EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of April 1, 1997,
by and between XxXxxxx Metals Golf Corp, a Nevada corporation and XxXxxxx
Metals, Inc., an Illinois corporation, herein collectively referred to as
"McHenry" and Xxxxx Xxxxxxx, herein referred to as "Xxxxxxx".
ARTICLE 1. TERM OF EMPLOYMENT
Section 1.01 McHenry hereby employs Xxxxxxx and Xxxxxxx hereby
accepts employment with McHenry for an initial period commencing on April 15,
1997 and terminating on December 31, 1998.
Section 1.02 This agreement shall be renewed automatically for
succeeding terms of one year unless either party gives notice to the other at
least sixty (60) days prior to the expiration of any term of his or its
intention not to renew.
Section 1.03 As used herein, the phrase "employment term" refers to
the entire period of employment of Xxxxxxx by McHenry hereunder, whether for
the periods provided above, or whether terminated earlier as hereinafter
provided or extended by mutual agreement between the parties.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01 Xxxxxxx shall serve as Director of Research and
Development of McHenry to design, develop, invent, improve methods, and
devices relating to the manufacturing and development of golf clubs, golf club
shafts, grips, and related components as well as systems for fabrication
thereof.
Section 2.02 (a) Xxxxxxx shall devote his entire productive time,
ability, and attention to the business of McHenry during the term of this
contract.
(b) Xxxxxxx shall not engage in any other business
duties or pursuits whatsoever, or directly or indirectly render any services
of a business, commercial, or professional nature to any other person or
organization, whether for compensation or otherwise, without the prior written
consent of XxXxxxx'x Board of Directors or Executive Committee. However, the
expenditure of reasonable amounts of time for educational, charitable, or
professional activities shall not be deemed a breach of this agreement if
those activities do not materially interfere with the services required under
this agreement and shall not require the prior written consent of Employer's
Board of Directors or Executive Committee.
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(c) This agreement shall not be interpreted to prohibit
Xxxxxxx from making passive personal investments or conducting private
business affairs if those activities do not materially interfere with the
services required under this agreement. However, Xxxxxxx shall not directly
or indirectly acquire, hold, or retain any interest in any business competing
with or similar in nature to the business of McHenry.
Section 2.03 During the term of this contract, Xxxxxxx shall not,
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officers, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of McHenry.
Provided, however, Xxxxxxx may continue to have his name and/or likeness on an
infomercial for "King Kong" xxxxx for a period of twenty-four (24) months from
the date hereof, provided further no such activities uses any of Xxxxxxx'x
time nor refers in any manner to McHenry.
Section 2.04 Xxxxxxx hereby represents and agrees that the services
to be performed under the terms of this contract are of a special, unique,
unusual, extraordinary, and intellectual character that gives them a peculiar
value the loss of which cannot be reasonably or adequately compensated in
damages in an action at law. Xxxxxxx therefore expressly agrees that McHenry,
in addition to any other rights or remedies that McHenry may possess, shall be
entitled to injunctive and other equitable relief to prevent or remedy a
breach of this contract by Xxxxxxx.
Section 2.05 (a) The parties acknowledge and agree that during
the term of this agreement and in the course of the discharge of his duties
hereunder, Xxxxxxx shall have access to and become acquainted with information
concerning the operation and processes of McHenry including without
limitation, financial, personnel, technical, patent, sales, scientific, and
other information that is owned by McHenry and regularly used in the operation
of XxXxxxx'x business, and that such information constitutes XxXxxxx'x trade
secrets.
(b) Xxxxxxx specifically agrees that he shall not
misuse, misappropriate, or disclose any such trade secrets, directly or
indirectly, to any other person or use them in any way, either during the term
of this agreement or at any other time thereafter, except as is required in
the course of his employment hereunder.
(c) Xxxxxxx acknowledges and agrees that the sale or
unauthorized use or disclosure of any of XxXxxxx'x trade secrets obtained by
Xxxxxxx during the course of his employment under this agreement, including
information concerning XxXxxxx'x current or any future and proposed work,
services, or products, the facts that any such work, services, or products are
planned, under consideration, or in production, as well as any descriptions
thereof, constitute unfair competition. Xxxxxxx promises and agrees not to
engage in any unfair competition with McHenry, either during the term of this
agreement or at any other time thereafter.
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(d) Xxxxxxx further agrees that all files, records,
documents, drawings, specifications, equipment, and similar items relating to
XxXxxxx'x business, whether prepared by Xxxxxxx or others, are and shall
remain exclusively the property of McHenry and that they shall not be removed
from the premises of McHenry.
Section 2.06 (a) Xxxxxxx promises and agrees that he will
promptly and fully inform XxXxxxx of and disclose to XxXxxxx all inventions,
designs, improvements, and discoveries that he makes during the term of this
agreement, whether individually or jointly in collaboration with others, which
pertain or relate to the business of McHenry or to any experimental work
carried on by McHenry, whether or not conceived during regular working hours.
(b) Xxxxxxx shall make full disclosure to McHenry
immediately after creating any invention, making any discovery, or developing
or improving any processes, methods, formulas, machines, or devices, and shall
thereafter keep McHenry fully informed at all times of all progress in
connection therewith.
Section 2.07 (a) Xxxxxxx agrees that any and all intellectual
properties, including, but not limited to, all ideas, concepts, themes,
inventions, designs, improvements, and discoveries conceived, developed, or
written by Xxxxxxx, either individually or jointly in collaboration with
others, pursuant to this agreement, shall belong to and be the sole and
exclusive property of McHenry.
(b) Xxxxxxx further agrees to submit any dispute regarding
whether any intellectual property was conceived, developed, or written
pursuant to this agreement to a review process pursuant to XxXxxxx'x rules and
policies.
(c) Xxxxxxx further agrees that all rights in all
intellectual properties prepared by him pursuant to this agreement, including
patent rights, trademarks and copyrights applicable to any of the intellectual
properties described hereinabove, shall belong exclusively to McHenry, shall
constitute "works made for hire," and shall be assigned promptly by Xxxxxxx to
XxXxxxx. Xxxxxxx further agrees to assist XxXxxxx in obtaining patents on all
such inventions, designs, improvements, and discoveries that are patentable or
copyright registration on all such works of creation that are copyrightable,
and shall execute all documents and do all things necessary to obtain patent
or copyright registration, vest McHenry with full and exclusive title, and
protect against infringement by others.
(d) Xxxxxxx further agrees that all files, records,
documents, drawings, specifications, equipment, and similar items relating to
XxXxxxx'x business, whether prepared by Xxxxxxx or others, are and shall
remain exclusively the property of McHenry and that they shall not be removed
from the premises of McHenry.
Section 2.08 (a) XxXxxxx shall have the right to use the name of
Xxxxxxx as part of the trade name or trademark of McHenry if it should be
deemed advisable to do so. Any
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trade name or trademark, of which the name of
Xxxxxxx is a part, that is adopted by McHenry during the employment of Xxxxxxx
may be used thereafter by McHenry for as long as XxXxxxx deems advisable.
(b) Xxxxxxx shall not, without the prior written consent
of McHenry, either during the term of this agreement or at any time
thereafter, use or permit the use of his name in the trade name or trademark
of any other enterprise if that other enterprise is engaged in a business
similar in any respect to that conducted by McHenry, unless that trade name or
trademark clearly indicates that the other enterprise is a separate entity
entirely distinct from and not to be confused with McHenry and unless that
trade name or trademark excludes any words or symbols stating or suggesting
prior or current affiliation or connection by that other enterprise or its
employees with McHenry.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
Section 3.01 McHenry shall provide Xxxxxxx with the compensation,
incentives, benefits, and business expense reimbursement specified herein.
Section 3.02 McHenry shall provide Xxxxxxx with a private office,
stenographic help, office equipment, supplies, and other shop facilities and
services, suitable to Xxxxxxx'x position and adequate for the performance of
his duties.
Section 3.03 McHenry shall indemnify Xxxxxxx for all losses
sustained by Xxxxxxx in direct consequence of the discharge of his duties on
XxXxxxx'x behalf.
ARTICLE 4. COMPENSATION OF EMPLOYEE
Section 4.01 (a) As compensation for the services to be performed
hereunder, Xxxxxxx shall receive a salary at the rate of $65,000 per annum,
payable not less than once
each month, on or before the 30th day of each month.
(b) Xxxxxxx shall receive such annual increases in salary
as may be determined by XxXxxxx'x Board of Directors or Executive Committee.
Section 4.02 (a) In addition to all other compensation payable to
Xxxxxxx, McHenry will pay to Xxxxxxx a royalty upon the sale or license of
"metal xxxxx" golf clubs designed by Xxxxxxx or by Xxxxxxx individually or in
collaboration with others during the term of this Agreement.
(b) One dollar ($1.00) on each such golf club sold by
McHenry during the term of this Agreement, for the first five hundred thousand
(500,000) sales; $.50 for the next five hundred thousand (500,000) sales; and
$.25 for all such sales in excess of one million (1,000,000) sales. For the
purposes hereof "unit" shall mean: each driver or fairway wood.
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(c) In the event McHenry shall license the manufacture or
assembly and sale of such golf clubs by others, McHenry will pay to Xxxxxxx a
royalty for each such sale by any such licensee in the amount and included in
the royalty set forth above.
(d) All question of whether, when, how, and to whom
licenses shall be generated, shall be determined in the sole discretion of
XxXxxxx.
(e) All such royalties shall be paid quarterly in arrears,
commencing April 15, 1998, and continuing on the 15th day of each quarter
thereafter, based on sales collections and shall exclude returns, and such
golf clubs supplied for demonstration or promotional purposes.
(f) This royalty will not be assigned by Xxxxxxx and any
such assignment or assignment to such payments, by operation of law or
otherwise, except to Xxxxxxx'x estate, or heirs at law, shall be void and of
no effect whatsoever.
Section 4.03 (a) As additional compensation, McHenry will issue
to Xxxxxxx, as of the effective date of this Agreement, Sixty Thousand
(60,000) shares of the common stock of McHenry.
(b) All shares issued to Xxxxxxx pursuant to this
provision shall be subject to restriction, in addition to those imposed by
Rule 144 of the Rules of the Securities and Exchange Commission, that McHenry
shall have the right and option, but not the obligation, to repurchase such
shares should Xxxxxxx resign or terminate his employment, except by his death,
be terminated for cause, give notice not to renew such employment, or be in
breach of any covenant herein.
(i) If during the period one (1) year from the date
hereof, all of such shares;
(ii) If during the period two (2) years from the date
hereof, 40,000 of such shares; and
(iii) If during the period three (3) years from the
date hereof, 20,000 shares.
(c) The repurchase price of such shares shall be $.10 per
share.
(d) The shares certificate or certificates shall bear a
legend referring to this Agreement which shall bind any transferee of such
shares subject to this Agreement in addition to all other restrictions or
limitations. Upon transfer of any such shares, McHenry shall remove such
legend as to shares no longer subject to this Agreement.
(e) XxXxxxx shall give written notice of exercise of this
right and option within thirty (30) days of any such termination or material
breach to Xxxxxxx or any such holder of such shares then subject to this
Agreement and within thirty (30) days
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thereafter such holder shall tender such shares subject to this Agreement as
of the date of such notice to XxXxxxx'x transfer agent conditioned upon
payment of the re-purchase price.
(f) In the event such shares are not tendered within such
period, then McHenry shall place a stop order on any further transfers of such
shares subject to this Agreement, and all rights and privileges of the holder
of such shares shall terminate.
(g) The provisions of this Agreement shall bind and inure
to the benefit of the parties, their permissible assigns, heirs and
successors. In the event that such shares are acquired in any merger or stock
exchange, the provisions hereof shall apply to any such shares on a prorata
basis issued in exchange for XxXxxxx'x shares then subject to this Agreement.
ARTICLE 5. EMPLOYEE BENEFITS
Section 5.01 Xxxxxxx shall be entitled to 10 vacation days each
year accrued prorata bimonthly in accordance with XxXxxxx'x Employee Policy
Manual. Xxxxxxx may be absent from his employment for vacation only at such
times as XxXxxxx'x Executive Committee shall determine from time to time. In
the event Xxxxxxx is unable for any reason to take the total amount of
vacation time authorized during any year, he may accrue that time and carry
unused time forward to the next benefit year, provided that the total amount
of accrued and unused vacation benefits shall not exceed a total of 15 days at
any time. Vacation compensation shall be paid at his base rate at the time
taken. No vacation pay will be paid for unused vacation time while employed.
Upon termination of employment he will be paid for any unused vacation time
accrued through the last day of employment.
Section 5.02 Xxxxxxx shall be entitled to 5 days per year as sick
leave accrued prorata monthly compensated at his base pay rate in accordance
with XxXxxxx'x Employee Policy Manual. Unused sick leave shall not be
accumulated beyond 5 days. Sick leave benefits will not be paid if not used.
Section 5.03 McHenry agrees to include Xxxxxxx in the coverage of
its medical, major medical, hospital, dental, and eye care insurance when
obtained by McHenry subject to eligibility.
ARTICLE 6. BUSINESS EXPENSES
Section 6.01 (a) McHenry shall promptly reimburse Xxxxxxx for all
reasonable business expenses incurred by Xxxxxxx in connection with the
business of McHenry.
(b) Each such expenditure shall be reimbursable only if it
is of a nature qualifying it as a proper deduction on the federal and state
income tax return of McHenry.
(c) Each such expenditure shall be reimbursable only if
Xxxxxxx furnishes to McHenry adequate records and other documentary evidence
required by federal and state statutes and regulations issued by the
appropriate taxing authorities for the substantiation of each such expenditure
as an income tax deduction.
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Section 6.02 In the event that any expenses paid for Xxxxxxx or any
reimbursement of expenses paid to Xxxxxxx shall, on audit or other examination
of XxXxxxx'x income tax returns, be determined not to be allowable deductions
from XxXxxxx'x xxxxx income, and in the further event that this determination
shall be acceded to by McHenry or made final by the appropriate federal or
state taxing authority or a final judgment of a court of competent
jurisdiction, and no appeal is taken from the judgment or the applicable
period for filing notice of appeal has expired, Xxxxxxx shall repay to McHenry
the full amount of the disallowed expenses.
Section 6.03 In order to reimburse Xxxxxxx for his ordinary
automobile expenses, McHenry shall pay to Xxxxxxx the sum of $600 per month as
a automobile expense payable monthly. Xxxxxxx shall be responsible for all
reporting requirements.
ARTICLE 7. TERMINATION OF EMPLOYMENT
Section 7.01 (a) McHenry reserves the right to terminate this
agreement if Xxxxxxx wilfully breaches or habitually neglects the duties which
he is required to perform under the terms of this agreement; or commits such
acts of dishonesty, fraud, misrepresentation or other acts of moral turpitude
as would prevent the effective performance of his duties.
(b) McHenry may at its option terminate this agreement for
the reasons stated in this Section by giving written notice of termination to
Xxxxxxx without prejudice to any other remedy to which McHenry may entitled
either at law, in equity, or under this agreement.
(c) The notice of termination required by this section
shall specify the ground for the termination and shall be supported by a
statement of all relevant facts.
(d) Termination under this section shall be considered
"for cause" for the purposes of this agreement.
Section 7.02 (a) This agreement shall be terminated upon the
death of Xxxxxxx.
(b) McHenry reserves the right to terminate this agreement
not less than three months after Xxxxxxx suffers any physical or mental
disability that would prevent the performance of his duties under this
agreement. Such a termination shall be effected by giving 10 days' written
notice of termination to Xxxxxxx.
(c) Termination under this section shall not be considered
"for cause" for the purposes of this agreement.
Section 7.03 (a) This agreement shall be terminated by any
voluntary or involuntary dissolution of McHenry resulting from either a merger
or consolidation in which
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McHenry is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of
McHenry.
(b) Termination under this section shall not be considered
"for cause" for the purposes of this agreement.
Section 7.04 Notwithstanding any provision of this agreement, if
McHenry terminates this agreement without cause, it shall pay Xxxxxxx an
amount equal to three (3) months' salary at the then current rate of
compensation.
Section 7.05 Notwithstanding any provision of this agreement, if
McHenry terminates this agreement without cause or shall give notice of its
intention not to renew as provided in Section 1.02, or is terminated pursuant
to Section 7.02(a), (b), or 7.03(a), then McHenry shall continue to pay to
Xxxxxxx, heirs or personal representative, for a period of one (1) year after
the effective date thereof, such royalties which may come due pursuant to
Section 4.02 of this agreement.
ARTICLE 8. GENERAL PROVISIONS
Section 8.01 Any notices to be given hereunder by either party to
the other shall be in writing and may be transmitted by personal delivery or
by mail, registered or certified, postage prepaid with return receipt
requested. Mailed notice shall be addressed to the parties at the addresses
appearing in the introductory paragraph of this agreement, but each party may
change that address by written notice in accordance with this section.
Notices delivered personally shall be deemed communicated as of the date of
actual receipt; mailed notices shall be deemed communicated as of the date of
mailing.
Section 8.02 (a) Any controversy between McHenry and Xxxxxxx
involving the construction or application of any of the terms, provisions, or
conditions of this agreement shall on the written request of either party
served on the other be submitted to arbitration. Arbitration shall comply
with and be governed by the provisions of the California Arbitration Act.
(b) XxXxxxx and Xxxxxxx shall each appoint one person to
hear and determine the dispute. If the two persons so appointed are unable to
agree, then those persons shall select a third impartial arbitrator whose
decision shall be final and conclusive upon both parties.
(c) The cost of arbitration shall be borne by the losing
party or in such proportions as the arbitrators decide.
Section 8.03 If any action at law or in equity is necessary to
enforce or interpret the terms of this agreement, the prevailing party shall
be entitled to reasonable attorney fees, costs, and necessary disbursements in
addition to any other relief to which that party may be entitled. This
provision shall be construed as applicable to the entire contract.
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Section 8.04 This agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Xxxxxxx by McHenry and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise, have been made by
any party, or anyone acting on behalf of any party, which are not embodied
herein, and that no other agreement, statement, or promise not contained in
this agreement shall be valid or binding on either party.
Section 8.05 Any modification of this agreement will be effective
only if it is in writing and signed by the party to be charged.
Section 8.06 The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this agreement
by the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
Section 8.07 If any provision in this agreement is held by a court
of competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect.
Section 8.08 This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Executed at Carlsbad, California, as of the day and year first above
appearing.
McHENRY XXXXXXX
XxXXXXX METALS, INC.
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxxx
By: __________________________________ ______________________________
XXXXX XXXXXXX
000 Xxxxx Xx.
Xxxxxxxx, XX 00000
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