Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e)
On
December 31, 2007, American Medical Alert Corp. (the “Company”) entered into a
stock purchase agreement with Mr. Frederic Siegel (the “Siegel Stock Purchase
Agreement”). The stock grants contemplated by the Siegel Stock Purchase
Agreement were made pursuant to the employment agreement, commencing as of
January 1, 2007, between Mr. Siegel and the Company (the “Employment
Agreement”), which was filed as an exhibit to the Company’s Form 8-K that was
filed on May 30, 2007 with the Securities and Exchange Commission. Pursuant
to
the Siegel Stock Purchase Agreement, Mr. Siegel was granted 22,000 shares of
restricted common stock subject to a repurchase right in favor of the Company.
The Company has the right to repurchase the shares for $.01 per share if Mr.
Siegel ceases to be employed by the Company. The repurchase right lapses with
respect to 5,500 shares on each of December 31, 2007, 2008, 2009 and 2010,
subject to the condition that Mr. Siegel remains employed by the Company on
each
such applicable date;
provided
,
however
,
that,
in the event of a change in control (as defined in the Employment Agreement),
if
the Company or its successor pursuant to such change in control, as applicable,
and Mr. Siegel either agree to continue the Employment Agreement or to enter
into a new employment agreement mutually acceptable to the Company or its
successor, as applicable, and Mr. Siegel in lieu of the Employment Agreement,
then any such remaining unvested shares shall vest immediately upon the mutual
agreement of the Company or its successor and Mr. Siegel to continue the
Employment Agreement or to enter into a new employment agreement.
In
addition, Mr. Siegel will be granted the following bonus compensation stock
grants: (i) up to 12,000 shares of common stock based on the earnings before
deduction of interest and taxes ("EBIT") of the Company’s Health and Safety
Monitoring Systems segment (“HSMS”), as set forth in the Company's audited
financial statements for the applicable fiscal year, meeting or exceeding the
HSMS EBIT performance goals set forth below as (A); and (ii) up to 34,000 shares
of common stock, based on the EBIT of the Company, as set forth in the Company's
audited financial statements for the applicable fiscal year, meeting or
exceeding the EBIT performance goals set forth below as (B). In connection
with
clause (i) herein, the Company and Mr. Siegel have agreed that the HSMS EBIT
targets were determined on the basis of the Company’s method of calculating EBIT
by segment for the fiscal year ended December 31, 2005 (such method of
calculating, the “2005 Methodology”) and that, if the Company changes its method
of calculating its EBIT by segment, the Company shall determine whether (a)
to
use the 2005 Methodology and the HSMS EBIT targets set forth herein in
connection with the stock grants contemplated hereby or (b) to use a method
of
calculating EBIT by segment that is based on its year end financial statements
and accordingly adjusted HSMS EBIT targets, provided that such adjustment from
the 2005 Methodology will not either benefit or detract from Mr. Siegel’s rights
in connection with the stock grants contemplated hereby.
(A)
|
HSMS
EBIT 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
|
(B)
|
Company
EBIT 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
|
To
the
extent that the aggregate number of shares to be granted pursuant to clause
(i)
and clause (ii) in the preceding paragraph exceeds 37,500, such shares will
only
be granted if shareholder approval of such grant is obtained. If such
shareholder approval is not obtained prior to the time any such shares are
earned by Mr. Siegel, then Mr. Siegel shall not be entitled to and shall not
be
granted any such shares.
A
copy of
the Siegel Stock Purchase Agreement is attached hereto as Exhibit 10.1. The
Siegel Stock Purchase Agreement is subject to the terms of the Company’s 2005
Stock Incentive Plan, as amended (“Plan”), which is filed herewith as Exhibit
10.2. The shares issued under the Siegel Stock Purchase Agreement shall be
issued out of the Plan;
provided
,
however
,
that if
a number of shares of common stock in excess of 37,500 are issued pursuant
to
the Siegel Stock Purchase Agreement, the shares in excess of 37,500 shall not
be
issued out of the Plan but rather issued as a separate individual grant to
Mr.
Siegel.