COVENANT NOT TO COMPETE AGREEMENT
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This Covenant Not to Compete Agreement ("Agreement") is entered into as
of June 3, 1999, by and between SVI HOLDINGS , INC., a Nevada corporation
("SVI"), having an address for notices at 0000 Xxxxxxx Xxx., Xxxxx 000, Xx
Xxxxx, Xxxxxxxxxx 00000, and THE XXXXXXXXX FAMILY TRUST, (the "Trust"), having
an address for notices at 0000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx, XX 00000, who agree
as follows:
1. RECITALS. This Agreement is made pursuant to the following recitals
of fact, which recitals constitute an integral part of this Agreement.
1.1. This Agreement is being executed in accordance with the
provisions of that certain Stock Purchase Agreement between SVI, the Trust and
the other parties listed therein (the "Purchase Agreement").
1.2. Pursuant to the Purchase Agreement, SVI has agreed to
purchase all of the outstanding shares of capital stock of Island Pacific
Systems Corporation, a California corporation ("Island Pacific").
1.3. Pursuant to the Purchase Agreement, The Xxxxxxxxx Family
Trust (the "Trust") has agreed to sell all of the shares of capital stock of
Island Pacific owned by the Trust to SVI. The Trust is the trustor and a trustee
of, and otherwise controls, the Trust.
1.4. The terms of the Purchase Agreement provide that as a
condition to SVI purchasing Island Pacific, the Trust must not directly or
indirectly own or participate in any business that is in competition with Island
Pacific's business. This Agreement is a material and integral part of the
consideration to be received by SVI pursuant to the Purchase Agreement. SVI
would not have entered into the Purchase Agreement without this Agreement.
2. COVENANT NOT TO COMPETE AND NONCOMPETITION. The Trust acknowledges
that this Agreement is being entered in connection with the acquisition by SVI
of all of the shares of capital stock of Island Pacific, with respect to which
the Trust is a major shareholder. To the extent permitted by applicable law,
during the period of time set forth in Section 2.5 below:
2.1. The Trust shall not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, or control of, be employed by, associated
with, or in any manner connected with, or render services or advice to, any
business whose products or activities compete in whole or in part with the
products or business of Island Pacific anywhere in the United States or the
United Kingdom, which business consists of the business that Island Pacific
conducts as of the date of this Agreement (the "Business").
2.2. The Trust shall not undertake any employment or activity
competitive with the Business, including without limitation the inducement or
solicitation of the Island Pacific's customers, if the duties or work of, in
connection with or related to such competitive employment or activity would or
might cause the Trust to reveal or use any Intellectual Property Assets of
Island Pacific (as defined in the Purchase Agreement). The restriction set forth
in this Section 2.2 shall not be limited to a particular geographical area.
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2.3. The Trust shall not undertake any employment or activity
competitive with the Business, including without limitation the inducement or
solicitation of Island Pacific's customers, anywhere in the United States or the
United Kingdom.
2.4. The Trust shall not, directly or indirectly, either for
himself or any other person, (i) induce or attempt to induce any employee of
Island Pacific or any Affiliate (as defined below) to leave the employ of Island
Pacific or any Affiliate, (ii) in any way interfere with the relationship
between Island Pacific or any Affiliate and any employee of such company, or
(iii) induce or attempt to induce any customer, supplier, licensee, or business
relation of Island Pacific or any Affiliate to cease doing business with such
company, or in any way interfere with the relationship between any customer,
supplier, licensee, or business relation of Island Pacific or any Affiliate.
2.5. The Trust shall not, directly or indirectly, either for
himself or any other person, solicit the business of any person known to the
Trust to be a customer of Island Pacific or any Affiliate, whether or not the
Trust had business or personal contact with such person, unless the Trust's
solicitation of such person is done in connection with a business that is not
competitive with that of Island Pacific or any Affiliate.
2.6. The duration of the covenants set forth in this Section 2
shall be two years after the date of the Closing (as defined in the Purchase
Agreement). The Trust agrees that this covenant is reasonable with respect to
its duration, geographical area, and scope. Notwithstanding such restriction,
the Trust may purchase or otherwise acquire up to (but not more than) one
percent (1%) of any class of securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if such securities are
listed on any national or regional securities exchange or have been registered
under Section 12(g) of the Securities Exchange Act of 1934.
In the event of a breach by the Trust of any covenant set
forth in this Section 2, the term of such covenant will be extended by the
period of the duration of such breach, provided, however, that such extension
shall be limited to two years. If a court of competent jurisdiction holds that
the obligations of the Trust pursuant to this Section 2 are unenforceable due to
the duration, geographical areas or scope of this covenant, then such duration,
geographical area or scope of this covenant shall be reduced to the least degree
necessary to render this covenant enforceable. For purposes of this Agreement,
"Affiliate" shall mean any partner, employee, director, shareholder, officer of
Island Pacific or any person or entity controlled by, controlling, or under
common control with, directly or indirectly, Island Pacific, and its successor
in title and interest.
3. BREACH. The Trust acknowledges and agrees that, in the event of any
violation of this Agreement, SVI shall be authorized and entitled to obtain,
from any court of competent jurisdiction, preliminary and permanent injunctive
relief, as well as an equitable accounting of all profits or benefits arising
out of such violation, if any, which rights and remedies shall be cumulative and
in addition to any other rights and remedies to which SVI may be entitled. The
Trust agrees that money damages alone would be inadequate to compensate SVI and
would be an inadequate remedy for such breach.
4. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
5. FURTHER ASSURANCES. Each party to this Agreement shall execute all
instruments and documents and take all actions as may be reasonably required to
effectuate this Agreement.
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6. VENUE AND JURISDICTION. For purposes of venue and jurisdiction, this
Agreement shall be deemed made and to be performed in San Diego, California.
7. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one document.
8. TIME OF ESSENCE. Time and strict and punctual performance are of the
essence with respect to each provision of this Agreement.
9. ATTORNEY'S FEES. In the event any litigation, arbitration,
mediation, or other proceeding ("Proceeding") is initiated by any party against
any other party to enforce, interpret or otherwise obtain judicial or
quasi-judicial relief in connection with this Agreement, the prevailing party in
such Proceeding shall be entitled to recover from the unsuccessful party all
costs, expenses, and actual attorney's fees relating to or arising out of (a)
such Proceeding (whether or not such Proceeding proceeds to judgment), and (b)
any post-judgment or post-award proceeding including without limitation one to
enforce any judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the recovery of all
such subsequently incurred costs, expenses, and actual attorney's fees.
10. MODIFICATION. This Agreement may be modified only by a contract in
writing executed by the party to this Agreement against whom enforcement of such
modification is sought.
11. HEADINGS. The headings of the Paragraphs of this Agreement have
been included only for convenience, and shall not be deemed in any manner to
modify or limit any of the provisions of this Agreement, or be used in any
manner in the interpretation of this Agreement.
12. PRIOR UNDERSTANDINGS. This Agreement contains the entire agreement
between the parties to this Agreement with respect to the subject matter of this
Agreement, is intended as a final expression of such parties' agreement with
respect to such terms as are included in this Agreement, is intended as a
complete and exclusive statement of the terms of such agreement, and supersedes
all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
13. INTERPRETATION. Whenever the context so requires in this Agreement,
all words used in the singular shall be construed to have been used in the
plural (and vice versa), each gender shall be construed to include any other
genders, and the word "person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an estate or any
other entity.
14. PARTIAL INVALIDITY. Each provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of such provision to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability, unless such provision or such
application of such provision is essential to this Agreement.
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15. SUCCESSORS-IN-INTEREST AND ASSIGNS. No party hereto shall assign or
delegate to any other person this Agreement or any rights or obligations under
this Agreement. Subject to any restriction on transferability contained in this
Agreement, this Agreement shall be binding upon and shall inure to the benefit
of the successors-in-interest and assigns of each party to this Agreement.
Nothing in this Paragraph shall create any rights enforceable by any person not
a party to this Agreement, except for the rights of the successors-in-interest
and assigns of each party to this Agreement, unless such rights are expressly
granted in this Agreement to other specifically identified persons.
16. NOTICES. All notices or other communications required or permitted
to be given to a party to this Agreement shall be in writing and shall be
personally delivered, sent by certified mail, postage prepaid, return receipt
requested, or sent by an overnight express courier service that provides written
confirmation of delivery, to such party at its address as set forth above in the
introductory Paragraph of this Agreement. Each such notice or other
communication shall be deemed given, delivered and received upon its actual
receipt, except that if it is sent by mail in accordance with this Paragraph,
then it shall be deemed given, delivered and received three days after the date
such notice or other communication is deposited with the United States Postal
Service in accordance with this Paragraph. Any party to this Agreement may give
a notice of a change of its address to the other party to this Agreement.
17. WAIVER. Any waiver of a default under this Agreement must be in a
writing executed by the party to this Agreement against whom enforcement of such
waiver is sought and shall not be a waiver of any other default concerning the
same or any other provision of this Agreement. No delay or omission in the
exercise of any right or remedy shall impair such right or remedy or be
construed as a waiver. A consent to or approval of any act shall not be deemed
to waive or render unnecessary consent to or approval of any other or subsequent
act.
18. DRAFTING AMBIGUITIES. Each party to this Agreement and its legal
counsel have reviewed and revised this Agreement. The rule of construction that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or of any amendments or
exhibits to this Agreement.
SVI HOLDINGS INC., a Nevada corporation0
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
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Title:
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THE XXXXXXXXX FAMILY TRUST
By:/S/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx, Trustee
By:/S/ Xxxxxxxx X. Xxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxx, Trustee
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