1
EXHIBIT 10.22
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of the ____ day of ________, 20__, between
Allied Healthcare Products, Inc., a Delaware corporation (the "Company"), and
_____________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the risk of
litigation and other claims being asserted against directors and officers of
public companies; and
WHEREAS, the Bylaws of the Company require the Company to indemnify and
advance expenses to its directors and officers to the fullest extent now or
hereafter authorized or permitted by law and authorize the Company to enter into
agreements providing for such indemnification and advancement of expenses; and
WHEREAS, in recognition of the fact that the Indemnitee agrees to serve
as director or officer of the Company, in part in reliance on the aforesaid
Bylaws, and of the fact of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued service to the
Company in an effective manner, and in part to provide Indemnitee with specific
contractual assurance that the protection promised by such Bylaws will be
available to Indemnitee (regardless of, among other things, any amendment to or
revocation of such Bylaws or any change in the composition of the Company's
Board of Directors or acquisition transaction relating to the Company), the
Company wishes to provide in this Agreement for the indemnification of, and the
advancing of expenses, to Indemnitee to the fullest extent (whether partial or
complete) now or hereafter authorized or permitted by law and as set forth in
this Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, another enterprise,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Approved Law Firm shall mean any law firm (i)
located in St. Louis, (ii) having 25 or more
attorneys, (iii) rated "av" by ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
Law Directory and (iv) recognized as having a
significant corporate law practice representing
publicly-owned corporations; provided, however, that
such law firm shall not, for a five-year period
prior to the Indemnifiable Event, have been engaged
by the Company, an Acquiring Person or the
Indemnitee.
2
(b) Board of Directors shall mean the Board of Directors
of the Company.
(c) Change in Control shall be deemed to have occurred
if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended [the "Act"]), other than a
trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a
corporation owned directly or indirectly by the
stockholders of the Company in substantially the
same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as
defined in rule 13d-3 under the Act), directly or
indirectly, of securities of the Company
representing 30% or more of the total voting power
represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two
consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of
the Company and any new director whose election by
the Board of Directors or nomination for election by
the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then
still in office who either were directors at the
beginning of the period or whose election or
nomination for election was previously so approved,
cease for any reason to constitute a majority
thereof, or (iii) the stockholders of the Company
approve a merger or consolidation of the Company
with any other corporation, other than a merger or
consolidation which would result in the Voting
Securities of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
Voting Securities of the surviving entity) at least
80% of the total voting power represented by the
Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of
the Company or an agreement for the sale or
disposition by the Company of (in one transaction or
a series of transactions) all or substantially all
of the Company's assets.
(d) Claim shall mean any threatened, pending or
completed action, suit or proceeding, or any inquiry
or investigation, whether instituted by the Company
or any other party, that Indemnitee in good faith
believes might lead to the institution of any such
action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses shall include attorneys' fees and all other
costs, expenses and obligations paid or incurred in
connection with investigating, defending obligations
paid or incurred in connection with investigating,
defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to
any indemnifiable Event, together with interest,
computed at the Company's average cost of funds for
short-term borrowings, accrued from the date of
2
3
payment of such expense to the date Indemnitee
received reimbursement therefor.
(f) Indemnitee shall include, in addition to the
Indemnitee named herein, such person's personal or
legal representatives, executors, administrators,
successors, heirs, distributees, devisees and
legatees. If Indemnitee should die while any amounts
would still be payable to Indemnitee hereunder if
Indemnitee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to
Indemnitee's devisee, legatee or other designee or,
if there be no such designee, to Indemnitee's
estate.
(g) Indemnifiable Event shall mean any event or
occurrence related to the fact that Indemnitee is or
was a director or officer of the Company, or is or
was serving at the request of the Company as a
director, officer, employee, trustee, agent or
fiduciary of another corporation of any type or
kind, domestic or foreign, partnership, joint
venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not
done by Indemnitee in any such capacity. Without
limitation of any indemnification provided
hereunder, an Indemnitee serving (i) another
corporation, partnership, joint venture or trust of
which 20 percent or more of the voting power or
residual economic interest is held, directly or
indirectly, by the Company, or (ii) any employee
benefit plan of the Company or any entity referred
to in clause (i), in any capacity, shall be deemed
to be doing so at the request of the Company.
(h) Potential Change in Control shall be deemed to have
occurred if after the date of this Agreement (i) the
Company enters into an agreement, the consummation
of which would result in the occurrence of a Change
in Control; (ii) any person (including the Company)
publicly announces an intention to take or to
consider taking actions which if consummated would
constitute a Change in Control; (iii) any person,
other than a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their
ownership of stock of the Company, who is or becomes
the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more
of the combined voting power of the Company's then
outstanding Voting Securities, increases his
beneficial ownership of such securities by five
percentage points or more over the percentage so
owned by such person; or (iv) the Board of Directors
adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has
occurred.
(i) Reviewing Party shall be (i) the Board of Directors
acting by a majority vote of a quorum consisting of
directors who are not parties to the
3
4
particular Claim with respect to which Indemnitee is
seeking indemnification, or (ii) if such a quorum is
not obtainable or, even if obtainable, if a quorum
of disinterested directors so directs, (A) an
Approved Law Firm or (B) the stockholders.
(j) Voting Securities shall mean any securities of the
Company which vote generally in the election of
directors.
2. Basic Indemnification Arrangement. If the Indemnitee was, is or
becomes at any time a party to or a witness or other participant in, or is
threatened to be made a party to or witness or other participant in, a Claim by
reason of (or arising in part out of) an indemnifiable Event, the Company shall
indemnify Indemnitee to the fullest extent now or hereafter authorized or
permitted by law as soon as practicable but in any event no later than 30 days
after written demand is presented to the Company, against any and all Expenses,
judgments, fines (including excise taxes assessed against an Indemnitee with
respect to an employee benefit plan), penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Claim; provided that such indemnification
shall not apply to any Claim if a judgment or other final adjudication adverse
to the Indemnitee establishes that his acts were committed in bad faith, or were
the result of active and deliberate dishonesty, or the Indemnitee personally
gained in fact a financial profit or other advantage to which he was not legally
entitled. If so requested by Indemnitee, the Company shall advance (within two
business days of such request) any and all Expenses to Indemnitee (an "Expense
Advance"). Notwithstanding anything in this Agreement to the contrary, prior to
a Change in Control Indemnitee shall not be entitled to indemnification pursuant
to this Agreement in connection with any Claim initiated by Indemnitee unless
the Board of Directors has authorized or consented to the initiation of such
Claim.
3. Payment. Notwithstanding the provisions of Section 2, the
obligations of the Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which the Indemnitee may be entitled
under Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL")) shall be subject to the condition that the Reviewing Party shall have
authorized such indemnification in the specific case (in a written opinion in
any case in which the special, independent counsel referred to in Section 4
hereof is involved or in an appropriate resolution in any case in which the
stockholders are involved) by having determined that the Indemnitee is permitted
to be indemnified under the applicable standard of conduct set forth in the
DGCL. The Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate a prompt
determination by the Reviewing Party with respect to the Claim. Indemnitee shall
be afforded the opportunity to make submissions to the Reviewing Party with
respect to the Claim. The obligation of the Company to make an Expense Advance
pursuant to Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the
full extent required by the DGCL to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to
4
5
secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or lapsed). If there
has been no determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. The Company agrees
that any litigation permitted under the preceding sentence may be brought in any
court having general jurisdiction and in which venue is proper in the State of
Delaware or in any such court in the State of Missouri in which the Indemnitee
is resident or in which the Company maintains facilities, since, notwithstanding
provisions relating to jurisdiction under Section 145 of the DGCL, jurisdiction
to resolve indemnification under this Agreement is not reserved to Delaware
courts. Any determination by the Reviewing Party otherwise shall be conclusive
and binding on the Company and Indemnitee.
4. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of the commencement of any action, suit, proceeding,
inquiry or investigation, Indemnitee will, if a Claim in respect thereof is to
be made against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission to notify the Company will not relieve it
from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such Claim as to which Indemnitee notifies the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, to the extent that it may
wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election so to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any legal or other
Expenses subsequently incurred by Indemnitee in connection with the
defense thereof other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ its
counsel in matters giving rise to such Claim, but the fees and expenses
of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Indemnitee
unless (i) the employment of counsel by Indemnitee has been authorized
by the Company, (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and the
Indemnitee in the conduct of the defense of matters giving rise to such
Claim or (iii) the Company shall not in fact have employed counsel to
assume the defense of action, suit, proceeding, inquiry or
investigation, in each of which cases the fees and expenses of counsel
for the Indemnitee shall be at the expense of the Company. The Company
shall
5
6
not be entitled to assume the defense of any action, suit, proceeding,
inquiry or investigation brought by or on behalf of the Company, or as
to which Indemnitee shall have made the conclusion provided in (ii)
above; and
(c) The Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any Action
effected without its written consent. The Company shall not settle any
Action in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither the Company
nor Indemnitee will unreasonably withhold their consent to any proposed
settlement.
5. Continuation of Indemnity. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director or officer of the Company (or is or was serving at the request of the
Company as a director, officer, employee, trustee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) and shall continue thereafter so long as Indemnitee shall be subject
to any possible claim or threatened, pending or completed action, whether civil,
criminal or investigative, by reason of the fact that Indemnitee was a director
of the Company or serving in any other capacity referred to herein.
6. Change in Control. If there is a Change in Control of the Company
(other than a Change in Control which has been approved by a majority of the
Company's Board of Directors who were directors immediately prior to such Change
in Control) then (i) all determinations by the Company pursuant to the first
sentence of Section 3 hereof and Section 145 of the DCGL shall be made pursuant
to subparagraph (d)(1) or (d)(2) of Section 145 and (ii) with respect to all
matters thereafter arising concerning the rights of Indemnitee to indemnity
payments and Expense Advances under this Agreement or any other agreement or
Company Bylaws now or hereafter in effect relating to Claims for Indemnifiable
Events (including, but not limited to, any opinion to be rendered pursuant to
subparagraph (d)(2) of Section 145 of the DCGL), the Company (including the
Board of Directors) shall seek legal advice from (and only from) special,
independent counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the Company) or an
Acquiring Person (or any affiliate or associate of such Acquiring Person) or
Indemnitee within the last five years (other than in connection with such
matters). Unless Indemnitee has theretofore selected counsel pursuant to this
Section 6 and such counsel has been approved by the Company, any Approved Law
Firm selected by Indemnitee shall be deemed to be approved by the Company. Such
counsel, among other things, shall render its written opinion to the Company,
the Board of Directors and Indemnitee as to whether and to what the extent the
Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the special, independent counsel
referred to above and to indemnify fully such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto. As used
in this Agreement, the terms "affiliate" and "associate" shall have the
respective meanings ascribed to such terms in rule 12b-2 of the General Rules
and Regulations under the Act and in effect on the date of this Agreement.
6
7
7. Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a trust
for the benefit of Indemnitee and from time to time upon written request of
Indemnitee shall fund such trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any Claim relating
to an Indemnifiable Event, and any and all judgments, fines, penalties and
settlement amounts of any and all Claims relating to an Indemnifiable Event from
time to time actually paid or claimed, reasonably anticipated or proposed to be
paid. The amount or amounts to be deposited in the trust pursuant to the
foregoing funding obligation shall be determined by the Reviewing Party, in any
case in which the special, independent counsel referred to above is involved.
The terms of the trust shall provide that upon a Change in Control (i) the trust
shall not be revoked or the principal thereof invaded, without the written
consent of the Indemnitee, (ii) the trustee shall advance, within two business
days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and
the Indemnitee hereby agrees to reimburse the trust under the circumstances
under which the Indemnitee would be required to reimburse the Company under
Section 3 hereof), (iii) the trust shall continue to be funded by the Company in
accordance with the funding obligation set forth above, (iv) the trustee shall
promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise, and (v) all unexpended
funds in such trust shall revert to the Company upon a final determination by
the Reviewing Party or a court of competent jurisdiction, as the case may be,
that Indemnitee has been fully indemnified under the terms of this Agreement.
The trustee shall be institutional trustee with a highly regarded, national
reputation chosen by Indemnitee. Nothing in this Section 7 shall relieve the
Company of any of its obligations under this Agreement.
8. Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or Company Bylaw now or hereafter in effect
relating to Claims for Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
9. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified, to the extent
permitted by law, against all Expenses incurred in connection with such
Indemnifiable Event.
7
8
10. Burden of Proof. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
11. No Presumptions. For purposes of this Agreement, the termination of
any claim, action, suit or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or conviction, or
upon a plea of nolo contendere, or its equivalent, shall not crate a presumption
that Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law.
12. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company's
Bylaws or the DCGL or otherwise. To the extent that a change in the DCGL
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such change.
13. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
director or officer of the Company.
14. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company or any
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two-year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
cause of action such shorter period shall govern.
15. Amendments, Etc. 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 effective
unless in writing and no written waiver shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar nor shall such
waiver constitute a continuing waiver).
16. 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 papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
17. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the
8
9
extent Indemnitee has otherwise actually received payment (under any insurance
policy, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder. To
the extent that Indemnitee is entitled to indemnification in respect of a Claim
from another party, the Indemnitee shall assign such right to the Company.
18. Specific Performance. The parties recognize that if any provision
of this Agreement is violated by the Company, Indemnitee may be without an
adequate remedy at law. Accordingly, in the event of any such violation, the
Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings,
either in law or at equity, to obtain damages, to enforce specific performance,
to enjoin such violation, or to obtain any relief or any combination of the
foregoing as Indemnitee may elect to pursue.
19. Binding, Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, assigns, spouses, heirs, executors, and personal
and legal representatives.
20. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable in any respect, and
the validity and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law.
21. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Missouri applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement this 6th day of November, 2000.
ALLIED HEALTHCARE PRODUCTS, INC.
INDEMNITEE: By: __________________________________
Name: ________________________________
________________________________ Title: _______________________________
9