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EXHIBIT 2.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as of
the 14th day of May, 1997 by and between FM PRECISION GOLF CORP., a Delaware
corporation ("FMP") on the one hand, and XXXXX XXXXXXX, an individual residing
at 0000 Xxxxx Xxxxxxxxxx Xxxxx Xxxx, Xxxxxxxx Xxxxxx, Xxxxxxx 00000
("Consultant") on the other hand.
WITNESSETH:
WHEREAS, Consultant is the founder and chief executive officer of Royal
Grip, Inc., a Nevada corporation (the "Company"), and
WHEREAS, FMP and the Company have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement") pursuant to which the
Company will become a wholly-owned subsidiary of FMP and each of the
shareholders of the Company will receive Common Stock in FMP; and
WHEREAS, Consultant has extensive knowledge about the customers, business
practices, pricing procedures and other matters regarding the businesses of the
Company; and
WHEREAS, FMP desires to maintain, on a formal basis, access to the
knowledge, information, contacts and expertise of Consultant;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound, agree
as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF CONSULTANT. Consultant hereby
represents and warrants to FMP that this Agreement is the legal, valid and
binding obligation of Consultant and is enforceable against Consultant in
accordance with its terms.
SECTION 2. REPRESENTATIONS OF FMP. FMP hereby represents and warrants to
Consultant that this Agreement has been duly authorized, executed and delivered
by FMP, is the legal, valid and binding obligation of FMP and is enforceable
against FMP in accordance with its terms.
SECTION 3. OBLIGATIONS OF CONSULTANT.
3.1. SCOPE. Consultant shall make himself reasonably available to consult
with FMP, and one or more Subsidiaries (as defined in the Merger Agreement) of
FMP as FMP may from time to time designate, on a regular basis as FMP may
reasonably request with respect to matters involving suppliers and purchasers,
potential suppliers and purchasers, business practices, business opportunities,
pricing points and practices, outlook for prices, negotiations of contracts,
personnel and other employment and employee matters relating to the business of
the Company. In addition, Consultant shall (a) make himself reasonably available
to consult with FMP, and one or more Subsidiaries of FMP, with respect to
business opportunities of every nature, including, but not limited to, joint
ventures, investment opportunities, consulting opportunities and other
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business matters relating to such parts of the golf industry where Consultant
has particular expertise, whether or not related to the business of the Company,
(b) introduce FMP, or one or more Subsidiaries of FMP as FMP may designate, to
potential suppliers and customers, potential business partners and other Persons
(as hereinafter defined) who may be useful to FMP or its Subsidiaries as they
attempt to develop business and discover investment opportunities in the golf
industry, (c) endorse all products of FMP and its Subsidiaries and use such
products in his activities hereunder or when appearing in the golf tournaments
sponsored by the Professional Golf Association or which are part of the Nike
tour (the "Tour") and (d) promote FMP and its products and those of its
Subsidiaries by actively appearing on the Tour, either as a player-participant
or otherwise.
3.2. LIMITATIONS. Consultant shall perform such consulting services as may
reasonably be requested by FMP; provided, however, that (a) Consultant shall not
be required to consult under this Agreement for more than 25 hours during any
calendar quarter (provided that time spent on the Tour shall not count towards
this minimum number of hours); and (b) FMP shall reimburse Consultant for all of
his reasonable out-of-pocket expenses (including, but not limited to, telephone,
fax and travel) incurred by Consultant in connection with the performance of the
consulting services required hereunder; provided that no reimbursement for Tour
expenses shall be required of FMP except to the extent set forth in Section 4.2
below.
3.3. COMPENSATION. Consultant shall be entitled to the payments
provided for in Section 4 below, regardless of the extent to which FMP or its
Subsidiaries request the use of the consulting services of Consultant.
3.4. DIRECTOR. During the term of this Agreement, FMP shall cause
Consultant to be nominated for election by the stockholders of FMP as a
director of FMP.
3.5. OFFICER. During the term of this Agreement, FMP shall cause
Consultant to be elected as a Vice Chairman of the Board of Directors of FMP.
3.6. TERM. The provisions of Sections 3 and 4 shall continue for a period
of two years commencing with the Effective Date (as defined in the Merger
Agreement) and ending on the second anniversary of the Effective Date, except
for the provisions of Section 3.7 which shall continue for an additional period
of two years following the Restricted Period (as hereinafter defined).
3.7. INDEMNITY. FMP agrees to indemnify and hold Consultant harmless
against any losses, claims, damages or liabilities to which Consultant may
become subject in connection with the services which are the subject of this
Agreement; provided, however, that FMP shall not be liable under the foregoing
indemnity in respect of any loss, claim, damage or liability to the extent that
such loss, claim, damage or liability resulted from a breach of the obligations
of Consultant to FMP in connection with the performance by Consultant of the
services which are the subject of this Agreement or from the willful misfeasance
or gross negligence of Consultant.
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SECTION 4. PAYMENTS.
4.1. DIRECTOR FEES. FMP shall pay Consultant $10,000, as a director's fee,
for each full year on and after the Effective Date that Consultant is a director
of FMP, at the times that director fees are paid to other directors of FMP.
4.2. CONSULTING FEES. FMP shall pay Consultant $180,000 per year, in
equal monthly installments, which includes the total amount that FMP is
obligated to reimburse Consultant for all Tour expenses that may be incurred
by Consultant hereunder.
4.3. RELATIONSHIP. FMP is engaging Consultant as an independent
contractor and not as an employee. In performing his obligations under this
Agreement, Consultant shall not identify himself as an employee of FMP. In
the event that Consultant hires one or more employees, Consultant shall be
solely responsible for all costs and expenses of such employees.
4.4. LIMITATIONS. If Consultant does not complete the first two days of at
least 10 tournaments on the Tour in any year, FMP may reduce the payments due
under Section 4.2 by $15,000 for each tournament under 10 on the Tour not so
completed; provided, that if Consultant is unable to complete the first two days
of a tournament on the Tour due to injury, but Consultant does appear and is
able to promote FMP at such tournament, such tournament shall count towards the
minimum.
4.5. BONUS. The Compensation Committee of the Board of Directors of
FMP shall review the activities of Consultant at the end of each year and
determine, at its sole discretion, whether Consultant shall be entitled to a
bonus.
4.6. OTHER BENEFITS. During the term of this Agreement, Consultant shall
be provided with (a) the same health insurance and other employee benefits on
the same terms as is made available to executives of FMP, and (b) the same
benefits on the same terms as are made available to other non-employee directors
of FMP.
SECTION 5. DEFINITION OF "PERSON". For all purposes of this Agreement, "Person"
means any individual, partnership, corporation, limited liability company,
trust, or other entity.
SECTION 6. TERMINATION. Consultant recognizes the detriment to FMP that would
result from the impairment of public confidence in the honest and orderly
conduct, the integrity and good character of Consultant. Consultant therefore
acknowledges that if he was engaged or should engage in gross and willful
misconduct injurious to FMP, FMP will have the right to terminate this
Agreement. In addition, FMP may terminate this Agreement if (a) Consultant shall
fail to complete the first two days of at least five tournaments on the Tour
during any year provided, that if Consultant is unable to complete the first two
days of a tournament on the Tour due to injury, but Consultant does appear and
is able to promote FMP at such tournament, such tournament shall count towards
the minimum, or (b) Consultant fails, in any material respect, in the reasonable
determination of the Board of Directors of FMP, to perform his obligation under
this Agreement, and such failure, if curable, shall continue for 30 days after
written notice to Consultant specifying the events constituting such failure.
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SECTION 7. COVENANT NOT TO COMPETE. Consultant acknowledges that (a) FMP is
engaged, through its ownership of the Company, in the business of designing and
distributing golf club grips and designing and manufacturing athletic headwear
(the "Business"), (b) Consultant is one of the limited number of persons who
developed such Business, and is the founder of the Company, (c) the Business is
conducted throughout the United States, (d) his work has given him, and his
consulting for the Company will continue to give him proprietary information and
trade secrets of and confidential information concerning the Company, and (e)
the agreements and covenants contained in this Section 7 are essential in order
to induce FMP to enter into the Agreement and Plan of Merger and to protect the
Business and goodwill of the Company that FMP will acquire thereunder.
Accordingly, Consultant covenants and agrees as follows:
7.1. TERM. For a period commencing on the Effective Date and ending on the
later of (a) the second anniversary of the Effective Date, or (b) the date of
the termination of Consultant's retention by FMP (such period of time being
referred to herein as the "Restricted Period") Consultant shall not, within the
United States of America or Japan (the "Territory"), directly or indirectly, (i)
engage in the Business or any aspect of the Business for the Consultant's own
account, (ii) enter the employ of, or render any services to, any Person (other
than FMP or any Subsidiary of FMP) engaged in the Business or any aspect of the
Business, (iii) become associated with any Person engaged in the Business as an
individual, partner, shareholder (other than as a shareholder owning not more
than 5% of the voting securities of any corporation having more than 500
stockholders), officer, director, employee, principal, agent, consultant or
trustee, or (iv) solicit, attempt to solicit or accept any business (which is
related to any aspect of the Business) to be conducted within the Territory (or
help any other Person solicit or accept any such business) from any Person who,
during the 12 months preceding the date of termination or expiration of
Consultant's retention by FMP, is a customer or supplier of the Company or who
during the Restricted Period becomes, and is known by Consultant to be, a
customer or supplier of the Company. Nothing in this Agreement shall prohibit
Consultant from sponsoring products or companies that are not directly
competitive with FMP or any Subsidiary of FMP.
7.2. EMPLOYEES; DISPARAGEMENT. Without the prior written consent of FMP,
during the Restricted Period, Consultant shall not, directly or indirectly, hire
or solicit any employee or consultant or advisor to the Company or encourage any
such employee or consultant or advisor to leave such employment or retention for
any business whether or not a competitor of the Company. During the Restricted
Period, Consultant shall not disparage FMP or any Subsidiary of FMP or their
personnel or services, or discourage or otherwise attempt to prevent any other
Person from doing business with FMP or any Subsidiary of FMP. Similarly, FMP,
during the Restricted Period, shall not disparage Consultant or his services, or
discourage or otherwise attempt to prevent any other Person from doing business
with Consultant.
7.3. CONSIDERATION. Consultant acknowledges that his acquisition of
shares of Common Stock of FMP as described in the Recitals to this Agreement
constitutes full and fair consideration for his covenants under this Section
7.
7.4. REFORMATION. If a court of competent jurisdiction shall determine
that the terms of this Section 7 are partially or wholly inoperative,
unenforceable or invalid in a particular case
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because of their time or geographic scope or for any other reason, such court
shall have the power to limit such time or geographic scope or otherwise to
recast the terms of this Section 7 in such case so as to permit its enforcement
to the greatest extent permitted by applicable law.
7.5. INJUNCTIVE RELIEF. Consultant specifically acknowledges and agrees
that the remedy at law for any breach of the provisions of Section 7, 8 and 9
will be inadequate (for reasons which include, but are not limited to, the fact
that Consultant's talents, and the services to be provided by Consultant, are
unique) and that FMP, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief.
SECTION 8. MAINTAINING CONFIDENTIAL INFORMATION.
8.1. FMP INFORMATION. Consultant agrees that at all times while he is
retained by FMP and for a period of one year thereafter, he will hold in
strictest confidence, and not use, except for the benefit of FMP, or disclose to
anyone, other than directors, officers, employees and counsel of FMP and Persons
to whom such disclosure is authorized by executive officers of FMP (other than
Consultant) and is made in furtherance of the interest of FMP, without the
written authorization of the Board of Directors of FMP, its Chairman of the
Board or President, any trade secrets, confidential knowledge, data or other
proprietary information of FMP or its Subsidiaries (including the trade secrets,
confidential knowledge, data or other proprietary information of the Company),
which by way of illustration and not limitation, include scientific, technical
and business information relating to products, processes, know-how, designs,
formulas, methods, developmental or experimental work, firmware, software
(whether executable or source code), improvements, discoveries, plans for
research, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers, and information regarding the skills and compensation of other
employees of FMP, the Company and their Subsidiaries, except for information
that becomes generally available to the public, or information received on a
non-confidential basis from sources other than FMP or the Company who are not in
violation of a confidentiality agreement with FMP or a Subsidiary of FMP.
8.2. THIRD PARTY INFORMATION. Consultant recognizes that FMP has received
and in the future will receive from third parties their confidential or
proprietary information subject to a duty on FMP's part to maintain the
confidentiality of such information and, in such cases, to use it only for
certain limited purposes. Consultant agrees that he owes FMP and such third
parties, during the term set forth in Section 8.1, a duty to hold all such
confidential or proprietary information in the strictest confidence and not to
disclose it to any Person or use it for the benefit of anyone other than FMP or
such third party, except in a manner that is consistent with FMP's agreement
with the third party.
SECTION 9. ASSIGNMENT OF INVENTIONS AND ORIGINAL WORKS.
9.1. INVENTIONS AND ORIGINAL WORKS RETAINED BY CONSULTANT. Consultant
represents and warrants that he has heretofore assigned to the Company without
further payment or consideration all his right, title and interest in and to any
ideas, inventions, original works of authorship, developments, improvements or
trade secrets which he solely or jointly conceived or
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reduced to practice, or caused to be conceived or reduced to practice while he
was an employee of the Company or which are related to the Business and has
granted to FMP a perpetual right to the molds used to inscribe his name on
packaging, grips and other items, and to the use of his name on such items
without any further consideration. Consultant has attached hereto as Exhibit A a
complete list of all inventions, original works of authorship, developments,
improvements, and trade secrets that Consultant has, alone or jointly with
others, conceived, developed or reduced to practice before the commencement of
this Agreement, that Consultant considers to be his property or the property of
third parties. If disclosure of an item on Exhibit A would cause Consultant to
violate any prior confidentiality agreement, Consultant understands that he is
not to list such in Exhibit A but is to inform FMP that all items have not been
listed for that reason. A space is provided on Exhibit A for such purpose. If no
list is attached, Consultant represents that there are no such items.
9.2. INVENTIONS AND ORIGINAL WORKS ASSIGNED TO FMP. Consultant agrees to
make prompt written disclosure to FMP of and will assign to FMP without further
payment or consideration all his right, title and interest in and to any ideas,
inventions, original works of authorship, developments, improvements or trade
secrets which Consultant may solely or jointly conceive or reduce to practice,
or cause to be conceived or reduced to practice during the period of his
retention by FMP. Consultant understands that only ideas, inventions, original
works of authorship, developments, improvements and trade secrets which
(a) were not developed or produced using equipment, supplies, facilities
or trade secrets that belong to FMP or any Subsidiary of FMP, and
(b) do not relate to (i) the Business as it is currently conducted or
contemplated to be conducted or as it may be conducted during the
term of Consultant's retention by FMP or (ii) actual or contemplated
research or development conducted by FMP, and
(c) were not developed or produced during hours that Consultant is
obligated to engage in FMP related activities hereunder or for which
FMP pays Consultant
are not covered by Consultant's obligations to report and assign under the first
sentence of this Section 9.2.
9.3. WORKS MADE FOR HIRE. Consultant acknowledges that all original works
of authorship which are made by Consultant (solely or jointly with others)
within the scope of his duties under this Agreement and which are protectable by
copyright are "works made for hire," as that term is defined in the United
States Copyright Act (17 U.S.C., Section 101).
9.4. OBTAINING LETTERS PATENT, COPYRIGHT REGISTRATIONS AND OTHER
PROTECTIONS. Consultant will assist FMP in every reasonable way, and at the sole
expense of FMP, to obtain and from time to time enforce United States and
foreign proprietary rights, including patents and copyrights, relating to any
and all inventions, original works of authorship, developments, improvements or
trade secrets of FMP in any and all countries. To that end Consultant will
execute, verify and deliver such documents and perform such other acts
(including appearing as a
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witness) as FMP may reasonably request for use in applying for, obtaining,
perfecting, evidencing, sustaining and enforcing such proprietary rights and the
assignment thereof. In addition, Consultant will execute, verify and deliver
assignments of such proprietary rights to FMP or its designee, without payment
or further consideration. Consultant's obligation to assist FMP with respect to
proprietary rights in any and all countries shall continue beyond the
termination of his retention, but FMP will compensate Consultant at a reasonable
rate after his termination for the time actually spent by Consultant at FMP's
request on such assistance.
9.5. OBLIGATION TO KEEP FMP INFORMED. In addition to Consultant's
obligations under Section 9.2, during the Restricted Period, Consultant will
promptly disclose to FMP fully and in writing all patent applications filed by
Consultant or on his behalf. At the time of each such disclosure, Consultant
will advise FMP in writing of any inventions that he believes are not required
to be assigned to FMP by Section 9.2 above; and Consultant will at that time
provide to FMP in writing all evidence necessary to substantiate that belief.
Consultant understands that FMP will, and FMP agrees to, keep in confidence and
will not disclose to third parties without Consultant's consent any proprietary
information disclosed in writing to FMP pursuant to this Agreement relating to
such inventions. Consultant will preserve the confidentiality of any invention
that is required to be assigned to FMP by Section 9.2 above.
9.6. RETURN OF FMP DOCUMENTS. When Consultant is no longer a consultant to
FMP, he will deliver to FMP (and will not keep in his possession, recreate or
deliver to anyone else) any and all devices, records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
firmware, software (whether executable or source code), sketches, materials,
equipment, other documents or property, together with all copies thereof (in
whatever medium recorded) belonging to FMP or any of its Subsidiaries, their
successors or assigns.
SECTION 10. MISCELLANEOUS.
10.1. THIS AGREEMENT. This Agreement and the agreements and instruments
required to be executed and delivered hereunder set forth the entire agreement
of the parties with respect to the subject matter hereof and supersede and
discharge all prior agreements (written or oral) and negotiations and all
contemporaneous oral agreements concerning such subject matter and negotiations.
There are no oral conditions precedent to the effectiveness of this Agreement.
10.2. NON-WAIVER. Neither the failure of nor any delay by either party to
this Agreement to enforce any right hereunder or to demand compliance with its
terms is a waiver of any right hereunder. No action taken pursuant to this
Agreement on one or more occasions is a waiver of any right hereunder or
constitutes a course of dealing that modifies this Agreement.
10.3. WAIVERS. No waiver of any right or remedy under this Agreement shall
be binding on either party unless it is in writing and is signed by the party to
be charged. No such waiver of any right or remedy under any term of this
Agreement shall in any event be deemed to apply to any subsequent default under
the same or any other term contained herein.
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10.4. AMENDMENTS. No amendment, modification or termination of this
Agreement shall be binding on either party hereto unless it is in writing and
is signed by the party to be charged.
10.5. SUCCESSORS. The terms of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs, personal
representatives or corporate successors.
10.6. THIRD PARTIES. Nothing herein expressed or implied is intended
or shall be construed to give any person other than the parties hereto any
rights or remedies under this Agreement.
10.7. JOINT PREPARATION. This Agreement shall be deemed to have been
prepared jointly by the parties hereto. Any ambiguity herein shall not be
interpreted against either party hereto and shall be interpreted as if each
of the parties hereto had prepared this Agreement.
10.8. RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular number include the plural, and in the
plural include the singular; and words of the masculine gender include the
feminine and the neuter, and when the sense so indicates words of the neuter
gender may refer to any gender. The preamble and the recitals are part of this
Agreement. The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience. They do not define, limit or describe
the scope or intent of the provisions of this Agreement.
10.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and
either party hereto may execute this Agreement by signing and delivering one
or more counterparts.
10.10. LEGAL MATTERS. The parties, being concerned that either party may
obtain some advantage by having the law of the jurisdiction of its principal
place of business apply, and agreeing in concept to have this Agreement subject
to the laws of a neutral jurisdiction, whose laws are perceived as being fair in
general to the business community at large, have determined and agreed as
follows: THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS. EACH OF THE PARTIES AGREES THAT ANY LEGAL ACTION BETWEEN
THE PARTIES RELATING TO THE ENTRY INTO OR PERFORMANCE OF THIS AGREEMENT, OR THE
INTERPRETATION OR ENFORCEMENT OF TERMS HEREOF, SHALL BE BROUGHT IN A FEDERAL OR
STATE COURT LOCATED IN NEW CASTLE COUNTY, DELAWARE, HAVING JURISDICTION OF THE
SUBJECT MATTER THEREOF, AND EACH PARTY IRREVOCABLY CONSENTS TO PERSONAL
JURISDICTION IN ANY SUCH FEDERAL OR STATE COURT, WAIVES ANY RIGHT TO OBJECT TO
SUCH VENUE OR TO ASSERT THE DEFENSE OF FORUM NON-CONVENIENS, AND AGREES THAT
SERVICE OF PROCESS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL IN ACCORDANCE
WITH, SECTION 10.11 HEREOF.
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10.11. NOTICES. Any notices or other communications required or permitted
by this Agreement shall be in writing and shall be delivered either by personal
delivery, by nationally recognized overnight courier service, by facsimile, by
first class mail or by registered or certified mail, return receipt requested,
addressed to the party at the address appearing below the signature of such
party, or to such other address as either party shall have previously designated
to the other by written notice given in the manner hereinabove set forth.
Notices shall be deemed given one day after being sent, if sent by overnight
courier; when delivered and receipted for, if hand delivered; when received, if
sent by facsimile or other electronic means or by first class mail; or when
receipted for (or upon the date of attempted delivery where delivery is refused
or unclaimed), if sent by certified or registered mail, return receipt
requested.
SIGNATURES:
IN WITNESS WHEREOF the parties have signed this Agreement as of this 14th
day of May, 1997.
FM PRECISION GOLF CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx /s/ Xxxxx Xxxxxxx
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Xxxxxxxxxxx X. Xxxxxxxx, President XXXXX XXXXXXX (Consultant)
Address: X.X. Xxx 00000 Address: 0000 Xxxxx Xxxxxxxxxx Xxxx Xxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000 Xxxxxxxx Xxxxxx, Xxxxxxx 00000
Xxxxxxx, Xxxxxxx 00000
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