This excerpt taken from the MRVL DEF 14A filed May 8, 2006.
At the Annual General Meeting, the shareholders will be asked to approve an amendment to the Companys Second Amended and Restated Bye-Laws. The amendment adds a right to advancement of expenses for directors and officers and clarifies the rights of directors and officers to indemnification by the Company in the event they incur personal liability or expense as a result of litigation against them in their capacity as directors and officers. The proposed amendments to the Bye-laws that will be made to the extent the shareholders approve the amendments are set forth in Appendix B, with deletions indicated by strikeout and additions indicated by underline. The current provisions and proposed amendments described below are qualified in their entirety by reference to the actual text as set forth in Appendix B.
The Second Amended and Restated Bye-laws provide for indemnification of expenses incurred by a director or officer in the execution of his or her duty but is silent as to the timing and process of such payments by the Company. The amendment adds additional provisions to mandate, without first requiring the Boards authorization, the advancement of expenses as they are incurred by a director or officer in defending any action, suit or proceeding not involving allegations of fraud or dishonesty on the part of the director or officer so long as the director or officer undertakes to repay such expenses if it is determined that he or she is not entitled to indemnity by the Company. In addition, the amendment clarifies that the Company is not required to advance any expenses to a person against whom the Company directly brings a claim. However, the Company would be required to pay all expenses if the director or officer obtains a judgment in his or her favor in such proceeding.
Under the Second Amended and Restated Bye-laws, the Company is only authorized to indemnify directors and officers while they are serving as such. The amendment extends indemnification protection to include former directors and officers.
In addition, the amendment clarifies that any person seeking indemnification under the Bye-laws in connection with a proceeding he or she initiates will only be indemnified if the proceeding was authorized by the Board.
The directors recognize they have a personal interest in this matter; however, they believe this amendment is in the best interest of the Company and its shareholders, primarily because minimizing the personal financial risks of serving the Company will make it easier for the Company to recruit and retain qualified directors and officers in the years ahead. Moreover, relieving officers and directors from these risks will permit them to exercise judgment on behalf of the Company without being unduly cautious out of fear of unexpected and perhaps unfounded personal claims.