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Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of
December 13, 2006 between AMERICAN MEDICAL ALERT CORP., a New York
corporation (the "Company"), with offices located at 3265 Lawson
Boulevard, Oceanside, New York 11572 and HOWARD M. SIEGEL, an
individual having an address at 131 Montauk Highway, West Hampton,
New York 11977 ("Siegel").
WITNESSETH :
WHEREAS , the Company desires to
retain the services of Siegel upon the terms and conditions stated
herein; and
WHEREAS , Siegel 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; Location . The Company
hereby employs Siegel for the period beginning as of January 1,
2007 and ending December 31, 2009, unless earlier terminated
pursuant hereto (the "Employment Period"). The Company and Siegel
agree that Siegel may provide the services described in Section 2
below either remotely (e.g., offsite) or at the Company's current
location in Oceanside, Long Island; provided, however, that if the
Company elects to vacate its Oceanside facility, it will give
Siegel 6 months notice prior to the expiration of the existing
lease currently in force, and will arrange for a physical office
for Employee to render services in Nassau or Suffolk County
together with secretarial access.
2. Duties; Authority . During the
Employment Period, subject to the authority of the Board of
Directors of the Company (the "Board"), Siegel shall be employed as
the Company's Senior Advisor. Siegel will render advisory or
consultative services related to the Company’s strategic
position, plans, prospects and objectives. Such services shall be
rendered based upon discussions and input between Siegel on the one
hand, and the Board and/or senior management of the Company on the
other hand, and may include, without limitation, traveling,
attendance at meetings or participation in conference calls, all as
directed by the Board or senior management. Siegel shall have no
authority to enter into any contracts or to otherwise bind the
Company, except as expressly agreed to between Siegel on the one
hand, and the Board and/or the Chief Executive Officer of the
Company on the other hand.
2A. Chairman of
the Board Position . The Company recognizes that it is the
intent and spirit of this Agreement that Siegel shall continue to
serve as Chairman of the Board. Notwithstanding the foregoing,
Siegel recognizes that neither the Board, nor any committee
thereof, including the Nominating Committee (collectively, the
"Committees"), nor any officer or agent of the Company, may legally
commit, agree, recommend or support this action due to, among other
matters, principles of corporate or common law, fiduciary
obligations, the applicability of current or future legislation,
changes in the nature of the Company's business, its management,
Board or Committee composition or otherwise. Therefore, although it
is recognized that the Company, acting through its Board and its
Committees, may consistent with its fiduciary and other obligations
and as further set forth above, strongly consider nominating Siegel
to the Company's Board at the annual meeting of the Company's
shareholders, Siegel recognizes and acknowledges, and he has sought
independent counsel for this and the other matters set forth in
this Agreement, that there shall be no liability to the Company,
the Board, its members, the Committees, their members, advisors or
other agents of the Company, should (i) Siegel not be nominated to
the Board or not be elected therefore even if nominated, or (ii)
Siegel not be appointed as the Chairman of the Board, even if
elected to the Board.
3. Hourly Commitment . (a) From January 1,
2007 through December 31, 2007, Siegel will devote his full time
and attention during regular business hours to the business and
affairs of the Company;
(b) From January 1, 2008 through
December 31, 2008, Siegel shall devote 80 hours per month to
the business and affairs of the Company.
(c) From January 1, 2009 through December 31,
2009, Siegel shall devote 70 hours per month to the business and
affairs of the Company.
(d) The foregoing
shall not prevent (i) the purchase, ownership or sale by Siegel 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, during the time
that Siegel is a full time employee, require active participation
of Siegel in the management of the business of such publicly held
companies, does not interfere or conflict with the performance of
Siegel's duties hereunder and does not otherwise violate any of the
provisions of this Agreement, or (ii) Siegel's participation in
philanthropic organizations to the extent that such participation
does not interfere or conflict with the performance of Siegel's
duties hereunder and does not otherwise violate any provision of
this Agreement.
4. Compensation . (a) In consideration of
the duties and services to be performed by Siegel pursuant to
Section 2 hereof, the Company agrees to pay, and Siegel agrees to
accept the amounts set forth below, to be paid on a bi-weekly
basis:
(i) $300,000 per
annum during the period beginning January 1, 2007 and
ending December 31, 2007;
(ii) $225,000 per
annum during the period beginning January 1, 2008 and
ending December 31, 2008, and
(iii) $175,000 per
annum during the period beginning January 1, 2009 and
ending December 31, 2009.
(b) As additional compensation, in each case,
based on the Board's assessment of Siegel's performance in relation
to achievement of the following EBIT (as hereinafter defined)
targets:
(i) with respect to
the fiscal year ending December 31, 2007, the following number of
shares of the Company's common stock based on the Company's EBIT
for such fiscal year ("2007 EBIT") meeting or exceeding the
following targets: 115% of the Company's EBIT for the fiscal year
ending December 31, 2006 ("2006 EBIT") - 6,000 shares, and an
additional 400 shares for each additional one (1%) percent growth
in 2007 EBIT over 2006 EBIT, up to a maximum of 10,000 shares if
2007 EBIT equals to or exceeds 125% if 2006 EBIT;
(ii) with respect to
the fiscal year ending December 31, 2008, the following number of
shares of the Company's common stock based on the Company's EBIT
for such fiscal year ("2008 EBIT") meeting or exceeding the
following targets: 115% of the 2007 EBIT - 4,500 shares, and an
additional 300 shares for each additional one (1%) percent growth
in 2008 EBIT over 2007 EBIT, up to a maximum of 7,500 shares if
2008 EBIT equals to or exceeds 125% of 2007 EBIT; and
(iii) with respect
to the fiscal year ending December 31, 2009, the following number
of shares of the Company's common stock based on the Company's EBIT
for such fiscal year ("2009 EBIT") meeting or exceeding the
following targets: 115% of the Company's 2008 EBIT - 3,600 shares,
and an additional 240 shares for each additional one (1%) percent
growth in 2009 EBIT over 2008 EBIT, up to a maximum of 6,000 shares
if 2009 EBIT equals to or exceeds 125% of 2008 EBIT.
In the event that the minimum EBIT growth
percentage is not met for a particular fiscal year, Siegel will
have the opportunity to earn back the minimum performance bonus
grant for such fiscal year as follows: if the EBIT growth
percentage in the subsequent fiscal year combined with the EBIT
growth percentage of the prior fiscal year meets or exceeds 30%,
then the number of percentage points needed to be added to the
prior fiscal year's EBIT growth percentage to equal up to 15%,
shall be deducted from the subsequent fiscal year EBIT growth
percentage and added to the prior fiscal year EBIT growth
percentage, and Siegel shall be granted such number of shares of
common stock for the prior fiscal year based on such year's
formula, and an additional number of shares of common stock
determined based on the above formula and the reduced subsequent
year EBIT growth percentage.
For the sake of clarity, and as an example only,
if 2006 EBIT equals $2,000,000, 2007 EBIT equals $2,400,000, 2008
EBIT equals $2,500,000 and 2009 EBIT equals $3,200,000, then Siegel
shall be entitled to 8,000 shares for 2007 (2007 EBIT = 120% of
2006 EBIT; 6,000 shares +(5 x 400 shares)), 4,500 shares for 2008
(2008 EBIT is 104% of 2007 EBIT, but, 2009 EBIT = 128% of 2008
EBIT, so 11% of the 2009 EBIT growth is added to the 2008 EBIT
growth, for a total of 115%), and 4,080 shares for 2009 (3,600
shares + (2 x 240 shares) since 2009 EBIT = 117% of 2008 EBIT (128%
- the 11% added to 2008 EBIT)).
For the purposes of this Agreement, "EBIT" shall
mean for each fiscal year, the Company's earnings before deduction
of interest and taxes, as set forth in the consolidated audited
financial statements of the Company, for such fiscal year, and
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.
(c) In addit
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