EXHIBIT 10.38

 

November 6, 2013

 

Melissa A. Waterhouse

PO Box 769

Philmont, New York 12565

 

Dear Melissa,

 

It is our pleasure to formally offer you the position of interim Chief Executive
Officer/Chief Financial Officer of American Bio Medica Corporation (“ABMC” or
the “Company”), reporting directly to the ABMC Board of Directors. This
agreement supersedes all other agreements whether written or verbal and may not
be amended except by a writing signed by you and the Board of Directors. Your
position will be primarily located at our New York corporate facility although
overnight travel may be required from time to time. You will perform all duties
as are generally associated with the position of Chief Executive Officer/Chief
Financial Officer, as directed by the Board of Directors. Below, we have
outlined the major terms and conditions applicable to your position.

 

Term

 

Your employment with ABMC will be for a term of one year unless sooner
terminated for cause, beginning on the date set forth above and automatically
renewed for successive one-year terms unless either side gives written notice of
intent not to renew at least sixty (60) days prior to the end of any one-year
term. If AMBC terminates your employment for cause, this agreement shall be
terminated and you will be entitled to no severance and no further compensation
or benefits from ABMC, other than payment of salary and benefits up to and
including the date of termination.

 

Compensation

 

Effective November 4, 2013, your base salary will be $11,667 per month, which is
equivalent to $140,000 on an annualized basis. You will be eligible for your
first performance review by the Board of Directors in November 2014.

 

All costs related to health insurance (including but not limited to dental, eye,
etc. and including family coverage if you so require) shall continue to be borne
100% by the Company. Please notify Human Resources if you wish to receive this
benefit.

 

You shall participate in any Management Bonus Program that may be approved by
the Board of Directors in the future.

 

Benefits

·20 vacation days

·Usual corporate holidays

·2 personal days

·401 (k)

 

 

 

 

Severance

 

In the unlikely event that ABMC elects to terminate your employment for anything
other than cause, you will receive severance pay equal to twelve (12) months of
your current base salary at the time of separation, with continuation of all
health benefits during the twelve-month period at ABMC’s expense. Cause shall be
defined as (1) death, (2) commission of a felony (3) acts of dishonesty, fraud
or malfeasance in connection with your service on behalf of the Company, (4)
gross dereliction of duty willful failure to carry out any lawful directive of
the Board of Directors, or material violations of Company policies which
continue after Company has provided you with written notice thereof and a period
of thirty (30) days to cure such action or misconduct or (5) disability of a
period of more than six (6) months). The severance payment will be made under
the current pay cycle, each pay period, during the twelve (12) months, subject
to all customary withholdings.

 

Additionally, you may resign your position and elect to exercise this severance
provision at your option under the following circumstances:

 

(1)If you are required to relocate by the Company or its Board of Directors more
than 50 miles from the Company’s Kinderhook facility as a condition of continued
employment

(2)A substantial change in responsibilities normally assumed by Chief Executive
Office/Chief Compliance Officer at the direction of the Company or its Board of
Directors (i.e. demotion)

(3)You are asked to commit or conceal the commitment of any illegal act by any
officer or member of the board of directors of the Company.

 

Change in Control

 

If there is a Change in Control (defined below) of ABMC, you may elect to resign
your position and to receive a lump sum severance payment equal to two (2) times
your annual base salary (“CIC Payment”). If you elect to resign, ABMC will pay
you the CIC Payment within thirty (30) days after you make your election, which
election must be in writing and received by ABMC’s Board of Directors within ten
(10) days after a Change in Control. In the event you continue employment with
ABMC or any successor to ABMC following a Change in Control or fail to make an
election within ten (10) days after a Change in Control, you will not be
entitled to receive the CIC Payment.

 

Change in Control is defined as follows:

 

(i)           the approval by shareholders of ABMC of a merger or consolidation
of ABMC with any other corporation, other than a merger or consolidation which
would result in the voting securities of ABMC outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
ABMC or such surviving entity outstanding immediately after such merger or
consolidation; or

 

(ii)           the approval by the shareholders of ABMC of a plan of complete
liquidation of ABMC or an agreement for the sale or disposition by ABMC of all
or substantially all of ABMC’s assets.

 

 

 

 

Restrictive Covenants

 

Company Handbook/Compliance Certification

 

You are aware that it is your responsibility to read the ABMC Employee Handbook
thoroughly and comply with the policies contained in the Handbook. You
understand that the policies, benefits and information contained in the Handbook
are subject to change and that revisions to the Handbook may be made. Any such
changes will be communicated through official written notices and you hereby
acknowledge that any such revisions may supercede, modify or eliminate existing
policies. Only a majority of the Executive Officers, or a majority of the Board
of Directors may adopt revisions to the policies contained in the Handbook. In
no circumstance may a change to the employee handbook reduce the salary,
benefits or other conditions outlined in this employment agreement.

 

You agree that in addition to any covenants included in this Employment Letter,
you will sign a Compliance Certification simultaneously with the signing of this
Employment Letter. If a conflicting covenant exists between the Employment
Letter and the Compliance Certification and/or the Company Handbook, the
Employment Letter shall be the ruling document.

 

Non-Solicitation

 

During the twelve (12) months immediately following your termination from
employment with ABMC for any reason, you agree that:

 

(a)You will not, directly or indirectly, solicit in any manner or capacity
whatsoever, including by way of illustration, but not limitation, call upon,
mail or e-mail notices to, or make telephone calls to, any Customer (defined
below) or Customer Prospect (defined below) of ABMC, for the purpose of selling
any Covered Services (defined below) or engaging in any business which directly
or indirectly competes with ABMC.

 

(b)You will not solicit, endeavor to entice away from ABMC, or otherwise
interfere with the relationship of ABMC with any person who is employed (or, but
for any violation of this agreement, would have been employed) by or otherwise
engaged to perform services for ABMC, whether for your own account or for the
account of any other person or entity.

 

(c)You will not, directly or indirectly, solicit in any manner or capacity
whatsoever, including by way of illustration, but not limitation, call upon,
mail, or e-mail notices to, or make telephone call to, any supplier or vendor of
ABMC for the purpose of engaging in any business which directly or indirectly
competes with ABMC.

 

Confidentiality

 

You agree not to disclose any Confidential Information (defined below) and you
promise to take all reasonable precautions to prevent its unauthorized
dissemination, both at all times during your employment with ABMC and after
termination of your employment for any reason. You agree to limit the disclosure
of any Confidential Information to only those employees and agents of ABMC who
have a need to know the information and who have similarly agreed to keep such
information confidential. Upon termination of your employment or upon request,
you will deliver to ABMC all documents and electronic files containing
Confidential Information and any personal property owned by ABMC.

 

You further agree not to use any Confidential Information for your own benefit
or for the benefit of anyone other than ABMC. You acknowledge that all
Confidential Information is and remains the property of ABMC and that no license
or rights in the Confidential Information has been or is granted to you.

 

 

 

 

“Confidential Information" means and includes all information not previously
known by you prior to your employment with ABMC relating to marketing,
advertising, public relations, development, services, trade secrets, trade
"know-how," business plans, Customer (as defined below) and Customer Prospect
(as defined below) lists, distributor lists, Customers and Customer Prospects
information, distributor information, financial data, personnel data, employee
compensation and benefits information, new personnel acquisition plans, details
of contracts, pricing policies, operational methods, marketing plans or
strategies, service development techniques or plans, business acquisition or
investment plans, or other confidential and proprietary information related to
the business or affairs of ABMC and/or its Customers or Customer Prospects.

 

The term "Customer" means any person or entity for which ABMC performed any
Covered Services during the one (1) year period immediately preceding the
termination of your employment with ABMC for any reason whatsoever.

 

"Customer Prospect" means any person or entity to which ABMC made a new business
presentation or proposal, whether formal or informal related to Covered Services
during the one (1) year period immediately preceding the termination of your
employment with ABMC for any reason whatsoever.

 

“Covered Services” means any services or products of whatever kind or character
offered or provided by ABMC to any person or entity.

 

Enforcement

 

If any provision of the covenants in this agreement shall be held invalid or
unenforceable, the remainder nevertheless shall remain in full force and effect.
If any provision is held invalid or unenforceable with respect to particular
circumstances, it nevertheless shall remain in full force and effect in all
other circumstances.

 

If, in connection with any action taken by ABMC to enforce the provisions of the
covenants of this agreement, a court shall hold that all or any portion of the
restrictions contained therein are unreasonable under the circumstances then
existing so as to render such covenants invalid or unenforceable, the parties
agree that any court of competent jurisdiction may reform such unreasonable
restrictions to the extent necessary to make such restrictions reasonable under
the circumstances then existing so as to render such restrictions both valid and
enforceable.

 

You acknowledge and agree that all of the covenants contained in this agreement
are necessary for the protection of ABMC's valuable and legitimate business
interests and are reasonable in scope and content. Accordingly, you acknowledge
and agree that if you violate any of the provisions of this agreement ABMC shall
sustain irreparable harm and, therefore, in addition to the other remedies which
ABMC may have under this agreement or otherwise, ABMC will be entitled to
specific performance, injunctive, and other equitable relief.

 

You agree to indemnify, save and hold harmless ABMC from and against any and all
claims, damages, losses, costs and expenses (including reasonable attorneys'
fees) incurred by ABMC in any action in which a court enforces the terms of the
covenants of this agreement.

 

 

 

 

Other Employment Information

 

In making this offer of continued employment, ABMC has relied on your
representations that: (a) you are not currently a party to any contract of
employment that might impede your ability to accept this offer or to perform the
services completed thereby; and (b) that you are not subject to any
non-competition arrangement or other restrictive covenants that might restrict
your employment at ABMC as contemplated by this offer.

 

Exclusive Service

 

You will perform services exclusively for ABMC and you will not perform services
for any other persons or entities related to or conducting business with the
Company for personal profit during the term of this agreement without the
written agreement of the Board of Directors.

 

Miscellaneous

 

This writing represents the entire agreement with respect to your employment and
any prior agreements or understandings, written or oral, are merged herein. This
agreement shall be governed by the laws of the State of New York. ABMC will not
be deemed to have waived any provision of this agreement except by a signed
writing. This agreement may not be amended, except by a signed writing. Notices
given pursuant to this Agreement shall be in writing and delivered personally or
by nationally recognized overnight courier in the case of ABMC to its Kinderhook
facility to the attention of the Compensation Committee Chairman of the Board of
Directors and in your case to your home address as set forth in ABMC’s personnel
file.

 

Melissa, we are enthusiastic about your appointment as Chief Executive
Officer/Chief Financial Officer, and our expectation is that you will continue
to make a tremendous contribution to the long-term success of ABMC.

 

Sincerely,

 

/S/ Jean Neff   Jean Neff (Compensation Committee Chair)   By order of the
American Bio Medica Corporation Board of Directors   Accepted this 6th Day of
November, 2013:       /S/ Melissa A. Waterhouse   Melissa A. Waterhouse