2023 Tennessee Code › Title 61 - PARTNERSHIPS (§§ 61-1-101 — 61-3-1207) › Chapter 2 - REVISED UNIFORM LIMITED PARTNERSHIP ACT (§§ 61-2-101 — 61-2-1209) › Part 1 - GENERAL PROVISIONS (§§ 61-2-101 — 61-2-109) › Section 61-2-109 - Indemnification of partner - Advancement of expenses

(a)
(1)
Subject to such standards and restrictions, if any, as are set forth in its partnership agreement, a limited partnership may, and shall have the power to, indemnify and hold harmless any partner or other person from and against any and all claims and demands whatsoever if:
(A)
He conducted himself in good faith;
(B)
He reasonably believed:
(i)
In the case of conduct in his official capacity with the partnership, that his conduct was in its best interests; and
(ii)
In all other cases, that his conduct was at least not opposed to its best interests; and
(C)
In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.
(2)
The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the partner did not meet the standard of conduct described in this section.
(b)
Unless limited by its partnership agreement, a partnership shall indemnify a partner who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he is a party because he is or was a partner of the partnership against reasonable expenses incurred by him in connection with the proceeding.
(c)
(1)
A partnership may pay for or reimburse the reasonable expenses incurred by a partner who is a party to a proceeding in advance of final disposition of the proceeding if:
(A)
The partner furnishes the partnership with a written affirmation of his good faith belief that he has met the standard of conduct described in subsection (a);
(B)
The partner furnishes the partnership with a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he is not entitled to indemnification; and
(C)
A determination is made that the facts then known to those making the determination would not preclude indemnification under this section;
(2)
The undertaking required by subdivision (c)(1)(B) must be an unlimited general obligation of the partner but need not be secured and may be accepted without reference to financial ability to make repayment; and
(3)
Determinations and authorizations of payments under this section shall be made in the manner specified in subsection (e).
(d)
Unless the partnership agreement provides otherwise, a partner of the partnership who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary may order indemnification if it determines:
(1)
That the partner is entitled to mandatory indemnification under subsection (b), in which case the court shall also order the partnership to pay the partner's reasonable expenses incurred to obtain court-ordered indemnification; or
(2)
The partner is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances, whether or not he is entitled to mandatory indemnification under subsection (b).
(e)
(1)
A partnership may not indemnify a partner under subsection (a) unless authorized in the specific case after a determination has been made that indemnification of the partner is permissible in the circumstances because he has met the standard of conduct set forth in subsection (a).
(2)
The determination shall be made:
(A)
By the general partners by majority vote of a quorum consisting of partners not at the time parties to the proceeding;
(B)
If a quorum cannot be obtained under subdivision (e)(2)(A), by majority vote of a committee duly designated by the general partners (in which designation partners who are parties may participate), consisting solely of two (2) or more partners not at the time parties to the proceeding;
(C)
By independent special legal counsel:
(i)
Selected by the general partners or its committee in the manner prescribed in subdivision (e)(2)(A) or (e)(2)(B); or
(ii)
If a quorum of the partners cannot be obtained under subdivision (e)(2)(A) and a committee cannot be designated under subdivision (e)(2)(B), selected by majority vote of the general partners (in which selection partners who are parties may participate); or
(D)
By the limited partners, but those who are at the time parties to the proceeding may not vote on the determination.
(3)
Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subdivision (e)(2)(C) to select counsel.
(f)
Unless the partnership agreement provides otherwise:
(1)
A limited partner of the partnership who is not a general partner is entitled to mandatory indemnification under subsection (b), and is entitled to apply for a court-ordered indemnification under subsection (d), in each case to the same extent as a general partner;
(2)
The partnership may indemnify and advance expenses under this part to an officer, employee or agent of the partnership who is not a partner to the same extent as to a partner; and
(3)
A partnership may also indemnify and advance expenses to an officer, employee or agent who is not a partner to the extent, consistent with public policy, that may be provided by its partnership agreement, general or specific action of its partners or contract.
(g)
A partnership may purchase and maintain insurance on behalf of an individual who is or was a partner, officer, employee or agent of the partnership, or who, while a partner, officer, employee or agent of the partnership, is or was serving at the request of the corporation as a partner, officer, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against the liability asserted against or incurred by him in that capacity or arising from his status as a partner, officer, employee or agent, whether or not the partnership would have power to indemnify him against the same liability under this section.
(h)
(1)
The indemnification and advancement of expenses granted pursuant to, or provided by, this section shall not be deemed exclusive of any other rights to which a partner, officer, employee or agent seeking indemnification or advancement of expenses may be entitled, whether contained in this section, the partnership agreement, action of partners or an agreement providing for such indemnification; provided, however, that no indemnification may be made to or on behalf of any person if a judgment or other final adjudication adverse to the person establishes his liability:
(A)
For any breach of the duty of loyalty to the partnership or its partners;
(B)
For acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or
(C)
For any distribution made in violation of the partnership agreement or any section of this chapter.
(2)
This part does not limit a partnership's power to pay or reimburse expenses incurred by a partner, officer, employee or agent in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent to the proceeding.
Acts 1988, ch. 922, § 1.