New Jersey § 14a:3-5

§ 14a:3-5.

Indemnification of directors, officers and employees. (1) As used in this section, (a) “ Corporate agent ” means any person who is or was a director, officer, employee or agent of the indemnifying

corporation or of any constituent corporation absorbed by the indemnifying corporation

in a consolidation or merger and any person who is or was a director, officer, trustee,

employee or agent of any other enterprise, serving as such at the request of the indemnifying

corporation, or of any such constituent corporation, or the legal representative of

any such director, officer, trustee, employee or agent; (b) “ Other enterprise ” means any domestic or foreign corporation, other than the indemnifying corporation,

and any partnership, joint venture, sole proprietorship, trust or other enterprise,

whether or not for profit, served by a corporate agent; (c) “ Expenses ” means reasonable costs, disbursements and counsel fees; (d) “ Liabilities ” means amounts paid or incurred in satisfaction of settlements, judgments, fines

and penalties; (e) “ Proceeding ” means any pending, threatened or completed civil, criminal, administrative or arbitrative

action, suit or proceeding, and any appeal therein and any inquiry or investigation

which could lead to such action, suit or proceeding; and (f) References to “ other enterprises ” include employee benefit plans; references to “ fines ” include any excise taxes assessed on a person with respect to an employee benefit

plan; and references to “ serving at the request of the indemnifying corporation ” include any service as a corporate agent which imposes duties on, or involves services

by, the corporate agent with respect to an employee benefit plan, its participants,

or beneficiaries; and a person who acted in good faith and in a manner the person

reasonably believed to be in the interest of the participants and beneficiaries of

an employee benefit plan shall be deemed to have acted in a manner “not opposed to

the best interests of the corporation” as referred to in this section. (2) Any corporation organized for any purpose under any general or special law of

this State shall have the power to indemnify a corporate agent against his expenses

and liabilities in connection with any proceeding involving the corporate agent by

reason of his being or having been such a corporate agent, other than a proceeding

by or in the right of the corporation, if (a) such corporate agent acted in good faith and in a manner he reasonably believed

to be in or not opposed to the best interests of the corporation; and (b) with respect to any criminal proceeding, such corporate agent had no reasonable

cause to believe his conduct was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or

upon a plea of nolo contendere or its equivalent, shall not of itself create a presumption

that such corporate agent did not meet the applicable standards of conduct set forth

in paragraphs 14A:3-5(2)(a) and 14A:3-5(2)(b). (3) Any corporation organized for any purpose under any general or special law of

this State shall have the power to indemnify a corporate agent against his expenses

in connection with any proceeding by or in the right of the corporation to procure

a judgment in its favor which involves the corporate agent by reason of his being

or having been such corporate agent, if he acted in good faith and in a manner he

reasonably believed to be in or not opposed to the best interests of the corporation. However, in such proceeding no indemnification shall be provided in respect of any

claim, issue or matter as to which such corporate agent shall have been adjudged to

be liable to the corporation, unless and only to the extent that the Superior Court

or the court in which such proceeding was brought shall determine upon application

that despite the adjudication of liability, but in view of all circumstances of the

case, such corporate agent is fairly and reasonably entitled to indemnity for such

expenses as the Superior Court or such other court shall deem proper. (4) Any corporation organized for any purpose under any general or special law of

this State shall indemnify a corporate agent against expenses to the extent that such

corporate agent has been successful on the merits or otherwise in any proceeding referred

to in subsections 14A:3-5(2) and 14A:3-5(3) or in defense of any claim, issue or matter

therein. (5) Any indemnification under subsection 14A:3-5(2) and, unless ordered by a court,

under subsection 14A:3-5(3) may be made by the corporation only as authorized in a

specific case upon a determination that indemnification is proper in the circumstances

because the corporate agent met the applicable standard of conduct set forth in subsection

14A:3-5(2) or subsection 14A:3-5(3). Unless otherwise provided in the certificate of incorporation or bylaws, such determination

shall be made (a) by the board of directors or a committee thereof, acting by a majority vote of

a quorum consisting of directors who were not parties to or otherwise involved in

the proceeding; or (b) if such a quorum is not obtainable, or, even if obtainable and such quorum of

the board of directors or committee by a majority vote of the disinterested directors

so directs, by independent legal counsel, in a written opinion, such counsel to be

designated by the board of directors; or (c) by the shareholders if the certificate of incorporation or bylaws or a resolution

of the board of directors or of the shareholders so directs. (6) Expenses incurred by a corporate agent in connection with a proceeding may be

paid by the corporation in advance of the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the corporate agent to repay such

amount if it shall ultimately be determined that he is not entitled to be indemnified

as provided in this section. (7)(a) If a corporation upon application of a corporate agent has failed or refused

to provide indemnification as required under subsection 14A:3-5(4) or permitted under

subsections 14A:3-5(2), 14A:3-5(3) and 14A:3-5(6), a corporate agent may apply to

a court for an award of indemnification by the corporation, and such court (i) may award indemnification to the extent authorized under subsections 14A:3-5(2)

and 14A:3-5(3) and shall award indemnification to the extent required under subsection

14A:3-5(4), notwithstanding any contrary determination which may have been made under

subsection 14A:3-5(5); and (ii) may allow reasonable expenses to the extent authorized by, and subject to the

provisions of, subsection 14A:3-5(6), if the court shall find that the corporate agent

has by his pleadings or during the course of the proceeding raised genuine issues

of fact or law. (b) Application for such indemnification may be made (i) in the civil action in which the expenses were or are to be incurred or other

amounts were or are to be paid; or (ii) to the Superior Court in a separate proceeding. If the application is for indemnification arising out of a civil action, it shall

set forth reasonable cause for the failure to make application for such relief in

the action or proceeding in which the expenses were or are to be incurred or other

amounts were or are to be paid. The application shall set forth the disposition of any previous application for indemnification

and shall be made in such manner and form as may be required by the applicable rules

of court or, in the absence thereof, by direction of the court to which it is made. Such application shall be upon notice to the corporation. The court may also direct that notice shall be given at the expense of the corporation

to the shareholders and such other persons as it may designate in such manner as it

may require. (8) The indemnification and advancement of expenses provided by or granted pursuant

to the other subsections of this section shall not exclude any other rights, including

the right to be indemnified against liabilities and expenses incurred in proceedings

by or in the right of the corporation, to which a corporate agent may be entitled

under a certificate of incorporation, bylaw, agreement, vote of shareholders, or otherwise;

provided that no indemnification shall be made to or on behalf of a corporate agent

if a judgment or other final adjudication adverse to the corporate agent establishes

that his acts or omissions (a) were in breach of his duty of loyalty to the corporation

or its shareholders, as defined in subsection (3) of N.J.S.14A:2-7, (b) were not in good faith or involved a knowing violation of law or (c) resulted in

receipt by the corporate agent of an improper personal benefit. (9) Any corporation organized for any purpose under any general or special law of

this State shall have the power to purchase and maintain insurance on behalf of any

corporate agent against any expenses incurred in any proceeding and any liabilities

asserted against him by reason of his being or having been a corporate agent, whether

or not the corporation would have the power to indemnify him against such expenses

and liabilities under the provisions of this section. The corporation may purchase such insurance from, or such insurance may be reinsured

in whole or in part by, an insurer owned by or otherwise affiliated with the corporation,

whether or not such insurer does business with other insureds. (10) The powers granted by this section may be exercised by the corporation, notwithstanding

the absence of any provision in its certificate of incorporation or bylaws authorizing

the exercise of such powers. (11) Except as required by subsection 14A:3-5(4), no indemnification shall be made

or expenses advanced by a corporation under this section, and none shall be ordered

by a court, if such action would be inconsistent with a provision of the certificate

of incorporation, a bylaw, a resolution of the board of directors or of the shareholders,

an agreement or other proper corporate action, in effect at the time of the accrual

of the alleged cause of action asserted in the proceeding, which prohibits, limits

or otherwise conditions the exercise of indemnification powers by the corporation

or the rights of indemnification to which a corporate agent may be entitled. (12) This section does not limit a corporation's power to pay or reimburse expenses

incurred by a corporate agent in connection with the corporate agent's appearance

as a witness in a proceeding at a time when the corporate agent has not been made

a party to the proceeding. (13) A right to indemnification or to advancement of expenses in favor of an officer

or director pursuant to a corporation's certificate of incorporation or bylaws shall

not be eliminated or impaired by an amendment to the certificate of incorporation

or bylaws after the occurrence of an act or omission that is the subject of a civil,

criminal, administrative or investigative action, suit or proceeding for which indemnification

or advancement of expenses is sought, unless the certificate of incorporation or bylaws

in effect at the time of the act or omission explicitly authorizes that elimination

or impairment after the action or omission has occurred.