the Representative must have had no reasonable cause to believe his or her conduct was unlawful. In general, the power to indemnify under these sections does not exist in the case of actions
against a director or officer by or in the right of the corporation if the person otherwise entitled to indemnification shall have been adjudged to be liable to the corporation unless it is judicially determined that, despite the adjudication of
liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnification for specified expenses.
Section 1743 of the PBCL provides mandatory indemnification for a present or former director or officer if he or she succeeds on the
merits or otherwise in the defense of any claim or action or proceeding, or in defense of any claim, issue or matter therein. The corporation must indemnify him or her to the extent of his or her actual and reasonable expenses (including
attorney’s fees) incurred in connection with the claim or action.
Section 1745 of the PBCL states that expenses (including
attorneys’ fees) incurred in defending any third-party or derivative action or proceeding may be paid by a business corporation in advance of the final disposition of the action or proceeding upon receipt of an undertaking by or on behalf of
the Representative to repay the amount if it is ultimately determined that such person is not entitled to be indemnified by the corporation as authorized by the PBCL or otherwise. Except as otherwise provided in the corporation’s articles or
bylaws, advancement of expenses must be authorized by the board of directors of the corporation. The PBCL provisions ordinarily governing transactions with interested directors or officers, or interested shareholders (Sections 1728 and 2538 of the
PBCL) do not apply to the authorization of advancement.
Section 1746(a) states that the statutory rights of indemnification and
advancement of expenses shall not be deemed exclusive of any other rights to which a person might be entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, both as to the action in his or her official
capacity and as to the action or proceeding in another capacity while holding that office. Section 1746(c) specifies that indemnification pursuant to Section 1746(a) may be made even if the corporation would not have the power to make such
indemnification under other provisions of law, and may be made even in the case of an action by or in the right of the corporation. Such indemnification is declared to be consistent with Pennsylvania’s public policy. However,
Section 1746(b) forbids indemnification under subsection 1746(a) to be made in any case where the act or failure to act giving rise to the claim is determined by a court to be willful misconduct or recklessness. A corporation’s articles of
incorporation may not provide for indemnification in the case of willful misconduct or recklessness.
The PBCL, in Section 1747, also
authorizes corporations to purchase and maintain insurance on behalf of a Representative or a person who is or was serving at the request of the corporation as a Representative of another domestic or foreign entity, whether or not the corporation
would have the power to indemnify him or her, unless otherwise restricted in its bylaws. Such insurance is declared to be consistent with Pennsylvania’s public policy.
Section 1750 of the PBCL provides that the indemnification and advancement of expenses provided by, or granted pursuant to Subchapter D
of the PBCL shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Representative and shall inure to the benefit of the heirs and personal representatives of that
person. Section 1750 of the PBCL provides that the right to indemnification or to advancement of expenses arising under a provision of the articles or bylaws may not be eliminated or impaired by an amendment to or repeal of
the provision after the occurrence of an act that is the subject of the threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, for which indemnification or advancement of expenses is sought,
unless the provision in effect at the time of the act explicitly authorizes the elimination or impairment after an act has occurred.
Section 9.02 of the Registrant’s bylaws provides that a director will not be personally liable for monetary damages for any action
taken, or any failure to take any action, unless the director has breached or failed to perform the duties of his or her office under Section 9.01 of the Registrant’s bylaws (relating to standard of care and justifiable reliance) and the
breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. A director’s criminal or tax liability is not limited by the foregoing provision.
Section 9.03 of the Registrant’s bylaws requires the Registrant to indemnify any director or officer of the Registrant to the
fullest extent not prohibited by law in connection with any actual or threatened action, suit or proceeding for indemnification, or that may give rise to indemnification, that (1) is brought against a person entitled to indemnification under
Article IX of the bylaws, and (2) arises out of the service of that person to the Registrant, or to another enterprise at the request of the Registrant (referred to as an “indemnification action”). The Registrant
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