EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of August 12, 2003 between AMERICAN
MEDICAL ALERT CORP., a New York corporation (the "Company"), with offices
located at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 and XXXXXX X.
XXXXXX, an individual having an address at 000 Xxxxxxx Xxxxxxx, Xxxx Xxxxxxx,
Xxx Xxxx 00000 ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires 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 the date hereof and ending December 31, 2006, 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.
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:
(i) $300,000 per annum during the period beginning
June 1, 2003 and ending December 31, 2003;
(ii) $315,000 per annum during the period beginning
January 1, 2004 and ending December 31, 2004;
(iii) $330.750 per annum during the period beginning
January 1, 2005 and ending December 21, 2005; and
(iv) $347,288 per annum during the period beginning
January 1, 2006 and ending December 31, 2006.
(b) As additional compensation, with respect to each fiscal
year of the Company during the Employment Period during which the Company's
PreTax Income (as hereinafter defined) exceeds $1,000,000, an amount equal to a
percentage of the Company's PreTax Income, as follows: (i) 5% of the Company's
PreTax Income between $1,000,000 and $2,000,000; (ii) 6% of the Company's PreTax
Income between $2,000,000 and $3,000,000; (iii) 7% of the Company's PreTax
Income between $3,000,000 and $4,000,000; (iv) 8% of the Company's PreTax
Income, between $4,000,000 and $5,000,000; (v) 9% of the Company's PreTax Income
between $5,000,000 and $6,000,000; and (vi) 10% of the Company's PreTax Income
in excess of $6,000,000.
For the sake of clarity, and as an example only, if the
Company's PreTax Income with respect to a particular fiscal year equals to
$2,100,000, then Employee will be entitled to additional compensation pursuant
to the preceding paragraph in an amount equal to $56,000, calculated as follows:
5% of $1,000,000 (the amount of the Company's PreTax Income between $1,000,000
and $2,000,000) plus 6% of $100,000 (the amount of the Company's PreTax Income
between $2,000,000 and $3,000,000), which equals to $50,000 plus $6,000, or a
total of $56,000.
(c) The Employee shall be eligible for bonus payments which
may be awarded by the Board of Directors of the Company in its sole discretion.
(d) The additional compensation to be paid pursuant to
paragraph 4(b) hereof shall be payable and/or issuable, as the case may be,
promptly following the availability of the audited financial statements relating
to the applicable fiscal year of Company. To the extent any such fiscal year is
not entirely included in the Employment Period, because for example 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
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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 the use of a
suitable 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 not to exceed $1,650.00 monthly.
(h) For the purposes of this Agreement, "PreTax Income" shall
mean for each fiscal year the net income before provision for income taxes 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) 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 for a
period of one (1) year following termination due to disability.
8. NonCompetition and NonDisclosure. (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
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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 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 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 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 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
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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 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 upon thirty (30) days' written
notice to the Company within one hundred and eighty (180) days following such a
Change in Control.
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).
(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 in effect at the time of such termination, the additional compensation
determined in accordance with paragraph 4(b) 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 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,
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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 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.
(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.
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 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
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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.
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
--------------------------------------------
Xxxxxx X. Xxxxxx
COMPANY:
AMERICAN MEDICAL ALERT CORP.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
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