AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the lst day of January 2000, by and between AMERICAN
ELECTROMEDICS CORP., a Delaware corporation (the "Company"), and MICHAEL T.
PIENIAZEK (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company has employed the Executive as an executive officer,
and the Executive has rendered such services, pursuant to an Employment
Agreement, dated as of January 1, 1998 (the "Original Agreement"); and
WHEREAS, the Company and the Executive desire to amend their Original
Agreement to assure the continuity of their relationship, all subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, agree as follows:
1. Retention of Employment. The Company hereby continues the employment of the
Executive as Executive Vice-President and Chief Financial Officer, and the
Executive hereby accepts the continuation of such employment, all upon and
subject to the terms and conditions hereinafter set forth.
2. Term. The term of the employment under this Agreement shall be for an
initial period commencing on January 1, 2000 and terminating on December
31, 2003 (the "Initial Term"), and shall be automatically renewed for
additional one (1) year periods thereafter (the "Renewal Term"), unless
either party gives the other written notice of termination not less than
sixty (60) days prior to the end of the Initial Term or any Renewal Term
(collectively, the "Term").
3. Position, Duties and Representations.
3.01.Service with the Company. The Executive shall serve as Executive
Vice-President and Chief Financial Officer. The Executive agrees to
perform such executive employment duties for the Company consistent
with the positions specified above, and as the Board of Directors and
the Chairman of the Board or the President of the Company shall assign
to him from time to time consistent with his positions with the
Company. The Company agrees to include the Executive on the management
slate of directors at any stockholders meeting held or consent in lieu
of meeting executed during the Term at which directors are to be
elected. The Executive shall report to the Board of Directors, the
Chairman of the Board and/or the President.
3.02.Scope of Services. The Executive agrees to serve the Company
faithfully and to the best of his ability and to devote his full
business time, attention and efforts necessary to advance the business
and affairs of the Company during the Term of this Agreement. If
requested, the Executive shall serve as an officer and/or director of
any subsidiary of the Company, without any additional compensation
hereunder. The Executive shall perform his services at the Company's
offices at 13 Columbia Drive, Amherst, New Hampshire until the Company
relocates to 238 Littleton Road, Westford, Massachusetts after which
time the Executive shall perform his services at such office. The
Executive acknowledges that as part of his services hereunder he will
be required to travel from the offices identified in the preceding
sentence; provided, however, without his prior consent, the Company
shall not require the Executive to spend more than eight (8) days in
any calendar month during the Term on travel assignments for the
Company.
4. Compensation.
4.01.Annual Salary. The Executive will receive an annual base salary
("Base Salary") at an annual rate of $150,000 for the Initial Term
paid in accordance with the Company's normal payroll practices,
provided that upon Rosch GmbH Medizintechnik, the Company's German
subsidiary, closing its initial public offering in Germany, the Base
Salary shall be increased to annual rate of $165,000. In addition, on
an annual basis the Board of Directors or a committee thereof (the
"Compensation Committee") shall review the Executive's compensation
with a view towards increasing the Base Salary and granting stock
options to the Executive based on the Executive's performance during
the preceding year or pursuant to guidelines established by the
Compensation Committee.
4.02.Bonus. (a) In further consideration of the Executive's agreement to
perform services hereunder, the Executive shall be entitled to an
annual cash bonus (the "Profits Bonus") in an amount equal to five
percent (5%) of the Company's consolidated pre-tax profits (the
"Company Profits") in excess of $500,000 (the "Threshold") for the
first two fiscal years during the Term commencing with the fiscal year
ending July 31, 2000. This annual Profits Bonus shall not exceed
$275,000 in the first fiscal year and $785,000 in the second fiscal
year.
(b) The Profits Bonus amount shall be calculated initially by the
Treasurer or Controller of the Company based upon the Company's
audited financial statements for the relevant fiscal year. Promptly
after completion of the Profits Bonus calculation for each fiscal
year, a report of the calculation shall be sent to the Board of
Directors. The Board of Directors will then present the proposed
Profits Bonus to the Executive. Within thirty (30) days after receipt
thereof, the Executive may object to the calculation by requesting
that the accounting firm then auditing the financial statements of the
Company review the calculation. The results of such accountants'
review shall be final and binding on the Executive and the Company.
Any Profits Bonus shall be paid to the Executive within thirty (30)
days after the Executive receives the Profits Bonus calculation,
except that if he objects thereto, the payment shall be made as soon
as practicable after the resolution of the objection. The Executive
shall bear the cost of the accounting firm's review, except if upon
such review of the Profits Bonus calculation the accounting firm
determines that the amount of the Profits Bonus should be increased by
ten percent (10%) or more from the amount calculated by the Company,
in which case the Company shall bear the cost of the accounting firm's
review.
(c) In the event the period of the Term for which a Profits Bonus is
being determined is less than the entire fiscal year being used for
the calculation, the Profits Bonus, if any, and the Threshold for such
period shall be multiplied by a fraction, the numerator of which shall
be the number of whole months during such fiscal year that the
Executive was an employee of the Company and the denominator of which
shall be 12.
(d) Notwithstanding any Profits Bonus which may be paid to the
Executive pursuant to this Section 4.02, for each fiscal year during
the Term the Compensation Committee may award the Executive a
supplemental bonus based upon factors other than the Company Profits
for such fiscal year, as determined by such Committee.
4.03.Bonus Shares. The Company hereby agrees to issue to the Executive
50,000 shares (the "Bonus Shares") of the Company's Common Stock, as
presently constituted, in the event that the closing price of the
Company's Common Stock as reported on the OTC Bulletin Board or other
national market quote system or exchange where the Common Stock is
then traded (the "Trading Price") equals or exceeds $6.20 per share
for a period of three (3) consecutive trading days during the Term. In
the event of any increase in the number of shares outstanding, stock
split, stock dividend, reorganization or other change in the Common
Stock, the number of Bonus Shares and/or the Trading Price shall be
proportionately adjusted. The Company shall immediately register the
Bonus Shares under the Securities Act of 1933, as amended, after the
issuance thereof, subject to the availability of audited financial
information and regulatory review.
4.04.Participation in Benefit Plans. The Executive shall also be entitled,
to the extent that his position, title, tenure, salary, age, health
and other qualifications make him eligible, to participate in all
employee benefit plans or programs (including, but not limited to,
medical/dental insurance, disability, stock option, retirement and
pension plans and vacation time, sick leave and holidays) of the
Company currently in existence on the date hereof or as may hereafter
be instituted from time to time. The Executive's participation in any
such plan or program shall be subject to the provisions, rules and
regulations applicable thereto.
4.05.Automobile. The Company shall provide the Executive with (i) the use
of an automobile or (ii) an allowance or reimbursement for the use by
the Executive of his personal automobile for Company purposes,
provided that the cost to the Company does not exceed $700 a month.
4.06.Expenses. In accordance with the Company's policies established from
time to time, the Company shall pay or reimburse the Executive for all
reasonable and necessary expenses incurred by him in the performance
of his duties under this Agreement, subject to the presentment of
appropriate vouchers and receipts.
4.07.Insurance. The Executive acknowledges and agrees that the Company may
obtain a life insurance policy on the life of the Executive in the
amount of at least $2,000,000 with the Company named as the
beneficiary. The Executive shall cooperate fully with the Company's
efforts to obtain such insurance policy, including making himself
available for physical examinations.
5. Non-Disclosure of Confidential Information; Non-Competition.
5.01.Confidentiality. Except as may be in furtherance of the Executive's
performance of his functions as a senior executive officer of the
Company, the Executive shall not, throughout the Term of this
Agreement and thereafter, disclose to any third party or use or
authorize any third party to use, any information relating to the
business, business plans, trade secrets or other interests of the
Company (including customers and clients of the Company) which is
confidential and valuable to the Company or any of its subsidiaries or
any third party (including customers and clients of the Company) and
which is not known to the public (the "Confidential Information"). The
Confidential Information is and will remain the sole and exclusive
property of the Company. During the Term of this Agreement, the
Confidential Information, when entrusted to the Executive's custody,
shall be deemed to remain at all times in the Company's sole
possession and control. Notwithstanding the foregoing, the Executive
may, after prior written notice to the Company (to the extent such
notice is possible under the circumstances) disclose such Confidential
Information pursuant to subpoena or other legal process, and promptly
thereafter shall advise the Company in writing as to the Confidential
Information which was disclosed and the circumstances of such
disclosure.
5.02.Return of Documents. The Executive agrees that, upon the expiration
of his employment with the Company for any reason, he shall forthwith
deliver up to the Company any and all documents and other material,
and all copies thereof, in his possession or under his control
relating to any Confidential Information which is otherwise the
property of the Company.
5.03.Non-Competition. The Executive recognizes that the services to be
performed by him for the Company are special and unique. The Executive
further recognizes that the nature of the Company's business is such
that the Executive will have full knowledge of the Company's business
plans and practices. The parties therefore confirm that, in order to
protect the Company's goodwill, it is necessary that the Executive
agree, and the Executive hereby does agree that he will not in the
United States, for a period of two (2) years after he ceases to be
employed by the Company, engage in or hold any equity interest or act
as a sole proprietor, partner, co-venturer, principal, director or
shareholder (to the extent of 5% or more of the equity interest
thereof), directly or indirectly, of any sole proprietorship,
partnership, joint venture, corporation or other business entity
engaged in or plans to engage in the business of the research,
development, manufacture and sale of automatic injection devices or in
any other business in which the Company engages in (or has formulated
plans to engage) at the time during the six (6) month period preceding
his termination of employment; provided, however, that should the
Executive's employment be terminated pursuant to Section 6.04 hereof
or by the Company other than pursuant to Section 6.01 or 6.03 hereof,
the foregoing restriction shall not be effective.
5.04.Remedies. The Executive agrees that any breach or threatened breach
by him of any provision of this Section 5 shall entitle the Company,
in addition to any other legal remedies available to it, to apply to
any court of competent jurisdiction to enjoin such breach or
threatened breach. The parties understand and intend that each
restriction agreed to by the Executive hereinabove shall be construed
as separable and divisible from every other restriction, and that the
unenforceability, in whole or in part of any restriction, will not
affect the enforceability of the remaining restrictions and that one
or more or all of such restrictions may be enforced in whole or in
part as the circumstances warrant. No waiver of any one breach of the
restrictions contained in this Section 5 shall be deemed a waiver of
any future breach.
6. Termination.
6.01.Disability. (a) The Executive shall be considered disabled if, due to
illness or injury, either physical or mental, he is unable to perform
his customary duties and responsibilities as required by this
Agreement for more than two (2) months in the aggregate out of any
period of six (6) consecutive months. The determination that the
Executive is disabled shall be made by the Executive Committee or, if
there is no Executive Committee, by the Board of Directors of the
Company (with the Executive abstaining from the decision if he is then
a member of such Committee or the Board), based upon an examination
and certification by a physician selected by the Company subject to
the Executive's approval, which approval shall not be unreasonably
withheld. The Executive agrees to submit timely to any required
medical or other examination, provided that such examination shall be
conducted at a location convenient to the Executive and that if the
examining physician is other than the Executive's personal physician,
the Executive shall have the right to have such personal physician
present at such examination.
(b) If the Executive is determined to be disabled pursuant to this
Section 6.01, the Company shall have the option to terminate this
Agreement by written notice to the Executive stating the date of
termination, which date may be any time subsequent to the date of such
determination.
6.02.Death. If the Executive shall die during the Term of this Agreement,
this Agreement and the Executive's employment hereunder shall
terminate immediately upon the Executive's death.
6.03.By the Company for Cause. The Company may terminate this Agreement
for cause at any time. For purposes of this Agreement, the term
"cause" shall be limited to (i) conviction of a felony or equivalent
crime under the laws of the United States or any state, (ii)
conviction of a felony or equivalent crime under the laws of any other
country or political subdivision thereof involving moral turpitude,
(iii) action involving willful gross misconduct having a material
adverse effect on the Company including willfully aiding the
competition, or (iv) the breach by the Executive of any of his
material obligations under this Agreement without proper
justification, which breach is not cured within thirty (30) days after
written notice thereof from the Company. Upon termination of
employment by the Company "for cause," the Executive shall receive any
accrued Base Salary through the termination date, less any amounts by
reason of claims the Company may have against the Executive.
6.04.By the Executive for Cause. The Executive may terminate this
Agreement for "cause" at any time. For purposes of this Section 6.04,
the term "cause" shall be limited to (i) the removal by the Company of
its principal place of business to a location which is more than 50
miles from the Executive's current residence, or (ii) the failure of
the Company to perform in a material respect of its obligations under
this Agreement without proper justification after notice thereof from
the Executive and, if curable, the opportunity to cure, within ten
(10) days after the giving of written notice thereof to the Company.
6.05.Termination Benefit. Upon termination of employment (i) by the
Company other than for "cause" pursuant to Section 6.03 hereof, (ii)
upon the disability of the Executive pursuant to Section 6.01 hereof,
(iii) by the Executive's death pursuant to Section 6.02 hereof, or
(iv) by the Executive for "cause" pursuant to Section 6.04 hereof, the
Executive (or his estate or representative) shall receive a severance
payment equal to the greater of (i) the amount of the then current
annual Base Salary or (ii) the continuation of the then Base Salary
for the balance of the Term.
6.06.Change in Control of the Company. (a) If at anytime during the Term
hereof a change in control of the Company (as defined in
Subsection (b) below) occurs, then within sixty (60) days after
receipt of written notice of such change in control of the Company,
the Executive may, by written notice to the Company (or its
successor), terminate this Agreement. In the event of said
termination, (i) the Executive shall receive a lump sum payment equal
to 2.99 times his then current Base Salary, payable within thirty (30)
days after termination of this Agreement, (ii) the Company (or its
successor) shall maintain, at its expense, the health plan coverage of
the Executive for a period of twelve (12) months after such
termination, subject to termination of such health plan benefits upon
the Executive becoming covered by a comparable plan offered by a
subsequent employer and also subject to any changes in such plan as
applicable to other executive officers and (iii) all stock options and
other equity based awards granted to the Executive by the Company
shall become fully vested and exercisable subject to their respective
terms; provided, however, if the amount to be paid or distributed to
the Executive pursuant to this Section 6.06 (taken together with any
amounts otherwise to be paid or distributed to the Executive by the
Company) (such amounts collectively the "Section 6.06 Payment") would
result in the application of an excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
successor or similar provision thereto, the Section 6.06 Payment shall
not be paid or distributed in the amounts or at the times otherwise
required by this Agreement, but shall instead be paid or distributed
annually, beginning within thirty (30) days after the termination date
and thereafter on each anniversary thereof, in the maximum
substantially equal amounts and over the minimum number of years that
are determined to be required to reduce the aggregate present value of
Section 6.06 Payment to the maximum amount that will not cause any
Section 6.06 Payment to be non-deductible under Section 280G of the
Code. For purposes of this Section 6.06, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.
(b) "Change of control of the Company" shall be deemed to have
occurred if: (i) any "person" or "group" (as "person" and "group" are
defined in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), other than (A) the Executive
or a person controlled by him, (B) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (C)
a person or group by reason of a transaction with the Company approved
by the Company Board of Directors as constituted in accordance with
Paragraph (ii) below, or (D) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of
the combined voting power of the Company's then outstanding
securities; or (ii) individuals who on the commencement date of this
Agreement constitute members of the Board of Directors, or successors
chosen by such individuals, shall cease for any reason to constitute a
majority of the whole Board of Directors.
7. Notices. All notices, requests, demands or other communications hereunder
shall be deemed to have been given if delivered in writing personally or by
registered mail or national overnight courier or by facsimile to either
party at the address set forth below, or at such other address as either
party may designate in writing to the other:
If to the Company:
American Electromedics Corp.
13 Columbia Drive
Amherst, New Hampshire 03031
Attn: Thomas A. Slamecka, Chairman
If to Executive:
Michael T. Pieniazek
38 Westview Road
Worcester, MA 01602
Fax: (___) ___-____
8. Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof, supersedes any prior
agreement between the parties. No change, termination or attempted waiver
of any of the provisions hereof shall be binding unless in writing and
signed by the party against whom the same is sought to be enforced.
9. Successors and Assigns; Binding Effect. This Agreement will be binding upon
and inure to the benefit of the Company and its successors and assigns, and
the Executive, and his heirs and administrators. The Company may assign
this Agreement to any corporation which is in a consolidated group with the
Company or which acquires the Company, subject to the Executive's rights
under Section 6.06 hereof.
10. Waiver and Severability. The waiver by either party of a breach of any
terms or conditions of this Agreement shall not operate or be construed as
a waiver of any subsequent breach by such party. In the event that any one
or more of the provisions of this Agreement shall be declared to be illegal
or unenforceable under any law, rule or regulation of any government having
jurisdiction over the parties hereto, such illegality or unenforceability
shall not affect the validity and enforceability of the other provisions of
this Agreement.
11. Heading; Interpretations. The headings and captions used in this Agreement
are for convenience only and shall not be construed in interpreting this
Agreement.
12. Governing Law. All matters concerning the validity and interpretation of
and performance under this Agreement shall be governed by the laws of the
Commonwealth of Massachusetts without regard to the conflicts of law
principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AMERICAN ELECTROMEDICS CORP.
By: _______________________
Thomas A. Slamecka
Chairman
_______________________
Michael T. Pieniazek