Section: Nonprofit Corporation Act

1. A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if both of the following conditions exist:
   1. The director furnishes to the corporation a written affirmation of the director’s good faith belief that the director has met the standard of conduct described in section 10-3851 or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of incorporation pursuant to section 10-3202, subsection B, paragraph 1.
   2. The director furnishes the corporation with a written undertaking, executed personally or on the director’s behalf, to repay the advance if the director is not entitled to mandatory indemnification under section 10-3852 and it is ultimately determined that the director did not meet the standard of conduct.
2. The undertaking required by subsection A, paragraph 2 of this section is an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.
3. Authorizations of payments under this section shall be made in a manner consistent with section 10-3830 or 10-3842.
4. This section does not apply to advancement of expenses to or for the benefit of an outside director. Advances to outside directors shall be made pursuant to section 10-3852.

1. Unless limited by its articles of incorporation, a corporation shall indemnify a director who was the prevailing party, on the merits or otherwise, in the defense of any proceeding to which the director was a party because the director is or was a director of the corporation against reasonable expenses incurred by the director in connection with the proceeding.
2. Unless limited by its articles of incorporation, section 10-851, subsection D or subsection C of this section, a corporation shall indemnify an outside director against liability. Unless limited by its articles of incorporation or subsection C of this section, a corporation shall pay an outside director’s expenses in advance of a final disposition of a proceeding, if the director furnishes the corporation with a written affirmation of the director’s good faith belief that the director has met the standard of conduct described in section 10-851, subsection A and the director furnishes the corporation with a written undertaking executed personally, or on the director’s behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct. The undertaking required by this subsection is an unlimited general obligation of the director but need not be secured and shall be accepted without reference to the director’s financial ability to make repayment.
3. A corporation shall not provide the indemnification or advancement of expenses described in subsection B of this section if a court of competent jurisdiction has determined before payment that the outside director failed to meet the standards described in section 10-851, subsection A, and a court of competent jurisdiction does not otherwise authorize payment under section 10-854. A corporation shall not delay payment of indemnification or expenses under subsection B of this section for more than sixty days after a request is made unless ordered to do so by a court of competent jurisdiction.

1. Except as provided in subsection D of this section, a corporation may indemnify an individual made a party to a proceeding because either:
   1. The individual is or was a director against liability incurred in the proceeding if all of the following conditions exist:
      1. The individual’s conduct was in good faith.
      2. The individual reasonably believed:
         1. In the case of conduct in an official capacity with the corporation, that the conduct was in its best interests.
         2. In all other cases, that the conduct was at least not opposed to its best interests.
      3. In the case of any criminal proceedings, the individual had no reasonable cause to believe the conduct was unlawful.
   2. The director engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation pursuant to section 10-3202, subsection B, paragraph 2.
2. A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection A, paragraph 1, subdivision (a) of this section.
3. The termination of a proceeding by judgment, order, settlement or conviction or on a plea of no contest or its equivalent is not of itself determinative that the director did not meet the standard of conduct described in this section.
4. A corporation may not indemnify a director under this section either:
   1. In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation.
   2. In connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in the director’s official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.
5. Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

In this article, unless the context otherwise requires:

1. “Corporation” includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.
2. “Director” means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation’s request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other entity. A director is considered to be serving an employee benefit plan at the corporation’s request if the director’s duties to the corporation also impose duties on or otherwise involve services by the director to the plan or to participants in or beneficiaries of the plan. Director includes the estate or personal representative of a director and includes ex officio members of the board.
3. “Expenses” include attorney fees and other costs and expenses reasonably related to a proceeding.
4. “Liability” means the obligation to pay a judgment, settlement, penalty or fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses actually incurred with respect to a proceeding and includes obligations and expenses that have not yet been paid by the indemnified persons but that have been or may be incurred.
5. “Officer” means an individual who is or was an officer of a corporation or an individual who, while an officer of a corporation, is or was serving at the corporation’s request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other entity. An officer is considered to be serving an employee benefit plan at the corporation’s request if the officer’s duties to the corporation also impose duties on or otherwise involve services by the officer to the plan or to participants in or beneficiaries of the plan. Officer includes the estate or personal representative of an officer.
6. “Official capacity” means if used with respect to a director, the office of director in a corporation and, if used with respect to an officer as contemplated in section 10-3856, the office in a corporation held by the officer. Official capacity does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other entity.
7. “Outside director” means a director who, when serving as a director, is not or was not a compensated officer, employee or member holding more than ten per cent of the voting power of the corporation or any affiliate of the corporation or an officer, employee or holder of more than ten per cent of the voting power of such a member or any affiliate of that member.
8. “Party” includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.
9. “Proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal.

Any contract or other instrument in writing executed or entered into between a corporation and any other person is not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the contract or other instrument if it is signed by two individuals who are either:

1. Both the presiding officer of the board of directors and the president.
2. Either the presiding officer of the board of directors or the president, and one of the following:
   1. A vice-president.
   2. The secretary.
   3. The treasurer.
   4. The executive director.

1. The appointment of an officer does not itself create contract rights.
2. An officer’s removal does not affect the officer’s contract rights, if any, with the corporation. An officer’s resignation does not affect the corporation’s contract rights, if any, with the officer.

1. An officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective date or event. If a resignation is made effective at a later date or event and the corporation accepts the later effective date, its board of directors may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date.
2. A board of directors may remove any officer at any time with or without cause.

1. If an officer has discretionary authority with respect to any duties, an officer’s duties shall be discharged under that authority:
   1. In good faith.
   2. With the care an ordinarily prudent person in a like position would exercise under similar circumstances.
   3. In a manner the officer reasonably believes to be in the best interests of the corporation.
2. In discharging duties, an officer is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by either:
   1. One or more officers or employees of the corporation whom the officer reasonably believes to be reliable and competent in the matters presented.
   2. Legal counsel, public accountants or other persons as to matters the officer reasonably believes are within the person’s professional or expert competence.
   3. In the case of corporations organized for religious purposes, religious authorities and ministers, priests, rabbis or other persons whose position or duties in the religious organization the officer believes justify reliance and confidence and who the officer believes to be reliable and competent in the matters presented.
3. An officer is not acting in good faith if the officer has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection B unwarranted.
4. An officer is not liable for any action taken as an officer or any failure to take any action if the officer’s duties were performed in compliance with this section. In any proceeding commenced under this section or any other provision of this chapter, an officer has all of the defenses and presumptions ordinarily available to an officer. An officer is presumed in all cases to have acted, failed to act or otherwise discharged such officer’s duties in accordance with subsection A. The burden is on the party challenging an officer’s action, failure to act or other discharge of duties to establish by clear and convincing evidence facts rebutting the presumption.

Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties and authority prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties and authority of other officers.

1. A corporation shall have the officers described in its articles of incorporation or bylaws or appointed by the board of directors in accordance with the articles of incorporation or bylaws.
2. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.
3. The bylaws or the board of directors shall delegate to one of the officers responsibility for preparing minutes of the directors’ and members’ meetings and for authenticating records of the corporation.
4. The same individual may simultaneously hold more than one office in a corporation.

1. A director who votes for or assents to a distribution made in violation of sections 10-11301 and 10-11302 or the articles of incorporation is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating sections 10-11301 and 10-11302 or the articles of incorporation if it is established that the director’s duties were not performed in compliance with section 10-3830.
2. A director of a corporation who is present at a meeting of its board of directors at which action on any distribution in violation of section 10-11301 is taken is presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to the action with the secretary of the meeting before the adjournment of the meeting or forwards the dissent by registered or certified mail to the secretary of the corporation before 5:00 p.m. of the next business day after the adjournment of the meeting. The right to dissent does not apply to a director who voted in favor of the action.
3. A director who is held liable under subsection A of this section for an unlawful distribution is entitled to contribution from:
   1. Every other director who could be held liable under subsection A of this section for the unlawful distribution.
   2. Each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the distribution knew it was made in violation of sections 10-11301 and 10-11302 or the articles of incorporation.
4. A proceeding under this section is barred unless it is commenced within two years after the date on which the distribution is made.

1. A director’s duties, including duties as a member of a committee, shall be discharged:
   1. In good faith.
   2. With the care an ordinarily prudent person in a like position would exercise under similar circumstances.
   3. In a manner the director reasonably believes to be in the best interests of the corporation.
2. In discharging duties, a director is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by any of the following:
   1. One or more officers or employees of the corporation whom the director reasonably believes are reliable and competent in the matters presented.
   2. Legal counsel, public accountants or other person as to matters the director reasonably believes are within the person’s professional or expert competence.
   3. A committee of or appointed by the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence.
   4. In the case of corporations organized for religious purposes, religious authorities and ministers, priests, rabbis or other persons whose position or duties in the religious organization the director believes justify reliance and confidence and whom the director believes to be reliable and competent in the matters presented.
3. A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection B unwarranted.
4. A director is not liable for any action taken as a director or any failure to take any action if the director’s duties were performed in compliance with this section. In any proceeding commenced under this section or any other provision of this chapter, a director has all of the defenses and presumptions ordinarily available to a director. A director is presumed in all cases to have acted, failed to act or otherwise discharged such director’s duties in accordance with subsection A. The burden is on the party challenging a director’s action, failure to act or other discharge of duties to establish by clear and convincing evidence facts rebutting the presumption.
5. A director shall not be deemed to be a trustee with respect to the corporation or with respect to any property held or administered by the corporation, including property that may be subject to restrictions imposed by the donor or transferor of that property.