-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DJhY++dNxjPvC4n6ehO5O0Jx9zKdEM4Qwf53f7R2+uIp4OJO4YVFQxzPVAcIpx3b /N9erTuDVkoxauX5N+crXw== 0000910680-97-000125.txt : 19970401 0000910680-97-000125.hdr.sgml : 19970401 ACCESSION NUMBER: 0000910680-97-000125 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDICAL ALERT CORP CENTRAL INDEX KEY: 0000700721 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 112571221 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-08635 FILM NUMBER: 97571136 BUSINESS ADDRESS: STREET 1: 3265 LAWSON BLVD CITY: OCEANSIDE STATE: NY ZIP: 11572 BUSINESS PHONE: 5165365850 MAIL ADDRESS: STREET 1: 3265 LAWSON BLVD CITY: OCEANSIDE STATE: NY ZIP: 11572 10KSB 1 AMAC FORM 10-KSB FYE 12/31/96 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 1-8635 AMERICAN MEDICAL ALERT CORP. ---------------------------- (Name of Small Business Issuer in Its Charter) New York 11-2571221 -------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3265 Lawson Boulevard, Oceanside, New York 11572 - ------------------------------------------ ----- (Address of Principal Executive Offices) (Zip Code) (516) 536-5850 ------------------------------------------------ (Issuer's Telephone Number, Including Area Code) Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.01 per share ---------------------------- (Title of Class) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. The issuer's revenues for its most recent fiscal year: $ 7,255,842. The aggregate market value of the voting stock held by non-affiliates of the registrant, as of March 26, 1997, was $11,286,475, computed by reference to the average closing bid and asked prices of such stock as reported on the Nasdaq on that date. The aggregate number of shares of Common Stock outstanding as of March 26, 1996: 5,808,679 DOCUMENTS INCORPORATED BY REFERENCE: Portions of the definitive Proxy Statement of the registrant, to be filed within 120 days after the end of the registrant's fiscal year, are incorporated by reference into Part III of this report. PART I Item 1. Description of Business General - ------- American Medical Alert Corp. (the "Company") is a corporation, formed under the laws of the State of New York in 1981 and is engaged in the business of designing, engineering, fabricating and marketing computerized Personal Emergency Response Systems ("PERS") using proprietary and commercially available technology. The Company markets to private-pay clients, not for profit consumer agencies, health maintenance organizations, long-term care providers, retirement communities, hospitals and government agencies. Part of the Company's strategy is to capitalize on opportunities created by new federal policies affecting the delivery of home healthcare services by HMOs and managed care groups. In order to achieve its goals, the Company is participating in a study to prove the cost effective benefits of PERS in home healthcare programs. During 1996, the Company finalized plans with a national provider of geriatric services to offer its PERS through their network of agencies, and launch its Model 700 (described below). Several of the systems the Company markets enable PERS to be provided to a wide range of individuals including; the medically at-risk, isolated and infirm, elderly, disabled as well as persons receiving home care services and their families, retirement and college campus sites, security/staff personnel who maintain health facilities and places of internment (referred to individually as the "Subscriber" and collectively as "Subscribers"). The Company's monitoring centers are designed to simultaneously process signals from different systems. Products and Services - --------------------- The Company's core business remains the development and marketing of high-tech effective PERS, primarily used by the senior population. VOICE OF HELP(R) Systems enable a person to remain independent and continue to enjoy the comforts of living at home. Models 500 and 1000 Personal Emergency Response Systems ------------------------------------------------------- VOICE OF HELP(R) Systems have been designed to permit two-way (talk/listen) voice communications between an individual and monitoring personnel located at the Company's Monitoring Center (the "Center"). VOICE OF HELP(R) Systems are currently available in two configurations. The stand alone Model 500 is utilized by private-pay consumers, hospitals, home healthcare providers, government agencies, third-party insurers, developers of retirement communities and certain commercial applications, among others. The flush mounted Model 1000 is used in new and rehabilitated multi-housing facilities. The usual protocol associated with the use of the Company's VOICE OF HELP(R) System is as follows: (1) The Subscriber activates the VOICE OF HELP(R) System by either pressing a button located on the home unit or from a portable activator. There is no need for the Subscriber to touch the telephone. (2) When the VOICE OF HELP(R) System is activated, the Subscriber hears a signal tone and sees a signal light on the home unit, indicating that the System is processing the signal to the Center. The home unit, coupled with the proper telephone connection, permits hands free communication between the Subscriber and the Center. After the telephone connection has been established, a monitor at the Center automatically displays relevant Subscriber information, including: (i) the telephone numbers of the Subscriber's physician, local police and fire departments, relatives and neighbors, etc.; (ii) the Subscriber's vital medical history and current prescriptions (if provided); and (iii)other pertinent information that should assist in securing appropriate action on behalf of the Subscriber. The Company's Centers are capable of handling multiple requests for assistance at any given time. The Company believes, based on its experience to date, that each request for assistance is accepted within one minute of its initiation. The Company makes available and believes that its back-up Center provides a significant additional safeguard to the operations of its VOICE OF HELP(R) Systems. (3) After the Subscriber's personal data is displayed, the Company's monitoring personnel and the Subscriber can talk and listen to each other. The Subscriber need not touch the telephone. If no overriding noise or physical sound barrier is present between the Subscriber and the VOICE OF HELP(R) System home unit, the parties will normally be able to talk and listen to each other. (4) Monitoring personnel at the Center will attempt to determine from the Subscriber what aid is required. If the Subscriber is unable to communicate, monitoring personnel will take actions pursuant to pre-designated instructions. (5) VOICE OF HELP(R) Systems can monitor proprietary and certain commercially available intrusion, fire detection and other similar devices. Monitoring - ---------- In addition to its voice systems, the Company makes available, as an additional and integral part of the VOICE OF HELP(R) System, a unique monitoring service. Personnel located at the Company's Monitoring Center utilize personal computers, arranged in a local area network, to process alerts. Each of the Company's monitoring personnel are certified as Emergency Medical Dispatchers. All signals for assistance are programmed to access the Center's Subscriber data base which enables monitoring personnel to take pre-determined actions quickly. Relevant information -2- concerning the Subscriber is displayed on a monitor. Monitoring personnel are trained to take appropriate action on behalf of all Subscribers. The technology includes digital communicators, radio frequency devices and two-way voice circuits. System activation may occur from a host of ancillary contacts, switches or other devices. In most applications the Company provides long distance, toll-free telephone lines for signal transmission. Production/Purchasing - --------------------- The Company continues to utilize subcontractors to assemble its products. These services are generally provided through verbal arrangements and Company issued purchase orders. The Company has several principal subcontractors. Although the Company currently maintains favorable relationships with its subcontractors, the Company believes that in the event any such relationship were to be terminated, the Company would be able to engage the services of additional or different subcontractors as would be required to fulfill its needs without any material adverse effect to the Company's operations. With the exception of several proprietary components, which are manufactured to the Company's specifications, the manufacturing of the Company's product lines requires the use of generally available electronic components and hardware. Marketing/Customers - ------------------- The Company markets its products and monitoring services to consumers, hospitals, home healthcare providers, government agencies, third-party insurers, developers of retirement communities and commercial applications, among others. The Company believes that these markets offer the Company an opportunity for significant growth. Sales and leases of the Company's products and monitoring services are made through the efforts of its own sales personnel, manufacturers' representatives and independent distributors. The Company markets its products through sales and various rental arrangements. The Company is an approved Medicaid Provider in the States of New York, Georgia, Illinois and South Carolina. During the years ended December 31, 1996, 1995 and 1994, the Company had revenues from one contract with a municipality located in New York which represented 44%, 44% and 37%, respectively, of its total revenue. On March 27, 1997, the Company was advised that the Agreement will be extended through February 28, 1998. The Company continues development on several new healthcare systems that it plans to continue testing during 1997. Examples are: a. MED PASS(R): The product will be used by home healthcare patients for the purpose of insuring that prescribed medications are taken in accordance with physicians' orders. b. ACCUTROL(R): The Company, in conjunction with one of its customers, is continuing its field testing of an access control version of its VOICE OF HELP(R) System. -3- c. PERS Model 700: An updated version of the electronics used in the Company's Models 500 and 1000. Production of the product is expected to begin during the second quarter of 1997. The Company continues to seek new applications for its interactive voice technology. Installation and Services - ------------------------- The Company currently provides its own personnel or provides training for customers' personnel for installation and servicing of its VOICE OF HELP(R) Systems. In addition, telephone interconnect companies install VOICE OF HELP(R) Systems for the Company in some areas. Sales, Leasing and Monitoring Revenues - -------------------------------------- The Company markets its products through sales and various rental arrangements. The Company also offers VOICE OF HELP(R) Systems, including monitoring center equipment for on-site monitoring, using similar purchase and lease arrangements. The Company is an approved Medicaid Provider in the States of Georgia, Illinois, New York, and South Carolina and continues to develop similar relationships in several other states. The Company offers monitoring service for its own, as well as personal emergency response systems manufactured by others on a monthly fee basis. Multi-user providers have the option of using the Company's monitoring services, either as a primary or back-up center. The majority of customers have selected the Company's Monitoring Center in Oceanside, NY to provide primary and back-up monitoring on behalf of their clients. Monitoring fees are charged to individuals and entities who utilize the Company's monitoring services, whether on a primary basis in the case of individuals or on a back-up basis with respect to those who purchase or lease complete VOICE OF HELP(R) Systems, electing to provide their own on-site primary monitoring. Patents and Trademarks - ---------------------- The Company considers its trademarks to be an important element of its marketing program. The Company's trademarks include "VOICE OF HELP(R)", "THE VOICE OF HELP(R)", "ACCUTROL(R)", "MED PASS(R)", "ROOM MATE(R)", "VOICECARE(R)", "SYSTEM-one(R)" and "HELPING PEOPLE LIVE BETTER(R)", each of which is registered with the United States Patent and Trademark Office. Competition - ----------- The Company's competition includes manufacturers, distributors and providers of personal emergency response equipment and services, and a limited number of burglar and fire alarm companies. Certain of the Company's competitors have more extensive manufacturing and marketing capabilities, as well as greater financial, technological and personnel resources, than the Company. The Company's competition focuses its marketing and sales efforts in two distinct areas; hospital/private-pay, and multi-housing applications. The Company believes that its experience and expertise give it a significant advantage over its competitors. -4- Research and Development - ------------------------ In a continuing effort by the Company to maintain state-of-the-art technology, the Company conducts research and development through the ongoing efforts of its employees and consulting groups. Expenditures for research and development for the years ended December 31, 1996, 1995 and 1994 were $24,339, $32,874 and $41,747, respectively. Employees - --------- As of March 21, 1997, the Company employed 82 persons who perform functions on behalf of the Company in the areas of administration, marketing, sales, engineering, finance, purchasing, operations, quality control and research. The Company is not a party to any collective bargaining agreement with its employees. The Company considers its relations with its employees to be good. Item 2. Description of Properties The Company's executive offices and primary monitoring Center are located in a 5,600 square foot facility at 3265 Lawson Boulevard, Oceanside, New York. The Company leases this space and the adjoining 8,000 square foot parking lot from Howard M. Siegel pursuant to a five-year lease which expires on December 31, 1999. The lease provides for a base annual rental of $74,600 plus certain operating expenses, subject to a 5% annual increase. The Company believes that the terms of this lease are no less favorable than could be obtained from an unaffiliated third party. The Company houses its Engineering, Research and Development, Quality Control, Testing and Back-up Monitoring Departments in a 5,400 square foot facility located in Mt. Laurel, New Jersey. The Company occupies this space pursuant to a lease with an unaffiliated party. The lease expires on December 31, 1997 and provides for a current base annual rental, net of certain operating expenses, of $33,534. The Company believes that it will be able to renew this lease on terms equally favorable to the Company. The Company maintains a satellite marketing and administrative office in Decatur, Georgia. The Company leases approximately 1,200 square feet of space from an unaffiliated party at an annual rental, plus certain operating charges, of $16,694, pursuant to a lease which expires on April 30, 1997. The Company believes that it will be able to renew this lease on terms equally favorable to the Company. The Company leases approximately 1,500 square feet of space in Flushing, New York, pursuant to a three-year lease which expires on June 30, 1998, for office, warehouse, storage, shipping and receiving purposes. The lease provides for an annual rent of $13,200 during the first year of the term, $13,860 during the second year of the term and $14,553 during the third year of the term. The Company maintains a satellite marketing and administrative office in Countryside, Illinois. The Company leases approximately 1,200 square feet of space from an unaffiliated party pursuant to a two-year lease which expires on July 9, 1997. The lease provides for an annual rent -5- of approximately $15,000. The Company believes that it will be able to renew this lease on terms equally favorable to the Company. The Company believes that these properties are suitable for their intended uses and are adequate to meet its current requirements. The Company does not own any property. Item 3. Legal Proceedings Although the Company is a party to certain routine litigations incidental to its business, the Company believes that there are no material pending legal proceedings to which it is a party or any of its properties are the subject. Item 4. Submission of Matters to a Vote of Security-Holders No matters were submitted, during the fourth quarter of the year covered by this report, to a vote of the security holders through the solicitation of proxies or otherwise. Executive Officers of the Registrant - ------------------------------------ Name Age Position - ---- --- -------- Howard M. Siegel 63 Chairman of the Board, President, Chief Executive Officer Corey M. Aronin 43 Chief Financial Officer Other Significant Officers of the Registrant - ----------------- John Lesher 42 President, Engineering John Rogers 50 Vice President, Operations and Secretary Officers serve at the discretion of the Board of Directors. Howard M. Siegel has been the Company's Chairman of the Board, President, Chief Executive Officer, and a Director for more than the past six years. He also served as Chief Financial Officer until September 1996. Corey M. Aronin joined the Company in September 1996, as Chief Financial Officer. Previously, Mr. Aronin held senior financial positions. From December 1995 to May 1996, he served as Executive Vice President of Finance at Affiliated Island Grocers, Inc. From August 1982 until November 1995, Mr. Aronin served as Chief Financial Officer and Treasurer at Golden Simcha Poultry, Inc., a local major food distributor. -6- John Lesher was elected Vice President, Engineering by the Company in March 1991. Prior thereto and from 1989, Mr. Lesher served as a senior engineer at the Company's former Bristol, PA 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. John Rogers joined the Company in July 1984. He has served in a variety of capacities and was appointed to be Vice President, Operations in July 1993. Additionally, he has been the Secretary since July 1993. PART II Item 5. Market for Common Equity and Related Stockholder Matters The Company's Common Stock is traded on Nasdaq (Symbol: AMAC). The high and low bid prices for the Common Stock, as furnished by Nasdaq, are shown for the fiscal years indicated. The quotations set forth below do not include retail markups, markdowns or commissions and may not represent actual transactions. High Low ---- --- 1995 First Quarter $ 2 15/16 $ 2 Second Quarter 3 1/2 2 9/16 Third Quarter 4 1/4 3 Fourth Quarter 4 2 1/8 1996 First Quarter $ 3 1/8 $ 2 1/8 Second Quarter 3 2 Third Quarter 4 1/16 2 5/16 Fourth Quarter 4 3/16 2 9/16 As of March 26, 1996, there were 514 recordholders of the Company's Common Stock. The Company did not pay dividends on its Common Stock during the two years ended December 31, 1996 and does not anticipate paying dividends in the foreseeable future. -7- SELECTED FINANCIAL DATA - AMERICAN MEDICAL ALERT CORP. The following table summarizes certain financial data and should be read in conjunction with the detailed financial information set forth elsewhere herein.
Year Ended December 31, ----------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Selected Statement of Operations Data: Revenues $ 7,255,842 $ 6,177,302 $ 5,384,671 $ 3,918,203 $ 3,558,749 Income before extraordinary item and cumulative effect of accounting change $ 918,893 $ 741,736 $ 727,166 $ 204,218 $ 230,410 Net income $ 918,893 $ 741,736 $ 727,166 $ 880,218 $ 335,410 Income per share before extraordinary item and cumulative effect of accounting change $ .16 $ .13 $ .13 $ .04 $ .04 ========== ============ ============ ============= ============ Net income per share $ .16 $ .13 $ .13 $ .16 $ .06 ========== ============ ============ ============= ============ Weighted average number of common shares 5,852,553 5,867,555 5,751,453 5,659,486 5,646,219 Selected Balance Sheet Data as of December 31: Total Assets $ 6,784,014 $ 5,750,042 $ 4,983,393 $ 3,583,991 $ 2,416,837 Long-term liabilities $ 719,849 $ 653,949 $ 93,276 $ 313,779 $ 26,293 Shareholders' equity $ 5,533,858 $ 4,407,350 $ 3,646,366 $ 2,856,689 $ 1,928,126
-8- Item 6. Managements's Discussion and Analysis or Plan of Operation The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read in conjunction with the consolidated financial statements and notes hereto. Results of Operations - --------------------- The Company's gross revenues increased from $ 6,177,302 in 1995 to $ 7,255,842 in 1996, an increase of 17% and increased from $ 5,384,671 in 1994 to $ 6,177,302 in 1995, an increase of 15%. The increase in gross revenues from 1995 to 1996 and 1994 to 1995 resulted from continued growth of the Company's existing customer bases as well as the addition of new customers. Revenues from services increased from $ 5,288,046 in 1995 to $ 6,119,946 in 1996, an increase of 16% and increased from $ 4,546,991 in 1994 to $ 5,288,046 in 1995, an increase of 16%. These increases resulted from continued expansion of the Company's customer base for monthly monitoring and leasing services. Costs related to services for 1996, 1995, and 1994 were 34%, 35% and 32%, respectively. In 1996, costs as a percentage of revenue decreased due to greater operational efficiency. Revenues from product sales increased from $ 889,256 in 1995 to $ 1,135,896 in 1996, an increase of 28% and increased from $ 837,680 in 1994 to $ 889,256 in 1995, an increase of 6%. These increases were primarily due to the increase in sales to retirement facilities and distributors. The gross profit on product sales in 1996, 1995, and 1994 was 30%, 39% and 30%, respectively. Gross profit on product sales decreased in 1996, in part, due to sales incentives given to large retirement communities. Gross profits increased in 1995 due to effective use of purchase discounts and lower unit costs relating to past production efficiencies. Selling, general and administrative expenses increased from $ 2,422,972 in 1995 to $ 2,705,525 in 1996, an increase of 12% and increased from $ 1,987,034 in 1994 to $ 2,422,972 in 1995, an increase of 22%. Additional expenses incurred in 1996 were the result of increased sales and marketing expenses, radio advertising campaigns, expansion of sales department and hiring of additional management personnel. Expenses in 1995 as compared to 1994 increased for similar reasons. Interest expense for 1996, 1995 and 1994 were $ 46,965, $ 55,694 and $46,233, respectively. Interest expense decreased in 1996 due to improved cash flow and decreases in average monthly borrowing. Interest expense in 1995 increased from 1994 due to increases in the average monthly borrowing. The Company's income before provision for income taxes in 1996 was $ 1,638,893, an increase of $ 311,157 from 1995, or 23%. The increase in 1996 resulted from an increase in the Company's revenues and greater operational efficiencies. Income before provision for income taxes in 1995 was $ 1,327,736, an increase of $ 26,570 from 1994. The increase in 1995 resulted from an increase in the Company's revenues offset by higher selling, general and administrative expenses. -9- Liquidity and Capital Resources - ------------------------------- During 1996, cash provided by operating activities was $1,319,517, as compared to $1,433,585 in 1995. Cash paid for income taxes in 1996 was $ 594,036 as compared to $457,284 in 1995. This increase was primarily due to an increase in income before provision for income taxes. Expenditures for fixed assets and medical devices held for lease, aggregated $1,535,703 in 1996, an increase from $1,184,141, the amount purchased in 1995. During 1996, cash decreased by $18,976, as compared to an increase in cash of $162,554 in 1995. On December 1, 1995, the Company renegotiated its $ 1,500,000 credit note (based upon 75% of eligible accounts receivable and 25% of inventory, as defined) and extended it until April 30, 1997. As of March 13, 1997, $ 450,000 was outstanding under this note. The credit note was recently extended to and it will expire on April 30, 1998. The Company's working capital on December 31, 1996 was $ 2,460,773 as compared to $ 2,188,303 on December 31, 1995. During 1997, the Company anticipates that it will make capital investments of approximately $ 1,000,000 for the production and purchase of additional systems which the Company intends to rent and to enhance management information systems. The Company believes that its present cash and working capital position, its borrowing availability and future anticipated income will be sufficient to meet its cash and working capital needs for the foreseeable future. Item 7. Financial Statements Financial Statements Page Number -------------------- ----------- Report of Independent Accountants F-1 Report of Independent Accountants F-2 Balance Sheets at December 31, 1996 and 1995 F-3 & F-4 Statements of Income for the years ended December 31, 1996, 1995 and 1994 F-5 Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 F-6 Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 F-7 & F-8 Notes to Financial Statements F-9 - F-17 -10- Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure On August 17, 1995, the Company's Board of Directors approved the dismissal of Deloitte & Touche LLP as its independent public accountants, which dismissal would take effect simultaneously with the Company's appointment of a new independent public accountant. There was no adverse opinion or disclaimer of opinion, or modification as to uncertainty, audit scope or accounting principles contained in the reports of Deloitte & Touche LLP for the past fiscal year ended December 31, 1994. During the Company's two previous fiscal years ended December 31, 1994 and the subsequent interim period preceding Deloitte & Touche LLP's dismissal on August 17, 1995, there were no disagreements with Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte & Touche LLP, would have caused Deloitte & Touche LLP to make reference in connection with its report concerning the Company's financial statements to the subject matter of the disagreements. On August 17, 1995, the Company's Board of Directors approved the proposal to engage Margolin, Winer & Evens LLP to be the Company's independent public accountants for its fiscal years ending December 31, 1996 and 1995. PART III The information called for by Part III (Items 9, 10, 11 and 12 of Form 10-KSB) is incorporated herein by reference to the Company's definitive Proxy Statement to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934 with respect to the Company's 1997 Annual Meeting of Shareholders. Item 13. Exhibits, List, and Reports on Form 8-K (a) Exhibits -------- Exhibit No. Identification of Exhibit ----------- ------------------------- 3(a) Articles of Incorporation of Company, as amended. (Incorporated by reference to Exhibit 3(a) to the Company's Form S-1 Registration Statement under the Securities Act of 1933, filed on September 30, 1983 - File No. 2-86862). 3(b) Amended and Restated By-Laws of Company. (Incorporated by reference to Exhibit 4(b) to the Company's Form S-3 Registration Statement under the Securities Act of 1933, Commission File No. 333-6159). -11- Exhibit No. Identification of Exhibit ----------- ------------------------- 4(a) Warrant Agreement between the Company and Continental Stock Transfer & Trust Company, the Company's transfer agent, with the Company's form of Warrant Certificate attached thereto. (Incorporated by reference to Exhibit 4(a) to the Company's Form S-1 Registration Statement under the Securities Act of 1933, filed on September 30, 1983 - File No. 2-86862). 4(b) Amendment, dated December 22, 1988, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(c) to the Company's Form 10-K for the year ended December 31, 1988). 4(c) Amendment, dated October 26, 1990, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(c) to the Company's Form 10-K for the year ended December 31, 1990). 4(d) Amendment, dated November 30, 1994, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(d) to the Company's Form 10-KSB for the year ended December 31, 1994). 4(e) Amendment, dated November 20, 1995, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(e) to the Company's Form 10-KSB for the year ended December 31, 1995). 4(f) Amendment, dated December 20, 1996, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(h) to the Company's Registration Statement on Form S-3, Commission File No. 333-6159). 10(a) Employment Agreement, dated January 1, 1997 between the Company and Howard M. Siegel.* 10(b) Employment Agreement, dated August 28, 1989 between the Company and John Lesher. (Incorporated by reference to Exhibit 10(c) to the Company's Form 10-K for the year ended December 31, 1990). 10(c) Amendment, dated March 4, 1992, to the Employment Agreement between the Company and John Lesher. (Incorporated by reference to Exhibit 10(d) to the Company's Form 10-K for the year ended December 31, 1991). -12- Exhibit No. Identification of Exhibit ----------- ------------------------- 10(d) Lease for the premises located at 520 Fellowship Road, Suite C301, Mt. Laurel, New Jersey ("Mt. Laurel Lease"). (Incorporated by reference to Exhibit 10(e) to the Company's Form 10-K for the year ended December 31, 1991). 10(e) First Amendment to the Mt. Laurel Lease. (Incorporated by reference to Exhibit 10(f) to the Company's Form 10-KSB for the year ended December 31, 1993). 10(f) Second Amendment to the Mt. Laurel Lease.* 10(g) Leases for the premises located at 3265 Lawson Boulevard, Oceanside, New York. (Incorporated by reference to Exhibit 10(h) to the Company's Form 10-KSB for the year ended December 31, 1994). 10(h) Lease for the premises located at 910 Church Street, Decatur, Georgia. (Incorporated by reference to Exhibit 10(i) to the Company's Form 10- KSB for the year ended December 31, 1995). 10(i) Lease for the premises located at 169-10 Crocheron Avenue, Flushing, New York. (Incorporated by reference to Exhibit 10(j) to the Company's Form 10-KSB for the year ended December 31, 1995.) 10(j) Lease for the premises located at 475 West 55th Street, Contryside, Illinois. (Incorporated by reference to Exhibit 10(k) to the Company's Form 10-KSB for the year ended December 31, 1995.) 10(k) 1984 Incentive Stock Option Plan, as amended. (Incorporated by ref erence to Exhibit 10(e) to the Company's Form 10-K for the year ended December 31, 1990). 10(l) Amended 1991 Stock Option Plan. (Incorporated by reference to Exhibit 10(l) to the Company's Form 10-KSB for the year ended December 31, 1994). 10(m) Restated and Amended Revolving Credit Note with North Fork Bank, dated December 1, 1995 (the "Revolving Credit Note").* 10(n) Letter from North Fork Bank extending the Revolving Credit Note until April 30, 1998.* 10(o) Agreement between the Company and the City of New York, as extended through February 18, 1998.* 23(a) Consent of Deloitte & Touche LLP.* 23(b) Consent of Margolin, Winer & Evens LLP.* 27 Financial Data Schedule.* ------------------- * Filed herewith. -13- (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the last quarter of the period covered by this report. -14- SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN MEDICAL ALERT CORP. March 31, 1997 By: /s/ Howard M. Siegel --------------------- Howard M. Siegel Chairman of the Board and President In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Howard M. Siegel Chairman of the Board, March 31, 1997 - ------------------------------ President Chief Executive Howard M. Siegel Officer, and Director (Principal Executive Officer) /s/ Corey M. Aronin Chief Financial Officer March 31, 1997 - ------------------------------ Corey M. Aronin /s/ Peter Breitstone Director March 31, 1997 - ------------------------------ Peter Breitstone Director - ------------------------------ Eli S. Feldman /s/ Leonard Herz Director March 31, 1997 - ------------------------------ Leonard Herz /s/ Myron Segal Director - ------------------------------ March 31, 1997 Myron Segal, M.D. AMERICAN MEDICAL ALERT CORP. ---------------------------------------------------------- FINANCIAL STATEMENTS Years Ended December 31, 1996, 1995 and 1994 AMERICAN MEDICAL ALERT CORP. CONTENTS - ------------------------------------------------------------------------------- Report of Independent Accountants F-1 Report of Independent Accountants F-2 Balance Sheets F-3 & F-4 Statements of Income F-5 Statements of Shareholders' Equity F-6 Statements of Cash Flows F-7 & F-8 Notes to Financial Statements F-9 - F-17 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of American Medical Alert Corp. Oceanside, New York We have audited the accompanying statement of income, sharholders' equity and cash flows of American Medical Alert Corp. for the year ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the result of operations and cash flows of American Medical Alert Corp. for the year ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP Deloitte & Touche LLP New York, New York March 3, 1995 F-1 Report of Independent Accountants Board of Directors and Shareholders American Medical Alert Corp. Oceanside, New York We have audited the accompanying balance sheets of American Medical Alert Corp. as of December 31, 1996 and 1995 and the related statements of income, shareholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Medical Alert Corp. as of December 31, 1996 and 1995 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Margolin, Winer & Evens LLP Garden City, New York March 7, 1997, except for Notes 3 and 11 as to which the date is March 27, 1997 F-2 AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS - ---------------------------------------------------------------------------------------------------- December 31, 1996 1995 - ---------------------------------------------------------------------------------------------------- ASSETS (Note 3) Current Assets: Cash $ 301,013 $319,989 Accounts and notes receivable (net of allowance for doubtful accounts of $30,000 in 1996 and 1995) (Notes 1, 2 and 11) 1,327,799 1,236,938 Inventory (Note 1) 1,171,021 1,116,810 Prepaid expenses and taxes and other current assets 137,247 149,309 Deferred income taxes (Notes 1 and 6) 54,000 54,000 ------------ ----------- Total Current Assets 2,991,080 2,877,046 ---------- ----------- Inventory of Medical Devices Held For Lease- at cost 637,000 - ----------- ----------- Notes Receivable (Notes 2 and 8) 15,956 - ------------ ----------- Fixed Assets - at cost: Leased medical devices 4,985,543 4,216,128 Monitoring equipment 192,290 172,815 Furniture and equipment 263,711 228,413 Leasehold improvements 151,825 146,467 Automobiles 27,182 21,932 ------------- ---------- 5,620,551 4,785,755 Less accumulated depreciation and amortization (Note 1) 2,505,441 1,937,646 ----------- ---------- 3,115,110 2,848,109 ----------- ---------- Other Assets 24,868 24,887 ------------- ---------- Total Assets $6,784,014 $5,750,042 ========== ========== (continued on next page)
The accompanying notes are an integral part of these financial statements. F-3 AMERICAN MEDICAL ALERT CORP.
BALANCE SHEETS - ------------------------------------------------------------------------------------------------ December 31, 1996 1995 - ------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $192,707 $467,300 Accrued expenses 311,954 214,092 Taxes payable 16,464 - Current portion of long-term debt (Note 4) 9,182 7,351 ------------- ------------ Total Current Liabilities 530,307 688,743 Deferred Income Tax Liability (Notes 1 and 6) 258,000 195,000 Notes Payable - Bank (Note 3) 450,000 450,000 Long-Term Debt - Less Current Maturities (Note 4) 11,849 8,949 ------------- ------------ Total Liabilities 1,250,156 1,342,692 ------------- ------------ Commitments (Notes 7, 8 and 10) - - Shareholders' Equity (Notes 8 and 10): Common stock, $.01 par value- authorized, 10,000,000 shares; issued 5,843,276 shares in 1996 and 5,504,741 shares in 1995 58,432 55,047 Additional paid-in capital 4,391,990 4,088,212 Retained earnings 1,189,468 270,575 -------------- ------------ 5,639,890 4,413,834 Less treasury stock, at cost (43,910 shares in 1996 and 1,995 shares in 1995) (106,032) (6,484) -------------- ------------- Total Shareholders' Equity 5,533,858 4,407,350 -------------- ------------- Total Liabilities and Shareholders' Equity $ 6,784,014 $ 5,750,042 ============== =============
The accompanying notes are an integral part of these financial statements. F-4 AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF INCOME - -------------------------------------------------------------------------------------------------- Years Ended December 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------- Revenue (Notes 1 and 11): Services $6,119,946 $5,288,046 $4,546,991 Product sales 1,135,896 889,256 837,680 ----------- ----------- ----------- 7,255,842 6,177,302 5,384,671 ----------- ----------- ----------- Costs and Expenses (Income): Costs related to services 2,075,819 1,826,036 1,468,477 Costs of products sold (Note 1) 789,878 545,231 584,684 Selling, general and administrative expenses 2,705,525 2,422,972 1,987,034 Interest expense 46,965 55,694 46,233 Other income (1,238) (367) (2,923) ---------- ---------- ----------- 5,616,949 4,849,566 4,083,505 ---------- ---------- ---------- Income Before Provision for Income Taxes 1,638,893 1,327,736 1,301,166 Provision for Income Taxes (Notes 1 and 6) 720,000 586,000 574,000 ---------- ---------- ---------- Net Income $918,893 $741,736 $727,166 ========== ========== ========== Net Income Per Share (Note 1) $.16 $.13 $.13 ========== ========== ========== Weighted Average Number of Common Shares (Note 1) 5,852,553 5,867,555 5,751,453 ========== ========== ==========
The accompanying notes are an integral part of these financial statements. F-5 AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------------------ Years Ended December 31, 1996,1995 and 1994 - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK --------------- ADDITIONAL RETAINED NUMBER OF PAID-IN EARNINGS UNEARNED TREASURY SHARES AMOUNT CAPITAL (DEFICIT) COMPENSATION STOCK TOTAL ------ ------ ------- --------- ------------ ----- ----- Balance - January 1, 1994 5,329,871 $53,298 $4,002,448 $(1,198,327) $ (730) $ - 2,856,689 Amortization of Unearned Compensation - - - - 730 - 730 Common Stock Issued (Note 8) 12,500 125 14,719 - - - 14,844 Exercise of Stock Options (Note 8) 120,341 1,204 52,217 - - (6,484) 46,937 Net Income for the Year Ended December 31, 1994 - - - 727,166 - - 727,166 ----------- -------- ---------- ----------- -------- -------- --------- Balance - December 31, 1994 5,462,712 54,627 4,069,384 (471,161) - (6,484) 3,646,366 Exercise of Stock Options (Note 8) 42,029 420 18,828 - - - 19,248 Net Income for the Year Ended December 31, 1995 - - - 741,736 - - 741,736 ----------- -------- ---------- ----------- -------- ------- --------- Balance - December 31, 1995 5,504,741 55,047 4,088,212 270,575 - (6,484) 4,407,350 Exercise of Stock Options (Note 8) 338,535 3,385 303,778 - - (99,548) 207,615 Net Income for the Year Ended December 31, 1996 - - - 918,893 - - 918,893 ----------- -------- ---------- ----------- -------- -------- ---------- Balance - December 31, 1996 5,843,276 $58,432 $4,391,990 $1,189,468 $ - $(106,032) $5,533,858 =========== ======== ========== =========== ======== ========== ===========
The accompanying notes are an integral part of these financial statements. F-6 AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------------------------- Years Ended December 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net income $918,893 $741,736 $727,166 Adjustments to reconcile net income to net cash provided by operating activities: Provision for deferred income taxes 63,000 234,000 493,000 Issuance of common stock in connection with consulting services performed (Note 8) - - 14,844 Depreciation and amortization 646,838 542,914 408,127 Amortization of deferred charges - - 730 Changes in operating assets and liabilities: (Increase) decrease in receivables (106,817) 60,520 (519,837) Increase in inventory (54,211) (32,425) (1,796) Decrease (increase) in prepaid expenses and taxes and other assets 12,081 (109,963) (16,888) (Decrease) increase in accounts payable, accrued expenses and taxes payable (160,267) (3,197) 290,636 ------- ---------- --------- Net Cash Provided by Operating Activities 1,319,517 1,433,585 1,395,982 --------- --------- --------- Cash Flows from Investing Activities: Expenditures for fixed assets and medical devices held for lease (1,535,703) (1,184,141) (1,757,849) ----------- --------- --------- Net Cash Used in Investing Activities (1,535,703) (1,184,141) (1,757,849) ----------- --------- --------- Cash Flows from Financing Activities: Net (repayments) proceeds on bank borrowings - (100,000) 300,000 Repayments of capital lease obligations - - (12,808) Proceeds of loans payable - 3,805 13,020 Repayments of loans payable (10,405) (9,943) (8,123) Proceeds upon exercise of stock options 207,615 19,248 46,937 ------- ------ ------ Net Cash Provided by (Used in) Financing Activities 197,210 (86,890) 339,026 ------- ------ -------
The accompanying notes are an integral part of these financial statements. F-7 AMERICAN MEDICAL ALERT CORP.
STATEMENTS OF CASH FLOWS - --------------------------------------------------------------------------------------------------- Years Ended December 31, 1996 1995 1994 - --------------------------------------------------------------------------------------------------- Net (Decrease) Increase In Cash $ (18,976) $162,554 $ (22,841) Cash - beginning of year 319,989 157,435 180,276 -------------- ---------- ------------- Cash - end of year $301,013 $319,989 $157,435 ============== ========== ============= Supplemental Disclosure of Cash Flow Information - Cash paid during the year for: Interest $ 46,965 $ 55,694 $ 46,233 Income taxes 594,036 457,284 28,120 Supplemental Schedule of Noncash Investing and Financing Activities: Fixed assets purchased under notes and loans payable and capital lease obligations $ 15,136 $ - $16,139 During 1996, an employee satisfied the exercise price of certain stock options by exchanging shares already owned with a fair market value of $99,548. The fair value of the shares receivedwas recorded as treasury stock.
The accompanying notes are an integral part of these financial statements. F-8 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Summary of Scope of business - The Company's business is to sell, rent, Significant install, service and monitor remote communication systems Accounting with personal security and smoke/fire detection Policies capabilities, linked to an emergency response monitoring center. The Company markets its products primarily to institutional customers, including long-term care providers, retirement communities, hospitals, and government agencies across the United States. (See Note 11.) Inventory valuation - Inventory, consisting of medical alert devices and component parts, is valued at the lower of cost (first-in, first-out) or market. Finished goods were approximately $894,000 and $731,600 at December 31, 1996 and 1995, respectively, and the remaining inventory consists of component parts. Fixed assets - Depreciation is computed by accelerated and straight-line methods at rates adequate to allocate the cost of applicable assets over their expected useful lives. Leased medical devices are depreciated on a straight line basis over seven years. Amortization of leasehold improvements is provided on a straight-line basis over the shorter of the useful life of the asset or the term of the lease. On January 1, 1996, the Company adopted the accounting requirements of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to be Disposed Of " (SFAS No. 121). SFAS No. 121 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Measurement of the impairment loss, if any, is based on the fair value of the asset. The statement also requires that certain long-lived assets and identifiable intangibles that are to be disposed of be reported at the lower of their carrying amount or fair value less cost to sell. The application of SFAS No. 121 did not have a significant impact on the Company's results of operations or financial condition. Income taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," pursuant to which deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. Revenue recognition - Revenue from the sale of medical alert devices is recognized upon delivery. Revenue from renting, installation and monitoring services is recognized upon performance of such services. F-9 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Research and development costs - Research and development costs, which are expensed and included in cost of products sold, were $24,339, $32,874, and $41,747 for the years ended December 31, 1996, 1995, and 1994, respectively. Income per share - Income per share is computed using the weighted average number of common shares and common share equivalents outstanding during each period. Concentration of credit risk - Financial instruments which potentially subject the Company to concentration of credit risk principally consist of accounts receivable from state and local government agencies. The risk is mitigated by the Company's procedures for extending credit, follow-up of disputes and receivable collection procedures. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Fair value of financial instruments - Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," requires all entities to disclose the fair value of certain financial instruments in their financial statements. The Company estimates that the fair value of its cash, accounts and notes receivable, accounts payable, accrued expenses, taxes payable and notes payable approximates their carrying amounts due to the short maturity of these instruments. Accounting for stock-based compensation - Recently, the Financial Accounting Standards Board issued Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). As permitted by SFAS No. 123, the Company has elected to continue to account for employee stock options under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. 2. Notes In November 1993 an employee borrowed $30,000 and issued a Receivable promissory note to the Company originally scheduled to mature during 1996. The note, as amended during 1996, bears interest at 7.5% per annum and the outstanding balance at December 31, 1996 of $18,687 is payable in monthly installments of $337 (principal and interest), with a final installment of $15,241 due April 1, 1998. In the event that F-10 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- the employee defaults on the promissory note, certain options granted to the employee will terminate (see Note 8). 3. Notes Payable- Effective December 1, 1995, the Company's restated and Bank amended revolving credit note permits maximum borrowings up to $1,500,000 (based on 75% of eligible accounts receivable and 25% of inventory, as defined), and matures on April 30, 1997. The note bears interest at the prime rate (8.25% at December 31, 1996) plus 1% per annum and is collateralized by the Company's assets. In addition, the note requires an unused commitment fee of 1/2 of 1% per annum on the daily average amount of unused commitment. At December 31, 1996 and 1995, $450,000 was outstanding. Borrowings outstanding prior to December 1, 1995 bore interest at the prime rate plus 1-1/2%. On March 27, 1997, the maturity date of the revolving credit note was extended until April 30, 1998 and the interest rate was changed to prime plus 3/4%. Accordingly, the amount outstanding at December 31, 1996 has been classified as long-term. The agreement provides for negative and affirmative covenants including those related to tangible net worth, working capital and other borrowings. 4. Long-Term Long-term debt at December 31, 1996 consists of an Debt automobile loan and two loans financing the purchase of equipment. The outstanding balance on these loans at December 31, 1996 was $21,031. Long-term debt (including the notes payable discussed in Note 3) matures in each of the years subsequent to December 31, 1996 as follows: Year ending December 31, 1997 $ 9,182 1998 459,056 1999 2,793 ----------- $ 471,031 =========== 5. Related Party A Director of the Company has an ownership interest in an Transactions insurance agency that has written policies for the Company with premiums of $153,856, $155,432, and $112,358 in fiscal 1996, 1995 and 1994, respectively. (See Notes 7 and 8.) F-11 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 6. Income Taxes The provision for income taxes consists of the following: Years Ended December 31, ------------------------ 1996 1995 1994 ---- ---- ---- Current: Federal $469,000 $222,000 $24,000 State 188,000 130,000 57,000 -------- -------- ------- 657,000 352,000 81,000 -------- -------- ------- Deferred: Federal 54,000 219,000 382,500 State 9,000 15,000 110,500 -------- -------- -------- 63,000 234,000 493,000 -------- -------- -------- Total $720,000 $586,000 $574,000 ======== ======== ======== The following is a reconciliation of the statutory federal income tax rate and the effective rate of the provision for income taxes:
Years Ended December 31, -------------------------------- 1996 1995 1994 ---- ---- ---- Statutory federal income tax rate 34.0% 34.0% 34.0% State and local taxes 8.0 8.0 6.0 Other 2.0 2.0 4.0 ----- ----- ----- Effective income tax rate 44.0% 44.0% 44.0% ==== ==== ==== The tax effects of significant items comprising the Company's deferred taxes at December 31, 1996 and 1995 are as follows: December 31, ------------ 1996 1995 ---- ---- Deferred tax liabilities: Difference between book and tax bases of property $ (258,000) $ (195,000) ----------- ----------- Deferred tax assets: Accrued compensation - 15,000 Reserves not currently deductible 13,000 13,000 Capitalization of inventory 41,000 26,000 ----------- ---------- Total 54,000 54,000 ----------- ---------- Net deferred tax liabilities $ (204,000) $ (141,000) =========== ==========
F-12 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- For the years ended December 31, 1995 and 1994, the Company utilized net operating loss carryforward benefits of $121,000 and $508,000, respectively. 7.Commitments In January 1990, the Company entered into a five year operating lease for offices owned by its principal shareholder with an initial minimum annual rental of $55,200, subject to a 5% annual increase. On January 1, 1995, the lease was renewed for a five year period expiring December 31, 1999. The new lease calls for an initial minimum annual rental of $74,600, subject to a 5% annual increase plus reimbursements for real estate taxes and other operating expenses. The Company has also entered into various other operating leases for warehouse and office space in Flushing, New York, Mt. Laurel, New Jersey, Decatur, Georgia and Countryside, Illinois. Rent expense was $182,179 in 1996, $169,824 in 1995, and $142,639 in 1994, which includes $100,835, $94,969 and $75,145, respectively, paid in connection with the above noted lease with the principal shareholder. The aggregate minimum annual rental commitments under non-cancelable operating leases are as follows: Year ending December 31, 1997 $ 143,107 1998 93,628 1999 90,669 ----------- $ 327,404 =========== The Company has entered into a three year employment agreement with its president (who is also the principal shareholder) which commences January 1, 1997. In addition to an annual base salary starting at $200,000, increasing to $215,000 in the second year and $230,000 in the third year, the agreement, among other things, provides for additional compensation which is based on the Company's pre-tax income, as defined. The employee may elect to receive the additional compensation either in cash or in the form of the Company's common stock. The agreement also provides for a termination payment, under certain circumstances, if a change in control (as defined) occurs. The termination payment is equal to 2.99 times the base amount, as defined. 8. Common Stock, The Company has two Stock Option Plans, an Incentive Stock Warrants and Option Plan ("1984 Plan") and a 1991 Stock Option Plan Options ("1991 Plan"). Under the 1984 and 1991 plans, as amended, a maximum of 500,000 and 750,000 options, respectively, may be granted as either Incentive Stock Options or Nonstatutory Stock Options. Stock options granted under the plans vest immediately and have a term not greater than ten years from the date the option is granted or five years for a holder of more than 10% of the Company's common stock. Incentive Stock Options may be granted at an exercise price not less than the fair market value of the underlying shares at the date of grant subject to certain other limitations specified in Section 422 of the Internal Revenue Code. The per share price of Nonstatutory Stock Options granted to Non- Insiders (as defined) shall be determined by the Board of Directors or the Stock F-13 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Option Committee of the Board. All options under the above plans have been granted at exercise prices equal to the fair market value of the underlying common shares at the date of the grant. The 1984 Plan term expired in May 1994. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock Based Compensation." Accordingly, no compensation expense has been recognized for the stock option plan. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date for awards in 1996 and 1995 consistent with the provisions of SFAS No. 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below: 1996 1995 ---- ---- Pro forma net income $ 744,700 $ 579,180 Pro forma net income per share $.13 $.10 The weighted average grant date fair value of options granted in 1996 and 1995 was $174,193 and $162,556, respectively. The fair value of options at date of grant was estimated using the Black-Scholes model with the following weighted average assumptions: 1996 1995 ---- ---- Expected life (years) 4 4 Risk free interest rate 5.69% 7.17% Expected volatility 52.6% 52.6% Expected dividend yield - - Information with respect to options under plans is as follows:
Weighted Average Number of Exercise Shares Price ------ ----- Balance - January 1, 1994 717,657 $1.16 Granted during 1994 235,410 2.63 Forfeitures/expirations during 1994 (59,001) 2.07 Exercised during 1994 (120,341) .44 -------- Balance - December 31, 1994 773,725 1.65 Granted during 1995 89,513 2.90 Forfeitures/expirations during 1995 (14,422) 2.48
F-14 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Exercised during 1995 (42,029) .46 ------- Balance - December 31, 1995 806,787 1.84 Granted during 1996 120,220 2.45 Forfeitures/expirations during 1996 (14,115) 2.24 Exercised during 1996 (338,535) .91 -------- Balance - December 31, 1996 574,357 2.50 ======= 529,480 and 706,900 options were exercisable at December 31, 1996 and 1995, respectively. F-15 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The following table summarizes information about the stock options outstanding at December 31, 1996: Options Outstanding Options Exercisable ------------------- ------------------- Weighted- Average Weighted- Weighted- Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price ------ ----------- ---- ----- ----------- ----- $1.5125- $1.9375 81,153 .83 years $1.89 81,153 $1.89 $2.1313- $2.8875 473,581 2.19 years $2.53 428,704 $2.55 $3.000 - $3.4375 19,623 1.83 years $3.11 19,623 $3.11 As of December 31, 1996, 574,533 options have been exercised under both plans and 83,795 options are available for future grants under the 1991 Plan. The Company has agreed to grant options to its management and employees in January and July of each year. The number of options to be granted is equal to 5% of the dollar amount of compensation during the two calendar quarters preceding the grant date. To the extent permitted by law, such options will be granted as Incentive Stock Options. Each nonemployee director will receive options for 2,500 shares of common stock on each grant date. In December 1983, the Company sold units that contained warrants to purchase 850,000 shares of the Company's common stock at $3.50 per share. The Company may, at its option, upon not less than 90 days written notice to warrant holders, terminate all outstanding warrants without payment, provided the market price of the common stock exceeds $7.00 per share during any 20 consecutive trading days. The warrants expire on December 27, 1997. In November 1994, the Company granted to legal counsel options to purchase 25,000 shares of common stock at $2.00 per share (the fair market value at the date of grant), such options being exercisable for a period of five years from the date of grant. During 1994, the Company issued 12,500 common shares to a director of the Company in consideration of services performed. These shares were charged to expense in the amount of $14,844. F-16 AMERICAN MEDICAL ALERT CORP. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 9. Employee Effective January 1997, the Company will sponsor a 401(k) Savings Plan savings plan which will be available to all eligible employees. Participants may elect to defer from 1% to 15% of their compensation, subject to an annual limitation provided by the Internal Revenue Service. The Company may make matching and/or profit sharing contributions to the plan at its discretion. 10. Consulting On December 1, 1994, the Company entered into a financial Agreement advisory and investment banking agreement. The Company will receive advice regarding certain internal operating matters, as well as certain corporate finance issues. In addition, the Company may pay certain fees (as defined) for transactions consummated by the Company that are either originated by the consultant or the Company. The agreement, which is for a term of 24 months, has annual fees of $30,000. In addition, the Company granted 150,000 warrants exercisable for a period of four years commencing one year from the date of the agreement at an exercise price of $2.00 per share (the fair market value at the date of grant). On January 1, 1997 the agreement was renewed for a term of 12 months. In addition to the annual fees of $30,000, the Company has agreed to grant to the consultant 50,000 warrants exercisable for a period of four years at an exercise price of $4.50. 11. Major The Company is an approved Medicaid Provider in the states Customers of New York and Georgia. During the years ended December 31, 1996, 1995 and 1994, the Company had revenue from one contract with a municipality in New York State which represented 44%, 44%, and 37% of total revenue, respectively. This contract is effective through June 30, 1997. On March 27, 1997, the Company was notified by the municipality that they are currently processing the renewal of the Company's contract which would extend it through February 28, 1998. During the years ended December 31, 1996, 1995 and 1994, the Company had revenue from the State of Georgia which represents 5%, 6%, and 7%, respectively, of total revenue. As of December 31, 1996 and 1995, accounts receivable from the one contract referred to above represented 39% and 46%, respectively, of accounts receivable. F-17 Exhibit Index ------------- 3(a) Articles of Incorporation of Company, as amended. (Incorporated by reference to Exhibit 3(a) to the Company's Form S-1 Registration Statement under the Securities Act of 1933, filed on September 30, 1983 - File No. 2-86862). 3(b) By-Laws of Company. (Incorporated by reference to Exhibit 4(b) to the Company's Form S-3 Registration Statement under the Securities Act of 1933, Commission File No. 333-6159). 4(a) Warrant Agreement between the Company and Continental Stock Transfer & Trust Company, the Company's transfer agent, with the Company's form of Warrant Certificate attached thereto. (Incorpo rated by reference to Exhibit 4(a) to the Company's Form S-1 Registration Statement under the Securities Act of 1933, filed on September 30, 1983 - File No. 2-86862). 4(b) Amendment, dated December 22, 1988, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(c) to the Company's Form 10-K for the year ended December 31, 1988). 4(c) Amendment, dated October 26, 1990, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(c) to the Company's Form 10-K for the year ended December 31, 1990). 4(d) Amendment, dated November 30, 1994, to the Warrant Agreement between the Company and Continental Stock Transfers & Trust Company. (Incorporated by reference to Exhibit 4(d) to the Company's Form 10-KSB for the year ended December 31, 1994). 4(e) Amendment, dated November 20, 1995, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(e) to the Company's Form 10-KSB for the year ended December 31, 1995). 4(f) Amendment, dated December 20, 1996, to the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. (Incorporated by reference to Exhibit 4(h) to the Company's Registration Statement on Form S-3, Commission File No. 333-6159). 10(a) Employment Agreement, dated January 1, 1997 between the Company and Howard M. Siegel.* 10(b) Employment Agreement, dated August 28, 1989 between the Company and John Lesher. (Incorporated by reference to Exhibit 10(c) to the Company's Form 10-K for the year ended December 31, 1990). 10(c) Amendment, dated March 4, 1992, to the Employment Agreement between the Company and John Lesher. (Incorporated by reference to Exhibit 10(d) to the Company's Form 10-K for the year ended December 31, 1991). 10(d) Lease for the premises located at 520 Fellowship Road, Suite C301, Mt. Laurel, New Jersey ("Mt. Laurel Lease"). (Incorporated by reference to Exhibit 10(e) to the Company's Form 10-K for the year ended December 31, 1991). 10(e) First Amendment to the Mt. Laurel Lease. (Incorporated by reference to Exhibit 10(f) to the Company's Form 10-KSB for the year ended December 31, 1993). 10(f) Second Amendment to the Mt. Laurel Lease.* 10(g) Leases for the premises located at 3265 Lawson Boulevard, Oceanside, New York. (Incorporated by reference to Exhibit 10(h) to the Company's Form 10-KSB for the year ended December 31, 1994). 10(h) Lease for the premises located at 910 Church Street, Decatur, Georgia. (Incorporated by reference to Exhibit 10(i) to the Company's Form 10-KSB for the year ended December 31, 1995). 10(i) Lease for the premises located at 169-10 Crocheron Avenue, Flushing, New York. (Incorporated by reference to Exhibit 10(j) to the Company's Form 10-KSB for the year ended December 31, 1994). 10(j) Lease for the premises located at 475 West 55th Street, Contryside, Illinois. (Incorporated by reference to Exhibit 10(k) to the Company's Form 10-KSB for the year ended December 31, 1994). 10(k) 1984 Incentive Stock Option Plan, as amended. (Incorporated by reference to Exhibit 10(e) to the Company's Form 10-K for the year ended December 31, 1990). 10(l) Amended 1991 Stock Option Plan. (Incorporated by reference to Exhibit 10(l) to the Company's Form 10-KSB for the year ended December 31, 1994). 10(m) Restated and Amended Revolving Credit Note with North Fork Bank, dated December 1, 1995 (the "Revolving Credit Note").* 10(n) Letter from North Fork Bank extending the Revolving Credit Note until April 30, 1998.* 10(o) Agreement between the Company and the City of New York, as extended through February 18, 1998.* 23(a) Consent of Deloitte & Touche LLP.* 23(b) Consent of Margolin, Winer & Evens LLP.* 27 Financial Data Schedule.* - ------------------- * Filed herewith. EX-10 2 EX.10(A) EMPLOYMENT AGREEMENT EXHIBIT 10(a) ------------- EMPLOYMENT AGREEMENT -------------------- EMPLOYMENT AGREEMENT dated as of January 1, 1997 between AMERICAN MEDICAL ALERT CORP., a New York corporation (the "Company"), with offices located at 3265 Lawson Boulevard, Oceanside, New York 11572, and HOWARD M. SIEGEL, an individual having an address at 3429 Westminster Road, Oceanside, New York 11572 ("Employee"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company desires to obtain the services of Employee upon the terms and conditions stated herein; and WHEREAS, Employee desires to be employed by the Company upon the terms and conditions stated herein. NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises contained herein, the parties hereby agree as follows: 1. Employment. The Company hereby employs Employee for the period beginning as of the date hereof and ending December 31, 1999, unless earlier terminated pursuant hereto (the "Employment Period"). 2. Duties. Subject to the authority of the Board of Directors of the Company, Employee shall be employed as the Company's Chairman of the Board, President and Chief Executive Officer. Employee will perform such duties and services of an executive nature, commensurate with his position as the Chairman of the Board, President and Chief Executive Officer, as may from time to time be assigned to him by the Board of Directors. -1- 3. Full Time. Employee agrees that he will devote his full time and attention during regular business hours to the business and affairs of the Company. The foregoing shall not prevent the purchase, ownership or sale by Employee of investments or securities of publicly held companies and any other business that is not competitive with the Company or any subsidiary of the Company so long as such investment does not require active participation of Employee in the management of the business of such publicly held companies, does not interfere or conflict with the performance of Employee's duties hereunder and does not otherwise violate any of the provisions of this Agreement, or Employee's participation in philanthropic organizations to the extent that such participation does not interfere or conflict with the performance of Employee's duties hereunder and does not otherwise violate any provision of this Agreement. 4. Compensation. In consideration of the duties and services to be performed by Employee hereunder, the Company agrees to pay, and Employee agrees to accept the amounts set forth below: (a) A base salary, to be paid on a weekly basis, at the rate of $200,000, $215,000 and $230,000 per annum, for the first, second and third years, respectively, of the Employment Period. (b) As additional compensation, with respect to each fiscal year of the Company during the Employment Period during which the Company's Pre-Tax Income (as hereinafter defined) exceeds $2,000,000, an amount equal to a percentage of the Company's Pre- Tax Income, as follows: (i) 8% of the Company's Pre-Tax Income between $2,000,000 and 3,000,000, (ii) 9% of the Company's Pre-Tax Income between $3,000,000 and $4,000,000, and -2- (iii) 10% of the Company's Pre-Tax Income in excess of $4,000,000. No additional compensation shall be paid for any fiscal year in which Pre-Tax Income is less than $2,000,000. (c) In lieu of part or all of the additional compensation payable in cash under paragraph 4(b), Employee may elect to receive, as of December 31 of the year for which Pre- Tax Profits are determined, such number of shares of the Company's Common Stock as the Board of Directors may determine has a fair market value equal to such additional compensation. If the Company's Common Stock is listed on a national securities exchange or traded on the Over-the- Counter market, the fair market value of a share of such Common Stock shall be the closing selling price or the mean of the closing bid and asked prices of the Company's Common Stock quoted on such exchange, or on the Over-the-Counter market as reported by the National Association of Securities Dealers Automated Quotation ("NASDAQ") system, or if the Company's Common Stock is not traded on NASDAQ, then as reported by the National Quotation Bureau, Incorporated, on the day on which such election is made, or, if there is no trading or bid or asked price on that day, the closing selling price or the mean of the closing bid and asked prices on the nearest trading date before that day and for which such prices are available, and if the Company's Common Stock is not listed on such exchange or traded in such market, then the fair market value shall be determined by an independent appraiser, selected by the Board of Directors, whose opinion shall be binding on the parties. The Company may require, as a condition to issuing shares of the Company's Common Stock pursuant to this paragraph 4(c), that it receive an opinion of its counsel that such securities may be issued pursuant to an exemption from registration under the Securities Act of 1933, as amended, and applicable state law. Each certificate for such securities shall bear a legend as follows: -3- "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or applicable state law. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law." (d) The additional compensation to be paid pursuant to paragraph 4(b) hereof and/or the shares of the Company's Common Stock, if any, issuable pursuant to paragraph 4(c) hereof shall be payable and/or issuable, as the case may be, promptly following the availability of the audited financial statements relating to the applicable fiscal year of Company. To the extent any such fiscal year is not entirely included in the Employment Period, because for example Employee is terminated by the Company other than in accordance with paragraph 9(a) hereof, Employee shall receive the pro rata portion of such additional compensation determined by multiplying the additional compensation, computed for the applicable fiscal year, by a fraction whose numerator is the number of days in such fiscal year included in the Employment Period and whose denominator is the total number of days in such fiscal year. (e) The compensation provided for herein shall be in addition to any retirement, profit sharing, insurance or similar benefit which may at any time be payable to Employee pursuant to any plan or policy of the Company relating to such benefits, which additional benefits shall be made available to Employee on the same basis as they are generally made available to other executive officers of the Company. Such compensation shall be in addition to any options which may be granted under any stock option plan of the Company. -4- (f) The Company shall reimburse Employee in accordance with the Company's normal policies for all reasonable travel, hotel, meal and other expenses properly incurred by him in the performance of his duties hereunder. (g) The Company shall provide Employee with the use of an automobile, selected by Employee and leased by the Company, with all expenses of operation, such as insurance, gas, oil and repair, paid for by the Company and having a cost to the Company of up to $1,250 per month. (h) For the purposes of this Agreement, "Pre-Tax Income" shall mean for each fiscal year the net income of the Company and its consolidated subsidiaries, as set forth in the audited financial statements of the Company, for such fiscal year before any adjustment for the effect of the additional compensation pursuant to paragraph 4(b) hereof, determined in accordance with generally accepted accounting principles, as consistently applied by the Company. 5. Vacation. Employee shall be entitled to four (4) weeks vacation each fiscal year, to be taken at such time as is mutually convenient to the Company and Employee. 6. Death. In the event of the death of Employee during the Employment Period, this Agreement and the employment of Employee hereunder shall terminate on the date of the death of Employee. The estate of Employee (or such person(s) as Employee shall designate in writing) shall be entitled to receive, and the Company agrees to continue to pay, in accordance with the normal pay practice of the Company, the base salary of Employee provided by paragraph 4(a), for a period of one (1) year following the date of death of Employee. 7. Disability. In the event that Employee shall be unable to perform because of illness or incapacity, physical or mental, the duties and services to be performed by him -5- hereunder for a period of one hundred and eighty (180) consecutive days or an aggregate period of more than one hundred and eighty (180) days in any 12-month period, the Company may terminate this Agreement after the expiration of such period. Upon such termination, Employee shall be entitled to receive the base salary provided by paragraph 4(a), the additional compensation provided by paragraphs 4(b) and 4(c) and payable in accordance with paragraph 4(d), and the additional benefits, if any, provided by paragraph 4(e), in each instance computed up to the date of termination. 8. Non-Competition and Non-Disclosure. (a) Employee covenants and agrees that, throughout the Employment Period and for a period of eighteen (18) months thereafter, he will not, directly or indirectly, own, manage, operate or control, or participate in the ownership, management, operation or control of, any business competing directly in the United States of America with the business conducted by the Company or any subsidiary of the Company on the date of termination hereof; provided, however, that Employee may own not more than 5% of the outstanding securities of any class of any corporation engaged in any such business, if such securities are listed on a national securities exchange or regularly traded in the Over-the-Counter market by a member of a national securities association. (b) Employee covenants and agrees that, throughout the Employment Period and for a period of eighteen (18) months thereafter, he will not directly or indirectly solicit, entice or induce any person who on the date of termination of employment of Employee is, or within the last three months of Employee's employment by the Company was, associated with or employed by the Company or any subsidiary of the Company to leave the employ of or terminate -6- his association with the Company, or any subsidiary of the Company, solicit the employment of any such person on his own behalf or on behalf of any other business enterprise. (c) Employee covenants and agrees that, throughout the Employment Period and at all times thereafter, he will not use, or disclose to any third party, trade secrets or confidential information of the Company, including, but not limited to, confidential information or trade secrets belonging or relating to the Company, its subsidiaries, affiliates, customers and clients or proprietary processes or procedures of the Company, its subsidiaries, affiliates, customers and clients. Proprietary processes and procedures shall include, but shall not be limited to, all information which is known or intended to be known only to employees of the Company, its respective subsidiaries and affiliates or others in a confidential relationship with the Company or its respective subsidiaries and affiliates which relates to business matters. (d) If any term of this paragraph 8 is found by any court having jurisdiction to be too broad, then and in that case, such term shall nevertheless remain effective, but shall be considered amended (as to the time or area or otherwise, as the case may be) to a point considered by said court as reasonable, and as so amended shall be fully enforceable. (e) In the event that Employee shall violate any provision of this Agreement (including but not limited to the provisions of this paragraph 8), then Employee hereby consents to the granting of a temporary or permanent injunction against him by a court of competent jurisdiction prohibiting him from violating any provision of this Agreement. In any proceeding for an injunction and upon any motion for a temporary or permanent injunction, Employee agrees that his ability to answer in damages shall not be a bar or interposed as a defense to the granting of such temporary or permanent injunction against Employee. Employee further -7- agrees that the Company will not have an adequate remedy at law in the event of any breach by Employee hereunder and that the Company will suffer irreparable damage and injury if Employee breaches any of the provisions of this Agreement. 9. Termination. (a) The Company may terminate this Agreement without liability (other than for the base salary provided in paragraph 4(a) accrued to the date of termination) in the event of (i) a material breach by Employee of the provisions of this Agreement, which breach shall not have been cured by Employee within sixty (60) days following notice thereof by the Company to Employee, (ii) the commission of gross negligence or bad faith by Employee in the course of his employment hereunder, which commission has a material adverse effect on the Company, (iii) the commission by Employee of a criminal act of fraud, theft or dishonesty causing material damages to the Company or any of its subsidiaries or (iv) Employee shall be convicted of (or plead nolo contendere to) any felony, or misdemeanor involving moral turpitude if such misdemeanor results in material financial harm to or materially adversely affects the goodwill of the Company. (b) Employee may terminate this Agreement without liability at any time upon at least one (1) year prior written notice. (c) After a Change in Control (as hereinafter defined) has occurred, Employee may terminate his employment at any time upon written notice of the Company within six (6) months after he has obtained actual knowledge of the occurrence of any of the following events: (i) Failure to elect or appoint, or re-elect or re-appoint, Employee to, or removal of Employee from, his office and/or position with the Company as -8- constituted prior to the Change in Control, except in connection with the termination of Employee's employment pursuant to paragraph 9(a) hereof; (ii) A reduction in Employee's overall compensation (including any reduction in pension or other benefit programs or perquisites) or a material adverse change in the nature or scope of the authorities, powers, functions or duties normally attached to Employee's position with the Company as referred to in paragraph 2 hereof; (iii) A determination by Employee made in good faith that, as a result of a Change in Control, he is unable effectively to carry out the authorities, powers, func tions or duties attached to his position with the Company as referred to in paragraph 2 hereof, and the situation is not remedied within thirty (30) days after receipt by the Company of written notice from Employee of such determination; (iv) A breach by the Company of any provision of this Agreement not covered by clauses (i), (ii) or (iii) of this paragraph 9(c), which is not remedied within thirty (30) days after receipt by the Company of written notice from Employee of such breach; (v) A change in the location at which substantially all of Employee's duties with the Company are to be performed to a location which is not within a 50- mile radius of the address of the place where Employee is performing services prior to the date of the Change in Control; or (vi) failure by the Company to obtain the assumption of, and the agreement to perform, this Agreement by any successor (pursuant to a transfer described in paragraph 15). -9- An election by Employee to terminate his employment under the provisions of this paragraph 9(c) shall not be deemed a voluntary termination of employment by Employee for the purpose of interpreting the provisions of any of the Company's employee benefit plans, programs or policies. Employee's right to terminate his employment pursuant to this paragraph 9(c) shall not be affected by his illness or incapacity, whether physical or mental, unless the Company shall at the time be entitled to terminate his employment under paragraph 7 of this Agreement. Employee's continued employment with the Company for any period of time less than six (6) months after a Change in Control shall not be considered a waiver of any right he may have to terminate his employment pursuant to this paragraph 9(c). (d) After a Change in Control has occurred, if Employee terminates his employment with the Company pursuant to paragraph 9(c) hereof or if Employee's employment is terminated by the Company for any reason other than pursuant to paragraph 9(a) hereof, Employee (i) shall be entitled to his base salary, the additional compensation determined in accordance with paragraph 4(b) hereof and/or the shares of the Company's Common Stock, if any, issuable pursuant to paragraph 4(c) hereof, bonuses, awards, perquisites and benefits, including, without limitation, benefits and awards under the Company's stock option plans and the Company's pension and retirement plans and programs, through the date specified in the notice of termination as the last day of Employee's employment by the Company (the "Termination Date") and, in addition thereto, (ii) shall be entitled to be paid in a lump-sum, on the Termination Date, an amount of cash (to be computed, at the expense of the Company, by the independent certified public accountants utilized by the Company immediately prior to the Change of Control (the "Accountants"), whose computation shall be conclusive and binding upon Employee and the -10- Company) equal to 2.99 times Employee's "base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Such lump-sum payment is hereinafter referred to as the "Termination Compensation." (e) Notwithstanding anything in this Agreement to the contrary, Employee shall have the right, prior to the receipt by him of any amounts due hereunder, to waive the receipt thereof or, subsequent to the receipt by him of any amounts due hereunder, to treat some or all of such amounts as a loan from the Company which Employee shall repay to the Company, within ninety (90) days from the date of receipt, with interest at the rate provided in Section 7872 of the Code. Notice of any such waiver or treatment of amounts received as a loan shall be given by Employee to the Company in writing and shall be binding upon the Company. (f) It is intended that the "present value" of the payments and benefits to Employee, whether under this Agreement or otherwise, which are includable in the computation of "parachute payments" shall not, in the aggregate, exceed 2.99 times the "base amount" (the terms "present value", "parachute payments" and "base amount" being determined in accordance with Section 280G of the Code). Accordingly, if Employee receives payments or benefits from the Company prior to payment of the Termination Compensation which, when added to the Termination Compensation, would, in the opinion of the Accountants, subject any of the payments or benefits to Employee to the excise tax imposed by Section 4999 of the Code, the Termination Compensation shall be reduced by the smallest amount necessary, in the opinion of the Accountants, to avoid such tax. In addition, the Company shall have no obligation to make any payment or provide any benefit to Employee subsequent to payment of the Termination Compensation which, in the opinion of the Accountants, would subject any of the payments or -11- benefits to Employee to the excise tax imposed by Section 4999 of the Code. No reduction in Termination Compensation or release of the Company from any payment or benefit obligation in reliance upon any aforesaid opinion of the Accountants shall be permitted unless the Company shall have provided to Employee a copy of any such opinion that specifically entitles Employee to rely thereon, no later than the date otherwise required for payment of the Termination Compensa tion or any such later payment or benefit. (g) "Change of Control" as used in this Agreement shall mean the occurrence of any of the following: (i) any "person" or "group" (as such terms are used in Section 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act")), except for an employee stock ownership trust (or any of the trustees thereof), becomes a "beneficial owner" (as such term in used in Rule 13d-3 promulgated under the Act), after the date hereof, directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; (ii) a change in "control" of the Company (as the term "control" is defined in Rule 12b-2 or any successor rule promulgated under the Act) shall have occurred; (iii) the majority of the Board of Directors, as such entire Board of Directors is composed at the date of this Agreement, no longer serve as directors of the Company, except that there shall not be counted toward such majority who no longer serve as directors any director who ceased to serve prior to the date of a Change in Control, for any reason, or at any other time due to his death, disability or termination for cause; -12- (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (v) the shareholders of the Company approve a merger or consolidation of the Company with any other company, other than a merger or consolidation which would result in the combined voting power of the Company's voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation. Notwithstanding the foregoing, any transaction involving a leveraged buyout or other acquisition of the Company which would otherwise constitute a Change in Control, in which Employee participates in the surviving or successor entity (other than solely as an employee or consultant), shall not constitute a Change in Control. 10. No Impediments. Employee warrants and represents that he is free to enter into this Agreement and to perform the services contemplated thereby and that such actions will not constitute a breach of, or default under, any existing agreement. 11. No Waiver. The failure of any of the parties hereto to enforce any provision hereof on any occasion shall not be deemed to be a waiver of any preceding or succeeding breach of such provision or of any other provision. 12. Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties hereto and no amendment, modification or waiver of any provision herein shall be effective unless in writing, executed by the party charged therewith. -13- 13. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with and shall be governed by the laws of the State of New York applicable to agreements to be wholly performed therein without giving effect to principles of conflicts of law. 14. Binding Effect. This Agreement shall bind and inure to the benefit of the parties, their successors and assigns. 15. Assignment and Delegation of Duties. This Agreement may not be assigned by the parties hereto except that the Company shall have the right to assign this Agreement to any successor in connection with a sale or transfer of all or substantially all of its assets, a merger or consolidation. This Agreement is in the nature of a personal services contract and the duties imposed hereby are non-delegable. 16. Paragraph Headings. The paragraph headings herein have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof. 17. Notices. Any notice under the provisions of this Agreement shall be in writing, shall be sent by one of the following means, directed to the address set forth on the first page of this Agreement or to such other address as shall be designated hereunder by notice to the other party, effective upon actual receipt and shall be deemed conclusively to have been given: (i) on the first business day following the day timely deposited for overnight delivery with Federal Express (or other equivalent national overnight courier service) or United States Express Mail, with the cost of delivery prepaid or for the account of the sender; (ii) on the fifth business day following the day duly sent by certified or registered United States mail, postage prepaid and -14- return receipt requested; or (iii) when otherwise actually received by the addressee on a business day (or on the next business day if received after the close of normal business hours or on any non-business day). 18. Unenforceability; Severability. If any provision of this Agreement is found to be void or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall, nevertheless, be binding upon the parties with the same force and effect as though the unenforceable part has been severed and deleted. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. EMPLOYEE: /s/ Howard M. Siegel -------------------- Howard M. Siegel COMPANY: AMERICAN MEDICAL ALERT CORP. By:/s/ John Rogers --------------------------------- Name: John Rogers Title: Vice President of Operations -15- EX-10 3 EX.10(F) SECOND AMENDMENT TO LEASE EXHIBIT 10 (f) -------------- SECOND AMENDMENT TO LEASE DATED JANUARY 15, 1997 BETWEEN FELLOWSHIP BUSINESS CENTER (LANDLORD) AND AMERICAN MEDICAL ALERT CORPORATION (TENANT) - ------------------------------------------------------------------------------- PURSUANT to a Lease dated April 8, 1991 for 2,100 square feet of space known as 520 Fellowship Road, Suite C-301, Mt. Laurel, New Jersey; and First Amendment to Lease dated November 18, 1993 (relocating to A-106/107 and 5,400 SF), between the aforementioned parties, the following changes shall be made: 1. TERM: The term of the Lease shall be extended for an additional one (1) year commencing January 1, 1997 and terminating December 31, 1997. 2. RENTAL: $33,534.00 per year, net; $2,794.50 per month, net. All other terms and conditions of the original Lease will remain in full force and effect. FELLOWSHIP BUSINESS CENTER, (Landlord) By: /s/ Steven Bloom ----------------- Steven Bloom AMERICAN MEDICAL ALERT CORPORATION, (Tenant) By: /s/ John Rogers ------------------------------ Name: John Lesher Title: Vice President of Engineering -1- EX-10 4 EX.10(M) EXHIBIT 10 (m) -------------- NORTH FORK BANK RESTATED AND AMENDED REVOLVING CREDIT NOTE The within is a further restatement and amendment and continuation of that certain Promissory Note from American Medical Alert Corp. to North Fork Bank dated October 31, 1991 in the original principal amount of $450,000; as modified by that certain Promissory Note from American Medical Alert Corp. to North Fork Bank in the original principal amount of $500,000 dated April 30, 1993. BORROWER: AMERICAN MEDICAL ALERT CORP. PRINCIPAL: $1,500,000.00 Date: As of December 1, 1995 PROMISE TO PAY: The undersigned (the "Borrower"), for value received, does hereby promise to pay to the order of NORTH FORK BANK (the "Bank") at its offices at 245 Love Lane, Mattituck, New York 11952, or at any of its branches, the sum of ONE MILLION FIVE HUNDRED THOUSAND ($1,500,000) DOLLARS plus interest thereon from the date hereof as set forth herein. RATE AND PAYMENT: The Borrower shall pay said sum, or such lesser amount as may then be the aggregate unpaid principal balance of all loans made by the Bank to the Borrower hereunder, (each a "Loan" and collectively the "Loans") on or before April 30, 1997 (the "Maturity Date"). The Borrower also promises to pay interest (computed on the basis of a 360 day year for actual days elapsed) at said office on the unpaid principal amount hereof from time to time outstanding from the date hereof until the Maturity Date at the rate of one (1%) percent per annum in excess of that rate stated by the Bank to be its Prime Rate from time to time in effect, which interest rate shall change when and as said Prime Rate changes. Prime Rate as referred to herein shall refer to the rate of interest determined or announced by the Bank from time to time as its Prime Rate and the Prime Rate is not necessarily the lowest rate of interest charged by the Bank on loans and other credit relationships. Each change in the Prime Rate shall effect a simultaneous and corresponding change in the interest rate hereunder without notice to the Borrower. Interest shall be payable monthly on the last day of each month commencing on the first such day to occur after the date hereof and upon payment in full of unpaid principal amount hereof. UNUSED FEE: The Borrower agrees to pay a fee at the rate of one half of one (1/2 of 1%) percent per annum, payable on the 1st day of each April, July, October and January commencing April 1, 1996 and on the termination date (a) on the difference between $1,500,000.00 and the average daily amount outstanding. -1- The Borrower further agrees that this Note shall bear interest at any stated or accelerated maturity hereof at a rate of five (5%) percent in excess of the rate hereinbefore provided for, payable on demand. In no event shall the rate either before or after the occurrence of any such default exceed the highest rate of interest, if any, permitted under applicable New York or Federal law. If any payment is not made within ten (10) days of its respective due date as set forth herein, or if the entire balance becomes due and payable and is not paid, all or part of the amount due may be offset out of any account or other property which the Borrower has at the Bank or any affiliate of the Bank without prior notice or demand. The Bank may charge any account of the Borrower for any payment due to the Bank hereunder. LATE CHARGES: The Borrower will pay a charge of four (4%) percent of the amount of any payment which is not made within ten (10) days of its respective due date, or, if applicable, which cannot be debited from its account due to insufficient balance on the debit date. ATTORNEYS FEES: In the event the Bank retains counsel with respect to enforcement of this Note or any other document or instrument given to the Bank, the Borrower agrees to pay the Bank's reasonable attorneys fees (whether or not an action is commenced and whether or not in the court of original jurisdiction, appellate court, bankruptcy court, or otherwise). SUBSEQUENT AGREEMENTS: The Borrower shall be bound by any agreement extending the time or modifying the above terms of payment made by the Bank without notice to the Borrower, and the Borrower shall continue to be liable to pay all amounts due hereunder, but at an interest rate not exceeding the rate set forth herein, according to the terms of any such agreement of extension or modification. In consideration of the granting of the Loans evidenced by this Note, the Borrower hereby agrees as follows: REVOLVING CREDIT COMMITMENT: (a) The Loans evidenced by this Note are available in one or more advances during the period which commences on the date hereof and ends on April 30, 1997 (the "Credit Period") in an aggregate principal amount up to, but not exceeding at any time the outstanding principal sum of One Million Five Hundred Thousand ($1,500,000) Dollars (the "Commitment"). During the Credit Period, the Borrower may use the Commitment by borrowing, prepaying in whole or in part and reborrowing, on a revolving basis, all in accordance with the terms and conditions hereof; provided, however, that each Loan or prepayment be in a minimum amount of $10,000. Notwithstanding the aforestated availability in the aggregate amount of One Million Five Hundred Thousand ($1,500,000) Dollars, advances hereunder shall be limited to, and the outstanding principal balance hereof shall at no time be greater than the following: (a) seventy-five (75%) percent of the Borrower's Eligible Accounts Receivable outstanding for less than ninety (90) days and 25% on inventory not to exceed -2- $400,000.00. The Borrower shall submit to the Bank at the time of each request for an advance hereunder, but not less than one time per month, a Borrowing Base Certificate in the form annexed hereto as Exhibit "A", certified by an officer of the Borrower, verifying the amounts of Eligible Accounts Receivable and Eligible Inventory, of the Borrower as of the date of said Certificate. (b) The date and amount of each Loan and of each payment of principal shall be maintained by the Bank in its books and records at the time of each Loan or payment. All such notations shall be presumed to be correct and the aggregate net unpaid amount of Loans set forth therein shall be presumed to be the principal balance hereof. (c) Each request for a Loan shall be subject to the satisfaction of the following conditions precedent: (i) The Borrower shall have given the Bank notice of such request, setting forth the amount of the Loan requested and the date thereof. In addition to the aforementioned, the Borrower shall have submitted to the Bank for the month in which such request is made, a completed Borrowing Base Certificate satisfactory in form and substance to the Bank. Such notice may be written or oral and shall be sufficient if received by 1 p.m. of the date the Loan is requested. If the request is oral, it shall be thereafter confirmed in writing delivered by the Borrower to the Bank. (ii) No Event of Default, or event which would be an Event of Default but for the giving of notice or the passage of time or both, has occurred and is continuing; and all of the representations and warranties made by the Borrower herein shall be true and correct on and as of the date of such request as if made on and as of such date. (d) The outstanding principal balance of the Loans shall at no time exceed the amount of the Commitment. CONDITIONS PRECEDENT: (a) Prior to funding the first Loan, the Borrower shall satisfy the following conditions precedent including delivery to the Bank of the following: (i) An executed copy of this Note; (ii) The Bank shall receive a first perfected security interest in certain assets of the Borrower (the "Collateral") pursuant to the general security agreement (the "Security Agreement") to be evidenced and delivered in connection herewith; (iii) A copy of the resolutions passed by the Borrower's Board of Directors certified by its Secretary or Assistant Secretary as being in full force and effect on the date of this Agreement, authorizing the loan herein provided for, the execution, delivery and performance of this -3- Note and any other instrument or agreement required hereunder and containing a certificate of incumbency as to the person or persons authorized to execute and deliver the same; (iv) A favorable written opinion, dated of even date herewith, of the Borrower's counsel (which counsel must be satisfactory to the Bank) with respect to the matters set forth in the Representations and Warranties section hereof with the exceptions of subsections (g) and (h); and (v) All other documents reasonably required by the Bank and/or its counsel in order to evidence and/or secure the Bank's position as set forth herein. REPRESENTATIONS AND WARRANTIES: The Borrower hereby represents and warrants to the Bank that: (a) The Borrower is duly organized, validly existing and in good standing under the laws of the State of its formation and is qualified to do business and in good standing under the laws of each state where its failure to so qualify would have a material adverse effect on its business, operations or properties. (b) This Note, the Security Agreement and all other documents executed and delivered herewith have been duly authorized, executed and delivered and constitute the valid and legally binding obligations of the Borrower, enforceable in accordance with their respective terms, including the granting to the Bank of a first perfected security interest in the Collateral. (c) The execution and delivery of this Note, the Security Agreement and all other documents executed and delivered herewith and performance hereunder and thereunder, will not violate any provision of law. (d) There are no actions or proceedings pending before any court or governmental authority, bureau or agency, with respect to or threatened against or affecting the Borrower, or any Subsidiary, which if determined adversely would have a material adverse effect on the business, the assets or the financial condition of the Borrower or any Subsidiary. As used herein, the term "Subsidiary" or "Subsidiaries" means any corporation or corporations of which the Borrower alone, or the Borrower and/or one or more of its Subsidiaries, owns, directly or indirectly, at least a majority of the securities having ordinary voting power for the election of directors. (e) The Borrower is not in default under, or in violation of, any term of any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or by which any of the properties or assets owned by or used in the conduct of its business is affected, which default or violation may have a material adverse effect on its business, assets or financial condition. The operations of the Borrower comply in all material respects with all laws, ordinances and regulations applicable to them. -4- (f) The Borrower is not a party to or bound by, nor are any of the properties or assets owned by it or used in the conduct of its business affected by any financial agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment, or subject to any charter or other corporate restriction, which materially and adversely affects its business, assets or financial condition. (g) All balance sheets, profit and loss statements and other financial information heretofore furnished to the Bank are complete and present fairly the financial condition of the Borrower and its Subsidiaries as at the dates thereof and for the periods covered thereby, including contingent liabilities of every kind, which financial conditions has not materially adversely changed since the date of the most recent dated balance sheet of the Borrower heretofore furnished to the Bank. (h) No part of the proceeds of the loan which is evidenced by this Note will be used directly or indirectly for the purpose of purchasing or carrying, or for payment in full or in part of indebtedness which was incurred for the purpose of purchasing or carrying, any margin stock as such term is defined in Sec. 221.3 of Regulation U of the Board of Governors of the Federal Reserve System. (i) The Borrower and its Subsidiaries are in compliance in all material respects with the Employees Retirement Income Security Act of 1974 ("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any of its Subsidiaries has any unfunded vested liability under any type of plan described in Section 4021(a) of ERISA ("Pension Plan") and no reportable event, as set forth in Section 4043(b) of ERISA, has occurred or is continuing with respect to any Plan. FINANCIAL STATEMENTS: The Borrower shall deliver to the Bank: (a) Annually, as soon as available, but in any event within one hundred twenty (120) days after the last day of each fiscal year, audited financial statements, including balance sheets as of the last day of the fiscal year and statements of income and retained earnings and changes in financial condition for such fiscal year each prepared in accordance with generally accepted accounting principles, consistently applied for the period and prior periods by independent Certified Public Accountants satisfactory to the Bank. (b) Quarterly 10-Q Reports of the Borrower within sixty (60) days after the end of each fiscal quarter. (c) Monthly Accounts Receivable aging and Borrowing Base Certificate within ten (10) days after the end of each month. (d) Within a reasonable time after a written request therefor, such other financial data or information as the Bank may reasonably request from time to time. -5- (e) At the same time as it delivers the financial statements required under the provisions of subsections (a) and (b) hereof, a certificate signed by the president or the chief financial, or accounting, officer or the Borrower, to the effect that no Event of Default hereunder or materially default under any other agreement to which the Borrower or any Subsidiary is a party or by which it is bound, or by which any of its properties or assets may be affected, and no event which, with the giving of notice or the lapse of time, or both, would constitute such an Event of Default, has occurred. AFFIRMATIVE COVENANTS: The Borrower will, and with respect to the agreements set forth in subsections (a) through (f) hereof, will cause each Subsidiary to: (a) With respect to its properties, assets and business, maintain insurance against loss or damage, to the extent that property, assets and businesses of similar character are usually so insured by companies similarly situated and operating like properties, assets or businesses with responsible insurance companies satisfactory to the Bank, said insurance to be assigned to the Bank at closing; (b) Duly pay and discharge all taxes or other claims which might become a lien upon any of its properties except to the extent that such items are being in good faith appropriately contested; (c) Maintain, preserve and keep its properties in good repair, working order and condition, and make all reasonable repairs, replacements, additions, betterment and improvements thereto; (d) Conduct its business in substantially the same manner and in substantially the same fields as such business is now carried on and conducted; (e) Comply with all statutes, rules and regulations and maintains its corporate existence; (f) Permit the Bank to make or cause to be made, inspections and audits of any financial books, records and papers of the Borrower and of any parent or subsidiary and each endorser or guarantor hereof and to make extracts therefrom at all such reasonable times and as often as the Bank may reasonably require; (g) Immediately give notice to the Bank that an Event of Default has occurred or that an event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred and specifying the action which the Borrower has taken and proposes to take with respect thereto; and (h) In addition to the aforementioned, the Borrower agrees that the following financial covenants are upon which the Bank relies the extension of the obligation evidenced hereby and that any violation or default under same shall constitute an Event of Default under the terms hereof: -6- (1) at all times during the term hereof, the Borrower shall maintain a ratio of Total Liabilities to Tangible Net Worth of not greater than .60:1; (2) at all times during the term hereof, the Borrower shall maintain a ratio of Current Assets to Current Liabilities of not less than 1.40:1; (3) The Borrower shall maintain a Minimum Tangible Net worth (A) at December 31, 1994 + 50% of 1995 net income should equal the minimum net worth as of December 31, 1995. NEGATIVE COVENANTS: The Borrower will not, and will not permit any Parent or Subsidiary to: (a) Create, incur, assume or suffer to exist any liability for borrowed money, except (i) indebtedness to the Bank; (ii) existing debt as reflected on the most recent balance sheet provided to the Bank and further incurred through the date of this Agreement, which further incurred debt has been acknowledged by the Borrower to the Bank in writing prior to the execution hereof; and (iii) other indebtedness for borrowed money (whether or not constituting a refinancing of existing indebtedness) so long as such indebtedness is not secured by collateral securing repayment of this loan and the incurrence of which will not cause a default hereunder. The Borrower agrees to provide the Bank an opportunity to finance any additional borrowing needs in excess of $100,000 during the term of this Note; (b) enter into any merger or consolidation or liquidate, wind-up or dissolve itself or sell, transfer or lease or otherwise dispose of all or any substantial part of its assets; (c) lend or advance money, credit or property to or invest in (by capital contribution, loan, purchase or otherwise) any firm, corporation, or other person in an amount greater than $250,000 in the aggregate except (i) investments in United States Government obligations and certificates of deposit of any bank institution with combined capital and surplus of at least $200,000,000, (ii) trade credit, and (iii) security deposits; (d) create, assume or permit to exist, any mortgage, pledge, lien or encumbrance of or upon or security interest in, any of its property or assets now owned or hereafter acquired except (i) mortgages, liens, pledges and security interests in favor of the Bank; (ii) other liens, charges and encumbrances incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not materially impair the use thereof in the operation of its business; (iii) liens for taxes or other governmental charges which are not delinquent or which are being contested in good faith and for which a reserve shall have been established in accordance with generally accepted accounting principles; and (iv) liens granted to secure purchase money financing of equipment, provided such liens are limited to the equipment financed; (v) liens granted to refinance unencumbered equipment provided such liens are limited to the equipment refinanced and the -7- incurrence of which will not cause a default hereunder or in any other loan agreements or notes with the Bank; (e) assume, endorse, be or become liable for or guarantee the obligations of any person except by the endorsement of negotiable instruments for deposit or collection in the ordinary course of business; or (f) (i) terminate any Pension Plan so as to result in any material liability to The Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (the "PBCG"), (ii) engage in or permit any person to engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended) involving any Pension Plan which would subject the Borrower to any material tax, penalty or other liability, (iii) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Pension Plan, or (iv) allow or suffer to exist any event or condition, which presents a material risk of incurring a material liability to the PBCG by reason of termination of any Pension Plan. COLLATERAL SECURITY: (a) As collateral security for the payment of any and all sums owing under this Note and all other obligations, direct or contingent, joint, several or independent, of the Borrower and of any Parent or Subsidiary and each endorser or guarantor hereof now or hereafter existing, due or to become due, or held, or to be held by, the Bank, whether created directly or acquired by assignment or otherwise (all of such obligations, including this Note, are hereinafter called the "Obligations"), the Borrower hereby grants to the Bank a lien on and security interest in any and all deposits or other sums at any time credited by or due from the Bank to the Borrower, whether in regular or special depository accounts or otherwise, and any and all monies, securities and other property of the Borrower, and the proceeds thereof, now or hereafter held or received by or in transit to the Bank from or for the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and any such deposits, sums, monies, securities and other property, may at any time after the occurrence of any Event of Default by set-off, appropriated and applied by the Bank against any of the Obligations whether or not such Obligations are then due or are secured by any collateral, or, if they are so secured, whether or not such collateral held by the Bank is considered to be adequate and with respect to all collateral security the Bank shall have all the rights and remedies available to it under the Uniform Commercial Code of New York and other applicable law. (b) This Note is also secured by the Collateral. EVENTS OF DEFAULT: If any one or more of the following events ("Events of Default") shall occur (and with the exception of subsection (c) hereof, shall have continued uncured for a period of ten (10) days after written notice thereof), the entire unpaid balance of the principal of and interest on the Obligations shall immediately become due and payable: -8- (a) Failure to pay any amount required by this Note within ten (10) days of its respective due date, or any other obligation owed to the Bank by Borrower or any Guarantor, or, if applicable, failure to have sufficient funds in its account for loan payments to be debited on the due date: (b) Failure to perform or keep or abide by any term, covenant or condition contained in this Note, any Guaranty or any other document or instrument given to the Bank in connection with this loan; (c) The filing of a bankruptcy proceeding, assignment for the benefit of creditors, issuance of any execution, garnishment, or levy against, or the commencement of any proceeding for relief from indebtedness by or against the Borrower or any Guarantor; (d) The happening of any event which, in the reasonable judgment of the Bank, adversely affects the Borrower's or guarantor's ability to repay or the value of any collateral; (e) If any written representation or statement made to the Bank by the Borrower or guarantors is untrue; (f) If any written representation, covenant or warranty made to the Bank by the Borrower or guarantors is breached; (g) The occurrence of a default under the Security Agreement or any other document or instrument given to the Bank in connection with this loan; (h) Failure to provide any financial information on request or permit an examination of books and records; MISCELLANEOUS: (a) Only those agreements, representations and warranties made expressly herein shall survive the delivery of this Note. The Borrower waives trial by jury, set-off and counterclaim of any nature or description in any litigation in any court with respect to, in connection with, or arising out of, this Note or any instrument or document delivered pursuant hereto or the validity, protection, interpretation, collection or enforcement hereof; (b) No modification or waiver of or with respect to any provision of this Note, or consent to any departure by the Borrower from any of the terms or conditions hereof, shall in any event be effective unless it shall be in writing and signed by the Bank, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Borrower in any case shall, of itself, entitle it to any other or further notice or demand in similar or other circumstances; -9- (c) Each and every right granted to the Bank hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Bank or the holder of this Note to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or future exercise thereof or the exercise of any other right; (d) In the event that this Note is placed in the hands of an attorney for collection by reason of any default hereunder, the Borrower agrees to pay reasonable attorney's fees so incurred. The Borrower promises to pay all expenses of any nature as soon as incurred whether in or out of court and whether incurred before or after this Note shall become due at its maturity date or otherwise and costs which the Bank may deem necessary or proper in connection with the satisfaction of the indebtedness or the administration, supervision, preservation, protection (including but not limited to maintenance of adequate insurance) of or the realization upon the collateral; (e) The Borrower hereby waives presentment, demand for payment, protest, notice of protest, notice of dishonor, and any or all other notices or demands except as otherwise expressly provided for herein; (f) All accounting terms not otherwise defined in this Note shall have the meanings ascribed thereto under generally accepted accounting principles; (g) Delay or failure of the Bank to exercise any of its rights under this Note shall not be deemed a waiver thereof. No waiver of any condition or requirement shall operate as a waiver of any other or subsequent condition or requirement. The Bank or any other holder of this Note need not present it before requiring payment. The Borrower waives trial by jury, offset, and counterclaim with respect to any action arising out of or relating to this Note. This Note may not be modified or terminated orally. This Note shall be governed by the laws of the State of New York without regard to its conflicts of laws rules. The Borrower irrevocably consents to the jurisdiction and venue of the New York State Supreme Court, Suffolk County in any action concerning this Note. This Note is binding upon the Borrower, its heirs, successors and assigns; (h) The Borrower expressly warrants and represents that no statements, agreements or representations, whether oral or written, have been made by the Bank, or by any employee, agent or broker of the Bank with respect to the obligation or debt evidenced by this Note. The Borrower further expressly warrants and represents that (i) no oral commitment has been made by the Bank to extend or continue any credit to the Borrower or any party other than as expressly stated herein or in those certain documents executed in connection herewith, (ii) no representation or agreement has been made by or with the Bank, or any employee, agent or broker of the Bank, to forebear or refrain in any way from exercising any right or remedy in its favor hereunder or otherwise unless expressly set forth herein, and (iii) the Borrower and Guarantors have not and will not rely on any commitment to extend or continue any credit, nor on any agreement to forebear or refrain from exercising rights -10- or remedies unless such commitment or agreement shall be in writing and duly executed by an authorized of officer of the Bank. NOTICES: All notices, requests and other communications pursuant to this Note shall be in writing, either by letter (delivered by hand or sent by certified mail, return receipt requested) or telegram, addressed as follows: (a) if to the Borrower: American Medical Alert Corp. 3265 Lawson Boulevard Oceanside, New York 11572 Attention: Howard M. Siegel, President (b) if to the Bank: North Fork Bank 275 Broad Hollow Road Melville, New York 11747 Attention: Bruce A. Salmon Vice President Any notice, request or communication hereunder shall be deemed to have been given when deposited in the mails, postage prepaid, or in the case of telegraphic notice, when delivered to the telegraph company, addressed as aforesaid. Any party may change the person or address to whom or which the notice are to be given hereunder, but any such notice shall be effective only when actually received by the party to whom it is addressed. IN WITNESS WHEREOF, the Borrower has signed this Note as of the 1st day of December , 1995. AMERICAN MEDICAL ALERT CORP. By: /s/ Howard M. Siegel -------------------- Howard M. Siegel, President STATE OF NEW YORK ) COUNTY OF NASSAU ) On this 1st day of December, 1995 before me personally came Howard M. Siegel, to me known, who, being by me duly sworn, did depose and say that he has an address at c/o AMERICAN MEDICAL -11- ALERT CORP., 3265 Lawson Boulevard, Oceanside, New York 11572, that he is the President of AMERICAN MEDICAL ALERT CORP., the corporation described in, and which executed, the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation. GABRIEL E. MERLE /s/ Gabriel E. Merle - -------------------- Notary Public, State of New York Notary Public No. 30-4745569 - Nassau County Commission Expires January 31, 1996 -12- EX-10 5 EX.10(N) EXHIBIT 10 (n) -------------- [NORTH FORK BANK LETTERHEAD] March 27, 1997 Mr. Howard Siegel President American Medical Alert Corp. 3265 Lawson Boulevard Oceanside, NY 11572-3723 Dear Mr. Siegel: We are pleased to confirm for you that North Fork Bank has re-approved for your company's use a $1,500,000, secured, Revolving Line of Credit. It is our understanding that borrowings under this facility will be used for general working capital needs and are secured by a blanket lien on corporate assets and will bear interest at North Fork Bank's Prime plus 3/4%. The facility will expire on April 30, 1998. Advances under this facility are subject to a monthly borrowing base as follows: 75% on receivables aged less than 90 days, 25% on total inventory capped at $400,000. Among other terms and conditions of this facility, as contained in the note and security agreement, all advances are subject to the continued satisfactory operations and financial condition of American Medical Alert Corp. as determined by the Bank in its sole discretion. We trust this information will be satisfactory to you and look forward to a continued relationship with you and your company. Very truly yours, /s/ Linda G. Orth Linda G. Orth Assistant Vice President cc: Bruce A. Salmon Vice President EX-10 6 EX.10(O) EXHIBIT 10 (o) -------------- March 27, 1997 Corey M. Aronin Chief Financial Officer American Medical Alert Corporation 3265 Lawson Boulevard Oceanside, New York 11572 Dear Mr. Aronin: Please be advised that the Home Care Services Program is currently processing the renewal of the contact for the provision of the Personal Emergency Response Services (PERS) with provider, American Medical Alert Corporation of Oceanside, New York. This renewal agreement will extend the current contract through February 28, 1998. If you have any questions, please contact me at (212) 835-7246. Sincerely, /s/ Rockie Ojomo-Kayoes ----------------------- Rockie Ojomo-Kayoes PERS Project Manager RENEWAL OF AGREEMENT FOR PROVIDING HOME CARE SERVICES (PERS) THIS RENEWAL AGREEMENT, dated as of this 27 day of May, 1994 between the City of New York acting through the Department of Social Services of the Human Resources Administration ("Department"), located at 250 Church Street, New York, New York 10013 and American Medical Alert Corp. ("Contractor") with offices at 3265 Lawson Boulevard, Oceanside, New York 11572. W I T N E S S E T H : --------------------- WHEREAS, the Department, pursuant to Section 367-g of the Social Services Law ("SSL") and the New York State Department of Social Services Regulations at Section 505.33 of Title 18 NYCRR, may authorize personal emergency response services ("PERS") to be provided to Medical Assistance ("MA") recipients whom the Department has determined eligible to receive these services; and WHEREAS, the parties hereto entered into an Agreement for the period from July 1, 1991 through June 30, 1994 to which the Contractor provided PERS; and WHEREAS, the contract was subsequently modified to give the Department the option to renew the Agreement upon the terms and conditions contained herein; and WHEREAS, the contract was further modified by having the Contractor provide a remote door release in order to expand PERS and include bedridden home care clients; and WHEREAS, the contract was further modified to include new language reflecting the new directives and policies issued by the New York State Department of Social Services; and WHEREAS, the Department desire to exercise its option to renew the Agreement for the periods from July 1, 1994 through June 30, 1995; July 1, 1995 through June 30, 1996; and from July 1, 1996 through June 30, 1997; and WHEREAS, the Contractor has the necessary expertise and experience to continue to provide the required services; and WHEREAS, the Department has requested that the Contractor continue to provide such services and the Contractor has agreed to do so. NOW, THEREFORE, the parties hereto agree a follows: 1. Except as modified herein all the terms and conditions of the Agreement shall remain in full force and effect. 2. Pursuant to Part I, Article I of the Agreement, the Department hereby exercises its option to renew and hereby renews the Agreement for the periods July 1, 1994 through June 30, 1995; July 1, 1995 through June 30, 1996; and from July 1, 1996 through June 30, 1997 unless sooner terminated pursuant to the terms of the Agreement. 3. Article VI (A) of Part I of the Agreement is hereby revised to read as follows: 1. Total payments to be made to the Contractor shall not exceed $560,000 for one year. IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written. CITY OF NEW YORK DEPARTMENT OF SOCIAL SERVICES HUMAN RESOURCES ADMINISTRATION COMMISSIONER By /s/ David Lopez ------------------------------ Corporate Contractor Affix Corporate Seal: AMERICAN MEDICAL ALERT CORP. --------------------------------- CONTRACTOR By /s/ Howard M. Siegel ------------------------------ Title PRESIDENT --------------------------- 11 25 71 221 --------------------------------- Fed. Employer I.D. No. or Soc. Sec. No. Approval as to form and certification as to legal authority was granted by the Corporation Counsel on: _____________________________. -2- STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 27th day of May 1994, before me personally came David Lopez, to me known and known to me to be Executive Deputy Administrator of the HUMAN RESOURCES ADMINISTRATION DEPARTMENT OF SOCIAL SERVICES of the CITY OF NEW YORK, the person described in and who executed the foregoing instrument, and he acknowledged to me that he executed the same for the purpose therein mentioned. /s/ Janet Smith ------------------------ NOTARY PUBLIC STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 26th day of May 1994, before me personally came Howard M. Siegel, to me known to be the individual described in and who executed the foregoing instrument, acknowledged that he executed the same. /s/ Janet Smith ------------------------ NOTARY PUBLIC -3- THIS LEASE AGREEMENT dated this 18 day of July, 1991, between the Department of Social Services of the Human Resources Administration ("Department") with offices at 250 Church Street, New York, New York 10013 and American Medical Alert Corp. ("Contractor") with offices at 3265 Lawson Boulevard, Oceanside, New York 11572. W I T N E S S E T H: WHEREAS, the Department's Home Care Services Program ("HCSF") provides a program of personal home care service for individuals eligible for such services, pursuant to applicable Federal and State laws and regulations; and WHEREAS, a significant number of the individuals served by HCSP require regular custodial care; and WHEREAS, in order to reduce the costs of such custodial care service, HCSP instituted a program designed to allow home care service clients, living alone, to call for assistance, via an electronic call service; and WHEREAS, the Contractor markets an electronic call device ("ECD") known as the Voice of Help System. WHEREAS, the Department desires to lease the Voice of Help System and the Contractor agrees to lease said System. NOW THEREFORE, the parties hereto agree as follows: PART I ------ ARTICLE I TERM OF AGREEMENT The term of this Agreement shall be from July 1, 1991 to June 30, 1994 unless sooner terminated pursuant to the terms hereof. ARTICLE II DEFINITIONS A. Voice of Help System" ("VHS") - the Contractors upgraded electronic call service system, which consists of the Voice of Help console, with provisions for remote activator, panic button at primary entrance, activator counted in bathroom and smoke detector (the "Upgraded System"). B. Emergency Response Center ("ERC") - the Contractor's central facilities for storing and retrieving client data and for responding to all ECDS. C. Client - the individual selected by the Department to receive the equipment and services described herein. ARTICLE III EQUIPMENT A. The Department agrees to lease from the Contractor and the Contractor agrees to lease to the Department as many VHS's as may be required by the Department. B. The Contractor shall be responsible for installing the VHS at the client's premises. Installation shall consist of all work that may be required to utilize a Client's existing telephone system. In no event shall the Contractor be responsible to perform such work that is required to be performed by the New York Telephone Company. If an installation cannot be completed, the Contractor shall immediately notify the Department contact, indicating why said installation cannot be completed. C. The Client shall be responsible for ensuring that the Contractor is provided: a) proper telephone equipment which enables Contractor to install an RJ31X connector in the Client's residence. b) properly functioning telephone service. c) twenty-four (24) hour, AC 110 volt circuit as required to power the Voice of Help Unit console. D. At the option of the Department, the Contractor shall install a VHS, at no cost to the Department, at a location to be selected by the Department for purposes of monitoring the Contractor's services. E. The parties agree that the VHS's previously installed under earlier lease agreements with the Contractor and any renewals thereof shall remain in place, unless removal and/or replacement of a System is requested by the Department, and shall be subject to the terms and conditions herein. 2 ARTICLE IV SERVICES The Contractor shall be responsible for the following services: 1. Install a VHS in a client's residence within seven (7) working days of telephone notification by authorized HCSP staff. a. The Contractor shall provide all parts and equipment necessary for installing the VHS into a functioning telephone system. b. The Contractor shall instruct the client in the use and maintenance of the VHS ard shall provide the client with simple written instructions, including how to report a malfunction of the unit. c. The Contractor shall forward to HCSP within (5) five working days of such installation, a form signed by a Contractor representative or employee are by the client or client's representative confirming the date of the installation and the client's understanding of the use and maintenance of the unit. 2. Maintain all installed VHS units in proper working order. a. The Contractor shall repair or replace with a VHS within 24 hours of notification any unit in place and installed under this Agreement that is not functioning properly. b. The Contractor shall notify HCSP immediately upon repairing or replacing a malfunctioning unit. 3. Monitor each VHS at least once every 24 hours to insure that the device is operating properly. The Contractor shall follow up immediately or any unit is not operating properly. Malfunctioning Equipment shall be repaired, or replaced within 24 hours of the Contractor's becoming aware of the malfunction. 4. Maintain a 24-hour emergency response center staffed with trained emergency response operators. a. The Contractor shall establish and maintain a 24-hour monitoring center for all installed VHS's. b. The Contractor shall insure 24-hour staffing of the emergency response center with trained operators. 3 5. Respond immediately to any and all signals from clients' VHS's and maintain appropriate contact until termination of the emergency situation. a. The Contractor, immediately upon receiving a signal from a client's VHS, shall retrieve the client's automated data records and contact the client or the client's representative, or take other emergency action as prescribed in the client's record. b. The emergency response operator shall monitor the provision of emergency service to verify that it has been provided and that the emergency situation no longer exists at the client's residence. c. The Contractor shall notify HCSP by telephone, or the working day following the emergency, of the nature and resolution of the emergency. The Contractor shall submit to HCSP a written summary of the emergency within five (5) working days of the incident. 6. Insure continuous monitoring and response capabilities during power failures, mechanical malfunction or other emergencies. 7. Create, maintain and protect automated client data records. a. The Contractor shall operate an automated client data storage and retrieval system which shall include all pertinent client information. b. Contractor shall notify the client to update client data every six (6) months by sending to each client by October 1 and April 1 a notice to update the clients information and shall perform such update immediately upon receipt of such data. The Department shall be notified of all such updates within seven (7) working days of the Contractor's report of such data. c. The Contractor shall protect client records from alteration or destruction, and shall protect the confidentiality of client records. 8. Maintain written records of all emergency response system (ERS) activities, including all activations of VHS's. 9. Devise and provide all client data, activity, and billing forms. 10. Submit detailed monthly billings within ten (10) working days of the end of the month. 11. Remove the VHS from a client's residence within seven (7) working days of telephone notification by authorized HCSP staff. 4 a. The Contractor shall, upon instruction by HCSP, arrange with the client or client's representative for a mutually convenient appointment within five (5) working days. b. The Contractor shall verify to HCSP by telephone and in writing that the unit has been removed. 12. The Contractor will provide a full time installer/service person to provide service for the HCSP/ECD clients at no additional cost to the Department. 13. All equipment installed by the Contractor shall have an adhesive label affixed to it displaying as follows: "-warning do not discard- Property of American Medical Alert Corp. 3265 Larsen Blvd., Oceanside, New York 11572 (Call 1-800-632-6729)" All equipment not so identified shall not be reimbursable to Contractor if deemed unrecoverable. ARTICLE V DEPRECIATION AND RECOVERY OF EQUIPMENT A. Each "VHS" which shall be or shall have been, installed shall be ascribed a certain agreed value, by unit (console) and component parts in accordance with the schedule of values as shown in Subsection 1 below, which values shall be used for the purposes of establishing depreciated values as described in Subsection 2 below. 1. a) Central unit (console)................... $395.00 b) Activators (3) each at................... $ 45.00 c) Smoke detector........................... $ 60.00 2. In the event, despite the good faith efforts of both the Department and the Contractor, the above mentioned unit and/or its respective component part is (are) not recoverable from the client, the Contractor, with the consent of the Department, shall be entitled to recover the depreciated value of such unit and/or component part. For the purposes of establishing such depreciated value the central unit (console) shall be depreciated at the rate of $9.00 per month; the activators shall be depreciated at the rate of $1.00 per month each; and the smoke detector shall be depreciated at the rate of $1.33 per month. 5 ARTICLE VI CHARGES AND TERMS OF PAYMENT A. Notwithstanding any other provision to this Lease Agreement, total payments to be made to the Contractor shall not exceed $1,564,000.00. B. The Department agrees to pay the following fees and charges for the equipment and services provided by the Contractor herein. 1. A one time fee of $50 for the installation of each VHS unit and a fee of $25.00 for the removal of each VHS unit. 2. For each VHS unit, a monthly monitoring/leasing fee of $30.00 per client; and for those units which have been in place for more than 24 months/a monthly monitoring/leasing fee of $25.00. 3. Billing for a partial month, irrespective of the number of days of service provided during any such partial month shall be in the sum of $15.00. C. The Contractor shall submit monthly statements to the Department setting forth the monthly rental and installation charges, if any, and the name and address of each client, for the month which payment is being requested. D. The Contractor and the Department shall jointly review, at such time or times as the Department deems necessary but not less than once during each fiscal year, the amount of payments made pursuant to this Agreement to determine the appropriateness of each fiscal year's budget in light of any program increases/reductions, operating cost increases/reductions and wage and salary increases/decreases. The Department, in its sole discretion, may then modify the Agreement in accordance with its determination, subject to all the appropriate approvals and the Procurement Policy Board Rules. E. As the period of performance contemplated by this Agreement involves performance by the Contractor in a subsequent City Fiscal Year(s), funding for such period is subject to the appropriation of funds for such subsequent City Fiscal Year(s) and the availability thereof. F. REDUCTION OF FEDERAL OR STATE FUNDING 1. The Contractor, acknowledging that this Agreement is funded in whole or in part by funds secured from the Federal Government, or New York State Government, or New York City Government, agrees that should there be a reduction or discontinuance of such funds by action of the Federal or New York State Government, or New York City Government, the 6 City of New York and the Department shall have, in their sole discretion, the right to terminate this Agreement in whole or in part, or to reduce the funding and level of services of this Agreement caused by such action by the Federal, State, or City Governments, including, in the case of the reduction option, but not limited to, the reduction or elimination of programs, services or service components; the reduction or elimination of contract-reimbursable staff or staff-hours, are the corresponding reductions in the Agreement budget and in the total amount payable under the Agreement. 2. In the case of the termination option referred to in subdivision 1, above, any such termination shall take effect immediately upon written notice thereof to the Contractor. In the case of the reduction option referred to in subdivision 1, above, any such reduction shall be effective as of the date set forth in a written notice thereof to the Contractor, which shall be not less than thirty (30) calendar days from the date of such notice. Prior to sending such notice of reduction, the Department shall advise the Contractor that such option is being exercised and affording the Contractor an opportunity to make within seven (7) calendar days any suggestion(s) it may have as to which program(s), service(s), service component(s), staff or staff-hours might be reduced or eliminated, PROVIDED, HOWEVER, that the Contractor expressly understands and agrees that the Department shall not be bound to utilize any of the Contractor's suggestions and that the Department shall have sole and exclusive discretion to decide how to effectuate the reductions. 3. The termination and reduction options of the Department and City set forth in subdivisions 1 and 2, above, are independent and separate rights in addition to any other rights of termination or modification provided by this Agreement, by law or by relevant regulation, and supersede any and all rights or actions the Contractor may have under any provision of this Agreement to the contrary. ARTICLE VII LIQUIDATED DAMAGES A. If the Contractor is not able to: (i) respond to a Client's or the Department's request for maintenance and service within 24 hours following receipt of such notification or (ii) get the VHS operating or supply a properly functioning VHS within 24 hours following receipt of said notification. B. The Contractor at the discretion of the Department shall pay to the Department, or at its option, the Department may deduct from any payment due or to become due to the Contractor, the monthly charge for the VHS, as fixed and agreed liquidated damages are not as a penalty. 7 C. If there are interruptions in the monitoring services provided by the Contractor pursuant to Article IV of Part I of this Lease Agreement, totaling 24 hours or more during a monthly billing period that are not the result of an improper, faulty or non-operational phone system, the Contractor at the discretion of the Department, shall pay to the Department, or at its option, the Department may deduct from any payment due or to become due to the Contractor, the monthly charge under this Lease Agreement for the month said interruptions occurred as fixed and agreed liquidated damages and not as a penalty. ARTICLE VIII MOST FAVORED CUSTOMER The Contractor warrants and represents that the prices, warranties, benefits and terms set forth herein are at least equal to or more favorable to the City than the prices, warranties, benefits, are terms now charged or offered by the Contractor to other customers under similar circumstances and terms and conditions, or that may be charged or offered during the term hereof for the same or substantially similar products or services defined in this Agreement. If at any time during the term hereof, the Contractor enters into an agreement or a basis that provides prices, warranties, benefits, or terms more favorable than those provided the City hereunder, then the Contractor shall within thirty (30) calendar days thereafter notify the City of such facts, and regardless of whether such notice is sent by the Contractor or received by the City, this Agreement shall be deemed to be amended, effective retroactively to the effective date of the more favorable agreement, to provide the same prices, warranties, benefits, or terms to the City; provided that the City shall have the right and option at any time to decline, to accept any such change, in which event such amendment shall be deemed null and void. If the Contractor is of the opinion that an apparently more favorable price, warranty, benefit or term charged or offered a customer during the term hereof is not in fact more favorable treatment, the Contractor shall promptly notify the Commissioner in writing setting forth in detail reasons that it believes said apparently more favorable treatment is in fact not more favorable treatment. The Commissioner, after due consideration of such written explanation, may decline to accept such explanation and thereupon this Agreement shall be deemed to be automatically amended effective retroactively to the effective date of the more favorable agreement, to provide the same prices, warranties, benefits, and/or terms to the City. ARTICLE IX INDIVIDUAL FILES The Contractor will keep separate files and records for each recipient of the services so that they may be readily identifiable from those relating to other activities of the Contractor. In 8 addition to information normally kept by the Contractor in individual files, such as basic information about the individual, describing and recording each use of the services by the individual, and the individual's progress, the Contractor will include such other information in individual files as the Department shall request. 9 PART II: GENERAL PROVISIONS --------------------------- ARTICLE I DEFINITIONS As used throughout this Agreement, the following terms shall have the meaning set forth below: a. "City" shall mean the City of New York, its departments and political subdivisions. b. "Comptroller" shall mean the Comptroller of the City of New York. c. "Department" shall mean the Department of Social Services of the Human Resources Administration including its constituent agencies, departments, bureaus and their subdivisions. d. "Administrator" or "Commissioner" or "Agency Head" shall mean the Administrator of the Human Resources Administration/Commissioner of the Department of Social Services or his duly authorized representative. The term "duly authorized representative" shall include any person or persons acting within the limits of his authority. e. "Law" or "Laws" shall include but not be limited to the New York City Charger, the New York City Administrative Code, a Local Law of the City of New York, and any ordinance, rule or regulation having the force of law. f. When referring to the Contractor, the pronoun "it", shall also mean he or she, and the adjective "its" shall also mean his or her, as the case may be. g. "Agency Chief Contracting Officer" shall mean the position delegated authority by the Agency Head to organize and supervise the procurement activity of subordinate agency staff in conjunction with the City Chief Procurement Officer. ARTICLE II INSURANCE 2.1 The Contractor shall carry paid up insurance in the sum of not less than One Million ($1,000,000) Dollars per occurrence to protect the Department and the City of New York, as their interests may appear, against any and all claims, loss or damage, whether in 10 contract or tort, including claims for injuries to, or death of persons, or damage to property whether such injuries, death or damages be attributable to the negligence or any other acts of the Contractor, its employees, or otherwise. Such policy or policies of insurance shall be obtained from a company, or companies, duly licensed to do business in the State of New York and shall name the Department and the City of New York as additional parties insured thereunder, and shall provide that in the event of cancellation thereof the Department shall be notified at least fifteen (15) days in advance thereof. Two (2) executed copies of all insurance policies shall be delivered to the Department for approval as to form prior to the effective date of this Agreement. 2.2 WORKER'S COMPENSATION AND DISABILITY BENEFITS. If this Agreement be of such a character that the employees engaged thereon are required to be insured by the provisions of Chapter 615 of the Laws of 1922, known as the "Worker's Compensation Law" and acts amendatory thereto, the Agreement shall be void and of no effect or less the Contractor shall secure compensation for the benefit of, and keep insured during the life of this Agreement such employees in compliance with the provisions of said law, inclusive of Disability Benefits; and, shall furnish the Department with two (2) certificates of these insurance coverages. 2.3 UNEMPLOYMENT INSURANCE. Unemployment Insurance coverage shall be obtained and provided by the Contractor of its employees. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 PROCUREMENT OF AGREEMENT. A. The Contractor represents and warrants that no person or selling agency has been employed or retained to elicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage fee, contingent fee or any other compensation. The Contractor further represents and warrants that no [payment], gift or thing of value has been made, given or promised to obtain this or any other agreement between the parties. The Contractor makes such representations and warranties to induce the City to enter into this Agreement and the City relies upon such representations and warranties in the execution hereof. B. For a breach or violation of such representations or warranties, the Administrator shall have the right to annul this Agreement without liability, entitling the City to recover all monies paid hereunder and the Contractor shall not make claim for, or be entitled to recover, any sum or sums due under this Agreement. This remedy, if effected, shall not constitute the sole remedy afforded the City for the falsity or breach, nor shall it constitute a waiver of the City's right to claim damages or refuse payment or to take any other action provided for by law or pursuant to this Agreement. 11 3.2 CONFLICT OF INTEREST A. The Contractor represents and warrants that neither it nor any of its directors, officers, members, partners or employees, has any interest nor shall they acquire any interest, directly or indirectly, which would or may conflict in any manner or degree with the performance or rendering of the services herein provided. The Contractor further represents and warranties that in the performance of this Agreement no person having such interest or possible interest shall be employed by it. An elected official or other officer or employee of the city or Department, nor any person whose salary is payable, in whole or in part, from the City Treasury, shall participate in any decision relating to this Agreement which affects his personal interest or the interest of any corporation, partnership or association in which he is, directly or indirectly, interested nor shall any such person have any interest, direct or indirect, in this Agreement or in the proceeds thereof. B. The names addresses of the members of the Board of Directors of the Contractor shall be delivered to the Department upon execution of this Agreement. Any changes in the makeup of the Board shall be reported to the Department within 10 working days of such change. C. The Contractor's employees and members of their immediate families may not serve on: 1. The Board of Directors of the Contractor, or 2. Any committee with authority to order personnel actions affecting his or her job, or which, either by rule or by practice, regularly nominates, recommends or screens candidates for employment in the program. 3.3 FAIR PRACTICES The Contractor and each person signing on behalf of any Contractor represents and warrants and certifies, under penalty of perjury, that to the best of its knowledge and belief: A. The prices in this Agreement have been arrived at independently without collusion, consultation, communication, or agreement, for the purpose of restricting competition, as to any matter relating to such prices with any other bidder or with any competitor; B. Unless otherwise required by law, the prices which have been quoted in this Agreement and or the proposal submitted by the Contractor have not been knowingly disclosed by the Contractor prior to the proposal opening, directly or indirectly, to any other bidder or to any competitor; and C. No attempt has been made or will be made by the Contractor to induce any other person, partnership or corporation to submit or not to submit a proposal for the purpose of restricting competition. 12 The fact that the Contractor (a) as published price lists, rates, or tariffs covering items being procured, (b) has informed prospective customers of proposed or pending publication of new or revised price lists for such items, or (c) has sold the same items to other customers at the same prices being bid, does not constitute, without more, a disclosure within the meaning of the above. 3.4 AFFIRMATION OF RESPONSIBILITY AND PAID TAXES The Contractor affirms and declares that said Contractor is not in arrears to the City of New York upon any debt, contract or taxes and is not a defaulter, as a surety or otherwise, upon any obligation to the City of New York, and has not been declared not responsible, or disqualified, by any agency of the City of New York, nor is there any proceeding pending relating to the responsibility or qualification of the Contractor to receive public contracts except as otherwise stated in the affirmation pertaining to the foregoing which has been furnished to the Department. ARTICLE IV AUDIT BY THE DEPARTMENT AND CITY 4.1 All vouchers or invoices presented for payment to be made hereunder, and the books, records and accounts upon which said vouchers or invoices are based are subject to audit by the Department and by the Comptroller of the City of New York pursuant to the powers and responsibilities as conferred upon said Department and said Comptroller by the New York City Charter and the Administrative Code of the City of New York, as well as all orders and regulations promulgated pursuant thereto. 4.2 The Contractor shall submit any and all documentation and justification in support of expenditures or fees under this Agreement as may be required by said Department and said Comptroller so that they may evaluate the reasonableness of the charges and shall make its records available to the Department and to the Comptroller as they consider necessary. 4.3 To the extent that the Contractor receives as payment hereunder the amount of $25,000 or more the source of which is derived from federal funding, the Contractor shall be subject to any agency wide audit at least annually, but not less frequently than every two years. Such audit shall be in accordance with the directive of the Comptroller of the City of New York and/or the Human Resources Administration, are Federal Office of Management and Budget Circular A-133, "Audits of Institutions of Higher Education and other Nonprofit Organizations." 4.4 All books, vouchers, records, reports, cancelled checks and any and all similar material related to this contract and the work thereunder may be subject to periodic inspection, 13 review and audit by the State of New York, Federal Government and other persons only authorized by the City including the Department's Office of the Inspector General. Such audit may include examination and review of the source and application of all funds whether from the City, any State, the Federal Government, private sources or otherwise. 4.5 The Contractor shall not be entitled to final payment under the Agreement until all requirements have been satisfactorily met. ARTICLE V COVENANTS OF THE CONTRACTOR 5.1 EMPLOYEES. All experts or consultants or employees of the Contractor who are employed by the Contractor to perform work under this Agreement are neither employees of the City nor under contract to the City and the Contractor alone is responsible for their work, direction, compensation and personal conduct while engaged under this Agreement. Nothing in this Agreement shall impose any liability or duty on the city for the acts, omissions, liabilities or obligations of the Contractor or any person, firm, company, agency, association, corporation or organization engaged by the Contractor as expert, consultant, independent contractor, specialist, trainee, employee, servant, or agent, or for taxes of any nature including but not limited to unemployment insurance, worker's compensation, disability benefits and social security. 5.2 LIABILITY A. The Contractor shall be solely responsible for all physical injuries or death to its agents, servants, or employees or to any other person and for all damage to any property sustained during its operations and work under this Agreement resulting from any act of commission or omission or error in judgment of any of its officers, trustees, employees, agents, servants, or independent contractors, and shall hold harmless and indemnify the City from liability upon any and all claims for damages on account of such injuries or death to any such person or damages to property or account of any neglect, fault or default of the Contractor, its officers, trustees, employees, agents, servants, or independent contractors. The Contractor shall be solely responsible for the safety and protection of all of its employees whether due to the negligence, fault or default of the Contractor or not. B. In the event that any claim is made or any action is brought against the City arising out of negligent or careless acts of an employee of the Contractor, either within or without the scope of his employment, or arising out of Contractor's negligent performance of this Agreement, then the City shall have the right to withhold further payments hereunder for the purpose of set-off in sufficient sums to cover the said claim or action. The rights and remedies of the City provided for in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or this Agreement. 14 5.3 MINIMUM WAGE. Except for those employees whose minimum wage is required to be fixed pursuant to Section 220 of the Labor Law of the State of New York, all persons employed by the Contractor in the performance of this Agreement shall be paid, without subsequent deduction or rebate, unless expressly authorized by law, nor less than the minimum wage as prescribed by law. Any breach or violation of the foregoing shall be deemed a breach or violation of a material provision of this Agreement. 5.4 INDEPENDENT CONTRACTOR STATUS. The Contractor and the Department agree that the Contractor is an independent contractor, and not an employee of the Department or the City of New York, and that in accordance with such status as independent Contractor covenants and agrees that neither it nor its employees or agents will hold themselves out as, nor claim to be, officers or employees of the City of New York, or of any department, agency or unit thereof, by reason hereof, and that they will not, by reason hereof, make any claim, demand or application to or for any right or privilege applicable to an officer or employee of the City of New York, including, but not limited to, Worker's Compensation coverage, Unemployment Insurance Benefits, Social Security coverage or employee retirement membership or credit. 5.5 CONFIDENTIALITY A. All information obtained, learned, developed or filed by the Contractor in connection with public assistance recipients or their relatives or in connection with other recipients of services, including data contained in official Department files or records, shall be held confidential by the Contractor pursuant to the provisions of the Social Services Law of the State of New York, the Federal Social Security Act, and any applicable regulations promulgated thereunder and shall not be disclosed by the Contractor to any person, organization, agency or other entity except as authorized or required by law. B. All of the reports, information or data, furnished to or prepared, assembled or used by the Contractor under this Agreement are to be held confidential, and the Contractor agrees that the same shall not be made available to any individual organization without the prior written approval of the Department. C. The provisions of this Section shall remain in full force and effect following termination of, or cessation of the services rendered by, this Agreement. 5.6 BOOKS AND RECORDS. The Contractor agrees to maintain separate and accurate books, records, documents and other evidence of accounting procedures and practices which sufficiently and properly reflect all direct and indirect costs of any nature expenses in the performance of this Agreement. Such records shall be subject to review, audit and inspection by City, State and Federal personnel, including the Department's Office of the Inspector General. 15 5.7 RETENTION OF RECORDS. The Contractor agrees to retain all books, records, and other documents relevant to this Agreement for six years after the final payment or termination of this Agreement, whichever is later. City, State and Federal auditors and any other persons duly authorized by the Department shall have full access to and the right to examine any of said materials during said period. 5.8 COMPLIANCE WITH LAW. Contractor shall render all services under this Agreement in accordance with the applicable provisions of Federal, State and local laws, rules and regulations as are in effect at the time such services are rendered. 5.9 FEDERAL EMPLOYMENT FACILITIES. The Contractor and its subcontractors shall comply with the Civil Rights Act of 1964 and any amendment thereto, and the rules and regulations promulgated thereunder. 5.10 NON-DISCRIMINATION AGAINST THE HANDICAPPED. The Contractor agrees that it will comply with the provisions of Section 504 of the Rehabilitation Act of 1973, as amended, and all regulations, guidelines and interpretations issued pursuant thereto. 5.11 INVESTIGATION A. The parties to this Agreement agree to cooperate fully and faithfully with any investigation, audit or inquiry conducted by a State of New York (State) or City of New York (City) governmental agency or authority that is empowered directly or by designation to compel the attendance of witnesses and to examine witnesses under oath, or conducted by the Inspector General of a governmental agency that is a party in interest to the transaction, submitted bid, submitted proposal, contract, lease, permit, or license that is the subject of the investigation, audit or inquiry. B. 1. If any person who has been advised that his or her statement, and any information from such statement, will not be used against him or her in any subsequent criminal proceedings refuses to testify before a grand jury or other governmental agency or authority empowered directly or by designation to compel the attendance of witnesses and to examine witnesses under oath concerning the award of or performance under any transaction, agreement, lease, permit, contract, or license entered into with the City, the State, or any political subdivision or public authority thereof, or the Port Authority of New York and New Jersey, or any local development corporation within the City, or any public benefit corporation organized under the laws of the State of New York, or; 2. If any person refuses to testify for a reason other than the assertion of his or her privilege against self incrimination in an investigation, audit or inquiry conducted by a City or State governmental agency or authority empowered directly or by designation to compel the attendance of witnesses and to take testimony under oath, or by the Inspector General of the governmental agency that is a party in interest in, and is seeking testimony concerning the award 16 of, or performance under, any transaction, agreement, lease, permit, contract, or license entered into with the City, the State, or any political subdivision thereof or any local development corporation within the City, then; C. 1. The commissioner or agency head whose agency is a party in interest to the transaction, submitted bid, submitted proposal, contract, lease, permit, or license shall convene a hearing, upon not less than five (5) days written notice to the parties involved to determine if any penalties should attach for the failure of a person to testify. 2. If any non-governmental party to the hearing requests an adjournment, the commissioner or agency head who covered the hearing may, upon granting the adjournment, suspend any contract, lease, permit, or license pending the final determination pursuant to paragraph E, below, without the City incurring any penalty or damages for delay or otherwise. D. The penalties which may attach after a final determination by the commissioner or agency head may include but shall not exceed: 1. The disqualification for a period not to exceed five (5) years from the date of an adverse determination for any person, or any entity of which such person was a member at the time the testimony was sought, from submitting bios for, or transacting business with, or entering into or obtaining any contract, lease, permit or license with or from the City; and/or 2. The cancellation or termination of any and all such existing City contracts, leases, permits or licenses that the refusal to testify concerns and that have not been assigned as permitted under this Agreement, nor the proceeds of which pledged, to an unaffiliated and unrelated institutional lender for fair value prior to the issuance of the notice scheduling the hearing, without the City incurring any penalty or damages on account of such cancellation or termination; monies lawfully due for goods delivered, work done, rentals, or fees accrued prior to the cancellation or termination shall be paid by the City. E. The commissioner or agency head shall consider and address in reaching his or her determination and in assessing an appropriate penalty, the factors in paragraphs 1 and 2, below. He or she may also consider, if relevant and appropriate, the criteria established in paragraphs 3 and 4, below, in addition to any other information which may be relevant and appropriate; 1. The party's good faith endeavors or lack thereof to cooperate fully and faithfully with any governmental investigation or audit, including but not limited to the discipline, discharge, or disassociation of any person failing to testify, the production of accurate and complete books and records, and the forthcoming testimony of all other members, agents, assignees or fiduciaries whose testimony is sought. 2. The relationship of the person who refused to testify to any entity that is a party to the hearing, including, but not limited to, whether the person whose testimony is sought 17 has an ownership interest in the entity and/or the degree of authority and responsibility the person has within the entity. 3. The nexus of the testimony sought to the subject entity and its contracts, leases, permits or licenses with the City. 4. The effect a penalty may have on an unaffiliated and unrelated party or entity that has a significant interest in an entity subject to penalties under D, above, provided that the party or entity has given actual notice to the commissioner or agency head upon the acquisition of the interest, or at the hearing called for in C(1), above, gives notice and proves that such interest was previously acquired. Under either circumstance, the party or entity must present evidence at the haring demonstrating the potential adverse impact a penalty will have or such person or entity. F. 1. The term "license" or "permit" as used herein shall be defined as a license, permit, franchise or concession not granted as a matter of right. 2. The term "person" as used herein shall be defined as any natural person doing business alone or associated with another person or entity as a partner, director, officer, principal or employee. 3. The term "entity" as used herein shall be defined as any firm, partnership, corporation, association, or person that receives monies, benefits, licenses, leases, or permits from or through the City or otherwise transact business with the City. 4. The term "member" as used herein shall be defined as any person associated with another person or entity as a partner, director, officer, principal or employee. G. In addition to and notwithstanding any other provision of this Agreement, the Commissioner or agency head may in his or her sole discretion terminate this Agreement upon not less than three (3) days written notice in the event Contractor fails to promptly report in writing to the Commissioner of Investigation of the City of New York any solicitation of money, goods, requests for future employment or other benefit or thing of value, by or on behalf of any employee of the City or other person, firm, corporation or entity for any purpose which may be related to the procurement or obtaining of this Agreement by the Contractor, or affecting the performance of this contract. 5.12 ASSIGNMENT A. The Contractor shall not assign, transfer, convey, sublet or otherwise dispose of this Agreement, or of the Contractor's right, title, interest obligations or duties herein, or the Contractor's power to execute such Agreement, or assign, by power of attorney or otherwise, any of its rights to receive monies due or to become due under this Agreement, unless the prior 18 written consent of the Administrator shall be obtained. Any such assignment, transfer, conveyance, sublease or other disposition without such consent shall be void. B. In the event that the Contractor assigns, transfers, conveys, sublets or otherwise disposes of this Agreement as specified in subdivision A, above, without the prior written consent of the Department, the Department shall revoke and annul this Agreement and the Department shall be relieved and discharged from any and all liability and obligations growing out of such Agreement to the Contractor, its assignees, transferees or sublessees, and the Contractor shall, lose all monies theretofore earned under this Agreement, except so much thereof as may be required to pay the Contractor's employees. The provisions of this section shall not hinder, prevent or affect an assignment by the Contractor for the benefit of its creditors made pursuant to the laws of the State of New York. C. This Agreement may be assigned by the City to any corporation, agency or instrumentality having authority to accept such assignment. 5.13 SUBCONTRACTOR A. The Contractor agrees not to enter into any sub-contracts for the performance of its obligations, in whole or in part, under this Agreement without the prior written approval of the Department. Two copies of each such proposed sub-contract shall be submitted to the Department with the Contractor's written request for approval. B. All such sub-contracts shall contain provisions specifying: 1. that the work performed by the sub-contractor must be in accordance with the terms of the Agreement between the Department and the Contractor; 2. that nothing contained in such contract shall impair the rights of the Department; 3. that nothing contained therein, or in the Agreement between the Department and the Contractor, shall create any contractual relationship between the sub- contractor and the Department; and 4. that the sub-contractor specifically agrees to be bound by the confidentiality provisions set forth in the Agreement between the Department and the Contractor. C. The Contractor agrees that it is fully responsible to the Department for the acts and omissions of the sub-contractors and of persons either directly or indirectly employed by them as it is for the acts and omissions of persons directly employed by it. 19 D. The aforesaid approval is required in all cases other than individual employer- employee contracts. E. The Contractor shall not in any way be relieved of any responsibility under this Agreement by any sub-contract. 5.14 PARTICIPATION IN AN INTERNATIONAL BOYCOTT A. The Contractor agrees that neither the Contractor nor any substantially-owned affiliate company is participating or shall participate in an international boycott in violation of the provisions of the Export Administration Act of 1979, as amended, of the regulations of the United States Department of Commerce promulgated thereunder. B. Upon the final determination by the Commerce Department or any other agency of the United States as to, or conviction of the Contractor or a substantially-owned affiliated company thereof, of participation in an international boycott in violation of the provisions of the Export Administration Act of 1979, as amended, or the regulations promulgated thereunder, the Comptroller may, at his option, render, forfeit and void this contract. C. The Contractor shall comply in all respects with the provisions of Section 6-114 of the Administrative Code of the City of New York and the rules and regulations issued by the Comptroller thereunder. 5.15 ANTI-TRUST. The Contractor hereby assigns, sells and transfers to the City all right, title and interest in and to any claims and causes of action arising under the anti-trust laws of the State of New York or of the United States relating to the particular goods or services purchased or procured by the City under this Agreement. 5.16 PUBLICITY A. The prior written consent of the Department is required before the Contractor or any of its employees, servants, agents or independent contractors may, at any time, either during or after completion or termination of this Agreement, make any statement to the press or issue any material for publication through any media of communication bearing on the work performed or data collected under this Agreement. B. If the Contractor publishes a work dealing with any aspect of performance under this Agreement, or of the results and accomplishments attached in such performance, the Department shall have a royalty free, non-exclusive and irrevocable license to reproduce, publish or otherwise use and to authorize others to use the publication. 20 5.17 INVENTIONS, PATENTS AND COPYRIGHTS. A. Any discovery or invention arising out of or developed in the course of performance of this Agreement shall be promptly and fully reported to the Department, and if this work is supported by a federal grant of funds, it shall be promptly and fully reported to the Federal Government for determination as to whether patent protection on such invention shall be sought and how the rights in the invention or discovery, including rights under any patent issued thereon, shall be disposed of and administered in order to protect the public interest. B. No report, document or other data produced in whole or in part with contract funds shall be copyrighted by the Contractor nor shall any notice of copyright be registered by the Contractor in connection with any report, document or other data developed for the Agreement. C. If any copyrightable material is developed under, or in the course of performing this Agreement, any Federal Agency providing federal financial participation for the Agreement, the New York State Department of Social Services and the City of New York shall have a royalty-free, non-exclusive and irrevocable right to reproduce, publish or otherwise use, and to authorize others to use, the work for governmental purposes. D. In no event shall Subsections A, B and C of this Section be deemed to apply to any report, document or other data, or any invention of the Contractor which existed prior to, or was developed or discovered independently from, its activities related to or funded by this Agreement. 5.18 INFRINGEMENTS The Contractor shall be liable to the Department and hereby agrees to indemnify and hold the Department harmless for any damage or loss or expense sustained by the Department from any infringement by the Contractor of any copyright, trademark or patent rights of designs, systems, drawings, graphs, charts, specifications or printed matter furnished or used by the Contractor in the performance of this Agreement. ARTICLE VI TERMINATION 6.1 The Department and/or City shall have the right to terminate this Agreement, in whole or in part: A. Under any right to terminate as specified in any section of this Agreement or for a material breach of this Agreement. 21 B. Upon the failure of the Contractor to comply with any of the terms and conditions of this Agreement which is not cured within ten (10) days of the Department's request therefor. C. Upon the Contractor's becoming insolvent. D. Upon the commencement under the Bankruptcy Act of any proceeding by or against the Contractor, either voluntarily or involuntarily. E. Upon receipt of notification that State or Federal reimbursement or funding is no longer available for services provided pursuant to this Agreement. F. Without cause or if the Department deems that termination would be in the best interest of the City. 6.2 The Department or City shall give the Contractor written notice of any termination of this Agreement specifying therein the applicable provisions of Section 6.1 of this Article and the effective date thereof which shall not be less than ten (10) days from the date the notice is received, except if termination is based on paragraph B of Section 6.1 of this Article, in which event notice shall be not less than thirty (30) days. 6.3 The Contractor shall be entitled to apply to the Department to have this Agreement terminated by said Department by reason of any failure in the performance of this Agreement (including any failure by the Contractor to make progress in the prosecution of work hereunder which endangers such performance), if such failure arises out of cause beyond the control and without the fault or negligence of the Contractor. Such causes may include, but are not restricted to: acts of God or of the public enemy; acts of the Government in either its sovereign or contractual capacity; fires, floods; epidemics; quarantine restrictions; strikes; freight embargoes, or any other cause beyond the reasonable control of the Contractor. The determination that such failure arises out of causes beyond the control and without the fault or negligence of the Contractor shall be made by the Department which agrees to exercise reasonable judgment therein. If such determination is made and the Agreement terminated by the Department pursuant to such application by the Contractor, such termination shall be deemed to be without cause. 6.4 Upon termination of this Agreement the Contractor shall comply with the Department or the City close-out procedures, including but not limited to: A. Accounting for and refund to the Department or City, within thirty (30) days, any unexpended funds which have been paid to the Contractor pursuant to this Agreement. B. Furnishing within thirty (30) days an inventory to the Department or City of all equipment, appurtenances and property purchased through or provided under this Agreement and carrying out any Department or City directive concerning the disposition thereof. 22 C. Not incurring or paying any further obligation pursuant to this Agreement beyond the termination date. Any obligation necessarily incurred by the Contractor on account of this Agreement prior to receipt of notice of termination are falling due after such date shall be paid by the Department or City in accordance with the terms of this Agreement. In no event shall the word "obligation," as used herein, be construed as including any lease agreement, oral or written, entered into between the Contractor and its Landlord. D. Turn over to the Department or City or its designees all books, records, documents and material specifically relating to this Agreement. E. Submit, within ninety (90) days, a final statement and report relating to this Agreement. The report shall be made by a certified public accountant or a licensed public accountant. 6.5 In the event the Department or City shall terminate this Agreement in whole or in part as provided in paragraphs A, B, C or D of Section 6.1 of this Article, the Department or City may procure, upon such terms and in such manner as deemed appropriate services similar to those so terminated, and the Contractor shall continue the performance of this Agreement to the extent not terminated thereby. 6.6 Notwithstanding any other provisions of this Agreement, the Contractor shall not be relieved of liability to the City for damages sustained by the City by virtue of the Contractor's breach of the Contract, and the City may withhold payments to the Contractor for the purpose of setoff until such time as the exact amount of damages due to the City from the Contractor is determined. 6.7 The provisions of the Agreement regarding confidentiality of information shall remain in full force and effect following any termination. 6.8 The rights and remedies of the City provided in this Article shall not be exclusive and are in addition to all other rights and remedies provided by law or under this Agreement. ARTICLE VII CONTRACTOR'S HIRING COMMITMENT 7.1 Except as otherwise provided by Paragraph (7) of this Article, Contractor agrees as a condition of this contract, to hire at least one Public Assistance Recipient ("PA Recipient") for each $250,000 in value of this contract, or to the extent that the Contractor enters into other contracts with the Department, for each $250,000 of the cumulative value of contracts of the Contractor during the term of this Agreement. 23 7.2 Such hiring shall be for full-time employment of at least a minimum of 35 hours per week. The rate of pay shall be at least 20% above the federal minimum wage, and the duration of the employment shall be for at least one year. In the event that a replacement of a PA Recipient is made by the Contractor during the one year, such replacement shall not count as an additional employee toward Contractor's hiring requirement set forth in Paragraph (1) of this Article. 7.3 Within thirty days of the commencement date of this contract ("commencement date") or fifteen days following notice from the Department that a request for an exemption from the provisions of this Rider has been denied, Contractor shall submit, on forms specified by the Department, information and specifications for the job(s) available. 7.4 The Contractor, may at its option, request the assistance of the Department in identifying potential employees. In such case, the Department will refer PA Recipients to the Contractor for employment interviews. 7.5 Contractor shall hire the number of employees agreed upon pursuant to Paragraph (1) of this Article within ninety days of the commencement date or such longer period as may be specified, in writing, by the Department. 7.6 In the event Contractor fails to hire [said] agreed upon number of PA Recipients within the time required pursuant to Paragraph (5) of this Article, and to pay or retain such employees pursuant to Paragraph (2) of this Article, Contractor shall pay to the Department or the Department may at its option, deduct from monies due or become due to Contractor, the amount of $19.18 per employee for each calendar day for which such PA Recipient(s) is/are not employed by Contractor as required by this Article. Such amount is hereby fixed and agreed as liquidated damages. 7.7 Contractor may apply to the Department for exemption from all or part of the requirements of this Article. Any application for an exemption must be made before the expiration of thirty days after the commencement date of this contract, or any subsequent contract as discussed in Paragraph (1) herein, and shall be in the form specified by the Department. Exemption may be granted upon a showing that the operation of this Article will constitute an extreme hardship, within the sole discretion of the Department; or to any Contractor not employing twenty or more employees at a place of business within the City of New York. 24 ARTICLE VIII MISCELLANEOUS 8.1 CHOICE OF LAW, CONSENT TO JURISDICTION AND VENUE. This Agreement shall be deemed to be executed in the City of New York, regardless of the domicile of the Contractor, and shall be governed by and construed in accordance with the laws of the State of New York. The parties agree that any and all claims asserted by or against the City arising under this Agreement or related thereto shall be heard and determined either in the courts of the United States located in New York City ("Federal Courts") or in the courts of the State of New York ("New York State Courts") located in the City and County of New York. To effectuate this agreement and intent, the Contractor agrees: A. If the City initiates any action against the Contractor in Federal Court or in New York State Court, service of process may be made on the Contractor either in person, wherever such Contract may be found, or by registered mail addressed to the Contractor at its address as set forth in this Agreement, or to such other address as the Contractor may provided to the City in writing; and B. With respect to any action between the City and the Contractor in New York State Court, the Contractor hereby expressly waives and relinquishes any rights it might otherwise have (i) to move to dismiss on grounds of [FORUM-NON-CONVENIENS], (ii) to remove to Federal Court; and (iii) to move for a change of venue to a New York State Court outside New York County. C. With respect to any action between the City and the Contractor in Federal Court located in New York City, the Contractor expressly waives and relinquishes any right it might otherwise have to move to transfer the action to a United States Court outside the City of New York. D. If the Contractor commences any action against the City in a court located other than in the City and State of New York, upon request of the City, the Contractor shall either consent to a transfer of the action to a court of competent jurisdiction located in the City and State of New York or, if the court where the action is initially brought will not or cannot transfer the action, the Contractor shall consent to dismiss such action without prejudice and may thereafter reinstitute the action in a court of competent jurisdiction in New York City. If any provision(s) of this Article is held unenforceable for any reason, each and all other provision(s) shall nevertheless remain in full force and effect. 25 8.2 GENERAL RELEASE. The acceptance by the Contractor or its assignees of the final payment under this Agreement, whether by voucher, judgment of any court of competent jurisdiction or any other administrative means, shall constitute and operate as a general release to the City from any and all claims of and liability to the Contractor arising out of the performance of this Agreement. 8.3 CLAIMS AND ACTIONS THEREON A. No action at law or proceeding in equity against the City or Department shall lie or be maintained upon any claim based upon this Agreement or arising out of this Agreement or in any way connected with this Agreement unless the Contractor shall have strictly complied with all requirements relating to the giving of notice and of information with respect to such claims, all as herein provided. B. No action at law or proceeding in equity shall lie or be maintained against the Department or the City upon any claim based upon this Agreement or arising out of this Agreement unless such action shall be commenced within six (6) months after the date of final payment hereunder, or within six (6) months of termination or conclusion of this Agreement, or within six (6) months of accrual of the cause of action, whichever is earliest. C. In the event any claim is made or any action brought in any way relating to the Agreement herein, the Contractor shall diligently render to the Department and/or the City of New York without additional compensation any and all assistance which the Department and/or the City of New York may require of the Contractor. D. The Contractor shall report to the Department in writing within three (3) working days of the initiation by or against the Contractor of any legal action or proceeding in connection with or relating to this Agreement. 8.4 NO CLAIM AGAINST OFFICERS, AGENTS OR EMPLOYEES. No claim whatsoever shall be made by the Contractor against any officer, agent or employee of the City for, or on account of, anything done or omitted in connection with this Agreement. 8.5 WAIVER. Waiver by the Department of a breach of any provision of this Agreement shall not be deemed to be a waiver of any other or subsequent breach and shall not be construed to be a modification of the terms of the Agreement unless and until the same shall be agreed to in writing by the Department or City as required and attached to the original Agreement. 8.6 NOTICE. The Contractor and the Department hereby designate the business addresses hereinabove specified as the places where all notices, directions or communications from and such party to the other party shall be delivered, or to which they shall be mailed. Actual delivery of any such notice, direction or communication to a party at the aforesaid place, or delivery by certified mail shall be conclusive and deemed to be sufficient service thereof upon such 26 party as of the date such notice direction or communication is received by the party. Such address may be changed at any time by an instrument in writing executed and acknowledged by the party making such change and delivered to the other party in the manner as specified above. Nothing in this section shall be deemed to serve as a waiver of any requirements for the service of notice or process in the institution of an action or proceeding as provided by law. 8.7 ALL LEGAL PROVISIONS DEEMED INCLUDED. It is the intent and understanding of the parties to this Agreement that each and every provision of law required to be inserted in this Agreement shall be and is inserted herein. Furthermore, it is hereby stipulated that every such provision is to be deemed to be inserted herein, and if, through mistake or otherwise, any such provision is not inserted, or is not inserted in correct form, then this Agreement shall forthwith upon the application of either party be amended by such insertion so as to comply strictly with the law and without prejudice to the rights of either party hereunder. 8.8 SEVERABILITY. If this Agreement contains any unlawful provision not an essential part of the Agreement and which shall not appear to have been a controlling or material inducement to the making thereof, the same shall be deemed no effect and shall, upon notice by either party, be deemed stricken from the Agreement without affecting the binding force of the remainder. 8.9 MODIFICATION. This Agreement may be modified by the parties in writing in a manner not materially affecting the substance hereof. It may not be altered or modified orally. 8.10 PARAGRAPH HEADINGS. Paragraph headings are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope or intent of this Agreement and in no way affect this Agreement. 8.11 CONSULTANTS REPORTS. A copy of each consultant report submitted by a consultant to any City official or to any officer, employee, agent or representative of a City department, agency, commission or body or to any corporation, association or entity whose expenses are paid in whole or in part from the City treasury shall be furnished to the Commissioner of the department to which such report was submitted or, if not a City department, then to the chief controlling officer or officers of such other office or entity. A copy of such report shall also be furnished to the Director of the Mayor's Office of Construction for matter related to construction or to the Director of the Mayor's Office of Operations for all other matters. 8.12 VENDEX QUESTIONNAIRES. The provision shall apply to contracts valued at $100,000 or more: A. The Contractor states that the Principal, Individual, Business Entity and Non-for-Profit Organization Questionnaires (VENDEX Questionnaires), as the case may be, required by Procurement Policy Board Rule 521 and any regulations promulgated thereunder, have been duly executed and submitted to the Department. The Contractor understands that the Department's 27 reliance upon the veracity of the information stated therein is a material condition to the execution of this Agreement, and that such information is in no respect misleading. B. The Contractor shall submit the applicable VENDEX Questionnaires, or if applicable, an Affidavit of No Change at least annually or upon the renewal of this Agreement. Any contractor for which submission requirements for Business Entities and Not-for-Profit Organizations apply shall submit the applicable new fully completed VENDEX Questionnaires to the Department every three years. C. This Agreement shall be a nullity until the Contractor complies with any and all the requirements set forth in Procurement Policy Board Rule 521 and any regulations promulgated thereunder, and the VENDEX Questionnaires. 8.13 EXTENSION OF TIME - NON-CONSTRUCTION. Upon written application by the Contractor, the Agency Chief Contracting Officer may grant an extension of time for performance of the contract. Said application must state, at a minimum, in detail, each cause for delay, the date the cause of the alleged delay occurred, and the total number of delay in days attributable to such cause. The ruling of the Agency Chief Contracting Officer shall be final and binding as to the allowance of an extension and the number of days allowed. 8.14 RESOLUTION OF DISPUTES 1. Any dispute arising out of the performance of this Agreement between the Department and the Contractor shall be resolved in accordance with this Section of the contract and with Section 741 of the Rules of the Procurement Policy Board. 2. The procedure for resolving any dispute described in this Section shall be the exclusive means of resolving any such dispute. 3. During the time the dispute is being presented, heard and considered pursuant to this Section, the terms of the contract shall remain in full force and effect and the Contractor shall continue to perform work in accordance with the contract and as directed by the Agency Chief Contracting Officer. Failure of the Contractor to continue the work as directed shall constitute a waiver by the Contractor of any and all claims being presented pursuant to this Section and a material breach of the contract. 4. PRESENTATION OF DISPUTES TO AGENCY HEAD A. The Contractor shall present its dispute in a written submission (hereinafter referred to as a "Notice of Dispute") to the Commissioner, hereinafter Agency Head for an initial determination, in accordance with the provisions of this Section. 28 B. TIME, FORM AND CONTENT OF A CONTRACTOR'S NOTICE OF DISPUTE AND THE AGENCY'S RESPONSE. The Notice shall be submitted by the Contractor to the Agency Head within ten (10) days of receiving notice of the determination or action which is the subject of the dispute. This notice requirement shall not replace any other notice requirements contained in the contract. The Contractor shall have an additional ten (10) days to submit a detailed written submission pertaining to the dispute. The written submission shall include all the facts, evidence, documents or other basis upon which the Contractor relies in support of its position, as well as a detailed computation demonstrating how the amount of money claimed by the Contractor in the dispute was arrived at. Within ten (10) days after receipt of the detailed written submission, the Agency Chief Contracting Officer shall submit to the Agency Head all materials which he or she deems pertinent to the dispute. Thereafter, either party may demand of the other the production of any documents or other material not already produced which the demanding party believes may be relevant to the dispute. The requested party shall produce all relevant documents. Any question as to relevancy shall be determined by application to the Agency Head, whose decision shall be final and conclusive as to both parties. Willful failure of the Contractor to produce any requested material whose relevancy the contractor has not disputed (or following a determination by the Agency Head that the material should be produced) shall constitute a final waiver by the Contractor of its claim. C. AGENCY HEAD INQUIRY. The Agency Head shall examine the material and may, in his or her exclusive discretion, convene an informal conference with the Contractor and the Agency Chief Contracting Officer to resolve the issue by mutual consent prior to reaching a determination. The Agency Head may seek such technical or other expertise as he or she shall deem appropriate, including the use of neutral mediators and require any such additional material from either or both parties as he or she deems fit. The Agency Head's ability to render, and the effect of a decision hereunder, shall not be impaired by any negotiations in connection with the dispute presented, whether or not the Agency Head participates therein. Any party to the dispute or the Agency Head may compel the participation of any other contractor with a contract related to project, and that Contractor shall be bound by the decision of the Agency Head. Any Contractor [thus] brought into the dispute resolution proceeding shall have the same rights to make presentations and to seek review as the initiating Contractor. D. AGENCY HEAD DETERMINATION. Within ten (10) days after the receipt of all materials and information or such longer time as may be agreed to by the parties, the Agency Head shall render its decision in writing and shall deliver or send a copy of such decision to the Contractor and Agency Chief Contracting Officer, together with a statement concerning how the decision may be appealed. Failure to render a decision within twenty (20) days, or within such longer time as is agreed to by the parties, shall be deemed rejection of the claim for purposes of presenting the claim to the Contract Dispute Resolution Board. E. FINALITY OF AGENCY HEAD DECISION. The Agency Head's decision shall be final and binding on both parties, unless presented to the Contract Dispute Resolution 29 Board pursuant to these rules. The City may not take a petition from a decision of the Agency Head to the Contract Dispute Resolution Board. However, should the Contractor take such a petition, the City may seek, and the Board may render, a determination less favorable to the Contractor and more favorable to the City than the decision of the Agency Head. 5. CONTRACT DISPUTES RESOLUTION BOARD. There shall be a Contract Dispute Resolution Board composed of: a. the City Chief Procurement Officer or a designee; who shall be the Chairperson of the Board; b. an employee of another City agency, having the requisite background to consider and resolve the merits of the dispute (who shall be selected by the City Chief Procurement Officer from a prequalified panel of such employees); and c. a neutral person with appropriate expertise. This person shall be selected by the City Chief Procurement Officer from a prequalified panel of individuals approved by the Procurement Policy Board with the appropriate background to act as decision-makers in a dispute. 6. PRESENTATION OF DISPUTE TO THE COMPTROLLER. Before any dispute may be brought by the Contractor to the Contract Dispute Resolution Board, the Contractor must first present its claim to the Comptroller for his or her review, investigation and possible adjustment. A. TIME FORM AND CONTENT OF NOTICES. Within twenty (20) days of its receipt of a decision by the Agency Head, the Contractor shall submit to the Comptroller a Notice of Claim regarding its dispute with the agency. The Notice of Claim shall consist of (i) a written statement of the substance of the dispute and why the dispute was wrongly decided by the Agency Head; (ii) a copy of the written decision of the Agency Head; (iii) copies of all materials submitted by the Contractor to the agency, including the Notice of Dispute and the detailed written submission pertaining to the dispute. The Contractor may not present to the Comptroller in this Notice any material not presented to the Agency Head, except at the request of the Comptroller. B. AGENCY RESPONSE. The Comptroller shall notify the agency of receipt of the notice of Claim. Within five (5) business days, the agency shall make available to the Comptroller copies of all material submitted by the agency to the Agency Head in connection with the dispute at issue. C. COMPTROLLER INVESTIGATION. The Comptroller may investigate the claim in dispute and, in the course of such investigation, may exercise all powers provided in section 7-201 and 7-203 of the New York City Administrative Code. In addition, the Comptroller may demand of either party, and such party shall provide, whatever actional material the comptroller deems pertinent to the claim, including original business records of the 30 Contractor. Such demand shall be made within fifteen (15) days of receipt of agency material. Willful failure of the Contractor to produce within ten (10) days any material requested by the Comptroller shall constitute a waiver by the Contractor of its claim. The Comptroller may also schedule an informal conference to be attended by the Contractor, agency representatives, and any other personnel desired by the Comptroller. D. OPPORTUNITY OF COMPTROLLER TO COMPROMISE OR ADJUST CLAIM. The Comptroller shall have forty-five (45) days from his or her receipt of all materials referred to in paragraph (c) to investigate the dispute claim. The period for investigation and compromise may be further extended by agreement between the Contractor and the Comptroller, to a maximum of ninety (90) days from the Comptroller's receipt of the materials. The Contractor may not present its petition to the Contract Dispute Resolution Board until the period for investigation and compromise delineated in this section has expired. In compromise or adjusting any claim hereunder, the Comptroller may not revise or disregard the terms of the contract between the parties. 7. PETITION TO CONTRACT DISPUTE RESOLUTION BOARD. In the event the claim has not been settled or adjusted by the Comptroller within the period provided in subsection (6) of this section, the Contractor, within ten (10) days thereafter, may petition the Contract Dispute Resolution Board to review the Agency Head determination. A. FORM AND CONTENT PETITION BY CONTRACTOR. The Contractor shall present its dispute to the Contract Dispute Resolution Board in the form of a Petition, with copies to the Agency Head, Corporation Counsel and the Comptroller. Such Petition shall include (i) a brief written statement of the substance of the dispute and the reason(s) the dispute was wrongly decided by the Agency Head; (ii) a copy of the written decision by the Agency Head; (iii) copies of all material submitted by the Contractor to the Comptroller. Within fifteen (15) days of its receipt of the Petition, the agency shall report to the brief written statement of the Contractor and make available to the Board all material it submitted to the Agency Head and Comptroller. B. FURTHER PROCEEDINGS. The Board shall permit the Contractor to present its case by the submission of memoranda, briefs and oral argument. The Contractor may not however, support its case with any documentation or other material which was not presented to the Agency Head or the Comptroller. The Board shall also permit the Agency to present its case in response to the Contractor by the submission of memoranda, briefs and oral document. If requested by the Corporation Counsel, the Comptroller will provide reasonable assistance in the preparation of the agency's case. The Board, at its discretion, may seek such technical or other expertise as it shall deem appropriate and any such additional material from either or both parties as it deems fit. C. CONTRACT DISPUTE RESOLUTION BOARD DETERMINATION. Within thirty (30) days of the conclusion of all written submission and oral arguments, the Board shall render a written decision resolving the dispute. In an unusually complex case, the Board may render its 31 decision in a longer period of time, not to exceed sixty (60) days, and shall so advise the parties at the commencement of this period. The Board's decision must be consistent with the terms of the contract between the parties. In reaching its decision, the Board shall accord no precedential significance to prior decisions of the Board involving other non-related contracts. D. NOTIFICATION OF CONTRACT DISPUTE RESOLUTION BOARD DECISION. The Board shall send a copy of its decision to the Contractor, the Agency Chief Contracting Officer and the Comptroller. E. FINALITY OF CONTRACT DISPUTE RESOLUTION BOARD DECISION. The Board's decision of a Contractor's appeal shall be final and binding on both parties, except to the extent that it may be reviewable in accordance with the balance of this subsection. The Contractor may seek review of the Board's decision solely in the form of a challenge, made within four months of the date of the Board's decision, in a court of competent jurisdiction of the State of New York, County of New York, under the procedures and rules applicable in the Court, and the City may then cross-appeal. Such review by the Court shall be limited to the question of whether or not the Board's decision was obtained or affected by fraud, bad faith, or palpable error. No evidence or information shall be introduced or relied upon in such proceeding which was not presented to the Board in accordance with this rule. In any such proceeding the City may seek and the Court may render a decision more favorable to the City than that rendered by the Contract Dispute Resolution Board. F. Any termination, cancellation, or alleged breach of the contract prior to or during the pendency of any proceedings pursuant to this Section shall not affect or impair the ability of the Agency Head or Dispute Resolution Board to make a binding and final decision pursuant to this section. 8.15 CONTRACT NAMES A. Changes may be made to this contract only as duly authorized by the Agency Chief Contracting Office or his or her designee. Vendors deviating from the requirements of an original purchase order or contract without a duly approved change order document, or written contract modification or amendment, do so at their own risk. All such changes, modifications and amendments will become a part of the original contract. B. Contract changes will be made only for work necessary to complete the work included in the original scope of the contract, and for non-material changes to the scope of the contract. Changes are not permitted for any material alteration in the scope of work. Contract changes may include any contract revision deemed necessary by the Contracting Officer. C. The Contractor shall be entitled to a price adjustment for extra work performed pursuant to a written change order. If any part of the contract work is necessarily delayed by a charge order, the contractor will be entitled to an extension of time for performance. Adjustments 32 to price shall be computed in one or more of the following ways: (i) by agreement of a fixed price; (ii) by unit process specified in the contract; (iii) by time and material record; and/or (iv) in any other manner approved by the City Chief Procurement Officer. D. Where the cost of the charge order has been negotiated in the absence of established cost history, the costs are subject to verification by post audit. If the post-audit reveals that the Contractor's costs for the change order work were inaccurately stated during negotiations, the agency shall recoup the amount by which the costs were inaccurately stated by proportionally reducing the price of the change order. This remedy is not exclusive and in addition to all other rights and remedies of the City. E. Except in the case of requirements contracts, any contract increases which cumulatively exceed the greater of 10% or $50,000 must be approved in writing by the City Chief Procurement Officer. Any contract amendment which either amends a unit price, cancels required units, or adds a new type of unit item to the contract must be approved in writing by the Agency Chief Contracting Officer. 8.16 NO DAMAGE FOR DELAY. The Contractor agrees to make no claim for damages for delay in the performance of this Contract occasioned by any act or omission to act of the City or any of its representatives, and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work as provided herein. 8.17 PROMPT PAYMENT A. The Prompt Payment provisions set forth in Chapter 6, Section 661 of the Procurement Policy Board Rules in effect at the time of this solicitation will be applicable to payments made under this contract. The provisions require the payment to contractors of interest on payments made after the required payment date except as set forth in subdivisions c(3) and c(2), (3) and (5) of Section 661 of the Rules. B. The contractor must submit a proper invoice to receive payment, except where the contract provides that the contractor will be paid at predetermined intervals without having to submit an invoice for each scheduled payment. C. Determination of interest due will be made in accordance with the provisions of Section 661 of the Procurement Policy Board Rules are General Municipal Law 3-a. 33 ARTICLE IX EQUAL EMPLOYMENT 9.1 PAYOR'S EXECUTIVE ORDER NO. 50 A. This Agreement is subject to the requirements of Executive Order No. 50 (1980) as revised ("E.O. 50") are the Rules and Regulations promulgated thereunder. No Contract will be awarded unless and until these requirements have been complied with in their entirety. By signing this Contract, the Contractor agrees that it: (1) will not engage in any unlawful discrimination against any employee or applicant for employment because of race, creed, color, national origin, sex, age, disability, marital status, or sexual orientation with respect to all employment decisions including, but not limited to recruitment, hiring, upgrading, demotion, downgrading, transfer, training, rates of pay or other forms of compensation, layoff, termination, and all other terms and conditions of employment; (2) the Contractor agrees that when it subcontracts it will not engage in any unlawful discrimination in the selection of subcontractors or the basis of the owner's race, color, creed, national origin, sex, age, disability, marital status or sexual orientation or that it is an equal opportunity employer; (3) will state in all solicitations or advertisements for employees placed by or on behalf of the Contractor that all qualified applicants will receive consideration for employment without regard to race, creed, color, national origin, sex, age, disability, marital status or sexual discrimination; or that it is an equal employment opportunity employer; (4) will send to each labor organization or representative of workers with which is has a collective bargaining agreement or other contract or memorandum of understanding, written notification of its equal employment opportunity commitments under E.O. 50 and the rules and regulations promulgated thereunder; and (5) will furnish all information and reports including an Employment Report before the award of the Contract which are required by E.O. 50, the rules and regulations promulgated thereunder, and orders of the Director of the Bureau of Labor Services ("Bureau"), and will permit access to its books, records and accounts by the Bureau for the purposes of investigation to ascertain compliance with such rules, regulations, and orders. Nothing contained in this section shall be construed to bar any religious or denominational institution or organization, or any organization operated for charitable or educational purposes, which is operated, supervised or controlled by or in connection with a religious organization, from limiting employment or giving preference to persons of the same 34 religious or denomination or from making such selection as is calculated by such organization to promote the religious principles for which it is established or maintained. B. The Contractor understands that in the event of its noncompliance with the nondiscrimination clauses of this Agreement or with any such rules, regulations or orders, such noncompliance shall constitute a material breach of this Agreement and noncompliance with E.O. 50 and the rules and regulations promulgated thereunder. After a hearing held pursuant to the rules of the Bureau, the Director may direct the imposition by the contracting agency head of any or all of the following sanctions: (1) disapproval of the Contractor; (2) suspension or termination of the Agreement; (3) declaring the Contractor in default; or (4) in lieu of any of the foregoing sanctions, the Director may impose an employment program. C. The Director of the Bureau may recommend to the contracting agency head that a Board of Responsibility be convened for purposes of declaring a contractor who has repeatedly failed to comply with E.O. 50 and the rules and regulations promulgated thereunder to be nonresponsible. D. The Contractor agrees to include the provisions of the foregoing paragraphs in every subcontract or purchase order in excess of $50,000 to which it becomes a party, unless exempted by E.O. 50 and the rules and regulations promulgated thereunder, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as may be directed by the Director of the Bureau of Labor Services as a means of enforcing such provisions including sanctions for noncompliance. E. The Contractor further agrees that it will refrain from entering into any contract or contract modification subject to E.O. 50 and the rules and regulations promulgated thereunder with a subcontractor who is not in compliance with the requirements of E.O. 50 and the rules and regulations promulgated thereunder. 9.2 WHERE REQUIRED BY NEW YORK STATE LABOR LAW SECTION 220-E THE CONTRACTOR AGREES: A. That in the hiring of employees for the performance of work under this Agreement or any subcontract hereunder, neither the Contractor, subcontractor, nor any person acting on behalf of such Contractor or subcontractor shall by reason of race, creed, color, sex or national origin discriminate against any citizen of the State of New York who is qualified and available to perform the work to which the employment relates; 35 B. That neither the Contractor, subcontractor, nor any person on behalf thereof shall, in any manner, discriminate against or intimidate any employee hired for the performance of work under this Agreement on account of race, creed, color, sex or national origin; C. That there may be deducted from the amount payable to the Contractor by the City under this Agreement a penalty of five dollars for each person for each calendar day during which such person was discriminated against or intimidated in violation of the provisions of this Agreement; and D. That this Agreement may be canceled or terminated by the City and all moneys due or to become due hereunder may be forfeited, for a second on any subsequent violation of the terms and conditions of this section of the Agreement. E. The aforesaid provisions of this section covering every contract for or on behalf of the State or a municipality for the manufacture, sale or distribution of materials, equipment or supplies shall be limited to operations performed with the territorial limits of the State of New York. 9.3 WHERE REQUIRED BY NEW YORK CITY ADMINISTRATIVE CODE SECTION 6-108 THE CONTRACTOR AGREES THAT: A. It shall be unlawful for any person engaged in the construction, alteration or repair of buildings or engaged in the construction or repair of buildings or engaged in the construction or repair of streets or highways pursuant to a contract with the City or engaged in the manufacture, sale or distribution of materials, equipment or supplies pursuant to a contract with the City to refuse to employ or to refuse to continue in any employment any person on account of the race, color or creed of such person. B. It shall be unlawful for any person or any servant, agent, or employee of any person, described in subdivision (A) above, to ask, indicate or transmit orally or in writing, directly or indirectly, the race, color, or creed or religious affiliation of any person employed or seeking employment from such person, firm or corporation. C. Disobedience of the foregoing provisions shall be deemed a violation of a material provision of this Agreement. D. Any person, or the employee, manager or owner of or officer of such firm or corporation who shall violate any of the provisions of this section shall, upon conviction thereof, be punished by a fine of not more than one hundred dollars or by imprisonment for not more than thirty days, or both. 36 ARTICLE X APPROVALS 10.1 PROCUREMENT POLICY BOARD RULES. This contract is subject to the Rules of the Procurement Policy Board of the City of New York dated August 1, 1990. In the event of a conflict between said Rules and a provision of this contract, the Rules shall take precedence. 10.2 THE CITY OF NEW YORK. This Agreement shall not become effective or binding unless: A. authorized by the Mayor; approved pursuant to New York City Charter and Procurement Policy Board Rules for contracts not subject to public betting; and the Comptroller shall have endorsed his certificate that there remains unexpended and unapplied a balance of the appropriation of funds applicable hereto sufficient to pay the estimated expense of executing this Agreement; and B. approved by the Mayor pursuant to the provisions of Executive Order No. 42, dated October 9, 1975 in the event the Executive Order requires such approval; and C. certified by the Mayor (Mayor's Fiscal Committee created pursuant to Executive Order No. 43, dated October 14, 1975) that performance thereof will be in accordance with the City's financial plan. D. approved by the New York State Financial Control Board ("Board") pursuant to the New York State Financial Emergency Act for the City of New York, as amended (the "Act"), in the event regulations of the Board pursuant to the Act require such approval. E. it has been authorized by the Mayor and the Comptroller shall have endorsed his or her certificate that there remains unexpended and unapplied a balance of the appropriation of funds applicable thereto sufficient to pay the estimated expense of carrying out this Agreement. The requirements of this section of the contract shall be in addition to, and not in lieu of, any approval or authorization otherwise required for this contract to be effective and for the expenditure of City funds. 10.3 OTHER APPROVALS OR AUTHORIZATIONS. The requirement of this Article shall be in addition to, and not in lieu of, any approval or authorization otherwise required for this Agreement to be effective and for the expenditure of City funds. 37 ARTICLE XI ANTI-APARTHEID PROVISION I. ANTI-APARTHEID PROVISIONS FOR NON-COMPETITIVELY BID CONTRACTS ------------- NOTICE FOR ALL PROSPECTIVE CONTRACTORS -------------------------------------- Local Law No. 19 of 1985 became effective on July 13, 1985 and added section 343-11.C (subsequently recodified as section 6-115) to the Administrative Code of the City of New York. The Local Law provides for certain restrictions on City contracts to express the opposition of the people of the City of New York to the policy of apartheid and to encourage companies doing business in South Africa and Namibia* support political and social change. The City Council subsequently accepted amendments adding to the provisions of Local Law No. 19, which were signed into law by the Mayor on December 30, 1986, as Local Law No. 81 of 1986. On July 25, 1990, the Mayor signed into law further amendments to the anti-apartheid law, as Local Law No. 49 of 1990. Pursuant to the aforementioned Local Laws, prospective contractors for contracts to provide goods,** services or construction involving expenditures of an amount greater than the amounts established pursuant to City Charter Section 314(b) and (c) are asked to sign a rider in which they covenant and represent, as a material condition of their contract that they and their affiliates*** do not engage in a number of specified activities related to South Africa. In addition, in the case of contracts for the supply of motor vehicles, heavy equipment, electronic data processing equipment and software, copying machines and petroleum products, contractors are asked to certify or provide a certification from the manufacturer or refiner does not engage in such South Africa-related activities. (See Article I, Part B.) Prospective contractors are not required to agree to these conditions. However, if the lowest responsible bidder does not agree to the conditions, the contracting agency shall not award - ------------------- * Activity in Namibia that occurred on or after March 21, 1990 is no longer covered by the City's anti-apartheid law. ** Local Law No. 49 amends the anti-apartheid law deleting the exemption applicable to contractors whose sole activity in South Africa is the manufacturing, processing and distribution of food and medical supplies. *** Local Law No. 49 expands the applicability of the anti-apartheid order to the contractor's corporate family. 38 the contract to that bidder unless the agency head certifies in writing that the contract is necessary for the agency to perform its functions and there is no other responsible contractor who will supply such goods, services or construction of comparable quality at a comparable price. The City reserves the right to take into account the process of selecting a contractor any direct or indirect relationship of a perspective contractor may have related to business activity in South Africa. The right is not limited to the consideration of specific south Africa-related activities covered by the express terms of this Article. Part A. In accordance with Section 6-115 of the Administrative Code of the City of New York, the Contractor hereby covenants and represents: 1) that the Contractor and its affiliates shall not during the term of this contract sell or agree to sell, goods or services directly to the following agencies of the South African government or directly to a corporation owned or controlled by such government and established expressly for the purposes of procuring such goods and services for such specific agencies. (a) the police, (b) the military (c) the prison system (d) the Ministry of Home Affairs and National Education, (e) the Ministry of Education and Development Aid, including the development boards and the rural development boards (f) the Ministry of Justice (g) the Ministry of Constitutional Development and Planning, (h) the Ministry of Law and Order, (i) the Bureau for Information, (j) the Ministry of Manpower, (k) any other agency of the South African government, including the governmental agencies of the "homelands" are any other political subdivisions of such government, (l) the Armaments Development and Production Corporation (ARMSCCR), and its subsidiaries Nimrod, Atlas Aircraft Corporation, Eloptro (Pty) Ltd., Kertser (Pty) Ltd., Infoplan Ltd., Lyttleter Engineering Works (Pty) Ltd., Naschem (Pty) Ltd., Pretoria Metal Pressing (Pty) Ltd., Somchem (Pty) Ltd., Swartklip Products (Pty) Ltd., Telacast (Pty) Ltd., and Musgrave Manufacturers and Distributors, (m) the national intelligence services, (n) the Council for Scientific and Industrial Research, (o) the Electricity Supply Commission (ESCCM), (p) the South African Coal, Oil and Gas Corporation (Sasol Limited or Sasol 1, 2 or 3), 39 (q) the Atomic Energy Corporation (Ltd.), or (r) the Southern Oil Exploration Corporation (Soeker). 2) In the case of a contract to supply goods, that none of the goods to be supplied to the City originated in South Africa. 3) That the Contractor and its affiliates do not do business**** or that the Contractor and its affiliates are actively engaged in the withdrawal of their operations from South Africa and within six months, provided, however, that if the Contractor and its affiliates have withdrawn or are so engaged in withdrawing their operations from South Africa and maintain a presence in South Africa after such six month period solely for the purpose of liquidating their business, they shall not be eligible for that reason to make the certification provided for in this Part. 4) That, except as provided in section 6 of this Part, the Contractor shall not make new investments in South Africa, and that if at any time during the course of the contract the Contractor acquires an entity which is doing business in South Africa, the Contractor shall initiate withdrawal of its acquisition's operations from South Africa. 5) That, except as provided in section 6 of this Part, the Contractor shall not enter into any new agreement with a South African entity allowing the use of its trademark, copyright or patent by such entity; furthermore, that it does not provide goods or services to any South African entity pursuant to any non-equity agreement. 6) That the provisions of Sections 4 and 5 concerning investments, agreements concerning trademarks, copyrights and patents, and non-equity agreements shall not apply to ownership of or agreements with entities whose presence in South Africa is for the following purposes: (i) the activities of religious, educational or charitable organizations; (ii) activities intended to promote the exchange of information, including the publication or sale of newspapers, magazines, books, films, television programming, photographs, microfilm, microfiche and similar materials; (iii) the gathering or dissemination of information by news media organizers; and (iv) the providing of telecommunications and mail services not involving the sale or leasing of equipment. 7) That this certification does not apply to the sale of goods or services to an agency of the South African government covered in subsections (a) through (o) of section - -------- **** A Contractor is not eligible to certify that it and its affiliates "do not do business in South Africa" if the contractor or any of its affiliates is involved in any of its activities covered by Section 1 of Part C. 40 1 of this Part when such sale is provided for by the terms of a contract entered into prior to July 13, 1985 (the effective date of Local Law 19), but it does apply to any increase in the amount of goods or services supplied to such a covered agency pursuant to any amendment, modification or extension of such a contract if the amendment, modification or extension was agreed to on or after July 13, 1985. 8) That this certification does not apply to the sale of goods or services to an agency of the South African government covered in subsections (d) through (j) and (i) through (4) of section 1 of this Part when such sale is provided for by the terms of a contract entered into prior to February 28, 1987 (the effective date of Local Law 81), which amends Local Law 19 but it does apply to any increase in the amount of goods or services supplied to such a covered agency pursuant to any amendment, modification or extension of such a contract if the amendment, modification or extension was agreed to on or after February 28, 1987. Part B. The following provision applies only to contracts for the supply of motor vehicles, heavy equipment, electronic data processing equipment and software, copying machines and petroleum products: In order for the contractor to be eligible to sign this anti-apartheid rider, the contractor must either certify or provide a certificate to the Department from the manufacturer or refiner or product to be supplied to the City that such manufacturer or refiner and its affiliates are in compliance with the terms set forth in Article I and II of this rider. Any such contractor who signs this rider shall be deemed to be certifying with respect to such supplier or refiner unless such contractor attaches to the contract a separate copy of this rider signed by such manufacturer or refiner. For the purpose of the certificate made by or with respect to such refiner or manufacturer, the term "contractor" as used in Articles I and II shall be deemed to refer to such manufacturer or refiner. Part C. For purposes of this anti-apartheid provision, the following terms shall have the following meanings: 1. An entity shall be considered to have "withdrawn its operations from South Africa" if: (a) it does not maintain any office, plant or employee in South Africa other than for the following purposes: (i) the activities of religious, educational or charitable organizations; (ii) activities intended to promote the exchange of information, including the publication or sale of newspapers, magazines, stocks, films, televisions programming, photographs, microfilm, microfiche, and similar materials; (iii) the gathering or dissemination of information by 41 news media organizations; and (iv) the providing of telecommunications and mail services not involving the sale or leasing of equipment. (b) it has no investments in South Africa; and (c) it does not provide goods or services to any South African entity pursuant to any non-equity agreement. 2. "Affiliates" of a Contractor shall mean the parent company of the Contractor, and any subsidiaries of the parent company, and any subsidiaries of the Contractor. 3. "Parent company" shall mean an entity that directly controls the Contractor. 4. "Subsidiary" shall mean an entity that is controlled directly, or indirectly through one or more intermediaries, by a Contractor or the Contractor's parent company. 5. "Control" shall mean holding five percent or more of the outstanding voting securities of a corporation, or having an interest of five percent or more in any other entity. 6. "Entity" shall mean a partnership, association, join venture, company, corporation or any other form of doing business. 7. "South African entity" shall mean an entity organized in South Africa, or a branch or office in South Africa of an entity which is domiciled or organized outside South Africa. 8. "Investment" shall mean the beneficial ownership or control of a controlling interest in a South African entity, but shall not include the purchase of securities of a South African entity for a customer's account. 9. "non-equity agreement" shall mean a license, franchise, distribution or other written agreement pursuant to which an entity provides management, maintenance, or training services directly to a South African entity, or supplies goods directly to a South African entity for distribution by such South African entity, or for use as component parts in the manufacture of other goods by such South African entity. In addition, a "non-equity agreement" shall mean an original manufacturer agreement ("O.E.M. agreement") for equipment sold by a manufacturer of computers, copiers, or telecommunications equipment, which provides for or authorizes the sale of such equipment, alone or as part of a finished product, to a South Africa entity. A company shall be deemed to be providing goods or services to a South African entity pursuant to an original equipment manufacturer 42 agreement in accordance with the following definitions and under the following circumstances: a. "Company #1 includes the company which seeks to enter a contract with a City agency, and is determining whether it is qualified to sign the City's anti-apartheid rider, and all "affiliates" of that company as defined in section 2 of this Part. b. "Sale includes lease or rental of equipment. c. An. O.E.M. agreement is an agreement between a manufacturer (Company #1) and another manufacturer, a distributor, or a value-added reseller (Company #2), such that Company #1 provides products (which may include parts, components and/or subassemblies) and authorized the sale of such products Company #2 under any of the following circumstances. 1) Company #1 makes a sale of its equipment to Company #2, which, with or without making minor modifications to the equipment, privately labels and seeks it. An example would be an O.E.M. agreement whereby Company #2 purchases a copier from Company #1, and resells it as a copier under its own brand name, with or without having first made minor modifications to the copier's packaging. 2) Company #1 makes a sale of its equipment to Company, which provides substantial added value to Company #2's added value may be major application software and/or special hardware integrated into the product. Examples include: a) an O.E.M. agreement whereby Company #2 adds banking application software to Company #1's personal computer, marketing the resulting product as a banking teller station under Company #2's brand name. b) an O.E.M. agreement whereby Company #2 embeds a subassembly purchased from Company #1, such as a disk drive or telecommunications multiplexor, into Company #2's computer system under its own brand name. 3) Company #1 makes a sale of Company #2, which resells Company #1's product with Company #1's name still intact on the product. An example would be an O.E.M. agreement whereby Company #2 43 sells Company #1's word processor and licensed software as an authorized dealer (exclusive or non-exclusive) of Company #1. d. An O.E.M. agreement for equipment sold by a manufacturer of computers, copiers or telecommunications equipment is considered to provide for or authorize the sale of such equipment, alone or as part of a furnished product, to South African entity if any of the following conditions is met: 1) The O.E.M. agreement states that Company #2 may sell equipment made by Company #1 (with or without modification by Company #2) in South Africa. 2) The equipment covered by the agreement (as sold by Company #1 after modification by Company #2, if any is made) falls under one of the designated classifications governed by the Export Administration Act of 1979 (50 U.S.C. section 2401) and the associated federal regulations for Electronics and Precision Instruments (15 C.F.R. section 795.1, Supp. 1, Group 5), such that Company #1 knows of resale or distribution of the equipment to South Africa by Company #2 and assists Company #2 in procuring required governmental authorizations for such resale or distribution. 3) Company #1 has actual knowledge of resale or distribution of the equipment to South Africa by Company #2 and has not either terminated its contractual arrangement with Company #2 concerning such equipment or otherwise prohibited Company #2 from making further resale or distribution of Company #1's equipment to South Africa. II. COMPREHENSIVE ANTI-APARTHEID ACT OF 1986, EXPORT ADMINISTRATION ACT, AND ARMS EXPORT CONTROL ACT PROVISIONS FOR COMPETITIVE BID CONTRACTS ---------------------------------------- The Contractor hereby covenants and represents that it and its affiliates have not within the twelve months prior to the award of such contract violated, and shall not during the period of this contract violate, the provisions of the Comprehensive Anti-Apartheid Act of 1986, the Export Administration Act of 1979 as amended (50) U.S.C. ss.2401, ET SEQ.) or the Arms Export Control Act of 1976 as amended (22 U.S.C. ss.2778) respecting business activity in the Republic of South Africa. 44 III. ENFORCEMENT OF ARTICLES I AND II A. The Contractor agrees that the covenants and representations in Article I above are material conditions of this contract. In the event the Department receives information that the Contractor, or a manufacturer or refiner subject to such provisions in accordance with Part B of Article I, is in violation of the provisions of such Article, the Department shall review such information and give the Contractor and any such manufacturer or refiner an opportunity to respond. If the Department fines that a violation has occurred, to the Department shall have the right to terminate this contract and procure the supplies, services or work from another source in any manner the Department deems proper. In the event of such termination, the Contractor shall pay to the Department, or the Department in its sole discretion may withhold from any amounts otherwise payable to the Contractor the difference between the contract price for the uncompleted portion of this contract and the cost to the Department of completing performance of this contract either itself or by engaging another contract or contractors. In the case of a requirements contract, the Contractor shall be liable for such difference in price for the entire amount of supplies required by the Department for the uncompleted term of this contract. In the case of a construction contract, the Department shall also have the right to hold the Contractor in partial or total default in accordance with the default provisions of this contract. The rights and remedies of the Department hereunder shall be in addition to, and not in lieu of, any rights and remedies the Department has pursuant to this contract or by the operation of law. B. Upon a final determination by the United States Department of Commerce or any other agency of the United States or a court that the Contractor or a manufacturer or refiner subject to the provisions of Article II pursuant to the provisions of Part B of Article I, or any affiliates of the contractor or such a manufacturer or refiner, has violated any provisions of the Comprehensive Anti-Apartheid Act, the Export Administration Act of the Arms Export Control Act respecting business activity in the Republic of South Africa, the Department shall have the right to terminate this contract and procure the supplies, services or work from another source in any manner the Department deems proper. In the event of such termination, the Contractor shall pay to the Department, or the Department in its sole discretion may withhold from any amounts otherwise payable to the Contractor the difference between the contract price for the uncompleted portion of this contract and the cost to the Department of completing performance of this contract either itself or by engaging another Contractor or Contractors. In the case of a requirements contract, the Contractor shall be liable for the difference in price for the entire amount of supplies required by the Department for the uncompleted term of this contract. In the case of a construction contract, the Department shall also have the right to hold the Contractor in partial or total default in accordance with the default provisions of this contract. The rights and remedies of the Department hereunder shall be in addition to, and not in lieu of, any rights and remedies the Department has pursuant to this contract or by operation of law. 45 ARTICLE XII ENTIRE AGREEMENT This written Agreement contains all the terms and conditions agreed upon by the parties hereto, and no other agreement, oral or otherwise, regarding the subject matter of this Agreement shall be deemed to exist or to bind any of the parties hereto, or to vary any of the terms contained herein. IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written. CITY OF NEW YORK DEPARTMENT OF SOCIAL SERVICES HUMAN RESOURCES ADMINISTRATION COMMISSIONER By /s/ Solomon Malach _______________________________________ Corporate Contractor Affix Corporate Seal: American Meidcal Alert Corp. _______________________________________ CONTRACTOR By /s/ Wilfred L. Mossey _____________________________________ Title Executive V.P. __________________________________ 11-2571221 _______________________________________ Fed. Employer I.D. No. or Soc. Sec. No. Approval as to form and certification as to legal authority was granted by the Corporation Counsel on:_______________________________________. 46 STATE OF NEW YORK ) : ss: COUNTY OF NEW YORK ) On this 27 day of June 1991, before me personally came Solomon Malach, to me known to me to be Deputy commissioner of the HUMAN RESOURCES ADMINISTRATION/DEPARTMENT OF SOCIAL SERVICES of the CITY OF NEW YORK, the person described in and who is duly authorized to execute the foregoing instrument on behalf of the Commissioner, and he acknowledge to me that he executed the same for the purpose therein mentioned. /s/ Janet Smith ______________________________ NOTARY PUBLIC STATE OF NEW YORK ) : ss: COUNTY OF NEW YORK ) On this 27th day of June 1991, before me personally came Wilfred L. Mossey, to me known, who, being by me duly sworn, did deposes and say that he resides at 380 West Penn Street, he is the Exec. V.P. of the American Medical Alert Corp., the corporation described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the board of Directors of said corporation, and that he signed his name thereto by like order. /s/ Janet Smith ______________________________ NOTARY PUBLIC 47 APPROVAL AS TO FROM OF A SINGLE CONTRACT NAME OF CONTRACTOR: AMERICAN MEDICAL ALERT CORP. Pursuant to the powers vested in me by Section 394, subd. b of the New York City Charter, I hereby approve as to form the annexed contract to be entered into by the Department of Social Services of the Human Resources Administration on behalf of the City of New York. Dated: APPROVED AS TO FORM CERTIFIED AS TO LEGAL AUTHORITY * (Signature Illegible) _______________________________ Acting Corporation Counsel June 14, 1991 48 THIS MODIFICATION AGREEMENT, dated this 8th day of May, 1989 between the City of New York acting through the Department of Social Services of the Human Resources Administration ("Department"), 250 Church Street, New York, New York 10013 and American Medical Alert Corp. ("Contractor") with offices at 3265 Lawson Boulevard, Oceanside, New York 11572. W I T N E S S E T H : --------------------- WHEREAS, parties hereto entered into an Agreement for providing an electronic call device system, known as the Voice of Help System ("Agreement") for the period of July 1, 1988 through June 30, 1989, which Agreement was approved pursuant to a Resolution adoption by the Board of Estimate on June 9, 1988 (Cal. No. 389); and WHEREAS, the Department desires to modify the Agreement by having the "Contractor" upgrade the present Voice of Help Units heretofore provided. NOW, THEREFORE, the parties hereto agree as follows: 1. Except as modified to date and as modified herein all the terms, conditions and covenants of the Agreement shall; remain in full force and effect. 2. Article II of Part I is amended by inserting a new Section B as follows: "D. "Upgraded Voice of Help System" - The Contractors upgraded electronic call device system, which consists of the Voice of Help console, with provisions for remote activator, panic button at primary entrance, activator mounted in bathroom and smoke detector (the "Upgraded System")" 3. Article III of Part I Sections B, D and E; Article IV, Sections 1a, 1b, 2, 3, 5, 5a and 11; and VI A (ii); are amended by adding the words and/or "the Upgrade System" after the words "Voice of Help Unit" each time the words "Voice of Help Unit" appears in those Articles and Sections. 4. Article III of Part I Section E is amended by inserting the words "and under this Agreement" after the words "under an earlier lease Agreement" on line 2 thereof. 5. Article IV of Part I is amended by adding Subsections 12, 13 and 14 as follows: "12. The Contractor will provide a full time installer/service person to provide service for the Home Care Service Program/ECD clients at no additional cost to the Department. 13. All equipment installed by the Contractor subsequent to the effective date of the modification shall have an adhesive label affixed to it identifying it as: "Property of American Medical Alert Corp." (Call 1-800-632-6729) All equipment not so identified shall not be reimbursable to Contractor if deemed unrecoverable. 14. A. The Contractor shall, upon the execution of the Modification Agreement and until the termination date of this Agreement, as modified, endeavor to change and/or modify, all existing units and 131N units in place to the "Upgraded System." B. Installations and removals of the "Upgraded System" shall be billed as hereinafter provided in Section 9 of this Modification Agreement." 6. Article V of Part I is amended by deleting it in its entirety and substituting in place and in lieu thereof a new Article V, Section A as follows: "A. 1. Each Voice of Help Unit (Models 131, 131N and 500) (activator and console) which shall have been installed shall have ascribed to it a value based on original equipment cost of $429.00 per unit for the purpose of determining depreciated value as provided for in Subsection 2 hereof. 2. In the event, despite the good faith efforts of both the Department and the Contractor, the above described unit is not recoverable from the client, the Contractor shall, with the consent of the Department, be entitled to recover the depreciated value of such unit. For the purpose of establishing undepreciated value the voice of help unit (activator and console) shall be depreciated at the rate of $9.00 per month." 7. Article V of Part I is further amended by adding a new Section B as follows: "B. Each "Upgraded System" which shall be or shall have been, installed shall be ascribed a certain agreed value, by unit (console) and component parts in accordance with the schedule of values as shown in Subsection 1 below, which values shall be used for the purposes of establishing depreciated values as described in Subsection 2 below. 1. a)Central unit (console).... $395.00 b)Activators (3) each at.... $ 45.00 c)Smoke detector............ $ 60.00 2. In the event, despite the good faith efforts of both the Department and the Contractor, the above mentioned unit and/or its respective -2- component parts is (are) not recoverable from the client, the Contractor, with the consent of the Department, shall be entitled to recover the undepreciated value of such unit and/or component part. For the purposes of establishing such undepreciated value the central unit (console) shall be depreciated at the rate of $9.00 per month; the activators shall be depreciated at the rate of $1.00 per month each; and the smoke detector shall be depreciated at the rate of $1.33 per month. 8. Amend Article VII, Section A of Part I by increasing the Agreement amount of "not to exceed" $150,000, by $75,000 to a new amount of "not to exceed $225,000.00." 9. Amend Article VII of Part I, Section B1 by deleting it in its entirety and substituting in lieu and in place thereof as follows: A. A one time fee of $50 for the installation of the "Upgraded System" and a fee of $25.00 for the removal of the "Upgrade System" and further amend Article VII, Part I B2 by deleting it in its entirety and substituting in lieu and in place thereof the following: B. A one time replacement fee of $75.00 for the replacement of each model 131 unit with an "UPgrade System." 2. a) For the Voice of Help Unit a monthly monitoring/leasing fee of $29.75 per client; and for those units which have been in place for more than 24 monthly a monthly monitoring/leasing fee of $20.75, and for the "upgraded system" a monthly monitoring/leasing fee of $30.00 per month. b) Billing for a partial month, irrespective of the number of days of service provided during any such partial month shall be in the sum of $15.00 And further deleting Subsection C of Article VII, Section A in its entirety. 10. APPROVALS 10.1 THE CITY OF NEW YORK This Modification Agreement shall not become effective or binding unless: A. authorized by the Mayor; approved by the Board of Estimate either pursuant to Section 349 of the New York City Charter for contracts not subject to public letting -3- if the amount to be paid hereunder exceeds $10,000, or for amendments to a contract previously approved by the Board of Estimate, if the amount to be paid hereunder exceeds the lesser of $10,000 or fifteen per cent (15%) of the original contract amount, or pursuant to Section 343(a) of the New York City Charter for contracts subject to public letting; and the Comptroller shall have endorsed his certificate that there remains unexpended and unapplied a balance of the appropriation of funds applicable hereto sufficient to pay the estimated expense of executing this Modification Agreement; and B. approved by the Mayor pursuant to the provisions of Executive Order No. 42, dated October 9, 1975 in the event the Executive Order requires such approval; and C. certified by the Mayor (Mayor's Fiscal Committee created pursuant to Executive Order No. 43, dated October 14, 1975) that performance thereof will be in accordance with the City's financial plan. 10.2 OTHER APPROVALS OR AUTHORIZATIONS The requirement of this Article shall be in addition to, and not in lieu of, any approval or authorization otherwise required for this Modification Agreement to be effective and for the expenditure of City funds. IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written. CITY OF NEW YORK DEPARTMENT OF SOCIAL SERVICES HUMAN RESOURCES ADMINISTRATION COMMISSIONER By /s/ Thomas W. Bergdelf ----------------------------- Corporate Contractor Affix Corporate Seal: AMERICAN MEDICAL ALERT CORP. ------------------------------- CONTRACTOR By /S/ WILFRED L. MOSSEY ----------------------------- Title EXECUTIVE VICE PRESIDENT ------------------------ 11-2571221-C --------------------------------------- Fed. Employer I.D. No. or Soc. Sec. No. -4- Approval as to form and certification as to legal authority was granted by the Corporation Counsel on: _____________________________. -5- STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 8th day of May 1989, before me personally came Thomas W. Bergdelf, to me known and known to me to be General Counsel of the HUMAN RESOURCES ADMINISTRATION DEPARTMENT OF SOCIAL SERVICES of the CITY OF NEW YORK, the person described in and who is duly authorized to executed the foregoing instrument on behalf of the Commissioner, and he acknowledged to me that he executed the same for the purpose therein mentioned. /s/ Mary J. Minor ----------------------------- NOTARY PUBLIC STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On this 8th day of May 1989, before me personally came Wilfred L. Mossey, to me known, who, being by me duly sworn, did depose and say that he resides at 124 Grant Avenue, East Rockaway, New York; that he is the Executive Vice President of American Medical Alert Corp., the corporation described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. /s/ Mary J. Minor ----------------------------- NOTARY PUBLIC -6- APPROVAL AS TO FORM OF A SINGLE CONTRACT NAME OF CONTRACTOR: AMERICAN MEDICAL ALERT CORP. Pursuant to the powers vested in me by Section 394, subd. b of the New York City Charter, I hereby approve as to form the annexed contract to be entered into by the Department of Social Services of the Human Resources Administration on behalf of the City of New York. Dated: * (Signature Illegible) -------------------------------- Acting Corporation Counsel April 04, 1989 -7- THIS LEASE AGREEMENT dated this 23 day of June, 1988, between the Department of Social Services of the Human Resources Administration ("Department") with offices at 250 Church Street, New York, New York 10013 and American Medical Alert Corp. ("Contractor") with offices at 3265 Lawson Boulevard, Oceanside, New York 11572. W I T N E S S E T H ------------------- WHEREAS, the Department's Medical Assistance Program/Office of Home Care Services ("MAP/"OHCS") provides a program of personal home care service for individuals eligible for such services, pursuant to applicable Federal and State Laws and regulations; and WHEREAS, a significant number of the individuals served by OHCS require regular custodial care; and WHEREAS, in order to reduce the costs of such custodial care service, OHCS instituted a program designed to allow home care service clients, living alone, to call for assistance, via an electronic call device; and WHEREAS, the Contractor markets an electronic call device ("ECD") known as the Voice of Help System. WHEREAS, the Department desires to lease the Voice of Help System and the Contractor agrees to lease said System. NOW THEREFORE, the parties hereto agree as follows: PART I ------ ARTICLE I --------- TERM OF AGREEMENT ----------------- A. The term of this Agreement shall be from July 1, 1988 to June 30, 1989. B. The Department shall have the option to renew this Lease Agreement upon the terms and conditions set-forth herein for an additional one year period, provided that the Board of Estimate shall authorize such renewal and all required approvals are obtained. ARTICLE II ---------- DEFINITIONS ----------- A. Voice of Help System - the Contractor's electronic call device system, consisting of the Voice of Help Activator and Voice of Help Console (Voice of Help) and the Monitoring System. B. Emergency Response Center ("ERC") - the Contractor's central facilities for storing and retrieving client data and for responding to all ECDS. C. Client - the individual selected by the Department to receive the equipment and services described herein. ARTICLE III ----------- EQUIPMENT --------- A. The Department agrees to lease from the Contractor and the Contractor agrees to lease from the Department as many Voice of Help Units may be required by the Department. B. The Contractor shall be responsible for installing the Voice of Help Unit at the Client's premises. Installation shall consist of all work that may be required to utilize a Client's existing telephone system. In no event shall the Contractor be responsible to perform such work that is required to be performed by the New York Telephone Company. If an installation cannot be completed, the Contractor shall immediately notify the Department contract, indicating why said installation cannot be completed. C. The Client shall be responsible for ensuring that the Contractor is provided: (a) proper telephone equipment which enables Contractor to install on RJ31X connector in the Client's residence. (b) properly functioning telephone service. (c) twenty-four (24) hour, AC 110 volt circuit as required to power the Voice of Help Unit console. D. At the option of the Department, the Contractor shall install a Voice of Help Unit, at no cost to the Department, at a location to be selected by the Department for purposes of monitoring the Contractor's services. -2- E. The parties agree that the Voice of Help Units previously installed under an earlier lease agreement with the Contractor and any renewals thereof shall remain in place, unless removal of a Unit is requested by the Department, and shall be subject to the terms and conditions herein. ARTICLE IV ---------- SERVICES -------- The Contractor shall be responsible for the following services: 1. Install a Voice of Help Unit in a client's residence within five (5) working days of telephone notification by authorized MAP/OHCS staff. (a) The Contractor shall provide all parts and equipment necessary for installing the Voice of Help unit into a functioning telephone system. (b) The Contractor shall instruct the client in the use and maintenance of the Voice of Help unit and shall provide the client with simple written instructions, including how to report a malfunction of the unit. (c) The Contractor shall forward to MAP/OHCS within (5) five working days of the installation, a form signed by a Contractor representative or employee and by the client or client's representative confirming the date of the installation and the client's understanding of the use and maintenance of the unit. 2. Maintain all installed Voice of Help units in proper working order. (a) The Contractor shall repair or replace within 24 hours of notification any unit that is not functioning properly. (b) The Contractor shall notify MAP/OHCS immediately upon repairing or replacing a malfunctioning unit. 3. Monitor each Voice of Help unit at least once every 24 hours to insure that the device is operating properly. The Contractor shall follow up immediately on any unit that is not operating properly. Malfunctioning equipment shall be repaired or replaced within 24 hours of the Contractor's becoming aware of the malfunction. 4. Maintain a 24-hour emergency response center staffed with trained emergency response operators. -3- (a) The Contractor shall establish and maintain a 24-hour monitoring center for all installed Voice of Help units. (b) The Contractor shall insure 24-hour staffing of the emergency response center with trained operators. 5. Respond immediately to any and all signals from clients' Voice of Help units and maintain appropriate contact until termination of the emergency situation. (a) The Contractor, immediately upon receiving a signal from a client's Voice of Help unit, shall retrieve the client's automated data records and contact the client or the client's representative, or take other emergency action as prescribed in the client's record. (b) The emergency response operator shall monitor the provision of emergency service to verify that it has been provided and that the emergency situation no longer exists at the client's residence. (c) The Contractor shall notify MAP/OHCS by telephone, on the working day following the emergency, of the nature and resolution of the emergency. The Contractor shall submit to MAP/OHCS a written summary of the emergency within five (5) working days of the incident. 6. Insure continuous monitoring and response capabilities during power failures, mechanical malfunction or other emergencies. 7. Create, maintain and protect automated client data records. (a) The Contractor shall operate an automated client data storage and retrieval system which shall include all pertinent client information. (b) The Contractor shall update client data every six (6) months. (c) The Contractor shall protect client records from alteration or destruction, and shall protect the confidentiality of client records. 8. Maintain written records of all emergency response system (ERS) activities, including all activations of Voice of Help units. 9. Devise and provide all client data, activity, and billing forms. 10. Submit detailed monthly billings within ten (10) working days of the end of the month. -4- 11. Remove the Voice of Help unit from a client's residence within five (5) working days of telephone notification by authorized MAP/OHCS staff. (a) The Contractor shall, upon instruction by MAP/OHCS, arrange with the client or client's representative for a mutually convenient appointment within five (5) working days. (b) The Contractor shall verify to MAP/OHCS by telephone and in writing that the unit has been removed. ARTICLE V --------- DEPRECIATION AND RECOVERY OF EQUIPMENT -------------------------------------- Each Voice of Help unit shall be depreciated at the rate of $9.00 per month, from the date of the first installation of the unit. In the event that, despite the good faith efforts of both the Department and the Contractor, the unit is not recoverable from the client the Contractor, with the consent of the Department, shall be entitled to recover the depreciated value of the Voice of Help unit. This value shall be based on an original equipment cost of $429.00 per unit (activator and console). ARTICLE VI ---------- LIQUIDATED DAMAGES ------------------ A. If the Contractor is not able to: (i) respond to Client's or the Department's request for maintenance and service within 24 hours following receipt of such notification or (ii) get the Voice of Help unit operating or supply a properly functioning Voicemitter within 24 hours following receipt of said notification; the Contractor at the discretion of the Department shall pay to the Department, or at its option, the Department may deduct from any payment due or to become due to the Contractor, the monthly charge for the Voice of Help unit, as fixed and agreed liquidated damages. B. If there are interruptions in the monitoring services provided by the Contractor pursuant to Article IV of Part I of this Lease Agreement, totaling 24 hours or more during a monthly billing period that are not the result of an improper, faulty or non-operational phone system, the Contractor at the discretion of the Department, shall pay to the Department, or at its -5- option, the Department may deduct from any payment due or to become due to the Contractor, the monthly charge under this Lease Agreement for the month said interruptions occurred as fixed and agreed liquidated damages. ARTICLE VII ----------- CHARGES ------- A. Notwithstanding any other provision to this Lease Agreement, total payments to be made to the Contractor shall not exceed $150,000.00 B. The Department agrees to pay the following fees and charges for the equipment and services provided by the Contractor herein. 1. A one time installation and removal fee per Voice of Help unit of $75.00. 2. A monthly monitoring/leasing fee of $29.75 per client for each of the first twenty-four months of service; all subsequent months for the client shall be billed at a rate of $20.75 per month. C. Billing for a partial month's monitoring/leasing resulting from an installation or removal of a Voice of Help unit shall be prorated at $1.00 per day for each day that the client received service during the billing month. D. The Contractor shall submit monthly statements to the Department setting forth the monthly rental and installation charges, if any, and the name and address of each Client, for the month which payment is being requested. ARTICLE VIII ------------ MOST FAVORED CUSTOMER --------------------- The Contractor warrants and represents that the prices, warranties, benefits and terms set forth herein are at least equal to or more favorable to the City than the prices, warranties, benefits, and terms now charged or offered by the Contractor to other customers under similar circumstances and terms and conditions, or that may be charged or offered during the term hereof for the same or substantially similar products or services defined in this Agreement. If at any time during the term hereof, the COontractor enters into an agreement on a basis that provides prices, warranties, benefits, or terms more favorable than those provided the City hereunder, then the Contractor shall within thirty (30) calendar days thereafter notify the City of such facts, and regardless of whether such notice is sent by the Contractor or received by the City, this Agreement shall be deemed to be amended, effective retroactively to the effective date of the more favorable agreement, to provide the same prices, warranties, benefits, or terms to the City; -6- provided that the City shall have the right and option at any time to decline, to accept any such change, in which event such amendment shall be deemed null and void. If the Contractor is of the opinion that an apparently more favorable price, warranty, benefit or term charged or offered a customer during the term hereof is not in fact more favorable treatment, the Contractor shall promptly notify the Commissioner in writing setting forth in detail the reasons that it believes said apparently moe favorable treatment is not in fact more favorable treatment. The Commissioner, after due consideration of such written explanation, may decline to accept such explanation and thereupon this Agreement shall be deemed to be automatically amended effective retroactively to the effective date of the more favorable agreement, to provide the same prices, warranties, benefits, and/or terms to the City. -7- PART II - GENERAL PROVISIONS ---------------------------- ARTICLE I --------- DEFINITIONS ----------- As used throughout this Agreement, the following terms shall have the meaning set forth below: (a) "City" shall mean the City of New York, its departments and political subdivisions. (b) "Comptroller" shall mean the Comptroller of the City of New York. (c) "Department" shall mean the Department of Social Services of the Human Resources Administration including its constituent agencies, departments, bureaus and their subdivisions. (d) "Administrator" or "Commissioner" shall mean the Administrator of the Human Resources Administration/Commissioner of the Department of Social Services or his duly authorized representative. The term "duly authorized representative" shall include any person or persons acting within the limits of his authority. (e) "Law" or "Laws" shall include but not be limited to the New York City Charter, the New York City Administrative Code, a local law of the City of New York, and any ordinance, rule or regulation having the force of law. (f) When referring to the Contractor, the pronoun "it", shall also mean he or she, and the adjective "its" shall also mean his or her, as the case may be. ARTICLE II ---------- REPRESENTATION AND WARRANTIES ----------------------------- 2.1 PROCUREMENT OF AGREEMENT ---------------------------------- A. The Contractor represents and warrants that no person or selling agency has been employed or retained to solicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage fee, contingent fee or any other compensation. The Contractor further represents and warrants that no payment, gift or thing of value has been made, given or promised to obtain this or any other agreement between the parties. The Contractor makes such representations and warranties to induce the City to enter into this Agreement and the City relies upon such representations and warranties in the execution hereof. -8- B. For a breach or violation of such representations or warranties, the Administrator shall have the right to annul this Agreement without liability, entitling the City to recover all monies paid hereunder and the Contractor shall not make claim for, or be entitled to recover, any sum or sums due under this Agreement. This remedy, if effected, shall not constitute the sole remedy afforced the City for the falsity or breach, nor shall it constitute a waiver of the City's right to claim damages or refuse payment or to take any other action provided for by law or pursuant to this Agreement. 2.2 CONFLICT OF INTEREST ------------------------ The Contractor represents and warrants that neither it nor any of its directors, officers, members, partners or employees, has any interest nor shall they acquire any interest, directly or indirectly, which would or may conflict in any manner or degree with the performance or rendering of the services herein provided. The Contractor further represents and warrants that in the performance of this Agreement no person having such interest or possible interest shall be employed by it. No elected official or other officer or employee of the City or Department, nor any person whose salary is payable, in whole or in part, from the City Treasury, shall participate in any cecision relating to this Agreement which affects his personal interest or the interest of any corporation, partnership or association in which he is, directly or indirectly, interested nor shall any such person have any interest, direct or indirect, in this Agreement or in the proceeds thereof. 2.3 FAIR PRACTICES ------------------ The Contractor and each person signing on behalf of any Contractor represents and warrants and certifies, under penalty of perjury, that to the best of its knowledge and belief: A. The prices in this Agreement have been arrived at independently without collusion, consultation, communication, or agreement, for the purpose of restricting competition, as to any matter relating to such prices with any other bidder or with any competitor; B. Unless otherwise required by law, the prices which have been quoted in this Agreement and on the proposal submitted by the Contractor have not been knowingly disclosed by the Contractor prior to the proposal opening, directly or indirectly, to any other bidder or to any competitor; and C. No attempt has been made or will be made by the Contractor to induce any other person, partnership or corporation to submit or not to submit a proposal for the purpose of restricting competition. The fact that the Contractor (a) has published price lists, rates, or tariffs covering items being procured, (b) has informed prospective customers of proposed or pending publication of new or revised price lists for such items, or (c) has sold the same items to other customers at the -9- same prices being bid, does not constitute, without more, a disclosure within the meaning of the above. 2.4 Affirmation of Responsibility And Paid Taxes ------------------------------------------------ The Contractor affirms and declares that said Contractor is not in arrears to the City of New York upon any debt, contract or taxes and is not a defaulter, as a surety or otherwise, upon any obligation to the City of New York, and has not been declared not responsible, or disqualified, by any agency of the City of New York, nor is there any proceeding pending relating to the responsibility or qualification of the Contractor to receive public contracts except as otherwise stated in the affirmation pertaining to the foregoing which has been furnished to the Department. ARTICLE III ----------- AUDIT BY THE DEPARTMENT AND CITY -------------------------------- 3.1 All vouchers or invoices presented for payment to be made hereunder, and the books, records and accounts upon which said vouchers or invoices are based are subject to audit by the Department and by the Comptroller of the City of New York pursuant to the powers and responsibilities as conferred upon said Department and said Comptroller by the New York City Charter and the Administrative Code of the City of New York, as well as all orders and regulations promulgated pursuant thereto. 3.2 The Contractor shall submit any and all documentation and justification in support of expenditures or fees under this Agreement as may be required by said Department and said Comptroller so that they may evaluate the reasonableness of the charges and shall make its records available to the Department and to the Comptroller as they consider necessary. 3.3 All books, vouchers, records, reports, cancelled checks and any and all similar material related to this contract and the work thereunder may be subject to periodic inspection, review and audit by the State of New York, Federal Government and other persons duly authorized by the City including the Department's Office of the Inspector General. Such audit may include examination and review of the source and application of all funds whether from the City, any State, the Federal Government, private sources or otherwise. 3.4 The Contractor shall not be entitled to final payment under the Agreement until all requirements have been satisfactorily met. -10- ARTICLE IV COVENANTS OF THE CONTRACTOR 4.1 EMPLOYEES ------------- All experts or consultants or employees of the Contractor who are employed by the Contractor to perform work under this Agreement are neither employees of the City nor under contract to the City and the Contractor alone is responsible for their work, direction, compensation and personal conduct while engaged under this Agreement. Nothing in this Agreement shall impose any liability or duty on the City for the acts, omissions, liabilities or obligations of the Contractor or any person, firm, company, agency, association, corporation or organization engaged by the Contractor as expert, consultant, independent contractor, specialist, trainee, employee, servant, or agent, or for taxes of any nature including but not limited to unemployment insurance, worker's compensation, disability benefits and social security. 4.2 LIABILITY ------------- A. The Contractor shall be solely responsible for all physical injuries or death to its agents, servants, or employees or to any other person and for all damage to any property sustained during its operations and work under this Agreement resulting from any act of omission or omission or error in judgment of any of its officers, trustees, employees, agents, servants, or independent contractors, and shall hold harmless and indemnify the City from liability upon any and all claims for damages on account of such injuries or death to any such person or damages to property on account of any neglect, fault or default of the Contractor, its officers, trustees, employees, agents, servants, or independent contractors. The Contractor shall be solely responsible for the safety and protection of all of its employees whether due to the negligence, fault or default of the Contractor or not. B. In the event any claim is made or any action is brought against the City arising out of negligent or careless acts of an employee of the Contractor, either within or without the scope of his employment, or arising out of Contractor's negligent performance of this Agreement, then the City shall have the right to withhold further payments hereunder for the purpose of set-off in sufficient sums to cover the said claim or action. The rights and remedies of the City provided for in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or this Agreement. 4.3 INSURANCE ------------- The Contractor shall carry paid up insurance in the sum of not less than One Million ($1,000,000) Dollars per occurrence to protect the Department and the City of New York against any and all claims, loss or damage, whether in contract or tort, including claims for injuries to, or death of persons, or damage to property, whether such injuries, death or damages be attributable -11- to the statutory or common law negligence or any other acts of the Contractor, its employees, or otherwise. Said policy shall also cover loses, death or injury due to failure of the Voice of Help System. Such policy or policies of insurance shall be obtained from a company, or companies, duly licensed to do business in the State of New York, shall name the Department and City of New York as additional parties insured thereunder, shall provide that in the event of cancellation thereof, the Department shall be notified at least fifteen (15) days in advance thereof, and shall provide that the carrier shall appear, defend and indemnify the Department and City, including the agents, servants and employees of the Department and City, in connection with all such claims, loss or damage. Two (2) executed copies of all insurance policies shall be delivered to the Department for approval as to form prior to the effective date of this Agreement. 4.4 WORKER'S COMPENSATION AND DISABILITY BENEFITS ------------------------------------------------- If this Agreement be of such a character that the employees engaged thereon are required to be insured by the provisions of Chapter 615 of the Laws of 1922, known as the "Worker's Compensation Law" and acts amendatory thereto, the Agreement shall be void and of no effect unless the Contractor shall secure compensation for the benefit of, and keep insured during the life of this Agreement such employees in compliance with the provisions of said law, inclusive of Disability Benefits; and, shall furnish the Department with two (2) certificates of these insurance coverages. 4.5 UNEMPLOYMENT INSURANCE -------------------------- Unemployment Insurance coverage shall be obtained and provided by the Contractor for its employees. 4.6 MINIMUM WAGE ---------------- Except for those employees whose minimum wage is required to be fixed pursuant to Section 220 of the Labor Law of the State of New York, all persons employed by the Contractor in the performance of this Agreement shall be paid, without subsequent deduction or rebate, unless expressly authorized by law, not less than the minimum wage as prescribed by law. Any breach or violation of the foregoing shall be deemed a breach or violation of material provision of this Agreement. 4.7 INDEPENDENT CONTRACTOR STATUS --------------------------------- The Contractor and the Department agree that the Contractor is an independent contractor, and not an employee of the Department or the City of New York, and that in accordance with such status as independent contractor, the Contractor covenants and agrees that neither it nor its employees or agents will hold themselves out as, nor claim to be, officers or employees of the City of New York, or of any department, agency or unit thereof, by reason hereof, and that they will not, by reason hereof, make any claim, demand or application to or for -12- any right or privilege applicable to an officer or employee of the City of New York, including, but not limited to, Worker's Compensation coverage, Unemployment Insurance Benefits, Social Security coverage or employee retirement membership or credit. 4.8 CONFIDENTIALITY ------------------- A. All information obtained, learned, developed or filed by the Contractor in connection with public assistance recipients or their relatives or in connection with other recipients of services, including data contained in official Department files or records, shall be held confidential by the Contractor pursuant to the provisions of the Social Services Law of the State of New York, the Federal Social Security Act, and any applicable regulations promulgated thereunder and shall not be disclosed by the Contractor to any person, organization, agency or other entity except as authorized or required by law. B. All of the reports, information or data, furnished to or prepared, assembled or used by the Contractor under this Agreement are to be held confidential, and the Contractor agrees that the same shall not be made available to any individual or organization without the prior written approval of the Department. C. The provisions of this Section shall remain in full force and effect following termination of, or cessation of the services required by, this Agreement. 4.9 BOOKS AND RECORDS --------------------- The Contractor agrees to maintain separate and accurate books, records, documents and other evidence and accounting procedures and practices which sufficiently and properly reflect all direct and indirect costs of any nature expended in the performance of this Agreement. Such records shall be subject to review, audit and inspection by City, State and Federal personnel, including the Department's Office of the Inspector General. 4.10 RETENTION OF RECORDS ------------------------- The Contractor agrees to retain all books, records, and other documents relevant to this Agreement for six years after the final payment or termination of this Agreement, whichever is later. City, State and Federal auditors and any other persons duly authorized by the Department shall have full access to and the right to examine any of said materials during said period. 4.11 COMPLIANCE WITH LAW ------------------------ The Contractor shall render all services under this Agreement in accordance with the applicable provisions of Federal, State and local laws, rules and regulations as are in effect at the time such services are rendered. -13- 4.12 FEDERAL EMPLOYMENT PRACTICES --------------------------------- The Contractor and its subcontractors shall comply with the Civil Rights Act of 1964 and any amendment thereto, and the rules and regulations promulgated thereunder. 4.13 NON-DISCRIMINATION AGAINST THE HANDICAPPED ----------------------------------------------- The Contractor agrees that it will comply with the provisions of Section 504 of the Rehabilitation Act of 1973, as amended, and all regulations, guidelines and interpretations issued pursuant thereto. 4.14 INVESTIGATIONS ------------------- A. The parties to this Agreement agree to cooperate fully and faithfully with any investigation, audit or inquiry conducted by a State of New York (State) or City of New York (City) governmental agency or authority that is empowered directly or by designation to compel the attendance of witnesses and to examine witnesses under oath, or conducted by the Inspector General of a governmental agency that is a party in interest to the transaction, submitted bid, submitted proposal, contract, lease, permit, or license that is the subject of the investigation, audit or inquiry. B. 1. If any person who has been advised that his or her statement, and any information from such statement, will not be used against him or her in any subsequent criminal proceeding refuses to testify before a grand jury or other governmental agency or authority empowered directly or by designation to compel the attendance of witnesses and to examine witnesses under oath concerning the award of or performance under any transaction, agreement, lease, permit, contract, or license entered into with the City, the State, or any political subdivision or public authority thereof, or the Port Authority of New York and New Jersey, or any local development corporation within the City, or any public benefit corporation organized under the laws of the State of New York, or; 2. If any person refuses to testify for a reason other than the assertion of his or her privilege against self incrimination in an investigation, audit or inquiry conducted by a City or State governmental agency or authority empowered directly or by designation to compel the attendance of witnesses and to take testimony under oath, or by the Inspector General of the governmental agency that is a party in interest in, and is seeking testimony concerning the award of, or performance under, any transaction, agreement, lease, permit, contract, or license entered into with the City, the State, or any political subdivision thereof or any local development corporation within the City, then; C. 1. The commissioner or agency head whose agency is a party in interest to the transaction, submitted bid, submitted proposal, contract, lease, permit, or license shall convene a -14- hearing, upon not less than five (5) days written notice to the parties involved to determine if any penalties should attach for the failure of a person to testify. 2. If any non-governmental party to the hearing requests an adjournment, the commissioner or agency head who governed the hearing may, upon granting the adjournment, suspend any contract, lease, permit, or license pending the final determination pursuant to paragraph E, below, without the City incurring any penalty or damages for delay or otherwise. D. The penalties which may attach after a final determination by the commissioner or agency head may include but shall not exceed: 1. The disqualification for a period not to exceed five (5) years from the date of an adverse determination for any person, or any entity of which such person was a member at the time the testimony was sought, from submitting bids for, or transacting business with, or entering into or obtaining any contract, lease, permit or license with or from the City; and/or 2. The cancellation or termination of any and all such existing City contracts, leases, permits or licenses that the refusal to testify concerns and that have not been assigned as permitted under this Agreement, nor the proceeds of which pledged, to an unaffiliated and unrelated institutional lender for fair value prior to the issuance of the notice scheduling the hearing, without the City incurring any penalty or damages on account of such cancellation or termination; monies lawfully due for goods delivered, work done, rentals, or fees accrued prior to the cancellation or termination shall be paid by the City. E. The commissioner or agency head shall consider and address in reaching his or her determination and in assessing an appropriate penalty, the factors in paragraphs 1 and 2, below. He or she may also consider, if relevant and appropriate, the criteria established in paragraphs 3 and 4, below, in addition to any other information which may be relevant and appropriate; 1. The party's good faith endeavors or lack thereof to cooperate fully and faithfully with any governmental investigation or audit, including but not limited to the discipline, discharge, or disassociation of any person failing to testify, the production of accurate and complete books and records, and the forthcoming testimony of all other members, agents, assignees or fiduciaries whose testimony is sought. 2. The relationship of the person who refused to testify to any entity that is a party to the hearing, including, but not limited to, whether the person whose testimony is sought has an ownership interest in the entity and/or the degree of authority and responsibility the person has within the entity. 3. The nexus of the testimony sought to the subject entity and its contracts, leases, permits or licenses with the City. -15- 4. The effect a penalty may have on a unaffiliated and unrelated party or entity that has a significant interest in an entity subject to penalties under D, above, provided that the party or entity has given actual notice to the commissioner or agency head upon the acquisition of the interest, or at the hering called for in C(1), above, gives notice and proves that such interest was previously acquired. Under either circumstance, the party or entity must present evidence at the hearing demonstrating the potential adverse impact a penalty will have or such person or entity. F. 1. The term "license" or "permit" as used herein shall be defined as a license, permit, franchise or concession not granted as a matter of right. 2. The term "person" as used herein shall be defined as any natural person doing business alone or associated with another person or entity as a partner, director, officer, principal or employee. 3. The term "entity" as used herein shall be defined as any firm, partnership, corporation, association, or person that receives monies, benefits, licenses, leases, or permits from or through the City or otherwise transacts business with the City. 4. The term "member" as used herein shall be defined as any person associated with another person or entity as a partner, director, officer, principal or employee. G. In addition to and notwithstanding any other provision of this Agreement the Commissioner or agency head may in his or her sole discretion terminate this Agreement upon not less than three (3) days written notice in the event Contractor fails to promptly report in writing to the Commissioner of Investigation of the City of New York any solicitation of money, goods, requests for future employment or other benefit or thing of value, by or on behalf of any employee of the City or other person, firm, corporation or entity for any purpose which may be related to the procurement or obtaining of this Agreement by the Contractor, or affecting the performance of this contract. 4.15 ASSIGNMENT --------------- A. The Contractor shall not assign, transfer, convey, sublet or otherwise dispose of this Agreement, or of the Contractor's right, title, interest obligations or duties herein, or the Contractor's power to execute such Agreement, or assign, by power of attorney or otherwise, any of its rights to receive monies due or to become due under this Agreement, unless the prior written consent of the Administrator shall be obtained. Any such assignment, transfer, conveyance, sublease or other disposition without such consent shall be void. B. In the event that the Contractor assigns, transfers, conveys, sublets or otherwise disposes of this Agreement as specified in subdivision A, above, without the prior written consent of the Department, the Department shall revoke and annul this Agreement and the Department -16- shall be relieved and discharged from any and all liability and obligations growing out of such Agreement to the Contractor, its assignees, transferees or sublessees, and the Contractor, lose all monies theretofore earned under this Agreement, except so much thereof as may be required to pay the Contractor's employees. The provisions of this section shall not hinder, prevent or affect an assignment by the Contractor for the benefit of its creditors made pursuant to the laws of the State of New York. C. This Agreement may be assigned by the City to any corporation, agency or instrumentality having authority to accept such assignment. 4.16 SUBCONTRACTING ------------------- A. The Contractor agrees not to enter into any sub-contracts for the performance of its obligations, in whole or in part, under this Agreement without the prior written approval of the Department. Two copies of each such proposed sub-contact shall be submitted to the Department with the Contractor's written request for approval. B. All such sub-contracts shall contain provisions specifying: 1. that the work performed by the sub-contractor must be in accordance with the terms of the Agreement between the Department and the Contractor; 2. that nothing contained in such contract shall impair the rights of the Department; 3. that nothing contained therein, or in the Agreement between the Department and the Contractor, shall create any contractual relationship between the sub- contractor and the Department; and 4. that the sub-contractor specifically agrees to be bound by the confidentiality provisions set forth in the Agreement between the Department and the Contractor. C. The Contractor agrees that it is fully responsible to the Department for the acts and omissions of the sub-contractors and of persons either directly or indirectly employed by them as it is for the acts and omissions of persons directly employed by it. D. The aforesaid approval is required in all cases other than individual employer- employee contracts. E. The Contractor shall not in any way be relieved of any responsibility under this Agreement by any sub-contract. -17- 4.17 PARTICIPATION IN AN INTERNATIONAL BOYCOTT ---------------------------------------------- A. The Contractor agrees that neither the Contractor nor any substantially-owned affiliated company is participating or shall participate in an international boycott in violation of the provisions of the Export Administration Act of 1979, as amended, of the regulations of the United States Department of Commerce promulgated thereunder. B. Upon the final determination by the Commerce Department or any other agency of the United States as to, or conviction of the Contractor or substantially-owned affiliated company thereof, of participation in an international boycott in violation of the provisions of the Export Administration Act of 1979, as amended, or the regulations promulgated thereunder, the Comptroller may, at his option, render forfeit and void this contract. C. The Contractor shall comply in all respects, with the provisions of Section 343- 10.0 of the Administrative Code of the City of New York and the rules and regulations issued by the Comptroller thereunder. 4.18 ANTI-TRUST --------------- The Contractor hereby assigns, sells, and transfers to the City all right, title and interest in and to any claims and causes of action arising under the anti-trust laws of the State of New York or of the United States relating to the particular goods or services purchased or procured by the City under this Agreement. 4.19 PUBLICITY -------------- A. The prior written approval of the Department is required before the Contractor or any of its employees, servants, agents, or independent contractors may, at any time, either during or after completion or termination of this Agreement, make any statements to the press or issue any material for publication through any media of communication bearing on the work performed or data collected under this Agreement. B. If the Contractor publishes a work dealing with any aspect of performance under this Agreement, or of the results and accomplishments attached in such performance, the Department shall have a royalty free, non-exclusive and irrevocable license to reproduce, publish or otherwise use and to authorize others to use the publication. 4.20 INVENTORY, PATENTS AND COPYRIGHTS -------------------------------------- A. Any discovery or invention arising out of or developed in the course of performance of this Agreement shall be promptly and fully reported to the Department, and if this work is supported by a federal grant of funds, it shall to promptly and fully reported to the Federal Government for determination as to whether patent protection on such invention shall be sought -18- and how the rights in the invention or discovery, including rights under any patent issued thereon, shall be disposed of and administered in order to protect the public interest. B. No report, document or other data produced in whole or in part with contract funds shall be copyrighted by the Contractor nor shall any notice of copyright be registered by the Contractor in connection with any report, document or other data developed for the Agreement. C. If any copyrightable material is developed under, or in the course of performing this Agreement, any Federal Agency providing federal financial participation for the Agreement free, non-exclusive and irrevocable right to reproduce, publish or otherwise use, and to authorize others to use, the work for governmental purposes. D. In no event shall Subsections A, B and C of this Section be deemed to apply to any report, document or other data, or any invention of the Contractor which existed prior to, or was developed or discovered independently from, its activities related to or funded by this Agreement. 4.21 INFRINGEMENTS ------------------ The Contractor shall be liable to the Department and hereby agrees to indemnify and hold the Department harmless for any damage or loss or expense sustained by the Department from any infringement by the Contractor of any copyright, trademark or patent rights of design, systems, drawings, graphs, charts, specifications or printed matter furnished or used by the Contractor in the performance of this Agreement. 4.22 INDIVIDUAL FILES --------------------- The Contractor will keep separate files and records for each recipient of the services so that they may be readily identifiable from those relating to other activities of the Contractor. In addition to information normally kept by the Contractor in individual files, such as basic information about the individual, describing and recording each use of the services by the individual, and the individual's progress, the Contractor will include such other information in individual files as the Department shall request. ARTICLE V --------- TERMINATION ----------- 5.1 The Department and/or City shall have the right to terminate this Agreement, in whole or in part: A. Under any right to terminate as specified in any section of this Agreement or for a material breach of this Agreement. -19- B. Upon the failure of the Contractor to comply with any of the terms and conditions of this Agreement which is not cured within ten (10) days of the Department's request therefor. C. Upon the Contractor's becoming insolvent. D. Upon the commencement under the Bankruptcy Act of any proceeding by or against the Contractor, either voluntarily or involuntarily. E. Upon receipt of notification that State or Federal reimbursement or funding is no longer available for services provided pursuant to this Agreement. F. Without cause or if the Department deems that termination would be in the best interest of the City. 5.2 The Department of City shall give the Contractor written notice of any termination of this Agreement specifying therein the applicable provisions of Section 5.1 of this Article and the effective date thereof which shall not be less than ten (10) days from the date the notice is received, except if termination is based on paragraph F of Section 5.1 of this Article, in which event notice shall be not less than thirty (30) days. 5.3 The Contractor shall have the right to terminate this Agreement, without cause, upon thirty (30) days written notice to the Department. 5.4 Upon termination of this Agreement the Contractor shall comply with the Department or City close-out procedures, including but not limited to: A. Accounting for and refund to the Department or City, within thirty (30) days, any unexpended funds which have been paid to the Contractor pursuant to this Agreement. B. Furnishing within thirty (30) days an inventory to the Department or City of all equipment, appurtenances and property purchased through or provided under this Agreement and carrying out any Department or City directive concerning the disposition thereof. C. Not incurring or paying any further obligation pursuant to this Agreement beyond the termination date. Any obligation necessarily incurred by the Contractor on account of this Agreement prior to receipt of notice of termination and falling due after such date shall be paid by the Department or City in accordance with the terms of this Agreement. In no event shall the word "obligation", as used herein, be construed as including any lease agreement, oral or written, entered into between the Contractor and its Landlord. D. Turn over to the Department or City or its designees all books, records, documents and material specifically relating to this Agreement. -20- E. Submit, within ninety (90) days, a final statement and report relating to this Agreement. The report shall be made by a certified public accountant or a licensed public accountant. 5.5 In the event the Department or City shall terminate this Agreement in whole or in part as provided in paragraphs A, B, C, or D of Section 5.1 of this Article, the Department or City may procure, upon such terms and in such manner as deemed appropriate, services similar to those so terminated, and the Contractor shall continue the performance of this Agreement to the extent not terminated thereby. 5.6 Notwithstanding any other provisions of this Agreement, the Contractor shall not be relieved of liability to the City for damages sustained by the City by virtue of Contractor's breach of the Contract, and the City may withhold payments to the Contractor for the purpose of setoff until such time as the exact amount of damages due to the City from the Contractor is determined. 5.7 The provisions of this Agreement regarding confidentiality of information shall remain in full force and effect following any termination. 5.8 The rights and remedies of the City provided in this Article shall not be exclusive and are in addition to all other rights and remedies provided by law or under this Agreement ARTICLE VI ---------- MISCELLANEOUS ------------- 6.1 CHOICE OF LAW, CONSENT TO JURISDICTION A ND VENUE ----------------------------------------------------------- This Agreement shall be deemed to be executed in the City of New York, regardless of the domicile of the Contractor, and shall be governed by and construed in accordance with the laws of the State of New York. The parties agree that any and all claims asserted by or against the City arising under this Agreement or related thereto shall be heard and determined either in the courts of the United States located in New York City ("Federal Courts") or in the Courts of the State of New York ("New York State Courts") located in the City and County of New York. To effectuate this agreement and intent, the Contractor agrees: A. If the City initiates any action against the Contractor in Federal Court or in New York State Court, service of process may be made on the Contractor either in person, wherever such Contractor may be found, or by registered mail addressed to the Contractor at its address as set forth in this Agreement, or to such other address as the Contractor may provide to the City in writing; and -21- B. With respect to any action between the City and the Contractor in New York State Court, the Contractor hereby expressly waives and relinquishes any rights it might otherwise have (i) to move to dismiss on grounds of forum non converiens, (ii) to remove to Federal Court; and (iii) to move for a change of venue to a New York State Court outside New York County. C. With respect to any action between the City and the Contractor in Federal Court located in New York City, the Contractor expressly waives and relinquishes any right it might otherwise have to move to transfer the action to a United States Court outside the City of New York. D. If the Contractor commences any action against the City in a court located other than in the City and State of New York, upon request of the City, the Contractor shall either consent to a transfer of the action to a court of competent jurisdiction located in the City and State of New York or, if the court where the action is initially brought will not or cannot transfer the action, the Contractor shall consent to dismiss such action without prejudice and may thereafter reinstitute the action in a court of competent jurisdiction in New York City. If any provision(s) of this Article is held unenforceable for any reason, each and all other provision(s) shall nevertheless remain in full force and effect. 6.2 GENERAL RELEASE ------------------- The acceptance by the Contractor or its assignees of the final payment under this Agreement, whether by voucher, judgment of any court of competent jurisdiction or any other administrative means, shall constitute and operate as a general release to the City from any and all claims of and liability to the Contractor arising out of the performance of this Agreement. 6.3 CLAIMS AND ACTIONS THEREON ------------------------------ A. No action at law or proceeding in equity against the City or Department shall lie o be maintained upon any claim based upon this Agreement or arising out of this Agreement or in any way connected with this Agreement unless the Contractor shall have strictly complied with all requirements relating to the giving of notice and of information with respect to such claims, all as herein provided. B. No action at law or proceeding in equity shall lie or be maintained against the Department or the City upon any claim based upon this Agreement or arising out of this Agreement unless such action shall be commenced within six (6) months after the date of final payment hereunder, or within six (6) months of termination or conclusion of this Agreement, or within six (6) months of accrual of the cause of action, whichever is earliest. -22- C. In the event any claim is made or any action brought in any way relating to the Agreement herein, the Contractor shall diligently render to the Department and/or the City of New York without additional compensation any and all assistance which the Department and/or the City of New York may require of the Contractor. D. The Contractor shall report to the Department in writing within three (3) working days of the initiation by or against the Contractor of any legal action or proceeding in connection with or relating to this Agreement. 6.4 NO CLAIM AGAINST OFFICERS, AGENTS OR EMPLOYEES -------------------------------------------------- No claim whatsoever shall be made by the Contractor against any officer, agent or employee of the City for, or on account of, anything done or omitted in connection with this Agreement. 6.5 WAIVER ---------- Waiver by the Department of a breach of any provision of this Agreement shall not be deemed to be a waiver of any other or subsequent breach and shall not be construed to be a modification of the terms of the Agreement unless and until the same shall be agreed to in writing by the Department or City as required and attached to the original Agreement. 6.6 NOTICE ---------- The Contractor and the Department hereby designate the business addresses hereinabove specified as the places where all notices, directions or communications from one such party to the other party shall be delivered, or to which they shall be mailed. Actual delivery of any such notice, direction or communication to a party at the aforesaid place, or delivery by certified mail shall be conclusive and deemed to be sufficient service thereof upon such party as of the date such notice, direction or communication is received by the party. Such address may be charged at any time by an instrument in writing executed and acknowledged by, the party making such change and delivered to the other party in the manner as specified above. Nothing in this section shall be deemed to serve as a waiver of any requirements for the service of notice or process in the institution of an action or proceeding as provided by law. 6.7 ALL LEGAL PROVISIONS DEEMED INCLUDED ---------------------------------------- It is the intent and understanding of the parties to this Agreement that each and every provision of law required to be inserted in this Agreement shall be and is inserted herein. Furthermore, it is hereby stipulated that every such provision is to be deemed to be inserted herein, and if, through mistake or otherwise, any such provision is not inserted, or is not inserted in correct form, then this Agreement shall forthwith upon the application of either party be -23- amended by such insertion so as to comply strictly with the law and without prejudice to the rights of either party hereunder. 6.8 SEVERABILITY ---------------- If this Agreement contains any unlawful provision not an essential part of the Agreement and which shall not appear to have been a controlling or material inducement to the making thereof, the same shall be deemed of no effect and shall, upon notice by either party, be deemed stricken from the Agreement without affecting the binding force of the remainder. 6.9 MODIFICATION ---------------- This Agreement may be modified by the parties in writing in a manner not materially affecting the substance hereof. It may not be altered or modified orally. 6.10 PARAGRAPH HEADINGS ----------------------- Paragraph headings are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope or intent of this Agreement and in no way affect this Agreement. 6.11 CETA AND PRIVATE SECTOR JOB DEVELOPMENT -------------------------------------------- A. The Contractor shall, when hiring into unsubsidized jobs in its workforce, give consideration to those persons presently employed in CETA public service positions in the City of New York, whose qualifications and skills are commensurate with those required for the positions to be filled. B. In the event that there are no persons for CETA public service positions who are available to fill the positions described in paragraph A above, the Contractor shall give consideration in hiring to persons who are enrolled in the Public Works Program of the Human Resources Administration and who have been assessed as employable by the HRA Private Sector Job Development Unit. In order to facilitate the referral of persons for such entry level positions, the Contractor shall notify the HRA Private Sector Job Development Unit whenever such entry level positions are available, indicating the number and types of positions to be filled. Additionally, the Contractor shall submit quarterly reports with the Private Sector Job Development Unit listing all unfilled, unsubsidized entry level positions available. Notification of such positions and the quarterly reports shall be addressed to the Director, HRA Private Sector Job Development Unit, 109 East 16th Street, New York, New York 10003. -24- 6.12 POOR PERFORMANCE --------------------- A. If, in the sole judgment of the Commissioner's designee, Contractor's performance of the work or other performance under the Contract is improper, cilatory, or otherwise not in strict compliance with all requirements of the Contract, the Commissioner's designee may, in addition to any other right or remedy of the Commissioner or the City, issue a written warning to Contractor that it is a poor performer, (the "Warning"). Such warning may be issued, at any time prior to the termination of the Contract. If the contractor disputes such Warning, Contractor shall given written notice (the "Protect Notice") to the Commissioner within fifteen (15) business days of receipt of the Warning. Commissioner or his designee shall review the matter and deliver a written determination to Contractor either affirming, modifying or rescinding the Warning. If the Commissioner does not give Contractor a determination within forty-five (45) days of receipt of the Contractor's Protest Notice, the Warning shall be deemed rescinded on the forty fifty (45) day following such receipt. Within ninety (90) days but not less than thirty (30) days after the termination of the Contract (unless the poor performer Warning was previously rescinded), the Commissioner shall review Contractor's performance and shall either rescind such Warning or shall notify Contractor of his right to appear at a hearing, on not less than five (5) days notice, to determine if Contractor shall be classified as a poor performer. At any such hearing, Contractor may be represented by counsel and present or refute evidence and testimony relevant to the issue of Contractor's alleged poor performance. The Commissioner, or his designee, shall issue a written decision either classifying Contractor as a poor performer or rescinding the poor performer Warning, as the case may be, with the reasons therefore. B. If Contractor disputes the final poor performer classification by Commissioner, Contractor may seek review of the decision by requesting the Commissioner, in writing, within ten (10) business days of receipt of the final poor performer classification, to convene a Review Board pursuant to the Regulations of the Board of Estimate. The Commissioner's decision shall be final and binding with respect to the classification of Contractor as a poor performer if Contractor does not request a review as herein provided. C. If Contractor does not dispute the final poor performer classification by Commissioner, Commissioner shall upon five (5) days written notice to Contractor and within fifteen (15) days of having delivered such written notice to Contractor, convene a Board of responsibility pursuant to the regulations of the Board of Estimate, to determine if Contractor is a responsible bidder. D. Contractor agrees to forebear from the commencement of any action or proceeding regarding the Commissioner's classification of Contractor as a poor performer, unless the Contractor has requested a Review Board pursuant to subsection B, above and such Board has issued a final decision. -25- E. Any notice to Contractor under this section shall be sufficient if it complies with the notice provision of the Agreement. 6.13 VENDEX QUESTIONNAIRES -------------------------- This provision shall apply to contracts in excess of $100,000: The Contractor states that the Principal Questionnaire and the Business Entity Questionnaire (Verdex Questionnaires) have been duly executed and submitted to the Department. The Contractor understands that the Department's reliance upon the veracity of the information stated therein is a material condition to the execution of this Agreement. The Contractor further states that the information stated therein is in no respect misleading. In the event any responses to the Vendex Questionnaire changes in any material respect, the Contractor shall promptly furnish the Department with a sworn statement setting forth the nature of such changes. This contract shall be a nullity until the Contractor complies with all the requirements set forth in the Vendex Questionnaires to the satisfaction of the Department. 6.14 CONSULTANT REPORTS ----------------------- A copy of each consultant report submitted by a consultant to any City official or to any officer, employee, agent or representative of a City department, agency, commission or body or to any corporation, association or entity whose expenses are paid in whole or in part from the City treasury shall be furnished to the Commissioner of the department to which such report was submitted or, if not a City department, then to the chief controlling officer or officers of such other office or entity. A copy of such report shall also be furnished to the Director of the Mayor's Office of Construction for matters related to construction or to the Director of the Mayor's Office of Operations for all other matters. ARTICLE VII. ------------ CONTRACTOR'S HIRING COMMITMENT ------------------------------ 1. Except as otherwise provided by Paragraph (7) of this Article, Contractor agrees as a condition of this contract, to hire at least one Public Assistance Recipient ("PA Recipient") for each $250,000 in value of this contract, or to the extent that the Contractor enters into other contracts with the Department, for each $250,000 of the cumulative value of contracts of the Contractor during the term of this Agreement. 2. Such hiring shall be for full-time employment of at least a minimum of 35 hours per week. The rate of pay shall be at least 20% above the federal minimum wage, and the duration of the employment shall be for at least one year. In the event that a replacement of a PA Recipient is made by the Contractor during the one year, such replacement shall not count as an additional employee toward Contractor's hiring requirement set forth in Paragraph (1) of this Article. -26- 3. Within thirty days of the commencement date of this contract ("commencement date") or fifteen days following notice from the Department that a request for an exemption from the provisions of this Rider has been denied, Contractor shall submit, on forms specified by the Department, information and specifications for the job(s) available. 4. The Contractor, may at its option, request the assistance of the Department in identifying potential employees. In such case, the Department will refer PA Recipients to the Contractor for employment interviews. 5. Contractor shall hire the number of employees agreed upon pursuant to Paragraph (1) of this Article within ninety days of the commencement date or such longer period as may be specified, in writing, by the Department. 6. In the event Contractor fails to hire said agreed upon number of PA Recipients within the time required pursuant to Paragraph (5) of this Article, and to pay and retain such employees pursuant to Paragraph (2) of this Article, Contractor shall pay to the Department or the Department may at its option, deduct from monies due or become due to Contractor, the amount of $19.18 per employee for each calendar day for which such PA Recipient(s) is/are not employed by Contractor as required by this Article. Such amount is hereby fixed and agreed as liquidated damages. 7. Contractor may apply to the Department for exemption from all or part of the requirements of this Article. Any application for an exemption must be made before the expiration of thirty days after the commencement date of this contract, or any subsequent contract as discussed in Paragraph (1) herein, and shall be in the form specified by the Department. Exemption may be granted upon a showing that the operation of this Article will constitute an extreme hardship, within the sole discretion of the Department; or to any Contractor not employing twenty or more employees at a place of business within the City of New York. ARTICLE VIII. ------------- EQUAL EMPLOYMENT ---------------- 8.1 Mayor's Executive Order No. 50 ---------------------------------- A. This Agreement is subject to the requirements of Executive Order No. 50 (1980) as revised ("E.O. 50") and the Rules and Regulations promulgated thereunder. No Contract will be awarded unless and until these requirements have been complied with in their entirety. By signing this Contract, the Contractor agrees that it: (1) will not engage in any unlawful discrimination against any employee or applicant for employment because of race, creed, color, national origin, -27- sex, age, disability, marital status, or sexual orientation with respect to all employment decisions including, but not limited to recruitment, hiring, upgrading, demotion, downgrading, transfer, training, rates of pay or other forms of compensation, layoff, termination, and all other terms and conditions of employment; (2) the Contractor agrees that when it subcontracts it will not engage in any unlawful discrimination in the selection of subcontractors on the basis of the owner's race, color, creed, national origin, sex, age, disability, marital status or sexual orientation or that it is an equal opportunity employer; (3) will state in all solicitations or advertisements for employees placed by or on behalf of the Contractor that all qualified applicants will receive consideration for employment without regard to race, creed, color, national origin, sex, age, disability, marital status or sexual orientation; or that it is an equal employment opportunity employer; (4) will send to each labor organization or representative of workers with which it has a collective bargaining agreement or other contract or memorandum of understanding, written notification of its equal employment opportunity commitments under E.O. 50 and the rules and regulations promulgated thereunder; and (5) will furnish all information and reports including and Employment Report before the award of the Contract which are required by E.O., 50, the rules and regulations promulgated thereunder, and orders of the Director of the Bureau of Labor Services ("Bureau"), and will permit access to its books, records and accounts by the Bureau for the purposes of investigation to ascertain compliance with such rules, regulations, and orders. B. The Contractor understands that in the event of its noncompliance with the nondiscrimination clauses of this Agreement or with any of such rules, regulations or orders, such noncompliance shall constitute a material breach of this Agreement and noncompliance with E.O. 50 and the rules and regulations promulgated thereunder. After a hearing held pursuant to the rules of the Bureau, the Director may direct the imposition by the contracting agency head of any or all of the following sanctions: (1) disapproval of the Contractor; (2) suspension or termination of the Agreement; (3) declaring the Contractor in default; or -28- (4) in lieu of any of the foregoing sanctions, the Director may impose an employment program. C. The Director of the Bureau may recommend to the contracting agency head that a Board of Responsibility be convened for purposes of declaring a contractor who has repeatedly failed to comply with E.O. 50 and the rules and regulations promulgated thereunder to be nonresponsible. D. The Contractor agrees to include the provisions of the foregoing paragraphs in every subcontract or purchase order in excess of $50,000 to which it becomes a party, unless exempted by E.O. 50 and the rules and regulations promulgated thereunder, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as may be directed by the Director of the Bureau of Labor Services as a means of enforcing such provisions including sanctions for noncompliance. E. The Contractor further agrees that it will refrain from entering into any contract or contract modification subject to E.O. 50 an the rules and regulations promulgated thereunder with a subcontractor who is not in compliance with the requirements of E.O. 50 and the rules and regulations promulgated thereunder. 8.2 Where required by New York State Labor Law Section 220-e - the ------------------------------------------------------------------ Contractor agrees: ----------------- A. That in the hiring of employees for the performance of work under this Agreement or any subcontract hereunder, neither the Contractor, subcontractor, nor any person acting on behalf of such Contractor or subcontractor shall by reason of race, creed, color, sex or national origin discriminate against any citizen of the State of New York who is qualified and available to perform the work to which the employment relates; B. That neither the Contractor, subcontractor, nor any person on behalf thereof shall, in any manner, discriminate against or intimidate any employee hired for the performance of work under this Agreement on account of race, creed, color, sex or national origin; C. That there may be deducted from the amount payable to the Contractor by the City under this Agreement a penalty of five dollars for each person for each calendar day during which such person was discriminated against or intimidated in violation of the provisions of this Agreement; and D. That this Agreement may be cancelled or terminated by the City and all moneys due or to become due hereunder may be forfeited, for a second or any subsequent violation of the terms or conditions of this section of the Agreement. -29- E. The aforesaid provisions of this section covering every contract for or on behalf of the State or a municipality for the manufacture, sale or distribution of materials, equipment or supplies shall be limited to operations performed within the territorial limits of the State of New York. 8.3 Where Required By New York City Administrative Code Section ----------------------------------------------------------------- 343-8.0 the Contractor Agrees That: ----------------------------------- A. It shall be unlawful for any person engaged in the construction, alteration or repair of buildings or engaged in the construction or repair of streets or highways pursuant to a contract with the City or engaged in the manufacture, sale or distribution of materials, equipment or supplies pursuant to a contract with the City to refuse to employ or to refuse to continue in any employment any person on account of the race, color or creed of such person. B. It shall be unlawful for any person or any servant, agent, or employee of any person, described in subdivision (A) above, to ask, indicate or transmit orally or in writing, directly or indirectly, the race, color, or creed or religious affiliation of any person employed or seeking employment from such person, firm or corporation. C. Disobedience of the foregoing provisions shall be deemed a violation of a material provision of this Agreement. D. Any person, or the employee, manager or owner of or officer of such firm or corporation who shall violate any of the provisions of this section shall, upon conviction thereof, be punished by a fine or not more than one hundred dollars or by imprisonment for not more than thirty days, or both. ARTICLE IX. ----------- APPROVALS --------- 9.1 The City of New York ------------------------ This Agreement shall not become effective or binding unless: A. authorized by the Mayor; approved by the Board of Estimate either pursuant to Section 349 of the New York City Charter for contracts not subject to public letting if the amount to be paid hereunder exceeds $10,000, or for amendments to a contract previously approved by the Board of Estimate, if the amount to be paid hereunder exceeds the lesser of $10,000 or fifteen per cent (15%) of the original contract amount, or pursuant to Section 343(a) of the New York City Charter for contracts subject to public letting; and the Comptroller shall have endorsed his certificate that there remains unexpended and unapplied a balance of the appropriation of funds applicable hereto sufficient to pay the estimated expense of executing this Agreement; and -30- B. approved by the Mayor pursuant to the provisions of Executive Order No. 42, dated October 9, 1975 in the event the Executive Order requires such approval; and C. certified by the Mayor (Mayor's Fiscal Committee created pursuant to Executive Order No. 43, dated October 14, 1975) that performance thereof will be in accordance with the City's financial plan. 9.2 OTHER APPROVALS OR AUTHORIZATIONS ------------------------------------- The requirement of this Article shall be in addition to, and not in lieu of, any approval or authorization otherwise required for this Agreement to be effective and for the expenditure of City funds. ARTICLE X. ---------- ANTI-APARTHEID PROVISIONS ------------------------- I. A. In accordance with Section 6-115 of the Administrative Code of the City of New York, the Contractor hereby covenants and represents: 1) that the Contractor and its substantially owned subsidiaries shall not during the term of this contract, sell or agree to sell, goods or services other than food or medical supplies directly to the following agencies of the South African government or directly to a corporation owned or controlled by such government and established expressly for the purposes of procuring such goods and services for such specific agencies: a) the police, b) the military, c) the prison system, d) the ministry of home affairs and national education, e) the ministry of education and development aid, including the development boards and the rural development boards, f) the ministry of justice, g) the ministry of constitutional development and planning, h) the ministry of law and order, i) the bureau for information, j) the ministry of manpower, k) the Armaments Development and Production Corporation (ARMSCOR), and its subsidiaries Nimrod, Atlas Aircraft Corporation, Eloptro (Pty) Ltd., Kentson (Pty) Ltd., Infoplan Ltd., Lyttleton Engineering Works (Pty) Ltd., Naschem (Pty) Ltd., -31- Pretoria Metal Pressing (Pty) Ltd., Somohem (Pty) Ltd., Swartklip Products (Pty) Ltd., Telacast (Pty) Ltd., and Musgrave Manufacturers and Distributions, l) the national intelligence services, m) the council for scientific and industrial research, n) the electricity supply commission (ESCOM), o) the South African Coal, Oil and Gas Corporation (Sasol Limited or Sasol 1, 2 or 3), p) the Automic Energy Corporation (Ltd.), or q) the Southern Oil Exploration Corporation (Soekor). 2) In the case of a contract to supply goods, that none of the goods to be supplied to the City originated in the Republic of South Africa or Namibia. 3) That the Contractor and its substantially owned subsidiaries do not do business in the Republic of South Africa or Namibia by maintaining any office, plant or employee in the Republic of South Africa or Namibia, or that the Contractor and its substantially owned subsidiaries are actively engaged in the withdrawal of their operations from the Republic of South Africa and Namibia and within six months will not maintain any office, plant or employee in the Republic of South Africa or Namibia, provided, however, that if the Contractor and its substantially owned subsidiaries have withdrawn or are so engaged in withdrawing their operations from the Republic of South Africa or Namibia and maintain a presence in South Africa or Namibia after such six month period solely for the purpose of liquidating their business, the Contractor shall be eligible to make the certification provided for in this section three. This section three shall not apply to news organizations, or to companies whose sole activity in the Republic of South Africa or Namibia is the manufacture, processing and distribution of food or medical supplies. 4) This stipulation does not apply to the sale of goods or services to an agency of the South African government covered in subsections a through c of section one when such sale is provided for by the terms of a contract entered into prior to July 13, 1985 (the effective date of Local Law 19), but it does apply to any increase in the amount of goods or services supplied to such a covered agency pursuant to any amendment, modification or extension of such a contract if the amendment, modification or extension was agreed to on or after July 13, 1985. 5) This stipulation does not apply to the sale of goods or services to an agency of the South African government covered in subsections d through q of section one when such sale is provided for by the terms of a contract -32- entered into prior to February 28, 1987 (the effective date of Local Law 81, which amends Local Law 19), but it does not apply to any increase in the amount of goods or services supplied to such a covered agency pursuant to any amendment, modification or extension of such a contract if the amendment, modification or extension was agreed to on or after February 28, 1987. B. The Contractor agrees that the covenants and representations in sub- section A above are material conditions of this Agreement. In the event that Department receives information that the Contractor is in violation of sub-section A, the Department shall review such information and give the Contractor an opportunity to respond. If the Department finds that a violation has occurred, the Department shall have the right to terminate this Agreement and procure the supplies, services or work from another source in any manner the Department deems proper. In the event of such termination, the Contractor shall pay to the Department, or the Department in its sole discretion may withhold from any amounts otherwise payable to the Contractor, the difference between the contract price for the uncompleted portion of this Agreement and the cost to the Department of completing performance of this Agreement either itself or by engaging another contractor or contractors. In the case of a requirements contract, the Contractor shall be liable for such difference in price for the entire amount of supplies required by the Department for the term of this Agreement. In the case of a construction contract, the Department shall also have the right to hold the Contractor in partial or total default in accordance with the default provisions of this Agreement. The rights and remedies of the Department hereunder shall be in addition to, and not in lieu of, any rights and remedies the Department has pursuant to the Agreement or by operation of law. II. The Contractor hereby covenants and represents that it and its substantially owned subsidiaries have not within the twelve months prior to the award of such contract violated, and shall not during the period of this contract violated, the provisions of the Comprehensive Anti-Apartheid Act of 1986, the Export Administration Act of 1979 as amended (50 U.S.C.ss.2401 et seq.) or the Arms Export Control Act of -- --- 1976 as amended (22 U.S.C.ss.2778) respecting business activity in the Republic of South Africa or Namibia. Upon a final determination by the United States Department of Commerce or any other agency of the United States or a court that the Contractor or its substantially owned subsidiary has violated any provision of the Comprehensive Anti-Apartheid Act, the Export Administration Act or the Arms Export Control Act respecting business activity in the Republic of South Africa or Namibia, the Department shall have the right to terminate this contract and procure the supplies, services or work from another source in any manner the -33- Department deems proper. In the event of such termination, the Contractor shall pay to the Department, or the Department in its sole discretion may withhold from any amounts otherwise payable to the Contractor, the difference between the contract price for the uncompleted portion of this contract and the cost to the Department of completing performance of this contract either itself or by engaging another contractor or contractors. In the case of a requirements contract, the Contractor shall be liable for the said difference in price for the entire amount of supplies required by the Department for the uncompleted term of this contract. In the case of a construction contract, the Department shall also have the right to hold the Contractor in partial or total default in accordance with the default provisions of this contract. The rights and remedies of the Department hereunder shall be in addition, to, and not in lieu of, any rights and remedies the Department has pursuant to this contract or by operation of law. ARTICLE XI. ----------- ENTIRE AGREEMENT ---------------- This written Agreement contains all the terms and conditions agreed upon by the parties hereto, and no other agreement, oral or otherwise, regarding the subject matter of this Agreement shall be deemed to exist or to bind any of the parties hereto, or to vary any of the terms contained herein. IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written. CITY OF NEW YORK DEPARTMENT OF SOCIAL SERVICES HUMAN RESOURCES ADMINISTRATION COMMISSIONER By /s/ Thomas W. Bugdall --------------------- Corporate Contractor Affix ____ Seal: American Medical Alert Corp. ---------------------------- CONTRACTOR -34- By /s/ Howard M. Siegel ----------------------- Title President --------------- 112571221 --------- Fed. Employer I.D. No. or Soc. Sec. No. Approval as to form was granted by the Corporation Counsel on:________________. -35- STATE OF NEW YORK ) : ss: COUNTY OF NEW YORK ) On this 23 day of June, 1988, before me personally came Thomas W. Bugdall, to me known and known to me to be General Counsel of the HUMAN RESOURCES ADMINISTRATION/DEPARTMENT OF SOCIAL SERVICES of the CITY OF NEW YORK, the person described in and who executed the foregoing instrument, and he acknowledged to me that he executed the same for the purpose therein mentioned. /s/ Janet Smith --------------- NOTARY PUBLIC STATE OF NEW YORK ) : ss: COUNTY OF NEW YORK ) On this 23 day of June, 1988, before me personally came Howard M. Siegel, to me known, who, being by me duly sworn, did depose and say that he resides at 31 Grand Blvd., Long Beach, New York, that he is the President of the American Medical Alert Corp., the corporation described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. /s/ Janet Smith --------------- NOTARY PUBLIC -36- Attachment 2 - Contracts AFFIRMATION The undersigned proposer or bidder affirms and declares that said proposer or bidder is not in arrears to the City of New York upon debt, contract or taxes and is not a defaulter, as surety or otherwise, upon obligation to the City of New York, and has not been declared not responsible, or disqualified, by any agency of the City of New York, nor is there any proceeding pending relating to the responsibility or qualification of the proposer or bidder to receive public contracts except_______________________________________________________________. Full name of Proposer or Bidder ________________________________________________ Address_________________________________________________________________________ City ______________________________ State _________________ Zip Code ___________ CHECK ONE BOX AND INCLUDE APPROPRIATE NUMBER: |_| A - Individual or Sole Proprietorship* SOCIAL SECURITY NUMBER ----------------------------- |_| B - Partnership, Joint Venture or other unincorporated organization EMPLOYER IDENTIFICATION NUMBER ----------------------------- |_| C - Corporation EMPLOYER IDENTIFICATION NUMBER 112571221 * Under the Federal Privacy Act the furnishing of Social Security Numbers by bidders on City contracts is voluntary. Failure to provide a Social Security Number will not result in a bidder's disqualification. Social Security Numbers will be used to identify bidders disqualification. Social Security Numbers will be used to identify bidders, proposers or vendors to ensure their compliance with laws, to assist the City in enforcement of laws as well as to provide the City a means of identifying of businesses which seek City contracts. By /s/ Howard M. Siegel -------------------- Signature President --------- Title If a corporation place seal here Must be signed by an officer or duly authorized representative. APPROVAL AS TO FORM OF A SINGLE CONTRACT Name of Contractor: AMERICAN MEDICAL ALERT CORP. - ------------------ Pursuant to the powers vested in me by Section 394, subo. b of the New York City Charter, I hereby approve as to form the annexed contract to be entered into by the Department of Social Services of the Human Resources Administration on behalf of the City of New York. Dated: MAY 19 1988 /s/__________________________ Acting Corporation Counsel EX-23 7 EX.23 CONSENT OF DELOITTE & TOUCHE EXHIBIT 23 (a) -------------- INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-48385, 33- 48297, and 33-91806 on Form S-8 and No. 333-6159 on Form S-3 of American Medical Alert Corp. our report dated March 3, 1995 appearing in this Annual Report on Form 10-KSB of American Medical Alert Corp. for the year ended December 31, 1996. /s/ Deloitte & Touche LLP - ------------------------- DELOITTE & TOUCHE LLP New York, New York March 27, 1997 EX-23 8 EX.23(B) CONSENT OF MARGOLIN, WINER & EVENS EXHIBIT 23 (b) -------------- INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-48385, 33- 91806, and 33-48297 on Form S-8 and Registration Statement No. 333-6159 on Form S-3 of American Medical Alert Corp. of our report dated March 7, 1997 (except for Notes 3 and 11, as to which the date is March 27, 1997) appearing in this Annual Report on Form 10-KSB of American Medical Alert Corp. for the year ended December 31, 1996. /s/ Margolin, Winer & Evens LLP Margolin, Winer & Evens LLP Garden City, New York March 27, 1997 EX-27 9 FDS -- FOR FYE 12/31/96
5 12-MOS DEC-31-1997 JAN-01-1996 DEC-31-1996 301,013 0 1,373,755 30,000 1,171,021 2,991,080 5,620,551 2,505,441 6,784,014 530,307 461,849 0 0 58,432 5,475,426 6,784,014 1,135,896 7,255,842 789,878 2,865,697 0 0 46,965 1,638,893 720,000 918,893 0 0 0 918,893 0.16 0
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