Arizona Laws 10-3851. Authority to indemnify
A. Except as provided in subsection D of this section, a corporation may indemnify an individual made a party to a proceeding because either:
Terms Used In Arizona Laws 10-3851
- Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
- Articles of incorporation: means the original or restated articles of incorporation or articles of merger and all amendments to the articles of incorporation or merger and includes amended and restated articles of incorporation and articles of amendment and merger. See Arizona Laws 10-140
- Conviction: A judgement of guilt against a criminal defendant.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. See Arizona Laws 10-3850
- Director: means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other entity. See Arizona Laws 10-3850
- Expenses: include attorney fees and other costs and expenses reasonably related to a proceeding. See Arizona Laws 10-3850
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Individual: includes the estate of an incompetent or deceased individual. See Arizona Laws 10-140
- Liability: means the obligation to pay a judgment, settlement, penalty or fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses actually incurred with respect to a proceeding and includes obligations and expenses that have not yet been paid by the indemnified persons but that have been or may be incurred. See Arizona Laws 10-3850
- Official capacity: means if used with respect to a director, the office of director in a corporation and, if used with respect to an officer as contemplated in section 10-3856, the office in a corporation held by the officer. See Arizona Laws 10-3850
- Party: includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding. See Arizona Laws 10-3850
- Plea: In a criminal case, the defendant's statement pleading "guilty" or "not guilty" in answer to the charges, a declaration made in open court.
- Proceeding: means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal. See Arizona Laws 10-3850
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
1. The individual is or was a director against liability incurred in the proceeding if all of the following conditions exist:
(a) The individual’s conduct was in good faith.
(b) The individual reasonably believed:
(i) In the case of conduct in an official capacity with the corporation, that the conduct was in its best interests.
(ii) In all other cases, that the conduct was at least not opposed to its best interests.
(c) In the case of any criminal proceedings, the individual had no reasonable cause to believe the conduct was unlawful.
2. The director engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation pursuant to section 10-3202, subsection B, paragraph 2.
B. A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection A, paragraph 1, subdivision (a) of this section.
C. The termination of a proceeding by judgment, order, settlement or conviction or on a plea of no contest or its equivalent is not of itself determinative that the director did not meet the standard of conduct described in this section.
D. A corporation may not indemnify a director under this section either:
1. In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation.
2. In connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in the director’s official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.
E. Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.