EXHIBIT 10.4
NON-COMPETITION AGREEMENT
DATED: 1999
BETWEEN:
XXXXXXXX XXXXXXXX
AND
HOME SECURITY INTERNATIONAL, INC
DIBBS XXXXXXXX & XXXXXXX
Solicitors
00 Xxxxxxxxxx Xxxxxx
XXXXXX XXX 0000
DX 000 XXXXXX
Tel: (000) 0000 0000
Fax: (000) 0000 0000
Ref: JEC/JPL:990332
NON-COMPETITION AGREEMENT
THIS AGREEMENT dated day of 0000
XXXXXXX: XXXXXXXX XXXXXXXX of 00x Xxxxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx Xxxxx
(in his personal capacity and as agent for Relevant Employees)
("Xxxxxxxx")
AND: HOME SECURITY INTERNATIONAL INC of Xxxxx 0, 00 Xxxxxxx Xxxxxxx Xxxxx
Xxxxxx Xxx Xxxxx Xxxxx
("HSI")
RECITALS
HSI has agreed to pay to Xxxxxxxx the sum of AUS$1,000,000 in consideration for
Xxxxxxxx agreeing to give covenants in favour of HSI and its Affiliates on the
terms and conditions of this Agreement.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this agreement, unless the context otherwise requires:
"Affiliate" of HSI means a corporation, partnership, limited liability
company or other business entity if:
(i) HSI directly or indirectly owns in excess of fifty percent (50%)
of the voting securities or interests of such entity; or
(ii) such entity directly or indirectly owns in excess of fifty
percent (50%) of the voting securities or interests of HSI.
"Business Enterprise" means:
(i) any entity primarily engaged in the sale, distribution,
manufacture and/or development of home security systems, or any
business utilizing any intellectual property of HSI; or
(ii) any business segment of any entity engaged in the sale,
distribution, manufacture and/or development of home security
systems, or any business utilizing any intellectual property of
HSI or any other business in which HSI or Ness is currently
engaged, but, in the case of this subsection (ii)
3
the definition of Business Enterprise shall not include the
portion of any business entity not engaged in any of the
foregoing activities.
"Change of Control" means:
(1) any merger or consolidation of, or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially
all of the assets of, HSI in each case on a consolidated basis,
in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction, any "person"
or "group" (as such terms are used for purposes of sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) is or
becomes the "beneficial owner", directly or indirectly, of more
than 50% of the aggregate voting power normally entitled to vote
in the election of directors of the transferee;
(2) the time that any "person" or "group" (as such terms are used for
purposes of sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable), is or becomes the "beneficial owner" directly
or indirectly, of more than 50% of the aggregate voting power of
all classes of Capital Stock then outstanding of HSI normally
entitled to vote in elections of directors; or
(3) during any period of 12 consecutive months after the date of this
Agreement, individuals who at the beginning of any such 12 month
period constituted the board of directors of HSI (together with
any new directors whose election by such board or whose
nomination for election by the stockholders of HSI was approved
by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose
election or nomination for election was previously so approved),
cease for any reason to constitute a majority of the board of
directors of HSI then in office.
"Confidential Information" means all information, and all documents
and other tangible items which record information relating to or
useful in connection with HSI's business (including the business of
any of HSI's Affiliates), which at the time or times concerned is
protectible as a trade secret or confidential information under
applicable law, and which has been or is from time to time disclosed
to or known by Xxxxxxxx either before or after the date of this
Agreement. This term shall be broadly construed to include anything
protectible as a trade secret or confidential information under
applicable law;
4
"Ness" means Ness Security Products Pty Limited ACN 069 984 372 of
0/000 Xxxxxxxx Xxxxxxx, Xxxxx Xxxxx, XXX.
"Relevant Employees" means those employees of Ness as agreed by the
parties to this agreement.
1.2 Interpretation
In this agreement, including the recitals, unless contrary to or
inconsistent with the context:
(1) words importing:
(1) the singular include the plural and vice versa; and
(2) a gender includes every other gender;
(2) a reference to a party or person includes a reference to that
party or person, its successors, substitutes (including, but not
limited to, a party or person taking by novation), executors,
administrators, assigns and principals;
(3) a reference to any thing or matter is a reference to the whole
and any part of it;
(4) the word "person" includes a corporation and vice versa; an
expression importing a natural person includes any company,
partnership, joint venture, association, corporation or other
body corporate and any governmental agency;
(5) a reference to a group of persons or parties is a reference to
any two or more of them jointly and to each of them individually;
(6) a covenant, representation or warranty in favour of two or more
persons is for the benefit of them jointly and severally;
(7) a covenant, representation or warranty on the part of two or more
persons binds them jointly and severally;
(8) a reference to this agreement or other document includes any
variation, novation or replacement of or supplement to any of
them from time to time;
5
(9) a reference to a part, clause, party, annexure, exhibit, appendix
or schedule is a reference to a part and clause of, and a party,
annexure, exhibit, appendix or schedule to this agreement and a
reference to this agreement includes any annexure, exhibit,
appendix and schedule;
(10) where any clause contains sub-clauses, paragraphs or sub-
paragraphs, each sub-clause, paragraph and sub-paragraph however
called will be read and construed separately and independently of
any other;
(11) a reference to a document includes without any limitation any
agreement or agreement in writing, certificate, notice or other
instruction of any kind;
(12) "writing" and related expressions includes all means of
reproducing words in a tangible and permanently visible form;
(13) headings are inserted only for guidance and do not affect the
interpretation of this agreement;
(14) a reference to any statute, regulation, proclamation, ordinance
or by-law includes all statutes, regulations, proclamations,
ordinances or by-laws amending, consolidating or replacing them
and a reference to a statute includes all regulations,
proclamations, ordinances and by-laws made or issued under that
statute;
(15) a reference to a body other than a party to this agreement:
(1) which ceases to exist; or
(2) the powers or functions of which are transferred to another
body,
is a reference to the body which replaces it or which
substantially succeeds to its powers or functions;
(16) no rule of construction applies to the disadvantage of a party
because that party was responsible for the preparation of this
agreement; and
(17) a reference to HSI includes each of its Affiliates.
2. HSI PAYMENT
6
HSI agrees to pay to Xxxxxxxx the sum of AUS$1,000,000 on the date of this
agreement and on the terms and conditions of this agreement.
3. NON-SOLICITATION COVENANTS
3.1 Xxxxxxxx covenants that he will not, for the lesser of:
(a) a period of 6 years or, where this is held by a Court to be
unenforceable, the greater of;
(A) 5 years;
(B) 4 years;
(C) 3 years;
(D) 2 years
(E) 1 year;
(F) 6 months,
after the date of this Agreement; or
(b) a period of two (2) years after the date HSI enters into a
transaction relating to a Change of Control,
directly or indirectly, on his own behalf or on behalf of any other
person or entity, without the express written permission of HSI:
(i) solicit, hire or attempt to hire or employ any employee of HSI
or its Affiliates on behalf of an individual or other entity
which provides the same or similar services, processes or
products as HSI or its Affiliates;
(ii) induce or attempt to induce any employee of HSI or its
Affiliates to leave his or her employ with HSI or its
Affiliates;
(iii) induce or attempt to induce any customer, supplier, vendor,
joint venture partner or any other person to curtail or cease
doing business with HSI or its Affiliates; or
(iv) solicit or attempt to solicit any customer of HSI on behalf of
an individual or other entity which provides the same or similar
services, processes or products as HSI or its Affiliates.
7
4. NON-COMPETITION
4.1 Except as otherwise provided in this Agreement, or for and on behalf
of HSI, Xxxxxxxx agrees that for either the lesser of:
(1) a period of 6 years or, where this is held by a Court to be
unenforceable, the greater of;
(A) 5 years;
(B) 4 years;
(C) 3 years;
(D) 2 years
(E) 1 year;
(F) 6 months,
after the date of this Agreement; or
(2) two (2) years after the date HSI enters into a transaction
relating to a Change of Control,
he will not, without the express written consent of HSI, either
directly or indirectly, own, manage, operate, control, be employed or
retained by, or in any way engage in or be connected with any Business
Enterprise, in any capacity whatsoever, including, but not limited to,
as a partner, owner, creditor, director, officer, employee, agent or
independent contractor in:
(a) any geographic territories served by HSI;
(b) the United States, Europe, Australia and New Zealand;
(c) the United States, Australia and New Zealand;
(d) Australia and New Zealand;
(e) Australia.
4.2 Circosta's ownership of less than one percent of the outstanding
equity securities of a firm which is listed on a US or Australian
national or regional securities exchange market shall not, in itself,
constitute a violation of this clause 4.
8
4.3 In the event that a Court determines the period of the restraint in
clauses 3.1 and 4.1 or the area of restraint in clause 4.1 to be
unenforceable, the next largest period or area acceptable to the Court
will be deemed to apply.
5. DISCLOSURE OF CONFIDENTIAL INFORMATION
Xxxxxxxx recognises that he will occupy a position of trust and confidence
with HSI as to Confidential Information pertaining to HSI. Therefore
Xxxxxxxx agrees that:
(a) for the longest period permitted by law from the date of this
Agreement, Xxxxxxxx and each Affiliate of Xxxxxxxx shall hold in the
strictest confidence and shall not, other than as required by law,
without the prior written consent of HSI, use for his own benefit or
that of any third party or disclose to any person, firm or corporation
(except HSI, an Affiliate of HSI or employees of HSI and its
Affiliates) any Confidential Information;
(b) Xxxxxxxx and each Affiliate of Xxxxxxxx (and if deceased, their
personal representatives) must promptly following a request therefor
from HSI return to HSI, without retaining copies, all tangible items
which are or which contain Confidential Information. Xxxxxxxx must
also surrender all computer print-outs, laboratory books, floppy discs
and other such media for storing software and information, work
papers, files, client lists, telephone and/or address books, rolodex
cards, internal memoranda, appointment books, calendars, keys and
other tangible things entrusted to Xxxxxxxx by HSI or authored in
whole or in party by Xxxxxxxx within the scope of his duties to HSI
even if such things do not contain Confidential Information; and
(c) at the request of HSI made at any time, Xxxxxxxx and each Affiliate of
Xxxxxxxx (and if deceased, their personal representatives) must make,
execute and deliver all applications, papers, assignments,
conveyances, instruments or other documents and shall perform or cause
to be performed such other lawful acts as HSI may reasonably deem
necessary or desirable to implement any of the provisions of this
Agreement, and shall give testimony and co-operate with HSI, its
Affiliates or their respective representatives in any controversy or
legal proceedings involving HSI, its Affiliates or their respective
representatives with respect to any Confidential Information.
6. WARRANTY
9
6.1 Xxxxxxxx warrants and undertakes to HSI and it is a condition of this
agreement that Xxxxxxxx has the capacity to act as agent for and bind
the Relevant Employees.
6.2 Xxxxxxxx must indemnify and keep indemnified HSI against any loss
incurred or liable to be incurred by reason of any claim, of whatever
nature, arising out of or in relation to the warranty contained in
this clause 6 being incorrect in any way.
7. GENERAL TERMS
7.1 Xxxxxxxx acknowledges that any breach of any obligation contained in
this Agreement is not adequately compensable by monetary damages, and
Xxxxxxxx agrees that any such breach shall cause HSI irreparable harm
for which HSI shall be entitled to a temporary restraining order and
preliminary injunction without prior notice to Xxxxxxxx. Any and all
attorneys' fees, costs and expenses incurred by HSI in enforcing the
terms of this Agreement shall be reimbursed to HSI by Xxxxxxxx.
7.2 In the event that any body of competent jurisdiction shall determine
that any of the restrictive covenants in this Agreement are
inequitably broad, it is the intention and agreement of the parties
that the decision-maker shall equitably adjust the obligations of
Xxxxxxxx under this Agreement to include the maximum reasonable
restriction allowed by law rather than entirely eliminate any such
obligations. In the event that the decision-maker shall equitably
adjust or eliminate any of the restrictive covenants in this
Agreement, all other aspects of this Agreement shall remain in full
force and effect.
7.3 In the event that any provision of this Agreement is determined by any
body of competent jurisdiction to be unenforceable, illegal or
contrary to public policy, that body shall modify such provision to
conform to public policy, or to interpret it in such a way as to
render it enforceable and legal, in accordance with the intent of the
parties as expressed in this Agreement. In the event that a body of
competent jurisdiction decides that any provision of this Agreement is
unenforceable, illegal or contrary to public policy and cannot be
reformed, only such provision shall be affected and all other
provisions of this Agreement shall remain in full force and effect.
7.4 This Agreement shall be binding upon Xxxxxxxx and inure to the benefit
of HSI and its successors and assigns.
7.5 This instrument contains the entire agreement of HSI and Xxxxxxxx and
respect to its subject matter and supersedes all prior understandings
and agreements of HSI and Xxxxxxxx with respect to its subject matter.
10
7.6 This Agreement shall be governed by and construed in accordance with
the laws of New South Wales applicable to contracts made and to be
performed therein. Each party irrevocably and unconditionally submits
to the exclusive jurisdiction of the courts of New South Wales and
courts of appeal from there. The parties acknowledge that due to
current international sales of HSI the scope of the provisions of this
Agreement are intended to be worldwide.
7.7 The rights and remedies enumerated herein, are in addition to any
rights or remedies HSI may have under any other agreement, and shall
not be construed as a release, waiver or modification of any of the
terms, conditions, representations, warranties, covenants, rights or
remedies set forth in any other agreement, including without
limitation, any rights or remedies HSI has under the employment
agreement dated , 1999, as amended, between HSI, Ness and
Xxxxxxxx.
EXECUTED as an agreement.
Signed by XXXXXXXX XXXXXXXX in the )
presence of: )
)
)
______________________________ ) _______________________________
Signature of witness ) Signature of XXXXXXXX XXXXXXXX
)
______________________________ )
Name of witness (block letters) )
The common seal of HOME )
SECURITY INTERNATIONAL INC )
was affixed in accordance )
with its constitution in )
the presence of: )
)
)
______________________________ ) ______________________________
Signature of authorised person ) Signature of authorised person
)
)
______________________________ ) ______________________________
Office held Office held
______________________________ ______________________________
Name of authorised person Name of authorised person
(block letters) (block letters)
