EXHIBIT 10.25
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into effective
as of the 24th day of August, 1999, by and between EARL REFSLAND a resident of
Missouri ("Executive") and ALLIED HEALTHCARE PRODUCTS, INC., a Delaware
corporation, for itself and on behalf of any of its current or future subsidiary
corporations (collectively referred to in this Agreement as the "Company").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of designing, manufacturing
and distributing a variety of respiratory products used in the health care
industry in a wide range of hospital and alternate site settings, including, but
not limited to, sub-acute care facilities, home health care and emergency
medical care (the "Business");
WHEREAS, the Company desires to employ Executive, and Executive desires
employment with the Company, in accordance with and only on the terms,
conditions and covenants set out in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, covenants, and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, the Company and Executive agree as follows:
1. Term. The term of Executive's employment with the Company begins on
September 13th, 1999, or on such earlier date as the parties may hereafter
mutually agree (hereinafter the "Effective Date"), and will continue through
and including the fourth anniversary thereafter (as the same may be extended or
renewed by mutual agreement, the "Expiration Date"), unless Executive's
employment is earlier terminated as hereinafter provided (the period from the
Effective Date to the Expiration Date or any such earlier date in which
Executive's employment is terminated pursuant to the provisions of this
Agreement is referred to herein as the "Term").
2. Duties of Executive. During the Term, Executive shall serve as the
Chief Executive Officer and President of the Company, and shall have, subject to
the directives of the Board of Directors of the Company (the "Board"),
supervision and control over, and responsibility for, the general management and
operation of the Company, and shall have such other powers and duties as may
from time to time be prescribed by the Board. Executive shall devote his full
working time and best efforts, skill and attention to the Business and interests
of the Company. Executive shall follow and act in accordance with all policies
established by the Company from time to time. During the Term, Executive shall
not actively engage in or be involved in any business activities other than on
behalf of the Company unless prior written consent is provided by the Board;
provided, however, Executive may continue to serve as Chairman of Andros
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Technologies, Inc., provided such position does not involve active management,
may serve as a director of other organizations with the prior consent of the
Company, such consent not to be unreasonably withheld, and may engage in such
charitable endeavors and/or other passive ownership activities, provided such
activities do not, whether individually or in the aggregate, materially
interfere with Executive's duties hereunder. In addition, during the Term, the
Company agrees to use reasonable efforts to cause Executive to be nominated to
the Board.
3. Compensation. As consideration for the services rendered by
Executive pursuant to this Agreement, the Company agrees to pay to Executive an
initial salary at the rate of Two Hundred Eighty Thousand Dollars ($280,000) per
year for the first year of the Term ("Annual Salary"), which amount shall be
payable in accordance with the Company's normal payroll practices in effect from
time to time. Executive's annual salary for the remainder of the Term will be
determined at the sole discretion of the Board, but in no event will Executive's
annual salary be reduced below the initial annual salary amount stated herein.
All payments of compensation will be subject to normal employee withholding and
all other applicable tax deductions.
4. Fringe Benefits. During the Term, Executive may participate in the
fringe benefit programs that may generally be made available by the Company to
management level employees of the Company from time to time (collectively,
"Fringe Benefits"). Executive's participation in the Fringe Benefits offered by
the Company shall be in accordance with the participation guidelines that the
Company may establish from time to time and may require a financial contribution
by Executive.
5. Other Compensation.
(a) Incentive Compensation. Commencing on and after the first
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anniversary of the Effective Date, Executive shall be entitled to receive, in
addition to his Annual Salary, such incentive compensation payments as the
Board, in its sole discretion, may determine appropriate or necessary.
(b) Stock Options. Concurrently herewith, the Company is granting
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Executive the right and option to acquire 542,000 shares of the Company's common
stock, $.01 par value, at a price per share equal to $2.00 (the "Stock
Options"). Stock Options shall vest at a rate of six and one-quarter percent
(6.25%) per three (3) month period, commencing three (3) months after the
Effective Date, and on each three (3) month anniversary thereafter, and any
non-vested Stock Options shall not be exercisable. Such Stock Options are
subject to the provisions and conditions more particularly set forth in that
certain 1999 Incentive Stock Plan dated July 15, 1999 (the "Plan") and the
letter from the Company granting such Stock Options in substantially the form
attached hereto as Exhibit A and incorporated herein by this reference. The
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Stock Options shall immediately vest upon the occurrence of a Change of Control
(as hereinafter defined), the termination of Executive's employment by the
Company without Cause (as hereinafter defined), the death or Disability (as
hereinafter defined) of Executive, the termination of Executive's employment by
Executive for Good Reason (as hereinafter defined), or the payment by the
Company of any cash dividends in respect of its issued and outstanding common
stock.
(c) Perquisites. The Company agrees that: (i) during the Term,
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the Company shall furnish to the Executive an automobile of a type mutually
acceptable to the Company and the Executive and the Company shall pay all of the
expenses for gasoline, insurance, maintenance and repairs for such automobile,
and (ii) at such time, and for so long as, the Board, in its discretion,
determines necessary or appropriate, the Company will pay the monthly assessment
and/or other monthly charges of the Executive for his existing membership in
Algonquin Golf Club.
(d) Vacations. During the Term, the Executive shall be entitled
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to four (4) weeks of vacation for each year of employment.
6. Expenses. The Company agrees to directly pay or reimburse Executive
for necessary and reasonable travel, entertainment and other business expenses
actually incurred by Executive in connection with Executive's duties hereunder
and approved by the Company pursuant to the Company's existing practices. The
Company shall reimburse Executive for such approved business expenses within a
reasonable time after submission by Executive of true and correct supporting
documentation as may be required by the Company.
7. Confidentiality. Executive acknowledges and agrees that:
(a) Executive has created and will continue to create, has and will
continue to have access to, and has received and will continue to receive
information, documents, and materials of a confidential and proprietary nature
to the Company and which may contain trade secrets of the Company or the
Company's customers, including, without limitation, designs, drawings, formulas,
plans, financial information, processes, methods, customer lists, prospective
customers and other prospects, business plans and other information
(collectively, "Confidential Information"), which would not have been or be
disclosed to Executive except for Executive's employment with the Company.
(b) Executive hereby acknowledges and agrees that Confidential
Information is an asset of the Company, is of a confidential nature and is not
generally known to the public, and, in order to protect and preserve the
goodwill of the Company, must be kept strictly confidential and used only in the
conduct of the Company's business from time to time.
(c) Executive hereby agrees that during his lifetime he will not
disclose or reveal in any manner whatsoever any of the Confidential Information
to any third party, except in the course of and during Executive's employment
with the Company. Executive shall not use any of the Confidential Information
in any manner for his own benefit or for the benefit of any other person or
entity.
(d) Executive will promptly return to the Company all written or
recorded Confidential Information, including all copies and reproductions
thereof in Executive's possession or under Executive's control, upon the earlier
of the Company's request or upon the termination of Executive's employment with
the Company. At such time, Executive shall also give the Company all notes,
summaries and analyses prepared by Executive which relate to or include
Confidential Information.
8. Survival of Confidentiality Provisions. Executive acknowledges and
agrees that the provisions of paragraph 7 herein will survive the termination of
Executive's employment hereunder and will continue in full force and effect
during and throughout Executive's lifetime.
9. Covenants Against Competition and Solicitation. Executive covenants
and agrees that, at all times while he is employed by the Company hereunder and
for a period of two (2) years after the effective date of the termination of
Executive's employment (whether or not such occurs after the Term of this
Agreement), he will not, directly or indirectly, in association or in
combination with any other person or entity, as an officer, director or
shareholder of a corporation, as a member or manager of a limited liability
company, or as an employee, agent, independent contractor, consultant, advisor,
joint venturer, partner or otherwise, whether or not for pecuniary benefit,
whether or not alone or in association with any person or entity:
(a) Carry on, be engaged in, concerned or take part in, or render
services, advise or lend money to any person or entity engaged in the Business
currently engaged in by the Company or any business in which the Company may
engage while Executive is employed by the Company hereunder; provided, however,
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and notwithstanding the foregoing, after the Executive is no longer employed
with the Company, Executive may carry on, be engaged in, concerned or take part
in, or render services, advise or lend money to any person or entity engaged in
the business of manufacturing respiratory products which do not compete,
directly or indirectly, in any manner with any product or service of the Company
which, individually or in the aggregate, generated gross revenues to the Company
in excess of Five Hundred Thousand Dollars ($500,000) as of the effective date
of Executive's termination of employment with the Company.
(b) Engage in or own, in whole or in part, manage, provide
financing to, operate or otherwise carry on the business of designing,
manufacturing and distributing respiratory products used in the health care
industry and which, individually or in the aggregate, generated annual gross
revenues to the Company in excess of Five Hundred Thousand Dollars ($500,000),
except: (i) in the course of Executive's performance of his duties during his
employment and then only for the benefit of the Company; and (ii) as a holder of
less than 1% of the stock of any corporation whose securities are traded on a
national securities exchange.
(c) Solicit, assist the solicitation of, or encourage any employee
or independent contractor of the Company to terminate or otherwise modify that
person's or entity's employment with or retention by the Company for the purpose
of encouraging that person or entity to become employed or retained by any other
person or entity unrelated to the Company.
(d) Solicit, assist the solicitation of, or encourage any person
or entity who was a customer of the Company within the one (1) year period
immediately preceding the date as of which Executive's employment is terminated
hereunder, to: (i) provide the same or similar services as provided by the
Company in competition with the Company; (ii) modify in any manner that person's
or entity's business relationship with the Company; or (iii) modify the terms or
reduce the volume of business which that person or entity transacts with the
Company.
(e) The geographic scope of the covenants contained in
subparagraphs (a) and (b) above shall extend to any state, county, municipality
or other locality within or without the United States wherein the Company sold
or actively attempted to sell products which, individually or in the aggregate,
generated annual gross revenues to the Company in excess of Five Hundred
Thousand Dollars ($500,000) at anytime during Executive's employment hereunder.
(f) If Executive terminates his employment with the Company for
Good Reason (other than and excluding on account of a Change of Control), and
irrevocably and unconditionally waives, in writing, his right to the payment and
other benefits set forth in Section 12(d) hereof, then the covenants contained
in this Section 9 shall terminate.
10. Discoveries and Inventions. Executive agrees that all
developments, discoveries and inventions relating to the Company's Business
(collectively referred to as the "Inventions") which Executive conceives or
makes while employed by the Company shall be the exclusive property of the
Company whether the Company, in its sole discretion, decides to pursue or not to
pursue a patent, copyright, trademark, service mark or other registered
embodiment of any kind of any country for such Invention. Whenever requested
by the Company, whether during or subsequent to Executive's employment with the
Company, Executive shall execute patent applications and other instruments
considered necessary by the Company to apply for and obtain patents of the
United States and foreign countries covering any such developments, discoveries
or inventions. Executive agrees to assign, and does hereby assign to the
Company, all title, interest and rights, including intellectual property rights,
in and to any and all Inventions, and Executive agrees to assign to the Company
any patents or patent applications arising from any such Inventions, and agrees
to execute and deliver all such assignments, patents, patent applications and
other documents as the Company may direct. Executive agrees to cooperate fully
with the Company, both during and after Executive's employment with the Company
is terminated, to enable the Company to secure and maintain rights in any such
Inventions in any and all countries. Without limiting the foregoing, Executive
hereby acknowledges that all works of authorship or invention which relate in
any manner to the Company's Business which are developed or written during the
term of Executive's employment with the Company are "works made for hire".
Accordingly, Executive agrees to assign, and does hereby assign to the Company,
any and all copyright rights and all other rights and all material prepared by
Executive during the term of Executive's employment which relate to the Business
of the Company.
11. Employer's Remedy. Executive acknowledges and agrees that the
covenants set forth in paragraphs 7, 8, 9 and 10 are necessary to protect the
Company's legitimate business interests, including, without limitation, the
Company's strong interest in the Confidential Information and Inventions and the
Company's strong interest in maintaining an undisrupted work place. Executive
acknowledges and agrees that the covenants are reasonable in scope, area, and
duration, particularly in light of Executive's responsibilities and the
international scope of the Company's business. Executive acknowledges that the
services to be rendered by him in accordance with the provisions of this
Agreement are of a special and unique character, and that the restrictions and
obligations on his activities as contained in paragraphs 7, 8, 9 and 10 are
reasonable and are required for the Company's protection. Executive hereby
agrees that if he violates any of the provisions contained in paragraphs 7, 8, 9
and 10, the Company may seek, at law or in equity, damages without regard to
paragraph 13 herein. The Company may also seek, without regard to paragraph 13
herein, to enjoin Executive from engaging in any activity in violation of this
Agreement. All rights and remedies of the Company hereunder, at law or in
equity, are cumulative in nature and will in no way be, or be deemed to be, the
exclusive rights and remedies of the Company. If any court finds that the
restrictions set forth in paragraphs 7, 8, 9 and 10 are unreasonable, this
Agreement will be interpreted to include the restrictions contained herein to
the extent such restrictions are permissible under law, giving effect to the
intent of the parties that the restrictions contained herein shall be effective
to the fullest extent possible.
12. Termination of Employment.
(a) Termination By Company without Cause. The Company shall have
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the right to terminate Executive's employment hereunder without Cause (as
defined below) upon providing Executive with written notice thereof. Any such
termination of employment shall be effective on the date specified in such
notice, or if no date is specified, then upon receipt by Executive of such
notice. In the event of any such termination of employment, (i) the Company
shall continue to pay to Executive, for the period (the "Continuation Period")
beginning on the effective date of such termination of employment and ending two
(2) years after the effective date of such termination of employment, an amount
per month equal to one-twelfth of Executive's then Annual Salary during the
Continuation Period in accordance with the provisions of Section 3 hereof; (ii)
throughout the Continuation Period, Executive shall be entitled to continued
participation under all Fringe Benefit programs in which he participates in
accordance with the terms thereof to the extent such participation is allowed
pursuant to the terms thereof and applicable law with no increase in any amounts
payable by the Company with respect thereto as a result of Executive no longer
being employed by the Company, or if Executive is not allowed continued
participation pursuant to the terms thereof and applicable law, then under
another reasonably equivalent plan providing for the same or similar coverage
but with no increase in any amounts payable by the Company with respect thereto
as a result of Executive no longer being employed by the Company; (iii) the
Company shall pay to Executive his unpaid Annual Salary, if any, earned prior to
the effective date of the termination of Executive's employment in accordance
with the Company's normal policies for same; (iv) the Company shall pay to
Executive any incentive compensation payments to which Executive is entitled as
of the effective date of the termination of Executive's employment in accordance
with the Company's normal policies for same; and (v) the Company shall pay to
Executive any business expenses remaining unpaid on the effective date of the
termination of Executive's employment for which Executive is entitled to be
reimbursed under Section 6 of this Agreement; provided, however,that without
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limiting any other remedy available hereunder, such payments shall immediately
terminate upon a breach or violation by Executive of the provisions of Sections
7, 8, 9 or 10 hereof and, in such event, the Company shall be entitled, in
addition to any other remedies it may have, to reimbursement from Executive of
the amount paid by the Company to Executive during the Continuation Period
pursuant to subparagraph (i) above.
(b) Termination by Company for Cause. The Company shall have the
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right to terminate Executive's employment hereunder for Cause (as defined below)
upon providing Executive with written notice thereof. Any such termination of
employment shall be effective on the date specified in such notice, or if no
date is specified, then upon receipt by Executive of such notice. In the event
of such termination of employment, the Company shall pay to Executive (i) his
unpaid Annual Salary through the effective date of such termination of
employment, and (ii) any business expenses remaining unpaid on the effective
date of such termination of employment for which Executive is entitled to be
reimbursed under Section 6 of this Agreement.
(c) Death or Disability. Executive's employment with the Company
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shall terminate upon the death or Disability (as hereinafter defined), of
Executive. Such termination of employment shall be effective as of the date of
Executive's death, or in the event of Executive's Disability, upon the Company's
giving Executive written notice thereof. In the event of such termination of
employment due to death or Disability, Executive (or his estate or other
designated beneficiary upon his death) shall be entitled to receive: (i) his
Annual Salary and accrued expense reimbursements earned or accrued through the
effective date of the termination of Executive's employment, (ii) any incentive
compensation payments to which Executive is entitled as of the effective date of
the termination of Executive's employment; and (iii) such payments, if any, as
may be provided for pursuant to all Fringe Benefit programs in which Executive
is participating as of the effective date of the termination of Executive's
employment. All such Annual Salary, incentive compensation and/or Fringe
Benefit payments payable upon termination of Executive's employment as aforesaid
shall be paid at or following the date of such termination of employment in
accordance with the Company's normal policies.
(d) Termination by Executive for Good Reason. Executive shall
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have the right to terminate his employment hereunder for Good Reason (as defined
below), if (A) Executive shall have given the Company prior written notice of
the reason therefor and (B) a period of thirty (30) days following receipt by
the Company of such notice shall have lapsed and, except for the occurrence of a
Change of Control (as hereinafter defined), the matters which constitute or give
rise to such "Good Reason" shall not have been cured or eliminated by the
Company; provided, however if such matters are of a nature that the same cannot
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be cured or eliminated within such thirty (30) day period, such period shall be
extended for so long as the Company shall be endeavoring in good faith to cure
or eliminate such matters, provided, further, however, that for the first such
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failure during each calendar year during the Term, the Company shall have thirty
(30) days after receipt of written notice of such failure to cure such failure,
and thereafter during that calendar year no such notice and cure period shall be
given. In the event the Company shall not take such actions within such period,
Executive may send another notice to the Company electing to terminate his
employment hereunder and, in such event, Employee's employment hereunder shall
terminate and the effective date of such termination of employment shall be the
third business day after the Company shall have received such notice. In the
event of any such termination of employment, Executive shall be entitled to
receive the same payments and benefits, subject to the same conditions and
limitations, as provided in Section 12(a) hereof.
(e) Termination by Executive without Good Reason. Executive shall
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have the right to terminate his employment hereunder without Good Reason by
giving the Company thirty (30) days prior written notice to that effect. Such
termination of employment shall be effective on the date specified in such
notice. In the event of such termination of employment, then the Company shall
pay to Executive: (i) his unpaid Annual Salary through the effective date of
such termination of employment, and (ii) any business expenses remaining unpaid
on the effective date of such termination of employment for which Executive is
entitled to be reimbursed under Section 6 of this Agreement.
(f) Expiration of the Term. Upon the termination of Executive's
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employment at the Expiration Date, Executive shall be entitled to receive: (i)
his Annual Salary and accrued expense reimbursements earned or accrued through
the effective date of such termination of Executive's employment, (ii) any
incentive compensation payments to which Executive is entitled as of the
effective date of such termination of Executive's employment; and (iii) such
payments as may be provided for pursuant to all Fringe Benefit programs in which
Executive is participating as of the effective date of the termination of
Executive's employment. All such Annual Salary, incentive compensation and/or
Fringe Benefit payments payable upon termination of Executive's employment as
aforesaid shall be paid at or following the date of such termination of
employment in accordance with the Company's normal policies.
(g) Definitions:
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(i) "Cause" shall mean: (A) theft, embezzlement, fraud or
misappropriation of funds of the Company; (B) conviction of a felony or
other crime involving moral turpitude; (C) chemical or alcohol dependency
which adversely affects performance of Executive's duties; (D) failure to
substantially perform (other than as a result of physical or mental
illness) the duties required under Section 2 hereof in any material manner,
provided, however, that for the first such failure during each calendar
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year during the Term, Executive shall have thirty (30) days after receipt
of written notice of such failure to cure such failure, and thereafter
during that calendar year no such notice and cure period shall be given;
(E) a material breach or violation by Executive of Sections 7, 8, 9 or 10
hereof; (F) the Company is convicted of any criminal felony liability due
to actions taken or failed to be taken by Executive without the consent of
the Company; and (G) failure of Executive (other than as a result of
physical or mental illness) to devote substantially all of his working time
to the performance of his duties required hereunder, provided, however,
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that for the first such failure during each calendar year during the Term,
Executive shall have thirty (30) days after receipt of written notice of
such failure to cure such failure, and thereafter during that calendar year
no such notice and cure period shall be given.
(ii) "Change of Control" means:
(A) The consummation by the Company of a merger, consolidation or
other reorganization if the percentage of the voting common stock of
the surviving or resulting entity held or received by all persons who
were owners of common stock of the Company immediately prior to such
merger, consolidation or reorganization is less than 50.1% of the
total voting common stock of the surviving or resulting entity
outstanding, on a fully diluted basis, immediately after such merger,
consolidation or reorganization and after giving effect to any
additional issuance of voting common stock contemplated by the plan
for such merger, consolidation or reorganization; or
(B) A majority of the directors of the Company are persons other
than persons (i) for whose election proxies have been solicited by the
Board, or (ii) who are then serving as directors appointed by the
Board to fill vacancies on the Board caused by the death or
resignation (but not removal) or to fill newly-created directorships,
but excluding for purposes of this clause (ii) any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule
14(a)-11 of Regulation 14A promulgated under the Securities Exchange
of 1934, as amended (the "Exchange Act")), or other actual or
threatened solicitation of proxies or consents; or
(C) The acquisition by any person or group (other than (i)
Executive, or (ii) a group composed solely of persons designated as
proxy-holders in connection with a solicitation by or on behalf of the
Company's management or directors) of ownership or voting rights
(including voting rights pursuant to any revocable or irrevocable
proxy) of a number of shares of the Company's voting common stock
equal to the number of shares of the Company's voting common stock
constituting 50.1% of the number of such shares actually voting in the
election of directors of the Company at the most recent meeting of
shareholders of the Company, and such person or group has made a
filing under Section 13(d) of the Exchange Act affirmatively stating
such persons' or groups' intent to change control of the Company; or
(D) The sale of all or substantially all of the assets of the
Company to another corporation or enterprise that is not a subsidiary,
direct or indirect, or other affiliate of the Company if such other
corporation or enterprise does not make arrangements with Executive
satisfactory to Executive for his employment by such other corporation
or enterprise.
(iii) "Disability" shall mean that, as a result of Executive's
incapacity due to physical or mental illness (as determined by a physician
mutually acceptable to the Company and Executive), Executive shall have
been absent from, or does not perform, his duties as described hereunder on
a substantially full-time basis for 75 days during any consecutive 150 day
period during the Term, and within ten (10) days after the Company notifies
Executive in writing that it intends to replace him, shall not have
returned to the performance of such duties on a full-time basis.
(iv) "Good Reason" shall mean the occurrence of any of the following:
(A) a material breach by the Company in the performance of its obligations
hereunder and the Company's failure to cure said breach within thirty (30)
days after receipt of written notice of such breach; provided, however if
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such matters are of a nature that the same cannot be cured or eliminated
within such thirty (30) day period, such period shall be extended for so
long as the Company shall be endeavoring in good faith to cure or eliminate
such matters, provided, further, however, that for the first such failure
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during each calendar year during the Term, the Company shall have thirty
(30) days after receipt of written notice of such failure to cure such
failure, and thereafter during that calendar year no such notice and cure
period shall be given; or (B) the occurrence of a Change of Control
provided Executive elects, within one hundred thirty five (135) days after
the effective date of such Change of Control, to terminate his employment
hereunder; said election to be evidenced by written notice of same from
Executive to the Company within said one hundred thirty five (135) day
period; or (C) the Company requests Executive to relocate to an office
outside the St. Louis metropolitan area.
13. Arbitration of Disputes. The Executive and the Company shall
resolve any claim, controversy or dispute whether concerning, arising out of, or
relating to this Agreement, the employment relationship between the parties or
alleging the violation of either a statutory or common law duty or both, by
arbitration, except for the remedy at law or in equity as provided for in
paragraph 11 herein which the Company may determine to be enforced by any court
having applicable jurisdiction. Executive or the Company shall invoke this
right to arbitrate any such claim, controversy or dispute only after first
attempting to resolve it through the exhaustion of any Executive problem solving
policy that the Company may establish from time to time without obtaining a
satisfactory result. The Missouri Uniform Arbitration Act in effect when any
arbitration occurs shall govern the procedures of any arbitration between the
parties. Any arbitration held in accordance with this paragraph shall take
place in St. Louis, Missouri, and shall be conducted by a single arbitrator.
The arbitrator may award full reimbursement to the prevailing party for
out-of-pocket expenses and losses, including, without limitation, reasonable
attorneys' fees, costs, and expenses arising from the preparation and
arbitration of the dispute. "Prevailing party" within the meaning of this
section includes, without limitation, a party who (i) agrees to dismiss an
action upon the other party's payment of all or a substantial portion of the
sums allegedly due or the other party's substantial performance of the covenants
allegedly breached, or (ii) who obtains substantially the relief sought by it.
14. Prior Agreements. Executive represents and warrants to the Company
that Executive is not presently a party to any agreement containing a
non-competition provision or other restriction with respect to: (a) the nature
of any services or business that Executive is entitled to perform or conduct for
the Company, or (b) the disclosure or use of any information which directly or
indirectly relates to the nature or business of the Company or the services to
be rendered by Executive to the Company. Executive further certifies that he
has not disclosed or used, and will not disclose or use during his employment
with the Company, any confidential information that he acquired as a result of
any previous employment or under a contractual obligation of confidentiality
before Executive's employment by the Company.
15. Notice. Any notice, agreement, or other communication provided for
in this Agreement shall be given in writing and will be considered effectively
given the day of delivery if sent via an overnight delivery service, the actual
time of receipt of a facsimile transmission, or on the third day after mailing
is sent by registered or certified mail, postage prepaid return receipt
requested and addressed to the parties as follows:
If to the Company: with a copy (which shall not
constitute notice) to:
Allied Healthcare Products, Inc. Joseph D. Lehrer, Esq.
1720 Sublette Avenue Greensfelder, Hemker & Gale, P.C.
St. Louis, Missouri 63110 2000 Equitable Building
Attn: Chairman of the Board 10 South Broadway
Fax: (314) 771-1242 St. Louis, Missouri 63102
Fax: (314) 241-8624
If to Executive: with a copy (which shall not
constitute notice) to:
Earl Refsland Kenneth H. Suelthaus, Esq.
7 Algonquin Woods Suelthaus & Walsh, P.C.
Glendale, Missouri 63122 7733 Forsyth Blvd.
St. Louis, Missouri 63105
Facsimile: (314) 727-7166
or to another person or address as the Company or Executive may designate.
16. Governing Law. This Agreement will be governed by, and construed
and interpreted according to, the laws and decisions of the State of Missouri
without regard to the choice of law provisions thereof.
17. Counterparts; Facsimile Signatures. This Agreement may be executed
by the parties hereto on any number of separate counterparts, and all such
counterparts so executed constitute one agreement binding on all the parties
hereto notwithstanding that all the parties hereto are not signatories to the
same counterpart. This Agreement and any other document to be executed in
connection herewith may be delivered by facsimile and documents delivered in
such manner shall be binding as though an original thereof had been delivered.
18. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matter hereof,
and supersedes all prior and contemporaneous communications, agreements,
understandings and assurances, whether oral or written. This Agreement may not
be changed, amended, or modified, except in writing signed by all of the parties
hereto.
19. Assignability. This Agreement shall inure to the benefit of the
Company and its successors and assigns. This Agreement is a personal services
agreement and may not be assigned or transferred by Executive.
20. Severability. If any provision contained in this Agreement is held
to be invalid or unenforceable, that provision will be severed from this
Agreement and that invalidity or unenforceability will not affect any other
provision of this Agreement, the balance of which will remain in and have its
intended full force and affect; provided, however, if any invalid or
unenforceable provision may be modified so as to be valid and enforceable as a
matter of law, that provision will be deemed to have been modified to the extent
necessary so as to be valid and enforceable to the maximum extent permitted by
law.
21. Non-Waiver. Failure to enforce any of the provisions of this
Agreement at any time shall not be interpreted to be a waiver of such provision
or to affect either the validity of this Agreement or the right of either party
thereafter to enforce each and every provision of this Agreement.
22. Consent to Jurisdiction. In connection with the enforcement of
the Company's rights and remedies under Section 11 hereof, Executive hereby
irrevocably submits to the jurisdiction of the Circuit Court of the County of
St. Louis, Missouri, and Executive hereby irrevocably consents to personal
jurisdiction in, and agrees that all claims in respect to such action or
proceeding may be heard and determined in, any such court as selected by the
Company. Executive hereby irrevocably waives any objection he may have to the
jurisdiction or venue of any such action or proceeding and any objection on the
grounds that any such action or proceeding in any such court has been brought in
an inconvenient forum. Nothing within this paragraph shall affect the Company's
right, to bring any action or proceeding arising out of or relating to the
enforcement of the Company's rights and remedies under Section 11 hereof against
Executive in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
ALLIED HEALTHCARE PRODUCTS, INC. EXECUTIVE
By: /s/ John D. Weil /s/ Earl R. Refsland
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Name: John D. Weil Earl Refsland
Title: Chairman of the Board
ALLIED HEALTHCARE PRODUCTS, INC.
1999 INCENTIVE STOCK OPTION PLAN
August 24, 1999
Mr. Earl Refsland
Allied Healthcare Products, Inc.
1720 Sublette Avenue
St. Louis, Missouri 63110
RE: 1999 INCENTIVE STOCK OPTION
Dear Mr. Refsland:
I am pleased to inform you that Allied Healthcare Products, Inc. (the
"Company") has granted you a non-qualified stock option under the Allied
Healthcare Products, Inc. 1999 Incentive Stock Plan (the "Plan") to purchase
542,000 shares of Common Stock, par value $0.01 per share, of the Company (the
"Option Shares") at a price of $ 2.00 per share (the "Exercise Price"), subject
to the Plan and the provisions set forth below.
This option is granted to you as part of the Company's compensation program
for key employees. The purpose of the Plan is to allow certain key employees,
upon whose efforts the Company is dependent for the successful conduct of its
business, to derive financial benefit from appreciation in the value of the
Company's stock and to encourage them to take a proprietary interest in the
Company and remain in its employ. You are under no obligation to exercise this
option.
Should you exercise your option you will be taxed (including withholding
taxes) on the difference between the fair market value and the exercise price
and your tax basis will be equal to fair market value on the date of exercise.
If you subsequently dispose of the stock, you will be taxed to the extent the
sales proceeds exceed the fair market price on the date of exercise.
Subject to compliance with the terms and conditions of this letter and the
Plan, you will become entitled to exercise your option with respect to the
number of Option Shares and as of the dates indicated in the following vesting
schedule:
DATE OPTION BECOMES EXERCISABLE NUMBER OF OPTION SHARES
December 7, 1999 33,875
March 7, 2000 33,875
June 7, 2000 33,875
September 7, 2000 33,875
December 7, 2000 33,875
March 7, 2001 33,875
June 7, 2001 33,875
September 7, 2001 33,875
December 7, 2001 33,875
March 7, 2002 33,875
June 7, 2002 33,875
September 7, 2002 33,875
December 7, 2002 33,875
March 7, 2003 33,875
June 7, 2003 33,875
September 7, 2003 33,875
The option will expire at the close of business on August 23, 2009, to the
extent not exercised and the Plan provides that the option may expire at an
earlier date in the event of a termination of your employment with the Company.
As provided in the Plan, in the event that you terminate employment with the
Company and, within six months thereafter, become employed by a competing entity
or you violate any restrictive covenant set forth in that certain Employment
Agreement dated August 24, 1999 (the "Employment Agreement") between you and the
Company, the Company will have the right to reacquire certain shares resulting
from your exercise of the option at a price equal to the Exercise Price;
provided, however, the Company's right to reacquire certain shares resulting
- -------- -------
from your exercise will not exist if the termination of your employment occurs
as a result of a Change of Control (as defined in the Employment Agreement).
Further, in the event of any such Change of Control, or the termination of
Executive's employment by the Company without Cause (as defined in the
Employment Agreement), or the termination of Executive's employment by Executive
for Good Reason (as defined in the Employment Agreement), or in the event of
your death or Disability (as defined in the Employment Agreement) or in the
event the Company pays any cash dividends in respect of its issued and
outstanding Common Stock, then all shares to which this option relates shall
immediately vest in full and will be exercisable until the earlier of: (i)
thirty (30) days following your termination of employment with the Company
(other than for "Cause", as defined in the Employment Agreement, in which case
the option granted hereby shall expire), or (ii) the expiration date set forth
above.
To exercise your option (or any part thereof), you should forward the
letter in substantially the form of Exhibit A attached hereto and incorporated
---------
herein by this reference to the Company, containing the information and payment
required thereby. In addition to payment of the Exercise Price, and prior to
issuance of any shares of common stock hereunder, you are required to deposit
with the Company an amount equal to any federal or state income withholding tax
arising from such exercise. No shares shall be issued until full payment
therefor, including any associated taxes, has been made.
Please note that, although you must return a signed copy of this letter in
order to validate your option, that act does not constitute the exercise of this
option nor does it in any way obligate you to exercise the option.
This letter constitutes an Incentive Stock Option Agreement between you and
the Company and incorporates the Plan by reference. Please indicate your
agreement to the terms and conditions set forth in this letter and in the Plan
by signing the accompanying copy of this letter in the space
indicated below and returning it to the Company, Attention: John D. Weil by
September 30, 1999. No part of this option is exercisable until a signed copy
of this letter is received by the Company.
Very truly yours,
/s/ John D. Weil
-----------------------------
John D. Weil
Chairman of the Board
Enclosure: Copy of the Allied Healthcare Products 1999 Incentive Stock Plan
The undersigned hereby acknowledges receipt of the foregoing letter and
Plan and agrees to be bound by all of the terms and conditions set forth in
this letter and in the Plan.
September 15, 1999 /s/ Earl R. Refsland
- -------------------- -----------------------
(Date) (Signature)
EXHIBIT A
Allied Healthcare Products, Inc.
1720 Sublette Avenue
St. Louis, Missouri 63110
Attn: Chairman
Re: EXERCISE OF 1999 INCENTIVE STOCK OPTION
Gentlemen:
I hereby exercise the Option granted to me under the Incentive Stock Option
Agreement dated ___________________, to purchase ______ shares of Allied
Healthcare Products, Inc. common stock, $0.01 par value per share (the "Common
Stock"), with respect to _______ shares of Common Stock for an aggregate
purchase price of $_________. As consideration for such shares, I have enclosed
payment in the amount of $__________.
I understand that I am required to deposit with the Company the amount of
federal and/or state income withholding tax arising from such exercise. Upon
receipt of this letter, the Company will advise me of the amount of such taxes,
and I agree to promptly, and not more than two business days thereafter, deposit
the same with the Company.
I agree that failure to deposit the amount of taxes required by the Company
within the time required thereby shall render this exercise null and void. I
also understand and agree that no shares will be issued until full payment
therefor, including any associated taxes, has been made.
Upon your receipt of full payment as aforesaid, please issue in my name and
send the certificates representing the shares purchased by my exercise of this
Option to me at the address indicated below.
Date:_________________ _______________________________
Optionee, ____________________
_______________________________
_______________________________
_______________________________
Address