CONSULTING AND SEVERANCE AGREEMENT
Agreement dated as of the 1st day of September, 1996 by and between David
V. LaRusso ("Consultant") and Allied Healthcare Products, Inc. ("Allied"), a
Delaware corporation.
WHEREAS, Consultant resigned as an officer and director of Allied and its
subsidiaries on August 7, 1996 and terminated his service as an employee
effective August 31, 1996; and
WHEREAS, Allied and Consultant wish to provide for consulting services to
be rendered by Consultant to Allied, severance benefits and certain other
matters.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. TERM. This Agreement shall be deemed to have commenced as of September
1, 1996 and shall expire on August 31, 1998.
2. DUTIES. During the term of this Agreement, Consultant shall upon
specific written request therefor advise Allied orally or in writing with
respect to any matters concerning Allied that relate to the period of
Consultant's prior employment by Allied, and shall in that connection cooperate
with Allied, its officers, agents and attorneys with respect thereto. Consultant
shall not be required to perform any minimum number of hours of
service hereunder and no request for advice or cooperation shall in any way
impede or interfere with Consultant's other business activities or constitute an
unreasonable burden upon Consultant. Consultant shall not be obligated to
perform more than ten (10) hours of service per month hereunder.
3. COMPENSATION. In consideration of Consultant's obligations under
Paragraphs 2, 6 and 7 and the release and covenant contained in Paragraph 8, and
to provide a severance benefit to Consultant, Allied shall pay Consultant at the
rate of $5,384.62 biweekly ($140,000 per annum) through August 31, 1997 and
$2,307.70 biweekly ($60,000 per annum) from September 1, 1997 through August 31,
1998. Such payments shall be made on Allied's regularly scheduled payroll dates.
In the event Consultant shall perform more than ten (10) hours of service per
month hereunder, Allied shall pay consultant a fee for such services in excess
of such ten (10) hours at an hourly, per diem, per project or other rate to be
mutually agreed upon by Allied and Consultant; PROVIDED HOWEVER, that Allied
shall not be obligated to pay Consultant for more than fourteen (14) hours of
service per day. For purposes of this Agreement, hours of service shall be
deemed to include travel time, other than commuting time. In the event
Consultant shall die or be disabled during the term of this Agreement, Allied
agrees to pay Consultant's designated beneficiary, or if no beneficiary has been
designated in writing to Allied, Consultant's estate, the compensation provided
for hereunder for the remaining term of this Agreement. Consultant shall also be
reimbursed by Allied for any expenses incurred by him hereunder.
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4. INDEPENDENT CONTRACTOR. Consultant and Allied agree that for the
purposes of this Agreement, Consultant shall be an independent contractor and
not an employee of Allied.
5. BENEFITS. Consultant shall be provided substantially the same medical
and employee insurance benefits that he was receiving from Allied at the time of
the termination of employment, including medical insurance for his dependents
and life insurance, except that the term life insurance provided hereunder shall
be limited to (a) $280,000 for the period September 1, 1996 through August 31,
1997 and (b) $120,000 for the period September 1, 1997 through August 31, 1998.
Such benefits will continue for a period (the "Benefit Period") that ends on the
earlier of (a) August 31, 1998 or (b) the date on which Consultant is first
entitled to obtain medical insurance provided by a successor employer. In
addition, Consultant shall be permitted to continue to utilize, at Allied's
expense, the vehicle heretofore provided to him by Allied through December 31,
1996. At such time, Consultant may either return the vehicle to Allied or
purchase the same at the lease buyout value specified in the vehicle lease.
6. COVENANT NOT TO DISCLOSE.
a. Consultant covenants and agrees that he will not, during the
period of his consultancy with Allied or at any time thereafter, except with the
express prior written consent of the President and Chief Executive Officer of
Allied, directly or indirectly disclose, communicate or divulge to any Person
(as defined in Section 15 hereof), or use
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for the benefit of any Person, any Proprietary Information (as defined in
Section 15 hereof). 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 generally known
in Allied's industry after the date of this Agreement from another source which
is under no obligation of confidentiality to Allied or its Affiliates (as
defined in Section 15 hereof) or (iii) is acquired from another source which is
under no obligation of confidentiality to Allied or its Affiliates.
b. All written 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
which may be or has been furnished to Consultant during his employment with
Allied or his consultancy hereunder or which was produced, prepared or designed
by Consultant in connection with his employment with Allied or his consultancy
hereunder shall be, become and remain the exclusive property of Allied.
Consultant acknowledges that all originals, copies and reprints in Consultant's
possession, custody or control have been surrendered and/or delivered to Allied
and Consultant agrees that he shall thereafter make no further use (except as
contemplated hereby), 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.
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7. COVENANT NOT TO SOLICIT CUSTOMERS OR EMPLOYEES; NONCOMPETITION COVENANT.
a. Consultant covenants and agrees that he will not personally
and/or individually at any time during the term of this Agreement, whether as
employee, owner, partner, agent, director, officer, consultant or shareholder
(except as the holder of not more than one percent (1%) of the outstanding
shares of a corporation whose stock is listed on any national or regional
securities exchange or reported by The Nasdaq Stock Market or any successor
thereto) solicit, divert or accept business competitive with Allied's business
as of the date hereof from or otherwise take away or interfere with any customer
of Allied.
b. Consultant further covenants and agrees that he will not personally
and/or individually at any time during the term of this Agreement or for a
period of three (3) years thereafter, whether as employee, owner, partner,
agent, director, officer, consultant or shareholder (except as the holder of not
more than one percent (1%) of the outstanding shares of a corporation whose
stock is listed on any national or regional securities exchange or reported by
The Nasdaq Stock Market or any successor thereto), without the prior written
consent of the President and Chief Executive Officer of Allied, solicit or
induce any person employed by Allied on the date hereof to accept employment in
any capacity with Consultant or any firm, person or entity with whom Consultant
is employed or associated whether as employee, owner, partner, agent, director,
officer, consultant or shareholder (except as the holder of not more than one
percent (1%) of the
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outstanding shares of a corporation whose stock is listed on any national or
regional securities exchange or reported by The Nasdaq Stock Market or any
successor thereto).
c. Consultant further covenants and agrees that he will not, during
the term of this Agreement, directly or indirectly, whether as employee, owner,
partner, agent, director, officer, consultant, shareholder (except as the holder
of not more than one percent (1%) of the outstanding shares of a corporation
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, for his own account or for the benefit of any Person in any business
in competition with Allied or any of its subsidiaries, without the prior written
consent of the President and Chief Executive Officer of Allied, establish,
engage in or be connected with any Person which competes with Allied or any of
its subsidiaries or proposes to compete with Allied or any of its subsidiaries
in any business in which Allied is engaged on the date hereof. For purposes of
this Agreement, "business" shall mean the business engaged in by Allied and its
subsidiaries on the date hereof in the manufacture and marketing of respiratory
therapy, medical gas and emergency medical equipment. Notwithstanding the
foregoing, Allied acknowledges and agrees that this Paragraph shall not prevent
Consultant from accepting employment with or otherwise being associated with
Sunrise Medical Inc.
d. If any provision of the covenants and agreements set forth in
Paragraph 6 and this Paragraph 7 shall be held invalid or unenforceable because
of the scope of the territory or the actions thereby restricted, or the period
of time within which
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such covenant or agreement is operative, or for any other reason, it is the
intent of the parties hereto that such provision shall be construed by limiting
and reducing it, or, if necessary, eliminating it so that the provisions hereof
be valid and enforceable to the extent compatible with applicable law as
determined by a court of competent jurisdiction.
8. RELEASE; NONDISPARAGEMENT. In further consideration of the payments to
be made to Consultant hereunder, Consultant hereby (a) completely and
irrevocably releases, to the extent he may lawfully do so, any claim that
Consultant may have against Allied, its subsidiaries and Affiliates and their
respective directors, officers, employees, partners and stockholders, except for
claims arising under (i) indemnification rights contained in Allied's Amended
and Restated Certificate of Incorporation or By-laws or arising under the
Delaware General Corporation Law or any other statutory or common law rights to
indemnification applicable to Consultant's service as a director, officer,
employee and/or agent of Allied; or (ii) Allied's Internal Revenue Code Section
401(k) retirement savings plan; and (b) agrees that he shall not disparage
Allied, its subsidiaries and Affiliates or their respective directors, officers,
employees, partners or stockholders or their respective personnel, products or
practices. Allied agrees that it will (a) instruct its executive officers not to
disparage Consultant, (b) request its directors not to disparage Consultant and
(c) as a corporate entity and body, not disparage Consultant. Without limiting
the generality of the foregoing, Allied acknowledges and agrees that it shall
indemnify Consultant against all liabilities, costs and expenses (including
reasonable attorney's fees and expenses) arising from Consultant's service as a
director and/or officer of Allied and its subsidiaries to the
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fullest extent permitted by the Delaware General Corporation Law and as provided
in the By-Laws of Allied as in effect on the date hereof.
9. ASSIGNMENT. Neither party shall have the right to assign this Agreement.
10. ENTIRE AGREEMENT. This Agreement contains all the understandings, terms
and conditions between the parties regarding the subject matter hereof. This
Agreement shall constitute the entire understanding and agreement between the
parties and shall supersede and be in lieu of any and all prior agreements
between the parties.
11. WAIVER. No waiver, alteration or modification of any of the provisions
of this Agreement or cancellation or replacement of this Agreement shall be
valid unless in writing and signed by the parties to this Agreement.
12. APPLICABLE LAW. The laws of the State of Missouri shall apply to this
Agreement without regard to principles of conflicts of law. In the event any
provision of this Agreement is declared null and void, it is hereby agreed that
the remaining provisions of this Agreement shall be deemed separate and shall
remain in full force and effect.
13. HEADINGS. The headings used in this Agreement have been included solely
for ease of reference and shall not be considered in the interpretation or
construction of this Agreement.
14. NOTICES. Any notice hereunder to Allied shall be addressed to it at its
offices, 1720 Sublette Avenue, St. Louis, Missouri 63110, Attention: President
and Chief
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Executive Officer, and any notice hereunder to Consultant shall be addressed to
him at 12511 Triple Oaks Drive, Sunset Hills, Missouri 63128 , subject to the
right of either party to designate at any time hereafter in writing some other
address. Such notices shall be sent by hand or certified mail, return receipt
requested.
15. DEFINITIONS.
a. "Affiliate" means any Person now or hereafter controlling,
controlled by, or under common control with another Person.
b. "Person" means any individual, corporation, firm, partnership
or other business entity.
c. "Proprietary Information" means all secret, confidential or
proprietary knowledge, information or data with respect to the conduct or
details of the business of Allied including, as applicable but without
limitation, methods of operation, customers and customer lists, products,
products under development as of the date of this Agreement, proposed, pending
or completed acquisitions of any company, division, product line or other
business unit, prices, fees, costs, plans, designs, technology, know-how,
software, marketing methods, policies, plans, personnel, suppliers, competitors,
markets or other specialized information or proprietary matters of Allied.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first above written.
ALLIED HEALTHCARE PRODUCTS, INC.
/s/ James C. Janning
By:_______________________________________
Name: James C. Janning
Title: President and Chief Executive Officer
/s/ David V. LaRusso
______________________________________
David V. LaRusso
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