EXHIBIT 10(a)
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of January 1, 1997 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 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000
("Employee").
W I T N E S S E T H:
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WHEREAS, the Company desires to obtain the services of Employee upon the
terms and conditions stated herein; and
WHEREAS, Employee desires 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 the date hereof and ending December 31, 1999, unless earlier terminated
pursuant hereto (the "Employment Period").
2. Duties. Subject to the authority of the Board of Directors of the
Company, Employee shall be employed as the Company's Chairman of the Board,
President and Chief Executive Officer. Employee will perform such duties and
services of an executive nature, commensurate with his position as the Chairman
of the Board, President and Chief Executive Officer, as may from time to time be
assigned to him by the Board of Directors.
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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 weekly basis, at the rate of
$200,000, $215,000 and $230,000 per annum, for the first, second and third
years, respectively, of the Employment Period.
(b) As additional compensation, with respect to each fiscal year of
the Company during the Employment Period during which the Company's Pre-Tax
Income (as hereinafter defined) exceeds $2,000,000, an amount equal to a
percentage of the Company's Pre- Tax Income, as follows: (i) 8% of the
Company's Pre-Tax Income between $2,000,000 and 3,000,000, (ii) 9% of the
Company's Pre-Tax Income between $3,000,000 and $4,000,000, and
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(iii) 10% of the Company's Pre-Tax Income in excess of $4,000,000. No
additional compensation shall be paid for any fiscal year in which Pre-Tax
Income is less than $2,000,000.
(c) In lieu of part or all of the additional compensation payable in
cash under paragraph 4(b), Employee may elect to receive, as of December 31
of the year for which Pre- Tax Profits are determined, such number of
shares of the Company's Common Stock as the Board of Directors may
determine has a fair market value equal to such additional compensation. If
the Company's Common Stock is listed on a national securities exchange or
traded on the Over-the- Counter market, the fair market value of a share of
such Common Stock shall be the closing selling price or the mean of the
closing bid and asked prices of the Company's Common Stock quoted on such
exchange, or on the Over-the-Counter market as reported by the National
Association of Securities Dealers Automated Quotation ("NASDAQ") system, or
if the Company's Common Stock is not traded on NASDAQ, then as reported by
the National Quotation Bureau, Incorporated, on the day on which such
election is made, or, if there is no trading or bid or asked price on that
day, the closing selling price or the mean of the closing bid and asked
prices on the nearest trading date before that day and for which such
prices are available, and if the Company's Common Stock is not listed on
such exchange or traded in such market, then the fair market value shall be
determined by an independent appraiser, selected by the Board of Directors,
whose opinion shall be binding on the parties. The Company may require, as
a condition to issuing shares of the Company's Common Stock pursuant to
this paragraph 4(c), that it receive an opinion of its counsel that such
securities may be issued pursuant to an exemption from registration under
the Securities Act of 1933, as amended, and applicable state law. Each
certificate for such securities shall bear a legend as follows:
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"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or applicable state law. The securities may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption from
registration under the Act and applicable state law."
(d) The additional compensation to be paid pursuant to paragraph 4(b)
hereof and/or the shares of the Company's Common Stock, if any, issuable
pursuant to paragraph 4(c) 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 Employee is terminated by the Company other than in
accordance with paragraph 9(a) hereof, Employee shall receive the pro rata
portion of such additional compensation determined by multiplying the
additional 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 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.
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(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 the use of an automobile,
selected by Employee and leased by the Company, with all expenses of
operation, such as insurance, gas, oil and repair, paid for by the Company
and having a cost to the Company of up to $1,250 per month.
(h) For the purposes of this Agreement, "Pre-Tax Income" shall mean
for each fiscal year the net income of the Company and its consolidated
subsidiaries, as set forth in the audited financial statements of the
Company, for such fiscal year 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.
5. Vacation. Employee shall be entitled to four (4) 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), 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
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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), the additional compensation provided by
paragraphs 4(b) and 4(c) and payable in accordance with paragraph 4(d), and the
additional benefits, if any, provided by paragraph 4(e), in each instance
computed up to the date of termination.
8. Non-Competition and Non-Disclosure. (a) Employee covenants and agrees
that, throughout the Employment Period and for a period of eighteen (18) 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 on the date
of termination hereof; 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
or regularly traded in the Over-the-Counter market by a member of a national
securities association.
(b) Employee covenants and agrees that, throughout the Employment
Period and for a period of eighteen (18) months thereafter, he will not
directly or indirectly solicit, entice or induce any person who on the date
of termination of employment of Employee is, or within the last three
months of Employee's 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
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his association with the Company, or any subsidiary of the Company, solicit
the employment 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. Proprietary
processes and procedures shall include, but shall not be limited to, all
information which is known or intended to be known only to 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 violate 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
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agrees that the Company will not have an adequate remedy at law in the
event of any 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. (a) The Company may terminate this Agreement without
liability (other than for the base salary provided in paragraph 4(a) 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 sixty (60) 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 or (iv) Employee 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.
(b) Employee may terminate this Agreement without liability at any
time upon at least one (1) year prior written notice.
(c) After a Change in Control (as hereinafter defined) has occurred,
Employee may terminate his employment at any time upon written notice of
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
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constituted prior to the Change in Control, except in connection with
the termination of Employee's employment pursuant to paragraph 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 paragraph 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, func tions or duties attached to his position
with the Company as referred to in paragraph 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 paragraph 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 to obtain the assumption of, and the
agreement to perform, this Agreement by any successor (pursuant to a
transfer described in paragraph 15).
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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 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 this paragraph 9(c).
(d) After a Change in Control has occurred, if Employee terminates his
employment with the Company pursuant to paragraph 9(c) hereof or if
Employee's employment is terminated by the Company for any reason other
than pursuant to paragraph 9(a) hereof, Employee (i) shall be entitled to
his base salary, the additional compensation determined in accordance with
paragraph 4(b) hereof and/or the shares of the Company's Common Stock, if
any, issuable pursuant to paragraph 4(c) hereof, 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
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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."
(e) 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.
(f) 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
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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 Compensa tion or any such later payment or benefit.
(g) "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;
(ii) a change in "control" of the Company (as the term "control"
is defined in Rule 12b-2 or any successor rule promulgated under the
Act) shall have occurred;
(iii) the majority of the Board of Directors, as such entire
Board of Directors is composed at the date of this Agreement, no
longer serve as directors of the Company, except that there shall not
be counted toward such majority who no longer serve as directors any
director who ceased to serve prior to the date of a Change in Control,
for any reason, or at any other time due to his death, disability or
termination for cause;
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(iv) 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
(v) the shareholders of the Company approve 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) more
than 70% of the combined voting power of the voting securities of the
Company or 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), 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 and no amendment, modification or waiver of
any provision herein shall be effective unless in writing, executed by the party
charged therewith.
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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 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
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
non-delegable.
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
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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 non-business 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
COMPANY:
AMERICAN MEDICAL ALERT CORP.
By:/s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Vice President of Operations
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