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Lounge Indemnification Agreement.

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Sectors: Aerospace and Defense
Governing Law: Washington, View Washington State Laws
Effective Date: October 22, 1996
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THIS INDEMNIFICATION AGREEMENT, dated as of October 22, 1996 (this "Agreement"), and between SPACEHAB, Incorporated, a Washington corporation (the "Company"), and John M. 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: 2
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


2 3 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 in
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