SB1127 EngrossedLRB097 04845 AEK 44884 b

1    AN ACT concerning corporations.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Business Corporation Act of 1983 is amended
5by 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,
8employees and agents; insurance.
9    (a) A corporation may indemnify any person who was or is a
10party, or is threatened to be made a party to any threatened,
11pending or completed action, suit or proceeding, whether civil,
12criminal, administrative or investigative (other than an
13action by or in the right of the corporation) by reason of the
14fact that he or she is or was a director, officer, employee or
15agent of the corporation, or who is or was serving at the
16request of the corporation as a director, officer, employee or
17agent of another corporation, partnership, joint venture,
18trust or other enterprise, against expenses (including
19attorneys' fees), judgments, fines and amounts paid in
20settlement actually and reasonably incurred by such person in
21connection with such action, suit or proceeding, if such person
22acted in good faith and in a manner he or she reasonably
23believed to be in, or not opposed to the best interests of the

 

 

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1corporation, and, with respect to any criminal action or
2proceeding, had no reasonable cause to believe his or her
3conduct was unlawful. The termination of any action, suit or
4proceeding by judgment, order, settlement, conviction, or upon
5a plea of nolo contendere or its equivalent, shall not, of
6itself, create a presumption that the person did not act in
7good faith and in a manner which he or she reasonably believed
8to be in or not opposed to the best interests of the
9corporation or, with respect to any criminal action or
10proceeding, that the person had reasonable cause to believe
11that his or her conduct was unlawful.
12    (b) A corporation may indemnify any person who was or is a
13party, or is threatened to be made a party to any threatened,
14pending or completed action or suit by or in the right of the
15corporation to procure a judgment in its favor by reason of the
16fact that such person is or was a director, officer, employee
17or agent of the corporation, or is or was serving at the
18request of the corporation as a director, officer, employee or
19agent of another corporation, partnership, joint venture,
20trust or other enterprise, against expenses (including
21attorneys' fees) actually and reasonably incurred by such
22person in connection with the defense or settlement of such
23action or suit, if such person acted in good faith and in a
24manner he or she reasonably believed to be in, or not opposed
25to, the best interests of the corporation, provided that no
26indemnification shall be made with respect to any claim, issue,

 

 

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1or matter as to which such person has been adjudged to have
2been liable to the corporation, unless, and only to the extent
3that the court in which such action or suit was brought shall
4determine upon application that, despite the adjudication of
5liability, but in view of all the circumstances of the case,
6such person is fairly and reasonably entitled to indemnity for
7such expenses as the court shall deem proper.
8    (c) To the extent that a present or former director,
9officer or employee of a corporation has been successful, on
10the merits or otherwise, in the defense of any action, suit or
11proceeding referred to in subsections (a) and (b), or in
12defense of any claim, issue or matter therein, such person
13shall be indemnified against expenses (including attorneys'
14fees) actually and reasonably incurred by such person in
15connection therewith, if the person acted in good faith and in
16a manner he or she reasonably believed to be in, or not opposed
17to, 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
20corporation only as authorized in the specific case, upon a
21determination that indemnification of the present or former
22director, officer, employee or agent is proper in the
23circumstances because he or she has met the applicable standard
24of conduct set forth in subsections (a), (b), or (c) (b). Such
25determination shall be made with respect to a person who is a
26director or officer of the corporation at the time of the

 

 

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1determination: (1) by the majority vote of the directors who
2are not parties to such action, suit or proceeding, even though
3less than a quorum, (2) by a committee of such the directors
4who are not parties to such action, suit, or proceeding, even
5though less than a quorum, designated by a majority vote of
6such the directors, (3) if there are no such directors, or if
7such the directors so direct, by independent legal counsel in a
8written opinion, or (4) by the shareholders.
9    (e) Expenses (including attorney's fees) incurred by an
10officer or director of the corporation in defending a civil or
11criminal action, suit or proceeding may be paid by the
12corporation in advance of the final disposition of such action,
13suit or proceeding upon receipt of an undertaking by or on
14behalf of such the director or officer to repay such amount if
15it shall ultimately be determined that such person is not
16entitled to be indemnified by the corporation as authorized in
17this Section. Such expenses (including attorney's fees)
18incurred by former directors and officers or other employees
19and agents of the corporation or by persons serving at the
20request of the corporation as directors, officers, employees or
21agents of another corporation, partnership, joint venture,
22trust or other enterprise may be so paid on such terms and
23conditions, if any, as the corporation deems appropriate.
24    (f) The indemnification and advancement of expenses
25provided by or granted under the other subsections of this
26Section shall not be deemed exclusive of any other rights to

 

 

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1which those seeking indemnification or advancement of expenses
2may be entitled under any by-law, agreement, vote of
3shareholders or disinterested directors, or otherwise, both as
4to action in his or her official capacity and as to action in
5another capacity while holding such office. A right to
6indemnification or to advancement of expenses arising under a
7provision of the articles of incorporation or a by-law shall
8not be eliminated or impaired by an amendment to such provision
9after the occurrence of the act or omission that is the subject
10of the civil, criminal, administrative or investigative
11action, suit or proceeding for which indemnification or
12advancement of expenses is sought, unless the provision in
13effect at the time of such act or omission explicitly
14authorizes such elimination or impairment after such act or
15omission has occurred.
16    (g) A corporation may purchase and maintain insurance on
17behalf of any person who is or was a director, officer,
18employee or agent of the corporation, or who is or was serving
19at the request of the corporation as a director, officer,
20employee or agent of another corporation, partnership, joint
21venture, trust or other enterprise, against any liability
22asserted against such person and incurred by such person in any
23such capacity, or arising out of his or her status as such,
24whether or not the corporation would have the power to
25indemnify such person against such liability under the
26provisions of this Section.

 

 

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1    (h) If a corporation indemnifies or advances expenses to a
2director or officer under subsection (b) of this Section, the
3corporation shall report the indemnification or advance in
4writing to the shareholders with or before the notice of the
5next shareholders meeting.
6    (i) For purposes of this Section, references to "the
7corporation" shall include, in addition to the surviving
8corporation, any merging corporation (including any
9corporation having merged with a merging corporation) absorbed
10in a merger which, if its separate existence had continued,
11would have had the power and authority to indemnify its
12directors, officers, and employees or agents, so that any
13person who was a director, officer, employee or agent of such
14merging corporation, or was serving at the request of such
15merging corporation as a director, officer, employee or agent
16of another corporation, partnership, joint venture, trust or
17other enterprise, shall stand in the same position under the
18provisions of this Section with respect to the surviving
19corporation as such person would have with respect to such
20merging corporation if its separate existence had continued.
21    (j) For purposes of this Section, references to "other
22enterprises" shall include employee benefit plans; references
23to "fines" shall include any excise taxes assessed on a person
24with respect to an employee benefit plan; and references to
25"serving at the request of the corporation" shall include any
26service as a director, officer, employee or agent of the

 

 

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1corporation which imposes duties on, or involves services by
2such director, officer, employee, or agent with respect to an
3employee benefit plan, its participants, or beneficiaries. A
4person who acted in good faith and in a manner he or she
5reasonably believed to be in the best interests of the
6participants and beneficiaries of an employee benefit plan
7shall be deemed to have acted in a manner "not opposed to the
8best interest of the corporation" as referred to in this
9Section.
10    (k) The indemnification and advancement of expenses
11provided by or granted under this Section shall, unless
12otherwise provided when authorized or ratified, continue as to
13a person who has ceased to be a director, officer, employee, or
14agent and shall inure to the benefit of the heirs, executors,
15and administrators of that person.
16    (l) The changes to this Section made by this amendatory Act
17of the 92nd General Assembly apply only to actions commenced on
18or after the effective date of this amendatory Act of the 92nd
19General Assembly.
20(Source: P.A. 94-889, eff. 1-1-07.)
 
21    Section 10. The General Not For Profit Corporation Act of
221986 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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1employees and agents; insurance.
2    (a) A corporation may indemnify any person who was or is a
3party, or is threatened to be made a party to any threatened,
4pending or completed action, suit or proceeding, whether civil,
5criminal, administrative or investigative (other than an
6action by or in the right of the corporation) by reason of the
7fact that he or she is or was a director, officer, employee or
8agent of the corporation, or who is or was serving at the
9request of the corporation as a director, officer, employee or
10agent of another corporation, partnership, joint venture,
11trust or other enterprise, against expenses (including
12attorneys' fees), judgments, fines and amounts paid in
13settlement actually and reasonably incurred by such person in
14connection with such action, suit or proceeding, if such person
15acted in good faith and in a manner he or she reasonably
16believed to be in, or not opposed to, the best interests of the
17corporation, and, with respect to any criminal action or
18proceeding, had no reasonable cause to believe his or her
19conduct was unlawful. The termination of any action, suit or
20proceeding by judgment, order, settlement, conviction, or upon
21a plea of nolo contendere or its equivalent, shall not, of
22itself, create a presumption that the person did not act in
23good faith and in a manner which he or she reasonably believed
24to be in or not opposed to the best interests of the
25corporation or, with respect to any criminal action or
26proceeding, that the person had reasonable cause to believe

 

 

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1that his or her conduct was unlawful.
2    (b) A corporation may indemnify any person who was or is a
3party, or is threatened to be made a party to any threatened,
4pending or completed action or suit by or in the right of the
5corporation to procure a judgment in its favor by reason of the
6fact that such person is or was a director, officer, employee
7or agent of the corporation, or is or was serving at the
8request of the corporation as a director, officer, employee or
9agent of another corporation, partnership, joint venture,
10trust or other enterprise, against expenses (including
11attorneys' fees) actually and reasonably incurred by such
12person in connection with the defense or settlement of such
13action or suit, if such person acted in good faith and in a
14manner he or she reasonably believed to be in, or not opposed
15to, the best interests of the corporation, provided that no
16indemnification shall be made in respect of any claim, issue or
17matter as to which such person shall have been adjudged to be
18liable for negligence or misconduct in the performance of his
19or her duty to the corporation, unless, and only to the extent
20that the court in which such action or suit was brought shall
21determine upon application that, despite the adjudication of
22liability, but in view of all the circumstances of the case,
23such person is fairly and reasonably entitled to indemnity for
24such expenses as the court shall deem proper.
25    (c) To the extent that a present or former director,
26officer or employee of a corporation has been successful, on

 

 

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1the merits or otherwise, in the defense of any action, suit or
2proceeding referred to in subsections (a) and (b), or in
3defense of any claim, issue or matter therein, such person
4shall be indemnified against expenses (including attorneys'
5fees) actually and reasonably incurred by such person in
6connection therewith, if that person acted in good faith and in
7a manner he or she reasonably believed to be in, or not opposed
8to, 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
11corporation only as authorized in the specific case, upon a
12determination that indemnification of the present or former
13director, officer, employee or agent is proper in the
14circumstances because he or she has met the applicable standard
15of conduct set forth in subsections (a), (b), or (c) (b). Such
16determination shall be made with respect to a person who is a
17director or officer of the corporation at the time of the
18determination: (1) by the majority vote of the directors who
19are not parties to such action, suit or proceeding, even though
20less than a quorum, (2) by a committee of such the directors
21designated by a majority vote of the directors, even though
22through less than a quorum, designated by a majority vote of
23such directors, (3) if there are no such directors, or if such
24the directors so direct, by independent legal counsel in a
25written opinion, or (4) by the members entitled to vote, if
26any.

 

 

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1    (e) Expenses (including attorney's fees) incurred by an
2officer or director of the corporation in defending a civil or
3criminal action, suit or proceeding may be paid by the
4corporation in advance of the final disposition of such action,
5suit or proceeding, as authorized by the board of directors in
6the specific case, upon receipt of an undertaking by or on
7behalf of such the director or officer to repay such amount,
8unless it shall ultimately be determined that such person is
9entitled to be indemnified by the corporation as authorized in
10this Section. Such expenses (including attorney's fees)
11incurred by former directors and officers or other employees
12and agents of the corporation or by persons serving at the
13request of the corporation as directors, officers, employees or
14agents of another corporation, partnership, joint venture,
15trust or other enterprise may be so paid on such terms and
16conditions, if any, as the corporation deems appropriate.
17    (f) The indemnification and advancement of expenses
18provided by or granted under the other subsections of this the
19Section shall not be deemed exclusive of any other rights to
20which those seeking indemnification or advancement of expenses
21may be entitled under any by-law bylaw, agreement, vote of
22members or disinterested directors, or otherwise, both as to
23action in his or her official capacity and as to action in
24another capacity while holding such office, and shall continue
25as to a person who has ceased to be a director, officer,
26employee or agent, and shall inure to the benefit of the heirs,

 

 

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1executors and administrators of such a person. A right to
2indemnification or to advancement of expenses arising under a
3provision of the articles of incorporation or a by-law shall
4not be eliminated or impaired by an amendment to such provision
5after the occurrence of the act or omission that is the subject
6of the civil, criminal, administrative or investigative
7action, suit or proceeding for which indemnification or
8advancement of expenses is sought, unless the provision in
9effect at the time of such act or omission explicitly
10authorizes such elimination or impairment after such act or
11omission has occurred.
12    (g) A corporation may purchase and maintain insurance on
13behalf of any person who is or was a director, officer,
14employee or agent of the corporation, or who is or was serving
15at the request of the corporation as a director, officer,
16employee or agent of another corporation, partnership, joint
17venture, trust or other enterprise, against any liability
18asserted against such person and incurred by such person in any
19such capacity, or arising out of his or her status as such,
20whether or not the corporation would have the power to
21indemnify such person against such liability under the
22provisions of this Section.
23    (h) In the case of a corporation with members entitled to
24vote, if a corporation indemnifies or advances expenses under
25subsection (b) of this Section to a director or officer, the
26corporation shall report the indemnification or advance in

 

 

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1writing to the members entitled to vote with or before the
2notice of the next meeting of the members entitled to vote.
3    (i) For purposes of this Section, references to "the
4corporation" shall include, in addition to the surviving
5corporation, any merging corporation (including any
6corporation having merged with a merging corporation) absorbed
7in a merger which, if its separate existence had continued,
8would have had the power and authority to indemnify its
9directors, officers, employees or agents, so that any person
10who was a director, officer, employee or agent of such merging
11corporation, or was serving at the request of such merging
12corporation as a director, officer, employee or agent of
13another corporation, partnership, joint venture, trust or
14other enterprise, shall stand in the same position under the
15provisions of this Section with respect to the surviving
16corporation as such person would have with respect to such
17merging corporation if its separate existence had continued.
18    (j) For purposes of this Section, references to "other
19enterprises" shall include employee benefit plans; references
20to "fines" shall include any excise taxes assessed on a person
21with respect to an employee benefit plan; and references to
22"serving at the request of the corporation" shall include any
23service as a director, officer, employee or agent of the
24corporation which imposes duties on, or involves services by
25such director, officer, employee, or agent with respect to an
26employee benefit plan, its participants, or beneficiaries. A

 

 

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1person who acted in good faith and in a manner he or she
2reasonably believed to be in the best interests of the
3participants and beneficiaries of an employee benefit plan
4shall be deemed to have acted in a manner "not opposed to the
5best interests of the corporation" as referred to in this
6Section.
7    (k) The indemnification and advancement of expenses
8provided by or granted under this Section shall, unless
9otherwise provided when authorized or ratified, continue as to
10a person who has ceased to be a director, officer, employee, or
11agent and shall inure to the benefit of the heirs, executors
12and administrators of that person.
13    (l) (k) The changes to this Section made by this amendatory
14Act of the 92nd General Assembly apply only to actions
15commenced on or after the effective date of this amendatory Act
16of the 92nd General Assembly.
17(Source: P.A. 92-33, eff. 7-1-01.)
 
18    Section 99. Effective date. This Act takes effect upon
19becoming law.