Document:

Exhibit 4

Exhibit 4.1

                Warrant No. 2002-001

Expiration Date: April

23, 2007

 

 

 

NON-TRANSFERABLE

COMMON STOCK PURCHASE WARRANT

 

1.             This is to certify that, for value received, the

registered holder named on the signature page (the “Holder”), is entitled for a

period commencing as of the date of this Agreement and ending on the Expiration

Date, subject to the terms and conditions herein set forth, to purchase from

American Medical Technologies, Inc. (the “Company”) the number of shares of the

Company’s common stock (“Common Stock”) set forth below the Holder’s name on

the signature page hereof at a purchase price of $.40 per share of Common Stock

(the “Purchase Price Per Share”).

 

2(a).        Other than as specified below, this Warrant is

non-transferable and may be exercised in whole or in part only by the Holder by

written certified or registered mail notice to the Company accompanied by the

surrendered Warrant and payment of the purchase price in certified or bank

funds for the number of shares so purchased. 

If this Warrant is exercised in part only, then the Company shall

execute and deliver a new Warrant evidencing the rights of the Holder to

purchase the remaining number of shares purchasable hereunder.

 

(b).          This Warrant may be exercised only by the Holder and may

not be transferred other than by will, laws of descent and distribution, a

qualified domestic relations order, or upon the prior written consent of

Company.  Any attempted assignment,

transfer, pledge or other disposition of this Warrant other than as provided herein,

shall be void and of no effect.

 

3.             Within five business days of receipt of notice of

exercise of this Warrant as above provided, the Company shall cause to be

issued in the name of and delivered to the Holder a certificate or certificates

for the shares of Common Stock so purchased; provided, however, notwithstanding

anything to the contrary in this Warrant, the Holder shall be deemed to be the

owner of all shares of Common Stock for which, and on the last date that, the

Holder gives notice of exercise, surrenders this Warrant, and pays the purchase

price for such shares pursuant to the notice of exercise.  The Company covenants and agrees that all

shares of Common Stock, which may be delivered upon exercise of this Warrant,

will, upon delivery, be fully paid and non-assessable. The Company agrees at

all times to reserve and hold available a sufficient number of authorized

shares of Common Stock to cover the number of shares issuable upon the full

exercise of this Warrant.

 

4(a).        If the Company at any time shall, by subdivision, combination

or reclassification of securities, by merger, by share exchange or otherwise,

change or permit to be changed any of the securities to which purchase rights

under this Warrant exist into the same or a different number of securities of

any class or classes, then this Warrant shall thereafter permit the Holder to

acquire such number and kind of securities and/or other consideration as would

have been issuable as the result of such change as if this Warrant had been exercised

immediately prior to such subdivision, combination, reclassification, merger,

share exchange or other change.  In case

the shares of Common Stock at any time outstanding shall be subdivided into a

greater number of shares, or combined into a lesser number of shares, then each

share of Common Stock purchasable under this Warrant shall be replaced for the

 

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purposes hereof by the number of the

subdivided or consolidated shares, as the case may be, issued in substitution

for each one share of Common Stock then issued and outstanding; and in case at

any time the Company shall issue any additional shares of Common Stock as a

stock dividend, then the shares purchasable under this Warrant shall be increased

in the same ratio as the then outstanding Common Stock was increased by such

stock dividend, and the Purchase Price Per Share correspondingly

decreased.  No fractional shares will be

issued and in lieu thereof the Holder will receive an amount of cash equal to

the closing sale price of the Common Stock as reported by Nasdaq on the last

trading day before the exercise date multiplied by the fractional share to

which the Holder would otherwise be entitled.

 

(b).          The Company will at all times in good faith assist in

carrying out the terms of this Warrant to protect the rights of the Holder

against dilution as provided herein.

 

5.             Neither this Warrant nor the shares issuable upon

exercise of this Warrant have been registered under the Securities Act of 1933,

as amended (the “Act”), or any applicable state “Blue Sky” laws.  By acceptance of this Warrant, the Holder

represents and warrants to the Company that the Holder will not offer,

distribute, sell, transfer or otherwise dispose of the shares received upon exercise

of this Warrant except pursuant to (i) an effective registration statement

under the Act and any applicable Blue Sky laws with respect thereto; (ii) an

opinion, reasonably satisfactory to the Company, addressed to the Company, from

counsel reasonably satisfactory to the Company, that such offering,

distribution, sale, transfer or disposition is exempt from registration under

the Act and any applicable Blue Sky laws; or (iii) a letter from the staff of

the Securities and Exchange Commission (“SEC”) or any state securities

commissioner, as the case may be, to the effect that it will recommend that no

action be taken with respect to such transaction.  The Holder agrees, by acceptance of this Warrant, to execute any

and all documents reasonably deemed necessary by the Company and required by

the regulatory authority of any state in connection with any public offering of

the shares underlying this Warrant.

 

6(a).        The Holder shall have the unlimited right to register the

Holder’s shares of Common Stock as a piggyback registration at no additional

cost to the Holder in connection with any such piggyback registration.  The Company’s obligation to register shares

on behalf of the Holder shall be conditional upon the Company’s receipt from

the Holder in writing, at least three business days prior to the date of such

registration statement filing, of (i) all information reasonably requested by

the Company and necessary under applicable law in connection with the

preparation of such registration statement, and (ii) an undertaking by the

Holder to (a) indemnify the Company and its directors, officers and affiliates

for all claims, damages, liabilities and expenses incurred by them arising out

of or based upon any untrue statement or omission, or alleged untrue statement

or omission, made in such registration statement or prospectus in reliance upon

information furnished to the Company in writing by the Holder specifically for

use therein and (b) temporarily cease making sales of shares registered under

such registration statement upon receipt of written notice from the Company, if

the Company determines, in good faith, that the use of the prospectus included

in such registration statement would require the disclosure of material,

non-public  information which would irreparably

and materially harm the Company  or the

disclosure of which would be reasonably likely (in the good faith determination

of the Company’s Board of Directors) to prevent the Company from consummating a

material transaction, until the receipt of a further notice from the Company

that sales may resume under the registration statement (and the Company

covenants to give prompt written notice to the Holder to allow additional sales

as soon as possible).

 

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(b).          The Company will indemnify the Holder for all claims,

damages, liabilities and expenses incurred by the Holder arising out of or

based upon any untrue statement or omission, or alleged untrue statement or

omission, made in any registration statement or prospectus used in connection

with a registered sale by the Holder hereunder to the extent the statement or

omission does not result from information furnished in writing by the Holder.

 

7.             The Holder of this Warrant shall not be entitled to vote

or receive dividends nor be deemed the owner of Common Stock of the Company for

any purpose, nor shall anything contained herein be construed to confer upon

the Holder of this Warrant, as such, any of the rights of a stockholder of the

Company or any right to vote, give or withhold consent to any corporate action

(whether upon any recapitalization, issue of stock, reclassification of the

stock, consolidation, merger, conveyance or otherwise), receive notice of

meetings, receive dividends or subscription rights, or otherwise, until this

Warrant shall have been validly exercised as provided above.

 

8.             If this Warrant shall be mutilated, lost, stolen or

destroyed, then the Company shall promptly issue a new Warrant of like date,

tenor, and denomination and deliver the same in exchange and substitution for

and upon surrender and cancellation of any mutilated Warrant, or in lieu of any

lost, stolen or destroyed Warrant, upon receipt of an indemnity agreement or

bond reasonably satisfactory to the Company; provided, however, the Company

agrees to use its best efforts to cause the Company’s transfer agent to accept

the Holder’s indemnity agreement without requiring a bond.

 

This Warrant issued this

29th day of April, 2002

 

 

AMERICAN MEDICAL

TECHNOLOGIES, INC.

 

 

	

  By:

  	

  /s/ John E. Vickers III

  
	

  

  	

   

  
	

  John E. Vickers, Interim

  Chief Executive Officer

  

 

 

 

Registered Holder:

Benjamin J. Gallant

 

 

Registered Holder’s Address:

1 Schendel

Portland, Texas 78374

 

Number of Shares:  75,000

 

3Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

                This

Employment Agreement (“Agreement”) is entered into effective as of the 1st day

of June, 2002 (the “Effective Date”), by and between American Medical

Technologies, Inc., a Delaware corporation (“ADT”) and Roger W. Dartt

(“Employee”).

 

                NOW,

THEREFORE, for and in consideration of the mutual covenants and conditions

contained herein, and in consideration of the employment of the Employee, and

further, in consideration of the compensation contained herein, the receipt and

sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.             Term.     ADT hereby agrees to employ Employee for a

term commencing on the Effective Date and ending at 6:00 PM, CST, May 31, 2004,

unless earlier terminated as provided in this Agreement. The term of this

Agreement may only be extended by the mutual written agreement of the parties

hereto.

 

2.             Duties.   Employee shall serve as the President and

Chief Executive Officer of ADT.  He

shall assume such duties as the By Laws of ADT (as in effect as of the

Effective Date) provide or as the Board of Directors of ADT may from time to

time prescribe pursuant to such By Laws. 

The duties of Employee shall be those as are generally consistent with

the duties of a President and Chief Executive Officer of a dental/medical

development, manufacturing and sales company of such size as ADT, including

such positions with and duties for ADT subsidiaries as may be assigned from

time to time.  The responsibilities of

the President and CEO shall include competent executive management, corporate

turnaround ability consistent with the standards of the Turnaround Management

Association and the ability to use reasonable efforts to attract and raise

equity capital on terms acceptable to the company.  Employee agrees to devote substantially all his time, attention,

and best efforts to the performance of his duties hereunder.

 

3.             Compensation.     ADT shall compensate Employee for the

services rendered under this Agreement as follows:

 

a.     Base Salary.    An

annual base salary (“Base Salary”) determined by the Board of Directors or its

compensation committee in its discretion and consistent with its practices for

executives of ADT, but not less than $250,000 per year (less applicable

withholdings), payable in accordance with the customary payroll practices of

ADT for compensation of its executives (currently bi-weekly).  If Employee’s base salary is increased at

any time, it shall not thereafter be decreased during the term of this Agreement,

unless such decrease is the result of a general reduction affecting the base

salaries of substantially all other executives of ADT.

 

b.     Stock Bonus.   150,000

shares of common stock contingent and to be issued upon receipt by ADT of

outside capital investment in the amount of not less than $3.5 million by no

later than December 31, 2002.

 

c.     Cash Bonus.    A cash

bonus of up to 25% of Employee’s Base Salary for the fiscal year ending June

30, 2003, based upon an “Executive Incentive Compensation Program” to be

developed and approved by the compensation committee and the Board of

Directors.

 

1

 

Thereafter, an annual bonus

will be granted for each succeeding July 1 — June 30 fiscal year remaining on

the Term, based upon achieving performance objectives established by the

compensation committee of the Board of Directors of ADT.

 

d.     Stock Options.

 

                (i)  On the

Effective Date, Employee shall be awarded stock options under ADT’s Long-Term

Incentive Plan (“LTIP”) to purchase 250,000 shares of ADT common stock with an

exercise price equal to $0.33 per share on the Effective Date.  These options are intended to be “Incentive

Stock Options”, as defined in the LTIP. 

The options shall vest at the rate of 31,250 shares every three months

after the Effective Date.  In order to

provide for this grant, ADT shall seek approval from its shareholders for an

increase in the shares available for issuance under its LTIP so that a

sufficient number of shares will be available under the LTIP for this

grant.  If the increase is not approved,

the grant of these options will be void. 

In the event of a “Change of Control”, as defined in Section 6 below,

occurring after the receipt of such shareholder approval, all options granted

pursuant to this Section 3(d)(i) shall immediately vest and become exercisable.

 

                (ii)  On the

Effective Date, Employee shall be awarded nonqualified stock options to

purchase 250,000 shares of ADT common stock with an exercise price equal to

$0.33 per share.  The options shall vest

at the rate of 31,250 shares every three months after the Effective Date.  In the event of a “Change of Control”, as

defined in Section 6 below, all options granted pursuant to this Section

3(d)(ii) shall immediately vest and become exercisable.  All of the terms of the LTIP applicable to

“Nonqualified Stock Options” shall apply to these options.  In the event the shareholders approve an

increase in the shares available for issuance under its LTIP so that a

sufficient number of shares will be available under the LTIP for the grant of

options under Section 3(d)(i), then the grant of options under this Section

3(d)(ii) will be void, to the end that Employee will only be able to exercise

options under either Section 3(d)(i) or Section 3(d)(ii), but not both.

 

e.             Performance

Incentives:  The

parties hereto agree that under ADT’s circumstances as of the Effective Date,

Employee is entitled to performance-based incentives.  Due to time constraints and the necessity for the immediate

services of Employee, the parties agree that they will negotiate in good faith

a performance-based incentives plan based on current industry standards for

incentives in the mid-range of those which a person with the qualifications of

Employee would receive from a company in ADT’s position as of the date of this

Agreement and that such a company would grant. 

The incentives may be in the form of stock options, or stock or cash

bonuses, as mutually determined by the parties hereto.  The incentive plan will establish a maximum

award amount part or all of which may be earned by satisfying the following

performance standards:

(1)

Minimum.  The minimum performance to be eligible for

incentives will be primarily based on keeping ADT out of bankruptcy until

adequate capital is obtained, though additional criteria may be appropriate.

(2)

Moderate.  The moderate performance will be primarily

based on factors such as returning ADT to cash flow breakeven, profitability,

increased sales and an increase in the value of ADT’s stock.

(3)

Excellent.  Excellent performance will be primarily

based on obtaining unexpected financial performance given the current overall

circumstances of ADT and returning an annual increase in the value of ADT’s

stock of at least 100%.

 

2

 

(4)

Sale or Merger.  Upon the sale or merger of ADT, Employee

would receive an incentive which will be primarily based on the excess of the

value of the consideration paid to ADT’s shareholders in such sale or merger

over the then-current market capitalization.

 

The terms, amounts and

schedules of payment and issuance of the Cash Bonus and Performance Incentives

described in this Section 3 will be set forth in the “Executive Incentive

Compensation Program” to be developed and approved by the compensation committee

and the Board of Directors by July 31, 2002. 

If by such date after good faith negotiations between the parties to

this Agreement, the Board of Directors has not completed and approved an

Executive Incentive Compensation Program based on current industry standards

for a performance based incentive plan satisfactory to the parties, the parties

will submit the matter to non-binding mediation within the following 21 days by

a mediator jointly selected by the parties. 

If the mid-range of current industry standards has not been agreed to by

the parties at the end of mediation, either party may request binding

arbitration under Section 11 of this Agreement.  The arbitrator shall be empowered to determine a reasonable incentive

plan based on the above criteria and any other criteria which he determines to

be relevant to what the mid-range of current industry standards is in the

market place as of the Effective Date for an employee with Employee’s

qualifications to be hired by a company in the condition of ADT as of the

Effective Date.  The arbitrator’s

decision shall be binding and not subject to appeal, and judgment or specific

performance may be enforced in any court having jurisdiction over the party

against which enforcement is sought. 

The parties agree that the number of shares which will be determined to

be issuable pursuant to the incentives under this Section 3(e) shall not exceed

1,500,000 shares of ADT common stock and that any options granted under this

Section 3(e) shall have an exercise price of $0.33 per share.  The parties acknowledge that the mid-range

of current industry standards for the foregoing incentive plan are

ascertainable from existing information available from executive compensation

specialists and surveys.

 

                The

parties acknowledge and agree that the grants made in this Section 3 are being

made as an inducement essential to Employee’s acceptance of employment with ADT

under the terms of this Agreement.  All

of the grants described in this Section 3 are being made as of the Effective

Date.

 

 

4.             Employee Benefits.

 

                a.     Benefit Plans.  Employee shall be entitled to full

participation on a basis commensurate with his position with ADT, in all plans

of life, accident, medical payment, health and disability insurance,

retirement, pension, perquisites and other employee benefit and pension plans

which generally are made available to executives of ADT or its subsidiaries

(“ADT Benefit Plans”), except for such plans which the Board, in its sole

discretion, shall adopt for select employees to compensate them for special or

extenuating circumstances.

 

                b.     Vacation.  Employee shall be entitled to an annual

vacation leave at full pay as may be provided for by ADT vacation policies

applicable to executives, but in any event such paid vacation shall not be less

than two weeks in the aggregate during the first twelve months and three weeks

thereafter.

 

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5.             Termination and Rights upon

Termination.

 

                a.     Death, Total Disability or Retirement.

 

(i)  This agreement shall automatically terminate

upon the death, total disability, or retirement of Employee.

 

(ii)  Total disability shall be deemed to occur

if, as a result of his incapacity resulting from physical or mental illness or

disease (including alcohol or other substance addiction), which is likely to be

permanent, Employee shall have been unable to perform his duties hereunder for

a period of more than 120 consecutive days during any twelve month period.  The Board of Directors will determine if

Employee’s termination is due to total and permanent disability according to

any long-term disability plan then in effect for executives of ADT, and

otherwise in good faith consistent with generally prevailing practices of

employers of like-size and industry type in the general geographic location.

 

(iii)  Upon termination for Employee’s death, ADT

shall continue to pay Employee’s salary to a legal representative previously

designated in writing by Employee (the “Legal Representative”), or if no such

designation has been made, to Employee’s estate, for a period of the greater of

twelve months or the remaining term of this Agreement in monthly increments.

 

(iv)  Upon termination for Employee’s total

disability, ADT shall continue to pay Employee’s salary to the Legal Representative

(or if no designation has been made, to Employee or Employee’s other legal

representative).

 

(v)  Upon termination for Employee’s retirement

at any time after Employee reaches the age of 67, Employee’s rights to

compensation and participation in ADT Benefit Plans shall end and Employee

shall not be entitled to a severance/separation payment.

 

(vi)  Following any termination pursuant to this

Section 5(a), Employee, Employee’s heirs, administrators, executors or legal

representatives, as applicable, shall have a period of one year from the date

this Agreement is so terminated to exercise any vested options previously

granted to Employee.  All previously

granted Options shall continue to vest during such one-year period in

accordance with the vesting schedule included as part of the grant of the

applicable Options.

 

                b.     Termination for Cause.

 

(i)  ADT may terminate this Agreement at any time

“For Cause” (as defined in the following sentence).  A termination “For Cause” means any of (A) the failure by Employee

to follow the reasonable instructions of the Board of Directors, which failure

is not remedied in a reasonable period of time (not to exceed thirty (30) days)

after receipt of written notice from ADT to Employee of such failure, (B) the

willful commission by Employee of acts that are dishonest, unethical, or

inconsistent with the local normal business standards, (C) the commission by

Employee of a felonious act, (D) intentional wrongful disclosure of

confidential information of ADT, (E) Employee’s engagement in any competitive

activity in violation of Section 9, or (F) Employee’s gross neglect of his

duties, which neglect is not remedied in a reasonable period of time

 

4

 

(not to exceed thirty (30)

days) after receipt of written notice from ADT to Employee of such failure.

 

(ii)  Employee’s right to compensation and

participation in ADT Benefit Plans shall end and Employee shall not be entitled

to a severance/separation payment if ADT terminates this Agreement For Cause.

 

                c.     Termination Without Cause.

 

(i)  ADT may terminate this Agreement at any time

“Without Cause,” upon thirty days written notice to Employee.  This termination of Employee’s employment by

ADT for any reasons other than those specified in Section 5(b)(i) shall be

deemed a termination Without Cause.

 

(ii)  Upon termination Without Cause prior to the

second anniversary date of the Effective Date, Employee shall be entitled to

severance/separation payments for a period of nine months from the date of the

termination, subject to Employee signing a general release of any claims

against ADT, known or unknown.  Such

payments shall be at Employee’s then effective salary rate payable in

accordance with the customary payroll practices of ADT for compensation of its

executives.  Additionally, Employee’s

stock options (other than the performance options) shall become automatically

vested and exercisable as to that number of shares of Common Stock as would have

become vested and exercisable if Employee’s employment continued until the date

nine (9) months following the date of such termination.  Such payments and options are to be in lieu

of and not in addition to any payments or benefits otherwise to be paid or

disbursed over the un-expired term of this Agreement.

 

                d.     Resignation.

 

(i)  Employee may terminate this Agreement at any

time through his resignation upon thirty days written notice to ADT.  Employee’s termination pursuant to this

Section 5(d) shall be deemed Resignation for Good Reason if such resignation

meets the criteria in part (ii) below, otherwise it shall be deemed a Voluntary

Resignation.

 

(ii)  Resignation for Good Reason is defined as

Employee’s resignation that (x) is not in connection with ADT’s Termination for

Cause, (y) is prior to a Change of Control of ADT (as defined below), and (z)

is the occurrence of any of the following events without the Employee’s written

consent:

 

	

  A.

  	

  Any material diminution of

  the Employee’s position, duties and responsibilities;

  
	

   

  	

   

  
	

  B.

  	

  Any reduction in the

  Employee’s base salary, except as permitted in Section 3a;

  
	

   

  	

   

  
	

  C.

  	

  Required relocation of the

  Employee’s principal place of employment more than 75 miles from the

  corporate headquarters of ADT as of the Effective Date for a period of more

  than 120 days in any 365 day period, except for strategic relocation of the

  personnel reporting to Employee or relocation of ADT’s headquarters

  

 

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  D.

  	

  Any material diminution in

  the kind or level of employee benefits to which Employee was entitled

  immediately prior to such reduction, with the result that Employee’s overall

  benefits package is materially reduced, unless such diminution affects the

  kind or level of employee benefits to which substantially all other executives

  of ADT are entitled; or

  
	

   

  	

   

  
	

  E.

  	

  A material breach by ADT

  of any of the provisions of this Agreement.

  

 

 

(iii)  In the event of Employee’s Voluntary

Resignation, Employee’s right to compensation and participation in ADT Benefit

Plans shall end, and Employee shall not be entitled to a severance/separation

payment.

 

(iv)  Upon Employee’s Resignation for Good Reason

prior to the second anniversary date of the Effective Date Employee shall be

entitled to severance/separation payments for a period of nine months from the

date of the termination, subject to Employee signing a general release of any

claims against ADT, known or unknown. 

Such payments shall be at Employee’s then effective salary rate payable

in accordance with the customary payroll practices of ADT for compensation of

its executives.  Additionally,

Employee’s stock options (other than the performance options) shall become

automatically vested and exercisable as to that number of shares of Common

Stock as would have become vested and exercisable if Employee’s employment

continued until the date nine (9) months following the date of such

termination.  Such payments and options

are to be in lieu of and not in addition to any payments or benefits otherwise

to be paid or disbursed over the un-expired term of this Agreement.

 

        e.     Termination Following a Change of Control.  The provisions of Section 6 govern

employee’s rights following a Change of Control of ADT.

 

6.             Change of Control and Rights Upon

Change of Control.

 

                a.     Definition of Change of Control.  For purposes of this Agreement, a Change of

Control of ADT shall be deemed to have taken place if one or more of the

following occurs:

 

(i)  Any person or entity, as that term is used

in Section 13 (d) and 14 (d)(2) of the Securities Exchange Act of 1934 as

amended (the “Exchange Act”), other than (A) a qualified benefit plan of ADT or

an affiliate of ADT; (B) any person who is a stockholder or beneficial owner of

thirty-five percent (35%) or more of ADT’s stock as of the Effective Date (a

“Current Stockholder”); (C) any successor of a Current Stockholder who acquires

his shares by inheritance, devise, trust, or operation of law directly from

such Current Stockholder (a “Successor”); or (D) any person or group of which

Current Stockholders or Successors hold stock representing an interest of

one-third or more of the person’s or group’s total stock, becomes a beneficial

owner (as defined in Rule 13d-3 under the Exchange Act as in effect on the date

hereof), directly or indirectly, of securities of ADT representing thirty-five

percent (35%) or more of the combined voting power of ADT’s then outstanding

securities; provided, however, that in no event shall the acquisition of

beneficial ownership of ADT stock by any person or persons pursuant to the

investment of outside capital contemplated in Section 3(b) be considered a

Change of Control.

 

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(ii)  ADT shall (in a single transaction or a

series of related transactions) purchase assets (other than cash) or engage in

a merger immediately after which securities of ADT (or if ADT shall not have

been the surviving corporation in any such merger, the merged company)

representing less than fifty percent (50%) of the combined voting power of the

then outstanding securities of ADT or the merged company shall be owned by

persons who owned the voting securities of ADT immediately prior to such

transaction.

 

(iii)  ADT and its affiliates shall sell or dispose

of (in a single transaction or series of related transactions) business

operations that generated a majority of the consolidated revenues (determined

on the basis of ADT’s four most recently completed fiscal quarters) of ADT and

its subsidiaries immediately prior thereto.

 

(iv)  The Board of Directors of ADT shall approve

the distribution to ADT’s shareholders of all or substantially all of ADT’s net

assets or shall approve the dissolution of ADT.

 

(v)  Any other transaction or series of

transactions occurring which have substantially the effect of the transactions

specified in any of the preceding clauses in this Section 6.

 

                b.     Rights Upon Change of Control.  Upon a Change of Control, and before any

subsequent resignation by Employee, Employee is required to negotiate in good

faith with the new controlling party for continued employment.  If, following Employee’s good faith

negotiations with the new controlling party, no agreement satisfactory to both

parties can be reached, and Employee shall then resign, Employee shall be

entitled to a Change of Control payment equal to twelve months of salary at his

then effective salary rate, payable in installments in accordance with the

customary payroll practices of ADT for compensation of its executives, subject

to the Employee signing a general release of any claims against ADT, known or

unknown.  For purposes of the foregoing

sentence, a change of control shall not include a change of control resulting

from the investment of outside capital in the amount of $3.5 million following

the Effective Date.  Such payments and

benefits are to be in lieu of and not in addition to any payments or benefits

otherwise to be paid or disbursed over the un-expired term of this

Agreement.  Further, upon Employee’s

termination for any reason other than For Cause, death, permanent disability or

retirement following a Change of Control, any stock options previously granted

to Employee that, by their terms, did not fully vest upon such Change of

Control, shall be fully vested.

 

7.             Other Benefits.    The provisions of Sections 5 and 6 shall not

affect Employee’s participation in, or termination of distributions and vested

rights under, any ADT Benefit Plans to which Employee is entitled pursuant to

the terms of such plan, except as otherwise expressly provided in Sections 5

and 6.

 

8.             Non-Disclosure Agreement.

 

                a.     In connection with his employment with ADT, Employee will have

access to and become acquainted with various trade secrets and other

proprietary and confidential information of ADT.  “Trade secrets and other proprietary and confidential

information” include but are not limited to the following:  (1) business, pricing, marketing and cost

data; (2) technical information; (3) customer and supplier lists; (4) contents

of contracts and agreements with customers; and (5) customer requirements and

specifications.  Employee acknowledges

that the trade secrets and other proprietary and confidential information have

been developed and acquired by ADT through

 

7

 

expenditures of substantial time, effort and

money and provide value to ADT with respect to competitors who do not know or

use such trade secrets and other proprietary and confidential information.

 

                b.     In consideration for access to trade secrets and other

proprietary and confidential information, Employee agrees that during the

Non-competition Period (as defined in Section 9) Employee will not directly or

indirectly disclose or use for any reason whatsoever any trade secrets and

other proprietary and confidential information obtained by Employee by reason of

his employment with ADT, except as required to conduct the business of ADT or

as authorized by express written permission of the Board of Directors or as

otherwise required by law.

 

                c.     Employee confirms that all trade secrets and other proprietary

and confidential information, and all documents reflecting such information,

remain the exclusive properties of ADT. 

All business record, papers and documents kept or made by Employee

relating to the business of ADT shall be and remain the property of ADT and shall

remain in the possession of ADT during the term of Employee’s employment and at

all times thereafter.  Upon termination

of employment with ADT or upon the request of ADT at any time, Employee shall

promptly deliver to ADT, and shall retain no copies of any materials, records

and documents (in whatever form or medium) made by Employee or coming into his

possession concerning the business or affairs of ADT.

 

9.             Non-Competition Agreement.           In consideration for access to trade

secrets and other proprietary information of ADT, for so long as Employee is

employed by ADT and for a period of ONE year thereafter (the “Non-competition

Period”) Employee will not:

 

                a.     Accept a position as an officer, director, employee, agent,

consultant, representative of (i) any other entity that, as of the date of

Employee’s termination, competes directly with ADT or any of its subsidiaries

(an entity described in either part or (i) is referred to in this Agreement as

a “Competitor”);

 

                b.     Acquire or fail to dispose of any stock or other ownership

interest in any Competitor, other than investments equal to less than one

percent of the outstanding stock of any class issued by any publicly traded

company;

 

                c.     Solicit or seek business from any of ADT customers, prospective

customers, suppliers, or prospective suppliers; or

 

                d.     Hire or engage any ADT employee or induce any ADT employee to

leave his employment with ADT on behalf of any Competitor.

 

10.          Remedies.

 

                a.     Without intending to limit the remedies available to ADT,

Employee acknowledges that a breach or threatened breach of any of the

covenants contained in Sections 8 and 9 may result in material irreparable

injury to ADT or its subsidiaries for which there is no adequate remedy at law,

that it may not be possible to measure damages for such injuries precisely, and

that in the event of such a breach or threat thereof, ADT shall be entitled to

obtain a temporary restraining order, a preliminary or permanent injunction, or

other comparable provisional or equitable relief restraining Employee from

engaging in activities prohibited by Sections 8 or 9, and such other relief as

may be

 

8

 

required to enforce specifically any of the

covenants in such Sections.  Employee

agrees to personal jurisdiction of any state or federal court in the State of

Texas in any proceeding brought by ADT to enforce Employee’s covenants under

Sections 8 and 9.

 

                b.     Without limiting the relief specified in Section 10a above, and

in addition to any other remedies available hereunder, at law, or in equity,

upon proof of Employee’s deliberate violation of his obligations under Sections

8 or 9, ADT shall be entitled to recover from Employee any severance paid

pursuant to Sections 5 or 6.

 

11.          Arbitration.

 

                a.     Subject to the provisions of Section 11(b) below, any dispute or

controversy arising under or in connection with this Agreement shall be settled

exclusively by arbitration before a single arbitrator in Nueces County, Texas,

in accordance with the rules of the labor section of American Arbitration

Association then in effect.  The

American Arbitration Association shall select the arbitrator.  Each party shall bear their own cost of arbitration,

except that if Employee is the prevailing party in such arbitration, the

Employee shall be entitled to recover from ADT as part of any award entered

reasonable expenses for attorneys and expert’s fees and disbursements.  In any arbitration related to the

calculation of the amount of the severance pay due to Employee, each party

shall submit a figure and supporting documentation and the arbitrator shall

select the figure from those materials submitted, but no other figure.  The arbitrator shall have no power to award

consequential or punitive damages, even if such damages are permitted under

applicable law.  The decision of the

arbitrator shall be final and binding and shall not be subject to appeal.  Judgment on the award rendered by the

arbitrator may be entered in any court having jurisdiction and enforcement may

be had according to its terms.  This

agreement to arbitrate shall be specifically enforceable against each of the

parties and an action to compel arbitration may be brought in any court of

competent jurisdiction.

 

                b.     Notwithstanding the foregoing, nothing in this Section 11 shall

prevent ADT from seeking equitable relief pursuant to Section 10 in a court of

law.

 

12.          Excise Tax.            If any payment or benefit the

Employee would receive pursuant to this Agreement or otherwise shall (i)

constitute “parachute payments” within the meaning of Section 280G of the

Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this

Section 12, would be subject to the excise tax imposed by Section 4999 of the

Code (a “Payment”), then the Employee shall receive (i) a payment from ADT

sufficient to pay the excise tax imposed by Section 4999 of the Code on such

Payment and (ii) an additional payment from ADT sufficient to pay all excise

taxes and federal and state income taxes arising from the payments made by ADT

to Employee pursuant to subsection (i) and this subsection (ii).

 

13.          Notices.        All

notices, request, demands and other communications called for or contemplated

hereunder shall be in writing and shall be deemed to have been duly given on

the date when delivered personally or when transmitted by facsimile with

receipt of delivery; on the next business day when sent by overnight courier

with receipt of delivery; or on the third business day following mailing by

United States certified mail, postage prepaid, addressed to the parties, their

successors in interest or assignees at the following addresses or such other

addresses as the parties may designate by notice in the manner aforesaid:

 

9

 

If to ADT:

        American Medical Technologies

        5555 Bear Lane

        Corpus Christi, TX 

78405

 

If to Employee:

        Roger W. Dartt

        10919 Meadow Lake Lane

        Houston, TX  77042

 

14.  Governing Law:  This Agreement shall be governed by and

construed in accordance with the laws of the State of Texas without giving

effect to any principle of conflict-of-laws that would require the application

of the law of any other jurisdiction.

 

15.          Validity.  The invalidity or unenforceability of any

provision or provisions of this Agreement shall not affect the validity or

enforceability of any other provision of this Agreement, which other provision

or provisions shall remain in full force and effect

 

16.  Entire Agreement.  This Agreement and the agreements in

connection with Section 3 constitute the entire understanding between the

parties with respect to the subject matter hereof.  This agreement may not be amended except in a writing executed by

the parties hereto.

 

17.  Effect on Successors in Interest.  This Agreement shall inure to the benefit of

and be binding upon the heirs, administrators, executors and successors of each

of the parties hereto.

 

18.  Assignment.  This Agreement is personal to Employee and Employee may not

assign this Agreement to any other person.

 

19.  Effectiveness.  This Agreement shall be effective upon the

Effective Date.

 

20.  Survival of Section.  The provisions of Sections 8 and 9 of this

Agreement shall survive the termination of the Agreement for the period

provided for therein, and Sections 10 and 11 shall survive for resolution of

any dispute arising out of or relating to this Agreement.

 

IN WITNESS

WHEREOF, the parties hereto have executed and delivered this

Agreement as of the date first above written.

 

 

American Medical Technologies, Inc.

“ADT”

 

 

 

	

  /s/ John Vickers

  	

   

  	

  /s/ Roger W. Dartt

  
	

  John Vickers, Vice

  President/General Counsel,

  Interim Chief Executive

  Officer

  	

   

  	

  Roger Dartt

  “Employee”

  

 

 

10

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