Exhibit 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of
October __, 2003 by and between Xxxxxx X. Xxxxx ("EXECUTIVE") and Natural Golf
Corporation, an Illinois corporation (the "COMPANY").
RECITALS
WHEREAS, the Company is engaged in the business of golf instruction,
primarily through the sale of instructional videotapes and golf schools, as well
as the design, manufacture and sale of golf equipment (the "BUSINESS").
WHEREAS, the Company desires to employ Executive as its President and
Chief Executive Officer, all under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Executive agree as follows:
1. EMPLOYMENT OF EXECUTIVE. The Company hereby employs Executive as
the Company's President and Chief Executive Officer, and Executive hereby
accepts such employment and agrees to act in such capacities, all in accordance
with the terms and conditions of this Agreement. This Agreement shall become
effective upon, and Executive's employment hereunder shall commence as of, the
closing of an initial public offering (an "IPO") of common stock by the Company
(the "EFFECTIVE DATE") and continue until terminated as provided in this
Agreement. In the event that an IPO has not been completed on or before March
31, 2004, either the Company or Executive may terminate this Agreement by
written notice to the other party, in which case, none of the terms or
conditions set forth herein shall be of any force or effect.
2. OFFICES AND DUTIES. During the term of his employment, Executive
will perform such duties as the Board of Directors of the Company ("BOARD") may
prescribe from time to time, consistent with Executive's titles, and Executive
shall report to the Board. Executive agrees that during the term of his
employment, he will devote substantially all of his business time and attention
to fulfilling his duties under this Agreement. Notwithstanding the foregoing,
nothing in this Agreement shall preclude Executive from devoting reasonable
periods of time and effort to (i) charitable, community and personal activities,
(ii) management of his personal investment assets, and (iii) with the approval
of the Board, serving as a director or advisor of any other business entity;
provided, however, that in each case, such activity does not interfere in any
material respect with the performance by Employee of his duties hereunder, and
does not violate SECTION 4 hereof. Executive hereby represents and warrants that
neither Executive's entry into this Agreement nor Executive's performance of his
obligations hereunder will conflict with or result in a breach of the terms,
conditions or provisions of any other agreement or obligation of any nature to
which Executive is a party or by which Executive is bound, including, without
limitation, any employment agreement, non-competition agreement or
confidentiality agreement entered into by Executive.
3. COMPENSATION.
3.1 BASE SALARY. During the term of his employment, the Company
will pay Executive a base salary at a rate of $225,000 per annum (the "BASE
SALARY"), payable in accordance with the Company's normal payroll practices for
executive officers. The Base Salary may be increased on an annual basis at the
sole discretion of the Board.
3.2 BONUS COMPENSATION. Executive shall be eligible to receive
discretionary annual bonuses, beginning with respect to the fiscal year ending
November 30, 2004, of up to 75% of his then current Base Salary ("BONUS
PAYMENTS"). It is anticipated that (i) up to 75% of Executive's potential Bonus
Payments for a given fiscal
year will be determined based upon the Board's evaluation, in its sole
discretion, as to the Company's performance and results during such fiscal year,
and (ii) up to 25% of Executive's potential Bonus Payments for a given fiscal
year will be determined based upon the Board's evaluation, in its sole
discretion, as to Executive's performance and contribution to the Company during
such fiscal year.
3.3 IPO BONUS. If an IPO is completed, the Company shall pay
Executive a special, one-time bonus of $50,000, payable on or before the tenth
(10th) business day following the closing of the IPO. Any bonus earned or paid
pursuant to this Section 3.3 shall not be deemed a "Bonus Payment" for purposes
of this Agreement.
3.4 STOCK INCENTIVE PLAN AWARDS. Executive shall be entitled to
participate in the Company's 2003 Stock Incentive Plan and any successor plan
(collectively, the "PLAN"). As of the Effective Date, Executive shall be granted
100,000 shares of restricted stock under the Plan, 50,000 shares of which shall
vest on January 1, 2005 and 50,000 shares of which shall vest on January 1,
2006. In addition, the Company shall grant Executive non-qualified options to
purchase an aggregate of 255,000 shares of the Company's common stock under the
Plan ("OPTIONS"). The agreement granting such Options shall be similar in form
to option agreements for other executives of the Company; provided, however,
that the Options granted pursuant to this SECTION 3.4 shall vest immediately
with respect to 155,000 shares, for which the exercise price will be $4.00 per
share, and the remaining 100,000 shares will vest pro rata on a monthly basis
over a two-year period from the Effective Date and have an exercise price equal
to the initial public offering price of the Company's common stock in the IPO.
In addition, Options and shares of restricted stock granted pursuant to this
SECTION 3.4 shall immediately vest upon a Change in Control (as defined below).
If Executive's employment hereunder is terminated by Executive for Good Reason
or by the Company without Cause, so long as Executive has executed and delivered
to the Company a general release in the form attached hereto as Exhibit A, a
portion of any shares of restricted stock that are scheduled to vest on January
1 of the year following the calendar year in which such termination occurs (the
"REFERENCE SHARES") shall immediately vest upon such termination determined by
multiplying the number of Reference Shares by a fraction in which the numerator
equals the number, if any, of whole calendar months during the calendar year in
which such termination occurs prior to the Termination Date, and the denominator
is twelve (12).
3.5 BENEFITS. Executive will be entitled to participate in
group life and medical insurance plans, profit-sharing and similar plans, and
other "fringe benefits" which are currently offered or may be offered in the
future by the Company (collectively, "BENEFITS"), comparable to those made
available by the Company to its other senior executive employees, in accordance
with the terms of such plans. On or before December 31, 2003, provided that
Executive makes himself reasonably available for any physical examinations and
provides all information necessary to satisfy this obligation, and assuming
Executive is insurable on commercially reasonable terms, the Company will also
provide Executive with a supplemental life insurance benefit of $500,000.
3.6 VACATION. Executive shall be entitled to take four (4)
weeks of vacation, with pay, during each full calendar year during the term of
his employment, or a proportionate fraction thereof for any partial calendar
year during the term of his employment. Vacation allowances shall be earned as
described in the Company's vacation policy then in effect. Vacation allowances
shall not be accumulated from year to year.
3.7 WITHHOLDING. All compensation payable to Executive under
this Agreement is stated in gross amount and will be subject to all applicable
withholding taxes, other normal payroll deductions, and any other amounts
required by law to be withheld.
3.8 EXPENSES. The Company, in accordance with its policies and
procedures, will pay or reimburse Executive for all expenses (including travel
and entertainment expenses) reasonably incurred by Executive during the term of
his employment in connection with the performance of Executive's duties under
this Agreement. In addition, the Company shall reimburse Executive for all
reasonable golf-related fees and expenses other than initial membership or
initiation fees for any club. Reimbursements paid by the Company pursuant to
this SECTION 3.8 shall be contingent upon Executive providing the Company with
reasonable documentation or evidence of the expenses for which Executive seeks
reimbursement, in accordance with the policies and procedures established by the
Company.
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3.9 BOARD AUTHORITY TO DELEGATE. The authority granted to the
Board pursuant to this SECTION 3 may be delegated by the Board to a duly
appointed compensation committee of the Board.
4. COVENANT NOT TO COMPETE.
4.1. EXECUTIVE'S ACKNOWLEDGMENT. Executive agrees and
acknowledges that in order to assure the Company that it will retain its value
and that of the Business as a going concern, it is necessary that Executive
undertake not to utilize his special knowledge of the Business and his
relationships with customers and suppliers to compete with the Company.
Executive further acknowledges that:
(a) the Company is currently engaged in the Business;
(b) Executive has occupied, and will continue to occupy, a
position of trust and confidence with the Company and has acquired, and
will continue to acquire, an intimate knowledge of all proprietary and
confidential information concerning the Business;
(c) the agreements and covenants contained in this SECTION 4
are essential to protect the Company and the goodwill of the Business;
(d) the Company would be irreparably damaged if Executive were
to provide services to any person or entity in violation of the
provisions of this Agreement;
(e) the scope and duration of the Restrictive Covenants are
reasonably designed to protect a protectible interest of the Company
and are not excessive in light of the circumstances; and
(f) Executive has a means to support himself and his dependents
other than by engaging in the Business, or a business similar to the
Business, and the provisions of this SECTION 4 will not impair such
ability.
4.2. NON-COMPETE. The "RESTRICTED PERIOD" for purposes of this
Agreement shall commence on the Effective Date of this Agreement and shall
continue until the one (1) year anniversary of the Termination Date. Executive
hereby agrees that at all times during the Restricted Period, Executive shall
not, directly or indirectly, whether individually or as an employee, agent,
consultant, stockholder, director, partner or in any other representative
capacity, engage in the Business, or own, operate, manage, control invest in or
participate in any manner in, act as a consultant or advisor to, render services
for (alone or in association with any person, firm, corporation or entity), or
otherwise assist any person or entity that engages in or owns, invests in,
operates, manages or controls any venture or enterprise that directly or
indirectly engages or proposes to engage in the Business, anywhere within the
United States or Canada (the "TERRITORY").
4.3. NON-SOLICITATION. Without limiting the generality of the
provisions of SECTION 4.2 above, Executive hereby agrees that, during the
Restricted Period, Executive will not, directly or indirectly, solicit, or
participate as an employee, agent, consultant, stockholder, director, partner or
in any other representative capacity in any business which solicits, business
from any Person which is or was a customer or vendor of the Business as of, or
during the six (6) months prior to, the Termination Date, or from any successor
in interest to any such Person, for the purpose of marketing, selling or
providing any such Person any services or products similar to those offered by
or available from the Company, or encouraging any such Person to terminate or
otherwise alter his, her or its relationship with the Company.
4.4. INTERFERENCE WITH EMPLOYEE AND INDEPENDENT CONTRACTOR
RELATIONSHIPS. During the Restricted Period, Executive shall not, directly or
indirectly, as employee, agent, consultant, stockholder, director, co-partner or
in any other individual or representative capacity, without the prior written
consent of the Company, employ or engage, recruit or solicit for employment or
engagement, any individual who is employed or engaged by the Company at that
time, or has been employed or engaged by the Company during the six (6) months
prior thereto, or otherwise seek to influence or alter any such individual's
relationship with the Company.
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4.5. BLUE-PENCIL. If any court of competent jurisdiction shall
at any time deem the term of any particular Restrictive Covenant too lengthy or
the Territory too extensive, the other provisions of this SECTION 4 shall
nevertheless stand, and the Restricted Period shall be deemed to be the longest
period permissible by law under the circumstances and the Territory shall be
deemed to comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted Period and/or
the Territory to permissible duration or size.
4.6. INVESTMENT EXCEPTION. Notwithstanding the foregoing,
nothing contained in this SECTION 4 shall be construed to prevent Executive from
investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if
Executive is not involved in the business of said corporation and if Executive
and his associates (as such term is defined in Regulation 14(A) promulgated
under the Securities Exchange Act of 1934, as in effect on the date hereof),
collectively, do not own more than an aggregate of two percent (2%) of the stock
of such corporation.
5. CONFIDENTIAL INFORMATION. During the term of this Agreement and
thereafter, Executive shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Company, furnish, make
available or disclose to any Person or use for the benefit of himself or any
Person, any Confidential Information, except to the extent reasonably necessary
to carry out Executive's duties and responsibilities to the Company or to the
extent required by law or to comply with the lawful subpoena of any
administrative or governmental body, in which case Executive shall give prompt
notice of such subpoena to Company. As used in this SECTION 5, "CONFIDENTIAL
INFORMATION" shall mean any information relating to the Business or affairs of
the Company, including but not limited to information relating to financial
statements, business plans, forecasts, purchasing plans, customer identities,
potential customers, employees, suppliers, equipment, marketing programs,
strategies and information, analyses, profit margins or other proprietary
information used by the Company in connection with the Business of the Company;
provided, however, that Confidential Information shall not include any
information which is in the public domain or becomes known in the industry
through no wrongful act on the part of Executive. Executive acknowledges that
the Confidential Information is vital, sensitive, confidential and proprietary
to the Company.
6. TERMINATION.
6.1. WITHOUT CAUSE. The Company, by action of the Board, may
terminate Executive's employment hereunder at any time, without Cause, upon not
less than ten (10) days' written notice to Executive. Upon notice of such
termination from the Company, the Company may (i) require Executive to continue
to perform his duties hereunder on the Company's behalf during such notice
period, (ii) limit or impose reasonable restrictions on Executive's activities
during such notice period as it deems necessary, or (iii) choose any date within
the notice period as the Termination Date of Executive's employment, provided,
however, that the Company will continue to pay Executive's Base Salary during
such notice period.
6.2. FOR CAUSE. The Company, action of the Board, may terminate
Executive's employment hereunder at any time for Cause by providing to Executive
written notice of termination stating the grounds for termination for Cause and
such termination shall take effect immediately upon notice of termination. If,
at any time, the Board determines in good faith to terminate Executive's
employment hereunder for Cause, such determination shall be final and binding
unless a court renders a final, unappealable decision to the contrary, and
Executive shall have the burden of proof in any such legal proceeding.
6.3. BY EXECUTIVE. Executive may terminate his employment
hereunder at any time, with or without Good Reason, upon not less than sixty
(60) days' written notice (thirty (30) days' written notice if Executive
terminates his employment with Good Reason at any time or without Good Reason
following a Change in Control) to the Company. Upon notice of such termination
from Executive, the Company may (i) require Executive to continue to perform his
duties hereunder on the Company's behalf during such notice period, (ii) limit
or impose reasonable restrictions on Executive's activities during such notice
period as it deems necessary, or (iii) accept Executive's notice of termination
as Executive's resignation from the Company and any subsidiary thereof
(including as a resignation from any position as director of the Company and any
subsidiary thereof) at any time during such notice period. If the Company at any
time during the notice period chooses to accept Executive's notice
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of termination as Executive's resignation from the Company, then the Termination
Date shall be the date as of which such resignation is accepted, and without
limiting any rights under SECTION 6.5, the Company will not be obligated to pay
Executive's Base Salary for any period beyond the Termination Date.
6.4. DEATH OR DISABILITY. Executive's employment will terminate
effective immediately upon the death or Disability of Executive.
6.5. SALARY AND BENEFIT ACCRUALS. Following the termination of
Executive's employment under this Agreement by Executive without Good Reason, by
the Company for Cause, or upon Executive's death, Executive will not be entitled
to receive any further compensation (whether in the form of Base Salary, Bonus
Payments, Benefits or otherwise) other than Base Salary, Bonus Payments and
Benefits earned and accrued but not yet paid as of the Termination Date and, in
the case of Executive's death, the proceeds of the life insurance benefit
provided in SECTION 3.4 above. Upon the termination of Executive's employment
under this Agreement by Executive for Good Reason, by the Company without Cause
or due to Disability, Executive will be entitled to receive: (i) all Base
Salary, Bonus Payments and Benefits earned and accrued but not yet paid as of
the Termination Date (provided, if Executive's employment is terminated by the
Company without Cause, his Base Salary will continue to accrue through the last
day of the notice period specified in SECTION 6.1 above), (ii) the Termination
Payment, to be paid by the Company to Executive in twelve (12) equal monthly
payments on the first business day of each month beginning after the month in
which the Termination Date occurs; and (iii) for a period of twelve (12) months
following the Termination Date: (x) all Benefits in type and amount at least
equivalent to those provided to him and his dependents by the Company
immediately prior to the Termination Date, and (y) the Company will continue to
pay the premiums with respect to the life insurance policy described in SECTION
3.4 above.
6.6. EFFECT OF CERTAIN PAYMENTS. Notwithstanding anything herein
to the contrary, if any payment or right accruing to Executive hereunder
(without the application of this SECTION 6.6), either alone or together with
other payments or rights accruing to Executive from the Company, would
constitute a "PARACHUTE PAYMENT" (as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "CODE"), and regulations thereunder), such
payment or right shall be reduced to the largest amount or greatest right (for
example, by deferring the vesting date of Executive's Options or restricted
stock) that will result in no portion of the amount payable or right accruing
hereunder being subject to an excise tax under Section 4999 of the Code, unless
Executive would be in a better after-tax economic position if no such reduction
were to occur. The determination of the amount of any potential reduction in the
rights or payments shall be made by Executive. The Company shall cooperate in
good faith with Executive in making such determination and providing the
necessary information for this purpose. In the event that the vesting date of
any Option is deferred hereunder, the term during which such Option may be
exercised shall be extended until the ninetieth (90th) day following the full
vesting thereof.
6.7. NO MITIGATION. Executive shall not be required to mitigate
damages or the amount of any payment provided for or referred to in SECTION 6.5
by seeking other employment or otherwise, nor shall the amount of any payment
provided for or referred to in SECTION 6.5 be reduced by any compensation earned
by the Executive as the result of employment by another employer after the
termination of the Executive's employment, or otherwise.
6.8. CONDITIONS TO TERMINATION PAYMENT AND BENEFIT. As a
condition to Executive's right to receive any Termination Payment and Benefits
pursuant to SECTION 6.5, Executive hereby agrees that he shall: (i) execute and
deliver to the Company a general release in the form attached hereto as EXHIBIT
A, and (ii) not breach any Restrictive Covenant. If, at any time, Executive
breaches any Restrictive Covenant, then without limiting any other remedies of
the Company, including without limitation, those set forth in SECTION 8,
Executive shall not be entitled to any Termination Payment otherwise payable at
any time after commencement of such breach, unless such breach is an isolated,
insubstantial or inadvertent action that was not in bad faith and that is
remedied by Executive promptly after Executive first becomes aware of such
action.
7. DEFINITIONS. As used in this Agreement:
"AFFILIATE" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without
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limitation, any member of an affiliated group of which the Company is a common
parent corporation as provided in Section 1504 of the Code.
"BASE TERMINATION AMOUNT" means, with respect to any termination
of Executive's employment under this Agreement by the Company without Cause, by
Executive for Good Reason or due to Disability, (i) if the Termination Date
occurs on or before November 30, 2004, an amount equal to 50% of the Executive's
Base Salary then in effect, or (ii) if the Termination Date occurs after
November 30, 2004, an amount equal to the sum of (A) Executive's Base Salary
then in effect, plus (B) (i) if the Termination Date occurs on or before
November 30, 2005, the Bonus Payments earned by Executive, if any, with respect
to the fiscal year ending November 30, 2004, or (ii) if the Termination Date
occurs after November 30, 2005, the average of the Bonus Payments earned by
Executive, if any, with respect to each of the two fiscal years prior to the
fiscal year in which the Termination Date occurs. If, at any time, the Board
elects to change the Company's fiscal year, the foregoing references to fiscal
periods shall be adjusted to the nearest equivalent period.
"CAUSE" means (a) an act of fraud or dishonesty by Executive that
results in material gain or personal enrichment of Executive at the Company's
expense, (b) Executive's conviction of a felony-class crime (other than relating
to the operation of a motor vehicle), (c) any material breach by Executive of
any provision of this Agreement that, if curable, has not been cured by
Executive within thirty (30) days' written notice of such breach from the
Company, (d) Executive willfully engaging in gross misconduct materially
injurious to the Company that, if curable, has not been cured by Executive
within thirty (30) days' written notice specifying the alleged willful gross
misconduct and material injury, or (e) any intentional act or gross negligence
on the part of Executive that has a material, detrimental effect on the
reputation or Business of the Company.
"CHANGE IN CONTROL" means the happening of any of the following
events:
(a) An acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"PERSON") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of either (1) the
then outstanding shares of common stock of the Company (the
"OUTSTANDING COMPANY COMMON STOCK") or (2) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "OUTSTANDING COMPANY VOTING
SECURITIES"); excluding, however, the following: (1) any acquisition
directly from the Company, other than an acquisition by virtue of the
exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Company, (2) any
acquisition by the Company; (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; (4) by any Xxxxxxxxxx Party; or
(5) any acquisition by any Person pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (c) below; or
(b) Within any period of twenty-four (24) consecutive months, a
change in the composition of the Board such that the individuals who,
immediately prior to such period, constituted the Board (such Board
shall be hereinafter referred to as the "INCUMBENT BOARD") cease for
any reason to constitute at least a majority of the Board; provided,
however, for purposes of this section, that any individual who becomes
a member of the Board during such period, whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of those individuals who are members of the Board
and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided further, that any
such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
(c) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company ("CORPORATE
TRANSACTION"); excluding, however, such a Corporate Transaction
pursuant to which (1) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
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Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets,
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no
Person (other than the Company, any Xxxxxxxxxx Party, any employee
benefit plan (or related trust) sponsored or maintained by the Company,
by any corporation controlled by the Company, or by such corporation
resulting from such Corporate Transaction) will beneficially own,
directly or indirectly, more than 25% of, respectively, the outstanding
shares of common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the
election of directors, except to the extent that such ownership existed
with respect to the Company prior to the Corporate Transaction, and (3)
individuals who were members of the Board immediately prior to the
approval by the shareholders of the Corporation of such Corporate
Transaction will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction; or
(d) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company, other than to a
corporation pursuant to a transaction which would comply with clauses
(1), (2) and (3) of subsection (c), assuming for this purpose that such
transaction were a Corporate Transaction.
"DISABILITY" will be deemed to have occurred whenever Executive
has suffered physical or mental illness, injury, or infirmity that renders
Executive unable to perform the essential functions of his job with or without
reasonable accommodation, except that said Disability shall not be grounds for
termination of Executive's employment under this Agreement in violation of the
Americans with Disabilities Act, Family Leave Act or any other state or federal
law governing the obligations of employers to persons having disability.
"GOOD REASON" means the occurrence of any of the following events,
unless (i) such event occurs with Executive's express prior written consent,
(ii) the event is an isolated, insubstantial or inadvertent action or failure to
act that was not in bad faith and that is remedied by the Company promptly after
receipt of notice thereof given by Executive, or (iii) the event occurs in
connection with termination of Executive's employment for Cause, Disability or
death:
(a) the assignment to Executive by the Company of any duties
which are, in any material respect, inconsistent with, a diminution of
or an adverse change in Executive's position, duty, title, office,
responsibility or status with the Company; provided, however, that Good
Reason shall not exist if, prior to a Change in Control, the Board
determines that it would be appropriate to separate the positions of
President and Chief Executive Officer of the Company and Executive is
asked to continue in one of these positions without any material
adverse change to his then current compensation and benefits;
(b) any failure to either continue in effect any material
Benefits or to substitute and continue other plans, policies, programs
or arrangements providing Executive with substantially similar
Benefits, or the taking of any action which would substantially and
adversely affect Executive's participation in or materially reduce
Executive's Benefits or compensation;
(c) any failure by any successor or assignee of the Company to
continue this Agreement in full force and effect;
(d) any breach of this Agreement by the Company (or any
successor or assignee of the Company), unless such breach is cured
within thirty (30) days of receiving written notice of the breach from
Executive; or
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(e) the relocation of the executive offices of the Company
following a Change in Control to a location that is more than fifty
(50) miles from the executive offices of the Company as of the
effective date of such Change in Control.
"XXXXXXXXXX PARTY" means Xxxxxx Xxxxxxxxxx and any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law of Xx. Xxxxxxxxxx (including
adoptive relationships); any person sharing Xx. Xxxxxxxxxx' household (other
than a tenant or employee); any trust in which Xx. Xxxxxxxxxx and any of these
persons have all of the beneficial interest; any foundation in which Xx.
Xxxxxxxxxx and any of these persons control the management of the assets; any
corporation, partnership, limited liability company or other entity in which Xx.
Xxxxxxxxxx and any of these other persons are the direct and beneficial owners
of all of the equity interests (provided Xx. Xxxxxxxxxx and these other persons
agree in writing to remain the direct and beneficial owners of all such equity
interests); and any personal representative of Xx. Xxxxxxxxxx upon Xx.
Xxxxxxxxxx' death for purposes of administration of Xx. Xxxxxxxxxx' estate or
upon Xx. Xxxxxxxxxx' incompetency for purposes of the protection and management
of the assets of Xx. Xxxxxxxxxx.
"PERSON" means any individual, corporation, trust, proprietorship,
association, governmental body, agency or subdivision or other entity.
"TERMINATION DATE" means the effective date of any termination of
Executive's employment hereunder.
"TERMINATION PAYMENT" means, with respect to any termination of
Executive's employment under this Agreement by the Company without Cause, by
Executive for Good Reason or due to Disability, the Base Termination Amount;
provided, with respect to a termination occurring after a Change in Control, the
Termination Payment shall be equal to the Base Termination Amount multiplied by
the greater of (x) one (1) or (y) the result of (i) thirty-six (36) months minus
the number of complete calendar months between the Change in Control and the
Termination Date, divided by (ii) twelve (12).
8. REMEDIES. Executive acknowledges and agrees that the covenants set
forth in SECTIONS 4 and 5 of this Agreement (collectively, the "RESTRICTIVE
COVENANTS") are reasonable and necessary for the protection of the Company's
business interests, that irreparable injury will result to the Company if
Executive breaches any of the terms of the Restrictive Covenants, and that in
the event of Executive's actual or threatened breach of any such Restrictive
Covenants, the Company will have no adequate remedy at law. Executive
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to specific
performance and other appropriate injunctive and other equitable relief, without
bond and without the necessity of showing actual monetary damages. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove.
9. LIABILITY INSURANCE. Without limiting Executive's rights pursuant
to the Company's Articles of Incorporation, Bylaws or any indemnification
agreement entered into between the Company and Executive, so long as the Company
is a reporting company under either Section 12 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, the Company shall maintain
liability insurance covering Executive as a director, officer, employee and
fiduciary of the Company so long as such insurance coverage remains available to
the Company on commercially reasonable terms. Notwithstanding the foregoing, it
shall not constitute a breach of this covenant if, at any time, the Company is
unable to continue or maintain such insurance due to the actions or inaction of
Executive.
10. MISCELLANEOUS.
10.1. NOTICES. All notices and other communication between the
parties pursuant to this Agreement must be in writing and will be deemed given
when delivered in person, one (1) business day after being dispatched by a
nationally recognized overnight courier service, three (3) business days after
being deposited in the U.S. Mail, registered or certified mail, return receipt
requested, or when sent by facsimile (with receipt acknowledged and a copy sent
for next day delivery by a nationally recognized overnight courier service), to
the
8
Company at the address or facsimile number of its principal office in Mount
Prospect, Illinois and to Executive (or his representatives) at his address or
facsimile as shown on the Company's records. The parties hereto (or their
representatives) may change their addresses or facsimile numbers for notice
purposes by delivering notice to the other party in accordance with this SECTION
10.1. All notices sent to the Company shall also be delivered to Xxxxxx Xxxxxx
Xxxxx Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000-0000, Attention: Xxxxxxx X. Xxxx, Esq., Facsimile No.: 000-000-0000.
10.2. GOVERNING LAW. This Agreement will be subject to and
governed by the laws of the State of Illinois, without regard to principles of
conflicts of laws. Any action or claim between the parties that arises out of
this Agreement shall be instituted and prosecuted only in the appropriate state
or federal court or other tribunal situated in Chicago, Illinois. The Company
and Executive knowingly and voluntarily waive any and all right to a trial by
jury in any action or proceeding arising out of, under, or in connection with,
this Agreement or the relationship between the parties hereto.
10.3. BINDING EFFECT. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, executors, administrators, successors, and assigns, subject to
the limitations on assignment in SECTION 10.8.
10.4. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties with respect to the subject matter of this
Agreement and supersedes any other agreements, whether oral or written, between
the parties with respect to the subject matter of this Agreement.
10.5. MODIFICATION. No change or modification of this Agreement
will be valid unless it is in writing and signed by both of the parties. No
waiver of any provision of this Agreement will be valid unless in writing and
signed by the person or party to be charged.
10.6. SEVERABILITY. If any provision of this Agreement is, for
any reason, invalid or unenforceable, the remaining provisions of this Agreement
will nevertheless be valid and enforceable and will remain in full force and
effect. Any provision of this Agreement that is held invalid or unenforceable by
a court of competent jurisdiction will be deemed modified to the extent
necessary to make it valid and enforceable and as so modified will remain in
full force and effect.
10.7. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered in the interpretation of
construction of the provisions of this Agreement.
10.8. ASSIGNABILITY. This Agreement may not be assigned by either
party without the prior written consent of the other party, except that the
Company may assign its rights to, and cause its obligations under this Agreement
to be assumed by, any person or entity to whom or to which the Company
simultaneously transfers by sale, merger, or otherwise all or substantially all
of its assets.
10.9. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied against
Executive or the Company.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement as of the date first above written.
NATURAL GOLF CORPORATION
By:
-----------------------------------------------
Xxxxxx Xxxxxxxxxx, Chairman of the Board
EXECUTIVE:
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Xxxxxx X. Xxxxx
10
EXHIBIT A
GENERAL RELEASE
This GENERAL RELEASE ("GENERAL RELEASE") is made as of ____________, by
Xxxxxx X. Xxxxx ("EXECUTIVE") for the benefit of Natural Golf Corporation, an
Illinois corporation ("COMPANY") and its successors and assigns.
WHEREAS, the Company and Executive have entered into an Executive
Employment Agreement, dated as of ________, 2003 (the "EMPLOYMENT AGREEMENT").
WHEREAS, as a condition to Executive's right to receive any Termination
Payments or Benefits provided for or referenced in Section 6 of the Employment
Agreement, Executive has agreed to execute and deliver to the Company this
General Release.
NOW, THEREFORE, in consideration of the Company's payment of the
Termination Payments and Benefits provided for or referenced in Section 6.5 of
the Employment Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Executive, for himself
and each of his executors, successors, and assigns (collectively, the
"RELEASORS"), hereby forever releases the Company and each of its predecessors,
successors, and past and present stockholders, directors, officers, managers,
employees, subsidiaries, affiliates, agents and representatives (collectively,
the "RELEASED PARTIES") from any and all claims, demands, and causes of action
of every kind and nature, including, without limitation, those relating to or
arising out of the Employment Agreement or any employment-related claims
Executive may have, including, without limitation, claims brought under the
Civil Rights Act of 1964, as amended, the Civil Acts Rights Act of 1991, the Age
Discrimination in Employment Act, the Employee Retirement Income Security Act,
the Americans with Disabilities Act and any other federal, state or local laws
regarding employment discrimination or termination of employment in the common
laws of any state relating to employment contracts, wrongful discharge,
defamation or any other matter arising under common law; provided, however, that
nothing contained herein shall be construed to limit in anyway any Releasor's
right to enforce the terms of the Employment Agreement or any other written
agreement, including with respect to indemnification, between the Company and
such Releasor, nor shall this General Release apply to or adversely affect any
vested rights to compensation or Company benefits which may arise prior to
Executive's termination from the Company, or to any of Executive's rights under
federal or state law regarding the continuation of medical benefits.
The Releasors hereby irrevocably agree to refrain from directly or
indirectly asserting any claim or demand or commencing (or causing to be
commenced) any suit, action, or proceeding of any kind, in any court or before
any tribunal, against any Released Party based upon any Released Claim.
This General Release will be governed by and construed in accordance
with the laws of the State of Illinois, without regard to conflicts of law
principles. All words used in this General Release shall be construed to be of
such gender and/or number as the circumstances require.
This General Release has been duly executed and delivered by Executive
and the consummation of the transactions contemplated hereby are within the
powers of Executive. The obligations under this General Release constitute the
legal, valid and binding obligations of Executive.
The undersigned has read and understands this General Release, has had
the opportunity to consult with an attorney prior to signing it, and voluntarily
enters into it with full knowledge of its terms and conditions and that such
terms and conditions are binding on him.
IN WITNESS WHEREOF, the undersigned has executed this General Release
as of the date first above written.
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Xxxxxx X. Xxxxx
