NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT made as of the 16th day of March, 2005
(the "AGREEMENT") is by and among 180 CONNECT INC., a Nevada corporation
("180"); DIGITAL INTERIORS INC., a California corporation ("DI") and HOME
DIRECTOR, INC., a Delaware corporation, the sole shareholder of DI ("HD").
WHEREAS 180 Digital Interiors, Inc. a wholly owned subsidiary of 180
has purchased from DI certain assets which are used in connection with DI's
business of installing, connecting, integrating and activating internet home
networks from facilities at the four (4) locations in Livermore and Montclair,
California; Xxxxxxxx Xxxxxxx, Xxxxxxxx xxx Xxx Xxxxxxxxx, Xxxxx (the
"Purchase"); and
WHEREAS HD is the sole shareholder of DI and as such is the owner of
all of the issued and outstanding capital stock of DI; and
WHEREAS DI and HD have agreed to execute this Agreement, voluntarily,
as a condition of and consideration for the Purchase;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter set forth, the terms and conditions of the Purchase by 180 and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 DEFINITIONS
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As used herein, the following terms have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, that Person. The term
"control" (including, with correlative meaning, the terms "controlled
by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to
elect a majority of the board of directors or to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities or other ownership
interests, by Contract, family relationship or otherwise and, in any
event and without limitation of the foregoing, any Person owning 10% or
more of the voting securities or other ownership interests of another
Person shall be deemed to control that Person.
"ASSOCIATE", when used to indicate a relationship with any Person,
means (i) a body corporate of which that Person beneficially owns or
controls, directly or indirectly, shares or securities currently
convertible into shares carrying more than 10% of the voting rights
under all circumstances or under any circumstances that have occurred
and are continuing, or a currently exercisable option or right to
purchase those shares or those convertible securities; (ii) a partner
of that Person acting on behalf of the partnership of which they are
partners; (iii) a trust or estate in which that Person has a
substantial interest or in respect of which he serves as a trustee or
in a similar capacity; (iv) a spouse of that Person; or (v) a relative
of that Person or of her spouse if that relative has the same residence
as that Person.
"BUSINESS" has the meaning set forth in Subsection 2.1(a).
"COMPETE" means directly or indirectly: (i) owning, controlling,
financing, managing, operating, investing in (other than investments in
publicly owned companies which constitute not more than 2% of the
voting securities of such public companies), promoting or engaging in
any Competitive Business; (ii) working for, advising, consulting,
representing, or providing information or services to a Competitive
Business, as a director, officer, employee, agent, employee or
otherwise; (iii) inducing or influencing or attempting to induce or
influence any employee of 180 or any of its Affiliates or Associates to
discontinue, reduce or modify his or her employment with 180 or
Affiliate or Associate; (iv) hiring, employing or otherwise engaging
the services of, or offering employment to any employee, agent,
consultant or independent contractor of 180 or any Affiliate or
Associate; (v) soliciting business from any client or customer of 180
or any Affiliate or Associate; (vi) inducing or influencing any client
or customer of 180 or any Affiliate or Associate to (A) discontinue,
reduce or modify its business relationship with 180 or any Affiliate or
Associate, (B) to commence doing business with or increase the amount
of business done with a Competitive Business, or (C) to hire another
person or entity to provide services being provided by 180; or (vii)
using Confidential Information for personal gain.
"COMPETITIVE BUSINESS" means any (i) Person, business or concern
engaged or planning to engage in activities that are the same or
similar to the Business or any existing or planned business activities
of 180 at any time, or (ii) any Person, business or concern that owns,
invests in, operates, manages or controls any entity referred to in
clause (i) of this definition.
"CONFIDENTIAL INFORMATION" means information, technology, material or
other property of any kind which is confidential or proprietary to 180
or any Affiliate or Associate or to any supplier, customer, client,
agent, employee, director or officer of 180 or any Affiliate or
Associate, including without limitation: (i) the names, addresses, and
purchasing history of and any other information about the customers,
clients, employees, consultants, agents, suppliers or other business
associates of 180 or any Affiliate or Associate; (ii) Proprietary
Rights of 180 or any Affiliate or Associate whether owned, licensed or
otherwise held or used; (iii) all current and future Inventions of 180
or any Affiliate or Associate; (iv) information relating to the past,
present and contemplated business plans, financial condition or
financial results, practices, resolutions, products, strategies,
pricing policies and lists, services, methods of production and
operation, business processes, marketing and marketing plans,
distribution, installations, facilities, machinery and equipment, and
research and development of 180 or any Affiliate or Associate; (v)
data,
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correspondence, notes, memoranda, manuals, financial statements, books
and records, documents, licensing arrangements, financing programs,
credit terms, banking arrangements or other contracts, terms or
negotiations of any kind whatsoever related to the assets, financial
condition or business of 180 or any Affiliate or Associate; (vi)
information which is instructional or informational, or promotional
materials or manuals; (vii) any information of a confidential or
sensitive nature which is received from or otherwise relates to any
Competitive Business; (viii) any information, the disclosure of which
could be reasonably expected to materially adversely affect 180 or any
Affiliate or Associate, or affect the competitive position of 180 or
any Affiliate or Associate; and (ix) originals, and Copies or
Representations, of any of the foregoing; provided, however, that
"Confidential Information" does not include information which is or
becomes generally available to the public, other than as a result of a
disclosure in violation of this Agreement.
"CONTROL" in relation to a body corporate means control of the body
corporate, and for the purposes of this Agreement, a Person or Persons
control a body corporate and a body corporate is controlled by a Person
or Persons if securities of the body corporate to which are attached
more than 50% of the votes that may be cast to elect directors of the
body corporate are held, other than by way of security only, by or for
the benefit of that Person.
"COPIES OR REPRESENTATIONS" means copies, versions, summaries,
representations or depictions of any kind or produced in any manner,
including photocopies or telefax copies, electromagnetic and electronic
versions, computerized versions and any media on which such versions
are recorded or stored, plans, diagrams, schematics, blue prints,
technical drawings, technical specifications, graphics or other
representations, lists, maps or charts.
"PERSON" means, where applicable, any individual, partnership,
corporation, limited liability company, association, joint stock
company, trust, joint venture, unincorporated organization,
governmental entity or any department, agency or division thereof.
"PROPRIETARY RIGHTS" means all intellectual property of 180 or any
Affiliate or Associate, including without limitation foreign and
domestic: (i) patents, patent applications, patent disclosures and
inventions, (ii) trademarks, service marks, trade dress, trade names,
logos, industrial designs, internet domain names and 180's corporate
name (in its jurisdiction of incorporation) and registrations and
applications for registration thereof, (iii) copyrights and
registrations and applications for registration thereof, (iv) mask
works and registrations and applications for registration thereof, (v)
computer software, programs, database technologies, data and
documentation (in both source code and object code form), demo disks,
source language statements and benchmark test results, (vi) trade
secrets and other confidential and proprietary information (including,
but not limited to, inventions, whether patentable or unpatentable),
know-how, licences and copyrightable works, (vii) other confidential
and proprietary intellectual property rights, (viii) Copies and
Representations of the foregoing (in whatever form or medium) and (ix)
all renewals, extensions, revivals and resuscitations of the foregoing.
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ARTICLE 2
COVENANTS OF DI AND HD
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2.1 NON-COMPETITION
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(a) Acknowledgement. DI and HD acknowledge that: (i) 180 (and its
Affiliates, Associates and subsidiaries) as a result of the
Purchase is and will continue to be engaged in the business of
installing, connecting, integrating and activating structured
wiring/whole house integration networks (the "BUSINESS"); (ii)
180 (and its Affiliates, Associates and subsidiaries) are and
will be actively engaged in the Business throughout North
America, and the Business and its goodwill is and will be
national and international in scope; (iii) DI and HD are
familiar with DI trade secrets and with other proprietary and
confidential information concerning DI and the Business that
were acquired by 180 (and its Affiliates, Associates and
subsidiaries) as part of the Purchase; and (iv) HD's ownership
of DI placed it in a special, unique and extraordinary
position with respect to the Business and 180 (and its
Affiliates, Associates and subsidiaries) would be irreparably
damaged if were to violate the provisions of this section.
(b) Restrictions. The DI and HD covenant and agree that for a
period commencing on the date hereof and terminating five (5)
years from the date hereof, DI and HD shall not Compete in any
way against 180 or any Affiliate or Associate (whether such
Affiliate or Associate is now existing or hereafter formed) in
the United States of America, Canada or Mexico, unless acting
in accordance with 180's prior written consent.
(c) Permitted Activity. Nothing contained in this Agreement shall
prevent or restricted HD from selling its products to any
person.
2.2 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
------------------------------------------
(a) General Restrictions. DI and HD covenant and agree with 180
that DI and HD shall at all times:
(i) receive and hold all Confidential Information
absolutely secret, undisclosed, in trust and in
confidence,
(ii) comply with 180's policies and guidelines and use
their best efforts for the protection of Confidential
Information, and
(iii) not make Copies or Representations of Confidential
Information.
(b) Disclosure. DI and HD shall not disclose any Confidential
Information to any Person, except:
(i) with the prior written consent of 180; or
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(ii) if required by a mandatory provision of applicable
law, provided however, that prior to any unauthorized
use or disclosure of Confidential Information that is
required by law, DI and HD shall give 180 reasonable
prior notice of any disclosure of Confidential
Information required by law and, if requested by 180,
shall use reasonable efforts to obtain a protective
order or similar protection for 180 and shall permit
and cooperate with any effort by 180 to obtain such
an order.
(c) Other Necessary Actions. DI and HD further agree to take all
reasonable and necessary steps to enforce the provisions of
this Section 2.2 and to take such action as is reasonably
necessary to ensure that no employee, agent, contractor,
associate, family member or other person discloses or permits
the disclosure of any Confidential Information.
ARTICLE 3
INJUNCTIVE RELIEF AND INDEMNITY
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3.1 INJUNCTIVE RELIEF
-----------------
DI and HD understand and agree that 180 and its Affiliates and
Associates shall suffer irreparable and substantial harm in the event that DI
and/or HD breaches any of DI and HD's obligations under this Agreement and that
monetary damages shall be inadequate to compensate for the breach. Accordingly,
DI and HD agree that, in the event of a breach or threatened breach by DI and/or
HD of any of the provisions of this Agreement, 180, in addition to and not in
limitation of any other rights, remedies or damages available to 180 at law or
in equity, shall be entitled to an interim injunction, interlocutory injunction
and permanent injunction in order to prevent or to restrain any such breach by
DI and/or HD, or by any or all of DI and/or HD's partners, co-venturers,
employers, employees, servants, agents, representatives and any and all persons
or entities directly or indirectly acting for, on behalf of or with DI and/or
HD. For certainty, nothing in this Agreement related to arbitration or dispute
resolution shall preclude 180 or any Affiliate or Associate from seeking and
being granted injunctive relief.
3.2 ACCOUNTING FOR PROFITS AND INDEMNIFICATION
------------------------------------------
The DI and HD agree that if DI and/or HD violates any of DI and HD's
covenants or agreements under this Agreement, 180 shall be entitled to an
accounting and repayment of all profits, compensation, royalties, commissions,
remunerations or benefits which DI and/or HD directly or indirectly shall have
realized or may realize relating to, growing out of, or in connection with any
violations, in addition to and not in limitation of any injunctive relief or
other rights or remedies to which 180 is or may be entitled to at law or in
equity or otherwise.
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ARTICLE 4
DISPUTE RESOLUTION
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4.1 NEGOTIATION OF DISPUTES
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In the event of a dispute between 180 and DI and/or HD arising out of
or in connection with this Agreement, the parties agree to act in good faith to
attempt to resolve such dispute by way of negotiations.
4.2 ARBITRATION
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If negotiations pursuant to Section 4.1 do not produce satisfactory
results, any dispute, conflicts or controversies relating to or arising out of
this Agreement shall be resolved by arbitration under Xxxxx 0, Xxxxxx Xxxxxx
Code "arbitration" (the "U.S. Federal Arbitration Act"), in accordance with the
then current rules of the American Arbitration Association, or any successor, at
its office closest to Ft. Lauderdale, Florida. In the event of a conflict
between the U.S. Federal Arbitration Act and the rules of the American
Arbitration Association, the rules of the American Arbitration Association shall
govern. 180 shall select one arbitrator and DI and HD shall select one
arbitrator and the two so selected shall select a third. The arbitrators shall
be individuals skilled in the legal and business aspects of the subject matter
of this Agreement. Notice of the demand for arbitration shall be made in writing
to the other party to this Agreement and to the American Arbitration
Association. The demand shall be made within a reasonable time after the claim
or dispute has arisen. In no event shall the demand for arbitration be made
after the date when institution of legal or equitable proceedings based on the
claim or dispute would be barred by the applicable statute of limitations. The
arbitration award shall be final and binding upon the parties. Judgment upon the
award shall be binding and may be entered in any court of competent
jurisdiction.
ARTICLE 5
MISCELLANEOUS
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5.1 CONFLICTING AGREEMENTS
----------------------
DI and HD represent that DI and HD's performance of all the terms of
this Agreement do not and shall not breach any fiduciary or other duty or any
covenant, agreement or understanding (including any agreement relating to any
confidential and proprietary information, knowledge or data acquired by DI and
HD in confidence, trust or otherwise prior to the Purchase) to which DI and HD
is a party or by which DI and HD may be bound. The DI and HD covenants and
agrees that DI and HD shall not disclose to 180 or an Affiliate or Associate, or
induce 180 or an Affiliate or Associate to use any confidential or proprietary
information, knowledge or data belonging to any previous employer or others. The
DI and HD further covenant and agree not to enter into any agreement or
understanding, either written or oral, in conflict with the provisions of this
Agreement.
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5.2 REASONABLENESS OF RESTRICTIONS
------------------------------
DI and HD acknowledge having carefully read and considered the
provisions of this Agreement and acknowledges that 180 has permitted DI and HD
sufficient time to seek independent legal advice and, having done so or
voluntarily elected not to do so, DI and HD agree that the restrictions set
forth herein are fair and reasonable (including, without limitation, as to
duration and geographical areas) and are reasonably required for the protection
of the interests of 180 and the Business and the business of its Affiliates,
Associates, officers, directors and employees.
5.3 SEVERABILITY AND ENFORCEABILITY
-------------------------------
(a) General. In the event that any provision or part of any
provision of this Agreement shall be deemed void or invalid by
a court of competent jurisdiction, the remaining provisions or
parts shall be and remain in full force and effect. DI and HD
agree that the breach or alleged breach by 180 or an Affiliate
or Associate of (a) any covenant contained in another
agreement (if any) between 180 or an Affiliate or Associate
and DI and/or HD or (b) any obligation owed to DI and/or HD by
180 or an Affiliate or Associate, shall not affect the
validity or enforceability of the covenants and agreements of
DI and HD set forth in this Agreement.
(b) Non-competition Covenants. With respect to the non-competition
covenants in Subsection 2.1(b), the parties acknowledge that
the Business is and will be national and international in
scope and that the Business and its goodwill extends to a
global market and, thus, the covenants in Subsection 2.1(b)
would be particularly ineffective if the covenants were to be
limited to a particular geographic area. If any court of
competent jurisdiction at any time deems such non-competition
covenants, or any part thereof, to be unenforceable because of
the duration or scope of such provisions, it is the intention
and desire of the parties that the court treat any such
provisions which are not fully enforceable as having been
modified to the extent deemed necessary by the court to render
them reasonable and enforceable, and that the court enforce
them to such extent.
5.4 AMENDMENT AND WAIVER, REMEDIES
------------------------------
Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement shall be effective against either
party unless such modification, amendment or waiver is approved in writing by
each of the parties. The failure of any party to enforce any of the provisions
of this Agreement shall in no way be construed as a waiver of such provisions
and shall not affect the right of such party thereafter to enforce each and
every provision of this Agreement in accordance with its terms. Any amendment,
modification or waiver hereof shall be delivered to all parties. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
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5.5 GOVERNING LAW
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This Agreement shall be governed by and construed in accordance with
the laws in force in the State of Florida without giving effect to the
principles of conflicts of law. The parties hereby agree to submit to the
exclusive jurisdiction of the courts of the State of Florida with respect to any
proceeding relating to this Agreement and the enforcement thereof.
5.6 NOTICES
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All notices or other communications required or permitted under this
Agreement shall be in writing and shall be given by (i) certified mail, (ii)
recognized commercial overnight courier, (iii) facsimile transmission with a
confirming copy by certified mail or recognized commercial overnight courier, or
(iv) e-mail with a confirming copy by certified mail or recognized commercial
overnight courier, all addressed as follows.
If to the 180:
180 Connect Inc.
0000 XX 0 Xxx, Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, CBDO
Facsimile: 954.489.9745
E-Mail: XXxxxxx@000xxxxxxx.xxx
with a copy to
Xxxxxx & Sinon LLP
Xxx X. Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 717.231.6694
E-Mail: XXxxxxxx@xxxxxx-xxxxx.xxx
or to such other Person or at such other place as the 180 shall furnish to the
DI and HD in writing, and
If to the DI or HD to:
Digital Interiors Inc.
Home Director, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, President & CEO
Facsimile: 925.243.1745
E-mail: xxxxxxx@xxxxxxxxxxxx.xxx
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with a copy to
____________________________
____________________________
____________________________
____________________________
Attn: _____________________
Facsimile: ___.___.____
E-Mail: _______@________.___
or to such other Person or at such other place as the DI or HD shall furnish to
the 180 in writing.
Any notice delivered by certified mail shall be effective on the third
Business Day after deposited in the United States mail. Any notice delivered by
recognized commercial overnight courier shall be effective on the next Business
Day after delivery to the recognized commercial overnight courier. Any notice
delivered by facsimile transmission or e-mail shall be effective on the day of
transmission, if transmitted prior to 3:00 p.m. prevailing Eastern time.
5.7 ENTIRE AGREEMENT
----------------
This Agreement contains the entire agreement and understanding by and
between 180 and DI and HD with respect to the subject matter hereof.
5.8 ASSURANCES
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At any time or from time to time after the date hereof, the parties
agree to cooperate with each other, and at the request of any other party, to
execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby and to
otherwise carry out the intent of the parties.
5.9 INTERPRETATION
--------------
The headings and other captions in this Agreement are for convenience
and reference only and are not to be construed in any way as additions or
limitations of the covenants and agreements contained in this Agreement.
References to the singular or masculine shall also or alternatively include the
feminine and plural, and vice versa.
5.10 SURVIVAL
--------
The covenants and agreements of DI and HD contained in this Agreement
shall survive DI and HD's for the period of survival specified, and if no period
of survival is specified, shall survive indefinitely.
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5.11 ASSIGNMENT
This Agreement inures to the benefit of, and is binding upon the
respective successors and assigns, as applicable, of the parties. This Agreement
may be freely assigned by 180 and upon such assignment 180 shall be released
hereunder. This Agreement may only be assigned by DI and/or HD with the prior
written consent of 180.
IN WITNESS WHEREOF this Agreement has been executed by the parties
effective the date first above written.
180 CONNECT INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Business
Development Officer
DIGITAL INTERIORS INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxx Xxxxxx
Title: President & Chief
Executive Officer
HOME DIRECTOR, INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxx Xxxxxx
Title: President & Chief
Executive Officer