EMPLOYMENT AGREEMENT
Exhibit
10.1
EMPLOYMENT AGREEMENT dated as
of January 1, 2009 between AMERICAN MEDICAL ALERT CORP., a New York corporation
(the “Company”), with offices located at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 and XXXXXXX XXXXX, an individual having an address at 0 Xxxxxxx
Xxxxx, Xxxxxxxx, XX 00000 (“Employee”).
WITNESSETH:
WHEREAS, the Company desires
to continue to retain the services of Employee upon the terms and conditions
stated herein; and
WHEREAS, Employee 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. The
Company hereby employs Employee for the period beginning as of January 1, 2009
and ending December 31, 2011 (the “Expiration Date”), unless earlier terminated
pursuant hereto (the “Employment Period”).
2. Duties. Subject
to the authority of the Board of Directors, the Chief Executive Officer and
President of the Company, Employee shall be employed as the Company’s Chief
Financial Officer and Chief Operating Officer of the Company’s HSMS
division. Employee will perform such duties and services of an
executive nature, commensurate with his position as the Chief Financial Officer
and Chief Operating Officer of the Company’s HSMS division, as may from time to
time be assigned to him by the Board of Directors or Chief Executive Officer and
President of the Company. The Company’s Board of Directors has also authorized
the CEO to appoint the employee as Chief Operating Officer of the Company’s TBCS
division, at the CEO’s discretion, at anytime during the term of this
agreement. The Employee shall report to the Company’s Chief Executive
Officer and President, and as necessary or appropriate, and in any event as
required by law, to the audit committee of the Board of Directors.
3. Full
Time. Employee agrees that he will devote his full time and
attention during regular business hours to the business and affairs of the
Company. The foregoing shall not prevent the purchase, ownership or
sale by Employee 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 require active participation of
Employee in the management of the business of such publicly held companies, does
not interfere or conflict with the performance of Employee’s duties hereunder
and does not otherwise violate any of the provisions of this Agreement, or
Employee’s participation in philanthropic organizations to the extent that such
participation does not interfere or conflict with the performance of Employee’s
duties hereunder and does not otherwise violate any provision of this
Agreement.
4. Compensation. In
consideration of the duties and services to be performed by Employee hereunder,
the Company agrees to pay, and 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:
(i) $215,000
per annum, for the period beginning January 1, 2009 and ending December 31,
2009;
(ii) $232,500
per annum, for the period beginning January 1, 2010 and ending December 31,
2010; and
(iii) $250,000
per annum, for the period beginning January 1, 2011 and ending December 31,
2011.
(b) In
addition to the base salary payable pursuant to Section 4(a) above, and subject
to subparagraph (c) below, the Employee shall be eligible for the following
stock grant payable in the Company’s common stock:
21,500
shares of common stock, to vest, subject to the condition that Employee is
employed by the Company at the applicable date, as follows: 6,500 shares on
December 31, 2009, 7,000 shares on December 31, 2010 and 8,000 shares on
December 31, 2011; provided, however, that in the
event of a Change in Control (as hereinafter defined), if the Company or its
successor pursuant to such Change in Control, as applicable, and the Employee,
either agree to continue this Agreement or to enter into a new employment
agreement mutually acceptable to the Company or its successor and the Employee
in lieu of this Agreement, then any such shares which remain unvested, shall
vest immediately upon the mutual agreement of the Company or its successor and
the Employee to continue this Agreement or to enter into a new
agreement.
(c) The
bonus stock grant provided for in subparagraph (b) above shall be issued to the
Employee following the negotiation and execution of a stock grant agreement
between the Company and the Employee. The bonus stock issued pursuant to
subparagraph (b) shall be subject to forfeiture to the extent such shares do not
vest. All shares to be issued pursuant to such stock grant agreement
shall be issued out of the Company’s 2005 Stock Incentive Plan.
(d) The
Employee shall be eligible for additional cash or equity bonus payments which
may be awarded by the Board of Directors of the Company in its sole
discretion.
(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
Employee pursuant to any plan or policy of the Company relating to such
benefits, which additional benefits shall be made available to Employee on the
same basis as they are generally made available to other executive officers of
the Company. Such compensation shall be in addition to any options
which may be granted under any stock option plan of the Company.
(f) The
Company shall reimburse Employee 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.
(g) The
Company shall provide Employee with a monthly automobile stipend in the amount
of $950.00.
5. Vacation. Employee
shall be entitled to three (3) weeks vacation each fiscal year, to be taken at
such time as is mutually convenient to the Company and Employee.
6. Death. In
the event of the death of Employee during the Employment Period, this Agreement
and the employment of Employee hereunder shall terminate on the date of the
death of Employee. The estate of Employee (or such person(s) as
Employee shall designate in writing) 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 Employee 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 the date of death of Employee.
7. Disability. In
the event that Employee 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 more than 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, Employee 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 through the date of such
termination.
8. Non-Competition,
Non-Solicitation and Non-Disclosure. (a) Employee 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 during the
Employment Period; provided, however, that
Employee 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, the NASDAQ Stock Market or regularly traded in the
Over the Counter market by a member of a national securities
association.
(b) Employee
covenants and agrees that, (i) throughout the Employment Period, he will not
directly or indirectly solicit, entice or induce any person (collectively,
“Solicit”) who during the Employment Period is associated with, employed by or
is a customer of the Company or any subsidiary, and (ii) for a period of twelve
(12) months following the Employment Period, he will not Solicit any person who
is, or within the last three months of Employee’s employment by the Company was,
associated with, employed by, or was a customer of the Company or any subsidiary
of the Company, in each case, to leave the employ of, terminate his association
or its relationship with the Company, or any subsidiary of the Company, or
solicit the employment or business of any such person on his own behalf or on
behalf of any other business enterprise.
(c) Employee
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,
or the Company’s or its subsidiaries’ business, business plans, investments,
customers, strategies, operations, records, financial information, assets,
technology, data and information that reveals the processes, methodologies,
technology or know-how of the Company or its subsidiaries. Trade
secrets and confidential information 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 reasonable, and as so
amended shall be fully enforceable.
(e) In
the event that Employee shall breach or threaten to breach any provision of this
Agreement (including but not limited to the provisions of this paragraph 8),
then Employee 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, Employee
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
Employee. Employee further agrees that the Company will not have an
adequate remedy at law in the event of any breach or threatened breach by
Employee hereunder and that the Company will suffer irreparable damage and
injury if Employee breaches any of the provisions of this
Agreement.
9. Termination;
Non-Renewal.
(a) The
Company may terminate this Agreement without liability (other than for the base
salary and any other compensation provided in paragraph 4 accrued to the
date of termination) in the event of (i) a material breach by Employee of the
provisions of this Agreement, which breach shall not have been cured by Employee
within one hundred twenty (120) days following notice thereof by the Company to
Employee, (ii) the commission of gross negligence or bad faith by Employee in
the course of his employment hereunder, which commission has a material adverse
effect on the Company, (iii) the commission by Employee of a criminal act of
fraud, theft or dishonesty causing material damages to the Company or any of its
subsidiaries, (iv) the conviction of Employee 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 (v) any violation by Employee 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. The circumstances specified in (i)
through (v) above shall be defined as “Cause.”
(b) The
Company may, outside of the circumstances describer in 9(d) below, terminate the
Agreement without Cause. In such case, the Employee shall be entitled to the
compensation payable under Section 4 hereof, as if the Agreement had not been
terminated (the “Termination Without Cause Compensation”). In addition, unless
the Employee is terminated for Cause pursuant to Section 9(a) above on or prior
to the Expiration Date, and other than in the circumstances described in Section
9(d), in the event that the Company does not offer Employee to enter into a
written employment agreement with terms and conditions no less favorable than
substantially the same terms and conditions as this Agreement to begin
immediately following the Expiration Date, Employee shall receive, in
consideration of his continuing obligations under Section 8 hereof, payment of
base salary, based on the then applicable salary level, for a period of twelve
(12) months (the “Non Renewal Payment”), commencing seven months following the
date of the expiration of the Employment Period. Employee’s right to
the Non-Renewal Payment pursuant to this Section 9(b) shall be in addition to,
and not in lieu of, the Termination Without Cause Compensation in the event of
the termination by the Company of this Agreement without Cause prior to the
Expiration Date.
(c) After
a Change in Control (as hereinafter defined) has occurred, Employee may
terminate his employment upon thirty (30) days’ written notice to the Company
within one hundred and eighty (180) days following such a Change in Control and
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 9(a) hereof;
(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
hereof;
(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 hereof, and the situation is not remedied within thirty (30) 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 this Section 9(c), which is not remedied within thirty
(30) 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 or its successor pursuant to such Change in Control, as
applicable, and the Employee to either agree to continue this Agreement or to
enter into a new employment agreement mutually acceptable to the Company or its
successor and the Employee in lieu of this Agreement.
An
election by Employee to terminate his employment under the provisions of this
paragraph 9(c) 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. Employee’s right to
terminate his employment pursuant to this paragraph 9(c) 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 paragraph 7 of
this Agreement. Employee’s continued employment with the Company for
any period of time less than one hundred and eighty (180) days after a Change in
Control shall not be considered a waiver of any right he may have to terminate
his employment pursuant to this paragraph 9(c). A termination by
Employee under this paragraph 9(c) shall be deemed a termination by the Company
of this Agreement without Cause.
(d) After
a Change in Control has occurred, in the event that this Agreement is terminated
by the Company or its successor without Cause (which termination is hereby
authorized) or by the Employee pursuant to Section 9(c), and if the
Company or its successor and the Employee do not agree to enter into
a new employment agreement in lieu hereof, then Employee shall be entitled to be
paid in a lump sum, within thirty days of such termination, an amount of cash
(to be computed, at the expense of the Company or its successor, 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 or its successor)
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”). Any such payment shall be in full satisfaction of all of the
Company’s or its successor’s obligations hereunder, and upon payment made
pursuant to this paragraph 9(d), all of the Company’s or its successor’s
obligations pursuant to this Agreement shall terminate in full and Employee
shall have no further rights hereunder or recourse against the Company or its
successor pursuant to this Agreement; provided, however, nothing in
this paragraph 9(d) shall be interpreted to preclude the Employee receiving his
accrued salary and other compensation payable pursuant to paragraph 4 through
the date of termination. Such lump sum payment is hereinafter
referred to as the “Termination Compensation.”
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.
(e) “Change
in 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), which takes place over not greater than a twelve (12) month period,
after the date hereof, directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the Company’s then
outstanding securities;
(ii) during
any twelve (12) month period during the Employment Period, individuals who at
the beginning of such period constitute the entire Board of Directors cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for 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 Employment Period or
who were new directors approved by such a vote;
(iii) the
consummation of the sale or disposition by the Company, which takes place over
not greater than a twelve (12) month period, of all or substantially all of the
Company’s assets to a non-affiliate (as the term “affiliate” is defined in Rule
405 promulgated under the Securities Act of 1933, as amended); or
(iv) the
consummation of a merger or consolidation of the Company with any other company,
other than a merger or consolidation 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 or the parent company of such
surviving entity) 50% or more of the combined voting power of the voting
securities of the Company or such surviving entity or the parent company of such
surviving entity outstanding immediately after such merger or
consolidation. 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
and other than with respect to securities received in exchange for Employee’s
stock in the Company owned prior to the transaction), shall not constitute a
Change in Control.
10. No
Impediments. Employee 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 with respect to the subject matter hereof
and no amendment, modification or waiver of any provision herein shall be
effective unless in writing, executed by the party charged
therewith. The parties hereto further acknowledge and agree that the
certain Employment Agreement dated as of January 1, 2006 between the Parties
hereto, is hereby terminated in full, shall be null and void and of no further
force or effect, and that all of the parties’ obligations thereunder are hereby
extinguished in full.
13. Governing
Law. This Agreement shall be construed, 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, other than
those which would defer to the substantive laws of another
jurisdiction.
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 substantially
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 provisions 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. Code Section
409A. The Company and the Employee agree to work together in
good faith to consider amendments to this Agreement necessary or appropriate to
avoid imposition of any additional tax or income recognition prior to actual
payment to Employee under Internal Revenue Code Section 409A and any temporary
or final Treasury Regulations and Internal Revenue Service guidance thereunder.
Any provision of this Agreement not in compliance with Section 409A shall be
void and the Company reserves the discretion to revise the Agreement as
necessary, without the consent of the Employee, to comply with Code Section
409A. Further, and notwithstanding anything to the contrary in this
Agreement, any cash severance payments due to Employee pursuant to this
Agreement or otherwise will not be paid during the six-month period following
Employee’s termination of employment unless the Company determines, in its good
faith judgment, that paying such amounts at the time or times indicated above
would not cause Employee to incur an additional tax under Code Section
409A. If the payment of any amounts are delayed as a result of the
previous sentence, any cash severance payments due to Employee pursuant to this
Agreement or otherwise during the first six (6) months after Employee’s
termination will accrue and will become payable in a lump sum payment on the
date six (6) months and one (1) day following the date of Employee’s
termination. Thereafter, payments will resume in accordance with the
applicable schedule set forth in this Agreement.
20. Counterparts;
Facsimile. This Agreement may be executed in one or more
counterparts and delivered by facsimile, each of which shall constitute an
original, and which when taken together, shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first
above written.
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EMPLOYEE:
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/s/ Xxxxxxx Xxxxx
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Xxxxxxx
Xxxxx
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COMPANY:
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By:
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/s/ Xxxx Rhian
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Name: Xxxx
Rhian
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Title: President
and Chief Executive Officer
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