Full Text of SB1127 97th General Assembly
SB1127eng 97TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning corporations.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The Business Corporation Act of 1983 is amended | 5 | | by changing Section 8.75 as follows:
| 6 | | (805 ILCS 5/8.75) (from Ch. 32, par. 8.75)
| 7 | | Sec. 8.75. Indemnification of officers, directors, | 8 | | employees and agents;
insurance.
| 9 | | (a) A corporation may indemnify any person who was or is a | 10 | | party,
or is threatened to be made a party to any threatened, | 11 | | pending or completed
action, suit or proceeding, whether civil, | 12 | | criminal, administrative or
investigative (other than an | 13 | | action by or in the right of the corporation)
by reason of the | 14 | | fact that he or she is or was a director, officer, employee
or | 15 | | agent of the corporation, or who is or was serving at the | 16 | | request of the
corporation as a director, officer, employee or | 17 | | agent of another corporation,
partnership, joint venture, | 18 | | trust or other enterprise, against expenses
(including | 19 | | attorneys' fees), judgments, fines and amounts paid in | 20 | | settlement
actually and reasonably incurred by such person in | 21 | | connection with such action,
suit or proceeding, if such person | 22 | | acted in good faith and in a manner he or
she reasonably | 23 | | believed to be in, or not opposed to the best interests of the
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| 1 | | corporation, and, with respect to any criminal action or | 2 | | proceeding, had no
reasonable cause to believe his or her | 3 | | conduct was unlawful. The termination
of any action, suit or | 4 | | proceeding by judgment, order, settlement, conviction,
or upon | 5 | | a plea of nolo contendere or its equivalent, shall not, of | 6 | | itself,
create a presumption that the person did not act in | 7 | | good faith and in a manner
which he or she reasonably believed | 8 | | to be in or not opposed to the best
interests of the | 9 | | corporation or, with respect to any criminal action or
| 10 | | proceeding, that the person had reasonable cause to believe | 11 | | that his or her
conduct was unlawful.
| 12 | | (b) A corporation may indemnify any person who was or is
a | 13 | | party, or is threatened to be made a party to any threatened,
| 14 | | pending or completed action or suit by or in the right of the
| 15 | | corporation to procure a judgment in its favor by reason
of the | 16 | | fact that such person is or was a director, officer, employee
| 17 | | or agent of the corporation, or is or was serving at the | 18 | | request
of the corporation as a director, officer, employee or | 19 | | agent
of another corporation, partnership, joint venture, | 20 | | trust or other
enterprise, against expenses (including | 21 | | attorneys' fees) actually
and reasonably incurred by such | 22 | | person in connection with the defense
or settlement of such | 23 | | action or suit, if such person acted in good faith
and in a | 24 | | manner he or she reasonably believed to be in, or not
opposed | 25 | | to, the best interests of the corporation, provided that no
| 26 | | indemnification shall be made with respect to any claim, issue, |
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| 1 | | or matter as to
which such person has been adjudged to have | 2 | | been liable to the corporation,
unless, and only to the extent | 3 | | that the court in which such action or suit was
brought shall | 4 | | determine upon application that, despite the adjudication of
| 5 | | liability, but in view of all the circumstances of the case, | 6 | | such person is
fairly and reasonably entitled to indemnity for | 7 | | such expenses as the court
shall deem proper.
| 8 | | (c) To the extent that a present or former director, | 9 | | officer or employee
of a corporation has been successful, on | 10 | | the merits or otherwise,
in the defense of any action, suit or | 11 | | proceeding referred to in
subsections (a) and (b), or in | 12 | | defense of any claim, issue or matter
therein, such person | 13 | | shall be indemnified against expenses (including
attorneys' | 14 | | fees) actually and reasonably incurred by such person in | 15 | | connection
therewith, if the person acted in good faith and in | 16 | | a manner he or she
reasonably believed to be in, or not opposed | 17 | | to, the best interests of the
corporation.
| 18 | | (d) Any indemnification under subsections (a) , and (b) , or | 19 | | (c) (unless ordered
by a court) shall be made by the | 20 | | corporation only as authorized in the specific
case, upon a | 21 | | determination that indemnification of the present or former
| 22 | | director, officer,
employee or agent is proper in the | 23 | | circumstances because he or she has met
the applicable standard | 24 | | of conduct set forth in subsections (a) , (b), or (c) (b) . Such
| 25 | | determination shall be made with respect to a person who is a | 26 | | director or
officer of the corporation at the time of the |
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| 1 | | determination: (1) by the majority vote of the
directors who | 2 | | are not parties to such action, suit or
proceeding, even though | 3 | | less than a quorum, (2) by a committee of such the
directors | 4 | | who are not parties to such action, suit, or proceeding , even | 5 | | though less than a quorum, designated by a majority vote of | 6 | | such the directors,
(3) if there are no such directors, or if | 7 | | such the directors so
direct, by independent legal
counsel
in a | 8 | | written opinion, or (4) by the shareholders.
| 9 | | (e) Expenses (including attorney's fees) incurred by an | 10 | | officer or
director of the corporation in defending a civil or | 11 | | criminal action, suit or
proceeding may be paid by the | 12 | | corporation in advance of the final disposition
of such action, | 13 | | suit or proceeding upon receipt of an undertaking by or on
| 14 | | behalf of such the director or officer to repay
such amount if | 15 | | it
shall ultimately be determined that such person is not
| 16 | | entitled to be indemnified
by the corporation as authorized in | 17 | | this Section.
Such expenses (including attorney's fees) | 18 | | incurred by former directors and
officers or other employees | 19 | | and agents of the corporation or by persons serving at the | 20 | | request of the corporation as directors, officers, employees or | 21 | | agents of another corporation, partnership, joint venture, | 22 | | trust or other enterprise may be so paid on such terms and
| 23 | | conditions, if any, as the corporation deems appropriate.
| 24 | | (f) The indemnification and advancement of expenses | 25 | | provided by or
granted under the other subsections of this | 26 | | Section shall not be
deemed exclusive of any other rights to |
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| 1 | | which those seeking
indemnification or advancement of expenses | 2 | | may be entitled under any
by-law, agreement, vote of | 3 | | shareholders or disinterested directors, or
otherwise, both as | 4 | | to action in his or her official capacity and as to action
in | 5 | | another capacity while holding such office. A right to
| 6 | | indemnification or to advancement of expenses arising under a | 7 | | provision of the articles of
incorporation or a by-law shall | 8 | | not be eliminated or impaired by an amendment to such provision
| 9 | | after the occurrence of the act or omission that is the subject | 10 | | of the civil, criminal, administrative
or investigative | 11 | | action, suit or proceeding for which indemnification or | 12 | | advancement of expenses
is sought, unless the provision in | 13 | | effect at the time of such act or omission explicitly | 14 | | authorizes
such elimination or impairment after such act or | 15 | | omission has occurred.
| 16 | | (g) A corporation may purchase and maintain insurance on | 17 | | behalf of
any person who is or was a director, officer, | 18 | | employee or agent of the
corporation, or who is or was serving | 19 | | at the request of the corporation as a
director, officer, | 20 | | employee or agent of another corporation, partnership,
joint | 21 | | venture, trust or other enterprise, against any liability | 22 | | asserted
against such person and incurred by such person in any | 23 | | such capacity, or
arising out of his or her status as such, | 24 | | whether or not the corporation would
have the power to | 25 | | indemnify such person against such liability under the
| 26 | | provisions of this Section.
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| 1 | | (h) If a corporation indemnifies or advances expenses to a
| 2 | | director or officer under subsection (b) of this Section, the | 3 | | corporation shall report the
indemnification or advance in | 4 | | writing to the shareholders with or before the
notice of the | 5 | | next shareholders meeting.
| 6 | | (i) For purposes of this Section, references to "the | 7 | | corporation" shall
include, in addition to the surviving | 8 | | corporation, any merging corporation
(including any | 9 | | corporation having merged with a merging corporation) absorbed
| 10 | | in a merger which, if its separate existence had continued, | 11 | | would have had
the power and authority to indemnify its | 12 | | directors, officers, and employees
or agents, so that any | 13 | | person who was a director, officer, employee or agent
of such | 14 | | merging corporation, or was serving at the request of such | 15 | | merging
corporation as a director, officer, employee or agent | 16 | | of another corporation,
partnership, joint venture, trust or | 17 | | other enterprise, shall stand in the
same position under the | 18 | | provisions of this Section with respect to
the surviving | 19 | | corporation as such person would have with respect to such
| 20 | | merging corporation if its separate existence had continued.
| 21 | | (j) For purposes of this Section, references to "other | 22 | | enterprises" shall
include employee benefit plans; references | 23 | | to "fines" shall include any
excise taxes assessed on a person | 24 | | with respect to an employee benefit plan;
and references to | 25 | | "serving at the request of the corporation" shall include
any | 26 | | service as a director, officer, employee or agent of the |
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| 1 | | corporation
which imposes duties on, or involves services by | 2 | | such director, officer,
employee, or agent with respect to an | 3 | | employee benefit plan, its participants,
or beneficiaries. A | 4 | | person who acted in good faith and in a manner he or
she | 5 | | reasonably believed to be in the best interests of the | 6 | | participants
and beneficiaries of an employee benefit plan | 7 | | shall be deemed to have acted
in a manner "not opposed to the | 8 | | best interest of the corporation" as referred
to in this | 9 | | Section.
| 10 | | (k) The indemnification and advancement of expenses | 11 | | provided by or granted
under this Section shall, unless | 12 | | otherwise provided when authorized or
ratified, continue as to | 13 | | a person who has ceased to be a director, officer,
employee, or | 14 | | agent and shall inure to the benefit of the heirs, executors, | 15 | | and
administrators of that person.
| 16 | | (l) The changes to this Section made by this amendatory Act | 17 | | of the 92nd
General Assembly apply only to actions commenced on | 18 | | or after the
effective date of this amendatory Act of the 92nd | 19 | | General Assembly.
| 20 | | (Source: P.A. 94-889, eff. 1-1-07.)
| 21 | | Section 10. The General Not For Profit Corporation Act of | 22 | | 1986 is amended by changing Section 108.75 as follows:
| 23 | | (805 ILCS 105/108.75) (from Ch. 32, par. 108.75)
| 24 | | Sec. 108.75.
Indemnification of officers, directors,
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| 1 | | employees and agents; insurance.
| 2 | | (a) A corporation may
indemnify any person who was or is a | 3 | | party, or is threatened
to be made a party to any threatened, | 4 | | pending or completed
action, suit or proceeding, whether civil, | 5 | | criminal,
administrative or investigative (other than an | 6 | | action by or
in the right of the corporation) by reason of the | 7 | | fact that
he or she is or was a director, officer, employee or | 8 | | agent
of the corporation, or who is or was serving at the | 9 | | request
of the corporation as a director, officer, employee or | 10 | | agent
of another corporation, partnership, joint venture, | 11 | | trust or
other enterprise, against expenses (including | 12 | | attorneys'
fees), judgments, fines and amounts paid in | 13 | | settlement
actually and reasonably incurred by such person in
| 14 | | connection with such action, suit or proceeding, if such
person | 15 | | acted in good faith and in a manner he or she
reasonably | 16 | | believed to be in, or not opposed to, the best
interests of the | 17 | | corporation, and, with respect to any
criminal action or | 18 | | proceeding, had no reasonable cause to
believe his or her | 19 | | conduct was unlawful. The termination of
any action, suit or | 20 | | proceeding by judgment, order,
settlement, conviction, or upon | 21 | | a plea of nolo contendere or
its equivalent, shall not, of | 22 | | itself, create a presumption
that the person did not act in | 23 | | good faith and in a manner
which he or she reasonably believed | 24 | | to be in or not opposed
to the best interests of the | 25 | | corporation or, with respect to
any criminal action or | 26 | | proceeding, that the person had
reasonable cause to believe |
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| 1 | | that his or her conduct was
unlawful.
| 2 | | (b) A corporation may indemnify any person who was or is a
| 3 | | party, or is threatened to be made a party to any
threatened, | 4 | | pending or completed action or suit by or in the
right of the | 5 | | corporation to procure a judgment in its favor
by reason of the | 6 | | fact that such person is or was a director,
officer, employee | 7 | | or agent of the corporation, or is or was
serving at the | 8 | | request of the corporation as a director,
officer, employee or | 9 | | agent of another corporation,
partnership, joint venture, | 10 | | trust or other enterprise,
against expenses (including | 11 | | attorneys' fees) actually and
reasonably incurred by such | 12 | | person in connection with the
defense or settlement of such | 13 | | action or suit, if such person
acted in good faith and in a | 14 | | manner he or she reasonably
believed to be in, or not opposed | 15 | | to, the best interests of
the corporation, provided that no | 16 | | indemnification shall be
made in respect of any claim, issue or | 17 | | matter as to which
such person shall have been adjudged to be | 18 | | liable for
negligence or misconduct in the performance of his | 19 | | or her
duty to the corporation, unless, and only to the extent | 20 | | that
the court in which such action or suit was brought shall
| 21 | | determine upon application that, despite the adjudication of
| 22 | | liability, but in view of all the circumstances of the case,
| 23 | | such person is fairly and reasonably entitled to indemnity
for | 24 | | such expenses as the court shall deem proper.
| 25 | | (c) To the extent that a present or former director, | 26 | | officer or
employee of a corporation has been successful, on |
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| 1 | | the merits or
otherwise, in the defense of any action, suit or | 2 | | proceeding
referred to in subsections (a) and (b), or in | 3 | | defense of any
claim, issue or matter therein, such person | 4 | | shall be
indemnified against expenses (including attorneys' | 5 | | fees)
actually and reasonably incurred by such person in
| 6 | | connection therewith, if that person acted in good faith and in | 7 | | a manner he
or she reasonably believed to be in, or not opposed | 8 | | to, the best interests of
the corporation.
| 9 | | (d) Any indemnification under subsections (a) , and (b) , or | 10 | | (c)
(unless ordered by a court) shall be made by the | 11 | | corporation
only as authorized in the specific case, upon a
| 12 | | determination that indemnification of the present or former | 13 | | director,
officer,
employee or agent is proper in the | 14 | | circumstances because he
or she has met the applicable standard | 15 | | of conduct set forth
in subsections (a) , (b), or (c) (b) . Such | 16 | | determination shall be made
with respect to a person who is a | 17 | | director or officer of the corporation at the time of the
| 18 | | determination: (1) by the majority vote of the directors who | 19 | | are not parties to such action,
suit or proceeding, even though | 20 | | less than a quorum, (2) by a committee of such
the directors | 21 | | designated by a majority vote of the directors , even though | 22 | | through
less than a quorum, designated by a majority vote of | 23 | | such directors, (3) if there are no such directors, or if such | 24 | | the directors
so direct, by independent legal
counsel in a | 25 | | written opinion, or (4) by the members entitled
to vote, if | 26 | | any.
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| 1 | | (e) Expenses (including attorney's fees) incurred by an | 2 | | officer or
director of the corporation in defending a civil or | 3 | | criminal
action, suit or proceeding may be paid by the | 4 | | corporation in
advance of the final disposition of such action, | 5 | | suit or
proceeding, as authorized by the board of directors in | 6 | | the
specific case, upon receipt of an undertaking by or on
| 7 | | behalf of such the director or officer to repay
such amount, | 8 | | unless it shall ultimately be determined that
such person is | 9 | | entitled to be indemnified by the corporation
as authorized in | 10 | | this Section.
Such expenses (including attorney's fees) | 11 | | incurred by former directors and
officers or other employees | 12 | | and agents of the corporation or by persons serving at the | 13 | | request of the corporation as directors, officers, employees or | 14 | | agents of another corporation, partnership, joint venture, | 15 | | trust or other enterprise may be so paid on such terms and
| 16 | | conditions, if any, as the corporation deems appropriate.
| 17 | | (f) The indemnification and advancement of expenses | 18 | | provided by or granted under the other subsections of this the | 19 | | Section shall not
be deemed exclusive of any other rights to | 20 | | which those
seeking indemnification or advancement of expenses | 21 | | may be entitled under any by-law bylaw ,
agreement, vote of | 22 | | members or disinterested directors, or
otherwise, both as to | 23 | | action in his or her official capacity
and as to action in | 24 | | another capacity while holding such
office , and shall continue | 25 | | as to a person who has ceased to
be a director, officer, | 26 | | employee or agent, and shall inure
to the benefit of the heirs, |
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| 1 | | executors and administrators of
such a person . A right to | 2 | | indemnification or to advancement of expenses arising under a | 3 | | provision of the articles
of incorporation or a by-law shall | 4 | | not be eliminated or impaired by an amendment to such
provision | 5 | | after the occurrence of the act or omission that is the subject | 6 | | of the civil, criminal,
administrative or investigative | 7 | | action, suit or proceeding for which indemnification or
| 8 | | advancement of expenses is sought, unless the provision in | 9 | | effect at the time of such act or
omission explicitly | 10 | | authorizes such elimination or impairment after such act or | 11 | | omission has
occurred.
| 12 | | (g) A corporation may purchase and maintain insurance on
| 13 | | behalf of any person who is or was a director, officer,
| 14 | | employee or agent of the corporation, or who is or was
serving | 15 | | at the request of the corporation as a director,
officer, | 16 | | employee or agent of another corporation,
partnership, joint | 17 | | venture, trust or other enterprise,
against any liability | 18 | | asserted against such person and
incurred by such person in any | 19 | | such capacity, or arising out
of his or her status as such, | 20 | | whether or not the corporation
would have the power to | 21 | | indemnify such person against such
liability under the | 22 | | provisions of this Section.
| 23 | | (h) In the case of a corporation with members entitled to
| 24 | | vote, if a corporation indemnifies or advances
expenses under | 25 | | subsection (b) of this Section to a director or
officer, the | 26 | | corporation shall report the indemnification
or advance in |
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| 1 | | writing to the members entitled to vote with
or before the | 2 | | notice of the next meeting of the members
entitled to vote.
| 3 | | (i) For purposes of this Section, references to "the
| 4 | | corporation" shall include, in addition to the surviving
| 5 | | corporation, any merging corporation (including any
| 6 | | corporation having merged with a merging corporation)
absorbed | 7 | | in a merger which, if its separate existence had
continued, | 8 | | would have had the power and authority to
indemnify its | 9 | | directors, officers, employees or agents, so
that any person | 10 | | who was a director, officer, employee or
agent of such merging | 11 | | corporation, or was serving at the
request of such merging | 12 | | corporation as a director, officer,
employee or agent of | 13 | | another corporation, partnership, joint
venture, trust or | 14 | | other enterprise, shall stand in the same
position under the | 15 | | provisions of this Section with respect
to the surviving | 16 | | corporation as such person would have with
respect to such | 17 | | merging corporation if its separate
existence had continued.
| 18 | | (j) For purposes of this Section, references to "other
| 19 | | enterprises" shall include employee benefit plans;
references | 20 | | to "fines" shall include any excise taxes
assessed on a person | 21 | | with respect to an employee benefit
plan; and references to | 22 | | "serving at the request of the
corporation" shall include any | 23 | | service as a director,
officer, employee or agent of the | 24 | | corporation which imposes
duties on, or involves services by | 25 | | such director, officer,
employee, or agent with respect to an | 26 | | employee benefit plan,
its participants, or beneficiaries. A |
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| 1 | | person who acted in
good faith and in a manner he or she | 2 | | reasonably believed to
be in the best interests of the | 3 | | participants and
beneficiaries of an employee benefit plan | 4 | | shall be deemed to
have acted in a manner "not opposed to the | 5 | | best interests of
the corporation" as referred to in this | 6 | | Section.
| 7 | | (k) The indemnification and advancement of expenses | 8 | | provided by or granted under
this Section shall, unless | 9 | | otherwise provided when authorized or ratified, continue as to | 10 | | a person
who has ceased to be a director, officer, employee, or | 11 | | agent and shall inure to the benefit of the
heirs, executors | 12 | | and administrators of that person. | 13 | | (l) (k) The changes to this Section made by this amendatory | 14 | | Act of the 92nd
General Assembly apply only to actions | 15 | | commenced on or after the
effective date of this amendatory Act | 16 | | of the 92nd General Assembly.
| 17 | | (Source: P.A. 92-33, eff. 7-1-01.)
| 18 | | Section 99. Effective date. This Act takes effect upon | 19 | | becoming law. |
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