INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and effective as
of this 16th day of July, 1996, between Advanced Aerodynamics & Structures,
Inc., a Delaware corporation (the "Company"), and ________________________
("Indemnitee"), an Agent (as defined below) of the Company.
A. The Company and Indemnity are aware of the substantial growth in the
number of lawsuits filed against corporate Agents in connection with their
activities in such capacities and by reason of their status as such.
B. The Company and Indemnitee recognize that the cost of defending
against such lawsuits, whether or not meritorious, is typically beyond the
financial resources of most Agents of the Company and often outweighs the
benefits of serving as an Agent of the Company.
C. The Company has investigated the availability of liability insurance
to provide its Agents with adequate protection against the foregoing legal risks
and potential liabilities. It has concluded that, whether or not it shall at
any time purchase such insurance, it is in the best interests of the Company and
its shareholders to contract with its directors, officers and other Agents (as
determined by the Board of Directors of the Company), including indemnitee, to
indemnify them to the fullest extent permitted by law against personal liability
for actions taken in the performance of their duties to the Company.
D. Section 145 of the Delaware General Corporation Law, which sets forth
certain provisions relating to mandatory and permissive indemnification of
officers, directors and other Agents of a Delaware corporation by such
corporation, requires indemnification in certain circumstances, permits it in
other circumstances, and prohibits it in some circumstances.
E. The Board of Directors of the Company has determined, after due
consideration and investigation of this Agreement and various other options
available, that the following Agreement is reasonable, prudent and necessary to
promote and ensure the best interests of the Company and its shareholders. This
Agreement is intended to: (i) induce and encourage highly experienced and
capable persons, such as indemnitee, to serve as Agents of the Company;
(ii) encourage such persons to resist what they consider to be unjustifiable
suits and claims made against them in connection with the performance of their
duties to the Company, secure in knowledge that certain expenses, costs, and
liabilities incurred by them in their defense of such litigation will be borne
by the Company and that they will receive the maximum protection against such
risks and liabilities as legally may be made available to them; and
(iii) encourage directors to exercise their best business judgment regarding
matters which come before the Board of Directors without undue concern for the
risk that claims may be made against them on account thereof.
F. The Company desires to have Indemnitee serve as Agent of the Company
free from concern about unpredictable, inappropriate or unreasonable legal risks
and personal liabilities by
reason of his actions or inactions in the performance of his duties to the
Company and its shareholders. Indemnitee desires to serve as an officer,
director or other Agent of the Company, provided, and on the express condition,
that he is furnished with the indemnity set forth herein.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
1.1 For the purposes of this Agreement, Indemnitee shall be deemed to
have been acting as an "AGENT" if he was (i) acting in his capacity as a
director or officer of the Company or a member of a committee of the Board of
Directors of the Company, (ii) serving as a director or officer of any other
enterprise at the request of Company, whether or not he was serving in such
capacity at the time any liability or expense is incurred for which
Indemnification or reimbursement can be provided under this Agreement, or
(iii) serving the Company in an agency capacity that the Board of Directors
determines is sufficient to warrant the provision of indemnity pursuant to this
Agreement.
1.2 "APPLICABLE STANDARD" means that Indemnitee acted in good faith
and in a manner he reasonable believed to be in or not opposed to the best
interests of both the Company and its shareholders; except that in a criminal
proceeding Indemnitee must also have had no reasonable cause to believe that his
conduct was unlawful. The termination of any Proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create any presumption, or establish, that Indemnitee did not
meet the "Applicable Standard."
1.3 "EXPENSES" include, without limitation, expenses of Proceedings
(as defined below), including investigations or appeals, court costs, attorneys'
fees and disbursements and any expenses of attempting to establish a right to
Indemnification under law, the Company's Articles of Incorporation, the
Company's Bylaws or this Agreement. Except as is expressly prohibited by
applicable law, "Expenses" shall include the amounts of any judgments, fines or
penalties actually levied against Indemnitee or amounts paid in settlement of a
Proceeding by or on behalf of Indemnitee. With regard to legal fees, the Company
shall have the right to designate, or approve the employment of, counsel for
Indemnitee as a precondition to the requirement to indemnify against Expenses of
such legal counsel.
1.4 "FINES" shall include any excise tax assessed with respect to any
employee benefit plan.
1.5 "INDEPENDENT LEGAL COUNSEL" shall include any firm of attorneys
selected by lot from a list consisting of firms which meet minimum size criteria
and other reasonable criteria established by the Board of Directors of the
Company, so long as such firm has not
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represented the Company, Indemnitee, any entity controlled by Indemnitee, or any
party adverse to the Company, within the preceding 24 calendar months.
1.6 "NOT INCONSISTENT WITH THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS" as referred to in this Agreement means that a person has acted in
good faith and in a manner he reasonably believes to be in the interests of the
Company's subsidiaries or affiliates and their respective shareholders, or in
the interests of the participants and beneficiaries of an employee benefit plan.
1.7 "OTHER ENTERPRISE" shall include employee benefit plans,
committees, subsidiaries and affiliates of the Company.
1.8 "PROCEEDING" shall include any threatened, pending or completed
action, suit or proceeding (including any appeals therefrom), whether brought in
the name of the Company or otherwise, whether of a civil, criminal,
administrative or investigative nature, and whether in a court or arbitration,
or before or involving a governmental, administrative or private entity
(including, but not limited to, an investigation by the Company or its Board of
Directors), including, but not limited to, actions, suits or proceedings brought
under and/or predicated upon the Securities Act of 1933, as amended, and/or the
Securities Exchange Act of 1934, as amended, and/or their respective state
counterparts, and/or any rule or regulation promulgated thereunder, in which
Indemnitee may be or may have been involved as a party or otherwise (other than
as plaintiff against the Company), by reason of the fact that Indemnitee is or
was an Agent of the Company, by reason of any action taken by him or of any
inaction on his part while acting as such Agent, or by reason of attempting to
establish a right to indemnity under law, the Company's Articles of
Incorporation, the Company's Bylaws or this Agreement.
1.9 "SERVING AT THE REQUEST OF THE COMPANY" shall include any service
as an Agent of the Company which imposes duties on, or involves services by,
such Agent with respect to any of the Company's subsidiaries, affiliates,
employee benefit plans, such plan's participants or beneficiaries or any other
enterprise.
2. AGREEMENT TO SERVE. Indemnitee agrees to serve or continue to serve
as a director, officer and/or other Agent of the Company at the will of the
Company or under separate contract, as the case may be, for so long as he is
duly elected or appointed, until such time as he tenders his resignation in
writing.
3. INDEMNITY. To the extent permitted by applicable law, as it now
exists or may hereafter be amended, the Company shall indemnify Indemnitee if
Indemnitee is made a party to, or threatened to be made a party to, or otherwise
involved in, any Proceeding by reason of the fact that Indemnitee is or was an
Agent of the Company. This indemnity shall apply, and be limited, to all
Expenses actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of the Proceeding, unless: (i) it is determined pursuant
to Section 6 of this Agreement or by the court before which such Proceeding was
brought, that Indemnitee did not meet the
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Applicable Standard; or (ii) the Proceeding was settled or otherwise disposed of
without court approval.
4. EXPENSES OF SUCCESSFUL DEFENSE. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee has been successful on the
merits in defense of any Proceeding or in defense of any claim, issue or matter
therein, including the dismissal of an action or portion thereof without
prejudice, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred in connection therewith.
5. ADVANCES OF EXPENSES. The Expenses incurred by Indemnitee in any
Proceeding shall be advanced by the Company at any time and from time to time
prior to the final disposition of such Proceeding at the written request of
Indemnitee, but only if Indemnitee shall provide the Company with an undertaking
agreement in which Indemnitee agrees to repay such advances. in a manner that is
not inconsistent with this Agreement, if and to the extent that it ultimately
determined that Indemnitee is not entitled to indemnification as provided
herein. Any advance required hereunder shall be deemed to have been approved by
the Board of Directors of the Company to the extent this Agreement was so
approved. In determining whether or not to make an advance hereunder, the
ability of Indemnitee to repay shall not be a factor. However, in a Proceeding
brought by the Company directly, in its own right (as distinguished from an
action brought derivatively or by any receiver or trustee), the Company shall
have discretion whether or not to make the advances called for hereby if
Independent Legal Counsel advises in writing that the Company has probable cause
to believe, and the Company does believe, that Indemnitee did not act in good
faith with regard to the subject matter of the Proceeding or a material portion
thereof.
6. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION; PROCEDURE
UPON APPLICATION. Any indemnification or advance under Sections 4 and/or 5
hereof shall be made no later than 20 days after receipt of a written request of
Indemnitee in accordance with Section 10 hereof. In all other cases,
indemnification shall be made by the Company only if authorized in the specific
case, upon a determination that indemnification of the Agent is proper under the
circumstances and the terms of this Agreement by: (i) a majority vote of a
quorum of the Board of Directors (or a duly constituted committee thereof),
consisting of directors who are not parties to such Proceeding; (ii) if such a
quorum of directors is not obtainable, by Independent Legal Counsel;
(iii) approval of the shareholders, with Indemnitee's shares not being entitled
to vote thereon; or (iv) the court in which such Proceeding is or was pending
upon application made by the Company, Indemnitee or any person rendering
services in connection with Indemnitee's defense, whether or not the Company
opposes such application.
If Indemnitee seeks to enforce his rights hereunder, the person or entity
making such determination shall presume that Indemnitee is entitled to
indemnification and the burden of proving that indemnification or advances are
not appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors or Independent Legal Counsel) to have made a
determination prior to the commencement of such action that indemnification or
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advances are proper in the circumstances because Indemnitee has met the
Applicable Standard of conduct, nor an actual determination by the Company
(including its Board of Directors or Independent Legal Counsel) that Indemnitee
has not met such Applicable Standard of conduct, shall be a defense to the
action or create a presumption that Indemnitee has not met the Applicable
Standard of conduct. Indemnitee's Expenses incurred in connection with
successfully establishing his right to indemnification or advances, in whole or
in part, in any such Proceeding shall also be indemnified by the Company;
provided, however, that if Indemnitee is only partially successful, the Company
shall indemnify Indemnitee to the extent that Indemnitee has been partially
successful.
The Company's obligations to advance expenses or provide indemnity
hereunder shall be deemed satisfied to the extent of any payments made by an
insurer on behalf of the Company or Indemnitee.
7. AGREEMENT TO BE LIBERALLY CONSTRUED. The purpose of this Agreement is
to induce Indemnitee either to serve the Company in one or more of the
capacities described in Section 1.1 hereof, or to induce Indemnitee to continue
to serve in one or more such capacities. The Company acknowledges that, but for
this Agreement and the expectation by Indemnitee that the Company will perform
each and every one of its obligations hereunder, Indemnitee may not consent to
serve or to continue to serve the Company in such capacities. Therefore, it is
the intention of the Company and Indemnitee that this Agreement be liberally
construed so as to achieve its purpose, subject to Section 9 hereof, of
protecting Indemnitee from and against Expenses, judgments, fines or penalties
arising from a Proceeding against Indemnitee in his capacity as Agent. The
Company agrees that it will not do or fail to do any act which might prevent or
hinder the performance by the Company of its obligations under this Agreement.
The Company agrees that its obligations hereunder will survive (A) any actual or
purported termination of this Agreement by the Company or its successors whether
by operation of law or otherwise, and (B) termination of the Indemnitee's
services to the Company, whether such services were terminated by the Company or
the Indemnitee, with respect to any Proceeding, whether or not such Proceeding
is made, threatened or commenced before or after the actual or purported
termination of this Agreement or the termination of the Indemnitee's services to
the Company.
8. AGREEMENT NOT EXCLUSIVE. The indemnification provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may be entitled under the Articles of Incorporation, the Bylaws, any agreement,
any vote of shareholders or disinterested directors, the Delaware General
Corporation Law, or otherwise, both as to action or inaction in his official
capacity and as to action or inaction in another capacity while holding such
office. The indemnification under this Agreement shall continue as to
Indemnitee even though he may have ceased to be an Agent and shall inure to the
benefit of the heirs, devisees, executors, administrators and other personal
representatives of Indemnitee.
9. LIMITATIONS. The Company shall not be liable under this Agreement to
make any payment or advance in connection with any claim made against
Indemnitee:
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9.1 to the extent paid under an insurance policy;
9.2 for which Indemnitee is indemnified by the Company otherwise than
pursuant to this Agreement;
9.3 based upon or attributable to the Agent gaining in fact any
personal profit or advantage to which he was not legally entitled;
9.4 for an accounting of profits made from the purchase or sale by
the Agent of securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of 1934 and amendments thereto or similar provisions
of any state statutory law or common law; or
9.5 for omissions or acts as to which indemnification is not
permitted under applicable law.
10. NOTICES. Indemnitee shall give to the Company notice in writing
within 30 days after he becomes aware of any claim made against him for which he
believes, or should reasonably believe, indemnification will or could be sought
under this Agreement; provided, however, that the failure to so notify the
Company shall not relieve the Company of any liability which it may have to
Indemnitee (i) under this Agreement, unless the failure to so notify shall have
materially prejudiced the Company's rights hereunder and (ii) otherwise than
under this Agreement.
All notices, requests, demands and other communications (collectively
"notices") provided for under this Agreement shall be in writing (including
communications by telephone, telex or telecommunication facilities providing
facsimile transmission) and mailed (postage prepaid and return receipt
requested), telegraphed, telexed, transmitted or personally served to the
Company at its main office, Attention: President, and to Indemnitee at the
address set forth at the end of this Agreement, or at such other address as any
party affected may designate in a written notice to the other parties in
compliance with this section. All such notices shall be effective when
transmitted or personally delivered.
No Expenses for which indemnity is sought hereunder shall be incurred
without the Company's consent, which consent shall not be unreasonably withheld.
11. CHOICE OF LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware, including applicable statutes
of limitation and other procedural statutes.
12. CHOICE OF FORUM. The Company and Indemnitee agree that any action
instituted by or on behalf of the Company, Indemnitee or any other person under
this Agreement or to enforce or interpret any provision of this Agreement shall
be brought only in the state courts of
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the State of Delaware, and in no other court. The parties agree, and will at
such time agree, to the exclusive jurisdiction and exclusive venue of such
court, and to personal service upon the Company and Indemnitee by such court for
the purpose of such action, and will not attempt to transfer or remove such
action to another court.
13. ATTORNEYS' FEES. If any legal action is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to recover, in
addition to other amounts to which the prevailing party may be entitled, actual
attorneys' fees and court costs as may be awarded by the court.
14. AMENDMENTS. Provisions of this Agreement may be waived, altered,
amended or repealed in whole or in part only by the written consent of all
parties hereto.
15. PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement to any persons other than the parties to it and their respective
successors and assigns (including the heirs, devisees, executors,
administrators or other legal representatives of Indemnitee), nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party hereto. Furthermore, no provision of this
Agreement shall give any third persons any right of subrogation or action
against any party here to.
16. SEVERABILITY. If any portion of this Agreement shall be deemed by a
court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable. If this Agreement or any portion hereof is
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee as to Expenses with respect to
any Proceeding to the fullest extent permitted by any applicable portion of this
Agreement by any other applicable law.
17. SUCCESSORS AND ASSIGNS. All terms and conditions of this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective transferees, successors and assigns, including without limitation the
heirs, devisees, executors, administrators or other legal representatives of
Indemnitee; provided, however, that this Agreement and all rights, privileges,
duties and obligations of the parties, may not be assigned or delegated by any
party without the prior written consent of the other parties.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. ENTIRE AGREEMENT. Except as provided in Section 8 hereof, this
Agreement represents and contains the entire agreement and understanding between
and among the parties, and all previous statements or understandings, whether
express or implied, oral or written, relating to the subject matter hereof are
fully and completely extinguished and superseded by this
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Agreement. This Agreement shall not be altered or varied except by a writing
signed by all of the parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
ADVANCED AERODYNAMICS &
STRUCTURES, INC.
By
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Indemnitee
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Address:
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