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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") made as of February 27, 1997,
between Grafalloy Acquisition Corporation, a Delaware corporation (the
"COMPANY"), and Xxxxxxx Xxxxxxx, an individual (the "EXECUTIVE"),
W I T N E S S E T H T H A T:
WHEREAS, the Company desires to employ Executive as one of its senior
executive officers for the period and upon and subject to the terms herein
provided; and
WHEREAS, the Company desires to be assured that Executive will not compete
with the Company for the period and within the geographical areas hereinafter
specified; and
WHEREAS, Executive is willing to agree to be employed by the Company for
the period and upon and subject to the terms herein provided; and
WHEREAS, Executive does not desire to work for the Company in a position
lower than that of an executive officer and is willing to agree not to compete
with the Company;
NOW, THEREFORE, in consideration of the premises, the parties hereto
covenant and agree as follows:
SECTION 1. TERM OF EMPLOYMENT; COMPENSATION. The Company agrees to employ
Executive from the date hereof until December 31, 1999, in an executive
capacity, as President and Chief Executive Officer and Director, with the
responsibilities and benefits normally associated with such position. The
Company will pay Executive for his services during the term of the Executive's
employment hereunder at an annual rate of not less than One Hundred Twenty-Five
Thousand Dollars ($125,000), payable in arrears, in equal installments, in
accordance with standard Company practice, but in any event not less often than
monthly, subject only to such payroll and withholding deductions as are required
by law. Executive's base salary shall be subject to annual review by the Board
of Directors of the Company, or any compensation committee established by such
Board of Directors; provided that Executive's base salary may not be reduced
below $125,000 per annum. Executive shall also be entitled to receive a bonus of
100% of base salary after each year of employment under this Agreement,
contingent upon achieving earnings before interest, taxes, depreciation and
amortization determined in accordance with generally accepted accounting
principle consistently followed ("EBITDA") in fiscal 1997 of $1,787,000, EBITDA
in fiscal 1998 of $3,000,000, and EBITDA in fiscal 1999 of $5,900,000. As of the
date of this Agreement, the Company shall cause Executive to be granted an
option to purchase up to 50,000 shares of common stock, $0.01 par value per
share, of The American Materials & Technologies Corporation ("AMT COMMON
STOCK"), at a purchase price of $5.00 per share. Executive shall be eligible to
receive an option to purchase up to 100,000 shares of AMT Common Stock at a
purchase price of $5.00 per share, subject to the successful completion of the
acquisition identified on EXHIBIT A hereto. All options granted in accordance
with this Section 1
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shall vest in three equal consecutive annual installments, the first installment
of which shall vest February 27, 1998, and shall be subject to the other terms
and conditions customarily attached to options issued by The American Materials
& Technologies Corporation under its 1996 Incentive and Nonqualified Stock
Option Plan. Notwithstanding the preceding sentence of this Section 1, all
options granted pursuant to Section 1 hereof shall fully vest upon and
immediately prior to any sale of all or substantially all of the assets of AMT,
the merger of AMT with any other corporation or other entity as a result of or
as a part of any change-in-control of AMT.
SECTION 2. OFFICE AND DUTIES. Executive shall have responsibility, subject
to the Board of Directors of the Company, for participating in the management
and direction of the Company's business and operations and shall perform such
tasks and duties as may from time to time be assigned to the Executive by the
Board of Directors; provided that Executive's duties shall not be inconsistent
with Executive's title and position within the Company. Executive shall devote
substantially all of his business time, labor, skill, undivided attention and
best ability to the performance of his duties hereunder. During the term of his
employment, Executive shall not directly or indirectly pursue any other business
activity without the Company's prior written consent. Executive agrees that he
will travel to whatever extent is reasonably necessary in the conduct of the
Company's business, provided, however, that Executive shall not be required to
move his residence from the San Diego, California area.
SECTION 3. EXPENSES. Executive shall be entitled to prompt reimbursement
for expenses incurred by him in connection with the performance of his duties
hereunder upon receipt of vouchers therefor in accordance with such procedures
as the Company has heretofore or may hereafter establish.
SECTION 4. VACATION DURING EMPLOYMENT. Executive shall be entitled to such
reasonable vacations as may be allowed by the Company in accordance with general
practices to be established, but in any event not less than three (3) weeks
during each twelve (12) month period.
SECTION 5. ADDITIONAL BENEFITS. Nothing herein contained shall preclude
Executive, to the extent he is otherwise eligible, from participation in all
group insurance programs or other fringe benefit plans which the Company may
hereafter in its sole and absolute discretion make available generally to its
employees, but the Company shall not be required to establish or maintain any
such program or plan.
SECTION 6. TERMINATION OF EMPLOYMENT. (a) Notwithstanding any other
provision of this Agreement, Executive's employment may be terminated:
(i) By the Company without cause upon not less than thirty (30) days'
written notice in which event the Company shall pay to Executive an amount equal
to the base salary required to be paid for the remainder of this Agreement, all
of Executive's options granted pursuant to this Agreement shall accelerate and
such options shall become immediately exercisable and any bonus amounts earned
under this Agreement shall become payable to Executive as follows: no later than
4 months following the end of the fiscal year in which such termination takes
place pursuant to this SECTION 6(a)(i), Executive shall be entitled to receive a
bonus
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calculated pursuant to SECTION 1 hereof but payable only on a pro rata
basis according to the number of months of employment completed during such
fiscal year.
(ii) By the Company for "CAUSE" (as hereafter defined) in which event
the Company's obligation to pay future compensation hereunder shall cease
forthwith, except for any obligation of the Company under any compensation or
benefit plan in which Executive is then a vested beneficiary. "CAUSE" means:
(A) Executive's material failure, refusal or inability to
perform, neglect of or carrying out in an irresponsible way his
duties hereunder, or breach of any one or more of the material
provisions of this Agreement, which shall have continued for a
period of thirty (30) days (or such longer period as is
reasonably required to cure such breach with diligent and good
faith effort) after written notice to Executive from the Chairman
or other representative of the Board of Directors of the Company
specifying such breach or failure and which shall not have
resulted from a breach of any material provision of this
Agreement by the Company;
(B) inability of Executive to discharge his duties hereunder for
one or more periods totaling three (3) consecutive months during
any consecutive twelve (12) month period due to illness, accident
or other disability (mental or physical); or
(C) conviction of Executive for any crime involving moral
turpitude or any other illegal act that materially and adversely
reflects upon the business, affairs or reputation of the Company
or on Executive's ability to perform his duties hereunder.
(iii) By the Executive for any reason upon fourteen (14) days' written
notice, in which event the Company's obligation to pay future compensation
hereunder shall cease forthwith, except for any obligation of the Company under
any compensation or benefit plan in which Executive is then a vested
beneficiary; PROVIDED, HOWEVER, that if such termination by the Executive is the
result of a material breach by the Company of the terms hereof which continues
for ten (10) days (or such longer period as is reasonably required to cure such
breach with diligent and good faith effort) after the Company's receipt written
notice thereof, then the Company shall pay to Executive an amount equal to the
base salary required to be paid for the remainder of this Agreement and any
bonus amounts earned under this Agreement and vesting of all of Executive's
options granted pursuant to this Agreement shall accelerate and such options
shall become immediately exercisable and any bonus amounts earned under this
Agreement shall become payable to Executive as follows: no later than 4 months
following the end of the fiscal year in which such termination takes place
pursuant to this SECTION 6(a)(iii), Executive shall be entitled to receive a
bonus calculated pursuant to SECTION 1 hereof but payable only on a pro rata
basis according to the number of months of employment completed during such
fiscal year.
(b) In the event of Executive's death during the term of his employment,
the Company's
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obligation to pay further compensation hereunder shall cease forthwith, except
that Executive's legal representative shall be entitled to receive his fixed
compensation for the period up to the last day of the month in which such death
shall have occurred.
SECTION 7. DISCLOSURE AND ASSIGNMENT OF INTELLECTUAL PROPERTY. Executive
shall promptly disclose to the Company and any successor or assign of the
Company, and grant to the Company, and its successors and assigns (without any
separate remuneration or compensation other than that received by him from time
to time in the course of his employment) his entire right, title and interest
throughout the world in and to all research, information, inventions, designs,
procedures, developments, discoveries, improvements, patents and applications
therefor, trademarks and applications therefor, copyrights and applications
therefor, trade secrets, drawings, plans, systems, methods, specifications, and
all other manufacturing, engineering, technical, research and development data
and know-how (herein sometimes "INTELLECTUAL PROPERTY") made, conceived,
developed and/or acquired by him solely or jointly with others during the period
of his employment with the Company, which relate to the manufacture, production
or processing of any products developed or sold by the Company during the term
of this Agreement or which are within the scope of or usable in connection with
the Company's business as it may, from time to time, hereafter be conducted or
proposed to be conducted. (It is understood and agreed that Executive has
heretofore disclosed to the Company, and assigned to it, all Intellectual
Property now known to him over which he has any control.) Executive agrees to
execute all appropriate patent applications securing all United States and
foreign patents on all Intellectual Property, and to do, execute and deliver any
and all acts and instruments that may be necessary or proper to vest all
Intellectual Property in the Company or its nominee or designee and to enable
the Company, or its nominee or designee, to obtain all such patents; and
Executive agrees to render to the Company, or its nominee or designee, all such
assistance as it may require in the prosecution of all such patent applications
and applications for the re-issue of such patents, and in the prosecution or
defense of all interferences which may be declared involving any of said patent
applications or patents, but the expense of all such assignments and patent
applications, or all other proceedings referred to herein above, shall be borne
by the Company. Executive shall be entitled to fair and reasonable compensation
for any such assistance requested by the Company or its nominee or designee and
furnished by him after the termination of his employment.
SECTION 8. CONFIDENTIALITY. Executive shall not, either during the period
of his employment with the Company or thereafter, reveal or disclose to any
person outside the Company or use for his own benefit, without the Company's
specific written authorization, whether by private communication or by public
address or publication or otherwise, any information not already lawfully
generally available to other companies in the business of manufacturing or
marketing golf- related products concerning any Intellectual Property, or any
marketing technique or cost method, or any customer, mailing or supplier list,
whether or not supplied by the Company, and whether or not made, developed
and/or conceived by Executive or by others in the employ of the Company. All
originals and copies of any of the foregoing, relating to the business of the
Company, however and whenever produced, shall be the sole property of the
Company. Upon the termination of Executive's employment in any manner or for any
reason, Executive shall promptly surrender to the Company all copies of any of
the foregoing, together with any other documents, materials, data, information
and equipment belonging to or
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relating to the Company's business and in his possession, custody or control,
and Executive shall not thereafter retain or deliver to any other person, any of
the foregoing or any summary or memorandum thereof.
SECTION 9. RESTRICTION. The Company has invested and may in the future be
required to invest substantial sums of money, directly or indirectly, to
continue and expand the business conducted by it and in connection therewith,
and as Executive recognizes that the Company would be substantially injured by
Executive disclosing to others, or by Executive using for his own benefit, any
Intellectual Property or any of the other types of information referred to in
SECTION 8 or other confidential or secret information he has obtained or
developed or shall obtain or develop as an employee of the Company, or which he
may now possess and which he has made available to the Company, Executive agrees
that during the period of his employment hereunder and for a period ending one
year after termination of employment:
(a) Neither he nor any member of his family will be interested,
directly or indirectly, as an investor in any other business or enterprise in
the United States engaged in the business of the manufacture and marketing of
advanced composite golf shaft products in competition with the Company (except
as an investor in securities listed on a national securities exchange or
actively traded over the counter so long as such investments are in amounts not
significant as compared to his total investments or to the aggregate of the
outstanding securities of the issuer of the same class or issue); and
(b) He will not, directly or indirectly, for his own account or as
employee, officer, director, partner, joint venturer or otherwise, engage within
the United States or elsewhere, in any phase of the business of the manufacture
and marketing of advanced composite golf shaft products in competition with the
Company in such geographic area in any other business in which the Company is
engaged and for which he has responsibility.
Executive and the Company are of the belief that the period of time and the
area herein specified are reasonable, in view of the nature of the business in
which the Company is engaged and proposes to engage, the state of its product
development and Executive's knowledge of this business. However, if such period
or such area should be adjudged unreasonable in any judicial proceeding, then
the period of time shall be reduced by such number of months or such area shall
be reduced by elimination of such portion of such area, or both, as are deemed
unreasonable, so that this covenant may be enforced in such area and during such
period of time as is adjudged to be reasonable.
SECTION 10. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when delivered or three (3)
days after mailing if mailed by first-class, registered or certified mail,
postage prepaid, addressed (a) if to Executive, at 0000 Xxxxxx Xxxx, Xxxxxx, XX
00000, with a copy to Messrs. X'Xxxxxx, Cavanaugh, Anderson, Killingworth &
Xxxxxxxx, Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000,
Attn: Xxxx Xxxxxx, Esq., or to such other person(s) or address(es) as Executive
shall have furnished to the Company in writing; and (b) if to the Company,
Grafalloy Corporation, 0000 Xxxxx Xxxxxxxx Xxxxxx, Xx Xxxxx, Xxxxxxxxxx 00000,
with copies to The American Materials &
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Technologies Corporation, 0000 Xxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 and
Xxxxx X. Xxxxxxxx, Esq., c/o Foley, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, or to such other person(s) or address(es) as the
Company shall have furnished to Executive in writing.
SECTION 11. ASSIGNABILITY. In the event that the Company shall be merged
with, or consolidated into, any other corporation owned wholly by The American
Materials & Technologies Corporation ("AMT"), or in the event that it shall sell
and transfer substantially all of its assets to another corporation owned wholly
by AMT, the terms of this Agreement shall inure to the benefit of, and be
assumed by, the corporation resulting from such merger or consolidation, or to
which the Company's assets shall be sold and transferred. This Agreement shall
not be assignable by Executive, but it shall be binding upon, and to the extent
provided in SECTION 6 shall inure to the benefit of, his heirs, executors,
administrators and legal representatives.
SECTION 12. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Executive with respect to the subject matter thereof and
there have been no oral or other agreements of any kind whatsoever as a
condition precedent or inducement to the signing of this Agreement or otherwise
concerning this Agreement or the subject matter hereof.
SECTION 13. EXPENSES. Each party shall pay its own expenses incident to the
performance or enforcement of this Agreement, including all fees and expenses of
its counsel for all activities of such counsel undertaken pursuant to this
Agreement, except as otherwise herein specifically provided.
SECTION 14. EQUITABLE RELIEF. Executive recognizes and agrees that the
Company's remedy at law for any breach of the provisions of SECTIONS 7, 8 OR 9
hereof would be inadequate, and he agrees that for breach of such provisions,
the Company shall, in addition to such other remedies as may be available to it
at law or in equity or as provided in this Agreement, be entitled to injunctive
relief and to enforce its rights by an action for specific performance to the
extent permitted by law. Should Executive engage in any activities prohibited by
this Agreement, he agrees to pay over to the Company all compensation,
remunerations or moneys or property of any sort received in connection with such
activities; such payment shall not impair any rights or remedies of the Company
or obligations or liabilities of Executive which such parties may have under
this Agreement or applicable law.
SECTION 15. WAIVERS AND FURTHER AGREEMENTS. Any waiver of any terms or
conditions of this Agreement shall not operate as a waiver of any other breach
of such terms or conditions or any other term or condition, nor shall any
failure to enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof; PROVIDED, HOWEVER, THAT no such written waiver,
unless it, by its own terms, explicitly provides to the contrary, shall be
construed to effect a continuing waiver of the provision being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance with such provision. Each of the parties hereto agrees to execute all
such further instruments and documents and to take all such further action as
the other party may
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reasonably require in order to effectuate the terms and purposes of this
Agreement.
SECTION 16. AMENDMENTS. This Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected except by an
instrument in writing executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or discharge is sought.
SECTION 17. SEVERABILITY. If any provision of this Agreement shall be held
or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflicting of any provision with
any constitution or statute or rule of public policy or for any other reason,
such circumstance shall not have the effect of rendering the provision or
provisions in question, invalid, inoperative or unenforceable in any other
jurisdiction or in any other case or circumstance or of rendering any other
provision or provisions herein contained invalid, inoperative or unenforceable
to the extent that such other provisions are not themselves actually in conflict
with such constitution, statute or rule of public policy, but this Agreement
shall be reformed and construed in any such jurisdiction or case as if such
invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted in such jurisdiction or in such case. In
addition to the foregoing, the Company may, in its sole discretion, elect to pay
Executive his base salary during the one year restricted period set forth in
SECTION 9.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and in pleading or
proving any provision of this Agreement, it shall not be necessary to produce
more than one of such counterparts.
SECTION 19. SECTION HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 20. GENERAL PROVISIONS
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(a) Executive and Company further agree that the obligations of
Executive under SECTION 8 only (or, in the case of termination OTHER THAN
pursuant to SECTION 6(a)(i) or pursuant to the proviso to the first sentence of
SECTION 6(a)(iii), SECTIONS 8 AND 9 only), of this Agreement shall be binding
upon him irrespective of the duration of his employment by the Company, the
reasons for any cessation of his employment by the Company, or the amount of his
compensation and shall survive the termination of this Agreement (whether such
termination is by the Company, by Executive, upon expiration of this Agreement
or otherwise). No other obligations of Executive shall survive the termination
of his employment by Company regardless of the reason for such termination.
(b) Executive represents and warrants to the Company that he is not
now under any obligations to any person, firm or corporation, and has no other
interest which is inconsistent or in conflict with this Agreement, or which
would prevent, limit or impair, in any way, the
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performance by him of any of the covenants or his duties in his said employment.
SECTION 21. GENDER. Whenever used herein, the singular number shall include
the plural, the plural shall include the singular, and the use of any gender
shall include all genders.
SECTION 22. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the law (other than the law governing
conflict of law questions) of the State of California.
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date first above written.
GRAFALLOY ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Chief Executive Officer
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/s/ Xxxxxxx Xxxxxxx
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Executive
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