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Exhibit 10.18
EMPLOYMENT AGREEMENT BETWEEN
AMERICAN MEDICAL TECHNOLOGIES, INC. AND JUDD D
HOFFMAN
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made effective
as of January 1, 2007 ("Effective Date"), is entered into by and
between American Medical Technologies, Inc., a Texas corporation
(the "Company") and Judd D Hoffman (the "Executive"), collectively
referred to herein as the "parties."
WHEREAS, the Company wishes to employ the Executive to serve as
its Chief Executive Officer and President to perform lawful duties
on behalf of the Company.
NOW, THEREFORE, for and in consideration of the mutual promises
and conditions made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows.
ARTICLE I
EMPLOYMENT AND TERM OF EMPLOYMENT
1.1.
Employment and Term. The Company hereby employs
Executive to render full-time services to the Company, subject to
Section 2.2 of this Agreement, and except during vacation
periods and reasonable periods of absence due to sickness, personal
injury or other disability, or family medical leave to the extent
required by applicable law, upon the terms and conditions set forth
below, from the Effective Date of this Agreement until the
employment relationship is terminated in accordance with the
provisions of this Agreement. This Agreement is for a term of
three (3) years from the Effective Date, that is, concluding on
December 31, 2009 (the "Stated Term"), unless renewed or terminated
earlier as provided for herein (the "Employment Term").
1.2
Renewal. This Agreement will be automatically renewed
for an additional one (1) year period (without any action by either
party) at the end of the Stated Term, that is, commencing on
January 1, 2010, and on each anniversary thereof ("Renewal
Period"), unless one party gives to the other written notice ninety
(90) days in advance of the beginning of any of the Renewal Periods
that this Agreement is to be terminated, subject to the terms of
Article IV of this Agreement.
1.3.
Acceptance. Executive hereby accepts employment
with the Company and agrees to devote his full-time attention and
best efforts to rendering the services described below. The
Executive shall accept and follow the reasonable and lawful
direction and authority of the Company’s Board of Directors
("Board"), in the performance of his duties, and shall comply with
all reasonable and lawful existing and future regulations
applicable to senior management level employees of the Company and
to the Company’s business.
1.4.
Termination of Prior Agreements. Upon execution of
this Agreement, all prior employment and/or consultant agreements
between Executive and the Company or its subsidiaries shall be
deemed terminated and there shall be no right to severance or other
related benefits thereunder; provided, however, that the foregoing
will not apply to any obligation of the Company or any of its
subsidiaries, if any, to indemnify Executive against any losses,
costs, damages or expenses.
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ARTICLE II
DUTIES OF EMPLOYEE
2.1. General
Duties. Executive shall serve as Chief Executive Officer and
President. In such capacity, Executive shall do and perform
all lawful services, acts, or other things necessary or advisable
to manage and conduct the worldwide direction of the Company,
including, but not limited to, the supervision, direction and
control of the work force and other employees of the Company,
subject to the lawful policies and direction of the Board. To
the extent consistent with the Company’s Articles of
Incorporation, as amended ("Articles") and Bylaws, as amended
("Bylaws"), Executive shall have all powers, duties and
responsibilities necessary to carry out his duties, and such other
powers and duties as the Board may reasonably and lawfully
prescribe consistent with the Company’s Articles and
Bylaws.
2.2. Exclusive
Services. It is understood and agreed that
Executive may not engage in any other business activity during the
Employment Term, whether or not for profit or other remuneration,
without the prior written consent of the Company; provided ,
however , that the Executive may (i) manage personal and
family investments (ii) engage in charitable, philanthropic,
educational, religious, civic and similar types of activities to
the extent that such activities do not in the view of the Company
interfere with the business of the Company or any affiliate or
subsidiary of the Company, or the performance of the
Executive’s duties under this Agreement, (iii) subject
to the approval of the Board, serve as a director or as a member of
an advisory board of another business enterprise, and (d) engage in
passive investment in non-competing businesses and participate on
non-profit boards.
2.3. Reporting
Obligations. In connection with the performance
of his duties hereunder, the Executive shall report directly to,
and take direction from, the Board.
ARTICLE III
COMPENSATION AND BENEFITS OF EMPLOYEE
3.1. Annual Base
Salary. The Company shall pay the Executive salary for the
services to be rendered by him during the Employment Term at the
rate of two hundred and ten thousand dollars ($210,000) annually
(prorated for any portion of a year), subject to increases, if any,
as the Board may determine in its sole discretion after periodic
review of the Executive’s performance of his duties hereunder
not less frequently than annually. Notwithstanding the
foregoing, Executive’s annual base salary shall increase as
of the first day of each anniversary year of the Effective Date in
an amount that is no less than five percent (5%), provided,
however, that there shall not be any increase in base salary if at
the anniversary date designated above either party to this
Agreement has issued a notice of termination as described in this
Agreement. Such base salary shall be payable in periodic
installments in accordance with the terms of the Company’s
regular payroll practices in effect from time to time during the
term of this Agreement, but in no event less frequently than once
each month.
3.2.
Bonuses. In addition to the base salary and
other benefits provided to Executive hereunder, Company shall also
pay the following bonus to Executive:
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(a)
The Company agrees to pay to Executive a cash bonus which shall be
calculated as follows: (i) A bonus to be earned when and if the
Company’s net operating profit reaches $500,000 for the
calendar year 2007. The bonus to be paid shall be 15% of the
$500,000 together with 10% of any net operating profit above this
$500,000 amount. Upon the Company’s reaching or
exceeding this goal of operating net profit, Employee shall have
the option of accepting payment of the bonus in cash or accepting
250,000 shares of Company common stock at an option price of $0.20
(20/100 Dollars) per share (which the parties agree represents the
market price on the date of this Agreement). For such bonus,
the documentation to be used to determine eligibility shall be the
usual profit and loss and/or balance sheet statements prepared by
the Company in the ordinary course of business. Any bonus
which is earned and due and payable to Executive shall be payable
in one lump sum within thirty (30) days after the issuance of the
10-K annual report following the end of the calendar year 2007,
provided, however, that if Executive is not employed with Company
for all of 2007 but the Company achieves the operating profit
levels identified herein while Executive is employed with the
Company, then the Company shall pay the bonus called for by this
Paragraph 3.2(a) pro rated based upon the number of months the
Executive is employed with the Company during calendar year
2007. All of the foregoing options shall have an
exercise term of no less than five (5) years from the date of each
vesting within which they must be exercised.
3.3.
Expenses. The Company shall pay or reimburse the
Executive for all reasonable, ordinary and necessary business
expenses actually incurred or paid by the Executive in the
performance of Executive’s services under this Agreement in
accordance with the expense reimbursement policies of the Company
in effect from time to time during the Employment Term, no later
than thirty (30) days following Executive’s presentation of
such accurate supporting documents as the Company may require,
provided, however, that any anticipated expense to be incurred by
Executive which exceeds $10,000.00 must first be authorized by the
Board in writing to be eligible for reimbursement.
3.4.
Vacation. The Executive shall be entitled to
three (3) weeks paid vacation for each calendar year (prorated for
any portion of a year, as applicable). Notwithstanding
anything to the contrary in this Agreement, vacation time shall
cease to accrue beyond six (6) weeks at any given time during the
Employment Term, and vacation time shall again accrue up to the
maximum when Executive uses up vacation time to drop the vacation
accrual below the maximum.
3.5. General
Employment Benefits. Except where expressly
provided for herein, the Executive shall be entitled to participate
in, and to receive the benefits under, any pension, health, medical
life, accident and disability insurance plans or programs and any
other employee benefit or fringe benefit plans that the Company
makes available generally to its employees, and any such benefits
and/or levels of benefits available to senior management of the
Company, as the same may be in effect from time to time during the
Employment Term.
3.6. Stock
Options.
(a)
On the Effective Date, Executive is hereby granted options to
purchase one hundred thousand (100,000) shares of common stock of
the Company at 20/100 dollars
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($.20) per share. Executive may sell such
vested shares within twelve (12) months of the Employment Term only
if the Employment Term ends due to a termination by Employer
without cause (Section 4.3 of this Agreement) or by Executive with
good reason (Section 4.6 of this Agreement.)
(b)
On the Effective Date, Executive is hereby granted options to
purchase seven-hundred and fifty thousand (750,000) shares of
common stock of the Company at the 20/100 dollars ($.20) per
share. One third of such options shall vest on the last day
of the first, second and third years of the Employment Term
resulting in one hundred percent (100%) vesting on the end of the
third year of the Employment Term, that is, on December 31,
2009.
(c)
All of the foregoing options shall have a term of no less
than five (5) years from the date of each vesting within which they
must be exercised.
3.7.
Location; Travel . In connection with his employment
during the Employment Term, unless otherwise agreed by the
Executive in writing, the principal place where Executive shall
office and provide services to the Company shall be within a ten
mile radius of Executive’s principal residence, which is
currently Redondo Beach, California ("Office Area").
Executive will undertake business travel on behalf of the Company,
the authorized expenses of which shall be paid by the Company
pursuant to Section 3.3 of this Agreement.
ARTICLE IV
TERMINATION OF EMPLOYMENT
4.1.
Termination. The Employment Term may be terminated
earlier as provided for in this Article IV, or extended as set
forth herein. In the event of any termination, in addition to
any other obligations of Company set forth below (e.g., Severance
Benefits), Company shall pay Executive (or the designated
beneficiary as provided in Section 6.8 below, or the estate or
personal representative of Executive ): (a) any accrued but unpaid
salary, accrued but unused vacation time, un-reimbursed expenses
which otherwise would be reimbursed in the normal course and vested
benefits under any of the Company’s benefit plans in which
the Executive and/or his dependents or beneficiaries are
participants or otherwise eligible for such benefits; (b) the bonus
identified in Paragraph 3.2 which has been previously declared but
not yet paid, according to the terms stated therein; and (c) any
other amounts due to Executive pursuant to this Article IV.
4.2.
Termination by Company for Cause. The Company
reserves the right to terminate the Employment Term for cause upon:
(a) Executive’s willful failure or refusal to perform his
duties with the Company (other than such failure resulting from his
incapacity due to physical or mental illness); (b)
Executive’s engaging in gross misconduct in connection with
Executive’s work for Company; (c) Executive’s breach of
this Agreement, or (d) Executive’s conviction of a felony, or
an act of fraud against the Company or its affiliates;
provided , however , the Company may not terminate
the Executive’s employment for cause unless the Company has
first provided Executive with written notice, specifying the act or
acts alleged to constitute cause, and provided the Executive with a
period of thirty (30) calendar days to cure the failure, unless the
cause is the Executive’s conviction for a crime or his
engaging in an act of fraud or gross misconduct, in which case he
will not be entitled to any cure period, and such notice of
termination will be effective immediately. Upon a termination
for cause, Executive shall not be entitled to
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any Severance Benefits (as defined below) and all
stock options of the Company granted to Executive which have not
vested shall be canceled.
4.3.
Termination by Company Without Cause. Notwithstanding
anything to the contrary in this Agreement, the Company reserves
the right to terminate the Employment Term at any time upon ninety
(90) days’ advance written notice to Executive, without
cause, subject to the express terms and provisions set forth in
Sections 4.5 and 4.6 of this Agreement.
4.4. Voluntary
Termination by Executive. Notwithstanding
anything to the contrary in this Agreement, Executive may terminate
this Agreement at any time upon ninety (90) days’ advance
written notice to the Company, subject to the terms and provisions
below. Except in the case of a termination for "good reason",
as set forth in Section 4.7 of this Agreement, the Company shall
not be obligated to pay any Severance Benefits to Executive if
Executive terminates this Agreement pursuant to this Section 4.4 of
this Agreement.
4.5. Severance
Benefits. If the Employment Term is terminated by
Company "without cause" (as set forth in Section 4.3 of this
Agreement), or Executive terminates his employment for "good
reason" (as set forth in Section 4.6 of this Agreement), Company
shall provide Executive (or the designated beneficiary, as provided
in Section 6.8 below, or the estate or personal representative of
Executive) "Severance Benefits" as follows: (a) an immediate
one-time lump-sum cash payment equal to twelve (12) months of
Executive’s annual base salary as provided for in Section 3.1
of this Agreement, or Executive’s then current rate of
compensation, whichever is greater, less any taxes that must be
withheld; and (b) any portion of any stock options granted by
Company to Executive pursuant to Section 3.6 or otherwise shall
immediately vest and all such options shall be exercisable until
and including ninety (90) days after the termination, provided,
however, that Executive shall not be entitled to receive any of
such Severance Benefits unless he (or his duly designated
representative if he is dead or disabled) shall first have executed
before a notary and delivered to the Company a Release of All
Claims of any kind or character he may have against the Company
(other than claims arising out of the Company’s failure to
comply with the severance terms), and such Release shall have
become effective under applicable law.
4.6.
Termination by Executive for Good Reason. The Executive may
terminate the Employment Term for "good reason" after giving the
Company written notice thereof, if the Company shall have failed to
cure the event or circumstance constituting "good reason" within
ten (10) business days after receiving such notice. Good reason
shall mean the occurrence of any of the following without the
written consent of the Executive: (a) the assignment to the
Executive of duties inconsistent with this Agreement or a change in
his reporting obligations, positions, titles or authority; (b) any
failure by the Company to comply with Article III hereof; (c) the
failure of the Company to comply with and satisfy Section 6.2 of
this Agreement; (d) a Change of Control (as defined in Section 4.7
of this Agreement) or a termination by Employee following the
commencement of any discussion with a third person that ultimately
results in a Change in Control; (e) the relocation of the principal
place where the Executive regularly performs services for the
Company outside of the Office Area; (f) any breach of this
Agreement by the Company; or (g) any misrepresentation by Company
to any government or other felony violation of law. The
Executive’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to
act constituting "good reason" hereunder,
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