U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-8635
AMERICAN MEDICAL ALERT CORP.
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(Name of Small Business Issuer in Its Charter)
NEW YORK 11-2571221
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3265 LAWSON BOULEVARD, OCEANSIDE, NEW YORK 11572
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(Address of Principal Executive Offices) (Zip Code)
(516) 536-5850
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 per share
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
The issuer's revenues for its most recent fiscal year: $7,636,730.
The aggregate market value of the voting stock held by
non-affiliates of the registrant, as of March 25, 1998, was $17,221,882 computed
by reference to the average closing bid and asked prices of such stock as
reported on NASDAQ on that date.
The aggregate number of shares of Common Stock outstanding as of
March 25, 1998: 5,925,809
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the definitive Proxy Statement of the registrant, to be
filed within 120 days after the end of the registrant's fiscal year ended
December 31, 1997, are incorporated by reference into Part III of this report.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
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American Medical Alert Corp. (the "Company") is a corporation,
formed under the laws of the State of New York in 1981 and is engaged in the
business of designing, engineering, fabricating, marketing, installing, and
monitoring computerized Personal Emergency Response Systems ("PERS") using
proprietary and commercially available technology. The Company markets to
private-pay clients, not for profit consumer agencies, health maintenance
organizations, long-term care providers, retirement communities, hospitals and
government agencies. Part of the Company's strategy is to capitalize on
opportunities created by new federal policies affecting the delivery of home
healthcare services by HMOs and managed care groups. In order to achieve its
goals, the Company is participating in a study to prove the cost effective
benefits of PERS in home healthcare programs. During 1997, the Company finalized
plans with a national provider of geriatric services to offer its PERS through
their network of agencies, and launch its Model 700 (described below).
Several of the systems the Company markets enable PERS to be
provided to a wide range of individuals including; the medically at-risk,
isolated and infirm, elderly, disabled as well as persons receiving home care
services and their families, retirement and college campus sites, security/staff
personnel who maintain health facilities and places of internment (referred to
individually as the "Subscriber" and collectively as "Subscribers"). The
Company's monitoring centers are designed to simultaneously process signals from
different systems.
PRODUCTS AND SERVICES
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The Company's core business is the development and marketing of
high-tech effective PERS, primarily used by the senior population. VOICE OF
HELP(R) Systems enable a person to remain independent and continue to enjoy the
comforts of living at home.
MODELS 500, 700 AND 1000 PERSONAL EMERGENCY RESPONSE SYSTEMS
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VOICE OF HELP(R) Systems have been designed to permit two-way
(talk/listen) voice communications between an individual and monitoring
personnel located at the Company's Monitoring Center (the "Center"). VOICE OF
HELP(R) Systems are currently available in two configurations. The stand alone
Models 500 and 700 (launched in 1997) are utilized by private-pay consumers,
hospitals, home healthcare providers, government agencies, third-party insurers,
developers of retirement communities and certain commercial applications, among
others. The flush mounted Model 1000 is used in new and rehabilitated
multi-housing facilities.
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<PAGE>
The usual protocol associated with the use of the Company's VOICE OF
HELP(R) System is as follows:
(1) The Subscriber activates the VOICE OF HELP(R) System by either
pressing a button located on the home unit or from a portable activator. There
is no need for the Subscriber to touch the telephone.
(2) When the VOICE OF HELP(R) System is activated, the Subscriber
hears a signal tone and sees a signal light on the home unit, indicating that
the System is processing the signal to the Center. The home unit, coupled with
the proper telephone connection, permits hands free communication between the
Subscriber and the Center. After the telephone connection has been established,
a monitor at the Center automatically displays relevant Subscriber information,
including:
(i) the telephone numbers of the Subscriber's physician, local
police and fire departments, relatives and neighbors, etc.;
(ii) the Subscriber's vital medical history and current
prescriptions (if provided); and
(iii) other pertinent information that should assist in securing
appropriate action on behalf of the Subscriber.
The Company's Centers are capable of handling multiple requests for
assistance at any given time. The Company believes, based on its experience to
date, that each request for assistance is accepted within one minute of its
initiation. The Company makes available and believes that its back-up Center
provides a significant additional safeguard to the operations of its VOICE OF
HELP(R) Systems.
(3) After the Subscriber's personal data is displayed, the
Company's monitoring personnel and the Subscriber can talk and listen to each
other. The Subscriber need not touch the telephone. If no overriding noise or
physical sound barrier is present between the Subscriber and the VOICE OF
HELP(R) System home unit, the parties will normally be able to talk and listen
to each other.
(4) Monitoring personnel at the Center will attempt to determine
from the Subscriber what aid is required. If the Subscriber is unable to
communicate, monitoring personnel will take actions pursuant to pre-designated
instructions.
(5) VOICE OF HELP(R) Systems can monitor proprietary and certain
commercially available intrusion, fire detection and other similar devices.
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<PAGE>
MONITORING
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In addition to its voice systems, the Company makes available, as an
additional and integral part of the VOICE OF HELP(R) System, a unique monitoring
service. Personnel located at the Company's Monitoring Center utilize personal
computers, arranged in a local area network, to process alerts. Each of the
Company's monitoring personnel are certified as Emergency Medical Dispatchers.
All signals for assistance are programmed to access the Center's Subscriber data
base which enables monitoring personnel to take pre-determined actions quickly.
Relevant information concerning the Subscriber is displayed on a monitor.
Monitoring personnel are trained to take appropriate action on behalf of all
Subscribers. The technology includes digital communicators, radio frequency
devices and two-way voice circuits. System activation may occur from a host of
ancillary contacts, switches or other devices. In most applications the Company
provides long distance, toll-free telephone lines for signal transmission.
PRODUCTION/PURCHASING
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The Company utilizes subcontractors to assemble its products. These
services are generally provided through verbal arrangements and Company issued
purchase orders. The Company has several principal subcontractors. Although the
Company currently maintains favorable relationships with its subcontractors, the
Company believes that in the event any such relationship were to be terminated,
the Company would be able to engage the services of additional or different
subcontractors as would be required to fulfill its needs without any material
adverse effect to the Company's operations.
With the exception of several proprietary components, which are
manufactured to the Company's specifications, the manufacturing of the Company's
product lines requires the use of generally available electronic components and
hardware.
MARKETING/CUSTOMERS
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The Company markets its products and monitoring services to
consumers, hospitals, home healthcare providers, government agencies,
third-party insurers, developers of retirement communities and commercial
applications, among others. The Company believes that these markets offer the
Company an opportunity for significant growth.
Sales and leases of the Company's products and monitoring services
are made through the efforts of its own sales personnel, manufacturers'
representatives and independent distributors. The Company markets its products
through sales and various rental arrangements. The Company is an approved
Medicaid Provider in the States of New York, Georgia, Illinois, South Carolina,
and Nevada. During the years ended December 31, 1997, 1996 and 1995, the Company
had revenues from one contract with a municipality located in New York which
represented 44%, 44% and 44%, respectively, of its total revenue. In February
1998, the Company was notified by the municipality that they are currently
processing the renewal of the Company's contract which would extend it through
June 30, 1999.
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<PAGE>
The Company continues development on new healthcare systems that it
plans to continue testing during 1998. Examples include:
a. MED PASS(R): The product will be used by home healthcare
patients for the purpose of insuring that prescribed medications are taken in
accordance with physicians' orders.
b. REMOTE PAGING
c. VITAL SIGN MONITORING
d. INTERACTIVE TELEPHONE MONITORING
The Company continues to seek new applications for its interactive
voice technology.
INSTALLATION AND SERVICES
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The Company currently provides its own personnel or provides
training for customers' personnel for installation and servicing of its VOICE OF
HELP(R) Systems. In addition, telephone interconnect companies install VOICE OF
HELP(R) Systems for the Company in some areas.
SALES, LEASING AND MONITORING REVENUES
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The Company markets its products through sales and various rental
arrangements. The Company also offers VOICE OF HELP(R) Systems, including
monitoring center equipment for on-site monitoring, using similar purchase and
lease arrangements. The Company is an approved Medicaid Provider in the States
of Georgia, Illinois, New York, Nevada and South Carolina and continues to
develop similar relationships in several other states.
The Company offers monitoring service for its own, as well as
personal emergency response systems manufactured by others on a monthly fee
basis. Multi-user providers have the option of using the Company's monitoring
services, either as a primary or back-up center. The majority of customers have
selected the Company's Monitoring Center in Oceanside, NY to provide primary and
back-up monitoring on behalf of their clients. Monitoring fees are charged to
individuals and entities who utilize the Company's monitoring services, whether
on a primary basis in the case of individuals or on a back-up basis with respect
to those who purchase or lease complete VOICE OF HELP(R) Systems, electing to
provide their own on-site primary monitoring.
PATENTS AND TRADEMARKS
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The Company considers its trademarks to be an important element of
its marketing program. The Company's trademarks include "VOICE OF HELP(R)", "THE
VOICE OF HELP(R)", "ACCUTROL(R)", "MED PASS(R)", "ROOM MATE(R)", "VOICECARE(R)",
"SYSTEM-one(R)" and "HELPING PEOPLE LIVE BETTER(R)", each of which is registered
with the United States Patent and Trademark Office.
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<PAGE>
COMPETITION
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The Company's competition includes manufacturers, distributors and
providers of personal emergency response equipment and services, and a limited
number of burglar and fire alarm companies. Certain of the Company's competitors
have more extensive manufacturing and marketing capabilities, as well as greater
financial, technological and personnel resources, than the Company. The
Company's competition focuses its marketing and sales efforts in two distinct
areas; hospital/private-pay, and multi-housing applications. The Company
believes that its experience and expertise give it a significant advantage over
its competitors.
RESEARCH AND DEVELOPMENT
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In a continuing effort by the Company to maintain state-of-the-art
technology, the Company conducts research and development through the ongoing
efforts of its employees and consulting groups. Expenditures for research and
development for the years ended December 31, 1997, 1996 and 1995 were $20,441,
$24,339 and $32,874, respectively.
EMPLOYEES
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As of March 25, 1998, the Company employed 82 persons who perform
functions on behalf of the Company in the areas of administration, marketing,
sales, engineering, finance, purchasing, operations, quality control and
research. The Company is not a party to any collective bargaining agreement with
its employees. The Company considers its relations with its employees to be
good.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's executive offices and primary monitoring Center are
located in a 5,600 square foot facility at 3265 Lawson Boulevard, Oceanside, New
York. On January 1, 1995, the Company entered into a five year operating lease
with Howard M. Siegel, Chairman and President. In February, 1998 the lease for
this space and the adjoining 8,000 square foot parking lot was extended until
September 30, 2007 (the "1995 Lease"). The 1995 Lease provides for a base annual
rental of $74,600, subject to a 5% annual increase plus reimbursements for real
estate taxes and other operating expenses. In October 1997, the Company entered
into a separate ten year operating lease for an additional 2,200 square feet of
office space owned by Howard M. Siegel, Chairman and President. The lease calls
for an initial minimum annual rental of $36,000, subject to a 5% annual increase
plus reimbursement for real estate taxes. The Company believes that the terms of
this lease are no less favorable than could be obtained from an unaffiliated
third party.
The Company houses its Engineering, Research and Development,
Quality Control, Testing and Back-up Monitoring Departments in a 5,400 square
foot facility located in Mt. Laurel, New Jersey. The Company occupies this space
pursuant to a lease with an unaffiliated party. The lease expires on December
31, 1998 and provided for a current base annual rental, net of certain operating
expenses, of $40,500.
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<PAGE>
The Company maintains a satellite marketing and administrative
office in Decatur, Georgia. The Company leases approximately 1,200 square feet
of space from an unaffiliated party at an annual rental, plus certain operating
charges, of $17,980, pursuant to a lease which expires on April 30, 1999.
The Company leases approximately 1,500 square feet of space in
Flushing, New York, pursuant to a three-year lease which expires on June 30,
1998, for office, warehouse, storage, shipping and receiving purposes. The lease
provides for an annual rent of $13,200 during the first year of the term,
$13,860 during the second year of the term and $14,553 during the third year of
the term.
The Company maintains a satellite marketing and administrative
office in Countryside, Illinois. The Company leases approximately 1,200 square
feet of space from an unaffiliated party pursuant to a lease which expires on
July 1, 2000. The lease provides for an annual rent of approximately $15,000.
The Company believes that these properties are suitable for their
intended uses and are adequate to meet its current requirements. The Company
does not own any property.
ITEM 3. LEGAL PROCEEDINGS
Although the Company is a party to certain routine litigations
incidental to its business, the Company believes that there are no material
pending legal proceedings to which it is a party or any of its properties are
the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matters were submitted, during the fourth quarter of the year
covered by this report, to a vote of the security holders through the
solicitation of proxies or otherwise.
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<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on NASDAQ (Symbol: AMAC). The
high and low bid prices for the Common Stock, as furnished by NASDAQ, are shown
for the fiscal years indicated. The quotations set forth below do not include
retail markups, markdowns or commissions and may not represent actual
transactions.
HIGH LOW
1996 First Quarter $ 3 1/8 $ 2 1/8
Second Quarter 3 2
Third Quarter 4 1/16 2 5/16
Fourth Quarter 4 3/16 2 9/16
1997 First Quarter $ 3 7/16 $ 2 1/16
Second Quarter 3 7/16 2 5/16
Third Quarter 3 9/16 2 9/16
Fourth Quarter 3 2
As of March 25, 1998, there were 475 recorded holders of the
Company's Common Stock.
The Company did not pay dividends on its Common Stock during the two
years ended December 31, 1997 and does not anticipate paying dividends in the
foreseeable future.
Recent Sales of Unregistered Securities
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The Company granted a Warrant to purchase 50,000 shares of Common
Stock to GKN Securities Corp. ("GKN") as of January 1, 1997 in connection with a
Financial Advisory and Investment Banking Agreement with GKN dated as of January
1, 1997 (the "GKN Warrant"), pursuant to which GKN will provide financial
consulting services to the Company for a period of one (1) year. The GKN Warrant
is immediately exercisable at an exercise price of $4.50 per share.
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<PAGE>
ITEM 6. MANAGEMENTS'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the financial statements and notes hereto.
RESULTS OF OPERATIONS
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The Company's gross revenues increased from $7,255,842 in 1996 to
$7,636,730 in 1997, an increase of 5%, and increased from $6,177,302 in 1995 to
$7,255,842 in 1996, an increase of 17%. The increase in gross revenues from 1996
to 1997 and 1995 to 1996 resulted from the emphasis on the continued growth of
the Company's recurring revenue base.
Revenues from services increased from $6,119,946 in 1996 to
$6,757,594 in 1997, an increase of 10%, and increased from $5,288,046 in 1995 to
$6,119,946 in 1997, an increase of 16%. These increases resulted from continued
expansion of the Company's customer base for monthly monitoring and leasing
services. Costs related to services for 1997, 1996, and 1995 were 38%, 34% and
35%, respectively. In 1997, costs as a percentage of revenue increased due to
increased reserves for obsolescence of equipment and amortization.
Revenues from product sales decreased from $1,135,896 in 1996 to
$879,136 in 1997, a decrease of 23%, and increased from $889,256 in 1995 to
$1,135,896 in 1996, an increase of 28%. These decreases in revenues from product
sales from 1996 to 1997 were primarily due to decreases in sales to retirement
facilities and distributors. Gross profit on product sales in 1997, 1996 and
1995 was 4%, 30% and 39% respectively. Gross profit on product sales decreased
in 1997 in part due to sales incentives given to introduce the Model 700 PERS
and associated start up production costs. Gross profit on product sales
decreased in 1996, in part, due to sales incentives given to large retirement
communities.
Selling, general and administrative expenses increased from
$2,705,525 in 1996 to $2,726,254 in 1997, and increased from $2,422,972 in 1995
to $2,705,525 in 1996, an increase of 12%. Expenses in 1997 did not increase as
a result of greater operational efficiencies. Additional expenses incurred in
1996 were the result of increased sales and marketing expenses, radio
advertising campaigns, expansion of sales department and hiring of additional
management personnel.
Interest expense for 1997, 1996 and 1995 was $46,705, $46,965 and
$55,694, respectively. Interest expense decreased in 1997 due to improved cash
flow and decreases in average monthly borrowing. Interest expense in 1996
decreased for similar reasons.
The Company's income before provision for income taxes in 1997 was
$1,477,508, a decrease of $161,385 from 1996, or 10%. The decrease in 1997
resulted from a decrease in the Company's product sales revenues and associated
decreases in gross profit. Income before provision for income taxes in 1996 was
$1,638,893, an increase of $311,157 from 1995, or 23%. The increase in 1996
resulted from an increase in the Company's residual revenues and greater
operational efficiencies.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
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During 1997, cash provided by operating activities was $945,939, as
compared to $1,319,517 in 1996. Cash paid for income taxes in 1997 was $704,254
as compared to $594,036 in 1996. Expenditures for fixed assets and medical
devices held for lease aggregated $761,019 in 1997, a decrease from $1,535,703,
the amount purchased in 1996. During 1997, cash increased by $3,726, as compared
to a decrease in cash of $18,976 in 1996.
On December 1, 1995, the Company renegotiated its $1,500,000 credit
facility (based upon 75% of eligible accounts receivable and 25% of inventory,
as defined) and extended it until April 30, 1998 (the "Credit Facility"). As of
March 25, 1998, there was no outstanding balance under the Credit Facility. The
Company is currently negotiating to extend or replace the Credit Facility.
Although the Company believes that it will successfully negotiate such extension
or replacement on terms and conditions at least as favorable as those presently
in effect, there can be no assurance that the Company will be able to do so. The
Company's working capital on December 31, 1997 was $3,023,365 as compared to
$2,460,773 on December 31, 1996. During 1998, the Company anticipates that it
will make capital investments of approximately $1,200,000 for the production and
purchase of additional systems which the Company intends to rent and to enhance
management information systems for compliance with Year 2000 issues. Enhancement
and Year 2000 compliance of the accounting management information system has
been completed. Completion of enhancements for Year 2000 compliance for
remaining management information systems is anticipated during 1998. The Company
believes that its present cash and working capital position, its borrowing
availability and future anticipated income will be sufficient to meet its cash
and working capital needs for the foreseeable future.
ITEM 7. FINANCIAL STATEMENTS
The financial statements required hereby are located on pages F-1
through F-18.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE>
PART III
The information called for by Part III (Items 9, 10, 11 and 12 of
Form 10-KSB) is incorporated herein by reference to the Company's definitive
Proxy Statement to be filed pursuant to Regulation 14A of the Securities
Exchange Act of 1934 with respect to the Company's 1998 Annual Meeting of
Shareholders.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit No. Identification of Exhibit
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3(a) Articles of Incorporation of Company, as amended.
(Incorporated by reference to Exhibit 3(a) to the
Company's Form S-1 Registration Statement under the
Securities Act of 1933, filed on September 30, 1983 -
File No. 2-86862).
3(b) Amended and Restated By-Laws of Company. (Incorporated
by reference to Exhibit 4(b) to the Company's Form S-3
Registration Statement under the Securities Act of 1933,
Commission File No. 333-6159).
4(a) Warrant Agreement between the Company and Continental
Stock Transfer & Trust Company, the Company's transfer
agent, with the Company's form of Warrant Certificate
attached thereto. (Incorporated by reference to Exhibit
4(a) to the Company's Form S-1 Registration Statement
under the Securities Act of 1933, filed on September 30,
1983 - File No. 2-86862).
4(b) Amendment, dated December 22, 1988, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(c) to the Company's Form 10-K for the year
ended December 31, 1988).
4(c) Amendment, dated October 26, 1990, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(c) to the Company's Form 10-K for the year
ended December 31, 1990).
4(d) Amendment, dated November 30, 1994, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(d) to the Company's Form 10-KSB for the year
ended December 31, 1994).
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<PAGE>
Exhibit No. Identification of Exhibit
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4(e) Amendment, dated November 20, 1995, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(e) to the Company's Form 10-KSB for the year
ended December 31, 1995).
4(f) Amendment, dated December 20, 1996, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(h) to the Company's Registration Statement on
Form S-3, Commission File No. 333-6159).
4(g)* Amendment, dated November 5, 1997, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company.
10(a) Employment Agreement, dated January 1, 1997 between the
Company and Howard M. Siegel. (Incorporated by reference
to Exhibit 10(a) to the Company's Form 10-KSB for the
year ended December 31, 1996).
10(b) Employment Agreement, dated August 28, 1989 between the
Company and John Lesher. (Incorporated by reference to
Exhibit 10(c) to the Company's Form 10-K for the year
ended December 31, 1990).
10(c) Amendment, dated March 4, 1992, to the Employment
Agreement between the Company and John Lesher.
(Incorporated by reference to Exhibit 10(d) to the
Company's Form 10-K for the year ended December 31,
1991).
10(d) Lease for the premises located at 520 Fellowship Road,
Suite C301, Mt. Laurel, New Jersey ("Mt. Laurel Lease").
(Incorporated by reference to Exhibit 10(e) to the
Company's Form 10-K for the year ended December 31,
1991).
10(e) First Amendment to the Mt. Laurel Lease. (Incorporated
by reference to Exhibit 10(f) to the Company's Form
10-KSB for the year ended December 31, 1993).
10(f) Second Amendment to the Mt. Laurel Lease. (Incorporated
by reference to Exhibit 10(f) to the Company's Form
10-KSB for the year ended December 31, 1996).
10(g)* Third Amendment to the Mt. Laurel Lease.
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<PAGE>
Exhibit No. Identification of Exhibit
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10(h) Lease for the premises located at 3265 Lawson Boulevard,
Oceanside, New York. (Incorporated by reference to
Exhibit 10(h) to the Company's Form 10-KSB for the year
ended December 31, 1994).
10(i)* Amendment to Lease for the premises located at 3265
Lawson Boulevard, Oceanside, New York.
10(j)* Lease for the premises located at 3255 Lawson Boulevard,
Oceanside, New York.
10(k)* Lease for the premises located at 910 Church Street,
Decatur, Georgia.
10(l) Lease for the premises located at 169-10 Crocheron
Avenue, Flushing, New York. (Incorporated by reference
to Exhibit 10(j) to the Company's Form 10- KSB for the
year ended December 31, 1995.)
10(m) Lease for the premises located at 475 West 55th Street,
Countryside, Illinois. (Incorporated by reference to
Exhibit 10(k) to the Company's Form 10-KSB for the year
ended December 31, 1995.)
10(n)* Amendment to Lease for the premises located at 475 West
55th Street, Countryside, Illinois.
10(o) 1984 Incentive Stock Option Plan, as amended.
(Incorporated by reference to Exhibit 10(e) to the
Company's Form 10-K for the year ended December 31,
1990).
10(p) Amended 1991 Stock Option Plan. (Incorporated by
reference to Exhibit 10(l) to the Company's Form 10-KSB
for the year ended December 31, 1994).
10(q)* 1997 Stock Option Plan.
10(r) Restated and Amended Revolving Credit Note with North
Fork Bank, dated December 1, 1995 (the "Revolving Credit
Note"). (Incorporated by reference to Exhibit 10(n) to
the Company's Form 10-KSB for the year ended December
31, 1996).
10(s) Letter from North Fork Bank extending the Revolving
Credit Note until April 30, 1998. (Incorporated by
reference to Exhibit 10(n) to the Company's Form 10-KSB
for the year ended December 31, 1996).
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Exhibit No. Identification of Exhibit
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10(t) Agreement between the Company and the City of New York,
as extended through February 28, 1998. (Incorporated by
reference to Exhibit 10(o) to the Company's Form 10-KSB
for the year ended December 31, 1996).
10(u)* Purchase/Leaseback Agreement dated January 13, 1998 with
Celtic Leasing Corp.
10(v)* Financial Advisory and Investment Banking Agreement with
GKN Securities Corp. dated as of January 1, 1997.
23(a)* Consent of Margolin, Winer & Evens LLP.
27* Financial Data Schedule.
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* Filed herewith.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.
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<PAGE>
AMERICAN MEDICAL ALERT CORP.
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FINANCIAL STATEMENTS
Years Ended December 31, 1997, 1996 and 1995
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONTENTS
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Report of Independent Accountants F-1
Financial Statements:
Balance Sheets F-2
Statements of Income F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-7
Notes to Financial Statements F-9 to F-18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
American Medical Alert Corp.
Oceanside, New York
We have audited the accompanying balance sheets of American Medical Alert Corp.
as of December 31, 1997 and 1996 and the related statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Medical Alert Corp. as
of December 31, 1997 and 1996 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Margolin, Winer & Evens LLP
Margolin, Winer & Evens LLP
Garden City, New York
February 20, 1998
F-1
<PAGE>
AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
December 31, 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Note 3)
Current Assets:
Cash $ 304,739 $ 301,013
Accounts and notes receivable (net of allowance for
doubtful accounts of $30,000 in 1997 and 1996)
(Notes 1, 2, 5 and 11) 1,574,738 1,327,799
Inventory (Note 1) 1,310,551 1,171,021
Prepaid expenses and taxes and other current assets
(Notes 1 and 6) 196,990 137,247
Deferred income taxes (Notes 1 and 6) 97,000 54,000
---------- ----------
Total Current Assets 3,484,018 2,991,080
---------- ----------
Inventory of Medical Devices Held for Lease - at cost -- 637,000
---------- ----------
Notes Receivable (Notes 2 and 8) -- 15,956
---------- ----------
Fixed Assets - at cost:
Leased medical devices 5,152,258 4,985,543
Monitoring equipment 308,563 192,290
Furniture and equipment 338,044 263,711
Leasehold improvements 197,680 151,825
Automobiles 36,302 27,182
---------- ----------
6,032,847 5,620,551
Less accumulated depreciation and amortization (Note 1) 2,299,998 2,505,441
---------- ----------
3,732,849 3,115,110
---------- ----------
Other Assets 34,761 24,868
---------- ----------
Total Assets $7,251,628 $6,784,014
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
December 31, 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable - bank (Note 3) $ 150,000 $ --
Accounts payable 161,795 192,707
Accrued expenses 139,802 311,954
Taxes payable -- 16,464
Current portion of long-term debt (Note 4) 9,056 9,182
----------- -----------
Total Current Liabilities 460,653 530,307
Deferred Income Tax Liability (Notes 1 and 6) 318,000 258,000
Notes Payable - Bank (Note 3) -- 450,000
Long-Term Debt - Less Current Maturities (Note 4) 2,797 11,849
----------- -----------
Total Liabilities 781,450 1,250,156
----------- -----------
Commitments (Notes 7, 8 and 10) -- --
Shareholders' Equity (Notes 8 and 10):
Common stock, $.01 par value -
authorized, 10,000,000 shares;
issued 5,904,607 shares in 1997 and
5,843,276 shares in 1996 59,045 58,432
Additional paid-in capital 4,523,189 4,391,990
Retained earnings 1,993,976 1,189,468
----------- -----------
6,576,210 5,639,890
Less treasury stock, at cost (43,910 shares in 1997
and 1996) (106,032) (106,032)
----------- -----------
Total Shareholders' Equity 6,470,178 5,533,858
----------- -----------
Total Liabilities and Shareholders' Equity $ 7,251,628 $ 6,784,014
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF INCOME
================================================================================
<TABLE>
<CAPTION>
Years Ended December 31, 1997 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue (Notes 1 and 11):
Services $ 6,757,594 $ 6,119,946 $ 5,288,046
Product sales 879,136 1,135,896 889,256
----------- ----------- -----------
7,636,730 7,255,842 6,177,302
----------- ----------- -----------
Costs and Expenses (Income):
Costs related to services 2,542,840 2,075,819 1,826,036
Cost of products sold (Note 1) 844,731 789,878 545,231
Selling, general and
administrative expenses 2,726,254 2,705,525 2,422,972
Interest expense 46,705 46,965 55,694
Other income (1,308) (1,238) (367)
----------- ----------- -----------
6,159,222 5,616,949 4,849,566
----------- ----------- -----------
Income Before Provision for Income Taxes 1,477,508 1,638,893 1,327,736
Provision for Income Taxes (Notes 1 and 6) 673,000 720,000 586,000
----------- ----------- -----------
Net Income $ 804,508 $ 918,893 $ 741,736
=========== =========== ===========
Basic Earnings Per Share (Note 1) $ .14 $ .16 $ .14
=========== =========== ===========
Diluted Earnings Per Share (Note 1) $ .14 $ .16 $ .13
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY
================================================================================
Years Ended December 31, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------
NUMBER ADDITIONAL
OF PAID-IN
SHARES AMOUNT CAPITAL
---------- ---------- ----------
<S> <C> <C> <C>
Balance - January 1, 1995 5,462,712 $ 54,627 $4,069,384
Exercise of Stock Options (Note 8) 42,029 420 18,828
Net Income for the Year Ended December 31, 1995 -- -- --
---------- ---------- ----------
Balance - December 31, 1995 5,504,741 55,047 4,088,212
Exercise of Stock Options (Note 8) 338,535 3,385 303,778
Net Income for the Year Ended December 31, 1996 -- -- --
---------- ---------- ----------
Balance - December 31, 1996 5,843,276 58,432 4,391,990
Common Stock Issued 2,500 25 3,803
Exercise of Stock Options (Note 8) 58,831 588 127,396
Net Income for the Year Ended December 31, 1997 -- -- --
---------- ---------- ----------
Balance - December 31, 1997 5,904,607 $ 59,045 $4,523,189
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY
================================================================================
Years Ended December 31, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETAINED
EARNINGS TREASURY
(DEFICIT) STOCK TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Balance - January 1, 1995 $ (471,161) $ (6,484) $ 3,646,366
Exercise of Stock Options (Note 8) -- -- 19,248
Net Income for the Year Ended December 31, 1995 741,736 -- 741,736
----------- ----------- -----------
Balance - December 31, 1995 270,575 (6,484) 4,407,350
Exercise of Stock Options (Note 8) -- (99,548) 207,615
Net Income for the Year Ended December 31, 1996 918,893 -- 918,893
----------- ----------- -----------
Balance - December 31, 1996 1,189,468 (106,032) 5,533,858
Common Stock Issued -- -- 3,828
Exercise of Stock Options (Note 8) -- -- 127,984
Net Income for the Year Ended December 31, 1997 804,508 -- 804,508
----------- ----------- -----------
Balance - December 31, 1997 $ 1,993,976 $ (106,032) $ 6,470,178
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Years Ended December 31, 1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 804,508 $ 918,893 $ 741,736
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for deferred income taxes 17,000 63,000 234,000
Issuance of common stock in
consideration for consulting services 3,828 -- --
Depreciation and amortization 780,280 646,838 542,914
Changes in operating assets and liabilities:
(Increase) decrease in receivables (230,983) (106,817) 60,520
Increase in inventory (139,530) (54,211) (32,425)
(Increase) decrease in prepaid
expenses and taxes and other assets (69,636) 12,081 (109,963)
Decrease in accounts payable, accrued
expenses and taxes payable (219,528) (160,267) (3,197)
----------- ----------- -----------
Net Cash Provided by Operating Activities 945,939 1,319,517 1,433,585
----------- ----------- -----------
Cash Flows from Investing Activities:
Expenditures for fixed assets, including
inventory of medical devices held for lease in
1996 (761,019) (1,535,703) (1,184,141)
----------- ----------- -----------
Net Cash Used in Investing Activities (761,019) (1,535,703) (1,184,141)
----------- ----------- -----------
Cash Flows from Financing Activities:
Net repayments on bank borrowings (300,000) -- (100,000)
Proceeds of loans payable -- -- 3,805
Repayments of loans payable (9,178) (10,405) (9,943)
Proceeds upon exercise of stock options 127,984 207,615 19,248
----------- ----------- -----------
Net Cash (Used in) Provided by
Financing Activities (181,194) 197,210 (86,890)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Years Ended December 31, 1997 1996 1995
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Increase (Decrease) In Cash $ 3,726 $ (18,976) $ 162,554
Cash - beginning of year 301,013 319,989 157,435
--------- --------- ---------
Cash - end of year $ 304,739 $ 301,013 $ 319,989
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION-
CASH PAID DURING THE YEAR FOR:
Interest $ 46,705 $ 46,965 $ 55,694
Income taxes 704,254 594,036 457,284
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Fixed assets purchased under notes and
loans payable and capital lease $ -- $ 15,136 $ --
obligations
During 1996, an employee satisfied the
exercise price of certain stock
options by exchanging shares already
owned with a fair value of $99,548.
The fair value of the shares received
was recorded as treasury stock.
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF SCOPE OF BUSINESS - The Company's business is to sell,
SIGNIFICANT rent, install, service and monitor remote communication
ACCOUNTING systems with personal security and smoke/fire detection
POLICIES capabilities, linked to an emergency response monitoring
center. The Company markets its products primarily to
institutional customers, including long-term care
providers, retirement communities, hospitals, government
agencies across the United States and individual
consumers. (See Note 11.)
INVENTORY VALUATION - Inventory, consisting of medical
alert devices and component parts, is valued at the
lower of cost (first-in, first-out) or market. Finished
goods were approximately $1,155,610 and $1,531,000 at
December 31, 1997 and 1996, respectively, and the
remaining inventory consists of component parts.
FIXED ASSETS - Depreciation is computed by accelerated
and straight-line methods at rates adequate to allocate
the cost of applicable assets over their expected useful
lives. Leased medical devices are depreciated on a
straight line basis over seven years. Amortization of
leasehold improvements is provided on a straight-line
basis over the shorter of the useful life of the asset
or the term of the lease.
On January 1, 1996, the Company adopted the accounting
requirements of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" (SFAS No. 121). SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an
asset may not be recoverable. Measurement of the
impairment loss, if any, is based on the fair value of
the asset. The statement also requires that certain
long-lived assets and identifiable intangibles that are
to be disposed of be reported at the lower of their
carrying amount or fair value less cost to sell. The
application of SFAS No. 121 did not have a significant
impact on the Company's results of operations or
financial condition.
INCOME TAXES - The Company accounts for income taxes in
accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes,"
pursuant to which deferred taxes are determined based on
the difference between the financial statement and tax
basis of assets and liabilities, using enacted tax
rates, as well as any net operating loss or tax credit
carryforwards expected to reduce taxes payable in future
years.
REVENUE RECOGNITION - Revenue from the sale of medical
alert devices is recognized upon delivery. Revenue from
renting, installation and monitoring services is
recognized upon performance of such services.
F-9
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
RESEARCH AND DEVELOPMENT COSTS - Research and
development costs, which are expensed and included in
cost of products sold, were $20,441, $24,339 and $32,874
for the years ended December 31, 1997, 1996, and 1995,
respectively.
INCOME PER SHARE - In February 1997, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per
Share" which changes the methodology of calculating
earnings per share. SFAS No. 128 requires the disclosure
of diluted earnings per share regardless of its
difference from basic earnings per share. The Company
adopted SFAS No. 128 in December 1997. Earnings per
share data for the years ended December 31, 1997, 1996
and 1995 have been restated to conform with this
pronouncement.
The following table is a reconciliation of the
numerators and denominators in computing earnings per
share:
INCOME SHARES PER-SHARE
1997 (NUMERATOR) (DENOMINATOR) AMOUNTS
---- --------- ----------- --------
Basic EPS -
Income available to
common stockholders $ 804,508 5,839,450 $ 0.14
=======
Effect of dilutive securities -
Options and warrants -- 92,168
--------- ---------
Diluted EPS -
Income available to common
stockholders and
assumed conversions $ 804,508 5,931,618 $ 0.14
========= ========= =======
1996
----
Basic EPS -
Income available to
common stockholders $ 918,893 5,683,880 $ 0.16
=======
Effect of dilutive securities -
Options and warrants -- 168,673
--------- ---------
Diluted EPS -
Income available to common
stockholders and
assumed conversions $ 918,893 5,852,553 $ 0.16
========= ========= =======
F-11
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1995
----
Basic EPS -
Income available to
common
stockholders $ 741,736 5,484,353 $ 0.14
=======
Effect of dilutive securities -
Options and warrants -- 383,202
--------- ---------
Diluted EPS -
Income available to common
stockholders and
assumed
conversions $ 741,736 5,867,555 $ 0.13
========= ========= =======
CONCENTRATION OF CREDIT RISK - Financial instruments which potentially subject
the Company to concentration of credit risk principally consist of accounts
receivable from state and local government agencies. The risk is mitigated by
the Company's procedures for extending credit, follow-up of disputes and
receivable collection procedures.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires ail entities to disclose the fair value of certain financial
instruments in their financial statements. The Company estimates that the fair
value of its cash, accounts and notes receivable, accounts payable, accrued
expenses, taxes payable and notes payable approximates their carrying amounts
due to the short maturity of these instruments.
ACCOUNTING FOR STOCK-BASED COMPENSATION - As permitted by SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company has elected to continue
to account for employee stock options under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of grant over the amount an employee
must pay to acquire the stock.
F-11
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
2. NOTES In November 1993 an employee borrowed $30,000 and issued
RECEIVABLE a promissory note to the Company originally scheduled to
mature during 1996. The note, as amended during 1996,
bears interest at 7.5% per annum and the outstanding
balance at December 31, 1996 of $18,687 is payable in
monthly installments of $337 (principal and interest),
with a final installment of $15,241 due April 1, 1998.
At December 31, 1997, the outstanding balance of $15,956
is included in accounts and notes receivable. In the
event that the employee defaults on the promissory note,
certain options granted to the employee will terminate
(see Note 8).
3. Notes Payable - At December 31, 1996, the Company had a revolving credit
Bank line which permitted maximum borrowings up to $1,500,000
(based on 75% of eligible accounts receivable and 25% of
inventory, as defined). The note bore interest at the
prime rate (8.25% at December 31, 1996) plus 1% per
annum and was collateralized by the Company's assets. In
addition, the note required an unused commitment fee of
1/2 of 1% per annum on the daily average amount of
unused commitment. At December 31, 1996, $450,000 was
outstanding. On March 27, 1997, the maturity date of the
revolving credit line was extended through April 30,
1998, and the interest rate was reduced to prime (8.5%
at December 31, 1997) plus 3/4 of 1%.
The agreement provides for negative and affirmative
covenants including those related to tangible net worth,
working capital and other borrowings.
4. LONG-TERM Long-term debt at December 31, 1997 consists of an
DEBT automobile loan and two loans financing the purchase of
equipment. The outstanding balance on these loans at
December 31, 1997 was $11,853.
Long-term debt matures in each of the years subsequent
to December 31, 1997 as follows:
Year ending December 31,
1998 $ 9,056
1999 2,797
-------
$11,853
=======
5. RELATED PARTY A Director of the Company has an ownership interest in
TRANSACTIONS an insurance agency that has written policies for the
Company with premiums of $165,094, $153,856 and $155,432
in fiscal 1997, 1996 and 1995, respectively. Included in
accounts and notes receivable is $65,204 due from the
president and principal shareholder of the Company. (See
Notes 7 and 8.)
F-12
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
6. INCOME TAXES The provision for income taxes consists of the
following:
YEARS ENDED DECEMBER 31,
------------------------
1997 1996 1995
---- ---- ----
Current:
Federal $ 452,000 $ 469,000 $ 222,000
State 204,000 188,000 130,000
656,000 657,000 352,000
--------- --------- ---------
Deferred:
Federal 14,000 54,000 219,000
State 3,000 9,000 15,000
--------- --------- ---------
17,000 63,000 234,000
--------- --------- ---------
Total $ 673,000 $ 720,000 $ 586,000
========= ========= =========
The following is a reconciliation of the statutory
federal income tax rate and the effective rate of the
provision for income taxes:
YEARS ENDED DECEMBER 31,
------------------------
1997 1996 1995
------ ------ ------
Statutory federal income tax rate 34.0% 34.0% 34.0%
State and local taxes 9.0 8.0 8.0
Other 2.0 2.0 2.0
------ ------ ------
Effective income tax rate 45.0% 44.0% 44.0%
====== ====== ======
The tax effects of significant items comprising the
Company's deferred taxes at December 31, 1997 and 1996
are as follows:
DECEMBER 31,
------------
1997 1996
---- ----
Deferred tax liabilities:
Difference between book and tax bases
of property $(318,000) $(258,000)
--------- ---------
Deferred tax assets:
Reserves not currently deductible 54,000 13,000
Capitalization of inventory 43,000 41,000
--------- ---------
Total 97,000 54,000
--------- ---------
Net deferred tax liabilities $(221,000) $(204,000)
========= =========
For the year ended December 31, 1995 the Company
utilized net operating loss carryforward benefits of
$121,000.
F-13
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
7. COMMITMENTS On January 1, 1995, the Company entered into a five year
operating lease for offices owned by its principal
shareholder. The lease calls for an initial minimum
annual rental of $74,600, subject to a 5% annual
increase plus reimbursements for real estate taxes and
other operating expenses. In February 1998, the lease
was extended until September 30, 2007. In October 1997,
the Company entered into a separate ten year operating
lease for additional office space owned by its principal
shareholder. The lease calls for an initial minimum
annual rental of $36,000, subject to a 5% annual
increase plus reimbursement for real estate taxes. The
Company has also entered into various other operating
leases for warehouse and office space in Flushing, New
York, Mt. Laurel, New Jersey, Decatur, Georgia and
Countryside, Illinois. Rent expense was $197,887 in
1997, $182,179 in 1996 and $169,824 in 1995, which
includes $116,719, $100,835 and $94,969, respectively,
paid in connection with the above noted leases with the
principal shareholder.
The aggregate minimum annual rental commitments under
noncancelable operating leases are as follows:
Year ending December 31,
1998 $ 204,740
1999 191,594
2000 183,707
2001 141,636
2002 148,717
Thereafter 813,397
-----------
$ 1,683,791
===========
On January 1, 1997 the Company entered into a four year
employment agreement with its president (who is also the
principal shareholder). In addition to an annual base
salary starting at $200,000, the agreement, among other
things, provides for additional compensation which is
based on the Company's pre-tax income, as defined. The
employee may elect to receive the additional
compensation either in cash or in the form of the
Company's common stock. The agreement also provides for
a termination payment, under certain circumstances, if a
change in control (as defined) occurs. The termination
payment is equal to 2.99 times the base amount, as
defined.
8. COMMON STOCK, The Company has three Stock Option Plans, an Incentive
WARRANTS AND Stock Option Plan ("l984 Plan"), a 1991 Stock Option
OPTIONS Plan ("1991 Plan"), and a 1997 Stock Option Plan ("1997
Plan"). Under these plans, as amended, a maximum of
500,000, 750,000 and 750,000 options, respectively, may
be granted as either Incentive Stock Options or
Nonstatutory Stock Options. Stock options granted under
the plans vest immediately and have a term not greater
than ten years from the date the option is granted or
five years for a holder of more than 10% of the
Company's common stock. Incentive Stock Options may be
F-14
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
granted at an exercise price not less than the fair
market value of the underlying shares at the date of
grant subject to certain other limitations specified in
Section 422 of the Internal Revenue Code. The per share
price of Nonstatutory Stock Options granted to
Non-Insiders (as defined) shall be determined by the
Board of Directors or the Stock Option Committee of the
Board. All options under the above plans have been
granted at exercise prices equal to the fair market
value of the underlying common shares at the date of the
grant. The 1984 Plan term expired in May 1994.
The Company has adopted the disclosure-only provisions
of Statement of Financial Accounting Standards (SFAS)
No. 123, "Accounting for Stock Based Compensation."
Accordingly, no compensation expense has been recognized
for the stock option plan. Had compensation cost for the
Company's stock option plan been determined based on the
fair value at the grant date for awards in 1997, 1996
and 1995 consistent with the provisions of SFAS No. 123,
the Company's net income and earnings per share would
have been reduced to the pro forma amounts indicated
below:
1997 1996 1995
--------- -------- -----------
Pro forma net income $ 694,844 $744,700 $ 579,180
Pro forma basic earnings
per share $ .12 $ .13 $ .11
The weighted average grant date fair value of options
granted in 1997, 1996 and 1995 was $109,664, $174,193
and $162,556, respectively.
The fair value of options at date of grant was estimated
using the Black-Scholes model with the following
weighted average assumptions:
1997 1996 1995
------- ------- -------
Expected life (years) 2.24 4 4
Risk free interest rate 5.97% 5.69% 7.17%
Expected volatility 32.1% 52.6% 52.6%
Expected dividend yield -- -- --
F-15
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
Information with respect to options under plans is as
follows:
Weighted
Number Average
of Exercise
Shares Price
------ -----
Balance - January 1, 1995 773,725 $ 1.65
Granted during 1995 89,513 2.90
Forfeitures/expirations during 1995 (14,422) 2.48
Exercised during 1995 (42,029) .46
--------
Balance - December 31, 1995 806,787 1.84
Granted during 1996 120,220 2.45
Forfeitures/expirations during 1996 (14,115) 2.24
Exercised during 1996 (338,535) .91
--------
Balance - December 31, 1996 574,357 2.50
Granted during 1997 160,917 2.70
Forfeitures/expirations during 1997 (73,267) 2.38
Exercised during 1997 (58,831) 2.18
-------- --------
Balance - December 31, 1997 603,176 $ 2.57
======== ========
564,886 and 529,480 options were exercisable at December
31, 1997 and 1996, respectively.
The following table summarizes information about the
stock options outstanding at December 31, 1997:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------ -----------------------
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Life Exercisable Price
-------- ----------- ------ ------ ----------- ------
$1.9375 -
$2.8875 545,821 1.83 years $2.52 507,531 $2.53
$2.9563 - 57,355 2.14 years $3.09 57,355 $3.09
$3.4375
As of December 31, 1997, 633,364 options have been exercised under both plans
and 672,548 and 330 options are available for future grants under the 1997 and
1991 Plan, respectively.
F-16
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
The Company has agreed to grant options to its
management and employees in January and July of each
year. The number of options to be granted is equal to 5%
of the dollar amount of compensation during the two
calendar quarters preceding the grant date. To the
extent permitted by law, such options will be granted as
Incentive Stock Options. Each non-employee director will
receive options for 2,500 shares of common stock on each
grant date.
In December 1983, the Company sold units that contained
warrants to purchase 850,000 shares of the Company's
common stock at $3.50 per share. The Company may, at its
option, upon not less than 90 days written notice to
warrant holders, terminate all outstanding warrants
without payment, provided the market price of the common
stock exceeds $7.00 per share during any 20 consecutive
trading days. The warrants expired on December 27, 1997.
The Company has agreed to extend their expiration to
December 26, 1998.
In November 1994, the Company granted to legal counsel
options to purchase 25,000 shares of common stock at
$2.00 per share (the fair market value at the date of
grant), such options being exercisable for a period of
five years from the date of grant.
9. EMPLOYEE Effective January 1997, the Company began to sponsor a
SAVINGS PLAN 401(k) savings plan which is available to all eligible
employees. Participants may elect to defer from 1% to
15% of their compensation, subject to an annual
limitation provided by the Internal Revenue Service. The
Company may make matching and/or profit sharing
contributions to the plan at its discretion. For the
year ended December 31, 1997 the Company contributed
$14,978.
10. CONSULTING On December 1, 1994, the Company entered into a
AGREEMENT financial advisory and investment banking agreement. The
Company will receive advice regarding certain internal
operating matters, as well as certain corporate finance
issues. In addition, the Company may pay certain fees
(as defined) for transactions consummated by the Company
that are either originated by the consultant or the
Company. The agreement, which is for a term of 24
months, has annual fees of $30,000. In addition, the
Company granted 150,000 warrants exercisable for a
period of four years commencing one year from the date
of the agreement at an exercise price of $2.00 per share
(the fair market value at the date of grant). On January
1, 1997, the agreement was renewed for a term of twelve
months. In addition to the annual fees of $30,000, the
Company has granted to the Consultant 50,000 warrants
exercisable for a period of four years at an exercise
price of $4.50. In July 1997, the companies mutually
agreed that the monthly payments of $2,500 to the
consultant would be suspended.
F-17
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
================================================================================
11. MAJOR The Company is an approved Medicaid Provider in the
CUSTOMERS states of New York and Georgia. During the years ended
December 31, 1997, 1996 and 1995, the Company had
revenue from one contract with a municipality in New
York State which represented 44% of total revenue each
year. This contract is effective through February 28,
1998. In February 1998, the Company was notified by the
municipality that they are currently processing the
renewal of the Company's contract which would extend it
through June 30, 1999. During the years ended December
31, 1997, 1996 and 1995, the Company had revenue from
the State of Georgia which represents 5%, 5% and 6%,
respectively, of total revenue. As of December 31, 1997
and 1996, accounts receivable from the one contract
referred to above represented 46% and 39%, respectively,
of accounts receivable.
F-18
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN MEDICAL ALERT CORP.
By: /s/ Howard M. Siegel
------------------------
Dated: March 27, 1998 Howard M. Siegel
Chairman of the Board and
President
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
/S/ HOWARD M. SIEGEL Chairman of the Board, March 27, 1998
- ----------------------------- President, Chief Executive
Howard M. Siegel Officer, and Director
(Principal Executive Officer)
/S/ COREY M. ARONIN Chief Financial Officer March 27, 1998
- -----------------------------
Corey M. Aronin
/S/ PETER BREITSTONE Director March 27, 1998
- -----------------------------
Peter Breitstone
/S/ LEONARD HERZ Director March 27, 1998
- -----------------------------
Leonard Herz
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
3(a) Articles of Incorporation of Company, as amended.
(Incorporated by reference to Exhibit 3(a) to the
Company's Form S-1 Registration Statement under the
Securities Act of 1933, filed on September 30, 1983 -
File No. 2-86862).
3(b) Amended and Restated By-Laws of Company. (Incorporated
by reference to Exhibit 4(b) to the Company's Form S-3
Registration Statement under the Securities Act of 1933,
Commission File No. 333-6159).
4(a) Warrant Agreement between the Company and Continental
Stock Transfer & Trust Company, the Company's transfer
agent, with the Company's form of Warrant Certificate
attached thereto. (Incorporated by reference to Exhibit
4(a) to the Company's Form S-1 Registration Statement
under the Securities Act of 1933, filed on September 30,
1983 - File No. 2-86862).
4(b) Amendment, dated December 22, 1988, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(c) to the Company's Form 10-K for the year
ended December 31, 1988).
4(c) Amendment, dated October 26, 1990, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(c) to the Company's Form 10-K for the year
ended December 31, 1990).
4(d) Amendment, dated November 30, 1994, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(d) to the Company's Form 10-KSB for the year
ended December 31, 1994).
4(e) Amendment, dated November 20, 1995, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(e) to the Company's Form 10-KSB for the year
ended December 31, 1995).
4(f) Amendment, dated December 20, 1996, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company. (Incorporated by reference to
Exhibit 4(h) to the Company's Registration Statement on
Form S-3, Commission File No. 333-6159).
<PAGE>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
4(g)* Amendment, dated November 5, 1997, to the Warrant
Agreement between the Company and Continental Stock
Transfer & Trust Company.
10(a) Employment Agreement, dated January 1, 1997 between the
Company and Howard M. Siegel. (Incorporated by reference
to Exhibit 10(a) to the Company's Form 10-KSB for the
year ended December 31, 1996).
10(b) Employment Agreement, dated August 28, 1989 between the
Company and John Lesher. (Incorporated by reference to
Exhibit 10(c) to the Company's Form 10-K for the year
ended December 31, 1990).
10(c) Amendment, dated March 4, 1992, to the Employment
Agreement between the Company and John Lesher.
(Incorporated by reference to Exhibit 10(d) to the
Company's Form 10-K for the year ended December 31,
1991).
10(d) Lease for the premises located at 520 Fellowship Road,
Suite C301, Mt. Laurel, New Jersey ("Mt. Laurel Lease").
(Incorporated by reference to Exhibit 10(e) to the
Company's Form 10-K for the year ended December 31,
1991).
10(e) First Amendment to the Mt. Laurel Lease. (Incorporated
by reference to Exhibit 10(f) to the Company's Form
10-KSB for the year ended December 31, 1993).
10(f) Second Amendment to the Mt. Laurel Lease. (Incorporated
by reference to Exhibit 10(f) to the Company's Form
10-KSB for the year ended December 31, 1996).
10(g)* Third Amendment to the Mt. Laurel Lease.
10(h) Lease for the premises located at 3265 Lawson Boulevard,
Oceanside, New York. (Incorporated by reference to
Exhibit 10(h) to the Company's Form 10-KSB for the year
ended December 31, 1994).
10(i)* Amendment to Lease for the premises located at 3265
Lawson Boulevard, Oceanside, New York.
10(j)* Lease for the premises located at 3255 Lawson Boulevard,
Oceanside, New York.
10(k)* Lease for the premises located at 910 Church Street,
Decatur, Georgia.
<PAGE>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
10(l) Lease for the premises located at 169-10 Crocheron
Avenue, Flushing, New York. (Incorporated by reference
to Exhibit 10(j) to the Company's Form 10-KSB for the
year ended December 31, 1995.)
10(m) Lease for the premises located at 475 West 55th Street,
Countryside, Illinois. (Incorporated by reference to
Exhibit 10(k) to the Company's Form 10-KSB for the year
ended December 31, 1995.)
10(n)* Amendment to Lease for the premises located at 475 West
55th Street, Countryside, Illinois.
10(o) 1984 Incentive Stock Option Plan, as amended.
(Incorporated by ref erence to Exhibit 10(e) to the
Company's Form 10-K for the year ended December 31,
1990).
10(p) Amended 1991 Stock Option Plan. (Incorporated by
reference to Exhibit 10(l) to the Company's Form 10-KSB
for the year ended December 31, 1994).
10(q)* 1997 Stock Option Plan.
10(r) Restated and Amended Revolving Credit Note with North
Fork Bank, dated December 1, 1995 (the "Revolving Credit
Note"). (Incorporated by reference to Exhibit 10(n) to
the Company's Form 10-KSB for the year ended December
31, 1996).
10(s) Letter from North Fork Bank extending the Revolving
Credit Note until April 30, 1998. (Incorporated by
reference to Exhibit 10(n) to the Company's Form 10-KSB
for the year ended December 31, 1996).
10(t) Agreement between the Company and the City of New York,
as extended through February 28, 1998. (Incorporated by
reference to Exhibit 10(o) to the Company's Form 10-KSB
for the year ended December 31, 1996).
10(u)* Purchase/Leaseback Agreement dated January 13, 1998 with
Celtic Leasing Corp.
10(v)* Financial Advisory and Investment Banking Agreement with
GKN Securities Corp. dated as of January 1, 1997.
<PAGE>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
23(a)* Consent of Margolin, Winer & Evens LLP.
27* Financial Data Schedule.
-------------------
* Filed herewith.
[American Medical Alert Corp. Letterhead]
November 5, 1997
Mr. William F. Seegraber, Vice President VIA FAX 212 509-5150
Continental Stock Transfer & Trust Company HARD COPY TO FOLLOW
2 Broadway
New York, NY 10004
Gentlemen:
Reference is made to that certain Warrant Agreement between American Medical
Alert Corp. (the "Company") and Continental Stock Transfer & Trust Company (the
"Warrant Agreement"), dated September 23, 1992, with regard to the Common Share
Purchase Warrants issued by the Company (the "Warrants").
The Warrant Agreement is hereby amended to provide that the expiration date of
the Warrants is extended from December 27, 1997 until December 26, 1998.
Very truly yours,
AMERICAN MEDICAL ALERT CORP.
By: /s/ HOWARD M. SIEGEL
-----------------------
Howard M. Siegel
President/CEO
Agreed to:
CONTINENTAL STOCK TRANSFER & TRUST CO.
By: /S/ WILLIAM SEEGRABER
------------------------
William F. Seegraber, Vice President
cc: Corey Aronin, AMAC
Parker Chapin Flattau & Klimpl
THIRD AMENDMENT TO LEASE
DATED DECEMBER 30, 1997
BETWEEN
FELLOWSHIP BUSINESS CENTER (LANDLORD)
AND
AMERICAN MEDICAL ALERT CORPORATION (TENANT)
-------------------------------------------------------------
PURSUANT to a Lease dated April 8, 1991 for 2,100 square feet of
space known as 520 Fellowship Road, Suite C-301, Mt. Laurel, New Jersey; and
First Amendment to Lease dated November 18, 1993 (relocating to Suite A-106/107
and a total of 5,400 SF); Second Amendment to Lease dated January 15, 1997;
between the aforementioned parties, the following changes shall be made:
1. TERM: The term of the Lease shall be extended for
an additional three (3) years commencing
January 1, 1998 and terminating December
31, 2000.
2. RENTAL: $40,500.00 per year, net;
$ 3,375.00 per month, net.
All other terms and conditions of the original Lease and subsequent
Letters of Amendment will remain in full force and effect.
FELLOWSHIP BUSINESS CENTER, (Landlord)
/s/ STEVEN BLOOM
-------------------------------------
By: Steven Bloom
AMERICAN MEDICAL ALERT
CORPORATION, (Tenant)
/s/ JOHN LESHER
-------------------------------------
By: John Lesher
Title: Vice President of Engineering
EXTENSION OF LEASE
It is hereby agreed by and between HOWARD SIEGEL, as Landlord, and
AMERICAN MEDICAL ALERT CORP., as Tenant, as follows:
1. The parties previously entered into a written lease of
premises 3265 Lawson Blvd., Oceanside, New York, on December 31, 1994 for a term
commencing on January 1, 1995 and ending on December 31, 1999.
2. It is hereby agreed that the term of the aforementioned Lease
is hereby extended for a term commencing on January 1, 2000 and terminating on
September 30, 2007.
3. It is hereby agreed that the annual rent shall be increased by
an amount equal to five (5%) percent of the prior years annual rent. As of
January 1, 2000, the annual rent shall be an amount equal to the annual rent in
effect for the calendar year 1999, plus an increase equal to five (5%) percent
of said annual rent. Thereafter, on January 1 of each succeeding year the annual
rent shall be increased by an amount equal to five (5%) percent of the prior
years rental. All rents shall be paid in equal monthly installments.
4. Except as hereinabove set forth, the terms and provisions of
the aforementioned Lease executed by and between the parties hereto shall remain
in full force and effect.
Dated: February 9, 1998
/s/ HOWARD SIEGEL
------------------------------
HOWARD SIEGEL, Landlord
AMERICAN MEDICAL ALERT CORP.
By: /s/ COREY M. ARONIN, CFO
----------------------------
Tenant
THIS LEASE made the 30th day of September 1997, between ADD-ON
PROPERTIES, LLC with offices at 3255 Lawson Boulevard, Oceanside, New York
11572, hereinafter referred to as LANDLORD, and AMERICAN MEDICAL ALERT CORP.
with offices at 3265 Lawson Boulevard, Oceanside, New York 11572, hereinafter
jointly, severally and collectively referred to as TENANT.
WITNESSETH, that the Landlord hereby leases to the Tenant, and the
Tenant hereby hires and takes from the Landlord in the building known as 3255
Lawson Boulevard, Oceanside, New York 11572 to be used and occupied by the
Tenant for offices, storage, monitoring services, assembly and any other
services and functions performed by the Tenant American Medical Alert Corp. and
for no other purpose, for a term to commence on October 1, 1997, and to end on
September 30, 2007, unless sooner terminated as hereinafter provided, at the
ANNUAL RENT of $36,000.00 per annum for the first 12 months and thereafter
pursuant to Rider annexed hereto all payable in equal monthly instalments in
advance on the first day of each and every calendar month during said term,
except the first instalment, which shall be paid upon the execution hereof.
THE TENANT JOINTLY AND SEVERALLY COVENANTS:
FIRST.-That the Tenant will pay the rent as above
provided.
REPAIRS SECOND.-That, throughout said term the tenant will
take good care of the demised premises, fixtures and
appurtenances, and all alterations, additions and
improvements to either; make all repairs in and about
the same necessary to preserve them in good order and
condition, which repairs shall be, in quality and class,
equal to the original work; promptly pay the expense of
such repairs; suffer no waste or injury; give prompt
notice to the Landlord of any fire that may occur;
ORDINANCES AND execute and comply with all laws, rules, orders,
VIOLATIONS ordinances and regulations at any time issued or in
force (except those requiring structural alterations),
applicable to the demised premises or to the Tenant's
occupation thereof, of the Federal, State and Local
Governments, and of each and every department, bureau
and official thereof, and of the New York Board of Fire
Underwriters; permit at all times during usual business
hours, the Landlord and representatives of the Landlord
to enter the demised premises for the purpose of
ENTRY inspection, and to exhibit them for purposes of sale or
rental; suffer the Landlord to erect, use, maintain,
repair and replace pipes and conduits in the demised
premises and to the floors above and below; forever
indemnify and save harmless the Landlord for and against
any and all liability, penalties, damages, expenses and
judgments arising from injury during said term to person
or property of any nature, occasioned wholly or in part
by any act or acts, omissions of the Tenant, or of the
INDEMNIFY employees, guests, agents, assigns or undertenants of
LANDLORD the Tenant and also for any matter or thing growing out
of the occupation of the demised premises or of the
streets, sidewalks or vaults adjacent thereto; permit,
during the six months next prior to the expiration of
the term the usual notice "To Let" to be placed and to
remain unmolested in a conspicuous place upon the
exterior of the demised premises; repair, at or before
the end of the term, all injury done by the installation
or removal of furniture and property; and at the end of
the term, to quit and surrender the demised premises
with all alterations, additions and improvements in good
order and condition.
<PAGE>
MOVING INJURY THIRD.-That the Tenant will not disfigure or
SURRENDER deface any part of the building, or suffer the same to
be done, except so far as may be necessary to affix such
trade fixtures as are herein consented to by the
Landlord; the Tenant will not obstruct, or permit the
obstruction of the street or the sidewalk adjacent
thereto; will not do anything, or suffer anything to be
done upon the demised premises which will increase the
NEGATIVE rate of fire insurance upon the building or any of its
COVENANTS contents, or be liable to cause structural injury to
said building; will not permit the accumulation of waste
or refuse matter, and will not, without the written
consent of the Landlord first obtained in each case,
either sell, assign, mortgage or transfer this lease,
OBSTRUCTION underlet the demised premises or any part thereof,
SIGNS permit the same of any part thereof to be occupied by
anybody other than the Tenant and the Tenant's
employees, make any alterations in the demised premises,
use the demised premises or any part thereof for any
purpose other than the one first above stipulated, or
for any purpose deemed extra hazardous on account of
fire risk, nor in violation of any law or ordinance.
AIR CONDITIONING That the Tenant will not obstruct or permit the
obstruction of the light, halls, stairway or entrances
to the building, and will not erect or inscribe any
sign, signals or advertisements unless and until the
style and location thereof have been approved by the
Landlord; and if any be erected or inscribed without
such approval, the Landlord may remove the same. No
water cooler, air conditioning unit or system or other
apparatus shall be installed or used without the prior
written consent of Landlord.
IT IS MUTUALLY COVENANTED AND AGREED, THAT
FIRE CLAUSE FOURTH.-If the demised premises shall be partially
damaged by fire or other cause without the fault or
neglect of Tenant, Tenant's servants, employees, agents,
visitors or licensees, the damages shall be repaired by
and at the expense of Landlord and the rent until such
repairs shall be made shall be apportioned according to
the part of the demised premises which is usable by
Tenant. But if such partial damage is due to the fault
or negligent of Tenant, Tenant's servants, employees,
agents, visitors or licensees, without prejudice to any
other rights and remedies of Landlord and without
prejudice to the rights of subrogation of Landlord's
insurer, the damages shall be repaired by Landlord but
there shall be no apportionment or abatement of rent. No
penalty shall accrue for reasonable delay which may
arise by reason of adjustment of insurance on the part
of Landlord and/or Tenant, and for reasonable delay on
account of "labor troubles", or any other cause beyond
Landlord's control. If the demised premises are totally
damaged or are rendered wholly untenantable by fire or
other cause, and if Landlord shall decide not to restore
or not to rebuild the same, or if the building shall be
so damaged that Landlord shall decide to demolish it or
to rebuild it, then or in any of such events Landlord
may, within ninety (90) days after such fire, or other
cause, give Tenant a notice in writing of such decision,
which notice shall be given as in Paragraph Twelve
hereof provided, and thereupon the term of this lease
shall expire by lapse of time upon the third day after
such notice is given, and Tenant shall vacate the demise
premises and surrender the same to Landlord. If Tenant
shall not be in default under this lease then, upon the
termination of this lease under the conditions provided
for in the sentence immediately preceding, Tenant's
liability for rent shall cease as of the day following
the casualty. Tenant hereby expressly
2
<PAGE>
waives the provisions of Section 227 of the Real
Property Law and agrees that the foregoing provisions of
this Article shall govern and control in lieu thereof.
If the damage or destruction be due to the fault or
neglect of Tenant the debris shall be removed by, and at
the expense of, Tenant.
EMINENT DOMAIN FIFTH.-If the whole or any part of the premises
hereby demise shall be taken or condemned by any
competent authority for any public use or purpose then
the term hereby granted shall cease from the time when
possession of the part so taken shall be required for
such public purpose and without apportionment of award,
the Tenant hereby assigning to the Landlord all right
and claim to any such award, the current rent, however,
in such case to be apportioned.
LEASE NOT IN SIXTH.-If, before the commencement of the term,
EFFECT the Tenant be adjudicated a bankrupt, or make a "general
assignment," or take the benefit of any insolvent act,
or if a Receiver or Trustee be appointed for the
Tenant's property, or if this lease or the estate of the
Tenant hereunder be transferred or pass to or devolve
upon any other person or corporation, or if the tenant
shall default in the performance of any agreement by the
Tenant contained in any other lease to the Tenant by the
Landlord or by any corporation of which an officer of
DEFAULTS the Landlord is a Director, this lease shall thereby, at
the option of the Landlord, be terminated and in that
case, neither the Tenant nor anybody claiming under the
Tenant shall be entitled to go into possession of the
demised premises. If after the commencement of the term,
any of the events mentioned above in this subdivision
shall occur, or if Tenant shall make default in
fulfilling any of the covenants of this lease, other
TEN DAY NOTICE than the covenants for the payment of rent of
"additional rent" or if the demised premises become
vacant or deserted, the Landlord may give to the Tenant
ten days' notice of intention to end the term of this
lease, and thereupon at the expiration of said ten days'
(if said condition which was the basis of said notice
shall continue to exist) the term under this lease shall
expire as fully and completely as if that day were the
date herein definitely fixed for the expiration of the
term and the Tenant will then quit and surrender the
demised premises to the Landlord, but the Tenant shall
remain liable as hereinafter provided.
RE POSSESSION If the Tenant shall make default in the payment of
BY LANDLORD the rent reserved hereunder, or any item of "additional
rent" herein mentioned, or any part of either or in
making any other payment herein provided for, or if the
notice last above provided for shall have been given and
if the condition which was the basis of said notice
shall exist at the expiration of said ten days' period,
the Landlord may immediately, or at any time thereafter,
re-enter the demised premises and remove all persons and
all or any property therefrom, either by summary
RE-LETTING disposess proceedings, or by any suitable action or
proceeding at law, or by force or otherwise, without
being liable to indictment, prosecution or damages
therefor, and re-possess and enjoy said premises
together with all additions, alterations and
improvements. In any such case or in the event that this
lease be "terminated" before the commencement of the
term, as above provided, the Landlord ma either re-let
the demised premises or any part or parts thereof for
WAIVER BY TENANT the Landlord's own account, or may, at the Landlord's
option, re-let the demised premises or any part or parts
thereof as the agent of the
3
<PAGE>
Tenant, and receive the rents therefor, applying the
same first to the payment of such expenses as the
Landlord may have incurred, and then to the fulfillment
of the covenants of the Tenant herein, and the balance,
if any, at the expiration of the term first above
provided for, shall be paid to the Tenant. Landlord may
rent the premises for a term extending beyond the term
hereby granted without releasing Tenant from any
liability. In the event that the term of this lease
shall expire as above in this subdivision "Sixth"
provided, or terminate by summary proceedings or
otherwise, and if the Landlord shall not re-let the
demised premises for the Landlord's own account, then,
whether or not the premises be re-let, the Tenant shall
remain liable for, and the Tenant hereby agrees to pay
to the Landlord, until the time when this lease would
have expired but for such termination or expiration, the
equivalent of the amount of all of the rent and
"additional rent" reserved herein, less the avails of
reletting, if any, and the same shall be due and payable
by the Tenant to the Landlord on the several rent days
above specified, that is, upon each of such rent days
the Tenant shall pay to the Landlord the amount of
deficiency then existing. The Tenant hereby expressly
waives any and all right of redemption in case the
Tenant shall be dispossessed by judgment or warrant of
any court or judge, and the Tenant waives and will waive
all right to trial by jury in any summary proceedings
hereafter instituted by the Landlord against the Tenant
in respect to the demised premises. The words "re-enter
and "re-entry" as used in this lease are not restricted
to their technical legal meaning.
REMEDIES ARE In the event or a breach of threatened breach by
CUMULATIVE the Tenant of any of the covenants or provisions hereof,
the Landlord shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity,
as if re-entry, summary proceedings and other remedies
were not herein provided for.
LANDLORD MAY SEVENTH.-If the Tenant shall make default in the
PERFORM performance of any covenant herein contained, the
Landlord may immediately, or at any time thereafter,
without notice, preform the same for the account of the
Tenant. If a notice of mechanic's lien be filed against
the demised premises or against premises of which the
demised premises are part, for, or purporting to be for,
labor or material alleged to have been furnished, or to
be furnished to or for the Tenant at the demised
premises, and if the Tenant shall fail to take such
action as shall cause such lien to be discharged within
fifteen days after the filing of such notice, the
Landlord may pay the amount of such lien or discharge
the same by deposit or by bonding proceedings, and in
the event of such deposit or bonding proceedings, the
Landlord may require the lienor to prosecute an
appropriate action to enforce the lienor's claim. In
such case, the Landlord may pay any judgment recovered
on such claim. Any amount paid or expense incurred by
ADDITIONAL RENT the Landlord as in this subdivision of this lease
provided, and any amount as to which the Tenant shall at
any time be in default for or in respect to the use of
water, electric current or sprinkler supervisory
service, and any expense incurred or sum of money paid
by the Landlord by reason of the failure of the Tenant
to comply with any provision hereof, or in defending any
such action, shall be deemed to be "additional rent" for
the demised premises, and shall be due and payable by
the Tenant to the Landlord on the first day of the next
following month, or, at the option of the Landlord, on
the first day of a succeeding month. The receipt by the
Landlord of any instalment of the regular
4
<PAGE>
stipulated rent hereunder or any of said "additional
rent" shall not be a waiver of any other "additional
rent" then due.
AS TO WAIVERS EIGHTH.-The failure of the Landlord to insist, in
any one or more instances upon a strict performance of
any of the covenants of this lease, or to exercise any
option herein contained, shall not be construed as a
waiver or a relinquishment for the future of such
covenant or option, but the same shall continue and
remain in full force and effect. The receipt by the
Landlord of rent, with knowledge of the breach of any
covenant hereof, shall not be deemed a waiver of such
breach and no waiver by the landlord or any provision
hereof shall be deemed to have been made unless
expressed in writing and signed by the Landlord. Even
though the Landlord shall consent to an assignment
hereof no further assignment shall be made without
express consent in writing by the Landlord.
COLLECTION OF NINTH.-If this lease assigned, or if the demised
RENT FROM OTHERS premises or any part thereof be underlet or occupied by
anybody other than the Tenant the Landlord may collect
rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein
reserved, and no such collection shall be deemed a
waiver of the covenant herein against assignment and
underletting, or the acceptance of the assignee,
under-tenant or occupant as tenant, or a release of the
Tenant from the further performance by the Tenant of the
covenants herein contained on the part of the Tenant.
MORTGAGES TENTH.-This lease shall be subject and subordinate
at all times, to the lien of the mortgages now on the
demised premises, and to all advances made or hereafter
to be made upon the security thereof, and subject and
subordinate to the lien of any mortgage or mortgages
which at any time may be made a lien upon the premises.
The Tenant will execute and deliver such further
instrument or instruments subordinating this lease to
the lien of any such mortgage or mortgages as shall be
desired by any mortgagee or proposed mortgagee. The
Tenant hereby appoints the Landlord the attorney-in-fact
of the Tenant, irrevocable, to execute ad deliver any
such instrument or instruments for the Tenant.
IMPROVEMENTS ELEVENTH.-All improvements made by the Tenant to
or upon the demised premises, except said trade
fixtures, shall when made, at once be deemed to be
attached to the freehold, and become the property of the
Landlord, and at the end or other expiration of the
term, shall be surrendered to the Landlord in as good
order and condition as they were when installed,
reasonable wear and damages by the elements excepted.
NOTICES TWELFTH.-Any notice or demand which under the
terms of this lease or under any statute must or may be
given or made by the parties hereto shall be in writing
and shall be given or made by mailing the same by
certified or registered mail addressed to the respective
parties at the addresses set forth in this lease.
NO LIABILITY THIRTEENTH.-the Landlord shall not be liable for
any failure of water supply or electrical current,
sprinkler damages, or failure of sprinkler service, nor
for injury or damages to person or property caused by
the elements or by
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other tenants or persons in said building, or resulting
from steam, gas, electricity, water, rain or snow, which
may leak or flow from any part of said buildings, or
from the pipes, appliances or plumbing works of the
same, or from the street or sub-surface, or from any
other place, nor for interference with light or other
incorporeal hereditaments by anybody other than the
Landlord, or caused by operations by or for a government
authority in construction of any public or quasi-public
works, neither shall the Landlord be liable for any
latent defect in the building.
NO ABATEMENT FOURTEENTH.-No diminution or abatement orf rent,
or other compensation shall be claimed or allowed for
inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its
appliances, nor for any space taken to comply with any
law, ordinance or other of a governmental authority. In
respect to the various "services," if any, herein
expressly or impliedly agreed to be furnished by the
Landlord to the Tenant, it is agreed that there shall be
no diminution or abatement of or impliedly agreed to be
furnished by the Landlord to the Tenant, it is agreed
that there shall be no diminution or abatement of the
rent, or any other compensation, for interruption or
curtailment of such "service" when such interruption or
curtailment shall be due to accident, alterations or
repairs desirable or necessary to be made or to
inability or difficulty in securing supplies or labor
for the maintenance of such "service" or to some other
cause, not gross negligence on the part of the Landlord.
No such interruption or curtailment of any such
"service" shall be deemed a constructive eviction. The
Landlord shall not be required to furnish, and the
Tenant shall not be entitled to receive, any of such
"services" during any period wherein the Tenant shall be
in default in respect to the payment of rent. Neither
shall there be any abatement or diminution of rent
because of making of repairs, improvements or
decorations to the demised premises after the date above
fixed for the commencement of the term, it being
understood that rent shall, in any event, commence to
run at such date so above fixed.
RULES, ETC. FIFTEENTH.-The Landlord may prescribe and regulate
the placing of safes, machinery, quantities of
merchandise and other things. The Landlord may also
prescribe and regulate which elevator ad entrances shall
be used by the Tenant's employees, and for the Tenant's
shipping. The Landlord may make such other and further
rules and regulations as, in the Landlord's judgment,
may from time to time be needful for the safety, care or
cleanliness of the building, and for the preservation of
good order therein. The Tenant and the employees and
agents of the Tenant will observe and conform to all
such rules and regulations.
SHORING SIXTEENTH.-In the event that an excavation shall
OF WALLS be made for building or other purposes upon land
adjacent to the demised premises or shall be
contemplated to be made, the Tenant shall afford to the
person or persons causing or to cause such excavation,
license to enter upon the demised premises for the
purpose of doing such work as said person or persons
shall deem to be necessary to preserve the wall or
walls, structure or structures upon the demised premises
from injury and to support the same by proper
foundations.
VAULT SPACE SEVENTEENTH.-No vaults or space not within the
property line of the
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building are leased hereunder. Landlord makes no
representation as to the location of the property line
of the building. Such vaults or space as Tenant may be
permitted to use or occupy are to be used or occupied
under a revocable license and if such license be revoked
by the Landlord as to the use of part or all of the
vaults or space Landlord shall not be subject to any
liability; Tenant shall not be entitled to any
compensation or reduction in rent nor shall this be
deemed constructive or actual eviction. Any tax, fee or
charge of municipal or other authorities for such vaults
or space shall be paid by the Tenant for the period of
the Tenant's use or occupancy thereof.
ENTRY EIGHTEENTH.-That during seven months prior to the
expiration of the term hereby granted, applicants shall
be admitted at all reasonable hours of the day to view
the premises until rented; and the Landlord and the
Landlord's agents shall be permitted at any time during
the term to visit and examine them at any reasonable
hour of the day, and workmen may enter at any time, when
authorized b the Landlord or the Landlord's agents, to
make or facilitate repairs in any part of the building;
and if the said Tenant shall not be personally present
to open and permit an entry into said premises, at any
time, when for any reason an entry therein shall be
necessary or permissible hereunder, the Landlord or the
Landlord's agents may forcibly enter the same without
rendering the Landlord or such agents liable to any
claim or cause of action for damages by reason thereof
(if during such entry the Landlord shall accord
reasonable care to the Tenant's property) and without in
any manner affecting the obligations and covenants of
this lease; it is, however, expressly understood that
the right and authority hereby reserved, does not
impose, nor does the Landlord assume, by reason thereof,
any responsibility or liability whatsoever for the care
or supervision of said premises, or any of the pipes,
fixtures, appliances or appliances therein contained or
therewith in any manner connected.
NO NINETEENTH - The Landlord has made no
REPRESENTATIONS representations or promises in respect to said building
or to the demise premises except those contained herein,
and those, if any, contained in some written
communication to the Tenant, signed by the Landlord.
This instrument may not be changed, modified, discharged
or terminated orally.
ATTORNEY'S FEES TWENTIETH.-If the Tenant shall at any time be in
default hereunder, and if the Landlord shall institute
an action or summary proceeding against the Tenant based
upon such default, then the Tenant will reimburse the
Landlord for the expense of attorneys' fees and
disbursements hereby incurred by the Landlord, so far as
the same are reasonable in amount. Also so long as the
Tenant shall be a tenant hereunder the amount of such
expenses shall be deemed to be "additional rent"
hereunder and as the Tenant shall be a tenant hereunder
the amount of such expenses shall be "additional rent"
hereunder and shall be due from the Tenant to the
Landlord on the first day of the month following the
incurring of such respective expenses.
POSSESSION TWENTY-FIRST.-Landlord shall not be liable for
failure to give possession of the premises upon
commencement date by reason of the fact that premises
are not ready for occupancy, or due to a prior Tenant
wrongfully holding over or any other person wrongfully
in possession or for any other
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reason: in such event the rent shall not commence until
possession is given or is available, but the term herein
shall not be extended.
THE TENANT FURTHER COVENANTS:
IF A FIRST FLOOR TWENTY-SECOND.-If the demised premises or any part
thereof consist of a store, or of a first floor, or of
any part thereof, the Tenant will keep the sidewalk and
curb in front thereof clean at all times and free from
snow and ice, and will keep insured in favor of the
Landlord, all plate glass therein and furnish the
Landlord with policies of insurance covering the same.
INCREASED FIRE TWENTY-THIRD.-If by reason of the conduct upon the
INSURANCE RATE demised premises of a business not herein permitted, or
if by reason of the improper or careless conduct of any
business upon or use of the demised premises, the fire
insurance rate shall at a time be higher than it
otherwise would be, then the Tenant will reimburse the
Landlord, as additional rent hereunder, for that part of
all fire insurance premiums hereafter paid out by the
Landlord which shall have been charged because of the
conduct of such business not so permitted, or because of
the improper or careless conduct of any business upon or
use of the demised premises, and will make such
reimbursement upon the first day of the month following
such outlay by the Landlord; but this covenant shall not
apply to a premium for any period beyond the expiration
date of this lease, first above specified. In any action
or proceeding wherein the Landlord and Tenant are
parties, a schedule or "make up" of rate for the
building on the demise premises, purporting to have been
issued by New York Fire Insurance Exchange, or other
body making fire insurance rates for the demised
premises, shall be prima facie evidence of the facts
therein stated and of the several items and charges
included in the fire insurance rate then applicable to
the demised premises.
WATER RENT TWENTY-FOURTH.-If a separate water meter be
installed for the demised premises, or any part thereof,
the Tenant will keep the same in repair and pay the
charges made by the municipality or water supply company
for or in respect to the consumption of water, as and
when bills therefor are rendered. If the demised
premises, or any part thereof, be supplied with water
through a meter which supplies other premises, the
Tenant will pay to the Landlord, as and when bills are
rendered therefor, the Tenant's proportionate part of
all charges which the municipality or water supply
company shall make for all water consumed through said
meter, as indicated by said meter. Such proportionate
part shall be fixed by apportioning the respective
SEWER charge according to floor area against all of the
rentable floor area in the building (exclusive of the
basement) which shall have been occupied during the
period of the respective charges, taking into account
the period that each part of such area was occupied.
Tenant agrees to pay as additional rent the Tenant's
proportionate part determined as aforesaid, of the sewer
rent or charge imposed or assessed upon the building of
which the premises are a part.
ELECTRIC CURRENT TWENTY-FIFTH.-That the Tenant will purchase from
the Landlord, if the Landlord shall so desire, all
electric current that the Tenant requires at the demised
premises, and will pay the Landlord for the same, as the
amount of
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consumption shall be indicated by the meter furnished
therefor. The price for said current shall be the same
as that charged for consumption similar to that of the
Tenant by the company supplying electricity in the same
community. Payments shall be due as and when bills shall
be rendered. The Tenant shall comply with like rules,
regulations and contract provisions as those prescribed
by sad company for a consumption similar to that of the
Tenant.
SPRINKLER SYSTEM TWENTY-SIXTH.-If there now is or shall be
installed in said building a "sprinkler system" the
Tenant agrees to keep the appliance thereto in the
demised premises in repair and good working condition,
and if the New York Board of Fire Underwriters or the
New York Fire Insurance Exchange or any bureau,
department or official of the State or local government
requires or recommends that any changes, modifications,
alterations or additional sprinkler heads or other
equipment be made or supplied by reason of the Tenant's
business, or the location of partitions, trade fixtures,
or other contents of the demised premises, or if such
changes, modifications, alterations, additional
sprinkler heads or other equipment in the demised
premises are necessary to prevent the imposition of a
penalty or charge against the full allowance for a
sprinkler system in the fire insurance rate as fixed by
said Exchange, or by any Fire Insurance Company, the
Tenant will at the Tenant's own expense, promptly make
and supply such changes, modifications, alterations,
additional sprinkler heads or other equipment. As
additional rent hereunder the Tenant will pay to the
Landlord, annually in advance, throughout the term
$______________________ toward the contract price for
sprinkler supervisory service.
SECURITY TWENTY-SEVENTH.-The sum of Six thousand
($6,000.00) Dollars is deposited by the Tenant herein
with the Landlord herein as security for the faithful
performance of all the covenants and conditions of the
lease by the said Tenant. If the Tenant faithfully
performs all the covenants and conditions on his part to
be performed, then the sum deposited shall be returned
to said Tenant.
NUISANCE TWENTY-EIGHTH.-This lease is granted and accepted
on the especially understood and agreed condition that
the Tenant will conduct his business in such a manner,
both as regards noise and kindred nuisances, as will in
no wise interfere with, annoy, or disturb any other
tenants, in the conduct of the several businesses, or
the landlord in the management of the building; under
penalty of forfeiture of this lease and consequential
damages.
BROKERS TWENTY-NINTH.-The Landlord hereby recognizes
COMMISSIONS ___________________ as the broker who negotiated and
consummated this lease with the Tenant herein, and
agrees that if, as and when the Tenant exercises the
option, if any, contained herein to renew this lease, or
fails to exercise the option, if any, contained therein
to cancel this lease, the Landlord will pay to said
broker a further commission in accordance with the rules
and commission rates of the Real Estate Board in the
community. A sale, transfer, or other disposition of the
Landlord's interest in said lease shall not operate to
defeat the Landlord's obligation to pay the said
commission to the said broker. The Tenant herein hereby
represents to the Landlord that the said broker is the
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sole and only broker who negotiated and consummated this
lease with the Tenant.
WINDOW CLEANING THIRTIETH.-The Tenant agrees that it will not
require, permit, suffer, nor allow the cleaning of any
window, or windows, in the demised premises from the
outside (within the meaning of Section 22 of the Labor
Law) unless the equipment and safety devices required by
law, ordinance, regulation or rule, including, without
limitation, Section 202 of the New York labor Law, are
provided and used, and unless the rules, or any
supplemental rules of the Industrial Board of the State
of New York are fully complied with; and the Tenant
hereby agrees to indemnify the Landlord, Owner, Agent,
Manager and/or Superintendent, as a result of the
Tenant's requiring, permitting, suffering, or allowing
any window, or windows in the demised premises to be
cleaned from the outside in violation of the
requirements of the aforesaid laws, ordinances,
regulations and/or rules.
VALIDITY THIRTY-FIRST.-The validity or unenforceability of
any provision of this lease shall in no way affect the
validity or enforceability of any other provision
hereof.
EXECUTION & THIRTY-SECOND.-In order to avoid delay, this lease
DELIVERY OF LEASE has been prepared and submitted to the Tenant for
signature with the understanding that it shall not bind
the Landlord unless and until it is executed and
delivered by the Landlord.
EXTERIOR OF THIRTY-THIRD.-The Tenant will keep clean and
PREMISES polished all metal, trim, marble and stonework which are
a part of the exterior of the premises, using such
materials and methods as the Landlord may direct, and if
the Tenant shall fail to comply with the provisions of
this paragraph, the Landlord may cause such work to be
done at the expense of the Tenant.
PLATE GLASS THIRTY-FOURTH.-The Landlord shall replace at the
expense of the Tenant any and all broken glass in the
skylights, doors and walls in and about the demised
premises. The Landlord may insure and keep insured all
plate glass in the skylights, doors and walls in the
demised premises, for and in the name of the Landlord
and bills for the premiums therefor shall be rendered by
the Landlord to the Tenant at such times as the Landlord
may elect, and shall be due from and payable by the
Tenant when rendered, and the amount thereof shall be
deemed to be, and shall be paid as, additional rent.
WAR EMERGENCY THIRTY-FIFTH.-This lease and the obligation of
Tenant to pay rent hereunder and perform all of the
other covenants and agreements hereunder on part of
Tenant to be performed shall in nowise be affected,
impaired or excused because Landlord is unable to supply
or is delayed in supplying any service expressly or
impliedly to be supplied or is unable to make, or is
delayed in making any repairs, additions, alterations or
decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is
prevented or delayed from so doing by reason of
governmental preemption in connection with a National
Emergency declared by the President of the United States
or in connection with any rule, order or regulation of
any department or subdivision thereof of any government
agency or by reason of the conditions of supply and
demand which have been or are affected by war or other
emergency.
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THE LANDLORD COVENANTS
QUIET POSSESSION FIRST.-That if and so long as the Tenant pays the
rent and "additional rent" reserved hereby, and performs
and observes the covenants and provisions hereof, the
Tenant shall quietly enjoy the demised premises,
subject, however, to the terms of this lease, and to the
mortgages above mentioned, provided however, that this
covenant shall be conditioned upon the retention of
title to the premises by Landlord.
ELEVATOR SECOND.-Subject to the provisions of Paragraph
"Fourteenth" above the Landlord will furnish the
following respective services: (a) Elevator service, if
the building shall contain an elevator or elevators, on
all days except Sundays and holidays, from _____ A.M. to
_____ P.M. and on Saturdays from _____ A.M. to _____
HEAT P.M.; (b) Heat, during the same hours on the same days
in the cold season in each year.
See Rider annexed hereto and made a part hereof.
And it is mutually understood and agreed that the covenants and agreements
contained in the within lease shall be binding upon the parties hereto and upon
their respective successors, heirs, executors and administrators.
IN WITNESS WHEREOF, the Landlord and Tenant have respectively signed and
sealed these presents the day and year first above written.
ADD-ON PROPERTIES, LLC
In presence of: /S/ HOWARD M. SIEGEL [L.S.]
--------------------------------------------
By: Howard M. Siegel Landlord
AMERICAN MEDICAL ALERT CORP.
/S/ COREY M. ARONIN [L.S.]
--------------------------------------------
By: Corey M. Aronin Tenant
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RIDER TO LEASE
BETWEEN
ADD-ON PROPERTIES, LLC, as Landlord
and
AMERICAN MEDICAL ALERT CORP., as Tenant
PREMISES:
3255 Lawson Boulevard, Oceanside, New York
=====================
1.AThe Tenant shall not permit or allow the placing of garbage or garbage
receptacles, containers or otherwise, in front of the premises or in the rear
thereof, and agrees that any garbage, debris or other matter or think which is
required to be removed from the premises shall be picked up and removed at the
Tenant's expense. Tenant will comply with all sanitation requirements of the
Town of Hempstead regarding the removal of garbage rubbish.
1.BIt is expressly understood and agreed that any and all alterations,
improvements, additions or changes which shall be made by the Tenant shall be
done at the Tenant's own cost and expense and in full compliance with all laws
and ordinances, whether federal, state, municipal, local or otherwise. It is
further understood that the Tenant will not make any structural alterations,
additions or Improvements without the written consent of the Landlord, which
will not be unreasonably withheld or delayed.
1.CIt is agreed that the Tenant shall be responsible for the payment of all real
estate taxes, including County, Town and School affecting the subject premises
in the proportion of said premises that is occupied by the Tenant. It is agreed
that as of the date of this Lease, the Tenant will occupy __________________
(_____%) percent of said total premises. The Landlord shall provide the Tenant
with copies of tax bills received by the Landlord and the Tenant shall make
payment of said taxes within 30 days after written demand by Landlord.
1.DNotwithstanding anything to the contrary hereinbefore set forth, it is
understood and agreed that the Tenant, at its own cost and expense, shall make
any and all repairs of any nature whatsoever to the premises with the exception
that the Landlord shall make structural repairs, if necessary. However, if
structural repairs are required by reason of the act or omission of the Tenant,
then in such event the Tenant shall make said repairs at its own cost and
expense. Tenant shall be obligated to replace, at its own cost and expense, any
window or plate glass which shall be damaged or broken in the demised premises.
Tenant shall be responsible for the maintenance and repair of the air
conditioning units and system, heating unit, lighting fixtures and plumbing, and
all other repairs unless structural and as set forth above.
<PAGE>
1.EIt is understood and agreed that the Tenant has inspected the premises herein
involved and that same are being on the part of the Landlord. At commencement of
Lease, premises will be in a state of good repair.
1.FTenant shall, at its own cost and expense, furnish heat, water, gas, electric
and all other utilities, and it is further understood and agreed that the Tenant
shall pay the cost of any meters installed for the purpose of measuring
consumption. In the event additional electric lines and/or equipment is required
by the Tenant for its business purposes, the Tenant shall pay the cost of said
installation.
1.GNotwithstanding anything hereinbefore contained to the contrary, Tenant
agrees, at its own cost and expense, to comply with all of the rules and
regulations of the Fire Insurance Rating Organization having jurisdiction, or
any similar body and the insurance company insuring the premises. If, at any
time or from time to time, as a result of or in connection with any failure by
Tenant to comply with the foregoing, or any act or omission or commission by the
Tenant, its employees, agents, contractors or licensees, or as a result of or in
connection with the use to which the demised premises are put by Tenant,
(notwithstanding that such use may be for the purpose hereinbefore permitted or
that such use may have been consented to by Landlord), the fire insurance rates
applicable to the demised premises, or the building in which same are located,
or to any other premise in said building, shall be higher than which would be
applicable for the present type of business, Tenant agrees that it will pay to
the Landlord, on demand, as additional rent, such portion of the premiums for
all fire insurance policies in force with respect to the aforesaid properties
and the contents of any occupant thereof as shall be attributable to such higher
rates. If Tenant installs any electrical equipment that overloads the lines in
the demised premises or the building in which the demised premises are located,
Tenant shall, at its own cost and expense, make whatever changes are necessary
to comply with the requirements of the Board of Fire Insurance Underwriters or
any similar body and any governmental authority having jurisdiction thereof. For
the purposes of this paragraph, any finding or schedule of the Fire Insurance
Rating Organization having jurisdiction thereof shall be deemed to be
conclusive. Tenant shall not be required to make structural repairs or capital
Improvements unless it relates to its operation of his business as a restaurant.
1.HThe Tenant, at its own cost and expense, shall provide and maintain
throughout the term of this Lease a comprehensive general public liability and
property damage insurance policy naming the Landlord as an insured thereunder,
which said policy will be in standard form insuring against any and all liens,
liability, damage or claim to persons and/or property and death or injury to any
persons by reason of negligence or otherwise, arising or occurring in any manner
out of the manner of use on or with respect to the premises or any appurtenances
thereto in an amount not less than $500,000.00 in respect to injury to any one
person; $1,000,000.00 in respect to any one occurrence; and $50,000.00 for
property damage. Such policy or certificate of insurance shall be deposited with
Landlord with proof of payment of premiums or financing arrangements. Such
insurance policy shall contain the standard waiver of subrogation provisions,
waiving any rights of the insured as against the Landlord and any and all
negligence of Landlord and such insurance shall further provide that it may not
be canceled except upon ten (10) days prior written notice to the Landlord.
1.ITenant shall remove snow and/or ice or premises and sidewalks when same exist
and shall not in any way obstruct or encumber the sidewalk or rear of the
premises. Tenant shall also maintain the
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sidewalk and premises free and clear of any debris or obstructions. Tenant shall
also provide at its own cost and expense professional exterminating service on a
regular basis not less than monthly.
1.JTenant, at its own cost and expense, agrees and covenants to comply with all
laws, regulations, notices, ordinances and violations of the Labor Department,
and any other governmental agency having jurisdiction over the demised premises.
Any failure on the part of the Tenant's part to comply with the aforesaid shall
be deemed a breach of a material covenant of this Lease. Tenant shall not be
compelled to make structural repairs unless relating to its operation as a
restaurant.
1.KNotwithstanding anything to the contrary herein set forth, the Tenant shall
not be permitted to assign this Lease or sublet all or a part of the demised
premises without the written consent of the Landlord, which will not
unreasonably be withheld. In the event the Landlord consents to an assignment or
sublease, it is understood that the proposed assignee or sub-lessee shall be a
reputable party of reasonable financial worth and credit reputation; that the
proposed assignee or sub-lessee shall enter into an assumption agreement whereby
he will assume the terms and provisions of the Lease herein on forms
satisfactory to the Landlord; and the Tenant herein shall remain liable pursuant
to all terms and provisions of this Lease until the termination thereof,
including payment of all rent and additional rent due and to become due dnd for
the performance of all covenants, conditions, agreement and terms contained in
this Lease.
1.LThe Tenant shall not permit or allow any Mechanic's Lien or other lien,
charge, or order that may be filed against the premises being demised pursuant
to this Lease, and in the event any such lien is filed or recorded as a result
of the actions of the Tenant, its agents, servants, employees or independent
contractors retained by the Tenant, then in such event the Tenant shall, at its
own cost and expense, cause said liens to be discharged of record within thirty
(30) days after notice to Tenant of the filing thereof, and the Tenant herein
shall indemnify and save the Landlord harmless against and from all costs,
liabilities, suits, penalties, claims and demands, including reasonable counsel
fees, resulting therefrom.
1.MAll notices to be given pursuant to this Lease shall be in writing, deposited
in the United States mail, certified or registered, with postage prepaid and
addressed to the Tenant at premises 3265 Lawson Boulevard, Oceanside, New York
11572 and to the Landlord at 3255 Lawson Boulevard, Oceanside, New York 11572,
and also to Landlord's attorney, Korn & Spirn, Esqs., at 50 Clinton Street,
Hempstead, New York 11550.
1.NFrom and after the date hereof, the Tenant shall be responsible for curing
any violations, of any governmental municipality that may arise as a result of
the operation of the Tenant's business, and shall also be responsible to obtain
any permits, licenses, zoning variances or certificates that may be required as
a result of the conduct of Tenant's business at the subject premises. It is
specifically understood and agreed that the Landlord shall not be obligated to
incur any expense in obtaining the aforesaid.
1.ONotwithstanding the provisions of Paragraph "5th" of the within Lease, in the
event that damage by fire or other elements is so extensive as to amount
practically to a total destruction of the building, the Landlord may elect to
rebuild, and this Lease shall remain in full force and effect, provided such
rebuilding shall be substantially completed and the building shall be tenantable
within 120 days from
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the date of such destruction, and provided further that the rent, and any
additional rent shall be abated during such period pending such rebuilding and
completion. Such period to rebuild shall be extended for such time during which
construction is delayed because of adjustment of Tenant's or Landlord's
insurance or to any other delay attributable to the Tenant, but not beyond 180
days from such destruction. Notice of intention to rebuild shall be given by
Landlord by registered mail, return receipt requested, within thirty (30) days
following the date of such damage. In the event that Landlord elects to rebuild
pursuant hereto, it shall reconstruct building in substantially the same manner
and to the same state of completion that said building was at the time of the
commencement of this Lease and only including items furnished or installed by
the Landlord pursuant to this Lease or existing in the building as of the date
of commencement of this Lease.
1.PUpon the expiration or other termination of the term of this Lease, Tenant
shall quit and surrender to the Landlord the demised premises broom-clean, in
good order and condition, reasonable wear and tear expected, and Tenant shall
remove all of its property from the premises. Tenant's obligation to observe and
perform his covenant shall survive the expiration or other termination of the
term of this Lease.
1.QIt is hereby expressly understood and agreed by and between the parties
hereto, that the Tenant shall not be entitled to any abatement of rent or rental
value or diminution of rent in any action or summary proceeding between the
parties hereto for the non-payment of rent or in any other actions or
proceedings by reason of any breach by the Landlord or any covenants contained
in this Lease on its part to be performed; and any such action or summary
proceedings or in any other action or proceedings for the breach by Tenant of
any covenant contained in this Lease, the Tenant shall not have the right to
set-off by way of damages, recoupment or counterclaim for any damages which the
Tenant may have sustained by reason of the Landlord's failure to perform any of
the terms, covenants and conditions contained in this Lease on its part to be
performed, or for any other cause, but the said Tenant shall be relegated to an
independent action for damages and such independent action shall not at any time
be tried jointly or consolidated with any action or proceedings instituted by
the Landlord.
1.RShould the demised premises become infested with vermin or rodents to the
annoyance of other occupants of the building or adjoining buildings, or
otherwise, as a result of Tenant's use of the premises, the same shall be cured
by the Tenant ten (10) days after notice and demand. Upon the failure or
omission of the Tenant to remedy such condition, the Landlord may do so and
charge the cost thereof to the Tenant as additional rent.
1.SThe Tenant and Landlord agree at any time and from time to time upon not less
than ten (10) days prior written notice by the other to execute, acknowledge and
deliver to the other a statement in writing certifying (a) that this Lease is
unmodified and in full force and effect or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications; (b) whether or not there are then existing any effects or
defenses against the enforcement of any of the terms, covenants or conditions
hereof upon the part of the other to be perform (and, if so, specifying the
same); and (c) the dates to which the basic rent and other charges have been
paid in advance, this paragraph may be relied upon by any prospective purchaser
or mortgagee of the fee of the demised premises or any assignee of any such
mortgage.
4
<PAGE>
1.TThe Landlord is exempt from any and all liability for any damage or injury to
person or property caused by or resulting from steam, electricity, gas, water,
rain, ice or snow, or any leak or flow from or into any part of said building or
from any damage or injury resulting or arising from any other cause or happening
whatsoever, unless said damage or injury be caused by or be due to the
negligence of the Landlord.
1.UIn the event of default by the Tenant under any of the terms of this Lease,
if the Landlord shall engage counsel for the purpose of effectuating at
dispossess or enforcing compliance by the Tenant with any of the Tenant's
obligations under the terms of this Lease, the Landlord shall be entitled to
recover and the Tenant shall pay as additional rent a sum equal to the
reasonable attorney's fees incurred by the Landlord, provided Landlord prevails
in enforcing compliance by the Tenant.
1.VIn the event any payment of rent or extra rent is not paid on or before the
10th day of the month when due, Tenant shall pay as an additional charge, a sum
equal to two (2%) percent of the amount which became due on the first day of
that month. This is in no way to constitute authorization to a Tenant to remit
payments otherwise than when due, but shall be applicable only in the event that
the Landlord shall accept late payment.
1.WCommencing on October 1, 1998, the annual rental shall be increased by an
amount equal to five (5%) percent of the prior year's annual rent. Thereafter on
October 1st of each succeeding year, the annual rental shall be increased by an
amount equal to five (5%) percent above the prior year's rental.
All rents shall be paid in monthly installments.
Dated: September 30, 1997
ADD-ON PROPERTIES, LLC, Landlord
By: /S/ HOWARD M. SIEGEL
HOWARD M. SIEGEL, President
AMERICAN MEDICAL ALERT CORP., Tenant
By: _______________________________
5
STANDARD COMMERCIAL LEASE CONTRACT [LA VISTA LOGO]
- ----------------------------------
THIS LEASE, made this 7th day of April, 1997, by and between Steven
E. Marcus, first party, (hereinafter called "Landlord"); and American Medical
Alert Corp., second party, (hereinafter called "Tenant"); and LaVista Realty
Co., Inc., third party, (hereinafter called "Agent");
W I T N E S S E T H :
Premises 1. The Landlord, for and in consideration of the rents,
covenants, agreements, and stipulations hereinafter mentioned,
reserved, and contained, to be paid, kept and performed by the
Tenant, has leased and rented, and by these presents does
lease and rent, unto the said Tenant, and said Tenant hereby
agrees to lease and take upon the terms and conditions which
hereinafter appear, the following described property
(hereinafter called premises), to wit Office space on the
second floor of 910 Church Street, Decatur, DeKalb County,
Georgia, now known as Suite Suite 203 per sketch attached. and
being known as _______________. No easement for light or air
is included in the premises.
Term 2. To have and to hold the same for a term of
twenty-four (24) months beginning on the 1st day of May, 1997
and ending on the 30th day of April, 1999, at midnight, unless
sooner terminated as hereinafter provided.
Rental 3. Tenant agrees to pay Landlord, by payments to LaVista
Realty Co., Inc. Agent of Landlord, who negotiated this lease,
at office of Agent in Atlanta, Georgia, promptly on the first
day of each month in advance, during the term of this lease, a
monthly rental of one thousand four hundred ninety-eight and
33/100 dollars payable in advance.
Agent's Commission 4. The commission to be paid in connection with this
transaction has been negotiated between Landlord and Agent and
Landlord agrees to pay Agent, as compensation for services
rendered in procuring this lease, 6% of rent, and Landlord,
with consent of Tenant, hereby assigns to Agent aforesaid
commission. If the term of this lease is extended, or if new
lease is entered into between Landlord and Tenant covering
leased premises or any part thereof, or covering any other
premises as an expansion of, or substitute for, the premises
herein leased, then in either of said events, Landlord, in
consideration of Agent's having procured Tenant hereunder,
agrees to pay Agent six (6)% under such extension, amendment,
or new lease. Agent agrees that, in the event Landlord sells
leased premises, and upon Landlord's furnishing Agent with an
agreement signed by Purchaser assuming Landlord's obligations
to Agent under this lease, Agent will release original
Landlord from any further obligations to Agent hereunder.
Tenant agrees that if this lease is validly assigned by him
that he will secure from assignee an agreement in writing by
assignee recognizing assignment held by Agent and agreeing to
pay rental to Agent herein named during the term of this
<PAGE>
lease. Agent is a party to this contract solely for the
purpose of enforcing his rights under this paragraph and it is
understood by all parties hereto that Agent is acting solely
in the capacity as agent for Landlord, to whom Tenant must
look as regards all covenants, agreements and warranties
herein contained, and that Agent shall never be liable to
Tenant in regard to any matter which may arise by virtue of
this lease. Voluntary cancellation of this lease shall not
nullify Agent's right to collect the commission due for the
remaining term of this lease. In the event that the premises
is condemned, or sold under threat of and in lieu of
condemnation, Agent shall, on the date of receipt by Landlord
of the condemnation award or sale proceeds, be paid Agent's
commission, reduced to its present cash value at the then
existing legal rate of Interest, which would otherwise be due
to end the term contracted for under paragraph 2 above.
Purchase of 5. In the event that tenant acquires title to the leased
Property by premises at any time during the term of this lease, any
Tenant renewals thereof, or within six months after the expiration of
the term hereof or the extended term hereof, then Landlord
shall pay Agent a commission on the sale of the property of
the Landlord in lieu of any additional rental commissions.
Such sales commission, as negotiated between parties, is to be
N/A.
Use of Premises 7. Premises shall be used for Medical Alert Center
purposes and no other. Premises shall not be used for any
illegal purposes; nor in any manner to create any nuisance or
trespass; nor any manner to vitiate the insurance or increase
the rate of insurance on premises.
Abandonment 8. Tenant agrees not to abandon or vacate leased
of Leased premises during the period of this lease, and agrees to use
Premises said premises for purpose herein leased until the expiration
hereof.
Repairs by 9. Landlord agrees to keep in good repair the roof,
Landlord foundations, and exterior walls of the premises (exclusive of
all glass and exclusive of all exterior doors), and
underground utility and sewer pipes outside the exterior walls
of the Building; except, repairs rendered necessary by the
negligence of Tenant, is agents, employees, or invitees.
Landlord gives to Tenant exclusive control of premises and
shall be under no obligation to inspect said premises. Tenant
shall promptly report in writing to Landlord any defective
condition known to it which Landlord is required to repair,
and failure to so report such defects shall make Tenant
responsible to landlord for any liability incurred by Landlord
by reason of such defects.
Repairs by 10. Tenant accepts the leased premises in their present
Tenant condition and as suited for the uses intended by Tenant.
Tenant shall, throughout the initial term of this lease and
all renewals thereof, at its expense, maintain in good order
and repair the leased premises, including the building and
other improvements located thereon, except those repairs
expressly required to be made by Landlord, including the
mowing of grass, paving, care of shrubs and general
landscaping.
2
<PAGE>
Tenant agrees to return said premises to Landlord at the
expiation, or prior to termination, of this lease in as good
condition and repair as when first received, natural wear and
tear, damage by storm, fire lightning, earthquake or other
casualty alone excepted.
Elevators, (if any), are accepted by Tenant as in
satisfactory operating condition on this date, and Tenant, at
his own expense, shall maintain said elevators in good
operating condition during the term of this lease, or any
extension thereof.
Destruction of, 12. If premises are totally destroyed by storm, fire,
or Damage to lightning, earthquake or other casualty, this lease shall
Premises terminate as of the date of such destruction, and rental shall
be accounted for as between Landlord and Tenant as of the
date. If premises are damaged but not wholly destroyed by any
such casualties, rental shall abate in such proportion as sue
of premises has been destroyed, and Landlord shall restore
premises to substantially the same condition as before damage
as speedily as practicable, whereupon full rental shall
recommence.
Indemnity 13. Tenant agrees to indemnify and save harmless the
Landlord against all claims for damages to persons or property
by reason of the use or occupancy of the leased premises, and
all expenses incurred by Landlord because thereof, including
attorneys' fees and court costs.
Governmental 14. Tenant agrees, at his own expense, to promptly
Orders comply with all requirements of any legally constituted public
authority made necessary by reason of Tenant's occupancy of
said premises. Landlord agrees to promptly comply with any
such requirements if not made necessary by reason of Tenant's
occupancy. It is mutually agreed, however, between Landlord
and Tenant, that if in order to comply with such requirements,
the cost to the Landlord or Tenant, as the case may be, shall
exceed a sum equal to one year's rent, then Landlord or Tenant
who is obligated to comply with such requirements is
privileged to terminate this lease by giving written notice of
termination to the other party, by registered mail, which
termination shall become effective sixty (60) days after
receipt of such notice, and which notice shall eliminate
necessity of compliance with such requirement by party giving
such notice unless party receiving such notice of termination
shall, before termination becomes effective, pay to party
giving notice all cost of compliance in excess of one year's
rent, or secure payment of said sum in manner satisfactory to
party giving notice.
Condemnation 15. If the whole of the leased premises, or such portion
thereof as will make premises unusable for the purposes herein
leased, be condemned by any legally constituted authority for
any public use or purpose, then in either of said events the
term hereby granted shall cease from the date when possession
thereof is taken by public authorities, and rental shall be
accounted for as between Landlord and Tenant as of said date.
Such termination, however, shall be
3
<PAGE>
without prejudice to the rights of either Landlord and Tenant
to recover compensation and damage caused by condemnation from
the condemnor. It is further understood and agreed that
neither the Tenant nor Landlord shall have any rights in any
award made to the other by an condemnation authority
notwithstanding the termination of the lease as herein
provided. Landlord agrees to pay to Agent, from the award made
to Landlord under condemnation, the balance of lease
commissions, reduced to then present cash value, as provided
in paragraph 4 hereof, and agent may become a party to the
condemnation proceeding of the purpose of enforcing its rights
under this paragraph.
Assignment 16. Tenant may sublease portions of the leased premises
and Subletting to others provided such sublessee's operation is a part of the
general operation of Tenant and under the supervision and
control of Tenant, and provided such operation is within the
purposes for which said premises shall be used. Except as
provided in preceding sentence, Tenant shall not, without the
prior written consent of Landlord endorsed hereon, assign this
lease or any interest hereunder, or sublet premises or any
part thereof, or permit the use of premises by any party other
than Tenant. Consent to any assignment or sublease shall not
destroy this provision, and all later assignments or subleases
shall be made likewise only on the prior written consent of
Landlord. Assignee of Tenant, at option of Landlord, shall
become directly liable to Landlord for all obligations of
Tenant hereunder, but no sublease or assignment by Tenant
shall relieve Tenant of any liability hereunder.
Removal of 17. Tenant may (if not in default hereunder) prior to
Fixtures the expiration of this lease, or any extension thereof, remove
all fixtures and equipment which he has placed in premises,
provided Tenant repairs all damage to premises caused by such
removal.
Cancellation 18. It is mutually agreed that in the event the Tenant
of Lease by shall default in the payment of rent, including additional
Landlord rent, herein reserved, when due, and fails to cure said
default within five(5) days after written notice thereof from
Landlord; or if Tenant shall be in default in performing any
of the terms or provisions of this lease other than the
provision requiring the payment of rent; and fails to cure
such default within thirty (30) days after the date of receipt
of written notice of default from Landlord; or if Tenant is
adjudicated bankrupt; or if a permanent receiver is appointed
for Tenant's property and such receiver is not removed within
sixty days after written notice form Landlord to Tenant to
obtain such removal; or if, whether voluntarily or
involuntarily, Tenant takes advantage of any debtor relief
proceedings under any present or future law, whereby the rent
or any part thereof is, or is proposed to be, reduced or
payment thereof deferred; or if Tenant makes an assignment for
benefit of creditors; or if Tenant's effects should be levied
upon or attached under process against Tenant, not satisfied
or dissolved within thirty (30) days after written notice from
Landlord to Tenant to obtain satisfaction thereof; then, and
in any of said events, Landlord at his option may at once, or
within six (6) months thereafter (but only during
4
<PAGE>
continuance of such default or condition), terminate this
lease by written notice to Tenant; whereupon this lease shall
end. After an authorized assignment or subletting of the
entire premises covered by this lease, the occurring of any of
the foregoing defaults or events shall affect this lease only
if caused by, or happening to, the assignee or sublessee. Any
notice provided in this paragraph may be given by Landlord, or
his attorney, or Agent herein named. Upon such termination by
Landlord, Tenant will at once surrender possession of the
premises to Landlord and remove all of Tenant's effect
therefrom; and Landlord may forthwith re-enter the premises
and repossess himself thereof, and remove all persons and
effects therefrom, using such force as may be necessary
without being guilty of trespass, forcible entry or detainer
or other tort.
Reletting by 19. Landlord, as Tenant's agent, without terminating
Landlord this lease, upon Tenant's breaching this contract, may at
Landlord's option enter upon and rent premises at the best
price obtainable by reasonable effort with advertising and by
private negotiations and for any term the Landlord deems
proper. Tenant shall be liable to Landlord for the deficiency,
if any, between Tenant's rent hereunder and the price obtained
by Landlord on reletting.
Exterior Signs 20. Tenant shall place no signs upon the outside walls
or roof of the leased premises except with the written consent
of the Landlord. Any and all signs placed on the within leased
premises by Tenant shall be maintained in compliance with
rules and regulations governing such signs and the Tenant
shall be responsible to Landlord for any damage caused by
installation, use, or maintenance of said signs, and Tenant
agrees upon removal of said signs to repair all damage
incident to such removal.
Entry for 21. Landlord may card premises "For Rent" or "For Sale"
Carding, etc. thirty (30) days before the termination of this lease.
Landlord may enter the premises at reasonable hours to exhibit
same to prospective purchasers or tenants and to make repairs
required of Landlord under the terms hereof, or to make
repairs to Landlord's adjoining property, if any.
Effect of 22. No termination of this lease prior to the normal
Termination of ending thereof, by lapse of time or otherwise, shall affect
Lease Landlord's right to collect rent for the period prior to
termination thereof.
Mortgagee's 23. Tenant's rights shall be subject to any bona fide
Rights mortgage or deed to secure debt which is now, or may hereafter
be, placed upon the premises by Landlord.
No Estate In 24. This contract shall create the relationship of
Land Landlord and Tenant between the parties hereto; no estate
shall pass out of Landlord. Tenant has only a usufruct, not
subject to levy and sale, and not assignable by Tenant except
by Landlord's Consent.
5
<PAGE>
Holding Over 25. If Tenant remains in possession of premises after
expiration of the term hereof, with Landlord's acquiescence
and without any express agreement of parties, Tenant shall be
a tenant at will at rental rate in effect at end of lease; and
there shall be no renewal of this lease by operation law.
Attorney's Fees 26. If any rent owing under this lease is collected by
and Homestead or through an attorney at law, Tenant agrees to apy ten
percent (10%) thereof as attorneys' fees. Tenant waives all
homestead rights and exemptions which he may have under any
law as against any obligation owing under this lease. Tenant
hereby assigns to Landlord his homestead and exemption.
Rights 27. All rights, powers and privileges conferred
Cumulative hereunder upon parties hereto shall be cumulative but not
restrictive to those given by law.
Service of 28. Tenant hereby appoints as his agent to receive
Notice service of dispossessory or distraint proceedings and notices
hereunder, and all notices required under this lease, the
person in charge of leased premises at the time, or occupying
said premises; and if no person is in charge of, or occupying
said premises, then such service or notice may be made by
attaching the same on the main entrance to said premises. A
copy of all notices under this lease shall also be sent to
Tenant's last known address, if different from said premises.
Waiver of 29. No failure of Landlord to exercise any power given
Rights Landlord hereunder, or to insist upon strict compliance by
Tenant with his obligations hereunder, and no custom or
practice of the parties at variance with the terms hereof
shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof.
Time of 30. Time is of the essence of this agreement.
Essence
Definitions 31. "Landlord" as used in this lease shall include first
party, his heirs, representatives, assigns and successors in
title to premises. "Tenant" shall include second party, his
heirs and representatives, and if this lease shall be validly
assigned or sublet, shall include also Tenant assignees or
sublessees, as to premises covered by such assignment or
sublease. "Agent" shall include third party, his successors,
assigns, heirs, and representatives. "Landlord", "Tenant", and
"Agent", include male and female, singular and plural,
corporation, partnership or individual, as may fit the
particular parties.
Special In so far as the following stipulations conflict with
Stipulations any of the foregoing provisions, the following shall control:
32. Landlord shall furnish, at no expense to Tenant,
lights, electricity, gas, hall and stair alarm and janitorial
service as presently furnished in the building. Landlord shall
maintain heating and air conditioning units.
6
<PAGE>
This lease contains the entire agreement of the parties hereto and
no representationss, inducements, promises or agreements, oral or otherwise,
between the parties, not embodied herein, shall be of any force or effect.
IN WITNESS WHEREOF, the parties herein have hereunto set their hands
and seals, in triplicate, the day and year first above written.
Signed, sealed and delivered as
to Landlord, in the presence of:
/S/ STEVEN E. MARCUS (Seal)
- ---------------------------- ------------------------------------
(Landlord) Steven E. Marcus
(Seal)
- ---------------------------- ------------------------------------
Notary Public (Landlord)
Signed, sealed and delivered as
to Tenant, in the presence of: American Medical Alert Corp.
By:/S/COREY M. ARONIN (Seal)
- ---------------------------- ------------------------------------
(Tenant) Chief Financial Officer
(Seal)
- ---------------------------- ------------------------------------
Notary Public (Tenant)
Signed, sealed and delivered as
to Tenant, in the presence of: ------------------------------------
La Vista Realty Co., Inc.
By: (Seal)
- ---------------------------- ------------------------------------
Agent
7
<PAGE>
TRANSFER OF LEASE
For, and in consideration of the sum of One Dollar ($1.00), each to
the other paid, receipt of which is hereby acknowledged, and other valuable
considerations, ______________________ hereby transfers and assigns to
___________________________ all _______________________ rights and benefits
under a written lease from________________________________________to,
___________________________________, dated _______________, 19____, covering
premises knows as _____________________, Atlanta, Georgia, and
___________________________________ hereby accepts said transfer and assignment
and agrees to comply with all of Landlord's covenants and agreements under said
lease with both Tenant and Agent therein named.
In WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals, in triplicate, this day of _________________, 19____
Signed, sealed and delivered as
to Seller, in the presence of:
- ----------------------------------
(Seal)
- ---------------------------------- ---------------------------------
Notary Public (Seller)
(Seal)
---------------------------------
(Seller)
Signed, sealed and delivered as to
Purchaser, in the presence of:
- ----------------------------------
(Seal)
- ---------------------------------- ---------------------------------
Notary Public (Seller)
(Seal)
---------------------------------
(Seller)
8
<PAGE>
RELEASE BY AGENT
GEORGIA, COUNTY
In consideration of ________________________ having assumed
_____________________ obligation to Agent under lease from
________________________ to _____________________ dated _____________________,
19____, covering premises located at ____________________ Atlanta, Georgia,
Agent hereby releases ________________________ from _________________
obligations to Agent under said lease.
IN WITNESS WHEREOF, said Agent has hereunto set his hand and affixed
his seal, in triplicate, this day of _____________________, 19______.
Signed, sealed and delivered in the presence
of:
(Seal)
- ---------------------------------- ---------------------------------
Agent)
- ----------------------------------
Notary Public
9
AMENDMENT TO THE ORIGINAL LEASE
-------------------------------
To - American Medical Alert Corporation
The new lease is in affect as of July 1st, 1997, for a period of (3) years to
June 30, 2000.
The new rent will be $1,386.00 per month.
Lessee Lessor
- --------------------------- -----------------------------
American Medical Alert Corp. Bank One as trustee under
Chief Financial Officer trust # 4812
1997 STOCK OPTION PLAN
of
AMERICAN MEDICAL ALERT CORP.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan") is designed to
provide an incentive to key employees (including directors and officers who are
key employees) and to consultants and directors who are not employees of
American Medical Alert Corp., a New York corporation (the "Company"), or any of
its Subsidiaries (as such term is defined in Paragraph 19), and to offer an
additional inducement in obtaining the services of such individuals. The Plan
provides for the grant of "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and nonqualified stock options which do not qualify as ISOs ("NQSOs"). The
Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12, the
aggregate number of shares of Common Stock, $.01 par value per share, of the
Company ("Common Stock") for which options may be granted under the Plan shall
not exceed 750,000. Such shares of Common Stock may, in the discretion of the
Board of Directors of the Company (the "Board of Directors"), consist either in
whole or in part of authorized but unissued shares of Common Stock or shares of
Common Stock held in the treasury of the Company. Subject to the provisions of
Paragraph 13, any shares of Common Stock subject to an option which for any
reason expires, is canceled or is terminated unexercised or which ceases for any
reason to be exercisable shall again become available for the granting of
options under the Plan. The Company shall at all times during the term of the
Plan reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board of
Directors or a committee of the Board of Directors (the "Committee") consisting
of not less than three directors, each of whom shall be a "non-employee
director" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (as the same may be in effect and interpreted
from time to time, "Rule 16b-3"). Unless otherwise provided in the By-Laws of
the Company or by resolution of the Board of Directors, a majority of the
members of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, and any acts
approved in writing by all members without a meeting, shall be the acts of the
Committee.
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, to determine the persons who shall
be granted options; the times when they shall receive options; whether an option
granted to an employee shall be an ISO or a NQSO; the number
<PAGE>
of shares of Common Stock to be subject to each option; the term of each option;
the date each option shall become exercisable; whether an option shall be
exercisable in whole or in installments, and, if in installments, the number of
shares of Common Stock to be subject to each installment; whether the
installments shall be cumulative; the date each installment shall become
exercisable and the term of each installment; whether to accelerate the date of
exercise of any option or installment; whether shares of Common Stock may be
issued upon the exercise of an option as partly paid, and, if so, the dates when
future installments of the exercise price shall become due and the amounts of
such installments; the exercise price of each option; the form of payment of the
exercise price; the fair market value of a share of Common Stock; whether and
under what conditions to restrict the sale or other disposition of the shares of
Common Stock acquired upon the exercise of an option and, if so, whether and
under what conditions to waive any such restriction; whether and under what
conditions to subject the exercise of all or any portion of an option to the
fulfillment of certain restrictions or contingencies as specified in the
contract referred to in Paragraph 11 (the "Contract"), including without
limitation, restrictions or contingencies relating to entering into a covenant
not to compete with the Company, its Parent (as such term is defined in
Paragraph 19) and Subsidiaries, to financial objectives for the Company, any of
its Subsidiaries, a division, a product line or other category, and/or the
period of continued employment of the optionee with the Company or any of its
Subsidiaries, and to determine whether such restrictions or contingencies have
been met; the amount, if any, necessary to satisfy the obligation of the
Company, any of its Subsidiaries or a Parent to withhold taxes or other amounts;
whether an optionee is Disabled (as such term is defined in Paragraph 19); with
the consent of the optionee, to cancel or modify an option, PROVIDED that the
modified provision is permitted to be included in an option granted under the
Plan on the date of the modification, and PROVIDED FURTHER, that in the case of
a modification (within the meaning of Section 424(h) of the Code) of an ISO,
such option as modified would be permitted to be granted on the date of such
modification under the terms of the Plan; to construe the respective Contracts
and the Plan; to prescribe, amend and rescind rules and regulations relating to
the Plan; to approve any provision of the Plan or any option granted under the
Plan or any amendment to either which, under Rule 16b- 3, requires the approval
of the Board of Directors, a committee of non-employee directors or the
shareholders to be exempt (unless otherwise specifically provided herein); and
to make all other determinations necessary or advisable for administering the
Plan. Any controversy or claim arising out of or relating to the Plan, any
option granted under the Plan or any Contract shall be determined unilaterally
by the Committee in its sole discretion. The determinations of the Committee on
the matters referred to in this Paragraph 3 shall be conclusive and binding on
the parties.
No member or former member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted hereunder. In addition, each member and former member of the
Committee shall be indemnified and held harmless by the Company from and against
any liability, claim for damages and expenses in connection therewith by reason
of any action or failure to act under or in connection with the Plan, any option
granted hereunder or any Contract to the fullest extent permitted with respect
to directors under the Company's certificate of incorporation, By-Laws and
applicable law.
4. ELIGIBILITY. The Committee may from time to time, consistent with the
purposes of the Plan, grant options to such key employees (including officers
and directors who are key employees) of, or consultants to, the Company or any
of its Subsidiaries, and to such directors of the Company who, at the time of
grant, are not common law employees of the Company or of any of its
<PAGE>
Subsidiaries, as the Committee may determine in its sole discretion. Such
options granted shall cover such number of shares of Common Stock as the
Committee may determine in its sole discretion; PROVIDED, HOWEVER, that the
maximum number of shares subject to options that may be granted to any employee
during any calendar year under the Plan shall be 250,000 shares; and PROVIDED
FURTHER that the aggregate market value (determined at the time the option is
granted) of the shares of Common Stock for which any eligible employee may be
granted ISOs under the Plan or any other plan of the Company, or of a Parent or
a Subsidiary of the Company, which are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. The $100,000 ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option (or the portion thereof) granted in excess of such
ISO limitation amount shall be treated as a NQSO to the extent of such excess.
5. EXERCISE PRICE. The exercise price of the shares of Common Stock under each
option shall be determined by the Committee in its sole discretion; PROVIDED,
HOWEVER, that the exercise price of an ISO shall not be less than the fair
market value of the Common Stock subject to such option on the date of grant;
and PROVIDED FURTHER that if, at the time an ISO is granted, the optionee owns
(or is deemed to own under Section 424(d) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company, of any of its Subsidiaries or of a Parent, the exercise price of such
ISO shall not be less than 110% of the fair market value of the Common Stock
subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of the
Common Stock on such day as reported by such exchange or on a consolidated tape
reflecting transactions on such exchange, (b) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is
quoted on the Nasdaq Stock Market ("Nasdaq"), and (i) if actual sales price
information is available with respect to the Common Stock, the average of the
highest and lowest sales prices per share of the Common Stock on such day on
Nasdaq, or (ii) if such information is not available, the average of the highest
bid and the lowest asked prices per share for the Common Stock on such day on
Nasdaq, or (c) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on Nasdaq, the average of
the highest bid and lowest asked prices per share for the Common Stock on such
day as reported on the OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; PROVIDED that if clauses (a), (b)
and (c) of this Paragraph are all inapplicable, or if no trades have been made
or no quotes are available for such day, the fair market value of a share of
Common Stock shall be determined by the Committee by any method consistent with
applicable regulations adopted by the Treasury Department relating to stock
options.
6. TERM. Each option granted pursuant to the Plan shall be for such term as is
established by the Committee, in its sole discretion, at or before the time such
option is granted; PROVIDED, HOWEVER, that the term of each ISO granted pursuant
to the Plan shall be for a period not exceeding 10 years from the date of grant
thereof, and PROVIDED FURTHER that if, at the time an ISO is granted, the
optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or
<PAGE>
of a Parent, the term of the ISO shall be for a period not exceeding five years
from the date of grant. Options shall be subject to earlier termination as
hereinafter provided.
7. EXERCISE. An option (or any installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the Company at its
principal office stating which option is being exercised, specifying the number
of shares of Common Stock as to which such option is being exercised and
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the applicable Contract permits installment payments)
(a) in cash and/or by certified check or (b) with the authorization of the
Committee, with cash, a certified check and/or with previously acquired shares
of Common Stock, having an aggregate fair market value (determined in accordance
with Paragraph 5), on the date of exercise, equal to the aggregate exercise
price of all options being exercised; PROVIDED, HOWEVER, that in no case may
shares be tendered if such tender would require the Company to incur a charge
against its earnings for financial accounting purposes.
The Committee may, in its sole discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of his irrevocable instructions to a broker
acceptable to the Committee to deliver promptly to the Company the amount of
sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
An optionee shall not have the rights of a shareholder with respect
to such shares of Common Stock to be received upon the exercise of an option
until the date of issuance of a stock certificate to him for such shares or, in
the case of uncertificated shares, until the date an entry is made on the books
of the Company's transfer agent representing such shares; PROVIDED, HOWEVER,
that until such stock certificate is issued or until such book entry is made,
any optionee using previously acquired shares of Common Stock in payment of an
option exercise price shall continue to have the rights of a shareholder with
respect to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly provided in
the applicable Contract, any optionee whose employment or consulting
relationship with the Company (and its Parent and Subsidiaries) has terminated
for any reason other than the death or Disability of the optionee may exercise
any option granted to him as an employee or consultant, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the option would otherwise have expired; PROVIDED, HOWEVER, that if such
relationship is terminated either (a) for cause, or (b) without the consent of
the Company, such option shall terminate immediately. Except as may otherwise be
expressly provided in the applicable Contract, options granted under the Plan to
an employee or consultant of the Company or any of its Subsidiaries shall not be
affected by any change in the status of the holder so long as he continues to be
an employee or a consultant of the Company, its Parent or any of the
Subsidiaries (regardless of a change in status from one to the other or having
been transferred from one corporation to another).
<PAGE>
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the corporation, any of its Subsidiaries or a Parent is
guaranteed either by statute or by contract. If the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed by statute or
by contract, the employment relationship shall be deemed to have terminated on
the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, an optionee whose directorship with the Company has terminated for any
reason other than his death or Disability may exercise the options granted to
him as a director who was not an employee of or consultant to the Company or any
of its Subsidiaries, to the extent exercisable on the date of such termination,
at any time within three months after the date of termination, but not
thereafter and in no event after the date the option would otherwise have
expired; PROVIDED, HOWEVER, that if his directorship is terminated for cause,
such option shall terminate immediately.
Nothing in the Plan or in any option granted under the Plan shall
confer on any person any right to continue in the employ or as a consultant of
the Company, its Parent or any of its Subsidiaries, or as a director of the
Company, or interfere in any way with any right of the Company, its Parent or
any of its Subsidiaries to terminate such relationship at any time for any
reason whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be expressly
provided in the applicable Contract, if an optionee dies (a) while he is
employed by, or a consultant to, the Company, its Parent or any of its
Subsidiaries, (b) within three months after the termination of his employment or
consulting relationship with the Company, its Parent and its Subsidiaries
(unless such termination was for cause or without the consent of the Company) or
(c) within one year following the termination of such employment or consulting
relationship by reason of his Disability, the options granted to him as an
employee of, or consultant to, the Company or any of its Subsidiaries, may be
exercised, to the extent exercisable on the date of his death, by his Legal
Representative (as such term is defined in Paragraph 19), at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired. Except as may otherwise be expressly provided in
the applicable Contract, any optionee whose employment or consulting
relationship with the Company, its Parent and its Subsidiaries has terminated by
reason of his Disability may exercise such options, to the extent exercisable
upon the effective date of such termination, at any time within one year after
such date, but not thereafter and in no event after the date the option would
otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an optionee dies (a) while he is a director of the Company, (b)
within three months after the termination of his directorship with the Company
(unless such termination was for cause) or (c) within one year after the
termination of his directorship by reason of his Disability, the options granted
to him as a director who was not an employee of or consultant to the Company or
any of its Subsidiaries, may be exercised, to the extent exercisable on the date
of his death, by his Legal Representative at any
<PAGE>
time within one year after death, but not thereafter and in no event after the
date the option would otherwise have expired. Except as may otherwise be
expressly provided in the applicable Contract, an optionee whose directorship
with the Company has terminated by reason of Disability, may exercise such
options, to the extent exercisable on the effective date of such termination, at
any time within one year after such date, but not thereafter and in no event
after the date the option would otherwise have expired.
10. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the exercise of any
option that either (a) a Registration Statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.
The Committee may require, in its sole discretion, as a condition to
the grant or exercise of an option, that the optionee execute and deliver to the
Company his representations and warranties, in form, substance and scope
satisfactory to the Committee, which the Committee determines is necessary or
convenient to facilitate the perfection of an exemption from the registration
requirements of the Securities Act, applicable state securities laws or other
legal requirement, including without limitation, that (a) the shares of Common
Stock to be issued upon exercise of the option are being acquired by the
optionee for his own account, for investment only and not with a view to the
resale or distribution thereof, and (b) any subsequent resale or distribution of
shares of Common Stock by such optionee will be made only pursuant to (i) a
Registration Statement under the Securities Act which is effective and current
with respect to the shares of Common Stock being sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the optionee, prior to any offer of sale or sale of
such shares of Common Stock, shall provide the Company with a favorable written
opinion of counsel satisfactory to the Company, in form, substance and scope
satisfactory to the Company, as to the applicability of such exemption to the
proposed sale or distribution.
In addition, if at any time the Committee shall determine that the
listing or qualification of the shares of Common Stock subject to such option on
any securities exchange, Nasdaq or under any applicable law, or that the consent
or approval of any governmental agency or regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option or
the issuance of shares of Common Stock thereunder, such option may not be
granted or exercised in whole or in part, as the case may be, unless such
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by an appropriate
Contract which shall be duly executed by the Company and the optionee. Such
Contract shall contain such terms, provisions and conditions not inconsistent
herewith as may be determined by the Committee in its sole discretion. The terms
of each option and Contract need not be identical.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding Common
Stock by reason of a
<PAGE>
stock dividend, recapitalization, merger in which the Company is the surviving
corporation, spinoff, split-up, combination or exchange of shares or the like
which results in a change in the number or kind of shares of Common Stock which
is outstanding immediately prior to such event, the aggregate number and kind of
shares subject to the Plan, the aggregate number and kind of shares subject to
each outstanding option and the exercise price thereof, and the maximum number
of shares subject to options that may be granted to any employee in any calendar
year, shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive and binding on all parties thereto. Such
adjustment may provide for the elimination of fractional shares that might
otherwise be subject to options without payment therefor.
In the event of (a) the liquidation or dissolution of the Company,
(b) a merger in which the Company is not the surviving corporation or a
consolidation, or (c) any transaction (or series of related transactions) in
which (i) more than 50% of the outstanding Common Stock is transferred or
exchanged for other consideration or (ii) shares of Common Stock in excess of
the number of shares of Common Stock outstanding immediately preceding the
transaction are issued (other than to shareholders of the Company with respect
to their shares of stock in the Company), any outstanding options shall
terminate upon the earliest of any such event, unless other provision is made
therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the Board of
Directors on April 4, 1997. No option may be granted under the Plan after April
3, 2007. The Board of Directors, without further approval of the Company's
shareholders, may at any time suspend or terminate the Plan, in whole or in
part, or amend it from time to time in such respects as it may deem advisable,
including without limitation, in order that ISOs granted hereunder meet the
requirements for "incentive stock options" under the Code, to comply with the
provisions of Rule 16b-3 promulgated the Exchange Act or Section 162(m) of the
Code or any change in applicable law or regulation, ruling or interpretation of
any governmental agency or regulatory body; PROVIDED, HOWEVER, that no amendment
shall be effective without the requisite prior or subsequent shareholder
approval which would (a) except as contemplated in Paragraph 12, increase the
maximum number of shares of Common Stock for which options may be granted under
the Plan or change the maximum number of shares for which options may be granted
to employees in any calendar year, (b) change the eligibility requirements for
individuals entitled to receive options hereunder or (c) make any change for
which applicable law or any governmental agency or regulatory body requires
shareholder approval. No termination, suspension or amendment of the Plan shall
adversely affect the rights of an optionee under any option granted under the
Plan without such optionee's consent. The power of the Committee to construe and
administer any option granted under the Plan prior to the termination or
suspension of the Plan shall continue after such termination or during such
suspension.
14. NON TRANSFERABILITY OF OPTIONS. No option granted under the Plan shall be
transferable other than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the optionee, only by the
optionee or his Legal Representatives. Except to the extent provided above,
options may not be assigned, transferred, pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process, and any such attempted assignment,
transfer, pledge, hypothecation or disposition shall be null and void AB INITIO
and of no force or effect.
<PAGE>
15. WITHHOLDING TAXES. The Company, or its Subsidiary or Parent, as applicable,
may withhold (a) cash or (b) with the consent of the Committee, shares of Common
Stock to be issued upon exercise of an option or a combination of cash and
shares, having an aggregate fair market value (determined in accordance with
Paragraph 5) equal to the amount which the Committee determines is necessary to
satisfy the obligation of the Company, a Subsidiary or Parent to withhold
Federal, state and local income taxes or other amounts incurred by reason of the
grant, vesting, exercise or disposition of an option or the disposition of the
underlying shares of Common Stock. Alternatively, the Company may require the
optionee to pay to the Company such amount, in cash, promptly upon demand. The
Company shall not be required to issue any shares of Common Stock pursuant to
any such option until all required payments have been made.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or legends
upon the certificates for shares of Common Stock issued upon exercise of an
option under the Plan and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as it determines, in its sole
discretion, to be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act,
applicable state securities laws or other legal requirements, (b) implement the
provisions of the Plan or any agreement between the Company and the optionee
with respect to such shares of Common Stock, or (c) permit the Company to
determine the occurrence of a "disqualifying disposition," as described in
Section 421(b) of the Code, of the shares of Common Stock transferred upon the
exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock upon the exercise of an option granted under
the Plan, as well as all fees and expenses incurred by the Company in connection
with such issuance.
17. USE OF PROCEEDS. The cash proceeds to be received upon the exercise of an
option under the Plan shall be added to the general funds of the Company and
used for such corporate purposes as the Board of Directors may determine, in its
sole discretion.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the shareholders, substitute new
options for prior options of a Constituent Corporation (as such term is defined
in Paragraph 19) or assume the prior options of such Constituent Corporation.
19. DEFINITIONS.
1. "Constituent Corporation" shall mean any corporation which engages
with the Company, its Parent or any Subsidiary in a transaction to
which Section 424(a) of the Code applies (or would apply if the
option assumed or substituted were an ISO), or any Parent or any
Subsidiary of such corporation.
2. "Disability" shall mean a permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
<PAGE>
3. "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the
rights of a deceased or incapacitated optionee with respect to an
option granted under the Plan.
4. "Parent" shall have the same definition as "parent corporation" in
Section 424(e) of the Code.
5. "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
20. GOVERNING LAW. The Plan, such options as may be granted hereunder, the
Contracts and all related matters shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to conflict
of law provisions that would defer to the substantive laws of another
jurisdiction.
Neither the Plan nor any Contract shall be construed or interpreted with
any presumption against the Company by reason of the Company causing the Plan or
Contract to be drafted. Whenever from the context it appears appropriate, any
term stated in either the singular or plural shall include the singular and
plural, and any term stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter.
21. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability of any
provision in the Plan, any option or Contract shall not affect the validity,
legality or enforceability of any other provision, all of which shall be valid,
legal and enforceable to the fullest extent permitted by applicable law.
22. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by a majority of
the votes of all outstanding shares entitled to vote hereon at the next duly
held meeting of the Company's shareholders at which a quorum is present. No
options granted hereunder may be exercised prior to such approval, PROVIDED that
the date of grant of any option shall be determined as if the Plan had not been
subject to such approval. Notwithstanding the foregoing, if the Plan is not
approved by a vote of the shareholders of the Company on or before March 25,
1998, the Plan and any options granted hereunder shall terminate.
CELTIC PURCHASE/LEASEBACK AGREEMENT and BILL OF SALE
Re: Lease No. CML-0572-A/ Schedule No. 01
CELTIC LEASING CORP. - Lessor/Purchaser
2061 Business Center Drive, Suite 200
o Irvine, California 92616
o (714) 263-3880
o Fax (714) 263-1331
Lessee/Seller: AMERICAN MEDICAL ALERT CORPORATION
-----------------------------------------------------------------
Corporate Address: 3265 LAWSON BOULEVARD, OCEANSIDE NY 11572
-------------------------------------------------------------
Contact: COREY M. ARONIN Title: CHIEF FINANCIAL OFFICER Phone No.516-536-5850
--------------- ----------------------- ------------
Equipment Location: SAME
------------------------------------------------------------
------------------------------------------------------------
This Agreement is to acknowledge that it has been the intent of the above named
Lessee/Seller (herein referred to as "Lessee" or as "Seller") at all times since
prior to delivery of the below listed equipment (the "Equipment") to lease said
Equipment. However, out of convenience, the Equipment was billed to and paid for
by Lessee. Therefore, Seller agrees to sell and Celtic Leasing Corp. (herein
referred to as "Lessor" or as "Purchaser") agrees to purchase the following
Equipment which is subject to the above referenced lease and schedule (the
"Lease") by and between Seller and Purchaser as Lessee and Lessor, respectively:
- --------------------------------------------------------------------------------
Equipment:
ITEM QTY DESCRIPTION PRICE
- ---- --- ------------------------------------------- -----
VENDOR: VARIOUS (SEE ATTACHED)/ AMERICAN MEDICAL ALERT CORPORATION
1.15 Various Miscellaneous computer equipment including personal
computers, software, related hardware and accessories and
attachments thereto, the vendors and costs of which are set forth
in the attached twelve page summary.
$ 128,719.35
=============
Note: The items described above represents Equipment Items 1. to 15.
to said Lease.
- --------------------------------------------------------------------------------
Purchaser shall pay to Seller the aggregate price listed above on the closing
date. The closing date is expected to occur on or about FEBRUARY 06, 1998.
Seller represents and warrants that it has good and merchantable title to the
Equipment free and clear of all adverse liens and encumbrances and Seller
covenants and agrees to defend same against any and all adverse claims and
demands. Lessee further represents and warrants that it elected to remit up
front all applicable sales and use tax with respect to its initial purchase fro
convenience and planned subsequent purchase/leaseback of the Equipment and has
thus remitted same to the applicable Equipment vendor(s) and/or directly to the
appropriate sales and use tax authorities and also represents and warrants that
<PAGE>
no further sales and/or use tax will be due pursuant to this Purchase Agreement
or said Lease. However, should any appropriate sales and or use tax authority
make a sales tax assessment at any time relating to this Purchase Agreement or
said Lease, then Lessee agrees to assume all liability for any such assessment,
including penalties and interest, if any, and agrees at its own cost and expense
to indemnify lessor.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Seller
hereby sells, transfers, grants bargains, sets over, assigns, delivers and
conveys all of its right, title and interest in and to the Equipment (except for
those rights and interests granted under said Lease) to Purchaser.
LESSEE/SELLER LESSOR/PURCHASER
American Medical Alert Corporation Celtic Leasing Corp.
Signature:/S/ COREY M. ARONIN Signature:/S/ TODD R. MEYER
Name: COREY M. ARONIN Name:TODD R. MEYER
Title:CHIEF FINANCIAL OFFICER Date:1/18/98 Title:VICE PRESIDENT Date:01/13/98
FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the 1st day of January
1997 between GKN Securities Corp. ("GKN" or the "Consultant") and American
Medical Alert Corporation (the "Company").
In consideration of the mutual promises made herein and for other
good valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company hereby engages Consultant for the term specified in
Paragraph 2 hereof to render consulting advice to the Company as an investment
banker relating to financial and similar matters upon the terms and conditions
set forth herein.
2. This Agreement shall commence as of January 1, 1997 and continue
for a term of twelve (12) months.
3. During the term of this Agreement, Consultant shall provide the
Company with such regular and customary consulting advice as is reasonably
requested by the Company, provided that Consultant shall not be required to
undertake duties not reasonably within the scope of the financial advisory or
investment banking services contemplated by this Agreement. It is understood and
acknowledged by the parties that the value of Consultant's advice is not readily
quantifiable, and that although Consultant shall be obligated to render advice
contemplated by this agreement upon the reasonable request of the Company, in
good faith, Consultant shall not be obligated to spend any specific amount of
time in so doing. Consultant's duties may include, but will not necessarily be
limited to, providing recommendations concerning the following financial and
related matters:
A. Disseminating information about the Company to the
investment community at large;
B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases;
C. Assisting in the Company's financial public relations;
D. Arranging, on behalf of the Company, at appropriate times,
meetings with securities analysts;
E. Rendering advice with regard to internal operations,
including:
1. the formation of corporate goals and their
implementation;
<PAGE>
2. the Company's financial structure and its
divisions or subsidiaries;
3. securing, when and if necessary and possible,
additional financing through banks and/or
insurance companies; and
4. corporate organization and personnel; and
F. Rendering advice with regard to any of the following
corporate finance
1. changes in the capitalization of the Company;
2. changes in the Company's corporate structure;
3. redistribution of shareholdings of the Company's
stock;
4. offerings of securities in public transactions;
5. sales of securities in private transactions;
6. alternative uses of corporate assets;
7. structure and use of debt; and
8. sales of stock by insiders pursuant to Rule 144 or
otherwise.
In addition to the foregoing, Consultant agrees to furnish advice to
the Company in connection with (i) the acquisition and/or merger of or with
companies, divestiture or any other similar transaction, or the sale of the
Company itself (or any significant percentage), or any material portion of its
assets, or any wholly or partially owned subsidiaries thereof (hereinafter
referred to as a "Transaction"), and (ii) bank financings or any other financing
from financial institutions, including but not limited to lines of credit,
performance bonds, letters of credit, loans or other financings (hereinafter
referred to as a "Bank Financing").
Consultant shall render such other financial advisory and investment
and/or investment banking services as may from time to time be agreed upon by
Consultant and the Company.
4. In consideration for the services rendered by Consultant to the
Company pursuant to this Agreement (and in addition to the expenses provided for
in Paragraph 5 hereof), the Company shall compensate Consultant as follows:
(a) The Company shall pay GKN an annual fee of $30,000
in monthly installments of $2,500, the first payment due upon the execution of
this Agreement.
<PAGE>
(b) Upon execution of this Agreement, the Company is
issuing to GKN (or its designees) 50,000 warrants exercisable for a period of
four years commencing one year from the date hereof at an exercise price of
$4.50 per share ("Warrants"). GKN and its designees shall have unlimited "piggy
bank" rights at the Company's cost. The Warrants will be evidenced by a warrant
agreement(s) in the form of Exhibit A hereto.
5. In addition to the above,
(a) In the event that any Transaction consummated by the
Company is originated by Consultant during the term of this Agreement, the
Company shall pay fees to Consultant as follows:
Consideration Fee
- ------------- ---
$ -0- to $500,000 Minimum fee of $25,000
$ 500,000 to $5,000,000 5% of Consideration
$ 5,000,000 or more $250,000 plus 2-1/2% of the
Consideration in excess of $5,000,000
If the Company identifies the other party to such a Transaction
during the term of this Agreement, the Company shall pay fees to Consultant to
be mutually agreed upon, but in any event not less than $25,000.
For the purposes of this Agreement, "Consideration" shall mean the
total market value on the day of closing of the Transaction of stock, cash,
assets and all other property (real or personal) exchanged or received or paid,
directly or indirectly, by the Company or any of its security holders in
connection with any Transaction, including without limitation any amounts paid
by the Company or any person or entity to holders of warrants, stock purchase
rights, straight or convertible securities of the Company or any affiliate
thereof, options or stock appreciation rights issued by the Company or any
affiliate thereof, whether or not vested, and to holders of any other securities
of any kind whatsoever of the Company, or pursuant to any employment agreement,
royalty, consulting agreement, covenant not to compete, earnout or contingent
payment right or similar arrangement, agreement or understanding, whether oral
or written; provided, however, that Consideration shall not include that portion
of the monies paid under any employment or consulting agreement or covenant not
to compete which represents the fair market value of the services to be so
provided thereunder. Any co-broker retained by Consultant shall be paid by
Consultant.
(b) In the event Consultant originates a Bank Financing,
the Company and Consultant will mutually agree on a satisfactory fee and the
terms of payment of such fee.
(c) In the event Consultant directly or indirectly
introduces the Company to a joint venture partner or customer and sales develop
as a result of the introduction, the Company agrees to pay a fee of two percent
(2%) of net cash revenues generated directly from this introduction during the
first two years following the date of the first sale, or such other
<PAGE>
compensation as shall be mutually agreed to. Commission payments shall be paid
on the 15th day of each month following the receipt of customers' payment. In
the event any adjustments are made to the total sales after the commissions has
been paid, the Company shall be entitled to an appropriate refund or credit
against future payments due under this Agreement.
(d) If Consultant acts as an underwriter or placement
agent in the sale or distribution of securities by the Company to the public or
in a private transaction, Consultant shall receive, as compensation for services
rendered, such compensation as may be agreed upon by the Company and the
Consultant.
(e) In the event the Company engages the Consultant to
act as its agent for the solicitation of the exercise of its outstanding
Warrants, the Company will, subject to the rules and regulations of the NASD,
pay GKN a commission equal to 5% of the exercise price for each Warrant exercise
if the exercise was solicited by GKN. The Company and GKN may enter into a more
formal warrant solicitation agreement if both determine it is necessary to do
so.
(f) Fees and expenses payable to Consultant with regard
to fairness opinions and valuations will be determined by mutual agreement at
such time as the nature and terms of such financing are affirmed.
All fees to be paid pursuant to this Agreement, except as otherwise
specified, are due and payable to Consultant in cash at the closing or closings
of any transaction specified in Paragraph 5 hereof, except when the Company has
not actually received the Consideration (i.e., payment is deferred because of
the terms of a note, or is not paid because of a contingency or earnout), in
which case the Consultant shall be paid when and if the Company is paid. In the
event that this Agreement shall not be renewed or if it is terminated for any
reason, then notwithstanding any such non-renewal or termination, Consultant
shall be entitled to a full fee (payable in accordance with the preceding
sentence) as provided under Paragraph 5 hereof, for any transaction for which
the discussions or introductions were initiated during the term of this
Agreement and which was consummated within 12 months of the termination of this
Agreement.
6. In addition to the fees payable hereunder, and regardless whether
any transaction set forth in Paragraph 5 hereof is proposed or consummated, the
Company shall reimburse Consultant for all reasonable travel and out-of-pocket
expenses incurred in connection with the services performed by Consultant
pursuant to this Agreement; provided, however, that Consultant shall incur no
expense in excess of $250 without Company's consent.
7. (a) The Company acknowledges that all opinions and advice
(written or oral) given by Consultant to the Company in connection with the
Consultant's engagement are intended solely for the benefit and use of the
Company in considering the transaction to which they relate, and the Company
agrees that no person or entity other than the Company shall be entitled to make
use of or rely upon the advice of Consultant to be given hereunder, and no such
opinion or advice shall be used for any manner or purpose, nor may the Company
make any public references to the Consultant or use any of Consultant's names in
any annual reports or any other reports or releases of the Company without
Consultant's prior written consent, which shall not be unreasonably withheld.
Notwithstanding the foregoing, the Company man, to the extent counsel
<PAGE>
advises it that it is legally required to do so, disclose GKN's name and a
description of this Agreement in the Company's press releases and governmental
filings.
(b) The Company acknowledges that Consultant makes no
commitment whatsoever as to making a market in the Company's securities or to
recommending or advising its clients to purchase the Company's securities.
Research reports or corporate finance reports ("Reports") that may be prepared
by Consultant will, when and if prepared, be done solely on the merits or
judgment of analysis of Consultant or any senior corporate finance or research
personnel of Consultant. Any such Reports will be delivered to the Company
before public dissemination. The Company will be given an opportunity to correct
any errors in such Reports.
8. Consultant will hold in confidence any confidential information
which the Company provides to Consultant pursuant to this Agreement and will
return all such confidential information promptly after the Company's request
for same. Notwithstanding the foregoing, Consultant shall not be required to
maintain confidentiality with respect to information (i) which is or becomes
part of the public domain not due to the breach of this Agreement by Consultant;
(ii) of which it had independent knowledge prior to disclosure; (iii) which
comes into the possession of Consultant in the normal and routine course of its
own business from and through independent non-confidential sources; (iv) which
is required to be disclosed by Consultant by laws, rules or regulators. If
Consultant is requested or required (by oral questions, interrogatories,
requests for information or document subpoenas, civil investigative demands, or
similar process) to disclose any confidential information supplied to it by the
Company, or the existence of other negotiations in the course of its dealings
with the Company or its representatives, Consultant shall, unless prohibited by
law, promptly notify the Company of such request(s) so that the Company may seek
an appropriate protective order. This paragraph shall survive termination of
this Agreement.
9. The Company acknowledges that Consultant or its affiliates are in
the business of providing financial services and consulting advice to others.
Nothing herein contained shall be construed to limit or resist Consultant in
conducting such business with respect to others, or in rendering such advice to
others. Notwithstanding the foregoing, if GKN is engaged in any capacity by a
company whose primary business is providing personal emergency response systems
services ("Competitor"), GKN will promptly notify the Company of such engagement
and the Company shall have the right to terminate this Agreement upon five days
notice to GKN ("Competitive Termination"). GKN represents and warrants that, as
of the date hereof, it has not been engaged by (nor entered into discussions
with respect to such engagement with) any Competitor.
10. The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, Consultant will use and rely
on data, material and other information furnished to Consultant by the Company.
The Company acknowledges and agrees that in performing its services under this
engagement, Consultant may rely upon the data, material and other information
supplied by the Company without independently verifying the accuracy,
completeness or veracity of same.
11. The Company agrees to indemnify and hold harmless GKN, its
employees, agents, representatives and controlling persons (and the officers,
directors, employees, agents,
<PAGE>
representatives and controlling persons of each of them) from and against any
and all losses, claims, damages, liabilities, reasonable costs and expenses (and
all actions, suits, proceedings or claims in respect thereof) and any reasonable
legal or other expenses in giving testimony or furnishing documents in response
to a subpoena or otherwise (including, without limitation, reasonable attorney
fees and the cost of investigating, preparing or defending any such action,
suit, proceeding or claim, whether or not in connection with any action, suit,
proceeding or claim in which GKN is a party), as and when incurred, directly or
indirectly caused by, relating to, based upon or arising out of GKN's services
pursuant to this Agreement so long as GKN shall not have engaged in intentional
or willful misconduct, or shall have acted grossly negligent ("GKN Acts"), in
connection with the services provided which form the basis of the claim for
indemnification. GKN agrees to indemnify and hold harmless the Company from all
GKN Acts on the same terms as the Company's indemnification of GKN. This
paragraph shall survive the termination of this Agreement.
12. Consultant shall perform its services hereunder as an
independent contractor and not as an employee of the Company or an affiliate
thereof. It is expressly understood and agreed to by the parties hereto that
Consultant shall have no authority to act for, represent or bind the Company or
any affiliate thereof in any manner, except as may be agreed to expressly by the
Company in writing from time to time.
(a) This Agreement between the Company and Consultant
constitutes the entire agreement between the parties with respect to the subject
matter hereof.
(b) No provision of this Agreement may be amended,
modified or waived, except in writing signed by all of the parties hereto.
(c) This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors, legal
representatives and assigns.
(d) This Agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same original
documents.
(e) In the event of any dispute under this Agreement,
then and in such event, each party hereto agrees that the same shall be
submitted to the American Arbitration Association in the City of New York, for
its decision and determination in accordance with its rules and regulations then
in effect. Each of the parties agrees that the decision and/or award made by the
Association may be entered as judgement of the Courts or the State of New York,
and shall be enforceable as such.
(f) This Agreement shall be construed and enforced in
accordance with the laws of the State of New York, without giving effect to
conflict of laws.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
GKN SECURITIES CORP. AMERICAN MEDICAL ALERT CORP.
By: /S/LESTER ROSENKRANTZ By: /S/HOWARD M. SIEGEL
---------------------------- ----------------------------
Lester Rosenkrantz Howard M. Siegel
Executive Vice President Chairman and Chief Executive Officer
Independent Auditor's Consent
We consent to the incorporation by reference in Registration Statement Nos.
33-48385, 33-91806 and 33-48297 on Form S-8 and Registration Statement No.
333-6159 on Form S-3 of American Medical Alert Corp. of our report dated
February 20, 1998 appearing in this Annual Report on Form 10-KSB of American
Medical Alert Corp. for the year ended December 31, 1997.
/S/ MARGOLIN, WINER & EVENS LLP
- -------------------------------
MARGOLIN, WINER & EVENS LLP
Garden City, New York
March 25, 1998
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<NAME> AMERICAN MEDICAL ALERT CORP.
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<TOTAL-LIABILITY-AND-EQUITY> 7,251,628
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<CGS> 844,731
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