NONCOMPETITION AGREEMENT
By signing below, I, Kenneth A.
Williams (sometimes referred to hereinafter as the
"Executive"), agree to the terms and conditions set
forth in this agreement (the "Agreement") between me and
CUC International Inc. (the "Company"). I am entering
into this Agreement (a) in connection with, and as
additional consideration for, the Company's acquisition,
on the date hereof (the "Acquisition"), of all of
the outstanding capital stock of Sierra On-Line, Inc.
("Sierra") pursuant to an Agreement and Plan of Merger,
dated as of February 19, 1996, as amended by an Amendment
No. 1 thereto, dated as of March 27, 1996 (as amended,
the "Merger Agreement") and (b) in accordance with the
terms and conditions of Section 4.17 of the Merger
Agreement and Section IXB. of the Employment Agreement
(as defined therein). Immediately prior to the
Acquisition, I was Chairman and Chief Executive
Officer of Sierra and beneficially owned 1,803,918
shares of Sierra common stock.
1. Confidentiality. The Executive acknowledges that
all secret, non-public, or proprietary information
pertaining to the affairs, business, results of operations,
accounting methods, practices and procedures, members,
acquisition candidates, financial condition, clients, customers
or other relationships of the Company or any of its
affiliates (including Sierra) that he possesses on the
date hereof and may come to possess hereafter
("Information") is confidential and is a unique and
valuable asset of the Com pany or any of its
affiliates. The Executive will not, except to the
extent reasonably necessary in performance of his duties
under his employment agreement with the Company, give any
person, firm, association, corporation or govern mental
agency any Information, except (a) as may be
required by law, court order or other legal process, (b)
as may be necessary in connection with any dispute
between Executive and the Company or any of its affiliates
relating to this Agreement or Executive's employment with
the Company or any of its affiliates, or (c)
Information which has entered the public domain or
becomes generally available to the public other than
as a result of a disclosure by Executive in
contravention of this Agreement. The Executive will not
make use of the Information for his own purposes or for
the benefit of any person or organization. The
Executive will also use his best efforts to prevent
the disclosure of the Information by others.
2. Restricted Activities
(a) For the period commencing on the date hereof and
ending on the third anniversary of the date hereof (the
"Initial Restricted Period"), the Executive will not make any
statements or perform any acts intended to or which may have the
effect of advancing the interest of any existing or prospective
competitors of Sierra or any of its subsidiaries or in any way
injuring the interests of Sierra or any of its subsidiaries. During
the Initial Restricted Period, the Executive, without prior express
written approval by the Board of Directors of the Company (the
"Board of Direc tors"), will not engage in competition, or directly
or indi rectly own or hold a proprietary interest in or be employed
by, or consult with or receive compensation from, any party which
competes, in any way or manner with the business of Sierra or any
of its subsidiaries, as such business or businesses may be
conducted from time to time. The Execu tive acknowledges that
Sierra's and its subsidiaries' businesses are conducted nationally
and internationally and agrees that the provisions in the foregoing
sentence shall operate throughout the United States and the World.
(b) During the period commencing on the date hereof
and ending on the later of the fifth anniversary of the date
hereof and the expiration or termination of the Period of Employment
(as defined in the Employment Agreement) (the "Restricted Period"),
the Executive, without express prior written approval from the
Board of Directors, will not solicit any clients of the Company or
any of its affiliates for any business of the Company or any of its
affiliates or discuss with any employee of the Company or any of
its affiliates information or operation of any business intended to
compete with the Company or any of its affiliates.
(c) During the Restricted Period, the Executive will
not solicit or induce any person who is an employee of the
Company or any of its affiliates to terminate any
relationship such person may have with the Company or any
of its affiliates, nor shall the Executive during such
period directly or indirectly engage, employ or
compensate, or cause or permit any person with which the
Executive may be affiliated, to engage, employ or
compensate, any employee of the Company or any of its
affiliates. The Executive hereby represents and warrants
that the Executive has not entered into any agreement,
understanding or arrangement which is currently in effect
with any employee of the Company or any of its
affiliates pertaining to any business in which the
Executive has participated or plans to participate, or
to the employment, engagement or compensation of any
such employee.
(d) Without limiting the provisions of
Sections 2(a), (b) and (c) above, during the Restricted
Period, Williams shall not own or hold proprietary
interest in, manage, be employed by or consult with,
operate, join, control or participate in the
ownership, management, operation or control of any
person or entity that (i) competes, in any way or
manner, with Sierra or its subsidiaries in the
packaged entertainment or education software
business anywhere in the World as such business may be
conducted from time to time or (ii) markets or
distributes entertainmentrelated software or services on
the Internet or any similar computer network.
(e) For the purposes of this Agreement,
proprietary interest means legal or equitable ownership,
whether through stock holding or otherwise, of an
equity interest in a business, firm or entity or
ownership or more than 5% of any class of equity interest
in a publicly-held company and the term "affiliate", when
used in respect of the Company, shall include without
limitation all subsidiaries of the Company, including
Stealth, and all licensees of the Company.
(f) The Executive hereby acknowledges
that damages at law may be an insufficient remedy to
the Company if the Executive violates the terms of this
Agreement and that the Company shall be entitled, upon
making the required showing, to preliminary and/or
permanent injunctive relief in any court of competent
jurisdiction to restrain the breach of or otherwise to
specifically enforce any of the covenants contained in
this Agreement without the necessity of showing any actual
damage or that monetary damages would not provide an
adequate remedy. Such right to an injunction shall be in
addition to, and not in limitation of, any other rights
or remedies the Company may have. Without limiting
the generality of the foregoing, neither party shall
oppose any motion the other party may make for any
expedited discovery or hearing in connection with any
alleged breach of this Agreement.
(g) The period of time during which the
provisions of this Agreement shall be in effect shall be
extended by the length of time during which the
Executive is in breach of the terms hereof as
determined by any court of competent jurisdiction on
the Company's application for injunctive relief.
(h) The Executive also agrees to
indemnify and hold the Company harmless from and against
any and all damages and expenses, including reasonable
attorneys' fees and dis bursements, resulting from any
breach by him of the terms and conditions of this
Agreement, which remedy is in addition to any and all
other remedies that the Company may possess at law or in
equity.
(i) The Executive agrees that the
restrictions contained in this Agreement are material to
the Company and, but for the Executive's agreement to
comply with such re strictions, the Company would not
have entered into the Merger Agreement.
3. Governing Law; Construction. This Agreement has
been executed and delivered in the State of Washington and
its validity, interpretation, performance and enforcement
shall be governed by the internal laws of that state.
4. Arbitration. (a) Any controversy, dispute or
claim arising out of or relating to this Agreement or the
breach hereof which cannot be settled by mutual agreement
(other than with respect to the matters for which the Compa
ny may, but shall not be required to, seek injunctive
re lief) shall be finally settled by binding
arbitration in accordance with the Federal Arbitration
Act (or if not ap plicable, the applicable state
arbitration law) as follows: Any party who is aggrieved
shall deliver a notice to the other party setting
forth the specific points in dispute. Any points
remaining in dispute twenty (20) days after the giving of
such notice may be submitted to arbitration in New York,
New York, or Seattle, Washington, whichever the
complaining party may choose, to Jams/Endispute, before
a single arbitrator appointed in accordance with the
arbitra tion rules of Jams/Endispute, modified only as
herein ex pressly provided. After the aforesaid twenty
(20) days, either party, upon ten (10) days notice to the
other, may so submit the points in dispute to arbitration.
The arbitrator may enter a default decision against any
party who fails to participate in the arbitration
proceedings.
(a) The decision of the arbitrator on the points in
dispute will be final, unappealable and binding, and
judgment on the award may be entered in any court having
jurisdiction thereof.
(b) Except as otherwise provided in this Agreement,
the arbitrator will be authorized to apportion its fees and
expenses and the reasonable attorney's fees and expenses of any
such party as the arbitrator deems appropriate. In the absence of
any such apportionment, the fees and expenses of the arbitrator will
be borne equally by each party, and each party will bear the fees and
expenses of its own attorney.
(c) The parties agree that this Section 4 has been
included to rapidly and inexpensively resolve any disputes
between them with respect to this Agreement, and that
this Section shall be grounds for dismissal of any court
action commenced by either party with respect to this
Agreement, other than with respect to matters for which
the Company has sought injunctive relief, and post-
arbitration actions seeking to enforce an arbitration
award. In the event that any court determines that this
arbitration procedure is not binding, or otherwise
allows any litigation regarding a dispute, claim or
controversy covered by this Agreement to proceed, the
parties hereto hereby waive any and all right to a trial
by jury in or with respect to such litigation.
5. Separability. All provisions of this Agreement
are intended to be severable. In the event any provision or
restriction contained herein is held to be invalid or
unenforceable in any respect, in whole or in part, such
finding shall in no way affect the validity or enforce
ability of any other provision of this Agreement. The par
ties hereto further agree that any such invalid or un
enforceable provision shall be deemed modified so that it shall
be enforced to the greatest extent permissible under law, and to
the extent that any court of competent jurisdic tion determines
any restriction herein to be unreasonable in any respect, such
court may limit this Agreement to render it reasonable in the
light of the circumstances in which it was entered into and
specifically enforce this Agreement as limited.
6. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and
shall be given (and shall be deemed to have been
duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified
mail, postage prepaid, return receipt requested) or
by any courier service, such as Federal Express,
providing proof of deliv ery. All communications
hereunder shall be delivered to the respective parties at
the following addresses:
If to the Executive: Kenneth A. Williams
c/o Sierra On-Line, Inc.
3380 146th Place, S.E., Ste. 300
Bellevue, WA 98007
with a copy to: Perkins Coie
1201 Third Avenue
40th Floor
Seattle, WA 98101-3099
Telephone: (206) 583-8534
Facsimile: (206) 583-8500
Attention: Stephen A. McKeon, Esq.
If to the Company: CUC International Inc.
707 Summer Street
Stamford, CT 06901
Telephone: (203) 924-9261
Facsimile: (203) 977-8501
Attention: Amy N. Lipton, Esq.
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000 Facsimile:
(212) 310-8007 Attention: Howard
Chatzinoff, Esq.
or to such other address as the person to whom notice
is given may have previously furnished to the others in
writing in the manner set forth above.
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
in equity, 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.
8. Assignability and Binding Effect. This Agreement
shall be binding upon and inure to the benefit of the
parties and their respective successors. The obligations of
the parties hereto may not be delegated, and any
attempted delegation shall be null and void and without
effect.
IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the 24th day of July, 1996.
CUC INTERNATIONAL
By:
Name: E. Kirk Shelton
Title: President
Kenneth A. Williams