EXHIBIT 2.5
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT is made as of October 13, 2005, between CINEMAWARE, INC. a
California corporation ("Cinemaware"), and eGAMES, INC., a Pennsylvania
corporation ("eGames").
W I T N E S S E T H :
WHEREAS, contemporaneously with the execution and delivery hereof,
eGames is acquiring the goodwill and substantially all of the assets used or
useful by Cinemaware in designing, developing, acquiring, promoting,
distributing, and/or selling interactive entertainment software for various game
platforms and the Internet (the "Business"), pursuant to an Asset Purchase
Agreement, dated as of October 6, 2005, to which eGames and Cinemaware are
parties (the "Purchase Agreement"); and
WHEREAS, execution by Cinemaware of this Agreement is a condition
precedent to eGames' obligation to perform under the Purchase Agreement; and
WHEREAS, by virtue of the purchase of the Business, eGames is and will
be engaged throughout the Area (as hereinafter defined) in the Business which
was formerly conducted by Cinemaware; and
WHEREAS, competition by Cinemaware with eGames, or disclosure by
Cinemaware of certain confidential and proprietary information of Cinemaware,
will result directly in damage to eGames and its business, properties, assets,
and goodwill and will cause the loss by eGames of the benefit of its bargain
with Cinemaware;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1. Definitions. The following terms shall have the definitions set
forth below:
(a) "Affiliate" of a person shall mean any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the indicated Person.
(b) "Area" shall mean anywhere within any state of the United
States of America or any other country in which eGames or its Affiliates,
directly or indirectly, at any time during the three-year period ending on the
date hereof carried on or engaged in business or otherwise designed, developed,
manufactured, provided, sold, licensed or distributed its products, services or
solutions.
(c) "Closing Date" shall mean the date of this Agreement.
(d) "Confidential Information" shall mean all of the following
materials and information (whether or not reduced to writing and whether or not
patentable) pertaining to the Business:
(1) All items of information relating to the Business
that could be classified as a trade secret pursuant to law;
(2) The names and addresses of the customers of the
Business and the nature and amount of business done with such customers;
(3) The names and addresses of employees, with
respect to the Business;
(4) The discoveries, concepts and ideas, whether
patentable or not, related to the nature and results of research and development
activities, processes and techniques related to research and development,
designs, drawings and specifications of Cinemaware relating to the Business;
(5) Source and object codes, flow charts, algorithms,
coding sheets, design concept and related documentation and manuals of
Cinemaware which relate to the Business;
(6) Production processes, marketing techniques,
purchasing information, price lists, pricing policies, quoting procedures,
financial information, customer names and requirements, customer data and other
materials or information relating to Cinemaware's manner of doing business with
respect to the Business;
(7) Any other materials or information related to the
Business which are not generally known to others engaged in similar business
activities.
eGames' or Cinemaware's failure to make and keep any of the foregoing
confidential shall not affect its status as part of the Confidential Information
under the terms of this Agreement.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Purchase Agreement.
2. Cinemaware covenants that it shall, and shall cause its wholly owned
and majority owned subsidiaries and other persons it controls to, for a period
of three (3) years from and after the Closing Date, observe the following
separate and independent covenants:
(a) Agreement Not to Compete. Except as set forth in this
Agreement, Cinemaware shall not, and shall not cause or permit any of its wholly
owned or majority owned subsidiaries or other persons it controls to, anywhere
in the Area, on its own behalf or in the service or on behalf of others (i)
engage in the Business; or (ii) use, or become financially interested in (other
than as a holder of less than one percent of the outstanding securities of any
entity whose voting securities are registered under the Securities Act of 1933,
as amended, or Section 12 of the Securities Exchange Act of 1934, as amended),
any business, person or entity that derives revenues from or otherwise engages
in the Business, or (iii) participate in, as a consultant, partner, agent,
independent contractor, joint venture or in any other relationship whatsoever,
any business, person or entity that derives revenues from or otherwise engages
in the Business.
(b) Agreement Not to Solicit Customers. Cinemaware shall not,
and shall not cause or permit any of its wholly owned or majority owned
subsidiaries or other Persons it controls to, either directly or indirectly, on
its own behalf or in the service or on behalf of others, solicit, divert, or
appropriate, or attempt to solicit, divert, or appropriate, to any Business, any
person or entity whose account was sold or serviced by or under the direction or
supervision of Cinemaware at any time prior to the Closing Date.
(c) Agreement Not to Solicit Employees. Cinemaware shall not,
and shall not cause or permit any of its wholly owned or majority owned
subsidiaries or other Persons it controls to, either directly or indirectly, on
its own behalf or in the service or on behalf of others, solicit, divert or hire
away, or attempt to solicit, divert, or hire away, to any Business, any person
employed by eGames, whether or not such employee is a full-time employee or a
temporary employee of eGames and whether or not such employment is pursuant to
written agreement and whether or not such employment is for a determined period
or is at will.
(d) Non-Interference with Third-Party Relationships.
Cinemaware shall not, and shall not cause or permit any of its wholly owned or
majority owned subsidiaries or other Persons it controls to, in addition to the
covenants contained in Sections 2(a), (b) and (c), intentionally interfere with,
or intentionally disrupt the relationship between eGames and any third party,
including without limitation, any customer, supplier, distributor or employee of
eGames.
3. Ownership and Non-Disclosure and Non-Use of Confidential
information.
(a) Cinemaware acknowledges and agrees that all Confidential
Information, and all physical embodiments thereof, are confidential to and shall
be and remain the sole and exclusive property of eGames. Except to the extent
provided in this Section 3, Cinemaware agrees that it will not (i) disclose or
make available any Confidential Information to any person or entity; or (ii)
make or cause to be made, or permit, either on its own behalf or in the service
or on behalf of others, any use of such Confidential Information.
(b) For purposes of this Section 3, any act, action or
omission done or performed by any Person (as defined in the Purchase Agreement)
50% or more of the equity interests of which is beneficially owned by Cinemaware
or that is otherwise controlled by Cinemaware shall be deemed to be an act,
action or omission done or performed by Cinemaware.
4. Acknowledgment. Cinemaware acknowledges that it has been for many
years, and that eGames is now, engaged in the Business throughout the Area, that
the within and foregoing covenants are made by it in consequence of and as an
inducement to eGames to acquire the Business and to protect and preserve to
eGames the benefit of its bargain in the acquisition of the Business, including,
particularly, the goodwill associated therewith; that each of the above and
foregoing covenants is reasonable and necessary to protect and preserve the
benefits of such purchase; and that irreparable loss and injury would result
should Cinemaware breach any of the foregoing covenants.
5. Severability. Each of the covenants hereinabove contained shall be
deemed separate, severable, and independent covenants, and in the event any
covenant shall be declared invalid by any court of competent jurisdiction, such
invalidity shall not in any manner affect or impair the validity or
enforceability of any other part or provision of such covenant or of any other
covenant contained herein.
6. Partial Enforcement. If any of the covenants contained in Section 2,
or any part thereof, is held to be unenforceable because of the duration of such
provision or the scope of the subject matter thereof or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration, scope and/or area of such provision and, in
its reduced form, said provision shall then be enforceable.
7. Enforcement. In addition to all other remedies provided at law or in
equity, eGames shall be entitled to both preliminary and permanent injunctions
against Cinemaware to prevent a breach or contemplated or threatened breach by
Cinemaware of any of the foregoing covenants, without the necessity of proving
actual damages; and the existence of any claim, demand, cause of action, or
action of Cinemaware against eGames, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the enforcement by eGames of any
such covenants. In the event of an actual breach of any of the foregoing
covenants, eGames shall have the right to recover damages for all losses, actual
and contingent, and the right to require Cinemaware to account for and pay over
to eGames all profits or other benefits (collectively "Benefits") derived or
received by Cinemaware as a result of any transactions constituting such breach,
and Cinemaware hereby agrees to account for and pay over such Benefits to
eGames. Each of the rights and remedies enumerated above shall be independent of
the other, and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to eGames at law or equity.
8. Governing Law; Jurisdiction; Consent to Service of Process. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT GIVING EFFECT TO ITS CHOICE OF
LAW RULES AND PRINCIPLES. EACH OF THE PARTIES HERETO IRREVOCABLY: (A) SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA
AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN PENNSYLVANIA,
FOR THE PURPOSE OF ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, (B)
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM IN ANY ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES THAT IT WILL NOT
ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST
FOR LEAVE FROM ANY SUCH COURT, (C) AGREES THAT IT WILL NOT BRING ANY ACTION
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING IN THE COMMONWEALTH OF
PENNSYLVANIA OR A PENNSYLVANIA COMMONWEALTH COURT, (D) AGREES THAT A FINAL
JUDGMENT IN ANY ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW AND (E) CONSENTS TO SERVICE OF PROCESS UPON IT BY MAILING
A COPY THEREOF BY CERTIFIED MAIL ADDRESSED TO IT AND ITS COUNSEL AS PROVIDED FOR
NOTICES HEREUNDER.
9. Counterparts. This Agreement may be executed and delivered in any
number of counterparts, each of which, when executed and delivered, shall be an
original, but all of which shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first above written.
CINEMAWARE, INC.
By: /s/ Xxxx Xxxxxxx-Xxxxxxx
Name: Xxxx Xxxxxxx-Xxxxxxx
Title: President
eGAMES, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President and CEO
