Exhibit 10.1
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of July 15, 2006 and effective as of August
9, 2006 (the "Effective Date") between ATC HEALTHCARE INC., a Delaware
Corporation ("ATC" or the "Corporation"), and Xxxxxx X. Xxxx who resides at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxx Xxxx 00000 ("Executive").
WHEREAS, ATC wishes to secure the services of the Executive on the terms
and conditions set forth below;
AND WHEREAS, the Executive is willing to accept employment with ATC on such
terms and conditions.
NOW, THEREFORE, in consideration of their mutual promises and other
adequate consideration, ATC and the Executive do hereby agree as follows:
1. EMPLOYMENT. ATC will employ the Executive as Senior Vice President,
Chief Financial Officer (CFO) and Treasurer, in accordance with the terms and
provisions of this Agreement.
2. DUTIES. The Executive shall be responsible for the management of all
aspects of the financial functions and related responsibilities of ATC. The
Executive shall report directly to the Chief Executive Officer or such other
Senior Executive of the Corporation and/or the Board of Directors. The Executive
shall devote his full business time, attention and skill to the performance of
his duties hereunder and to the advancement of the business and interests of
ATC. Notwithstanding the foregoing, Executive may, at the discretion of ATC and
with prior written approval which will not be unreasonably withheld provided it
does not unreasonably interfere with his duties under or violate this Agreement,
and does not take place during business hours, acquire and oversee personal and
family investments, serve as a director of other companies and engage in
charitable activities.
3. TERM. This Agreement shall continue in force and effect until the
earliest of: (i) August 8, 2009 or (ii) until such time as notice is given in
writing by either the Corporation or the Executive to the other, that they wish
to terminate the Agreement. The Corporation and the Executive agree to meet to
negotiate in good faith the renewal of this Agreement no less than two (2)
months prior to the expiration date of this Agreement. This Agreement may be
extended for an additional period or periods by mutual written agreement of the
Company and the Executive. A termination of the terms of this Agreement where
the parties are unable to agree to renewal terms shall not affect the payment or
any provision of compensation or benefits, nor affect Executive's right to
twelve (12) months of Base Salary as severance pay if terminated as set forth
herein.
4. COMPENSATION
(a) Salary. The Executive shall be paid a base salary of $227,200 per annum
during the first year of the Agreement, $239,700 per annum during the second
year of the Agreement, and $252,200 per annum during the third year of the
Agreement. Such amounts payable in the same frequency as provided to other
Executives of ATC.
(b) Bonus. Executive shall be entitled to participate in any bonus program (the
"Bonus Program") that the Corporation makes generally available to its senior
executive employees. Executive shall be entitled to participate in the Bonus
Program so long as Executive serves as an employee of the Corporation, subject
to the terms and conditions of the Bonus Program and the then current policies
and procedures of the Corporation. The Bonus Program may involve a sum of cash
or other consideration representing a pool for the benefit of all Executives
(the "Pool"). The Executive will participate in the Pool, if earned, in an
amount equal to no less than 20% (twenty percent) of the total Pool
consideration.
(c) Benefits. The Executive shall be eligible to receive and participate in all
health, medical or other insurance benefits that ATC provides or makes available
to its executive employees. The Executive may enroll in the ATC health program
effective upon the first date of employment.
(d) Expenses. ATC shall reimburse the Executive for all reasonable and necessary
expenses, including without limitation professional dues associated with
belonging to the New York State Society of Certified Public Accountants and the
American Institute of Certified Public Accountants, upon submission by the
Executive of receipts in accordance with ATC policy.
(e) Car Allowance. The executive will be paid a car allowance of $650 per month.
(f) Vacation. The Executive shall be entitled to twenty four (24) business days
of paid time off (in addition to holidays recognized by the Company) during each
twelve-month period of employment during the term of this Agreement.
(g) Employee Stock Purchase Plan. The Executive is entitled to participate in
the Employee Stock Purchase Plan as described in the related plan documents.
5. TERMINATION: RIGHTS AND OBLIGATIONS UPON TERMINATION.
If the Executive's employment with the Corporation terminates during the term of
this Agreement, then the Executive shall be entitled to receive severance
benefits as follows:
(a) Involuntary Termination. If, at any time during the term of this Agreement,
the Executive's employment terminates as a result of Involuntary Termination,
including Good Reason as defined below, other than for Cause, Disability or
death, or the Corporation breaches any of the material terms of this Agreement,
the Corporation shall pay the Executive severance in the amount of one-twelfth
(1/12) of the Base Salary of the Executive at the time of such termination
(without giving effect to any reduction in Base Salary that resulted in such
Involuntary Termination) per month, for a period of twelve (12) months. "Good
Reason" shall mean (i) any material reduction in Executive's duties, titles or
responsibilities, (ii) the required relocation of Executive from the greater New
York area, or (iii) any breach of Section 3, 4 or 5 of this Agreement by the
Corporation unless such breach is cured within fifteen (15) days of written
notice of the breach by Executive.
(b) Disability; Death. If the Corporation terminates the Executive's employment
as a result of the Executive's Disability, or such Executive's employment is
terminated due to the death of the Executive, then the Executive shall not be
entitled to receive severance or other benefits except (i) those (if any) as may
then be established (and applicable) under the Corporation's then-existing
severance and other benefits plans and policies at the time of such Disability
or death, (ii) benefits required by applicable laws, (iii) in the case of death,
the Executive's salary for twenty six (26) weeks payable to the Executive's
surviving spouse, or if the Executive has no spouse, to the Executive's estate,
and (iv) the Executive, his spouse, or his estate as the case may be, has the
right to exercise the vested portion of any stock options, stock rights or the
like, for a period of three (3) months following the termination for death or
disability. In the event of termination as a result of Disability under this
Agreement, the Executive shall be entitled to the benefits provided under the
Corporation's then-existing disability or extended sick pay plan, for so long as
such Executive continues to be disabled under this Agreement or benefits
otherwise terminate under such plan, provided the Executive is deemed to be
disabled under such plan.
(c) Voluntary Resignation; Termination for Cause. If the Executive's employment
terminates by reason of the Executive's voluntary resignation (and is not an
Involuntary Termination), or if the Executive is terminated for Cause, then the
Executive shall not be entitled to receive severance or other benefits except
for those (if any) as may then be established (and applicable) under the
Corporation's then-existing severance and benefits plans and policies at the
time of such termination.
The Corporation shall have the right to terminate the Executive's
employment under this Agreement for Cause. For purposes of the Agreement, the
Corporation shall have "Cause" to terminate the Executive's employment if (i)
the Executive assigns, pledges, or otherwise disposes of his rights and
obligations under this Agreement, or attempts to do the same without the prior
written consent of the Corporation; or (ii) the Executive deliberately or
intentionally fails to fulfill his obligations under this Agreement or has
materially breached any of the terms or conditions hereof and, in the case of a
material breach, has failed to cure such breach within thirty (30) days after
receiving notice from the Corporation thereof; (iii) Executive has engaged in
willful misconduct or has acted in bad faith in the performance of his duties
under this Agreement in a manner that has a materially adverse effect on the
Corporation or its financial performance; or (iv) the Executive has breached
Section 7 of this Agreement; or (v) the Executive has committed or been
convicted of a felony or has committed embezzlement or a theft of funds or
assets of the Corporation. If the Corporation terminates this Agreement for
Cause, the Corporation's obligations hereunder shall cease, except for the
Corporation's obligation to pay the Executive the compensation and expenses
accrued and unpaid as of the date of termination in accordance with the
provisions hereof. Notwithstanding the foregoing, for a period of eighteen (18)
months after a Change of Control, as defined below, the term Cause shall solely
mean an event described in clauses (i), (ii), (iv) or (v) of the immediately
preceding sentence.
(d) In the event that at any time Executive is discharged by the Corporation
other than for Cause as defined above or in the event that at any time after a
Change of Control (as defined below) but prior to the end of eighteen (18)
months after such Change of Control, the Executive is discharged for any reason
other than for Cause or resigns for any reason (other than due to termination
for Cause), the Executive, in addition to receiving any compensation and
expenses accrued and unpaid as at the date of termination of the Executive's
employment, shall begin to receive upon such discharge or resignation, a
severance payment equal to one (1) year's salary at the same rate of pay in
effect at the date of the Change of Control to be paid in weekly installments
for the one (1) year period following such discharge or resignation. In
addition, Executive shall receive (i) all benefits received by the Executive as
if he continued to be employed for the period of the severance payment and (ii)
Executive's bonus for the period covered by the severance payment calculated on
a prorated basis as of the date or discharge or resignation. Anything contained
herein to the contrary notwithstanding, a "Change of Control" shall be deemed to
occur when a person, corporation, partnership, association, entity or group (as
defined for purposes of the Securities Exchange Act of 1934, as amended) (x)
directly or indirectly acquires a majority of the outstanding voting securities
of ATC, including as the result of a merger or consolidation or other form of
reorganization or recapitalization, or (y) acquires securities bearing a
majority of voting power with respect to election of directors of ATC, including
as the result of a merger or consolidation or other form of reorganization or
recapitalization, or (z) acquires all or substantially all of ATC's assets or
the assets of its direct or indirect subsidiaries if those assets are
substantially all of the assets of the business conducted by ATC and its
subsidiaries taken as a whole. Notwithstanding anything to the contrary
contained herein, all payments owed to the Executive upon termination of this
Agreement shall be subject to offset by the Corporation for any amounts owed to
the Corporation by the Executive.
(e) Notwithstanding anything to the contrary contained herein, there shall be no
requirement on the part of Executive to seek other employment or otherwise
mitigate damages in order to be entitled to the full amount of any payments and
benefits to which Executive is entitled under this Agreement or as the result of
any breach of this Agreement. However, in the event Executive obtains other
employment during all or a portion of the period during which Executive is to
receive such payments and benefits, the amount of the payments and benefits to
which Executive is entitled under this Agreement during the period of other
employment, shall be reduced by the amount of the base salary and equivalent
benefits received by Executive from the other employment during that period. The
immediately preceding sentence shall not apply in the event of any resignation
or termination without Cause occurring within eighteen (18) months following a
Change of Control.
(f) The obligations of the Corporation and the Executive pursuant to this
Section 5 shall survive the termination of this Agreement.
(g) Options. In the event the Executive is entitled to severance benefits
pursuant to subsection 5(a)(i), the Executive's stock options and other exercise
rights shall remain exercisable in accordance with the provisions of the Stock
Option Plan, and, in accordance with Section 5 (h) below.
(h) Vesting of Benefits. If the Executive's employment terminates as a result of
Involuntary Termination other than Cause, or if a Change-of-Control occurs as
defined herein, then any unvested benefits on the date of termination or the
date of Change-of-Control, including stock options, restricted stock, stock
appreciation rights, growth units, or other incentive compensation, shall
immediately accelerate and one hundred percent (100%) of such unvested benefits
shall become fully vested and exercisable. The Executive shall thereupon have
fully vested rights to such benefits in accordance with the terms of the
applicable plan or agreement and will have a period of three (3) months from the
date of termination or the date of the Change-in-Control to exercise such stock
options, stock appreciation rights, growth units or restricted stock.
6. NOTICES. Any written notice permitted or required under this Agreement
shall be deemed sufficient when hand delivered or posted by certified or
registered mail, postage prepaid, and addressed to:
If to ATC:
----------
ATC Healthcare, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
or
If to the Executive:
--------------------
Xxxxxx X. Xxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Either party may, in accordance with the provisions of this Section, give
written notice of a change of address, in which event all such notices and
requests shall thereafter be given as above provided at such changed address.
7. CONFIDENTIALITY OBLIGATIONS; NON-COMPETITION BY EXECUTIVE
(a) The Executive acknowledges that in the course of performing his
duties hereunder, he will be made privy to confidential and
proprietary information. The Executive covenants and agrees that
during the term of this Agreement and at any time after the
termination of this Agreement, he will not directly or
indirectly, for his own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, disclose to others or use for his own benefit or cause
or induce others to do the same, any proprietary or confidential
information or trade secrets of ATC, including but not limited
to, any confidential information concerning the business of ATC.
(b) The Executive agrees that, during the term hereof and for twelve
(12) months following the termination hereof, he will not, within
the United States (A) compete, directly or indirectly, for his
own account or as an employee, officer, director, partner, joint
venturer, shareholder, investor, or otherwise, with the
supplemental staffing and permanent placement business conducted
by ATC; or (B) be employed by, work for, advise, consult with,
serve or assist in any way, directly or indirectly, any person or
entity whose business competes with the supplemental staffing or
permanent placement business conducted by ATC or (C) directly or
indirectly solicit, recruit or hire any employee of ATC to leave
the employ of ATC; or (D) solicit any client or customer of ATC
to terminate or modify its business relationship with ATC.
Notwithstanding the foregoing, Executive's ownership of less than
five (5%) of the outstanding stock of any publicly-traded company
shall not be deemed to violate this subsection.
(c) The foregoing restrictions on the Executive set forth in this
Section 7 shall be operative for the benefit of ATC and of any
business owned or controlled by ATC, or any successor or assign
of any of the foregoing. In addition, the severance payments
noted above are deemed consideration for Executive's compliance
with this Section 7.
(d) Executive acknowledges that the restricted period of time and
geographical area specified in this Section 7 is reasonable, in
view of the nature of the business in which ATC is engaged and
the Executive's knowledge of ATCs' business. Notwithstanding
anything herein to the contrary, if the period of time or the
geographical area specified in this Section 7 should be
determined to be unreasonable in a judicial proceeding, then the
period of time and territory of the restriction shall be reduced
so that this Agreement may be enforced in such area and during
such period of time as shall be determined to be reasonable.
(e) The parties acknowledge that any breach of this Section 7 will
cause ATC irreparable harm for which there is no adequate remedy
at law, and as a result of this, ATC shall be entitled to the
issuance of an injunction, restraining order or other equitable
relief in favor of ATC restraining Executive from committing or
continuing any such violation. Any right to obtain an injunction,
restraining order or other equitable relief hereunder shall not
be deemed a waiver of any right to assert any other remedy ATC
may have at law or in equity.
(f) For purposes of this Section 7, the term "ATC" shall refer to the
Corporation and all of its parents, subsidiaries and affiliated
corporations.
8. JURISDICTION. The Executive consents to the jurisdiction of the Supreme
Court of the State of New York or of any Federal Court in the City of New York
for a determination with respect to Section 7 only and authorizes the service of
process on him by registered mail sent to him at his address shown in ATCs'
records.
(a) ARBITRATION. Any controversy, dispute or claim arising out of or relating to
this Agreement, or the breach hereof, except for those arising from section 7,
shall be resolved by arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association through its New York, New York
office, and the hearing of such dispute will be held in New York, New York. The
decision of the arbitrator(s) will be final and binding on all parties to the
arbitration and said decision may be filed as a final judgment in any court. The
prevailing party in any arbitration shall be entitled to recover its reasonable
attorney' fees and costs from the other party or parties. Notwithstanding the
foregoing, nothing contained in this Agreement shall limit a party's right to
seek specific performance of any term or provision of this Agreement to the
extent permitted by applicable law.
(b) LEGAL FEES. In the event that, after a Change of Control, the Executive is
required to enforce this Agreement or to procure the benefits hereunder through
arbitration or litigation, the Executive shall be entitled to reasonable legal
fees and all out-of-pocket expenses.
9. STOCK OPTIONS. The Executive will be granted stock options to purchase
400,000 shares of the publicly traded stock of ATC on the Effective Date. This
grant will be issued at the closing price of ATCs' stock on the day before the
Effective Date and vest over 3 years in accordance with the terms of an Option
Agreement between the Executive and the Corporation, a copy of which is
attached. Vesting will occur as follows; 25% (twenty-five percent) of the shares
underlying the grant will vest one (1) year from the Effective Date and the
remaining 75% (seventy-five percent) of the shares will vest monthly in equal
amounts of 12,500 shares over the following two (2) years. It is intended that
all stock options issued to the Executive during the term of the Agreement, will
be "Incentive Stock Options" to the extent permitted by applicable laws and
regulations.
10. INDEMNIFICATION AND INSURANCE. In the event that during or after the
term of this Agreement, Executive is made a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative ("proceeding"), by reason of the fact
that he is or was an officer, employee or agent of the Corporation or acting in
such capacity, Executive shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by applicable law and the
Corporation's Bylaws, it being agreed that such indemnification, including the
obligation to advance expenses, shall be mandatory, subject to applicable law.
The Corporation agrees, that it will maintain Directors and Officers Insurance
during the term of this Agreement and for a period of three (3) years thereafter
covering Executive and the other officers and managers of the Corporation in an
amount that is generally in effect at other similar public companies.
11. BINDING EFFECT. This agreement shall bind and inure to the benefit of
ATC, its successors and assigns and shall inure to the benefit of, and be
binding upon, the Executive, his heirs, executors and legal representatives.
12. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall in no way affect the validity or enforceability of any
other provision, or any part thereof.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties.
15. MODIFICATION, TERMINATION OR WAIVER. This Agreement may only be amended
or modified by a written instrument executed by the parties hereto. The failure
of any party at any time to require performance of any provision of this
Agreement shall in no manner affect the right of such party at a later time to
enforce the same.
IN WITNESS WHEREOF, ATC and the Executive have executed this Employment
Agreement as of the date first above written.
ATC Healthcare, INC.
By: /s/ XXXXX XXXXXXXX
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Xxxxx Xxxxxxxx, CEO
By: /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx, Executive
