EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
September ___, 2002, by and between GolfGear International, Inc. (the
"Company"), a Nevada Corporation, and Xxxxxxx X. Xxxxxxx ("Executive").
I.
EMPLOYMENT
1.1 Position and Duties. The Company hereby engages and employs
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Executive as President, Chief Operating Officer and Chief Financial Officer on
the terms set forth in this Agreement. The Company shall appoint Executive to
fill a vacancy on the Company's Board of Directors (the "Board") and shall
nominate Executive to serve on the Board at each annual meeting of the Company's
stockholders during the term of this Agreement.
The Board may provide such additional designations of title to
Executive as the Board, in its discretion, may deem appropriate. Executive shall
perform the executive duties and functions customarily related to the above
positions, subject to the reasonable limitations of authority set forth from
time to time in the resolutions of the Board and applicable law.
1.2 Best Efforts. Commencing on September ___, 2002,
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Executive agrees to devote his full time and attention to the Company, to use
his best efforts to advance the business and welfare of the Company, to render
his services under this Agreement fully, faithfully, diligently, competently and
to the best of his ability, and not to engage in any other employment
activities. Notwithstanding anything herein to the contrary, Executive shall
not be precluded from (a) engaging in charitable activities and community
affairs, (b) managing his personal investments and affairs, provided that such
activities do not materially interfere with the proper performance of his duties
and responsibilities under this Agreement or (c) serving on a board of directors
for a business which is not competitive with the Company.
II.
COMPENSATION AND BENEFITS
2.1 Base Salary. For all services to be rendered by Executive
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under this Agreement, the Company agrees to pay Executive an annual base salary
of Two Hundred Thousand Dollars ($200,000.00), less deductions required by law,
payable not less frequently than bi-weekly in accordance with the normal payroll
practices of the Company. The annual base salary shall be subject to an annual
review and adjustment based on Executive's performance.
2.2 Stock Option Grant. The Company shall grant to Executive
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options to purchase three million (3,000,000) shares of the Company's common
stock at an exercise price per share equal to the fair market value of the stock
on the date of the grant pursuant to a stock option agreement in substantially
the form attached hereto as Exhibit A and by this reference made a part hereof
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("Stock Option Agreement"). Should the Company successfully (i) complete an
acquisition, directly or indirectly, of Xxxxx Golf, whether by merger, or
purchase of substantially all of its
securities, a purchase of substantially all of its assets or otherwise or (ii)
completes new financing generating net proceeds of at least One Million Five
Hundred Thousand Dollars ($1,500,000.00), the Company shall grant Executive,
within five business days after the closing of the first to occur of the
foregoing, an option to purchase an additional one million (1,000,000) shares of
the Company's common stock at the then current fair market value. Executive
shall vest in such options over a four (4) year period at twenty five percent
(25%) on the first anniversary of Executive's employment and one thirty-sixth
(1/36th) of the remaining shares at the end of each month thereafter that
Executive is employed hereunder. In addition, so long as Executive is employed
by the Company prior to a change of control, all of Executive's unvested shares
on such date shall become vested in full immediately prior to the change of
control. A "change of control" shall mean and include any of the following:
(a) The purchase or other acquisition by any person, entity
or group of persons, within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 ("Act"), or any comparable successor provisions,
of beneficial ownership (within the meaning of Rule 13 D-3 promulgated under the
Act) of fifty percent (50%) or more of either the outstanding shares of common
stock of the Company's or its then outstanding voting securities entitled to
vote generally;
(b) The approval by the stockholders of the Company of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than fifty percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or consolidated the
Company's then outstanding securities; or
(c) Of the sale of fifty percent (50%) or more of the assets
of the Company.
Notwithstanding the foregoing, the purchase of the Company by, or merger with,
Xxxxx Golf, in any form whatsoever, shall be excluded from the definition of
"change of control."
2.3 Other Benefits. The Company shall further provide to
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Executive the following other benefits:
(a) Full participation, on a basis commensurate with his
position with the Company, in all plans of life, accident, disability and health
insurance and other benefits that generally are made available to senior
executives of the Company;
(b) Four (4) weeks paid vacation; and
(c) Until such time as the Company obtains health insurance
coverage for its employees, the Company shall pay Executive Four Hundred Fifty
Dollars ($450.00) per month to offset COBRA or third party health insurance
premiums.
2.4 Expense Reimbursement. The Company shall promptly reimburse
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Executive for all actual and reasonable business expenses incurred by Executive
in promoting the business of the Company, including expenditures for car phone,
entertainment, travel, or other expenses,
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provided that (a) such expenditures are of a nature qualifying them as
legitimate business deductions and (b) Executive furnishes to the Company
adequate records and other documentary evidence reasonably required by the
Company to substantiate such expenditures.
III.
TERMINATION AND SEVERANCE PAY
3.1 Involuntary Termination.
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(a) Severance Pay. In the event that Executive's employment
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with the Company is terminated by the Company for Cause (as defined in Section
3.1(c)), Executive shall be entitled to no severance pay. In the event that
Executive's employment with the Company is terminated by the Company other than
for Cause, or Executive resigns for Good Reason (as defined in Section 7.7),
then in consideration of Executive's compliance with his obligations under
Article V and Article VI and Executive's execution of a general release in favor
of the Company (which release shall contain reasonable and customary terms and
exceptions), Executive shall be entitled to severance pay ("Severance Pay") in
the form of (i) bi-weekly payments to Executive in the amount of Executive's
monthly base salary as in effect on the date of termination, payable in
accordance with customary payroll practices, and related health benefits for a
four (4) month period commencing on the date of termination if the date of
termination occurs during the first year of the Agreement, a five (5) month
period commencing on the date of termination if the date of termination occurs
during the second year of the Agreement; a six (6) month period commencing on
the date of termination if the date of termination occurs during any subsequent
year of the Agreement; and (ii) if the date of termination occurs during the
first year of the Agreement, seven hundred fifty thousand (750,000) shares of
any then unvested common stock options under the Stock Option Agreement shall
immediately vest. Notwithstanding the foregoing, Executive acknowledges and
agrees that in the event Executive breaches any material provision of Article V
or Article VI, his right to receive severance payments under this Section 3.1(a)
shall automatically terminate.
(b) Benefits. Following termination, Executive shall cease
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to be a Company employee and shall not be entitled to any employee benefits,
except as provided in Section 3.1(a) above. This shall not preclude Executive
from exercising his COBRA benefits under applicable law.
(c) Cause. For purposes of this Agreement , the term "Cause"
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shall mean the determination by a majority of the disinterested members of the
Board that Executive has engaged in any one of the following: (i) material
financial dishonesty, including, without limitation, misappropriation of funds
or property, or any attempt by Executive to secure any personal profit related
to, and to the material detriment of, the business or business opportunities of
the Company; (ii) gross negligence or reckless or willful misconduct in the
performance of job duties; (iii) willful refusal or the repeated failure of
Executive to perform his job duties to the reasonable satisfaction of the Board
or to comply with the lawful instruction of the Board; (iv) the conviction of,
or plea of nolo contender to, any felony; (v) intentional and material violation
of the Company's written policies including, without limitation, the Company's
policies on equal employment opportunity and prohibition of unlawful harassment;
or (vi) any material breach of any agreement between Executive and the Company.
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Termination under subsections (i), (ii), (iii), (v) or (vi) shall
be warranted only after the Board has determined, in good faith, that Cause
exists after having given Executive written notice of such Cause for termination
on at least two (2) separate occasions and such activity is not permanently
ceased within five (5) business days of each such notice; provided, however,
that Executive's employment may be terminated immediately under subsection (v)
above, without the opportunity to cure, for any intentional and material
violation by Executive of the Company's policies on equal employment opportunity
or prohibition of unlawful harassment.
3.2 Voluntary Termination. In the event Executive voluntarily
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terminates his employment with the Company, Executive shall be entitled to no
severance pay. For purposes of this Agreement, the term "voluntarily
terminates" shall not include a resignation that is tendered by Executive
pursuant to a direct request of the Board or a resignation for Good Reason. A
resignation tendered by Executive pursuant to a direct request of the Board
shall, for purposes of this Agreement, be treated as an involuntary termination,
and Executive's entitlement to severance pay in accordance with the provisions
of Section 3.1(a) shall depend upon whether the Board's request was based on
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Cause (as defined in Section 3.1(c)).
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3.3 Death. In the event of Executive's death, this Agreement
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shall automatically terminate and shall be of no further force and effect.
Termination of Executive's employment as a result of his death shall not result
in any obligation by the Company to pay severance pay or other unearned benefits
to Executive's estate or heirs.
3.4 Disability. In the event of Executive's Disability (as
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defined below) during the term of this Agreement for any period of at least
three (3) consecutive months, the Company shall have the right, which may be
exercised in its sole discretion, to terminate this Agreement. In the event the
Company does elect to terminate this Agreement, Executive shall not be entitled
to any severance pay at any time but shall be entitled to normal disability
benefits in accordance with the policies established from time to time by the
Company. For purposes of this Agreement, "Disability" shall mean the inability
of Executive to perform his employment services hereunder by reason of physical
or mental illness or incapacity as determined by a physician chosen by the
Company and reasonably satisfactory to Executive or his legal representative.
IV.
TERM
Executive and the Company acknowledge and agree that Executive's
employment with the Company is expressly "at-will" both during and after the
term of this Agreement. This means that either party may terminate Executive's
employment with or without cause. Any termination of Executive's employment is,
however, subject to the terms and provisions of this Agreement as to severance
pay and other obligations.
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V.
NONDISCLOSURE OF INFORMATION
AND NON-SOLICITATION OF EMPLOYEES
5.1 Employee Proprietary Information and Inventions Agreement.
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Executive shall be subject to the provisions of the Company's Employee
Proprietary Information and Inventions Agreement, a copy of which is attached
hereto as Exhibit B and by this reference made a part hereof.
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5.2 Return of Information. Upon termination of Executive's
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employment, Executive will deliver to the Company all customer lists, proposals,
reports, memoranda, computer software and programming, budgets and other
financial information, and other materials or records or writings of any type
(including any copies thereof and regardless of the medium in which the
information exists) made, used or obtained by Executive in connection with his
employment by the Company.
VI.
NON-COMPETITION
Executive agrees that given the extent and nature of the Confidential
Information he obtains during the course of his employment, it would be
inevitable that such Confidential Information would be disclosed or utilized by
the Executive should he obtain employment from, or become associated with, an
entity or person that is engaged in a business whose products or services are
substantially similar in function or capability to the products or services then
being developed, manufactured or sold by the Company, and are marketed to
substantially the same type of user as that to which the products and services
of the Company are marketed or proposed to be marketed. In order to protect the
Confidential Information Executive obtains during the course of his employment,
Executive agrees that, so long as Executive is employed by the Company,
Executive shall not, without the prior written consent of the Company, either
directly or indirectly, including without limitation through a partnership,
joint venture, corporation or other entity or as a consultant, director or
employee, engage in a business whose products or services are substantially
similar in function or capability to the products or services then being
developed, manufactured or sold by the Company, and are marketed to
substantially the same type of user as that to which the products and services
of the Company are marketed or proposed to be marketed. Nothing herein shall
prohibit Executive from making a passive investment in up to five percent (5%)
of the equity of a publicly held company which would otherwise be prohibited by
this Section VI.
VII.
MISCELLANEOUS
7.1 Successors; Binding Agreement. This Agreement shall not be
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terminated by the voluntary or involuntary dissolution of the Company or by any
merger or consolidation, whether or not the Company is the surviving or
resulting corporation, or upon any transfer of all or substantially all of the
assets of the Company. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall bind and inure to the
benefit of the
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surviving or resulting corporation, or the corporation to which such assets
shall have been transferred, as the case may be; provided, however, that the
Company will require any successor to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.
7.2 Arbitration. In consideration for the mutual benefits arising
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from the employment relationship entered contemporaneously with this Agreement,
Executive and the Company agree as follows:
Any claim, dispute, or controversy, including but not limited to any
claim, dispute, or controversy which would first have to be filed with the
California Department of Fair Employment and Housing (DFEH) and/or the Equal
Employment Opportunity Commission (EEOC), and would otherwise require or allow
resort to any court or other governmental dispute resolution forum, between the
Company and Executive arising from, related to, or having any relationship or
connection whatsoever with Executives employment by the Company, whether based
on tort, contract, statutory, or equitable law, or otherwise, including Federal
Title VII claims (with the sole exception of claims arising under the National
Labor Relations Act which are brought before the National Labor Relations Board;
claims for medical and disability benefits under the California Workers
Compensation Act, and Employment Development Department claims), shall be
submitted to and determined exclusively by binding arbitration in accordance
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with the Arbitration Rules of JAMS and in conformity with the procedures of the
California Arbitration Act, and not by way of a trial by jury. Pursuant to
Section 1283.05 of the California Code of Civil Procedure, each party will be
entitled to all methods of discovery incorporated therein, and all additional
methods of discovery otherwise necessary to vindicate the issues raised, as
required by law. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction. Though Executive has no contractual
right to attorneys fees by this agreement, Executive is entitled to all relief
otherwise available in court, including the recovery of costs and attorneys fees
where expressly provided by law.
The arbitration hearing and all proceedings in connection therewith
shall take place in Orange County, California. There shall be one arbitrator,
chosen by mutual agreement of the Executive and the Company. If the arbitrator
shall not have been selected within thirty (30) days after dispute has been
submitted to JAMS, the appointment shall be made by JAMS. The arbitrator shall
be a lawyer or judge who appears on the lists of JAMS, shall be a neutral party,
and shall be familiar with employment agreements. Each party shall pay the fees
of his or her own attorneys, unless attorneys' fees are awarded to the
prevailing party pursuant to law, and the expenses of his or her witnesses.
Each party will be responsible for all reasonable filing and administrative
costs and fees that each party would otherwise be required to pay if the action
was brought before a court of law, except the Company agrees to pay the fees of
the arbitrator and any other expenses unique to arbitration. At the conclusion
of the arbitration, the arbitrator will provide a written decision disclosing
the essential findings and conclusions upon which the award is based. The
arbitrators decision will be final and binding and no further remedies may be
sought by either party.
This Agreement contains the entire agreement between the parties
regarding arbitration of claims arising out of the employment relationship and
supercedes all such prior oral and written agreements, understandings,
commitments, and practices between them, including all
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prior arbitration agreements and/or employment agreements to the extent such
agreements contain an agreement to arbitrate, whether or not fully performed by
Executive before the date of this agreement. No oral modifications, express or
implied, may alter or vary the terms of this Agreement. No amendments to this
Agreement may be made except by a writing signed by both parties. No employee or
supervisor of the Company is authorized to alter or vary the terms of this
Agreement except by written agreement by the President. Any representations
contrary to this Agreement, express or implied, written or oral, are hereby
disclaimed.
BY INITIALING BELOW, BOTH EXECUTIVE AND THE COMPANY UNDERSTAND BY
VOLUNTARILY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH EXECUTIVE AND
ACU GIVE UP THEIR RIGHTS TO TRIAL BY JURY.
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The Company Executive
7.3 No Waiver. The waiver by either party of a breach of any
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provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach thereof.
7.4 Governing Law. This Agreement shall be construed and enforced
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in accordance with the laws and decisions of the State of California.
7.5 Entire Agreement; Modifications. This Agreement represents
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the entire agreement between the parties with respect to the matters set forth
herein and supersedes all prior agreements and understandings between the
parties relating to the employment of Executive by the Company, and it may not
be changed or terminated orally. No modification, termination, or attempted
waiver of any other provisions of this Agreement shall be valid unless in
writing signed by the party against whom the same is sought to be enforced.
7.6 Jurisdiction; Venue. The parties do hereby agree and submit
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to personal jurisdiction in the State of California for the purposes of any
proceedings brought to enforce or construe the terms of this Agreement or to
resolve any dispute or controversy relating to Executive's employment or arising
under, as a result of, or in connection with this Agreement, and do hereby agree
and stipulate that any such proceedings shall be venued and held in Orange
County, California.
7.7 Definition of "Good Reason." For purposes of this agreement,
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"Good Reason" shall mean the occurrence of any of the following circumstances
without the prior written consent of the Executive: (a) the requirement that
Executive report other than to the Company's Board as a whole or a formal
committee of the Company's Board; (b) the failure of the Company to maintain and
continue Executive's participation in the Company's benefit plans as stated in
Section 2.3 of this Agreement and such benefits are not reinstated within five
(5) business days from the date of notice from Executive of his intention to
terminate this Agreement; (c) a material breach of the Company's obligations
under this agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
The "COMPANY":
GolfGear International, Inc., a Nevada
corporation
By:
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Xxxxx X. Xxxxxxxxxxx
Its: Chairman of the Board
"EXECUTIVE":
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Name: Xxxxxxx X. Xxxxxxx
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EXHIBITS
EXHIBIT A Stock Option Agreement
EXHIBIT B Employee Proprietary
Information and Inventions
Agreement
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