EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") made as of the 19th day of
November, 1996 between Allied Healthcare Products, Inc., a Delaware corporation
(the "Company") and Xxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Executive has been elected the President and Chief
Executive Officer of the Company and is expected to make major contributions to
the profitability, growth and financial strength of the Company and its
subsidiaries;
WHEREAS, the Company desires to retain the benefit of the Executive's
services to facilitate the conduct of the business, assuring that the
Executive's skills, knowledge and experience will be available to the Company
and its subsidiaries;
WHEREAS, the Company also desires to secure the Executive's agreement
not to compete with the Company and its Affiliates and to keep confidential and
secret all information the Executive has regarding the operations of the Company
and its Affiliates, all upon the terms and conditions set forth herein;
WHEREAS, the Executive understands the necessity of keeping the
aforementioned information confidential and secret, recognizees the proprietary
nature of such information and agrees not to compete with the Company and its
Affiliates under the circumstances and for the periods specified in the
Agreement;
WHEREAS, the Company is willing to compensate the Executive for his
services in the capacity of President and Chief Executive Officer of the
Company, such compensation to include the concurrent grant of options to
purchase the Company's Common Stock, (copies of such option agreements being
attached hereto as Exhibit A), together with his noncompetition and
nondisclosure covenants, all upon the terms, covenants and conditions
hereinafter set forth;
WHEREAS, the Executive is desirous of committing himself to serve the
Company on the terms herein provided:
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants, agreements and promises hereinafter set forth and other good valuable
consideration the receipt of which is hereby acknowledged and agreed, the
parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to serve the Company, on the terms and
conditions set forth herein for the period commencing on the date hereof and
expiring on November 19, 1998, unless sooner terminated as hereinafter set forth
(the "Term of Employment").
2. POSITION AND DUTIES. The Executive shall serve as the Chief
Executive Officer and President of the Company, reporting only to the Board of
Directors of the Company (the "Board"), and shall have 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 provided
that such duties are consistent with his present duties and with the Executive's
position as the senior executive officer in charge of the general management of
the company. The Executive shall devote his full time and efforts to the
business and affairs of the Company during the Term of Employment. Without
limiting the generality of the foregoing, during the Term of Employment, the
Executive shall not, without the prior written approval of the Board, render
services of a business, professional or commercial nature for compensation or
otherwise to any other Person.
3. PLACE OF PERFORMANCE. In connection with his employment by the
Company, the Executive shall be based at the Company's principal executive
offices at 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx (the "Principal Executive
Offices"), and, except for required business travel to an extent substantially
consistent with the present business travel obligations of senior level
executives of the Company, the Executive shall not be required to relocate to a
new principal place of business which is more than thirty (30) miles from the
Principal Executive Offices. Not later than six (6) months after the date
hereof, the Executive shall relocate his principal residence to St. Louis,
Missouri or the suburbs surrounding such city (the "St. Louis Area").
4. COMPENSATION.
(a) BASE SALARY. The Executive shall receive a base salary at
the annual rate of $225,000, or at such greater rate as the Board shall from
time to time determine (the "Base Salary") payable biweekly on the Company's
regular scheduled payroll dates. The Board may from time to time, direct such
upward adjustments in the Base Salary as the board deems necessary or desirable,
including without limitation adjustments in order to reflect increases in the
cost of living. Any increase in Base Salary or other compensation shall in no
way limit or reduce any other obligation of the Company hereunder and, once
established at an increased specified rate, the Executive's Base Salary
hereunder shall not thereafter be reduced.
(b) INCENTIVE COMPENSATION. In addition to Base Salary, the
Executive shall be entitled to receive such incentive compensation payments as
the Board may determine pursuant to the Company's incentive compensation plan
for the Company President (the "Plan") in accordance with the Company's past
practice, or otherwise. For any period less than a full fiscal year during the
term of this agreement, the Executive shall receive an amount equal to the
prorated portion of the incentive compensation payable pursuant to the Plan. The
amount of any additional compensation payable to the Executive pursuant to this
paragraph in respect of any full fiscal year or part thereof will be determined
as promptly as practicable after the determination of the Company's earnings for
the year, but such payment will be made not later than thirty (30) days after
the Company's receipt of audited consolidated financial statements.
(c) EXPENSES. During the term of his employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
presently established by the Board for its senior executive officers) in
performing services hereunder, provided that the Executive properly accounts
therefor in accordance with Company policy.
(d) MOVING EXPENSES. (i) The Company shall reimburse the
Executive for (x) all moving expenses reasonably incurred by the Executive in
relocating his furniture and other household goods from his present principal
residence in the Chicago, Illinois area (his "Principal Residence") to his new
residence as contemplated by Section 3 hereof, (y) the commissions paid to any
real estate broker in connection with the sale of his Principal Residence and
(z) the reasonable closing costs associated with the purchase of the Executive's
new permanent residence in the St. Louis Area. The Company shall make such
payments to the Executive promptly upon receipt of a reasonably detailed invoice
therefor; provided, however, that such reimbursement shall not include
reimbursement for any loss sustained in connection with the sale of the
Executive's Principal Residence.
(ii) The Executive shall be entitled to reimbursement from
the Company for the actual reasonable expenses incurred for temporary housing in
the St. Louis Area and a reasonable number of trips between St. Louis and
Chicago for him and his spouse for the shorter of six (6) months or such time as
he has moved into a new primary residence in the St. Louis Area. The Company
shall make such payments to the Executive promptly upon receipt of a reasonably
detailed invoice therefor.
(e) FRINGE BENEFITS. The Executive shall be entitled to receive
benefits under all the Company's employee benefits plans, including life, health
and accidental death and dismemberment insurance, and arrangements in effect on
the date hereof or plans or arrangements providing the Executive with at least
equivalent benefits thereunder. The Executive shall be entitled to participate
in or receive benefits under any pension plan, profit-sharing plan, savings
plan, stock option plan, life insurance, health-and-accident plan or arrangement
made available by the Company in the future to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements. Nothing paid to the
Executive under any plan or arrangement presently in effect or made available in
the future (other than under the incentive compensation referred to in Section
(b) hereof), shall be deemed to be in lieu of compensation to the Executive
hereunder.
(f) VACATIONS. The Executive shall be entitled to the number of
paid vacation days in each calendar year determined by the Company from time to
time for its senior executive officers, but not less than four (4) weeks in any
calendar year (prorated in any calendar year during which the Executive is
employed hereunder for less than the entire such year in accordance with the
number of days in such calendar year during which he is so employed). The
Executive shall also be entitled to all paid holidays given by the Company to
its senior executive officers.
(g) PERQUISITES. During the Term of Employment and for so long
as the Executive is employed by the Company, the Executive shall be entitled to
receive the
following fringe benefits: (i) the Company shall furnish to the Executive an
automobile selected by the Executive and shall pay all of the related expenses
for gasoline, insurance, maintenance and repairs, or otherwise in accordance
with present Company practices and (ii) the Company shall pay the initiation fee
and the annual dues, assessments and other membership charges of the Executive
for membership in a country club or luncheon club selected by the Executive. In
addition, the Executive shall be entitled to receive such other fringe benefits
in accordance with the plans, practices, programs and policies of the Company
from time to time in effect, commensurate with his position and at least
comparable to those received by other senior executives of Company.
5. OFFICES. The Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more offices or as a
director of any of the Company's subsidiaries, provided, however, that the
Executive shall not be required to serve as an officer or director of any
subsidiary if such service would expose him to adverse financial consequences.
6. AGREEMENT NOT TO DISCLOSE.
(a) The Executive covenants and agrees that, at all times from
and after the date hereof, except as required by law or by order of any court or
government agency, he shall keep completely confidential and retain in strictest
confidence and shall not, except with the express prior written consent of the
Company, directly or indirectly disclose, communicate or divulge to any Person
(as defined in Section 18), or use for the
benefit of any Person, any Proprietary Information. The restriction contained in
the preceding sentence shall not apply to any Proprietary Information that (i)
is a matter of public knowledge on the date of this Agreement, (ii) becomes a
matter of public knowledge after the date of this Agreement from a source other
than the Executive, or (iii) is later lawfully acquired by the Executive from
sources other than the Company.
(b) All data, designs, drawings, blueprints, tracings, sketches,
plans, layouts, specifications, models, programs, cards, tapes, disks,
printouts, writings, manuals, guides, notes and any and all other memoranda,
including without limitation any and all written information which may be or has
been furnished to the Executive or which may be produced, prepared or designed
by the Executive in connection with his employment with the Company or its
Affiliates, shall be, become and remain the exclusive property of the Company,
as the case may be. Upon the termination of the Executive's employment with the
Company or its Affiliates, all originals, copies and reprints in the Executive's
possession, custody, or control shall be promptly surrendered and/or delivered
to the Company, and the Executive shall thereafter make no further use, either
directly or indirectly, of any such data, designs, drawings, blueprints,
tracings, sketches, plans, layouts, specifications, models, programs, cards,
tapes, disks, printouts, writings, manuals, guides, notes or other memoranda or
written information, provided that the Executive shall not be obligated to
deliver to the Company or prohibited from using such written information as a
matter of public knowledge on or prior to the date of the termination of his
employment with the Company or its Affiliates.
7. AGREEMENT TO DISCLOSE.
(a) The Executive agrees to disclose in writing to the Company
or its designee promptly and fully all works and property related to the
Business of the Company, including but not limited to all intellectual
properties, ideas, inventions, discoveries, concepts, computer systems or
programs, works, techniques, programs or any components or associated products
thereof and all hardware and software inventions, products, improvements,
innovations, discoveries and writings which are made, conceived, reduced to
practice, developed, written, contributed to or prepared by the Executive
during, or related in any manner whatsoever to, his employment with the Company
or any of its Affiliates following the date hereof or which result from or are
suggested by any work the Executive may do in connection with his employment
with the Company or any of its Affiliates following the date hereof, whether or
not patentable or copyrightable and whether made solely by the Executive or
jointly with others, all of such works and property being hereinafter referred
to in this Agreement as "Works and Property." The Executive acknowledges that he
does not claim any interest in Works and Property (defined for purposes of this
sentence to include matters arising at any time during his employment by the
Company).
(b) If the Executive includes in any written disclosure required
by Section 7(a) a request that ownership of any Works and Property be
transferred to him, the Company or the relevant Affiliate shall promptly
determine, in its sole discretion, whether it elects to transfer its ownership
of such Works and Property to the Executive and the terms
and conditions, if any, of such transfer. If the Company or the relevant
Affiliate elects in writing to transfer its ownership of any such Works and
Property to the Executive and if the Executive complies with any terms and
conditions specified by the Company or the relevant Affiliate in connection with
such transfer, the Executive shall thereafter have all right, title and interest
to such transferred Works and Property.
(c) In the event that the Executive fails to disclose to the
Company or the relevant Affiliate in writing any Works and Property, the Company
or the relevant Affiliate shall retain complete right, title and interest in
Works and Property as specified in Section 8(a).
8. OWNERSHIP OF WORKS AND PROPERTY.
The Executive hereby agrees that:
(a) Except as provided in Section 7, all Works and Property
shall unconditionally be, become and remain the sole and exclusive property of
the Company or the relevant Affiliate forever;
(b) Pursuant to Sections 101 and 201 of the United States
Copyright Law, all Works and Property shall be "works made for hire," and all
rights in such Works and Property shall belong entirely and exclusively to the
Company or the relevant Affiliate and their
successors and assigns forever, and the Company or the relevant Affiliate and
their successors and assigns may make any use or nonuse of such Works and
Property throughout the world without any further obligation to the Executive;
(c) All Works and Property shall belong entirely and exclusively
to the Company or the relevant Affiliate and their successors and assigns
forever, and the Executive hereby grants and assigns forever to the Company or
the relevant Affiliate all rights whatsoever that the Executive might have
therein, and the Company or the relevant Affiliate may make any use or nonuse of
such Works and Property throughout the world without any further obligation to
the Executive;
(d) The Executive will promptly execute, acknowledge and deliver
all applications, oaths, declarations, and further documents and will provide
such additional assistance as the Company or the relevant Affiliate or their
counsel may deem necessary or desirable to evidence the Company's or the
relevant Affiliate's title to such Works and Property; and
(e) In performing duties or services for the Company or the
relevant Affiliate regarding Works and Property, the Executive will not
knowingly infringe upon the rights, including but not limited to patent,
copyright, trade secret or other proprietary rights, of any third party
whatsoever.
9. TERMINATION.
(a) DEATH. The Executive's employment shall be deemed
terminated automatically upon his death.
(b) DISABILITY. The Company shall have the right to terminate
the employment of the Executive upon his Disability (as defined below).
"Disability" means any impairment of mind or body that renders the Executive
unable to perform his normal duties and functions hereunder for a period of at
least three (3) months during any twelve (12) month period, as determined in
good faith by a physician selected by the Company. Any refusal by the Executive
to submit to a medical examination for the purpose of certifying Disability
under this Paragraph 9(b) shall be deemed conclusively to constitute evidence of
the Executive's Disability. The Executive's Base Salary shall continue to be
paid until his Disability is established in accordance with the preceding
sentence.
(c) FOR CAUSE. The Company shall have the right to terminate
this Agreement for Cause (as defined below). For purposes of this Agreement,
"Cause" shall be defined as: (i) the commission of any act by the Executive
constituting financial dishonesty against the Company; (ii) the commission of a
felony; (iii) the commission of an act by the Executive involving moral
turpitude that brings the Company or any of its Affiliates into public disrepute
or disgrace or causes harm to the customer relations, operations or business
prospects of the Company; (iv) incompetence of the Executive due to the use or
reporting to work under the influence of alcohol, narcotics, other unlawful
drugs or controlled substances; or (v) breach of this Agreement or the failure
of the Executive to perform his duties as contemplated hereunder. Upon such
termination, the Executive shall be entitled to receive his Base Salary and
other benefits through the date of termination. The Company shall have no
obligation to continue to pay the Base Salary or other incentive compensation,
including incentive compensation under the Plan following such termination.
(d) WITHOUT CAUSE. The Company shall also have the right to
terminate the Executive's employment at any time during the term of this
Agreement without Cause.
(e) TERMINATION BY THE EXECUTIVE. The Executive may elect to
terminate this Agreement by notice in writing not less than thirty (30) days in
advance of the termination date. Upon such termination, the Executive shall be
entitled to receive his Base Salary and other benefits (including expense
reimbursements but excluding any unpaid incentive compensation, whether or not
accrued) through the date of termination, and the Company shall have no further
liability for compensation or other benefits to the Executive under this
Agreement.
(f) In the event that the Executive's employment shall terminate
in accordance with subsections (a), (b) or (d) above, the Company agrees to pay
to the Executive or, in the case of termination by reason of death, the
Executive's designated beneficiary, or if no beneficiary has been designated in
writing to the Company, the
Executive's estate, the Base Salary and Incentive Compensation provided for
hereunder for the remaining term of this Agreement. For purposes of computing
the amount of Incentive Compensation payable hereunder, the Executive shall be
entitled to receive, for each remaining year the greater of such amount of
Incentive Compensation as was established by the Board as the target amount of
Incentive Compensation for such year or the amount of Incentive Compensation
actually earned for the fiscal year preceding the date of termination.
10. SUCCESSORS. This agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
11. NON-COMPETITION.
(a) The Executive covenants and agrees on behalf of himself and
his Affiliates that he will not at any time during the term of this Agreement
and, except as set forth in Section 11(c) below, for two (2) years after
termination of the Agreement, except with the express prior written consent of
the Company: (i) directly or indirectly, whether as executive, owner, partner,
agent, director, officer, consultant, shareholder (except as the
holder of not more than one percent (1%) of the outstanding shares of a company
whose stock is listed on any national or regional securities exchange or
reported by the Nasdaq Stock Market or any successor thereto) or in any other
capacity, establish, engage in, or be connection with in any manner any Person
which engages in, the Business or proposes to engage in the Business within the
Area; (ii) with respect to the Business heretofore engaged in by the Executive,
and to be engaged in by the Company or its Affiliates, directly or indirectly
solicit, divert or accept business from or otherwise take away or interfere with
any customer, supplier, distributor or manufacturer of the Company or its
Affiliates or (iii) induce or attempt to induce any Person who is an executive
of, or consultant to, the Company, to perform work or services for any Person
other than the Company.
(b) The Executive will not during the term of this Agreement and
except as set forth in Section 11(c) below, for two (2) years after termination
of the Agreement, directly or indirectly, accept employment, be employed by or
be a principal of any business or enterprise operating within the Area which
then employs or has as a principal or holder of any interest therein (except as
the holder of not more than one percent (1%) of the outstanding shares of a
company whose shares are publicly traded) any individual who was previously
employed in a managerial or executive position with the Company or any of its
Affiliates, provided, however, that this prohibition shall not be applicable if
such business or enterprise does not engage in the Business within the Area, or
if such business or enterprise engages in activities which do constitute
engaging in the Business within the Area and other activities which do not
constitute engaging in the
Business within the Area and the Executive and/or the other individual who was
previously employed by the Company or any of its Affiliates, neither being a
principal of such business or enterprise, are employed by such business or
enterprise in connection with activities which in no way constitute engaging in
the Business within the Area.
(c) If the Executive's employment with the Company shall be
terminated by the Company in accordance with Section 9(c), the covenants
contained in this Section 11 shall terminate.
12. ACKNOWLEDGMENTS OF THE EXECUTIVE; INJUNCTIVE RELIEF.
(a) The Executive acknowledges that the term, the geographical
areas of this Agreement and the scope of the restraints imposed by Sections 6
and 11 of this Agreement are fair and reasonably required for the protection of
the Company. Therefore, in addition to any other remedies which the Company may
have under this Agreement or otherwise, the Company shall be entitled to apply
to any court of competent jurisdiction for an injunction restraining the
Executive from committing or continuing any violation of Sections 6 and 11 of
this Agreement, and the Executive shall not object to such application except to
litigate whether, in fact, he has violated Sections 6 and 11 of this Agreement.
(b) The parties agree that it is impossible to measure in money
the damages that will accrue to the Company by reason of the Executive's failure
to perform his respective obligations under this Agreement, that such failure to
perform will result in irreparable damage to the Company, and that specific
performance of the Executive's
obligations may therefore be obtained by suit in equity. Without limiting the
generality of the foregoing sentence, the Company shall be entitled to an
injunction from any court of competent jurisdiction restraining the Executive
from committing or continuing any violations of Sections 6 and/or 11. The
Executive will neither assert any claim nor any defense in any action or
proceeding to enforce any provision hereof that the Company has or had an
adequate remedy at law.
13. NOTICE. For the purposes of this agreement, notices and all
other communications provided for in the agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xx. Xxx X. Xxxxxxxx
[ ]
[ ]
If to the Company:
Allied Healthcare Products, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: Chairman of the Board
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. MISCELLANEOUS. No provision of this agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this agreement. The validity,
interpretation, construction and performance of this agreement shall be governed
by the laws of the State of Missouri.
15. VALIDITY. The invalidity or unenforceability of any provision or
provisions 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.
16. COUNTERPARTS. This agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. ARBITRATION. Any dispute or controversy arising under or in
connection with this agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that the
Company shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of
Section 6 or 11 hereof.
18. CERTAIN DEFINITIONS.
(a) "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person.
(b) "Area" means the State of Missouri, the states adjacent
thereto, the Midwestern states, elsewhere in the United States, North America
and the world.
(c) "Business" means the businesses engaged in by the Company
and its Affiliates on the date hereof and during the period of the Executive's
employment with the Company subsequent to the date hereof.
(d) "Person" means any individual, company, firm, partnership or
other business entity.
(e) "Proprietary Information" means all information with respect
to the conduct or details of the business and operations of the Company
including, without limitation, methods of operation, customers and customer
lists, details of contracts with customers, consultants, suppliers or employees,
products, proposed products, former products, proposed, pending or completed
acquisitions of any company, division, product line or other business unit,
prices and pricing policies, fees, costs, plans, designs,
technology, inventions, trade secrets, know-how, software, marketing methods,
policies, plans, personnel, suppliers, competitors, markets or other specialized
information or proprietary matters of the Company or any of its Affiliates.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this agreement on the
date and year as first above written.
ALLIED HEALTHCARE PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
Chairman of the Board
/s/ Xxx X. Xxxxxxxx
------------------------------------
Xxx X. Xxxxxxxx
