Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


EMPLOYMENT AGREEMENT dated as of November 11, 2005 between
AMERICAN MEDICAL ALERT CORP., a New York corporation (the “Company”), with
offices located at 3265 Lawson Boulevard, Oceanside, New York 11572 and JACK
RHIAN, an individual having an address at 32 Everdell Drive, East Rockaway New
York, NY 11515 (“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 January 1, 2006 and ending December 31, 2010 (the “Expiration
Date”), 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 President and Chief
Operating Officer.  Employee will perform
such duties and services of an executive nature, commensurate with his position
as the President and Chief Operating 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 bi weekly basis, at the rate of:


 


(i)            $240,000 per annum,
for the period beginning January 1, 2006 and ending December 31, 2006;


 


(ii)           $260,000 per annum,
for the period beginning January 1, 2007 and ending December 31, 2007;


 


(iii)          $280,000 per annum,
for the period beginning January 1, 2008 and ending December 31, 2008;


 


(iv)          $300,000 per annum,
for the period beginning January 1, 2009 and ending December 31, 2009; and


 


(v)           $300,000 per annum,
for the period beginning January 1, 2010 and ending December 31, 2010.


 


(b)   In addition to the base
salary payable pursuant to Section 4(a) above, and subject to subparagraph (c)
below, the Employee shall be eligible for the following stock grants payable in
the Company’s common stock:


 


(i)            Up to 80,000 shares
over the Employment Period based on the Company’s earnings before deduction of
interest and taxes (“EBIT”), as set forth in the Company’s audited financial
statements for the applicable fiscal year, meeting or exceeding the following
targets:


 


For 2006 — 2010


 




	
  EBIT growth over prior fiscal
  year

  	
   

  	
  # of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.0 — 17.49%

  	
   

  	
  8,000 shares

  	
   

  
	
  17.5 — 19.99%

  	
   

  	
  9,000 shares

  	
   

  
	
  20.0 — 22.49%

  	
   

  	
  10,500 shares

  	
   

  
	
  22.5 — 24.99%

  	
   

  	
  13,000 shares

  	
   

  
	
  25.0% - or more

  	
   

  	
  16,000 shares

  	
   

  






 


In the event that the
minimum EBIT growth percentage is not met for a particular fiscal year, Employee
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 15%, shall be deducted from
the subsequent fiscal year EBIT growth percentage and added to the prior fiscal
year EBIT growth percentage, and Employee shall be granted 8,000 shares of
common stock for the prior fiscal year, and an additional number of shares of
common stock determined based on the above formula and the reduced subsequent
year EBIT growth percentage.  For
example, if in 2006, 2007 and 2008 EBIT growth percentage was 14%, 13% and 20%,
respectively, then Employee would be deemed (i) not to have met the fiscal year
2006 EBIT growth percentage,


 


 


2





















 


(ii) to have met the minimum (15%) EBIT growth
percentage (by virtue of deducting 2% percentage points from the fiscal year
2008 EBIT growth percentage and adding those to the 2007 fiscal year EBIT
growth percentage), and (iii) to have met the 17.5 — 19.99% EBIT growth
percentage for fiscal 2008 (20% - 2% =18%), thereby earning a total 17,000
shares of common stock (8,000 shares relating to 2007 and 9,000 shares relating
to 2008); and


 


(ii)           2,000 shares of
common stock per year, for a total of up to 10,000 shares of common stock over the
Employment Period, based on the Company’s total revenues, as set forth in the
Company’s audited financial statements for the applicable fiscal year, meeting
or exceeding an amount equal to at least 115% of the Company’s total revenues
for the prior fiscal year.


 


In addition, to the extent that the number of shares
of common stock earned by Employee pursuant to subparagraphs (b)(i) and (ii)
above exceeds a total of 50,000 shares, the grant of such shares shall be
subject to obtaining shareholder approval. 
If such shareholder approval is not obtained prior to the time
any such shares are earned by Employee, then Employee shall not be entitled to
and shall not be granted any such shares. 
Any shares to be issued under (b)(i) or (b)(ii) shall be issued on April
15 of the year following the fiscal year for which the shares were earned.


 


(iii)          50,000 shares of common
stock, to vest, subject to the condition that Employee is employed by the
Company at the applicable date, as follows: 10,000 shares on December 31, 2006,
10,000 shares on December 31, 2007, 10,000 shares on December 31, 2008, 10,000
shares on December 31, 2009 and 10,000 shares on December 31, 2010; provided,
however, that in the event of a Change in Control (as hereinafter
defined), if the Company or its successor pursuant to such Change in Control,
as applicable, and the Employee either agree to continue this Agreement or to
enter into a new employment agreement mutually acceptable to the Company or its
successor and the Employee in lieu of this Agreement, then any such shares
which remain unvested, shall vest immediately upon the mutual agreement of the
Company or its successor and the Employee to continue this Agreement or to
enter into a new agreement.


 


(c)   The
bonus stock grant provided for in subparagraph (b)(iii) above shall be issued
to the Employee following the negotiation and execution of a stock grant
agreement between the Company and the Employee, and shall only be issued after
an applicable Form S-8 registration statement has been filed by the Company
with the U.S. Securities and Exchange Commission. The bonus stock issued
pursuant to subparagraph (b)(iii) shall be subject to forfeiture to the extent
such shares do not vest.  The bonus stock
grants provided for in subparagraphs (b)(i) and b(ii) above shall also be
subject to such stock grant agreement and shall be issued when earned. All
shares to be issued pursuant to such stock grant agreement shall be issued out
of the Company’s 2005 Stock Incentive Plan (the “Plan”), except that to the
extent the shares to be issued under b(i) and b(ii) exceed 50,000 shares, such
shares shall be issued as a separate individual grant to Employee and not out
of the Plan.  The adjustment features of
Section 10 of the Plan shall also be applied in the stock grant agreement to
the separate grant.


 


 


3





















 


(d)   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 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.


 


(e)   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.


 


(f)    The
Company shall provide Employee with the use of an automobile stipend to cover expenses
of operation such as insurance, gas, oil and repair Company not to exceed [1,000.00] monthly.


 


5.     Vacation.  Employee shall be entitled to three (3) 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(d), 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(d), in each instance through the date of such termination.


 


8.     NonCompetition and
NonDisclosure.  (a) Employee
covenants and agrees that throughout the Employment Period and for a period of
twelve (12) 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 the
Company during the Employment Period; 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 the NASDAQ Stock Market regularly traded in
the Over the Counter market by a member of a national securities association.


 


(b)   Employee covenants and
agrees that, (i) throughout the Employment Period, he will not directly or
indirectly solicit, entice or induce any person (collectively, 


 


4





















 


“Solicit”) who during
the Employment Period is associated with, employed by or is a customer of the
Company or any subsidiary, and (ii) for a period of twenty-four (24) months
following the Employment Period, he will not Solicit any person who is, or
within the last three months of Employee’s employment by the Company was,
associated with, employed by, or was a customer of the Company or any
subsidiary of the Company, in each case, to leave the employ of, terminate his
association or its relationship with the Company, or any subsid­iary of the
Company, or solicit the employment or business 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,
or the Company’s or its subsidiaries’ business, business plans, investments,
customers, strategies, operations, records, financial information, assets,
technology, data and information that reveals the processes, methodologies,
technology or know-how of the Company or its subsidiaries.  Trade secrets and confidential information 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 breach or threaten to breach 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 or threatened 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;
Non-Renewal.


 


(a)   The Company may terminate
this Agreement without liability (other than for the base salary and any other
compensation pro­vided in paragraph 4 accrued to the date of termination) in
the event of (i) a material breach by Employee of the provisions of this
Agreement, which breach shall not have been cured by Employee within one
hundred twenty 


 


5





















 


(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, (iv) the
conviction of Employee 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, or (v) any violation by Employee of the Company’s Code of Business
Conduct and Ethics or the Company’s sexual harassment and other forms of
harassment policy or drug and alcohol abuse policy, as set forth in the Company’s
employee handbook.  The circumstances
specified in (i) through (v) above shall be defined as “Cause.”


 


(b)   Unless the Employee is
terminated for Cause pursuant to Section 9(a) above on or prior to the Expiration
Date, and other than in the circumstances described in Section 9(d), in the
event that the Company does not offer Employee to enter into a written
employment agreement with terms and conditions no less favorable than substantially
the same terms and conditions as this Agreement to begin immediately following
the Expiration Date, Employee shall receive, in consideration of his continuing
obligations under Section 8 hereof, payment of base salary, based on the then
applicable salary level, for a period of twelve (12) months, commencing seven months
following the date of the expiration of the Employment Period.  Employee’s right to any payments pursuant to
this Section 9(b) shall be in addition to, and not in lieu of, any damages for
the termination by the Company of this Agreement prior to the Expiration Date
for any reason other than those set forth in Section 9(a) above.


 


(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 and after he has obtained
actual knowledge of the occurrence of any of the following events:


 


(i)            Failure to elect or
appoint, or re-elect or re-appoint, Employee to, or removal of Employee from,
his office and/or position with the Company as constituted prior to the Change
in Control, except in connection with the termination of Employee’s employment
pursuant to Section 9(a) hereof;


 


(ii)           A reduction in
Employee’s overall compensation (including any reduction in pension or other
benefit programs or perquisites) or a material adverse change in the nature or
scope of the authorities, powers, functions or duties normally attached to
Employee’s position with the Company as referred to in Section 2 hereof;


 


(iii)          A determination by
Employee made in good faith that, as a result of a Change in Control, he is
unable effectively to carry out the authorities, powers, functions or duties
attached to his position with the Company as referred to in Section 2 hereof,
and the situation is not remedied within thirty (30) days after receipt by the
Company of written notice from Employee of such determination;


 


6





















 


(iv)          A breach by the
Company of any provision of this Agreement not covered by clauses (i), (ii) or
(iii) of this Section 9(c), which is not remedied within thirty (30) days after
receipt by the Company of written notice from Employee of such breach;


 


(v)           A change in the
location at which substantially all of Employee’s duties with the Company are
to be performed to a location which is not within a 50-mile radius of the
address of the place where Employee is performing services prior to the date of
the Change in Control; or


 


(vi)          failure by the Company
or its successor pursuant to such Change in Control, as applicable, and the
Employee to either agree to continue this Agreement or to enter into a new
employment agreement mutually acceptable to the Company or its successor and
the Employee in lieu of this Agreement.


 


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).  A termination by Employee under
this paragraph 9(c) shall be deemed a termination by the Company of this
Agreement without Cause.


 


(d)   After a Change in Control
has occurred, in the event that this Agreement is terminated by the Company or
its successor without Cause or by the Employee pursuant to Section 9(c), and if
the Company or its successor and the Employee do not agree  to enter into a new employment agreement in
lieu hereof, then Employee shall be entitled to be paid in a lump sum, within
thirty days of such termination, an amount of cash (to be computed, at the
expense of the Company or its successor, 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 or its successor) 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”).  Any such
payment shall be in full satisfaction of all of the Company’s or its successor’s
obligations hereunder, and upon payment made pursuant to this paragraph 9(d), all
of the Company’s or its successor’s obligations pursuant to this Agreement shall
terminate in full and Employee shall have no further rights hereunder or
recourse against the Company or its successor pursuant to this Agreement; provided,
however, nothing in this paragraph 9(d) shall be interpreted to preclude
the Employee receiving his accrued salary and other compensation payable
pursuant to paragraph 4 through the date of termination.  Such lump sum payment is hereinafter referred
to as the “Termination Compensation.”


 


7





















 


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.


 


(e)   “Change in 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 35%
or more of the combined voting power of the Company’s then outstanding
securities;


 


(ii)           during any twelve
(12) month period during the Employment Period, individuals who at the
beginning of such period constitute the entire Board of Directors cease for any
reason to constitute at least a majority thereof, unless the election, or the
nomination for election, by shareholders of the Company of each new director
was approved or ratified by a vote of at least a majority of the directors then
still in office who were directors at the beginning of the Employment Period or
who were new directors approved by such a vote;


 


(iii)          the consummation of
the sale or disposition by the Company of all or substantially all of the
Company’s assets; or


 


(iv)          the consummation of
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 or the parent company of such surviving
entity) 50% or more of the combined voting power of the voting securities of
the Company or such 


 


8





















 


surviving entity
or the parent company of 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, other than those which would defer to the substantive laws of another
jurisdiction.


 


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 non-delegable.


 


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 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).


 


9





















 


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.


 


10





















 


IN
WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the date
first above writ­ten.


 


	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jack Rhian

  
	
   

  	
  Jack Rhian

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  AMERICAN MEDICAL ALERT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Howard M. Siegel

  
	
   

  	
   

  	
  Name: Howard M. Siegel

  
	
   

  	
   

  	
  Title: Chairman of the
  Board,

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  



 


11