness and Termination. Notwithstanding anything in this Agreement to the
contrary, in the event the Merger Agreement is terminated in accordance with its terms prior to the
Acceptance Date, this Agreement shall not become effective and shall, without any action of any
party hereto, automatically terminate, become void ab initio, and have no force or effect
simultaneously with the termination of the Merger Agreement. From and after the Termination Date,
this Agreement shall be of no further force or effect.
7. Responsibility for the Restricted Party Group. The Restricted Party will be
responsible for breach of Section 3 by a Restricted Party Group to the extent that Restricted Party
intentionally caused or knowingly approved such breach by a Restricted Party Group.
8. Miscellaneous. It is further agreed as follows:
(a) Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be delivered personally, facsimile with confirmation of
receipt, or by next day courier service, providing proof of delivery. Any such notice shall be
effective upon receipt, if delivered personally or by facsimile, or one day after delivery to a
courier service for next-day delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
| If the Restricted Party: | X.X. Xxx 000000 | |||
| Xxxxx, Xxxxx 00000-0000 | ||||
| Attention: H. Xxxx Xxxxx | ||||
| Facsimile: (000) 000-0000 | ||||
| copy to: | Xxxxxx and Xxxxx, LLP | |||
| 0000 Xxxxxxx Xxxxxx | ||||
| Xxxxx 000 | ||||
| Xxxxxx, Xxxxx 00000-0000 | ||||
| Attention: Xxx X. Xxxxxx and Xxxxxxx Xxxxxxx | ||||
| Facsimile: (000) 000-0000 | ||||
| If to Parent: | Dell Inc. | |||
| Xxx Xxxx Xxx, XX0-00 | ||||
| Xxxxx Xxxx, Xxxxx 00000-0000 | ||||
| Attention: Xxxxx X. Xxxxxx | ||||
| Facsimile: (000) 000-0000 |
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| copy to: | Xxxxxx & Xxxxxx L.L.P. | |||
| Xxxxxxxx Xxxx Center | ||||
| 0000 Xxxx Xxxxxx, Xxxxx 0000 | ||||
| Xxxxxx, Xxxxx 00000 | ||||
| Attention: Xxxxxx X. Xxxxxxx and | ||||
Xxxxxxxxxxx X. Xxxxxx |
||||
| Facsimile: (000) 000-0000 | ||||
| If to Company: | Xxxxx Systems Corporation | |||
| 0000 Xxxx Xxxxx Xxxxxxx | ||||
| Xxxxx, Xxxxx 00000 | ||||
| Attention: Xxxxxx X. Xxxxxxxx | ||||
| Facsimile: (000) 000-0000 | ||||
| copy to: | Xxxxx Xxxxx LLP | |||
| 0000 Xxxx Xxxxxx | ||||
| Xxxxxx, Xxxxx 00000-0000 | ||||
| Attention: Xxxxx Xxxxxxxxx | ||||
| Facsimile: (000) 000-0000 |
or to such other address as the Person to whom notice is given may have previously furnished to the
others in writing in the manner set forth above.
(b) Severability. Whenever possible, each provision or portion of any provision of
this Agreement will be interpreted in such manner as to be effective and valid under applicable law
but if any provision or portion of any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein. Notwithstanding the above, in the event any such invalidity,
illegality or unenforceability of any portion of Section 3 (a) hereof is caused by such
provision being held to be excessively broad as to time, duration, geographical scope, activity or
subject in any jurisdiction, then such provision shall, at the option of Parent, remain a part of
this Agreement and shall be reformed and construed within such jurisdiction by limiting and
reducing it so as to be enforceable to the extent compatible with then applicable law.
(c) Entire Agreement. This Agreement, together with the Merger Agreement and the
other documents referred to herein, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter hereof.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of
a written agreement executed by Parent and the Restricted Party.
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(e) Governing Law; Jurisdiction. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas without regard to principles of conflicts of law.
THE PARTIES HERETO IRREVOCABLY SUBMIT AND CONSENT TO THE EXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS, AUSTIN DIVISION AND THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION OR OTHER TEXAS DOMICILE OF
RESTRICTED PARTY (AND IN THE EVENT THERE IS NO BASIS FOR FEDERAL JURISDICTION, THEN THE TEXAS STATE
DISTRICT COURT IN XXXXXXXXXX COUNTY TEXAS AND DALLAS COUNTY TEXAS OR OTHER TEXAS DOMICILE OF
RESTRICTED PARTY) AND HEREBY AGREE THAT SUCH COURTS SHALL BE THE EXCLUSIVE PROPER FORUM FOR THE
DETERMINATION OF ANY DISPUTE RELATING IN ANY WAY TO THIS AGREEMENT. THIS AGREEMENT, AND ANY
DISPUTE RELATING IN ANY WAY TO THIS AGREEMENT’S INTERPRETATION, PERFORMANCE OR BREACH SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WHETHER THE DISPUTE OR CLAIM IS IN CONTRACT, TORT, OR
OTHERWISE AND INCLUDING STATUTORY, CONSUMER PROTECTION, COMMON LAW, AND EQUITABLE CLAIMS. The
initiation of any lawsuit or other proceedings in a forum not specified by this paragraph shall
constitute a breach of contract and shall provide grounds for an injunction prohibiting such
lawsuit or proceedings and for recovery of all resulting damages, including, without limitation,
all judgments, awards, attorneys’ fees and expenses incurred in connection with such lawsuit or
proceedings. No action or proceeding with any Governmental Authority alleging a breach of this
Agreement may be initiated by either party against the other party until such initiating party has
provided the other party with written notice describing in detail the alleged breach of this
Agreement by the other party, and the other party failed to cure the alleged breach within 14 days
of receiving written notice. A party’s observance of the 14-day cure period set forth in the
preceding sentence shall not provide a basis for any other party to assert that the observing party
did not suffer or will not suffer irreparable injury as a result of a breach asserted by the
observing party.
(f) Specific Enforcement. The Restricted Party acknowledges that the covenants of the
Restricted Party contained in Sections 3(a), 4, 5 and 7 hereof are special and unique, that
a breach by the Restricted Party or any member of the Restricted Party Group of any term or
provision of any of such Sections will cause irreparable injury to the Parent Companies, and that
remedies at law for the breach of any terms or provisions of Sections 3(a), 4, 5 and 7
hereof will be inadequate. Accordingly, in addition to any other remedies they may have in the
event of breach, the Parent Companies shall be entitled to enforce specific performance of the
terms and provisions of Sections 3(a), 4, 5 and 7 hereof, to obtain temporary and permanent
injunctive relief to prevent the continued breach of such terms and provisions without the
necessity of posting a bond or of proving actual damage, and to obtain attorneys’ fees in respect
of the foregoing if the Parent Companies prevails in such action or proceeding. Restricted Party
shall be entitled to specific performance of the terms and provisions of Section 5 hereof, to
obtain temporary and permanent injunctive relief to prevent the continued breach of such terms and
provisions without the necessity of posting a bond or proving actual damages, and to obtain
attorneys’ fees in respect of the foregoing if the Restricted Party prevails in such action or
proceeding, in addition to any other remedies restricted party may have in the event of a breach.
If either party prevails in or on any action or proceeding initiated by the other party seeking to
enforce any provision in this Agreement, such prevailing party shall be entitled to attorneys’ fees
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such prevailing party incurred in connection with such action or proceeding. For purposes of
this Section 8(f) and Sections 3(a), 4, 5 and 7 hereof, each of the Parent
Companies other than Company and Parent shall be deemed a third party beneficiary entitled to the
benefits of such Sections and shall be entitled to enforce Sections 3(a), 4, 5 and 7 hereof
in accordance with this Section 8(f).
(g) No Third Party Beneficiaries. Except as specifically stated in Section
8(f), this Agreement is not intended to be for the benefit of, and shall not be enforceable by,
any Person who or which is not a party hereto.
(h) Assignment. This Agreement is personal to the parties hereto, and cannot be
assigned to any Person without the prior written consent of the other parties, provided, however,
that the Parent Companies shall have the right to assign this Agreement without the consent of any
other party to any successor to all or substantially all of the assets or business of the Parent
Companies to which this Agreement relates.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| DELL INC. | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxxxx
|
|||||
| Title: | Senior Vice President, Human Resources | |||||
| DII – HOLDINGS, INC. | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxxxx
|
|||||
| Title: | Senior Vice President, Human Resources | |||||
| XXXXX SYSTEMS CORPORATION | ||||||
| By: Name: |
/s/ Xxxx X. Xxxxxx
|
|||||
| Title: | Vice President and Chief Financial Officer | |||||
| /s/ H. Xxxx Xxxxx | ||||||
| H. Xxxx Xxxxx, an individual | ||||||
Signature Page to
Non-Competition Agreement
Non-Competition Agreement
ANNEX I
Defined Terms
For purposes of the Non-Competition Agreement, dated as of the 20th day of
September, 2009, by and among H. Xxxx Xxxxx, an individual, Dell Inc., a Delaware corporation,
DII – Holdings, Inc., a Delaware corporation , and Xxxxx Systems Corporation, a Delaware
corporation, to which this Annex I is attached, the following terms shall have the
following meanings:
“Acceptance Date” shall have the meaning assigned to such term in the Merger
Agreement.
“Affiliate” means, with respect to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is
under common control with such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly or
indirectly, of the actual power to direct or cause the direction of the management policies of a
Person, whether through the ownership of stock, by contract, credit arrangement or otherwise.
“Business Enterprise” means any corporation, partnership, limited liability company,
unincorporated organization, association, trust, or other entity.
“Closing” shall have the meaning assigned to such term in the Merger Agreement.
“Competing Business” means any Business Enterprise (i) whose primary business is the
information technology services and business solutions business of the Xxxxx Companies as conducted
as of the Acceptance Date in the Territory and whose gross revenues exceed $100 million during any
consecutive 12-month period with respect to such primary business, or (ii) whose business
activities make such Business Enterprise a major competitor with the information technology
services and business solutions business of the Xxxxx Companies as conducted as of the Acceptance
Date in the Territory, including, by way of illustration, and not by limitation, Hewlett-Packard,
Lenovo, IBM, Gateway, Apple, Acer, CDW, EDS, EMC, Software House International, Insight (Software
Spectrum), Softchoice, Computer Sciences Corporation and Digital River.
“Confidential Information” means all Intellectual Property owned or used by the Xxxxx
Companies, and all other information that is or has been conceived, made, developed, disclosed to
or acquired by the Restricted Party, individually or in conjunction with others, during the period
of the Restricted Party’s employment or other affiliation with the Xxxxx Companies (whether during
business hours or otherwise and whether on the Company’s premises or otherwise) that relate to any
of the Xxxxx Companies’ businesses, products or services (including, without limitation, all such
information relating to corporate opportunities, strategies, business plans, product
specifications, compositions, manufacturing and distribution methods and processes, research,
financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition
prospects, the identity of customers or their requirements, the identity of key contacts within the
customer’s organizations or within the organization of acquisition prospects, or production,
marketing and merchandising techniques, prospective names and marks) and all
Annex I - 1
writings or materials of any type embodying any of such information; provided, however, that
Confidential Information shall not include any information, knowledge and/or data that (i) is
generally known to the public other than as a result of disclosure by the Restricted Party in
breach of the Agreement to which this Annex I is attached or in breach of any other
agreement or applicable Law, (ii) is independently developed by the Restricted Party without the
utilization of any Confidential Information, or (iii) becomes available to the Restricted Party
from a source which, to the Restricted Party’s knowledge, is not prohibited from disclosing such
information to the Restricted Party by a legal, contractual or fiduciary obligation to any Parent
Company.
“Derivative Information” means any notes, summaries, evaluations, analyses and other
material derived by the Restricted Party from any of the Confidential Information.
“Equity Interest” means the equity ownership rights in a Business Enterprise, whether
in the form of capital stock, ownership unit, limited liability company interest, limited or
general partnership interest or any other form of ownership, or any right, option, warrant,
convertible security or indebtedness or other instrument enabling any Person to acquire any of the
same.
“Governmental Authority” means any governmental or quasi governmental body of the
United States, or any other country, including any state, province, county, city or other political
subdivision thereof, or any authority, agency, court, instrumentality or statutory or regulatory
body of any of the foregoing.
“Intellectual Property” means any or all of the following and all rights in, arising
out of or associated therewith: (i) all United States, international and foreign patents and
applications therefor and all reissues, reexaminations, divisions, renewals, extensions,
provisionals, continuations and continuations in part thereof; (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data, business methods and customer lists and other data pertaining
to customers and all documentation relating to any of the foregoing; (iii) all copyrights,
copyright registrations and applications therefor and all other rights corresponding thereto
throughout the world; (iv) all industrial designs and methods and any registrations and
applications therefor throughout the world; (v) all trade names, trademarks, service marks, trade
dress, logos, URLs (including domain names), and other indicia of source, sponsorship, affiliation,
or approval and the goodwill associated therewith, including any registrations and applications
therefor throughout the world; (vi) all rights of publicity and privacy; (vii) all moral and
economic rights of authors and inventors, however denominated, throughout the world; (viii) all
software, including data files, source code, object code, application programming interfaces,
architecture, documentation, files, records, schematics, verilog files, net lists, emulation and
simulation reports, test vectors and hardware development tools, computerized databases and other
software-related specifications and documentation; and (ix) any similar or equivalent rights to any
of the foregoing anywhere in the world including licenses providing any of the above intellectual
property.
“Law” means any preliminary or permanent foreign or domestic law, statute, code,
ordinance, rule, regulation, or order, judgment, writ, stipulation, award, injunction, decree,
arbitration award or finding of any Governmental Authority, arbitrator or mediator.
Annex I - 2
“Parent Companies” means Parent and each of its Subsidiaries, including, after the
Closing, the Company Subsidiaries.
“Xxxxx Companies” means Company and each of its Subsidiaries.
“Person” means any natural person, Business Enterprise or Governmental Authority.
“Related Business Enterprise” means any Business Enterprise in which the Restricted
Party has control, through the ownership of a voting interest or otherwise, to direct the
activities of such Business Enterprise or prevent such Business Enterprise from taking any action
that would constitute a breach of this Agreement if undertaken by the Restricted Party.
“Restricted Party Group” means the Restricted Party together with any Related Business
Enterprise.
“Subsidiaries” means, with respect to any party, any entity, whether incorporated or
unincorporated, of which at least a majority of the securities or ownership interest having by
their terms voting power to elect a majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries.
“Termination Date” means December 31, 2014.
“Territory” means everywhere worldwide.
Annex I - 3
