(a) Except as otherwise provided in this section, a corporation may indemnify an individual who is a party to a proceeding because the individual is a director against liability incurred in the proceeding if:

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Terms Used In Hawaii Revised Statutes 414-242

  • Articles of incorporation: include amended and restated articles of incorporation and articles of merger. See Hawaii Revised Statutes 414-3
  • 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.
  • Employee: includes an officer but not a director. See Hawaii Revised Statutes 414-3
  • 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: means a natural person. See Hawaii Revised Statutes 414-3
  • Nolo contendere: No contest-has the same effect as a plea of guilty, as far as the criminal sentence is concerned, but may not be considered as an admission of guilt for any other purpose.
  • 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: includes civil suit and criminal, administrative, and investigatory action. See Hawaii Revised Statutes 414-3
  • 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)

(A) The individual conducted the individual’s self in good faith; and
(B) The individual reasonably believed:

(i) In the case of conduct of official capacity, that the individual’s conduct was in the best interests of the corporation; and
(ii) In all other cases, that the individual’s conduct was at least not opposed to the best interests of the corporation; and
(C) In the case of any criminal proceeding, the individual had no reasonable cause to believe the individual’s conduct was unlawful; or
(2) The individual engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation (as authorized by section 414-32(b)(5) ).
(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 the beneficiaries of, the plan is conduct that satisfies the requirement of subsection (a)(1)(B)(ii).
(c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section.
(d) Unless ordered by a court under section 414-245(a)(3), a corporation may not indemnify a director:

(1) In connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a); or
(2) In connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis that the director received a financial benefit to which the director was not entitled, whether or not involving action in the director’s official capacity.
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