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EXHIBIT 10.58
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, dated as of October 22, 1996 (this
"Agreement"), and between SPACEHAB, Incorporated, a Washington corporation (the
"Company"), and Xxxx X. Lounge ("Indemnitee").
WITNESSETH
WHEREAS, highly competent persons are becoming more reluctant to
sense publicly-held corporations as directors, executive officers, or in other
capacities unless they are provided with adequate protection through insurance
and indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation; and
WHEREAS, the current difficulties or virtual impossibility of
obtaining adequate insurance and uncertainties relating to indemnification have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company has determined that
the inability to attract and retain such persons is detrimental to the best
interests of the Company's stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection in
the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, the Shareholders of the Company have adopted the Amended
and Restated Articles of Incorporation of the Company (the "Articles") and the
Amended and Restated Bylaws of the Company (the "Bylaws") providing for the
indemnification of the directors, officers, agents and employees of the Company
to the full extent permitted by the Washington Business Corporation Act (the
"Act"). The Articles, the Bylaws and Act specifically provide that they are not
exclusive, and thereby contemplate that contracts may be entered into between
the Company and the members of its Board of Directors and its executive officers
with respect to indemnification of such directors and executive officers: and
WHEREAS, this Agreement is being entered into as part of
Indemnitee's total compensation for serving as a director and/or an executive
officer, as the case may be;
NOW THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
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SECTION I. Service by Indemnitee.
Indemnitee agrees to serve as director of the Company and/or
executive officer of the Company if so designated by the Company and appointed
by the Board of Directors, and agrees to the indemnification provisions provided
for herein. Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or other obligation
imposed by operation of law), in which event the Company shall have no
obligation under this Agreement to continue Indemnitee in any such position.
SECTION II. Indemnification.
The Company shall indemnify Indemnitee to the fullest extent
permitted by applicable law in effect on the date hereof, notwithstanding that
such indemnification is not specifically authorized by this Agreement, the
Articles, the Bylaws, the Act or otherwise. In the event of any change, after
the date of this Agreement, in any applicable law, statute or rule regarding the
right of a Washington corporation to indemnify a member of its board of
directors or an officer, such changes, to the extent that they would expand
Indemnitee's rights hereunder, shall be within the scope of Indemnitee's rights
and the Company's obligations hereunder, and, to the extent that they would
narrow Indemnitee's rights hereunder, shall be excluded from this Agreement;
provided, however, that any change that is required by applicable laws, statutes
or rules to be applied to this Agreement shall be so applied regardless of
whether the effect of such change is to narrow Indemnitee's rights hereunder.
Without diminishing the scope of the indemnification provided by this Section 2,
the rights of indemnification of Indemnitee provided hereunder shall include
indemnification in respect of the Company's initial public offering of Common
Stock pursuant to its Registration Statement on Form S-1 (File No. 33-97812) and
shall further include any other public offerings of securities by the Company,
and shall not be limited to those rights set forth hereinafter, except to the
extent expressly prohibited by applicable law.
SECTION III. Action or Proceeding Other Than an Action
by or in the Right of the Company.
Indemnitee shall be entitled to the indemnification rights provided
in this Section 3 if he is or was a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is or was a director,
officer, employee, agent or fiduciary of the Company or is or was serving at the
request of the Company as a director, officer, employee, agent, partner, trustee
or fiduciary of any other entity (a "Related Company") or by reason of anything
done or not done by him in any such capacity. Pursuant to this Section 3,
Indemnitee shall be indemnified against reasonable costs and expenses
(including, but not limited to, counsel fees, costs, judgments, penalties,
fines, ERISA excise taxes, and amounts paid in settlement) (collectively,
"Damages") actually and reasonably incurred by him connection with such action,
suit or proceeding (including, but not limited to, the investigation, defense or
appeal thereof), if, in the case of conduct in his official capacity with the
corporation, he acted in good faith and in the Company's best interests, and in
all other cases, he acted in good faith and was at least not opposed to the
Company's best interests, and with respect to any criminal action or proceeding
had no reasonable cause to believe his conduct was unlawful, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable for (i)
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action or suit was brought,
or any other court of competent jurisdiction, shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly
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and reasonably entitled to indemnity for such expenses as such court shall deem
proper or (ii) the indemnification does not relate to any liability arising
under Section 16(b) of the Securities Exchange Act of 1934, as amended, or any
of the rules or regulations promulgated thereunder. Notwithstanding the
foregoing, the Company shall be required to indemnify an officer or director in
connection with an action, suit or proceeding initiated by such person only if
such action, suit or proceeding was authorized by the Board or a committee
thereof. No indemnity pursuant to this Agreement shall be provided by the
Company for Damages that have been paid directly to Inductee by an insurance
carrier under a policy of directors' and officers' liability insurance
maintained by the Company.
SECTION IV. Actions by or in the Right of the Company.
Indemnitee shall be entitled to the indemnification rights
provided in this Section 4 if he is or was made a party or is threatened to be
made a party to any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative brought by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee, agent or fiduciary of
the Company or is or was serving at the request of the Company as a director,
officer, employee, agent, partner, trustee or fiduciary of any other entity by
reason of anything done or not done by him in any such capacity. Pursuant to
this Section 4, Indemnnitee shall be indemnified against Damages (as deemed in
Section 3 of this Agreement) actually and reasonably incurred by him in
connection with such action or suit (including, but not limited to the
investigation, defense, settlement or appeal thereof) if, in the case of conduct
in his official capacity with the corporation, he acted in good faith and in the
Company's best interests, and in all other cases, he acted in good faith and was
at least not opposed to the Company's best interests, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable for (i)
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action or suit was brought,
or any other court of competent jurisdiction, shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper or (ii) the indemnification does not
relate to any liability arising under Section 16(b) of the Securities Exchange
Act of 1934, as amended, or any of the rules or regulations promulgated
thereunder. Notwithstanding the foregoing, the Company shall be required to
indemnify an officer or director in connection with an action, suit or
proceeding initiated by such person only if such action, suit or proceeding was
authorized by the Board or a committee thereof. No indemnity pursuant to this
Agreement shall be provided by the Company for Damages that have been paid
directly to Indemnitee by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company.
SECTION V. Indemnification for Costs, Charges and Expenses
of Successful Party.
Notwithstanding the other provisions of this Agreement, to the
extent that Indemnitee has served as a witness on behalf of the Company or has
been successful, on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Section 3 and Section 4 hereof, or in defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against all
reasonable costs, charges, and expenses (including counsel fees) actually and
reasonably incurred by him or on his behalf in connection therewith.
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SECTION VI. Partial Indemnification.
If Indemnitee is only partially successful in the defense,
investigation, settlement or appeal of any action, suit, investigation or
proceeding described in Section 3 or Section 4 hereof, and as a result is not
entitled under Section 5 hereof to indemnification by the Company for the total
amount of reasonable Damages actually and reasonably incurred by him, the
Company shall nevertheless indemnify Indemnitee, as a matter of right pursuant
to Section 5 hereof, to the extent Indemnitee has been partially successful.
SECTION VII. Determination of Entitlement to
Indemnification.
Upon written request by Indemnitee for indemnification pursuant to
Section 3 or Section 4 hereof, the entitlement of Indemnitee to indemnification
pursuant to the terms of this Agreement shall be determined by the following
person or persons who shall be empowered to make such determination: (a) the
Board of Directors of the Company by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined); or (b) if such a quorum is not
obtainable or, even if obtainable, if the Board of Directors by the majority
vote of Disinterested Directors so directs, by Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (c) by the stockholders, but shares
owned by or voted under the control of directors, including the Indemnitee, who
are at the time parties to the proceeding may not be voted on the determination.
Such Independent Counsel shall be selected by the Board of Directors and
approved by Indemnitee. Upon failure of the Board of Directors to so select such
Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by any state or federal court situated in
the State of Virginia. Such determination of entitlement to indemnification
shall be made no later than sixty (60) days after receipt by the Company of a
written request for indemnification. Such request shall include documentation or
information which is necessary for such determination and which is reasonably
available to Indemnitee. Any Damages incurred by Indemnitee in connection with
his request for indemnification hereunder shall be borne by the Company. The
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom
irrespective of the outcome of the determination of Indemnitee's entitlement to
indemnification. If the person making such determination shall determine that
Indemnitee is entitled to indemnification as to part (but not all) of the
application for indemnification, such person shall reasonably prorate such
partial indemnification among such claims, issues or matters.
SECTION VIII. Presumptions and Effect of Certain
Proceedings.
The Secretary of the Company shall, promptly upon receipt of
Indemnitee's request for indemnification, advise in writing the Board of
Directors or such other person or persons empowered to make the determination as
provided in Section 7 that Indemnitee has made such request for indemnification.
Indemnitee shall be presumed to be entitled to indemnification hereunder and the
Company shall have the burden of proof in the making of any determination
contrary to such presumption. If the person or persons so empowered to make such
determination shall have failed to make the requested indemnification within 60
days after receipt by the Company of such request, the requisite determination
of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be absolutely entitled to such indemnification, absent actual
and material fraud in the request for indemnification. The termination of any
action, suit, investigation or proceeding described in Section 3 or Section 4
hereof by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself (a) create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of
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the Company, and, with respect to any criminal action or proceeding, that
Indemnitee had reasonable cause to believe that his conduct was unlawful or (b)
otherwise adversely affect the rights of Indemnitee to indemnification except as
may be provided herein.
SECTION IX. Advancement of Expenses and Costs.
All reasonable expenses and costs incurred by Indemnitee who is
party to a proceeding (including counsel fees, retainers and advances of
disbursements required of Indemnitee) (collectively, the "Expense Advance")
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding at the request of Indemnitee within twenty (20) days after
the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances from time to time. Such statement or
statements shall reasonably evidence the expenses and costs incurred by him in
connection therewith. The Company's obligation to provide an Expense Advance is
subject to the following conditions: (i) If the proceeding arose in connection
with Indemnitee's service as a director and/or executive officer of the Company
(and not in any other capacity in which Indemnitee rendered service, including
service to any related company), then the Indemnitee or his representative shall
have executed and delivered to the Company an undertaking, which need not be
secured and shall be accepted without reference to Indemnitee's financial
ability to make repayment, by or on behalf of Indemnitee to repay all Expense
Advance if and to the extent that it shall ultimately be determined by a final,
unappealable decision rendered by a court having jurisdiction over the parties
and the question that Indemnitee is not entitled to be indemnified for such
Expense Advance under this Agreement or otherwise; (ii) Indemnitee shall give
the Company such information and cooperation as it may reasonably request and as
shall be within Indemnitee's power; and (iii) Indemnitee shall furnish, upon
request by the Company and if required under applicable law, a written
affirmation of Indemnitee's good faith belief that any applicable standards of
conduct have been met by Indemnitee. Indemnitee's enticement to such Expense
Advance shall include those incurred in connection with any proceeding by
Indemnitee seeking an adjudication pursuant to this Agreement. In the event that
a claim for an Expense Advance is made hereunder and is not paid in full within
twenty (20) days after written notice of such claim is delivered to the Company,
Indemnitee may, but need not, at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim.
SECTION X. Remedies of Indemnitee in Cases of Determination
not to Indemnify or to Advance Expenses.
In the event that a determination is made that Indemnitee is not
entitled to indemnification hereunder or if payment has not been timely made
following a determination of entitlement to indemnification pursuant to Sections
7 and 8, or if expenses are not advanced pursuant to Section 9, Indemnitee shall
be entitled to a final adjudication in an appropriate court of the State of
Washington or any other court of competent jurisdiction of his entitlement to
such indemnification or advance. The Company shall not oppose Indemnitee's right
to seek any such adjudication or any other claim. Such judicial proceeding shall
be made de novo and Indemnitee shall not be prejudiced by reason of a
determination (if so made) that he is not entitled to indemnification. If a
determination is made or deemed to have been made pursuant to the terms of
Section 7 or Section 8 hereof that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination and is precluded from asserting
that such determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court that the Company is bound by all
the provisions of this Agreement and is precluded from making any assertion to
the contrary. If the court shall determine that Indemnitee is entitled to any
indemnification hereunder, the Company shall pay all reasonable Damages actually
incurred by
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Indemnitee in connection with such adjudication (including, but not limited to,
any appellate proceedings).
SECTION XI. Other Rights to Indemnification.
The indemnification and advancement of expenses (including counsel
fees) and costs provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may now or in the future be entitled under any
provision of the By-laws, provisions of the Articles, vote of stockholders or
Disinterested Directors, provision of law or otherwise.
SECTION XII. Counsel Fees and Other Expenses to
Enforce Agreement.
In the event that Indemnitee is subject to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication or award in arbitration to enforce his rights under, or
to recover damages for breach of, this Agreement, Indemnitee, if he prevails in
whole or in part in such action, shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any reasonable expenses for
counsel fees and disbursements actually and reasonably incurred by him.
SECTION XIII. Duration of Agreement.
This Agreement shall continue until and terminate upon the later of
(a) 10 years after Indemnitee has ceased to occupy any of the positions or have
any of the relationships described in Section 3 or Section 4 of this Agreement
or (b) the final termination of all pending or threatened actions, suits,
proceedings or investigations with respect to Indemnitee. This Agreement shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors,
administrators or other legal representatives.
SECTION XIV. Severability.
If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
SECTION XV. Identical Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original, but all of which
together shall constitute one and the same Agreement. Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.
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SECTION XVI. Headings.
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.
SECTION XVII. Definitions.
For purposes of this Agreement:
A. "Disinterested Director" shall mean a director of the
Company who is not or was not a party to the action, suit, investigation or
proceeding in respect of which indemnification is being sought by Indemnitee.
B. "Independent Counsel" shall mean a law firm or a member of a
law firm that neither is presently nor in the past five years has been retained
to represent (i) the Company or Indemnitee in any matter material to either such
party or (ii) any other party to the action, suit, investigation or proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's right to indemnification under this
Agreement.
SECTION XVIII. Modification and Waiver.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
SECTION XIX. Mutual Acknowledgment.
The Company and Indemnitee acknowledge that, in certain instances,
federal law or public policy may override applicable state law and prohibit the
Company from indemnifying Indemnitee under this Agreement or otherwise. For
example, the Company and Indemnitee acknowledge that the U.S. Securities and
Exchange Commission (the "SEC") has taken the position that indemnification is
not permissible for liabilities arising under certain federal securities laws,
and federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the SEC to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
SECTION XX. Notice by Indemnitee.
Indemnitee agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any matter which may be subject to
indemnification covered hereunder, whether civil, criminal or investigative.
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SECTION XXI. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i) delivered
by hand and receipted for by the party to whom said notice or other
communication shall have been directed or if (ii) mailed by certified or
registered mail with postage prepaid on the third business day after the date on
which it is so mailed, to the following addresses:
A. to Indemnitee:
Xxxx X. Lounge
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
B. to the Company:
SPACEHAB, Incorporated
0000 Xxxxxx Xxxx Xxxx
Xxxxxx,Xxxxxxxx 00000
Attention: President
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
SECTION XXII. Other Agreements.
This Agreement restates and supersedes, but does not limit or
negate, any indemnification, rights or interests of Indemnitee under any prior
agreements between the Company and Indemnitee.
SECTION XXIII. Governing Law.
The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Washington.
IN WITNESS WHEREOF, the parties hereto have executed this,
Agreement on the day and year first above written.
SPACEHAB, INCORPORATED
By: /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx
President
INDEMNITEE:
By: /s/ Xxxx X. Lounge
-----------------------
Xxxx X. Lounge
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