EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of May 1, 1997, by
and between McHenry Metals, Inc., an Illinois corporation, herein referred to
as "XxXxxxx" and Xxxxx Xxxxxx Xxxxxxx, herein referred to as "Xxxxxxx".
ARTICLE 1. TERM OF EMPLOYMENT
Section 1.01 McHenry hereby employs Xxxxxxx and Xxxxxxx hereby
accepts employment with McHenry for a period of one year beginning on May 1,
1997 and terminating on April 30, 1998.
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 Xxxxxxx 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 Xxxxxxx shall serve as Senior Vice President of Sales
for McHenry. In his capacity, Xxxxxxx shall do and perform all services,
acts, or things necessary or advisable to fulfill such duties as shall be
determined by the Executive Committee of McHenry consistent with his
professional skills and abilities, including development and implementation of
domestic and "inside" sales programs, recruitment and training of personnel,
production and supervision of sales forecasts, budgets, and programs in
regards thereto, subject at all times to policies set by XxXxxxx'x Board of
Directors or Executive Committee.
Section 2.02 (a) Xxxxxxx shall devote his entire productive time,
ability, and attention to the business of McHenry during the term of this
contract.
(b) Xxxxxxx 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 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.
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(c) This agreement shall not be interpreted to
prohibit Xxxxxxx 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, Xxxxxxx 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 2.03 During the term of this contract, Xxxxxxx 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 2.04 Xxxxxxx 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. Xxxxxxx 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 Xxxxxxx.
Section 2.05 (a) The parties acknowledge and agree that during
the term of this agreement and in the course of the discharge of his duties
hereunder, Xxxxxxx 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.
(b) Xxxxxxx 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) Xxxxxxx acknowledges and agrees that the sale or
unauthorized use or disclosure of any of XxXxxxx'x trade secrets obtained by
Xxxxxxx 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) Xxxxxxx further agrees that all files, records,
documents, drawings, specifications, equipment, and similar items relating to
XxXxxxx'x business, whether prepared by Xxxxxxx or others, are and shall
remain exclusively the property of McHenry and that they shall not be removed
from the premises of McHenry.
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ARTICLE 3. OBLIGATIONS OF EMPLOYER
Section 3.01 McHenry shall provide Xxxxxxx with the compensation,
incentives, benefits, and business expense reimbursement specified herein.
Section 3.02 McHenry shall provide Xxxxxxx with a private office,
stenographic help, office equipment, supplies, and other facilities and
services, suitable to Xxxxxxx'x position and adequate for the performance of
his duties.
Section 3.03 McHenry shall indemnify Xxxxxxx for all losses sustained
by Xxxxxxx 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 his services to be performed
hereunder, Xxxxxxx shall receive a salary at the rate of $5,000 until August
31, 1997, and thereafter at the rate of $8,500 per month, payable not less
than once each month, on or before the 30th day of each month.
(b) Xxxxxxx shall receive such annual increases in
salary as may be determined by XxXxxxx'x Board of Directors or Executive
Committee.
Section 4.02 (a) As additional compensation for services
contemplated herein, Xxxxxxx shall be entitled to a commission of two percent
(2%) of the net sales price of all merchandise sold under contracts procured
by him during the term of this Agreement on direct sales on corporate sales to
domestic companies not engaged in wholesale or retail sales of golf clubs, and
on direct sales to military installations, e.g. PX's and military operated
golf facilities.
(b) Xxxxxxx shall not be entitled to commissions on
sales made under contracts procured by Xxxxxxx which sales are made after
expiration of this Agreement or termination in any other manner.
ARTICLE 5. EMPLOYEE BENEFITS
Section 5.01 Xxxxxxx shall be entitled to 10 vacation days each year
accrued prorata bimonthly in accordance with XxXxxxx'x Employee Policy Manual.
Xxxxxxx may be absent from his employment for vacation only at such times as
XxXxxxx'x Senior Vice President shall determine from time to time. In the
event Xxxxxxx is unable for any reason to take the total amount of vacation
time authorized during any year, he may accrue that time and carry unused time
forward to the next benefit year, provided that the total amount of accrued
and unused vacation benefits shall not exceed a total of 15 days at any time.
Vacation compensation shall be paid at his base rate at the time taken. No
vacation pay will be paid for unused vacation time while employed. Upon
termination of employment he will be paid for any unused vacation time accrued
through the last day of employment.
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Section 5.02 Xxxxxxx shall be entitled to 5 days per year as sick
leave accrued prorata monthly compensated at his base pay rate in accordance
with XxXxxxx'x Employee Policy Manual. Unused sick leave shall not be
accumulated beyond 5 days. Sick leave benefits will not be paid if not used.
Section 5.03 McHenry agrees to include Xxxxxxx in the coverage of its
medical, major medical, hospital, dental, and eye care insurance when obtained
by McHenry subject to eligibility.
ARTICLE 6. BUSINESS EXPENSES
Section 6.01 (a) McHenry shall promptly reimburse Xxxxxxx for all
reasonable business expenses incurred by Xxxxxxx 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 Xxxxxxx 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 6.02 In the event that any expenses paid for Xxxxxxx or any
reimbursement of expenses paid to Xxxxxxx 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 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, Xxxxxxx shall repay to McHenry
the full amount of the disallowed expenses.
ARTICLE 7. TERMINATION OF EMPLOYMENT
Section 7.01 (a) McHenry reserves the right to terminate this
agreement if Xxxxxxx 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 Xxxxxxx 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.
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(d) Termination under this section shall be
considered "for cause" for the purposes of this agreement.
Section 7.02 (a) This agreement shall be terminated upon the
death of Xxxxxxx.
(b) McHenry reserves the right to terminate this
agreement not less than three months after Xxxxxxx 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 Xxxxxxx.
(c) Termination under this section shall not be
considered "for cause" for the purposes of this agreement.
Section 7.03 (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.
(b) Termination under this section shall not be
considered "for cause" for the purposes of this agreement.
Section 7.04 Notwithstanding any provision of this agreement, if
McHenry terminates this agreement without cause, it shall pay Xxxxxxx an
amount equal to three (3) months' salary at the then current rate of
compensation.
ARTICLE 8. GENERAL PROVISIONS
Section 8.01 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 8.02 (a) Any controversy between McHenry and Xxxxxxx
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 Xxxxxxx 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 8.03 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.
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Section 8.04 This agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Xxxxxxx 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.
Section 8.05 Any modification of this agreement will be effective
only if it is in writing and signed by the party to be charged.
Section 8.06 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 8.07 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 8.08 This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Executed at Carlsbad, California, as of the day and year first above
appearing.
EMPLOYER EMPLOYEE
XxXXXXX METALS, INC.
/s/ Xxxx X. Xxxxx /s/ Xxxxx Xxxxxx Xxxxxxx
By: __________________________________ ______________________________
XXXXX XXXXXX XXXXXXX
00000 Xxxxxxxxx
Xx Xxxxxx, XX 00000
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ADDENDUM TO EMPLOYMENT AGREEMENT
This Addendum is made to that certain Employment Agreement dated as of
May 1, 1997 (herein the "Agreement"), by and between XxXxxxx Metals Golf
Corp. (hereinafter "XxXxxxx"), and Xxxxx Xxxxxx Xxxxxxx (hereinafter
"Xxxxxxx"), and all parties further agree as follows:
Section 2.01.1 Xxxxxxx shall in addition serve as manager of international
sales for McHenry. In such capacity, Xxxxxxx shall, subject to approval of
the Executive Committee of McHenry, recruit and appoint international
distributors and consistent with his professional skill and abilities, do and
perform all services, acts, or things necessary in connection therewith,
including development and implementation of international sales programs,
production and supervision of international sales forecasts, budgets, and
programs in regards thereto.
Section 2.02(b)(1) Consent is given to act as consultant to Xxxx Xxxxxxx in
the sale and manufacturing of the "seemore" putter provided such activity does
not materially interfere with the service required under this Agreement.
Section 4.02(a)1 Notwithstanding the provisions of Section 4.02(a) of the
Agreement, Xxxxxxx shall not be entitled to commissions in direct sales to
military installations.
Section 4.03 As additional compensation for services completed herein,
Xxxxxxx shall be entitled to a commission of two (2) percent of the net sales
price sold through international distributors established by Xxxxxxx during
the term of the Agreement. Such commissions shall not become due until
payment has been received from the respective distributors. Accrued
commissions, adjusted for returns, shall be paid quarterly thirty (30) days
after the end of each calendar quarter. Such commissions shall be limited in
each year of the term of this Agreement to an amount, together with all other
salary or cash bonuses paid to Xxxxxxx in such year, shall not exceed
$200,000.
Section 4.03.1 International sales as used herein shall be deemed to be sales
to distributors or dealers located without the United States, its possessions,
and the provinces of Canada for sale or resale without the United States, its
possessions and the provinces of Canada. Such sales shall not include direct
sales of products by McHenry to golf professionals or for promotional
purposes.
Section 8.09 Except as expressly changed or modified hereby, the remaining
terms of the Agreement are hereby ratified and confirmed.
Executed at Carlsbad, California, this 5th day of March, 1998.
MCHENRY XXXXXXX
XxXxxxx Metals Golf Corp.
/s/ Xxxx X. Xxxxx /s/ Xxxxx Xxxxxx Xxxxxxx
By:___________________________ ______________________________
Xxxxx Xxxxxx Xxxxxxx
