Except as provided in Subsection (4), a nonprofit corporation may indemnify an individual made a party to a proceeding because the individual is or was a director, against liability incurred in the proceeding if:
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Terms Used In Utah Code 16-6a-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.
Director: includes , unless the context requires otherwise, the estate or personal representative of a director. See Utah Code 16-6a-901
Employee: includes an officer of a nonprofit corporation. See Utah Code 16-6a-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.
Nonprofit corporation: includes any domestic or foreign entity that is a predecessor of a nonprofit corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. See Utah Code 16-6a-901
Official capacity: means :
(i)
when used with respect to a director, the office of director in a corporation; and
(ii)
when used with respect to a person other than a director, as contemplated in Section 16-6a-907, the office in a corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the person on behalf of the corporation. See Utah Code 16-6a-901
Party: includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. See Utah Code 16-6a-901
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: means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. See Utah Code 16-6a-901
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.
(a)
the individual’s conduct was in good faith;
(b)
the individual reasonably believed that the individual’s conduct was in, or not opposed to, the corporation’s best interests; and
(c)
in the case of any criminal proceeding, the individual had no reasonable cause to believe the individual’s conduct was unlawful.
(2)
A director’s conduct with respect to any employee benefit plan for a purpose the director 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 nonprofit corporation may not indemnify a director under this section:
(a)
in connection with a proceeding by or in the right of the nonprofit corporation in which the director was adjudged liable to the nonprofit corporation; or
(b)
in connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in the director’s official capacity, in which proceeding the director was adjudged liable on the basis that the director derived an improper personal benefit.
(5)
Indemnification permitted under this section in connection with a proceeding by or in the right of the nonprofit corporation is limited to reasonable expenses incurred in connection with the proceeding.
