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").
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:
1.1 For purposes of this Agreement, the following terms have the
(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
(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
(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.
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
account prior to Closing and (ii) each party's representative will be permitted
to call on such account.
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
(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
(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
(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
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
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
3.2 CompuCom's Agreement. (a) CompuCom agrees that during the Non-
Competition Period CompuCom will not, and will not permit any of its
(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.
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.
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 including, 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.
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.
Six International Drive
Rye Brook, N.Y. 10573
Facsimile No.: (914) 935-3720
Attention: Lynne A. Burgess, Esq.,
Senior Vice President and General Counsel
with a copy (which shall not constitute notice to Seller) to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
Attention: Gerald S. Tanenbaum, Esq.
If to CompuCom, to:
CompuCom Systems, Inc.
7171 Forest Lane
Dallas, Texas 75230
Facsimile No.: (972) 856-5395
Attention: Ms. Lazane Smith, Senior Vice President
and Chief Financial Officer
with a copy (which shall not constitute notice to CompuCom) to:
Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Facsimile No.: (214) 651-4330
Attention: Frederick J. Fowler, 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
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 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
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.
Name: Lazane M. Smith
Title: Senior Vice President and
Chief Financial Officer
ENTEX INFORMATION SERVICES, INC.
Name: Kenneth A. Ghazey