EXHIBIT 10.5
HOME SECURITY INTERNATIONAL INC.
XXXXXXX XXXXX XXXXXX
EXECUTIVE SERVICE AGREEMENT
XXXXXX XXXXXXX
Lawyers
Xxxxxx Xxxxxxx Building
00 Xxxxxx Xxxxx
XXXXXX XXX 0000
DX 000 Xxxxxx
Telephone (00) 0000 0000
Facsimile (00) 0000 0000
MAP:
TABLE OF CONTENTS
1. DEFINITIONS............................................................ 1
2. APPOINTMENT AND POSITION............................................... 2
3. EXECUTIVE'S DUTIES..................................................... 2
4. THE EXECUTIVE'S REMUNERATION AND OTHER BENEFITS........................ 3
5. OPTIONS................................................................ 3
6. BONUS.................................................................. 3
8. ILLNESS OR INJURY...................................................... 3
9. CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY..................... 4
10. ASSIGNMENT OF INTELLECTUAL PROPERTY.................................... 5
11. TERMINATION............................................................ 5
12. REDUNDANCY............................................................. 6
13. WHAT HAPPENS AFTER TERMINATION OF EMPLOYMENT........................... 6
14. RESTRAINT ON THE EXECUTIVE'S CONDUCT................................... 6
15. COMPLIANCE............................................................. 7
16. SEVERABILITY........................................................... 7
17. WAIVER................................................................. 8
18. NOTICE................................................................. 8
19. GOVERNING LAW.......................................................... 8
20. ENTIRE AGREEMENT....................................................... 8
21. ALTERATION............................................................. 8
22. THIS AGREEMENT IS CONFIDENTIAL......................................... 9
23. HEADINGS............................................................... 9
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EXECUTIVE SERVICE AGREEMENT
AGREEMENT dated 1997
BETWEEN: HOME SECURITY INTERNATIONAL, INC., a company incorporated in Delaware,
United States of America, and having its registered office at 00
Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx ('COMPANY')
AND: XXXXXXX XXXXX XXXXXX of 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxx Xxxxx,
Xxxxxxxxx ('EXECUTIVE')
RECITALS
The Company has offered the Executive employment on the terms of this Agreement
and the Executive has accepted that offer.
AGREEMENT
1. DEFINITIONS
1.1 In this Agreement:
'CONFIDENTIAL INFORMATION' means all confidential information including,
but not limited to trade secrets and confidential know-how of which the
Executive becomes aware or generates (both before and after the day this
Agreement is signed) in the course of, or in connection with, employment
with the Company, its subsidiaries and predecessors.
'EXTERNAL BUSINESSES' means any businesses or other commercial activities
engaged in by the Executive otherwise than in the course of his engagement
under this agreement.
'HSI DEALER' means any dealer, distributor or agent appointed by the
Company (or any subsidiary of the Company) from time to time to promote the
sales, installation and/or service of the SecurityGuard Product.
'HSI GROUP' means the Company and its wholly owned subsidiaries.
'HSI GROUP COMPANY' means a member of the HSI Group.
'INTELLECTUAL PROPERTY RIGHTS' means all intellectual property rights
including without limitation:
(a) patents, copyright, registered designs, trademarks and the right to
have confidential information kept confidential; and
(b) any application or right to apply for registration of any of those
rights
'SALE' means the sale by an HSI Dealer of a SecurityGuard product to a
member of the public where the product has not been returned by the
consumer, nor has there been a refund of the price paid for the
SecurityGuard Product.
'SECURITYGUARD PRODUCT' means the home security alarm devices which at the
date of this agreement are manufactured by Ness Security Products Pty
Limited and known as 'SecurityGuard' and 'SecurityGuard II'.
'TOTAL REMUNERATION' means the benefits due under CLAUSE 4.1 from time to
time.
1.2 In this Agreement, unless the contrary intention appears:
(a) the singular includes the plural and vice versa;
(b) a reference to a clause or schedule is a reference to a clause or
schedule to this Agreement and a reference to this Agreement includes
any schedules;
(c) a reference to a document or agreement, including this Agreement,
includes a reference to that document or agreement as novated, altered
or replaced from time to time;
(d) a reference to '$' is a reference to Australian currency; and
(e) a reference to writing includes typewriting, printing, photocopying
and any other method of representing words, figures or symbols in a
permanent visible form.
2. APPOINTMENT AND POSITION
2.1 The Company must employ the Executive in the position of Chief Executive
Officer.
2.2 The Executive's employment will commence immediately following the
successful completion of the float of the Company.
3. EXECUTIVE'S DUTIES
3.1 The Executive must:
(a) perform to the best of the Executive's abilities and knowledge the
duties assigned to the Executive by the Company from time to time,
whether during or outside the Company's normal business hours and at
such places as the Company requires.
(b) subject to CLAUSE 3.3, devote substantially all of his time and
attention to the business of the Company;
(c) use all reasonable efforts to promote the interests of the Company;
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(d) act in the Company's best interests;
(e) comply with all policies of the Company in place from time to time;
(f) comply with all law applicable to the Executive's position and the
duties assigned to the Executive;
(g) report to the person or persons nominated by the Company from time to
time;
(h) perform work in connection with any subsidiaries of the Company as
directed anywhere throughout the world; and
(i) if required by the Company, accept employment with an HSI Group
Company, either exclusively or in conjunction with employment by the
Company.
3.2 Without limiting the Executive's duties to the Company, the Executive must
not:
(a) act in conflict with the Company's best interests; or
(b) compete with the Company.
3.3 The Executive may spend a reasonable amount of time on a weekly basis
working on the External Businesses. If the Executive is not performing his
obligations under clauses 3.1 and 3.2 to the satisfaction of the board of
the Company because of his rights under this clause 3.3, then the board of
the Company may review the time spent by the Executive working on the
External Businesses.
4. THE EXECUTIVE'S REMUNERATION AND OTHER BENEFITS
4.1 The Company must pay the Executive a remuneration package of US$700,000 per
annum, which is to be paid monthly. The Executive may request the Company
from time to time to pay part or all of the Total Remuneration by way of
life insurance, superannuation, contributions to a pension plan, income
protection insurance or such other components as may otherwise be agreed
between the parties.
4.2 For the avoidance of doubt, the Company is not obliged to pay or reimburse
the Executive for any out of pocket expenses incurred by the Executive in
relation to the business of the Company or otherwise.
4.3 The Company must review the Total Remuneration not less than once each year
and may vary the Total Remuneration following that review.
4.4 The Executive's Total Remuneration set out in clause 4.1 is inclusive of
any payments required to be made by the Company pursuant to any applicable
legal, statutory or regulatory requirement arising from work performed by
the Executive in accordance with this agreement in any jurisdiction in
which the Executive is required to work pursuant to clause 3.1.
4.5 The Company may and, if requested by the Executive must, set off against
the Total Remuneration (net of tax) any or all interest which has become
due to the Company by the Executive on the loan to be made by the Company
to the Executive in respect of 95% of the allotment price for the 250,000
shares in the Company to be allotted to the Executive.
5. OPTIONS
The Executive may be issued with options in accordance with SCHEDULE 1.
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6. BONUS
The Company must pay a bonus to the Executive in accordance with Schedule
2. The Company may pay a further bonus to the Executive in accordance with
Schedule 3.
7. EXECUTIVE'S LEAVE
The Company must grant the Executive leave in accordance with applicable
law.
8. ILLNESS OR INJURY
8.1 The Company must grant the Executive up to 10 days' paid sick leave each
year if the Executive is unable to perform the Executive's duties due to
illness or injury.
If the Executive is unable to perform the Executive's duties due to illness
or injury:
(a) for more than the period of the Executive's untaken paid sick leave,
but less than three months in any one period of 52 consecutive weeks,
the Executive's employment under this Agreement will continue but the
Company is not obliged to remunerate the Executive in accordance with
clause 4.1; or
(b) for equal to or more than three months in any one period of 52
consecutive weeks, the Company may terminate this Agreement by giving
to the Executive in addition to the Total Remuneration received or
earned until that point in accordance with clause 4.1, an amount
equal to the Total Remuneration received or earned by the Executive
during the three month period immediately preceding termination.
8.3 The Executive acknowledges that the Executive is not entitled to any
payment from the Company if this Agreement is terminated under clause 8.2
except for:
(a) any remuneration due under CLAUSE 4 but unpaid at the date of the
termination; and
(b) any amount required under clause 11.1 to be paid; and
(c) any amount required under applicable law to be paid, less any amount
required to be paid under clause 11.1.
9. CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY
9.1 The Executive may use Confidential Information solely for the purpose of
performing the Executive's duties with the Company.
9.2 The Executive must keep confidential all Confidential Information but may
disclose Confidential Information:
(a) to persons who:
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(i) are aware and agree that the Confidential Information must be
kept confidential; or
(ii) have signed any confidentiality agreement required by the Company
from time to time,
and either:
(iii) have a need to know relative to the running to the Business (and
only to the extent that each has a need to know); or
(iv) have been approved by the person or persons nominated by the
Company from time to time;
(b) that the Executive is required to disclose in the course of the
Executive's duties with the Company;
(c) that was public knowledge when this Agreement was signed or became so
at a later date (other than as a result of a breach of confidentiality
by the Executive); or
(d) that the Executive is required by law to disclose.
9.3 The Executive must immediately notify the Company of any suspected or
actual unauthorised use, copying or disclosure of Confidential Information.
9.4 The Executive must provide assistance reasonably requested by the Company
in relation to any proceedings the Company may take against any person for
unauthorised use, copying or disclosure of Confidential Information.
10. ASSIGNMENT OF INTELLECTUAL PROPERTY
10.1 The Executive:
(a) presently assigns to the Company all existing and future Intellectual
Property Rights in all inventions, models, designs, drawings, plans,
software, reports, proposals and other materials created or generated
by the Executive (whether alone or with the Company, its other
employees or contractors) for use by the Company; and
(b) acknowledges that by virtue of this clause all such existing rights
are vested in the Company and, on their creation, all such future
rights will vest in the Company.
10.2 The Executive must do all things reasonably requested by the Company to
enable the Company to assure further the rights assigned under CLAUSE 10.1.
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11. TERMINATION
11.1 Subject to CLAUSES 8.3 and 12, the Executive's employment may be terminated
after three years from the date of commencement of the Executive's
employment under this agreement:
(a) by the Executive giving to the Company three months' notice; or
(b) by the Company giving to the Executive three months' notice.
11.2 The Executive's employment may be terminated by the Company at any time
without notice if the Executive:
(a) disobeys a lawful direction of the Company;
(b) is guilty of other serious misconduct;
(c) breaches CLAUSE 9;
(d) other than CLAUSE 9, breaches any other material provision of this
Agreement including CLAUSES 3.1 or 3.2;
(e) is found guilty by a court of a criminal offence.
11.3 Termination under this clause does not affect any accrued rights or
remedies of either party.
12. REDUNDANCY
If the Executive's employment is terminated for redundancy, the Executive
agrees that:
(a) the Company may terminate this Agreement by giving to the Executive in
addition to the Total Remuneration received or earned until that point
in accordance with CLAUSE 4.1, an amount equal to the Total
Remuneration received or earned by the Executive during the 12 month
period immediately preceding termination.
(b) the Executive is not entitled to any payment from the Company except
for:
(i) any remuneration due under CLAUSE 4 but unpaid at the date of the
termination; and
(ii) any amount required under applicable law to be paid, less any
amount paid under CLAUSE 12 (a).
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13. WHAT HAPPENS AFTER TERMINATION OF EMPLOYMENT
13.1 If the Executive's employment is terminated for any reason:
(a) the Company may set off any amounts the Executive owes the Company
against any amounts the Company owes the Executive at the date of
termination except for amounts the Company is not entitled by law to
set off;
(b) the Executive must return all the Company's property (including
property leased by the Company) to the Company on termination
including all written or machine readable material, software,
computers, credit cards, keys and vehicles;
(c) the Executive's obligations under CLAUSE 9 continue after termination
except in respect of information that is part of the Executive's
general skill and knowledge; and
(d) the Executive must not record any Confidential Information in any form
after termination.
14. RESTRAINT ON THE EXECUTIVE'S CONDUCT
14.1 During the Restraint Period after termination of the Executive's
employment, the Executive must not in any area in which the Company has
operated during the preceding 24 months or to the Executive's knowledge
intends to operate in the ensuing 24 months.
(a) engage in or prepare to engage in any business or activity that is the
same or similar to that part or parts of the business carried on by
the Company in which the Executive was employed at any time during the
Executive's last 24 months with the Company; or
(b) solicit, canvass, approach or accept any approach from any person who
was at any time during the Executive's last 24 months with the Company
a client of the Company in that part or parts of the business carried
on by the Company in which the Executive was employed with a view to
obtaining the custom of that person in a business that is the same or
similar to the business conducted by the Company; or
(c) interfere with the relationship between the Company and its customers,
employees or suppliers; or
(d) induce or assist in the inducement of any employee of the Company to
leave their employment.
14.2 In CLAUSE 14.1, 'Restraint Period' means:
(a) 12 months after termination of the Executive's employment;
(b) 9 months after termination of the Executive's employment;
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(c) 6 months after termination of the Executive's employment.
14.3 CLAUSE 14.1 has the effect of several separate and individual covenants and
restraints consisting of each separate covenant and restraint set out in
CLAUSE 14.1 combined with each separate period of time set out in CLAUSE
14.2.
14.4 If any of the several separate and independent covenants and restraints
referred to in CLAUSE 14.3 are or become invalid or unenforceable for any
reason, then that invalidity or unenforceability will not effect the
validity of enforceability of any of the other separate and independent
covenants and restraints.
14.5 In CLAUSE 14.1 'engage in' means to participate, assist or otherwise be
directly or indirectly involved as a member, shareholder, unitholder,
director, consultant, advisor, contractor, principal, agent, manager,
employee, beneficiary, partner, associate, trustee or financier.
14.6 The Company may require the Executive to provide evidence confirming to the
satisfaction of the Company that the Executive is not in breach of this
clause.
14.7 The Executive acknowledges that each restriction specified in CLAUSE 14.1
is in the circumstances reasonable and necessary to protect the Company's
legitimate interests.
15. COMPLIANCE
The exercise of or compliance with any discretion, right or obligation
under this Agreement is subject to compliance with all applicable laws.
16. SEVERABILITY
Part or all of any clause of this Agreement that is illegal or
unenforceable will be severed from this Agreement and the remaining
provisions of this Agreement continue in force.
17. WAIVER
The failure of either party at any time to insist on performance of any
provision of this Agreement is not a waiver of its right at any later time
to insist on performance of that or any other provision of this Agreement.
18. NOTICE
18.1 A party giving notice under this Agreement must do so in writing.
18.2 A notice given in accordance with CLAUSE 18.1 is taken to be received if:
(a) hand delivered, on delivery;
(b) sent by prepaid post, 3 days after the date of posting;
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(c) sent by telex, when the machine on which the telex is transmitted
receives at the end of transmission, the answerback code of the
recipient unless, within 8 Business Hours after that transmission, the
recipient informs the sender that it has not received the entire
notice;
(d) sent by facsimile, when the sender's facsimile system generates a
message confirming successful transmission of the total number of
pages of the notice unless, within 8 Business Hours after that
transmission, the recipient informs the sender that it has not
received the entire notice.
19. GOVERNING LAW
This Agreement is governed by the law applicable in the United States of
America and the parties irrevocably and unconditionally submit to the
exclusive jurisdiction of the courts of the United States of America.
20. ENTIRE AGREEMENT
This Agreement (including its schedules):
(a) constitutes the entire agreement between the parties as to its subject
matter; and
(b) in relation to that subject matter, supersedes any prior understanding
or agreement between the parties and any prior condition, warranty,
indemnity or representation imposed, given or made by a party.
21. ALTERATION
This Agreement (including its schedules) may only be altered in writing
signed by each party.
22. THIS AGREEMENT IS CONFIDENTIAL
The terms of this Agreement and any subsequent amendments are confidential
and may not be disclosed by the Executive to any other person, other than
for the purpose of obtaining professional legal or accounting advice,
without the written approval of the Company.
23. HEADINGS
Headings are for ease of reference only and do not affect the meaning of
this agreement.
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SCHEDULE 1 - OPTIONS (CLAUSE 5)
As determined by resolution of the Board of Directors from time to time pursuant
to the terms and conditions of the Company's Executive Option Plan.
SCHEDULE 2 - BONUS (CLAUSE 6)
10% of the audited net profit of the HSI Group after tax. The bonus is to be
paid monthly, calculated on the basis of net profits after tax, as disclosed in
the monthly management accounts of the HSI Group. If, when the audited accounts
of the HSI Group are released, it is apparent that the amount actually paid in
the preceding 12 months is more or less than 10% of the audited net profit of
the HSI Group after tax as per those annual accounts, then the parties must,
within 30 days of release of those accounts, make the necessary adjustment
between them to reduce or increase the amount actually paid to equal 10% of the
audited net profit of the HSI Group after tax.
SCHEDULE 3 - BONUS (CLAUSE 6)
As determined by a resolution of the Board of Directors of the Company.
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EXECUTED as an agreement.
THE COMMON SEAL of )
HOME SECURITY INTERNATIONAL )
INC. is affixed in accordance with its articles )
of association in the presence of )
-------------------------------- --------------------------------
Secretary Director
-------------------------------- --------------------------------
Name of secretary (print) Name of director (print)
SIGNED by XXXXXXX XXXXX XXXXXX )
in the presence of )
-------------------------------- --------------------------------
Signature of witness XXXXXXX XXXXXX
--------------------------------
Name of witness (print)
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