13.1-697 - Authority to indemnify. - Virginia Statutes

§ 13.1-697. Authority to indemnify.

A. Except as provided in subsection D, a corporation may indemnify anindividual made a party to a proceeding because he is or was a directoragainst liability incurred in the proceeding if the director:

1. Conducted himself in good faith; and

2. Believed:

a. In the case of conduct in his official capacity with the corporation, thathis conduct was in its best interests; and

b. In all other cases, that his conduct was at least not opposed to its bestinterests; and

3. In the case of any criminal proceeding, he had no reasonable cause tobelieve his conduct was unlawful.

B. A director's conduct with respect to an employee benefit plan for apurpose he believed to be in the interests of the participants in andbeneficiaries of the plan is conduct that satisfies the requirement ofsubdivision A 2 b.

C. The termination of a proceeding by judgment, order, settlement orconviction, or upon a plea of nolo contendere or its equivalent, is not, ofitself, determinative that the director did not meet the relevant standard ofconduct described in this section.

D. Unless ordered by a court under subsection C of § 13.1-700.1, acorporation may not indemnify a director under this section:

1. In connection with a proceeding by or in the right of the corporationexcept for reasonable expenses incurred in connection with the proceeding ifit is determined that the director has met the relevant standard undersubsection A; or

2. In connection with any other proceeding charging improper personal benefitto the director, whether or not involving action in his official capacity, inwhich he was adjudged liable on the basis that personal benefit wasimproperly received by him.

(Code 1950, § 13.1-3.1; 1968, c. 570; 1975, c. 500; 1979, c. 99; 1985, c.522; 2005, c. 765.)