Exhibit 10.1
ALLIED HEALTHCARE INTERNATIONAL INC.
STOCK APPRECIATION RIGHTS AGREEMENT
     THIS STOCK APPRECIATION RIGHTS AGREEMENT (the “Agreement”) is hereby
entered into effective as of April 21, 2009 (the “Date of Grant”) by and between
ALLIED HEALTHCARE INTERNATIONAL INC., a New York corporation (the “Company”),
having an address at 245 Park Avenue, New York, New York 10167 and Alexander
Young, having an address at Fords Field, Smugglers Lane, Crowborough, East
Sussex, England TN6 1TG (the “Grantee”).
     1. PURPOSE. This Agreement is intended to constitute a one person special
scheme and forms an integral part of the Company’s compensation package offered
to the Grantee in connection with the Grantee’s agreement to become employed by
the Company as its chief executive officer.
     2. GRANT OF AWARD. The Company hereby grants to the Grantee an award of
566,135 stock appreciation rights (“SARs”) with respect to shares of the
Company’s common stock, $.01 par value per share (the “Shares”), subject to the
terms and conditions set forth in this Agreement (the “Award”). The SARs
represent the right to receive from the Company, upon settlement of the Award
under the circumstances set forth herein, a payment, paid in Shares of the
Company, equal to the product of (A) the number of SARs granted pursuant to this
Agreement that become vested pursuant to Section 5 hereof and (B) the excess of
(i) the Fair Market Value of one Share of the Company on the date the vested
SARs are paid to the Grantee over (ii) the Base Price.
     3. ADMINISTRATION. The terms and conditions of this Agreement are, to the
extent interpretation is required, to be determined by the Compensation
Committee of the Company’s Board of Directors, or such committee of the Board of
Directors as may be established and charged with such responsibilities from time
to time. The Compensation Committee of the Board of Directors, any other
committee of the Board of Directors as may be charged with such responsibilities
from time to time, and/or the Board of Directors itself, when acting to
administer and interpret this Agreement, shall be referred to herein as the
“Committee.”
     4. DEFINITIONS.
     For purposes of this Agreement, the following capitalized terms shall have
the meanings indicated:
          (a) “Base Price” means the Fair Market Value of one Share determined
on the Date of Grant or such greater price as is required pursuant to Section 7.
          (b) “Change of Control” 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. In the case of a sale or

 

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disposition of assets of the Company, the acquiring party may be treated as a
Surviving Entity for purposes of paragraph 5(d).
          (c) “Fair Market Value” means, with respect to a Share as of any date
of determination, in the discretion of the Committee, (i) the last reported sale
price (on that date) of the Common Stock on the principal national securities
exchange on which the Shares are traded; or (ii) the closing bid price (or
average of bid prices) last quoted (on that date) by an established quotation
service for over-the-counter securities, if the Shares are not reported on the
NASDAQ Stock Market; or (iii) if Shares are not publicly traded, the fair market
value of such Share as determined by the Board in good faith after taking into
consideration all facts which it deems appropriate and in accordance with
applicable statutory and regulatory guidelines.
          (d) “Grantee’s Options” means those stock options granted by the
Company to the Grantee on February 6, 2008.
          (e) “Performance Period” means the four-year period beginning on
October 1, 2007 and ending September 30, 2011.
          (f) “Vesting Date” means September 30, 2011.
     5. VESTING.
          (a) Performance Vesting. Except as otherwise provided below, as soon
as practicable following the completion of the Performance Period, the Committee
shall determine the number of SARs that will be vested, as of the Vesting Date,
based on the achievement of the Performance Measures set forth on Exhibit A. If
the Threshold performance level for all Performance Measures (as set forth on
Exhibit A) has not been achieved, the Award shall be forfeited without
consideration as of the last day of the Performance Period.
          (b) Time Vesting. The Award shall vest and become nonforfeitable with
respect to the number of SARs determined to be vested pursuant to Section 5(a)
above provided that the Grantee remains continuously employed with the Company
for the three (3) year period beginning on January 14, 2008 and ending on
January 13, 2011. Except as provided below, if the Grantee’s employment with the
Company is terminated by the Grantee or the Company prior to January 14, 2011,
the Award shall be immediately forfeited on the date of his termination of
employment regardless of the achievement of any of the Performance Measures set
forth in Exhibit A.
          (c) Employment Termination: If, prior to January 14, 2011, the
Grantee’s employment with the Company is terminated by reason of the Grantee’s
death, a condition that the Committee determines constitutes a disability,
injury or health condition making continued employment impossible or impractical
(which may include, but is not limited to a condition that constitutes a
“disability” for purposes of disability insurance or other benefits), or by
reason of any other circumstances the Committee determines, the Grantee shall
become vested in the Award to the extent determined by the Committee, which
determination shall be made by determining the extent to which the performance
levels have been achieved, and further establishing the portion of the Award
that is to be considered vested by multiplying that portion of the Award that
are deemed potentially to have vested by reason of satisfaction of the

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applicable performance levels by a fraction, the numerator of which is the
number of completed months elapsed from October 1, 2007 through the date of the
Grantee’s termination of employment, and the denominator of which is forty-eight
(48).
          (d) Change of Control: In the event there is a Change of Control, the
Award shall become immediately vested to the same extent as provided for in
paragraph 5(c), above, and shall, to the extent vested, be exercisable for a
period of thirty (30) days following the Change of Control. If not exercised
within such thirty (30) day period, the Award shall be forfeited.
Notwithstanding the foregoing, however, if there is a surviving entity following
the Change of Control that is continuing the business operations of the Company
as in place immediately prior to the Change of Control (the “Surviving Entity”),
and the Surviving Entity makes arrangements for the continuation of the Award,
with appropriate adjustments to take into account changes in the business
structure of the Surviving Entity as compared with the Company immediately prior
to the Change of Control, the Award shall only become vested at the time and to
the extent provided in this Agreement without regard to the accelerated vesting
provided for in this paragraph 5(d).
          (e) Termination for Cause. If the Grantee’s employment with the
Company is terminated at any time by the Company for reasons the Committee
constitutes Cause for the Grantee’s termination, the Award shall be forfeited in
its entirety, without regard to whether the Award had previously become vested
and exercisable. For this purpose, “Cause” includes the circumstances that would
permit the Company to terminate the Grantee’s employment pursuant to
“Termination by Events of Default” in that certain employment agreement in
effect between the Grantee and the Company dated December 22, 2007, (other than
clause (e) (relating to becoming of unsound mind) and clause (i) (relating to
illness or injury).
     6. PAYMENT OF AWARD. Subject to the provisions of Sections 7 and 10 hereof,
the Company shall deliver to the Grantee a payment for each earned and vested
SAR as determined in accordance with this Agreement, with such payment to be
made in Shares. Payment shall be made as soon as practicable following the
Committee’s determination of the number of vested SARs, based on the achievement
of the Performance Measures set forth on Exhibit A, but not later than
January 31, 2012.
     7. LIMITS ON AWARD.
          (a) Notwithstanding any provisions contained herein to the contrary,
the maximum aggregate value of (i) the vested portion of the Award and (ii) the
vested portion of the Grantee’s Options (“Total Award Value”) shall be limited
to £3,000,000, determined as of the date the Award is settled. If the Total
Award Value exceeds £3,000,000, the Base Price shall increase so that the Total
Award Value equals £3,000,000.
          (b) The value of the vested portion of the Grantee’s Options shall be
determined, if still outstanding on the date the Award is settled, as of the
date the Award is settled and shall be equal to the excess of (i) the Fair
Market Value of the Shares subject to the vested portion of the Grantee’s
Options on such date, in the aggregate, over (ii) the exercise price required to
purchase such Shares in their entirety. The Grantee shall not be obligated to
exercise

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the Grantee’s Options in connection with the settlement of the Award, and future
increases in value of the Grantee’s Options shall have no impact on the value of
the Award.
          (c) If the vested portion of the Grantee’s Options have been
exercised, in whole or in part, prior to the date the Award is settled
hereunder, the value of the vested portion of the Grantee’s Options, to the
extent already exercised, shall be equal to the excess of the Fair Market Value
of the Shares purchased upon exercise of the Option, determined as of the date
the Option was exercised over (ii) the exercise price required to purchase such
Shares.
          (d) Because the limitation on the value of the Award in paragraph
6(b), above, is an aggregate, the limitation shall be applied on a pro rata
basis if the Award actually being exercised represent less than all of the SARs.
     8. NONTRANSFERABILITY. The Award may be transferred only by will or the
laws of descent and distribution, but only to the extent vested as of the date
of the Grantee’s death. During the Grantee’s lifetime, the Award may be
exercised only by the Grantee (or by the Grantee’s legal representative in the
event the Grantee is disabled and is incapable of acting on his own behalf).
     9. GRANTEE’S REPRESENTATIONS.
          (a) Grantee acknowledges that the Company may issue Shares upon the
settlement of the Award without registering such Shares under the Securities Act
of 1933, as amended (the “1933 Act”), on the basis of certain exemptions from
such registration requirement. Accordingly, Grantee agrees that the settlement
of Award may be expressly conditioned upon his delivery to the Company of an
investment certificate including such representations and undertakings as the
Company may reasonably require in order to assure the availability of such
exemptions, including a representation that Grantee is acquiring the Shares for
investment and not with a present intention of selling or otherwise disposing
thereof and an agreement by Grantee that the certificates evidencing the Shares
may bear a legend indicating such non registration under the 1933 Act and the
resulting restrictions on transfer. Grantee acknowledges that, because Shares
received upon the settlement of the Award may be unregistered, Grantee may be
required to hold the Shares indefinitely unless they are subsequently registered
for resale under the 1933 Act or an exemption from such registration is
available.
          (b) Grantee hereby acknowledges that, in addition to certain
restrictive legends that the securities laws of the jurisdiction in which
Grantee resides may require, each certificate representing the Shares may be
endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND ANY

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APPLICABLE STATE SECURITIES LAW OF RECEIPT BY THE ISSUER OF AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW IS NOT REQUIRED.
     10. ADJUSTMENT IN THE SHARES. If the Shares, as presently constituted,
shall be changed into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split, reverse split,
combination of shares, or otherwise) or if the number of Shares shall be
increased through the payment of a share dividend, the determinations of value
of the Award and of the Shares that may be issued upon the settlement of the
Award shall be modified so as to preserve the intended economic benefits
intended to be provided by the grant of the Award, as determined by the
Committee. The deemed exercise price and other terms of the hypothetical
nonqualified stock option to which the grant of the Award corresponds shall be
appropriately modified as determined by the Committee.
     11. TAX WITHHOLDING. The Company shall have the right to require the
Grantee to remit to the Company amount sufficient to satisfy any applicable
foreign, federal, state and local tax withholding requirements in respect of the
settlement of the Award. The Grantee may give the Company cash equal to the
amount required to be withheld or the Company may withhold Shares otherwise
issuable upon the settlement of the Award having a Fair Market Value on the
settlement date equal to the amount required to be withheld (but only to the
extent of the minimum amount that must be withheld to comply with applicable
foreign, state, federal and local income, employment and wage tax laws.)
     12. NO LIMITATION ON RIGHTS OF COMPANY. The Award shall not in any way
affect the right or power of the Company to make adjustments, reclassifications,
or changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate, sell, or transfer all or any part of its business or
assets.
     13. NO RIGHTS AS A SHAREHOLDER. The Grantee shall have no rights of a
shareholder with respect to any shares that may be transferable to the Grantee
in connection with the settlement of the Award unless and until Shares are in
fact issued to the Grantee.
     14. COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates for Shares pursuant to the settlement of the Award, unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authority, and the requirements of any exchange upon which Shares
are traded. The Company shall in no event be obligated to register any
securities pursuant to the 1933 Act (as now in effect or as hereafter amended)
or to take any other action in order to cause the issuance and delivery of such
certificates to comply with any such law, regulation or requirement. The Board
of Directors of the Company may require, as a condition of the issuance and
delivery of such certificates and in order to ensure compliance with such laws,
regulations, and requirements, that the Grantee make such covenants, agreements,
and representations as the Board of Directors, in its sole discretion, considers
necessary or desirable.

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     15. NO OBLIGATION TO EXERCISE RIGHTS. The granting of the Award shall
impose no obligation upon the Grantee to exercise the Award.
     16. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. This Agreement is not a
contract of employment, and the terms of service of the Grantee or the
relationship of the Grantee with the Company or any affiliate shall not be
affected in any way by this Agreement except as specifically provided herein.
The execution of this Agreement shall not be construed as conferring any legal
rights upon the Grantee for a continuation of directorship or relationship with
the Company or any affiliate, nor shall it interfere with the right of the
Company or any affiliate to discharge the Grantee and to treat him without
regard to the effect which that treatment might have upon him as a Grantee.
     17. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally or sent by
certified, registered, or express mail, postage prepaid. Any such notice shall
be deemed given when so delivered personally or, if mailed, four days after the
date of deposit in the United States mails, to each party at its address set
forth above or to such other address as may be designated in a notice given in
accordance with this paragraph 17.
     18. GOVERNING LAW. Except to the extent preempted by Federal law, this
Agreement shall be construed and enforced in accordance with, and governed by,
New York law other than its conflicts of law provisions.
     19. ENTIRE AGREEMENT. This Agreement contains all of the understandings and
agreements between the Company and its affiliates, and the Grantee concerning
the Award and supersedes all earlier negotiations and understandings, written or
oral, between the parties with respect thereto. The Company, its affiliates and
the Grantee have made no promises, agreements, conditions or understandings,
either orally or in writing, that are not included in this Agreement.
     20. HEADINGS. The headings of paragraphs and subparagraphs herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Agreement.
     21. AMENDMENTS. This Agreement may be amended or modified at any time by an
instrument in writing signed by the parties hereto.
     IN WITNESS WHEREOF, the Company and the Grantee have duly executed this
Agreement as of the date first written above.

            ALLIED HEALTHCARE INTERNATIONAL INC.
      By:   /s/ Jeffrey Peris         Title: Interim Chairman               
GRANTEE
      /s/ Sandy Young       Alexander Young         

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EXHIBIT A
Schedule of Performance Measures

                                          Metric   Weighting   Measurement
Period   Threshold   Base   Stretch
Sales Growth
    40 %   Average of October     34.4 %     43.8 %     52.4 %
 
          1, 2009 - September                        
 
          30, 2011 vs. Base                        
 
          Year ending                        
 
          September 30, 2007                        
 
                                       
Earnings per Share
    30 %   Average of October     417.6 %     617.4 %     789.3 %
Growth
          1, 2009 - September                        
 
          30, 2011 vs. Base                        
 
          Year ending                        
 
          September 30, 2007                        
 
                                        EBITA (Earnings
Before Interest,
Taxes, and
Amortization)
Growth     30 %   Average of October
1, 2009 - September
30, 2011 vs. Base
Year ending
September 30, 2007     150.6 %     228.5 %     311.7 %

Vesting Schedule

                                          Metric   < Threshold   Threshold  
Base   Stretch   > Stretch
Sales Growth
    0 %     4 %     22 %     40 %     40 %
Earnings per Share Growth
    0 %     3 %     16.5 %     30 %     30 %
EBITA Growth
    0 %     3 %     16.5 %     30 %     30 %
Total Vesting
    0 %     10 %     55 %     100 %     100 %

     The above Metrics shall generally be applied to determine the vesting of
the SARs as of September 30, 2011, based on the following:
     1. The determination of vesting attributable to each performance metric
shall be independent from the other performance metrics. For example, a below
threshold performance

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on a single performance metric does not preclude vesting under either or both of
the other performance metrics.
     2. If the actual results fall between Threshold and Base, or Base and
Stretch, the vesting of the Award will be prorated.
     3. For purposes of measuring EBITA Growth and Earnings Per Share Growth,
the accounting cost of the long-term incentive plan share-based remuneration
shall be included.
     4. The Committee may adjust the performance metrics attributable to the
Award at its discretion at any time to take into account exceptional events,
such as mergers, acquisitions and share buybacks.
     5. The performance metrics will be measured in the reporting currency for
the Company’s financial statements at the time of the payout of the Award. Any
necessary currency conversions shall be made using the average exchange rate
over the course of the Performance Period.
     6. In the event a determination regarding vesting of the Award is required
to be made before September 30, 2011, the performance metrics described above
will be annualized on the basis of the period elapsed from October 1, 2009
through such date of determination. The Company shall be deemed not to have
achieved any portion of the above performance metrics prior to October 1, 2009,
so that no portion of the Award shall become vested prior to such date, except
to the extent expressly provided in the Agreement. The methodology used by the
Committee in determining the extent to which any of the performance metrics have
been achieved as of a date prior to September 30, 2011 shall be determined at
the discretion of the Committee, taking into account such factors as it deems
appropriate under the facts and circumstances existing at the time of any such
determination.

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