AMERICAN MEDICAL ALERT CORP. STOCK PURCHASE AGREEMENT
Exhibit
10.1
2005
STOCK INCENTIVE PLAN
STOCK
PURCHASE AGREEMENT, dated as of December 31, 2007, by and between American
Medical Alert Corp., a New York corporation (the "Company"),
and
Xxxxxxxx Xxxxxx, having an address at _____________________
(the "Holder").
W
I T N E S S E T H:
WHEREAS,
the Company has adopted the 2005 Stock Incentive Plan (the "Plan");
WHEREAS,
the Company regards Holder as a valuable contributor to the Company and has
determined that it would be in the interest of the Company and the shareholders
of the Company to grant the shares provided for in this Agreement to Holder
in
consideration of the services he has or will perform for the
Company;
WHEREAS,
pursuant to the Plan, the Administrator has determined that the Holder is
entitled to a grant of shares, subject to the terms of the Plan and this
Agreement (the defined terms in such Plan shall, except as otherwise provided
herein, also be applicable to such terms as utilized herein); and
WHEREAS,
each party hereto desires to enter into this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Award
of Restricted Shares.
(a)
Subject to the restrictions, terms and conditions of this Agreement, the Company
hereby awards to the Holder Twenty Two Thousand (22,000) shares of Common Stock
(the "Restricted
Shares")
in
consideration of services actually rendered and to be rendered to the Company
by
Holder. Such Restricted Shares shall be subject to the Repurchase Right with
respect to Unvested Shares (as hereinafter defined) as set forth in Section
4
herein. The Company and Holder acknowledge and agree that the value of the
services actually rendered to the Company prior to the date hereof by the Holder
as consideration for the issuance of the Restricted Shares exceeds
$220.00.
(b) The
Restricted Shares, when issued pursuant to the provisions hereof, shall
constitute issued and outstanding shares of Common Stock for all corporate
purposes. Subject to the restrictions set forth herein, the Holder will have
the
right to exercise all rights, powers and privileges of a holder of Common Stock
with respect to the Restricted Shares, including the right to vote, receive
stock or cash dividends (but subject to the Repurchase Right with respect to
Unvested Shares), participate in stock splits or other recapitalizations and
exchange such shares in a merger, consolidation or other reorganization. The
term "Restricted Shares," in addition to the shares received pursuant to this
Agreement, also refers to all securities received in replacement of the
Restricted Shares, as a stock dividend or as a result of any stock split,
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to Holder is entitled
by reason of Holder’s ownership of the Restricted Shares.
(c) The
Company shall hold the certificates representing any Restricted Shares which
are
subject to the Repurchase Right (as defined below) in escrow, provided that
any
Restricted Shares held in escrow shall be released from escrow and delivered
to
Holder as and when such shares are no longer subject to the Repurchase Right.
In
addition, Holder shall execute an assignment, in the form attached hereto as
Exhibit
A,
with
respect to the Restricted Shares.
2. Legends.
(a) The
Shares (as hereinafter defined) shall be represented by a stock certificate
or
certificates registered in the name of the Holder.
(b) From
and
after the date of original issuance, stock certificates representing the
Restricted Shares shall bear a legend in substantially the following form:
"THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE SUBJECT TO CERTAIN
REPURCHASE RIGHTS GRANTED TO AMERICAN MEDICAL ALERT CORP. (“COMPANY”) AND,
ACCORDINGLY, MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY
MANNER DISPOSED OF EXCEPT IN CONFORMITY WITH THE TERMS OF THE STOCK PURCHASE
AGREEMENT, DATED DECEMBER 31, 2007, BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). A COPY
OF
THE STOCK PURCHASE AGREEMENT IS MAINTAINED AT THE COMPANY'S PRINCIPAL CORPORATE
OFFICES."
3. Transfer
Restrictions.
(a) Restriction
on Transfer.
Except
for any Permitted Transfer, Holder shall not transfer, assign, encumber or
otherwise dispose of any of the Restricted Shares which are subject to the
Repurchase Right.
(b) Transferee
Objections.
Each
Person (other than the Company) to whom the Restricted Shares are transferred
by
means of a Permitted Transfer must, as a condition precedent to the validity
of
such transfer, acknowledge in writing to the Company that such Person is bound
by the provisions of this Agreement and that the transferred shares are subject
to the Repurchase Right.
2
4. Repurchase
Right.
(a) Grant.
The
Company is hereby granted the right (the "Repurchase
Right"),
exercisable at any time during the ninety (90)-day period following the date
Holder ceases for any reason to remain in Service, to repurchase at the Per
Share Purchase Price all or any portion of the Restricted Shares in which,
at
the time of his cessation of Service, Holder is not vested in accordance with
the Vesting Schedule (such shares to be hereinafter referred to as the
"Unvested
Shares").
(b) Exercise
of the Repurchase Right.
The
Repurchase Right shall be exercisable by written notice delivered to each Owner
of the Unvested Shares prior to the expiration of the ninety (90)-day exercise
period. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date
to
be not more than thirty (30) days after the date of such notice. In order to
effect any such repurchase, the Company shall pay to Owner, in cash or cash
equivalents, an amount equal to the Per Share Purchase Price multiplied by
the
number of Unvested Shares which are to be repurchased from Owner.
(c) Termination
of the Repurchase Right.
The
Repurchase Right shall terminate with respect to any Unvested Shares for which
it is not timely exercised under Paragraph 4(b). In addition, the Repurchase
Right shall terminate and cease to be exercisable with respect to any and all
Restricted Shares in which Holder vests in accordance with the Vesting
Schedule.
(d) Recapitalization.
Any
new, substituted or additional securities or other property (including cash)
paid as a dividend or otherwise) which is by reason of any Recapitalization
distributed with respect to or in exchange for the Restricted Shares shall
be
immediately subject to the Repurchase Right, but only to the extent the
Restricted Shares are at the time covered by such right. Appropriate adjustments
to reflect such distribution shall be made to the number and/or class of
Restricted Shares subject to this Agreement and to the Per Share Purchase Price
to be paid upon the exercise of the Repurchase Right in order to reflect the
effect of any such Recapitalization upon the Company's capital structure;
provided,
however,
that
the aggregate of the Per Share Purchase Price applicable to all Unvested Shares
shall remain the same. Any securities or other property (including cash)
distributed with respect to the Restricted Shares as a dividend or otherwise
which are subject to the Repurchase Right shall be held in escrow.
(e) Special
Tax Election.
The
grant of the Restricted Shares may result in adverse tax consequences which
may
be avoided or mitigated by filing an election under Code Section 83(b). Such
election must be filed within thirty (30) days after the date of this Agreement.
The form for making the Code Section 83(b) election is set forth in Exhibit
B
hereto.
HOLDER SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX
CONSEQUENCES OF ACQUIRING THE RESTRICTED SHARES AND THE ADVANTAGES AND
DISADVANTAGES OF FILING THE CODE SECTION 83(B) ELECTION. HOLDER ACKNOWLEDGES
THAT IT IS HOLDER'S SOLE RESPONSIBILITY, AND NOT THE COMPANY'S RESPONSIBILITY,
TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF HOLDER REQUESTS
THAT
THE COMPANY OR ITS REPRESENTATIVES FILE AN ELECTION UNDER CODE SECTION 83(B)
ON
HOLDER’S BEHALF.
3
5. Additional
Stock Grants.
In
addition to the grant of the Restricted Shares, and subject to the terms of
the
Employment Agreement and this Agreement, the Company shall xxxxx Xxxxxx the
following shares of Common Stock (together with the Restricted Shares, the
"Shares"):
(a) Up
to
12,000 shares over the Employment Period (as defined in the Employment
Agreement) based on the Company's Health and Safety Monitoring Systems
(“HSMS”)
segment’s earnings before deduction of interest and taxes ("EBIT"),
as
determined based on the Company's audited financial statements for the
applicable fiscal year, meeting or exceeding the following targets:
|
For
2007 - 2010
|
|
|
HSMS
EBIT as a percentage of HSMS
|
|
|
revenues
for the applicable fiscal year
|
#
of Shares
|
|
5.0
-
5.99%
|
500
shares
|
|
6.0
-
6.99%
|
1,000
shares
|
|
7.0
-
7.99%
|
1,500
shares
|
|
8.0
-
8.99%
|
2,000
shares
|
|
9.0
-
9.99%
|
2,500
shares
|
|
10.0%
-
or more
|
3,000
shares; and
|
It
is
agreed and understood that the above performance targets were arrived at
based
on the Company’s method of calculating EBIT by segment for the fiscal year ended
December 31, 2005 (the “2005
Methodology”).
In
the event the Company uses a method of calculating EBIT by segment in the
future
which is different than the 2005 Methodology, the Company shall have the
option
to either (i) use the 2005 Methodology for the purposes hereof, in which
case,
the above performance targets shall be used, or (ii) use an EBIT by segment
calculation consistent with its year end financial statements, in which case,
the above performance targets shall be appropriately adjusted in a manner
which
would not cause either a benefit to the Employee or detract from Employee’s
rights hereunder, in comparison to the use of the 2005
Methodology.
(b) Up
to
34,000 shares over the Employment Period based on the Company's EBIT, as
determined based on the Company's audited financial statements for the
applicable fiscal year, meeting or exceeding the following targets:
|
For
2007 - 2010
|
|
|
EBIT
growth over prior fiscal year
|
#
of Shares
|
|
15.0
-
17.49%
|
3,000
shares
|
|
17.5
-
19.99%
|
4,000
shares
|
|
20.0
-
22.49%
|
5,250
shares
|
|
22.5
-
24.99%
|
6,500
shares
|
|
25.0%
-
or more
|
8,500
shares
|
(c) To
the
extent that the number of shares of Common Stock earned by Holder pursuant
to
subparagraphs 5(a) and 5(b) above exceeds a total of 37,500 shares of Common
Stock, the grant of such shares of Common Stock shall be subject to obtaining
shareholder approval. If such shareholder approval is not obtained prior
to the
time any such shares are earned by Holder, then Holder shall not be entitled
to
and shall not be granted any such shares. Any shares to be issued under
subparagraphs 5(a) or 5(b) above shall be issued on April 15 of the year
following the fiscal year for which the shares were earned.
(d) All
shares to be issued pursuant to this Section 5 shall be issued out of the Plan,
except that to the extent that the shares to be issued under subparagraphs
5(a)
and 5(b) above exceed 37,500 shares of Common Stock, such shares to be issued
in
excess of 37,500 shares of Common Stock shall be issued as a separate individual
grant to Employee and not out of the Plan.
4
6. Securities
Law Compliance.
(a) Registration
of Securities. The Shares, to the extent issued out of the Plan, have been
registered under the Act and are being issued to Holder pursuant to a Form
S-8
registration statement.
(b) Restrictions
on Disposition of Restricted Shares. Holder shall make no disposition of the
Restricted Shares (other than a Permitted Transfer) unless and until there
is
compliance with all of the following requirements:
(i)
Holder shall have provided the Company with a written summary of the terms
and
conditions of the proposed disposition of the Restricted Shares;
and
(ii)
Holder shall have complied with all requirements of this Agreement applicable
to
the disposition of the Restricted Shares.
(c) In
addition, Holder shall make no disposition of the Shares unless Holder shall
have provided the Company with written assurances, in form and substance
satisfactory to the Company, that (a) the proposed disposition does not require
registration of the Shares under the 1933 Act or (b) all appropriate action
necessary for compliance with the registration requirements of the 1933 Act
(including a Form S-3 reoffer prospectus, as applicable) or any exemption from
registration available under the 1933 Act (including Rule 144) has been
taken.
(d) The
Company shall not be required (i) to transfer on its books any Shares which
have
been sold or transferred in violation of the provisions of this Agreement or
(ii) to treat as the owner of the Shares, or otherwise to accord voting,
dividend or liquidation rights to, any transferee to whom the Shares have been
transferred in contravention of this Agreement.
7. No
Right to Employment.
Nothing
in this Agreement shall be construed to give the Holder any right to be awarded
any additional awards of shares or options under the Plan, or to confer on
the
Holder any right to continue in the employ of the Company or to be evidence
of
any agreement or understanding, express or implied, that the Company or any
of
its Subsidiaries or Parent will employ the Holder in any particular position
or
at any particular rate of remuneration, or for any particular period of time
or
to interfere in any way with or otherwise restrict in any way the rights of
the
Company or of the Holder, other as set forth in the Employment Agreement.
8. Amounts
Not Salary or Bonus.
The
Holder agrees that the award of the Shares hereunder is special incentive
compensation and that it will not be taken into account as "salary" or
"compensation" or "bonus" in determining the amount of any payment under any
pension, retirement, profit-sharing, savings or stock ownership plan of the
Company, its Parent or any of its Subsidiaries, unless expressly provided
pursuant to the terms of such plan.
5
9. Forfeiture
for Violation of Employment Agreement.
In the
event that Holder violates any of his Confidentiality or Non-Competition
obligations arising under the Employment Agreement or other agreement with
the
Company, then all profits or gains realized by Holder as a result of the sale
of
any of the Shares shall be forfeited and returned to the Company.
10. Amendments.
Except
as otherwise provided in the Plan, this Agreement may only be amended or
modified by written agreement of the Company and the Holder.
11. Successor
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the Company and
its
successors and assigns, and shall be binding upon and inure to the benefit
of
the Holder and his legatees, distributees and Legal Representatives. The Company
may assign the Repurchase Right to any Person selected by the Board, including
(without limitation) one or more shareholders of the Company.
12. Governing
Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New York, other than those laws which
would defer to the substantive laws of another jurisdiction.
13. Shares
Award Subject to Plan.
By
entering into this Agreement, the Holder agrees and acknowledges that the Holder
has received and read a copy of the Plan. The Shares are subject to the Plan.
The terms and provisions of the Plan as it may be amended from time to time
are
hereby incorporated herein by reference. Capitalized terms used herein and
not
otherwise defined herein shall have the meaning provided for such terms in
the
Plan. In the event of a conflict between any term or provision contained herein
and a term or provision of the Plan, the applicable terms and provisions of
the
Plan will govern and prevail.
14. Signature
in Counterparts.
This
Agreement may be signed in one or more counterparts and delivered by facsimile,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
15. Definitions.
As used
herein, the following definitions shall apply:
(a) "Agreement"
shall
mean this Stock Purchase Agreement.
(b) "Board"
shall
mean the Company's Board of Directors.
(c) "Change
in Control"
shall
have the same meaning as defined in the Employment Agreement.
(d) "Code"
shall
mean the Internal Revenue Code of 1986, as amended.
(e) "Common
Stock"
shall
mean the Company's common stock, $.01 par value per share, as well as all
securities received in replacement of the Company's common stock, as a stock
dividend, or as a result of any stock split, recapitalization, merger,
reorganization, exchange or the like, and all new, substituted or additional
securities or other properties that a holder of common stock is entitled to
by
reason of the holder's ownership of the common stock.
6
(f) "1933
Act"
shall
mean the Securities Act of 1933, as amended.
(g) "Employment
Agreement"
shall
mean that certain Employment Agreement, dated as of May 24, 2007, between the
Company and Holder.
(h) "Owner"
shall
mean Holder and all subsequent holders of the Restricted Shares who derive
their
chain of ownership through a Permitted Transfer from Holder.
(i) "Permitted
Transfer"
shall
mean (i) a gratuitous transfer of the Restricted Shares to any “family member”
as such term is defined in Section 1(a)(5) of the General Instructions to Form
S-8 under the 1933 Act, provided, and provided only, that Holder obtains the
Company's prior written consent to such transfer, or (ii) a transfer of title
to
the Restricted Shares effected pursuant to Holder's will or the laws of descent
and distribution following Holder's death.
(j) "Person"
shall
mean an individual, a partnership, a corporation, a trust, a joint venture,
a
limited liability company, an unincorporated organization, a government or
any
department or agency thereof or any other entity.
(k) "Per
Share Purchase Price"
shall
mean $.01.
(l)
"Recapitalization"
shall
mean any stock split, stock dividend, recapitalization, combination of shares,
merger, consolidation, exchange of shares or other change affecting the
Company's outstanding Common Stock as a class.
(m) "SEC"
shall
mean the Securities and Exchange Commission.
(n) "Service"
shall
mean Holder's provision of services to the Company (or a Parent or Subsidiary
of
the Company) pursuant to the Employment Agreement.
(o) "Vesting
Schedule"
shall
mean the vesting schedule specified in Section 4(b) in the Employment Agreement,
pursuant to which Holder is to vest in the Restricted Shares in annual
installments over the period of Service, subject to accelerated vesting under
certain circumstances in connection with a Change in Control.
16. Notices.
Any
notice required to be given under this Agreement shall be in writing and shall
be deemed effective upon personal delivery or upon delivery through the U.
S.
mail, registered or certified, postage prepaid and properly addressed to the
party entitled to such notice at the address indicated below such party's
signature line on this Agreement or at such other address as such party may
designate by ten (10) days' advance written notice under this paragraph to
all
other parties to this Agreement.
7
17. No
Waiver.
The
failure of the Company in any instance to exercise the Repurchase Right shall
not constitute a waiver of any other repurchase rights that may subsequently
arise under the provisions of this Agreement or any other agreement between
the
Company and Holder. No waiver of any breach or condition of this Agreement
shall
be deemed to be a waiver of any other or subsequent breach or condition, whether
of like or different nature.
18. Cancellation
of Unvested Shares.
If the
Company shall make available, at the time and place and in the amount and form
provided in this Agreement, the consideration for the Unvested Shares to be
repurchased in accordance with the provisions of this Agreement, then from
and
after such time the person from whom such shares are repurchased shall no longer
have any rights as a holder of such shares (other than the right to receive
payment of such consideration in accordance with this Agreement). Such shares
shall be deemed purchased in accordance with the applicable provisions hereof,
and the Company shall be deemed the owner and holder of such shares, whether
or
not the certificates evidencing such shares have been delivered as required
by
this Agreement.
19. Holder
Undertaking.
Holder
hereby agrees to take whatever additional action and execute whatever additional
documents the Company may deem necessary or advisable in order to carry out
or
effect one or more of the obligations or restrictions imposed on either Holder
or the Restricted Shares pursuant to the provisions of this
Agreement.
8
IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
by
its agent thereunto duly authorized, and the Holder has hereunto set his hand,
all as of the date first above written.
|
By:
/s/
Xxxx Rhian
Name:
Xxxx Rhian
Title:
President and Chief Executive Officer
|
|
|
HOLDER
/s/
Xxxxxxxx Xxxxxx
Xxxxxxxx
Xxxxxx
|
9
EXHIBIT
A
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR
VALUE
RECEIVED ___________________ hereby sell(s), assign(s)and transfer(s) unto
American Medical Alert Corp. (the "Company"), _________________ (__________)
shares of the Common Stock of the Company standing in his or her name on the
books of the Company represented by Certificate No. ___________________ herewith
and do(es) hereby irrevocably constitute and appoint ________________ Attorney
to transfer the said stock on the books of the Company with full power of
substitution in the premises.
Date:
_________________________
Signature:
_________________________
INSTRUCTION:
Please do not fill in any blanks other than the signature line.
Please
sign exactly as you would like your name to appear on the issued
stock
certificate.
The purpose of this assignment is to enable the Company to exercise
the
Repurchase Right without requiring additional signatures on the part
of
Employee.
10
EXHIBIT
B
SECTION
83(B) ELECTION
This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1)
The
taxpayer who performed the services is:
Name:
Address:
Taxpayer
Ident. No.:
(2)
The
property with respect to which the election is being made is ____________ shares
of the common stock of American Medical Alert Corp., (the
"Company")
(3) The
property was issued on [_____ __], 2007.
(4) The
taxable year in which the election is being made is the calendar year
2007.
(5) The
property is subject to a repurchase right pursuant to which the issuer has
the
right to acquire the property at the original purchase price if taxpayer's
employment with the issuer is terminated under certain
circumstances.
(6) The
fair
market value at the time of transfer (determined without regard to any
restriction other than a restriction which by its terms will never lapse) is
[$
] per share.
(7) The
amount paid for such property is [$ ] per share.
(8) A
copy of
this statement was furnished to the Company.
(9)
This
statement is executed [____ __], 200_.
| ------------------------------ | ------------------------------------------ |
| Spouse (if any) | Taxpayer |
THIS
ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH
TAXPAYER FILES HIS OR HER FEDERAL INCOME TAX RETURNS AND MUST BE MADE WITHIN
THIRTY (30) DAYS AFTER THE EXECUTION DATE OF THE STOCK PURCHASE AGREEMENT.
THIS
FILING SHOULD BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED.
TAXPAYER MUST RETAIN TWO (2) COPIES OF THE COMPLETED FORM FOR FILING WITH HIS
OR
HER FEDERAL AND STATE TAX RETURNS FOR THE CURRENT TAX YEAR AND AN ADDITIONAL
COPY FOR HIS OR HER RECORDS.
11
