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COVENANT
NOT TO COMPETE
This
Covenant Not to Compete (the “Covenant”) is entered into and effective as of
July 15, 2008 by and between _________________________________ (“Seller”) and
Platinum Studios, Inc., a California corporation (“Purchaser”).
WHEREAS,
Purchaser, Seller and others have entered into an Acquisition Agreement dated
as
of July 15, 2008 (the “Acquisition Agreement”) pursuant to which Purchaser is
purchasing all of the outstanding membership interests in WOWIO, LLC, a
Pennsylvania limited liability company (the “Company”), including the membership
interests in the Company owned by Seller (“Seller’s Membership Interests”).
Capitalized terms not otherwise defined herein shall have the same meanings
set
forth for such terms in the Acquisition Agreement;
WHEREAS,
Seller is receiving significant consideration in exchange for the sale of
Seller’s Membership Interests to Purchaser pursuant to the terms of the
Acquisition Agreement;
WHEREAS,
to preserve the value of the business of the Company being acquired by Purchaser
under the Acquisition Agreement, it is a condition to the consummation of the
sale of Seller’s Membership Interests thereunder that Seller shall enter into
this Covenant;
NOW,
THEREFORE, in consideration of the mutual promises made herein, Seller hereby
agrees as follows:
1. Covenant
Not to Compete or Solicit.
(a)
Non-Competition.
For a
period of three years measured from the Closing Date (the “Non-Competition
Period”), Seller shall not, without the prior written consent of Purchaser,
engage in a Competitive Business Activity (as defined below) anywhere in the
Restricted Territory (as defined below).
(i) For
all
purposes hereof, the term “Competitive Business Activity” shall mean: (A)
engaging in, or managing or directing persons engaged in any business in
competition with the business of the Company being acquired by Purchaser
pursuant to the Acquisition Agreement (the “Acquired Business”); (B) acquiring
or having an ownership interest in any entity that derives revenues from any
business substantially similar to the Acquired Business (except for passive
ownership of one percent (1%) or less of any entity whose securities are
publicly traded on a national securities exchange or market or five percent
(5%)
or less of any entity whose securities are not publicly traded on a national
securities exchange or market); or (C) participating in the operation,
management or control of any firm, partnership, corporation, entity or business
(each, an “Entity”) described in subsection (B) above.
(ii) For
all
purposes hereof, the term “Restricted Territory” shall mean each and every
country, province, state, city or other political subdivision in which the
Company is engaged in the Acquired Business.
(iii) Notwithstanding
the provisions of subsection (i) above, the term “Competitive Business Activity”
does not include (A) writing, editing, contributing to, compiling, publishing,
or promoting a book, magazine, or other literary work, electronically or
otherwise as long as such activities are not being performed by Seller as an
employee of, or independent contractor or consultant for, a business
substantially similar to the Acquired Business; or (B) giving lectures, giving
addresses, speaking at conferences, or engaging in any other type of public
speaking
(b) Non-Solicitation.
During
the Non-Competition Period, Seller shall not solicit, encourage or take any
other action which is intended to induce or encourage, or could reasonably
be
expected to have the effect of inducing or encouraging, any employee or
independent contractor of the Company or Purchaser or any of its subsidiaries
to
terminate his or her employment or engagement with the Company or Purchaser;
provided, however, that any general solicitation of employees or independent
contractors not specifically targeted to Purchaser’s shall not be deemed a
violation of this Section 1(b).
(c) The
covenants contained in Section 1(a) hereof shall be construed as a series of
separate covenants, one for each country, province, state, city or other
political subdivision of the Restricted Territory. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms to
the
covenant contained in Section 1(a) hereof. If, in any judicial proceeding,
a
court refuses to enforce any of such separate covenants (or any part thereof),
then such unenforceable covenant (or such part) shall be eliminated from this
Agreement to the extent necessary to permit the remaining separate covenants
(or
portions thereof) to be enforced. In the event that the provisions of this
Section 1 are deemed to exceed the time, geographic or scope limitations
permitted by applicable law, then such provisions shall be reformed to the
maximum time, geographic or scope limitations, as the case may be, permitted
by
applicable laws.
(d)
Seller
acknowledges that (i) the goodwill associated with the Company Assets is an
integral component of the value of the Company to Purchaser and is reflected
in
the consideration received by Seller under the Acquisition Agreement; and (ii)
the Covenant as set forth herein is necessary to preserve the value of the
Company for Purchaser following the Closing Date. Seller also acknowledges
that
the limitations of time, geography and scope of activity agreed to in this
Agreement are reasonable because, among other things, (1) The Company is engaged
in business in a highly competitive industry, and (2) this Covenant provides
no
more protection than is necessary to protect Purchaser’s interests in the
goodwill associated with the Company.
2. Specific
Performance; Injunctive Relief.
The
parties acknowledge that Purchaser will be irreparably harmed and that there
will be no adequate remedy at law for a violation of any of the covenants or
agreements of Seller. Therefore, it is agreed that, in addition to any other
remedies that may be available to Purchaser upon any such violation, Purchaser
shall have the right to seek enforcement of such covenants and agreements by
specific performance, injunctive relief or by any other means available to
Purchaser at law or in equity.
3. Miscellaneous
Provisions.
(a)<
