AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT is made and entered into as of this 10th day of December,
1992, by and between American Medical Holdings, Inc., a Delaware corporation
("AMH"), and Lawrence N. Kugelman ("Kugelman") and amends that certain Letter
of Understanding made and entered into as of October 30, 1992 by and between
Kugelman and AMH (the "Letter of Understanding").
W I T N E S S E T H:
WHEREAS, AMH and Kugelman desire to amend the Letter of Understanding as
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. The Letter of Understanding shall remain in full force and effect
except to the extent specifically amended hereby. The Letter of Understanding
as amended hereby is hereinafter referred to as the "Employment Agreement."
Terms defined in the Letter of Understanding shall have like meanings when
used herein, unless the context otherwise requires.
2. A new Paragraph 3 is hereby added to the Employment Agreement as
follows:
"3 CHANGE OF CONTROL. Immediately upon the occurrence of any "Change
of Control" (as defined below), Kugelman shall
be entitled to and shall fully vest in 100% of any and all amounts payable
to his pursuant to AMI's Executive Incentive Compensation Plan (formerly
known as the Short-Term Cash Incentive Plan) for services rendered by
Kugelman through the date and for the fiscal year in which such Change of
Control occurs, which amounts shall be calculated (with interest) as if
any and all individual and AMH performance goals applicable to any such
payments (whether to be made currently or on a deferred basis) had been
achieved immediately prior to such "Change of Control." AMH shall be
obligated to pay and hereby agrees to pay Kugelman any and all amounts
due him pursuant hereto within 7 calendar days after the occurrence of
any Change of Control.
For purposes of this Employment Agreement, a "Change of Control" shall be
deemed to have occurred if GKH Investments, L.P. shall sell, transfer, assign
or otherwise dispose of its direct ownership in all or a substantial
percentage of the equity securities of AMH held thereby as of August 22, 1991
or shall fail to either designate a majority of nominees or maintain a majority
of directors to serve on AMH's Board of Directors."
3. RENUMBERING. Paragraphs 3 through 7 of the Letter of Understanding
are hereby renumbered as Paragraphs 4 through 8 of the Employment Agreement.
4. Paragraph 4 of the Employment Agreement is hereby amended in its
entirety as follows:
"4. OPTIONS.
(a) Upon execution of the appropriate option agreements by
Kugelman, Kugelman shall be entitled to options to purchase (a) 100,000
common shares of AMH common stock pursuant to the Non-Qualified
Performance Stock Option Plan for Key Employees of American Medical
Holdings, Inc. and Subsidiaries (the "Key Employees Plan") and (b)
100,000 shares of common stock of AMH pursuant to the Non-Qualified
Employees Stock Option Plan of American Medical Holdings, Inc. and
Subsidiaries (the "Option Plan" and together with the Key
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Employees Plan, the "Option Plans"). Such options shall vest at 20% per
year on the same terms as the options granted to other AMH executives.
The exercise price for such options shall be the price at which the common
shares of AMH were offered in the Public Offering of August 15, 1991.
(b) Notwithstanding anything to the contrary set forth in the
foregoing subparagraph 4(a), Kugelman's option agreements or the Option
Plans, in the event of the occurrence of any "Change of Control" (as
defined in Paragraph 3 hereof), Kugelman shall vest in and be entitled
to acquire 100% of the shares of Common Stock subject to any options
theretofore granted to him but which have not been fully exercised,
and all such options shall become fully exercisable immediately prior to
(but conditional upon the occurrence of) any Change of Control.
Furthermore, upon the occurrence of a Change of Control, Kugelman shall
be entitled to receive as full consideration for, and in cancellation of,
any such options, an amount not less than the excess, if any, of (i) the
per share consideration payable pursuant to the terms of such Change of
Control in respect of the Common Stock over (ii) the exercise price per
share for all shares of Common Stock subject to such option, times the
number of shares of Common Stock then remaining, subject to such option.
5. Paragraph 5 of the Employment Agreement is hereby amended in its
entirety as follows:
"5. SEVERANCE.
(a) In the event of the termination of Kugelman's employment as
Executive Vice President of AMH for any reason other than "cause" (as
defined in subparagraph (c) below), Kugelman shall be entitled to receive
a one time lump sum payment in an amount equal to 12 months base
compensation (excluding bonus) determined on the basis of his
annual salary for AMH's fiscal year then most recently commenced (the
"Severance Payment"). In the event such termination is a result of
Kugelman's death or mental incapacity, the Severance Payment shall be
made to Kugelman's estate or personal representative. The obligations of
AMH under this subparagraph 5(a) shall be the only obligations of AMH and
its subsidiaries for the payment of compensation (except as otherwise
provided under applicable law) to Kugelman in the event of the termination
of his employment as described in this subparagraph 5(a).
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(b) In the event Kugelman voluntarily terminates his employment with
AMH within 120 days after the occurrence of a Change of Control or in the
event of his "Involuntary Termination" (as defined in subparagraph 5(d)
hereof) within 12 months after the occurrence of a Change of Control,
Kugelman shall be entitled to receive and AMH shall be obligated to pay to
Kugelman, his estate or personal representative, the Severance Payment (in
addition to any and all amounts due him pursuant to paragraphs 3 and 4
hereof and any and all amounts due him under applicable law). Any and all
payments to be made to Kugelman pursuant to this subparagraph 5(b) shall
be made within 14 calendar days after the effective date of Kugelman's
voluntary termination or his Involuntary Termination. The obligations of
AMH referenced in this subparagraph 5(b) shall be the only obligations of
AMH and its subsidiaries for the payment of compensation to Kugelman
in the event of the termination of his employment as described in this
subparagraph 5(b).
(c) For purposes of this Employment Agreement, Kugelman shall be
deemed to be terminated for cause if his employment is terminated due to
(i) the commission by Kugelman of an act of fraud or embezzlement
(including the unauthorized disclosure of confidential or proprietary
information of AMH or its subsidiaries), (ii) a conviction of Kugelman
(including a NOLO CONTENDERE plea) involving in the good faith judgment of
the Board of Directors of AMH, fraud, dishonesty or moral turpitude, (iii)
willful misconduct as an employee of AMH or a subsidiary or (iv) the
willful failure of Kugelman to render services to AMH or a subsidiary in
accordance with his employment.
(d) For purposes of this Employment Agreement, an "Involuntary
Termination" of Kugelman's employment with AMH shall be deemed to have
occurred if: (i) Kugelman's employment with AMH or its successor is
terminated for any reason other than "cause"; (ii) Kugelman's total
compensation, including benefits, is substantially reduced other than in
connection with an across-the-board reduction similarly affecting all
executives of AMH; (iii) the title, functions, duties, authority or
responsibilities of Kugelman's present position are materially reduced or
diminished; (iv) Kugelman is reassigned to another geographic location
more than 50 miles from his current place of employment; or (v) AMH is
liquidated, dissolved, consolidated or merged, or all or substantially all
of its assets are transferred, assigned or sold, unless a successor
assumes all of AMH's obligations under this Employment Agreement."
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6. Paragraph 7 of the Employment Agreement is hereby amended in its
entirety as follows:
"Subject to the terms of this Employment Agreement, Kugelman
shall have the right to participate in all other employee plans and
benefits currently existing or hereafter granted by AMH to its employees
and, except for the AMH Supplemental Executive Retirement Plan (the
"SERP"), all waiting periods will be waived to the full extent possible
unless such waiver would require AMH to waive waiting periods for other
employees. Kugelman shall be eligible to participate in all employee
compensation and benefit plans customarily available to executive vice
presidents."
7. INTEGRATION. The Employment Agreement constitutes the entire
agreement of the parties hereto with respect to Kugelman's employment, and no
modification, amendment or waiver of any of the provisions of the Employment
Agreement shall be effective unless in writing and signed by both parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
AMERICAN MEDICAL HOLDINGS, INC.
By: /s/ Robert W. O'Leary
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Its: Chairman and CEO
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Accepted and Agreed this 10th
day of December, 1992.
By: /s/ Lawrence N. Kugelman
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Lawrence N. Kugelman
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