EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT
(“Agreement”),
dated
as of June 16, 2008, by and between GPS Industries, Inc., a Nevada corporation
(the “Employer”)
and
Xxxxx Xxxxxxxx, an individual residing at 0000 Xxx Xxxxx Xxx Xxxxxxxx, XX
00000 (the
“Executive”).
RECITAL
WHEREAS,
the
Employer and the Executive desire to set forth the terms pursuant to which
the
Executive will be employed by the Employer as its Chief Executive
Officer.
NOW,
THEREFORE,
the
Employer and the Executive hereby agree as follows:
Section
1. Employment
(a) The
Employer shall employ the Executive, and the Executive agrees to be employed
by
the Employer, upon the terms and conditions hereinafter provided, for a term
commencing June 16, 2008 (the “Effective
Date”)
and
expiring December 31, 2011 unless earlier terminated pursuant to the terms
hereto (the “Term”).
(b) The
Executive hereby represents, warrants and covenants that (1) the Executive
has
the legal capacity to execute and perform this Agreement, (2) this Agreement
is
a valid and binding agreement enforceable against the Executive according to
its
terms, (3) the execution and performance of this Agreement by the Executive
does
not violate the terms of any existing agreement or understanding to which the
Executive is a party or any rights of any third party, and (4) in performing
his
services hereunder, Executive will not use any intellectual property owned
by
any third party except with proper license or other authorization.
Section
2. Duties.
The
Executive shall report to the Board of Directors of the Employer (the
“Board”)
and
have the title of Chief Executive Officer of the Employer. The Executive shall
be appointed to the Employer’s board of directors and be nominated for election
as a member of the Board at each annual meeting of shareholders of the Employer
occurring during the Term. The Executive shall have such duties as are generally
applicable to chief executive officers of companies similar to that of the
Employer and which are consistent with the Executive’s experience, expertise and
position as shall be assigned to the Executive from time to time by the Board.
During the Term, and except for vacation in accordance with the Employer’s
standard vacation policies or due to illness or incapacity, the Executive shall
devote all of the Executive’s business time, attention, skill and efforts
exclusively to the business and affairs of the Employer and its parents,
subsidiaries and affiliates. The Executive understands that the Employer is
currently headquartered in Vancouver, British Columbia with substantial
operations in Austin, Texas. While the Employer is considering moving its
headquarters to the Sarasota, Florida region, no final decision has been made.
Accordingly, Executive may be required to spend all or a substantial portion
of
his time at the Employer’s existing locations. Notwithstanding anything herein
to the contrary, to the extent that the following does not impair Executive’s
ability to perform Executive’s duties pursuant to this Agreement, nor violate
the terms of the provisions set forth in Section 6 hereof, Executive may
make personal investments in such form or manner as will not require the
Executive’s services in the operation or affairs of the business in which such
investments are made. Further, it is understood that the Executive owns directly
or indirectly systems relating to GPS golf course products (“Systems”)
consisting of approximately 2,000 GPS Video Display units (“Units”)
in
North America and 700 Units outside North America which the Executive leases
to
golf courses (“Leases”).
To
avoid conflict, so long as Executive is employed by the Employer, the Executive
hereby assigns all of his rights in all of the advertising revenues generated
from the Units. Should the Executive no longer be employed by the Employer,
any
advertising agreements that were then in existence with respect to the Units
shall be entitled to run throughout the term of the advertising contracts except
that the Executive shall be entitled to the revenues therefrom from the
effective date of his termination. During the Term, the Executive will also
negotiate and split with the Employer a portion of all of the service and
support revenue that he receives, and the Employer in turn will provide service
and support to all of the courses covered by the Leases. During the period
ending on the earlier of December 31, 2011 or the Termination Date, Employer
will not sell its Units to golf courses if such Units will interfere with the
Leases, and the Executive will not remove the Units from their existing
locations so as to compete with the Employer. As used herein, “compete”
means
selling or leasing the Units to (a) courses which then use Units provided by
the
Employer; or (b) courses which are on a prospect list of the Employer with
targeted transactions to take place within nine months from the date of removal.
Additionally, during the Term, the Executive shall not acquire additional
Systems for lease to golf courses which the Employer or its contracted lease
financing company (after notice from the Executive) has indicated it is
interested in leasing. The Executive shall not allocate more than five (5)
hours
a month to this business activity.
Section
3. Compensation.
For all
services rendered by the Executive in any capacity required hereunder during
the
Term, including, without limitation, services as an officer, director, or member
of any committee of the Employer or any parent, subsidiary, affiliate or
division thereof, the Executive shall be compensated as follows:
(a) The
Employer shall pay the Executive a fixed salary (“Base
Salary”)
at a
rate of $120,000 per annum from the Effective Date through December 31,
2009, $126,000 per annum from January 1, 2010 through December 31,
2010, and $132,000 per annum from January 1, 2011 until the last day of the
Executive’s employment with the Employer. The Board may from time to time
further increase the Base Salary in its sole discretion. The Base Salary shall
be payable in accordance with the customary payroll practices of the Employer.
(b) For
each
twelve-month period, commencing January 1, 2009, and each annual period
thereafter, Executive shall be entitled to a bonus of 50% of the then applicable
Base Salary (the “Bonus
Amount”)
if at
least half of the Performance Criteria for such year have been achieved as
reflected in the table in Section 3(c) (the “Performance
Criteria”).
Any
Bonus shall be payable within thirty days following the filing date of the
Employer’s 10-K Report for the applicable year.
(c) Executive
is hereby granted options (the "Options")
to
purchase an aggregate of 60,000,000 shares of the Employer's Common Stock (the
"Option
Shares").
The
Options shall be divided into thirty-nine tranches (each a "Tranche").
Tranches 1-15 shall have a term of 30 months and Tranches 16-39 shall have
a
term of two years from the date such Tranche vests. No Tranche which requires
the satisfaction of Performance Criteria shall vest unless such Criteria have
been met for the applicable period as set forth on the following table. If
such
Criteria have not been so met, the Options granted with respect to such
Tranche shall be deemed to have expired and may not be exercisable. The
Options are being granted pursuant to and subject to the Employer's existing
Stock Option Plan (the "Plan"),
it
being understood, however, that the grant hereunder is subject to shareholder
approval to increase the authorized number of Option Shares eligible to be
granted thereunder. The Employer shall use its best efforts to obtain such
approval as soon as practicable. The terms of the Options are as
follows:
-
2
-
|
Tranche
|
Number
of
Option
Shares
|
Vesting
|
Exercise
Price
|
Performance
Criteria
|
|||||||||
|
1
|
2,500,000
|
June
11, 2008
|
$
|
.031
|
None
|
||||||||
| 2 |
1,000,000
|
June
11, 2008
|
$
|
.061
|
None
|
||||||||
|
3
|
500,000
|
December
31, 2008
|
$
|
.031
|
Business
plan completed, presented to the Board of Directors by June 30, 2008
and
subsequently approved by the Board.
|
||||||||
|
4
|
2,500,000
|
December
31, 2008
|
$
|
.031
|
Formation
of Lease Repurchase Company before August 15, 2008.
|
||||||||
|
5
|
2,500,000
|
December
31, 2008
|
$
|
.031
|
Formation
of Finance Company before August 15, 2008
|
||||||||
|
6
|
3,000,000
|
December
31, 2009
|
$
|
.031
|
100
plus installations (18 hole equivalent golf courses).
|
||||||||
|
7
|
2,000,000
|
December
31, 2009
|
|
$
|
.061
|
100
plus installations (18 hole equivalent golf courses).
|
|||||||
|
8
|
2,200,000
|
December
31, 2009
|
$
|
.031
|
Gross
revenue of over $20,000,000 for the fiscal year ending December 31,
2009.
|
||||||||
|
9
|
1,000,000
|
December
31 2009
|
$
|
.061
|
Gross
revenue of over $20,000,000 for the fiscal year ending December 31,
2009.
|
||||||||
|
10
|
2,000,000
|
December
31, 2009
|
$
|
.031
|
Gross
margin of over 30% for the fiscal year ending December 31,
2009.
|
||||||||
|
11
|
500,000
|
December
31, 2009
|
|
$
|
.061
|
Gross
margin of over 30% for the fiscal year ending December 31,
2009.
|
|||||||
|
12
|
2,000,000
|
December
31, 2009
|
$
|
.000
|
XXXXXX
neutral for year ending December 31, 2009.
|
||||||||
|
13
|
1,000,000
|
December
31, 2009
|
$
|
.000
|
XXXXXX
neutral for year ending December 31, 2009.
|
||||||||
|
14
|
100,000
|
December
31, 2009
|
$
|
.031
|
Prepare
business plan for 2010 by November 1, 2009 and subsequently approved
by
the Board.
|
||||||||
|
15
|
100,000
|
December
31, 2009
|
$
|
.061
|
Prepare
business plan for 2010 by November 1, 2009 and subsequently approved
by
the Board.
|
||||||||
-
3
-
|
16
|
3,000,000
|
December
31, 2010
|
$
|
.031
|
120
plus installations (18 hole equivalent golf courses).
|
||||||||
|
17
|
1,200,000
|
December
31, 2010
|
$
|
.061
|
120
plus installations (18 hole equivalent golf courses).
|
||||||||
|
18
|
2,000,000
|
December
31, 2010
|
$
|
.031
|
Gross
revenue of over $24,000,000 for the fiscal year ending December 31,
2010.
|
||||||||
|
19
|
1,000,000
|
December
31, 2010
|
$
|
.061
|
Gross
revenue of over $24,000,000 for the fiscal year ending December 31,
2010.
|
||||||||
|
20
|
2,000,000
|
December
31, 2010
|
$
|
.031
|
Gross
margin of over 35% for the fiscal year ending December 31,
2009.
|
||||||||
|
21
|
1,000,000
|
December
31, 2010
|
$
|
.061
|
Gross
margin of over 35% for the fiscal year ending December 31,
2009.
|
||||||||
|
22
|
2,200,000
|
December
31, 2010
|
$
|
.000
|
XXXXXX
positive of $2,000,000 for year ending December 31, 2010.
|
||||||||
|
23
|
1,000,000
|
December
31, 2010
|
$
|
.000
|
XXXXXX
positive of $2,000,000 for year ending December 31, 2010.
|
||||||||
|
24
|
2,200,000
|
December
31, 2010
|
$
|
.031
|
Net
profit positive of $1,000,000 for the fiscal year ending December
31,
2010.
|
||||||||
|
25
|
1,000,000
|
December
31, 2010
|
$
|
.061
|
Net
profit positive of $1,000,000 for the fiscal year ending December
31,
2010.
|
||||||||
|
26
|
100,000
|
December
31, 2010
|
$
|
.031
|
Prepare
business plan for 2011 by November 1, 2010 and subsequently approved
by
the Board.
|
||||||||
|
27
|
100,000
|
December
31, 2010
|
$
|
.061
|
Prepare
business plan for 2011 by November 1, 2010 and subsequently approved
by
the Board.
|
||||||||
|
28
|
3,000,000
|
December
31, 2011
|
$
|
.031
|
144
plus installations (18 hole equivalent golf courses).
|
||||||||
|
29
|
2,000,000
|
December
31, 2011
|
$
|
.061
|
144
plus installations (18 hole equivalent golf courses).
|
||||||||
|
30
|
2,000,000
|
December
31, 2011
|
$
|
.031
|
Gross
revenue of over $28,800,000 for the fiscal year ending December 31,
2011.
|
||||||||
|
31
|
2,000,000
|
December
31, 2011
|
$
|
.061
|
Gross
revenue of over $28,800,000 for the fiscal year ending December 31,
2011.
|
-
4
-
|
32
|
2,000,000
|
December
31, 2011
|
$
|
.031
|
Gross
margin of over 40% for the fiscal year ending December 31,
2011.
|
||||||||
|
33
|
1,000,000
|
December
31, 2011
|
$
|
.061
|
Gross
margin of over 40% for the fiscal year ending December 31,
2011.
|
||||||||
|
34
|
2,000,000
|
December
31, 2011
|
$
|
.000
|
XXXXXX
positive of $2,400,000 for the fiscal year ending December 31,
2011.
|
||||||||
|
35
|
2,000,000
|
December
31, 2011
|
$
|
.000
|
XXXXXX
positive of $2,400,000 for the fiscal year ending December 31,
2011.
|
||||||||
|
36
|
2,000,000
|
December
31, 2011
|
$
|
.031
|
Net
profit $1,400,000 for the fiscal year ending December 31,
2011.
|
||||||||
|
37
|
2,000,000
|
December
31, 2011
|
$
|
.061
|
Net
profit $1,400,000 for the fiscal year ending December 31,
2011.
|
||||||||
|
38
|
200,000
|
December
31, 2011
|
$
|
.031
|
Prepare
business plan for 2012 by November 1, 2011 and subsequently approved
by
the Board.
|
||||||||
|
39
|
100,000
|
December
31, 2011
|
$
|
.061
|
Prepare
business plan for 2012 by November 1, 2011 and subsequently approved
by
the Board.
|
The
number of Option Shares and the exercise prices shall be adjusted for any stock
splits, stock dividends, recapitalizations.
As
used
herein, gross margin means net revenue divided by installation costs (cost
of
goods and installation expenses). EBITDA means for the Employer and its
subsidiaries, an amount equal to (a) the sum (without duplication) of (i) annual
net income plus
(ii) to
the extent deducted in determining annual net income, (A) interest expense,
(B)
income tax expense, (C) depreciation and amortization, (D) net losses on asset
sales for such period, and (E) other non-cash charges for such period (excluding
any non-cash charge to the extent that it represents an accrual of or reserve
for cash expenditures in any future period) minus
(b) to
the extent included in determining annual net income, (i) net gains on asset
sales for such period, (ii) other non-cash items increasing annual net income
(excluding any non-cash gains for such period resulting from the reversal of
an
accrual or reduction or elimination of a reserve established in a prior period
to the extent the related non-cash charge was excluded in accordance with clause
(a)(ii)(E) above). Net profit means the net income of the Employer without
regard to any financial reporting charge arising from (a) the conversion of
Series B Preferred Stock, (b) the conversion of any other class or series of
equity securities, (c) depreciation and amortization, or (d) adjustments related
to prior transactions.
As
a
condition to exercise of the Options, the Employer may require the Executive
to
pay over to the Employer all applicable federal, state and local taxes which
the
Employer is required to withhold with respect to the exercise of the Options.
At
the discretion of the Board of Directors and upon the request of the Executive,
the minimum statutory withholding tax requirements may be satisfied by the
withholding of Option Shares otherwise issuable to the Executive upon the
exercise of the Options. The Executive understands that: (a) unless the issuance
of the Option Shares to the Executive upon exercise of the Options is registered
under the Securities Act of 1933, as amended (the “Securities
Act”),
the
Option Shares will be “restricted securities” within the meaning of Rule 144
under such Act; and (b) the Option Shares may not be sold, transferred or
assigned by the Executive except pursuant to an effective registration statement
under the Securities Act or an exemption from registration under the Securities
Act. The Executive agrees that any certificates evidencing Option Shares may
bear a legend indicating that their transferability is restricted in accordance
with applicable state and federal securities laws. Notwithstanding the
foregoing, the Employer shall use commercially reasonable best efforts as soon
as practicable to have the shares of common stock of the Employer issuable
upon
the exercise of the Options covered by a registration statement on Form
S-8.
-
5
-
(d) Except
as
expressly modified by this Agreement, the Executive shall be entitled to
participate in all employee benefit plans or programs, and to receive all
benefits, perquisites and emoluments, which are approved by the Board and are
generally made available by the Employer to salaried employees of the Employer,
to the extent permissible under the general terms and provisions of such plans
or programs and in accordance with the provisions thereof. Notwithstanding
the
foregoing, nothing in this Agreement shall require any particular plan or
program to be continued nor preclude the amendment or termination of any such
plan or program, provided that such amendment or termination is applicable
generally to the employees of the Employer.
(e) The
Executive shall be entitled to four (4) weeks vacation per calendar year
during the Term, and a car allowance of $1,000 per month.
(f) Notwithstanding
anything herein to the contrary, Executive hereby acknowledges and consents
to
readjustments to the Performance Criteria for any acquisitions by the Employer
of an unaffiliated third party. Any adjustments to the Performance Criteria,
will be mutually agreed upon between the Employer and the Executive.
Section
4. Business
Expenses.
The
Employer shall pay or reimburse the Executive for all necessary expenses
reasonably incurred by the Executive in connection with the performance of
the
Executive’s duties and obligations under this Agreement, subject to the
Executive’s presentation of appropriate vouchers in accordance with such expense
account policies and approval procedures as the Employer may from time to time
reasonably establish for employees (including but not limited to prior approval
of extraordinary expenses). Travel by air shall be in coach except as to flights
in excess of three hours, in which case Executive shall be entitled to fly
business class or equivalent. Additionally, upon submission of appropriate
documentation, the Employer shall reimburse the Executive for all travel related
expenses incurred on behalf of the Employer during the period May 2-May 20,
2008
(up to $25,000).
Section
5. Effect
of Termination of Employment.
(a) Termination
Generally.
Notwithstanding anything herein to the contrary, this Agreement may be
terminated by the Employer, at any time, without “Cause” or “Good Reason” (each
as defined below in Section 5(h)); provided,
however,
that
Employer shall give Executive at least thirty (30) days’ prior written notice of
such termination. The Employer may, in lieu of the notice period, pay the
Executive’s Base Salary for the notice period. The date specified in any notice
of termination as the Executive’s final day of employment shall be referred to
herein as the “Termination
Date.”
-
6
-
(b) Accrued
Obligations.
Except
as set forth in this Section 5, in the event that Executive’s employment
hereunder is terminated for any reason, then Executive shall be entitled to
no
compensation or other benefits of any kind whatsoever, other than
(i) payment of any unpaid accrued vacation or business expenses,
(ii) payment of any other unpaid amounts due and owing under any benefit,
fringe or equity plans, and (iii) the opportunity to continue health
coverage under the Employer’s group health plan in accordance with “COBRA”
(“COBRA
Coverage”)
(the
foregoing payments and benefits collectively referred to herein as “Accrued
Obligations”).
(c) Termination
Without Cause, Resignation for Good Reason.
In the
event that the Employer terminates Executive’s employment hereunder during the
Term without “Cause” (defined below in Section 5(h)(i)) or the Executive resigns
for “Good Reason” (defined below in Section 5(h)(iii)), then the Executive shall
be entitled to no compensation or other benefits of any kind whatsoever, other
than: (i) the Accrued Obligations, (ii) the Severance Amount (defined
below in Section 5(h)(iv)) payable over the Severance Period (defined below
in
Section 5(h)(v)) in accordance with the Employer’s normal payroll practices, and
(iii) the Executive’s Options (to the extent not already vested), and any
other stock options shares granted to the Executive during the Term, shall
become fully vested, and the Executive shall be permitted to exercise the
Options for up to 24 months following the Termination Date. Notwithstanding
the
foregoing, (x) Options which are based on Performance Criteria with respect
to
any prior year which have not vested because the Performance Criteria for such
year(s) have not been achieved shall not vest; and (y) 50% of the Options that
are not based on Performance Criteria shall vest immediately, and the remaining
50% of such Options shall vest on the second (2nd)
anniversary of the Effective Date, provided that during the 24-month period,
Employer does not secure a judgment in a court of the State of Nevada or in
the
United States District Court in the Nevada District against Executive for breach
of his obligations pursuant to this Agreement. In addition, if the Executive
elects COBRA Coverage following the Termination Date, the applicable cost for
such coverage during the Severance Period shall be that which the Employer
charges active employees for group health coverage. Following the Severance
Period, the Executive shall be required to pay the full applicable premium
cost
for the remainder of the COBRA Coverage period.
(d) Death
or Disability.
The
Executive’s employment with the Employer shall terminate upon Executive’s death
or “Disability” (defined below in Section 5(h)(ii)), in which case the Executive
(or his estate and heirs) shall be entitled to no compensation or other benefits
of any kind whatsoever for any period after the Executive’s date of termination
other than (i) the Accrued Obligations, and (ii) continued payment of
the Executive’s Base Salary (at the rate in effect as of his date of
termination) for six months. To the extent that the Executive and/or his
eligible dependents elect COBRA Coverage, the Employer shall waive the cost
of
such coverage for the first six months of such coverage. Thereafter, the
Executive and/or his eligible dependents shall be responsible for the full
applicable premium cost for the remainder of the COBRA Coverage period. In
addition, the Executive (or his estate and heirs) shall be permitted to exercise
his Option (to the extent vested as of the date of Executive’s termination of
employment) for up to twelve months following such date of termination.
-
7
-
(e) Termination
Due to Expiration.
Upon
termination of this Agreement due to the expiration of the Term, then the
Executive shall be entitled to no compensation or other benefits of any kind
whatsoever, other than the Accrued Obligations. The Executive’s Options (to the
extent vested as of the Termination Date) in such event shall be exercisable
for
up to twelve months following the Termination Date. In addition, if the
Executive elects COBRA Coverage following the Termination Date, the Executive
shall be required to pay the full applicable premium cost for the remainder
of
the COBRA Coverage period.
(f) Release.
Payment
of any amounts under this Section 5 (other than the Accrued Obligations)
shall be contingent upon Executive executing a general release of claims in
favor of the Employer, its subsidiaries and affiliates, and their respective
officers, directors, shareholders, partners, members, managers, agents or
employees, which release shall be provided to the Executive within five business
days following the Termination Date, and which must be executed by the Executive
and become effective within thirty days thereafter. Severance payments under
this Section 5 that are contingent upon such release shall commence within
ten days after such release becomes effective. Upon delivery of such release
by
the Executive, the Employer shall deliver a general release to the Executive
in
his favor.
(g) Termination
With Cause.
The
Employer may terminate this Agreement immediately for “Cause” by giving written
notice to the Executive. In the event that this Agreement is terminated pursuant
to this Section 5(g), the Executive shall be entitled to no compensation or
other benefits of any kind whatsoever for any period after the Termination
Date
set forth in the notice given by the Employer to the Executive, except for
the
Accrued Obligations. The Executive’s Options, to the extent not vested as of the
Termination Date, shall be forfeited and, with the exception of termination
pursuant to either Section 5(h)(i)(6), 5(h)(i)(7) or 5(h)(i)(8), all vested
Options may only be exercised for a period of thirty days after the Termination
Date. In the event Employer terminates this Agreement pursuant to either Section
5(h)(i)(6), 5(h)(i)(7) or 5(h)(i)(8), all vested Options may be exercised during
their original terms as set forth in Section 3(c) above. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to Section 5(h)(i)(7),
Executive shall receive an additional three months of Base Salary.
(h) Definitions.
(i) “Cause”
shall
mean: (1) the Executive’s gross negligence in the performance of the
material responsibilities of his office or position; (2) the Executive’s
gross or willful misconduct in the performance of the material responsibilities
of his office or position; (3) material failure or refusal by the Executive
to perform his duties, as such may be reasonably assigned to him from time
to
time, other than by reason of his disability, or other acts or omissions
constituting material neglect or dereliction of his duties; (4) any
conviction by a court of law of, or entry of a pleading of guilty or nolo
contendre by Executive with respect to a felony; (5) the Executive’s
embezzlement or intentional misappropriation of any property of the Employer
(other than good faith expense account disputes or de minimis amounts);
(6) the Executive’s breach of Section 6 of this Agreement; (7) the
Employer’s failure to achieve at least one-half of the Performance Criteria for
the most recently completed year; (8) the filing by a third party of a lawsuit
against the Employer claiming that the entering into or performance of this
Agreement violates the rights of such third party or interferes with an economic
advantage or contract rights of such third party, and which lawsuit, in the
opinion of the Employer’s board of directors, represents a significant burden on
the Employer; (9) the Executive’s breach in any material respect with any other
representation or covenant set forth herein; (10) fraud, dishonesty or
other acts or omissions by the Executive that constitute a willful breach of
his
fiduciary duty to the Employer; or (11) the Executive’s use of alcohol or
drugs which materially interferes with the performance of his duties hereunder
or which materially compromises his integrity and reputation or the integrity
and reputation of the Employer, or that of its employees, services or products.
For purposes of this definition, an act or failure to act shall be considered
“willful” only if done or omitted to be done without a good faith reasonable
belief that such act or failure to act was in the best interests of the
Employer. The Executive shall be given notice of the termination of his
employment for Cause. If the Executive shall be terminated pursuant to
clause (1), (2), (3), (6) or (9) above, the Executive shall be given a
reasonable period of time, not to exceed 30 days, to cure the matter (if
curable). In all other cases, termination shall be effective as of the date
notice is given.
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(ii) “Disability”
shall
mean that Executive is incapable of performing his principal duties due to
physical or mental incapacity or impairment for 180 consecutive days, or for
240
non-consecutive days, during any 12-month period.
(iii) “Good
Reason”
shall
mean (a) a material adverse reduction in the Executive’s duties and
responsibilities without his consent, or a reduction in the Executive’s title or
positions (other than during any period of illness or disability); (b) a
material breach by the Employer of a material term of the Agreement,
(c) any reduction, without Executive’s consent, of Executive’s Base Salary,
(d) any diminution, without Executive’s consent, in the Performance
Criteria used to determine the Executive’s bonus opportunity under
Section 3(b), or (e) a change of control. No failure described in
clauses (a), (b), (c), or (d) shall constitute “Good Reason” unless the
Executive provides the Board with written notice of the Executive’s objection to
such failure within thirty (30) days after such failure first occurs, and the
Employer is afforded an opportunity to cure such failure within 30 days after
the Board’s receipt of such notice. As used herein, a “change
of control”
means
the acquisition by an unaffiliated party of not less than 90% of the capital
stock or all of the assets of the Employer.
(iv) “Severance
Amount,”
for
purposes of Section 5(c), shall mean an amount equal to the lesser of
the aggregate Base Salary for the remaining period of the Term or twelve months
Base Salary, in each case at the rate in effect as of the Executive’s
Termination Date.
(v) “Severance
Period,”
for
purposes of Section 5(c), shall mean the remaining period of the
Term.
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Section
6. Confidentiality
and Covenants Against Competition, Solicitation,
Disparagement.
(a) The
Executive agrees that his services hereunder are of a special, unique,
extraordinary and intellectual character, and his position with the Employer
places him in a position of confidence and trust with employees, customers,
and
suppliers of the Employer. The Executive further agrees and acknowledges that
in
the course of the Executive’s employment with the Employer, the Executive has
been and will be privy to confidential information of the Employer. The
Executive consequently agrees that it is reasonable and necessary for the
protection of the trade secrets, goodwill and business of the Employer that
the
Executive make the covenants contained herein. Accordingly, the Executive agrees
that while employed by the Employer and during the “Restrictive Period” (defined
below in Section 6(b)(iv)) except as contained in Section 6(j) of this
Employment Agreement, the Executive shall not (without the express prior written
consent of the Employer), anywhere in the world, directly or
indirectly,
(i) become
Associated With any Competing Business;
(ii) solicit,
sell, call upon or induce others to solicit, sell or call upon, directly or
indirectly, any customer or prospective customer of the Employer for the purpose
of inducing any such customer or prospective customer to purchase, license
or
lease a product or service of a Competing Business; or
(iii) employ,
solicit for employment, or advise or recommend to any other person that they
employ or solicit for employment or retention as a consultant, any person who
is, or was at any time within twelve (12) months prior to the last day of
Executive’s employment with the Employer, an employee of, or exclusive
consultant to, the Employer.
(b) For
purposes of this Section 6, the term:
(i) “Employer”
shall
include the Employer, and any of its subsidiaries or affiliates.
(ii) “Competing
Business”
means
that portion or segment of the business of any person, corporation (for profit
or not for profit) or other entity which, directly or indirectly, engages in
the
manufacture, development, licensing, sale, and/or leasing of GPS and Wi-Fi
software and hardware for use in golf course operations, residential community
developments and other recreational and industrial applicants, except that
Competing Business shall not include the sale or leasing of the Units referred
to in Section 2 which the Executive currently owns, and the financing of new
Systems for golf courses.
(iii) “Associated
With”
means
serving as an owner, officer, employee, independent contractor, agent or a
holder of 5% or more of any class of equity securities of, director, trustee,
member, consultant or partner of any person, corporation (for profit or not
for
profit) or other entity engaged in a Competing Business.
(iv) “Restrictive
Period”
means
the twelve-month period commencing from the Executive’s date of termination with
the Employer.
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(c) If
the
Executive or Employer commits a breach or is about to commit a breach, of any
of
the provisions of this Section 6, the Employer or the Executive shall have
the right to have the provisions of this Agreement specifically enforced by
any
court having equity jurisdiction without being required to post bond or other
security and without having to prove the inadequacy of the available remedies
at
law, it being acknowledged and agreed that any such breach or threatened breach
will cause irreparable injury to the Employer or Executive and that money
damages will not provide an adequate remedy to the Employer. In addition, the
Employer may take all such other actions and remedies available to it under
law
or in equity and shall be entitled to such damages as it can show it has
sustained by reason of such breach.
(d) Executive
shall not make any negative or disparaging comments regarding the Employer
or
its subsidiaries or affiliates, or any of their respective officers, directors,
shareholders, partners, members, managers, agents or employees (collectively,
the “Representatives”),
including regarding the performance of the Employer or such subsidiaries or
affiliates, or otherwise take any action that could reasonably be expected
to
adversely affect the Employer or its subsidiaries or affiliates or the personal
or professional reputation of any of their respective Representatives; and
the
Employer and its Representatives shall not make any negative or disparaging
comments regarding Executive, or otherwise take any action that could reasonably
be expected to adversely affect the personal or professional reputation of
Executive. Disclosure of information required to be disclosed by either party
pursuant to any applicable law, court order, subpoena, compulsory process of
law, or governmental decree shall not constitute a violation or breach of this
Section 6(d); provided,
that
the disclosing party delivers written notice of such required disclosure to
the
other parties promptly before making such disclosure if such notice is not
prohibited by applicable law, court order, subpoena, compulsory process of
law,
or governmental decree.
(e) The
Executive further agrees that all documents, reports, plans, proposals,
marketing and sales plans, customer lists, or materials principally relating
to
the businesses of the Employer or any of its subsidiaries or affiliates and
made
by the Executive or that came or come into the Executive’s possession by reason
of the Executive’s employment by the Employer are the property of such entities
and shall not be used by the Executive in any way adverse to the interests
of
the Employer or any of its subsidiaries or affiliates. The Executive will not,
during the Term and thereafter, deliver, reproduce or in any way allow such
documents or things to be delivered or used by any third party without specific
direction or consent of a duly authorized representative of the Employer. During
or after termination of the Executive’s employment with the Employer, the
Executive will not publish, release or otherwise make available to any third
party any information describing any trade secret or other confidential
information of the Employer without prior specific written authorization of
the
Employer.
(f) During
the Term and thereafter, the Executive will regard and preserve as confidential
all trade secrets and other confidential information pertaining to the business
of the Employer that have been or may be obtained by the Executive by reason
of
the Executive’s employment by the Employer. The Executive will not, without
written authority from the Employer to do so, use for the Executive’s own
benefit or purposes, nor disclose to others, either during the Executive’s
employment by the Employer or thereafter any trade secret or other confidential
information relating to the business of the Employer, except as required in
the
course of the Executive’s employment with the Employer, or as required by law,
or as (and only to the extent) required pursuant to legal process or by an
order
of a court having competent jurisdiction or under subpoena from an appropriate
government agency (and then only after providing the Employer with the
opportunity to prevent such disclosure or to receive confidential treatment
for
the confidential information required to be disclosed); and the Executive will
not take or retain or copy any of the information, customer lists, or other
documents of the Employer. This Section 6(f) shall not apply with respect
to information which has been voluntarily disclosed to the public by or with
the
consent of the Employer, independently developed and disclosed by others, or
otherwise enters the public domain through lawful means.
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(g) For
purposes of this Agreement, the term “trade
secret”
shall
include, but not be limited to, information encompassed in all plans, proposals,
marketing and sales plans, customer lists, mailing lists, financial information,
costs, pricing information, and all concepts or ideas in or reasonably related
to the businesses of the Employer (whether or not divulged by the Executive
or
other employees or agents of the Employer) that have not previously been
publicly released by duly authorized representatives of the
Employer.
(h) Executive
acknowledges that the type and periods of restriction imposed in the provisions
of this Section 6 are fair and reasonable and are reasonably required for
the protection of the Employer and the goodwill associated with the business
of
the Employer; and that the time, scope, geographic area and other provisions
of
this Section 6 have been specifically negotiated by sophisticated parties
and are given as an integral part of this Agreement. The Executive specifically
acknowledges that the restrictions contemplated by this Agreement will not
prevent him from being employed or earning a livelihood. If any of the covenants
in this Section 6, or any part thereof, is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenants, which shall be given full effect, without regard to the invalid
portions. If any of the covenants contained in this Section 6, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or areas of such
provision and, in its reduced form, such provision shall then be enforceable.
The parties hereto intend to and hereby confer jurisdiction to enforce the
covenants contained in this Section 6 upon the courts of any state or other
jurisdiction within the geographical scope of such covenants. In the event
that
the courts of any one or more of such states or other jurisdictions shall hold
such covenants wholly unenforceable by reason of the breadth of such scope
or
otherwise, it is the intention of the parties hereto that such determination
not
bar or in any way affect the right of the Employer to the relief provided above
in the courts of any other states or other jurisdictions within the geographical
scope of such covenants, as to breaches of such covenants in such other
respective states or other jurisdictions, the above covenants as they relate
to
each state or other jurisdiction being, for this purpose, severable into diverse
and independent covenants. The existence of any claim or cause of action by
the
Executive against the Employer shall not constitute a defense to the enforcement
by the Employer of the foregoing restrictive covenants, but such claim or cause
of action shall be determined separately.
(i) The
Executive further agrees that a copy of a summons and complaint seeking the
entry of such order may be served upon the Executive by certified mail, return
receipt requested, at the address set forth above or at any other address which
the Executive shall designate in a writing addressed to the Employer in the
manner that notices are to be addressed pursuant to Section 9 of this
Agreement.
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(j) The
Employer fully acknowledges that the Executive owns existing businesses that
sell, operate, install, refurbish, and finance, but do not manufacture, GPS
golf
systems throughout the world (“Executive’s
Business”).
Immediately after the earlier of December 31, 2011 or the Termination Date
the
Executive will be able to continue Executive’s Business without restriction in
the same manner as of the date immediately prior to the Effective Date, it
being
understood that such action shall not constitute a breach under this Agreement.
Section
7. Assignment
of Developments; Works for Hire.
If at
any time or times during Executive’s employment with the Employer, the Executive
shall (either alone or with others) make, conceive, discover or reduce to
practice any invention, modification, discovery, design, development,
improvement, process, software program, work-of-authorship, documentation,
formula, data, technique, know-how, secret or intellectual property right
whatsoever or any interest therein (whether or not patentable or registrable
under copyright or similar statutes or subject to analogous protection) (herein
called “Developments”)
that
(a) relates to the business of the Employer (or any subsidiary or affiliate
of the Employer) or any customer of or supplier to the Employer (or any of
its
subsidiaries or affiliates) or any of the products or services being developed,
manufactured, sold or provided by the Employer or which may be used in relation
therewith or (b) results from tasks assigned to the Executive by the
Employer, such Developments and the benefits thereof shall immediately become
the sole and absolute property of the Employer and its assigns, and the
Executive shall promptly disclose to the Employer (or any persons designated
by
it) each such Development and hereby assigns any rights the Executive may have
or acquire in the Developments and benefits and/or rights resulting therefrom
to
the Employer and its assigns without further compensation and shall communicate,
without cost or delay, and without publishing the same, all available
information relating thereto (with all necessary documentation, plans and
models) to the Employer.
Upon
disclosure of each Development to the Employer, the Executive will, during
the
Term and at any time thereafter, at the request and cost of the Employer, sign,
execute, make and do all such deeds, documents, acts and things as the Employer
and its duly authorized agents may reasonably require:
(a) to
apply
for, obtain and vest in the name of the Employer alone (unless the Employer
otherwise directs) letters patent, copyrights, trademarks, service marks or
other analogous protection in any country throughout the world and when so
obtained or vested to renew and restore the same; and
(b) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyrights, trademarks, service marks or other analogous
protection.
In
the
event the Employer is unable, after commercially reasonable effort, to secure
the Executive’s signature on any letters patent, copyrights, trademarks, service
marks or other analogous protection relating to a Development, whether because
of the Executive’s physical or mental incapacity or for any other reason
whatsoever, the Executive hereby irrevocably designates and appoints the
Employer and its duly authorized officers and agents as the Executive’s agent
and attorney-in-fact, to act for and on his behalf and stead to execute and
file
any such application or applications and to do all other lawfully permitted
acts
to further the prosecution and issuance of any such letters patent, copyrights,
trademarks, service marks and other analogous protection thereon with the same
legal force and effect as if executed by the Executive. Notwithstanding the
foregoing, it is understood and agreed that all intellectual property rights
relating to the Units and the Units themselves referred to in Section 2 which
the Executive currently owns are and will continue to be the property of the
Executive or his assignee.
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Section
8. Withholding
Taxes.
The
Employer may directly or indirectly withhold from any payments to be made under
this Agreement all Federal, state, city or other taxes and all other deductions
as shall be required pursuant to any law or governmental regulation or ruling
or
pursuant to any contributory benefit plan maintained by the
Employer.
Section
9. Notices.
All
notices, requests, demands and other communications required or permitted
hereunder shall be given in writing, and shall be deemed effective upon
(a) personal delivery, if delivered by hand, (b) three days after the
date of deposit in the mails, postage prepaid, if mailed by certified or
registered United States mail, or (c) the next business day, if sent by a
prepaid overnight courier service, and in each case addressed as
follows:
| (a) |
To
the Employer:
|
|
0000
000xx Xxxxxx, Xxxxx 000
Xxxxxx,
X.X. X0X 0X0, Xxxxxx
Attn:
Chairman of the Board
|
|
with
a copy (which shall not be deemed notice) to:
Xxxxx
X. Xxxxxxxx, Esq.
TroyGould
PC
0000
Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx
Xxxxxxx, XX 00000
|
| (b) |
To
the Executive:
|
|
to
the Executive at the Executive’s address listed
above.
|
or
to
such other address as either party shall have previously specified in writing
to
the other.
Section
10. No
Attachment.
Except
as required by law, no right to receive payments under this Agreement shall
be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no effect;
provided, however, that nothing in this Section 10 shall preclude the
assumption of such rights by executors, administrators or other legal
representatives of the Executive or the Executive’s estate and their assigning
any rights hereunder to the person or persons entitled thereto.
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Section
11. Binding
Agreement; No Assignment.
This
Agreement shall be binding upon, and shall inure to the benefit of, the
Executive, the Employer and their respective permitted successors, assigns,
heirs, beneficiaries and representatives. This Agreement is personal to the
Executive and may not be assigned by the Executive without the prior written
consent of the Board, as evidenced by a resolution of the Board. Any attempted
assignment in violation of this Section 11 shall be null and
void.
Section
12. Governing
Law.
This
Agreement, and all matters arising directly or indirectly from this Agreement,
shall be governed by, and construed and interpreted in accordance with, the
laws
of the State of Nevada, without giving effect to the choice of law provisions
thereof.
Section
13. Entire
Agreement.
This
Agreement shall constitute the entire agreement between the parties with respect
to the terms of Executive’s employment relationship with Employer, and
supersedes all previous written, oral or implied understandings between them
with respect to Executive’s employment by Employer.
Section
14. Amendments.
This
Agreement may only be amended or otherwise modified by a writing executed by
each of the parties hereto.
Section
15. Survivorship.
The
provisions of Sections 5 through 13 hereof and this Section 15 shall
survive the termination of this Agreement.
Section
16. Indemnification.
Except
to the extent of any breach by the Executive of any provision of this Agreement,
the Employer shall indemnify, defend and hold the Executive harmless for actions
and omissions as an officer and/or director of the Employer to the extent set
forth in the Employer’s By-laws and/or Articles of Incorporation, as applicable.
The Employer agrees that the Executive shall be covered by directors and
officers insurance coverage during the Term on the same basis as the Employer
maintains such coverage for other officers and directors of the Employer. The
Executive shall indemnify, defend and hold the Employer harmless from damages
incurred or payments made by the Employer arising out of a breach by the
Executive of Section 1(b) of this Agreement.
Section
17. Key
Man Life Insurance.
The
Executive agrees to cooperate with the Employer in obtaining any key man life
insurance coverage insuring the Executive’s life and to submit to such physical
examinations as may be needed to secure such coverage.
Section
18. Counterparts.
This
Agreement may be executed in any number of counterparts or facsimile copies,
each of which when executed shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
Section
19. Legal
Counsel.
Executive represents that he is knowledgeable and sophisticated as to business
matters, including the subject matter of this Agreement, that he has read this
Agreement and that he understands its terms. Executive acknowledges that, prior
to assenting to the terms of this Agreement, he has been given a reasonable
period of time to review it, to consult with counsel of his choice, and to
negotiate at arm’s-length with the Employer as to its contents. Executive and
the Employer agree that the language used in this Agreement is the language
chosen by the parties to express their mutual intent, and that they have entered
into this Agreement freely and voluntarily and without pressure or coercion
from
anyone.
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Section
20. Section 409A.
This
Agreement shall be interpreted to avoid any penalty sanctions under
Section 409A of the Code (“Section 409A”)
and
regulations promulgated thereunder. Notwithstanding anything contained herein
to
the contrary, the Executive shall not be considered to have terminated
employment with the Employer for purposes of the payments and benefit of
Section 5 hereof unless he would be considered to have incurred a
“termination of employment” from the Employer within the meaning of Treasury
Regulation §1.409A-1(h)(1)(ii). For purposes of Section 409A, each
payment made under this Agreement shall be treated as a separate payment. In
no
event may the Executive, directly or indirectly, designate the calendar year
of
payment.
[Signature
Page Follows]
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IN
WITNESS WHEREOF,
the
Employer has caused this Agreement to be executed and delivered by its duly
authorized officer and the Executive has signed this Agreement, all as of the
first date written above.
|
By:
|
/s/
Xxxx Xxxxxx
|
||
|
Name:
|
Xxxx
Xxxxxx
|
||
|
Title:
|
Principal
Executive Officer
|
||
| EXECUTIVE: | ||
| Xxxxx Xxxxxxxx | ||
|
/s/
Xxxxx Xxxxxxxx
|
||
|
|
||
|
|
||
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