The directors filed this suit seeking an order requiring both the old and new companies to indemnify them for their settlement expenses. The defendants moved to dismiss that action pursuant to Court of Chancery Rule 12(b)(6). The Court dismissed the plaintiffs’ claims as to the new holding company, which the Court found as a matter of law had no obligation to indemnify its predecessors’ former directors and officers. However, the Court denied the motion to dismiss as to the old company. Defendants argued that all counts against New Hayes should be dismissed because the plaintiffs were never directors of New Hayes. Defendants moved to dismiss the complaint against both Old and New Hayes because, they argued, the plaintiffs had breached their indemnification agreements. The outside directors never were directors of New Hayes, and never signed indemnification agreements with that entity. The only remaining claims for indemnification, therefore, are against Old Hayes, by virtue of the plaintiffs’ indemnification agreements with that company, as authorized by the Old Hayes bylaws. There is no indication that the indemnification provision requires the plaintiffs in this case to issue a written demand on Old Hayes. The Court finds the indemnification agreements are clear that no written demand for indemnification is required. The defendants claimed the Court should stay the plaintiffs’ indemnification action until the SEC concludes its investigation of the underlying accounting irregularities and financial restatements that gave rise to the class action.
