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8-K - FORM 8-K - ALLIED HEALTHCARE INTERNATIONAL INC | c20613e8vk.htm |
EX-2.1 - EXHIBIT 2.1 - ALLIED HEALTHCARE INTERNATIONAL INC | c20613exv2w1.htm |
EX-10.3 - EXHIBIT 10.3 - ALLIED HEALTHCARE INTERNATIONAL INC | c20613exv10w3.htm |
EX-10.1 - EXHIBIT 10.1 - ALLIED HEALTHCARE INTERNATIONAL INC | c20613exv10w1.htm |
Exhibit 10.2
July 28, 2011
Alexander Young
Fords Fields
Smugglers Lane
Crowborough
East Sussex
TN6 1TG
Fords Fields
Smugglers Lane
Crowborough
East Sussex
TN6 1TG
Dear Sandy:
As you are aware, Allied Healthcare International Inc. (the Company), a New York
corporation, is contemplating a sale of the Company. As a member of the senior leadership team,
the Company will rely on your proven leadership and managerial abilities to successfully complete a
transaction.
On behalf of the Company, I am pleased to offer you the opportunity to earn a retention bonus in
connection with the successful completion of a Sale and your continued employment with the Company
and its affiliates for twelve (12) months following the completion of the Sale, the terms of which
are outlined below.
This Agreement shall continue in effect from the date hereof through December 31, 2011; provided
that if either (i) a Sale has occurred prior to December 31, 2011 or (ii) a Sale has not occurred
on or prior to December 31, 2011 but a definitive agreement providing for a transaction, the
consummation of which would be a Sale, has been executed on or prior to such date, this Agreement
shall continue in effect until such definitive agreement has been fully performed by the Company or
either party to such agreement has agreed to terminate such agreement in accordance with its terms.
Notwithstanding anything herein to the contrary, in the event that a Sale does not occur on or
before December 31, 2011 or a definitive agreement providing for a transaction, the consummation of
which would be a Sale, has not been executed on or prior to December 31, 2011, this Agreement shall
terminate and be of no further force and effect and you will have no rights to earn the Retention
Bonus hereunder after such time.
1. Retention Bonus
(a) If a Sale is consummated on or prior to December 31, 2011 (or if a Sale has not occurred
on or prior to December 31, 2011 but a definitive agreement providing for a transaction, the
consummation of which would be a Sale, has been executed on or prior to December 31, 2011), the
Company shall pay you the following amounts; provided that, except as provided below, on each
payment date, you are then employed by the Employing Group and not under notice, whether given or
received:
(i) An amount equal to the Cash Bonus will be paid to you as soon as administratively
practicable following the date of the consummation of the Sale, but in no event later than
thirty (30) days following such date;
(ii) An amount equal to the Transaction Bonus will be paid as follows:
(A) Thirty-three and one-third percent (33-1/3%) of the Transaction Bonus will
be paid to you as soon as administratively practicable following the date of the
consummation of the Sale, but in no event later than thirty (30) days following such
date; and
(B) Sixty-six and two-thirds percent (66-2/3%) of the Transaction Bonus will be
paid to you on the last day of the Retention Period.
For purposes of subsections (i) and (ii)(A) above, you will be considered employed by the
Employing Group on the payment date of the Retention Bonus (i) if you have not terminated your
employment or given notice under the terms of the Executive Service Agreement for any reason on or
prior to the date of the consummation of the Sale or (ii) even though the Company terminates your
employment with the Company other than for Gross Misconduct on or prior to the date of the
consummation of the Sale.
(b) Further, the Company shall encourage the acquirer of the Company to consider making you
eligible to participate in any equity compensation plan maintained by the Company after the Sale on
an equitable equivalent basis to other senior executives of the Company.
2. Separation from Service
(a) If your employment with the Employing Group is terminated before the end of the Retention
Period either (i) by the Employing Group for Gross Misconduct or (ii) by you other than for Good
Reason or by reason of your death or disability, any unpaid portion of the Transaction Bonus shall
be immediately forfeited and you shall have no right to receive payment of such amount. For
purposes of this Section 2(a), the giving or receiving of any notice required by the terms of the
Executive Service Agreement shall constitute a termination of your employment as of the date such
notice is given. In the event of a termination of employment described in this Section 2(a), you
further agree as follows:
(x) If the portion of the Transaction Bonus previously paid to you pursuant to Section
1(a)(ii)(A) equals or exceeds the amount of the Severance Entitlement then remaining to be
paid to you, you will forfeit such remaining Severance Entitlement and pay to the Company,
within thirty (30) days after your termination of employment, an amount equal to the excess
of such portion of the Transaction Bonus over the remaining Severance Entitlement.
(y) If the portion of the Transaction Bonus previously paid to you pursuant to Section
1(a)(ii)(A) is less than the Severance Entitlement then remaining to be paid to you, the
remaining Severance Entitlement shall be reduced by an amount equal to such portion of the
Transaction Bonus previously paid to you, such reduction to be applied to the portion of the
Severance Entitlement payable closest in time to the date of
termination.
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(b) If your employment with the Employing Group is terminated before the end of the Retention
Period (i) by reason of your death or disability, (ii) by the Employing Group other than for Gross
Misconduct or (iii) by you for Good Reason, any unpaid portion of the Transaction Bonus shall be
paid to you in a lump sum as soon as administratively practicable thereafter, but no later than
thirty (30) days following your separation from service and you will forfeit any remaining
Severance Entitlement (even if the remaining Severance Entitlement exceeds the Transaction Bonus).
(c) By way of illustration with respect to this Section, see Appendix B.
3. Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
(a) Cash Bonus means an amount equal to £225,000.
(b) Code means the Internal Revenue Code of 1986, as amended.
(c) Employing Group means the Company, any holding company of the Company, or any
subsidiary of the Company or any such holding company, including, without limitation Allied
Healthcare Group Limited.
(d) Executive Service Agreement means that certain Executive Service Agreement dated
December 22, 2007 between you and the Company, as such may be amended from time to time.
(e) Good Reason means your voluntary termination, within ninety (90) days after the
occurrence of any of the following events without your written consent, provided that you have
provided written notice to the Company describing such event and the matter has not been fully
remedied by the Company within thirty (30) days after receipt of such notice: (i) a material
reduction by the Company of your annual base salary as in effect on the date of the Sale; (ii)
following a Sale, the Company does not continue your employment in a senior position for the
business that constitutes the Companys operations immediately prior to the Sale with the same or
greater authority, duties, and responsibilities as those held by you immediately prior to the Sale;
provided, however, that a reduction in duties, position or responsibilities solely by virtue of the
Company being acquired or made part of a larger entity (for example, if you remain as chief
executive officer of the Company following the Sale but is not made the Chief Executive Officer of
the acquiring entity) will not constitute Good Reason; or (iii) any requirement by the Company
that the location or facility at which you perform your principal duties for the Employing Group be
changed to a new location or facility that is more than fifty (50) miles from the location or
facility at which you performs your principal duties for the Employing Group immediately prior to
the Sale but only if such change in location or facility is further away from your then current
principal residence (for example, a change in location or facility that is closer to your principal
residence will not constitute Good Reason).
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(f) Gross Misconduct mean the termination by the Company of your employment
for any reason stated in Section 19.1 of the Executive Service Agreement, other than Section
19.1(e) and 19.1(i), and any finding by the Employing Group of a gross misconduct pursuant to the
Employing Groups Disciplinary Policy and Procedure.
(g) Retention Bonus means the Cash Bonus and the Transaction Bonus.
(h) Retention Period means the period beginning on the date of the consummation of a
Sale and ending on the date that is twelve (12) months following the consummation of a Sale.
(i) Sale shall be deemed to have occurred at such time as any person, or persons
acting as a group, acquires more than 50% of the outstanding voting equity of the Company, or at
such time as all or substantially all of the assets of the Company are sold or otherwise disposed
of to any person, or persons acting as a group.
(j) Severance Entitlement means any salary or bonus, if any, for the year of
termination paid or to be paid to you at or after notice of termination has been given or received,
including any salary paid in lieu of notice plus the value of any car allowance, pension
contribution, health insurance contribution and holiday entitlement, to which you are entitled to
receive under the Executive Service Agreement upon your termination of employment with the Company.
(k) Transaction Bonus means an amount equal to the product of (i)(A) the total
number of shares of the Companys common stock, $0.01 par value per share (or such shares into
which the Companys common stock have been exchanged or converted prior to the Sale), issued and
outstanding immediately prior to the date of the Sale multiplied by (B) the fair market value of
the per share consideration received by stockholders of the Company pursuant to the Sale and (ii)
0.75%; provided, however, that the amount of the Transaction Bonus shall be reduced by an amount
equal to the cash payment(s), if any, received or receivable by you in connection with the Sale and
attributable to stock options, stock appreciation rights or other equity awards granted prior to
the Sale under the Companys equity incentive plans to you, regardless of whether you received such
payment(s) in exchange for shares of Common Stock received upon exercise of such stock options,
stock appreciation rights or other equity awards or received such payment(s) in consideration of
the cancellation of such stock options, stock appreciation rights or other equity awards. For
avoidance of doubt, the reduction pursuant to the proviso in the preceding sentence with respect to
any payment received in exchange for shares of common stock shall be net of the amount paid by you,
as the exercise price or otherwise, to acquire the shares.
4. Confidentiality
You agree to keep the terms of this Agreement and the existence and terms of any proposed Sale and
related information strictly confidential, unless such disclosure is required by law or order of a
court or regulatory authority or has been specifically approved for release by the Company in
writing; provided, however, that you may disclose the terms of this Agreement and the existence
(but not the terms) of any proposed Sale only to your tax advisor, legal advisor, management
advisor and immediate family members, each of whom shall be instructed by you to hold the
existence and terms of this Agreement and the existence of any proposed Sale in the strictest
confidence, in accordance with the terms of this Agreement. If you (or advisors or family members)
violates this provision, you will forfeit, and not be entitled to receive, the Retention Bonus
under this Agreement.
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5. Restrictive Covenants
The restrictive covenants set forth in the Executive Service Agreement regarding
non-competition, non-solicitation and confidentiality shall remain in full force and effect.
6. Successors and Assigns
This Agreement shall inure to the benefit of, and be binding upon, the Company and its successors
and assigns, and the Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or assets of
the Company, to expressly assume and agree to perform the obligations of the Company under this
Agreement in the same manner and to the same extent that the Company would be required to perform
if no succession had taken place. As used in this Agreement, Company shall mean the Company as
hereinbefore defined and any successor to its business or assets which assumes and agrees to
perform this Agreement by operation of law or otherwise.
This Agreement is personal to you and is not assignable by you, other than by will or the laws of
descent and distribution, without the prior written consent of the Company.
7. Notice
Notices and other communications provided for in this Agreement shall be in writing and shall be
delivered by hand delivery, by a reputable overnight courier service, or by registered or certified
mail, return receipt requested, postage prepaid, in each case addressed as follows:
If to the Company:
Allied Healthcare International Inc.
245 Park Avenue
New York, NY 10167
245 Park Avenue
New York, NY 10167
If to you:
To the most recent address in the Companys records.
8. Entire Agreement
This Agreement constitutes the entire agreement between the parties with regard to the Retention
Bonus and other matters referred to herein and supersedes any and all previous communications,
representations, understandings and agreements with respect to the Retention Bonus; provided,
however, that this Agreement does not amend or modify the Executive Service Agreement.
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9. No Guarantee of Employment
This Agreement is not a contract of employment. The execution of this Agreement shall not be
construed as conferring any legal rights upon you to continued employment, nor shall it interfere
with the right of the Employing Group to terminate your employment for any reason.
10. Withholding
All payments made pursuant to this Agreement will be subject to withholding of applicable federal,
state, local and foreign income and employment taxes.
11. Miscellaneous
(a) This Agreement shall be unfunded. Any payment made under this Agreement shall be made
from the Companys general assets.
(b) To the extent you are or become subject to the federal tax laws of the United States,
Appendix A shall be applicable.
(c) No provision of this Agreement may be amended, modified, waived or discharged other than
by a written agreement executed by the parties hereto or their respective successors and legal
representatives.
(d) This Agreement shall be governed by and construed and entered in accordance with the laws
of the State of New York without giving effect to the conflict of law principles thereof.
(e) This Agreement may be executed by one or more of the parties to this Agreement in any
number of separate counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one and the same
instrument. All captions and section headings used in this Agreement are for convenient reference
only and do not form a part of this Agreement.
(f) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.
If this letter agreement correctly sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter agreement which will then
constitute our agreement on this subject.
[The remainder of this page intentionally left blank.]
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Sincerely, | ||||||
ALLIED HEALTHCARE INTERNATIONAL INC. | ||||||
/s/ Jeffrey Peris | ||||||
Name: | Jeffery S. Peris | |||||
Title: | Chairman of the Board of Directors of Allied Healthcare International Inc. and Chairman of the Compensation Committee of the Board of Directors |
I acknowledge receipt and agree with the foregoing terms and conditions.
/s/ Sandy Young | ||||
Name:
|
Alexander Young |
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APPENDIX A
1. Code Section 409A. (a) It is intended that the Agreement (and any payout) will be
exempt from or in compliance with Internal Revenue Code Section 409A (Section 409A), and the
Agreement (and any payout) shall be interpreted and construed on a basis consistent with such
intent. The Agreement (and any payout) may be amended in any respect deemed necessary or desirable
(including retroactively) by the Company with the intent to preserve exemption from or compliance
with Section 409A. The preceding shall not be construed as a guarantee of any particular tax
effect for payouts under the Agreement. The Executive is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on such person in connection with the
Agreement (including any taxes and penalties under Section 409A), and the Company shall have no
obligation to indemnify or otherwise hold an employee harmless from any or all of such taxes or
penalties.
(b) Notwithstanding anything to the contrary in this Agreement, if a payment obligation under
this Agreement arise on account of the Executives separation from service and the Executive is
deemed to be a specified employee(as defined under Section 409A of the Code and determined in
good faith by the Committee), any payment of deferred compensation (as defined under Treas. Reg.
Section 1.409A-1(b)(1)) that is scheduled to be paid within six (6) months after such separation
from service shall accrue without interest and shall be paid, as soon as administratively
practicable but not later than thirty (30) days (i) after the end of the six (6) month period,
measured from the date of the Executives separation from service or (ii) if earlier, the date of
the Executives death. This subsection (d) shall apply only if the Executive is (or becomes)
subject to the federal tax laws of the United States or if, upon advice of legal counsel to the
Company or the Executive, the Executive would be subject to the tax imposed by Section
409A(a)(1)(B) of the Code.
(c) For purposes of this Agreement, termination of employment or words of similar import, as
used in this Agreement, means, for purposes of any payments under this Agreement that are payments
of deferred compensation subject to Section 409A of the Code, the Executives separation from
service as defined in Section 409A of the Code. This subsection (e) shall apply only if the
Executive is (or becomes) subject to the federal tax laws of the United States or if, upon advice
of legal counsel to the Company or the Executive, the Executive would be subject to the tax imposed
by Section 409A(a)(1)(B) of the Code.
2. Parachute Payments. Notwithstanding anything to the contrary in this Agreement, if
any payment or benefit the Executive would receive from the Company as a result of a Change in
Control (the Payment) would (a) constitute a parachute payments within the meaning of Section
280G of the Code and (b) but for this Section 5, be subject to the excise tax imposed by Section
4999 of the Code (the Excise Tax), the Payment shall be reduced to the largest amount which would
result in no portion of the Payment being subject to the Excise Tax. Any determination as to
whether a reduction is required under this Agreement and as to the amount of such reduction shall
be made in writing by an independent public accountants appointed for this purpose by the Company
prior to, or following the Change in Control, whose determinations shall be conclusive and binding
upon the Executive and the Company for all purposes. This Section 5 shall be applicable only if
the Executive is (or becomes) subject to the federal tax laws
of the United States or if, upon advice of legal counsel to the Company, the Company would be
prohibited from deducting from its taxable income the Retention Bonus by reason of Section 280G of
the Code.
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APPENDIX B
This Appendix B is to be used for illustrative purposes only and the amounts set forth herein are
merely hypothetical amounts and do not represent the actual amounts of the Transaction Bonus or
Severance Entitlement to which you may be entitled.
BAD LEAVER EXAMPLES
Example 1: | Transaction Bonus equals or exceeds Severance Entitlement and You Resign other than for Good Reason |
Assume the Transaction Bonus equals £775,000 as follows:
| Transaction Bonus £775,000, to be paid £258,385 at closing and £516,615 on the last day
of the Retention Period |
| Your remaining Severance Entitlement: £250,000 |
You would forfeit the second payment of the Transaction Bonus of £516,615. Further, because
that part of the Transaction Bonus already paid to you (£258,385) exceeds your remaining Severance
Entitlement, you will forfeit your remaining Severance Entitlement (£250,000) and repay the Company
£8,385.
Example 2: | Transaction Bonus less than Severance Entitlement and You Resign other than for Good Reason |
Assume the Transaction Bonus equals £775,000 as follows:
| Transaction Bonus £775,000, to be paid £258,385 at closing and £516,615 on the last day
of the Retention Period |
| Your remaining Severance Entitlement: £300,000 |
You would forfeit the second payment of the Transaction Bonus of £516,615. Further, because
that part of the Transaction Bonus already paid to you (£258,385) is less than your remaining
Severance Entitlement, your remaining Severance Entitlement (£300,000) will be reduced by the
amount of the Transaction Bonus previously paid to you (£258,385), such that your remaining
Severance Entitlement will be £41,615.
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GOOD LEAVER EXAMPLES
Example 3: | Transaction Bonus equals or exceeds Severance Entitlement and You Resign for Good Reason |
Assume the Transaction Bonus equals £775,000 as follows:
| Transaction Bonus £775,000, to be paid £258,385 at closing and £516,615 on the last day
of the Retention Period |
| You have already received payment of the first part of the Transaction Bonus. |
| Your remaining Severance Entitlement: £250,000 |
You are entitled to the second payment of the Transaction Bonus of £516,615. You will forfeit
your remaining Severance Entitlement (£250,000).
Example 4: | Transaction Bonus less than Severance Entitlement and You Resign for Good Reason |
Assume the Transaction Bonus equals £775,000 as follows:
| Transaction Bonus £775,000, to be paid £258,385 at closing and £516,615 on the last day
of the Retention Period |
| You have already received payment of the first part of the Transaction Bonus. |
| Your remaining Severance Entitlement: £850,000 |
You are entitled to the second payment of the Transaction Bonus of £516,615. You agree to
forgo the difference between the Transaction Bonus and your remaining Severance Entitlement.
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