An executive's guilty plea in a criminal matter cannot trump an indemnity agreement that granted reimbursement to corporate officers, the Delaware Court of Chancery has ruled.

Vice Chancellor Donald F. Parsons Jr. said the agreement's language did not require a director to be completely successful in litigation, adding the case could still be dismissed on procedural grounds or the prosecution may drop the case at any point. Parsons' decision granted indemnification to the chairman of a diabetes monitoring device manufacturer that was acquired by a rival, despite the chairman pleading guilty to insider trading.

George H. Holley founded Home Diagnostics Inc. (HDI) and the company was purchased by rival Nipro Diagnostics Inc. for roughly $215 million in 2010, according to a company announcement at that time. Shortly after the acquisition, the U.S. Securities and Exchange Commission began investigating a series of suspicious HDI stock trades around the time of the merger, the court said in its opinion. The SEC commenced a 2011 action against Holley in the U.S. District Court for the District of New Jersey for insider trading.