<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): June 2, 1999
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Home Security International, Inc.
---------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-26399 98-0169495
- ---------------------------------- ----------- ------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File number) Identification No.)
Level 7, 77 Pacific Highway
North Sydney, NSW Australia 2060
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (011) (612) 9936-2424
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_________________________________________________________________
Former name or former address, if changed since last report
<PAGE>
Item 2. Acquisition of Assets
---------------------
On June 2, 1999, Home Security International, Inc. ("HSI" or the
"Company"), closed the purchase of the remaining 24.96% interest in Ness
Security Products Pty Limited ("Ness"), a 75.04% indirect subsidiary of HSI.
Ness is a leading manufacturer of security alarm products in Australia and the
Company's sole supplier of the security guard alarm.
On April 9, 1999, the Company agreed to effectively purchase this 24.96%
interest through a series of transactions in which: (i) Circosta agreed to enter
into a Non-Competition Agreement with the Company in exchange for a cash payment
of $621,200; (ii) Circosta agreed to purchase 277,778 shares of HSI Common Stock
for $2,484,800 (payable through a 90 day promissory note secured by the HSI
Common Stock); (iii) Ness agreed to redeem 260,000 shares of Ness ("Ness
Shares") from Circosta Pty Limited, a unit trust beneficially owned by Nazareno
Circosta the principal management officer of Ness ("Circosta") as well as
certain relevant employees, for $2,025,360 (collectively, the "Redemption
Transaction"). In addition, Ness agreed to pay $2,902,246 to Circosta in
exchange for Circosta terminating his existing employment contract and entering
into a new employment contract with Ness.
As a result of the Redemption Transaction, the Company's wholly-owned
subsidiary, Integrated International Home Security Limited, became the sole
owner of Ness. The Redemption Transaction was subject to certain Australia
governmental approvals and other closing conditions. The dollar amounts used in
this paragraph are in US dollars, reflecting approximate conversion rates from
Australian dollars as of April 9, 1999.
The company previously acquired the controlling 75.04% interest in Ness
as of September 30, 1998. See the Form 8-K Current Report filed on October 7,
1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) See the Financial Statements filed on the Form 8-KA Current
Report on December 15, 1998.
(b) See the Pro Forma Financial Information filed on the Form 8-KA
Current Report on December 15, 1998.
(c) Exhibits. The following exhibits are filed herewith in
accordance with Item 601 of Regulation S-K:
10.1 Share Buy Back Agreement between Ness Security Products Pty Ltd.
and Integrated International Home Security Limited.
10.2 Employment Agreement between Ness Security Products Pty Limited;
Nazareno Circosta and Home Security International, Inc.
10.3 Agreement between Nazareno Circosta and Ness Security Products
Pty Limited.
10.4 Non-Competition Agreement between Nazareno Circosta and Home
Security International, Inc.
<PAGE>
10.5 Share Buy Back Agreement between Circosta Pty Limited and Ness
Security Products Pty Limited.
<PAGE>
HOME SECURITY INTERNATIONAL, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this 8-K report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HOME SECURITY INTERNATIONAL, INC.
BY: /s/ Mark Whitaker
____________________________________
Mark Whitaker
Chief Financial Officer
Dated: June 17, 1999
<PAGE>
EXHIBIT 10.1
SHARE BUY BACK AGREEMENT
NESS SECURITY PRODUCTS PTY LIMITED
ACN 069 984 372
INTEGRATED INTERNATIONAL HOME SECURITY LIMITED
Kevin Munro & Associates
Solicitors
Level 6, Kelco House
364 Kent Street
SYDNEY NSW 2000
Telephone: 9290 3838
Facsimile: 9290 3737
<PAGE>
INDEX
CLAUSE NUMBER CONTENTS
1. Definitions and Interpretation
2. Buy-Back
3. Condition Precedent
4. Transfer and Registration
<PAGE>
THIS AGREEMENT is made on 2 June 1999
PARTIES:
1. NESS SECURITY PRODUCTS PTY LIMITED ACN 069 984 372 of Unit 4, 167 Prospect
Highway, Seven Hills, New South Wales (the "Company").
2. INTEGRATED INTERNATIONAL HOME SECURITY LIMITED of C/- Alliance Investments,
Sam Le Panorama Bloc AB, 57 Rue Grimaldi, MC 98000, Monaco, (the
"Shareholder")
RECITALS:
A. The Company has agreed to buy-back 260,000 Ordinary shares in the capital
of the Company held by the Shareholder for $12.54 per share for total
consideration of $3,260,400 according to the terms in this Agreement and
the Shareholder has agreed to sell those shares for the same terms.
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
In this Agreement unless the context otherwise requires:
reference to a person includes any other entity recognised by law and vice
versa;
words importing the singular number include the plural number and vice
versa:
words importing one gender include every gender;
any reference to any of the parties by their defined terms include that
party's executors, administrators or permitted assigns or, being a company,
its successors or permitted assigns;
every Agreement or undertaking expressed or implied by which more than one
person agrees or undertakes any obligation or derives any benefit binds or
enures for the benefit of those persons jointly and each severally;
clause headings are for reference purposes only;
2. BUY-BACK
The shareholder for $12.54 per share for the total consideration of
<PAGE>
$3,260,400 from the Company hereby agrees to sell 260,000 Ordinary Class
shares in the capital of the Company held by the Shareholder to the
Company.
3. CONDITION PRECEDENT
This Agreement is conditional upon the Company putting all arrangements
into place that will make the Agreement valid under Division 2 of Part2J.1
of the Corporations Law.
4. TRANSFER AND REGISTRATION
The Company will register the transfer of shares made pursuant to this
Agreement and pay the consideration on completion, which will occur as soon
as possible after the condition in clause 3 is satisfied.
EXECUTED as an Agreement.
SIGNED on behalf of NESS )
SECURITY PRODUCTS PTY )
LIMITED by its Authorised Officer in )
the presence of: )
)
)
- ------------------------------------------------------------------------------
Signature of Witness ) Signature of Authorised Officer
)
)
- ---------------------------------------
Name of Witness - please print
SIGNED on behalf of INTEGRATED )
INTERNATIONAL HOME )
SECURITY LIMITED by its )
Authorised Officer in the presence of:)
)
)
- ------------------------------------------------------------------------------
Signature of Witness ) Signature of Authorised Officer
)
)
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Name of Witness - please print
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
DATED: 1999
BETWEEN
NESS SECURITY PRODUCTS PTY LIMITED
ACN 069 984 372
AND
NAZARENO CIRCOSTA
AND
HOME SECURITY INTERNATIONAL INC
DIBBS CROWTHER & OSBORNE
Solicitors
50 Carrington Street
SYDNEY NSW 2000
DX 101 SYDNEY
Tel: (02)9290-8200
Fax: (02)9290-2964
Ref: JEC/JPL:960762
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TABLE OF CONTENTS
DEFINITIONS AND INTERPRETATION 2
Definitions 2
Interpretation 4
EMPLOYMENT 6
TERM AND RENEWAL 6
EMPLOYEE'S DUTIES 6
REMUNERATION 7
PERFORMANCE REVIEW 7
EXPENSES 8
ANNUAL LEAVE 8
LONG SERVICE LEAVE 8
SICK LEAVE 8
PLACE OF EMPLOYMENT 9
12. VEHICLE 9
BONUS 9
Profit Target 9
Bonus 10
Calculation and Payment of Bonus 10
Variation of Profit Target 10
Valuation of Options 10
Entitlement to Options 10
Exercise 11
Notice 11
Issue of Shares 11
CONFLICTING ACTIVITY 11
CONFIDENTIALITY 12
NOTES AND MEMORANDA 12
INVENTIONS and INTELLECTUAL PROPERTY 12
SMOKING 13
TERMINATION 13
Termination by the Company 13
Termination by either party 14
RECONSTRUCTION OF THE COMPANY 14
CONSEQUENCES OF TERMINATION 14
SURVIVAL OF OBLIGATIONS 16
RELATIONSHIP OF THE PARTIES 16
VARIATION 16
GOVERNING LAW AND JURISDICTION 16
PROHIBITION AND ENFORCEABILITY 16
WAIVERS 16
ENTIRE AGREEMENT 17
<PAGE>
THIS AGREEMENT is made on 1999
BETWEEN: NESS SECURITY PRODUCTS PTY LIMITED (ACN 069 984 372) of 4/167 Prospect
Highway Seven Hills New South Wales ("Company")
AND NAZARENO CIRCOSTA of 618 Windermere Avenue Northmead New South Wales
("Employee")
AND HOME SECURITY INTERNATIONAL INC of Level 7, 77 Pacific Highway North
Sydney New South Wales ("HSI")
RECITALS
A. The Company operates the Business.
B. The Company has agreed to employ the Employee and the Employee has
agreed to be employed by the Company in the Business on the terms set
out in this agreement.
OPERATIVE PROVISIONS
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this agreement, unless contrary to or inconsistent with the
context:
"Abnormal Item" means any major decision by HSI or its Associates
that have a material adverse or positive effect upon the Company's
profits.
"Associates" has the meaning given to it in section 11 of the
Corporations Law.
"Board" means the Board of Directors of the Company from time to
time.
"Business" means the business of the manufacture, sale and/or
distribution of electronic residential security alarm systems for
residential and other purposes.
"Business Day" means the day on which trading banks are open for
business in Sydney, but does not include a Saturday, Sunday or
public holiday.
"Business Hours" means 9 am until 5 pm on any Business Day.
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"Change in Ownership of HSI" means a change in ownership of 50% or
more of the shares outstanding in HSI in which the acquirer of such
shares is a single entity.
"Commencement Date" means the date of this agreement.
"Confidential Information" means all the information including any
documentary technical information, know how, ideas, concepts,
technology, processes, industrial knowledge, statements, formula,
trade secrets, drawings and data concerning the Business operations,
intellectual property, finance, customers, markets, suppliers and
transactions of the Company or any Related Body Corporate but does
not include information which:
(a) is in or comes into the public domain otherwise than through a
breach of obligation of confidentiality by anyone; or
(b) was already in the possession of the Employee prior to the
commencement of his employment in the Business.
"Current Package" means the employment package as specified in
Schedule 3.
"Duties" means the duties set out in clause 4 and any other duties
which the Company may assign from time to time.
"Employee Bonus Scheme" means any share scheme adopted by HSI for
the benefit of HSI's employees including, without limitation, the
HSI Stock Option Plan.
"Exercise Period" in relation to an Option means the period
commencing on the Issue Date of that Option and ending on the Expiry
Date of that Option.
"Expiry Date" in relation to an Option means the tenth anniversary
of the Issue Date of that Option or any later date which the Company
and HSI determine.
"Financial Year" means the period from 1 January to 31 December in
each year during the term of this agreement.
"HSI Stock Option Plan" means HSI's 1997 stock option plan which is
annexure 1 to this agreement.
"Intellectual Property" means all present and future copyright,
registered and unregistered trademark, patent, design or circuit
layout rights and any other intellectual or industrial property
rights arising from statute, under common law or in equity
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affecting, relating to or capable of being used or adopted for use
in the Business.
"Inventions" means any discovery, invention, secret process or
improvement in procedure of any kind affecting, relating to or
capable of being used or adapted for use in the Business.
"Issue Date" in relation to an Option, means the date the Option is
issued in accordance with this agreement.
"Option Price" means the purchase price at which each stock option
may be purchased calculated in accordance with HSI Stock Option
Plan.
"Options" means the options to purchase stock in the capital of HSI
granted by HSI to the Employee under clause 13.2(a) of this
agreement
"Position" means the position described in clause 2 and any other
position which the Company may give the Employee from time to time.
"Related Body Corporate" has the meaning ascribed to "related body
corporate" in the Corporations Law in force at the date of this
agreement and includes any related body corporate formed or acquired
after the date of this agreement.
1.2 Interpretation
In this agreement unless contrary to or inconsistent with the
context:
(1) words importing:
(1) the singular include the plural and vice versa; and
(2) any gender include all genders;
(2) a reference to a party or person includes a reference to that
party or person and its successors, substitutes (including, but
not limited to, any party or person taking by novation),
executors, administrators and assigns;
(3) the word "person" includes a corporation and vice versa;
(4) a reference to any thing or any matter is a reference to the
whole and any part of it;
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(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;
(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
deed and a reference to this deed 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 are to be read and construed separately and
independently of any other;
(11) a reference to a document includes, but is not limited to, any
agreement in writing, certificate, notice or other instrument
in writing 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 for guidance only and do not affect the
interpretation of this agreement;
(14) a reference (whether specific or general) to a statute or to
any other legislation includes any code, proclamation,
ordinance or other law, and any regulation, rule or by-law or
other instrument made under it, and any official directives and
all amendments, consolidations, re-enactments or substitutions,
of any of them from time to time;
(15) any agreement, undertaking, acknowledgment, condition or other
term made or given by the Employee is deemed to be a covenant
by the Employee in favour of and for the benefit of the
Company;
(16) a reference to a "month" or "monthly" means a calendar month or
calendar monthly respectively; and
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(17) no rule of construction applies to the disadvantage of a party
because that party was responsible for the preparation of this
agreement.
2. EMPLOYMENT
Subject to the terms of this agreement, the Company agrees to employ the
Employee and the Employee accepts employment with the Company as the
Managing Director of the Business for the term of this agreement
3. TERM AND RENEWAL
This agreement will commence on the Commencement Date and continue, subject
to the rights of early termination in clause 19, for an initial period of 5
years. Upon expiry of the initial period, this agreement will
automatically renew for a further 5 year period unless, not less than 2
months prior to the expiration of the initial period, either party notifies
the other party in writing that it wishes to terminate this agreement to be
effective on the expiration of the initial period. If either party
notifies the other in accordance with this clause, this agreement
terminates on the expiration of the initial period.
4. EMPLOYEE'S DUTIES
4.1 The Employee agrees to devote all time and attention during Business
Hours to discharge the Duties under this agreement.
4.2 The Employee's duties in the Position are the duties in relation to
the Company and its Business which the Company may from time to time
require the Employee to perform having regard to the Company's
objects, as stated from time to time.
4.3 The Employee must perform the Duties to the best of the Employee's
knowledge and ability and in accordance with:
(1) any rules of employment or conduct relating to employees
generally which are promulgated from time to time by the
Company; and
(2) any directions or instructions given to the Employee from time
to time by superiors of the Employee.
4.4 The Employee must observe a duty of utmost fidelity to the Company,
its businesses and personnel.
4.5 The Employee must refrain from acting or giving the appearance of
acting contrary to the interests of the Company and HSI.
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5. REMUNERATION
5.1 During the continuance of this agreement, the Company agrees to pay
to the Employee remuneration in accordance with Current Package
(excluding the motor vehicle which is dealt with in clause 12.1), or
whatever higher rate from time to time is determined and notified to
the Employee by the Company, which is exclusive of superannuation
contributions required to be made under the Superannuation Guarantee
(Administration) Act 1992 or otherwise.
5.2 The remuneration of the Employee will be reviewed annually by the
Company and will commence on the first anniversary of this
agreement. The Company will notify the Employee of any increase in
remuneration. In the event of any increase of remuneration being
notified, that increase will have effect as if it were specifically
provided for as a term of this agreement. The company agrees that
any remuneration reviewed in accordance with this agreement will not
be less favourable to the Employee than the remuneration current at
the time of the review.
5.3 The remuneration will be paid by equal monthly instalments in
arrears.
5.4 In addition, the Employee will be entitled to participate in any
Employee Bonus Scheme from time to time.
5.5 The parties agree that the Company must pay any fringe benefits tax
arising in connection with the performance by the Employee of his
obligations under this agreement.
6. PERFORMANCE REVIEW
6.1 The performance of the Employee will be reviewed annually by the
Company and will commence on the first anniversary of this
agreement.
6.2 The purpose of the review is:
(1) to assess the performance of the Employee generally; and
(2) to determine whether the Employee should be paid the bonus
specified in clause 13.2.
6.3 The Board will review the Employee's performance within 1 month (the
"Review Date") after the general meeting of the Company at which the
balance sheet for that year shall have been passed.
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6.4 The Board will, after reviewing the Employee's performance, make a
determination as to whether the Employee should be paid the bonus
described in 13. The determination will be made within 1 month of
the Review Date.
6.5 The determination of the Board will be final and binding on the
Employee.
6.6 The criteria on which the performance of the Employee is reviewed
will be the satisfactory performance of all of the Duties .
7. EXPENSES
The Company agrees to reimburse the Employee for all expenses reasonably
and necessarily incurred by the Employee, with the prior written consent of
the Company, in the performance of the Duties.
8. ANNUAL LEAVE
The Company must allow the Employee four weeks paid annual holidays each
year in accordance with the Annual Holidays Act 1944 to be taken at such
times as the Board considers most convenient having regard to the
requirements of the Company's Business and the balance of which must not
exceed 8 weeks.
9. LONG SERVICE LEAVE
The Company must allow the Employee to take long service leave in
accordance with the Long Service Leave Act 1955.
10. SICK LEAVE
10.1 The Employee is entitled to 8 days' sick leave per year when the
Employee is incapacitated by virtue of personal illness, accident or
injury from carrying out the Duties.
10.2 Subject to clause 10.5, sick leave not taken in any year must accrue
and must be carried over to the following year.
10.3 The Employee is not entitled to payment for unused sick leave on
termination or expiration of this agreement.
10.4 If required by the Company, the Employee must produce a medical
certificate from a qualified medical practitioner evidencing the
incapacity of the Employee to carry out the Duties.
10.5 The Employee may accumulate 16 days of sick leave over a period of 2
years. The Employee's entitlement to unused sick
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leave must not exceed 16 days. The Employee forfeits any unused sick
leave which has accumulated in excess of 16 days.
11. PLACE OF EMPLOYMENT
The Employee is not obliged (except for occasional visits in the ordinary
course of business) to work or to reside outside the Sydney metropolitan
area.
1. VEHICLE
11.1 The Company agrees to provide and maintain a car of a type
determined by the Company which will not be less favourable than the
car currently provided for the sole use of the Employee while on
business of the Company and the Company agrees to pay all expenses
in connection with use of the car.
11.2 The Company agrees to replace the Employee's car from time to time
in accordance with the Company's policy regarding motor car
replacement.
11.3 The Company agrees to pay any fringe benefits tax payable in respect
of the use by the Employee of the car in accordance with the terms
of this agreement.
12. BONUS
12.1 Profit Target
(1) The Company, the Employee and HSI will negotiate in good faith
an annual profitability target for the Company before the
commencement of each Financial Year (the "Profit Target");
(2) If no agreement is reached between the parties as to the Profit
Target for a Financial Year then each party must, no later than
1 month before the commencement of the next Financial Year
deliver to Paul Brown, in his capacity as a director of HSI,
written submissions as to the appropriate Profit Target for the
Financial Year. Before the commencement of the Financial Year,
Paul Brown will decide the Profit Target. The parties agree
that this decision is binding in the parties;
(3) In the event that Paul Brown ceases for any reason to be a
director of HSI, the parties agree that his role will be
performed by any other director of HSI as mutually agreed
between the parties. If no agreement is reached before 1 month
before the commencement of the next Financial Year, the finance
director of HSI will perform the role until such times as the
parties agree otherwise.
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12.2 Bonus
Subject to clauses 6.4, 13.3 and 13.5, the Company and HSI agree to
pay to the Employee a bonus if the Company in any Financial Year
exceeds the Profit Target as follows:
(a) If the Company achieves 105% of the Profit Target, HSI agrees
to grant to the Employee an amount of options to purchase stock
in the capital of HSI in accordance with the HSI Stock Option
Plan with a value equivalent to Aus$300,000 for nil
consideration;
(b) If the Company achieves 110% of the Profit Target, the Company
agrees to pay to the Employee a further cash payment of
Aus$100,000; and
(c) If the Company achieves 120% of the Profit Target, the Company
agrees to pay to the Employee a further cash payment of
Aus$100,000.
12.3 Calculation and Payment of Bonus
The bonuses referred to in clause 13.2:
(a) are calculated on the basis that the Profit Target represents
the Company's net profits (before interest, depreciation and
tax as dividends) earned by the Company in each financial year;
(b) must be paid within 30 days after the determination made by the
Board in accordance with clause 6.4.
12.4 Variation of Profit Target
The Company, the Employee and HSI agree that the Profit Target may
be changed by agreement between the parties if at any time the
Company's business is affected by an Abnormal Item .
12.5 Valuation of Options
The parties agree that the Options must be valued in accordance with
the Black and Scholes Option Pricing Model which is annexure 2 of
this agreement.
12.6 Entitlement to Options
The Options entitle the Employee to acquire shares if:
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(a) an exercise right has vested in accordance with clause 13.7:
(b) at the Option Price; and
(c) during the Exercise Period.
12.7 Exercise
Subject to the terms of the HSI Stock Option Plan, the right of the
Employee to exercise Options will be limited in accordance with this
clause. Options issued to the Employee under this agreement can
only be exercised at the following times unless HSI and the Company
determine (at their absolute discretion) that the Options can be
exercised at an earlier time:
(1) up to 40% of Options can be exercised at any time during the
Exercise Period which applies to those Options;
(2) up to 60% of Options can be exercised between the third
anniversary of the Issue Date and the Expiry Date which apply
to those Options;
(3) up to 80% of the Options can be exercised between the fourth
anniversary of the Issue Date and the Expiry Date which apply
to those Options;
(4) 100% of the Options can be exercised between the fifth
anniversary of the Issue Date and the Expiry Date which relate
to those Options.
12.8 Notice
The Employee must give HSI written notice (the "Exercise Notice") of
his intention to exercise an Option and deliver to HSI a cheque for
the amount payable in relation to the number of Options being
exercised.
12.9 Issue of Shares
The Company must issue the shares described in an Exercise Notice
within 14 days of the date upon which HSI receives cleared funds
from the Employee for the shares described in the Exercise Notice.
13. CONFLICTING ACTIVITY
During the term of this agreement the Employee must not engage in any other
employment, occupation, consulting or other business activity
<PAGE>
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directly or indirectly related to or competing with the Business or in
conflict with the Employee's obligations to the Company.
14. CONFIDENTIALITY
14.1 Any Confidential Information of the Company or any Related Body
Corporate gained by the Employee whether during or prior to this
agreement, must be kept secret and must not be used directly or
indirectly otherwise than for the purposes of the Business.
14.2 Without the consent of the Company, the Employee must not infringe
any restriction or obligation of non-disclosure relating to trade
secrets or any other Confidential Information contained in any
agreement between the Company or Related Body Corporate and any
third party.
15. NOTES AND MEMORANDA
15.1 The Employee agrees not to use or permit to be used, any notes or
memoranda relating to any matter within the scope of the Business or
concerning any of the Company's dealings or affairs, otherwise than
for the benefit of the Company.
15.2 The Employee acknowledges that any notes or memoranda of the type
referred to in clause 16.1 are the absolute property of the Company
and must be left at the Company's offices, or at whatever place the
Company may direct upon the termination of the Employee's employment
under this agreement.
16. INVENTIONS and INTELLECTUAL PROPERTY
16.1 The Employee agrees to immediately disclose to the Company any
Inventions or Intellectual Property made or discovered by the
Employee during the term of this agreement which are connected with
or in any way affect, relate to or are capable of being used or
adapted for use in or in connection with the Business or the
business of any Related Body Corporate.
16.2 The Employee acknowledges that:
(1) the Inventions and Intellectual Property referred to in clause
17.1 are the absolute property of the Company or any person
nominated by it for that purpose;
(2) the Employee must assign absolutely any rights in those
Inventions and Intellectual Property to the Company or its
nominee; and
(3) at the expense of the Company, the Employee must do any act or
thing which the Company may require, either
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during the term of this agreement or after its termination, to
protect the Company or its nominee's rights in those Inventions
and Intellectual Property, throughout the world.
16.3 The Employee irrevocably appoints the Company to be the Employee's
attorney and to execute any instrument or do any thing and generally
to use the Employee's name for the purpose of giving to the Company
or to its nominee the full benefit of this clause. The Employee
acknowledges that a certificate in writing, signed by any director
or secretary of the Company (other than the Employee) that any
instrument or act falls within the authority conferred by this
clause, will be conclusive evidence of that fact.
17. SMOKING
Smoking is prohibited in the office environment.
18. TERMINATION
18.1 Termination by the Company
The Company may terminate this agreement, at any time without prior
notice, if the Employee:
(1) commits any serious or persistent breach of the Employee's
obligations under this agreement;
(2) is guilty of wilful neglect in the discharge of the Duties or
any serious misconduct;
(3) becomes bankrupt or makes any assignment, arrangement or
composition with creditors of the Employee pursuant to the
Bankruptcy Act 1966 or otherwise;
(4) is convicted of any criminal or civil offence other than an
offence which, in the reasonable opinion only of the Company,
does not affect the Employee's ability to perform the Duties;
(5) becomes of unsound mind or under the control of any committee
or officer under any law relating to mental health; or
(6) becomes permanently incapacitated by reason of accident or
illness from performing the Duties. For the purposes of this
clause incapacity in excess of 60 Business Days in any 12 month
period is to be taken to be permanent incapacity.
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18.2 Termination by either party
During the operation of this agreement either party may terminate
this agreement on 12 months written notice to the other party.
18.3 At its discretion, the Company will be entitled to pay the Employee
in lieu of the notice period referred to in clause 19.2.
19. RECONSTRUCTION OF THE COMPANY
If, before the termination of this agreement, the employment of the
Employee under this agreement ceases because of the liquidation of the
Company for the purpose of reconstruction or amalgamation and the Employee
is offered employment with another company or concern resulting from that
reconstruction or amalgamation on terms and conditions as favourable as
this agreement, then the Employee will have no claim against the Company in
respect of any failure to fulfil this agreement.
20. CONSEQUENCES OF TERMINATION
20.1 After termination of this agreement (whether done lawfully and
pursuant to the terms of this agreement or not and without prejudice
to any claim for damages which may arise as a result of the
termination), the Employee must:
(1) not directly or indirectly be engaged, employed, concerned with
or interested as principal, employer, employee, consultant,
partner, director, shareholder (other than as a minority
shareholder in a publicly listed company) or otherwise with or
in:
(1) any customer of or supplier to the Company;
(2) any entity related to, Related Body Corporate of, any
customer of, or supplier to the Company; or
(3) any business which may be actually or potentially in
competition with the Business,
for the period of:
(A) 6 years;
(B) 5 years;
(C) 4 years;
<PAGE>
-15-
(D) 3 years;
(E) 2 years
(F) 1 year;
(G) 6 months,
from the date of this agreement at any place within:
(A) the United States, Europe, Australia and New Zealand;
(B) the United States, Australia and New Zealand;
(C) Australia and New Zealand;
(D) Australia.
(2) not on the Employee's own account or for any other person
solicit, interfere with, or endeavour to entice away from the
Company or any of its Related Bodies Corporate, any person who
at any time during the term of this agreement was a client,
customer or employee of the Company or any of its Related
Bodies Corporate for the period of 2 years.
(3) immediately deliver to the Company all documents relating to
the Confidential Information, Inventions and Intellectual
Property prepared by the Employee or any other person and any
equipment, tools or other devises owned by the Company in the
possession of the Employee; and
(4) from the date of termination of this agreement, immediately
cease to hold himself out to the public as being in any way
associated with the Company or the Business.
20.2 In the event that a Court determines the period or area of the
restraint in clause 21.1 to be unenforceable, the next largest
period and the next largest area acceptable to the Court will be
deemed to apply.
20.3 On the termination of this agreement under clause 19, the Employee
must immediately resign as a director and officer of the Company
effective from the date of termination.
20.4 In the event of a Change in Ownership of HSI during or after the
termination of this agreement, the greatest period of restraint
<PAGE>
-16-
under clause 21.1(a) is reduced on the date of the acquisition to 2
years from the date this agreement.
22. CHANGE IN OWNERSHIP
If a Change in Ownership of HSI occurs during the term of this agreement,
the Company agrees to pay to the Employee an amount in cash being
equivalent to the salary component for one year of the Employee's
remuneration at the time of the Change in Ownership of HSI. The Company
agrees to pay this amount to the Employee within 30 days of completion of
the transfer of shares under the Change in Ownership of HSI.
21. SURVIVAL OF OBLIGATIONS
The obligations of the Employee contained in this agreement which are
intended to survive its termination, will continue in force for the benefit
of the Company.
22. RELATIONSHIP OF THE PARTIES
The parties acknowledge that this agreement is intended as a contract of
service and to create the relationship of employer and employee and not any
other relationship and, in particular, not the relationship of principal
and contractor or the relationship of partnership.
23. VARIATION
Any variation of this agreement must be in writing signed by the parties.
24. GOVERNING LAW AND JURISDICTION
This agreement is governed by the laws of New South Wales and both parties
submit to the exclusive jurisdiction of the courts of that State.
25. PROHIBITION AND ENFORCEABILITY
25.1 Any provision, or the application of any provision, of this
agreement which is prohibited in any jurisdiction is, in that
jurisdiction, ineffective only to the extent of that prohibition.
25.2 Any provision, or the application of any provision, of this
agreement which is void, illegal or unenforceable in any
jurisdiction does not affect the validity, legality or
enforceability of that provision in any other jurisdiction or of the
remaining provisions in that or any other jurisdiction.
26. WAIVERS
<PAGE>
-17-
26.1 Waiver of a breach or any right of election arising from a breach of
this agreement must be in writing and signed by the party granting
the waiver.
26.2 A breach or a right of election arising from a breach of this
agreement is not waived by any failure to or delay in exercise, or
partial exercise, of that right of election or any other right.
27. ENTIRE AGREEMENT
This agreement contains the entire agreement and is in substitution of any
previous contracts of service between the Company and the Employee which
are deemed to have been terminated by mutual consent from the date of this
agreement.
<PAGE>
-18-
Executed by the parties as an agreement.
The common seal of NESS SECURITY )
PRODUCTS PTY LIMITED ACN 069 )
984 372 was affixed in accordance )
with its articles of association )
in the presence of: )
) .................................
) Signature of
................................. ) authorised person
Signature of authorised )
person ) .................................
) Office held
................................. )
Office held ) .................................
) Name of authorised person
................................. ) (block letters)
Name of authorised person
(block letters)
Signed sealed and delivered by )
NAZARENO CIRCOSTA in the )
presence of: )
)
)
................................. ) .................................
Signature of witness )
)
................................. )
Name of witness (block letters)
<PAGE>
-19-
The common seal of HOME )
SECURITY INTERNATIONAL INC )
was affixed in accordance )
with its articles of )
association in the presence )
of: )
)
) .................................
................................. ) Signature of authorised person
Signature of authorised )
person ) .................................
) Office held
................................. )
Office held ) .................................
) Name of authorised person
................................. ) (block letters)
Name of authorised person )
(block letters)
<PAGE>
EXHIBIT 10.3
AGREEMENT
DATED: 1999
BETWEEN:
NAZARENO CIRCOSTA
AND:
NESS SECURITY PRODUCTS PTY LIMITED
DIBBS CROWTHER & OSBORNE
Solicitors
50 Carrington Street
SYDNEY NSW 2000
DX 101 SYDNEY
Tel: 9290 8200
Fax: 9290 2964
Ref: JEC/JPL:990332
<PAGE>
AGREEMENT
THIS AGREEMENT dated 1999
BETWEEN: NAZARENO CIRCOSTA of 61b Windermere Avenue Northmead New South Wales
(in his personal capacity and as agent for Relevant Employees)
("Circosta")
AND: NESS SECURITY PRODUCTS PTY LIMITED ACN 069 984 372 of 4/167 Prospect
Highway, Seven Hills New South Wales ("Ness")
RECITALS:
A. Under an employment agreement between Circosta and Ness (previously Lisluck
Pty Limited) dated 3 October 1995 ("Employment Contract"), Circosta
provided managerial services to Ness.
B. In consideration of Circosta agreeing to:
(i) terminate the Employment Contract; and
(ii) enter into a new employment contract with Ness.
Ness has agreed to pay to Circosta the sum of AUS$4,672,000.00 on the terms
and conditions of this agreement.
1. OPERATIVE PROVISIONS
1.1 DEFINITIONS
In this agreement, including the recitals, unless contrary to or
inconsistent with the context:
"Completion Date" means the date being the earlier of:
(a) the date of execution by Circosta of the new employment
contract with Ness;
(b) the date of completion of the share buy-back by Ness of the
shares in Ness owned by Circosta Pty Limited; and
(c) the date of the subscription by Circosta for the shares in HSII
referred to in clause 3.1.
"Confidential Information" means all information in relation to the
existence and content of this agreement.
<PAGE>
3
"HSII" means Home Security International Inc. of Level 7, 77 Pacific
Highway, North Sydney, New South Wales.
"Relevant Employees" means those employees of Ness as agreed by the
parties to this agreement.
1.2 Interpretation
In this deed unless contrary to or inconsistent with the context:
(1) words importing:
(1) the singular include the plural and vice versa; and
(2) any gender includes all genders;
(2) a reference to a party or person includes a reference to that
party or person and its successors, substitutes (including, but
not limited to, any party or person taking by novation),
executors, administrators, assigns and principals;
(3) the word "person" includes a corporation and vice versa;
(4) a reference to any thing or any matter is a reference to the
whole and any part of it;
(5) a reference to a Group of persons or parties is a reference to
any 2 or more of them jointly and to each of them severally;
(6) a covenant, representation or warranty in favour of 2 or more
persons is for the benefit of them jointly and severally;
(7) a covenant, representation or warranty on the part of 2 or more
persons binds them jointly and severally;
(8) a reference to this deed or other document includes any
variation, novation or replacement of or supplement to any of
them from time to time;
(9) a reference to a clause means a reference to a clause of this
deed;
(10) where any clause contains sub-clauses, paragraphs or sub-
paragraphs, each sub-clause, paragraph and sub-
<PAGE>
4
paragraph however called is to be read and construed separately
and independently of each other;
(11) a reference (whether specific or general) to a statute or to
any other legislation includes any code, ordinance or other
law, and any regulation, rule or by-law or other instrument
made under it, and all official directives (if any) and all
amendments, consolidations, re-enactments or substitutions of
any of them from time to time;
(12) a reference to a document includes, but is not limited to, any
agreement in writing, certificate, notice or other instrument
in writing of any kind;
(13) "writing" and related expressions includes all means of
reproducing words in a tangible and permanently visible form;
and
(14) headings are inserted for guidance only and do not affect the
interpretation of this deed.
2. INCENTIVE
2.1 Subject to clauses 2.2 and 3, in consideration of Circosta:
(a) terminating the Employment Contract on the Completion Date; and
(b) entering into a new employment contract with Ness on the
Completion Date,
Ness agrees to pay to Circosta the sum of Aus$4,672,000.00 within 90
days of the Completion Date.
2.2 Circosta acknowledges that the amount which Ness must pay to
Circosta under clause 2.1 is before tax, in respect of which Ness
will assume liability for group tax of Aus$2,265,920 and all on
costs including, without limitation, workers compensation and
payroll tax on behalf of Circosta. Circosta agrees that after the
deduction of group tax by Ness, the amount payable by Ness to
Circosta under clause 2.1 is Aus$2,406,080.
<PAGE>
5
3. COMPLETION
Completion of this Agreement will occur in accordance with clause 2.1 and
upon Circosta subscribing for shares in HSII in accordance with a
Subscription Agreement between Circosta and HSII made on or about the date
of this Agreement.
4. CONFIDENTIALITY
4.1 Circosta covenants and undertakes to keep the Confidential Information
secret and confidential and to refrain from disclosing the
Confidential Information to any person.
4.2 The obligations of confidentiality contained in this clause do not
prevent the disclosure by Circosta of the Confidential Information in
circumstances where:
(1) Circosta is required by law to make the disclosure; and
(2) the Confidential Information enters the public domain otherwise
than as a result of a breach of this agreement.
5. WARRANTY
5.1 Circosta warrants and undertakes to Ness and it is a condition of this
agreement that Circosta has the capacity to act as agent for and bind
the Relevant Employees.
5.2 Circosta must indemnify and keep indemnified Ness 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 5 being incorrect in any way.
6. VARIATION
Any variation of this agreement must be in writing signed by the parties.
7. GOVERNING LAW AND JURISDICTION
This agreement is governed by the laws of New South Wales and both parties
submit to the exclusive jurisdiction of the courts of that State.
8. PROHIBITION AND ENFORCEABILITY
8.1 Any provision, or the application of any provision, of this agreement
which is prohibited in any jurisdiction is, in that jurisdiction,
ineffective only to the extent of that prohibition.
<PAGE>
6
8.2 Any provision, or the application of any provision, of this agreement
which is void, illegal or unenforceable in any jurisdiction does not
affect the validity, legality or enforceability of that provision in
any other jurisdiction or of the remaining provisions in that or any
other jurisdiction.
9. WAIVERS
9.1 Waiver of a breach or any right of election arising from a breach of
this agreement must be in writing and signed by the party granting the
waiver.
9.2 A breach or a right of election arising from a breach of this
agreement is not waived by any failure to or delay in exercise, or
partial exercise, of that right of election or any other right.
10. NOTICES
A notice or other communication including, but not limited to, a request,
demand, consent or approval to be made or given to or by a party to this
agreement:
(a) must be in writing unless expressly specified otherwise;
(b) must be sent to the address of the addressee or sent by facsimile to
the facsimile number respectively of the addressee given in this
agreement or, if the addressee notifies another address or facsimile
number, then to that address or facsimile number respectively;
(c) must be signed by an authorised officer of the party giving or
making it;
(d) is deemed to be duly given or made;
(i) in the case of a posted letter, on the third (seventh, if
posted to or from a place outside Australia) day after posting;
(ii) in the case of a facsimile, on production of a transmission
report by the machine from which the facsimile was sent which
indicates that the facsimile was sent in its entirety to the
facsimile number of the recipient; and
(iii) in the case of delivery by hand, on delivery,
but, if delivery or receipt is not on a Business Day in that
place to which a notice or communication is sent or is
<PAGE>
7
later than 4.00 pm (local time) in the place of receipt, it will
be deemed to have been duly given or made at 9.00 am on the next
succeeding Business Day in that place; and
(e) in the case of a facsimile transmission, is regarded as legible
unless the addressee telephones the sender within two hours after
the transmission is deemed to be received and informs the sender
that it is not legible.
11. ENTIRE AGREEMENT
This agreement contains the entire agreement and is in substitution of any
previous sub-contracting or employment agreements between the parties or
related persons which are deemed to have been terminated by mutual consent
from the date of this agreement.
EXECUTED as an Agreement
Signed by NAZARENO CIRCOSTA in the )
presence of: )
)
)
.................................. )
Signature of witness )
)
.................................. ) ...................................
Name of witness (block letters) Signature of NAZARENO CIRCOSTA
The common seal of NESS )
SECURITY PRODUCTS PTY LIMITED )
was affixed in accordance with )
its articles of association 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)
<PAGE>
EXHIBIT 10.4
NON-COMPETITION AGREEMENT
DATED: 1999
BETWEEN:
NAZARENO CIRCOSTA
AND
HOME SECURITY INTERNATIONAL, INC
DIBBS CROWTHER & OSBORNE
Solicitors
50 Carrington Street
SYDNEY NSW 2000
DX 101 SYDNEY
Tel: (612) 9290 8200
Fax: (612) 9290 2964
Ref: JEC/JPL:990332
<PAGE>
NON-COMPETITION AGREEMENT
THIS AGREEMENT dated day of 1999
BETWEEN: NAZARENO CIRCOSTA of 61b Windermere Avenue Northmead, New South Wales
(in his personal capacity and as agent for Relevant Employees)
("Circosta")
AND: HOME SECURITY INTERNATIONAL INC of Level 7, 77 Pacific Highway North
Sydney New South Wales
("HSI")
RECITALS
HSI has agreed to pay to Circosta the sum of AUS$1,000,000 in consideration for
Circosta 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)
<PAGE>
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 Circosta 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;
<PAGE>
4
"Ness" means Ness Security Products Pty Limited ACN 069 984 372 of
4/167 Prospect Highway, Seven Hills, NSW.
"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;
<PAGE>
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
<PAGE>
6
HSI agrees to pay to Circosta 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 Circosta 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.
<PAGE>
7
4. NON-COMPETITION
4.1 Except as otherwise provided in this Agreement, or for and on behalf
of HSI, Circosta 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.
<PAGE>
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
Circosta recognises that he will occupy a position of trust and confidence
with HSI as to Confidential Information pertaining to HSI. Therefore
Circosta agrees that:
(a) for the longest period permitted by law from the date of this
Agreement, Circosta and each Affiliate of Circosta 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) Circosta and each Affiliate of Circosta (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. Circosta 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 Circosta by HSI or authored in
whole or in party by Circosta 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, Circosta and each Affiliate of
Circosta (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
<PAGE>
9
6.1 Circosta warrants and undertakes to HSI and it is a condition of this
agreement that Circosta has the capacity to act as agent for and bind
the Relevant Employees.
6.2 Circosta 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 Circosta acknowledges that any breach of any obligation contained in
this Agreement is not adequately compensable by monetary damages, and
Circosta 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 Circosta. Any and all
attorneys' fees, costs and expenses incurred by HSI in enforcing the
terms of this Agreement shall be reimbursed to HSI by Circosta.
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
Circosta 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 Circosta and inure to the benefit
of HSI and its successors and assigns.
7.5 This instrument contains the entire agreement of HSI and Circosta and
respect to its subject matter and supersedes all prior understandings
and agreements of HSI and Circosta with respect to its subject matter.
<PAGE>
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
Circosta.
EXECUTED as an agreement.
Signed by NAZARENO CIRCOSTA in the )
presence of: )
)
)
______________________________ ) _______________________________
Signature of witness ) Signature of NAZARENO CIRCOSTA
)
______________________________ )
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)
<PAGE>
EXHIBIT 10.5
SHARE BUY-BACK AGREEMENT
NESS SECURITY PRODUCTS PTY LIMITED
ACN 069 984 372
CIRCOSTA PTY LIMITED
ACN 071 135 709
Kevin Munro & Associates
Solicitors
Level 6, Kelco House
364 Kent Street
SYDNEY NSW 2000
Telephone: 9290 3838
Facsimile: 9290 3737
<PAGE>
INDEX
CLAUSE NUMBER CONTENTS
1. Definitions and Interpretation
2. Buy-Back
3. Condition Precedent
4. Transfer and Registration
<PAGE>
THIS AGREEMENT is made on 2 June 1999
PARTIES:
1. NESS SECURITY PRODUCTS PTY LIMITED ACN 069 984 372 of Unit 4, 167 Prospect
Highway, Seven Hills, New South Wales (the "Company").
2. CIRCOSTA PTY LIMITED ACN 071 135 709 of Unit 4, 167 Prospect Highway, Seven
Hills, New South Wales, (the "Shareholder")
RECITALS:
A. The Company has agreed to buy-back 260,000 Ordinary shares in the capital
of the Company held by the Shareholder for $12.54 per share for total
consideration of $3,260,400 according to the terms in this Agreement and
the Shareholder has agreed to sell those shares for the same terms.
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
In this Agreement unless the context otherwise requires:
reference to a person includes any other entity recognised by law and vice
versa;
words importing the singular number include the plural number and vice
versa:
words importing one gender include every gender;
any reference to any of the parties by their defined terms include that
party's executors, administrators or permitted assigns or, being a company,
its successors or permitted assigns;
every Agreement or undertaking expressed or implied by which more than one
person agrees or undertakes any obligation or derives any benefit binds or
enures for the benefit of those persons jointly and each severally;
clause headings are for reference purposes only;
2. BUY-BACK
The shareholder for $12.54 per share for the total consideration of
$3,260,400 from the Company hereby agrees to sell 260,000 Ordinary Class
shares in the capital of the Company held by the Shareholder to the
Company.
<PAGE>
3. CONDITION PRECEDENT
This Agreement is conditional upon the Company putting all arrangements
into place that will make the Agreement valid under Division 2 of Part2J.1
of the Corporations Law.
4. TRANSFER AND REGISTRATION
The Company will register the transfer of shares made pursuant to this
Agreement and pay the consideration on completion, which will occur as soon
as possible after the condition in clause 3 is satisfied.
EXECUTED as an Agreement.
SIGNED on behalf of NESS SECURITY )
PRODUCTS PTY LIMITED by its )
Authorised Officer in the presence of: )
)
)
- ---------------------------------------------------------------------------
Signature of Witness ) Signature of Authorised Officer
)
)
- ---------------------------------------------------------------------------
Name of Witness -- please print
SIGNED on behalf of CIRCOSTA PTY )
LIMITED by its Authorised Officer in the )
presence of: )
)
)
- ---------------------------------------------------------------------------
Signature of Witness ) Signature of Authorised Officer
)
)
- ------------------------------------------
Name of Witness -- please print
