Indemnification of director, officer, employee, or agent

1. Law
2. Mississippi Code
3. Corporations, Associations, and Partnerships
4. Nonprofit, Nonshare Corporations and Religious Societies
5. Mississippi Nonprofit Corporation Act
6. Indemnification of director, officer, employee, or agent

1. In this section:
   1. "Director" means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if his duties to the corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director.
   2. "Expenses" includes counsel fees.
   3. "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred with respect to a proceeding.
   4. "Official capacity" means: (i) when used with respect to a director, the office of director in a corporation; or (ii) when used with respect to an individual other than a director, as contemplated in subsection (8) of this section, the office in a corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation. "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise.
   5. "Party" includes an individual 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 and whether formal or informal.
2. Except as provided in subsection (3) of this section, a corporation may indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if:
   1. He conducted himself in good faith; and
   2. He in good faith believed:
      1. In the case of conduct in his official capacity with the corporation that his conduct was in its best interests; and
      2. In all other 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.

      A director's conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (2)(b)(ii) of this section.

      The termination of a proceeding by judgment, order, settlement or conviction is not, of itself, determinative that the director did not meet the standard of conduct described in this section.

3. A corporation may not indemnify a director under this section:
   1. In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or
   2. In connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him.

      Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

4. Unless limited by its articles of incorporation, a corporation shall indemnify a director who entirely prevails in the defense of any proceeding to which he was a party because he is or was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.
5. A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:
   1. The director furnishes the corporation a written statement of his good faith belief that he has met the standard of conduct described in subsection (2) of this section;
   2. The director furnishes the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct; and
   3. A determination is made that the facts then known to those making the determination would not preclude indemnification under Section 79-11-101 et seq.

      The undertaking required by subsection (5)(b) of this section 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 payment under this section shall be made in the manner specified in subsection (7) of this section.

6. Unless limited by a corporation's articles of incorporation, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or seek indemnification in another court of competent jurisdiction. The court may order indemnification if it determines:
   1. The director is entitled to mandatory indemnification under subsection (4) of this section, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification; or
   2. With respect to a proceeding by or in the right of the corporation, the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, even though he was adjudged liable, but any indemnification shall be limited to reasonable expenses incurred.
7. A corporation may not indemnify a director under subsection (2) of this section 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 (2) of this section.
   1. The determination shall be made:

      1. Selected by the board of directors or its committee in the manner prescribed in subparagraph (i) or (ii) of this paragraph; or

      2. If a quorum of the board of directors cannot be obtained under subparagraph (i) of this paragraph and a committee cannot be designated under subparagraph (ii) of this paragraph selected by majority vote of the full board of directors (in which selection directors who are parties may participate); or

      1. By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;
      2. If a quorum cannot be obtained under subparagraph (i) of this paragraph, by a majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding;
      3. By special legal counsel:
      4. By the members but with the parties to the proceeding not being permitted to vote on the determination.
   2. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (7)(a)(iii) of this section to select counsel.
8. Unless limited by a corporation's articles of incorporation:
   1. An officer of the corporation is entitled to mandatory indemnification under subsection (2) of this section and is entitled to apply for court-ordered indemnification under subsection (6) of this section, in each case to the same extent as a director;
   2. The corporation may indemnify and advance expenses under Section 79-11-101 et seq. to an officer, employee or agent of the corporation to the same extent as to a director.
9. A corporation may purchase and maintain insurance on behalf of an individual 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, employee benefit plan or other enterprise, against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee or agent, whether or not the corporation would have power to indemnify him against the same liability under subsection (1) or (2) of this section.
10. Unless the articles of incorporation or bylaws provide otherwise, any authorization of indemnification in the articles of incorporation or bylaws shall not be deemed to prevent the corporation from providing the indemnity permitted or mandated by this section.
11. Any corporation shall have power to make any further indemnity, including advance of expenses, to and to enter into contracts of indemnity with any director, officer, employee or agent that may be authorized by the articles of incorporation or any bylaw made by the members (or if there are no members, by the board of directors) or any resolution adopted, before or after the event, by the members (or if there are no members, by the board of directors), except an indemnity against his failure to act in accordance with the standard of conduct provided in Section 79-11-267 or 79-11-275, as applicable. Unless the articles of incorporation, or any such bylaw or resolution provide otherwise, any determination as to any further indemnity shall be made in accordance with subsection (7)(a) of this section. Each such indemnity may continue as to a person who has ceased to have the capacity referred to above and may inure to the benefit of the heirs, executors and administrators of such a person.

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