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, 1998
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. [X]
The issuer's revenues for its most recent fiscal year:
$8,297,208.
The aggregate market value of the voting stock held by
non-affiliates of the registrant, as of March 22, 1999, was $19,137,156 computed
by reference to the average closing bid and asked prices of such stock as
reported on NASDAQ on that date.
Aggregate number of shares of Common Stock outstanding as of
March 22, 1999: 6,379,052
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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, 1998, are incorporated by reference into Part III of this report.
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PART I
Item 1. Description of Business.
General
American Medical Alert Corp. (the "Company"), a company incorporated
under the laws of the State of New York in 1981, is engaged in the business of
designing, engineering, marketing, installing and monitoring computerized
Personal Emergency Response Systems ("PERS"), stand-alone and PERS integrated
medication dispensers using proprietary and commercially available technology.
The Company markets to consumers, healthcare agencies, hospitals, health
maintenance organizations, durable medical equipment providers, retirement
communities, hospitals and government agencies amongst others. Changes in new
federal policies affecting the delivery of home healthcare services to medicare
and medicaid populations are an important factor in the Company's marketing
philosophy. A primary corporate goal is to enhance the use of homecare as
opposed to hospitalization by making available cost effective at-home patient
monitoring services.
The Company has entered into an exclusive licensing agreement to market
a unique medication dispenser. Exclusive marketing rights include the United
States, Canada and Mexico. The failure of patients to achieve medication
compliance is a major contributor to increasing hospitalization costs. The
device will be marketed in conjunction with the Company's PERS products (i.e.
supervised) as a stand-alone unit.
Products and Services
The Company's core business has and will continue to be to increase
monthly residual revenues (MRR) through the development and marketing of
high-tech PERS and other home care monitoring devices. VOICECARE(R) Systems
enable a person to remain independent, reduce costly hours of safety
supervision, and enjoy the comforts of living at home while giving family and
care givers peace of mind. Monitoring an individual from such person's home
demands the immediate transmission of changes that have an effect on medical and
physical conditions. The Health Care Financing Administration's (HCFA) list of
approved homecare monitored services is continuously increasing. The use of
homecare as an alternative to internment should continue to increase, thereby
making available the opportunity for broader use of the Company's current and
future products.
Personal Emergency Response Systems
VOICECARE(R) Systems have been designed to permit two-way (talk/listen)
voice communications between an individual and monitoring personnel.
VOICECARE(R) Systems are packaged as either a table top or wall mounted system.
The table top systems are primarily utilized by private-pay consumers,
hospitals, home healthcare providers and government agencies. The wall mounted
units are typically used in new and refurbished senior multi-housing facilities,
i.e., assisted living retirement settings.
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The Company's PERS provide 24 hour monitoring and customized response
protocols to the medically at-risk, elderly, infirm, physically challenged and
home-bound population. Through the use of its VOICECARE(R) System, individuals
in need of assistance are able to signal for help at the touch of a button and
utilize two-way voice communication to identify the appropriate level of
assistance required.
When the subscriber initiates a call for help, the system transmits an
audible tone and flashes a light, indicating that the system is alerting the
Emergency Response Center ("ERC"). The Company's VOICECARE(R) System, utilizing
the subscriber's telephone, permits hands-free voice communication between the
subscriber and the ERC. The equipment includes a two-way voice communicator
connected to the telephone line in the subscriber's home and a personal help
activator which is worn or carried by the subscriber. When the system is
activated, the ERC software acknowledges the incoming signal and automatically
displays the subscriber's personal information in the monitoring center. The
subscriber and monitor speak to each other, thus allowing the ERC to determine
the nature of the emergency and the level of help required. Appropriate
assistance is immediately dispatched in accordance with predetermined protocol
and the assistance of the subscriber.
The Company's primary and back-up ERCs are capable of handling multiple
requests for assistance at any given time. The Company believes that subscriber
signals are routinely processed by the ERC in less than one minute from
initiation. The Company's back-up monitoring center, first introduced by the
Company, located in Mt. Laurel, New Jersey, provides an additional safeguard to
the reliability of its VOICECARE(R) Systems.
VOICECARE(R) Systems can monitor proprietary as well as commercially
available intrusion, fire detection and other similar devices.
Medical Dispensing Device
MEDTIME(R), the Company's newly licensed medication dispenser and
reminder system, is a natural extension to the Company's products and services.
Management believes that such product's potential is significant as a result of
a growing concern over non-compliance issues. Management believes that
MEDTIME(R) could be a valuable asset to visually or mentally handicapped and
senile patients as well as patients on daily medication regimes. The product can
be utilized on a stand-alone basis or integrated with the Company's PERS to
notify the Monitoring Center of a patient's non- compliant event. MEDTIME(R)
contains a tray with 28 compartments, and at pre-programmed times (one to four
times a day), the dispenser emits an audible tone and rotates to deliver the
right medication at the right time through an aperture in the lid. The signal
remains active for a maximum of 30 minutes or until the medication is taken.
Upon consumer compliance, the alarm signal shuts off and is automatically reset.
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Several states have already created a reimbursement mechanism for the
use of MEDTIME(R) by Medicaid and AIDS patients. In addition, a major developer
and operator of assisted living facilities is test marketing the use of the
dispenser at several of its assisted living facilities.
Monitoring
In addition to its voice communication systems, the Company makes
available, as an additional and integral part of the VOICECARE(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 all
incoming signals. Each of the Company's monitoring personnel are trained
according to Emergency Medical Dispatcher protocol. All signals for assistance
are programmed to access the Center's subscriber database 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. The Company's
monitoring centers are capable of simultaneously identifying and processing a
variety of signals from a host of activating devices.
Vital Sign Monitoring
The Company recently entered into a consulting agreement with a leading
cardiologist to assist in the selection of equipment and/or partners to enter
the field of cardiac monitoring in the home. Many of the Company's service
providers have suggested that the Company consider diversification and offer a
broader range of monitoring services. Management believes that this field offers
a significant opportunity for expansion.
Production/Purchasing
Generally, the Company utilizes subcontractors to assemble its
products. These services are generally provided through verbal arrangements and
Company-issued purchase orders. The Company has primary and back-up
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.
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Marketing/Customers
The Company markets its products and monitoring services to consumers,
hospitals, home healthcare providers, government agencies, third-party insurers,
developers of retirement communities and in connection with commercial
applications, among others. The Company believes that these markets offer the
Company an opportunity for significant growth.
Sales, rentals and leases of the Company's products and monitoring
services are made through the efforts of its own sales personnel, service
providers and independent distributors. The Company is an approved Medicaid
provider in the States of New York, Georgia, Illinois, South Carolina, Colorado
and Nevada. During the years ended December 31, 1998, 1997 and 1996, the Company
had revenues from one contract with a municipality located in New York which
represented 47%, 44% and 44%, respectively, of its total revenue. The contract
to provide services to this municipality expires on June 30, 1999. In January
1999, the Company submitted its proposal to the municipality to renew and extend
the contract. If the municipality does not renew the contract, a significant
amount of the Company's revenues would be lost, which would have a material
adverse effect on the Company's business and results of operations.
The Company continues development on new healthcare systems that it
plans to continue testing during fiscal year 1999. Examples include:
1. MED TIME(R): This product will be used by home healthcare
patients for the purpose of insuring that prescribed
medications are taken in accordance with physicians' orders.
2. Remote Paging
3. Vital Sign Monitoring
4. Interactive Telephone Monitoring
5. Cardiac Monitoring
6. H-LINK(R): Marketing concept to facilitate the continuum of
care through managed care networks.
In addition, the Company continues to seek new applications for its interactive
voice technology.
Installation and Services
The Company provides its own personnel, uses independent subcontractors
or provides training for customers' personnel for installation and servicing of
its VOICECARE(R) Systems. In addition, telephone interconnect companies install
VOICECARE(R) Systems for the Company in some locations.
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Sales, Leasing and Monitoring Revenues
The Company markets its products through sales and various rental
arrangements. The Company also offers VOICECARE(R) Systems, including monitoring
center equipment for on-site monitoring, using similar purchase and lease
arrangements.
The Company offers monitoring service for its own PERS, 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, New York 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 VOICECARE(R) Systems
and elect to provide their own on-site primary monitoring.
Patents and Trademarks
The Company considers its proprietary trademarks to be an important
element of its marketing program. The Company believes that continued
development of new services and products and trademark protection are important
in maintaining its competitive advantage. The Company's trademarks include
"VOICECARE(R)", "VOICE OF HELP(R)", "THE VOICE OF HELP(R)", "MED TIME(R)",
"H-LINK(R)", "ACCUTROL(R)", "MED PASS(R)", "ROOM MATE(R)", "SYSTEM-one(R)" and
"HELPING PEOPLE LIVE BETTER(R)", each of which is registered with the United
States Patent and Trademark Office.
Competition
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 three distinct areas:
Government reimbursed programs, hospital/private-pay and multi-housing
applications. The Company believes that its customers' main considerations in
choosing a personal response service are the high quality of service and product
performance and reliability; customer support and service; and reputation and
experience in the industry. The Company believes that its experience and
expertise give it a significant advantage over its competitors.
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Research and Development
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, 1998, 1997 and 1996 were $14,586,
$20,441 and $24,339, respectively.
Employees
As of March 24, 1999, the Company employed 103 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
rent 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. 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, 2000 and provides for a current base annual rental of $40,500 plus charges
for certain operating expenses.
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 August 31,
2001, for office, warehouse, storage, shipping and receiving purposes. The lease
provides for an annual rent of $15,281 during the first year of the term,
$16,045 during the second year of the term and $16,848 during the third year of
the term.
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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 $16,000.
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 to which any of its
properties are 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
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1997 First Quarter $ 3.4375 $ 2.0625
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Second Quarter 3.4375 2.3125
Third Quarter 3.5625 2.5625
Fourth Quarter 3.0000 2.0000
1998 First Quarter $ 3.0000 $ 2.1250
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Second Quarter 4.1250 2.6250
Third Quarter 3.1250 2.3750
Fourth Quarter 4.2500 2.2500
As of March 24, 1999, there were 426 record holders of the Company's
Common Stock.
The Company did not pay dividends on its Common Stock during the two
years ended December 31, 1998 and does not anticipate paying dividends in the
foreseeable future.
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
The Company's gross revenues increased from $7,636,730 in 1997 to
$8,297,208 in 1998, an increase of 9%, and increased from $7,255,842 in 1996 to
$7,636,730 in 1997, an increase of 5%. The increase in gross revenues from 1997
to 1998 and 1996 to 1997 resulted from management's emphasis on the continued
growth of the Company's recurring service revenue base.
Revenues from services increased from $6,757,594 in 1997 to $7,812,571
in 1998, an increase of 16%, and increased from $6,119,946 in 1996 to $6,757,594
in 1997, an increase of 10%. These
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increases resulted from the expansion of the Company's customer base for monthly
monitoring, rental and leasing services. Costs related to services for 1998,
1997 and 1996 were 36%, 38% and 34%, respectively. In 1998, costs as a
percentage of revenue decreased as a result of greater operational efficiencies.
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 $879,136 in 1997 to $484,637
in 1998, a decrease of 45%, and decreased from $1,135,896 in 1996 to $879,136 in
1997, a decrease of 23%. Decreases in revenues from product sales from 1997 to
1998 and 1996 to 1997 were primarily a result of management's changing focus
toward the growth of its subscriber base, rental income and service revenues.
Gross profit on product sales in 1998, 1997 and 1996 was 2%, 4% and 30%,
respectively. Gross profit on product sales decreased in 1998 and 1997 in part
due to sales incentives given to introduce the Model 800 and 700 PERS,
respectively, and associated start-up production costs.
Selling, general and administrative expenses increased from $2,726,254
in 1997 to $3,254,153 in 1998, an increase of 19%, and increased from $2,705,525
in 1996 to $2,726,254 in 1997, an increase of 8%. Additional expenses incurred
in 1998 were the result of increased sales and marketing expenses, expansion of
the sales department and hiring of additional management personnel. Expenses in
1997 did not increase as a result of greater operational efficiencies.
Interest expense for 1998, 1997 and 1996 was $21,802, $46,705, and
$46,965, respectively. Interest expense decreased in 1998 and 1997 due to
improved cash flow and reductions in average monthly borrowing.
The Company's income before provision for income taxes in 1998 was
$1,725,503, an increase of $247,995 from 1997, or 17%. The increase in 1998
resulted from an increase in the Company's residual service revenues and greater
operational efficiencies. 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.
Liquidity and Capital Resources
During 1998, cash provided by operating activities was $1,511,320 as
compared to $945,939 in 1997. Cash paid for income taxes in 1998 was $695,809 as
compared to $704,254 in 1997. Expenditures for fixed assets and medical devices
held for lease aggregated $1,711,996 in 1998, an increase from $761,019, the
amount purchased in 1997. During 1998, cash increased by $1,115,103, as compared
to an increase in cash of $3,726 in 1997.
In December 1998, 369,310 warrants to purchase shares of the Company's
Common Stock at $3.50 per share were exercised, increasing cash by $1,292,586.
The Company had sold units that contained warrants to purchase 850,000 shares of
the Company's Common Stock at $3.50 per share
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in December 1983. The remaining 480,690 units that contained warrants to
purchase the Company's Common Stock expired on December 26, 1998.
On April 27, 1998, the Company renegotiated a $2,000,000 Revolving
Credit Facility (the "Credit Facility") with a bank (based upon 75% of eligible
accounts receivable and 25% of inventory, as defined) expiring May 31, 2000. The
note bears interest at the lower of prime rate or the LIBOR Rate plus 2.50% (as
defined) and is collateralized by the Company's assets. There are no amounts
outstanding under the Credit Facility as of March 24, 1999. The agreement
provides for negative and affirmative covenants including those related to
tangible net worth, working capital and other borrowings. Prior to April 27,
1998, the Company had a similar arrangement with another bank which permitted
borrowings up to $1,500,000. At December 31, 1997, $150,000 was outstanding.
The Company's working capital on December 31, 1998 was $4,787,083 as
compared to $3,023,365 on December 31, 1997. During 1999, the Company
anticipates that it will make capital investments of approximately $1,700,000
for the production and purchase of additional systems which the Company intends
to rent and enhance its management information systems. 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.
The Company derives a significant portion of its revenue from one
contract with a municipality located in New York. This contract expires on June
30, 1999. In January 1999, the Company submitted its proposal to the
municipality to renew and extend the contract. Revenues earned from this
municipality represented 47%, 44% and 44%, respectively, of total revenues for
the years ended December 31, 1998, 1997 and 1996. Leased medical devices in
service relating to this contract represented 42% and 45%, respectively, of
total leased medical devices at December 31, 1998 and 1997. In the event the
municipality does not renew such contract, a significant amount of the Company's
revenues would be lost, which would have a material adverse effect on the
Company's business and results of operations. In the event of such non-renewal,
the Company's management will continue to build its subscriber base through
consumers, healthcare agencies, health maintenance organizations, durable
medical equipment providers, retirement communities, hospitals and other
govermental agencies.
Year 2000 Compliance
General
The Company is in the process of evaluating its management information
systems to determine what modifications, if any, are necessary to make such
systems compatible with Year 2000 requirements. As many of the Company's
computer systems and software have been put into service within the last few
years, or are currently being replaced with Year 2000 compliant systems and
software, the Company does not expect any such modifications to require material
expenditures or have a material adverse effect on the Company's financial
position or results of operations. The
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Company anticipates that any modifications required to be made to its software
systems to comply with the Year 2000 Issue will be completed in a timely manner.
Third Parties
The Company has also initiated formal communications with significant
suppliers and other key third parties to determine the extent to which the
Company is vulnerable to those third parties' failure to resolve their own Year
2000 compliance issues. There can be no assurance that the systems of other
companies on which the Company's systems rely will be timely converted, or that
a failure to convert by another company, or a conversion that is incompatible
with the Company's systems, would not have a material adverse effect on the
Company's results of operations.
Risk Assessment/Contingency Planning
At this time, the Company believes its most reasonable likely worst
case scenario would include (i) a key material vendor or service provider
experiencing problems with delivery of materials, components or services; or
(ii) the failure of infrastructure services provided by government agencies and
other third parties (e.g., electricity, telephone, transportation, Internet
services, etc.). As noted above, the Company is evaluating the Year 2000
compliance status of its key third-party vendors to identify potential risks for
contingency planning purposes. The Company anticipates that appropriate
contingency plans will be prepared throughout 1999 as determined to be
necessary.
Item 7. Financial Statements.
The financial statements required hereby are located on pages F-1
through F-21.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
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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 1999 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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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 (Incorporated by reference to
Exhibit 4(g) to the Company's Form 10-KSB
for the year ended December 31, 1997).
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).
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Exhibit No. Identification of Exhibit
---------- -------------------------
10(g) Third Amendment to the Mt. Laurel Lease
(Incorporated by reference to Exhibit
10(g) to the Company's Form 10-KSB for
the year ended December 31, 1997).
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 (Incorporated by
reference to Exhibit 10(i) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
10(j) Lease for the premises located at 3255
Lawson Boulevard, Oceanside, New York
(Incorporated by reference to Exhibit
10(j) to the Company's Form 10-KSB for
the year ended December 31, 1997).
10(k) Lease for the premises located at 910
Church Street, Decatur, Georgia
(Incorporated by reference to Exhibit
10(k) to the Company's Form 10- KSB for
the year ended December 31, 1997).
10(l)* Lease for the premises located at 169-10
Crocheron Avenue, Flushing, New York
dated September 1, 1998 by and between
the Company and Roseann and Charles Rojo.
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 (Incorporated by
reference to Exhibit 10(n) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
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 (Incorporated by
reference to Exhibit 10(q) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
-16-
<PAGE>
Exhibit No. Identification of Exhibit
---------- -------------------------
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
June 30, 1999. (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. (Incorporated by reference to
Exhibit 10(u) to the Company's Form
10-KSB for the year ended December 31,
1997).
10(v) Financial Advisory and Investment Banking
Agreement with GKN Securities Corp. dated
as of January 1, 1997 (Incorporated by
reference to Exhibit 10(v) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
10(w)* Loan Agreement dated as of April 27, 1998
by and between the Company and European
American Bank.
10(x)* Assignment of Rents and Leases dated
January 7, 1999 relating to the leased
premises at 910 Church Street, Decatur,
Georgia.
23(a)* Consent of Margolin, Winer & Evens LLP.
27* Financial Data Schedule.
-------------------
* 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.
-17-
<PAGE>
AMERICAN MEDICAL ALERT CORP.
FINANCIAL STATEMENTS
Years Ended December 31, 1998, 1997 and 1996
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONTENTS
Report of Independent Accountants 1
Financial Statements:
Balance Sheets 2
Statements of Income 5
Statements of Shareholders' Equity 6
Statements of Cash Flows 8
Notes to Financial Statements 10
<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, 1998 and 1997 and the related statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. 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, 1998 and 1997 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
MARGOLIN, WINER & EVENS LLP
Garden City, New York
February 17, 1999
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS
==================================================================================================================================
December 31, 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS (Note 3)
<S> <C> <C>
Current Assets:
Cash $ 1,419,842 $ 304,739
Accounts and notes receivable (net of allowance for doubtful
accounts of $60,000 in 1998 and $30,000 in 1997)
(Notes 1, 2, 5 and 10) 2,170,498 1,574,738
Inventory (Note 1) 1,329,526 1,310,551
Prepaid expenses and taxes and other current assets
(Notes 1 and 5) 139,632 196,990
Deferred income taxes (Notes 1 and 5) 121,000 97,000
---------------- ---------------
Total Current Assets 5,180,498 3,484,018
---------------- ---------------
Fixed Assets - at cost:
Leased medical devices 6,214,857 5,152,258
Monitoring equipment 561,033 308,563
Furniture and equipment 419,450 338,044
Leasehold improvements 214,638 197,680
Automobiles 44,792 36,302
---------------- ---------------
7,454,770 6,032,847
Less accumulated depreciation and amortization (Note 1) 2,913,424 2,299,998
---------------- ---------------
4,541,346 3,732,849
---------------- ---------------
Other Assets
Intangible assets (net of accumulated amortization
of $24,150 in 1998) (Note 1) 167,350 -
Other assets 35,002 34,761
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS
=================================================================================================================
December 31, 1998 1997
<S> <C> <C>
202,352 34,761
---------- ----------
Total Assets $ ,924,196 $7,251,628
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable - bank (Note 3) $ - $ 150,000
Accounts payable 185,394 161,795
Accrued expenses 142,342 139,802
Taxes payable 21,569 -
Current portion of capital lease obligations (Note 6) 44,110 9,056
---------- ----------
Total Current Liabilities 393,415 460,653
Deferred Income Tax Liability (Notes 1 and 5) 332,000 318,000
Deferred Income 22,766 -
Long-Term Portion of Capital Lease Obligations (Note 6) 148,542 2,797
---------- ----------
Total Liabilities 896,723 781,450
---------- ----------
Commitments (Notes 6, 7 and 9) - -
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS
==============================================================================================================================
December 31, 1998 1997
<S> <C> <C>
Shareholders' Equity (Notes 7 and 9):
Common stock, $.01 par value authorized, 10,000,000 shares; issued
6,397,570 shares in 1998 and
5,904,607 shares in 1997 63,976 59,045
Additional paid-in capital 6,089,050 4,523,189
Retained earnings 2,980,479 1,993,976
------------- --------------
9,133,505 6,576,210
Less treasury stock, at cost (43,910 shares in 1998
and 1997 (106,032) (106,032)
------------- ---------------
Total Shareholder's Equity 9,027,473 6,470,178
------------- --------------
Total Liabilities and Shareholder's Equity $ 9,924,196 $ 7,251,628
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF INCOME
============================================================================================================================
Year Ended December 31, 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue (Notes 1 and 10):
Services 7,812,571 $ 6,757,594 $ 6,119,946
Product sales 484,637 879,136 1,135,896
---------- ------------ ------------
8,297,208 7,636,730 7,255,842
---------- ------------ ------------
Costs and Expenses (Income):
Costs related to services 2,828,094 2,542,840 2,075,819
Cost of products sold (Note 1) 476,227 844,731 789,878
Selling, general and
administrative expenses 3,254,153 2,726,254 2,705,525
Interest expense 21,802 46,705 46,965
Other income (8,571) (1,308) (1,238)
---------- ------------ ------------
6,571,705 6,159,222 5,616,949
---------- ------------ ------------
Income Before Provision for Income Taxes 1,725,503 1,477,508 1,638,893
Provision for Income Taxes (Notes 1 and 5) 739,000 673,000 720,000
---------- ------------ ------------
Net Income 986,503 $ 804,508 $ 918,893
========== ============ ============
Basic Earnings Per Share (Note 1) .17 .14 $ .16
========= ============ ============
Diluted Earnings Per Share (Note 1) .16 .14 $ .16
========= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY
====================================================================================================================================
Years Ended December 31, 1998, 1997 and 1996
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
NUMBER ADDITIONAL
OF PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
-------------- --------------- ------------- -------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1996 5,504,741 $ 55,047 $ 4,088,212 $ 270,575 $ (6,484) $4,407,350
Exercise of Stock Options (Note 7) 338,535 3,385 303,778 - (99,548) 207,615
Net Income for the Year Ended - - - 918,893 - 918,893
------------- -------------- ------------ ----------- ------------ -----------
December 31, 1996
Balance - December 31, 1996 5,843,276 58,432 4,391,990 1,189,468 (106,032) 5,533,858
Common Stock Issued 2,500 25 3,803 - - 3,828
Exercise of Stock Options (Note 7) 58,831 588 127,396 - - 127,984
Net Income for the Year Ended - - - 804,508 - 804,508
------------- -------------- ------------ ------------ ------------- -----------
December 31, 1997
Balance - December 31, 1997 5,904,607 59,045 4,523,189 1,993,976 (106,032) 6,470,178
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
NUMBER ADDITIONAL
OF PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
-------------- --------------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Exercise of Stock Options (Note 7) 123,653 1,237 276,969 - - 278,206
Exercise of Stock Warrants (Note 7) 369,310 3,694 1,288,892 - - 1,292,586
Net Income for the Year Ended - - - 986,503 - 986,503
----------- --------- ------------ ------------ ----------- ---------
December 31, 1998
Balance - December 31, 1998 6,397,570 $ 63,976 $ 6,089,050 $ 2,980,479 $(106,032) $9,027,473
========== ========= ============ =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF CASH FLOWS
====================================================================================================================================
Years Ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 986,503 $ 804,508 $ 918,893
Adjustments to reconcile net income to net cash provided by
operating activities:
(Decrease) increase in provision for deferred (10,000) 17,000 63,000
income taxes
Provision for doubtful receivables 30,000 - -
Gain on sale and leaseback of fixed assets (5,600) - -
Issuance of common stock in consideration
for consulting services - 3,828 -
Depreciation and amortization 1,050,327 780,280 646,838
Changes in operating assets and liabilities:
Increase in receivables (625,760) (230,983) (106,817)
Increase in inventory (18,975) (139,530) (54,211)
(Increase) decrease in prepaid expenses 57,117 (69,636) 12,081
and taxes and other assets
Increase (decrease) in accounts payable, 47,708 (219,528) (160,267)
------------- --------------- --------------
accrued expenses and taxes payable
Net Cash Provided by Operating Activities 1,511,320 945,939 1,319,517
------------- --------------- --------------
Cash Flows from Investing Activities:
Expenditures for fixed assets including inventory (1,711,996) (761,019) (1,535,703)
of medical devices held for lease in 1996
Proceeds from sale of equipment 128,719 - -
Payment for account acquisitions (191,500) - -
------------- --------------- -------------
Net Cash Used in Investing Activities (1,774,777) (761,019) (1,535,703)
------------- --------------- --------------
Cash Flows from Financing Activities:
Net repayments on bank borrowings (150,000) (300,000) -
Principal payments under capital lease
obligations (42,232) (9,178) (10,405)
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
Proceeds upon exercise of stock options 278,206 127,984 207,615
Proceeds upon exercise of stock warrants 1,292,586 - -
----------- --------------- -----------
Net Cash Provided by (Used in) Financing 1,378,560 (181,194) 197,210
----------- ---------------- -----------
Activities
Net Increase (Decrease) In Cash $ 1,115,103 $ 3,726 $ (18,976)
Cash - beginning of year 304,739 301,013 319,989
------------ --------------- -----------
Cash - end of year $ 1,419,842 $ 304,739 $ 301,013
============ =============== ==========
Supplemental Disclosure of Cash Flow Information Cash paid during the year for:
Interest $ 21,802 $ 46,705 $ 46,965
Income taxes $ 695,809 $ 704,254 $ 594,036
Supplemental Schedule of Noncash Investing
and Financial Activities:
Fixed assets recorded under Capital lease obligations $ 223,030 $ - $ 15,136
During 1996, an employee satisfied the exercise price of certain stock
options by exchanging shares already owned with a fair value of $99,5489.
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-9
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Summary of Scope of business - The Company's business is to
Significant sell, rent, install, service and monitor remote
Accounting communication systems with personal security and
Policies smoke/fire detection 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, and government
agencies across the United States and individual
consumers. (See Note 10.)
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
$1,262,890 and $1,155,610 at December 31, 1998 and
1997, respectively, and the remaining inventory
consists of component parts.
Fixed assets - Depreciation is computed by the
straight-line method at rates adequate to allocate
the cost of applicable assets over their expected
useful lives as follows:
Leased medical devices 5-7 years
Monitoring equipment 5 years
Furniture and equipment 5-7 years
Automobiles 3 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 during the three year period ending
December 31, 1998.
F-10
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Intangible assets - Intangible assets, consisting
of purchased trade accounts and a related trade
name are amortized using straight-line methods at
rates adequate to allocate the cost of applicable
assets over their expected useful lives. Trade
accounts are amortized on a straight-line basis
over five years. The trade name is amortized on a
straight-line basis over ten years.
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 carry
forwards 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.
Research and development costs - Research and
development costs, which are expensed and included
in cost of products sold, were $14,586, $20,441,
and $24,339 for the years ended December 31, 1998,
1997, and 1996, 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, 1998, 1997 and 1996 is presented in
conformity with this pronouncement.
The following table is a reconciliation of the
numerators and denominators in computing earnings
per share:
F-11
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 Income Shares Per-Share
(Numerator) (Denominator) Amounts
--------- ----------- ---------
<S> <C> <C> <C>
Basic EPS -
Income available to common stockholders $ 986,503 5,938,900 $ 0.17
===========
Effect of dilutive securities -
Options and warrants - 122,993
----------------- ----------------
Diluted EPS -
Income available to common
stockholders and assumed conversions $ 986,503 6,061,893 $ 0.16
================= ================ ------------
1997
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 an
assumed conversions $ 918,893 5,852,553 $ 0.16
================= ================ ============
</TABLE>
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. In addition, the Company maintains its
cash in various bank accounts which at times may
exceed federally insured limits.
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
F-12
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 all 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.
2. Notes Receivable In November 1993 an employee borrowed $30,000 and
issued an interest bearing promissory note to the
Company originally scheduled to mature during
1996.
The note had been extended and in December 1998,
the note was paid in full.
3. Notes Payable - On April 27, 1998, the Company negotiated a new
Bank revolving credit line which permits maximum
borrowings up to $2,000,000 (based upon 75% of
eligible accounts receivable and 25% of inventory,
as defined). Borrowings under the line bear
interest at the lower of the prime rate or LIBOR
plus 2.50% (as defined) and are collateralized by
the Company's assets. The credit line is available
until May 31, 2000. No amounts were outstanding at
December 31, 1998.
The agreement provides for negative and
affirmative covenants including those related to
tangible net worth, working capital and other
borrowings.
F-13
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Prior to April 27, 1998, the Company had a similar
arrangement with another bank which permitted
borrowings up to $1,500,000. At December 31, 1997,
$150,000 was outstanding.
4. Related Party Director of the Company has an ownership interest
Transactions in an insurance agency that has written policies
for the Company with premiums of $147,924,
$165,094 and $153,856 in fiscal 1998, 1997 and
1996, respectively.
Included in accounts and notes receivable at
December 31, 1998 and 1997 is $84,350 and $65,204,
respectively, due from the president and principal
shareholder of the Company. (See Notes 6 and 7.)
5. Income Taxes The provision for income taxes consists of the
following:
Years Ended December 31,
1998 1997 1996
---- ---- ----
Current:
Federal $ 542,000 $ 452,000 $ 469,000
State 207,000 204,000 188,000
---------- ------------ -----------
749,000 656,000 657,000
---------- ------------ -----------
Deferred:
Federal (8,000) 14,000 54,000
State (2,000) 3,000 9,000
--------- ------------ -----------
(10,000) 17,000 63,000
---------- ------------ -----------
Total 739,000 $ 673,000 $ 720,000
========== ============ ===========
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,
1998 1997 1996
---- ---- ----
Statutory federal
income tax rate 34.0% 34.0% 34.0%
State and local taxes 8.0 9.0 8.0
Other 1.0 2.0 2.0
------ ----- ------
Effective income
Tax rate 43.0% 45.0% 44.0%
====== ====== ======
F-14
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The tax effects of significant items comprising
the Company's deferred taxes at December 31, 1998
and 1997 are as follows:
December 31,
------------
1998 1997
------ -----
Deferred tax liabilities:
Difference between
book and tax bases
of property $ (332,000) $ (318,000)
---------- ----------
Deferred tax assets:
Reserves not currently
deductible 75,000 54,000
Capitalization of
inventory 46,000 43,000
Total 121,000 97,000
Net deferred tax liabilities $ (211,000) $ (221,000)
========= ==========
6. Commitments Capital leases - At December 31, 1998, the Company
is obligated under certain capital lease
agreements for monitoring equipment and two
automobiles that expire at various dates in 1999
through 2003.
The amounts of monitoring equipment and
automobiles recorded under capital leases and
included in fixed assets at December 31, 1998 are
as follows:
Monitoring equipment $ 209,085
Automobiles 14,336
Less accumulated depreciation 23,008
-------------
$ 200,413
==================
The following is a schedule by years of future
minimum lease payments under capital leases
together with the present value of the net minimum
lease payments as of December 31, 1998:
F-15
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Years ending December 31,
1999 $ 59,394
2000 56,191
2001 53,505
2002 50,820
2003 11,173
--------
Total minimum lease payments 231,083
Less amounts representing interest 38,431
Present value of net minimum
lease payments 192,652
Less current portion 44,110
Obligation under capital leases,
less current portion $ 148,542
=========
Operating leases - 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 $260,645
in 1998, $197,887 in 1997, and $182,179 in 1996,
which includes $147,357, $116,719, and $100,835,
respectively, paid in connection with the above
noted leases with the principal shareholder.
F-16
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The aggregate minimum annual rental commitments
under non-cancelable operating leases are as
follows:
Year ending December 31,
------------------------
1999 $ 219,283
2000 212,175
2001 152,872
2002 148,722
2003 156,159
Thereafter 659,261
$ 1,548,472
============
Employment agreements - On January 1, 1997 the
Company entered into a three 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.
For the years ended December 31, 1998 and 1997, no
additional compensation has been earned. 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.
7. Common Stock, The Company has three Stock Option Plans, an
Warrants and Incentive Stock Option Plan ("1984 Plan"), a 1991
Options Stock Option 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 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
F-17
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 1998,
1997 and 1996 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:
1998 1997 1996
---- ---- ----
Pro forma net income $854,573 $694,844 $744,700
Pro forma basic
earnings per share $ .14 $ .12 $ .13
The weighted average grant date fair value of
options granted in 1998, 1997 and 1996 was
$131,930, $109,664 and $174,193, respectively.
The fair value of options at date of grant was
estimated using the Black-Scholes model with the
following weighted average assumptions:
1998 1997 1996
---- ---- ----
Expected life (years) 2 2.24 4
Risk free interest rate 5.31% 5.97% 5.69%
Expected volatility 27.66% 32.10% 52.60%
Expected dividend yield - - -
F-18
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Information with respect to options under plans is as follows:
Weighted Average
Number Exercise
of Shares Price
Balance - January 1, 1996 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
Granted during 1998 283,774 2.75
Forfeitures/expirations
during 1998 (48,597) 2.78
Exercised during 1998 (123,653) 2.25
Balance - December 31, 1998 $669,700 $ 2.68
======== ========
At December 31, 1998 and 1997, 669,700 and 564,886
options were exercisable. respectively.
The following table summarizes information about
the stock options outstanding at December 31,
1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted- Average
Range of Number Remaining Weighted- Average Number Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
<S> <C> <C> <C> <C> <C>
$2.1875 -
$3.4375 669,700 2.62 years $2.68 669,700 $2.68
</TABLE>
As of December 31, 1998, 757,017 options have been
exercised under both plans and 433,774 options are
available for future grants under the 1997. No
options are available for future grant under the
1991 Plan.
The Company has agreed to grant options to its
management and employees in January and July of
each year. The
F-19
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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
nonemployee 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. In
December 1997, the Company agreed to extend the
expiration date of the warrants from December 27,
1997 to December 26, 1998. In December 1998, prior
to the December 26, 1998 expiration date, 369,310
warrants were exercised. The remaining 480,690
warrants expired on 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.
8. Employee Savings Effective January 1997, the Company began to
Plan sponsor a 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. The Company
contributed $15,282 and $14,978 for the years
ended December 31, 1998 and 1997, respectively.
9. 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
F-20
<PAGE>
AMERICAN MEDICAL ALERT CORP.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Company granted the consultant 50,000 warrants
exercisable for a period of four years at an
exercise price of $4.50. In July 1997, the parties
mutually agreed that the monthly payments of
$2,500 to the consultant would be suspended. At
December 31, 1998 all of the options remain
outstanding.
10. Major Customers The Company is an approved Medicaid Provider in
the states of New York and Georgia. During the
years ended December 31, 1998, 1997 and 1996, the
Company had revenue from one contract with a
municipality in New York State which represented,
respectively, 47%, 44% and 44% of total revenue
each year. The contract is effective through June
30, 1999. In January 1999, the Company submitted
its proposal to the municipality to renew and
extend the contract. If the municipality does not
renew the contract, a significant amount of the
Company's revenues would be lost, which would have
a material adverse effect on operating results. As
of December 31, 1998 and 1997, accounts receivable
from the contract represented 67% and 46%,
respectively, of accounts receivable and leased
medical devices in service under the contract
represented 42% and 45%, respectively, of leased
medical devices. During the years ended December
31, 1998, 1997 and 1996, the Company had revenue
from the State of Georgia which represented 5% of
total revenue in each of the three years.
F-21
<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
---------------------------------------
Howard M. Siegel
Chairman of the Board and President
Dated: March 24, 1999
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 24, 1999
- -----------------------
Howard M. Siegel President, Chief Executive
Officer and Director
/s/ Corey M. Aronin Chief Financial Officer March 24, 1999
- -----------------------
Corey M. Aronin
/s/ Peter Breitstone Director March 24, 1999
- -----------------------
Peter Breitstone
/s/ Leonard Herz Director March 24, 1999
- -----------------------
Leonard Herz
/s/ Theodore Simon Director March 24, 1999
- -----------------------
Theodore Simon
/s/ Frederick Siegel Director March 24, 1999
- -----------------------
Frederick Siegel
<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).
<PAGE>
Exhibit No. Identification of Exhibit
---------- -------------------------
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 (Incorporated by reference to
Exhibit 4(g) to the Company's Form 10-KSB
for the year ended December 31, 1997).
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).
<PAGE>
Exhibit No. Identification of Exhibit
---------- -------------------------
10(g) Third Amendment to the Mt. Laurel Lease
(Incorporated by reference to Exhibit
10(g) to the Company's Form 10-KSB for
the year ended December 31, 1997).
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 (Incorporated by
reference to Exhibit 10(i) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
10(j) Lease for the premises located at 3255
Lawson Boulevard, Oceanside, New York
(Incorporated by reference to Exhibit
10(j) to the Company's Form 10-KSB for
the year ended December 31, 1997).
10(k) Lease for the premises located at 910
Church Street, Decatur, Georgia
(Incorporated by reference to Exhibit
10(k) to the Company's Form 10- KSB for
the year ended December 31, 1997).
10(l)* Lease for the premises located at 169-10
Crocheron Avenue, Flushing, New York
dated September 1, 1998 by and between
the Company and Roseann and Charles Rojo.
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 (Incorporated by
reference to Exhibit 10(n) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
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 (Incorporated by
reference to Exhibit 10(q) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
<PAGE>
Exhibit No. Identification of Exhibit
---------- -------------------------
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
June 30, 1999. (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. (Incorporated by reference to
Exhibit 10(u) to the Company's Form
10-KSB for the year ended December 31,
1997).
10(v) Financial Advisory and Investment Banking
Agreement with GKN Securities Corp. dated
as of January 1, 1997 (Incorporated by
reference to Exhibit 10(v) to the
Company's Form 10-KSB for the year ended
December 31, 1997).
10(w)* Loan Agreement dated as of April 27, 1998
by and between the Company and European
American Bank.
10(x)* Assignment of Rents and Leases dated
January 7, 1999 relating to the leased
premises at 910 Church Street, Decatur,
Georgia.
23(a)* Consent of Margolin, Winer & Evens LLP.
27* Financial Data Schedule.
- ------------------------
* Filed herewith
Exhibit 10(l)
THIS LEASE made the __________ day of _________________ between Roseann and
Charles Rojo hereinafter referred to as LANDLORD, and AMERICAN MEDICAL ALERT
CORP., a domestic corporation with offices
at:________________________________________________ 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 the premises on the first floor
only--- in the building known as 169- 10 Crocheron Avenue, Flushing, New York
11358 to be used and occupied by the Tenant for offices only and for no other
purposes, for a term to commence on September 1, 1998 and to end on August 31,
2001 unless sooner terminated as hereinafter provided, at the ANNUAL RENT of
1st year = $ 15,281.28
2nd year = $ 16,045.32
3rd year = $ 16,847.64
all payable in equal monthly installments in advance on the first day of each
and every calendar month during said term, except the first installment, 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.
SECOND. - That, throughout said term the Tenant will take good care of
the demised premises, fixtures and appurtenances, and all alternations,
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; execute and comply with all laws, rules, orders,
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 inspection, and to exhibit them for purposes of sale or rental;
suffer the Landlord to make repairs and improvements to all parts of the
building, and to comply with all orders and requirements of governmental
authority applicable to said building or to any occupation thereof; 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,
omission or omissions of the Tenant, or of the employees, guests, agents,
assigns or undertenants of 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
expiation 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
<PAGE>
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.
THIRD. - That the Tenant will not disfigure or 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 rate of fire insurance upon the
building or any of its 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, underlet the demised
premises or any part thereof, permit the same or 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. 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 prior written consent of Landlord.
IT IS MUTUALLY COVENANTED AND AGREED, THAT
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 damage 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 neglect 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 the 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
demised premises and surrender the same to Landlord. If Tenant shall not be
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 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.
FIFTH. - If the whole or any part of the premises hereby demised 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.
SIXTH. - If, before the commencement of the term, 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 the Landlord is a
-2-
<PAGE>
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 than the covenants for the payment of rent or "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.
If the Tenant shall make default in the payment of 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 dispossess 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 may either re-let the demised premises or any part or
parts thereof for 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
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 to 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.
In the event of a breach or threatened breach by 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.
SEVENTH. - If the Tenant shall make default in the performance of any
covenant herein contained, the Landlord may immediately, or at any time
thereafter, without notice, perform 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
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<PAGE>
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, 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
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 any
succeeding month. The receipt by the Landlord of any installment of the regular
stipulated rent hereunder or any of said "additional rent" shall be a waiver of
any other "additional rent" then due.
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 of 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.
NINTH. - If the lease be assigned, or if the demised premises or any
part thereof by 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.
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 and deliver any such instrument or instruments for the Tenant.
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.
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 address set forth in
this lease.
THIRTEENTH. - The Landlord shall not be liable for any failure of water
supply or electrical current, sprinkler damage, or failure of sprinkler service,
nor for injury or damage to person or property caused by the elements or by
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 from a governmental
authority in construction of any public or quasi-public work, neither shall the
Landlord be liable for any latent defect in the building.
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<PAGE>
FOURTEENTH. - No diminution or abatement of 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 order 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 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 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.
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 and entrances shall be used by the
Tenant's employees, and for the Tenants' 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.
SIXTEENTH. - In the event that an excavation shall 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 the injury and to support the same by proper foundations.
SEVENTEENTH. - No vaults or space not within the property line of the
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.
EIGHTEENTH. - That during seven months prior to the expiration of the
term hereby granted, applicants shall be admitted to 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 by 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 Landlords' 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 appurtenances therein contained or therewith in any
manner connected.
NINETEENTH. - The Landlord has made no representations or promises in
respect to said building or to the demised premises except those contained
herein, and those, if any,
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<PAGE>
contained in some written communication to the Tenant, signed by the Landlord.
This instrument may not be changed, modified, discharged or terminated orally.
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 thereby 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 shall be due from the Tenant to the
Landlord on the first day of the month following the incurring of such
respective expenses.
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
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:
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.
TWENTY-THIRD. - If by reason of the conduct upon the 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 any time be higher than it otherwise would be, then the Tenant
will reimburse the Landlord 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 demised
premises, purporting to have been issued by New York fire Insurance Exchange, or
other body making fire insurance rages 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.
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 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.
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 same, as the amount of
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
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<PAGE>
and contract provisions as those prescribed by said company for consumption
similar to that of the Tenant.
TWENTY-SIXTH. - If there now is or shall be installed in said building
a "sprinkler system" the Tenant agrees to keep the appliances 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 Tenants's business, or the
location or 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.
TWENTY-SEVENTH. - The sum of ________________________________________
Dollars is deposited by the Tenant herein with the Landlord herein as security
for the faithful performance of all 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.
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 their
several businesses, or the landlord in the management of the building; under
penalty of forfeiture of this lease and consequential damages.
TWENTY-NINTH. - The Landlord hereby recognizes
____________________________ ________________ as 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 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 sole and only broker who negotiated and consummated this
lease with the Tenant.
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 202 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.
THIRTY-FIRST. - The invalidity or unenforceability of any provision of
this lease shall in no way affect the validity or enforceability of any other
provision hereof.
THIRTY-SECOND. - In order to avoid delay, this lease has been prepared
and submitted to the Tenant for signature with the understanding that it should
not bind the Landlord unless and until it is executed and delivered by the
Landlord.
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<PAGE>
THIRTY-THIRD. - The Tenant will keep clean and 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.
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.
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.
THE LANDLORD COVENANTS
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 Tenants 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.
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 P.M.; (b)
Heat, during the same hours on the same days in the cold season in each year.
See Rider Attached 10 page.
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.
------------------------------------
Roseann & Charles Rojo, Landlord
IN PRESENCE OF:
------------------------------------
American Medical Alert Corp., Tenant
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<PAGE>
State of New York County of ss.:
On before me, the undersigned, a Notary Public in and for said State, personally
appeared personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
----------------------------------------
(signature and office of person taking
acknowledgments)
State of New York County of ss.:
On before me, the undersigned, a Notary Public in and for said State, personally
appeared the subscribing witness(es) to the foregoing instrument, with whom I am
personally acquainted, who, being by me duly sworn, did depose and say that
he/she/they reside(s) in (if the place of residence is in a city, include the
street and street number, if any, thereof);
that he/she/they know(s)
to be the individual(s) described in and who executed the foregoing instrument;
that said subscribing witness(es) was (were) present and saw said
execute the same; and that said witness(es) at the same time subscribed
his/her/their name(s) as a witness(es) thereto.
--------------------------------------
(signature and office of person taking
acknowledgments)
GUARANTY
In consideration of the letting of the premises within mentioned to the
Tenant within named, and of the sum of One Dollar, to the undersigned in hand
paid by the Landlord within named, the undersigned hereby guarantees to the
Landlord and to the heirs, successors and/or assigns of the Landlord, the
payment by the Tenant of the rent, within provided for, and the performance by
the Tenant of all of the provisions of the within lease. Notice of all defaults
is waived, and consent is hereby given to all extensions of time that any
Landlord may grant.
Dated,
State of New York County of ss.:
On before me, the undersigned, a Notary Public in and for said
State, personally appeared
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<PAGE>
personally known to me or proved tome on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged tome that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
-------------------------------------
(signature and office of person taking
acknowledgments)
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<PAGE>
RIDER TO LEASE DATED, 1998
BETWEEN ROSEANN & CHARLES ROJO, as, LANDLORD
and AMERICAN MEDICAL ALERT CORP., as TENANT
PREMISES: FIRST FLOOR
169-10 CROCHERON AVENUE
FLUSHING, NEW YORK 11358
TO THE EXTENT THAT THERE MAY BE ANY CONFLICT OR INCONSISTENCY BETWEEN ANY
PROVISION OF THIS RIDER AND ANY PROVISION CONTAINED IN THE MAIN BODY OF THIS
LEASE, THE PROVISION IN THIS RIDER SHALL GOVERN.
- --------------------------------------------------------------------------------
36. TERM AND RENT
-------------
The three (3) year term of this Lease shall commence as of September 1,
1998 and end on August 31, 2001, (unless sooner terminated in accordance with
the terms hereof) and Tenant shall pay rent for the demised premises during said
term as follows:
TERM MONTHLY RENT ANNUAL RENT
---- ------------ -----------
Sept. 1, 1998-Aug. 31, 1999 $1,273.44 $15,281.28
Sept. 1, 1999-Aug. 31, 2000 1,337.11 $16,045.32
Sept. 1, 2000-Aug. 31, 2001 1,403.97 $16,847.64
37. ADDITIONAL RENT
All costs and expenses which Tenant assumes or agrees to pay pursuant
to this Lease shall at Landlord's option be treated as additional rent and, in
the event of non-payment, Landlord shall have all the right and remedies herein
provided for the case of non-payment of rent or of a breach of condition. If
Tenant shall default in making any payment required to be made by Tenant (other
than the payment of rent required by ARTICLES First and 36 of this Lease), or
shall default in performing any term, covenant or condition of this Lease on the
part of tenant to be performed which shall involve the expenditure of money by
tenant, Landlord at Landlord's option may, but shall not be obligated to, make
such payment or, on behalf of Tenant, expend such sum as may be necessary to
perform and fulfill such term, covenant or condition, at the maximum legal rate
of interest per annum from the date of such expenditure, shall be and be deemed
to additional rent, in addition to fixed rent, and shall be repaid by Tenant to
Landlord, on demand, but no such payment of expenditure by Landlord shall be
deemed a waiver of Tenant's default nor shall it affect any other remedy of
Landlord by reason of such default.
38. FUEL & UTILITIES:
The Landlord agrees to pay on hundred (100%) percent of all charges for
fuel used in or upon the demised premises; however, Tenant shall be responsible
for the payment of all charges for electricity, gas and water used in or upon
the demised premises. Tenant acknowledge that the heating system shall be
Landlord's responsibility to maintain (and replace if necessary) said systems at
Landlord's own cost and expense, unless such maintenance or replacement is
caused or necessitated by the act or negligence of Tenant, its agents,
contractors servants, employees licensees or invitee. Furthermore, within 45
days after Landlord request, Tenant shall furnish Landlord with copies receipted
utility bills for the prior month (or applicable billing period) or cancelled
checks evidencing payment of said bills.
In no event shall Landlord be responsible for providing services and/or
for the payment of charges for water at the demised premises. Landlord shall not
in any way be liable or responsible
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<PAGE>
to Tenant for any loss, damage or expense which Tenant may sustain or incur if
either the quantity or character of electric services or other utility services
is changed or is no longer available suitable for Tenant's requirements.
Interruption or curtailment of such service shall not constitute a
constructive or partial eviction nor entitle Tenant to any compensation or
abatement of rent. Tenant covenants and agrees that at all times its use of
electric current shall never exceed the capacity of the existing feeders to the
building or the risers or wiring installation. Tenant shall make no alteration
or addition to the electrical, heating, air conditioning, gas or water equipment
without the prior written consent of Landlord.
39. INSURANCE:
(a) The Tenant agrees, at its own cost and expense, to maintain in full
force and effect during the term hereof and any extension or renewal thereof
(and any period to the commencement of the term following the Tenant's entry)
with respect to the demised premised, and the tenant's and any and all other
occupant's business therein or therefrom, a policy of comprehensive general
public liability insurance with minimum single combined limits of liability in
the amount of ONE MILLION ($1,000,000.00) DOLLARS for the injury or death to one
or more than one person. THREE HUNDRED THOUSAND DOLLARS for damage to property
inclusive of sidewalk and parking facilities; and policy insuring against
business interruption to the extent of six (6) months rent to be determined in
accordance with the applicable Annual Rent set forth in ARTICLE 36 above. In
addition, Tenant will, at Tenant's expense maintain Workman's Compensation
insurance with respect to the demised premises if required in accordance with
applicable law. In addition, Tenant agrees to produce and maintain a policy of
standard plate glass insurance for the demised premises.
Simultaneously with the execution hereof, a duplicate original or
certificate of each policy of such insurance shall be furnished to Landlord.
Such policy or policies shall be written by an insurance company or companies
authorized to do business in the State of New York. Landlord shall be named as
an insured in each such policy as its interest may appear. In or on each such
policy, company, clauses or endorsements to the effect that except upon thirty
(30) days' prior written notice to Landlord, such policies shall be
non-cancelable and the amount of insurance subrogation against Landlord on any
claim that Tenant or any other party having an interest in such policy of the
proceeds thereof may have against Landlord.
40. REPAIRS:
(a) Notwithstanding anything contained herein to the contrary, during
the term hereof, Tenant shall make all non-structural repairs required to
maintain the interior of the demised premises in good order and condition.
Landlord shall not be liable to Tenant, or any other occupant of the demised
premises, for the damages resulting from any failure by Tenant to repair or
maintain the demised premises as required to Tenant by this paragraph. Landlord
shall not be obligated to perform any repairs or maintenance upon the demised
premises, other than structural repairs which are not caused or necessitated by
the act or negligence of Tenant, its agents, contractors, servants, employees,
licensees or invitee.
(b) Tenant covenants that no waster shall be committed or suffered upon
or to the demised premises, and agrees, at its own cost and expense, to repair
and maintain the demised premises, and all fixtures, appurtenances, alteration,
additions and improvements in and to the demised premises in good order and
condition, including without limitation all doors, windows, window glass, floor
covering and interior wall, as well as the plumbing, heating, electrical
facilities and appliances in or on the demised premises.
(c) Tenant shall be responsible for keeping the demised premises and
its adjacent sidewalks and parking lot, if any, clean and free of debris, snow
and ice, etc. _______________________________________________________ charge for
its services for having performed the work on behalf of the tenant. Such costs
and charges shall be deemed additional rent and shall be due with the next
installment of rent due thereafter. Any such performance by
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Landlord on behalf of Tenant shall not be deemed a waiver by Landlord of such
default by Tenant.
41. MORTGAGE SUBORDINATION:
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 hereafter placed on the demised premises. 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. Tenant hereby appoints Landlord as
attorney-in-fact of Tenant, irrevocably, to execute and deliver any such
instrument or instruments for Tenant.
Tenant shall furnish, upon demand from any such mortgagee or proposed
mortgagee, its financial statement suitable for presentation to a duly
accredited lending institution in order to assist Landlord in obtaining a
mortgage against the premises if which the demised premises form a part. In the
event said mortgagee shall require further information, Tenant shall promptly
furnish such information, if same is available.
42. ESTOPPEL CERTIFICATE:
Within ten (10) days after request therefor by the Landlord, Tenant
shall deliver in recordable form a certificate to Landlord or to any proposed
mortgagee or purchaser certifying that this lease is in full force and effect
and that there are no defenses or offsets to any rent payments hereunder, or
stating those defaults or claims asserted by Tenant against Landlord.
Such certificate shall be furnished without charge.
43. ATTORNMENT:
Tenant agrees that if by reason of default on the part of Landlord
herein under any ground or underlying lease or mortgage or leasehold mortgage
affecting Landlord's interest, a ground or underlying lessor or mortgagee or
leasehold mortgagee shall enter into and become possessed of the real property
of which the demised premises form a part, or any part or parts of such real
property, either through possession or foreclosure action or proceedings, or
either through the issuance and delivery of a new ground or underlying lease for
said premises, then, if this Lease is in full force and effect at such time,
Tenant shall attorn to such lessor, mortgagee or leasehold mortgagee, as its
Landlord, In such event, such lessor, mortgagee or leasehold mortgagee shall not
be liable to Tenant for any defaults theretofore committed by Landlord and not
such default shall give rise to any of offset or deduction against the rents
payable under this Lease to such lessor, mortgagee or leasehold mortgagee.
44. LANDLORD'S WORK:
Landlord shall have no obligation to decorate the demised premises or
to make any installations, alterations, improvements or additions of any kind to
adapt or equip the demised premises for the use provided for and contemplated by
this Lease which shall be the sole responsibility of Tenant.
45. ALTERATIONS:
Tenant shall not make any alterations, additions or improvements to the
demised premises without Landlord's prior written consent.
All alterations, decorations, installations, additions or improvements
upon the demised premises made by either party, including without limitation all
paneling, decorations, partitions, railings, floors, galleries and the like,
shall, unless Landlord elects otherwise (which election shall be made by written
notice to Tenant not less than thirty (30) days prior to the expiration or other
termination of this Lease) become the property of Landlord, and shall remain
upon, and be surrendered with, said premises as a part thereof at the end of the
term. At the expiration of the
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term hereof, Tenant shall be entitled to remove all removable trade fixtures at
its own cost and expense, provided said fixtures have not become affixed to the
demised premises and further provided Tenant restores the demised premises to
its original condition. In the event Landlord shall elect to have all or any
such alterations, decorations, installations, additions or improvements removed
by Tenant as set forth above, then such alterations, decorations, installations,
additions or improvements removed by Tenant as set forth above, then such
alterations, decorations, installations removed by Tenant as set forth above,
then such alterations, decorations, installations, additions or improvements as
landlord shall select, shall be removed by Tenant at Tenant's expense and Tenant
shall restore the demised premises to its original condition, at its own cost
and expense, at or prior to the expiration of the term.
46. INDEMNITY:
Tenant agrees to indemnify and hold Landlord harmless from and against
any and all claims by or on behalf of any person or persons, firm or firms,
corporation or corporations arising from any work or thing whatsoever done by or
on behalf of Tenant in or about the demised premises and will further indemnify
and hold Landlord harmless from and against any and all claims arising from any
breach or default on the part of Tenant to be performed pursuant to the terms of
this Lease, or arising rom any act or negligence of Tenant, or any of its
agents, contractors, servants employees, licensees or invitee, and from and
against all cost, reasonable attorney's fees, expenses and liabilities incurred
in or about any such claim or action or proceeding be brought against Landlord
by reason of any such claim, Tenant, upon notice from Landlord, covenants to
resist or defend, at Tenant's expense, such action or proceeding by counsel
reasonably satisfactory to landlord.
47. EXCULPATORY CLAUSE:
Not withstanding anything contained herein to the contrary, Tenant
shall look solely to the estate and property of Landlord in the land and
building of which the demised premises form a part for the satisfaction of
Tenant's remedies for the collection of a judgment of other judicial process
requiring the payment of money by Landlord as result of any negligence, default
or breach by Landlord with respect of any of the terms, covenants and conditions
or this Lease to be observed and/or performed by Landlord, and not other
property or assets of Landlord or any or its individual partners shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant's remedies.
48. INVOLUNTARY ASSIGNMENT:
Notwithstanding any provision herein contained to the contrary,
Landlord shall not be required to consent to any involuntary assignment of this
Lease or of the interest of Tenant in this Lease by operation of law. Each of
the following acts shall be considered an involuntary assignment:
(a) If Tenant is or becomes bankrupt or insolvent or is a
debtor-in-possession under any insolvency statute, such as "Chapter XI"
proceedings under the Bankruptcy Act, or where Tenant makes an assignment for
the benefit of creditors or institutes a proceeding under the Bankruptcy Act in
which Tenant is a bankruptcy or a debtor or a debtor-in-possession, or if any
proceeding is instituted against Tenant under the Bankruptcy Act which is not
dismissed within sixty (60) days' or if Tenant a partnership or consists of more
than one person or entity is or becomes bankrupt or insolvent or makes an
assignment for the benefit of creditor, or in the event any court, court
officer, referee, judge, trustee or judicial officer attempts to assign or offer
the subject Lease for sale at auction or otherwise; or
(b) If a writ of attachment or execution is levied on this Lease; or
(c) If, in any proceeding or action to which Tenant is a party, a
receiver is appointed with authority to take possession of the demised premises.
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Any such involuntary assignment shall constitute a default by Tenant
hereunder, and Landlord shall have the right to terminate this Lease, in which
case this Lease shall not be treated as an asset of Tenant. Any such termination
shall be made by Landlord in writing sent to Tenant by certified mail, return
receipt requested.
Ten (10) days after notifying Tenant of such termination, Landlord
shall be entitled to immediate possession of the demised premises and may
institute summary proceedings against Tenant or may take other suitable
proceeding or action to obtain possession thereof.
49. DEFAULT:
(a) Non-payment of rent or any other breach of this Lease by Tenant
shall be the basis for summary proceedings and Tenant by signing this Lease or
assuming the obligations thereunder through assignment of otherwise hereby
consents to the jurisdiction of any court to immediately dispossess Tenant in
such summary proceedings.
If Landlord shall be compelled to institute an action or summary
proceedings against Tenant based upon a default hereunder by Tenant, then Tenant
shall be liable to Landlord for any expenses incurred by Landlord as a result
thereof, including but not limited to costs, disbursements and reasonable
attorney's fees. The amount of any such expenses shall be deemed to be
"additional rent" hereunder and shall be due from Tenant to Landlord on the
first day of the next month following the expenditure of such sums by Landlord.
(b) If the demised premises shall be vacated or abandoned, or in the
event of a cancellation or termination hereof either by operation of law or by
the issuance of a dispossess warrant or by the service of a notice of
termination based on a default of Tenant as herein provided, Tenant shall,
nevertheless, remain and continue liable to Landlord in a sum equal to all fixed
rent and all additional rent herein reserved for the balance of the term herein
originally granted; and Landlord may re-enter the demised premises, using such
force for that purpose as may be necessary without being liable to any
prosecution for said re-entry or the use of such force, and Landlord may repair
or alter the demised premises in such manner as a Landlord may deem necessary or
advisable, and/or let or relet the demised premises or any or all parts thereof
for the whole or any part of the remainder of the original term hereof or whole
or any of the remainder of the original term hereof or for a longer period in
Landlord's name or as the agent of tenant, and, out of any rent so collected or
received, Landlord shall first pay to itself the expense or cost or retaking,
repossessing, repairing and/or altering the demised premises and the expense of
removing all persons and property therefrom, including attorney's fees, and then
shall pay itself any cost or expense sustained in securing any new tenant or
tenants, including advertising, attorney's fees and brokerage fees, and then
shall pay to itself any balance remaining on account of the liability of Tenant
to Landlord for the sum equal to the rents and additional rents reserved herein
and then unpaid by Tenant for the remainder of the term original herein demised.
Any entry or re-entry by Landlord, whether had or taken under summary
proceedings or otherwise, shall not absolve or discharge tenant from liability
hereunder.
(c) Should any rent so collected by Landlord after deduction of the
aforementioned payments therefrom be insufficient to fully pay to Landlord a sum
equal to all fixed rent and additional rent herein reserved, the balance of such
deficiency shall be paid by Tenant on the rent days above specified, that is,
upon each of such rent days Tenant shall pay to Landlord the amount of the
deficiency then existing; and Tenant shall be and remain liable for any such
amount thereof, or a sum equal to the amount of all rent and additional rent
herein reserved, if there shall be no reletting, shall survive the issuance of
any dispossess warrant of other termination hereof bases upon a default by
Tenant and Tenant hereby expressly waives any defense that might be predicated
upon the issuance of such dispossess warrant of such termination or cancellation
of the term hereof.
(d) Suits or suits for the recovery of any such deficiency or damages,
or for sum equal to any installment of installment or rent or additional rent
payable hereunder, may be brought by Landlord from time to time at Landlord's
election, and nothing herein contained shall be deemed
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to require landlord to await the date whereon this Lease of the term hereof
would have expired by limitation had there been no such default by Tenant or no
such termination to cancellation.
(e) Tenant hereby waives any and all rights to recover or regain
possession of the demised premises or to reinstate or to redeem this Lease as
permitted of provided by or under any statute, law or decision now or hereafter
in force and effect.
50. WAIVER OF COUNTERCLAIM:
Tenant waives any and all rights to interpose any counterclaim in any
summary proceedings for the non-payment of rent; and any and all claims that may
be asserted by Tenant shall only be made the subject of separate action and in
such separate action, it is agreed that trial by jury is waived.
51. PERMITS:
Tenant covenants that Tenant will not use of suffer or permit any
persons to use the demised premises for any unlawful purpose and to obtain and
maintain at Tenant's sole cost and expense all licenses and permit from any and
all governmental authorities having jurisdiction of the demised premises which
may be necessary for the conduct of Tenant's business therein. Tenant further
covenants to comply with all applicable laws, resolutions, codes, rules and
regulation of any department, bureau, agency or any governmental authority
having jurisdiction over the operations, occupancy, maintenance and use of the
demised premises for the purposes set forth herein. Tenant will indemnify and
hold Landlord harmless from and against any and all claims, penalties, loss,
applicable law, rule or regulation of any governmental authority having
jurisdiction over Tenant's use and occupancy of the subject premises. Tenant
shall keep in full force and effect all necessary certificates of occupancy for
the purposes for which the demised premises are rented.
52. LIENS:
Tenant agrees not to suffer or permit, during the demised term, any
mechanic's or other lien for work, labor or services and/or materials furnished
or otherwise to attach to and become a lien upon the premises as a result of any
work done by or on behalf of Tenant. If such lien shall so attach, Tenant shall,
within thirty (30) days after notice thereof, either pay or satisfy such lien or
procure the discharge of such lien or record in such manner as may be permitted
by law. Should Tenant fail or refuse to discharge any such lien within said
thirty (30) day period, then Landlord is hereby authorized to add the amount of
such lien to any regular installment of rent thereafter becoming due as
additional rent and satisfy such lien out of such additional rent so paid or in
the event of non-payment thereof, to declare a default hereunder.
53. CONDEMNATION:
(a) If the whole of the demised premises shall be acquired or condemned
or any public or quasi-public use or purpose, this Lease and the term hereof
shall end as of the date of the vesting of title with the same effect as if said
date were the expiration date of the term. In such event the fixed rent and any
additional rent shall be apportioned as of the date of expiration or sooner
termination of this Lease.
(b) If only a part of the demised premises shall be so acquired or
condemned, then, except as otherwise provided in this paragraph, this Lease and
the demised term shall continue in force and effect but, from and after the date
of the vesting of title, the fixed rent shall be reduced in the proportion which
the area of the part of the demised premises (other than the parking lot and
sidewalk, if any) so acquired or condemned bears to the total area of the
demised premises) immediately prior to such acquisition or condemnation. If a
part of the demised premises shall be so acquired or condemned and, if by reason
of such acquisition or condemnation, Tenant no longer has reasonable means of
access to the demised premises, or cannot reasonably operate its business
thereon, Tenant, at Tenant's option, may give Landlord, within forty-five (45)
days next following the date upon which Tenant shall have received notice of
vesting or title, five (5) days
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written notice of termination is given by Tenant, this Lease and the term hereof
shall come to an end and expire upon the expiration of said five (5) days with
the same effect as if such date was the date of expiration of this Lease. If a
part of the demised premises shall be so acquired or condemned and this Lease
and the demised term shall not be terminated pursuant to the foregoing
provisions of this paragraph, Landlord shall restore that part of the demised
premises not so acquired or condemned to the condition which it was in prior to
such acquisition or condemnation. Landlord shall only be liable for such
restoration expenses to the extent of any condemnation award it may receive on
account thereof. In the event of the termination of this Lease and the term
hereof pursuant to the provisions of this paragraph, the fixed rent and any
additional rent shall be apportioned as of the date of expiration or sooner
termination.
(c) In the event of any such acquisition or condemnation of all or any
part of the demised premises, Landlord shall be entitled to receive the entire
award for any such acquisition or condemnation. Tenant shall have no claim
against Landlord for the value of any unexpired portion of the term. Nothing
contained in this paragraph shall be deemed to prevent Tenant from making a
claim against the condemning authority for the value of Tenant's personal
property which is compensable in law, such as trade fixtures.
54. ASSIGNMENT AND SUBLETTING:
Neither this Lease nor any portion of Tenant's interest therein shall
be assigned or sublet, without the prior written consent of Landlord which
consent shall not be unreasonably withheld or unduly delayed.
(a) Any proposed assignment or sublet must be approved by the Landlord,
and shall require Landlord's prior consent in written which consent shall not be
unreasonably withheld. A request for Landlord's consent shall be in writing
setting forth the following: (i) the names of the principals of the proposed
assignee and their home addresses; (ii) the background experience of the
proposed assignee with respect to the use set forth in this Lease, and (iii)
evidence of financial responsibility, including such financial statements as
Landlord may require; all of the foregoing so that Landlord may be in position
to determine whether or not the requested consent should be given, it being the
intention of Landlord that the proposed assignee shall conduct business
operations on a quality standard similar to the standards of Tenant.
(b) That at the time of any such permitted assignment or sublet, Tenant
shall have complied with and performed all of the terms, covenants and
conditions of this Lease imposed upon and required to be complied with and
performed by Tenant to the date of such assignment or sublet.
(c) In the event Tenant assigns this Lease, or sublets any portion of
the premises, such assignment of sublet shall be evidenced by and instrument in
writing duly executed and acknowledged in duplicate by the Tenant and the
assignee or subtenant as the case may be. Such assignee or subtenant shall
expressly accept and assume and agree to perform all of the terms and provisions
in this Lease contained to be kept, observed and performed by the Tenant, and an
executed duplicate original of such instrument, together with the address of the
assignee of subtenant shall be delivered to the Landlord, all before any such
assignment or sublease shall become effective. All instruments of assignment or
sublease and assumption shall be prepared by the attorney for the Landlord at
the cost and expense of the Tenant.
(d) Tenant and subsequent assignees or subtenants, notwithstanding any
such assignment or sublease and notwithstanding the acceptance of rent by
Landlord from such assignee or subtenant, shall always remain liable for the
payment of rent and additional rent hereunder and for the performance of all the
agreements, conditions, covenants and terms herein contained on the part of the
Tenant herein to be kept, observed and performed.
(e) The use of the premises shall be restricted to the same use set
forth herein.
(f) If the tenant is a corporation, any dissolution, merger,
consolidation or reorganization of Tenant or the sale or other transfer of more
than forty-nine (49%) percent of the
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capital stock of the Tenant or the sale of any portion of the assets of the
Tenant outside "the ordinary course of business" shall be deemed an assignment
under the terms of this paragraph and subject to the requirement of Landlord's
prior consent hereunder.
55. SIGNS:
Tenant is herewith permitted to erect a sign on the outside of the
demised premises advertising the conduct of Tenant's business therein, provided
however, that it be installed erected in a non-hazardous manner and further
provided that in the installation or erection thereof, Tenant does not in any
respect deface, damage or mar any portion of the demised premises. Furthermore,
Tenant shall obtain all necessary permits for such sign from any and all
municipal departments having jurisdiction thereof and shall maintain said sign
in compliance with all municipal laws and ordinances governing same.
56. GARBAGE:
Tenant agrees that it will be responsible for handling and disposing of
all rubbish, garbage and waste from the demised premises at the sole cost and
expense of Tenant in accordance with the regulations established by Landlord, if
any. Tenant further agrees not to permit the accumulation of any garbage in, on
or about any part of the demised premises.
57. NOTICES:
All notices, requests, demands or other communications desired or
required to be given under any of the provisions hereof shall be in writing and
shall be deemed to have been duly given on the date mailed if sent by
certificated mail, return receipt requested, addressed to Tenant at the demised
and to Landlord at 111 Wilson Avenue, Amity Harbor, New York 11701, with copies
to Landlord's attorneys, Alfonso Duarte, Esq., 199-14 24th Road, Whitestone, New
York 11357 or at such other or additional addresses and the parties may
designate by such notice to the other.
58. "AS IS"
Tenant does herewith acknowledge and declare that it is full familiar
with the premises and environs, and the buildings and improvements thereon, and
accepts said premises and environs, the buildings and improvements thereon, in
an "as is" condition. Landlord makes no representation or warranty as to the
fitness, feasibility or use of the demised premises, and any violations against
the demised premises shall be removed promptly by Tenant at its sole cost and
expense.
59. NO OFFER TO LEASE:
The submission of this Lease by Landlord for execution by Tenant does
not constitute and offer by Landlord to lease the demised premises to Tenant.
This Lease shall not be effective until it has been fully executed by Landlord
and Tenant and copies and counterparts have been delivered to the perspective
parties.
60. ATTORNEY'S FEES:
In the event Landlord shall be required to commence any legal
proceeding against Tenant on account of a default of breach by Tenant under this
Lease, Tenant shall be obligated to pay to Landlord the reasonable attorney's
fees and costs incurred in such legal proceedings by Landlord and for which
Landlord shall receive final judgment.
61. CAPTIONS:
The captions are inserted only as a matter of convenience for reference
and in no way define, limit or describe the scope or intent of this Lease nor in
any way affect this Lease.
62. ENTIRE AGREEMENT BETWEEN PARTIES:
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This Lease contains the entire agreement and understanding between the
parties with respect to the subject matter hereof, supersedes all prior
agreements between said parties with respect to the subject matter hereof and
cannot be amended or modified except by a written agreement signed by all of the
parties hereto.
63. SEVERABILITY:
The unenforceability, invalidity or illegality of any provision of this
Lease shall not render the other provisions unenforceable, invalid or illegal.
64. SUCCESSORS:
This Lease shall be binding on and insure to the benefit of the parties
hereof and their legal representatives, successors, heirs and assigns.
65. LATE CHARGES:
In the event that any rent or additional rent payment hereunder is not
received by Landlord on or before the tenth (10) day after such payment is due
under the Lease, Tenant agrees to pay Landlord a late payment fee of five (5%)
percent of the payment so overdue. Such late payment fee shall be paid together
with said overdue payment of rent or additional rent. Such late payment fee is
not a penalty but is a mutually agreed upon administrative charge of defray the
expenses incurred by Landlord on account of such late payment. Acceptance of
such late payment fee shall not be deemed a waiver of Landlord's right to
declare a default under the Lease for non-payment.
In addition, Tenant shall pay Landlord a fee of FIFTY ($50.00) DOLLARS
for each check of Tenant given to Landlord which is returned unpaid by
Landlord's bank to defray the expenses incurred by Landlord as a result of such
returned check.
66. SECURITY DEPOSIT:
At all times during the term of this Lease, Tenant shall maintain on
deposit with Landlord a sum equal to two (2) months' rent (as per the rent
schedule set forth in Article 36 above) as security for the due and faithful
payment, as herein provided, of the rent, additional rent, charges and damages
payable by Tenant under this Lease or pursuant to law and for the due and
faithful payment herein provided, of the rent, additional rent, charges and
damages payable by Tenant under this Lease or pursuant to law and for the due
and faithful keeping, observance and performance of all other covenants,
agreements, terms, provisions and conditions of this Lease on the part of Tenant
to be kept, observed and performed if at any time shall be in default in the
payment of any such rent or in the keeping, observance or performance of any
such other covenant, agreement, term provision or condition, Landlord may at its
option apply the security so on deposit with Landlord in curing such default. If
as a result of any such application of all or any part of such security, the
amount of security so on deposit with Landlord shall be less than two (2)
months' current rent tenant shall forthwith deposit with Landlord cash in an
amount equal to the deficiency. If at the expiration of the term of this Lease,
Tenant shall not be in default in the payment of any such rent, additional rent,
charge of damage or in the keeping observance or performance of any such other
covenant, agreement, observance or performance of any other such covenant,
agreement, term, provision or condition of this Lease, then Landlord shall,
within a reasonable time after the expiration of said term, return said
security, if any, then on deposit with Landlord to Tenant pursuant to this
Article 66. In the event of transfer of Landlord's interest in the premises,
Landlord shall have the right to transfer the security to the transferee and
Landlord shall, without any further agreement between the parties, thereupon
released by Tenant from all liability for the return of such security; and
Tenant agrees to look to the new Landlord solely for the return of said
security; and it is agreed that the provisions hereof shall apply to every
transfer of assignment make of the security to a new Landlord. Tenant further
covenants that it will not assign or encumber or attempt to assign to encumber
said security or any part thereof and that neither Landlord nor its successors
or assigns shall be bound by any such assignment, encumbrance, attempted
assignment or attempted encumbrance.
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Any failure or refusal on the part of Tenant, its successors or assigns
to timely make said security deposits required hereunder shall be deemed to be a
material default of the terms of this Lease.
IN WITNESS WHEREOF, the Landlord and Tenant have respectively executed
this Agreement as of the date and year first written above.
/s/ ROSEANN & CHARLES ROJO
-----------------------------------
ROSEANN & CHARLES ROJO, Landlord
/s/ AMERICAN MEDICAL ALERT CORP.
-----------------------------------
AMERICAN MEDICAL ALERT CORP.
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Exhibit 10(w)
LOAN AGREEMENT
Dated as of April 27, 1998
AMERICAN MEDICAL ALERT CORP., a New York corporation, having its
principal place of business at 3265 Lawson Blvd., Oceanside, New York 11572 (the
"Borrower") and EUROPEAN AMERICAN BANK, a New York banking corporation, having
an office at 1 EAB Plaza, Uniondale, New York 11555 (the "Bank") hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accounts" shall mean those accounts arising out of the sale or
lease of goods or the rendition of services by the Borrower.
"Account Debtor" shall mean the Person who is obligated on or under
an Account.
"Affiliate" means, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) or more of the equity
interest of which, is directly or indirectly beneficially owned or held by such
Person. The term control means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"Board of Governors" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing Base" means the sum of seventy five (75%) of the
Borrower's Eligible Accounts Receivable, plus (ii) the lesser of (x) twenty five
(25%) percent of the Borrower's Eligible Inventory or (y) $400,000.00.
<PAGE>
"Business Day" means (i) a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close and (ii) if the relevant day relates to a Eurodollar Loan, an
Interest Period, or notice with respect to a Eurodollar Loan, a day on which
dealings in Dollar deposits are carried on in the London interbank market.
"Capital Base" means the Borrower's (i) shareholder's equity plus
(ii) Subordinated Debt minus (iii) intangible assets (including amounts due from
officers or Affiliates of the Borrower).
"Capital Lease" means a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"Collateral" means all property which is subject or is to be subject
to the Lien granted by the Security Agreement.
"Commitment" means the Bank's obligation to make Revolving Credit
Loans and Term Loans to the Borrower pursuant to the terms and conditions of
this Agreement.
"Current Assets" means, as to any Person, at any date, the aggregate
amount of all assets of such Person which would be properly classified as
current assets at such date, but excluding deferred assets, all computed in
accordance with GAAP.
"Current Liabilities" means, as to any Person, the aggregate amount
of all liabilities of such Person (including tax and other proper accruals)
which would be properly classified as current liabilities, including the
outstanding principal amount of the Notes, all computed in accordance with GAAP.
"Debt" means, as to any Person, (i) all indebtedness or liability of
such Person for borrowed money; (ii) indebtedness of such Person for the
deferred purchase price of property or services (including trade obligations);
(iii) obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities; (vii) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other
Person, or otherwise to assure a creditor against loss; (viii) obligations
secured by any Lien on property owned by such Person whether or not the
obligations have been assumed; and (ix) all other liabilities recorded as such,
or which should be recorded as such, on such Person's financial statements in
accordance with GAAP.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
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"Eligible Accounts Receivable" means Accounts which are due and
payable within ninety (90) days from the original date of invoice and are
satisfactory to the Bank in its sole credit judgment based on information
available to the Bank. References to percentages of all Accounts are based on
dollar amount of Accounts, and not number of Accounts.
"Eligible inventory" shall mean all unencumbered inventory of
finished goods from time to time on hand satisfactory to the Bank in its sole
discretion, valued at the lower of (a) cost, (b) market value, or (c) the
valuation consistent with that employed in the preparation of the financial
statements of the Borrower referred to in Section 5.01(b) hereof. The total
amount of Eligible Inventory shall not at any time exceed $400,000.00.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with any other Person would be treated, with such
Person, as a single employer under Section 4001 of ERISA.
"Eurocurrency Reserve Requirement" means, with respect to the LIBOR
Rate for an Interest Period, the aggregate (without duplication) daily average
of the rates (expressed as a decimal fraction) of reserve requirements in effect
on such day (including, without limitation, basic, marginal, supplemental or
emergency reserves) under any regulation (including, but without limitation,
Regulation D) promulgated by the Board of Governors (or any successor thereto or
other governmental authority having jurisdiction over the Bank) by the Bank
against "Eurocurrency liabilities" (as such term is used in Regulation D) , but
without benefit or credit for proration, exemptions or offsets that might
otherwise be available to the Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by the Bank against (1) any
category of liabilities that includes deposits by reference to which the LIBOR
Rate is to be determined; or (2) any category of extension of credit or other
assets that include loans bearing a LIBOR Rate. As of the date of this Agreement
there are no Eurocurrency Reserve Requirements in effect.
"Eurodollar Loan" means a Loan bearing interest at an interest rate
determined with reference to the LIBOR Rate in accordance with the provisions of
Article II hereof.
"Event of Default" means any of the events specified in Section 6.01
of this Agreement, provided that any requirement for notice or lapse of time or
any other condition has been satisfied.
"Fixed Rate" means an annual rate of interest equal to 2 1/4% in
excess of the United States Treasury Note yield for a period equal to the period
of a Term Loan, determined by the Bank to be in effect two (2) days prior to the
date of such Term Loan.
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"Fixed Rate Loan" means a Term Loan bearing interest at a Fixed Rate
in accordance with the provisions of Article II hereof.
"GAAP" means Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.
"Guarantor" or Guarantors" means any Person required to guarantee
the obligations of the Borrower in accordance with Section 5.01(l) of this
Agreement.
"Guaranty" or "Guaranties" means the guaranty or guaranties executed
and delivered by the Guarantors pursuant to Section 5.01(l) of this Agreement.
"Hazardous Materials" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 9601 et. seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any other federal,
state or local environmental law, ordinance, rule or regulation.
"Interest Determination Date" means the date on which a Prime Rate
Loan is converted to a Eurodollar Loan and, in the case of a Eurodollar Loan,
the last day of the applicable Interest Period.
"Interest Payment Date" means (i) as to each Eurodollar Loan, the
first Business Day of each month during the applicable Interest Period and the
last day of each Interest Period, (ii) as to each Prime Rate Loan, the first
Business Day of each month, and (iii) as to each Fixed Rate Loan, the first
Business Day of each month.
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"Interest Period" means as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) that no Interest Period shall end later than the Maturity Date, (ii) if any
Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
(iii) interest shall accrue from and including the first day of such Interest
Period to but excluding the date of payment of such interest, and (iv) no
Interest Period of particular duration may be selected by the Borrower if the
Bank determines, in its sole, good faith discretion, that Eurodollar Loans with
such maturities are not generally available.
"Investment" means any stock, evidence of Debt or other security of
any Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business) and any purchase of
(i) any security of another Person or (ii) any business or undertaking of any
Person or any commitment or option to make any such purchase, or any other
investment.
"LIBOR Rate" means the rate per annum identified as the LIBOR Rate
for a requested Interest Period as published on page 3750 of the Dow Jones
Telerate service.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other) , or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or "Loans" means the Term Loans and the Revolving Credit
Loans or any or all of the same as the context may require and includes Prime
Rate Loans and Eurodollar Loans, as the context may require.
"Loan Documents" means this Agreement, the Notes, the Guaranties,
the Security Agreements and any other document executed or delivered pursuant to
this Agreement.
"Material Adverse Change" means, as to any Person, (i) a material
adverse change in the financial condition, business, operations, properties or
results of operations of such Person or (ii) any event or occurrence which could
have a material adverse effect on the ability of such Person to perform its
obligations under the Loan Documents.
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"Maturity Date" means May 31, 2000.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.
"Note" or "Notes" means the Term Loan Notes, the Revolving Credit
Note or any or all of the same as the context may require.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means, (i) direct obligations of the United
States of America or any governmental agency thereof, or obligations guaranteed
by the United States of America, provided that such obligations mature within
one year from the date of acquisition thereof; (ii) time certificates of deposit
having a maturity of one year or less issued by any commercial bank organized
and existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $1,000,000,000.00; (iii) money market
mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper
rated not less than P-1 or A-1 or their equivalent by Moody's Investor Services,
Inc. or Standard & Poor's Corporation, respectively; or (v) tax exempt
securities rated Prime 2 or better by Moody's Investor Services, Inc. or A-1 or
better by Standard & Poor's Corporation.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity or a federal, state or local government, or a political
subdivision thereof or any agency of such government or subdivision.
"Plan" means any employee benefit plan established, maintained, or
to which contributions have been made by the Borrower or any ERISA Affiliate.
"Prime Rate" means the fluctuating rate per annum equal to the rate
of interest publicly announced by the Bank at its principal office from time to
time as its Prime Rate, each change in the Prime Rate to be effective on the
date such change is announced to be effective.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time.
"Regulation D" means Regulation D of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation G" means Regulation G of the Board of Governors, as the
same may be amended and in effect from time to time.
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"Regulation T" means Regulation T of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the
same may be amended and in effect from time to time.
Regulation X" means Regulation X of the Board of Governors, as the
same may be amended and in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Revolving Credit Loans" shall have the meaning assigned to such
term in Section 2.08 of this Agreement.
"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of the Bank, in substantially the form of Exhibit A annexed
hereto, evidencing the aggregate indebtedness of the Borrower to the Bank
resulting from Revolving Credit Loans made by the Bank to the Borrower pursuant
to this Agreement.
"Security Agreement" means the security agreement to be executed and
delivered pursuant to Section 3.01(e) of this Agreement.
"Subordinated Debt" means Debt of any Person, the repayment of which
the obligee has agreed in writing, on terms which have been approved by the Bank
in advance in writing, shall be subordinate and junior to the rights of the Bank
with respect to Debt owing from such Person to the Bank.
"Subsidiary" means, as to any Person, any corporation, partnership
or joint venture whether now existing or hereafter organized or acquired (i) in
the case of a corporation, of which a majority of the securities having ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) are at the time owned by
such Person and/or one or more Subsidiaries of such Person or (ii) in the case
of a partnership or joint venture, of which a majority of the partnership or
other ownership interests are at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"Term Loan" shall have the meaning assigned in Section 2.01 hereof.
"Term Loan Note" means a promissory note of the Borrower payable to
the order of the Bank, in substantially the form of Exhibit B annexed hereto,
evidencing the indebtedness of the Borrower to the Bank resulting from the Term
Loan made by the Bank to the Borrower pursuant to the Agreement.
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"Total Liabilities" means, as to any Person, all of the liabilities
of such Person, including all items which, in accordance with GAAP would be
included on the liability side of the balance sheet (other than capital stock,
treasury stock, capital surplus and retained earnings) computed in accordance
with GAAP.
"Total Unsubordinated Liabilities" means, as to any Person, the
excess of (i) such Person's Total Liabilities over (ii) such Person's
Subordinated Debt.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
SECTION 1.03. Accounting Terms. Except as otherwise herein
specifically provided, each accounting term used herein shall have the meaning
given to it under GAAP.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. The Bank agrees, on the
date of this Agreement, on the terms and conditions of this Agreement and in
reliance upon the representations and warranties set forth in this Agreement, to
lend to the Borrower prior to the Maturity Date such amounts as the Borrower may
request from time to time (individually, a "Revolving Credit Loan" or
collectively, the "Revolving Credit Loans"), which amounts may be borrowed,
repaid and reborrowed, provided, however, that the aggregate amount of such
Revolving Credit Loans and Term Loans outstanding at any one time shall not
exceed the lesser of (i) Two Million ($2,000,000.00) Dollars, or (ii) the
Borrowing Base (the "Commitment"), or such lesser amount of the Commitment as
may be reduced pursuant to Section 2.19 hereof. In addition, for a period of
thirty (30) consecutive days during each fiscal year of the Borrower, the total
outstanding principal balance of the Revolving Credit Note shall not exceed Two
Hundred Fifty Thousand ($250,000.00) Dollars.
Each Revolving Credit Loan shall be a Prime Rate Loan or a
Eurodollar Loan as the Borrower may request subject to and in accordance with
Section 2.02. The Bank may at its option make any Eurodollar Loan by causing a
foreign branch or affiliate to make such Loan, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of the Revolving Credit Note. Subject to the other
provisions of this Agreement, Revolving Credit Loans of more than one type may
be outstanding at the same time.
SECTION 2.02. Notice of Revolving Credit Loans. (a) The Borrower
shall give the Bank irrevocable written, telex, telephonic (immediately
confirmed in writing) or facsimile notice (i) at least two (2) Business Days
prior to each Revolving Credit Loan comprised in whole or in part of one or more
Eurodollar Loans (subject to Section 2.21 hereof) and (ii) prior to 11:00 a.m.
on the day of each Revolving Credit Loan consisting solely of a Prime Rate Loan.
If a notice of borrowing is received
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by the Bank after 11:00 a.m. on a Business Day, such notice shall be deemed to
have been given on the next succeeding Business Day.
(b) Each notice given pursuant to this Section 2.02 shall specify
the date of such borrowing, the amount thereof and whether such Loan is to be a
Prime Rate Loan or a Eurodollar Loan and, if such Loan or any portion thereof is
to consist of one or more Eurodollar Loans, the principal amounts thereof and
Interest Period or Interest Periods with respect thereto. If no election as to a
type of Loan is specified in such notice, such Loan (or portion thereof as to
which no election is specified) shall be a Prime Rate Loan. If no election as to
the Interest Period is specified in such notice with respect to any Eurodollar
Loan, the Borrower shall be deemed to have selected an Interest Period of one
month's duration and if a Eurodollar Loan is requested when such Loans are not
available, the Borrower shall be deemed to have requested a Prime Rate Loan.
(c) The Borrower shall have the right, on such notice to the Bank as
is required pursuant to (a) above, (x) to continue any Eurodollar Loan into a
subsequent Interest Period (subject to availability) and (y) to convert a Prime
Rate Loan into a Eurodollar Loan (subject to availability) subject to the
following:
(i) if a Default or an Event of Default shall have
occurred and be continuing at the time of any proposed conversion or
continuation only Prime Rate Loans shall be available;
(ii) in the case of a continuation or conversion of
fewer than all Loans, the aggregate principal amount of each
Eurodollar Loan continued or into which a Loan is converted shall be
in the minimum principal amount of $10.,000.00 and in increased
integral multiples of $10,000.00;
(iii) each continuation or conversion shall be effected
by each Bank applying the proceeds of the new Loan to the Loan (or
portion thereof) being continued or converted;
(iv) if the new Loan made as a result of a continuation
or conversion shall be a Eurodollar Loan, the first Interest Period
with respect thereto shall commence on the date of continuation or
conversion;
(v) each request for a Eurodollar Loan which shall fail
to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month's duration and each
request for a Eurodollar Loan made when such Loans are not available
shall be deemed to be a request for a Prime Rate Loan;
(vi) in the event that the Borrower shall not give
notice to continue a Eurodollar Loan as provided above, such Loan
shall automatically be converted into a Prime Rate Loan at the
expiration of the then current Interest Period.
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SECTION 2.03. Revolving Credit Note. Each Revolving Credit Loan
shall be in the minimum principal amount of $10,000.00, and in minimum multiples
of $10,000.00 thereafter. The Revolving Credit Note shall be dated the date,
hereof and be in the principal amount of Two Million and 00/100 ($2,000,000.00)
Dollars, and shall mature on the Maturity Date, at which time the entire
outstanding principal balance and all interest thereon shall be due and payable.
The Revolving Credit Note shall be entitled to the benefits and subject to the
provisions of this Agreement.
At the time of the making of each Revolving Credit Loan and at the
time of each payment of principal thereon, the holder of the Revolving Credit
Note is hereby authorized by the Borrower to make a notation on the schedule
annexed to the Revolving Credit Note of the date and amount, and the type and
Interest Period of the Revolving Credit Loan or payment, as the case may be.
Failure to make a notation with respect to any Revolving Credit Loan shall not
limit or otherwise affect the obligation of the Borrower hereunder or under the
Revolving Credit Note with respect to such Revolving Credit Loan, and any
payment of principal on the Revolving Credit Note by the Borrower shall not be
affected by the failure to make a notation thereof on said schedule.
SECTION 2.04. Payment of Interest on the Revolving Credit Note. (a)
In the case of a Prime Rate Loan, interest shall be payable at a rate per annum
equal to the Prime Rate. Such interest shall be payable on each Interest Payment
Date, commencing with the first Interest Payment Date after the date of such
Prime Rate Loan and on the Revolving Credit Maturity Date. Any change in the
rate of interest on the Revolving Credit Notes due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum equal to the LIBOR Rate plus two and one half (2 1/2%) percent.
Such interest shall be payable on each Interest Payment Date, commencing with
the first Interest Payment Date after the date of such Eurodollar Loan and on
the Maturity Date. In the event Eurodollar Loans are available, the Bank shall
determine the rate of interest applicable to each requested Eurodollar Loan for
each Interest Period at 11:00 a.m., New York City time, or as soon as
practicable thereafter, two (2) Business Days prior to the commencement of such
Interest Period and shall use its best efforts to notify the Borrower of the
rate of interest so determined. Such determination shall be conclusive absent
manifest error.
SECTION 2.05. The Term Loans. The Bank agrees, on the terms and
conditions of this Agreement and in reliance upon the representations and
warranties set forth in this Agreement, to make Term Loans to the Borrower in
the aggregate principal amount of up to Five Hundred Thousand ($500,000.00)
Dollars, and the Borrower agrees to borrow such amount from the Bank by
executing and delivering to the Bank the Term Loan Notes. The Term Loans, or
portions thereof, shall be Prime Rate Loans or Fixed Rate Loans as the Borrower
may request subject to and in accordance with Section 2.06 hereof.
SECTION 2.06. Notice of Term Loan Designations. (a) The Borrower
shall give the Bank irrevocable written, telex, telephonic (immediately
confirmed in writing) or facsimile notice (i)
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at least two (2) Business Days prior to each Term Loan bearing interest at the
Fixed Rate, and (ii) prior to 11:00 a.m. on the day of each Term Loan consisting
solely of a Prime Rate Loan. If a notice of borrowing is received by the Bank
after 11:00 a.m. on a Business Day, such notice shall be deemed to have been
given on the next succeeding Business Day.
(b) Each notice given pursuant to this Section 2.06 shall specify
the date of such borrowing, the amount thereof, the term thereof, which term may
be for 36 to 60 months, and whether such Loan is to be a Prime Rate Loan or a
Fixed Rate Loan. If no election as to a type of Loan is specified in such
notice, such Loan (or portion thereof as to which no election is specified)
shall be a Prime Rate Loan. If no term is designated for any Term Loan, the
Borrower shall be deemed to have requested a term of 36 months.
SECTION 2.07. Term Loan Notes. Each Term Loan shall be evidenced by
a Term Loan Note of the Borrower. Each Term Loan Note shall be dated the date of
each Term Loan and shall have the term designated therefor in accordance with
the provisions of Section 2.06(b) hereof. At the end of such term the entire
outstanding principal balance of such Term Loan Note and all interest thereon
shall be due and payable. Each Term Loan Note shall be entitled to the benefits
and subject to the provisions of this Agreement.
SECTION 2.08. Repayment of Term Loan Notes. The principal balance of
each Term Loan Note shall be payable in equal monthly installments of principal,
each due on the first Business Day of each month beginning on the first such day
after the date of such Term Loan and continuing on the first Business Day of
each calendar month thereafter, calculated on a straight line amortization
basis. The final such monthly principal installment shall be in an amount equal
to the then outstanding principal balance of such Term Loan Note.
SECTION 2.09. Payment of Interest on the Term Loan Note. (a) In the
case of a Prime Rate Loan, interest shall be payable at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Prime Rate. Such interest shall be payable on each Interest
Payment Date, commencing with the first Interest Payment Date after the date of
such Prime Rate Loan and on the maturity date of each Term Loan. Any change in
the rate of interest on each Term Loan Note due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Fixed Rate Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the Fixed Rate. Such interest shall be payable on
each Interest Payment Date, commencing with the first Interest Payment Date
after the date of such Fixed Rate Loan and on the maturity date of each Term
Loan.
SECTION 2.10. Intentionally Omitted.
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SECTION 2.11. Use of Proceeds. The proceeds of the Revolving Credit
Loans shall be used by the Borrower for working capital, and the proceeds of the
Term Loans shall be used by the Borrower exclusively to finance capital
expenditures. No part of the proceeds of any Loan may be used for any purpose
that directly or indirectly violates or is inconsistent with, the provisions of
Regulations G, T, U or X.
SECTION 2.12. Facility Fee. The Borrower agrees to pay to the Bank a
Facility Fee equal to $10,000.00, of which $5,000.00 shall be payable on the
date hereof, and $5,000.00 shall be payable on the first anniversary of the date
hereof.
SECTION 2.13. Intentionally Omitted.
SECTION 2.14. Prepayment. (a) The Borrower shall have the right at
any time and from time to time to prepay any Prime Rate Loan, in whole or in
part, without premium or penalty on the same day on which telephonic notice is
given to the Bank (immediately confirmed in writing) of such prepayment
provided, however, that each such prepayment shall be on a Business Day and
shall be in an aggregate principal amount which is an integral multiple of
$10,000.00.
(b) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Eurodollar
Loan, in whole or in part, on three (3) Business Days' prior irrevocable written
notice to the Bank, provided, however, that such prepayment may only be made on
an Interest Determination Date.
(c) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Fixed Rate Loan
in whole or in part at any time in a minimum amount of Ten Thousand ($10,000.00)
Dollars and whole multiples thereof, in each case upon at least ten (10) days
notice. Any such written notice shall be irrevocable and shall obligate the
Borrower to make such prepayment on the date noticed for prepayment. All
prepayments shall be accompanied by interest accrued on the amount prepaid
through the date of prepayment (the "Prepayment Date"). If prepayment occurs
during the 90 day period preceding the maturity date of a Term Loan Note, such
Term Loan may be prepaid without penalty. If such prepayment occurs at any other
time, the Borrower shall pay to the Bank as a condition to such prepayment a
prepayment premium, as liquidated damages and not as a penalty, the net present
value of: (i) the difference, if positive, between the interest rate then in
effect and the current yield on U.S. Treasury Securities with maturities
approximately equal to the remaining time between the Prepayment Date and the
maturity date of the Term Loan Note being prepaid (expressed as a percentage) ,
multiplied by (ii) the total amount of principal prepaid, divided by (iii) 360
and multiplied by (iv) the actual number of days remaining until the maturity
date of such Term Loan. In addition, all prepayments shall be accompanied by any
and all additional administrative costs incurred by the Bank (as determined by
the Bank in its reasonable discretion) as a result of such prepayment. All
prepayments shall be applied in inverse order of maturity.
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(d) The notice of prepayment under this Section 2.14 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Borrower to prepay such Loan by the amount
and on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.14 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Borrower. Eurodollar Loans may be prepaid
only in accordance with the provisions of paragraph (b) above. Fixed Rate Loans
may be prepaid only in accordance with the provisions of paragraph (c) above.
SECTION 2.15. Reimbursement by Borrower. The Borrower shall
reimburse the Bank upon the Bank's demand for any loss, cost or expense incurred
or to be incurred by it (in the Bank's sole determination) as a result of any
prepayment or conversion (whether voluntarily or by acceleration) of any
Eurodollar Loan other than on the last day of the Interest Period for such Loan,
or if the Borrower fails to borrow the Eurodollar Loan (or is not able to borrow
because of an Event of Default or for any other reason hereunder) after having
given the irrevocable notice of borrowing required by this Agreement. Such
reimbursement shall include, but not be limited to, any loss, cost or expense
incurred by the Bank in obtaining, liquidating or redeploying any funds used or
to be used in making or maintaining the Eurodollar Loan.
SECTION 2.16. Eurocurrency Reserve Requirement. It is understood
that the cost to the Bank of making or maintaining Eurodollar Loans may
fluctuate as a result of the applicability of, or change in, the Eurocurrency
Reserve Requirement. The Borrower agrees to pay to the Bank from time to time,
as provided in Section 2.17 below, such amounts as shall be necessary to
compensate the Bank for the cost of making or maintaining any Eurodollar Loans
made by it resulting from any change in the Eurocurrency Reserve Requirement, it
being understood that the rates of interest applicable to Eurodollar Loans
hereunder have been determined on the basis of the Eurocurrency Reserve
Requirement in effect at the time of determination of the LIBOR Rate and that
such rates do not reflect costs imposed on the Bank in connection with any
change to the Eurocurrency Reserve Requirement. It is agreed that for purposes
of this paragraph the Eurodollar Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities as defined in Regulation D and to be subject
to the reserve requirements of Regulation D without benefit or credit of
proration, exemptions or offsets which might otherwise be available to the Bank
from time to time under Regulation D.
SECTION 2.17. Increased Costs. If, after the date of this Agreement,
the adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to its
Commitment, the Loans, the Notes or on any amount paid or to be paid
under or pursuant to this Agreement, the Loans or the Notes (other
than any tax measured by or based upon the overall net income of the
Bank);
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(ii) changes the basis of taxation of payments to the
Bank of any amounts payable hereunder (other than any tax measured
by or based upon the overall net income of the Bank);
(iii) imposes, modifies or deems applicable any reserve,
capital adequacy or deposit requirements against any assets held by,
deposits with or for the account of, or loans made by, the Bank; or
(iv) imposes on the Bank any other condition affecting
its Commitment, the Loans, the Notes or this Agreement; and the
result of any of the foregoing is to increase the cost to the Bank
of maintaining this Agreement or the Commitment or making the Loans,
or to reduce the amount of any payment (whether of principal,
interest or otherwise) receivable by the Bank or to require the Bank
to make any payment on or calculated by reference to the gross
amount of any sum received by it, in each case by an amount which
the Bank in its sole judgment deems material, then and in any such
case:
(a) the Bank shall promptly advise the
Borrower of such event, together with the date thereof,
the amount of such increased cost or reduction or
payment and the way in which such amount has been
calculated; and
(b) the Borrower shall pay to the Bank,
within ten (10) days after the advice referred to in
subsection (a) hereinabove, such an amount or amounts as
will compensate the Bank for such additional cost,
reduction or payment for so long as the same shall
remain in effect.
The determination of the Bank as to additional amounts payable
pursuant to this Section 2.17 shall be conclusive evidence of such amounts
absent manifest error.
SECTION 2.18. Capital Adequacy. If the Bank shall have determined
that the applicability of any law, rule, regulation or guideline, or the
adoption after the date hereof of any other law, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (or any lending office of the
Bank) or the Bank's holding company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the Bank's capital or on the capital of the bank's holding
company, if any, as a consequence of its obligations hereunder to a level below
that which the Bank or the Bank's holding company could have achieved but for
such adoption, change or compliance (taking into consideration the Bank's
policies and the policies of the Bank's holding company with respect to capital
adequacy) by an amount deemed by the Bank to be material, then from time to time
the Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank or the Bank's holding company for any such reduction
suffered.
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SECTION 2.19. Change in Legality. (a) Notwithstanding anything to
the contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for the Bank to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower, the Bank may:
(i) declare that Eurodollar Loans will not thereafter be
made hereunder, whereupon the Borrower shall be prohibited from
requesting such Eurodollar Loans hereunder unless such declaration
is subsequently withdrawn; and
(ii) require that, subject to the provisions of Section
2.15, all outstanding Eurodollar Loans made by it be converted to a
Prime Rate Loan, whereupon all of such Eurodollar Loans shall be
automatically converted to a Prime Rate Loan as of the effective
date of such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.19, a notice to the Borrower by
the Bank pursuant to paragraph (a) above shall be effective, for the purposes of
paragraph (a) above, if lawful, and if any Eurodollar Loans shall then be
outstanding, on the last day of the then current Interest Period; otherwise,
such notice shall be effective on the date of receipt by the Borrower.
SECTION 2.20. Indemnity. The Borrower will indemnify the Bank
against any loss or expense which the Bank may sustain or incur as a consequence
of any default in payment or prepayment of the principal amount of any Loan or
any part thereof or interest accrued thereon, as and when due and payable (at
the due date thereof, by notice of prepayment or otherwise), or the occurrence
of any Event of Default, including but not limited to any loss or expense
sustained or incurred in liquidating or employing deposits from third parties
acquired to affect or maintain such Loan or any part thereof. When claiming
under this Section 2.20, the Bank shall provide to the Borrower a statement,
signed by an officer of the Bank, explaining the amount of any such loss or
expense (including the calculation of such amount), which statement shall, in
the absence of manifest error, be conclusive with respect to the parties hereto.
SECTION 2.21. Change in LIBOR; Availability of Rates. In the event,
and on each occasion, that, on the day the interest rate for any Eurodollar Loan
is to be determined, for a requested Eurodollar Loan, the Bank shall have
determined (which determination, absent manifest error, shall be conclusive and
binding upon the Borrower) that dollar deposits in the amount of the principal
amount of the requested Eurodollar Loan are not generally available in the
London Interbank Market, or that the rate at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to the Bank of
making or maintaining the principal amount of such Eurodollar Loan during such
Interest Period, such Eurodollar Loan shall be unavailable, Loans based on such
rate shall be unavailable. The Bank shall, as soon as practicable thereafter,
give written, telex or telephonic notice of such determination of availability
to the Borrower. Any request by the Borrower for an unavailable Eurodollar Loan
shall be deemed to have been a request for a Prime Rate
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Loan. After such notice shall have been given and until the Bank shall have
notified the Borrower that the circumstances giving rise to such notice no
longer exist, each subsequent request for an unavailable Eurodollar Loan shall
be deemed to be a request for a Prime Rate Loan.
SECTION 2.22. Authorization to Debit Borrower's Account. The Bank is
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments of principal and/or interest under the Notes, and
(ii) the commitment fee and all other amounts due hereunder; all such debits to
be made on the days such payments are due in accordance with the terms hereof.
SECTION 2.23. Late Charges, Default Interest. (a) If the Borrower
shall default in the payment of any principal installment of or interest on any
Loan or any other amount becoming due hereunder, the Borrower shall pay
interest, to the extent permitted by law, on such defaulted amount up to the
date of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to three (3%) percent in excess of the interest rate otherwise in
effect with respect to the type of Loan in connection with which the required
payments have not been made.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall pay interest on all amounts owing under the Notes
and this Agreement (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to three (3%) percent in excess of the interest rate otherwise in
effect hereunder.
SECTION 2.24. Payments. All payments by the Borrower hereunder or
under the Notes shall be made in Dollars in immediately available funds at the
office of the Bank by 12:00 noon, New York City time on the date on which such
payment shall be due. Interest on the Notes shall accrue from and including the
date of each Loan to but excluding the date on which such Loan is paid in full
or refinanced with a Loan of a different type.
SECTION 2.25. Interest Adjustments. (a) If the provisions of this
Agreement or the Notes would at any time otherwise require payment by the
Borrower to the Bank of any amount of interest in excess of the maximum amount
then permitted by applicable law the interest payments shall be reduced to the
extent necessary so that the Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
shall receive interest payments hereunder or under the Notes in an amount less
than the amount otherwise provided" such deficit (hereinafter called the
"Interest Deficit") will cumulate and will be carried forward (without interest)
until the termination of this Agreement. Interest otherwise payable to the Bank
hereunder and under the Notes for any subsequent period shall be increased by
such maximum amount of the Interest Deficit that may be so added without causing
the Bank to receive interest in excess of the maximum amount then permitted by
applicable law.
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(b) The amount of the Interest Deficit shall be treated as a
prepayment penalty and paid in full at the time of any optional prepayment by
the Borrower to the Bank of all outstanding Loans. The amount of the Interest
Deficit relating to the Notes at the time of any complete payment of the Notes
at that time outstanding (other than an optional prepayment thereof) shall be
cancelled and not paid.
SECTION 2.26. Participations, Etc. The Bank shall have the right at
any time, with or without notice to the Borrower, to sell, assign, transfer or
negotiate all or any part of the Term Loan Notes or the Revolving Credit Note or
the Commitment or grant participations therein to one or more banks (foreign or
domestic, including an affiliate of the Bank), insurance companies or other
financial institutions, pension funds or mutual funds. The Borrower and the
Guarantors agree and consent to the Bank providing financial and other
information regarding their business and operations to prospective purchasers or
participants and further agree that to the extent that the Bank should sell,
assign, transfer or negotiate all or any part of the Notes or the Commitment,
the Bank shall be forever released and discharged from its obligations under the
Notes, the Commitment and this Agreement to the extent same is sold, assigned,
transferred or negotiated. Nothing herein shall be read or construed as
prohibiting or otherwise limiting the ability or right of the Bank to pledge any
Note to a Federal Reserve Bank.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial
Revolving Credit Loan and the Initial Term Loan. The obligation of the Bank to
make the initial Revolving Credit Loan and the initial Term Loan contemplated by
this Agreement is subject to the condition precedent that the Bank shall have
received from the Borrower and the Guarantors the following, in form and
substance satisfactory to the Bank and its counsel:
(a) The Revolving Credit Note and the initial Term Loan Note, in
each case duly executed and payable to the order of the Bank.
(b) Certified (as of the date of this Agreement) copies of the
resolutions of the Board of Directors of the Borrower authorizing the Loans and
authorizing and approving this Agreement and the other Loan Documents and the
execution, delivery and performance thereof and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the other Loan Documents.
(c) A certificate of the Secretary or an Assistant Secretary
(attested to by another officer) of the Borrower certifying: the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Term Loan Notes, the Revolving Credit Note and the other Loan
Documents to be delivered hereunder on behalf of the Borrower.
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(d) Intentionally omitted.
(e) From the Borrower, an executed Security Agreement giving to the
Bank a first priority security interest in all assets of the Borrower including,
but not limited to, all personal property, equipment, fixtures, inventory,
accounts, chattel paper and general intangibles all whether now owned or
hereafter acquired (the "Collateral").
(f) From the Borrower, UCC-1 filings perfecting the Bank's security
interests in the Collateral.
(g) A property damage insurance policy for the Collateral in the
amount of the greater of (1) the replacement value of the Collateral or (2) the
principal amount outstanding under the Loans, naming the Bank as loss payee with
an insurance company acceptable to the Bank. The policy shall provide for thirty
(30) days notice to the Bank of cancellation or change.
(h) From the Borrower, receipt and satisfactory review by the Bank
of the Borrower's audited financial statement for the fiscal year ended December
31, 1997.
(i) From the Borrower, a Borrowing Base certificate dated the date
hereof.
(j) The Bank shall have received favorable responses to its
inquiries regarding the Borrower from each of North Fork Bank and Chase
Manhattan Bank.
(k) Intentionally omitted.
(1) All schedules, documents, certificates and other information
provided to the Bank pursuant to or in connection with this Agreement shall be
satisfactory to the Bank and its counsel in all respects.
(m) Receipt by the Bank of such other approvals, opinions or
documents as the Bank or its counsel may reasonably request.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans and
All Term Loans. The obligations of the Bank to make each Revolving Credit Loan
(including the initial Revolving Credit Loan) and each Term Loan (including the
initial Term Loan) shall be subject to the further condition precedent that on
the date of such Revolving Credit Loan or Term Loan, as the case may be:
(a) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower dated the date of such Revolving Credit Loan or Term Loan, stating
that:
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(i) The representations and warranties contained in
Article IV of this Agreement and in the Loan Documents are true and
correct on and as of such date as though made on and as of such
date; and
(ii) No Default or Event of Default has occurred and is
continuing, or would result from such Revolving Credit Loan.
(b) The Bank shall have received, in the case of a Term Loan, a Term
Loan Note duly executed and payable to the order of the Bank.
(c) The Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date hereof and
on each date that the Borrower requests a Revolving Credit Loan or a Term Loan,
the Borrower and each of the Guarantors represent and warrant as follows:
(a) on the date hereof, the only Subsidiaries of the Borrower are
those set forth on Schedule 4.01(a) annexed hereto, which Schedule accurately
sets forth with respect to each such Subsidiary, its name and address, any other
addresses at which it conducts business, its state of incorporation and each
other jurisdiction in which it is qualified to do business and the identity and
share holdings of its stockholders. Except as set forth on Schedule 4.01(a), all
of the issued and outstanding shares of each Subsidiary which are owned by the
Borrower are owned by the Borrower free and clear of any mortgage, pledge, lien
or encumbrance. Except as set forth on Schedule 4.01(a), there are not
outstanding any warrants, options, contracts or commitments of any kind
entitling any Person to purchase or otherwise acquire any shares of common or
capital stock or other equity interest of the Borrower or any Subsidiary of the
Borrower, nor are there outstanding any securities which are convertible into or
exchangeable for any shares of the common or capital stock of the Borrower or
any Subsidiary of the Borrower.
(b) The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New York and has
the corporate power to own its assets and to transact the business in which it
is presently engaged and is duly qualified and is in good standing in all other
jurisdictions where the character or nature of its business requires such
qualification.
(c) The execution, delivery and performance by the Borrower of the
Loan Documents to which it is a party are within the Borrower's corporate power
and have been duly authorized by all necessary corporate action and do not and
will not (i) require any consent or approval of the stockholders of the
Borrower; (ii) do not contravene the Borrower's certificate of incorporation,
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charter or by-laws; (iii) violate any provision of or any law, rule, regulation,
contractual restriction, order, writ, judgment, injunction, or decree,
determination or award binding on or affecting the Borrower; (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement, or any other agreement, lease or instrument to which the Borrower or
any Guarantor is a party or by which it or its properties may be bound or
affected; and (v) result in, or require, the creation or imposition of any Lien
(other than the Lien of the Loan Documents) upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower or any Guarantor.
(d) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower or any Guarantor of
any Loan Document to which it is a party, except authorizations, approvals,
actions, notices or filings which have been obtained, taken or made, as the case
may be.
(e) The Loan Documents when delivered hereunder will have been duly
executed and delivered on behalf of the Borrower and each Guarantor, as the case
may be, and will be legal, valid and binding obligations of the Borrower and
each Guarantor, as the case may be, enforceable against the Borrower or such
Guarantor in accordance with their respective terms.
(f) The financial statements of the Borrower for the fiscal year
ended December 31, 1997, copies of which have been furnished to the Bank, fairly
present the financial condition of the Borrower as at such date and the results
of operations of the Borrower for the period ended on such date, all in
accordance with GAAP, and since such date there has been (i) no material
increase in the liabilities of the Borrower, and (ii) no Material Adverse Change
in the Borrower.
(g) There is no pending or threatened action, proceeding or
investigation affecting the Borrower or any Subsidiary of the Borrower before
any court, governmental agency or arbitrator, which either in one case or in the
aggregate, result in a Material Adverse Change in the Borrower or any such
Subsidiary.
(h) The Borrower and each Subsidiary of the Borrower have filed all
federal, state and local tax returns required to be filed and have paid all
taxes, assessments and governmental charges and levies thereon to be due,
including interest and penalties.
(i) The Borrower and each Subsidiary of the Borrower possess all
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, to conduct their respective businesses substantially as now
conducted and as presently proposed to be conducted, and neither the Borrower
nor any such Subsidiary are in violation of any similar rights of others.
(j) Neither the Borrower nor any Guarantor is a party to any
indenture, loan or credit agreement or any other agreement, lease or instrument
or subject to any charter or corporate restriction which could result in a
Material Adverse Change in the Borrower or any Guarantor.
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(k) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation G, T, U or X), and no proceeds of any Loan will be used to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or in any other way which will cause the
Borrower to violate the provisions of Regulations G, T, U or X.
(l) No proceeds of any Loan will be used to acquire any security in
any transaction which is subject to Sections 13 or 14 of the Securities Exchange
Act of 1934.
(m) The Borrower and each Subsidiary of the Borrower are in all
material respects in compliance with all federal and state laws and regulations
in all jurisdictions where the failure to comply with such laws or regulations
could result in a Material Adverse Change in the Borrower or any such
Subsidiary.
(n) The Borrower, each Subsidiary of the Borrower and each ERISA
Affiliate are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower, any Subsidiary of the Borrower, nor any ERISA Affiliate
has completely or partially withdrawn under Sections 4201 or 4204 of ERISA from
a Multiemployer Plan; the Borrower, each Subsidiary of the Borrower and each
ERISA Affiliate have met their minimum funding requirements under ERISA with
respect to all of their Plans and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan in accordance with the
provisions of ERISA for calculating the potential liability of the Borrower, any
such Subsidiary or any ERISA Affiliate to PBGC or the Plan under Title IV of
ERISA; and neither the Borrower, any such Subsidiary nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
(o) The Borrower and each Subsidiary of the Borrower are in
compliance with all federal, state or local laws, ordinances, rules, regulations
or policies governing Hazardous Materials and neither the Borrower nor any such
Subsidiary has used Hazardous Materials on, from, or affecting any property now
owned or occupied or hereafter owned or occupied by the Borrower or any such
Subsidiary in any manner which violates federal, state or local laws,
ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials, and that to the best of the Borrower's and such
Subsidiaries, knowledge, no prior owner of any such property or any tenant,
subtenant, prior tenant or prior subtenant have used Hazardous Materials on,
from or affecting such property in any manner which violates federal, state or
local laws, ordinances, rules, regulations, or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
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(p) The proceeds of the Term Loans and the Revolving Credit Loans
shall be used exclusively for the purposes set forth in Section 2.11 hereof.
(q) The properties and assets of the Borrower are not subject to any
Lien other than those described in Section 5.02(a) hereof.
(r) Neither the business nor the properties of the Borrower or any
Subsidiary of the Borrower are affected by any fire, explosion, accident,
strike, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance), which could result in a Material
Adverse Change in the Borrower or any such Subsidiary.
(s) The Lien on the Collateral created by the Security Agreements
constitute valid first priority perfected security interests in favor of the
Bank.
(t) Any reprogramming or other corrective modifications required to
permit the proper functioning, in and following the year 2000, of (i) the
Borrower's or any Subsidiary's computer systems, and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrower's or any Subsidiary's computer systems interface) and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by January 1, 1999. The cost to the Borrower and any Subsidiaries of such
reprogramming, modifications and testing and of the reasonably foreseeable
consequences of year 2000 to the Borrower and any Subsidiaries (including,
without limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in an Event of Default or result in a Material
Adverse Change in the Borrower or any Subsidiary. Except for such of the
reprogramming and modifications referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
any Subsidiaries are, and with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Borrower
and any Subsidiaries to conduct their respective businesses without any material
adverse effect thereto.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any amount shall
remain outstanding under any Term Loan Note or the Revolving Credit Note, or so
long as the Commitment shall remain in effect, the Borrower and the Guarantors
will, unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of
the Borrower to comply, in all material respects with all applicable laws,
rules, regulations and orders, where the failure to so comply could result in a
Material Adverse Change in the Borrower or any such Subsidiary.
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(b) Reporting Requirements. Furnish to the Bank: (i) Annual
Financial Statements. (1) As soon as available and in any event within ninety
(90) days after the end of each fiscal year of the Borrower, a copy of the
audited financial statements of the Borrower for such year, including balance
sheets with related statements of income and retained earnings and statements of
cash flows, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, together with an unqualified opinion,
prepared by independent certified public accountants selected by the Borrower
and satisfactory to the Bank, all such financial statements to be prepared in
accordance with GAAP, and (2) As soon as available and in any event within five
(5) days after filing, a copy of the Borrower's 10-K report filed with the
United States Securities and Exchange Commission.
(ii) Quarterly Financial Statements. (1) As soon as
available and in any event within five (5) days after filing, a copy of the
Borrower's 10-Q report filed with the United States Securities and Exchange
Commission.
(iii) Management Letters. Promptly upon receipt thereof,
copies of any reports submitted to the Borrower by independent certified public
accountants in connection with the examination of the financial statements of
the Borrower made by such accountants;
(iv) Certificate of No Default. Simultaneously with the
delivery of the financial statements referred to in Section 5.01(b)(i) and (ii),
a certificate of the President or the Chief Financial officer of the Borrower
(1) certifying that no Default or Event of Default has occurred and is
continuing, or if a Default or Event of Default has occurred and is continuing,
a statement as to the nature thereof and the action which is proposed to be
taken with respect thereto; and (2) with computations demonstrating compliance
with the covenants contained in Section 5.03.
(v) Accountants' Report. Simultaneously with the
delivery of the annual financial statements referred to in Section 5.01(b)(i), a
certificate of the independent certified public accountants who audited such
statements to the effect that, in making the examination necessary for the audit
or review of such statements, they have obtained no knowledge of any condition
or event which constitutes a Default or Event of Default, or if such accountants
shall have obtained knowledge of any such condition or event, specify in such
certificate each such condition or event of which they have knowledge and the
nature and status thereof.
(vi) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Borrower or any Subsidiary
of the Borrower which, if determined adversely to the Borrower or any such
Subsidiary could result in a Material Adverse Change in the Borrower or any such
Subsidiary.
(vii) Notice of Defaults and Events of Default. As soon
as possible and in any event within five (5) days after the occurrence of each
Default or Event of Default, a written notice setting
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forth the details of such Default or Event of Default and the action which is
proposed to be taken by the Borrower with respect thereto.
(viii) ERISA Reports. Promptly after the filing or
receiving thereof, copies of all reports, including annual reports, and notices
which the Borrower or any Subsidiary of the Borrower files with or receives from
the PBGC, the Internal Revenue Service or the U.S. Department of Labor under
ERISA; and as soon as possible after the Borrower or any such Subsidiary knows
or has reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or any such
Subsidiary has instituted or will institute proceedings under Title IV of ERISA
to terminate any Plan, the Borrower will deliver to the Bank a certificate of
the President or the Chief Financial Officer of the Borrower setting forth
details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action the Borrower proposes to take with respect thereto;
(ix) Reports to Other Creditors. Promptly after the
furnishing thereof, copies of any statement or report furnished to any other
party pursuant to the terms of any indenture, loan, or credit or similar
agreement and not otherwise required to be furnished to the Bank pursuant to any
other clause of this Section 5.01(b).
(x) Proxy Statements, Etc. Within five (5) days after
the sending or filing thereof, copies of all proxy statements, financial
statements and reports which the Borrower sends to its stockholders, and copies
of all regular, periodic, and special reports, and all registration statements
which the Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange, including but not limited to Securities and Exchange
Commission Form 8-K.
(xi) Notice of Affiliates. Promptly after any Person
becomes an Affiliate of the Borrower, notice to the Bank of such Affiliate.
(xii) Borrowing Base Certificate. As soon as available
and in any event within twenty (20) days after the end of each calendar month, a
Borrowing Base certificate in form and substance satisfactory to the Bank.
(xiii) Accounts Receivable Aging. As soon as available
and in any event within twenty (20) days after the end of each calendar month,
an accounts receivable aging in form and substance satisfactory to the Bank.
(xiv) Change in Management. As soon as available and in
any event within one (1) day of any change in the Borrower's officers or
executive management, a notice setting forth such changes.
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(xv) General Information. Such other information
respecting the condition or operations, financial or otherwise, of the Borrower,
any Guarantor or any Subsidiary of the Borrower as the Bank may from time to
time reasonably request.
(c) Taxes. Pay and discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges upon it or them, its
or their income and its or their properties prior to the dates on which
penalties are attached thereto, unless and only to the extent that (i) such
taxes shall be contested in good faith and by appropriate proceedings by the
Borrower,.any Guarantor or any such Subsidiary, as the case may be; (ii) there
be adequate reserves therefor in accordance with GAAP entered on the books of
the Borrower, any Guarantor or any such Subsidiary; and (iii) no enforcement
proceedings against the Borrower, any Guarantor or any such Subsidiary have been
commenced.
(d) Corporate Existence. Preserve and maintain, and cause its
Subsidiaries to preserve and maintain, their corporate existence and good
standing in the jurisdiction of their incorporation and the rights, privileges
and franchises of the Borrower and each such Subsidiary in each case where
failure to so preserve or maintain could result in a Material Adverse Change in
the Borrower or such Subsidiary.
(e) Maintenance of Properties and Insurance. (i) Keep, and cause any
Subsidiaries to keep, the respective properties and assets (tangible or
intangible) that are useful and necessary in its business, in good working order
and condition, reasonable wear and tear excepted; (ii) maintain, and cause any
Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
properties doing business in the same general areas in which the Borrower, any
Guarantors and any such Subsidiaries operate; and (iii) cause the Bank to be
named as loss payee on any such insurance policies.
(f) Books of Record and Account. Keep, and cause any Subsidiaries to
keep, adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors, and any such Subsidiaries.
(g) Visitation. At any reasonable time, and from time to time,
permit the Bank or any agents or representatives thereof, to examine and make
copies of and abstracts from the books and records of, and visit the properties
of, the Borrower or any Guarantor and to discuss the affairs, finances and
accounts of the Borrower or any Guarantor with any of the respective officers or
directors of the Borrower or such Guarantor or the Borrower's or such
Guarantor's independent accountants.
(h) Performance and Compliance with Other Agreements. Perform and
comply, and cause any Subsidiaries to perform and comply, with each of the
provisions of each and every agreement the
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failure to perform or comply with which could result in a Material Adverse
Change in the Borrower, any Guarantor or any Subsidiary.
(i) Continued Perfection of Liens and Security Interest. Record or
file or rerecord or refile the Loan Documents or a financing statement or any
other filing or recording or refiling or rerecording in each and every office
where and when necessary to preserve and perfect the security interests of the
Loan Documents.
(j) Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Borrower or any Subsidiary of the Borrower to comply with the
following:
(i) engage solely in transactions which would not
subject any of such entities to either a civil penalty assessed
pursuant to Section 502 (i) of ERISA or a tax imposed by Section
4975 of the Internal Revenue Code in either case in an amount in
excess of $25,000.00;
(ii) make full payment when due of all amounts which,
under the provisions of any Plan or ERISA, the Borrower, any such
Subsidiary or any ERISA Affiliate of any of same is required to pay
as contributions thereto;
(iii) all applicable provisions of the Internal Revenue
Code and the regulations promulgated thereunder, including but not
limited to Section 412 thereof, and all applicable rules,
regulations and interpretations of the Accounting Principles Board
and the Financial Accounting Standards Board;
(iv) not fail to make any payments in an aggregate
amount greater than $25,000.00 to any Multiemployer Plan that the
Borrower, any such Subsidiary or any ERISA Affiliate may be required
to make under any agreement relating to such Multiemployer Plan, or
any law pertaining thereto; or
(v) not take any action regarding any Plan which could
result in the occurrence of a Prohibited Transaction.
(k) Licenses. Maintain at all times, and cause each Subsidiary to
maintain at all times, all licenses or permits necessary to the conduct of its
business or as may be required by any governmental agency or instrumentality
thereof.
(l) New Affiliates. Cause any Affiliate of the Borrower formed after
the date of this Agreement to become a Guarantor of all obligations of the
Borrower to the Bank, whether incurred under this Agreement or otherwise.
(m) Banking Relationship. Maintain its primary banking and
depository relationship with the Bank.
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SECTION 5.02. Negative Covenants. So long as any amount shall remain
outstanding under any Term Loan Note or the Revolving Credit Note, or so long as
the Commitment shall remain in effect, the Borrower will not, without the
written consent of the Bank:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Bank;
(ii) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and payable
if they are being contested in good faith by appropriate proceedings
and for which appropriate reserves are maintained;
(iii) Liens imposed by law, such as mechanics',
materialmen's, landlords', warehousemen's, and carriers' Liens, and
other similar Liens, securing obligations incurred in the ordinary
course of business which are not past due or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
(iv) Liens under workers, compensation, unemployment
insurance, Social Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the
performance of bids, tenders, contracts (other than contracts for
the payment of money), leases (permitted under the terms of this
Agreement), public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a), provided that
no such Liens shall be renewed, extended or refinanced;
(vii) Judgment and other similar Liens arising in
connection with court proceedings (other than those described in
Section 6.01(f)), provided the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are
being actively contested in good faith and by appropriate
proceedings;
(viii) Easements, rights-of-way, restrictions, and other
similar encumbrances which, in the aggregate, do not materially
interfere with the Borrower's occupation, use and enjoyment of the
property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject
thereto;
(ix) Purchase money Liens on any property hereafter
acquired or the assumption of any Lien on property existing at the
time of such acquisition, or a Lien incurred in
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connection with any conditional sale or other title retention
agreement or a Capital Lease, provided that:
(1) Any property subject to any of the
foregoing is acquired by the Borrower in the ordinary course of its
respective business and the Lien on any such property is created
contemporaneously with such acquisition;
(2) The obligation secured by any Lien so
created, assumed, or existing shall not exceed one hundred (100%)
percent of lesser of cost or fair market value of the property
acquired as of the time of the Borrower acquiring the same;
(3) Each such Lien shall attach only to the
property so acquired and fixed improvements thereon;
(4) The Debt secured by all such Liens shall
not exceed $100,000.00 at any time outstanding in the aggregate; and
(5) The obligation secured by such Lien is
permitted by the provisions of Section 5.02 (b) and the related
expenditure is permitted by the provisions of Section 5.03(c).
(b) Debt. Create, incur, assume, or suffer to exist, any Debt,
except:
(i) Debt of the Borrower under this Agreement or the
Notes or any other Debt of the Borrower or the Guarantors owing to
the Bank;
(ii) Debt described in Schedule 5.02(b), provided that
no such Debt shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Accounts payable to trade creditors for goods or
services which are not aged more than ninety (90) days from billing
date and current operating liabilities (other than for borrowed
money) which are not more than ninety (90) days past due, in each
case incurred in the ordinary course of business and paid within the
specified time, unless contested in good faith and by appropriate
proceedings;
(v) Debt of the Borrower secured by purchase money Liens
permitted by Section 5.02(a)(ix).
(c) Lease obligations. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (i) Capital Leases permitted by Section 5.02(a), or (ii) leases existing
on the date of this Agreement and any extensions or renewals thereof and other
leases entered into after the date of this Agreement (other than Capital Leases)
which do
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not in the aggregate require the Borrower to make payments (including taxes,
insurance, maintenance, and similar expenses which the Borrower is required to
pay under the terms of any lease) in any fiscal year of the Borrower in excess
of $250,000.00.
(d) Merger. Merge into, or consolidate with or into, or have merged
into it, any Person; and, for the purpose of this subsection (d), the
acquisition or sale by the Borrower by lease, purchase or otherwise, of all, or
substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with the Borrower.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a sale leaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; and (ii) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
(f) Investments, Etc. Make any Investment other than Permitted
Investments.
(g) Transactions With Affiliates. Except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's or a
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or the Subsidiary than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate, enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate.
(h) Intentionally omitted.
(i) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; or (ii) guarantees existing on
the date hereof and set forth in Schedule 5.02(i) annexed hereto.
(j) Change of Business. Materially alter the nature of its business.
(k) Fiscal Year. Change the ending date of its fiscal year from
December 31.
(1) Intentionally Omitted.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Change of Tax Status. Change its tax reporting status as a
sub-chapter C corporation.
(o) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of
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assets to its stockholders as such, whether in cash, assets, or in obligations
of the Borrower; or allocate or otherwise set apart any sum for the payment of
any dividend or distribution on, or for the purchase, redemption or retirement
of any shares of its capital stock; or make any other distribution by reduction
of capital or otherwise in respect of any share of its capital stock.
Notwithstanding the foregoing, (i) the Borrower shall be permitted to pay
dividends on its capital stock for each fiscal year in an amount not exceeding
the lesser of (x) $300,000.00, or (y) five ($.05) cents per share, and (ii) for
any fiscal year during which Borrower is an electing S corporation for federal
income tax purposes, it may declare and pay cash dividends out of its net income
for the current or preceding fiscal year, provided however that no such dividend
may be paid which would result in the Borrower failing to meet the requirements
of Section 5.03 hereof.
(p) Hazardous Material. The Borrower, each Guarantor and each
Subsidiary of the Borrower shall not cause or permit any property owned or
occupied by the Borrower, any Guarantor or any such Subsidiary to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable federal, state and local laws or regulations nor shall the Borrower,
any Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of the Borrower, any
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied by the Borrower, any
Guarantor or any such Subsidiary or onto any other property. The Borrower, each
Guarantor and each such Subsidiary shall not fail to comply with all applicable
federal, state and local laws, ordinances, rules and regulations, whenever and
by whomever triggered, and shall not fail to obtain and comply with, any and all
approvals, registrations or permits required thereunder. The Borrower and the
Guarantors shall execute any documentation required by the Bank in connection
with the representations, warranties and covenants contained in this paragraph
and Section 4.01 of this Agreement.
(q) Treasury Stock Purchases. Purchase treasury stock of the
Borrower in the aggregate amount of greater than $250,000.00 during any fiscal
year.
(r) Loans or Advances to Employees. Make loans or other advances to
the Borrower's employees, officers or management in excess of $25,000.00 in the
aggregate during any fiscal year.
SECTION 5.03. Financial Requirements. So long as any amount shall
remain outstanding under any Term Loan Note or the Revolving Credit Note or so
long as the Commitment shall remain in effect:
(a) Leverage Ratio. The Borrower will maintain at all times a ratio
of Total Unsubordinated Liabilities to Capital Base of not greater than 0.75 to
1.0, to be tested quarterly as of the last day of each fiscal quarter.
(b) Capital Base. The Borrower shall maintain at all times a minimum
Capital Base of at least $6,000,000.00, to be tested quarterly as of the last
day of each fiscal quarter.
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(c) Debt Service Coverage Ratio. The Borrower shall maintain at all
times a minimum Debt Service Coverage Ratio, the ratio of (i) net income plus
depreciation and amortization expense plus interest expense to (ii) the current
portion of long term Debt plus interest expense (each calculated in accordance
with GAAP) of at least 1.20 to 1.0, to be tested quarterly as of the last day of
each fiscal quarter.
(d) Current Ratio. The Borrower shall maintain at all times a ratio
of Current Assets to Current Liabilities of at least 1.40 to 1.0.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of principal of,
or interest on, any Term Loan Note or the Revolving Credit Note when due or any
fees or other amounts owed in connection with this Agreement; or
(b) Any representation or warranty made by the Borrower or any
Guarantor herein or in the Loan Documents or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or any Guarantor shall fail to perform or observe
any term, covenant, or agreement contained in this Agreement in any other Loan
Document (other than the Notes) on its part to be performed or observed; or
(d) The Borrower, any Guarantor, or any Subsidiary of the Borrower
shall fail to pay any Debt (excluding Debt evidenced by any Term Loan Note or
the Revolving Credit Note) of the Borrower, any Guarantor or any such Subsidiary
(as the case may be), or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any such Debt, or any other event shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment) prior to the stated
maturity thereof; or
(e) The Borrower, any Guarantor or any Subsidiary of the Borrower
shall generally not pay its Debts as such Debts become due, or shall admit in
writing its inability to pay its Debts
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generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower, any Guarantor or
any such Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and if instituted
against the Borrower, any Guarantor or any such Subsidiary shall remain
undismissed for a period of 30 days; or the Borrower, any Guarantor or any such
Subsidiary shall take any action to authorize any of the actions set forth above
in this subsection (e); or
(f) Any judgment or order or combination of judgments or orders for
the payment of money, in excess of $50,000.00 in the aggregate, which sum shall
not be subject to full, complete and effective insurance coverage, shall be
rendered against the Borrower, any Guarantor or any Subsidiary of the Borrower
and either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(g) Any Guarantor shall fail to perform or observe any term or
provision of its Guaranty or any representation or warranty made by any
Guarantor (or any of its officers or partners) in connection with such
Guarantor's Guaranty shall prove to have been incorrect in any material respect
when made; or
(h) Any of the following events occur or exist with respect to the
Borrower, any Subsidiary of the Borrower, or any ERISA Affiliate: (i) any
Prohibited Transaction involving any Plan; (ii) any Reportable Event with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution of the PBGC
of any such proceedings; (v) complete or partial withdrawal under Section 4201
or 4204 of ERISA from a Multiemployer Plan or the reorganization insolvency, or
termination of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, could in the
opinion of the Bank subject the Borrower, any such Subsidiary or any ERISA
Affiliate to any tax, penalty, or other liability to a Plan, a Multiemployer
Plan, the PBGC, or otherwise (or any combination thereof) which in the aggregate
exceeds or may exceed $50,000.00; or
(i) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
or shall be declared to be null and void, or the validity or enforceability of
any document or instrument delivered pursuant to this Agreement shall be
contested by the Borrower, any Guarantor or any party to such document or
instrument or the Borrower, any Guarantor or any party to such document or
instrument shall deny that it has any or further liability or obligation under
any such document or instrument; or
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(j) An event of default specified in any Loan Document other than
this Agreement shall have occurred and be continuing.
SECTION 6.02. Remedies on Default. Upon the occurrence and
continuance of an Event of Default the Bank may by notice to the Borrower, (i)
terminate the Commitment, (ii) declare the Term Loan Notes, the Revolving Credit
Note, all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Commitment shall be terminated, the
Term Loan Notes, the Revolving Credit Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and (ii) proceed to enforce its rights whether by suit in
equity or by action at law, whether for specific performance of any covenant or
agreement contained in this Agreement or any Loan Document, or in aid of the
exercise of any power granted in either this Agreement or any Loan Document or
proceed to obtain judgment or any other relief whatsoever appropriate to the
enforcement of its rights, or proceed to enforce any other legal or equitable
right which the Bank may have by reason of the occurrence of any Event of
Default hereunder or under any Loan Document, provided, however, upon the
occurrence of an Event of Default referred to in Section 6.01(e), the Commitment
shall be immediately terminated, the Term Loan Notes, the Revolving Credit Note,
all interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
Any amounts collected pursuant to action taken under this Section 6.02 shall be
applied to the payment of, first, any costs incurred by the Bank in taking such
action, including but without limitation attorneys fees and expenses, second, to
payment of the accrued interest on the Term Loan Notes and the Revolving Credit
Note , and third, to payment of the unpaid principal of the Term Loan Notes and
the Revolving Credit Note.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or
reserved to the Bank hereunder or in any Loan Document is intended to be
exclusive of any other available remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
any Loan Document or now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Bank to exercise any remedy
reserved to it in this Article VI, it shall not be necessary to give any notice,
other than such notice as may be herein expressly required in this Agreement or
in any Loan Document.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment, modification,
termination or waiver of any provision of any Loan Document to which the
Borrower or any Guarantor is a party, nor consent to any departure by the
Borrower or any Guarantor from any provision of any Loan Document to which it is
a party, shall in any event be effective unless the same shall be in writing and
signed by the Bank, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed, telegraphed, sent by facsimile or delivered, if to the Borrower or
any Guarantor, at the address of the Borrower set forth at the beginning of this
Agreement and if to the Bank, at the address of the Bank set forth at the
beginning of this Agreement to the attention of Robert Ehrlich, V.P., or, as to
each party, at such other address as shall be designated by such party in a
written notice complying as to delivery with the terms of this Section 7.02 to
the other parties. All such notices and communications shall be effective when
mailed, telegraphed or delivered, except that notices to the Bank shall not be
effective until received by the Bank.
SECTION 7.03. No Waiver, Remedies. No failure on the part of the
Bank to exercise, and no delay in exercising, any right, power or remedy under
any Loan Document, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 7.04. Costs, Expenses and Taxes. The Borrower agrees to pay
on demand all costs and expenses of the Bank in connection with (including
counsel fees and expenses) the enforcement of this Agreement, the Term Loan
Notes, the Revolving Credit Note and any other Loan Documents. The Borrower
shall at all times protect, indemnify, defend and save harmless the Bank from
and against any and all claims, actions, suits and other legal proceedings, and
liabilities, obligations, losses, damages, penalties, judgments, costs, expenses
or disbursements which the Bank may, at any time, sustain or incur by reason of
or in consequence of or arising out of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. The
Borrower acknowledges that it is the intention of the parties hereto that this
Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, all of
which risks are hereby assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority,
provided that the Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Bank's gross negligence or
willful misconduct. The
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provisions of this Section 7.04 shall survive the payment of the Notes and the
termination of this Agreement.
SECTION 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any affiliate of the Bank to or for the credit or the account of the Borrower or
any Guarantor against any and all of the obligations of the Borrower or any
Guarantor now or hereafter existing under this Agreement and the Term Loan Notes
and the Revolving Credit Note irrespective of whether or not the Bank shall have
made any demand under this Agreement or the Term Loan Notes, or the Revolving
Credit Note and although such obligations may be unmatured. The rights of the
Bank under this Section are in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
SECTION 7.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Guarantors and the Bank
and thereafter it shall be binding upon and inure to the benefit of the
Borrower, the Guarantors and the Bank and their respective successors and
assigns, except that neither the Borrower nor any Guarantor shall have any right
to assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
SECTION 7.07. Further Assurances. The Borrower and each Guarantor
agree at any time and from time to time at its expense, upon request of the Bank
or its counsel, to promptly execute, deliver, or obtain or cause to be executed,
delivered or obtained any and all further instruments and documents and to take
or cause to be taken all such other action the Bank may deem desirable in
obtaining the full benefits of this Agreement or any other Loan Document.
SECTION 7.08. Section Headings, Severability, Entire Agreement.
Section and subsection headings have been inserted herein for convenience only
and shall not be construed as part of this Agreement. Every provision of this
Agreement and each Loan Document is intended to be severable; if any term or
provision of this Agreement, any Loan Document, or any other document delivered
in connection herewith shall be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions hereof or thereof shall not in any way be affected or impaired
thereby. All exhibits and schedules to this Agreement shall be annexed hereto
and shall be deemed to be part of this Agreement. This Agreement and the
exhibits and schedules attached hereto embody the entire Agreement and
understanding between the Borrower, the Guarantors and the Bank and supersede
all prior agreements and understandings relating to the subject matter hereof.
SECTION 7.09. Governing Law. This Agreement, the Term Loan Notes,
the Revolving Credit Note and all other Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of New York.
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SECTION 7.10. Waiver of Jury Trial. The Borrower, each Guarantor and
the Bank waive all rights to trial by jury on any cause of action directly or
indirectly involving the terms, covenants or conditions of this Agreement or any
Loan Document.
SECTION 7.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
AMERICAN MEDICAL ALERT CORP.
By /s/ Howard M. Siegel By /s/ Corey M. Aronin
-------------------------- -----------------------
Name: Howard M. Siegel Name: Corey M. Aronin
Title: President Title: Chief Financial Officer
EUROPEAN AMERICAN BANK
By /s/ Robert Ehrlich
----------------------------
Name: Robert Ehrlich
Title: Vice President
-36-
<PAGE>
SCHEDULE 4.01(a)
----------------
STATE OF INCORPORATION IDENTITY AND
AND EACH STATE PERCENTAGE OF
SUBSIDIARY'S NAME IN WHICH IT IS QUALIFIED OWNERSHIP OF
AND ADDRESS TO DO BUSINESS EACH SHAREHOLDER
- ---------------------- ----------------------------- ---------------------
None.
-37-
<PAGE>
SCHEDULE 5.02(a)
----------------
Creditor Amount Property Subject to Lien
- -------- ------ ------------------------
NBD Equipment Financing, Inc. $127,000 Computer Equipment
NBD Equipment Financing, Inc. $ 80,000 Dictaphone and imaging systems
-38-
<PAGE>
SCHEDULE 5.02(b)
----------------
Creditor Amount
- -------- ------
Same as Schedule 5.02(a)
-39-
<PAGE>
SCHEDULE 5.02(i)
----------------
Description of All Guaranties:
None.
-40-
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
$2,000,000.00 Uniondale, New York
April 27, 1998
FOR VALUE RECEIVED, on May 31, 2000, AMERICAN MEDICAL ALERT CORP., a New
York corporation, having its principal place of business at 3265 Lawson Blvd.,
Oceanside, New York 11572 (the "Borrower"), promises to pay to the order of
EUROPEAN AMERICAN BANK ("Bank") at its office located at 1 EAB Plaza, Uniondale,
New York 11555, the principal sum of the lesser of: (a) Two Million
($2,000,000.00) Dollars; or (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by Bank to Borrower pursuant to the Agreement (as
defined below).
Borrower shall pay interest on the unpaid principal balance of this
Note from time to time outstanding, at said office, at the rates of interest, at
the times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in
lawful money of the United States of America in immediately available funds.
Except as otherwise provided in the Agreement, if a payment becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day, and interest shall be payable
thereon at the rate herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the
amount of each Loan to Borrower and the amount of each payment on a Loan on the
schedule annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is the Revolving Credit Note referred to in that certain
Loan Agreement among Borrower and Bank of even date herewith (the "Agreement"),
as such Agreement may be further amended from time to time, and is subject to
prepayment and its maturity is subject to acceleration upon the terms contained
in said Agreement. All capitalized terms used in this Note and not defined
herein shall have the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or
enforce any of its provisions, Borrower further agrees to pay all costs and
expenses of such action or proceeding and attorneys' fees and expenses and
further expressly waives any and every right to interpose any counterclaim in
any such action or proceeding. Borrower hereby submits to the jurisdiction of
the Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of New
York for purposes of any action on or related to this Note, the liabilities, or
the enforcement of either or all of the same. Borrower hereby waives personal
service by manual delivery and agrees that service of process may be made
-41-
<PAGE>
by post-paid certified mail directed to the Borrower at the Borrower's address
set forth above or at such other address as may be designated in writing by the
Borrower to Bank in accordance with Section 7.02 of the Agreement, and that upon
mailing of such process such service be effective with the same effect as though
personally served. Borrower hereby expressly waives any and every right to a
trial by jury in any action on or related to this Note, the liabilities or the
enforcement of either or all of the same.
Bank may transfer this Note and may deliver the security or any part
thereof to the transferee or transferees, who shall thereupon become vested with
all the powers and rights above given to Bank in respect thereto, and Bank shall
thereafter be forever relieved and fully discharged from any liability or
responsibility in the matter. The failure of any holder of this Note to insist
upon strict performance of each and/or all of the terms and conditions hereof
shall not be construed or deemed to be a waiver of any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment
and demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
AMERICAN MEDICAL ALERT CORP.
By: /s/ Corey M. Aronin
---------------------------------
Name: Corey M. Aronin
Title: Chief Financial Officer
By: /s/ Howard M. Siegel
---------------------------------
Name: Howard M. Siegel
Title: President
-42-
<PAGE>
Schedule of Revolving Credit Loans
----------------------------------
Unpaid Name of
Amount of Principal Principal Person Making
Date Amount of Loan Paid or Prepaid Balance Notation
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
-43-
<PAGE>
EXHIBIT B
TERM LOAN NOTE
$____________ Uniondale, New York
_____________, 199_
FOR VALUE RECEIVED, AMERICAN MEDICAL ALERT CORP., a New York
corporation, having its principal place of business at 3265 Lawson Blvd.,
Oceanside, New York 11572 (the "Borrower") promises to pay to the order of
EUROPEAN AMERICAN BANK ("Bank") at its office located at 1 EAB Plaza, Uniondale,
New York 11555, the principal sum of _____________ ($__________) DOLLARS in
__________ (___) monthly principal installments, each of the first __________
(___) such installments being in the principal amount of _____________
($__________) DOLLARS, commencing on the first Business Day of ___________,
199_, and continuing monthly thereafter until ___________, 199_, when any
remaining principal amount shall be due and payable.
The Borrower shall pay interest on the unpaid balance of this
Note from time to time outstanding at said office, at the rates of interest, at
the times and for the periods as set forth in the Agreement (as defined below).
All payments including prepayments on this Term Loan Note
shall be made in lawful money of the United States of America in immediately
available funds. Except as otherwise provided in the Agreement, if a payment
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day, and interest shall be
payable thereon at the rate herein specified during such extension.
This Term Loan Note is a term loan note referred to in that
certain Loan Agreement among Borrower, certain Guarantors and Bank of even date
herewith (the "Agreement"), as such Agreement may be further amended from time
to time, and is subject to prepayment and its maturity is subject to
acceleration upon the terms contained in said Agreement. All capitalized terms
used in this Term Loan Note and not defined herein shall have the meanings given
them in the Agreement.
If any action or proceeding be commenced to collect this Term
Loan Note or enforce any of its provisions, Borrower further agrees to pay all
costs and expenses of such action or proceeding and attorneys, fees and expenses
and further expressly waives any and every right to interpose any counterclaim
in any such action or proceeding. Borrower hereby submits to the jurisdiction of
the Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of New
York for purposes o any action on or related to this Term Loan Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by post-paid certified mail directed to Borrower at Borrower's
address designated in the Agreement or at such other address as may be
designated in writing by Borrower
-44-
<PAGE>
to Bank in accordance with Section 7.02 of the Agreement, and that upon mailing
of such process such service be effective with the same effect as though
personally served. Borrower hereby expressly waives any and every right to a
trial by jury in any action on or related to this Term Loan Note, the
liabilities or the enforcement of either or all of the same.
Bank may transfer this Term Loan Note and may deliver the
security or any part thereof to the transferee or transferees, who shall
thereupon become vested with all the powers and rights above given to Bank in
respect thereto, and Bank shall thereafter be forever relieved and fully
discharged from any liability or responsibility in the matter. The failure of
any holder of this Term Loan Note to insist upon strict performance of each
and/or all of the terms and conditions hereof shall not be construed or deemed
to be a waiver of any such term or condition.
Borrower and all endorsers and Guarantors hereof waive
presentment and demand for payment, notice of non-payment, protest, and notice
of protest.
This Term Loan Note shall be construed in accordance with and
governed by the laws of the State of New York.
AMERICAN MEDICAL ALERT CORP.
By:
--------------------------------
Name:
Title:
-45-
Exhibit 10(x)
STATE OF GEORGIA
COUNTY OF GWINNETT
ASSIGNMENT OF RENTS AND LEASES
In Re: 910 Church Street, Decatur, Georgia
For value received, the undersigned hereby grants, transfers and
assigns to Brince H. Manning, III & Calvin A. Liepold, Jr. all of his rights,
title and interest in, to and under any and all leases or other rental
agreements, whether written or oral, affecting or covering all or any portion of
the above-referenced property (hereinafter referred to as "premises"), together
with all rents, security deposits or other sums currently held by the
undersigned or which come due after the date hereof.
WITNESS the hand and seal of the undersigned this 7th day of
January, 1999.
/s/ Steven E. Marcus
----------------------
STEVEN E. MARCUS
- ---------------------------
Witness
Exhibit 23(a)
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 17, 1999 appearing in this Annual Report on Form 10-KSB of American
Medical Alert Corp. for the year ended December 31, 1998.
/s/ MARGOLIN, WINER & EVENS LLP
- ------------------------------------
MARGOLIN, WINER & EVENS LLP
Garden City, New York
March 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000700721
<NAME> AMERICAN MEDICAL ALERT CORP.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,419,842
<SECURITIES> 0
<RECEIVABLES> 2,230,498
<ALLOWANCES> 60,000
<INVENTORY> 1,329,526
<CURRENT-ASSETS> 5,180,498
<PP&E> 7,454,770
<DEPRECIATION> 2,913,424
<TOTAL-ASSETS> 9,924,196
<CURRENT-LIABILITIES> 393,415
<BONDS> 192,652
0
0
<COMMON> 63,976
<OTHER-SE> 8,963,497
<TOTAL-LIABILITY-AND-EQUITY> 9,924,196
<SALES> 484,637
<TOTAL-REVENUES> 8,297,208
<CGS> 476,227
<TOTAL-COSTS> 6,558,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,802
<INCOME-PRETAX> 1,725,503
<INCOME-TAX> 739,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 986,503
<EPS-PRIMARY> .17
<EPS-DILUTED> .16
</TABLE>
