Terms Used In 18 Guam Code Ann. § 2117

  • Contract: A legal written agreement that becomes binding when signed.
  • 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.
  • Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
  • 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
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • 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.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • 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.
  • Quorum: The number of legislators that must be present to do business.
  • 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.
  • Trustee: A person or institution holding and administering property in trust.
(a) As used in this section:

(1) Director means any person who is or was a director or nominee director of a FSC and any person who, while a director of the FSC, is or was serving at the request of the FSC as a director, nominee director, officer, partner, trustee, employee or agent of another foreign

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or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan.

(2) Corporation includes any domestic or foreign predecessor entity of the FSC in a merger, consolidation, or other transaction in which the predecessor’s existence ceased upon consummation of such transaction.

(3) Expenses includes attorneys’ fees. (4) official capacity means
(A) when used with respect to a director: the office of director in the corporation; or

(B) when used with to a person other than a director, as contemplated in subsection (i) of this section: the elective or appointive office in the corporation held by the officer or the employment or agency relationship undertaken by the employee or agent in behalf of the corporation.

official capacity does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan.

(5) Party includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

(6) Proceeding means any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative.

(b) A corporation shall have the power to indemnify any person made a party to any proceeding by reason of the fact that he is or was a director if

(1) he conducted himself in good faith; and

(2) he reasonably believed

(A) in the case of conduct in his official capacity with the corporation, that his conduct was in its best interests; and

(B) in all cases, that his conduct was at least not opposed to its best interests; and

(3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

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Indemnification may be made against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the person in connection with the proceeding; except that if the proceeding was by or in the right of the corporation, indemnification may be made only against such reasonable expenses and shall not be made in respect to any proceeding in which the person shall have been adjudged liable to the corporation. The termination to any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, be determinative that the person did not meet the requisite standard of conduct set forth in this subsection.

(c) A director shall not be indemnified under subsection (b) of this section in respect to any proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he shall have been adjudged to be liable on the basis that personal benefit was improperly received by him.

(d) Unless limited by the articles of incorporation,

(1) a director who has been wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in Subsection (b) of this Section shall be indemnified against reasonable expenses incurred by him in connection with the proceeding; and

(2) a court of appropriate jurisdiction, upon application of a director and such notice as the court shall require, shall have authority to order indemnification in the following circumstances:

(A) if the Court determines a director is entitled to reimbursement under clause (l) of this Subsection (d), the court shall order indemnification, in which case the director shall also be entitled to recover the expenses of securing such reimburse- ment; or

(B) if the Court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he has met the standard of conduct set forth in Subsection (b) of this Section or has been adjudged liable in the circumstances described in Subsection (c) of this Section, the court may order such indemnification as the court shall deem proper, except that indemnification with respect to any proceeding by or in the right of the corporation or in which

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liability shall have been adjudged in the circumstances described in Subsection (c) of this Section shall be limited to expenses.

A court of appropriate jurisdiction may be the same court in which the proceeding involving the director’s liability took place.

(e) No indemnification under Subsection (b) of this Section shall be made by the corporation unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in Subsection (b). Such determination shall be made:

(l) by the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or

(2) if such a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the matter by a majority vote of the full board in which designation directors who are parties may participate, consisting solely of two or more directors not at the time parties to the proceeding; or

(3) by special legal counsel, selected by the board of directors or a committee thereof by vote as set forth in clauses (l) and (2) of this Subsection (e), or, if the requisite quorum of the full board cannot be obtained and such committee cannot be established, by a majority vote of the full board in which selection directors who are parties may par- ticipate; or

(4) by the shareholders.

Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in a manner specified in clause (3) of this Subsection (e) for the selection of such counsel. Shares held by directors who are parties to the proceeding shall not be voted on the subject matter under this Subsection (e).

(f) Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of such proceeding upon receipt by the corporation of

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(1) a written affirmation by the director of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation as authorized in this Section, and

(2) a written undertaking by or on behalf of the director to repay such amount if it shall ultimately be determined that he has not met such standard of conduct, and

(3) after a determination that the facts then known to those making the determination would not preclude indemnification under this Section.

The undertaking required by clause (2) of this Subsection shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. Determinations and authorizations of payments under this Subsection (f) shall be made in the manner specified in Subsection (e) of this Section.

(g) No provision for the corporation to indemnify or to advance expenses to a director who is made a part to a proceeding, whether contained in the articles of incorporation, the by-laws, a resolution of shareholders or directors, an agreement or otherwise, except as contemplated by Subsection (j), shall be valid unless consistent with this Section or, to the extent that indemnity hereunder is limited by the articles of incorporation, consistent therewith. Nothing contained in this Section shall limit the corporation’s power to pay or reimburse expenses incurred by a director in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent in the proceeding.

(h) For purposes of this Section, the corporation shall be deemed to have requested a director to serve an employee benefit plan whenever the performance by him of his duties to the corporation also imposes duties on, or otherwise involves services by, him to the plan or participants or beneficiaries of the plan; excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall be deemed ‘fines’, and action taken or omitted by him with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation.

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(i) Unless limited by the articles of incorporation,

(1) an officer of the corporation shall be indemnified as and to the same extent provided in Subsection (d) of this Section for a director and shall be entitled to the same extent as a director to seek indemnification pursuant to the provisions of Subsection (d) of this Section;

(2) a corporation shall have the power to indemnify and to advance expenses to an officer, employee or agent of the corporation to the same extent that it may indemnify and advance expenses to directors pursuant to this Section; and

(3) a corporation, in addition, shall have the power to indemnify and to advance expenses to an officer, employee or agent who is not a director to such further extent, consistent with law, as may be provided by its articles of incorporation, by-laws, general or specific action of its boards of directors, or contract.

(j) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or who, while a director, officer, employee or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Section.

(k) Any indemnification of, or advance of expenses to, a director in accordance with this Section, if arising out a proceeding by or in the right of the corporation, shall be reported in writing to the shareholders with or before the notice of the next shareholders’ meeting.

(l) Notwithstanding any other provision of this Section, the provisions of this Section shall apply only to indemnification by Foreign Sales Corporations or FSCs, as such terms are defined in [§ 16500 of the Government Code, as amended from time to time.

SOURCE: CC § 300.2 added by P.L. 17-75:24.