14A:3-5 Indemnification of directors, officers and employees.
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.
amended 1973, c.366, s.8; 1987, c.35, s.2; 1988, c.94, s.13; 1989, c.17, s.2; 2011, c.31, s.1; 2014, c.77.
Structure New Jersey Revised Statutes
Title 14A - Corporations, General
Section 14A:1-1 - Short title; purposes; rules of construction; variation
Section 14A:1-2.1 - Definitions.
Section 14A:1-3 - Application of act
Section 14A:1-5 - Reservation of power
Section 14A:1-6 - Execution, filing and recording of documents
Section 14A:1-7 - Repeal of prior acts
Section 14A:1-8.1 - Provision of certain notices by electronic transmission.
Section 14A:1-9 - Certificates and certified copies.
Section 14A:1-10 - Filing documents by telecopy
Section 14A:1-11 - Preclearance of documents to be filed
Section 14A:2-2 - Corporate name of domestic or foreign corporations
Section 14A:2-2.1 - Corporate alternate names
Section 14A:2-2.2 - "Blind" or "handicapped" as part of corporate name
Section 14A:2-3 - Reserved name.
Section 14A:2-4 - Registered name
Section 14A:2-5 - Renewal of registered name
Section 14A:2-6 - Incorporators
Section 14A:2-7 - Certificate of incorporation
Section 14A:2-8 - Organization meeting of directors
Section 14A:2-9 - By-laws; making and altering.
Section 14A:2-10 - By-laws and other powers in emergency
Section 14A:3-1 - General powers.
Section 14A:3-2 - Ultra vires transactions
Section 14A:3-3 - Guaranty not in furtherance of business interest
Section 14A:3-4 - Contributions by corporations
Section 14A:3-5 - Indemnification of directors, officers and employees.
Section 14A:3-6.1 - Definitions relative to derivative proceedings and shareholder class actions.
Section 14A:3-6.2 - Conditions for commencing, maintaining proceeding.
Section 14A:3-6.3 - Actions taken before commencing proceeding.
Section 14A:3-6.4 - Stay of proceeding.
Section 14A:3-6.5 - Conditions for dismissal of proceeding.
Section 14A:3-6.6 - Court's approval required.
Section 14A:3-6.7 - Termination of derivative proceeding, shareholder class action.
Section 14A:3-6.8 - Security for reasonable expenses.
Section 14A:3-6.9 - Applicability.
Section 14A:4-1 - Registered office and registered agent
Section 14A:4-2 - Function of registered agent and office; service of process, notice or demand
Section 14A:4-3 - Change of registered office or registered agent
Section 14A:4-4 - Resignation of registered agent
Section 14A:4-5 - Annual report to State Treasurer.
Section 14A:4-6 - Complete address required
Section 14A:5-1 - Place of shareholders' meetings.
Section 14A:5-2 - Annual meeting of shareholders
Section 14A:5-3 - Call of special meeting of shareholders
Section 14A:5-4 - Notice of shareholders' meetings.
Section 14A:5-5 - Waiver of notice or of lapse of time
Section 14A:5-6 - Action by shareholders without a meeting.
Section 14A:5-7 - Fixing record date
Section 14A:5-9 - Quorum of shareholders
Section 14A:5-10 - Voting of shares
Section 14A:5-11 - Votes required
Section 14A:5-12 - Greater voting requirements
Section 14A:5-13 - Shares owned or controlled by the corporation not voted or counted
Section 14A:5-14 - Shares held by another corporation
Section 14A:5-15 - Shares held by fiduciaries
Section 14A:5-16 - Shares held jointly or as tenants in common
Section 14A:5-17 - Voting of pledged stock
Section 14A:5-18 - When redeemable shares no longer entitled to vote
Section 14A:5-19 - Proxy voting.
Section 14A:5-20 - Voting trust
Section 14A:5-22 - Infant shareholders and bondholders
Section 14A:5-23 - Voting powers of bondholders; right to inspect
Section 14A:5-24 - Elections of directors; cumulative voting.
Section 14A:5-25 - Selection of inspectors
Section 14A:5-26 - Duties of inspectors
Section 14A:5-27 - Review of elections by superior court
Section 14A:5-28 - Books and records; right of inspection.
Section 14A:5-29 - Preemptive rights.
Section 14A:5-30 - Liability of subscribers and shareholders
Section 14A:6-1 - Board of Directors
Section 14A:6-2 - Number of directors
Section 14A:6-3 - Term of directors; resignation.
Section 14A:6-4 - Classification of directors; restriction of right to choose directors
Section 14A:6-5 - Vacancies and newly created directorships
Section 14A:6-6 - Removal of directors
Section 14A:6-8 - Director conflicts of interest
Section 14A:6-9 - Executive committee; other committees
Section 14A:6-10 - Place and notice of directors' meetings
Section 14A:6-11 - Loans to directors, officers or employees
Section 14A:6-12 - Liability of directors in certain cases
Section 14A:6-13 - Liability of directors; presumption of assent to action taken at a meeting
Section 14A:6-14 - Liability of directors; reliance on records and reports
Section 14A:6-16 - Removal and resignation of officers; filling of vacancies
Section 14A:6-17 - Bonds; facsimile signatures and seals
Section 14A:7-1 - Authorized shares
Section 14A:7-2 - Issuance of shares in classes and series; board action
Section 14A:7-3 - Subscription for shares.
Section 14A:7-4 - Consideration for shares
Section 14A:7-5 - Payment for shares; nonassessability
Section 14A:7-6 - Redeemable shares
Section 14A:7-7 - Share rights and options
Section 14A:7-8.1 - Par value of shares and stated capital.
Section 14A:7-9 - Convertible shares and bonds.
Section 14A:7-10 - Expenses of organization, reorganization and financing
Section 14A:7-11 - Certificates representing shares
Section 14A:7-12 - Transfer of shares and restrictions on transfer
Section 14A:7-13 - Issuance of fractional shares or scrip
Section 14A:7-14.1 - Limitations on distributions to shareholders
Section 14A:7-15 - Authority to pay dividends
Section 14A:7-15.1 - Share dividends, share divisions and combinations
Section 14A:7-16 - Acquisitions of a corporation's own shares
Section 14A:7-18 - Cancellation of reacquired shares
Section 14A:8-1 - Employee benefit plans.
Section 14A:8-2.1 - Trust funds for employees; creation; maintenance and administration
Section 14A:8-3.1 - Continuation of trust; law against perpetuities inapplicable
Section 14A:9-1 - Amendment of certificate of incorporation
Section 14A:9-2 - Procedure to amend certificate of incorporation
Section 14A:9-3 - Class voting on amendments
Section 14A:9-4 - Certificate of amendment
Section 14A:9-5 - Restated certificate of incorporation
Section 14A:9-6 - Abandonment of amendment or restated certificate
Section 14A:10-1 - Procedure for merger
Section 14A:10-2 - Procedure for consolidation
Section 14A:10-3 - Approval by shareholders.
Section 14A:10-4.1 - Certificate of merger or consolidation.
Section 14A:10-5.1 - Merger of subsidiary corporation
Section 14A:10-6 - Effect of merger or consolidation
Section 14A:10-7 - Merger or consolidation of domestic and foreign corporations
Section 14A:10-8 - Abandonment of merger or consolidation
Section 14A:10-9 - Acquisition of all the shares, or a class or series of shares, of a corporation
Section 14A:10-11 - Sale or other disposition of assets other than in regular course of business
Section 14A:10-12 - Shareholders' rights on other corporate acquisitions
Section 14A:10-13 - Share exchange
Section 14A:10-14 - Merger or consolidation of domestic corporation with other entities; manner.
Section 14A:10A-1 - Short title
Section 14A:10A-2 - Findings, declarations
Section 14A:10A-3 - Definitions.
Section 14A:10A-4 - Five-year restriction; exceptions.
Section 14A:10A-5 - Permissible business combinations.
Section 14A:10A-6 - Exemptions.
Section 14A:11-1 - Right of shareholder to dissent.
Section 14A:11-2 - Notice of dissent; demand for payment; endorsement of certificates
Section 14A:11-3 - "Dissenting shareholder" defined; date for determination of fair value
Section 14A:11-4 - Termination of right of shareholder to be paid the fair value of his shares
Section 14A:11-5 - Rights of dissenting shareholder
Section 14A:11-6 - Determination of fair value by agreement
Section 14A:11-8 - Action to determine fair value; jurisdiction of court; appointment of appraiser
Section 14A:11-9 - Judgment in action to determine fair value
Section 14A:11-10 - Costs and expenses of action
Section 14A:11-11 - Disposition of shares acquired by corporation
Section 14A:12-1 - Methods of dissolution
Section 14A:12-2 - Dissolution before commencing business
Section 14A:12-3 - Dissolution without a meeting of shareholders
Section 14A:12-4 - Dissolution pursuant to action of board and shareholders
Section 14A:12-4.1 - Dissolution of corporations without assets
Section 14A:12-5 - Dissolution pursuant to provision in certificate of incorporation
Section 14A:12-5.1 - Dissolution upon expiration of period of duration
Section 14A:12-6 - Dissolution in action brought by the Attorney General
Section 14A:12-7 - Involuntary dissolution; other remedies
Section 14A:12-8 - Effective time of dissolution
Section 14A:12-9 - Effect of dissolution
Section 14A:12-10 - Revocation of dissolution proceedings
Section 14A:12-11 - Effect of revocation of dissolution
Section 14A:12-12 - Notice to creditors; filing claims
Section 14A:12-13 - Barring of claims of creditors
Section 14A:12-13.1 - Creditors barred from suing shareholders of certain dissolved corporations.
Section 14A:12-14 - Disposition of rejected claims
Section 14A:12-15 - Jurisdiction of the Superior Court
Section 14A:12-16 - Distribution to shareholders
Section 14A:12-17 - Disposition of unclaimed distributive shares
Section 14A:12-18 - Judgment of dissolution; filing copy
Section 14A:12-19 - Dissolution upon liquidation
Section 14A:13-1 - Holding and conveying real estate
Section 14A:13-2 - Application of act to foreign corporations
Section 14A:13-3 - Admission of foreign corporation
Section 14A:13-4 - Application for certificate of authority
Section 14A:13-5 - Effect of certificate of authority
Section 14A:13-6 - Amended certificate of authority
Section 14A:13-7 - Change of name by foreign corporation
Section 14A:13-8 - Withdrawal of foreign corporation
Section 14A:13-9 - Termination of existence of foreign corporation
Section 14A:13-10 - Revocation of certificate of authority; issuance of certificate of revocation
Section 14A:13-11 - Transacting business without certificate of authority
Section 14A:13-12 - Injunction against foreign corporation
Section 14A:13-14 - Short title
Section 14A:13-16 - Exemptions
Section 14A:13-17 - Definitions
Section 14A:13-18 - Annual filing; due date
Section 14A:13-19 - Forms; certification
Section 14A:13-20 - Failure to file timely report
Section 14A:13-21 - Application of state tax uniform procedure law to this act
Section 14A:13-22 - Administration of act by director of division of taxation
Section 14A:13-23 - Severability
Section 14A:14-1 - Definitions
Section 14A:14-2 - Jurisdiction of the superior court; appointment of receiver
Section 14A:14-3 - Multiple receivers
Section 14A:14-4 - Title to corporate property and franchises
Section 14A:14-5 - Powers of receivers; general
Section 14A:14-6 - Powers of receiver; contempt of court
Section 14A:14-7 - Powers of receiver; sale of property free of encumbrances
Section 14A:14-8 - Rights of debtors; setoff; counterclaim
Section 14A:14-9 - Payment or delivery to corporation
Section 14A:14-13 - Liens by legal process
Section 14A:14-14 - Preferences
Section 14A:14-15 - Notice to creditors
Section 14A:14-16 - Claims; presentation; approval or rejection
Section 14A:14-17 - Claims; jury trial
Section 14A:14-18 - Review of receiver's actions
Section 14A:14-19 - Discontinuance of receivership action
Section 14A:14-20 - Allowances to receiver and others; costs and expenses
Section 14A:14-21 - Distribution of assets; priorities
Section 14A:14-22 - Judgment of dissolution
Section 14A:14-23 - Reorganization under act of Congress; "plan of reorganization" defined
Section 14A:14-24 - Reorganization under act of Congress; implementation of plan of reorganization
Section 14A:14-25 - Reorganization under act of Congress; rights of certain shareholders
Section 14A:14-26 - Reorganization under act of Congress; certificates
Section 14A:15-2 - Filing fees of the State Treasurer.
Section 14A:15-3 - Additional corporate filing fees
Section 14A:16-1 - Construction
Section 14A:16-2 - Acts saved from repeal
Section 14A:16-3 - Acts repealed
Section 14A:16-4 - Effective date
Section 14A:17-1 - Legislative intent
Section 14A:17-2 - Short title
Section 14A:17-3 - Terms defined.
Section 14A:17-4 - Application of act
Section 14A:17-5 - Professional corporation and foreign professional legal corporation
Section 14A:17-6 - Directors and officers
Section 14A:17-8 - Professional relationship; personal liability; corporate liability
Section 14A:17-9 - Limitations on corporate business activity
Section 14A:17-10 - Who may own shares; voting trust; estate ownership
Section 14A:17-11 - Disqualification to render service
Section 14A:17-12 - Transfer of shares
Section 14A:17-14 - Corporate name.
Section 14A:17-15 - Applicable law; consolidation, merger; report, contents
Section 14A:17-16 - Provisions severable; repealer
Section 14A:17-17 - Construction
Section 14A:18-1 - Definitions relative to benefit corporations.
Section 14A:18-2 - Formation of benefit corporation.
Section 14A:18-3 - Certain corporations may become benefit corporations.
Section 14A:18-4 - Termination of status as benefit corporation.
Section 14A:18-5 - Purpose of benefit corporation.
Section 14A:18-6 - Consideration of effects of action.
Section 14A:18-7 - "Benefit director."
Section 14A:18-8 - Actions of officers.
Section 14A:18-9 - "Benefit officer."
Section 14A:18-10 - Enforcement of duties of directors and officers.