Texas Business Organizations Code 8.102 – General Scope of Permissive Indemnification
(a) Subject to Subsection (b), an enterprise may indemnify a governing person, former governing person, or delegate against:
(1) a judgment; and
(2) expenses, other than a judgment, that are reasonable and actually incurred by the person in connection with a proceeding.
(b) Indemnification under this subchapter of a person who is found liable to the enterprise or is found liable because the person improperly received a personal benefit:
(1) is limited to reasonable expenses actually incurred by the person in connection with the proceeding;
(2) does not include a judgment, a penalty, a fine, and an excise or similar tax, including an excise tax assessed against the person with respect to an employee benefit plan; and
(3) may not be made in relation to a proceeding in which the person has been found liable for:
(A) wilful or intentional misconduct in the performance of the person’s duty to the enterprise;
(B) breach of the person’s duty of loyalty owed to the enterprise; or
(C) an act or omission not committed in good faith that constitutes a breach of a duty owed by the person to the enterprise.
Terms Used In Texas Business Organizations Code 8.102
- Governing person: means a person serving as part of the governing authority of an entity. See Texas Business Organizations Code 1.002
- 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
- Law: means , unless the context requires otherwise, both statutory and common law. See Texas Business Organizations Code 1.002
- Person: means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity. See Texas Business Organizations Code 1.002
(c) A governing person, former governing person, or delegate is considered to have been found liable in relation to a claim, issue, or matter only if the liability is established by an order, including a judgment or decree of a court, and all appeals of the order are exhausted or foreclosed by law.