EXHIBIT 2.4
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT is made as of October 13, 2005, between XXXX XXXXXXX-XXXXXXX
("Xxxxxxx"), a principal securityholder of 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, Xxxxxxx and Cinemaware
are parties (the "Purchase Agreement"); and
WHEREAS, by virtue of the purchase of the Business, eGames is and will
be engaged throughout the Area in the Business which was formerly conducted by
Cinemaware; and
WHEREAS, Xxxxxxx is a principal record and beneficial owner of the
outstanding securities of Cinemaware:
and
WHEREAS, in consideration of the execution of the Purchase Agreement by
eGames, Xxxxxxx (in his capacity as a principal securityholder) has agreed not
to compete with the Business as conducted by eGames and to certain other
obligations, as set forth herein; and
WHEREAS, competition by Xxxxxxx with eGames, or disclosure by Xxxxxxx
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, Cinemaware 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 Xxxxxxx'x 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.
(e) "Prohibited Business" shall mean any and all designing,
developing, acquiring, promoting, distributing, and/or selling of interactive
entertainment software for various game platforms and the Internet that is based
upon or derived from the Intellectual Property and any ideas, concepts, product
lines, trade secrets or Confidential Information developed, created or under
consideration for approval by eGames or Xxxxxxx while Xxxxxxx is employed by
eGames.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Purchase Agreement.
2. As an inducement and in consideration for eGames to enter into the
Purchase Agreement, Xxxxxxx covenants that he shall, for a period of two (2)
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, Xxxxxxx shall not, anywhere in the Area, on his own behalf or in the
service or on behalf of others (i) engage in the Prohibited 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 Prohibited 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 Prohibited
Business.
(b) Agreement Not to Solicit Customers. Xxxxxxx shall not,
either directly or indirectly, on his 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. Xxxxxxx shall not,
either directly or indirectly, on his 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. Xxxxxxx
shall not, 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. Xxxxxxx 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, Xxxxxxx agrees that he 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 his own behalf or in the service or on
behalf of others, any use of such Confidential Information.
4. Acknowledgment. Xxxxxxx acknowledges that he 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 him 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 Xxxxxxx 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 Xxxxxxx to prevent a breach or contemplated or threatened breach by
Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx to account for and pay over to
eGames all profits or other benefits (collectively "Benefits") derived or
received by Xxxxxxx as a result of any transactions constituting such breach,
and Xxxxxxx 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.
/s/ Xxxx Xxxxxxx-Xxxxxxx
Xxxx Xxxxxxx-Xxxxxxx
eGAMES, INC.
By:/s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President and CEO
