Nouri v. Smart Online


07/29/09 – 07/29/09

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1 day trial in suit brought to compel advancement of legal fees by former CEO of Smart Online, Inc.

The corporation's by-law stated unambiguously that the corporation shall pay expenses incurred by a director, officer, employee, or agent in defending a proceeding in advance of the final disposition, which was a non-discretionary commitment.

The court concluded that the by-laws' requirement of an undertaking was met precisely as required by the defendant company, and that there was a sufficient nexis between the plaintiff's positions and the charged conduct.

According to the court, the defendant could have and should have drafted a by-law that required a secured bond, a letter of credit, or other reasonable affirmation of the ability to repay in the event that it were ultimately determined that the employee, officer, or director was not entitled to indemnification. The court stated that it is not a defense to advancement that the defendant believes indemnification will not ultimately be warranted.


The court found in favor of the Nouris for advancement of legal fees incurred defending themselves in the Criminal Action and Class Action and pending actions.


Recording Disclaimer: This proceeding was recorded in full.

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