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EXHIBIT 99.02
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement") is made and
entered into as of this 27th day of August, 1998, by and among Xxxxxxx X.
Xxxxxxxx (the "Executive"), Cyberworks, Inc., a California corporation
("Cyberworks"), and Inland Entertainment Corporation, a Utah corporation (the
"Company").
RECITALS
WHEREAS, the Executive, prior to the date hereof, has been an
executive officer and a director of Cyberworks;
WHEREAS, the Executive is the sole record and beneficial
holder of the issued and outstanding share capital of Cyberworks;
WHEREAS, the Company has entered into an Agreement and Plan of
Reorganization with, among others, the Executive (the "Acquisition Agreement")
which will, at the Effective Date (as defined within the Acquisition Agreement)
result in the Company acquiring 100% of the issued and outstanding shares of
capital stock of Cyberworks (the "Cyberworks Shares");
WHEREAS, as a condition to the closing of the Acquisition
Agreement, the Executive shall enter an Employment Agreement with the Company
and Cyberworks (the "Employment Agreement");
WHEREAS, the parties hereto agree that it would be detrimental
to the Company if the Executive, directly or indirectly, were to engage in the
business of the Company or Cyberworks once the Executive ceases to be employed
by the Company or Cyberworks, particularly while the Executive is in possession
of confidential, secret or proprietary information about the business of
Cyberworks and the Company;
WHEREAS, to protect the value of the Cyberworks Shares being
acquired by the Company, and in return for the consideration received by the
Executive from the Company under the Acquisition Agreement, the parties hereto
have agreed to enter into this Agreement. The agreements contained herein are
valuable, bargained-for consideration, and the acquisition of the Cyberworks
Shares by the Company, as contemplated by the Acquisition Agreement, is based in
substantial part on the Company's reliance on the agreements set forth herein.
AGREEMENT
In consideration of the above-referenced recitals and of the
terms, conditions and covenants set forth below, the parties agree as follows:
1. Noncompetition.
(a) Except as otherwise explicitly permitted by this
Agreement, from the Effective Date (as defined in the Acquisition Agreement and
the related Agreement of Merger) and continuing throughout the duration of
Executive's employment with the Company or any of its Affiliates and thereafter
for the greater of (i) three (3) years from the date of this Agreement or (ii)
the remainder of the then current term of the
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Employment Agreement or any extension(s) thereof, so long as the Company carries
on a like business of Cyberworks within the Territory (as herein defined), the
Executive will not within the Territory, either directly or indirectly, and will
not permit any Covered Entity to, either directly or indirectly, engage or
participate in any business or enterprise competing with the Company or
Cyberworks, or any Managed Entity (as now or hereafter conducted).
(b) A "Covered Entity" means every Affiliate of the Executive
and every business, association, trust, entity, corporation, partnership or
proprietorship in which the Executive or any Affiliate of the Executive has an
ownership interest or profit sharing percentage of five percent (5%) or more, or
a firm from which the Executive or any Affiliate of the Executive receives or is
entitled to receive income or compensation, or in which the Executive or any
Affiliate of the Executive has an interest as a lender. The agreements of the
Executive contained herein also apply to each entity which is presently a
Covered Entity or which becomes a Covered Entity subsequent to the date of this
Agreement.
(c) The Executive and any Covered Entity will be deemed to be
engaging or participating in competition prohibited by this Agreement if the
Executive or a Covered Entity contracts with, consults with, advises or assists
(financially or otherwise) any other party to engage in activities which may
not, consistent with this Agreement, be undertaken directly by the Executive or
a Covered Entity, whether or not such contract, consultation, advice or
assistance is for explicitly stated compensation.
(d) "Affiliate" means, with respect to any party, any
corporation, company, partnership, joint venture and/or firm which controls, is
controlled by or is under common control with such party; provided, however,
that the Company shall not be deemed to be an Affiliate of Cyberworks. "Control"
means (i) in the case of corporate entities, direct or indirect ownership of at
least twenty five percent (25%) of the stock or participating shares entitled to
vote for the election of directors; and (ii) in the case of non-corporate
entities (such as limited liability companies, partnerships or limited
partnerships), either (A) direct or indirect ownership of at least twenty five
percent (25%) of the equity interest, or (B) the power to direct the management
and policies of the noncorporate entity.
(e) A "Managed Entity" means any corporation, company,
partnership, joint venture and/or firm in which the Company, Cyberworks or any
Affiliate of the Company or Cyberworks has a direct or indirect equity interest
or interest as a lender and in which the Executive has at any time held a
management position.
(f) "Territory" means the United States of America.
2. Non-Solicitation of Employees.
During the Noncompete Term, the Executive will not, either
directly or indirectly, and will not permit any Covered Entity to, either
directly or indirectly, hire, solicit, take away, or attempt to hire, solicit or
take away (either on behalf of the Executive or on behalf of any other person or
entity) any person (a) who is then an employee of the Company, Cyberworks, any
Affiliate of Cyberworks or any Managed Entity, or (b) who has terminated his or
her employment by the Company, Cyberworks,
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any Affiliate of Cyberworks or any Managed Entity without the consent of such
employer, within 180 days of such termination.
3. Non-Solicitation of Customers and Suppliers.
During the Noncompete Term, the Executive will not, directly
or indirectly, and will not permit any Covered Entity to, either directly or
indirectly, with respect to each and every individual, corporation, partnership,
company or other association that during the Executive's term of employment by
the Company, Cyberworks or any of its Affiliates (a) has obtained or contracted
to obtain intellectual property, technology, goods or services from the Company,
Cyberworks, any Affiliate of Cyberworks or any Managed Entity (a "Customer") and
with which the Executive had contact during his term of employment by the
Company, Cyberworks or any of its Affiliates, or (b) became known to the
Executive as a Customer or potential Customer of the Company or Cyberworks, any
Affiliate of Cyberworks or any Managed Entity in any manner and whose name
and/or address would constitute proprietary or confidential information, or (c)
has a contractual relationship with the Company, Cyberworks, any Affiliate of
Cyberworks or any Managed Entity to provide intellectual property, technology,
goods or services to be utilized in the business of the Company, Cyberworks, any
Affiliate of Cyberworks or any Managed Entity (a "Supplier"), solicit, call
upon, divert or take away such Customer or potential Customer or Supplier as a
client, customer or supplier on his behalf or on behalf of any other individual,
corporation, company, partnership or other association conducting a business
substantially similar to the business of the Company or Cyberworks, any
Affiliate of Cyberworks or any Managed Entity or cause or attempt to cause such
Customer or potential Customer or Supplier to redirect, terminate, limit, modify
or fail to enter into any actual or potential relationship with the Company or
Cyberworks, any Affiliate of Cyberworks or any Managed Entity involving the
business of the Company, Cyberworks, any Affiliate of Cyberworks or any Managed
Entity, notwithstanding that any such Customer, potential Customer or Supplier
may have been induced to give his or its patronage to the Company, Cyberworks,
any Affiliate of Cyberworks or any Managed Entity by the solicitation by the
Executive or by someone on the Executive's behalf.
4. Enforcement.
The Executive acknowledges that a breach of this Agreement by
the Executive or any Covered Entity will cause serious and potentially
irreparable harm to Cyberworks, the Company, each of their Affiliates and each
Managed Entity. The Executive therefore acknowledges that a breach of this
Agreement by him or any Covered Entity cannot be adequately compensated in an
action for damages at law, and equitable relief would be necessary to protect
Cyberworks, the Company, each of their Affiliates and each Managed Entity from a
violation of this Agreement and from the harm which this Agreement is intended
to prevent. By reason thereof, the Executive acknowledges on behalf of himself
and each Covered Entity that Cyberworks, the Company, each of their Affiliates
and each Managed Entity are entitled, in addition to any other remedies they may
have under this Agreement or otherwise, to preliminary and permanent injunctive
and other equitable relief to prevent or curtail any breach of this Agreement.
The Executive acknowledges, however, that no specification in this Agreement of
a specific legal or equitable remedy may be construed as a waiver of or
prohibition against pursuing
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other legal or equitable remedies in the event of a breach of this Agreement by
the Executive or any Covered Entity.
5. Survival.
All recitals, covenants, commitments and agreements of any of
the parties made in this Agreement shall survive the execution and delivery of
this Agreement and the closing of the transactions contemplated by the
Acquisition Agreement.
6. Binding Effect; Successors and Assigns.
This Agreement may be assigned by the Company or Cyberworks if
such assignment is accompanied by the sale of the stock of the Company or
Cyberworks, as applicable, or of substantially all of the assets of the Company
or Cyberworks, as applicable. The terms and provisions set forth in this
Agreement inure to the benefit of and are enforceable by the Company and its
successors, assigns, and successors-in-interest, including without limitation
any corporation with which the Company may be merged or by which it may be
acquired, or which may be the acquiring corporation in an asset sale transaction
or other form of corporate reorganization. This Agreement may not be assigned by
the Executive.
7. Severability.
In the event that any provision or term of this Agreement, or
any word, phrase, clause, sentence or other portion thereof (including, without
limitation, the geographic and temporal restrictions and provisions contained in
this Agreement) is held to be unenforceable or invalid for any reason, such
provision or portion thereof will be modified or deleted in such a manner as to
make this Agreement, as modified, legal and enforceable to the fullest extent
permitted under applicable laws.
8. Governing Law.
This Agreement will be governed by and construed in accordance
with the laws of the State of California without regard to the conflicts of law
principles thereof.
9. Venue.
The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of California,
County of San Diego, and/or the United States District Court for the Southern
District of California for any actions, suits, controversies or proceedings
arising out of or relating to this Agreement and the transactions contemplated
hereby (and the parties agree not to commence any action, suit or proceeding
relating thereto except in such courts), and further agree that service of any
process, summons, notice or document by U.S. registered mail to the respective
addresses set forth above shall be effective service of process for any action,
suit or proceeding brought against the parties in any such court. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any action,
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suit, controversies or proceeding arising out of this agreement or the
transactions contemplated hereby, in the courts of the State of California,
County of San Diego and/or the United States District Court for the Southern
District of California, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient or
improper forum.
10. Notices.
All notices, claims, requests, demands, and other
communications hereunder ("notices") shall be in writing and shall be deemed to
have been given if personally delivered or if sent by telecopy or facsimile or
mailed by overnight, commercial air courier service or by first class,
registered or certified mail, postage prepaid, and properly addressed as
follows:
To Executive: Xx. Xxxxxxx X. Xxxxxxxx
000 Xxxxxx Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000
with a copy to: Sparber, Ferguson, Xxxxxx & Xxxx
000 X Xxxxxx, 00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
To Company Inland Entertainment Corporation
or Cyberworks: 00000 Xxx Xxx Xxxxx Xxxxx, #000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Executive Vice
President, Chief Financial Officer, and Treasurer
Fax: (000) 000-0000
with a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
Any party may change its address for the purpose of this Article by giving the
other parties written notice of the new address in the manner set forth above.
Notice will conclusively be deemed to have been given when personally delivered,
or if given by mail, on the second day after being sent by an overnight,
commercial air courier service or on the fifth day after being sent by first
class, registered or certified mail, or if given by telecopy or facsimile
machine, when confirmation of transmission is indicated by the sender's telecopy
or facsimile machine.
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11. Miscellaneous Terms.
(a) The headings contained in this Agreement are for reference
purposes only, are not necessarily descriptive of the paragraphs to which they
relate and shall not affect the meaning or interpretation of this Agreement.
(b) No change, modification, addition or amendment to this
Agreement will be valid unless in writing and signed by the party against which
enforcement of such change, modification, addition or amendment is sought.
(c) The parties agree to cooperate in good faith to accomplish
the objectives of this Agreement and, to that end, agree to execute and/or
deliver from time to time such other and further instructions and documents and
to take such other actions as may be necessary or convenient to fulfillment of
these purposes.
(d) No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, will
be deemed to be, or may be construed as, a further or continuing waiver of any
such term, provision or condition.
(e) In the event of any dispute concerning the interpretation
of this Agreement or its enforcement, or any proceeding arising out of or in
connection with an alleged or actual breach of this Agreement, the prevailing
party will be entitled to recover, in addition to any other relief obtained or
awarded, any reasonable attorneys' fees and expenses incurred in relation to
such dispute, enforcement or proceeding.
(signature page follows)
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
INLAND ENTERTAINMENT CORPORATION, a
Utah corporation
By:/s/ L. Xxxxxx Xxxxx, XX
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L. Xxxxxx Xxxxx, XX
Chairman of the Board, Chief Executive
Officer and President
CYBERWORKS, INC., a California corporation
By:/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
President
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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