N.Y. PTR. LAW § 115-c : NY Code - Section 115-C: Indemnification of general partner in actions in the right of a limited partnership to procure a judgment in its favor

Search N.Y. PTR. LAW § 115-c : NY Code - Section 115-C: Indemnification of general partner in actions in the right of a limited partnership to procure a judgment in its favor

1. No
  provision made to indemnify general partners  for  the  defense  of  any
  action  brought  pursuant  to  section  one  hundred  fifteen-a  of this
  article, whether contained  in  the  articles  of  limited  partnership,
  agreement  or  otherwise,  nor  any award of indemnification by a court,
  shall be valid unless consistent with this section.
    2. A limited partnership may indemnify any  general  partner,  made  a
  party  to  an  action in the right of a limited partnership to procure a
  judgment in its favor by reason of the fact that  he,  his  testator  or
  intestate  was a general partner in the limited partnership, against the
  reasonable expenses, including attorneys' fees, actually and necessarily
  incurred by him in connection with the defense of  such  action,  or  in
  connection  with  an appeal therein, except in relation to matters as to
  which such general partner is adjudged to have breached his duty to  the
  limited partnership.
    3.  The  indemnification  authorized  under  subdivision  two  of this
  section shall in no case include
    (a) amounts paid in settling or otherwise disposing  of  a  threatened
  action, or pending action with or without court approval, or
    (b)  expenses  incurred  in  defending a threatened action, or pending
  action which is settled or otherwise disposed of without court approval.
    4. A general partner who has been wholly successful on the  merits  or
  otherwise  in  the  defense  of  an action of the character described in
  subdivision two of this section shall be entitled to indemnification  as
  authorized in subdivisions two and three of this section.
    5.  Except  as  provided  in  subdivision  four  of  this section, any
  indemnification under subdivision two, unless ordered by a  court  under
  subdivision  six,  shall  be  made  by  the  limited partnership only if
  authorized in the specific case
    (a) by a majority of all the general partners, excluding any  partners
  who  are parties to such action, upon a finding that the general partner
  to be  indemnified  has  met  the  standard  of  conduct  set  forth  in
  subdivision two, or,
    (b)  if  a  majority  of  general partners who are not parties to such
  action is not obtainable with due diligence by the  general  partner  or
  partners,   upon   the   opinion   of  independent  legal  counsel  that
  indemnification is proper in the circumstances because the  standard  of
  conduct set forth in subdivision two has been met by the general partner
  to be indemnified.
    6.  (a)  Notwithstanding  the  failure  of  the limited partnership to
  provide indemnification, and despite any contrary determination  by  the
  general  partners,  indemnification  shall  be awarded by a court to the
  extent authorized under subdivisions  two  and  four  of  this  section.
  Application therefor may be made, in every case, either
    (i) in the action in which the expenses were incurred or other amounts
  were paid, or
    (ii)  to the supreme court in a separate proceeding, in which case the
  application shall set forth the disposition of any previous  application
  made  to any court for the same relief and also reasonable cause for the
  failure to make application for such relief in the action in  which  the
  expenses were incurred or other amounts were paid.
    (b)  The  application  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 a court to which it is made. Such application shall  be  on
  notice  to  the limited partnership, given through a general partner, if
  any, other than the general partner making the  application.  The  court
  may  also  direct  that  notice  be  given at the expense of the limited

  partnership, to the limited partners and such other persons  as  it  may
  designate  in  such  manner  as it may require. When there is no general
  partner other than those making the application, notice shall be  given,
  as herein provided, to the limited partners.
    (c)  When  indemnification is sought by judicial action, the court may
  allow a general partner such reasonable expenses,  including  attorneys'
  fees,  during  the  pendency  of  the  litigation  as  are  necessary in
  connection with his defense therein, if the court shall  find  that  the
  defendant  has  by  his pleadings or during the course of the litigation
  raised genuine issues of fact or law.
    7. Expenses incurred in defending an action of the character described
  in subdivision two of this  section  may  be  paid  voluntarily  by  the
  limited  partnership  in advance of the final disposition of such action
  if authorized under subdivision five of this section.
    8. All expenses incurred in defending an action which are  allowed  by
  the  court  under  subdivisions  six  or  seven of this section shall be
  repaid in  case  the  general  partner  receiving  such  advancement  or
  allowance  is  ultimately  found,  under the procedure set forth in this
  section, not to be entitled to indemnification or, where indemnification
  is granted, to the extent  the  expenses  so  advanced  by  the  general
  partnership  or allowed by the court exceed the indemnification to which
  he is entitled.
    9. No indemnification, advancement or allowance shall  be  made  under
  this section in any circumstance where it appears
    (a) that indemnification would be inconsistent with a provision of the
  certificate of limited partnership, agreement, partnership resolution or
  other proper partnership action, in effect at the time of accrual of the
  alleged  cause of action asserted in the threatened or pending action in
  which the expenses were incurred  or  other  amounts  were  paid,  which
  prohibits or otherwise limits indemnification; or
    (b)  if  there  has  been a settlement approved by the court, that the
  indemnification would be inconsistent with any condition with respect to
  indemnification  expressly  imposed  by  the  court  in  approving   the
  settlement.