ALLIED HEALTHCARE INTERNATIONAL INC. INDEMNITY AGREEMENT
EXHIBIT 10.2
ALLIED HEALTHCARE INTERNATIONAL INC.
INDEMNITY AGREEMENT
INDEMNITY AGREEMENT
This Indemnity Agreement, effective as of January 14, 2008, is made by and between Allied
Healthcare International Inc., a New York corporation (the “Company”), and , an
officer and/or director of the Company (the “Indemnitee”).
RECITALS
A. The Company is aware that competent and experienced persons are increasingly reluctant to
serve as directors or officers of corporations unless they are protected by comprehensive liability
insurance and/or indemnification, due to increased exposure to litigation costs and risks resulting
from their service to such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers;
B. Based upon their experience as business managers, the Board of Directors of the Company
(the “Board”) has concluded that, to retain and attract talented and experienced
individuals to serve as officers and directors of the Company, and to encourage such individuals to
take the business risks necessary for the success of the Company, it is necessary for the Company
to contractually indemnify officers and directors, and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and directors in connection
with their service to the Company;
C. Section 722 of the Business Corporation Law of the State of New York, under which the
Company is organized (“Section 722”), empowers the Company to indemnify by agreement its
officers, directors, employees and agents, and persons who serve, at the request of the Company, as
directors, officers, employees or agents of other corporations or enterprises; in addition, Section
721 of the Business Corporation Law expressly provides that the indemnification provided by Section
722 is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or continue to serve as a
director or officer of the Company free from undue concern for claims for damages arising out of or
related to such services to the Company.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions.
1.1 Agent. For the purposes of this Agreement, “agent” of the Company means any
person who is or was a director or officer of the Company or a subsidiary of the Company; or is or
was serving at the request of, for the convenience of, or to represent the interest of the Company
or a subsidiary of the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate
of the Company; or was a director or officer of a foreign or domestic corporation which was a
predecessor corporation of the Company or a subsidiary of the Company, or was a director or officer
of another enterprise or affiliate of the Company at the request of, for the convenience of, or to
represent the interests of such predecessor corporation. The term “enterprise” includes any
employee benefit plan of the Company, its subsidiaries, affiliates and predecessor corporations.
1.2 Expenses. For purposes of this Agreement, “expenses” includes all direct and
indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees
and related disbursements and other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement, Section 722 or
otherwise; provided, however, that expenses shall not include any judgments, fees, ERISA excise
taxes or penalties or amounts paid in settlement of a proceeding.
1.3 Proceeding. For the purposes of this Agreement, “proceeding” means any
threatened, pending, or completed action, suit or other proceeding, whether civil, criminal,
administrative, investigative or any other type whatsoever.
1.4 Subsidiary. For purposes of this Agreement, “subsidiary” means any corporation of
which more than 50% of the outstanding voting securities is owned directly or indirectly by the
Company, by the Company and one or more other subsidiaries, or by one or more other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve as an
agent of the Company, at the will of the Company (or under separate agreement, if such agreement
exists), in the capacity Indemnitee currently serves as an agent of the Company, faithfully and to
the best of his ability so long as he is duly appointed or elected and qualified in accordance with
the applicable provisions of the Bylaws or charter documents of the Company or any subsidiary of
the Company; provided, however, that Indemnitee may at any time and for any reason resign from such
position (subject to any contractual obligation that Indemnitee may have assumed apart from this
Agreement) and that the Company or any subsidiary shall have no obligation under this Agreement to
continue Indemnitee in any such position.
3. Mandatory Indemnification. The Company shall indemnify the Indemnitee:
3.1 Third Party Actions. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in the right of the
Company) by reason of the fact that he is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, against any and all expenses and liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties,
and amounts paid in settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; and
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3.2 Derivative Actions. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was an agent of the Company, or by reason
of anything done or not done by him in any such capacity, against any amounts paid in settlement of
any such proceeding and all expenses actually and reasonably incurred by him in connection with the
investigation, defense, settlement, or appeal of such proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the Company; except
that no indemnification under this subsection shall be made in respect of any claim, issue or
matter as to which such person shall have been finally adjudged to be liable to the Company by a
court of competent jurisdiction due to willful misconduct of a culpable nature in the performance
of his duty to the Company, unless and only to the extent that the court in which such proceeding
was brought shall determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which such court shall deem proper; and
3.3 Exception for Amounts Covered by Insurance. Notwithstanding the foregoing, the
Company shall not be obligated to indemnify the Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) which have been paid directly to Indemnitee by directors’ and officers’
liability insurance (“D&O Insurance”).
4. Partial Indemnification. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a proceeding but not entitled, however, to indemnification for all of the
total amount thereof, the Company shall nevertheless indemnify the Indemnitee for such total amount
except as to the portion thereof to which the Indemnitee is not entitled.
5. Mandatory Advancement of Expenses. Subject to Section 8 below, the Company shall
advance all expenses incurred by the Indemnitee in connection with the investigation, defense,
settlement or appeal of any proceeding to which the Indemnitee is a party or is threatened to be
made a party by reason of the fact that the Indemnitee is or was an agent of the Company or by
reason of anything done or not done by him in any such capacity. Indemnitee hereby undertakes to
repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that
the Indemnitee is not entitled to be indemnified by the Company under the provisions of this
Agreement, the Certificate of Incorporation or Bylaws of the Company, the Business Corporation Law
of the State of New York or otherwise. The advances to be made hereunder shall be paid by the
Company to the Indemnitee within forty-five (45) days following delivery of a written request
therefor by the Indemnitee to the Company. Notwithstanding the foregoing provisions of this
Section 5, the Company shall not be obligated to advance any expenses to Indemnitee arising from a
lawsuit filed by the Company against the Indemnitee if a determination is reasonably made in good
faith, within forty-five (45) days of Indemnitee’s request to be advanced expenses, by the Board of
Directors by a majority vote of a quorum consisting of directors who are not parties to the
proceeding (or, if no such quorum exists, by independent legal counsel in a written opinion) that
the facts known to the decision making party at the time such determination is made demonstrate
clearly and convincingly that
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such person acted in bad faith or in a manner that such person did not believe to be in, or
not opposed to, the best interests of the Company. If the Board of Directors makes such a
determination, Indemnitee may have such decision reviewed by another forum, in the manner set forth
in Sections 7.3, 7.4 and 7.5 hereof, and the burden of proof shall be on the Company to demonstrate
that, based on the facts known at the time, the Indemnitee acted in a manner set forth in the
previous sentence.
6. Notice and Other Indemnification Procedures.
6.1 Promptly after receipt by the Indemnitee of notice of the commencement of or the threat of
commencement of any proceeding, the Indemnitee shall, if the Indemnitee believes that
indemnification with respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat of commencement thereof.
6.2 If, at the time of the receipt of a notice of the commencement of a proceeding pursuant to
Section 6.1 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice
of the commencement of such proceeding to the insurers in accordance with the procedures set forth
in the respective policies. The Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.
6.3 In the event the Company shall be obligated to advance the expenses for any proceeding
against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of
such proceeding, with counsel approved by the Indemnitee, upon the delivery to the Indemnitee of
written notice of its election to do so. After delivery of such notice, approval of such counsel
by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable
to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the
Indemnitee with respect to the same proceeding, provided that (a) the Indemnitee shall have the
right to employ his own counsel in any such proceeding at the Indemnitee’s expense; (b) the
Indemnitee shall have the right to employ his own counsel in connection with any such proceeding,
at the expense of the Company, if such counsel serves in a review, observer, advice and counseling
capacity and does not otherwise materially control or participate in the defense of such
proceeding; and (c) if (i) the employment of counsel by the Indemnitee has been previously
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the Indemnitee in the conduct of any such defense or
(iii) the Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the
Company.
7. Determination of Right to Indemnification.
7.1 To the extent the Indemnitee has been successful on the merits or otherwise in defense of
any proceeding referred to in Section 3.1 or 3.2 of this Agreement or in the defense of any claim,
issue or matter described therein, the Company shall indemnify the
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Indemnitee against expenses actually and reasonably incurred by him in connection with the
investigation, defense or appeal of such proceeding,
7.2 In the event that Section 7.1 is inapplicable, the Company shall nonetheless indemnify the
Indemnitee unless the Company shall prove by clear and convincing evidence to a forum listed in
Section 7.3 below that the Indemnitee has not met the applicable standard of conduct required to
entitle the Indemnitee to such indemnification.
7.3 The Indemnitee shall be entitled to select the forum in which the validity of the
Company’s claim under Section 7.2 hereof that the Indemnitee is not entitled to indemnification
will be heard from among the following:
(a) A quorum of the Board consisting of directors who are not parties to the proceeding for
which indemnification is being sought;
(b) The stockholders of the Company;
(c) Legal counsel selected by the Indemnitee, and reasonably approved by the Board, which
counsel shall make such determination in a written opinion; or
(d) A panel of three arbitrators, one of whom is selected by the Company, another of whom is
selected by the Indemnitee and the last of whom is selected by the first two arbitrators so
selected.
7.4 As soon as practicable, and in no event later than 30 days after written notice of the
Indemnitee’s choice of forum pursuant to Section 7.3 above, the Company shall, at its own expense,
submit to the selected forum in such manner as the Indemnitee or the Indemnitee’s counsel may
reasonably request, its claim that the Indemnitee is not entitled to indemnification; and the
Company shall act in the utmost good faith to assure the Indemnitee a complete opportunity to
defend against such claim.
7.5 If the forum listed in Section 7.3 hereof selected by Indemnitee determines that
Indemnitee is entitled to indemnification with respect to a specific proceeding, such determination
shall be final and binding on the Company. If the forum listed in Section 7.3 hereof selected by
Indemnitee determines that Indemnitee is entitled to indemnification with respect to a specific
proceeding, the Indemnitee shall have the right to apply to the court in which that proceeding is
or was pending or any other court of competent jurisdiction, for the purpose of enforcing the
Indemnitee’s right to indemnification pursuant to the Agreement.
7.6 Notwithstanding any other provision in this Agreement to the contrary, the Company shall
indemnify the Indemnitee against all expenses incurred by the Indemnitee in connection with any
hearing or proceeding under this Section 7 involving the Indemnitee and against all expenses
incurred by the Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the Indemnitee under this
Agreement unless a court of competent jurisdiction finds that each of the material claims and/or
defenses of the Indemnitee in any such proceeding was frivolous or not made in good faith.
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8. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:
8.1 Claims Initiated by Indemnitee. To indemnify or advance expenses to the
Indemnitee with respect to proceedings or claims initiated or brought voluntarily by the Indemnitee
and not by way of defense, except with respect to proceedings specifically authorized by the Board
of Directors or brought to establish or enforce a right to indemnification under this Agreement,
the Bylaws or charter documents of the Company or any subsidiary, or any statute or law or
otherwise as required under Section 722, but such indemnification or advancement of expenses may be
provided by the Company in specific cases if the Board of Directors finds it to be appropriate; or
8.2 Unauthorized Settlements. To indemnify the Indemnitee hereunder for any amounts
paid in settlement of a proceeding unless the Company consents in advance in writing to such
settlement; or
8.3 Unlawful Indemnification. To indemnify the Indemnitee if a final decision by a
court having jurisdiction in the matter shall determine that such indemnification is not lawful.
In this respect, the Company and the Indemnitee have been advised that the Securities and Exchange
Commission takes the position that indemnification for liabilities arising under the federal
securities law is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication.
9. Non-exclusivity. The provisions for indemnification and advancement of expenses
set forth in this Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote
of the Company’s stockholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while occupying his position
as an agent of the Company, and the Indemnitee’s rights hereunder shall continue after the
Indemnitee has ceased acting as an agent of the Company and shall inure to the benefit of the
heirs, executors and administrators of the Indemnitee.
10. General Provisions
10.1 Interpretation of Agreement. It is understood that the parties hereto intend
this Agreement to be interpreted and enforced so as to provide indemnification to the Indemnitee to
the fullest extent now or hereafter permitted by law, except as expressly limited herein.
10.2 Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, (a) the validity, legality and
enforceability of the remaining provisions of the Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby, and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that are not
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themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unenforceable and to give effect to
Section 10.1 hereof
10.3 Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
10.4 Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all documents required and shall do all acts that may be necessary or desirable to secure
such rights and to enable the Company effectively to bring suit to enforce such rights.
10.5 Counterparts. This Agreement may be executed in one or more counterparts, which
shall together constitute one agreement.
10.6 Successors and Assigns. The terms of this Agreement shall bind, and shall inure
to the benefit of, the successors and assigns of the parties hereto.
10.7 Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (a) if delivered by hand and receipted
for by the party addressee or (b) if mailed by certified or registered mail with postage prepaid,
on the third business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement, or as subsequently modified by written notice.
10.8 Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of New York, as applied to contracts between New York residents
entered into and to be performed entirely within New York
10.9 Consent to Jurisdiction. The Company and the Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of New York for all purposes in connection
with any action or proceeding which arises out of or relates to this Agreement.
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The parties hereto have entered into this Indemnity Agreement effective as of the date first
written above.
| ALLIED HEALTHCARE INTERNATIONAL INC. | ||||||
| By: | ||||||
| Title: | ||||||
| ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | ||||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||||
| INDEMNITEE | ||||||
| Name: | ||||||
| Address: | ||||||
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