UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2011 (July 28, 2011)
ALLIED HEALTHCARE INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
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New York
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1-11570
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13-3098275
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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245 Park Avenue, New York,
New York
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10167
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
(212) 750-0064
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A DEFINITIVE MATERIAL AGREEMENT.
Merger Agreement
On July 28, 2011, Allied Healthcare International Inc. (the
Company
) entered into an
Agreement and Plan of Merger (the
Merger Agreement
) with Saga Group Limited, a
corporation organized under the laws of England and Wales (
Parent
), and AHL Acquisition
Corp., a New York corporation and a wholly-owned subsidiary of Parent (
Merger Sub
). The
Merger Agreement provides that, upon the terms and subject to satisfaction or waiver of the
conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company
(the
Merger
), with the Company continuing as the surviving corporation in the Merger and
a wholly-owned subsidiary of Parent.
Pursuant to the Merger Agreement, at the effective time of the Merger:
(i) each outstanding share of common stock of the Company, other than shares owned by Parent,
Merger Sub or any other wholly-owned subsidiary of Parent and shares held in the treasury of the
Company, will be cancelled and converted into the right to receive $3.90 in cash, without interest
and
(ii) each outstanding option to purchase Company common stock and stock-settled stock
appreciation right (
SAR
) that has vested prior to the effective time, including those
options and SARs that vest as a result of the Merger, will be cancelled in consideration of a cash
payment equal to the excess, if any, of (i) $3.90 over (ii) the per share exercise price of such
option or SAR, as applicable, multiplied by the total number of shares of common stock subject to
such option or SAR. In the event the exercise price of any option or SAR is equal to or greater
than $3.90, the option or SAR will be cancelled without payment
The Board of Directors of the Company (the
Board
) unanimously approved the Merger
Agreement and the Merger. Prior to the Boards approval of the Merger Agreement and the Merger, Oppenheimer &
Co. Inc. delivered its opinion to the Board that, as of the date of the opinion, the merger
consideration was fair, from a financial point of view, to the shareholders of the Company.
The completion of the Merger is subject to various conditions, including, among others,
obtaining the approval of the Companys shareholders, which, under New York law, will require the
vote of at least two-thirds of the Companys outstanding shares of common stock. The parties
expect to notify the merger to the Competition Authority in Ireland,
where the Company and affiliates of Parent
have operations, as soon as practicable. Consummation of the Merger is not subject to a financing
condition.
Pursuant to the terms of the Merger Agreement, the Company may not solicit competing takeover
proposals or engage in discussions with third parties regarding competing takeover proposals,
subject to an exception that permits the Company to take certain actions if the Company receives an
unsolicited takeover proposal that the Board determines could reasonably be expected to result in a
proposal that is superior to that contained in the Merger Agreement.
The Merger Agreement contains termination rights for both the Company and Parent. The Company
may be required to pay Parent a termination fee of $5.2 million under certain circumstances,
including if the Board, following the receipt of a superior proposal, changes its recommendation to
the shareholders to vote in favor of the Merger.
The foregoing description of the Merger Agreement and the Merger does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is
attached hereto as Exhibit 2.1 and incorporated herein by reference.
The Merger Agreement has been filed as an exhibit to this Form 8-K to provide investors and
security holders with information regarding its terms. It is not intended to provide any other
factual information about the Company. The representations, warranties and covenants contained in
the Merger Agreement were made only for purposes of such agreement and as of specific dates, were
solely for the benefit of the parties to such agreement, and may be subject to limitations agreed
upon by the contracting parties, including being qualified by confidential disclosures exchanged
between the parties in connection with the execution of the Merger Agreement. The representations
and warranties may have been made for the purposes of allocating contractual risk between the
parties to the agreement instead of establishing these matters as facts, and may be subject to
standards of materiality applicable to the contracting parties that differ from those applicable to
investors. Investors should not rely on the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of facts or condition of the Company
or Parent or any of their respective subsidiaries or affiliates. Moreover, information concerning
the subject matter of the representations and warranties may change after the date of the Merger
Agreement, which subsequent information may or may not be fully reflected in the Companys public
disclosures. The Merger Agreement should not be read alone, but should instead be read in
conjunction with the other information regarding the Company and the Merger that will be contained
in, or incorporated by reference into, the
proxy statement that the Company will be filing in connection with the Merger, as well as in
the other filings that the Company makes with the Securities and Exchange Commission (the
SEC
).
Amendment to Rights Agreement
In connection with entering into the Merger Agreement, the Company entered into Amendment No.
3 to Rights Agreement, dated as of July 28, 2011 (the
Amendment to Rights Agreement
),
with Computershare Trust Company, N.A., as rights agent (the
Rights Agent
). A brief
summary of the Amendment to Rights Agreement is set forth below under Item 3.03 Material
Modification to Rights of Security Holders and is incorporated herein by reference.
Retention Bonus Agreements with Executive Officers
In connection with the execution of the Merger Agreement, the Company entered into a retention
bonus agreement, dated July 28, 2011, with Sandy Young, the Companys chief executive officer, and
Allied Healthcare Group Limited, a subsidiary of the Company (
AHGL
), entered into a
retention bonus agreement, dated July 28, 2011, with Paul Weston, the Companys chief financial
officer. A brief summary of the retention bonus agreements is set forth below under Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers and is incorporated herein by reference.
Additional Information About the Merger
In connection with the proposed Merger, the Company will file a proxy statement and other
documents with the SEC. We urge shareholders to carefully read the proxy statement and any other
documents filed with the SEC when they become available because they
will contain important information
about the Company, the proposed Merger and related matters. A copy of the proxy statement will be
sent to shareholders seeking their approval of the proposed Merger. Shareholders also will be able
to obtain a copy of the proxy statement (when available) and other documents filed by the Company
free of charge at the SECs web site, http://www.sec.gov, or at the SECs public reference room at
100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, documents filed by the Company
can be obtained by contacting the Company at the following address and telephone number: 245 Park
Avenue, 39
th
Floor, New York, New York 10167, 212-750-0064, or from the Companys
website, http://www.alliedhealthcare.com.
The Company and its officers, directors and certain other employees may be soliciting proxies
from the Companys shareholders in favor of the proposed Merger and may be deemed to be
participants in the solicitation under the rules of the SEC. Information regarding the Companys
directors and executive officers is available in its proxy statement relating to its 2011 annual
meeting of shareholders, which was filed with the SEC on May 3, 2011. Other information regarding
the direct or indirect interests, by security holdings or otherwise, of the participants in the
solicitation will be set forth in the proxy statement relating to the Merger when it becomes
available.
Cautionary Language Regarding Forward-Looking Statements
Statements about the expected timing, completion, and effects of the proposed transaction and
all other statements in this Form 8-K, other than historical facts, constitute forward-looking
statements within the meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking
statements and any such forward-looking statements are qualified in their entirety by reference to
the following cautionary statements. All forward-looking statements speak only as of the date
hereof and are based on current expectations and involve a number of assumptions, risks, and
uncertainties that could cause the actual results to differ materially from such forward-looking
statements. The Company and Parent may not be able to complete the proposed transaction on the
terms described above, on other acceptable terms, or at all because of a number of factors,
including the failure to obtain shareholder approval or the failure to satisfy the other closing
conditions. Other factors that may affect the business or financial results of the Company, are
described in the Companys filings with the SEC, including Items 1, 1A and 7 of the Companys
annual report on Form 10-K for the fiscal year ended September 30, 2010.
ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
In connection with entering into the Merger Agreement, the Company entered into the Amendment
to Rights Agreement. The Amendment to Rights Agreement amends the Rights Agreement, dated as of
April 2, 2009, between the Company and the Rights Agent, as amended by Amendment No. 1 to Rights
Agreement, dated March 10, 2010 and Amendment No. 2 to Rights Agreement, dated May 10, 2010
(together with the Amendment to Rights Agreement, the
Rights Agreement
). The Amendment
to Rights Agreement was entered into so that that neither the execution or delivery of the Merger
Agreement nor the consummation of the Merger will trigger the distribution and/or exercise of the
Rights (as such term is defined in the Rights Agreement).
The Amendment to Rights Agreement provides, among other things, that:
(i) neither Parent nor Merger Sub nor any of their affiliates will become an Acquiring Person
or a Beneficial Owner (each as defined in the Rights Agreement) as a result of the execution and
delivery of the Merger Agreement or the consummation of the Merger;
(ii) neither a Stock Acquisition Date nor a Distribution Date (each as defined in the Rights
Agreement) will occur as a result of the execution and delivery of the Merger Agreement or the
consummation of the Merger; and
(iii) the Rights will expire immediately prior to the effective time of the Merger.
The foregoing description of the Amendment to Rights Agreement does not purport to be complete
and is qualified in its entirety by reference to the Amendment to Rights Agreement, a copy of
which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
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ITEM 5.02
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DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN
OFFICERS; COMPENSATORY ARRANGEMENT OF CERTAIN OFFICERS.
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In connection with the execution of the Merger Agreement, the Company entered into a retention
bonus agreement, dated July 28, 2011, with Sandy Young, the chief executive officer of the Company,
and AHGL entered into a retention bonus agreement, dated July 28, 2011 with Paul Weston, the chief
financial officer of the Company.
Retention Bonus Agreement with Sandy Young
The
retention bonus agreement with Mr. Young provides that, if the
Merger is consummated, Mr. Young will receive a cash bonus equal to £225,000 (approximately
$368,800 at current exchange rates) and a transaction bonus equal to approximately $1,275,000. The
transaction bonus is equal to the product of (i)(A) the total number of shares of common stock of
the Company that are outstanding immediately prior to the effective time of the Merger multiplied
by (B) $3.90 and (ii) 0.75%, and will be reduced by the amount Mr. Young receives in the Merger in
respect of his vested stock options and vested SARs (which is expected to be zero). The cash bonus
will be paid to Mr. Young within 30 days after the closing of the Merger. The transaction bonus
will be paid to Mr. Young in two installments, with one-third of the transaction bonus being paid
within 30 days after the closing of the Merger and the remaining two-thirds of the transaction
bonus to be paid on the first anniversary of the closing of the Merger, provided that Mr. Young is
employed by the Company or its affiliates on such date.
The retention bonus agreement also provides that if Mr. Young is terminated by the Company
other than for Gross Misconduct (as defined in the agreement) or he terminates employment with
the Company for Good Reason (as defined in the agreement) or his employment is terminated due to
death or disability, in each case after the effective date of the Merger and prior to the first
anniversary of the closing of the Merger, he is still entitled to the second payment of the
transaction bonus described in the preceding paragraph. In these cases, Mr. Young will forfeit any
severance payments remaining to be paid to him.
The retention bonus agreement also provides that if Mr. Youngs employment with the Company is
terminated by the Company for Gross Misconduct (as defined in the agreement) or by Mr. Young
other than for Good Reason (as defined in the agreement), death or disability, in each case after
the effective date of the Merger and prior to the first anniversary of the closing of the Merger,
Mr. Young will forfeit the second payment of the transaction bonus. Further, any remaining
severance payments to be paid to Mr. Young will be reduced by the amount of the transaction bonus
previously paid to him, and to the extent the amount of the transaction bonus previously paid to
him equal or exceeds the remaining severance payments, the retention bonus agreement requires Mr.
Young to repay to the Company such excess.
The retention bonus agreement for Mr. Young also provides that the Company shall require any
successor of the Company (whether by consolidation, merger or otherwise) to expressly assume and
agree to perform the obligations of the Company under the retention bonus agreement.
Retention Bonus Agreement with Paul Weston
The
retention bonus agreement with Mr. Weston provides that, if the
Merger is consummated, Mr. Weston will receive a cash bonus equal to £150,000 (approximately
$245,900 at current exchange rates) and a retention bonus equal to £164,472, which is the amount of
his base salary at the time of the closing of the Merger (approximately $269,600 at current
exchange rates). The cash bonus will be paid to Mr. Weston within 30 days after the closing of the
Merger. The retention bonus will be paid to Mr. Weston in two installments, with one-third of the
retention bonus being paid within 30 days after the closing of the Merger and the
remaining two-thirds of the retention bonus to be paid on the first anniversary of the closing
of the Merger provided that Mr. Weston is employed by AHGL or its affiliates on such date. The
retention bonus agreement requires Mr. Weston to repay AHGL the amount of the retention bonus
previously paid to him in the event Mr. Westons employment with AHGL or its affiliates is
terminated for any reason prior to the first anniversary of the closing of the Merger.
The retention bonus agreement for Mr. Weston provides that AHGL shall require any successor of
AHGL (whether by consolidation, merger or otherwise) to expressly assume and agree to perform the
obligations of AHGL under the retention bonus agreement.
The foregoing description of the retention bonus agreements with Messrs. Young and Weston does
not purport to be complete and is qualified in its entirety by reference to the retention bonus
agreements, copies of which are attached hereto as Exhibit 10.2 and Exhibit 10.3 and incorporated
herein by reference.
ITEM 8.01 OTHER EVENTS.
On July 29, 2011, the Company issued a press release in which it announced that it had entered
into the Merger Agreement. A copy of the press release is filed
herewith as Exhibit 99.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
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2.1
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Agreement and Plan of Merger, dated as of July 28, 2011, by and among Saga Group Limited,
AHL Acquisition Corp. and Allied Healthcare International Inc. Schedules, exhibits and similar
attachments to the Agreement and Plan of Merger are not being filed. Allied Healthcare
International Inc. hereby undertakes to furnish supplementally any omitted schedule, exhibit or
similar attachment to the Securities and Exchange Commission upon request.
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10.1
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Amendment No. 3 to Rights Agreement, dated as of July 28, 2011, between Allied Healthcare
International Inc. and Computershare Trust Company, N.A., as rights agent.
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10.2
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Letter agreement, dated July 28, 2011, between Allied Healthcare International Inc. and Sandy Young.
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10.3
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Letter agreement, dated July 28, 2011, between Allied Healthcare Group Limited and Paul Weston.
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99.1
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Press release, dated July 29, 2011, of Allied Healthcare International Inc.
(incorporated by reference to Exhibit 99.1 of the Form 8-K of
Allied Healthcare International Inc. filed with the Securities
and Exchange Commission on July 29, 2011; File No. 1-11570).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 1, 2011
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ALLIED HEALTHCARE INTERNATIONAL INC.
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By:
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/s/ Marvet Abbassi
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Name:
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Marvet Abbassi
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Title:
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Financial Controller
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