Utah Code 16-10a-902. Authority to indemnify directors
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(1) Except as provided in Subsection (4), a corporation may indemnify an individual made a party to a proceeding because he is or was a director, against liability incurred in the proceeding if:
Terms Used In Utah Code 16-10a-902
- 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, unless the director accepts a duty that makes that director also an employee. See Utah Code 16-10a-102
- 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 :(22)(a) a natural person;(22)(b) the estate of an incompetent individual; or(22)(c) the estate of a deceased individual. See Utah Code 16-10a-102
- 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 :
(26)(a) a civil suit;(26)(b) arbitration or mediation; and(26)(c) a criminal, administrative, or investigatory action. See Utah Code 16-10a-102- 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) his conduct was in good faith; and(1)(b) he reasonably believed that his conduct was in, or not opposed to, the corporation’s best interests; and(1)(c) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.(2) A director’s conduct with respect to any employee benefit plan for a purpose he reasonably believed to be in or not opposed to the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of Subsection (1)(b).(3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.(4) A corporation may not indemnify a director under this section:(4)(a) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or(4)(b) in connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in his official capacity, in which proceeding he was adjudged liable on the basis that he derived an improper personal benefit.(5) 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.