§714. Indemnification of officers, directors, employees and agents; insurance
1.
Power to indemnify.
A corporation may indemnify, or if so provided in the bylaws shall in all cases indemnify, a person who was or is a party or is threatened to be made a party to a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding; except that indemnification may not be provided for a person with respect to a matter as to which the person has been finally adjudicated in an action, suit or proceeding not to have acted in good faith in the reasonable belief that the person's action was in the best interests of the corporation or, with respect to a criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. The termination of an action, suit or proceeding by judgment, order or conviction adverse to the person, or by settlement or plea of nolo contendere or its equivalent, does not of itself create a presumption that the person did not act in good faith in the reasonable belief that the person's action was in the best interests of the corporation, and, with respect to a criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful.
[RR 2025, c. 2, Pt. B, §16 (COR).]
2.
Indemnity against expenses.
Notwithstanding any provision of subsection 1 or 3 to the contrary, to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of an action, suit or proceeding referred to in subsection 1, or in defense of a claim, issue or matter therein, the director, officer, employee or agent must be indemnified against expenses, including attorney's fees, actually and reasonably incurred by the director, officer, employee or agent in connection with the defense of the action, suit or proceeding or claim, issue or matter. The right to indemnification granted by this subsection may be enforced by a separate action against the corporation if an order for indemnification is not entered by a court in the action, suit or proceeding in which the director, officer, employee or agent was successful on the merits or otherwise.
[RR 2025, c. 2, Pt. B, §17 (COR).]
3.
Indemnity made by corporation.
Indemnification under subsection 1, unless ordered by a court or required by the bylaws, must be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because the director, officer, employee or agent has met the applicable standard of conduct set forth in subsection 1. The determination must be made by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding or, if such a quorum is not obtainable, or even if obtainable and a quorum of disinterested directors so directs, by independent legal counsel in a written opinion. The determination, once made by the board of directors, may not be revoked by the board of directors, and upon the making of the determination by the board of directors, the director, officer, employee or agent may enforce the indemnification against the corporation by a separate action notwithstanding any attempted or actual subsequent action by the board of directors.
[RR 2025, c. 2, Pt. B, §18 (COR).]
4.
Expenses incurred in civil or criminal action.
Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of the action, suit or proceeding as authorized by the board of directors in the manner provided in subsection 3 upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it is ultimately determined that the director, officer, employee or agent is entitled to be indemnified by the corporation as authorized in this section.
[RR 2025, c. 2, Pt. B, §19 (COR).]
5.
Provisions of indemnification.
The indemnification provided by this section may not be considered exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of disinterested directors or otherwise, both as to action in a person's official capacity and as to action in another capacity while holding office, and continues as to a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person. A right to indemnification required by the bylaws may be enforced by a separate action against the corporation if an order for indemnification has not been entered by a court in an action, suit or proceeding in respect to which indemnification is sought.
[RR 2025, c. 2, Pt. B, §20 (COR).]
6.
Power to purchase and maintain insurance.
A corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against liability asserted against the person and incurred by the person in that capacity, or arising out of the person's status as a director, officer, employee or agent, whether or not the corporation would have the power to indemnify the person against such liability under this section.
[RR 2025, c. 2, Pt. B, §21 (COR).]
SECTION HISTORY
PL 1977, c. 525, §13 (NEW). PL 1979, c. 541, §A134 (AMD). PL 1981, c. 470, §A31 (AMD). RR 2025, c. 2, Pt. B, §§16-21 (COR).