EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of April 2, 1997,
by and between XxXxxxx Metals Golf Corp, a Nevada corporation and XxXxxxx
Metals, Inc., an Illinois corporation, herein collectively referred to as
"McHenry" and Xxxx X. Xxxxx, herein referred to as "Xxxxx".
ARTICLE 1. TERM OF EMPLOYMENT
Section 1.01. XxXxxxx hereby employs Xxxxx and Xxxxx hereby accepts
employment with McHenry for a period of three years beginning on April 2, 1997
and terminating on April 1, 2000.
Section 1.02. This agreement shall be renewed automatically for
succeeding terms
of one year unless either party gives notice to the other at least sixty (60)
days prior to the expiration of any term of his or its intention not to renew.
Section 1.03. As used herein, the phrase "employment term" refers to
the entire period of employment of Xxxxx by McHenry hereunder, whether for the
periods provided above, or whether terminated earlier as hereinafter provided
or extended by mutual agreement between the parties.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01. Xxxxx shall serve as the President and Chairman of the
Board of Directors of McHenry. In his capacity as President of McHenry, Xxxxx
shall do and perform all services, acts, or things necessary or advisable to
manage and conduct the business of McHenry, subject at all times to the
policies set by XxXxxxx'x Board of Directors, and to the consent of the Board
or the Executive Committee of the Board when required by the terms of this
contract.
Section 2.02. Xxxxx shall not, without specific approval of XxXxxxx'x
Board of Directors or Executive Committee, do or contract to do any of the
following:
(1) Borrow on behalf of McHenry;
(2) Purchase capital equipment for amounts in excess of the
amounts budgeted for expenditure by the Board of Directors or Executive
Committee.
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(3) Commit McHenry to the expenditure of more than $1,000 in the
development and sale of new products.
Section 2.03(a). Xxxxx shall devote his entire productive time,
ability, and attention to the business of McHenry during the term of this
contract.
(b) Xxxxx shall not engage in any other business duties or
pursuits whatsoever, or directly or indirectly render any services of a
business, commercial, or professional nature to any other person or
organization, whether for compensation or otherwise, without the prior written
consent of XxXxxxx'x Board of Directors or Executive Committee. However, the
expenditure of reasonable amounts of time for Fraternity of Golf or
educational, charitable, or professional activities shall not be deemed a
breach of this agreement if those activities do not materially interfere with
the services required under this agreement and shall not require the prior
written consent of Employer's Board of Directors or Executive Committee.
(c) This agreement shall not be interpreted to prohibit Xxxxx
from making passive personal investments or conducting private business
affairs if those activities do not materially interfere with the services
required under this agreement. However, Xxxxx shall not directly or
indirectly acquire, hold, or retain any interest in any business competing
with or similar in nature to the business of McHenry.
Section 2.04. During the term of this contract, Xxxxx shall not,
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officers, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of McHenry.
Section 2.05. Xxxxx hereby represents and agrees that the services to
be performed under the terms of this contract are of a special, unique,
unusual, extraordinary, and intellectual character that gives them a peculiar
value the loss of which cannot be reasonably or adequately compensated in
damages in an action at law. Xxxxx therefore expressly agrees that McHenry,
in addition to any other rights or remedies that McHenry may possess, shall be
entitled to injunctive and other equitable relief to prevent or remedy a
breach of this contract by Xxxxx.
Section 2.06(a). The parties acknowledge and agree that during the term
of this agreement and in the course of the discharge of his duties hereunder,
Xxxxx shall have access to and become acquainted with information concerning
the operation and processes of McHenry including without limitation,
financial, personnel, sales, scientific, and other information that is owned
by McHenry and regularly used in the operation of XxXxxxx'x business, and that
such information constitutes XxXxxxx'x trade secrets.
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(b) Xxxxx specifically agrees that he shall not misuse,
misappropriate, or disclose any such trade secrets, directly or indirectly, to
any other person or use them in any way, either during the term of this
agreement or at any other time thereafter, except as is required in the course
of his employment hereunder.
(c) Xxxxx acknowledges and agrees that the sale or unauthorized
use or disclosure of any of XxXxxxx'x trade secrets obtained by Xxxxx during
the course of his employment under this agreement, including information
concerning XxXxxxx'x current or any future and proposed work, services, or
products, the facts that any such work, services, or products are planned,
under consideration, or in production, as well as any descriptions thereof,
constitute unfair competition. Employee promises and agrees not to engage in
any unfair competition with McHenry, either during the term of this agreement
or at any other time thereafter.
(d) Xxxxx further agrees that all files, records, documents,
drawings, specifications, equipment, and similar items relating to XxXxxxx'x
business, whether prepared by Xxxxx or others, are and shall remain
exclusively the property of McHenry and that they shall be removed from the
premises of McHenry.
Section 2.07.(a). Xxxxx promises and agrees that he will promptly and
fully inform XxXxxxx of and disclose to XxXxxxx all inventions, designs,
improvements, and discoveries that he makes during the term of this agreement,
whether individually or jointly in collaboration with others, which pertain or
relate to the business of McHenry or to any experimental work carried on by
McHenry, whether or not conceived during regular working hours.
(b) Xxxxx shall make full disclosure to McHenry immediately after
creating any invention, making any discovery, or developing or improving any
processes, methods, formulas, machines, or devices, and shall thereafter keep
McHenry fully informed at all times of all progress in connection therewith.
Section 2.08.(a). Xxxxx agrees that any and all intellectual
properties, including, but not limited to, all ideas, concepts, themes,
inventions, designs, improvements, and discoveries conceived, developed, or
written by Xxxxx, either individually or jointly in collaboration with others,
pursuant to this agreement, shall belong to and be the sole and exclusive
property of McHenry.
(b) Xxxxx further agrees to submit any dispute regarding whether
any intellectual property was conceived, developed, or written pursuant to
this agreement to a review process pursuant to XxXxxxx'x rules and policies.
(c) Xxxxx further agrees that all rights in all intellectual
properties prepared by him pursuant to this agreement, including patent
rights, trademarks and copyrights applicable to any of the intellectual
properties described hereinabove, shall belong
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exclusively to McHenry, shall
constitute "works made for hire," and shall be assigned promptly by Xxxxx to
XxXxxxx. Xxxxx further agrees to assist XxXxxxx in obtaining patents on all
such inventions, designs, improvements, and discoveries that are patentable or
copyright registration on all such works of creation that are copyrightable,
and shall execute all documents and do all things necessary to obtain patent
or copyright registration, vest McHenry with full and exclusive title, and
protect against infringement by others.
(d) Xxxxx further agrees that all files, records, documents,
drawings, specifications, equipment, and similar items relating to XxXxxxx'x
business, whether prepared by Xxxxx or others, are and shall remain
exclusively the property of McHenry and that they shall not be removed from
the premises of McHenry.
Section 2.09(a). XxXxxxx shall have the right to use the name of Xxxxx
as part of the trade name or trademark of McHenry if it should be deemed
advisable to do so. Any trade name or trademark, of which the name of Xxxxx
is a part, that is adopted by McHenry during the employment of Xxxxx may be
used thereafter by McHenry for as long as XxXxxxx deems advisable.
(b) Xxxxx shall not, without the prior written consent of
McHenry, either during the term of this agreement or at any time thereafter,
use or permit the use of his name in the trade name or trademark of any other
enterprise if that other enterprise is engaged in a business similar in any
respect to that conducted by McHenry, unless that trade name or trademark
clearly indicates that the other enterprise is a separate entity entirely
distinct from and not to be confused with McHenry and unless that trade name
or trademark excludes any words or symbols stating or suggesting prior or
current affiliation or connection by that other enterprise or its employees
with McHenry.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
Section 3.01. McHenry shall provide Xxxxx with the compensation,
incentives, benefits, and business expense reimbursement specified herein.
Section 3.02. McHenry shall provide Xxxxx with a private office,
stenographic help, office equipment, supplies, and other facilities and
services, suitable to Xxxxx' position and adequate for the performance of his
duties.
Section 3.03. McHenry shall indemnify Xxxxx for all losses sustained by
Xxxxx in direct consequence of the discharge of his duties on XxXxxxx'x
behalf.
ARTICLE 4. COMPENSATION OF EMPLOYEE
Section 4.01.(a). As compensation for the services to be performed
hereunder, Xxxxx shall receive a salary at the rate of $120,000 per annum,
payable not less than once
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each month, on or before the 30th day of each month through August 31, 1997,
and thereafter at the rate of $150,000 per annum.
(b). Xxxxx shall receive such annual increases in salary as
may be determined by XxXxxxx'x Board of Directors or Executive Committee.
Section 4.02. Xxxxx may at any time relinquish the position of
President of McHenry and retain the position of Chairman of the Board of
Directors of McHenry. At such time, the salary of Xxxxx shall be subject to
renegotiation and Xxxxx' obligations shall be redetermined as mutually agreed
between Xxxxx and McHenry; provided, however, Xxxxx' rights to and rights to
exercise the stock options granted pursuant to Article 5 of this Agreement
shall not be affected thereby.
Section 4.03. (a). In addition to all other compensation payable to
Xxxxx, McHenry will pay to Xxxxx a royalty upon the sale or license of "metal
xxxxx" designed by Xxxxx or by Xxxxx individually or in collaboration with
others during the term of this Agreement, excluding any royalty or any such
"metal xxxxx" developed pursuant to any license agreement between McHenry and
Xxxxxx Sporting Goods Co., as follows:
(b). One dollar ($1.00) on each unit of such "metal xxxxx"
sold by McHenry during the term of this Agreement, for the first five hundred
thousand (500,000) units sales; $.50 for the next five hundred thousand
(500,000) units sales; and $.25 for all such sales in excess of one million
(1,000,000) units sales.
(c). In the event McHenry shall license the manufacture or
assembly and sale of such metal xxxxx by others, McHenry will pay to Xxxxx a
royalty for each such sale by any such licensee in the amount and included in
the royalty set forth above.
(d). All question of whether, when, how, and to whom
licenses shall be generated, shall be determined in the sole discretion of
McHenry.
(e). All such royalties shall be paid quarterly in arrears,
thirty (30) days after the end of each calendar quarter, based on sales
collections and shall exclude returns, and such "metal xxxxx" supplied for
demonstration or promotional purposes.
(f). This royalty will not be assigned by Xxxxx and any
such assignment or assignment to such payments, by operation of law or
otherwise, except to Xxxxx' estate, or heirs at law, shall be void and of no
effect whatsoever.
ARTICLE 5. STOCK OPTION
Section 5.01.(a). McHenry hereby grants Xxxxx an option to purchase
600,000 shares of XxXxxxx'x common stock at a purchase price of $.50 per
share. This option may be exercised in whole or in part, but may only be
exercised in lots of 100,000 shares or
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more. Xxxxx shall not have any of the
rights of, nor be treated as, a shareholder with respect to the shares subject
to this option until he has exercised the option and has become the
shareholder of record of those shares.
(b) This option may only be exercised by Xxxxx during the term of
his employment hereunder. However, in the event that the employment term is
terminated, Xxxxx shall retain the right to exercise any unused portion of the
option until three (3) months after such termination.
ARTICLE 6. EMPLOYEE BENEFITS
Section 6.01. Xxxxx shall be entitled to 15 days vacation time each
year without loss of compensation. Xxxxx may be absent from his employment
for vacation only at such times as XxXxxxx'x Board of Directors or Executive
Committee shall determine from time to time. In the event that Xxxxx is
unable for any reason to take the total amount of vacation time authorized
herein during any year, he may accrue that time and add it to vacation time
for any following year or may receive a cash payment therefor in an amount
equal to the amount of annual salary attributable to that period of time or
shall be deemed to have waived any entitlement to vacation time for that year.
Section 6.02. Xxxxx shall be entitled to 15 days per year as sick leave
with full pay. Sick leave may be accumulated up to a total of 60 days.
Section 6.03. McHenry agrees to include Xxxxx in the coverage of its
medical, major medical, hospital, dental, and eye care insurance when obtained
by McHenry subject to eligibility.
ARTICLE 7. BUSINESS EXPENSES
Section 7.01.(a) McHenry shall promptly reimburse Xxxxx for all
reasonable business expenses incurred by Xxxxx in connection with the business
of McHenry.
(b) Each such expenditure shall be reimbursable only if it is of
a nature qualifying it as a proper deduction on the federal and state income
tax return of McHenry.
(c) Each such expenditure shall be reimbursable only if Xxxxx
furnishes to McHenry adequate records and other documentary evidence required
by federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction.
Section 7.02. In the event that any expenses paid for Xxxxx or any
reimbursement of expenses paid to Xxxxx shall, on audit or other examination
of XxXxxxx'x income tax returns, be determined not to be allowable deductions
from XxXxxxx'x gross income, and in the further event that this determination
shall be acceded to by McHenry or made final
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by the appropriate federal or
state taxing authority or a final judgment of a court of competent
jurisdiction, and no appeal is taken from the judgment or the applicable
period for filing notice of appeal has expired, Xxxxx shall repay to McHenry
the full amount of the disallowed expenses.
Section 7.03. McHenry shall provide to Xxxxx, at the expense of
McHenry, a driver/personal assistant. Such driver shall be in lieu of all
expenses for use of Xxxxx' automobile incurred in connection with the business
of McHenry. Xxxxx shall obtain and maintain at his expense, an automobile
liability insurance policy which shall name McHenry as an additional insured.
ARTICLE 8. TERMINATION OF EMPLOYMENT
Section 8.01.(a) McHenry reserves the right to terminate this agreement
if Xxxxx wilfully breaches or habitually neglects the duties which he is
required to perform under the terms of this agreement; or commits such acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties.
(b) McHenry may at its option terminate this agreement for the
reasons stated in this Section by giving written notice of termination to
Xxxxx without prejudice to any other remedy to which McHenry may entitled
either at law, in equity, or under this agreement.
(c) The notice of termination required by this section shall
specify the ground for the termination and shall be supported by a statement
of all relevant facts.
(d) Termination under this section shall be considered "for
cause" for the purposes of this agreement.
Section 8.02.(a) This agreement shall be terminated upon the death of
Xxxxx.
(b) McHenry reserves the right to terminate this agreement not
less than three months after Xxxxx suffers any physical or mental disability
that would prevent the performance of his duties under this agreement. Such a
termination shall be effected by giving 10 days' written notice of termination
to Xxxxx.
(c) Termination under this section shall not be considered "for
cause" for the purposes of this agreement.
Section 8.03.(a) This agreement shall be terminated by any voluntary or
involuntary dissolution of McHenry resulting from either a merger or
consolidation in which McHenry is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of
McHenry.
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(b) Termination under this section shall not be considered "for
cause" for the purposes of this agreement.
Section 8.04. Notwithstanding any provision of this agreement, if
McHenry terminates this agreement without cause, it shall pay Xxxxx an amount
equal to three (3) months' salary at the then current rate of compensation.
ARTICLE 9. GENERAL PROVISIONS
Section 9.01. Any notices to be given hereunder by either party to the
other shall be in writing and may be transmitted by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested.
Mailed notice shall be addressed to the parties at the addresses appearing in
the introductory paragraph of this agreement, but each party may change that
address by written notice in accordance with this section. Notices delivered
personally shall be deemed communicated as of the date of actual receipt;
mailed notices shall be deemed communicated as of the date of mailing.
Section 9.02.(a) Any controversy between McHenry and Xxxxx involving
the construction or application of any of the terms, provisions, or conditions
of this agreement shall on the written request of either party served on the
other be submitted to arbitration. Arbitration shall comply with and be
governed by the provisions of the California Arbitration Act.
(b) McHenry and Xxxxx shall each appoint one person to hear and
determine the dispute. If the two persons so appointed are unable to agree,
then those persons shall select a third impartial arbitrator whose decision
shall be final and conclusive upon both parties.
(c) The cost of arbitration shall be borne by the losing party
or in such proportions as the arbitrators decide.
Section 9.03. If any action at law or in equity is necessary to enforce
or interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorney fees,
costs, and necessary disbursements in addition to any other relief to which
that party may be entitled. This provision shall be construed as applicable
to the entire contract.
Section 9.04. This agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Xxxxx by McHenry and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise, have been made by
any party, or anyone acting on behalf of any party, which are not embodied
herein, and that no other agreement, statement, or promise not contained in
this agreement shall be valid or binding on either party.
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Section 9.05. Any modification of this agreement will be effective only
if it is in writing and signed by the party to be charged.
Section 9.06. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this agreement
by the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
Section 9.07. If any provision in this agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect.
Section 9.08. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Executed at Carlsbad, California, a of the day and year first above
appearing.
EMPLOYER EMPLOYEE
XxXXXXX METALS, INC.
/s/Xxxxxxxx Xxxxxx /s/Xxxx X. Xxxxx
By: __________________________________ ______________________________
XXXX X. XXXXX
XxXXXXX METALS GOLF CORP.
/s/Xxxxxxxx Xxxxxx
By: __________________________________
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