EMPLOYMENT AGREEMENT
Exhibit
10.1
EMPLOYMENT
AGREEMENT
dated as
of December 13, 2006 between AMERICAN MEDICAL ALERT CORP., a New York
corporation (the "Company"), with offices located at 0000 Xxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 and XXXXXX X. XXXXXX, an individual having an address
at 000 Xxxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 ("Xxxxxx").
WITNESSETH:
WHEREAS,
the
Company desires to retain the services of Xxxxxx upon the terms and conditions
stated herein; and
WHEREAS,
Xxxxxx
desires to continue to be employed by the Company upon the terms and conditions
stated herein.
NOW,
THEREFORE,
in
consideration of the mutual covenants, conditions and promises contained herein,
the parties hereby agree as follows:
1.
Employment;
Location.
The
Company hereby employs Xxxxxx for the period beginning as of January 1, 2007
and
ending December 31, 2009, unless earlier terminated pursuant hereto (the
"Employment Period"). The Company and Xxxxxx agree that Xxxxxx may provide
the
services described in Section 2 below either remotely (e.g., offsite) or at
the
Company's current location in Oceanside, Long Island; provided, however, that
if
the Company elects to vacate its Oceanside facility, it will give Xxxxxx 6
months notice prior to the expiration of the existing lease currently in force,
and will arrange for a physical office for Employee to render services in Nassau
or Suffolk County together with secretarial access.
2.
Duties;
Authority.
During
the Employment Period, subject to the authority of the Board of Directors of
the
Company (the "Board"), Xxxxxx shall be employed as the Company's Senior Advisor.
Xxxxxx will render advisory or consultative services related to the Company’s
strategic position, plans, prospects and objectives. Such services shall be
rendered based upon discussions and input between Xxxxxx on the one hand, and
the Board and/or senior management of the Company on the other hand, and may
include, without limitation, traveling, attendance at meetings or participation
in conference calls, all as directed by the Board or senior management. Xxxxxx
shall have no authority to enter into any contracts or to otherwise bind the
Company, except as expressly agreed to between Xxxxxx on the one hand, and
the
Board and/or the Chief Executive Officer of the Company on the other
hand.
2A. Chairman
of the Board Position.
The
Company recognizes that it is the intent and spirit of this Agreement that
Xxxxxx shall continue to serve as Chairman of the Board. Notwithstanding the
foregoing, Xxxxxx recognizes that neither the Board, nor any committee thereof,
including the Nominating Committee (collectively, the "Committees"), nor any
officer or agent of the Company, may legally commit, agree, recommend or support
this action due to, among other matters, principles of corporate or common
law,
fiduciary obligations, the applicability of current or future legislation,
changes in the nature of the Company's business, its management, Board or
Committee composition or otherwise. Therefore, although it is recognized that
the Company, acting through its Board and its Committees, may consistent with
its fiduciary and other obligations and as further set forth above, strongly
consider nominating Xxxxxx to the Company's Board at the annual meeting of
the
Company's shareholders, Xxxxxx recognizes and acknowledges, and he has sought
independent counsel for this and the other matters set forth in this Agreement,
that there shall be no liability to the Company, the Board, its members, the
Committees, their members, advisors or other agents of the Company, should
(i)
Xxxxxx not be nominated to the Board or not be elected therefore even if
nominated, or (ii) Xxxxxx not be appointed as the Chairman of the Board, even
if
elected to the Board.
3.
Hourly
Commitment.
(a)
From January 1, 2007 through December 31, 2007, Xxxxxx will devote his full
time
and attention during regular business hours to the business and affairs of
the
Company;
(b)
From
January 1, 2008 through December 31, 2008, Xxxxxx shall devote 80 hours per
month to the business and affairs of the Company.
(c)
From
January 1, 2009 through December 31, 2009, Xxxxxx shall devote 70 hours per
month to the business and affairs of the Company.
(d) The
foregoing shall not prevent (i) the purchase, ownership or sale by Xxxxxx of
investments or securities of publicly held companies and any other business
that
is not competitive with the Company or any subsidiary of the Company so long
as
such investment does not, during the time that Xxxxxx is a full time employee,
require active participation of Xxxxxx in the management of the business of
such
publicly held companies, does not interfere or conflict with the performance
of
Xxxxxx'x duties hereunder and does not otherwise violate any of the provisions
of this Agreement, or (ii) Xxxxxx'x participation in philanthropic organizations
to the extent that such participation does not interfere or conflict with the
performance of Xxxxxx'x duties hereunder and does not otherwise violate any
provision of this Agreement.
4.
Compensation.
(a) In
consideration of the duties and services to be performed by Xxxxxx pursuant
to
Section 2 hereof, the Company agrees to pay, and Xxxxxx agrees to accept the
amounts set forth below, to be paid on a bi-weekly basis:
(i) $300,000
per annum during the period beginning January 1, 2007 and ending
December 31, 2007;
(ii) $225,000
per annum during the period beginning January 1, 2008 and ending
December 31, 2008, and
(iii) $175,000
per annum during the period beginning January 1, 2009 and ending
December 31, 2009.
(b)
As
additional compensation, in each case, based on the Board's assessment of
Xxxxxx'x performance in relation to achievement of the following EBIT (as
hereinafter defined) targets:
(i) with
respect to the fiscal year ending December 31, 2007, the following number of
shares of the Company's common stock based on the Company's EBIT for such fiscal
year ("2007 EBIT") meeting or exceeding the following targets: 115% of the
Company's EBIT for the fiscal year ending December 31, 2006 ("2006 EBIT") -
6,000 shares, and an additional 400 shares for each additional one (1%) percent
growth in 2007 EBIT over 2006 EBIT, up to a maximum of 10,000 shares if 2007
EBIT equals to or exceeds 125% if 2006 EBIT;
(ii) with
respect to the fiscal year ending December 31, 2008, the following number of
shares of the Company's common stock based on the Company's EBIT for such fiscal
year ("2008 EBIT") meeting or exceeding the following targets: 115% of the
2007
EBIT - 4,500 shares, and an additional 300 shares for each additional one (1%)
percent growth in 2008 EBIT over 2007 EBIT, up to a maximum of 7,500 shares
if
2008 EBIT equals to or exceeds 125% of 2007 EBIT; and
(iii) with
respect to the fiscal year ending December 31, 2009, the following number of
shares of the Company's common stock based on the Company's EBIT for such fiscal
year ("2009 EBIT") meeting or exceeding the following targets: 115% of the
Company's 2008 EBIT - 3,600 shares, and an additional 240 shares for each
additional one (1%) percent growth in 2009 EBIT over 2008 EBIT, up to a maximum
of 6,000 shares if 2009 EBIT equals to or exceeds 125% of 2008
EBIT.
In
the
event that the minimum EBIT growth percentage is not met for a particular fiscal
year, Xxxxxx will have the opportunity to earn back the minimum performance
bonus grant for such fiscal year as follows: if the EBIT growth percentage
in
the subsequent fiscal year combined with the EBIT growth percentage of the
prior
fiscal year meets or exceeds 30%, then the number of percentage points needed
to
be added to the prior fiscal year's EBIT growth percentage to equal up to 15%,
shall be deducted from the subsequent fiscal year EBIT growth percentage and
added to the prior fiscal year EBIT growth percentage, and Xxxxxx shall be
granted such number of shares of common stock for the prior fiscal year based
on
such year's formula, and an additional number of shares of common stock
determined based on the above formula and the reduced subsequent year EBIT
growth percentage.
For
the
sake of clarity, and as an example only, if 2006 EBIT equals $2,000,000, 2007
EBIT equals $2,400,000, 2008 EBIT equals $2,500,000 and 2009 EBIT equals
$3,200,000, then Xxxxxx shall be entitled to 8,000 shares for 2007 (2007 EBIT
=
120% of 2006 EBIT; 6,000 shares +(5 x 400 shares)), 4,500 shares for 2008 (2008
EBIT is 104% of 2007 EBIT, but, 2009 EBIT = 128% of 2008 EBIT, so 11% of the
2009 EBIT growth is added to the 2008 EBIT growth, for a total of 115%), and
4,080 shares for 2009 (3,600 shares + (2 x 240 shares) since 2009 EBIT = 117%
of
2008 EBIT (128% - the 11% added to 0000 XXXX)).
For
the
purposes of this Agreement, "EBIT" shall mean for each fiscal year, the
Company's earnings before deduction of interest and taxes, as set forth in
the
consolidated audited financial statements of the Company, for such fiscal year,
and before any adjustment for the effect of the additional compensation pursuant
to paragraph 4(b) hereof, determined in accordance with generally accepted
accounting principles, as consistently applied by the Company.
(c)
In
addition to the compensation provided for in Section 4(b), the Board may in
its
discretion grant additional shares, not to exceed an aggregate total of 50,000
shares (inclusive of the number of shares granted pursuant to the EBIT growth
targets set forth in Section 4(b) hereof), based on significant contributions
made by Xxxxxx.
Any
shares to be issued pursuant to Sections 4(b) or 4(c) hereof, shall be issued
pursuant to, and be subject to the terms of, the Company's 2005 Stock Incentive
Plan. The award of shares pursuant to this Agreement shall be evidenced by
a
stock purchase agreement.
(d)
The
additional compensation to be paid pursuant to paragraph 4(b) hereof shall
be
payable and/or issuable, as the case may be, promptly following the availability
of the audited financial statements relating to the applicable fiscal year
of
Company. To the extent any such fiscal year is not entirely included in the
Employment Period, because for example Xxxxxx'x employment ceases other than
in
accordance with paragraph 9(a) hereof, then subject to the determination of
the
Board as set forth in Section 4(b) above, Xxxxxx may be entitled to receive
the
pro rata portion of such additional compensation determined by multiplying
the
addi-tional compensation, computed for the applicable fiscal year, by a fraction
whose numerator is the number of days in such fiscal year included in the
Employment Period and whose denominator is the total number of days in such
fiscal year.
(e)
The
compensation provided for herein shall be in addition to any retirement, profit
sharing, insurance or similar benefit which may at any time be payable to Xxxxxx
pursuant to any plan or policy of the Company relating to such benefits, which
additional benefits shall be made available to Xxxxxx on the same basis as
they
are generally made available to executive officers of the Company. In the event
Xxxxxx is not eligible to so participate in the Company's health insurance
plan,
the Company will pay the cost of COBRA (up to a total of 18 months, but not
beyond the term of this Agreement). In the event Xxxxxx is not eligible for
COBRA coverage or such coverage expires, then during such time through the
end
of the Employment Period, the Company will reimburse Xxxxxx for the cost of
supplemental health insurance (including prescription drug coverage) to the
extent needed to supplement Xxxxxx'x Medicare coverage so as to provide him
with
coverage equivalent or as nearly equivalent as possible under the Medicare
program, to that he would have had as a full time employee of the
Company.
(f)
The
Company shall reimburse Xxxxxx in accordance with the Company's normal policies
for all reasonable travel, hotel, meal and other expenses properly incurred
by
him in the performance of his duties hereunder. Any request for reimbursement
must be submitted to and approved by, the Company's Chief Financial Officer,
whose decision to approve or disapprove a reimbursement shall be subject to
review by the Company's audit committee.
(g)
The
Company shall provide Xxxxxx with the use of a suitable automobile leased by
the
Company, including any insurance costs, with all business expenses of operation
such as, gas, oil and repair reimbursed by the Company in accordance with
procedures set forth in sub paragraph 4(f) above.
5.
Vacation.
Xxxxxx
shall be entitled to four (4) weeks vacation, in each fiscal year, to be taken
at such time as is mutually convenient to the Company and Xxxxxx.
6.
Death.
In the
event of the death of Xxxxxx during the Employment Period, this Agreement and
the employment of Xxxxxx hereunder shall terminate on the date of such death.
The estate of Xxxxxx (or such person(s) as Xxxxxx shall designate in writing
in
applicable testamentary documents) shall be entitled to receive, and the Company
agrees to continue to pay, in accordance with the normal pay practice of the
Company, the base salary of Xxxxxx provided by paragraph 4(a) and the additional
benefits (other than health insurance), if any, provided by paragraph 4(e),
in
each instance for a period of one (1) year following the date of death of
Xxxxxx.
7.
Disability.
In the
event that Xxxxxx shall be unable to perform because of illness or incapacity,
physical or mental, the duties and services to be performed by him hereunder
for
a period of one hundred and eighty (180) consecutive days or an aggregate period
of one hundred and eighty (180) days in any 12 month period, the Company may
terminate this Agreement after the expiration of such period. Upon such
termination, Xxxxxx shall be entitled to receive the base salary provided by
paragraph 4(a) and the additional benefits, if any, provided by paragraph 4(e),
in each instance for a period of one (1) year following termination due to
disability.
8.
Non-Competition,
Non-Solicitation and Non-Disclosure.
(a)
Xxxxxx covenants and agrees that, throughout the Employment Period and for
a
period of twelve (12) months thereafter, he will not, directly or indirectly,
own, manage, operate or control, or participate in the ownership, management,
operation or control of, any business competing directly in the United States
of
America with the business conducted by the Company or any subsidiary of the
Company as such business is conducted during the Employment Period; provided,
however,
that
Xxxxxx may own not more than 5% of the outstanding securities of any class
of
any corporation engaged in any such business, if such securities are listed
on a
national securities exchange or market regularly traded in the Over the Counter
market by a member of a national securities association.
(b)
Xxxxxx
covenants and agrees that, throughout the Employment Period and for a period
of
twelve (12) months thereafter, he will not directly or indirectly solicit,
entice or induce any person who on the date of termination of employment of
Xxxxxx is, or within the last three months of Xxxxxx'x employment by the Company
was, associated with or employed by the Company or any subsidiary of the Company
to leave the employ of or terminate his association with the Company, or any
subsid-iary of the Company, solicit the employment of any such person on his
own
behalf or on behalf of any other business enterprise.
(c)
Xxxxxx
covenants and agrees that, throughout the Employment Period and at all times
thereafter, he will not use, or disclose to any third party, trade secrets
or
confidential information of the Company, including, but not limited to,
confidential information or trade secrets belonging or relating to the Company,
its subsidiaries, affiliates, customers and clients or proprietary processes
or
procedures of the Company, its subsidiaries, affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited
to,
all information which is known or intended to be known only by employees of
the
Company, its respective subsidiaries and affiliates or others in a confidential
relationship with the Company or its respective subsidiaries and affiliates
which relates to business matters.
(d)
If
any
term of this paragraph 8 is found by any court having jurisdiction to be too
broad, then and in that case, such term shall nevertheless remain effective,
but
shall be considered amended (as to the time or area or otherwise, as the case
may be) to a point considered by said court as reason-able, and as so amended
shall be fully enforceable.
(e)
In
the
event that Xxxxxx shall violate any provision of this Agreement (including
but
not limited to the provisions of this paragraph 8), then Xxxxxx hereby consents
to the granting of a temporary or permanent injunction against him by a court
of
competent jurisdiction prohibiting him from violating any provision of this
Agreement. In any proceeding for an injunction and upon any motion for a
temporary or permanent injunction, Xxxxxx agrees that his ability to answer
in
damages shall not be a bar or interposed as a defense to the granting of such
temporary or permanent injunction against Xxxxxx. Xxxxxx further agrees that
the
Company will not have an adequate remedy at law in the event of any breach
by
Xxxxxx hereunder and that the Company will suffer irreparable damage and injury
if Xxxxxx breaches any of the provisions of this Agreement.
(f)
The
provisions of this Paragraph 8 shall survive the expiration or termination
of
this Agreement.
9.
Termination.
(a) The
Company may terminate this Agreement without liability (other than for the
base
salary pro-vided in paragraph 4(a) accrued to the date of termination) in the
event of (i) a material breach by Xxxxxx of the provisions of this Agreement,
which breach shall not have been cured by Xxxxxx within thirty (30) days, or
such shorter period as determined by the Board in emergency situations,
following notice thereof by the Company to Xxxxxx, (ii) the commission of gross
negligence or bad faith by Xxxxxx in the course of his employment hereunder,
(iii) the commission by Xxxxxx of a criminal act of fraud, theft or dishonesty
(iv) failure by Xxxxxx to obey the reasonable and lawful directions of the
Board, (v) Xxxxxx shall be convicted of (or plead nolo contendere
to) any
felony, or misdemeanor involving moral turpitude if such misdemeanor results
in
material financial harm to or materially adversely affects the goodwill of
the
Company, or (vi) any violation by Xxxxxx of the Company’s Code of Business
Conduct and Ethics or the Company’s sexual harassment and other forms of
harassment policy or drug and alcohol abuse policy, as set forth in the
Company’s employee handbook.
(b)
Employee may terminate this Agreement at anytime without liability to the
Company, upon ninety (90) days prior written notice to the Company. Upon such
termination, (i) the Company shall have no liability or obligations pursuant
to
this Agreement, other than with respect to the base salary provided in Paragraph
4(a) accrued to the date of termination and any additional compensation, if
any,
to be paid pursuant to Paragraph 4(b), subject to the provision of Paragraph
4(d), and (ii) this Agreement shall terminate and shall be of no further force
or effect, except with respect to the provisions hereof which expressly state
that they survive the expiration or termination of this Agreement.
10.
No
Impediments.
Xxxxxx
warrants and represents that he is free to enter into this Agreement and to
perform the services contemplated thereby and that such actions will not
constitute a breach of, or default under, any existing agreement.
11.
No
Waiver.
The
failure of any of the parties hereto to enforce any provision hereof on any
occasion shall not be deemed to be a waiver of any preceding or succeeding
breach of such provision or of any other provision.
12.
Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of the parties
hereto and no amendment, modification or waiver of any provision herein shall
be
effective unless in writing, executed by the party charged
therewith.
13.
Governing
Law.
This
Agreement shall be con-strued, interpreted and enforced in accordance with
and
shall be governed by the laws of the State of New York applicable to agreements
to be wholly performed therein without giving effect to principles of conflicts
of law.
14.
Binding
Effect.
This
Agreement shall bind and inure to the benefit of the parties, their successors
and assigns.
15.
Assignment
and Delegation of Duties.
This
Agreement may not be assigned by the parties hereto except that the Company
shall have the right to assign this Agreement to any successor in connection
with a sale or transfer of all or sub-stantially all of its assets, a merger
or
consolidation. This Agreement is in the nature of a personal services contract
and the duties imposed hereby are nondelegable.
16.
Paragraph
Headings.
The
paragraph headings herein have been inserted for convenience of reference only
and shall in no way modify or restrict any of the terms or provi-sions
hereof.
17.
Notices.
Any
notice under the provisions of this Agreement shall be in writing, shall be
sent
by one of the following means, directed to the address set forth on the first
page of this Agreement or to such other address as shall be designated hereunder
by notice to the other party, effective upon actual receipt and shall be deemed
conclusively to have been given: (i) on the first business day following the
day
timely deposited for overnight delivery with Federal Express (or other
equivalent national overnight courier service) or United States Express Mail,
with the cost of delivery prepaid or for the account of the sender; (ii) on
the
fifth business day following the day duly sent by certified or registered United
States mail, postage prepaid and return receipt requested; or (iii) when
otherwise actually received by the addressee on a business day (or on the next
business day if received after the close of normal business hours or on any
nonbusiness day).
18.
Unenforceability;
Severability.
If any
provision of this Agreement is found to be void or unenforceable by a court
of
competent jurisdiction, the remaining provisions of this Agreement shall,
nevertheless, be binding upon the parties with the same force and effect as
though the unenforceable part has been severed and deleted.
19.
Advice
of Independent Advisors.
Employee acknowledges that he has had the opportunity to review the terms of
this Agreement with his independent advisors, including attorneys, accountants
and compensation consultants.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date first above writ-ten.
| EMPLOYEE: | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxx | |
|
Xxxxxx X. Xxxxxx |
||
| COMPANY: | ||
| AMERICAN MEDICAL ALERT CORP. | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxx | |
|
Name: Xxxxxxx
Xxxxx
Title: Chief
Financial Officer
|
||
