Exhibit 10(a)(ii)
AMENDED
-------
EMPLOYMENT AGREEMENT
--------------------
AMENDED EMPLOYMENT AGREEMENT dated as of February 1, 2002 between
AMERICAN MEDICAL ALERT CORP., a New York corporation (the "Company"), with
offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇
RHIAN, an individual having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇ ("Employee").
W I T N E S S E T H:
WHEREAS, the Company has employed the Employee and Employee has been
employed by the Company pursuant to "Original Employment Agreement" dated as of
January 31, 2000 covering the period from January 31, 2000 ending January 31,
2002, and
WHEREAS, the Company desires to renew and continue the Employment
Agreement and the Employee wishes to continue to be employed by the Company upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises contained herein, the parties hereby amend the terms of the
"Original Employment Agreement" as follows: 1. Employment. The Company hereby
renews and continues the employment of the Employee for the period beginning
February 1, 2002 through January 31, 2005, unless earlier terminated pursuant to
the provisions of the Agreement dated January 31, 2000 and the provisions set
forth herein.
2. Compensation: In consideration of the duties and services to be
performed by the Employee hereunder, the Company agrees to pay and the Employee
agrees to accept the amounts set forth below:
(a) A base salary, to be paid on a bi-weekly basis, at the rate
of $165,000.00 per annum during the first twelve (12) months; $180,000.00 per
annum during the second twelve (12) months and $200,000.00 per annum during the
third twelve (12) months;
(b) As additional compensation, the Employee shall receive
additional stock options under the Company Stock Option Plan to purchase up to
an additional 80,000 shares of the Company's Common Stock. The term of exercise
will be five (5) years from the date of vesting of each installment. As long as
the Employee remains employed by the Company hereunder, the options to purchase
30,000 shares shall vest on January 31, 2002 at an exercise price of the closing
price as of January 31, 2002; 25,000 shares shall vest on January 31, 2003, at a
exercise price of $3.50 per share and 25,000 share shall vest as of January 31,
2004 at an exercise price of $4.00 per share. It is agreed that the provisions
of Paragraph 4(b) of the Agreement dated January 31, 2000 with regard to stock
options shall apply to the additional options being granted here.
1
3. Non-Competition: The provisions of Paragraph 8 (a) of the Agreement
dated January 31, 2000 shall be modified to expand the term to two (2) years and
to increase the geographical area to include any area in which the Company has
or has evidenced intention to market its products or services; The provisions of
Paragraph 8 (b) shall be modified to extend the period to three (3) years and
the provisions of Paragraph 8 (c) shall be modified to extend the period to two
(2) years. It is specifically understood and agreed that the changes being made
herein are in consideration of the continued employment, salary adjustments and
other benefits being provided to and for the benefit of the employee.
4. Representations and Warranties of Employee: Paragraph 9 (d) of the
aforementioned Agreement dated January 31, 2000, shall include any other written
representations or warranties that may have been made by the Employee beyond the
representations set forth in Paragraph 9 of said Agreement.
5. Bonus Compensation Plan: In addition to the base salary, the
Employee shall be compensated for the sales and operating results achieved by
the Company in accordance with the following schedules:
(a) Commencing as of February 1, 2002, 1% on EBIT of
$1,000,000.00 to $1,500,000.00;
(b) 1.5% on EBIT from $1,500,000.00 to $2,000,000.00;
(c) 3% on EBIT from $2,000,000.00 to $2,500,000.00;
(d) 4% on EBIT in excess of $2,500,000.00.
(e) It is further agreed that in the event the Company realizes
an EBIT of $3,000,000.00 or more in calendar year 2003 or
calendar year 2004, the Company will provide the employee
with an option to purchase an additional 25,000 shares of
Common Stock of the Company at a price of $3.50 per share
pursuant to Paragraph 2 (c) of this Agreement.
Any commissions that may be due and owing to the Employee
pursuant to the aforesaid schedule shall be paid within ninety (90) days from
the end of the fiscal year.
6. (A) Death: In the event of the death of the Employee during the
term of this Agreement, the Agreement and the Employment shall terminate as of
the date of death. The Company agrees to pay to the Estate of the Employee an
amount equal to the equivalent of four (4) months of the Employees base salary
during the first year of this Agreement; Eight (8) months in the event the
Employee died during the second year of this Agreement; or Twelve (12) months in
the event the Employee died during the third year of this Agreement. The base
salary shall be the salary in effect at the time of death.
(B) Disability: In the event that Employee shall be, in the sole
judgment of the Company, 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 eighty (180) consecutive days or an aggregate period of
more that one hundred eighty (180) days in any
2
12-month period, the Company may terminate this Agreement after the expiration
of such period. Upon such termination, Employee shall be entitled to receive the
base salary provided by paragraph 4(a), and the additional benefits, if any,
provided by paragraph 4(f) hereof for an additional one (1) year period from the
date of termination.
7. Termination: In addition to the provisions set forth in Paragraph
10 of the aforementioned Agreement dated January 31, 2000, it is agreed that in
the event there is a "change of control" the following provisions will apply.
(A) After a Change in Control (as hereinafter defined) has
occurred, Employee may terminate his employment at any time upon written notice
to the Company within six (6) months after he has obtained actual knowledge of
the occurrence of any of the following events:
(i) Failure to elect or appoint, or re-elect or re-appoint,
Employee to, or removal of Employee from, his office and/or position with the
Company as constituted prior to the Change in Control, except in connection with
the termination of Employee's employment pursuant to Section 10(a) of "Original
Employment Agreement";
(ii) A reduction in Employee's overall compensation
(including any reduction in pension or other benefit programs or perquisites) or
a material adverse change in the nature or scope of the authorities, powers,
functions or duties normally attached to Employee's position with the Company as
referred to in Section 2 of Original Agreement;
(iii) A determination by Employee made in good faith that,
as a result of a Change in Control, he is unable effectively to carry out the
authorities, powers, functions or duties attached to his position with the
Company as referred to in Section 2 of Original Agreement, and the situation is
not remedied within sixty (60) days after receipt by the Company of written
notice from Employee of such determination;
(iv) A breach by the Company of any provision of this
Agreement not covered by clauses (i), (ii) or (iii) of Section 7(A) herein,
which is not remedied within sixty (60) days after receipt by the Company of
written notice from Employee of such breach;
(v) A change in the location at which substantially all of
Employee's duties with the Company are to be performed to a location which is
not within a 50-mile radius of the address of the place where Employee is
performing services prior to the date of the Change in Control; or
(vi) failure by the Company to obtain the assumption of, and
the agreement to perform, this Agreement by any successor.
An election by Employee to terminate his employment under the
provisions of this Section 7(A) shall not be deemed a voluntary termination of
employment by Employee for the purpose of interpreting the provisions of any of
the Company's employee benefit plans, programs or policies Employees right to
terminate his employment pursuant to Section 7(A) shall not be affected by his
illness or incapacity, whether physical or mental, unless the Company shall at
the time be entitled to terminate his employment under this Agreement.
Employee's continued employment with the Company for any period of time less
than six (6) months after a Change in Control shall not be considered a waiver
of any right he may have to terminate his employment pursuant to Section 7(A) of
the Agreement.
After a Change in Control has occurred, if Employee terminates his employment
with the Company pursuant to Section 7(A) or if Employee's employment is
terminated by the Company for any reason other than pursuant to Section 10(A) of
the Original Agreement, Employee (i) shall be entitled to his base salary in
accordance with this Agreement, the additional
3
compensation determined in accordance with this Agreement, and any bonuses,
awards, perquisites and benefits, including, without limitation, benefits and
awards under the Company's stock option plans and the Company's pension and
retirement plans and programs, through the date specified in the notice of
termination as the last day of Employee's employment by the Company (the
"Termination Date") and, in addition thereto, (ii) shall be entitled to be paid
in a lump-sum, on the Termination Date, an amount of cash (to be computed, at
the expense of the Company, by the independent certified public accountants
utilized by the Company immediately prior to the Change of Control (the
"Accountants"), whose computation shall be conclusive and binding upon Employee
and the Company) equal to [2.99] times Employee's "base amount" as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"). Such lump-sum payment is hereinafter referred to as the "Termination
Compensation."
Notwithstanding anything in this Agreement to the contrary, Employee shall have
the right, prior to the receipt by him of any amounts due hereunder, to waive
the receipt thereof or, subsequent to the receipt by him of any amounts due
hereunder, to treat some or all of such amounts as a loan from the Company which
Employee shall repay to the Company, within ninety (90 days from the date of
receipt, with interest at the rate provided in Section 7872 of the Code. Notice
of any such waiver or treatment of amounts received as a loan shall be given by
Employee to the Company in writing and shall be binding upon the Company.
It is intended that the "present value" of the payments and benefits to
Employee, whether under this Agreement or otherwise, which are includable in the
computation of "parachute payments" shall not, in the aggregate, exceed [2.99]
times the "base amount" (the terms "present value", "parachute payments" and
"base amount" being determined in accordance with Section 280G of the Code).
Accordingly, if Employee receives payments or benefits from the Company prior to
payment of the Termination Compensation which, when added to the Termination
Compensation, would, in the opinion of the Accountants, subject any of the
payments or benefits to Employee to the excise tax imposed by Section 4999 of
the Code, the Termination Compensation shall be reduced by the smallest amount
necessary, in the opinion of the Accountants, to avoid such tax. In addition,
the Company shall have no obligation to make any payment or provide any benefit
to Employee subsequent to payment of the Termination Compensation which, in the
opinion of the Accountants, would subject any of the payments or benefits to
Employee to the excise tax imposed by Section 4999 of the Code. No reduction in
Termination Compensation or release of the Company from any payment or benefit
obligation in reliance upon any aforesaid opinion of the Accountants shall be
permitted unless the Company shall have provided to Employee a copy of any such
opinion that specifically entitles Employee to rely thereon, no later than the
date otherwise required for payment of the Termination Compensation or any such
later payment or benefit.
"Change of Control" as used in this Agreement shall mean the occurrence of any
of the following:
(i) any "person" or "group" (as such terms are used in
Section 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act")), except for an employee stock ownership trust (Or any of the
trustees thereof), becomes a "beneficial owner" (as such term in used in Rule
13d-3 promulgated under the Act), after the date hereof, directly or indirectly,
of securities of the Company representing 30% or more of the combined voting
power of the Company's then outstanding securities, excluding, however, any
acquisition directly from
4
the company and any merger or consolidation which does not constitute a
transaction specified under subparagraph (iv) below.
(ii) during any period of not more than two consecutive
years (not including any period prior to the date of this Agreement),
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for the election, by shareholders of the Company of each new
director was approved or ratified by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the period
or who were new directors approved by such a vote.
(iii) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(iv) the shareholders of the Company approve a merger,
consolidation or exchange of outstanding shares of the Company with any other
company, other than a merger, consolidation or exchange of outstanding shares,
which would result in the combined voting power of the Company's voting
securities outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger, consolidation or exchange of outstanding shares. Notwithstanding
the foregoing, any transaction involving a leveraged buyout or other acquisition
of the Company which would otherwise constitute a Change in Control, in which
Employee participates in the surviving or successor entity (other than solely as
an employee or consultant), shall not constitute a Change in Control.
8. Salary Continuation in Event of Termination: The provisions of
paragraph 10(b) of the "Original Employment Agreement" dated January 31, 2000,
shall be of no further force and effect. The provisions of paragraph 10(c) of
said "Original Employment Agreement" shall continue to remain in full force and
effect and the words "Initial Employment Period" shall be amended to include the
"Renewal Employment Period" pursuant to this Agreement dated as of February 1,
2002.
9. Reaffirmation of Prior Agreement: It is specifically understood and
agreed that except for the modifications set forth in this agreement, the terms
and provisions of the aforementioned "Original Employment Agreement" dated
January 31, 2000, shall remain in full force and effect.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
Approved Unanimously by the
Compensation Committee EMPLOYEE:
on: /s/ ▇▇▇▇ Rhian
---------------------. ------------------------------------
▇▇▇▇ Rhian
Refer to minutes: COMPANY:
CC minutes, 2/06/02, 5:00 PM
---------------------------- AMERICAN MEDICAL ALERT CORP.
mtng. @ MWE.
---------------------------- BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
6
