The Delaware Court of Chancery recently held that Mikhail Kokorich (Kokorich), the co-founder and former CEO of space infrastructure company Momentus Inc. (Momentus or the Company), waived the majority of his rights to indemnification and advancement when he left the Company and sold his stock in 2021. This decision is significant because the court found that Kokorich extinguished both his contractual rights to advancement and indemnification under an indemnification agreement as well as those same rights under the Company's bylaws.
The Company and its directors have been facing legal challenges in Delaware and California over the Company's merger with a special purpose acquisition company named Stable Road Acquisition Corp. Momentus is also facing a federal securities class action in the Central District of California that was spurred by a settlement with the U.S. Securities and Exchange Commission and involved an $8 million fine. Finally, the Company has also drawn the attention of the U.S. Committee on Foreign Investments because Kokorich is a Russian national who lives in Switzerland.
After the launch of government investigations, Kokorich resigned from his roles at the company and entered into a separation agreement that placed his Momentus stock in a trust. In addition, and to further appease regulators, Kokorich sold his shares back to the Company through a stock repurchase agreement. The repurchase agreement included a broad release of all his claims against Momentus, except for narrow exceptions.
In seeking advancement, Kokorich claimed he was entitled to indemnification under a 2017 indemnification agreement, the Company's bylaws, various carve-outs and side agreements, and other "promises" that the court referred to as a "daisy chain of other agreements and correspondence."
However, the court disagreed with Kokorich. Although the Court observed that the indemnification agreement and Company bylaws offered contractual, mandatory rights, those rights were subject to release. Therefore, upon entering into the stock repurchase agreement, "Kokorich released all his claims under the indemnification agreement, other agreements, and Momentus's bylaws, as well as the promise on which he brings his claim for promissory estoppel."