STATE OF SOUTH CAROLINA )
) CONSULTING AND
COUNTY OF BEAUFORT ) NON-COMPETITIVE AGREEMENT
THIS AGREEMENT IS SUBJECT TO ARBITRATION TO THE EXTENT PROVIDED IN PARAGRAPH 9,
PURSUANT TO THE UNIFORM ARBITRATION ACT, SECTION 15-48-10, ET SEQ., CODE OF LAWS
OF SOUTH CAROLINA, 1976 (AS AMENDED).
THIS AGREEMENT is made this 27th day of July, 1994, by and between THE
TEARDROP PUTTER CORPORATION, its successors and assigns (hereinafter referred to
as the "Owner"), Suite 207 WatersEdge, Shelter Cove, Xxxxxx Xxxx Xxxxxx, Xxxxx
Xxxxxxxx, 00000, and XXXXX XXXXXXX XXXXXX, his heirs and assigns, Xxxxx 0, Xxx
000, Xxxxxxxxxx, Xxxxxxx 00000 (hereinafter referred to as the "Consultant").
WHEREAS, the Owner desires to engage the Consultant to serve as a
consultant in connection with Owner's golf equipment manufacturing and sales
business to include the manufacture of the Teardrop Putter in current and future
models (hereinafter referred to as the "Owner's Business"); and
WHEREAS, the Consultant desires to provide to the Owner such consulting
services; and
WHEREAS; this Agreement is executed in order to set forth the respective
functions and obligations of the parties;
NOW, THEREFORE, for and in consideration of Ten and No/100 ($10.00) Dollars
in hand paid by the Owner to the Consultant, of the mutual promises contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, and intending to be legally bound, the
parties hereto agree as follows:
1. Recitals. The above preamble and "Whereas" clauses are incorporated
herein as if restated verbatim.
2. Services. The Owner hereby hires and engages the Consultant on an
exclusive basis to provide the following
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consulting services in connection with the Owner's Business, and the Consultant
hereby accepts such engagement, utilizing such time and effort as the Consultant
solely at his option deems necessary except as herein provided:
(a) The Consultant shall be available to the Corporation to assist and
consult on meeting requests for special variations of the Teardrop Putter
made by the professional golfers from time to time and consult on the
design of new prototype putters
(b) Such other consulting services reasonably related to the Business
of the Corporation as may be requested during the term hereof.
(c) Consultant's services under this contract shall be and are
strictly limited solely to consulting and advising, primarily by telephone,
mail and telefacsimile communications and will not unreasonably interfere
with his regular employment. Consultant shall not be required or requested
to do any design work or hands on work except as may be required to fulfill
requests made by professional golfers as provided at subparagraph (a)
above.
(d) If Owner desires Consultant to do any design work, all such design
work shall be optional (except as to requests for professional golfers)
with Consultant and performed on an "as available" basis only and
compensation for such design work shall be as provided under subparagraph
12(d) for new models placed into production by Owner plus compensation for
actual design time as provided for in paragraph 13.
Services shall be provided hereunder at the request of the Owner but shall
not exceed eight (8) hours per month for a period of twenty-four (24) months
from the date of this Agreement.
3. Description of the Owner's Business. The Owner's Business is the
development, manufacture and sale of golf putters and other golf equipment.
4. Contract Approval by the Consultant. Any contract or agreement to which
the Owner is a party and which may place any responsibility, duty or obligation
on the Consultant must be approved by the Consultant prior to its
implementation.
5. Term. The term of this Agreement shall be for a period of twenty-four
(24) months, beginning on the date hereof, however, Owner's obligations to
compensate Consultant shall be for a minimum of four (4) years or as otherwise
provided elsewhere herein.
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6. Independent Contractor. The Consultant hereby acknowledges that it is an
independent contractor of the Owner, and that it shall be responsible for all
Internal Revenue Service and state reporting and withholding and other related
labor reporting and record keeping requirements of the Consultant.
7. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall be settled by arbitration in accordance
with South Carolina Code of Laws Section 15-48-10, et seq., as amended, and
judgment upon the award rendered may be entered in any court having
jurisdiction.
8. Confidentiality. The Consultant shall not, during the term of this
Agreement or thereafter, disclose to others or use, except as authorized by the
Owner, any of the Owner's confidential, technical or other business information.
"Confidential, technical or other business information" shall mean any
information (including lists of the Owner's clients and customers) which the
Consultant has used, learned, or contributed to during the term of this
Agreement or acquired during the course of providing services hereunder whether
it is written or other tangible form that is not generally available to the
public, and gives one who uses it a competitive advantage over the Owner. Use of
any such information by Consultant which is generally known in the trade or is
easily obtainable from other sources shall not be in violation of this
restriction. The Consultant shall not during the term of this Agreement or
thereafter use or make any references to the Teardrop name or logo, including
any tradenames, in any commercial activity or venture related to the sale and/or
marketing of golf equipment and related products. References to Seller as
designer and/or developer of the Teardrop putter and other putters or products
designed by Seller for the Corporation in any publication where said references
are of an editorial or informative nature in describing Seller's past
achievements and which are not originated by Seller for advertising or
promotional purposes shall be permitted as an exception to the above.
Upon termination of this Agreement, the Consultant shall surrender to
the Owner any and all materials, including but not limited to, drawings,
manuals, reports, documents, list of Owner's suppliers and customers,
photographs, blue prints, design drawings and the like (including all copies
thereof), models of prototype putters that the Consultant has prepared for
Owner's Business or has in his possession relating to the business of the Owner,
or its affiliates. The Consultant acknowledges that all such material is the
property of the Owner solely and that he does not have any right, title, or
interest in or to such materials. However, this requirement does not apply to
any work product of Consultant which
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does not directly relate to either golf putters or other products on which
Consultant has worked or designed for Owner.
The Consultant acknowledges that the remedies at law for any breach by the
Consultant of this Paragraph 8 will be inadequate and that the Owner shall be
entitled to injunctive relief, without bond, against either or both of them in
the event of any such breach. If any court of competent jurisdiction shall hold
that the restrictions contained in this article are unreasonable as to time or
geographical area, such restrictions shall be deemed to be reduced to the extent
necessary, in the opinion of such court, to make them reasonable.
9. Security. The Consultant's compensation for the term of hereof and the
Consultant's covenant not to compete shall be secured by the personal guaranty
of Xxxx X. Xxxxxxx in the form attached hereto as Exhibit A.
10. Consultant to Fully Indemnify The Owner. The Consultant shall indemnify
the Owner, its affiliated companies, and shareholders and save them harmless
from and against any and all claims, common actions, damages, liabilities, and
expense in connection with loss of like, personal injury, and/or damage to the
property and/or monetary loss arising from or out of any occurrence, act or
omission arising out of Consultant's services under this Agreement including any
representations or statements made by the Consultant. The Consultant shall also
pay all costs, expenses, and reasonable attorneys' fees that may be incurred or
paid by the Owner in enforcing the covenants and agreements of this Agreement.
This indemnification shall survive the termination of this Agreement.
In addition to the above general indemnification, the Consultant shall
indemnify the Owner and its affiliated companies and shareholders from any
penalty, interest, or claims which may be incurred by the Owner of the
shareholders for a period of two (2) years after the date of this Agreement.
11. Covenant Not To Compete. Consultant hereby represents, warrants and
covenants to Owner that neither he, nor any entity or enterprise in which he has
an ownership interest or exercises any degree of control, shall provide services
and/or products regarding the design, manufacture, sale, marketing or
distribution of golf putters for a period of two (2) years from the date hereof,
in the entire world. This prohibition specifically includes operating, advising,
representing, becoming an employee or independent contractor of, rendering
services to, selling products to, designing putters for, being an officer or
director of any person or entity engaged in the design, manufacture, sale,
marketing or
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distribution of golf putters. Owner expressly reserves the right to use
Consultant's name in connection with the promotion, marketing and sales of any
putters or other products designed or developed by Consultant for Owner for as
long as royalties are being paid to Owner hereunder.
12. Compensation for Consulting And None Competitive Agreement. In exchange
for Consultant's agreement not to compete, Owner agrees to pay Consultant
royalties on the sale of putters and other equipment developed, designed or
modified by Consultant as follows:
(a) Fifty ($0.50) Cents per putter for each and every putter sold by
Owner during the first six (6) months from the Date of Closing (beginning
with the Date of Closing).
(b) For each and every putter sold by Owner for the period beginning
six (6) months after the Date of Closing through the day immediately
preceding the first anniversary date of the Agreement, Consultant shall be
paid by Owner at the following rates, to wit: One ($1.00) Dollar per putter
for each of the first Forty Thousand (40,000) putters sold by Owner, plus
Two ($2.00) Dollars per putter for each putter sold by Owner in excess of
Forty Thousand (40,000).
(c) For each and every putter sold by Owner beginning on the first
anniversary date of this Agreement, Owner shall pay Consultant as follows:
One ($1.00) Dollar per putter for each of the first Forty Thousand (40,000)
putters sold by Owner each year for the second, third and fourth year
immediately following the date of this Agreement, plus Two ($2.00) Dollars
per putter for each putter sold by Owner in excess of Forty Thousand
(40,000) in each of the same three (3) years. The anniversary date of this
Agreement shall be the beginning date for calculating the number of putters
sold annually in the second, third and fourth years under this Agreement.
For every "cavity back" putter sold by Owner, in lieu of the above, Owner
shall pay Consultant Two and No/10 ($2.00) Dollars for a term of four (4)
years following the date of the first sale of such putters.
(d) For each new putter design or modification or other product
developed or designed by Consultant and accepted by Owner for production as
hereinafter defined, Owner shall pay Consultant as follows: Three ($3.00)
Dollars for each putter with a new design or modification developed by
Consultant and sold by Owner during the four (4) year period immediately
following the date of the first sale of such putter with a new design or
modification or other product designed by Consultant. This obligation of
Owner shall continue even if Owner's other obligations to pay Consultant
under this
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Agreement have expired. This payment shall be made to Consultant in lieu
of payment due under subparagraphs (a), (b) and (c) above if the putter or
other product is a new product or modification made by Consultant and
accepted by Owner for production.
(e) All royalties due by Owner to Consultant hereunder shall be paid
to Consultant by Owner quarterly, July, 1994 being the first month of the
first such quarter. The first such payment shall be due following the end
of September, 1994. The first quarterly payment shall include only putters
sold in July, 1994 on or after the Date of Closing. The last quarterly
payment shall include only putters sold through the fourth anniversary date
of this Agreement. Royalties due by Owner to Consultant for new putter
designs and modifications and new product designs likewise shall be paid
quarterly on the same date as the royalties are due Consultant hereunder
for all other putters (even though the first and last quarterly payments
may cover a period of less than three (3) full months).
(f) In addition to all other compensation, Owner agrees that for so
long as Owner is obligated to make royalty payments hereunder to pay
Consultant a bonus of Five Thousand ($5,000.00) Dollars each time any major
professional golfing event or tournament is won by a player using a
Teardrop putter or any other product designed by Consultant and sold by
Owner, said sum to be paid to Consultant by Owner no later than ninety (90)
days after the closing day of each such tournament or event.
Owner shall notify Consultant with five (5) days in writing after
each such tournament win. For the purpose of this Agreement, "major
professional golfing events and tournaments" shall be defined as all
televised PGA Tournaments, the Master Tournament, the British Open
Tournament and the U.S. Open.
(g) Owner's obligations hereunder to pay royalties and bonuses to
Consultant extend beyond the expiration of Consultant's obligations
hereunder not to compete, and Owner acknowledges that Consultant's right to
receive all putter royalties and bonuses required to be paid to Consultant
hereunder will have been fully earned at the end of two (2) years from the
date of this Agreement, even though Owner's obligations to pay Consultant
royalties continue for two (2) more years thereafter for all putters, and
for periods of four (4) years after any newly designed or modified putter
or other product developed or designed by Consultant is first sold by
Owner.
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(h) All funds and correspondence require to be sent to Consultant
shall be mailed or delivered by Owner to Consultant at Xxxxx 0, Xxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, or at such other address as Consultant may
advise Owner in writing.
(i) Owner agrees to send Consultant a complete and detailed
production and sales report each month beginning with the date of Closing.
Each report shall reflect the total number of buyer's putters (and other
products, if any, for which Consultant is entitled to receive a royalty),
produced and sold by Owner in the monthly period covered by the report.
Owner shall continue to send such monthly reports to Consultant as long as
Consultant is entitled to receive compensation from Owner under this
Agreement. Each such monthly report shall be sent to Consultant no later
than fifteen (15) days following the last day of the period covered by the
report.
(j) All royalties to which Consultant is entitled hereunder shall be
due and shall be paid by Owner no later than the fifteenth (15th) day
following the end of the quarter in which the royalties have been earned as
set forth in this Agreement. Owner agrees to pay Consultant a five (5)
percent late charge for any payment due Consultant which is not received by
Consultant by the fifteenth (15th) day following the end of each quarterly
period Consultant is due royalties.
(k) In the event Consultant must collect any sum due him from Owner
hereunder, Owner agrees to pay all of Consultant's expenses of collection,
including all legal and court costs.
(l) Consultant is not an employee of Owner and the funds to be paid
Consultant hereunder by Owner constitute compensation for Consultant's
agreement not to compete with Owner, and/or the future design and
modification of putters and other products as set forth in this Agreement.
(m) For purposes of this Agreement, a putter or other product for
which Consultant is entitled to receive a royalty hereunder, shall be
considered "sold" as of the date the putter or other product is actually
shipped by Owner; the "date of the first sale" of such item shall also be
the first date of shipment of such item provided, however, that putters
ordered prior to Closing shall not be included in calculating the within
described royalty for the first six (6) months after Closing
notwithstanding the date the putters are shipped. Owner's monthly reports
to Consultant shall reflect the date of shipment of all putters and other
products designed by Consultant. In addition, monthly reports for the
first six (6) months shall reflect the date putters were ordered.
Notwithstanding the foregoing, Consultant is not entitled to
receive a royalty twice for the same putter. There will be paid only one
royalty to Consultant the first time each putter is "sold". Anytime Owner
has to take back a putter which Owner has already paid a royalty for, Owner
shall not pay Consultant a royalty when or if that putter is returned to
Owner (without having been paid for) and then is "sold" the second time by
Owner.
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Notwithstanding the foregoing, for purposes of making the final
quarterly payment due Consultant at the end of the fourth (4th) year as
provided above, the word "sold" herein shall also include all putter and
other products for which orders have been received by Owner either through
the fourth anniversary date of this Agreement as to putter designs
currently being manufactured by Owner or the fourth (4th) anniversary date
since the first newly designed putter or other products were shipped by
Owner (as to newly designed putters and other products), even though such
putters or other products may not have been manufactured or shipped by
Owner as of said fourth (4th) anniversary date.
(n) Consultant's death shall in no manner lessen or terminate Owner's
obligation to pay Consultant hereunder, and in the event of Consultant's
death, Consultant's heirs and/or estate shall be entitled to receive all
compensation due Consultant hereunder following Consultant's death.
(o) For purposes of this Agreement, the newly designed putter or
putters or other products shall include all putter(s), putter designs and
modifications and other product designs designed or developed by Consultant
after the date of Closing of the Stock Purchase Agreement or even date.
For purposes of clarification, if Consultant redesigns the existing
Teardrop Tour Model to prevent bounce (the "radius face" or "arch face"),
said redesign shall be a newly designed putter. However, the original
Xxxxxx I, the Xxxxxx II, the Teardrop Tour Model, the Teardrop with a flat
face, including the modified smaller flat face and the cavity back putters
are not newly designed putters for purposes of this Agreement. For
purposes of this Agreement, a new design shall be considered submitted to
Owner on the date drawings or plans are delivered by Consultant to Owner
which are detailed to the extent necessary to permit production of a
finished product based on such drawings or plans.
The agreement to pay the compensation not to compete is independent of
all other agreements, and Owner shall be obligated to pay same notwithstanding
any other agreements to the contrary as long as Consultant complies with this
Consulting and Non-Competitive Agreement.
13. Additional Compensation for Consultant.
(a) Consultant shall not receive any additional compensation for the
first eight (8) hours of consultation and advice each month for the twenty-
four (24) month period his is to be a consultant hereunder.
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(b) Consultant shall be paid an additional Twenty-Five and No/100
($25.00) Dollars per hour for each hour in excess of eight (8) hours per
month he provides consulting services to Owner each month. Notwithstanding
the foregoing, Consultant shall not be required to perform any consulting
work beyond eight (8) hours per month; any additional consulting work is
solely option with the Consultant. All payments due Consultant under this
paragraph shall be paid by Owner on the fifteenth (15th) day of the month
following the month those additional services are rendered
(c) The Consultant shall be reimbursed for all reasonable and
authorized expenditures, such as travel and entertainment, which he may
incur in promoting the business of the Owner provided such activities shall
be approved in advance by the Owner. Such authorized expenditures will be
reimbursed upon presentation by the Consultant to the Owner of an itemized
accounting of such expenditures and receipts relating thereto in the form
requested by the Owner.
14. Illegal Compensation. The Consultant agrees that he shall not, to the
best of his knowledge, nor shall he allow anyone under his supervision to
receive from a third party directly or indirectly, any bribes or kickbacks
regardless of form, whether in money, property or services in connection with
any business transaction related to his services hereunder or the Business of
the Owner. All compensation to the Consultant relating to any business
transaction in which the Owner is involved shall be made by the Owner only.
15. Miscellaneous.
(a) No person who is not a party to this Agreement shall have any equitable
or other rights by virtue of this Agreement.
(b) If any term or provision of this Agreement should be determined to be
invalid or unenforceable, such term or provision shall, if possible, be changed
to the most minor extent necessary to make it valid and enforceable and to carry
out the intent of the parties. In such event, all remaining terms and provisions
of this Agreement shall remain in full force and effect with such change or
without the affected term or provision, as the case may be.
(c) This Agreement constitutes the entire Agreement of the parties and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings, and negotiations between the parties.
(d) This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one and the same
documents.
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(e) This Agreement and any rights herein granted are personal to the
parties hereto, and shall not be assigned, encumbered, or otherwise transferred
by any party without the prior written consent of the other parties provided,
however, that in the event of the sale of all or substantially all of the assets
of the Owner or [ILLEGIBLE] this Agreement may be assigned without the written
permission of the Consultant. Any attempt at violative assignment, encumbrance,
or other transfer, whether voluntary or by operation of law, shall be void and
of no force and effect.
(f) Failure of any party to complain of any act or omission on the part of
any other party, no matter how long the same may continue, shall not be deemed
to be a waiver by any part of its rights under this Agreement.
(g) This Agreement shall be binding on the parties hereto, their
successors, assigns and legal representatives.
(h) Notice by any party is deemed given when personally delivered or
mailed, postage prepaid, addressed to the other parties at the address appearing
below:
As to Owner: The Teardrop Putter Corporation
Suite 207 WatersEdge, Shelter Cove
Hilton Xxxx Xxxxxx, XX 00000
Attention: Xx. Xxxx X. Xxxxxxx
With copy to: Xxxxxxx X. Xxxxxxxxxx, Esquire
Novit & Scarminach, P.A.
Xxxx Xxxxxx Xxxxxx 00
Xxxxxx Xxxx Xxxxxx, XX 00000
As to Consultant: Xx. Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0, Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000
With copy to: Xxxxx X. Xxxxx, Xx., Esquire
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
(i) Nothing in this Agreement shall be considered to create the
relationship of employer and employee between the parties hereto and the
Consultant shall be deemed at all time to be an independent contractor.
(j) The Corporation and Owner will provide Consultant with reasonable
quantities of prototypes, samples and production models
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of all newly designed and modified putters and other products designed or
modified by Consultant for Consultant's personal use and evaluation, all at no
charge to Consultant.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
WITNESSES: OWNER:
THE TEARDROP PUTTER CORPORATION
/s/ Xxxxxxx X. Xxxxxxxxxx /s/ Xxxx X. Xxxxxxx
--------------------------------- By: ---------------------------------
Xxxx X. Xxxxxxx
Its: President
/s/ Xxxxxxxx Xxxx Xxxxxx /s/ Xxxxx X. Xxxxxxx
--------------------------------- Attest: ----------------------------
Xxxxx X. Xxxxxxx
Its: Secretary
(corporate seal)
CONSULTANT
/s/ [Illegible] /s/ Xxxxx Xxxxxxx Xxxxxx
--------------------------------- --------------------------------------
XXXXX XXXXXXX XXXXXX
/s/ Xxxx Xxxx
---------------------------------
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EXHIBIT A
---------
GUARANTY OF CONSULTING AND NON-COMPETITIVE AGREEMENT
12
STATE OF SOUTH CAROLINA )
) GUARANTY OF CONSULTING AND
COUNTY OF BEAUFORT ) NON-COMPETITIVE AGREEMENT
THIS GUARANTY is given by XXXX X. XXXXXXX, the undersigned, to XXXXX
XXXXXXX XXXXXX.
The undersigned, in consideration of the Agreement by Xxxxx Xxxxxxx Xxxxxx
as consultant to, and not to compete with, The Teardrop Putter Corporation, a
South Carolina corporation, under that certain Consulting and Non-Competitive
Agreement of even date herewith (the "Agreement"), does hereby covenant with
Xxxxx Xxxxxxx Xxxxxx that if default shall, at any time, be made by The Teardrop
Putter Corporation in the payment of compensation for the Consulting and Non-
Competitive Agreement, the undersigned will pay to Xxxxx Xxxxxxx Xxxxxx,
compensation or any arrears thereof, and all costs of collection including
accounting fees, attorney's fees and court costs, on receipt of written notice
of such default from Xxxxx Xxxxxxx Xxxxxx, his personal representative or
assigns. The Guaranty shall be a continuing Guaranty, and the liability
hereunder shall in no way be affected or diminished by reason of any extension
of time that may be granted by Xxxxx Xxxxxxx Xxxxxx to The Teardrop Putter
Corporation. This Guaranty is irrevocable.
Notwithstanding anything herein to the contrary, Xxxxx Xxxxxxx Xxxxxx shall
not be required to exhaust his legal remedies against The Teardrop Putter
Corporation for any breach of the Agreement prior to proceeding against the
undersigned.
IN WITNESS WHEREOF, the undersigned has signed this Guaranty this 27th day
of July, 1994.
/s/ Xxxxxxx X. Xxxxxxxxxx /s/ Xxxx X. Xxxxxxx
--------------------------------- ---------------------------------
XXXX X. XXXXXXX
/s/ Xxxxxxxx Xxxx Xxxxxx
---------------------------------
