FW: Section 145

FYI - See attached. =20

Rose =20

-----Original Message-----
From: =09Karathanos, Gina =20
Sent:=09Friday, August 24, 2001 4:15 PM
To:=09Engeldorf, Roseann
Subject:=09Section 145

Rose, I included links to case law at bottom if you want them.

8 Del. C. ? 145=20
DELAWARE CODE ANNOTATED=20
Copyright ? 1975-2001 by The State of Delaware=20
All rights reserved.=20
*** ANNOTATIONS CURRENT THROUGH JUNE 2001 ***=20
*** CURRENT THROUGH 2000 REGULAR SESSION ***=20
TITLE 8. CORPORATIONS=20
CHAPTER 1. GENERAL CORPORATION LAW=20
SUBCHAPTER IV. DIRECTORS AND OFFICERS=20

GO TO CODE ARCHIVE DIRECTORY FOR THIS JURISDICTION </research/search/adf?=
_m=3D81d49c05eecba5d2c9c640b2affdf524&wchp=3DdGLSzS-lSlWk&_md5=3Da8ab54a933=
c6a3f1764cddf431861e83<
8 Del. C. ? 145 (2001)=20
? 145. Indemnification of officers, directors, employees and agents; insura=
nce=20

(a) A corporation shall have power to indemnify any person who was or is a =
party or is threatened to be made a party to any threatened, pending or com=
pleted action, suit or proceeding, whether civil, criminal, administrative =
or investigative (other than an action by or in the right of the corporatio=
n) by reason of the fact that the person is or was a director, officer, emp=
loyee or agent of the corporation, or is or was serving at the request of t=
he corporation as a director, officer, employee or agent of another corpora=
tion, partnership, joint venture, trust or other enterprise, against expens=
es (including attorneys' fees), judgments, fines and amounts paid in settle=
ment actually and reasonably incurred by the person in connection with such=
action, suit or proceeding if the person acted in good faith and in a mann=
er the person reasonably believed to be in or not opposed to the best inter=
ests of the corporation, and, with respect to any criminal action or procee=
ding, had no reasonable cause to believe the person's conduct was unlawful.=
The termination of any action, suit or proceeding by judgment, order, sett=
lement, conviction, or upon a plea of nolo contendere or its equivalent, sh=
all not, of itself, create a presumption that the person did not act in goo=
d faith and in a manner which the person reasonably believed to be in or no=
t opposed to the best interests of the corporation, and, with respect to an=
y criminal action or proceeding, had reasonable cause to believe that the p=
erson's conduct was unlawful.=20

(b) A corporation shall have power to indemnify any person who was or is a =
party or is threatened to be made a party to any threatened, pending or com=
pleted action or suit by or in the right of the corporation to procure a ju=
dgment in its favor by reason of the fact that the person is or was a direc=
tor, officer, employee or agent of the corporation, or is or was serving at=
the request of the corporation as a director, officer, employee or agent o=
f another corporation, partnership, joint venture, trust or other enterpris=
e against expenses (including attorneys' fees) actually and reasonably incu=
rred by the person in connection with the defense or settlement of such act=
ion or suit if the person acted in good faith and in a manner the person re=
asonably believed to be in or not opposed to the best interests of the corp=
oration and except that no indemnification shall be made in respect of any =
claim, issue or matter as to which such person shall have been adjudged to =
be liable to the corporation unless and only to the extent that the Court o=
f Chancery or the court in which such action or suit was brought shall dete=
rmine upon application that, despite the adjudication of liability but in v=
iew of all the circumstances of the case, such person is fairly and reasona=
bly entitled to indemnity for such expenses which the Court of Chancery or =
such other court shall deem proper.=20

© To the extent that a present or former director or officer of a corpora=
tion has been successful on the merits or otherwise in defense of any actio=
n, suit or proceeding referred to in subsections (a) and (b) of this sectio=
n, or in defense of any claim, issue or matter therein, such person shall b=
e indemnified against expenses (including attorneys' fees) actually and rea=
sonably incurred by such person in connection therewith.=20

(d) Any indemnification under subsections (a) and (b) of this section (unle=
ss ordered by a court) shall be made by the corporation only as authorized =
in the specific case upon a determination that indemnification of the prese=
nt or former director, officer, employee or agent is proper in the circumst=
ances because the person has met the applicable standard of conduct set for=
th in subsections (a) and (b) of this section. Such determination shall be =
made, with respect to a person who is a director or officer at the time of =
such determination, (1) by a majority vote of the directors who are not par=
ties to such action, suit or proceeding, even though less than a quorum, or=
(2) by a committee of such directors designated by majority vote of such d=
irectors, even though less than a quorum, or (3) if there are no such direc=
tors, or if such directors so direct, by independent legal counsel in a wri=
tten opinion, or (4) by the stockholders.=20

(e) Expenses (including attorneys' fees) incurred by an officer or director=
in defending any civil, criminal, administrative or investigative action, =
suit or proceeding may be paid by the corporation in advance of the final d=
isposition of such action, suit or proceeding upon receipt of an undertakin=
g by or on behalf of such director or officer to repay such amount if it sh=
all ultimately be determined that such person is not entitled to be indemni=
fied by the corporation as authorized in this section. Such expenses (inclu=
ding attorneys' fees) incurred by former directors and officers or other em=
ployees and agents may be so paid upon such terms and conditions, if any, a=
s the corporation deems appropriate.=20

(f) The indemnification and advancement of expenses provided by, or granted=
pursuant to, the other subsections of this section shall not be deemed exc=
lusive of any other rights to which those seeking indemnification or advanc=
ement of expenses may be entitled under any bylaw, agreement, vote of stock=
holders or disinterested directors or otherwise, both as to action in such =
person's official capacity and as to action in another capacity while holdi=
ng such office.=20

(g) A corporation shall have power to purchase and maintain insurance on be=
half of any person who is or was a director, officer, employee or agent of =
the corporation, or is or was serving at the request of the corporation as =
a director, officer, employee or agent of another corporation, partnership,=
joint venture, trust or other enterprise against any liability asserted ag=
ainst such person and incurred by such person in any such capacity, or aris=
ing out of such person's status as such, whether or not the corporation wou=
ld have the power to indemnify such person against such liability under thi=
s section.=20

(h) For purposes of this section, references to "the corporation" shall inc=
lude, in addition to the resulting corporation, any constituent corporation=
(including any constituent of a constituent) absorbed in a consolidation o=
r merger which, if its separate existence had continued, would have had pow=
er and authority to indemnify its directors, officers, and employees or age=
nts, so that any person who is or was a director, officer, employee or agen=
t of such constituent corporation, or is or was serving at the request of s=
uch constituent corporation as a director, officer, employee or agent of an=
other corporation, partnership, joint venture, trust or other enterprise, s=
hall stand in the same position under this section with respect to the resu=
lting or surviving corporation as such person would have with respect to su=
ch constituent corporation if its separate existence had continued.=20

(i) For purposes of this section, references to "other enterprises" shall i=
nclude employee benefit plans; references to "fines" shall include any exci=
se taxes assessed on a person with respect to any employee benefit plan; an=
d references to "serving at the request of the corporation" shall include a=
ny service as a director, officer, employee or agent of the corporation whi=
ch imposes duties on, or involves services by, such director, officer, empl=
oyee or agent with respect to an employee benefit plan, its participants or=
beneficiaries; and a person who acted in good faith and in a manner such p=
erson reasonably believed to be in the interest of the participants and ben=
eficiaries of an employee benefit plan shall be deemed to have acted in a m=
anner "not opposed to the best interests of the corporation" as referred to=
in this section.=20

(j) The indemnification and advancement of expenses provided by, or granted=
pursuant to, this section shall, unless otherwise provided when authorized=
or ratified, continue as to a person who has ceased to be a director, offi=
cer, employee or agent and shall inure to the benefit of the heirs, executo=
rs and administrators of such a person.=20

(k) The Court of Chancery is hereby vested with exclusive jurisdiction to h=
ear and determine all actions for advancement of expenses or indemnificatio=
n brought under this section or under any bylaw, agreement, vote of stockho=
lders or disinterested directors, or otherwise. The Court of Chancery may s=
ummarily determine a corporation's obligation to advance expenses (includin=
g attorneys' fees).=20

HISTORY: 8 Del. C. 1953, ? 145; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186, =
? 6; 57 Del. Laws, c. 421, ? 2; 59 Del. Laws, c. 437, ? 7; 63 Del. Laws, c.=
25, ? 1; 64 Del. Laws, c. 112, ? 7; 65 Del. Laws, c. 289, ?? 3-6; 67 Del. =
Laws, c. 376, ? 3; 69 Del. Laws, c. 261, ?? 1, 2; 70 Del. Laws, c. 186, ? 1=
; 71 Del. Laws, c. 120, ?? 3-11.=20

NOTES:=20
REVISOR'S NOTE. --Section 30 of 67 Del. Laws, c. 376, provides: "This act s=
hall become effective on July 1, 1990." Chapter 376 was signed by the Gover=
nor on July 17, 1990.=20
Section 3 of 69 Del. Laws, c. 261, provides: "This act shall become effecti=
ve July 1, 1994, and shall not apply to suits pending as of July 1, 1994."=
=20
Section 32 of 71 Del. Laws, c. 120, provides: "This act shall be effective =
on July 1, 1997, except that ? 5 of this act shall become effective with re=
spect to indemnification of expenses (including attorneys' fees) for acts o=
r omissions occurring on or after July 1, 1997."=20

EFFECT OF AMENDMENTS. --67 Del. Laws, c. 376, in (e), inserted "(including =
attorneys' fees)" in the first and second sentences and substituted "any ci=
vil, criminal, administrative or investigative" for "a civil or criminal" i=
n the first sentence.=20
69 Del. Laws, c. 261, effective July 1, 1994, rewrote the second sentence i=
n (d); and added (k).=20
71 Del. Laws, c. 120, neutralized gender-specific language in ©, (e), (f)=
, (g), (h) and (i); in ©, substituted "present or former director or offi=
cer" for "director, officer, employee or agent"; in (d), inserted "present =
or former" in the first sentence and rewrote the second sentence; and, in t=
he second sentence in (e), inserted "former directors and officers or" and =
substituted "corporation" for "board of directors."=20

PURPOSE OF INDEMNIFICATION STATUTES. --Indemnification statutes were enacte=
d in this State, and elsewhere, to induce capable and responsible businessm=
en to accept positions in corporate management. Merritt-Chapman & Scott Cor=
p. v. Wolfson, Del. Super. Ct., 264 A.2d 358 (1970). </research/buttonTFLin=
k?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%2=
2%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_bu=
tType=3D3&_butStat=3D242&_butNum=3D2&_butInline=3D1&_butinfo=3D%3ccite%20cc=
%3d%22USA%22%3e%3c%21%5bCDATA%5b264%20A.2d%20358%5d%5d%3e%3c%2fcite%3e&_fmt=
str=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=
=3D9b87026358b9ae7fd1b510e141679cb9<=20

PURPOSE OF SECTION. --This section is a new statute, enacted to clarify its=
predecessor, and to give vindicated directors and others involved in corpo=
rate affairs a judicially enforceable right to indemnification. Galdi v. Be=
rg, 359 F. Supp. 698 (D. Del. 1973). </research/buttonTFLink?_m=3De9aa1ac14=
45d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDA=
TA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butSt=
at=3D242&_butNum=3D3&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%=
3c%21%5bCDATA%5b359%20F.%20Supp.%20698%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL=
&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D77b3127f=
e477a9364de9fe4041424054<=20
The purpose of this section is not to encourage litigation or to deter the =
losing party in the underlying action from prescribed categories of conduct=
; rather, its purpose is to encourage capable persons to serve as officers,=
directors, employees or agents of Delaware corporations, by assuring that =
their reasonable legal expenses will be paid. Mayer v. Executive Telecard, =
Ltd., Del. Ch., 705 A.2d 220 (1997). </research/buttonTFLink?_m=3De9aa1ac14=
45d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDA=
TA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butSt=
at=3D242&_butNum=3D4&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%=
3c%21%5bCDATA%5b705%20A.2d%20220%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnu=
m=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D7b14040ddc0f96=
3631fcf7ef69d594bb<=20

WHO IS ENTITLED TO INDEMNIFICATION. --Chairman of the board and president o=
f wholly owned subsidiary of parent corporation entitled to benefit of this=
section. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., 321 A.=
2d 138 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e38=
4&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%=
a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D5&_=
butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b321%20=
A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_s=
tartchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Dfd4897a2a16cd65d86bfe0634d4ea742<=20
Where the president and chairman of the board of a subsidiary corporation p=
articipated in the fraudulent stock repurchase plan, shared the inside info=
rmation, and was prosecuted because of his employment or agency relationshi=
p, he is entitled to indemnification. Merritt-Chapman & Scott Corp. v. Wolf=
son, Del. Super. Ct., 321 A.2d 138 (1974). </research/buttonTFLink?_m=3De9a=
a1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21=
%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&=
_butStat=3D242&_butNum=3D6&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%=
22%3e%3c%21%5bCDATA%5b321%20A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL=
&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D34e79d1d=
fb66c10d942cab660e6ae7d5<=20
Subsection (a) of this section does not oblige Delaware corporations to ind=
emnify those who serve other enterprises at their request; if a corporation=
wishes not to extend indemnification rights to those who serve elsewhere a=
t its request, it can say so in its bylaws, or it can say nothing at all, t=
hereby achieving the same result. VonFeldt v. Stifel Fin. Corp., Del. Supr.=
, 714 A.2d 79 (1998). </research/buttonTFLink?_m=3De9aa1ac1445d754549228193=
68e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%2=
0C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNu=
m=3D7&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5=
b714%20A.2d%2079%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=
=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D476d5eff3f56300fbd15cdd64824a=
ec5<=20
The director of a subsidiary corporation who was successful in defending a =
derivative action against the subsidiary could not recover attorney fees in=
an indemnification suit against the parent corporation which was not a suc=
cessor in interest to the subsidiary. Chamison v. Healthtrust, Inc., Del. C=
h., 735 A.2d 912 (1999), </research/buttonTFLink?_m=3De9aa1ac1445d754549228=
19368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del=
.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_bu=
tNum=3D8&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDAT=
A%5b735%20A.2d%20912%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_start=
doc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Dfea49d11f5efe74e0094fe56a6=
1c4617< aff'd, Del. Supr., 748 A.2d 407 (2000). </research/buttonTFLink?_m=
=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e=
%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butTyp=
e=3D3&_butStat=3D242&_butNum=3D9&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%=
22USA%22%3e%3c%21%5bCDATA%5b748%20A.2d%20407%5d%5d%3e%3c%2fcite%3e&_fmtstr=
=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Dc=
e778b0e7640ee0cc9e93cf3a9d30f21<=20

MUST BE A COVERED PROCEEDING. --First requirement for indemnification under=
this section is that the expenses in question be incurred in connection wi=
th a covered proceeding as described in subsection (a) or (b) of this secti=
on. Shearin v. E.F. Hutton Group, Inc., Del. Ch., 652 A.2d 578 (1994). </re=
search/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3cci=
te%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3=
e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D10&_butInline=3D1&_but=
info=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b652%20A.2d%20578%5d%5d%3=
e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=
=3DdGLSzS-lSlWk&_md5=3D21651be108ba0efab1c14bdc2bffbf47<=20

JUDICIAL DETERMINATION OF INDEMNITEE'S CORPORATE POSITION NOT REQUIRED. --S=
ubsections (a) and (b) of this section do not require a prior judicial dete=
rmination of the validity of the indemnitee's position as to the proceeding=
for which indemnification is sought. Green v. Westcap Corp., Del. Super. C=
t., 492 A.2d 260 (1985). </research/buttonTFLink?_m=3De9aa1ac1445d754549228=
19368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del=
.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_bu=
tNum=3D11&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDA=
TA%5b492%20A.2d%20260%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_star=
tdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D4bfcdbce4415f9af8f49feac6=
9ec81b0<=20

PARENT AND SUBSIDIARY. --Where a 100 percent stockholder elects a director =
to the board of a subsidiary, that director thereafter serves the subsidiar=
y "at the request of" the stockholder, within the meaning of subsection (a)=
of this section. VonFeldt v. Stifel Fin. Corp., Del. Supr., 714 A.2d 79 (1=
998). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xferci=
te=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%=
20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D12&_butInlin=
e=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b714%20A.2d%207=
9%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=
=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D18630983e072c4fdaeb97210c3513a35<=20

LANGUAGE "IN SUBSECTIONS (A) AND (B)," REFERRED TO IN SUBSECTION (C), incor=
porates those portions of subsections (a) and (b) of this section which def=
ine the type of action, suit or proceeding but does not incorporate the sub=
sequent qualifications required for indemnification. Green v. Westcap Corp.=
, Del. Super. Ct., 492 A.2d 260 (1985). </research/buttonTFLink?_m=3De9aa1a=
c1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5b=
CDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_bu=
tStat=3D242&_butNum=3D13&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22=
%3e%3c%21%5bCDATA%5b492%20A.2d%20260%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&d=
ocnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D071b63bd6f=
8dd54944b58a87514197a0<=20

SUBSECTION (C) IS MANDATORY. --Subsection © is a mandatory provision that=
applies to all Delaware corporations and grants an absolute right of indem=
nification. Witco Corp. v. Beekhuis, 38 F.3d 682 (3d Cir. 1994). </research=
/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20c=
c%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2=
fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D14&_butInline=3D1&_butinfo=
=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b38%20F.3d%20682%5d%5d%3e%3c%=
2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLS=
zS-lSlWk&_md5=3D412a2c0298fb960f188c1eac1b9a79b3<=20

INDEMNITY NOT RESTRICTED TO THOSE STANDING AS DEFENDANTS IN MAIN ACTION. --=
By the language of subsections (a) and (b) of this section, indemnity is no=
t limited to only those who stand as defendants in the main action. Hibbert=
v. Hollywood Park, Inc., Del. Supr., 457 A.2d 339 (1983). </research/butto=
nTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%2=
2USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%=
3e&_butType=3D3&_butStat=3D242&_butNum=3D15&_butInline=3D1&_butinfo=3D%3cci=
te%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b457%20A.2d%20339%5d%5d%3e%3c%2fcite%=
3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlW=
k&_md5=3D0b52567e73502253ff84a8bace5801cd<=20

CLAIMANT ASSUMES RISK OF NOT BEING INDEMNIFIED. --Where indemnification is =
sought, the claimant will have usually assumed the risk of not being indemn=
ified. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., 321 A.2d =
138 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_=
xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%=
20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D16&_bu=
tInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b321%20A.=
2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_sta=
rtchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Df6ee2f84d32c1ee02e0aca5f4db3a886<=20

CORPORATION CAN ALSO GRANT INDEMNIFICATION RIGHTS BEYOND THOSE PROVIDED BY =
STATUTE. Hibbert v. Hollywood Park, Inc., Del. Supr., 457 A.2d 339 (1983). =
</research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%=
3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%=
5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D17&_butInline=3D1&=
_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b457%20A.2d%20339%5d%=
5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wc=
hp=3DdGLSzS-lSlWk&_md5=3D92fc3731ca399f11233b123a976ace71<=20
Under subsection ©, to the extent a claimant has not been successful "on =
the merits or otherwise," the claimant may still be entitled to indemnifica=
tion of expense incurred in a covered proceeding, if a disinterested quorum=
of the board, or legal counsel at the request of the board, or the shareho=
lders, specifically determines: (1) if the indemnification is sought in res=
pect to a civil matter; (2) that the proceeding was a covered proceeding; a=
nd (3) that the claimant acted in good faith and in a manner the claimant r=
easonably believed to be in or not opposed to the best interest of the corp=
oration. Shearin v. E.F. Hutton Group, Inc., Del. Ch., 652 A.2d 578 (1994).=
</research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D=
%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d=
%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D18&_butInline=3D1=
&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b652%20A.2d%20578%5d=
%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&w=
chp=3DdGLSzS-lSlWk&_md5=3D58fb256be451214e02e026a9ba128209<=20

AUTHORITY MANDATED BY BYLAWS. --While permissive authority to indemnify its=
directors, officers, etc., may be exercised by a corporation's board of di=
rectors on a case-by-case basis, most corporations and virtually all public=
corporations have by bylaw exercised the authority recognized by this sect=
ion so as to mandate the extension of indemnification rights in circumstanc=
es in which indemnification would be permissible under this section. Advanc=
ed Mining Sys. v. Fricke, Del. Ch., 623 A.2d 82 (1992). </research/buttonTF=
Link?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22US=
A%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&=
_butType=3D3&_butStat=3D242&_butNum=3D19&_butInline=3D1&_butinfo=3D%3ccite%=
20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b623%20A.2d%2082%5d%5d%3e%3c%2fcite%3e&_=
fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_m=
d5=3D8b889d0987e225a464119d1116e3956d<=20

THIS SECTION DOES NOT REQUIRE COMPLETE SUCCESS but provides for indemnifica=
tion to the extent of success "in defense of any claim, issue or matter" in=
an action. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., 321 =
A.2d 138 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e=
384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%2=
0%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D2=
0&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b321=
%20A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1=
&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D5069ecf3173b671060118beb8de89488<=
=20

A MANDATE TO INDEMNIFY DOES NOT INCLUDE AN OBLIGATION TO ADVANCE EXPENSES P=
RIOR TO A DETERMINATION OF WHETHER INDEMNIFICATION IS PERMITTED OR REQUIRED=
. Advanced Mining Sys. v. Fricke, Del. Ch., 623 A.2d 82 (1992). </research/=
buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc=
%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2f=
cite%3e&_butType=3D3&_butStat=3D242&_butNum=3D21&_butInline=3D1&_butinfo=3D=
%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b623%20A.2d%2082%5d%5d%3e%3c%2fc=
ite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-=
lSlWk&_md5=3D13fa25192df7c06e083ecf41908b7c15<=20

ADVANCEMENT OF EXPENSES. --Subsection (e) leaves to the business judgment o=
f the board the task of determining whether the undertaking proffered in al=
l of the circumstances is sufficient to protect the corporation's interest =
in repayment and whether, ultimately, advancement of expenses would on bala=
nce be likely to promote the corporation's interests. Advanced Mining Sys. =
v. Fricke, Del. Ch., 623 A.2d 82 (1992). </research/buttonTFLink?_m=3De9aa1=
ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5=
bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_b=
utStat=3D242&_butNum=3D22&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%2=
2%3e%3c%21%5bCDATA%5b623%20A.2d%2082%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&d=
ocnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Dc66eb20418=
afe85d4363d2b6f1e0e45b<=20
This section does not afford a director a right to advancement of his litig=
ation expenses. VonFeldt v. Stifel Fin. Corp., Del. Supr., 714 A.2d 79 (199=
8). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=
=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20=
%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D23&_butInline=
=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b714%20A.2d%2079=
%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D=
1&wchp=3DdGLSzS-lSlWk&_md5=3D1531afbc1e85edb0b7da46c1deb446e9<=20
The Business Trust Act does not prohibit a business trust from advancing li=
tigation expenses to trustees. Nakahara v. NS 1991 Am. Trust, Del. Ch. 770,=
739 A.2d 770 (1998). </research/buttonTFLink?_m=3De9aa1ac1445d754549228193=
68e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%2=
0C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNu=
m=3D24&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%=
5b739%20A.2d%20770%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdo=
c=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D14fc3de4c2f74e029119283c3b6b=
06b5<=20

SUBSECTION (B) IS NOT GRANT OF ABSOLUTE IMMUNITY. --Subsection (b) of this =
section does not necessarily preclude personal liability of directors becau=
se it is not a grant of absolute immunity. Bergstein v. Texas Int'l Co., De=
l. Ch., 453 A.2d 467 (1982). </research/buttonTFLink?_m=3De9aa1ac1445d75454=
922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%2=
0Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242=
&_butNum=3D25&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5=
bCDATA%5b453%20A.2d%20467%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_=
startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3De1a817dc3856997bcddbb=
92c47126370<=20

IN CRIMINAL ACTION, ANY RESULT OTHER THAN CONVICTION MUST BE CONSIDERED SUC=
CESS. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., 321 A.2d 1=
38 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_x=
fercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%2=
0145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D26&_but=
Inline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b321%20A.2=
d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_star=
tchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Dc2757887bbfa2cffb397d954148788f0<=20
Claimants are entitled to partial indemnification if successful on a count =
of an indictment, which is an independent criminal charge, even if unsucces=
sful on another related count. Merritt-Chapman & Scott Corp. v. Wolfson, De=
l. Super. Ct., 321 A.2d 138 (1974). </research/buttonTFLink?_m=3De9aa1ac144=
5d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDAT=
A%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butSta=
t=3D242&_butNum=3D27&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%=
3c%21%5bCDATA%5b321%20A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnu=
m=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D9b31b41c9b47b3=
16eb0e1b297010fca1<=20

FINDING OR INFERENCE OF WRONGDOING HAS GENERALLY PRECLUDED INDEMNIFICATION =
under this section. McLean v. Alexander, 449 F. Supp. 1251 (D. Del. 1978), =
</research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%=
3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%=
5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D28&_butInline=3D1&=
_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b449%20F.%20Supp.%201=
251%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=
=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D6476dca9de54c2a3e775967f750776dd< rev'd on =
other grounds, 599 F.2d 1190 (3d Cir. 1979). </research/buttonTFLink?_m=3De=
9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%=
21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D=
3&_butStat=3D242&_butNum=3D29&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22U=
SA%22%3e%3c%21%5bCDATA%5b599%20F.2d%201190%5d%5d%3e%3c%2fcite%3e&_fmtstr=3D=
FULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D6ecc=
104dfd5ba9639fc8ccbba6bae75a<=20

WHAT CONSTITUTES JUDGMENT OF CONVICTION. --Although a plea of nolo contende=
re may not be used as an admission in another action, upon acceptance by th=
e court and imposition of sentence there is a judgment of conviction agains=
t the claimant. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., =
321 A.2d 138 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d7545492281936=
8e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20=
C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=
=3D30&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5=
b321%20A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=
=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D0bf9f42586064154d7f5650e186f2=
830<=20

CONVICTION AFTER 1 ALLEGATION OF CRIMINAL INDICTMENT REMOVED. --Where an al=
leged violation under a count of a criminal indictment was removed, but def=
endant was still convicted under the count for other violations, defendant =
had not been "successful" on the merits or otherwise. Merritt-Chapman & Sco=
tt Corp. v. Wolfson, Del. Super. Ct., 264 A.2d 358 (1970). </research/butto=
nTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%2=
2USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%=
3e&_butType=3D3&_butStat=3D242&_butNum=3D31&_butInline=3D1&_butinfo=3D%3cci=
te%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b264%20A.2d%20358%5d%5d%3e%3c%2fcite%=
3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlW=
k&_md5=3D4c8a0cf69973b760772cf12452b16600<=20

WHEN CASE IS DISMISSED WITHOUT PREJUDICE SO THAT SAME ISSUE MAY BE LITIGATE=
D IN ANOTHER PENDING CASE, an indemnification award would be premature and =
contrary to the spirit of the statute. Galdi v. Berg, 359 F. Supp. 698 (D. =
Del. 1973). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_=
xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%=
20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D32&_bu=
tInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b359%20F.=
%20Supp.%20698%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D=
1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Daa95621494ae42b1ec4d6113e68c9a5c=
<=20

STANDARD OF REVIEW. --The reviewing court must treat the Court of Chancery'=
s findings under subsection (b) with substantial deference. Yiannatsis v. S=
tephanis ex rel. Sterianou, Del. Supr., 653 A.2d 275 (1995). </research/but=
tonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d=
%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcit=
e%3e&_butType=3D3&_butStat=3D242&_butNum=3D33&_butInline=3D1&_butinfo=3D%3c=
cite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b653%20A.2d%20275%5d%5d%3e%3c%2fcit=
e%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lS=
lWk&_md5=3D9fb8cb5841edd4815e9bcb79e3017d83<=20

COURT WHICH FINALLY RESOLVES ISSUE HAS AUTHORITY TO AWARD INDEMNIFICATION, =
if justified under subsection (b) of this section. Galdi v. Berg, 359 F. Su=
pp. 698 (D. Del. 1973). </research/buttonTFLink?_m=3De9aa1ac1445d7545492281=
9368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.=
%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_but=
Num=3D34&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDAT=
A%5b359%20F.%20Supp.%20698%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&=
_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Dd52f8c5d864e73d38a05=
d06b65cec7e0<=20

AND SUCH AWARD COULD INCLUDE REASONABLE FEES AND EXPENSES INCURRED IN DEFEN=
SE. Galdi v. Berg, 359 F. Supp. 698 (D. Del. 1973). </research/buttonTFLink=
?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22=
%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_but=
Type=3D3&_butStat=3D242&_butNum=3D35&_butInline=3D1&_butinfo=3D%3ccite%20cc=
%3d%22USA%22%3e%3c%21%5bCDATA%5b359%20F.%20Supp.%20698%5d%5d%3e%3c%2fcite%3=
e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk=
&_md5=3D40ed0254a559e64f6fdb785205cb9b9b<=20

STANDARDS USED IN DETERMINING WHETHER FEES HAVE BEEN "REASONABLY INCURRED" =
for purposes of this section are similar to standards used by courts in awa=
rding fees. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., 321 =
A.2d 138 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e=
384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%2=
0%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D3=
6&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b321=
%20A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1=
&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D780110a715d11f3ee47e3161376322ca<=
=20

CHARGING FLAT FEE FOR EACH TRIAL IS NOT INHERENTLY UNREASONABLE for indemni=
fication under this section. Merritt-Chapman & Scott Corp. v. Wolfson, Del.=
Super. Ct., 321 A.2d 138 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d=
75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%=
5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=
=3D242&_butNum=3D37&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3=
c%21%5bCDATA%5b321%20A.2d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=
=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D8208aae5fb9cdc4=
1b89f4c7f7328943c<=20

FEES DEDUCTED FROM AWARD. --Where the initial purchase of stock represented=
usurpation of a corporate opportunity, the Court of Chancery properly dedu=
cted attorney's fees and past payments from the amounts to be paid to a cor=
porate shareholder for the repurchase of the stock. Yiannatsis v. Stephanis=
ex rel. Sterianou, Del. Supr., 653 A.2d 275 (1995). </research/buttonTFLin=
k?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%2=
2%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_bu=
tType=3D3&_butStat=3D242&_butNum=3D38&_butInline=3D1&_butinfo=3D%3ccite%20c=
c%3d%22USA%22%3e%3c%21%5bCDATA%5b653%20A.2d%20275%5d%5d%3e%3c%2fcite%3e&_fm=
tstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=
=3D7ae454b4299abde045ea8b28938f94d2<=20

RECOVERY OF EXPENSES OF PROXY CONTEST, COUCHED IN TERMS OF BOARD ELECTION, =
INVOLVING SUBSTANTIVE DIFFERENCES ABOUT CORPORATE POLICY. --Where a proxy c=
ontest, though couched in terms of election to the board, was actually one =
involving substantive differences about corporation policy, former corporat=
e directors, determined to be the management group for the purposes of reel=
ection to the board and, therefore, entitled to use corporate funds to pres=
ent its position, had an equitable and legal right to recover from the corp=
oration their reasonable expenses resulting from the proxy contest. Hibbert=
v. Hollywood Park, Inc., Del. Supr., 457 A.2d 339 (1983). </research/butto=
nTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%2=
2USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%=
3e&_butType=3D3&_butStat=3D242&_butNum=3D39&_butInline=3D1&_butinfo=3D%3cci=
te%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b457%20A.2d%20339%5d%5d%3e%3c%2fcite%=
3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlW=
k&_md5=3Dde930b183fe1e03fb1e327641bcb726b<=20

EXPENSES INCURRED IN ESTABLISHING ENTITLEMENT TO INDEMNIFICATION. --This se=
ction allows for indemnification of legal fees only in the underlying actio=
n against an officer or director, and does not allow for recovery of legal =
fees and expenses incurred in a proceeding to establish an entitlement to s=
uch indemnification. Mayer v. Executive Telecard, Ltd., Del. Ch., 705 A.2d =
220 (1997). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_=
xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%=
20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D40&_bu=
tInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b705%20A.=
2d%20220%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_sta=
rtchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D5f7a88fc0ed17b1cb35e7f2322228208<=20

OFFICERS AS CORPORATE EMPLOYEES. --A corporate officer is not, as a matter =
of law, also a corporate employee merely by virtue of office; whether a cor=
porate officer is also an employee depends on the incidents of the relation=
ship to the corporation. Haft v. Dart Group Corp., 841 F. Supp. 549 (D. Del=
. 1993). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_xfe=
rcite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%201=
45%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D41&_butIn=
line=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b841%20F.%20=
Supp.%20549%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_=
startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Df3c68088700b2563987656b669c40069<=
=20

FORMER DIRECTORS HELD ENTITLED TO INDEMNIFICATION FOR LEGAL FEES RELATIVE T=
O UNSUCCESSFUL REELECTION BID. --Former corporate directors were entitled t=
o indemnification for legal fees and related costs incurred with respect to=
suits filed by them in their unsuccessful bid for reelection to the corpor=
ation's board where the pertinent corporation bylaw contained no limitation=
on the type of action for which an individual, otherwise qualified under t=
he bylaw, must be indemnified and where indemnification would be consistent=
with subsections (a) and (b) of this section. Hibbert v. Hollywood Park, I=
nc., Del. Supr., 457 A.2d 339 (1983). </research/buttonTFLink?_m=3De9aa1ac1=
445d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCD=
ATA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butS=
tat=3D242&_butNum=3D42&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3=
e%3c%21%5bCDATA%5b457%20A.2d%20339%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&doc=
num=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D392b602f1875=
ecc021ee27ab53df148f<=20

WITHOUT INTEREST ON EXPENSES ACTUALLY PAID, INDEMNIFICATION WOULD BE INCOMP=
LETE. Merritt-Chapman & Scott Corp. v. Wolfson, Del. Super. Ct., 321 A.2d 1=
38 (1974). </research/buttonTFLink?_m=3De9aa1ac1445d75454922819368e9e384&_x=
fercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b8%20Del.%20C.%20%a7%2=
0145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butStat=3D242&_butNum=3D43&_but=
Inline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDATA%5b321%20A.2=
d%20138%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_star=
tchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D7bf7f1f5536e463fd87258977d03fbff<=20

THERE ARE SEVERAL FACTORS TO BE CONSIDERED IN INDEMNIFICATION FOR ATTORNEYS=
' FEES: (a) The time and labor required, the novelty and difficulty of the =
questions involved, and the skill requisite to perform the legal service co=
mpetently, (b) the likelihood that a particular retainer will preclude othe=
r employment by the attorney, © the fee customarily charged in the commun=
ity for similar services, (d) the amount involved in the litigation and the=
results obtained, (e) the time limitations imposed by the litigation, (f) =
the nature and length of professional relationship with the client, (g) the=
experience, reputation and ability of the lawyer performing the services, =
and (h) a consideration whether the fee is fixed or contingent. Galdi v. Be=
rg, 359 F. Supp. 698 (D. Del. 1973). </research/buttonTFLink?_m=3De9aa1ac14=
45d75454922819368e9e384&_xfercite=3D%3ccite%20cc%3d%22USA%22%3e%3c%21%5bCDA=
TA%5b8%20Del.%20C.%20%a7%20145%20%5d%5d%3e%3c%2fcite%3e&_butType=3D3&_butSt=
at=3D242&_butNum=3D44&_butInline=3D1&_butinfo=3D%3ccite%20cc%3d%22USA%22%3e=
%3c%21%5bCDATA%5b359%20F.%20Supp.%20698%5d%5d%3e%3c%2fcite%3e&_fmtstr=3DFUL=
L&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D0b7d8e7=
ea3d96e74d1a269c3b233dc90<=20

USER NOTE: For more generally applicable notes, see notes under the first s=
ection of this heading, subchapter, chapter, part or title.=20
Top of Form 1
=20
Bottom of Form 1
=09

=09
=09

=09Source: =09All Sources </research/sel?_m=3D53b9bcab390bd5354f8ae0ea50cc=
3faf&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lS=
lWk&_md5=3D9ba4b5c348c99792d1332cfc3fd55c2f< < / . . . / < DE - Delaware Co=
de Annotated (including Constitution), Court Rules Annotated and </researc=
h/srcinfo?_m=3D53b9bcab390bd5354f8ae0ea50cc3faf&src=3D5083&_fmtstr=3DFULL&d=
ocnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3D9ba4b5c348=
c99792d1332cfc3fd55c2f< </research/srcinfo?_m=3D53b9bcab390bd5354f8ae0ea50=
cc3faf&src=3D5083&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D1&wch=
p=3DdGLSzS-lSlWk&_md5=3D9ba4b5c348c99792d1332cfc3fd55c2f<=09
=09TOC: =09Delaware Code Annotated </research/retrieve?_m=3D53b9bcab390bd5=
354f8ae0ea50cc3faf&_ansset=3DA-WA-A-WB-MsSEWE-UUW-EEYYCEDBA-CYBEWEZVV-WB-U&=
_src=3D5083&tcver=3D13&_tcinlni=3D43N1-9KV0-004D-4082&svc=3Dbl&_search=3DSe=
ction%20145&_srchVal=3Dsection%20145&_form=3Dbool&_stateList=3D_src%2csvc%2=
c_search%2c_srchVal%2c_form&dummy=3D1&_tcid=3D5080&_fmtstr=3DTOC&tcact=3Din=
itial&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Db9e=
0a063f47acaad9dbe1ed99a8696af< < / . . . / <javascript:void 0< < =09
=09=09. . . / TITLE 8. CORPORATIONS </research/retrieve?_m=3D53b9bcab390bd5=
354f8ae0ea50cc3faf&_ansset=3DA-WA-A-WB-MsSEWE-UUW-EEYYCEDBA-CYBEWEZVV-WB-U&=
_src=3D5083&tcver=3D13&_tcinlni=3D43N1-9KV0-004D-4082&al=3DTAI&svc=3Dbl&_se=
arch=3DSection%20145&_srchVal=3Dsection%20145&_form=3Dbool&_stateList=3D_sr=
c%2csvc%2c_search%2c_srchVal%2c_form&tcbill=3D1&_tcid=3D5080&tcnid=3DTAI&_f=
mtstr=3DTOC&tcact=3Dbct&tcaid=3DTAI&docnum=3D4&_startdoc=3D1&_startchk=3D1&=
wchp=3DdGLSzS-lSlWk&_md5=3Db9e0a063f47acaad9dbe1ed99a8696af< < CHAPTER 1. G=
ENERAL CORPORATION LAW </research/retrieve?_m=3D53b9bcab390bd5354f8ae0ea50c=
c3faf&_ansset=3DA-WA-A-WB-MsSEWE-UUW-EEYYCEDBA-CYBEWEZVV-WB-U&_src=3D5083&t=
cver=3D13&_tcinlni=3D43N1-9KV0-004D-4082&al=3DTAIAB&svc=3Dbl&_search=3DSect=
ion%20145&_srchVal=3Dsection%20145&_form=3Dbool&_stateList=3D_src%2csvc%2c_=
search%2c_srchVal%2c_form&tcbill=3D1&_tcid=3D5080&tcnid=3DTAIAB&_fmtstr=3DT=
OC&tcact=3Dbct&tcaid=3DTAIAB&docnum=3D4&_startdoc=3D1&_startchk=3D1&wchp=3D=
dGLSzS-lSlWk&_md5=3Db9e0a063f47acaad9dbe1ed99a8696af< / . . . =09
=09=09SUBCHAPTER IV. DIRECTORS AND OFFICERS </research/retrieve?_m=3D53b9bc=
ab390bd5354f8ae0ea50cc3faf&_ansset=3DA-WA-A-WB-MsSEWE-UUW-EEYYCEDBA-CYBEWEZ=
VV-WB-U&_src=3D5083&tcver=3D13&_tcinlni=3D43N1-9KV0-004D-4082&al=3DTAIABAE&=
svc=3Dbl&_search=3DSection%20145&_srchVal=3Dsection%20145&_form=3Dbool&_sta=
teList=3D_src%2csvc%2c_search%2c_srchVal%2c_form&tcbill=3D1&_tcid=3D5080&tc=
nid=3DTAIABAE&_fmtstr=3DTOC&tcact=3Dbct&tcaid=3DTAIABAE&docnum=3D4&_startdo=
c=3D1&_startchk=3D1&wchp=3DdGLSzS-lSlWk&_md5=3Db9e0a063f47acaad9dbe1ed99a86=
96af< < ? 145. Indemnification of officers, directors, employees and agents=
; insurance =09
=09Terms: =09section 145 (Edit Search </research/form/bool?_m=3D36fba89260=
04720af18aca48dded6ca5&_fmtstr=3DFULL&docnum=3D4&_startdoc=3D1&_startchk=3D=
1&wchp=3DdGLSzS-lSlWk&_md5=3Dd40c9958f31f14d3c1ae6f897bc56a00<)=09
=09View: =09Full=09
=09Date/Time: =09Friday, August 24, 2001 - 5:01 PM EDT=09

Best regards,
Gina Karathanos
Sr. Legal Specialist
Enron Global Finance Legal
713-853-3376 phone
713-853-9252 fax

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