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.
1
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:
2
(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
$10,000.00 must first be authorized by the Board in writing to be
eligible for reimbursement.
3.4.
Vacation. The
Executive shall be entitled to three (3) weeks paid vacation for
each calendar year (prorated for any portion of a year, as
applicable). Notwithstanding anything to the contrary in this
Agreement, vacation time shall cease to accrue beyond six (6) weeks
at any given time during the Employment Term, and vacation time
shall again accrue up to the maximum when Executive uses up
vacation time to drop the vacation accrual below the
maximum.
3.5.
General Employment Benefits. Except where expressly provided for
herein, the Executive shall be entitled to participate in, and to
receive the benefits under, any pension, health, medical life,
accident and disability insurance plans or programs and any other
employee benefit or fringe benefit plans that the Company makes
available generally to its employees, and any such benefits and/or
levels of benefits available to senior management of the Company,
as the same may be in effect from time to time during the
Employment Term.
3.6.
Stock Options.
(a)
On the Effective Date, Executive is hereby granted options to
purchase one hundred thousand (100,000) shares of common stock of
the Company at 20/100 dollars
3
($.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
4
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” hereun
