AMERICAN MEDICAL ALERT CORP. STOCK PURCHASE AGREEMENT
2005
STOCK INCENTIVE PLAN
STOCK
PURCHASE AGREEMENT dated as of January 20, 2006 by and between American
Medical Alert Corp., a New York corporation (the "Company"),
and
Xxxx Rhian, having an address at 00 Xxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxx,
XX
00000 (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 its Shareholder’s
to grant the shares provided for in this Restricted Stock Purchase Agreement
("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,
the parties now desire to enter into the 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 Fifty Thousand (50,000) shares (the "Restricted
Shares")
of
Common Stock of the Company in consideration of services actually rendered
and
to be rendered to the Company by Holder. Such shares shall be subject to the
Repurchase Right set forth in Section 4, below. 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 $500.00
(b) The
Restricted Shares, when issued pursuant to the provisions hereof, shall
constitute issued and outstanding shares 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
(as hereinafter defined)), 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 THE COMPANY AND ACCORDINGLY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF EXCEPT IN
CONFORMITY WITH THE TERMS OF A STOCK PURCHASE AGREEMENT DATED JANUARY __, 2006,
BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR
IN INTEREST TO THE SHARES). A COPY OF SUCH 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.
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 Holder
is not, at the time of his or her cessation of Service, vested in accordance
with the Vesting Schedule (such shares to be hereinafter referred to as the
"Unvested
Shares").
2
(b) Exercise
of The Repurchase Rights.
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 are 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, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(B), EVEN IF EMPLOYEE REQUESTS THE COMPANY OR
ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
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"):
3
(a) Up
to
80,000 shares over the Employment Period (as defined in the Employment
Agreement) based on the Company's earnings before deduction of interest and
taxes ("EBIT"),
as
set forth in the Company's audited financial statements for the applicable
fiscal year, meeting or exceeding the following targets:
For
2006 - 2010
EBIT
growth over prior fiscal year- #
of Shares
15.0
-
17.49%
8,000
shares
17.5
-
19.99%
9,000
shares
20.0
-
22.49%
10,500
shares
22.5
-
24.99%
13,000
shares
25.0%
-
or
more
16,000
shares
In
the
event that the minimum EBIT growth percentage is not met for a particular fiscal
year, Holder will have the opportunity to earn back the minimum performance
bonus grant for such fiscal year as follows: if the EBIT growth percentage
in
the subsequent fiscal year combined with the EBIT growth percentage of the
prior
fiscal year meets or exceeds 30%, then the number of percentage points needed
to
be added to the prior fiscal year's EBIT growth percentage to equal 15%, shall
be deducted from the subsequent fiscal year EBIT growth percentage and added
to
the prior fiscal year EBIT growth percentage, and Holder shall be granted 8,000
shares of Common Stock for the prior fiscal year, and an additional number
of
shares of Common Stock determined based on the above formula and the reduced
subsequent year EBIT growth percentage. For example, if in 2006, 2007 and 2008
EBIT growth percentage was 14%, 13% and 20%, respectively, then Holder would
be
deemed (i) not to have met the fiscal year 2006 EBIT growth percentage, (ii)
to
have met the minimum (15%) EBIT growth percentage (by virtue of deducting 2%
percentage points from the fiscal year 2008 EBIT growth percentage and adding
those to the 2007 fiscal year EBIT growth percentage), and (iii) to have met
the
17.5 - 19.99% EBIT growth percentage for fiscal 2008 (20% - 2% =18%), thereby
earning a total 17,000 shares of Common Stock (8,000 shares relating to 2007
and
9,000 shares relating to 2008); and
(b) 2,000
shares per year, for a total of up to 10,000 shares of Common Stock over the
Employment Period, based on the Company's total revenues, as set forth in the
Company's audited financial statements for the applicable fiscal year, meeting
or exceeding an amount equal to at least 115% of the Company's total revenues
for the prior fiscal year.
(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 50,000 shares, the grant
of
such shares 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 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.
4
(d) All
shares to be issued pursuant to this Section 5 shall be issued out of the Plan,
except that to the extent the shares to be issued under 5(a) and 5(b) above
exceed 50,000 shares, such shares shall be issued as a separate individual
grant
to Employee and not out of the Plan.
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; 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
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 or her 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.
6
(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.
(f) "1933
Act"
shall
mean the Securities Act of 1933, as amended.
(g) "Employment
Agreement"
shall
mean that certain Employment Agreement dated November 11, 2005, 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 only if 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"
means
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"
means
$.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)
pursuant to the Employment Agreement.
(o) "Vesting
Schedule"
shall
mean the vesting schedule specified Section 4(b)(iii) in the Employment
Agreement pursuant to which Holder is to vest in the Restricted Shares in a
series of installments over his period of Service, subject to certain
acceleration events in the event of 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 Restricted 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 Restricted 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 to be 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 therefor 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/
Xxxxxx X.
Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Chairman and CEO
|
|
|
/s/
Xxxx
Xxxxx
Xxxxxx:
Xxxx Rhian
|
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.
Dated:
_________________________
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 [_____ __], 2006.
(4) The
taxable year in which the election is being made is the calendar year
2006.
(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
