EXHIBIT 10.22
INDEMNITY AGREEMENT
This Indemnity Agreement (the
“Agreement”), dated as of
, is made by and between Abaxis, Inc., a California corporation
(the “Company”), and
(the “Indemnitee”).
Recitals
A. The Company is aware that
competent and experienced persons are increasingly reluctant to
serve as directors, officers or agents of corporations unless they
are protected by comprehensive liability insurance 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, officers and
other agents.
B. The statutes and judicial
decisions regarding the duties of directors and officers are often
difficult to apply, ambiguous, or conflicting, and therefore fail
to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or
information regarding the proper course of action to take.
C. Plaintiffs often seek damages
in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense
and/or settlement of such litigation is often beyond the personal
resources of directors, officers and other agents.
D. The Company believes that it
is unfair for its directors, officers and agents and the directors,
officers and agents of its subsidiaries to assume the risk of huge
judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases
where the director, officer or agent was not culpable.
E. The Company recognizes that
the issues in controversy in litigation against a director, officer
or agent of a corporation such as the Company or its subsidiaries
are often related to the knowledge, motives and intent of such
director, officer or agent, that he is usually the only witness
with knowledge of the essential facts and exculpating circumstances
regarding such matters, and that the long period of time which
usually elapses before the trial or other disposition of such
litigation often extends beyond the time that the director, officer
or agent can reasonably recall such matters; and may extend beyond
the normal time for retirement for such director, officer or agent
with the result that he, after retirement, or, in the event of his
death, his spouse, heirs, executors or administrators may be faced
with limited ability and undue hardship in maintaining an adequate
defense, which may discourage such a director, officer or agent
from serving in that position.
1.
F. 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 directors,
officers and agents of the Company and its subsidiaries and to
encourage such individuals to take the business risks necessary for
the success of the Company and its subsidiaries, it is necessary
for the Company to contractually indemnify its directors, officers
and agents and the directors, officers and agents of its
subsidiaries, and to assume for itself maximum liability for
expenses and damages in connection with claims against such
directors, officers and agents in connection with their service to
the Company and its subsidiaries, and has further concluded that
the failure to provide such contractual indemnification could
result in great harm to the Company and its subsidiaries and the
Company’s shareholders.
G. Sections 204 and 317 of
The California General Corporation Law, as amended (the
“Code”), under which the Company is organized, empower
the Company to adopt provisions in its Articles of Incorporation to
indemnify its directors, officers and other agents by Bylaw
provision, agreement or otherwise and to indemnify persons who
serve, at the request of the Company, as the directors, officers or
agents of other corporations or enterprises. Sections 204 and
317(g) of the Code provide that the indemnification permitted by
Section 317 of the Code is not exclusive.
H. The Company, after reasonable
investigation prior to the date hereof, has determined that the
liability insurance coverage available to the Company and its
subsidiaries as of the date hereof is inadequate and/or
unreasonably expensive. The Company believes, therefore, that the
interests of the Company’s shareholders would best be served
by a combination of such insurance as the Company may obtain, or
request a subsidiary to obtain, pursuant to the Company’s
obligations hereunder and the indemnification by the Company of the
directors, officers and agents of the Company and its
subsidiaries.
I. The Company desires and has
requested the Indemnitee to serve or continue to serve as a
director, officer or agent of the Company and/or one or more
subsidiaries of the Company free from undue concern for claims for
damages arising out of or related to such services to the Company
and/or one or more subsidiaries of the Company.
J. The Indemnitee is willing to
serve, or to continue to serve, the Company and/or one or more
subsidiaries of the Company, provided that he is furnished the
indemnity provided for herein.
2.
Agreement
NOW, THEREFORE, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions .
(a)
Agent . For the purposes of this Agreement,
“agent” of the Company means any person who is or was a
director, officer, employee or other agent 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 interests of the
Company or a subsidiary of the Company as a director, officer,
employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other domestic corporation
which was a predecessor corporation of the Company or a subsidiary
of the Company, or was a director, officer, employee or agent of
another enterprise at the request of, for the convenience of, or to
represent the interests of such predecessor corporation.
(b)
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, other
out-of-pocket costs and reasonable compensation for time spent by
the Indemnitee for which he is not otherwise compensated by the
Company or any third party) 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 or Section 317 of the
Code, or settling or otherwise disposing of a pending action
provided court approval is obtained.
(c)
Liabilities . For purposes of this Agreement,
“liabilities” include all judgments, fines, ERISA
excise taxes and penalties and amounts paid in settlement.
(d)
Proceeding . For purposes of this Agreement,
“proceeding” means any threatened, pending, or
completed action, suit or other proceeding, whether civil,
criminal, administrative, or investigative.
(e)
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 its will (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as
an agent of the Company, so long as he is duly appointed or elected
and qualified in accordance with the applicable provisions of the
Bylaws of the Company or any subsidiary of the Company or until
such time as he tenders his resignation in writing; provided,
however, that nothing contained in this Agreement is intended to
create any right to continued employment by Indemnitee.
3.
3. Liability Insurance
.
(a)
Maintenance of D&O Insurance . The Company hereby
covenants and agrees that, so long as the Indemnitee shall continue
to serve as an agent of the Company and thereafter so long as the
Indemnitee shall be subject to any possible proceeding by reason of
the fact that the Indemnitee was an agent of the Company, the
Company, subject to Section 3(c), shall promptly obtain and
maintain in full force and effect directors’ and
officers’ liability insurance (“D&O
Insurance”) in reasonable amounts from established and
reputable insurers.
(b)
Rights and Benefits . In all policies of D&O Insurance,
the Indemnitee shall be named as an insured in such a manner as to
provide the Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company’s directors, if
the Indemnitee is a director; or of the Company’s officers,
if the Indemnitee is not a director of the Company but is an
officer; or of the Company’s key employees, if the Indemnitee
is not a director or officer but is a key employee.
(c)
Limitation on Required Maintenance of D&O Insurance .
Notwithstanding the foregoing, the Company shall have no obligation
to obtain or maintain D&O Insurance if the Company determines
in good faith that such insurance is not reasonably available, the
premium costs for such insurance are disproportionate to the amount
of coverage provided, the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or
the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company.
4. Mandatory
Indemnification . Subject to Sections 4(d) and 9 below, the
Company shall indemnify the Indemnitee as follows:
(a)
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 such capacity, the C
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