NON-COMPETITION, REFERRAL AND NON-DISCLOSURE AGREEMENT
NON-COMPETITION, REFERRAL AND NON-DISCLOSURE AGREEMENT (the "Agreement"),
dated as of May 10 , 1999, by and between CompuCom Systems, Inc., a Delaware
corporation ("CompuCom"), and ENTEX Information Services, Inc., a Delaware
corporation ("Seller").
RECITALS
WHEREAS, CompuCom and Seller have entered into an Asset Purchase Agreement
dated as of May 10 , 1999 (the "Asset Purchase Agreement");
WHEREAS, the execution of this Agreement is a condition to CompuCom
acquiring, and Seller disposing of, the Purchased Assets (as defined in the
Asset Purchase Agreement) in connection with the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, CompuCom and Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 For purposes of this Agreement, the following terms have the following
meanings:
(1) "Configuration" means the preparation of a computer and related
hardware and integration of components into a computer system; provided
that the term "Configuration" shall not include installation of a computer
or related hardware at a customer site.
(2) "Non-Competition Period" means the period commencing on May 12,
1999 and ending on May 11, 2000.
(3) "Product" means any computer or related hardware and peripherals
(including hubs, switches and routers or networking hardware) or software
products (including networking software products) which CompuCom has the
ability to sell.
(4) "Product Business" means the acceptance and fulfillment of
customer orders for Products, including the manufacturing, channel
assembly, co-location or centralized image loading and Configuration of
Products; provided that the term "Product Business" shall not include
on-site Configuration of computer or related
hardware or software products made subsequent to the initial image
load/configuration.
(5) "Outsourcing and Professional Services" means (a) consulting,
system migrations, project management, other services typically referred to
as "high-end" services, and (b) outsourcing contracts having a term of more
than one year which require pricing be done on a per seat basis. Agreements
that consist primarily of lower-end services, including, but not limited
to, break/fix, IMAC, warranty and low-end staff augmentation, other than
agreements priced on a per-seat basis, are not Outsourcing and Professional
Services agreements.
(6) "Service Accounts" means the customer accounts of Seller listed on
Exhibits B and C hereto.
(7) "Services" means all IT services offered by Seller, including, but
not limited to, all outsourcing, professional services, break/fix, staff
augmentation and consulting services; provided that the term "Services"
shall not include (i) on-site Configuration of Products by CompuCom or (ii)
the sale (but not the performance) by CompuCom of extended warranty
contracts at time of initial sale of Products to customers.
(8) "Subsidiary," with respect to any person, means (i) any
corporation of which the outstanding capital stock having at least a
majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or
indirectly, by such person or (ii) any other person of which at least a
majority of the voting interest under ordinary circumstances is at the
time, directly or indirectly, owned by such person.
Capitalized terms used in this Agreement and not otherwise defined shall
have the meanings ascribed thereto in the Asset Purchase Agreement.
ARTICLE II
AGREEMENT TO COOPERATE
Subject to the limitations set forth in Article III, Seller and CompuCom
agree that with respect to each account listed on Exhibit A hereto, that until
the earlier of (a) May 11, 2000 or (b) the termination of the existing contract
between Seller and such account (i) each party will cooperate with the other in
delivering Services and Products to such account in substantially the same
manner in which such Services and Products were delivered to such account prior
to Closing and (ii) each party's representative will be permitted to call on
such account.
ARTICLE III
AGREEMENT NOT TO COMPETE
3.1 Seller's Agreement. (a) Seller agrees that during the Non-Competition
Period Seller will not, and will not permit any of its Subsidiaries to:
(i) engage in the Product Business;
(ii) encourage any Service Account to specify a party other than
CompuCom to provide Products and image load/configurations to such Service
Account; or
(iii) solicit, entice or induce any employee of CompuCom or any
Subsidiary of CompuCom to terminate his or her employment with CompuCom or
any Subsidiary of CompuCom or hire any person who was or is at any time
from the date of execution of the Asset Purchase Agreement to the end of
the Non-Competition Period an employee of CompuCom or any Subsidiary of
CompuCom.
(b) Seller agrees that during the Non-Competition Period Seller will, and
will cause its Subsidiaries to use commercially reasonable efforts to cause
future Service customers to whom Seller provides Outsourcing and Professional
Services and existing Service customers of Seller to whom Seller is able to
expand its Services, to procure Products and image load/configuration from
CompuCom in accordance with the provisions of Article IV, provided that CompuCom
is not competing with Seller to provide future or expanded Services to such
customers.
Notwithstanding the foregoing, Seller shall be permitted to preserve its
ability to resell Products to the extent required by existing customer
agreements if (i) the customer refuses to approve of CompuCom providing such
Products after Seller uses commercially reasonable efforts to obtain such
approval, (ii) CompuCom rejects the customer order for such Products pursuant to
Article IV (provided that CompuCom shall comply with the requirements of the
Asset Purchase Agreement with respect to such agreements), or (iii) CompuCom
fails to meet the requirements of the customer agreement, including but not
limited to price, payment terms, return privileges and service level agreements
("SLA's) (subject to applicable cure periods). In addition, Seller shall be
permitted (A) to arrange for the procurement of computers or related hardware
and software products as agent for customers in connection with future
Outsourcing and Professional Services engagements, subject to Seller's
obligations under Section 3.1(b) and the conditions provided for in the
immediately preceeding sentence (B) to refer orders for Products for delivery
outside the United States to comply with Seller's obligations under Seller's
international alliance agreements and (C) to perform initial on-site image
load/configuration and augmentation in a manner consistent with Seller's current
business practices, provided that Seller agrees that during the Non-Competition
Period, it will not actively encourage any Services customer to move its initial
image load/configuration business from CompuCom's configuration facilities to
the customer`s site.
3.2 CompuCom's Agreement. (a) CompuCom agrees that during the
Non-Competition Period CompuCom will not, and will not permit any of its
Subsidiaries to:
(i) provide any Services to any account listed on Exhibit B hereto;
(ii) provide any Services to any account listed on Exhibit C hereto
except to the extent provided for in such Exhibit; or
(iii) except as contemplated by the Asset Purchase Agreement, solicit,
entice or induce any employee of Seller or any Subsidiary of Seller to
terminate his or her employment with Seller or any Subsidiary of Seller or
hire any person who was or is at any time from the date of execution of the
Asset Purchase Agreement to the end of the Non-Competition Period an
employee of Seller or any Subsidiary of Seller.
Notwithstanding the foregoing, CompuCom shall be permitted to provide
Services under any "request for proposal", bid, contract or statement of
work submitted by CompuCom to the applicable potential customer prior to
May 12, 1999 . In the event of a dispute between CompuCom and Seller as to
the matters covered by the immediately preceeding sentence, CompuCom shall
furnish, in response to the reasonable request of Seller, evidence and
shall have the burden of proving, that the applicable "request for
proposal", bid, contract or statement of work was submitted by CompuCom to
the customer prior to May 12, 1999.
(b) CompuCom agrees that it will refer to Seller the performance of
extended warranty service (other than manufacturers' warranties) or warranty
upgrades sold by CompuCom to any Service Accounts, provided that Seller has the
ability to perform such extended warranty service or warranty upgrades except
that CompuCom may continue to perform extended warranty services and warranty
upgrades in accordance with the provisions of Exhibit C. The parties agree to
negotiate in good faith the terms, conditions and amount of payment Seller will
receive for performing such warranty service or warranty upgrades.
ARTICLE IV
Acceptance of Product Orders
CompuCom agrees that during the Non-Competition Period, it will accept
orders for Products submitted to CompuCom by Seller pursuant to Section 3.1(b)
under the following conditions: (i) CompuCom has the ability to offer such
Product for sale; (ii) the purchase price required by the customer order for the
Product is reasonably acceptable to CompuCom; (iii) such Product offered by
CompuCom meets the customer's specifications, including, but not limited to,
configuration specifications; and (iv) the requirements of the customer with
respect to such Product, including but not limited to delivery, payment terms
and return privileges are reasonably acceptable to CompuCom. CompuCom agrees to
notify
Seller of CompuCom's rejection of such orders for Product within a mutually
agreed upon time that is reasonable under the time constraints required by the
customer order or contract.
ARTICLE V
NON-DISCLOSURE
5.1 Seller's Non-Disclosure Obligations. Seller covenants and agrees that,
unless otherwise required by law, from and after the Closing:
(a) Seller shall cooperate with CompuCom at CompuCom's expense to
protect and safeguard all of CompuCom's Confidential Information; and
(b) Seller shall not, directly or indirectly, use, sell, license,
publish, disclose, or otherwise transfer or make available to others any of
CompuCom's Confidential Information.
As used in this Agreement, the terms "CompuCom's Confidential Information"
means proprietary or confidential information concerning the Business including,
without limitation, information regarding prices charged for Products, the
assets, liabilities, and financial condition of the Business, names and
identities of customers and analyses of the amount and types of Products
purchased by each such customer.
Notwithstanding the foregoing, Seller shall be permitted to disclose
historical financial information, including financial information relating to
the Business, as may be required by customers, vendors, lenders or other third
parties, provided that such third parties shall agree to preserve the
confidentiality of such information.
5.2 CompuCom's Non-Disclosure Obligations. CompuCom covenants and agrees
that unless otherwise required by law, from and after the Closing:
(a) CompuCom shall cooperate with Seller at Seller's expense to
protect and safeguard all of Seller's Confidential Information;
(b) CompuCom shall not, directly or indirectly, use, sell, license,
publish, disclose or otherwise transfer or make available to others any of
Seller's Confidential Information; and
(c) CompuCom shall not solicit or knowingly utilize any of Seller's
Confidential Information regarding Seller's Services business from any
former employee of Seller.
As used in this Agreement, the terms "Seller's Confidential Information" means
proprietary or confidential information and business secrets of Seller
pertaining to its Services Business in-
cluding, without limitation, information regarding prices charged for Services,
copies of existing Services contracts to which Seller is a party (other than any
such contracts provided to CompuCom pursuant to the provisions of the Asset
Purchase Agreement) and analyses of the amount and types of Services purchased
by customers.
ARTICLE VI
MISCELLANEOUS
6.1 Notices, Etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by facsimile and confirmed by
return facsimile, or five business days after being mailed by first-class mail,
postage prepaid in each case to the applicable addresses set forth below:
If to Seller, to:
ENTEX Information Services, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.,
Senior Vice President and
General Counsel
with a copy (which shall not constitute notice to Seller) to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to CompuCom, to:
CompuCom Systems, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxx,
Senior Vice President
and Chief Financial Officer
with a copy (which shall not constitute notice to CompuCom) to:
Xxxxxxxxxxx & Price, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
or to such other address as such party shall have designated by notice so given
to each other party.
6.2 Amendments, Waivers, Termination Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated
except by an instrument in writing signed by each of the parties hereto.
6.3 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns, including without limitation by merger or otherwise.
This Agreement shall not be assignable.
6.4 Entire Agreement. This Agreement and the Asset Purchase Agreement
embody the entire agreement and understanding among the parties relating to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. There are no covenants by the parties hereto
relating to such subject matter other than those expressly set forth in this
Agreement and the Asset Purchase Agreement.
6.5 Specific Performance. The parties acknowledge that money damages are
not an adequate remedy for violations of this Agreement and that any party may,
in its sole discretion, apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable law, each party waives any objection to
the imposition of such relief.
6.6 Remedies Cumulative. All rights, powers and remedies provided for under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
6.7 No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or inequity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute
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a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
6.8 Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action inconsistent
herewith or not to take an action consistent herewith or required hereby, the
validity, legality and enforceability of the remaining provisions and
obligations contained or set forth herein shall not in any way be affected or
impaired thereby. Upon any such holding that any provision of this Agreement is
null, void or unenforceable, the parties will negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
6.9 GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND
THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW.
6.10 Name, Captions. The name assigned to this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
6.12 Referral Fees. To the extent that the parties agree that the payment
of referral fees will further their mutual business interests or is required in
order to compensate either party for material services rendered for the benefit
of the other, the parties agree to negotiate the terms and conditions of the
payment of such referral fees in good faith.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
COMPUCOM SYSTEMS, INC.
By: /s/ X. Xxxxxx Xxxxx
----------------------------------------
Name: Lazane X. Xxxxx
Title: Senior Vice President and
Chief Financial Officer
ENTEX INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
