A SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6 (e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
American Medical Alert Corp.
----------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
AMERICAN MEDICAL ALERT CORP.
3265 LAWSON BOULEVARD
OCEANSIDE, NEW YORK 11572
May 26, 2000
Dear Fellow Shareholders:
You are cordially invited to attend our 2000 Annual Meeting of
Shareholders, which will be held on Wednesday, June 28, 2000 at 10:30 a.m., at
Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, 9th Floor, New
York, NY 10174.
The Notice of Annual Meeting and Proxy Statement which follows
describes the business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
Notice of Annual Meeting and Proxy Statement, I urge you to complete, sign, date
and return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please advise our Transfer Agent,
Continental Stock Transfer & Trust Company, in writing, at 2 Broadway, New York,
New York 10004.
Your vote is very important, and we would appreciate a prompt return of
your signed proxy card. We hope to see you at the meeting.
Cordially,
HOWARD M. SIEGEL
Chairman and Chief Executive Officer
<PAGE>
AMERICAN MEDICAL ALERT CORP.
3265 LAWSON BOULEVARD
OCEANSIDE, NEW YORK 11572
----------
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY JUNE 28, 2000
To the Shareholders of American Medical Alert Corp.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of
American Medical Alert Corp. will be held at Parker Chapin LLP, The Chrysler
Building, 405 Lexington Avenue, 9th Floor, New York, NY, on Wednesday June 28,
2000 at 10:30 A.M., Eastern Daylight Time, to consider and act upon the
following matters:
1. the election of five (5) directors to serve until the next
Annual Meeting of Shareholders and until their respective
successors are elected and qualified;
2. the approval of the Company's 2000 Stock Option Plan;
3. the approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of
Common Stock, par value $.01 per share ("Common Stock") of the
Company from ten million shares to twenty million shares; and
4. the transaction of such other business as may properly come
before the Meeting or any adjournments or postponements
thereof.
Information regarding the matters to be acted upon at the Meeting is
contained in the accompanying Proxy Statement.
The close of business on May 11, 2000 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors,
JOHN ROGERS,
Secretary
Oceanside, New York
May 26, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. EACH SHAREHOLDER
IS URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHICH IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. AN ENVELOPE, ADDRESSED TO THE
COMPANY'S TRANSFER AGENT, IS ENCLOSED FOR THAT PURPOSE AND NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
AMERICAN MEDICAL ALERT CORP.
3265 LAWSON BOULEVARD
OCEANSIDE, NEW YORK 11572
----------------
PROXY STATEMENT
----------------
This Proxy Statement is being furnished to the holders of Common Stock,
par value $.01 per share ("Common Stock"), of American Medical Alert Corp. (the
"Company") in connection with the solicitation by and on behalf of its Board of
Directors of proxies ("Proxy" or "Proxies") for use at the 2000 Annual Meeting
of Shareholders (the "Meeting") to be held on Wednesday June 28, 2000 at 10:30
A.M., Eastern Daylight Time at Parker Chapin LLP, The Chrysler Building, 405
Lexington Avenue, 9th Floor, New York, NY, and at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
2000 Annual Meeting of Shareholders.
The cost of preparing, assembling and mailing the Notice of 2000 Annual
Meeting of Shareholders, this Proxy Statement and the Proxies is to be borne by
the Company. The Company will also reimburse brokers who are holders of record
of Common Stock for their expenses in forwarding Proxies and Proxy soliciting
material to the beneficial owners of such shares of Common Stock. The Company
may retain an independent proxy solicitation firm to solicit Proxies. The cost
of such Proxy solicitation will be borne by the Company. In addition to the use
of the mails, Proxies may be solicited without extra compensation by directors,
officers and employees of the Company by telephone, facsimile, telegraph or
personal interview. The approximate mailing date of this Proxy Statement is May
26, 2000.
Unless otherwise specified, all Proxies, in proper form, received by the
time of the Meeting will be VOTED FOR the election of all nominees named herein
to serve as directors, FOR the approval of the Company's 2000 Stock Option Plan
and FOR the approval to increase the number of common shares to twenty million
shares.
A Proxy may be revoked by a shareholder at any time before its exercise
by filing with John Rogers, the Secretary of the Company at the address set
forth above, an instrument of revocation or a duly executed proxy bearing a
later date or by attendance at the Meeting and voting in person. Attendance at
the Meeting will not, in and of itself, constitute revocation of a Proxy.
The close of business on May 11, 2000 has been fixed by the Board of
Directors as the record date ("Record Date") for the determination of
shareholders entitled to notice of and to vote at the Meeting or any
adjournments or postponements thereof. As of the Record Date, there were
6,415,241 shares of Common Stock outstanding. Each share of Common Stock
outstanding on the Record Date will be entitled to one vote on all matters to
come before the Meeting.
A majority of the total number of shares of the Company's Common Stock,
issued and outstanding and entitled to vote, represented in person or by proxy,
is required to constitute a quorum for the transaction of business. Proxies
submitted which contain abstentions or broker non-votes will be deemed present
at the Meeting for determining the presence of a quorum.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, shareholders will elect five directors to serve until
the next Annual Meeting of Shareholders and until their respective successors
are elected and qualified. Unless otherwise directed, the persons named in the
Proxy intend to cast all properly executed Proxies received by the time of the
Meeting FOR the election of Messrs. Howard M. Siegel, Leonard Herz, Peter
Breitstone, Theodore Simon and Frederic S. Siegel (the "nominees") to serve as
directors upon their nomination at the Meeting. All nominees are currently
members of the Board of Directors. Each of Messrs. Howard M. Siegel, Herz,
Breitstone, Simon and Frederic S. Siegel were elected by shareholders at the
1999 Annual Meeting of Shareholders. Each nominee has advised the Company of his
willingness to serve as a director of the Company. In case any nominee should
become unavailable for election to the Board of Directors for any reason, the
persons named in the Proxies have discretionary authority to vote the Proxies
FOR one or more alternative nominees who will be designated by the Board of
Directors.
The directors and executive officers of the Company, their ages and
present positions with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C>
Howard M. Siegel 66 Chairman of the Board, President,
Chief Executive Officer and Director
Leonard Herz 68 Director
Peter Breitstone 46 Director
Theodore Simon 64 Director
Frederic S. Siegel 30 Vice President - Sales and Marketing and Director
</TABLE>
INFORMATION ABOUT NOMINEES
Set forth below is certain information with respect to each nominee:
HOWARD M. SIEGEL, 66, has been the Company's Chairman of the Board,
President and Chief Executive Officer and a director for more than the past five
years. Mr. Siegel also served as the Company's Chief Financial Officer for more
than the past five years, prior to the Company hiring Corey M. Aronin to serve
in such capacity in September, 1996.
LEONARD HERZ, 68, has been a director of the Company since June 1993.
He has been the President of Leonard Herz and Associates, a financial consulting
firm since 1982. Leonard Herz and Associates is located in Denver, Colorado. Mr.
Herz is a certified public accountant.
PETER BREITSTONE, 46, has been a director of the Company since March
1994. He has been the President of Breitstone & Co., Ltd., an insurance
brokerage and consulting firm located in Cedarhurst, New York, since December
1989. He is also the President of Shinecock Insurance Ltd., a company providing
reinsurance. He has served in such capacity since December 1987. Mr. Breitstone
has also been a practicing attorney in New York for more than the past five
years.
THEODORE SIMON, 64, has served as the Senior Vice President of
Engineering of Fire Burglary Instruments, a division of Pittway Corp., since
1990. Prior to 1990, Mr. Simon served as President of that company prior to its
acquisition by Pittway.
2
<PAGE>
FREDERIC S. SIEGEL, 30, has been a director of the Company since
September 1998 and has served as Vice President of Sales and Marketing for the
Company since July 1998. Mr. Siegel joined the Company in April 1994 and has
held various sales and marketing positions with the Company. From October 1991
to October 1994, Mr. Siegel served as a benefits consultant for J.N. Savasta
Corp. Mr. Siegel also serves as a director of Nursing Sister Homecare, a
division of Catholic Health Services of Long Island.
INFORMATION ABOUT NON-DIRECTOR EXECUTIVE OFFICERS
The following is a brief summary of the background of each executive
officer of the Company who is not also a director of the Company:
COREY M. ARONIN, 47, joined the Company in September 1996 as the Chief
Financial Officer. Previously, Mr. Aronin held senior financial positions. From
December 1995 to May 1996, he served as the Executive Vice President of Finance
at Affiliated Island Grocers, Inc. From August 1982 until November 1995, Mr.
Aronin served as the controller and Treasurer at Golden Simcha Poultry, Inc., a
closely held corporation, in which Mr. Aronin was a shareholder. Mr. Aronin is a
certified public accountant.
JACK RHIAN, 45, joined the Company in January 2000 as Vice President
and Chief Operating Officer. From November 1994 until February 1999, he served
as Executive Vice President and Chief Operating Officer of Transcare New York,
Inc. a medical transportation company. From March 1988 through November 1994 he
served as Chief Operating Officer of Nationwide Nassau Ambulance Service.
Previously, Mr. Rhian held senior management positions in the delivery of health
care services. Mr. Rhian holds a Masters Degree in Public Administration. Mr.
Rhian serves as an appointee to the New York State Emergency Medical Services
Counsel.
NON-DIRECTOR-SIGNIFICANT OFFICERS
JOHN LESHER, 45, became the Company's Vice President, Engineering in
March 1991. Prior thereto and from 1989, Mr. Lesher served as a senior engineer
at the Company's former Bristol, Pennsylvania facility. From May 1984 to
November 1988, Mr. Lesher served as the Operations and Manufacturing Director of
Advanced Graphic Systems, Inc. (a subsidiary of Automation and Printing
International Technology, Inc.), a company engaged in the sale and marketing of
computerized printing equipment. Mr. Lesher holds a doctorate degree in
Electrical Engineering / Computer Engineering.
JOHN ROGERS, 53, joined the Company in 1984 as the Manager of the
Emergency Response, Installation and Service Center. He became the Company's
Vice President, Operations in July 1993. Additionally, he has been the Secretary
of the Company since July 1993. Prior to joining the Company he was employed at
Technical Liaison Corporation from 1969 through May 1984 as Installation &
Service Manager.
There is no family relationship between any of the directors, executive
officers or significant officers of the Company, with the exception of Howard M.
Siegel and Frederic S. Siegel. Howard M. Siegel is the father of Frederic S.
Siegel.
BOARD OF DIRECTOR MEETINGS
The Board of Directors is responsible for the affairs and the business
of the Company. During the Company's fiscal year ended December 31, 1999, the
Board of Directors held six meetings. During such year, the Board of Directors
did not act by written consent.
3
<PAGE>
COMMITTEES
The Stock Option Committee of the Board of Directors consists of Messrs.
Howard M. Siegel, Leonard Herz, Peter Breitstone and Theodore Simon. The
function of the Stock Option Committee is to administer the Company's employee
stock option plans. During the Company's fiscal year ended December 31, 1999,
the Stock Option Committee held two meetings and did not act by written consent.
The Audit Committee of the Board of Directors consists of Messrs.
Leonard Herz, Peter Breitstone and Theodore Simon. The function of the Audit
Committee is to review and advise the Board of Directors with respect to matters
concerning the financial condition and operations of the Company, to nominate
independent auditors, subject to approval of the Company's Board of Directors,
and to examine and consider matters related to the audit of the Company's
accounts, the financial affairs and accounts of the Company, the scope of the
independent auditors' engagement and their compensation, the effect on the
Company's financial statements of any proposed changes in generally accepted
accounting principles, disagreements, if any, between the Company's independent
auditors and management, and matters of concern to the independent auditors
resulting from the audit, including the results of the independent auditors'
review of internal accounting controls. During the fiscal year ended December
31, 1999, the Audit Committee held one meeting and did not act by written
consent. In December 1999, both the SEC and Nasdaq adopted new rules relating to
Audit Committees. In response to the SEC and Nasdaq rules, the Board of
Directors is currently reviewing an Audit Committee Charter which will
specifically define the responsibilities and obligations of the Audit Committee.
The Board of Directors expects to adopt an Audit Committee Charter prior to June
14, 2000, which will be in compliance with the new SEC and Nasdaq rules.
The Compensation Committee of the Board of Directors consists of Messrs.
Howard M. Siegel, Leonard Herz, Peter Breitstone and Theodore Simon. The
Compensation Committee reviews and discusses executive compensation for the
Company's executive officers and makes recommendations to the Board of Directors
in connection therewith. During the fiscal year ended December 31, 1999, the
Compensation Committee held one meeting and acted on one occasion by unanimous
written consent.
The Board of Directors has no standing Executive or Nominating
Committees.
Each incumbent director attended at least 75% of the aggregate of all
meetings of the Board of Directors, the Stock Option Committee, the Audit
Committee and the Compensation Committee, if a member thereof.
COMPENSATION OF DIRECTORS
Pursuant to the Company's 1997 Stock Option Plan, the Board
automatically grants options to purchase 10,000 shares of the Company's Common
Stock to non-employee directors in July of each year. The Board of Directors may
from time to time authorize the grant of stock options to directors in
connection with attendance at Board of Director meetings, at such times and in
amounts as determined by the Board in its sole discretion. In addition, each
director receives $750 for each meeting of the Board of Directors attended. No
person receives any fees in connection with attendance at meetings of committees
of the Board of Directors.
EXECUTIVE OFFICERS
The Executive Officers of the Company are Howard M. Siegel, Chairman of
the Board, President and Chief Executive Officer, Corey M. Aronin, Chief
Financial Officer, and Jack Rhian, Vice President and Chief Operating Officer.
The other Significant Officers of the Company are John Lesher, Vice
4
<PAGE>
President, Engineering, Frederic S. Siegel, Vice President Sales and Marketing
and John Rogers, Vice President, Operations and Secretary. Information regarding
each of these persons is provided above.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the ownership of shares
of the Company's Common Stock, as of April 24, 2000, with respect to (a) holders
known to the Company to beneficially own more than five percent of the
outstanding Common Stock of the Company, (b) each director and nominee, (c) the
executive officers named in the Summary Compensation Table under the caption
"Executive Compensation" below and (d) all directors and executive officers of
the Company as a group. The Company understands that, except as noted below,
each beneficial owner has sole voting and investment power with respect to all
shares attributable to such owner.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
Beneficial Owner(1) Beneficial Ownership Class (2)
- -------------------- -------------------- ---------
<S> <C> <C>
Howard M. Siegel 1,125,496(3) 17.3 %
Leonard Herz 57,000(4) *
254 Garfield Street
Denver, Colorado 80206
Peter Breitstone 35,000(5) *
534 Willow Avenue
Cedarhurst, New York 11516
Theodore Simon 171,570(6) 2.7 %
35 Melrose Road
Dix Hills, New York 11746
Frederic S. Siegel 175,951(7) 2.7 %
Corey M. Aronin 64,327(8) *
John Lesher 80,067(9) 1.2 %
All directors and executive
officers as a group
(7 persons) 1,709,411(10) 25.1 %
</TABLE>
(1) Except as otherwise indicated, the address of each individual listed is
c/o the Company at 3265 Lawson Boulevard, Oceanside, New York 11572.
(2) Asterisk indicates less than 1%. Shares subject to options are
considered outstanding only for the purpose of computing the percentage
of outstanding Common Stock which would be owned by the optionee if the
options were so exercised, but (except for the calculation of
beneficial ownership by all directors and executive officers as a
group) are not considered outstanding for the purpose of computing the
percentage of outstanding Common Stock owned by any other person.
5
<PAGE>
(3) Includes 93,229 shares subject to currently exercisable stock options
and 19,300 shares held by Mr. Siegel as custodian for his son. Does not
include options granted by the Company to Mr. Siegel contingent upon
approval by the Company's shareholders of an option plan reserving
sufficient shares for the grant.
(4) Includes 35,000 shares subject to currently exercisable stock options.
(5) Includes 35,000 shares subject to currently exercisable stock options.
(6) Includes 50,801 shares held by Mr. Simon as custodian for three of his
children. Mr. Simon disclaims beneficial ownership of such shares. Also
includes 20,000 shares subject to currently exercisable stock options.
(7) Includes 19,300 shares held by Mr. Howard M. Siegel as custodian for
Frederic S. Siegel and 81,651 shares subject to currently exercisable
stock options.
(8) Includes 2,000 shares held by Mr. Aronin's wife as custodian for their
child. Also includes 57,027 shares subject to currently exercisable
stock options.
(9) Includes 80,067 shares subject to currently exercisable stock options.
(10) Includes options indicated in notes (3), (4), (5), (6), (7), (8) and
(9).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Common Stock, to file initial reports of ownership and reports
of changes of ownership with the Securities and Exchange Commission and furnish
copies of those reports to the Company. Each of Messrs. Corey Aronin, Leonard
Herz, Frederic S. Siegel, Howard M. Siegel and Theodore Simon failed to timely
file an Annual Statement of Changes in Beneficial Ownership of Securities on
Form 5. Each of Messrs. Leonard Herz and Howard M. Siegel failed to timely file
a statement of Changes in Beneficial Ownership on Form 4.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation of the Company's Chief Executive Officer and the three
most highly compensated executive officers who were serving at the end of the
fiscal year ended December 31, 1999, each of whose salary and bonus exceeded
$100,000 for the fiscal year ended December 31, 1999, for services rendered in
all capacities to the Company and its subsidiary during the Company's 1997, 1998
and 1999 fiscal years. No other person earned compensation in excess of
$100,000. The listed individuals shall be hereinafter referred to as the "Named
Executive Officers."
<TABLE>
<CAPTION>
Long-Term
Name and Annual Compensation Compensation
Principal ------------------- --------------
Position Year Salary Bonus Options(#)
- ---------------------------- ---- ------ ----- ----------
<S> <C> <C> <C> <C>
Howard M. Siegel 1999 $230,000 0 35,442
Chairman of the 1998 $215,000 0 19,183
Board, President 1997 $200,000 0 9,200
and Chief Executive
Officer
Corey M. Aronin 1999 $123,333 0 19,090
Chief Financial Officer 1998 $106,666 0 26,420
1997 $93,333 0 3,517
John Lesher 1999 $100,000 $3,500 15,000
Vice President- 1998 $105,000 0 7,825
Engineering 1997 $92,512 0 5,313
Frederic S. Siegel 1999 $125,000 0 23,846
Vice President- 1998 $83,481 0 32,799
Sales and Marketing 1997 $61,775 0 3,840
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted
during the Company's 1999 fiscal year to the Named Executive Officers. All such
options were granted under the Company's 1997 Stock Option Plan or the Company's
1991 Stock Option Plan, as amended.
<TABLE>
<CAPTION>
Percent
of Total
Options
Granted to Exercise
Number of Employees in Price Expiration
Name Options Fiscal Year Per Share Date
- ----------------- --------- ------------ --------- ----
<S> <C> <C> <C> <C>
Howard M. Siegel 24,000 16.18% $4.1938 01/04/2004
11,442 8.10% $2.6125 09/16/2004
Corey M. Aronin 12,500 8.42% $3.8125 01/04/2004
6,590 4.66% $2.3750 09/16/2004
John Lesher 10,000 6.74% $3.8125 01/04/2004
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
5,000 3.54% $2.3750 09/16/2004
Frederic S. Siegel 16,500 11.12% $3.8125 01/04/2004
7,346 5.20% $2.3750 09/16/2004
</TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE
The following table sets forth certain information concerning the
number of shares of Common Stock acquired upon the exercise of stock options
during the year ended December 31, 1999 and the number and value at December 31,
1999 of shares of Common Stock subject to unexercised options held by the Named
Executive Officers.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- --------------- ------------------ ------------- -------------
<S> <C> <C>
Howard M. Siegel --- --- 80,657/0 0/0
Corey M. Aronin --- --- 49,027/0 0/0
John Lesher --- --- 76,307/0 $142.69/0
Frederic S. Siegel --- --- 64,774/0 $63.81/0
</TABLE>
COMPENSATION COMMITTEE AND INSIDER PARTICIPATION
The Board of Directors has a Compensation Committee, of which Mr.
Howard M. Siegel is a member. The Compensation Committee advises the Board of
Directors with respect to executive officer compensation.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Howard M.
Siegel pursuant to which he is employed full-time as the Company's Chairman of
the Board, President and Chief Executive Officer. The agreement expires in
December 2002 and provides for an annual base salary of $260,000 for the year
2000, $290,000 for the year 2001 and $320,000 for the year 2002. As an
inducement for Mr. Siegel to enter into the employment agreement, Mr. Siegel
will receive, contingent upon approval by the Company's shareholders of an
option plan reserving sufficient shares for the grant, options to purchase up to
160,000 shares of the Company's Common Stock, at an exercise price of $2.75 per
share. The term of exercise will be five years from the date of grant and all
such options will be immediately exercisable.
Mr. Siegel will receive additional compensation for any year that the
Company's pre-tax income, as defined in the employment agreement, exceeds
$2,000,000. Mr. Siegel will receive an amount equal to 8% of the Company's
pre-tax income between $2,000,000 and $3,000,000, 9% of the Company's pre-tax
8
<PAGE>
income between $3,000,000 and $4,000,000 and 10% of the Company's pre-tax income
in excess of $4,000,000. Such additional compensation may be paid to Mr. Siegel,
at his option, in cash, Common Stock of the Company or a combination of both.
In the event of his death during the term of the employment agreement,
Mr. Siegel's estate or such other person as he shall designate shall be entitled
to receive his base salary for a period of one year from the date of his death.
In the event that Mr. Siegel should become disabled and be unable to perform his
duties for a period of one hundred eighty (180) consecutive days or an aggregate
of more than one hundred and eighty (180) days in any 12 month period, the
Company may terminate the employment agreement after the expiration of such
period. In such event, Mr. Siegel shall be entitled to receive his base salary
and any additional compensation earned for such fiscal year pro rated to the
date of termination. In addition, in the event there is a "change in control"
and Mr. Siegel terminates his employment with the Company within 180 days
following such "change in control", Mr. Siegel will be entitled to his base
salary, the additional compensation described in the preceding paragraph, any
benefits or awards earned through his last day of employment and a lump sum
payment equal to 2.99 times his average annual total compensation for the past 5
years.
The Company has entered into an employment agreement with Mr. Corey M.
Aronin pursuant to which he is employed full-time as the Company's Chief
Financial Officer. The agreement expires in August 2000 and provides for an
annual base salary of $130,000 plus additional compensation as determined by the
Board of Directors. As an inducement to Mr. Aronin to continue his employment,
the Company granted Mr. Aronin, pursuant to the Company's 1997 Stock Option
Plan, 15,000 stock options at an exercise price of $2.75 per share. The term of
exercise is five years from the date of grant and all such options are
immediately exercisable.
In the event of his death during the term of the employment agreement,
Mr. Aronin's estate or such other person as he shall designate shall be entitled
to receive his base salary for a period of one year from the date of his death.
In the event that Mr. Aronin should become disabled and be unable to perform his
duties for a period of one hundred eighty (180) consecutive days or an aggregate
of more than one hundred and eighty (180) days in any 12 month period, the
Company may terminate the employment agreement after the expiration of such
period. In such event, Mr. Aronin shall be entitled to receive his base salary
and any additional compensation earned for such fiscal year pro rated to the
date of termination. In addition, in the event there is a "change in control"
and Mr. Aronin terminates his employment with the Company within 180 days
following such "change in control", Mr. Aronin will be entitled to his base
salary, the additional compensation described in the preceding paragraph, any
benefits or awards earned through his last day of employment and a lump sum
payment equal to his average annual total compensation for the past 5 years.
The Company has entered into an employment agreement with Mr. Frederic
S. Siegel pursuant to which he is employed full-time as the Company's Vice
President of Marketing. The agreement expires in September 2000 and provides for
an annual base salary of $110,000. In addition, Mr. Siegel shall receive as
additional compensation: a commission in the amount of 3% on all incremental
sales above 105% of 1997 sales, compounded by an additional 5% annually; a
commission in the amount of .0375% on any increased net income above the base
year 1997 so long as the Company's pre-tax income increases on a year to year
basis; stock options, pursuant to the Company's 1991 or 1997 Stock Option Plans
or other option plans which may be adopted in the future, to purchase a number
of shares of Common Stock equal to 5% of the total compensation paid to him
during each semi-annual stock option grant period; and options to purchase a
number of shares of Common Stock equal to 2.5% of the incremental sales above
105% of 1997 sales, compounded by an additional 5% annually.
9
<PAGE>
In the event of his death during the term of the employment agreement,
Mr. Siegel's estate or such other person as he shall designate shall be entitled
to receive his base salary for a period of one year from the date of his death.
In the event that Mr. Siegel should become disabled and be unable to perform his
duties for a period of one hundred eighty (180) consecutive days or an aggregate
of more than one hundred and eighty (180) days in any 12 month period, the
Company may terminate the employment agreement after the expiration of such
period. In such event, Mr. Siegel shall be entitled to receive his base salary
and any additional compensation earned for such fiscal year pro rated to the
date of termination. In addition, in the event there is a "change in control"
and Mr. Siegel terminates his employment with the Company within 180 days
following such "change in control", Mr. Siegel will be entitled to his base
salary, the additional compensation described in the preceding paragraph, any
benefits or awards earned through his last day of employment and a lump sum
payment equal to 1.99 times his average annual total compensation for the past 5
years.
The Company has entered into an employment agreement with Mr. Jack
Rhian pursuant to which he is employed full-time as the Company's Vice President
and Chief Operating Officer. The agreement expires in January 2002 and provides
for an annual base salary of $125,000. In addition, contingent upon approval by
the Company's shareholders of an option plan reserving sufficient shares for the
grant of options, Mr. Rhian will receive options to purchase up to 100,000
shares of the Company's Common Stock at an exercise price of $2.00 per share.
The options will vest in installments over a period of three years commencing on
January 31, 2001. The term of the options will be 5 years from the date of
vesting of each installment. The Company may pay Mr. Rhian additional
compensation upon the achievement of certain goals and milestones to be
determined and approved by the Compensation Committee.
In the event that Mr. Rhian should become disabled and be unable to
perform his duties for a period of sixty (60) consecutive days or an aggregate
of more than ninety (90) days in any 12 month period, the Company may terminate
the employment agreement after the expiration of such period. In such event, Mr.
Rhian shall be entitled to receive his base salary and additional compensation
earned for such fiscal year, if any, pro rated to the date of termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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, CEO 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 located in an adjacent building owned by Add on Properties, LLC,
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. In November 1999, an Addendum to the lease was entered into for an
additional 2,200 square feet under the same terms and conditions stated in the
original lease. The Company believes that the terms of this lease are no less
favorable than could be obtained from an unaffiliated third party.
The Company purchases all of its business insurance through Breitstone
& Co., Ltd., an insurance brokerage and consulting firm which is owned by Mr.
Peter Breitstone, a director of the Company. The annual commission currently
earned by Breitstone & Co., Ltd. on such insurance is approximately
10
<PAGE>
$15,000. The Company believes that the premiums paid to the various insurance
carriers are competitive and the commissions paid to Breitstone & Co., Ltd. are
customary in the insurance industry.
The Company has entered into an employment agreement with Mr. Frederic S. Siegel
pursuant to which he is employed full-time as the Company's Vice President of
Marketing. Mr. Frederic S. Siegel is the son of Mr. Howard M. Siegel, the
Chairman of the Board, President and Chief Executive Officer of the Company. See
"Item 10 - Employment Agreements".
PROPOSAL 2
APPROVAL OF THE COMPANY'S 2000 STOCK OPTION PLAN
On March 17, 2000, the Board of Directors adopted, subject to
shareholder approval at the Annual Meeting, the Company's 2000 Stock Option
Plan. The 2000 Stock Option Plan is herein referred to as the "Plan". The Board
of Directors believes that it is in the best interests of the Company to
implement a comprehensive equity incentive program for the Company, which will
provide a meaningful opportunity for officers, employees and non-employee
directors to acquire a substantial proprietary interest in the Company and
thereby encourage such individuals to remain in the Company's service and more
closely align their interests with those of the shareholders. The proceeds
derived from the sale of shares subject to options will be used for general
corporate purposes of the Company.
The following summary of certain material features of the Plan does not
purport to be complete and is qualified in its entirety by reference to the text
of the Plan, a copy of which is set forth as Exhibit A to this Proxy Statement.
SHARES SUBJECT TO THE OPTION PLAN AND ELIGIBILITY
The Plan authorizes the grant of options to purchase a maximum of
1,250,000 shares of the Company's Common Stock (subject to adjustment as
described below) to employees (including officers and directors who are
employees) and non-employee directors of, and consultants to, the Company. Upon
expiration, cancellation or termination of unexercised options, the shares of
the Company's Common Stock subject to such options will again be available for
the grant of options under the Plan. All of the approximately 115 employees of
the Company are currently eligible to receive grants of options under the Plan.
Set forth in the table below is information as to the number of shares
as to which options have been granted under the Company's 2000 Stock Option Plan
to the Named Executive Officers, to each other person who has received 5% of
such options, to all current executive officers as a group, to all current
directors who are not executive officers as a group and to all current
employees, including all current officers who are not executive officers, as a
group.
NUMBER OF
NAME OPTIONS
---- -------
Howard M. Siegel 160,000
Jack Rhian 100,000
11
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All current executive officers as a group 260,000
All current directors who are not executive
officers as a group 0
All current employees, including all current
officers who are not executive officers, as a
group 0
On March 17, 2000, the high and low sales prices of the Company's
Common Stock as reported by NASDAQ were $3.375 and $2.75 per share,
respectively.
TYPE OF OPTIONS
Options granted under the Plan may either be incentive stock options
("ISOs"), within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or nonqualified stock options which do not
qualify as ISOs ("NQSOs").
ADMINISTRATION
The Plan will be administered by a committee of the Board of Directors
(the "Committee") consisting of at least two members of the Board, each of whom
is a "non-employee director" within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934. It is also intended that each member of the
Committee will be an "outside director" within the meaning of Section 162(m) of
the Code. The current members of the Committee are Messrs. Howard M. Siegel,
Herz, Breitstone and Simon.
Among other things, the Committee is empowered to determine, within the
express limits contained in the Plan: the employees and consultants to be
granted options, the times when options shall be granted, whether an option is
to be an ISO or a NQSO, the number of shares of Common Stock to be subject to
each option, the exercise price of each option, the term of each option, the
date each option shall become exercisable as well as any terms, conditions or
installments relating to the exercisability of each option, whether and under
what conditions to accelerate the date of exercise of any option or installment,
the form of payment of the exercise price, the amount, if any, required to be
withheld with respect to an option and, with the consent of the optionee, to
modify an option. The Committee is also authorized to prescribe, amend and
rescind rules and regulations relating to the Plan and to make all other
determinations necessary or advisable for administering the Plan and to construe
the Plan.
TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan will be subject to, among other things,
the following terms and conditions:
(a) The exercise price of each option will be determined by the
Committee; provided, however, that the exercise price of an
ISO may not be less than the fair market value of the
Company's Common Stock on the date of grant (110% of such fair
market value if the optionee owns (or is deemed to own) more
than 10% of the voting power of the Company).
12
<PAGE>
(b) Options may be granted for terms determined by the Committee;
provided, however, that the term of an ISO may not exceed 10
years (5 years if the optionee owns (or is deemed to own) more
than 10% of the voting power of the Company).
(c) The maximum number of shares of the Company's Common Stock for
which options may be granted to an employee in any calendar
year is 300,000. In addition, the aggregate fair market value
of shares with respect to which ISOs may be granted to an
employee which are exercisable for the first time during any
calendar year may not exceed $100,000.
(d) The exercise price of each option is payable in full upon
exercise or, if the applicable stock option contract
("Contract") entered into by the Company with an optionee
permits, in installments. Payment of the exercise price of an
option may be made in cash, certified check or, if the
applicable Contract permits, in shares of the Company's Common
Stock or by the Company's withholding from the purchased
shares an amount having an aggregate fair market value, on the
date of exercise, equal to the aggregate exercise price of all
options being exercised, or any combination thereof.
(e) Options may not be transferred other than by will or by the
laws of descent and distribution, and may be exercised during
the optionee's lifetime only by the optionee or his or her
legal representatives.
(f) Except as may otherwise be provided in the applicable
Contract, if the optionee's relationship with the Company as
an employee or consultant is terminated for any reason (other
than the death or disability of the optionee), the option may
be exercised, to the extent exercisable at the time of
termination of such relationship, within three months
thereafter, but in no event after the expiration of the term
of the option. However, if the relationship is terminated
either for cause or without the consent of the Company, the
option will terminate immediately. In the case of the death of
an optionee while an employee or consultant (or, generally,
within three months after termination of such relationship, or
within one year after termination of such relationship by
reason of disability), except as otherwise provided in the
Contract, his or her legal representative or beneficiary may
exercise the option, to the extent exercisable on the date of
death, within one year after such date, but in no event after
the expiration of the term of the option. Except as otherwise
provided in the Contract, an optionee whose relationship with
the Company was terminated by reason of his or her disability
may exercise the option, to the extent exercisable at the time
of such termination, within one year thereafter, but not after
the expiration of the term of the option. Options are not
affected by a change in the status of an optionee so long as
he or she continues to be an employee of, or a consultant to,
the Company.
(g) The Company may withhold cash and/or shares of the Company's
Common Stock having an aggregate value equal to the amount
which the Company determines is necessary to meet its
obligations to withhold any federal, state and/or local taxes
or other amounts incurred by reason of the grant or exercise
of an option, its disposition or the disposition of shares
acquired upon the exercise of the option. Alternatively, the
Company may require the optionee to pay the Company such
amount, in cash, promptly upon demand.
13
<PAGE>
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments will be made in the number and kind of shares
available under the Plan, in the number and kind of shares subject to each
outstanding option and the exercise prices of such options, as well as the
number of shares subject to future grants to non-employee directors and
limitation on the number of shares that may be granted to any employee in any
calendar year, in the event of any change in the Company's Common Stock by
reason of any stock dividend, split-up, spin off, combination, reclassification,
recapitalization, merger in which the Company is not the surviving corporation,
exchange of shares or the like. In the event of (a) the liquidation or
dissolution of the Company, or (b) a merger in which the Company is not the
surviving corporation or a consolidation, the Board of Directors of the Company
shall, as to outstanding options, either (i) make appropriate provisions for the
protection of any such outstanding options by the substitution on an equitable
basis of appropriate stock of the Company or of the merged, consolidated or
otherwise reorganized corporation which will be issuable in respect to one share
of Common Stock of the Company; provided, only that the excess of the aggregate
fair market value of the shares subject to the options immediately after such
substitution over the purchase price thereof is not more than the excess of the
aggregate fair market value of the shares subject to such options immediately
before such substitution over the purchase price thereof, or (ii) upon written
notice to an optionee, provide that all unexercised options must be exercised
within a specified number of days of the date of such notice or they will be
terminated. In any such case, the Board of Directors may, in its discretion,
advance the lapse of any waiting or installment periods and exercise dates.
DURATION AND AMENDMENT OF THE PLAN
No option may be granted under the Plan after March 17, 2010. The Board
of Directors may at any time terminate or amend the Plan; provided, however,
that, without the approval of the Company's shareholders, no amendment may be
made which would (a) except as a result of the anti-dilution adjustments
described above, increase the maximum number of shares available for the grant
of options or increase the maximum number of options that may be granted to an
employee in any calendar year, (b) change the eligibility requirements for
persons who may receive options or (c) make any changes for which applicable law
or regulatory authority requires shareholder approval. No termination or
amendment may adversely affect the rights of an optionee with respect to an
outstanding option without the optionee's consent.
FEDERAL INCOME TAX TREATMENT
The following is a general summary of certain material federal income
tax consequences of the grant and exercise of the options under the Plan and the
sale of any underlying security. This description is based on current law which
is subject to change, possibly with retroactive effect. This discussion does not
purport to address all tax considerations relating to the grant and exercise of
the options or resulting from the application of special rules to a particular
optionee (including an optionee subject to the reporting and short-swing profit
provisions under Section 16 of the Securities Exchange Act of 1934, as amended),
and state, local, foreign and other tax consequences inherent in the ownership
and exercise of stock options and the ownership and disposition of any
underlying security. An optionee should consult with the optionee's own tax
advisors with respect to the tax consequences inherent in the ownership and
exercise of stock options and the ownership and disposition of any underlying
security.
14
<PAGE>
(a) ISOs Exercised With Cash
------------------------
No taxable income will be recognized by an optionee upon the
grant or exercise of an ISO. The optionee's tax basis in the
shares acquired upon the exercise of an ISO with cash will be
equal to the exercise price paid by the optionee for such
shares.
If the shares received upon exercise of an ISO are disposed of
more than one year after the date of transfer of such shares
to the optionee and more than two years from the date of grant
of the option, the optionee will recognize long-term capital
gain or loss on such disposition equal to the difference
between the selling price and the optionee's basis in the
shares, and the Company will not be entitled to a deduction.
Long-term capital gain is generally subject to more favorable
tax treatment than short-term capital gain or ordinary income.
If the shares received upon the exercise of an ISO are
disposed of prior to the end of the
two-years-from-grant/one-year-after-transfer holding period (a
"disqualifying disposition"), the excess (if any) of the fair
market value of the shares on the date of transfer of such
shares to the optionee over the exercise price (but not in
excess of the gain realized on the sale of the shares) will be
taxed as ordinary income in the year of such disposition, and
the Company generally will be entitled to a deduction in the
year of disposition equal to such amount. Any additional gain
or any loss recognized by the optionee on such disposition
will be short-term or long-term capital gain or loss, as the
case may be, depending upon the period for which the shares
were held.
(b) NQSOs Exercised With Cash
-------------------------
No taxable income will be recognized by an optionee upon the
grant of an NQSO. Upon the exercise of an NQSO, the excess of
the fair market value of the shares received at the time of
exercise over the exercise price therefor will be taxed as
ordinary income, and the Company will generally be entitled to
a corresponding deduction. The optionee's tax basis in the
shares acquired upon the exercise of such NQSO will be equal
to the exercise price paid by the optionee for such shares
plus the amount of ordinary income so recognized.
Any gain or loss recognized by the optionee on a subsequent
disposition of shares purchased pursuant to an NQSO will be
short-term or long-term capital gain or loss, depending upon
the period during which such shares were held, in an amount
equal to the difference between the selling price and the
optionee's tax basis in the shares.
(c) Exercises of Options Using Previously Acquired Shares or by the
-----------------------------------------------------------------------
Company's Withholding Shares
----------------------------
If previously acquired shares are surrendered in full or
partial payment of the exercise price of an option (whether an
ISO or a NQSO), gain or loss generally will not be recognized
by the optionee upon the exercise of such option to the extent
the optionee receives shares which on the date of exercise
have a fair market value equal to the fair market value of the
shares surrendered in exchange therefor ("Replacement
Shares"). If the option exercised is an ISO or if the shares
used were acquired pursuant to the exercise
15
<PAGE>
of an ISO, the Replacement Shares are treated as having been
acquired pursuant to the exercise of an ISO.
However, if an ISO is exercised with shares which were
previously acquired pursuant to the exercise of an ISO but
which were not held for the required
two-years-from-grant/one-year-after-transfer holding period,
there is a disqualifying disposition of such previously
acquired shares. In such case, the optionee would recognize
ordinary income on such disqualifying disposition equal to the
difference between the fair market value of such shares on the
date of exercise of the prior ISO and the amount paid for such
shares (but not in excess of the gain realized). Special rules
apply in determining which shares are considered to have been
disposed of and in allocating the basis among the shares. No
capital gain is recognized.
The optionee will have an aggregate basis in the Replacement
Shares equal to the basis of the shares surrendered, increased
by any ordinary income required to be recognized on the
disposition of the previously acquired shares. The optionee's
holding period for the Replacement Shares generally includes
the period during which the surrendered shares were held.
Any shares received by the optionee on such exercise in
addition to the Replacement Shares will be treated in the same
manner as a cash exercise of an option for no consideration.
To the extent that an ISO is exercised by the Company's
withholding shares, such exercise will result in a
disqualifying disposition of the underlying shares and the
excess (if any) of the fair market value of the shares on the
date of transfer of such shares to the optionee over the
exercise price (but not in excess of the gain realized on the
sale of the shares) will be taxed as ordinary income in the
year of such disposition, and the Company generally will be
entitled to a deduction in the year of exercise equal to such
amount. The exercise of a NQSO by the Company's withholding of
shares will have the same federal tax consequences as the
exercise of a NQSO with cash.
(d) Alternative Minimum Tax
-----------------------
In addition to the federal income tax consequences described
above, an optionee who exercises an ISO may be subject to the
alternative minimum tax, which is payable only to the extent
it exceeds the optionee's regular tax liability. For this
purpose, upon the exercise of an ISO, the excess of the fair
market value of the shares over the exercise price is an
adjustment which increases the optionee's alternative minimum
taxable income. In addition, the optionee's basis in such
shares is increased by such amount for purposes of computing
the gain or loss on disposition of the shares for alternative
minimum tax purposes. If the optionee is required to pay an
alternative minimum tax, the amount of such tax which is
attributable to deferral preferences (including the ISO
adjustment) is allowable as a tax credit against the
optionee's regular tax liability (net of other non-refundable
credits) in subsequent years. To the extent the credit is not
used, it is carried forward. An optionee holding an ISO should
consult with the optionee's tax advisors concerning the
applicability and effect of the alternative minimum tax.
16
<PAGE>
REQUIRED VOTE
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present, in person or by proxy, at the
Annual Meeting and entitled to vote on this proposal. If the Plan is not
approved by shareholders on or before March 17, 2001, the Plan will terminate.
The Board of Directors recommends a vote "FOR" approval of the Plan.
PROPOSAL 3
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has unanimously approved and recommends to
shareholders that they consider and approve an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of the
Company's Common Stock, par value $.01 per share, from 10,000,000 shares to
20,000,000 shares. If the proposed amendment is approved, Article Fourth of the
Company's Articles of Incorporation would be amended to read as set forth in
Exhibit B attached to this proxy statement.
The Board of Directors recommends the proposed increase in the
authorized number of shares of Common Stock to insure that a sufficient number
of authorized and unissued shares is available (i) to raise additional capital
for the operations of the Company, (ii) for the financing of the acquisition of
other businesses and (iii) to make options and shares available to employees,
future non-employee directors and consultants of the Company as an incentive for
services provided to the Company.
Although it is not the purpose of the proposed amendment and the Board
is not aware of any pending or proposed effort to acquire control of the
Company, the authorized but unissued shares of Common Stock also could also be
used by the Board to discourage, delay or make more difficult a change in
control of the Company. This proposed amendment will not affect the rights of
existing holders of Common Stock except to the extent that further issuances of
Common Stock will reduce each existing shareholder's proportionate ownership.
If the proposed amendment is approved, the additional shares of Common
Stock, when issued, will have the same voting and other rights as the Company's
currently authorized Common Stock. The present holders of Common Stock do not
have preemptive rights to subscribe to additional shares of Common Stock. Such
shares may be issued by the Board of Directors without further shareholder
action except as required by law. The Company's present shareholders may be
diluted by any future issuances of Common Stock.
If the proposed amendment is adopted, there would be a total of an
additional 10,000,000 authorized but unissued shares of Common Stock. As of the
Record Date, the Company had 6,415,241 shares of Common Stock issued and
outstanding and 1,154,079 shares of Common Stock reserved for future issuance
upon exercise of certain options.
If approved by the shareholders, the proposed amendment will become
effective upon the filing of a Certificate of Amendment with the Secretary of
State of the State of New York amending the
17
<PAGE>
Company's Certificate of Incorporation as set forth in Exhibit B attached to
this Proxy Statement, which filing will be made as soon as reasonably
practicable after shareholder approval.
REQUIRED VOTE
Approval of the proposed amendment requires the affirmative vote of the
holders of a majority of all outstanding shares entitled to vote thereon at the
Annual Meeting. The Board of Directors recommends a vote FOR approval of the
proposed amendment.
VOTING REQUIREMENTS
Directors are elected by a plurality of the votes cast at the Meeting
(Proposal 1). The affirmative vote of a majority of the votes cast at the
meeting will be required to approve the Company's 2000 Stock Option Plan
(Proposal 2). The affirmative vote of a majority of all outstanding shares
entitled to vote will be required to approve and amendment to the Company's
Certificate of Incorporation (Proposal 3). Abstentions and broker non-votes with
respect to any matter are not considered as votes cast with respect to that
matter. THE BOARD OF DIRECTORS HAS UNANIMOUSLY RECOMMENDED A VOTE FOR EACH
NOMINEE FOR DIRECTOR NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND 3.
MISCELLANEOUS
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company not later than January
21, 2001 for inclusion in the Company's proxy statement and form of proxy for
that meeting.
OTHER MATTERS
Management does not intend to bring before the Meeting for action any
matters other than those specifically referred to above and is not aware of any
other matters which are proposed to be presented by others. If any other matters
or motions should properly come before the Meeting, the persons named in the
Proxy intend to vote thereon in accordance with their judgment on such matters
or motions, including any matters or motions dealing with the conduct of the
Meeting.
PROXIES
All shareholders are urged to fill in their choices with respect to the
matters to be voted on, sign and promptly return the enclosed Proxy.
By Order of the Board of Directors,
JOHN ROGERS
Secretary
May 26, 2000
18
<PAGE>
PROXY AMERICAN MEDICAL ALERT CORP. PROXY
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock of AMERICAN MEDICAL ALERT CORP.,
revoking all proxies heretofore given, hereby constitutes and appoints Howard M.
Siegel and John Rogers and each of them, Proxies, with full power of
substitution, for the undersigned and in the name, place and stead of the
undersigned, to vote all of the undersigned's shares of said stock, according to
the number of votes and with all the powers the undersigned would possess if
personally present, at the 2000 Annual Meeting of Shareholders of AMERICAN
MEDICAL ALERT CORP., to be held at the offices of Parker Chapin LLP, The
Chrysler Building, 405 Lexington Avenue, 9th Floor, New York, NY on Wednesday
June 28, 2000 at 10:30 A.M., Eastern Daylight Time, and at any adjournments or
postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement relating to the Meeting and hereby revokes any Proxy or
Proxies heretofore given.
Each properly executed Proxy will be voted in accordance with the
specifications made on the reverse side of this Proxy and in the discretion of
the Proxies on any other matter that may come before the meeting. Where no
choice is specified, this Proxy will be voted (i) FOR all listed nominees to
serve as directors, (ii) FOR the approval of the Company's 2000 Stock Option
Plan, and (iii) FOR the approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of common stock to
twenty million shares, and in accordance with their discretion on such other
matters as may properly come before the meeting.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ALL LISTED NOMINEES.
1. Election of FOR all nominees WITHHOLD AUTHORITY
five Directors listed (except as marked to the to vote for all
listed nominees contrary) [ ] below [ ]
Nominees: Howard M. Siegel, Leonard Herz, Peter Breitstone, Theodore Simon and
Frederic S. Siegel.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CIRCLE
THAT NOMINEE'S NAME IN THE LIST PROVIDED ABOVE.)
2. The approval of the Company's 2000 Stock Option Plan.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. The approval of an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of common stock to twenty million
shares.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
4. The proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting.
The shares represented by this Proxy will be voted in the manner
directed. In the absence of any direction, the shares will be voted FOR each
nominee listed above, (ii) FOR the approval of the Company's 2000 Stock Option
Plan and (iii) FOR the approval to increase the authorized number of common
shares to twenty million shares and in accordance with their discretion on such
other matters as may properly come before the Meeting.
Dated _____________________,2000
----------------------------------
----------------------------------
Signature(s)
(Signature(s) should conform to names as
registered. For jointly owned shares, each
owner should sign. When signing as attorney,
executor, administrator, trustee, guardian
or officer of a corporation, please identify
the capacity in which you are acting.)
<PAGE>
EXHIBIT A
---------
PROPOSED FORM OF THE 2000 STOCK OPTION PLAN
2000 STOCK OPTION PLAN
OF
AMERICAN MEDICAL ALERT CORP.
1. Purposes of the Plan. This stock option plan (the "Plan") is
intended to provide an incentive to employees (including directors and officers
who are employees), and to consultants and directors who are not employees, of
American Medical Alert Corp., a New York corporation (the "Company"), or any of
its Subsidiaries (as such term is defined in Paragraph 19), and to offer an
additional inducement in obtaining the services of such individuals. The Plan
provides for the grant of "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and nonqualified stock options which do not qualify as ISOs ("NQSOs"). The
Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.
2. Stock Subject to the Plan. Subject to the provisions of Paragraph
12, the aggregate number of shares of the Company's Common Stock, par value $.01
per share ("Common Stock"), for which options may be granted under the Plan
shall not exceed 1,250,000 shares. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of Directors"),
consist either in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock held in the treasury of the Company. Subject to
the provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable shall again become available for the
granting of options under the Plan. The Company shall at all times during the
term of the Plan reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of the Plan.
3. Administration of the Plan. The Plan will be administered by the
Board, or by a committee (the "Committee") consisting of two or more directors
appointed by the Board. Those administering the Plan shall be referred to herein
as the "Administrators." Notwithstanding the foregoing, if the Company is or
becomes a corporation issuing any class of common equity securities required to
be registered under section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to the extent necessary to preserve any deduction
under Section 162(m) of the Code or to comply with Rule 16b-3 promulgated under
the Exchange Act, or any successor rule ("Rule 16b-3"), any Committee appointed
by the Board to administer the Plan shall be comprised of two or more directors
each of whom shall be a "non-employee director," within the meaning of Rule
16b-3, and an "outside director," within the meaning of Treasury Regulation
Section 1.162-27(e)(3), and the delegation of powers to the Committee shall be
consistent with applicable laws and regulations (including, without limitation,
applicable state law and Rule 16b-3). Unless otherwise provided in the By-Laws
of
<PAGE>
the Company, by resolution of the Board of Directors or applicable law, a
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, and any acts approved in writing by all members without a meeting,
shall be the acts of the Committee.
Subject to the express provisions of the Plan, the Administrators shall
have the authority, in their sole discretion, to determine the persons who shall
be granted options; the times when they shall receive options; whether an option
granted to an employee shall be an ISO or a NQSO; the type (i.e., voting or
non-voting) and number of shares of Common Stock to be subject to each option;
the term of each option; the date each option shall become exercisable; whether
an option shall be exercisable in whole or in installments, and, if in
installments, the number of shares of Common Stock to be subject to each
installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any option or installment; whether shares
of Common Stock may be issued upon the exercise of an option as partly paid,
and, if so, the dates when future installments of the exercise price shall
become due and the amounts of such installments; the exercise price of each
option; the form of payment of the exercise price; the fair market value of a
share of Common Stock; whether and under what conditions to restrict the sale or
other disposition of the shares of Common Stock acquired upon the exercise of an
option and, if so, whether and under what conditions to waive any such
restriction; whether and under what conditions to subject the exercise of all or
any portion of an option to the fulfillment of certain restrictions or
contingencies as specified in the contract referred to in Paragraph 11 (the
"Contract"), including without limitation restrictions or contingencies relating
to (a) entering into a covenant not to compete with the Company, its Parent (if
any) (as such term is defined in Paragraph 19) and any Subsidiaries, (b)
financial objectives for the Company, any of its Subsidiaries, a division, a
product line or other category and/or (c) the period of continued employment of
the optionee with the Company or any of its Subsidiaries, and to determine
whether such restrictions or contingencies have been met; the amount, if any,
necessary to satisfy the obligation of the Company, any of its Subsidiaries or
any Parent to withhold taxes or other amounts; whether an optionee has a
Disability (as such term is defined in Paragraph 19); with the consent of the
optionee, to cancel or modify an option, provided, however, that the modified
provision is permitted to be included in an option granted under the Plan on the
date of the modification; provided, further, however, that in the case of a
modification (within the meaning of Section 424(h) of the Code) of an ISO, such
option as modified would be permitted to be granted on the date of such
modification under the terms of the Plan; to construe the respective Contracts
and the Plan; to prescribe, amend and rescind rules and regulations relating to
the Plan; to approve any provision of the Plan or any option granted under the
Plan or any amendment to either which, under Rule 16b-3 or Section 162(m) of the
Code, requires the approval of the Board of Directors, a committee of
non-employee directors or the shareholders, in order to be exempt under Section
16(b) of the Exchange Act (unless otherwise specifically provided herein) or to
preserve any deduction under Section 162(m) of the Code; and to make all other
determinations necessary or advisable for administering the Plan. Any
controversy or claim arising out of or relating to the Plan, any option granted
under the Plan or any Contract shall be determined unilaterally by the
Administrators in their sole discretion. The determinations of the
2
<PAGE>
Administrators on matters referred to in this Paragraph 3 shall be conclusive
and binding on all parties. No Administrator or former Administrator shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted hereunder.
4. Eligibility. The Administrators may from time to time, consistent
with the purposes of the Plan, grant options to such employees (including
officers and directors who are employees) of, or consultants to, the Company or
any of its Subsidiaries, and to such directors of the Company who, at the time
of grant, are not common law employees of the Company or of any of its
Subsidiaries, as the Administrators may determine in their sole discretion. Such
options granted shall cover such number of shares of Common Stock as the
Administrators may determine in their sole discretion; provided, however, that
if on the date of grant of an option, any class of common stock of the Company
(including without limitation the Common Stock) is required to be registered
under Section 12 of the Exchange Act, the maximum number of shares subject to
options that may be granted to any employee during any calendar year under the
Plan shall be 300,000 shares; provided, further, however, that the aggregate
market value (determined at the time the option is granted) of the shares of
Common Stock for which any eligible employee may be granted ISOs under the Plan
or any other plan of the Company, or of a Parent or a Subsidiary of the Company,
which are exercisable for the first time by such optionee during any calendar
year shall not exceed $100,000. The $100,000 ISO limitation amount shall be
applied by taking ISOs into account in the order in which they were granted. Any
option (or portion thereof) granted in excess of such ISO limitation amount
shall be treated as a NQSO to the extent of such excess.
5. Exercise Price. The exercise price of the shares of Common Stock
under each option shall be determined by the Administrators in their sole
discretion; provided, however, that the exercise price of an ISO shall not be
less than the fair market value of the Common Stock subject to such option on
the date of grant; and provided, further, however, that if, at the time an ISO
is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
exercise price of such ISO shall not be less than 110% of the fair market value
of the Common Stock subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of the
Common Stock on such day as reported by such exchange or on a consolidated tape
reflecting transactions on such exchange, (b) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is
quoted on the Nasdaq Stock Market ("Nasdaq"), and (i) if actual sales price
information is available with respect to the Common Stock, the average of the
highest and lowest sales prices per share of the Common Stock on such day on
Nasdaq, or (ii) if such information is not available, the average of the highest
bid and the lowest asked prices per share for the Common Stock on such day on
Nasdaq, or (c) if the principal market for the Common Stock is not a national
securities exchange
3
<PAGE>
and the Common Stock is not quoted on Nasdaq, the average of the highest bid and
lowest asked prices per share for the Common Stock on such day as reported on
the OTC Bulletin Board Service or by National Quotation Bureau, Incorporated or
a comparable service; provided, however, that if clauses (a), (b) and (c) of
this Paragraph 5 are all inapplicable because the Company's Common Stock is not
publicly traded, or if no trades have been made or no quotes are available for
such day, the fair market value of a share of Common Stock shall be determined
by the Committee by any method consistent with any applicable regulations
adopted by the Treasury Department relating to stock options.
6. Term. Each option granted pursuant to the Plan shall be for such
term as is established by the Administrators, in their sole discretion, at or
before the time such option is granted; provided, however, that the term of each
option granted pursuant to the Plan shall be for a period not exceeding 10 years
from the date of grant thereof, and provided further, that if, at the time an
ISO is granted, the optionee owns (or is deemed to own under Section 424(d) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, of any of its Subsidiaries or of a Parent,
the term of the ISO shall be for a period not exceeding five years from the date
of grant. Options shall be subject to earlier termination as hereinafter
provided.
7. Exercise. An option (or any installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the Company at its
principal office stating which option is being exercised, specifying the number
of shares of Common Stock as to which such option is being exercised and
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the applicable Contract permits installment payments)
(a) in cash and/or by certified check, (b) with the authorization of the
Committee, with previously acquired shares of Common Stock, (c) with the
authorization of the Committee, by the Company withholding from the purchased
shares an amount having an aggregate fair market value (determined in accordance
with Paragraph 5), on the date of exercise, equal to the aggregate exercise
price of all options being exercised, or (d) some combination thereof; provided,
however, that in no case may shares be tendered or withheld if such tender or
withholding would require the Company to incur a charge against its earnings for
financial accounting purposes. The Company shall not be required to issue any
shares of Common Stock pursuant to the exercise of any option until all required
payments with respect thereto, including payments for any required withholding
amounts, have been made.
The Administrators may, in their sole discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of the optionee's irrevocable instructions to a
broker acceptable to the Administrators to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
4
<PAGE>
An optionee shall not have the rights of a shareholder with respect to
such shares of Common Stock to be received upon the exercise of an option until
the date of issuance of a stock certificate to the optionee for such shares or,
in the case of uncertificated shares, until the date an entry is made on the
books of the Company's transfer agent representing such shares; provided,
however, that until such stock certificate is issued or until such book entry is
made, any optionee using previously acquired shares of Common Stock in payment
of an option exercise price shall continue to have the rights of a shareholder
with respect to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. Termination of Relationship. Except as may otherwise be expressly
provided in the applicable Contract, any optionee whose employment or consulting
relationship with the Company (and its Parent and Subsidiaries) has terminated
for any reason other than the death or Disability of the optionee may exercise
any option granted to the optionee as an employee or consultant, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the option would otherwise have expired; provided, however, that if such
relationship is terminated either (a) for Cause (as defined in Paragraph 19), or
(b) without the consent of the Company, such option shall terminate immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military leave,
sick leave or other bona fide leave of absence shall continue to be considered
an employee for purposes of the Plan during such leave if the period of the
leave does not exceed 90 days, or, if longer, so long as the individual's right
to reemployment with the Company, any of its Subsidiaries or a Parent is
guaranteed either by statute or by contract. If the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed by statute or
by contract, the employment relationship shall be deemed to have terminated on
the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, an optionee whose directorship with the Company has terminated for any
reason other than the optionee's death or Disability may exercise the options
granted to the optionee as a director who was not an employee of or consultant
to the Company or any of its Subsidiaries, to the extent exercisable on the date
of such termination, at any time within three months after the date of
termination, but not thereafter and in no event after the date the option would
otherwise have expired; provided, however, that if the optionee's directorship
is terminated for Cause, such option shall terminate immediately.
Nothing in the Plan or in any option granted under the Plan shall
confer on any person any right to continue in the employ or as a consultant of
the Company, its Parent or any of its Subsidiaries, or as a director of the
Company, or interfere in any way with any right of the Company, its Parent or
any of its
5
<PAGE>
Subsidiaries to terminate such relationship at any time for any reason
whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. Death or Disability of an Optionee. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is employed by, or a consultant to, the Company, its Parent or any of its
Subsidiaries, (b) within three months after the termination of the optionee's
employment or consulting relationship with the Company, its Parent and its
Subsidiaries (unless such termination was for Cause or without the consent of
the Company) or (c) within one year following the termination of such employment
or consulting relationship by reason of the optionee's Disability, the options
granted to the optionee as an employee of, or consultant to, the Company or any
of its Subsidiaries, may be exercised, to the extent exercisable on the date of
the optionee's death, by the optionee's Legal Representative (as such term is
defined in Paragraph 19), at any time within one year after death, but not
thereafter and in no event after the date the option would otherwise have
expired. Except as may otherwise be expressly provided in the applicable
Contract, any optionee whose employment or consulting relationship with the
Company, its Parent and its Subsidiaries has terminated by reason of the
optionee's Disability may exercise such options, to the extent exercisable upon
the effective date of such termination, at any time within one year after such
date, but not thereafter and in no event after the date the option would
otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an optionee dies (a) while the optionee is a director of the
Company, (b) within three months after the termination of the optionee's
directorship with the Company (unless such termination was for Cause) or (c)
within one year after the termination of the optionee's directorship by reason
of the optionee's Disability, the options granted to the optionee as a director
who was not an employee of or consultant to the Company or any of its
Subsidiaries, may be exercised, to the extent exercisable on the date of the
optionee's death, by the optionee's Legal Representative at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired. Except as may otherwise be expressly provided in
the applicable Contract, an optionee whose directorship with the Company has
terminated by reason of Disability, may exercise such options, to the extent
exercisable on the effective date of such termination, at any time within one
year after such date, but not thereafter and in no event after the date the
option would otherwise have expired.
10. Compliance with Securities Laws. It is a condition to the exercise
of any option that either (a) a Registration Statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.
6
<PAGE>
The Administrators may require, in their sole discretion, as a
condition to the grant or exercise of an option, that the optionee execute and
deliver to the Company the optionee's representations and warranties, in form,
substance and scope satisfactory to the Administrators, which the Administrators
determine is necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirements, including without limitation,
that (a) the shares of Common Stock to be issued upon exercise of the option are
being acquired by the optionee for the optionee's own account, for investment
only and not with a view to the resale or distribution thereof, and (b) any
subsequent resale or distribution of shares of Common Stock by such optionee
will be made only pursuant to (i) a Registration Statement under the Securities
Act which is effective and current with respect to the shares of Common Stock
being sold, or (ii) a specific exemption from the registration requirements of
the Securities Act, but in claiming such exemption, the optionee, prior to any
offer of sale or sale of such shares of Common Stock, shall provide the Company
with a favorable written opinion of counsel satisfactory to the Company, in
form, substance and scope satisfactory to the Company, as to the applicability
of such exemption to the proposed sale or distribution.
In addition, if at any time the Administrators shall determine that the
listing or qualification of the shares of Common Stock subject to such option on
any securities exchange, Nasdaq or under any applicable law, or that the consent
or approval of any governmental agency or regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option or
the issuance of shares of Common Stock thereunder, such option may not be
granted or exercised in whole or in part, as the case may be, unless such
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Administrators.
11. Stock Option Contracts. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee. Such Contract shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Administrators in their sole
discretion. The terms of each option and Contract need not be identical.
12. Adjustments upon Changes in Common Stock. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger in which the
Company is the surviving corporation, spinoff, split-up, combination or exchange
of shares or the like which results in a change in the number or kind of shares
of Common Stock which are outstanding immediately prior to such event, the
aggregate number and kind of shares subject to the Plan, the aggregate number
and kind of shares subject to each outstanding option and the exercise price
thereof, and the maximum number of shares subject to options that may be granted
to any employee in any calendar year, shall be appropriately adjusted by the
Board of Directors, whose determination shall be conclusive and binding on all
parties. Such adjustment may provide for the elimination of fractional shares
that might otherwise be subject to options without payment therefor.
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<PAGE>
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Paragraph 12 if such adjustment (a) would cause the Plan to fail to comply with
Section 422 of the Code or with Rule 16b-3 of the Exchange Act (if applicable to
such option), or (b) would be considered as the adoption of a new plan requiring
shareholder approval.
In the event of a proposed dissolution or liquidation of the Company,
or in the event of a proposed sale of all or substantially all of the assets of
the Company, or the merger of the Company with or into another corporation, the
Board of Directors of the Company shall, as to outstanding options, either (a)
make appropriate provision for the protection of any such outstanding options by
the substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to one share of Common Stock of the Company; provided that
the excess of the aggregate fair market value of the shares subject to the
options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such options immediately before such substitution over the purchase
price thereof, or (b) upon written notice to an optionee, provide that all
unexercised options must be exercised within a specified number of days of the
date of such notice or they will be terminated. In any such case, the Board of
Directors may, in its discretion, advance the lapse of any waiting or
installment periods and exercise dates.
13. Amendments and Termination of the Plan. The Plan was adopted by the
Board of Directors on March 17, 2000. No option may be granted under the Plan
after March 17, 2010. The Board of Directors, without further approval of the
Company's shareholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, or to comply
with the provisions of Rule 16b-3 or Section 162(m) of the Code or any change in
applicable laws or regulations, ruling or interpretation of any governmental
agency or regulatory body; provided, however, that no amendment shall be
effective, without the requisite prior or subsequent shareholder approval, which
would (a) except as contemplated in Paragraph 12, increase the maximum number of
shares of Common Stock for which options may be granted under the Plan or change
the maximum number of shares for which options may be granted to employees in
any calendar year, (b) change the eligibility requirements for individuals
entitled to receive options hereunder, or (c) make any change for which
applicable law or any governmental agency or regulatory body requires
shareholder approval. No termination, suspension or amendment of the Plan shall
adversely affect the rights of an optionee under any option granted under the
Plan without such optionee's consent. The power of the Administrators to
construe and administer any option granted under the Plan prior to the
termination or suspension of the Plan shall continue after such termination or
during such suspension.
14. Non-Transferability. No option granted under the Plan shall be
transferable other than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the optionee, only by the
optionee or the optionee's Legal
8
<PAGE>
Representatives. Except to the extent provided above, options may not be
assigned, transferred, pledged, hypothecated or disposed of in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process, and any such attempted assignment, transfer,
pledge, hypothecation or disposition shall be null and void ab initio and of no
force or effect.
15. Withholding Taxes. The Company, or its Subsidiary or Parent, as
applicable, may withhold (a) cash or (b) with the consent of the Administrators
(in the Contract or otherwise), shares of Common Stock to be issued upon
exercise of an option or a combination of cash and shares, having an aggregate
fair market value (determined in accordance with Paragraph 5) equal to the
amount which the Administrators determine is necessary to satisfy the obligation
of the Company, a Subsidiary or Parent to withhold Federal, state and local
income taxes or other amounts incurred by reason of the grant, vesting, exercise
or disposition of an option or the disposition of the underlying shares of
Common Stock. Alternatively, the Company may require the optionee to pay to the
Company such amount, in cash, promptly upon demand.
16. Legends; Payment of Expenses. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued upon exercise
of an option under the Plan and may issue such "stop transfer" instructions to
its transfer agent in respect of such shares as it determines, in its sole
discretion, to be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act,
applicable state securities laws or other legal requirements, (b) implement the
provisions of the Plan or any agreement between the Company and the optionee
with respect to such shares of Common Stock, or (c) permit the Company to
determine the occurrence of a "disqualifying disposition," as described in
Section 421(b) of the Code, of the shares of Common Stock transferred upon the
exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.
17. Use of Proceeds. The cash proceeds to be received upon the exercise
of an option under the Plan shall be added to the general funds of the Company
and used for such corporate purposes as the Board of Directors may determine, in
its sole discretion.
18. Substitutions and Assumptions of Options of Certain Constituent
Corporations. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the shareholders, substitute new
options for prior options of a Constituent Corporation (as such term is defined
in Paragraph 19) or assume the prior options of such Constituent Corporation.
9
<PAGE>
19. Definitions.
(a) "Cause", in connection with the termination of an optionee, shall
mean (i) "cause," as such term (or any similar term, such as "with cause") is
defined in any employment, consulting or other applicable agreement for services
between the Company and such optionee, or (ii) in the absence of such an
agreement, "cause" as such term is defined in the Contract executed by the
Company and such optionee pursuant to Paragraph 11, or (iii) in the absence of
both of the foregoing, (A) indictment of such optionee for any illegal conduct,
(B) failure of such optionee to adequately perform any of the optionee's duties
and responsibilities in any capacity held with the Company, any of its
Subsidiaries or any Parent (other than any such failure resulting solely from
such optionee's physical or mental incapacity), (C) the commission of any act or
failure to act by such optionee that involves moral turpitude, dishonesty,
theft, destruction of property, fraud, embezzlement or unethical business
conduct, or that is otherwise injurious to the Company, any of its Subsidiaries
or any Parent or any other affiliate of the Company (or its or their respective
employees), whether financially or otherwise, (D) any violation by such optionee
of any Company rule or policy, or (E) any violation by such optionee of the
requirements of such Contract, any other contract or agreement between the
Company and such optionee or this Plan (as in effect from time to time); in each
case, with respect to subsections (A) through (E), as determined by the Board of
Directors.
(b) "Constituent Corporation" shall mean any corporation which engages
with the Company, its Parent or any Subsidiary in a transaction to which Section
424(a) of the Code applies (or would apply if the option assumed or substituted
were an ISO), or any Parent or any Subsidiary of such corporation.
(c) "Disability" shall mean a permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
(d) "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under the
Plan.
(e) "Parent" shall mean a "parent corporation" within the meaning of
Section 424(e) of the Code.
(f) "Subsidiary" shall mean a "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
20. Governing Law. The Plan, such options as may be granted hereunder,
the Contracts and all related matters shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to conflict
or choice of law provisions.
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Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
21. Partial Invalidity. The invalidity, illegality or unenforceability
of any provision in the Plan, any option or Contract shall not affect the
validity, legality or enforceability of any other provision, all of which shall
be valid, legal and enforceable to the fullest extent permitted by applicable
law.
22. Shareholder Approval. The Plan shall be subject to approval by a
majority of the votes present in person and by proxy entitled to vote hereon at
a duly held meeting of the Company's shareholders at which a quorum is present.
No options granted hereunder may be exercised prior to such approval, provided,
however, that the date of grant of any option shall be determined as if the Plan
had not been subject to such approval. Notwithstanding the foregoing, if the
Plan is not approved by a vote of the shareholders of the Company on or before
March 17, 2001, the Plan and any options granted hereunder shall terminate.
11
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EXHIBIT B
---------
PROPOSED FORM OF AMENDMENT TO CERTIFICATE OF INCORPORATION
INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN MEDICAL ALERT CORP.
(UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW)
1. The name of the corporation is American Medical Alert Corp.
2. The Certificate of Incorporation of the corporation was filed by the
Department of State on January 14, 1981.
3. A Certificate of Amendment of the Certificate of Incorporation was
filed in the office of the Department of State at Albany, New York on each of
August 12, 1981, December 1, 1983 and July 2, 1997.
4. The certificate of incorporation of the corporation is hereby
amended by striking out the first sentence of Article Fourth thereof and by
substituting in lieu of said first sentence of Article Fourth the following new
first sentence of Article Forth:
"The total number of shares of stock which the corporation shall have
authority to issue shall be 21,000,000 of which 20,000,000 shall be
common stock, par value $.01 per share, and 1,000,000 shares shall be
preferred stock, par value $.01 per share."
5. The amendment to the corporation's Certificate of Incorporation was
authorized by vote of the board of directors followed by vote of the holders of
a majority of all the outstanding shares of Common Stock of the corporation.
IN WITNESS WHEREOF, we have executed this certificate this ___ day of
June, 2000, and do hereby affirm under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
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Howard M. Siegel John Rogers
Chairman and CEO Secretary
