8-K

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 27, 2009

ALLIED HEALTHCARE PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-19266	25-1370721
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1720 Sublette Avenue, St. Louis, Missouri  (Address of principal executive offices) 63110 (Zip Code)

Registrant’s telephone number, including area code 

(314) 771-2400

Not applicable 

(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:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(a) Adoption of 2009 Incentive Stock Plan by the Board of Directors (subject to stockholder approval)

On August 27, 2009 the board of directors (the “Board”) of Allied Healthcare Products, Inc. (the “Company”) approved a 2009 Incentive Stock Plan (the “2009 ISP”) subject to approval by the stockholders of the Company at the 2009 annual meeting of the Company’s stockholders.  The 2009 ISP is intended to replace the Company’s 1999 Incentive Stock Plan, under which no awards could be granted after June 30, 2009.  If the Company’s stockholders do not approve the 2009 ISP at such meeting, the 2009 ISP, and any incentives granted thereunder, will be null, void and of no legal force or effect.

The purpose of the 2009 ISP is to (i) stimulate employees’ efforts on the Company’s behalf, (ii) maintain and strengthen employees’ desire to remain with the Company, (iii) encourage employees to have a greater personal financial investment in the Company through ownership of the Company’s common stock, and (iv) aid the Company in recruiting and retaining qualified executive employees.  The 2009 ISP provides for the issuance of up to an aggregate of six hundred thousand (600,000) shares of the Company’s common stock (subject to adjustment in the event of stock splits, stock dividends, merger, consolidation or other similar events) as non-qualified stock options, incentive stock options, restricted stock, restricted stock units, stock appreciation rights and other stock-based awards.  No award may be made under the 2009 ISP after August 27, 2019, but awards granted prior theretofore may extend beyond that date.  Each award granted under the 2009 ISP is not transferable other than by will or the laws of descent and distribution, and with respect to stock options, shall be exercisable, during the grantee’s lifetime, only by the grantee or the grantee’s guardian or legal representative.

As provided in the 2009 ISP, all power to administer the 2009 ISP and grant awards thereunder was delegated to the Compensation Committee of the Board of the Company (the “Committee”).  Subject to any applicable limitations contained in the 2009 ISP, the Committee shall select recipients of awards under the 2009 ISP and determine, among other things: (i) the number of shares of common stock covered by the options, (ii) the date upon which such options shall vest and become exercisable, (iii) the exercise price of options (which shall be determined by the Committee in a manner that shall not subject the Company, grantee or the compensation at issue to any tax, interest or penalties under Section 409A of the United States Internal Revenue Code of 1986, as amended from time to time and any Department of Treasury rules and regulations issued thereunder), (iv) the duration of options and (v) the number of shares of common stock subject to any stock appreciation rights, restricted stock award, restricted stock unit award or other stock-based award.  Such terms and any other conditions or restrictions of any award granted under the 2009 ISP shall be expressly set forth in the applicable grant document between the Company and the recipient thereof.

The Committee may discontinue the 2009 ISP at any time and may from time to time amend or revise the terms of the 2009 ISP subject to applicable statutes and the requirements of the Nasdaq Stock Market, except that the Committee may not revoke or alter, in a manner unfavorable to the grantees of any awards thereunder, any awards then outstanding.  In addition, the Committee may not amend the 2009 ISP without stockholder approval if the effect of such amendment or absence of such stockholder approval would cause the 2009 ISP to fail to comply with Rule 16b-3 under the Exchange Act, any other requirement of applicable law or regulation or requirement of the Nasdaq Stock Market.

A copy of the 2009 ISP is filed as Exhibit 99.1 to this Form 8-K, which is incorporated herein by this reference, and the summary set forth herein is qualified in its entirety by reference to the 2009 ISP.

(b) Grant of Option to Earl Refsland (subject to stockholder approval)

On August 27, 2009, the Committee approved a Nonqualified Stock Option Agreement pursuant to the 2009 ISP (the “Grant Agreement”) by and between the Company and Earl Refsland, the Company’s President and Chief Executive Officer (“Refsland”).  The Grant Agreement remains subject to approval of the 2009 ISP by the stockholders of the Company at the 2009 annual meeting of the Company’s stockholders.  In the event that the Company’s stockholders do not approve the 2009 ISP at such meeting, then the Grant Agreement shall automatically and immediately become null and void and Refsland will not be entitled to receive any shares pursuant to the Grant Agreement.

Subject to stockholder approval as described above, the Grant Agreement awards Refsland the option to purchase under the 2009 ISP for an aggregate of up to three hundred twenty thousand (320,000) shares of the Company’s common stock.  The option is fully-vested, subject to shareholder approval as described above, and shall expire on August 27, 2015 (to the extent not exercised) unless otherwise earlier terminated pursuant to the terms of the Grant Agreement or the 2009 ISP.  In the event that Refsland elects to exercise less than all of the stock option granted pursuant to the Grant Agreement in accordance with the terms and conditions set forth therein, any remaining portion of such stock option shall remain vested and exercisable until August 27, 2015, subject to the terms and conditions of the Grant Agreement and the 2009 ISP.

The exercise price of the option is $4.25 per share of the Company’s common stock, which is equal to the closing price of the Company’s common stock on the Nasdaq stock market on the date immediately prior to the grant date.

A copy of the Grant Agreement is filed as Exhibit 99.2 to this Form 8-K, which is incorporated herein by this reference, and the summary set forth herein is qualified in its entirety by reference to the Grant Agreement.

Item 9.01 Financial Statements and Exhibits.

(a)           Not applicable.

(b)           Not applicable.

(c)           Not applicable.

(d)           Exhibits.

Exhibit
Number	Description
99.1	Allied Healthcare Products, Inc. 2009 Incentive Stock Plan.
99.2	Nonqualified Stock Option Agreement by and between Allied Healthcare Products, Inc. and Earl Refsland.

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 thereunto duly authorized.

	ALLIED HEALTHCARE PRODUCTS, INC.
Date:  September 2, 2009	By:	/s/ Daniel C. Dunn
		Daniel C. Dunn
		Chief Financial Officer

EX-99.1

Exhibit 99.1

ALLIED HEALTHCARE PRODUCTS, INC.

2009 INCENTIVE STOCK PLAN

The 2009 Incentive Stock Plan (“ISP”) of Allied Healthcare Products, Inc. (the “Company”) is established to encourage eligible employees of the Company, and its subsidiaries to acquire Common Stock in the Company.  It is believed that the ISP will (i) stimulate employees’ efforts on the Company’s behalf, (ii) tend to maintain and strengthen their desire to remain with the Company, (iii) be in the interest of the Company and its Stockholders, (iv) encourage such employees to have a greater personal financial investment in the Company through ownership of its Common Stock, and (v) aid the Company in recruiting and retaining qualified executive employees.

1.           Administration

The Board of Directors of the Company (the “Board”) has delegated the power to administer the ISP and grant awards thereunder to the Compensation Committee of the Board (the “Committee”), which meets the independent requirements of the NASDAQ Stock Market and consists of two or more Non-Employee Directors as that term is defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The Committee is authorized, subject to the provisions of the ISP, to establish such rules and regulations as it deems necessary for the proper administration of the ISP, and to make such determinations and to take such action in connection therewith or in relation to the ISP as it deems necessary or advisable, consistent with the ISP.  Except as otherwise provided herein, the Committee may delegate some or all of its power and authority hereunder with respect to matters other than the grant of awards to the Chief Executive Officer of the Company or to such other senior member of management as the Committee deems appropriate; provided, however, that no such delegation shall be applicable with regard to any matter or action affecting an officer subject to Section 16 of the Exchange Act.

For the purpose of this section and all subsequent sections, the ISP shall be deemed to include this plan and any comparable sub-plans established by subsidiaries which, in the aggregate, shall constitute one plan governed by the terms set forth herein.

2.           Eligibility

Regular full-time employees of the Company and its subsidiaries, including officers, whether or not directors of the Company, shall be eligible to participate in the ISP (“Eligible Employees”) if designated by the Committee.  Directors who are not regular employees are not eligible.  It is intended that awards will be made principally to those employees who are key officers or management employees of the Company or a subsidiary thereof, including employees subject to Section 16 of the Exchange Act, and who are in a position to have significant impact or achievement of the Company’s long term objectives.

3.           Incentives

Incentives under the ISP may be granted in any one or a combination of (i) Nonqualified Stock Options; (ii) Reload or Stock Appreciation Right features in conjunction with such Nonqualified Options; (iii) Performance Share Awards; and (iv) Restricted Stock Grants (collectively “Incentives”) not qualifying for treatment as statutory incentive stock options.  All Incentives shall be subject to the terms and conditions set forth herein and to such other terms and conditions as may be established by the Committee.  Determinations by the Committee under the ISP including without limitation, determinations of the Eligible Employees, the form, amount and timing of Incentives, the terms and provisions of Incentives, and the agreements evidencing Incentives, need not be uniform and may be made selectively among Eligible Employees who receive, or are eligible to receive, Incentives hereunder, whether or not such Eligible Employees are similarly situated.

4.           Shares Available for Incentives

(i)           Shares Subject to Issuance or Transfer.  There is hereby reserved for issuance under the ISP an aggregate of Six Hundred Thousand (600,000) shares of the Company’s Common Stock (“Common Stock”).

In the event of a lapse, expiration, termination or cancellation of any Incentive granted under the ISP without the issuance of shares or payment of cash, or if shares are issued under a Restricted Stock Grant hereunder and are reacquired by the Company pursuant to rights reserved upon the issuance thereof, the shares subject to or reserved for such Incentive may again be used for new Incentives hereunder; provided, that in no event may the number of shares issued hereunder exceed the total number of shares reserved for issuance.

(ii)           Limitations on Individual Awards.  In any given year, no eligible employee may be granted Incentives covering more than ten percent (10%) of the number of fully-diluted shares of the Company’s Common Stock outstanding as of the first business day of the Company’s fiscal year.

(iii)           Recapitalization Adjustment.  In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of Common Stock of the Company, the Committee shall (to the extent that the grant or award does not already mandate adjustments) make a corresponding adjustment in the number and kind of shares authorized by the ISP, in the number and kind of shares covered by Incentives granted, and, in the case of Stock Options, in the Base Price (as defined below).

5.           Non-Qualified Stock Options

Non-Qualified Stock Options (“Stock Options”) shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe:

(i)           Option Price.  The option price per share with respect to each Stock Option (the “Base Price”) shall be determined by the Committee in a manner that shall not subject the Company, grantee or the compensation at issue to any tax, interest or penalties under Section 409A of the United States Internal Revenue Code of 1986, as amended from time to time and any Department of Treasury rules and regulations issued thereunder.

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(ii)           Period of Option.  The duration of each Stock Option shall be fixed at the time of grant, except that no Stock Option granted shall be exercisable more than ten (10) years after the date so granted.

(iii)           Payment.  At the time the Stock Option is exercised, the Base Price shall be payable (as may be determined at the discretion of the Committee) in whole or in part by (a) cash, (b) cashier’s check, (c) consideration received by the Company through a cashless exercise procedure (i.e., the number of shares of Common Stock to be received will be equal to (I) the number of shares of Common Stock exercised by the grantee less (II) the number of shares of Common Stock (valued at their fair market value as of the close of business on the last trading date immediately prior to the exercise date) with a value equal to the aggregate Base Price to be paid for such Common Stock), (d) shares of the Company’s Common Stock already owned by the grantee (based on the fair market value of such Common Stock on the date the option is exercised) or (e) any such other manner as may be determined at the discretion of the Committee that shall not subject the Company, grantee or the compensation at issue to any tax, interest or penalties under Section 409A of the United States Internal Revenue Code of 1986, as amended from time to time and any Department of Treasury rules and regulations issued thereunder.  In addition to payment of the Base Price, the Company may, as determined by the Committee, either withhold from the grantee a number of shares of the Common Stock (valued at their fair market value as of the close of business on the last trading date immediately prior to the exercise date) with an aggregate value equal to, or condition the exercise of any Stock Option upon the grantee’s deposit with the Company of funds in the amount of, any federal or state income withholding tax arising from such exercise.  No shares shall be issued until withholding of or full payment therefor, including any associated taxes, has been made in accordance with the determination of the Committee.  A grantee of a Stock Option shall have none of the rights of a stockholder until the shares are issued.

(iv)           Exercise of Option.  The shares covered by a Stock Option may be purchased in such installments and on such exercise dates as may be provided and set forth in the grant or award.  In  the absence of any terms so provided, a Stock Option shall vest ratably over its term on an annual basis first becoming exercisable in part on the first anniversary of the date of grant and becoming exercisable in full on the anniversary of the date of grant next preceding the expiration date of the option.  Any shares not purchased on the applicable exercise date may be purchased thereafter at any time prior to the final expiration of the Stock Option.  In no event (including those specified in paragraphs (v), (vi) and (vii) of this Section 5 set forth below) shall any Stock Option be exercisable after its specified expiration period.

(v)           Forfeiture of Certain Option Benefits.  Unless otherwise provided in connection with the grant or award of a Stock Option, the Company shall have the right to repurchase shares of its Common Stock acquired upon exercise of a Stock Option at a price equal to the Base Price paid by the grantee in the event that the employee holding such shares shall, within six (6) months of terminating employment with the Company, commences employment which the Committee reasonably believes, in its discretion, to be competitive with the Company or in violation of any employment or other agreement between the Company and such employee, provided, however, that (a) such repurchase right shall only be applicable to shares acquired upon exercise of the Stock Option occurring on or after a date which is six (6) months prior to such grantee’s termination of employment with the Company and (b) such right of repurchase shall not be applicable with respect to shares of the Company’s Common Stock acquired upon exercise of a Stock Option if the termination of employment occurred at the election of the employee following a “change of control” of the Company pursuant to rights granted to such employee under a written employment agreement or in the terms of the option grant or award.

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(vi)           Other terms and conditions.  To the extent not specifically provided in this ISP, the Committee shall set forth, to the extent it deems appropriate in its sole discretion, vesting, expiration and such other terms, conditions and restrictions of any Stock Option granted under this ISP in an agreement or agreements between the Company and the recipient of the Stock Option.

(vii)           Reload Provisions.  Any Stock Option which by its terms includes provisions permitting the exercise of the option by means of an exchange of previously-owned shares of the Company’s Common Stock held by the optionee may also include so-called “reload provisions” resulting in the grant of a new option to the employee covering a number of shares of the Company’s Common Stock equal to the number of shares of stock surrendered to the Company in connection with such exchange exercise; having a price per share for such new option equal to the fair market value per share of the shares so surrendered as of the date of such surrender and expiring as of the later of five (5) years following the date of such exchange exercise or the date upon which the original option expires.  The rights under such “reload option” shall vest immediately but all terms of such option shall (other than price, number of shares and vesting) be consistent with the terms of the original option.

(viii)                      Tandem Stock Appreciation Right Provisions.  The Company may include with any Stock Option granted hereunder so-called tandem stock appreciation rights allowing the optionee to receive, in lieu of the exercise of such option, the value of the option as evidenced by the amount by which the fair market value exceeds the Base Price.  In connection with the grant of any such tandem stock appreciation rights, the option grant shall specify whether such right (if exercised) shall be payable in cash or in shares of the Company’s Common Stock or in a combination thereof.  Any such stock appreciation rights granted in tandem with a Stock Option (a) must be granted at the time of the grant of the associated Stock Option, (b) may be granted with respect to all or part of the stock under a particular Stock Option, (c) may be exercised only to the extent that the related Stock Option has not been exercised and (d) shall result in a pro rata surrender of the related Stock Option to the extent that such stock appreciation rights have been exercised.

6.           Performance Share Awards

The Company may, in its sole discretion, grant awards under which payment may be made in shares of Common Stock, cash or any combination of shares and cash if the performance of the Company or any subsidiary or division of the Company selected by the Committee during the Award Period meets certain goals established by the Committee (“Performance Share Awards”).  Such Performance Share Awards shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe:

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(i)           Award Period and Performance Goals.  The Company shall determine and include in a Performance Share Award grant the period of time for which a Performance Share Award is made (“Award Period”).  The Company shall also establish performance objectives (“Performance Goals”) to be met by the Company, subsidiary or division during the Award Period as a condition to payment of the Performance Share Award.  The Performance Goals may include earnings per share, return on stockholder equity, return on assets, net income, or any other financial or other measurement established by the Company.  The Performance Goals may include minimum and optimum objectives or a single set of objectives.

(ii)           Payment of Performance Share Awards.  The Company shall establish the method of calculating the amount of payment to be made under a Performance Share Award if the Performance Goals are met, including the fixing of a maximum-payment.  The Performance Share Award shall be expressed in terms of shares of Common Stock and referred to as “Performance Shares”.  After the completion of an Award Period, the performance of the Company, subsidiary or division shall be measured against the Performance Goals, and the Committee shall determine whether all, none or any portion of a Performance Share Award shall be paid.  The Committee, in its discretion, may elect to make payment in shares of Common Stock, cash or a combination of shares and cash.  Any cash payment shall be based on the fair market value of Performance Shares on, or as soon as practicable prior to, the date of payment.

(iii)           Revision of Performance Goals.  At any time prior to the end of an Award Period, the Committee may revise the Performance Goals and the computation of payment if unforeseen events occur which have a substantial effect on the performance of the Company, subsidiary or division and which in the judgment of the Committee make the application of the Performance Goals unfair unless a revision is made.

(iv)           Requirement of Employment.  A grantee of a Performance Share Award must remain in the employment of the Company until the completion of the Award Period in-order to be entitled to payment under the Performance Share Award; provided, that the Committee may, in its sole discretion, provide for a partial payment where such an exception is deemed equitable.

(v)           Dividends.  The Committee may, in its discretion, at the time of the granting of a Performance Share Award, provide that any dividends declared on the Common Stock during the Award Period, and which would have been paid with respect to Performance Shares had they been owned by a grantee, be (a) paid to the grantee, or (b) accumulated for the benefit of the grantee and used to increase the number of Performance Shares of the grantee.

(vi)           Other terms and conditions.  To the extent not specifically provided in this ISP, the Committee may set forth, to the extent it deems appropriate in its sole discretion, vesting, expiration and such other terms, conditions and restrictions of any Performance Share Award granted under this ISP in an agreement or agreements between the Company and the recipient of the Performance Share Award.

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7.           Restricted Stock Grants

The Committee may, in its sole discretion,  issue shares of Common Stock or awards of units representing shares of the Company’s Common Stock to a grantee which shares or units shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe (“Restricted Stock Grant”):

(i)           Requirement of Employment.  A grantee of a Restricted Stock Grant must remain in the employment of the Company during a period designated by the Committee (“Restriction Period”).  If the grantee leaves the employment of the Company prior to the end of the Restriction Period, the Restricted Stock Grant shall terminate and the shares of Common Stock or units representing shares of the Company’s Common Stock shall be returned immediately to the Company; provided, that the Committee may, at the time of the grant, provide for the employment restriction to lapse with respect to a portion or portions of the Restricted Stock Grant at different times during the Restriction Period.  The Committee may, in its discretion, also provide for such complete or partial exceptions to the employment restriction as it deems equitable.

(ii)           Restrictions on Transfer and Legend on Stock Certificates.  During the Restriction Period, the grantee may not sell, assign, transfer, pledge, or otherwise dispose of the shares of Common Stock or units representing shares of the Common Stock except to a successor under Section 9 hereof.  Each certificate for shares of Common Stock issued hereunder shall contain a legend giving appropriate notice of the restrictions in the grant.

(iii)           Stockholder Rights.  Beginning on the date of grant of the Restricted Stock award and subject to the execution of the award agreement by the recipient of the award and subject to the terms, conditions and restrictions of the award agreement, the Committee shall determine to what extent the recipient of the award has the rights of a stockholder of the Company including, but not limited to, whether the employee receiving the award has the right to vote the shares or to receive dividends or dividend equivalents.  Restricted Stock awarded with limited or no stockholder rights pending vesting or entitlement will not be represented by certificate and may be denominated as “units” which are converted into the Company’s Common Stock upon satisfaction of the conditions established in the award.

(iv)           Escrow Agreement.  The Company may require the grantee to enter into an escrow agreement providing that the certificates representing the Restricted Stock Grant will remain in the physical custody of an escrow holder until all restrictions are removed or expire.

(v)           Lapse of Restrictions.  All restrictions imposed under the Restricted Stock Grant shall lapse upon the expiration of the Restriction Period if the conditions as to employment set forth above have been met.  The grantee shall then be entitled to have the legend removed from the certificates.

(vi)           Dividends.  The Committee may, in its discretion, at the time of the Restricted Stock Grant, provide that any dividends declared on the Common Stock during the Restriction Period shall either be (a) paid to the grantee, or (b) accumulated for the benefit of the grantee and paid to the grantee only after the expiration of the Restriction Period.

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(vii)           Other terms and conditions.  To the extent not specifically provided in this ISP, the Committee may set forth, to the extent it deems appropriate in its sole discretion, vesting, expiration and such other terms, conditions and restrictions of any Restricted Stock Grant granted under this ISP in an agreement or agreements between Company and recipient of the Restricted Stock Grant.

8.           Stock Appreciation Rights

The Committee may, in its sole discretion, from time to time grant stand alone stock appreciation rights (“Stock Appreciation Rights”) allowing the grantee to receive, upon exercise thereof, value from the Company equivalent to the amount by which the fair market price per share of the Common Stock on the exercise date exceeds the Base Price times the number of stock appreciation rights exercised (“Share Equivalents”).  Such Stock Appreciation Rights shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe:

(i)           Award.  Stock Appreciation Rights may be granted (a) on a stand alone basis or (b) in tandem with any Stock Option granted under this Plan pursuant to Section 5(xi) above.  Stock Appreciation Rights granted on a stand alone basis shall specify the Base Price, the number of Share Equivalents, the dates upon which such Stock Appreciation Rights vest, and the date such Stock Appreciation Rights expire (which shall in no event be more than ten (10) years following the date of grant).  The Committee shall, at the time of making any stand alone award of Stock Appreciation Rights, determine whether the value represented on the exercise date shall be settled in cash or in shares of Common Stock or in any combination thereof.

(ii)           Terms and Conditions.  Stand alone Stock Appreciation Rights shall be subject to such terms and conditions which are not inconsistent with this ISP as shall from time to time be approved by the Committee and reflected in the applicable award agreement delivered to the grantee (or in a separate document, which shall be considered for purposes of the Plan to be incorporated into and part of any applicable award agreement), and to the following terms and conditions:

(a)           Stock Appreciation Rights issued on a stand alone basis shall expire on the later of (1) the date which such rights vest on a performance or period of service basis or (2) the expiration date determined by the Committee and set forth in the applicable award agreement delivered to the grantee; provided, however, that all Stock Appreciation Rights shall expire upon the termination of employment of the holder of such Stock Appreciation Rights and upon any such termination any vested rights shall be settled.

(b)           To the extent not specifically provided in this ISP, the Committee may set forth, to the extent it deems appropriate in its sole discretion, vesting, expiration and such other terms, conditions and restrictions of any Stock Appreciation Rights granted under this ISP in an agreement or agreements between the Company and the recipient of the Stock Appreciation Rights.

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9.           Discontinuance or Amendment of the Plan.

The Committee may discontinue the ISP at any time and may from time to time amend or revise the terms of the ISP subject to applicable statutes and the requirements of the NASDAQ Stock Market except that it may not revoke or alter, in a manner unfavorable to the grantees of any Incentives hereunder, any Incentives then outstanding, nor may the Committee amend the ISP without stockholder approval, if the effect of such amendment or absence of such stockholder approval would cause the Plan to fail to comply with Rule 16b-3 under the Exchange Act, any other requirement of applicable law or regulation or requirement of the NASDAQ Stock Market.  No incentive shall be granted under the ISP after August 27, 2019 but Incentives granted theretofore may extend beyond that date.

10.           Nontransferability

Each Incentive granted under the ISP shall not be transferable other than by will or the laws of descent and distribution, and with respect to Stock Options, shall be exercisable, during the grantee’s lifetime, only by the grantee or the grantee’s guardian or legal representative.

11.           No Right of Employment

ISP and the Incentives granted hereunder shall not confer upon any Eligible Employee the right to continued employment with the Company or affect in any way the right of the Company to terminate the employment of an Eligible Employee at any time and for any or no reason.

12.           Taxes

The Company shall be entitled to withhold the amount of any tax attributable to any amount payable or shares deliverable under the ISP after giving the person entitled to receive such amount or shares notice as far in advance as practicable and may condition delivery of certificates evidencing shares awarded or purchased under the ISP upon receipt of funds to effect such withholding.

13.           Listing and Registration of the Shares

Each option issued hereunder shall be subject to the requirement that if at any time the Company shall determine that the listing, registration or qualification of the shares subject to the option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue or purchase of shares thereunder, such option may not be exercised in whole or in part unless and until such listing, registration, qualification consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.  In the absence of any such registration or qualification the Company may place the following legend on the certificates representing any shares issued under this Plan:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED WITHOUT AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH TRANSFER MAY BE LAWFULLY EFFECTED IN THE ABSENCE OF SUCH REGISTRATION.”

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14.           Effective Date

The Plan shall be effective as of August 27, 2009.

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EX-99.2

Exhibit 99.2

NONQUALIFIED STOCK OPTION AGREEMENT

AWARDED UNDER

ALLIED HEALTHCARE PRODUCTS, INC.

 2009 INCENTIVE STOCK PLAN

THIS AGREEMENT (the “Agreement”) is made this 27th day of August, 2009, by and between Allied Healthcare Products, Inc., a Delaware corporation (“Company”), and Earl Refsland (“Optionee”).

RECITALS

A.           The Board of Directors of the Company (the “Board of Directors”) has adopted the Allied Healthcare Products, Inc. 2009 Incentive Stock Plan (the “Plan”) pursuant to which options covering an aggregate of Six Hundred Thousand (600,000) shares of the common stock of the Company, par value $0.01 per share (the “Common Stock”), may be granted to certain key employees of the Company.

B.           Subject to stockholder approval of the Plan as set forth below, the Company desires to grant to Optionee the option to purchase certain shares of the Common Stock under the terms of the Plan.

C.           Except as otherwise defined in this Agreement, all capitalized terms shall have the definitions set forth in the Plan.

NOW, THEREFORE, in consideration of the premises, and of the mutual agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, it is hereby covenanted and agreed as follows:

1.          Grant Subject to Stockholder Approval. This Agreement is conditioned upon approval of the Plan by the stockholders of the Company at the 2009 annual meeting of the Company’s stockholders.  Notwithstanding anything to the contrary set forth in this Agreement, in the event that the Plan is not approved by the stockholders of the Company at such meeting, this Agreement shall immediately and automatically, without any further action of the parties hereto, become null and void and be of no further legal force or effect.  Optionee acknowledges that he will not be entitled to receive any shares pursuant to this Agreement in the event that the stockholders of the Company do not approve the Plan at such meeting.

2.          Administration of Grant.  The option granted pursuant to this Agreement is made under and is expressly subject to, all terms and provisions of the Plan (which is hereby incorporated herein by reference), except as specifically set forth in this Agreement.  The Company’s Board of Directors of Company has delegated the power to administer the Plan and grant awards thereunder to the Committee referred to in Section 1 of the Plan (“Committee”).

3.         Grant and Terms of Option. Pursuant to action of the Committee, which action was taken on the date of this Agreement (“Date of Grant”), but subject to Section 1 of this Agreement, the Company hereby grants to Optionee the option to purchase all or any part of an aggregate of Three Hundred Twenty Thousand (320,000) shares of Common Stock, for a period of six (6) years from the date hereof (subject to earlier termination as provided in this Agreement), at the purchase price of Four and 25/100 Dollars ($4.25) per share (the “Base Price”), which is equal to the fair market value of the Common Stock based upon the closing price of the Common Stock on the date immediately prior to the date hereof.  Such grant is full-vested and exercisable (in whole or in part) as of the date hereof and shall expire on the sixth (6th) anniversary of the date hereof (to the extent not exercised) (the “Expiration Date”) unless otherwise earlier terminated pursuant to the terms of this Agreement or the Plan.  If the option granted pursuant to this Agreement or a portion thereof is exercised by the Optionee prior to the Expiration Date in accordance with the terms and conditions of this Agreement, the aggregate Base Price to be paid upon such exercise shall be payable in whole or in part by immediately available funds (by wire transfer, certified check or cashier’s check); provided, however, that at the discretion of the Committee, the aggregate Base Price payable upon exercise of the option granted pursuant to this Agreement may be made through (a) a cashless exercise procedure (i.e., the number of shares to be received will be equal to (i) the number of shares exercised by the Optionee less (ii) the number of shares (valued at their fair market value as of the close of business on the last trading date immediately prior to the exercise date) with a value equal to the aggregate purchase price to be paid for such shares), (b) through the transfer to the Company of shares of Common Stock already owned by the Optionee (based on the fair market value of such shares on the date the option is exercised as determined in a manner consistent with the establishment of fair market value per share on the Date of Grant) or (c) any such other manner as may be determined at the discretion of the Committee and is in compliance with applicable laws and which will not subject the Company, grantee or the compensation at issue to any tax, interest or penalties under Section 409A of the United States Internal Revenue Code of 1986, as amended from time to time and any Department of Treasury rules and regulations issued thereunder.  In addition to payment of the aggregate Base Price, the Company may, at the discretion of the Committee, either withhold from the Optionee a number of shares (valued at their fair market value as of the close of business on the last trading date immediately prior to the exercise date) with an aggregate value equal to, or condition the exercise of the option granted by this Agreement upon the Optionee’s deposit with the Company of funds in the amount of, any federal, state or local income withholding tax arising from such exercise.  No shares shall be issued until withholding of or full payment therefor, including any associated taxes, has been made in accordance with such determination by the Committee.  In the event that the Optionee elects to exercise less than all of the option granted pursuant to this Agreement in accordance with the terms and conditions of this Agreement, any remaining portion of such option shall remain vested and exercisable until the Expiration Date, subject to the terms and conditions of this Agreement.

4.          Exercise of Option.  In order to exercise the option, in whole or in part, the Optionee shall complete, execute and deliver to the Company the form of notice attached hereto as Exhibit A and incorporated herein by reference or of any other form of written notice approved for such purpose by the Committee which shall state the Optionee’s election to exercise the option granted under this Agreement, the number of shares in respect of which such option is being exercised, and such other representations and agreements as to the Optionee's investment intent with respect to such shares of Common Stock as may be required by the Committee pursuant to the provisions of the Plan.  Such written notice shall be signed by Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. If applicable, such written notice shall be accompanied by payment of the aggregate Base Price. This Option shall be deemed to be exercised upon receipt by the Company of such written notice and, if applicable, the aggregate Base Price.

5.          Post-employment Competition.  As provided in the Plan, the Company shall have the right, but not be obligated, to repurchase any shares acquired by Optionee upon exercise of the option granted pursuant to this Agreement (at a price equal to the aggregate Base Price paid by the Optionee) in the event that the Optionee shall, within six (6) months of the termination of his employment with the Company, commence employment which the Committee reasonably believes, in its discretion, to be competitive with the Company or in violation of that certain Employment Agreement dated August 24, 1999 between the Company and the Optionee (the “Employment Agreement”); provided, however, that (a) such repurchase right shall only be applicable to shares acquired upon exercise of the option granted pursuant to this Agreement that occurs on or after a date which is six (6) months prior to the Optionee’s termination of employment with the Company and (b) the Company’s right to repurchase such shares shall be null and void if the termination of Optionee’s employment occurs as the result of a Change of Control (as defined in the Employment Agreement)

6.          Termination of Service.  In the event that the Optionee’s employment by the Company or its affiliates is terminated for “Cause” (as defined in the Employment Agreement), then the option granted pursuant to this Agreement shall immediately and automatically, without any further action by the parties hereto, expire on the date of such termination.  In the event that the Optionee’s employment with the Company or its affiliates is terminated for any reason other than Cause, including without limitation: (a) of a Change of Control (as defined in the Employment Agreement), (b) termination of Optionee’s employment by the Company without Cause (as defined in the Employment Agreement), (c) termination of Optionee’s employment by the Optionee for Good Reason (as defined in the Employment Agreement), or (d) the retirement, death or Disability (as defined in the Employment Agreement) of the Optionee, then all shares issuable pursuant to the option granted by this Agreement shall remain fully vested and exercisable in accordance with the terms and conditions of this Agreement until the Expiration Date.

7.          Investment Purpose. Optionee represents that, in the event of his exercise of all or any portion of the option granted by this Agreement, he intends to purchase the shares for investment and not with a view to resale or other distribution; except that the Company, at its election, may waive or release this condition in the event the shares acquired on exercise of the option are registered under the Securities Act of 1933, as amended (the “Act”), or upon the happening of any other contingency which the Company shall determine warrants the waiver or release of this condition. Optionee agrees that certificates evidencing the shares acquired by him upon exercise of all or any part of the option granted by this Agreement may bear a restrictive legend, if appropriate, indicating that the shares have not been registered under the Act and are subject to restrictions on the transfer thereof, which legend may be in the following form (or such other form as the Company shall determine to be proper), to-wit:

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“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED WITHOUT AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH TRANSFER MAY BE LAWFULLY EFFECTED IN THE ABSENCE OF SUCH REGISTRATION.”

8.         Non-Transferability. Neither the option hereby granted nor any rights thereunder or under this Agreement may be assigned, transferred or in any manner encumbered by the Optionee except by will or the laws of descent and distribution, and any attempted assignment, transfer, mortgage, pledge or encumbrance except as herein authorized, shall be void and of no effect.  The option may be exercised during Optionee's lifetime only by him. Notwithstanding the foregoing, the option may be transferred by gift or otherwise to a member of Optionee's immediate family and/or trusts whose beneficiaries are members of Optionee's immediate family, or to such other persons or entities as may be approved in writing by the Committee prior to such transfer.

9.         No Guarantee of Continued Employment.  Optionee acknowledges and agrees that nothing in this Agreement or the Plan shall confer on Optionee the right to continue in the service of the Company or any affiliate thereof or interfere in any way with the right of the Company or any affiliate thereof to terminate his service at any time.

10.       Shares Issued on Exercise of Option. It is the intention of the Company that on any exercise of this option it will transfer to Optionee shares of its authorized but unissued stock or transfer Treasury shares, or utilize any combination of Treasury shares and authorized but unissued shares, to satisfy its obligations to deliver shares of the Common Stock upon any exercise of the stock option granted pursuant to this Agreement.

11.       Committee Administration. This option has been granted pursuant to a determination made by the Committee, and such Committee or any successor or substitute committee authorized by the Board of Directors, subject to the express terms of this Agreement, shall have plenary authority to interpret any provision of this Agreement and to make any determinations necessary or advisable for the administration of this Agreement and the exercise of the rights herein granted, and may waive or amend any provisions of this Agreement in any manner not adversely affecting the rights granted to Optionee by the express terms of this Agreement.

12.       Option Not an Incentive Stock Option. The grant contemplated by this Agreement is not intended as, nor shall it be treated as or deemed to be, an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended.

13.       Choice of Law. This Agreement shall be governed by the laws of the State of Missouri, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Agreement to the substantive law of another jurisdiction. Optionee hereby agrees to submit to the exclusive jurisdiction and venue of the federal or state courts of Missouri, County of St. Louis, to resolve any and all issues that may arise out of or relate to this Agreement.

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14.       Waiver.  No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, shall be in writing and shall be effective only to the extent specifically set forth in such writing.

15.       Integration. This Agreement, and the other documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement, including without limitation the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.

16.       Optionee Acknowledgment.  The Participant hereby acknowledges receipt of a copy of the Plan and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Agreement subject to all of the terms and provisions thereof.  Optionee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized representative set forth below, and Optionee has signed this Agreement to evidence his acceptance of the option herein granted and of the terms hereof, all as of the date hereof.

“COMPANY”
ALLIED HEALTHCARE PRODUCTS, INC.
By:	/s/ Daniel C. Dunn
Name:	Daniel C. Dunn
Title:	Chief Financial Officer
“OPTIONEE”
/s/ Earl Refsland
Earl Refsland, individually

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EXHIBIT A

Exercise Notice

Allied Healthcare Products, Inc.

1720 Sublette Avenue

St. Louis, Missouri 63110

Attn:  Chairman

Re:           EXERCISE OF 2009 INCENTIVE STOCK OPTION

Ladies and Gentlemen:

I hereby exercise the option granted to me under that certain Agreement (the “Agreement”) between me and Allied Healthcare Products, Inc. (the “Company”) dated August 27, 2009, to purchase Three Hundred Twenty Thousand (320,000) shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”), with respect to ______ (_____) shares of Common Stock for an aggregate purchase price of $__________ (the “Aggregate Exercise Price”).  Pursuant to the Agreement, payment of the Aggregate Exercise Price may be made in whole or in part by immediately available funds (by wire transfer, certified check or cashier’s check); provided, that at the discretion of the Committee (as defined in the Agreement), the Aggregate Exercise Price may be payable through (a) a cashless exercise procedure or (b) the transfer to the Company of shares of the Company’s Common Stock already owned by me or (c) any such other manner as may be determined at the discretion of the Committee and is in compliance with applicable laws and which will not subject the Company, grantee or the compensation at issue to any tax, interest or penalties under Section 409A of the United States Internal Revenue Code of 1986, as amended from time to time and any Department of Treasury rules and regulations issued thereunder.  As consideration for such shares, I therefore elect to pay the Aggregate Exercise Price by [wire transfer / certified check / cashier’s check] unless the Committee decides to permit alternative payment arrangements as set forth above.

I understand that the Company shall, and I hereby authorize the Company to, withhold from me a number of shares of the Common Stock (valued at their fair market value) with an aggregate value equal to any federal or state income withholding tax arising from such exercise.  I also understand and agree that no shares will be issued until full payment for (or, if applicable, withholding in the amount of) the Aggregate Exercise Price and any associated taxes, has been made.

Upon your receipt of full payment as aforesaid, please issue in my name and send the certificates representing the shares purchased by my exercise of the option awarded pursuant to this Agreement to me at the address indicated below.

Date:_______________________	____________________________
	Optionee,  ____________________
	_____________________________
	_____________________________
	Address

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