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HomeMy WebLinkAbout87/07/21 RANCHO CUCAMONGA COMMUNITY FOUNDATION RANCHO CU CAMONOA COMMUNITY FOUNDATION AGENDR Lions Parh Community L'enter 9161 Base Line Road Rancho Cucamonga, California 91701 July 21, 1987 - 1:00 p.m. A. CALL TO ORDER 1. Roll Call: Dutton Mc Nay _, Schafer , Beyersdorf _, Lewis _, Grigsby , Barton • B. FOUNDATION BUSINESS 1. Approval of Minutes - June 16, 1987 and July 6, 1987. 2. Treasurer's Report - period end inq June 30. 1987. 3. Foundation Liability Insurance - presentation of options for the Board of Directors to consider in obtaining general liability insurance for the Foundation. 4. Legislation Update - report on the status of pending legislation which may impact Foundation. 5. Foundation Development Plan - report from the Board Subcommittee on the progress of the Foundation Development Plan. C. IDENTIFICATION OF ITEMS FOR NEXT NEETIN6 e This is the time for thn Fnund a!i on Members to identf ft' the items that' wish to discuss at the next meeting. These items will not be discussed at this meeting, only identified for the next meeting. 9110 aue Ilse ReeA ~ P, O. b, ql ~ Rerch.+ Cuc~p, CJifanl, 911N1 ~ pl q 9691 tl1 Rancho Cucamonga Community Foundation Agenda July 21, 1987 Page 2 • D. COMMUNICATIONS FROM THE PUBLIC This is the time and place for the general public to address the Rancho Cucamonga Community Foundation Members. State law prohibits the Foundation Members from addressing any issue not previously included on the Agenda. The Foundation may receive testimony and set the matter for a 5ubseouent maaTinn r,,,,.,,o.,~e M ho li:n: lad hn a:tee m:not na ver individuals. - -~- ' E. ADJOURNMENT 7, Eva Merritt, Assistant Secretary of the Rancho Cucamonga Community foundation, hereby certify that a true, accurate copy of the foregoing agenda was posted on July 15, 1987, seventy-two f72) hours prior to the meeting per A. B. 2674 at 9320-C Base Line Road. • • si;;.: June 16, 1987 CITY OP RANCHO COCAMDNGA Rancho Cucamongs Coo.uaity Foundation Resular Hearses A. CALL TU ORDBR A regular meeting of the Rancho Cucamonga Coamunity Pcundntion met on June 16, 1987 in the Lions Park Community Center, 9161 Baae Line Road. Rancho Cucavonce. ?..r-r ^_^ -, ... ai., caixa see meeting to order at 7:00 p. m. Present mere: Robert Dutton, Betty McKay, Pnule Grigsby, Guy Beyeredorf, and Jenne Berton, Chair. Absent were: Gary Schafer, and Pelph Lewis. Also pceaent vere eteff members: Lauren M. Nee eetmen, City Manager; Bill Holley, Community Services Directors and Mark Lorimer, Adminiatretive Analyst. H. CONSBNT GALHNDAR B1. Approval of Minutes - May 19, 1987. Thera was one correction made order section "C7-Foundation Development Plen" as to the volunteers for the Sub- committee, vho vere Paula Gtigsbq, Bob Dutton and Batts McNav. MOTION: Moved by Beyeredorf, seconded by Grigsby to approve the Concept Calen- dar. Motion carried 5-0-2 (absent vere Schafer and Lerie). C. FOUNDATION BUSINHSS C2. Treasurer's Report - period ending May 31, 1987. Mr. Beyeredorf presented the Treasurer's Aeport fos Lhe Reecho Cucamonga Community Foundation. C3. Poundatio¢ Mfzer (Meg 26) - m ovaluetion of the Poundetion'a first activ- ity field on May 26 st Barton Plena. The Mizer vas felt to hove been sucesesful and pleaaent eva¢t. C+r. Bcacue of Central Park - presentation of dravinga for Rancho Cunamonga's 99 acre park facility. Nr. Aol ley presented the Central Park Naetet Plen conceptual drawings. Na suggested that the Foundation express their approval of the plan by latter. Community Poundation Minutes Jme i6, 1937 Page 2 NOTION: Naved by Beyeredorf, seconded by Grigsby to send letter approving con- cept of Central Pnrk Neater Plan to City Covncil. Motion carried 5-0-2 (Schafer and Levis absent). Diescueion continued rith Mr. Dutton suggesting a letter be sent supporting the Redevelopment Avwnrv Amwndwwnt -1en to Ciw ('nunrit_ MOTION: Homed by Dutton, seconded by Beyeredorf to authorize the Chair to represent the Comunity Poundation in presenting a letter of support of the Re- development Agency Amendment Plan. Motion carried 5-0-2 (Schafer end Levis ab- sent). C5. Alta Loma Hi¢h School Auditorium Restoration - an overview of the efforts to raise funds for the restoraiioa of the Alta Loma High School Auditorium. Mr, Ketterliag, Administrative Assistant at the High School, stated s aced to raise funds for the restoration of the Nigh School's Avditoriw. ACTION: Chair euggented [hat Mr. Retterling submit a coat and priority list to the Poundation. Cb, Poundation Liabil iiy Insurance - preeentntion of options for the Board of Directors to consider in obtaining general liability insurance for the Founda- tion. StefF report presented by Mr. Lorimer. Mr. Lorimer elated thst there are bo types of Insurance available to the Foua- detion: (1) Error 6 Omission and (2) General Lisbil ity. He did find thst the Poundation cannot be added to the City of Rancho Cucamonga'e Insurance because the Poundation ie not a municipality. ACTION: Lorimer to present hie findings on the various options for insurance to the Poundation et the nest regularly scheduled Poundation meeting. C7. Poundation Development Plm -report from the Board Subcomittee on the progress of the Poundation Development Plsn. The Subcomittee did not have e report et this time. Mr. Rovett, btrectoz/Development et Cal Poly, presented s proposal to the Poua- datioa concerning the Pouedati on Development Plan. MOTION: Moved bq Grigsby, eaconded by Dutton to accept the proposal presented by Nr. Rovett. Motion carried 5-0-2 (absent rare Schafer end Levis). •. Coaaunity Ponndatioa Minute June 16. 1987 Page 3 D. IDBM1'IPIGTION OF ITRlIS POR NIIT MBHTING Dl. Update on Legislation bills that nay ispact the Foundation. D2. Report regarding findings on General Liability Insurmce. D3. Aeport on Pomdation Developaaat Plan trw the Subtoanittee. B. COMNONIGTION PROM TNB PUBLIC There were none. 8. ADJOURN!ffifT MOTION: Moved by Dutton, seconded by Grigsby to adjourn. Motion carried 5-0-2 (absent were Schafer and Lwia). The seating adjourned at 9s30 p. a. to a 8ouo- detion Board of Directors Norluhop Heating to bs bald on Monday. July 6, 1987 at 5:30 p. n. at the Gsk n' Qever 14staurmt in Rancho Cucsaoaga. Raspacttully sutaittad, Guy Bayeradorf. Secretary BYS ~~ 1_ ~4J~1uMJ Bye Merritt. NJi tie t Secretory Approved: July 21, 1987 July 6, 1987 CITY OY BANCHO CUCAlONGA Rancho Cucamonga Commmity Fouadatiom Miautea Adiourned Meeting A. CALL 11D ORDBB M edj ournad aeetiag of the Rancho Cucamonga Coaaunity Pomdation Net on July 6. 1987, for dinner at the Caak 'n Clerver Restaurant. 8689 9th Street. Rancho Cucamonga. The meetiaa tea called «~ t.r.. a. ::75 r.... :,y ~eaana Horton, Chair. Preaeat rare: Paula Grigsby, Ralph Leria, Crory Schafer. Hobert Dutton (rho ar- rived at 6125 p. m.), and Chair Jeaaaa Barton. Abeent were: Betty McKay and Guy Byeradorf. e f R e e# B. POUImATION BUSINESS 81. Fou¢dntio¢ Gonla aad Obj ectivaa - diacusaloa by the Board of Dimcora rt gerding goals end obj actives for the Fomdatio¢. Thu an~.d of nl ~.r«.. r_ .,e Cn~.C. r.Jy.r..l .uLmi«eu iry Jonn Nora[[, Price-Rower[ Sesiaara, and a raqusat for a abort tam loan frw the City of Bencho Cucamonga. It vas ¢uggeetad chat a letter to the City Council be prepared fns the Cbais's signature clarifying the position of the Pomdation regarding the regwst for a short tetra loan. Specifically, [hs City Council should ba uda orate of the Foundstia¢'a nand far guidance in the initial aUga• of prioritizing goals s¢d obj ectivaa. In addition, the letter should saflact the fact tbat the short term lom would provide the Boats of Directors an opportunity to idamtify re- souccea for funding, oat the direction, of the Foundation, aad unite the aembara of the Hoazd and their individual ideas i¢ order to fonulate appropriate goals e¢d obj ectivsa. MOTION: Moved by Ralph Loris, aecondsd by Paula Grigsby Chat the Board of Di- reciors accept the proposal auheitted by Jeha P.eorett and allocate Iuadimg of $500 per month for co¢eul tiag eervicaa until such servitu are te:siwtsd. !b- tioa approved as follora: AYES: Ralph Laria, Paula Grigsby, Jeaaw Batton, Gary Schafer NOBS: Noun AB SBNT: Bob Dutton, Guq Begersdorf, Batty McKay Community Powdntion Minutes July 6, 1987 Page 2 H2. John Roreti discussed the oparationa plan presented to [he Board of Direc- tors. 'Ihe Board members diaewsed that they felt should 6e the mission of the Foundation. •af~ee Robert Dutton arrived et 6:25 p. a. fe#ef# Ralph Levis stated that the Foundation should eaeourage a vide range cf cultural activities end not just £ocw on ow specific area of cui coral arts. Robert Dutton stated that the Powdation should ceozdinate with other ~.a+..i++uvae interested 1o cui rural arts to help raise fords for partiruler needs end programs. Mr. Dutton also stated that the Foundation should aCi as e custodian For cultural arts fuadiag through other local orgaaisationa and that the Foundation should pork to emcoutsge the support of orgaaiaatioaa to joie is the Fomdation'a efforts et providing cultural arts City-ride, Peule Grigsby concurred rith the need to focw on a ride variety of proj ect^ end the need to involve other local organiaatioas. Gary Schafer stated that ha did not roar to see the Foundation compete rich other local col coral aria orgaaiaatioaa for fund raiaiag dollars, but rather that these orgaaiaatiooe rich similar iatarsata should supporC each others efforts. Jeanne Barton al eo concurred that the Pound+r+..., -~:•,: e~~l+~ v~her ... ar.LLZatiena rate fund zalaiag and progi~ planning. B3. Discussion of Miaeion Statement - John Rorett lead the Hoard of Directors through ea informal session to identifq a prelimiwry mission atatsene for the Foundation. Mr. Rorett offered the folloring £ive points as a suggeatioa to begin establishing s mraaion atatsant. 1. Identify reaouscae nvailabie to the couunity in arena of cultural arts and quality of life activities. 2. Plan for development of erietiag sad net resources, 3. Bacournge e:ieting aria orgaaiaations to prmote col CUral arts and quality of life activities. 4. Aeaiet orgaaisatione rit6 potential cultural arts progrra. 5. Iwolw conatitwney is cut coral arts progrpa. Coanunity Fowdatlon lfinwn July 6, 1987 Page 3 Paula Grigsby anggaatad that variow aiaaiov atateaanis frw other Pomdations (Brea, Costa Mew, Bww Park) ba obtained and that the Hoard of Directors we tbeae as suggeetiona for creating the Powdation'a ovn ~itaiov attt~ant. H4. Board of Directors Workshop - John Rorett cuggeated that the Board of Di- rectors bold • special rorkshop in order to consider developing the opera[ims plea aad a coapxehawiva aiaaiop ststeaant. Tha Board identified August 15 os 17 ae potential dates foz holding such a vorkahop. • • - : s a usei~iVlilwb eaun >]:B Y11oey11: No cosnunicstione free the public. e e w w w s D. AWOBiMO}f Meeting ndj ourvad to regularly scheduled seating Tuesday. July 21, 1987. lNaC- ing adjourned at BIOS p. a. NOTION: !loved by Gary Schafer, aacoadad by Rohart Duitoa aad approved by the follosing vole: AY68s Ralph Leris, Paula Griaabv. Jsanw Barton. Gan Schafer. Aobwrr DLLtCOn NOBS: Now AB SHNT: Guy Bayeredorf, Betty McKay Raapsctfully euheitted, GUY BBRYBRSDORP, SBCRHTARY v HY: .~ Mark Lo r, Acting Secretary Approved: July 21, 1987 • RANCHO CUCAMONGA COMMUNITY FOUNDATION RANCHO CUCAXONGA COMMUNITY FOUNDATION MINUTES Cask n' Cleaver Restaurant 8689 9th Street. Rancho Cucamonga, California 91730 July 5. 2987 - 5:3^ :.^. A. CALL TO ORDER Meeting was called to order at 5:35 p.m. Present were: Jeanne Barton, Paula Grigsby, Ralph Lewis, Gary Schafer. Rbsent were: Betty NcNay, Guy Beyersdorf, Bob Dutton. Bob Dutton arrived at 6:25 p.m. • A R} U f R ~- FOUNDATION 6USINESS B1. Foundation Goals and Ob,tectives - discussion Dy the Board of Directors regarding goals and ob,iett ves for the Foundation. The Doard of Directors discussed a proposal submitted by John Rowett, Price-Rowett Seminars, and a request fora short term loan from the City of Rancho Cucamonga. It was suggested that a letter to the City Council be prepared for the Chair's signature clarifying the position of the Foundation regarding the request fora short term loan. Specifically, the City Council should be made aware of the Foundation's need for guidance in the initial stages of prioritizing goals and ob3ectives. In addition, the letter should reflect the fact that the short term loan wouid provfde the Board of Directors an opportunity to identify resources for funding, set the direction pf the Foundation, and unite the members of the Board and their individual ideas in order to formulate appropriate goals and ob,lectives. • fla) aw W, a,r ~ -, O. an m • IWab CYe~a,ff, C,wae4 911]0 ~ ItN) 9n•11f 1 Rancho Cucamonga Community Foundation Minutes July 6, 1987 Page 2 MOT?ON: Moved by Ralph Lewis, seconded by Paula Grigsby that the Board of Directors accept the proposal submitted by John Rowett and allocate funding of 5500 per month for consulting services until such services are terminated. Yote was: AYES: ".a1ph Law is, Feuia Grigsby, Jeanne Barton, Gary Schafer NOES: None npcpwT: a_• 9L't tLO uuy oerersdo rr, Betty MC Nay 62. John Rowett discussed the operations plan presented to the Board of Directors. The Board members discussed what they felt should be the mission of the Foundation. :~a.~: Bob Dutton arrived at 6 25 p.m. •.:..x Ralph Lewis stated that the Foundation should encourage a wide range of cultural activities and not ,iust focus on one specific area of cultural • arts. Bob Dutton stated that the Foundation should coordinate with other organizations interested in cultural arts to help raise funds for v-r t',ccSar accua miJ yruyrams. mr. uutton also stated that the Foundation should act as a custodian for cultural arts funding through other local organizations and that the Foundation should work to encourage the support of organizations to loin fn the Foundation's efforts at providing cultural arts City-wide. Paula Grigsby concurred with the need to focus on a wide variety of profec is and the need to involve other local organizations. Gary Schafer stated that he did not want to see the Foundation compete with other local cultural arts organizations for fund raising dollars, but rather that these organizations with similar interests should support each others efforts. Jeanne Barton also concurred Lhat the Foundation should assist otfier organizations xith fund raising and program pianrting. BJ. Discussion of Mission Statement - John Rowett lead the Board of Directors through an informal session to identify a preliminary mission statement for the Foundation. Mr. Rowett offered the following five points as a suggestion to begin establishing a mission statement. Rancho Cucamonga Community Foundation Minutes July 6, 1987 Page 3 J 1. Identf fy resources available to the comun ity in areas of cultural arts and quality of life activities. 2. Plan for development of existing and new resources. 3. Encourage existing arts organizations to promote cultural arts and quality of life activities. 4. Assist organizations with potentf al cultural arts programs. 5. Involve constituency in cultural arts prograwa. Paula Grigsby suggested that various mission statements from other Foundations (Brea, Costa Mesa, Buena Park) be obtained and that the Board of Directors use these as suggestions for creating the Foundation's own mission statement. 84. Board of~ Directors Ibrksho -John Rawett suggested that the Board of Director hold a special workshop in order to consider developing the operations Dl an and a comprehensive mission statement. The Board identf fled August 15 or 17 as potential dates for holding such a . workshop. •+,.++: C._ COINUNICATIDNS FROM THE -U{Lit No communications from the public. + x • • : + D. ADJOURNMENT Meeting adjourned to regularly scheduled meeting Tuesday, July 21, 1987. Meeting adjourned at 8:05 p.m. MOTION: Moved by Gary Schafer, seconded by Bob Dutton. RYES: Ralph Lewfs, Paula Grigaby, Jeanne Barton, Gary Schafer, Bob Dutton NOES: None ABSENT: Guy Beyersdorf, Betty Mc Nay Respectfully submitted, Eva Merritt \\_~\) Assistant Secretary ~\ flANCNO CUCAMONOA COMMUNITY FOUNDATION TREASURER'S REPORT Period Ending -June 30, iS87 Beginning Cash Helflnce -epoeite RGL Dietributiom Center - S 500.00 contribution Schafer Bros. - contribution 500.00 Lemie Homes - oonttibuCion 1,000.00 Into rear Earned Cbecking 3.38 Totsl Deposits Expenses Pederal Tax Withheld on .69 Interest Payment Ending Cash Balance Respectfully submitted, Guy Beyeredorf, Treasurer Secrtary Eva Metritt, eC C ectetary S 7,000.00 j 1,003.38 .68 $ 9.002.70 9IR~ au< ^M enp • P, O. Bow A9] ~ auwb Cu[umnp, Ctli(ani[ 91 LN1 a Di[19tl9~1 A51 RANCHO CUCAMOWGA COhriIUNITY FOUNDATION PERIOD ENOBVG JUNE 3u, 1907 • • BEGINNING CASH BALANCE $7,000.00 DEPOSITS ADDED: RGL DISTRIBUTION CENTER - CONTRIBUTION 500.00 SCRAPER BROS - CONTRIBUTION 500.00 LEWIS HOMES - CONTRIBUTION 1,000.00 INTEREST EARNED ON CHECKING ACCOUNT 3.38 T07AL DEPOSITS 2,003.38 EXPENSES DEDUCTED: FEDERAL TAX WITHELD ON INTEREST PAYMENT .68 ENDING CASH BALANCE $9,002.70 SUBMITTED BY K. JAMES, ACCOUNT TECHNICIAN JUNE 30, 1587 .... - . '-<i yyJn -'.i ~t ' IEWIS HOMES 1196 Nanh NOUnYIn Av..,w / P.O. ao~ 678/ VpY~CJ1aN, 91]85/ ]It 9810911 June 22, 1987 Mre. Jeanne Barton, Chair Rancho Cucamonga Coanunlty Poundation ~~~p~P~.O., Box ~.80j~~_ i;1 .,~ _ -._L:4:1a:.RdnotidiCuddsongar-CA-9.1730-___._~____.-._._~,.___ _"^^._..~_-~^-_ ... '. Dear Jeanne: '~ Rncloaed ie our check far 51,000.00 ae a contribution, for whatever purpose :the Board aeee fit. The Poundation is off [o a good start under your fine leadership. It ie nice working with you. ~COidielly yours, ~Relph M,. Lewis RML:dgm P.nrinaore ~ ~ ~''f1IS0 SSE; '~-11~C~,Y~(,¢ ;~ (A. ~.,. • ~ 1 RANCHO CUCAMONGA COMMUNITY FOUNDATION RIINCMO CUCAMONGA COMMUNITY FOUNDATION NtMUTES Cask n' Cleaver Restaurant 8689 9th Street- Rancha Cucamonga, California 91730 July 6, 1907 - 5:30 o.m. A. CALL TO ORDER Meeting was called to order at 5:35 p.m. Present were: Jeanne Barton, Paula Grigsby, Raiph Lewis, Gary Schafer. Absent were: Betty McKay. buy Beyersdorf, Bob Dutton. • Bob Dutton arrived at 6:25 p.m. R t i t f A N. FOUNDATION 6USINE55 B1. Foundation Goals and Ob.lective_s - discussion by the Board of Directors regarding goats and obJ ec ti ves for the Foundation. The Board of Directors discussed a Droposal submitted by John Rowett, Price-ROwett Seminars, and a request for a short term loan from the City of Rancho Cucamonga. It was suggested that a letter to the City Council De prepared for the Chair's signature clarifying the posliton of the Foundation regarding the request fora short term~iban. Specifically, the City Council should be made aware of the Foundati'on's need for guidance in the initial stages of prioritizing goals and ob~ettives. In addition, the letter should refiect the fact that the short term loan would provide the Board of Directors an opportunity to identify resaurcos for funding, set the dlrettien of the Foundation, and unite the members of the Board and their Individual ideas to order to formulate apProDriate goals and objectives. 1110 a,r Ilr a,r ~ r. O. a. qt 1 orb C1+r.M1 C,YMw, 91710 ~ 17N11M-1NI Rancho Cucamonga Community Foundation Minutes July 6, 1987 Page 2 • NOTION: Moved by Ralph Lewis, seconded by Paula Grigsby that the Board of Directors accept the proposal suWnitted 6y John Rowett and allocate funding of 5500 per month for consulting services until such services are terminated. Vote was: AYES: Ralph Lewis, Paula Grigsby, Jeanne Barton, Gary Schafer NOES: None ABSENT: Bob Dutton, buy Beyersdo rf, Betty McKay 82. Jahn Rowett discussed the operations plan presented to the Board of Directors. The Board members discussed whet they felt should be the mission of the Foundation. ::•;:~ BoD Dutton arrived at 6:25 p.m. •~~~w~ Ralph Lewis stated that the Foundation should encourage a wide range of cultural activities and not Sust focus on one specific area of cultural arts. • Bob Dutton stated that the Foundation should coordinate with other organizations Interested in cultural arts to help raise funds for particular needs and programs. Mr. Dutton also stazea tnac the rounaazion should act as a custodian for cultural arts funding through other local organizations and that the Foundation should work to encourage the support of organizations to ,join in the Foundation's efforts at providing cultural arts Cf ty-wide. Paula Grigsby concurred with the need to focus on a wide variety of pro,j efts and the need to involve other local orgy nizatlons. Gary Schafer stated that he did not want to see the Foundatton compete with other local cultural arts organizations for fund raising dollars, but rather that these organizations with similar Interests should support each others efforts. Jeanne Barton also concurred that the founeation should as sf st other organizations with fund raising and program planning. 83. Discussion of Mission Statement - John Rowett lead the Board of Directors through an in onaal session to identify a preliminary mission statement for the Foundatton. Mr. Rowett offered the following five points as a suggestion to begin establishing a mission statement. • Rancho Cucamonga Community Foundation Mfnu tes July 6, 1987 Page 3 1. Identify resources available to the community in areas of cultural arts and quality of life activities. 2. Plan for development of existing and new resources. 3. E.^.c,ersge a, isiing arts organizations to promote cultural arts and quality of life activities. 4. Assist organizations with potential cultural arts programs. 5. Involve constituency in cultural arts oran.e.~!s, Paula Grigsby suggested that various mission statements from other Foundations (Brea, Costa Mesa, Buena Park) be obtained and that the Board of Directors use Lhese as suggestions for creating the Foundation's own mission statement. 64. Board of rectors Morkshao - John Rowett suggested that the Board of Directors hod a spec~~ rksNop 1n order to consider developing the operations plan and a comprehensive mission statement. The Board identified August 15 or 17 as potential dates for Aolding such a • workshop. :..:.. C. COMNUNICATIDNS FRDM THE PUNLIC nu communications from the public. • : w . . D. ADJOURNMENT Meeting ad,iourned to regulariy scheduied meeting iuesday, July 21, 1987. Meeting adJourned at 8:05 p.m. MOT10N: Moved by Gary Schafer, seconded by Bob Dutton. AYES: Rat ph Lewis, Paula Grigsby, Jeanne Barton, Gary Schafer, Bob Dutton NOES: Nene ABSENT: buy Beyersdorf, Betty MCMay Respectfully submitted, Eva Merritt Assistant Secretary CITY OF RANCHO CUCAMONGA G~~ MEM©RANDUM ~~ 9 2 LL r ~ DATE: June 11, 1982 F~ z U:~ J> T0: Rancho Cucamonga Ccmmunlty Poundation ~ 19'~ BROM: Mark Lorimer, Administrative An~'y~+ ~/~~ SUBJECT: POURDATION LIABILITY IR3URARCE City etalf is currently investigating the ootential for obtalninn yeneeai liability insurance for the Rancho Cucamonga Comaunity Poundation. As per the attached letter to the Calilornia Municipal Insurance Authority, staff Ss requesting a position from the Insurance Authority relative to whether or not the Foundation could be ndded to the CSly'a general liability coverage provided through the Authority. The CMIA pill be meeting on June 1Z to disease this issue. Staff pill update you ae to the outcome of the request for the Houndetion to be added as a supplement to the City's general coverage et the upcoming June SB Poundation meeting. Zn the event the insurance authority does not Lind it appropriate I for the Foundation to be added to the City's coverage, the Foundation could Beek general liability insurance on its own provided by • privets firm. However, this option may be too COetlV for the FOUnAatinn to nhl~~.+~ uCLl~ •__~..__ C,j:uv ~uv I Foundation has regarding insurance would be !o simply not carry any general liability. These options and any others which the Hoard of Directors say wish to pursue will be discussed at the upcoming June 16 meeting. Should you have any questions or comments the attached letter to the California Authority, please do not hesitate to convenience. ML(lr Attachment regarding this Ssaue or Municipal Insurance contact me at your RECEIVED .:,';; p 3 ?S37 • Y~ . 0 9 cm June 2, 1987 CUCAMONGA Pon Olmn Six b7, P.erio Cue.mwµ Catifwvi. 911b, (111) 9891151 California Municipal Insurance Authority Angela Jean, Administrative Assistant 5330 Primrose Dr., Suite 150 Fair Oaks, CA 95628 near rnyeia: The City recently incorporated a separate non-profit Community Foundation. The Board of Directors of the Foundation is appointed by the City Council. A11 funds donated to the foundation are accounted for by City staff and placed in a separate Community Foundation bank account. Checks are dispursed by the foundation Chairman and Treasurer. I am requesting that the Community Foundation be added to the City's general liability coverage provided through the CMIA. This, in essence, would be equivalent to how Redevelopment Agencies have been handled. I would appreciated Board review of this proposal at the June 12, 1987 meeting. Sinc rely,'/~!/~~~q~ ~"~"'~° Jim Hart Administrative Services Director i.', Z.~' Myv ~ D~boM N. MpNp pn,n~ RIMS' Kle{ Gp hrP 4<s ~ :4 r ,41ta Loma High School 8880 BoSeline Ave. Alto Loma, California 91701 17741 989~55t 7 • R.ul w.ro. fti..ccr Rm EcMM, AsaY NvcpY Lary MucNm, AafY RMp4 RoMA KM•rlmp. AMAtiab•M A!•Y July 9, 1907 Jeanne Barton r^~ir D.^C~C) ",...ai~~utla roundation P. 0. Box 807 V Rancho Cucamonga, CA 91730 Oear Jeanne. Thank You so much for allowing me to speak to the foundation Doard of directors. I apologize for not getting back in touch with you sooner but the close Of achooi and the opening of summer school are very busy times for me. At the June meeting of the restoration committee In response to your suggestion we priori tlzed the Iist of items to be address in the restoration. In ortler of priority they are: 1. Sound System (Including all Items Ilstetl) 2. Lighting (including all items Ilstetl) 3. Painting and Re-upholstering seats • 4. Carpec (aisle runners) 5. Curtains (back stage) I Dave enclosed a Copy of ail Items In the prof ect with an estimate of their cost, na i sate at the board meeting this facll lty has served the whole community and It will continue to do so. We apprec~. sip 'J OUC Interest 10 Chi9 PCOj eCt and we 1n4•Ite ybU t0 pdf tl CipdtB with us in bringing iC to a successful conciu9lon. Sincerely, /~tt ~~ P.obert Ref teriing Admlb istrative Aas slant s CNAffEy JOINT UNION NIGH SCHOOL DISTRICT • SUPERINTENDENT ~ MIKE D. DIR KSEN r„ ~ ALTA LOMA HIGH SCHOOL AUDITORIUM RESTORATION COMMITTEE PROJECTED COSTS FOR RESTORATION • 3/23/87 Project will include the foyer, auditorium proper, sta ge, beck stage, both band and choral rooms and office. FOYER Paint (including restrooms) walls, ceiling, acoustical tiles, doors and metal casings, MJCi1, uC ini yur-~..-.. , __.. ~...~- .~.....- $ 2r10O.00 AUDITORIUM PROPER Paint ra ll, ceilings, acoustical tile, doors and storage areas S 11,500.00 carpet (aisle runners) > 3,040.00 Paint seat backs (includes pickup and return) S 18,000.00 Re-upholstering the seats p $40 each seat $ 31,500.00 Curtains Back Siege Backstage area and projection room (painting only $ 4,250.00 MUSIC ANNEX Painting S 1,SOQ.00 Carpet S 7,091.00 vi vii i i iru Spot Lights; 12 LERO adjusts ble spot lights 12 FRE5NEL - area spots $ 1,500.00 Lighting Control (Bid not received at this time) SOUND SYSTEM Mixer Amplifier, speakers, atege monltoca and tw additional microphone circuits S 9,000.00 Head sets -stage communication system $ 300.00 Microphones - 6 hand held, 4 area cable and stands $ 3,000.00 cmnP,ArE Racks, shelves and lockers S 1,000.00 APPROXIMATE COSTS $ 97,331.00 RX/vjs r'? c,rr i yr nruvunv wcemvlvue MEMOgtANDUM GATE: July 7, 1481 T0: Ranch C amon ga Community Foundation Board of Directors FROM: Jim Administrative Services Director auaUtbl: L1Nfi 1T~1 1f1JUttHbbt UYUMIC The City belongs to a Joint Powers Rutho rity (JPA) for general liability coverage. I made application to this JPA in an effort to obtain General Liability and Directors Errors and Omissions coverage for the Foundation. The application was denied because the JPA has a policy of only insuring cities. I have contacted a broker and am searching the market for coverage. Once he has reported back to me, I will pass the infannation to you. JH :cv ;. CPPY OF RANCHO CUCAMONGA STAFF REPORT ~~cuc~~~.n 0 0 r $ z J 19 ~~ DATE: June 30, 1987 T0: Board of Directors, .Rancho Cucamonga Community Foundation FROM: Mark Lorimer, Administrative Analyst SUBJECT: UPDATE ON LEGISLATION IMPACTING nOUut>amin•. As was reported to the Board of Directors at its regularly scheduled meeting on May 19, 1987, the following three b311s currently pending in the California State Legislature may have a significant impact to tha operations of a non-profit corporation. The status of each bill pending in the legislature !e provided below. A8490 (ASSemblvmember Banal -- Loan to Directore_and Officers Under existing law, a non-profit public benefit corporation may not make a loan of money to a director or officer except ae an advance for expenses, in payment of life insurance premiums under dp~c iiieu circumacancee, or where necessary to provide financing for an officer's residence in order to secure the officer's services. AB490 would prohibit loans to employees of non-profit public benefit corporations and would prohibik loans to directors and officers or employees for financing of a residence except 1n the case of post secondary education institutions. Status: AB490 is still held up in the Assembly committee on finance and insurance. No action has been taken on this bill since March 16. Position: Board of Directors has unanimously voted to support AB490. Update on Legislation Impacting Foundation Page 2 June 30, 1987 AB1530 (ASSemblvmember Willie Brownl -- Liability for_1)i rectors Under existing law, a director of a corporation is remitrnA r.. ycclu.w the du uce of a mirector in good faith and in ~a manner the director believes to be Sn the best interest of the corporation, and with the care of an ordinarily prudent person. AB1530 would specify that the director's or employee's duty includes performing the duty in a manner the director or employee believes to be in the beet Sntereai of the ahareholdere of the corporation. This bill would also revise the prerequisites for indemnlfScatSon for a director's or employee's expenses to also require the director or employee to have acted Sn a manner believed to be in the beat interest of the ahareholdere, and to eliminate a requirement of acting with the care of an ordinarily prudent person. Exleting law prohibl to any provision made by a corporatlon to indemnify its dlractore or officers for the defense oP any va..... °~ - "" "" ~.. uviue ii~a. cne aru ciea of a corporation mayy contalnvuproviaSons eliminating or limiting the liability of a director as a director for monetary damages to the corporation or its ahareholdere except in epeclfied instances. Further, the bill would provide that the articles of incorporation may authorize the indemnification of or of provision of insurance for a director or employee for a breach of duty to the corporation or Ste shareholders except Sn specified instances. ThSa piece of legSalation is considered an urgency bill. Status: Since the last update of AB3530, the bill has passed the Assembly, was introduced in the Senate and is now under consideration in the Senate Committee on Judiciary. Position: The Board of Directors has unanimouaiy voted to support A01530. Update on Legislation Impacting Foundation Page 3 June 30, 1987 581025 (Senator Hil' Campbell) -- INDEMNIFICATION FOR DIRECTORS Existing law provides that, except as to certain self-dealing transactions, a person who performs the duties of a director or officer of anon-profit corporation in accordance with statutory requirements has no liability based upon any alleged failure to discharge the persons obligations at a director or officer. 181025 would provide immunity for a director or officer of a non- profit organization from liability for any alleged failure to perform the duties of a director or officer. Status: 581025 is still held up in the Senate Committee on Judiciary. The bill was taken off the committee calendar and has not been considered since March 12. Position: The Board of Directors has voted unanimously to support 381025. A81784 (Assemblvmember Killeal -- Immunity to Non-Profit Corporation Directors and Officers A81784, if passed, would provide immunity to a non-paid director or non-paid officer of a non-profit public benefit corporation (the Rancho Cucamonga Community Foundation applies) from liability for any injury to a third party caused by the Director's or officer's negligent failure to perform their duties if the Board of Directors of the corporation makes a good faith effcrt to provide each director or officer liability insurance, and declares, by board resolution, that the cost of that insurance significantly damages the public benefit purposes Por :'hick t.:e cvipotatlon waA ecrahiiehed '^d fi.:all'y tY,at the corporation is adequately insured for third party claims. Please note that liability insurance for directors or officers Ss different from liability insurance for the entire corporation. Status: AB1784 has passed the Assembly and is now under consideration in the Senate Committee on Judiciary, it Sa likely that this bill will be acted on during this legislative year. Position: It is recommended that the Board of Directors support passage of AB1784, Update on Legislation Impacting Foundation Page 4 June 30, 1987 ABi9i6 (&drri9i Aiiurney uenetai to Supervise Charitabie Trusts if passed, AB1916 would provide that the Attorney General has broad powers to carry out the enforcement responsibilities for charitable trusts. The enforcement responsibilities would include specified statutory trusts provisions. Status: AB1916 has passed the Assembly and is currently under consideration in the Senate CommSttee on Jvdlciary, This bill Ss expected to be acted upon during this year's legislatlve session. Position: It ie recommended that the Board of Directors oppose AB1916. cc: Clty Conncllmembers City Manaqer Attachments -'t:. 1:'r tFiFlrir#"x'RiF"xiFiFirirfiGiiFiFCfi£itfixxxxtxxxxxxxifiFifxxxiFifxx xiixiiF i'iFirVFiFiFIFiFx*R'xxxxxxxxxxii x,Fili!'i x LEGI-TECH FILL TEXT kEPDkT U7 mS/87 xwwxwwxxxxxwwxxxxxwxxxwwwwxwxxxxxxxxxxwwxwwxxxwwxwxxxxwwwwxwwwwwwwwxwwxxxwxxxwa AS 491: FAGE 1 .. Intr odl~c ad by Assembly Member bane 4 February 4, 1987 6 Hn act to amend Section 52.6 of the Corporations Cotle, rel atinq to 7 nonprofit corporations. 9 LEGISLATIVE WUNtlEL'b Utueb: SU '-"" YI A@-49h;~a5 TrttTaducetl, Ran e. Mbnprvf it corporati~onsr leans. 12 Under e>:istiny law, a nonprofit public benefit corporation may not 1:, ma1:e a loan of money to a tlire[tor or officer except as an advance fcr -I4 ev,perrses, Sn payment of life insurance premiums under specified 15 circumstances, or where necessary to provide financing for an o4Ficer 's 16 residence where necessary to secure the officer's services. 17 ThSS n111 wduid also prohi trit loans tv employees of nonprofit public 18 benefit corporations, would prohibit loans to officers or employees for 19 finance ng of a residence except in the case of postsecondary educational 20 inst ttuti on=_, and would exempt st ur!ent lcans~ta employees by 21 postsec ondarY educational institutions from the prohibition. _ Vote: majority. Appropriation: no. Fiscal committee: no. ~. .~.s.c s... r.s: ,. _„ t•.,,-mot nnrgm: no. ~4 _ fhe people of the State of California do enact as follows: 26 27 SECTION 1. Section 5^<36 of the Corporations Code is amended to read: 2S 52'_.6. (a> q corporation shall not make any loan cf money or property 29 to or guarantee the obligati vn of any direct orC or7, officer, OF ~0 EMPLOYEE, unless appr uv ed by the Rttorney General, provided, however-, _•1 that a corporation may advance money to a director[ or], officer, OR _,_ EMPLDVEE of the corporation or of its parent or any subsidiary for _ e::penses reasonably anticipated to be incurred in the performance of the 34 tluties o4[ such officer or director] THAT PERSON, provided that in the ., atsence of such advance,[ such director or officer] THAT PERSOIJ would be '6 anti tl ed to be reimbursed for such er,pen ses by such corporation, its S7 parent, ar any subsidiary. 'S .nt Thv orovisi Cris of subdivision rat do not apply to the payment of $9 premiums in whole or in part by a corporation on a iife insurance pclicy 40 on the life o; a director[ or], officer OR EMPLDVEE so long as repayment 41 to the corporation of the amount paid by It i"s secured by the proceeds of 42 the policy and its [ash surrender value. 43 ([) The provisions of suhdi vi lion la) do not apply to a FOSTSECONDARV 44 EDUCATIONAL INSTITUTIUN WITH RESPECT TO A loan of mosey to or for the 45 benefit of an officer Ok EMPLDVEE in circumstances where the loan is 46 necessary, in the judgment of the board, to provide financing for the 47 purchase of'khe print lpaI"rest dance oi--tTi"4 ~offY CeY 'UR"EMPCOVE£'in order 48 to secure the Services or continued services of the officer DR EMPLDVEE 49 and the loan is secured by real property located in the state. 50 fD] 9U@DIVI9ION lA> DOES NOT FROHI SIT R STUDENT LOAN SV A CORPORRTIUN DELETED MATERIAL IS IN BRACKETS C7. ADDED MATERIAL IS CAPITALIZED. -.-~- -*iF*iV*I%iFM iFiFiF#M%iYM*M1tif 1F%iFiT%*~F~fNi}7F7{~Fi~/F%IF7i1F1F7F'R-iF*iF7F%iiFiiiF#if#7FF~Fi~fiiFiF jF###*%#####**il * LEGI-TECH HILL TEXT REPORT 07/06/81 %%*%%%%%%%%*%***%%%%M%*%*%%#**#%#%*%**#%%%%#%%**%#%#%%%*M*%*%%%%*%**%**%%%%**it AS 490 PAGE I THAT' IS ALSO A POSTSECONDARY EDUCATIONAL INSTITUTION TO AN EMPLOYEE WHO . ._ Z ""-IS ~AtSO--is-sTnDENT- FoR--TtiE- PURPOSE-e9F--7HiSSUBD-IVI9iaM-~ti- "sruncu'r 3 LORN" IS A LOAN Tn Prunn~rc we r _ ~ ~ ~ i~TiiutN~ -"~4i'RiiFiFiF 1FiF.T~Fi#iiF.FiFiTiFgxiF iFiF#RiF iF iF lF it iF xif iFiFi"#RiFirlFiF'~iiiF iFiFit#iiGVr~nr.F~FaFSi-iii tlFiF: wi~F iE iF iFSi= * LEGI-TECH BILL TEXT REPOFT ~i7 /iib/87 iiiYiiiiii•iiiiiiiiiiiiiMiiiiiirtiiiiiiiFiiiiiiiiKiiiiiFi iiiiii#iii#iii klFM<iliiii~ AB 1530 PAGE AMENDED IN R55EMELV MRV 7, 1987 .. Introduced by Assembly Member Willie Rrpwn ! r -,- -pru cn or: assembly tomb c~ ax one epos) (Cvauthorss Rssembly Mert~bersyHarris, lluackenbush, 5- a"nd Ma x~i ne-WAt" r~Y._..___ ... _ .__ ..__....._._ __ __ 6 March 4, 1987 7 B ~ Rn act f'o-amend Se~fl bms 'LU4- 3~' "!"-' "<, of _ai .~,2 _:8, 7132, 7C31, 9 ~^T' ..- >~41,t and 92467 9246, 12313,•17_71, RND 12377 of the 10 Corporations Code, rel atinq to corporations, antl declaring the urgency II--fh~eredf, fd take of sect-i"fimcdI atel y.'~-".__--'-~-- '~----'----~~ 1<^ 1.3 LEGISLRTIVE COUNSEL'S DIGEST I4 15 Ab 15.:0, as amendetl, W. brown. Corporations: liability. 16 Under existing law, a director of a corporation is required tv perform 17 Ene defies of-a'"dI"P~Cor "in gvotr fd~f"th~aFl"ti-fn a manner trie director 18 believes to be in the best interests of the corporation, antl with the f9 care of an ordinarily prudent person. 2R Ttils bi1I'"Wdu12I'-ZiTSo 'specify That the"Duty ih^I'Ude9"'perf arming the 21 duty in a manner the director believes to be in the best interests of the .. shareholders of a corporation. _~ EX1 Stlnq 1dW sets fOr4h +ho ~: i~~_ Y.~-~~~- , ~ iy ~urpOrAtlGn may tw indemnify an agent, inc;udi ng a director, officer, or employee with _.~ respect tc indemnificdti on {or an agent's a>:penses arising From An action 26 di3ainst the agent by or in the right of the torpor atlon. Ev,i sting law <<^7 permits indemnification only if the agent acted it good faith, in a 2B manner believed to be in the beet interests of the torpor anon, and with 29 the care of an pr dinariIy prudent person. Er.i sting Iaw prohibits ;0 indemniflcati on under that provision of amounts paid in settling or o't dispasi r,g of an action, with pr without court approval, or of expenses paid in an action whi eh is disposed of without tour} approval. ~._ This bill would revise the prerequisites for indemnification for an .34 agent's e>penses to also require the agent to have acted in a manner '..°i believed tv be in the best interests of shareholders, and to eliminate a .6 req~_u rement of acting with the care of an ordinarily prudent person. The 37 bill would eliminate the prohibitions against intlemnificati on under that 38 provision of amn~~n t=_ paid in -ttIlnq nr disposing cf action with or ~„ w, Lhvui court approval, or n4=expenses paid in any action which is 40 disposed cf without court approval. 41 Under e;:i sting law, the indemnification of an agent #or expenses, 4<^ hitlgments, fines, settlements, or other amounts, except in those cases in 4~ which the agent has been sur.cessf ul on the merits, may be made only if 44 authorized in the specific case and if the agent is tletermined to have 45 met the applicable standard of conduct by the directors, shareholders, or 46 a court. 47 This bill wbulC praVlde that the`#Iridi n-g'may-ISS-RrACa Gy "fnd2pendeht 48 legal counsel 1f a quorum of directors is not obtainable. 49 Existing law authorizes a corporation to obtain insurance for its 50 agents whether or not it could indemnify them for the liability. DELETED MRTERIRL IS IN SRACKET5 [7. ADllED MATERIAL IS CRFI7ALIZED. ___.. _ *,#iftr%'+#%%%%%at#7Fk%%7M%%%%%%%##iF######%##%%%%'%%%%Y%iFiF%YA%%7Fii%i'%%'%iF#%%%%#%%%%%%%#; % LEGI-TECH RILL TEXT REPORT i.i7/6E/5; ..._ %###%#M###%######%%%%#%%%%%%%%###%#%%######~M####%%##%%%%#%%##%%#%%%%%%##%##%#i AR 1.°,'6 FAGE 1 This bill would provide that the F.arf ri..~F F1... ~ _ _ - _ _ part nt-tha-ilrsarer does not ren der~~tT're--aothorizati-orrty pur[has= insurance inapplicable if certain conditions are met. 4 Existing law prohibits any provision made by a corporation to ---"--"~--~tnCEmn-f-f~q-S~ty-d2rzctars or~af fl cer-s-Y-ortTr~-defar~rse-~f--any proceeding 6 except in accordance with the above-mentioned and related provisions. 7 This bill would, instead, provide that the articles of incorporation " S- of a-corporat l'oTf-maycontain provisions eiimi rtating or'limiti ng the 9 liability of a director AS A DIRECTOR far monetary damages to the 30 corporation or its shareholders ev.cept in specified instances. Further, "-~~""~~-YI- the tsl7T~v7agTd-pravi tle that~the artlcTes-~rsf ~Trrcorparati an may authorize 12 the indemnification of or provision of insurance for agents icr a breach 13 of duty to the corporation or its shareholders er.c ept in specified I4" ihstdn CL S. '--_"" C "__".., .. -. ._ ._ _ 15 C This hill would make parallel changes in the corresponding provisions 16 [governing r~onprof it public benefit, mutual benefit, and religions 4~ ~N~ .T la UThisnGili would make Gar allel changes in the corresponding provisions 19 governing nonprofit public benefit, mutual ben efit,C and] reli giousC 26 Ccorpor ations7, AND COOPERATIVE CORF'ORATIOIVS. ~i The bill would declare that it is to take effect immediately as an _ urgency state. .-.. Vote: Appropriation: no. Fi sc a7 c'ommi ttee: no. State-mandated 24 local priggram: no. '6 27 The people of the State of California do enact as follows: :8 29 SECTION 1. Section 2n4 of the Corpor afions Code fs amended to read: '.0 ~04. The ar'ttcles of incorporation may set forth: '] ~a) Any or all of the follawi ng provisions, which shall not be --- _.._.. ..~... ....~» a;:pre-3i'y pic - in file ar ciai es: .•° (1) Granting, with or without climitations, the power to levy '4 assessments upon the shares or any class of shares. (c^7 Granting to shareholders preemptive rights to subscribe to any or 36 all issues o4 shares or securities. =~ (3) Special qualifications o4 persons who may be shareholders. 39 (4) A provi Si on limiting the duration of tfie corporation's existence 39 to a specified date. 46 (5) A provision requiring, for any or all corporate actions (except 41 as provided-iri"'Section '03, subdi visi on t5T of"Bec £1 an 402 5, subdivision 42 fc) of Section 768 and Section 1900) the vote of a larger proportion or 43 of all of the shares of any class or series, or the vote or quorum for 44 taking ecti on of a larger proportion or of all of the directorz, 43 than !a otherwise required by this :li vi lion. 46 (b) A provision limiting o 47 corporation may engage or the 46 or both. 49 t7i A provision r.on{erring ~O intlebtetlness, isslred or to be r restricting the business rn whr ch the powers whi d'i the cnrporation may e::ercise upon the holders of any evidences of issued by the corporation, t-he right to ** * x#Y y Y i lrx *ifY {{TF#iF ir#'{fi'#iFi x~` Kv'Fv! 1f RiF lF if iiKiFaFiF'fi#lF#i#'~F 1F#i.Fi FiF#.F'#iF#iF #+Ei #i!s## Y# # # s#a##1f # LEGI-TECH SILL TEXT REF'OR}' :~nJh Jfl7 x#x*#x#x*#%###+#*####*#x##x##*####**%##*##!#x####xxfFxx..~,...##*###*##rtK*#*#R#* AN (° . 1 4 b 8 9 1 it t1 12 I: 14 lb Vn I' 13 1" .Y, JI 3. Zh ,., ~0 :9 I '4 :J SG :7 -5 ~9 FACE vote in the election of drrect ors and on any other matters on which shareholders may vote. !0) A provision conferring upon shar eh oltlers the right to determine the <on sideration for which shares shall 6e issued. t4) A prcvi sior, requiring the a-p Orova7 of the shar eT!olders t5ection - i`3) or the approval of the outstandrng shares (Section ]52> for any ccir por ata action, even though not otnerwi se required 4y this division. i10) Provisions eliminating or limiting the personal liability of a dl r-eC.t or for monetary damaoes tc the corporation or its shar eh alders for 6r each of a director's duties to the corporation antl its shareh~?tlc e!. 7 CH~wevar, !A> the provision may not e3imi Hate or *(,-,,;~ cne liability of 7 Cdrrer,t ors tll for omr ssr ons or] ., acts commrtted in bad firth or 7 Cthat rnvoive intend a~~r nu sconduct or a knowing violation of law, (tr) ) Cfnr- ,-, ~,nr s5fon or act that a dlreC for belleve5 to be centr ary to or 7 Cinconsrstent with the best interests of the corparati on and its Csh ar eholders, (iir> for any transaction from whrch a direct-or derrved an] C i,r,prcper personal economic benefit, br fivl undEr Section ?16, and fR) 7 rthe provr stun shall Hat elrmrnate orl, F'F'OVIDED, HOWEVER, THAT IA) 5!iC 4d P f•'P gvISION MAY NUT ELIMINATE OR L,IMST THE LIAEILITY OF DIF'ECTORB (I! Fi]F; ACTS OR OMISSIONS THAT INVOLVE IfJTENTIOP1Al MISCONDUCT QR A h NOWING AND CIILF'ASLE VIOLATION tlF LAW, (IS) FOR ACTS OR OM16S[ONS THAT H IJIRECTOR EELIF_'JES TO HE CONTRARY TO THE iE97 INTEREB75 DF THE CORPORATION Ofi ITF SHAREHOLDEFS OR THAT INVOLVE THE ARSENC,E OF GOOD FRITH ON THE FART ur~ rHE: ~)IRET:TOR, (Iiii F'pR ANY TRANSACTION FFOM WHICH A DIREC T(7R DERIVED Ah: IMP'F'OF'ER F'E'RSOfJHL ECONOMIC BENEFIT, (IVr UNDEF: SECTION .ir7. nc: ;V) UNDER SECTION 31b. AND tB) ND SUCH PROVISION SHALL GLiM2h!AT`c ilF limit the 1rcUrlity e4 a director for any a~_t c~ ~mr sion o¢urring prior to tY-~~; darn whoa the preer<tc^, uecomes effective. (11> A F'RD'J ISIOPJ AUTHORIZING, WHETHER HY NYL AW, AGREEMENT, UR 01'HERWISE, THE SNDEMNIFICATiUN OF AGENTS (AS DEFINED IN SECTION 317) IN EXC,E5S OF THAT E%FRESSI.Y PERMITTED DY SECTION '.17, OR THE F'ROVISI Oh! OF INSUFANi;E A5 F'ROVI DED EV SECTION 317 FOR THOSE AGENTS OF THE CORPORATION FOR EREACH OF DUTY TD THE CORPORATION RND ITS STOCKHOLDERS, FROM DED, HOWEVEP., THAT TtiE PROVISION MAV NOT PROVIDE FOR INDEMNIFICATION OF OR ANY INSURANCE FUF RNY AGENT FOR ANY ACTS OR OMISSIONS OR TRANSACTIONS FROM WHICH R I>I REf T'Ok MA`/ NOI FE RELIEVED OF LIAEII LTTV AS SET FOfrTH IN THE EXCEF'7IDN TO P'ARAGRAP'H (10). Nokwithstandrng this suodi visi on, in the case of a close corporation 4U any of the provisions referred to above may he validly include[ in a s ar eeTioT~"-agreement-. Not wf tTSt arsdf r:q this subdi V151 ort, bylaws may 42 require for all ar any actions by the boartl the of 4irmative vote of a 43 majority of the authorized number of directors. Nothing contained in ---'44'-'CfiTS'~r6dYGTSI Cn shah affect the r?n fi'arcea6131ty, as between the parties 45 thereto, of any lawful agreement not otherwise contrary to puhlic policy. 46 (b> Reasonable restrictions upon the right to transfer or hypothecate ~~--~T s'Fisr"es'-oT any crass or cT'asses or sEi`: es ~"'buC"no rest rii`tion 5haII 6e 48 bindtny with respect to shares issued prior to the adoption of the 4Y restrtctton uni ess 'the holders of such shares voted to favor of iixe .._ _.._ _. _.Sn-r est r i c-Ei on . ..-.--7F1Fif iFiF'iFiF C7FZ R'z IF1FiFiF'iFiFSirriFatiFaFir.FSiF rlF xiFiriFiFiFi lriF+rlF+F iFiFiFlra~af 1riFaiF'rFSiririFiFi xs#sit+lf {tft+t iF Fit%wiFRw rr LEGI-TECH FILL TE%T REPORT U7/06/87 MiFiFMMM~M MiFMk%iFIFiF iFM VF tFkM kiFIFMiFN Y1tM iF%MYiF•lYKMMiFf ••If ••%iFiF F JF iF ^iF #iF iFiF#rF •iFM MiFYiiF iFw4M1F••N AE 1530 F'AGE 1 (U The names and addresses of the persor.=_ appointed to act ~_ ^<-"- ~ih3 ti al direct&rs. C _----' L ~• C (d> Provisions (1) authorizing, whether by bylaw, agreement, or _ __ _ _ [: ~+1~: r ~C n... ~. nn nl . n nw•~ roc !n• irm•anh •n Csubdi vi si on`(i) of Section 3177 io"r „agents (as def in2"B'in Section 317) G Coo the torpor atton for breach o4 duty to the corporation and its C shareholders provided, however, that (A) the provt si on may not provide 6 Cf or indemnification of or insurance for any agent ii) for omissions or 9 [acts committed in bad faith or which involve intentional mi scontluct or a' 10 Lknawing violation of law, (!t) for any amtssi on or act that an agent 11 [believes to he contrary to or inconsistent with the best interests of 12 Cthe corporation and its shareholders, (iii) for any transaction from 1'.S [which an agent derived an improper personal economic benefit, and 12) 14 Cany ath er-7 15 (D) RNY OTHER provision, not in conflict with law, for the management ib of the business and for the conduct of the affairs o4 the corporation, 17 includtng any pr ovisian which is required or permitted by this division 18 to 6e stated to the bylaws. rv ..-Fi'. -. ~ rti, - ni 4he Coroor ati ons Cvde .- -mended to rEad: 20 3i~9. (a) eR director shall perform the duties ofaa director, including 21 duties as a member of any committee of the board upon which the director 22 may serve, in good faith, in a manner such director believes to 6e in the 23 best interests of the corporation and its shareholders and with such 24 care, including reasonable inquiry, as an ordinarily prudent person in a 25 like position would use under similar circumstances. 26 (6) In performing the duties of a director, a director shall be 27 entitled to rely on information, opinions, reports or statements, 28 including financial statements and other financial data, in each case 2fi prepared or presented ~4y any o4 the f'bllawingr ~~~ 3U (1) One ar more officers or employees of the corporation wham the 31 director believes to he reliable and competent in the matters presented. 32 (2) Counsel, independent accountants or other persons as to matters 33 which the director beltevea to be within such person's prof ensi oval or 34 expert competence. '"~-- z3T~-fr commi{tee of the board open whi cfi"the director does not serve, ~6 as to matters within its designated authority, which commvttee the 37 director believes to merit confidence, so long as, in any such case, the ---~~' 36--director acts in good Faith, after reasonable inquiry when the need 39 therefor is indicated by the circumstances and without knowledge that 40 would cause such reliance to be unwarranted. 4'1 -- (c )" A'~person who performs"the dufies of a"direcfor -~in actbrdance with 42 subdivisions !a) and (b) shall ha•re no liability based upon env ailencN 4' failure to di srnarne the pc s~,~, 's ooligau ons as a director[, and in 1. 44~~~7N a3dti~ion ~-~tTie`L'i ati"ility of a"Hirect~aP~ti~--monet4iry d?mage=_ xay h= 4v eliminated or limited in a corporation's articles to the extent provided 46 in paragraph (1rl) of subdivision fa) op 9ecti on 204. " '"-~~- 3T-~- -'SEC=-".-Se~iori"3I'T~oi"ffie"CSrpor S'Ei ons ~o3e-T3-~in~ndetl to read 4a __.. cal rrJr ens purposes of this sec t.i on, "agent " means any person 49 who is or was a director, officer, employee or other agent of the - '" 'SU- ZoPpdr'aEid7i, o'r Ys"dr'was'sewing-at'trie'iF'~gU[st''df the corporation as a -. -..." iV#iF41Fw#waiF r 7f wiiRiF7i7Fif iiFiYYMNhiF iF4##1F #1f iF##iii##iF iFfi Air'iFi AFiF iFiF'R'iFiiiF~r*iF#iF#KIn ~F #f iF##k#if##~ i LEGI-TECH GILL TEXT REF'uFT 07/Oh/8' rrWarrrx#xr##i#i######M#####K#iiiiiiia##.'v++iw###%######i###########<#i##i#iM#~ AE 15'0 .,tee 1 director, officer, employee or a9 ent cf another foreign or domestic corporation, partnership, joint venture, trust or ocher enterprise, or was a director, officer, employee or agent of a foreign or domestic 4 corp er ation which was a predecessor corporation of the corporation or of another enterprise at the request of such predece"ssor corporation; 6 " proceeding " means any threatened, pending or completed action ar 7 pr ec eedi ray, whether civil, criminal, administrative or investigative; and 2 •'e:;penses " includes without limitation attorneys' fees and any expenses 9 of establishing a right to indemnification under subdivision (d) or 10 paragraph S3> of subdivision (e). 1f UiY A corporation shall have power to indemnify any person who was or l? is a party rr is threatened to be made a party to any proceeding father 1'_• than an artinn by _, the right a( the ~vr p~.r a{ion to nr nr~rr'o =. i4 lodgment in its favor)^by reason of the fact that such person is or was 15 an agent of the corporation, against expenses, judgments, fines, 16 settlements and other amounts actually and reasonably ineurr-ed in 17 connection with such proceeding if such person acted in good faith and in 18 a manner such person reasonahly believed to 6e in the best interests of 19 the corporation and, in the case o4 a criminal proceeding, had no 20 reasonable cause to believe the conduct of such person was unlawful. The 21 termination of any proceeding Gy judgment, order, settlement, 22 conviction or upon a plea of Halo contenders or its equivalent shall not, 23 of~ itself,`create a pFeaumption that th'e per"son'""dTTf-Ti of act in ycod faith 24 and in a manner which the person reasonahly believed to be in the best 26 interests of the corporation or that the person had reasonable cause to 26 believe that the person's conduct was unlawful. 27 fc) A corporation shall have power to indemnify any person who was nr 28 is a party or is threatened to be made a party to any threatened, pending mot= compTted actl on by or iri the right "bf tFie't erpbrati on to procure a 30 judgment in its favor by reason of the fact that such person is ar was an 31 agent of the corporation, against expenses actually and reasonably 37 incurred by 'such person in connection with tfie defefi se or Settlement of 33 such action if such person acted in good faith, in a manner such person _ 34 believed to 6e in the best .interests of the corporation and its '._.~~~sFareh of ders-" Nb indemnifi2ati on s7iaTI tie riiar~e "ur(der'fhisC subdivision Sh Cinl SURDIVSSION FOR qNV CIF THE FDL(_OWING: 37 (1) iN respect of any claim, issue or matter as to which such person ~36 sFalTTiave-6e'en eiTj ud'cj ed-to Tie"'I"iaTi'I a"to tl-ie coro'orat'i nn in fhP 39 performance of such person's duty to the corporation and its 4fj shareholders, unless and only to the e>;tent that the court in which ' - ~fl--sac pr oc ee~is 6~"was-(SLSiitlYh7i."~"s7Ta3'I"Z1~Ca=r71fY'nP-Rpnrt appIicati on that, "^ i:. '. '._w ~` u:l tt ~ L _,,,~,~La~~~a~ ..P .' .. ~ ..a~ ~ Per ~.,~~ i it iy antl 4~ reasonably entitled ~to indemnity for' expenses an d~then only~to~ths e:tent _ _ ..44._ CFat" the"cd~rt-shill T""7fet'eY Rif ITB7__"___- .._ ._. _..__.__. 4v 46 (2) OF RMOUNTS PAID IN SETTLING OR OTHERWISE DISPOSING OF A FENDING _... __.__ 47--ADT'LDI~'-WITFfODI-COORT'TiPPROVAt- -._.-... 48 ('_•> OF E%PENSES INCURRED IN DEFENDING A FENDING ACTION WHICH IS 49 SETTLED Oft OTHERWISE DISPOSED OF WITHOUT COURT APPROVRL. ' SC1 'CdT" To the extent that an agent of a corporation has been successful * ***iF* ***M* ***•*• MiF iIF Y if iF iFiFf iF IF Y iiiiHiti#iF**AiF iFR f if iiF ifiiiF i iiiisiiiiif iN*itiki* **k*%iF ai ii LEGI-TECH FILL TEXT R'EF'URT „7~~~6~6; it 4* *++F•R**+. i` • •siF*•*iF'k***M* M ** **w •. *ri**•*****ii***iF**iF iFM *iF* ***MM* * *iiiF•*iF**+**+s AD 1530 PRGE 1 on the merits in defense of any proceeding referred to in subdivision (h) cr (cJ or ire defense of any claim, issue or matter therein, the agent '• shall 6e indemnified against expenses actually and reasonably incurred by 4 the agent in connection therewith. (e) E::cept as provided in subdivision (d), any indemnification under b this sect.i on shall be made by the corporation only if author:zc+d rn the ? __:f :r_ c.a~c, up or. a deter minati ari thnt i~5d dnniif ication of the as enf is S proper in the circumstances because the agent has met the applicahle 9 standard of conduct set forth in subdivision (h) or (c), by any of the IrJ following: I1 U) A majority vote of a quorum consisting of directors who are not 12 par t.i es to such proceediny. 1 (2) If such a quorum of directors is not obtainable, by independent 14 legal counsel in a written opinion. 15 l31 Approval of the shareholders (Section 1531, with the shares owned 36 6y the person to be indemnified not being entitled to vote thereon. 17~ C4) The ~c Dart in which such p~oc eeding~is o'r was' pending upon IS application made by the corporation or the agent or the attorney or other 19 person rendering services in connection with the defense, whether or not 20 such application 6y the agent, attorney or other person is opposed by thr 21 corporation. 22 (f) Expenses incurred in defending any proceeding may be advanced 6y ~E tTe corpo~a~ion~prior to the"final"di-sposI"fiori--of s'i[cfi proceeding upon 24 receipt of an undertaking by or nn behalf of the agent to repay SLICK 25 amount if it shall be deter mcned ultimately that the agent is not '-"'--~'-ZS- ent3{-l-ed"'to be-indemnified as authoriz ed-in"LFis"seCtTOn: 27 (g) The indemnification provided by this section shall not he deemed 28 exclusive of any other rights to which those seeking indemnification may ----~ ~~--5e entifIed-uri der 'any'byl aw ~'-a yreeme~-Vr>~T'slsareFo-I'd2r=s 'OY 'fir disinterested directors or otherwise, both as to action in an official .~i capacity and as to action m another cap achy while holding such office, '-~_-'ai to T:Fe ex e{ nt such'a3~ti-bfi'aI ~~f 1"dtit6"-C6"-frtIISifiMTfT23tI On"aPe authdri~=d in .__. the articles of the corporation. The rights to indemnity hereunder shall 34 continue as to a person Who has ceased.to be a director, officer-, - --"- ~:'-' Eittp7Sylse ~ "aY-TgE75C" a7T?--ST:a I2 -t RCfPE-tU-the -O ERB~ft-oY- tti9 hei r5, 6 executors. and ad mini stratcrs of e pc~: :;cn. rv., i.... ny ~onca:netl :n this S7 section shall affect any right to indemnification to which persons other ---"'38-'-Ch a75 SttCtf'71•tr ~[tUTS aRd-6f i1'[ers-may-tre'-ertti t'i ed-bp-contract or 39 otherwise. 40 fh) No indemni4icati on or advance shall be made under this section, -._..__-~_~te~t-as-pYOVIQEU-1~rr-saCdYVtsT'on~YtlT"OT'"p"ara9Taph-tSY of sub di vi si an 42 (e), in any circumstance where it appear sr 43 (1) That it would be inconsistent with a provi Sinn of the articles, - _-' 4'4-bylaws;-'-a-resd uti nn a; the sharehal dots or aR agreement in effect at the 45 time of the accrual of the alleged cause of action asserted in the 46 proceeding in which the expenses were incurred or other amounts were """""-4T'pai3;"-wfi3cTproTiiTi'i f's "dr' othePWiSa-Tlfi2ts'fTiGemM'i'f'S'catlon. 48 r2) That it would be inconsistent with any condition er:pressly 49 imposed by a mutt ir. approving a settlement. " Sff-"'-'-I i')' -"A' c6rporatf on sh air t5a'Ve pbwLT" t:a jiLtP'[11~SE"'and maintain insurance :r it*w***+*k 14M * if * *** **+F* *** * ****************iFi-i 1F 3 aFiF1F1F1F1F#*** ***** ** * *VF*M* ****M** i * LEGI-TECH BILL TEXT REPORT 07/06/Bi AH 1°, :!~ F'ACiE f nn beh _+1f of agc"a of ~~.c cnrpnrati-- agai r~si arrv 3iaGility asserted against or incurred by the`agent in such capacity or ari sing put Of the .~ agent's status as such whether or not the corporation would have the 4 power to intlemnify the agent against such li ability under the provisions of this section. The fact that a corporation owns all or a portion of 6 t~~e shares of the company issuing a policy of insurance shall not render 7 this subdivision inapplicable if either of the followi n9 conditions are 8 satisfied: ii) "any policy issued is limited to the ev,tent provided 6y 9 subdivi 5i nn (d) of Section 2Cr4g or f2) !A) the company issuing the 30 insurance polity is organized, licensed, and operated In a manner that. 11 complies with the insu'r arice'I aws and"r`egtiQ'a{i"ori s'zpplicable to its 12 jurisdiction of oryaniz ation, (B) the company issuing the policy provides 13 procedures for processing claims THAT DO NOT PERMIT THAT COMPANY TO BE 14 SUBJECT TD THE DIRECT CONTROL OF THE GOR'F'ORATION THAT PURCHASED THRT IS POLICY, and fC) the policy Issued provides far some manner of risk 16 sharing between the issuer and purchaser of the policy, on one hantl, and -dun eTT-iTi'aF d persori or~ per sans, on ~ffie~bih er, such as by providing 18 for more than one unaffiliated owner of the company issuing the policy or 19 by providing that a portion of the coverage furnished will be obtained --- ZLi-Trom same Gh"afTiIiated insurer or reinsur'Er. ""' ' 21 (j) This section does not apply tc any proceeding against any trustee, investment manager or other fiduciary of an employee benefit --~'"~ ~ plan in~-sCicF per~6dn's capaci"ty~as ~'sifcfi ~--even-tRSCr~sTCh person may also <4 be an anent as defined in subdivision (s) of the emolover corporation. q ^^<5 corporation shall have ppwer to indemnify such a trustee, investment '""-" "~S" manager-o~ ~oEEPFe7-TiBGC'I'ai-y""t6-tT'~Rt771Y--p~+rm~lYtnmZsy cnbrtl vi <S er+ rf~ of 27 Section ^<07. 28 SEC. 4. Section 5132 of the Corpor akions Code is amended to read: -~ ~T57:-~fa1-T1T~'artTCIes afi-tncorTraratiait-may"sEt-forth any or all of .~, •,,e fn17 n.._ ~wM.1. ch ~1, ....~ ~.... ~r-- - ..a,~ao 31 provided in^th eY articles: ' - ~ T-"- Y7T-'A'~provI-si'an--IY7rrftY~g the'-dnr2tian~f'ttre-Torpor ate on 's er,i st ence 33 to a specified date. 34 (Z) In the case of a subordinate corporation instituted or created "'-~- un ~"tTi€-~arttTaP7t~-cf`z-h~ad~-orgarsYTat i~~on~ apr-ovi~si an setting forth 36 either or both of the following: 37 (ii That the subordinate corporation shall dissolve whenever its ' ~-' 3B cfiarf e~ Ts -silrY~ndercrd"ta, taken away by ,~ or revoked by the head 39 prganizati on granting it. 4U (ii) That in the event of its disso7 ution pursuant to an article '- "~4T""prove sidn aTlower7"5'y"sCi5'di v35i'oT'-f~T,`par'a'gr'apttt~', 'cl ause fi), of this 4~ section, or, in the event of its dissolution for arty reason, any assets 4S of the corporation after complsance with the applica63e prove si ons of 4~"- ti'ha~eFS'TSTC-dmmencing 'wi t15'getti6R "'63TU7T "I"S "'tCOmilfgrtclnq witn Section 45 6610) and 17 (commencing with Section 6710) shall be distributed to the n~ tie-..r .. ,t :., 47~ ~ T3T'~FPdvi si vns eIi minat ing'or I:mnFing"tfi€-p'BY's'6naI"I1ab11 vty of a 48 director for monetary damages to the corporation for breach of the 49 person's duties to the[ torpor ate on. However, (A) the pravisi on may not 50 [eliminate or limit the liability of directors (i) for omissions or acts R * * RRRRRRRR*RR R *R*RRRRRMRRRiFR MRRM*RMRRR**YMY~}*i: iFAM iF iF*MiF*NMYik iF ifRM RRRR*R*RRRRRR * LEGI-TECH HILL FE%T REPORT q7/U6/G i.'~iF iF i'iF ifif it i wR t'w :1'w ti w'R*w** 11'1tfiR fi,l' RR1t R' fiw*'fi'IF*'R RRR*fi * fi*R'R RR*RRRRR*RRRRRRRRRRRRRR RR* RH 1530 F'AGE 1 [committed in bad faith or that involve intentional misconduct or a [knowing vi of at~i on of law, fie) for any omission or act that a director .~ C6elieves to 6e contrary to or inconsistent with the best] C 4 [interests of the torpor ation, (iii) for any transaction from which a ___ 5 direcf or deal Jed~an improper per son aI economic benefit, or (i v) under 6 ISection 5237 and (B) the provision shall not] 7 CORPORATION. PROVIDED, HOWEVER, THRT (A) SUCH R FRDVISION MAV NOT S ELIMINATE OR LIMIT THE LSRBILITV OF DIRECTORS fI) FOR ACiS OR OMISSIONS 9 THAT INVOLVE INTENTIONAL MISCDNDUCT OR A KNOWING AND CULPRBLE V10LATION 10 OF LAW, (II> FOR RCTS OR OMISSIONS THRT A DIRECTOR BELIEVES TO BE TD'"THE'FEST INTERESTS OF THE CORPORf1TION-OR-?HfiT~~INVC7LVE THE 12 ABSENCE OF GOOD FRITH ON THE PART OF THE DIRECTOR, (III) FOR RNV 13 TRANSRCTION FROM WHICH A DIRECTOR DERIVED AN IMF'ROFER PERSONRL ECONOMIC - T4'" ~BENE'FTT ~" CIVT UNDER SECTION 3^<34, [)F2 (V) UNDER~~SECTIDN-3'259,' AND (B7 NO 35 SUCH PROVISION SHRLL eliminate or limit the 3iability 16 04 a director for any act or omission occurring prior to the date when --~- ~"-I7-"-the "provision Becomes'-effective: ~ -" -'--~ -~ IS (4) R PROVISION AUTHORIZING, WHETHER BV BVLRW, RGREEMENT, OR 19 OTHERWISE, THE INDEMNIFICATION OF HGtNIS (H5 UEF tNtU 1N SECTION 5238) IN _ -_..~' EXCESS-OF7HRT-EXPRESSLY"~PERMYTTEIY-HV"SECTSON--32S~bR-THE PROVISION OF 21 INSURANCE RS PROVIDED BY SECTION 5238 FOR THOSE AGENTS OF THE CORFOkgTION 22 FOR BRERCH OF DUTY TO THE CORPORATION AND ITS MEMBERS, PROVIDED, HOWEVER, - _--'':THAT-THE'PROVTSTDM1Y INRI^"~N09' PROVIDE "FO .F-TNDEMNIFiLF1TIDM1i-'OF OR ANV 4A inlC'i IP (fNl'C FIIG aNV ArFNT GnF 4N`/ ArTC IlP nM?CG?nMC np TDnnm nnT)n~ln cOn.n 25 WHICH A DIRECTOR MRY NOT BE RELIEVED OF LIRRILITV RS SET FORTH IN THE -___._ ~S-"F1ILE'PTION"'TO-"PRRRt,RAPIi-~CSL." _ _ 27 (b) Nothing contained in subdivision (a) shall affect the 28 enforceability, as between the parties thereto, of any lawful agreement -----'Z'T-"no~to F.er wise-EaTi£rAi'/r'to pub'T S"r='p'eY'1-C y. 30 <c) The articles of incorporation may set forth any or all of the 31 following provisions: '-'~-~ "~32-~ ~ ~ ~~-(IT"The-names"-and~~addresse8 of the persons apptFl ntetl to act as 33 initial directors. 34 (2) The classes of members, if any, and if there are two or more -"""----35-"c I"assee~-LFe"~igF{s~ pr3 vileges, pPeieP~n2~7"LsStP't"c[I6f(s and conditions 36 attaching to each class. ~.7 (3> H provision which would allow any member to have more or less " ~ ~ "Lhan'one ~vo~ in any election'"or'otFier"ma"tCe~~~esente~-to the members ~9 for a vote. C ~.. r ~~~ o.-_..: _: ___ ..~ _...~__~_:-_ ..~__.. _._ ... .... ... _-______. _._ 41 [otherwise, {he indemfii4idation df -oF prbJisi on oT"3)isirr once (pursuant to: 42 Csubdivi si on (i) of Section 52'8) for agents (as defined in Ser.ti on 5238): 4:S Co4 the corporation for breach of duty to the corporation and its members: 44 [provided, however, that (R7 the provision may hdE~prbVide for 45 [indemnification of or insurance for any agent (i) far omissions or acts 46 [committed in bad faith or which involve intentional misconduct or a 47 C6.nowing vi olatior. of law, (ii) for any-omissi on br act that an agent 48 f.helieves to be contrary to or incansi stem with the best interests o4 49 [the corporation and its members, (iii) for any traneacti on from which an 5li Cag ent derived an improper personal economic benefit, and (2) any other %%%%%%%%%%%%%%%%%%%%N%rt%%rt%%%%%%%%%%%%%%%%%iF%%%%%Y%%%%%%%%%%%%%M%%%%%%%%%%%%%• % LEGI-TECH BILL TEXT REPORT 07/O6/B' %rt%%%%%M%%%%%M%%%%rt%%k%rt%%rt%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%- AB 1536 PAGE Cprovi aion,7 f4) ANY OTHER PROVISIONS not in conflict with law, for the management of the activities and for the conduct of the affairs of the corporation 4 including any provision which is required or permitted by this part to be --~~t3CBZi-tlr~YnLl-6yI aws~: ~ _-. .. ___._ _. _.____. 6 SEC. 5. Section 5231 of the Corporations Code is amended to read: 7 5231. (a) A director shall perform the duties of a director, "° - '8~--~i ~ncIildifiq ~dutYes as a member of any committee of th~boarC~upon which the 9 director may serve, in good faith, ire a manner such director believes to 1C1 6e in the best interests of the corporation and with such care, including -TT--reas'bn able-I haL(iYY.~ ~s-ari "arli~aP~IIy p~r(zreht-Tfersarr-t n'a-T:ke' position 12 would use under similar circumstances. 13 (6) In performing 'the duties o: a diYec tor, a director shall be -- -....i4-- first , TsiarmatY-olf ~pf-nYnn~s: ~-rclports-ar-sta?-ements, 15 including financial statements and other financial data, in each case 16 prepared or presented 6y: ---- "--TT-Y'I7--orse-~oT-fiDPE 6f#I~et"r5 oef rattan whom the 18 director believes to be reliable and compet Pnt in the matters p erented. 19 (2) Counsel, independent accountants or other persons as tormatters .. _- .2rr wflieh-tfi~'-diY'aetaP"-621TavE3-to~~E>-Wt[tsTrr-SUCh-'pprsoii~•~s prof essi onal or 21 expert competence. 22 (3> A committee o{ the board upon which the director does not serve, ---~- as ~o ma-f'fers w1ThT~ -IYs 3~gnatzl~?'~3utt1GPT•ty~~ wh-f-ci~COmilfTttee the 24 director believes to merit confidence, so long as, in any such case, the 25 director arts in good faith, after reasonable inquiry when the need -~25- fher e-fo'r i5""fndYt-at~G'tfy the eircumst anees artai without knowletlge that 27 would cause such reliance to be unwarranted. 2H (c) Er.c ept as provided in Section 5233, a person who performs the "" ~--Z4--"3u~les o'T-a -"d"i rec"fo~'Tn aZC Sr3atTCE'pTtTi-sgi77I'VtgT'Ort'S~ f3) antl (b) shall all have no liability based upon any alleged failure to discharge the ~1 pzr son's obligati ans as a director, including, without limiting the 3Z'-geiief aTi-fy~i-CK4~';6P~'gDi'ryg',-'aTy-'a~if OrtS-ar-61rt!'SHlGrtR'-pti11•h er,ceed or 33 defeat a public or charitable purpose to which a corporation, or assets 34 heltl by it. are dpdiratPdr an.: ...1 Tnl a.:n;~:.... ~~... ,:..~:, directtir'for monet a'ry damages may tie"eI'1'mirTa78S nr-IYTfTtEd in a '6 corporation's articles to the er,tent provided in paragraph (.3) of '% subdivision (a) of Section 51:2. 38 SEC. 6. Section 5238 of fhe Corporations Cnde fs amended to read: 39 5238. (a) For the purposes of this section, "agent " means any 40 person who is or was a director, officer, employez or other anent of the 41 corporation, or is or was serving at fhe request 'df the corporation as a 42 director, o;f icer, employee or agent of another foreign or domestic 93. corporation, partnership, joint venture, trust or other ent erprl se, or 44 was a director, officer, employee or agent of a for eigh or domestic 45 corporation which was a predecessor corporation of the corporation or of 96 another enterprise at the request of such predecessor corporations 47 " proceeding " means any threatened, pending or completed action or 4S proceeds rig, whether civil, criminal, adminl strative or investigative) 49 ..,.^.d c;:„zn~es " includzs w1 lhVUt 111111 Ca}lOn atf nrnPVa fPPS ann anv Sit e::penses of est ahlishing a right to indemnification under subdivision (d) ##%~11###M##*###rt*M*#k*###Nrt##*dl###*1F#######'##*#*#####*##F!F#*###rt##A######rt#M#M- • LEGI-TECH HILL TERT REPORT 07/06/8' NM11MkMkAI/M#MR1~AF4AMNil11#MMIIA f1M#1~NN1F *iV1lMMfFil i! 1t iF##MM%Mrt#i!#Mi1NiFM#rtNMMkk1lMMNNwMk1iNNM R6 1°30 PRGE 1 or paragraph (3) of suhdivi sion (e). -~'~~~-----"~°-; (6) ~A cor oration shall have p power to indemnify any pprstln who was or 3 is a party or is threatened to be made a party to any proceeding (other 4 than an action by or in the right of the corporation to procure a ~~ .. .ri .. ~~judgment in its favor, an action brought un der 'Sec"Sion 5235, or an action b brcught 6y the Attorney General or a person granted relator status 6y the ~ n~«,__...,. n,~....~. al <..~ ~ tire ~~h ..c w..•.. .,, t~_ _- °-___ .._ld in ' S ~dh~ar3 table trus~T-'Sy reason of "tom-{acf-th'af "~uCfT per sot1435For was an 9 agent of the corporation, against er,p enses, judyments, fines, settlements Iii and other amounts actually and reasonably incurred in connection with __._. 37-'sucFi-"procee3ing-iT SucFi"person ac'Eed-'in Sood-iaitTi-an tl- In a manner such 12 person reasonably believed to 6e in the best interests of the corporation 1- and, in the cases of a criminal proreedinq, hatl no reasona63e cause to ~~-~-T4--beTi eDe "tfie-"c on fiucf oi~~~sucfi perso"n WaS~~UT513W'fliY.--"T'fie-termination of any 15 proceeding 6y judgment, order, settlement, conviction or upon a plea of 16 nolo contendere or its equivalent shall not, tlf itself, create a -'~---"i~esump £i on Fh a~~'-flue-~p eP Sbn did-"naF'-a"cC3n c7SIId-Fa1Yls aTSd~ in a manner 18 which the person reasonably believed to be in the best interests of the 19 corporation or that the person had reasona63e cause to believe that the -~~---~~-ZL>-'"'person's"c onducf was unlawful. - 21 (c) A corporation shall have power to indemnify any person who was or ^c2 is a party or is threatened to be made a party to any threatened, pending -Z3 or compTet"ea"acf3 on Fiy o"r" in- the ri gh C-ai-tK~'C6Yp6raClon, or brought 24 under Sectzon 5233, or brought by the Attorney General or a person 25 granted relator status 6y the Attorney General fur trench of duty -~'- ZS" ~elaEing to-asset""s heI'd" in "char£tabI a""C~sL~ fS pPaCUre ~a ]utlgment in its 27 flavor by reason of the fact that such person is or was an agent of the 2B torpor atl On. dOdlnst eY.pensB6 actualiv and rea4nnwM V inntrroH by m~rh 24~-person in connection with the defense br sef tI einenf of such action if 30 such person acted in goad faith, in a manner such person believed to be 31 in the best interests of the corporation. No indemnification shall 6e 32 made under this[ subdivision in7 SUBDIVISION FOR' ANY DF THE FOLLOWING: _•' (1) IN respect of any cl arm, issue or matter as to which such person 34 shall have boen ad]udged to be liable to the cor-porati on in the ~° performance of such person's duty td~fhe corporation, unless and 36 only to the extent that the court in which such proceeding is or was 37 pending shall determine upon application that, in view of all tYie 'e circumstances of the case, such person is fairly and reasonably entitled 39 to indemnity far expenses to the extent that the court shall determine. 4U 41 (2) pF AMOUNTS PAID IN SETTLING OR OTHERWISE DISPOSING OF A PENDING 42^. Af TIDM, WITHOUT COUF.T APPROVAL. 43 (3) nF Ex F•FNgFg INrLiRpEP SN DEFENDSNS n PENDING ACTION WHICH I~ 44 atIILE:O OR OTHERWISE DISPOSED OF WITHOUT COURT APPROVAL UNLESS IT I9 45 SETTLED WITH THE RFF'ftOVAL OF THE RTTORNEV GENERRL. 46 (d) To the extent that an agent tlf a corporation has been successful 47 on the merits in defense of any proceeding referred to in subdivision (b1 48 or (c) or in defense of any claim, issue pr matter therein, the agent 49 shall 6e indemnifred against expenses actually and reasonably incurred by 3d the agent !n ctlrtnection therewl th. "~SFSFiiFiFiFiriFiFRiF7f iFIF'iF'IF"IFiF iFifiF iF iF iF iF if iF iiiFS if iFiFxxc~FiF lFiF iF if.FiF iF iF iF SiF ~F iF iriiF iFiF iFiF itiFa#iFif,`F iF MitiFiF iF icit iF M iFi • LEGI-TECH FILL TEXT kEF'OkT 07/06/81 ••rir.itit..ititititititit.«.++rit•it itit..••...++r.itiFit««it**+tit***itrititeat•witiciritit wit ititex++.•aFitxfi~r RE 153ir ____________ F RGE i (e) Except as provided in subdivision (d), any indemnification under _~ ~"~~"'-- tx3s 9~c E?'o'n sFaIT"he "mad= 5y-Cree"carp cr=ati~315"tl75'I"y if a4lP harized in khr specific case, upon a determination that indemnification of the agent is 4 proper in the circumstances bec ruse the agent has met the applicable . _..-f_._~ard-.aP-rartrlncr set'-fi'arth-'Y'n'~-Cb-Tyr--(rYi 6y any of the 6 following: 7 U) q ma.7ority vote of a quorum consisting of directors who are not . u pa'r 1;25 to sUCn proceeding. 9 (2) If such a quorum of direr_t ors is not obtainable, by intlependent 30 legal counsel in a written opinion. ..-.-Tf--C'7.-Rppra~/aT'~af-tt5rs"memtrers-TSe>•tY~ort-.,~q~witK-ths'~persons to be 12 indemnified not hein9 entitled to vote thereon. 1' (4) The court in which such proceeding is or was pending upon '~ ~~"~"Y 4' appTTeation made by the "carporatiah or tTre-agent or the attorney ar other 33 person rentlering services in connection with the defense, whether or not 16 such application 6y the agent, attorney or other person is opposed by the "_IT'[orpo"ration. _ .' -'." '. .'---- 1E (f) E::penses incurred in def entling any proceeding may be advanced by !9 the corperation prior to the final disposition of such praceedi ng upon -- - ZO~ .r ece3pt"df an undertaY.i ng by-~ar >Rf~beKafTf ~oi-2h>s agent'to repay such 21 amount if it shall he determined ultimately that the agent is not entitled to be indemnified as authorized in this section. ..~ (gs The indemnification prdvi3ed $y tRis'sat-L ush shall not be tleemed ^_4 e::clusive of any other rights to which those seel:i ng indemnif i.cation may he entitled under any bylaw, agreement, vote of members or disinterested 26 directors or otherwise, both as to action in an official capacity antl as 27 to acts on in another capacity while holding such office, to the extent 2G such addi t; oral •-iyhts to indemniiicati on are authorized in the articles 29 of the corporation. The rights to'fndemnity hereunder shall continue as 30 to a person who has ceased to be a director, officer, employee, or agent 1 ar~d shall inure to the benefit of the heirs, executors, and _.. administrators of the person. Nothing contained in this section shall '•3 affect arty right to indemnification to which persons other than such 34 directors and o4ficers may be entitled by contract or otherwise. Ri) No indemnification or advance shaII be made under this section, B6 e>:cept as provided in subtle vi si on (d) or paragraph (b) of subdivision 't~ (P), _ !~.nst a.^.ce where it appears: '9 (1) Thatrit~would 6e inconsistent with a pravi si on of the articles, 39 6yl aws, a resolution of the members oi° an agreement in effect at the time 46 of the accrual of the alleged cause of action asserted in the proceeding 41 in which the expenses were incurred or other amounts were paid, which 42 prohibits or otherwise limits indemnification. 43 (2) That it would be inconsistent with any condition expressly 44 imposed by a court in approving a settlement. 4S (i) A corporation shall have power to purchase and maintain incur once 46 on heh alf of any agent of the corporation against any liability asserted 47 ~~ against or inc ur'red by the agent in such capacity or arising out of the 48 agent's status as such whether or not the corporation would have the 49 power to indemnify the agent ag ainat such liability under the provisions SO o4 this section. The fact that a corporation owns all pr a portion of -- ---.~...»~..kkk~~.~;~~~.~.*3Vkk~;~,~~,~F*~~F~=~~=,I~~,~~,r~~r~~...~.,~..*»~>»»~.~.. * LEGI-TECH PILL TEXT REPORT 07/46/6' kkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkk#kkkkilkkkkkkkkkkkkkkkk~ AB 1530 FAGS 1 the shares of the rnmpnny issirt r.a a oalicv of insurance shall not render T-~--£fiis~'s~r63 va si on' "inip pIicrBtP Yf ~i tTfgP'~f-t~-;e2IOwSng contll trans are ., satisfied: (1> any policy issued is limited to the e>:tent provided by 4 paragraph f4) of subdivision ([) of Section X132 or (2)(A) the company "~- ""~-5--issuing fFe ansur once -poI-icy"'is ~orgsn iz 5d~'Tf~75'saa-, and operated in a b manner *_han complies with the insurance laws and regulations applicable 7 to its jurisdiction of organization, (6) the company issuing the policy B prove des -p ~ocetlur es for processing c2 ai m5~THAT DQ NCT PERMIT THAT COMPANY 9 TO SE SUDJECT TO THE DIRECT CONTROL OF THE CORPORATION THRT PURCHASED 30 THRT POLICY, and (C) the policy issued provides for some manner of risk -IT--'-'-~---'sTiaring -fie-£weeri~tfi'e issuer and'"pUrcFaser of-'"the policy, on one 12 hared, and some unaffiliated person or persons, on the other, such as by to p.-o viding for more than one unaffiliateJ owner of the company assuing the f4~ policy"or by~prbvi ding £hat a por£i on'df ~£fie coverage furnished will 6e I~ obtained from some unaffiliated insurer or reinsur er. 7h !i) Thic cPrtinn dnoc nn4 only fn o cnd:nn ~ no• ~ 17 tri.rstee, irvestment manager or aoth er--f idudaryr bf an employee benefit 18 plan in such person's capacity as such, even though such person may also 19 b= an agent as defined in subdivision (a) of the employer corporation. A 2U corpcrati on shall have power to indemnify such trustee, investment 21 manager or other fiduciary to the extent permitted by subdivision (f) 04 Section 207. _.. SEC. 7. Section 7132 of the Corpor afibns Code is amended to read: 24 71_2. (a) The articles of incorporation may' set forth any or all of .. tr,e following provisions, which shall not be effective unless e>:pressly Zb provided in the articles: 27 (1) R provision limiting the duration of the corporation's e;:i st ence 26 to a specified date. 29 (2) A provision conferring upon the hal dens of any evidences o4 30 indebtedness, issued or T.n be issr.red by a corporation the right to vote ':] _n the c.l c~hi~n r_.S directors Nr.d on any other matters cn which cerbers 32 may vote under this part even i4 the corporation ddes not have members. (3) A provision conferring upon members the right to dot er mi re the 34 con si tler ation far which memberships shall be issued. .• (4> In the case of a subor dindttT~corpBr~flan-i n5titut ed or created 36 under the authority of a heatl organization, a provision setting forth 37 either or both o4 the followings iB Cf I' TM'atr Lme 5llbdrdlnate COPpdratl Oll sk821'C144o1V0 Whenever its 39 charter is surrendered to, taken away by, or revoked by the head 40 organization granting it. 47 --~-~ " tL77""That"Yri the event-o;~its~ai'SSa1'OtTBTf-piiPS[.ia7sC-ta an article 42 provision allowed by sr.lbdivi sion (a), paragraph (4), clause (i), of this 43 section, or, in the event of its dissolution for any reason, any asset=_ 44 of the corporation after complianre wish the applicable provisions of 45 Chapters 15 tc ommencing With Section 6:,10), 15 (commencing with 46 Section 8616), and 17 (commencing with Section 0730) shall 6e distributed ----4T't"fst7f a ~-I'S'E'a-d'~-aP'gatsitatton. -.. _.. .....-- 46 (°•) F'r ovi si ons eliminating or limiting the personal liability of a a9 director for monetary damages to the corporation or its mem6 ers for "" -~ 'breach of a dY rector's Doti es to the corpor atYaT) and'i-ts members[. : .. i'iF*~-#Tiiiii*'gr*iF1f~iF 1!*iF1r `II'11i?111Y111F**M#***NiFiFM***!f if~ * LEGI-TECH HILL TEXT REPORT n7/Ob/8- ********************************k********************************************- A6 1536 FRGE 1 [However, fR) the provision may not eliminate or limit the liability of [directors -f t_r fbY`-tsml-ssi ons or acts comfit tted in tad faith or that 3 Cinvol ve intentional misconduct or a knowing violation of law, (ii) for 4 [any omission or act that a director believes to be contrary to or Cinc on si's-t'erit wi EF-"tKe-Gesf-InteFc S't"s-n'f 'tiSe-['aPp'oPat2 on and its memtere, 6 Ciiii) far any transaction from which a director derived an improper 7 [parson al economic benefit, or (i v) and zr 3ection 7236, and (B) the 6 Cpr-ovi si on 's*r'a I7--riot'e12'mYhat6~~bT TTmit Yfse7~"FROViDED, HOWEVEF, THAT 9 (R) SUCH R PROVISION MAV NOT ELIMINATE OR LIMIT THE LIABILITV OF Ih DIRECTORS (I) FDR ACTS OR OMISSIONS THAT INVOI VE INTFNTTnNA1 NTSCnNni irT i1 DR A k"NOWING RNR CULF'RHCE VIOLATItIN-T]F 1_AVr~ ~CtTY~FOFT 7iCTS OR OMISSIONS 12 THAT A DIRECTOF' BELIEVES TO PE CONTRARY TD THE EEST INTERESTS OF THE 13 COF'F'UFATION OR ITS MEMBERS Ok THAT INVOLVE THE ABSENCE OF GOOD FAITH ON 14 THE FART OF THE DIRECTOR, tIII7 FOfi ANV TRRNSACT tDN FROM WHICH R DIRELTOR i5 DERIVED AN IMPROPER PERSONRL ECONOMIC BENEFIT, (IV) UNDER SECTION 7233, 16 OR fV1 UNDER SECTION 7236, RND (B) NO SUCH PROVISION SHALL ELIMINATE OR 17 LIMIT THE liability of a director ftlr any-act cr'tlmisslon occurring 1B prior to t:he date when the provision becomes effective. 19 <<^6 (6) R PROVISION AUTHORIZING, WHETHER SY PVLAW, AGREEMENT, OR 't OTHERWISE, THE INDEMNIFICATION OF AGENTS (AS DEFINED IN SECTION 7237) IN E%CESS OF THR7 E%FRESSLV PERMITTED BV SECTION 7237, Ok THE PROVISION OF .. iMSURANCF, AS PROVIDED BV SECTION 7227 FOR ~TFiOSE~RGENTS OF THE CORPORATION ~4 FDF' BREACH CF DUTY TO THE CORPORATION AND ITS MEMBERS, PROVIDED, HOWEVER, .-, roar THE PROVISIUN MP.Y NOT. apnulDE cnF rMDEMyrrrrRTION CF Oft A`:Y ~6 INSURgNCE FOR ANV AGENT FOR ANV AL'TS~~OR~OI`TISSIDNS OR TRANSACTIONS FFOM 27 WHICH A DIRECTOF' MAV NOT EE RELIEVED OF LIABILITY AS SET FORTH IN THE 2S EXCEPTION TO PARAGRAPH (5). 29 (67 Plothing contained in subdivision Cal shaII affect the O enforceability, as between the parties thereto, cf any lawful agreement 31 nut otherwise contrary to public policy. ..2 (c) The articles of incorporation may set forth any or all of the ~... fallowing provisions: 34 (1) The names and addresses of the per eons appointed to act as 35 initi al~direc2or s. ~ ~ ~----~-~-~---'~~~~ 36 (2) F'rovi sions concerning the transfer of memberships, in accordance 37 with Section 7320. 38 (3) The classes of members, if any, and if there are two or mare 39 cloacae, the rights, privileges, preferences, restrictions and conditions 40 attaching to each class. -~{3- ~t43-~7-5""provisior. which- would al Itiw ariy memo er-td~~i-cave more or less 42 than one vote in any el action or other- matter presented to the members 43 for a vote. [ --~-~~-- 44-~L C55 Provisions (1) authorizing, whether by 6y1 aw, agreement, or 45 [otherwise, the intlemnif icati on of or provision of insurance (pursuant to 46 Csubdivi si on (i) of Section 7237) for agents (as defined in Section 7237) 4T~~-Lof the corporation for breacF o~ duty -f6 ftTe cbrpor-anon and its members 48 [provided, however, that (R) the provision may not provide for 49 Cindemnificati on of or insurance for any agent (i)7 C for omissions or _-.ST"-rar}q-~r nmm. t}e.T ::: FC'~"r:.i ~I~G-" Y'F i'~Q-~-.: ~aTC ~i~ejii: oi~a'a S~lewnd~icL nr q. MF'iFM it iiF M'wrMMrM ~Fi{i7F7ti/rVFi1#'RA{fiiRFiFiFi7FiF'iFR7FiFiF7F3Fli>F'iFIFiFaf:Fifaf is3FiFiFif:Fix~k ic~it it it iFrF if ~iF aif ilif + LEGI-TECH FILL TEXT kEPOPT 07/06/e~ MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMittMMM4MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM- AE 153n FACE i Ch:n o:ai nG vi nl anon of law, fii) for any omi ssi o.: or act that an agent 2 Cb elieves~td 6e 'c ontrary to'~~or~-inconsistent w1"th the test Interests Gf ~~ Cthe corporation and its rt~embers, (iii) for any transaction from which an 4 Caq ent derived an imor oo er oerson al economic heneFit. ~.,,i r?r ~ „r-r,,,~ v Cprovi si ori,] - ~ ~ ~~ 6 (5) ANV OTHEF F'ROVI5ION5 not in conf lick- with law, for the management 7 of the activities and far the conduct o-f the affairs of the corporation, e including any provision which is requiretl or permitted by this part to be 9 stated in the bylaws. 10 SEC. 8. Section 7231 of the Carpor ati ons Code is amended to read: fi 7231. (al A director shall perform the duties of a director, 12 includ:nq duties as a member of any committee of the board upon which the i'. director may serve, in good faith, in a manner such director believes to 14 6e in the best interests of the corporaticm and its members and with such 15 care, including reasonable inquiry, as an ordinarily prudent person in a 16 like position would use ,.ender similar circumstances. 17 (b) Ir. performing the duties of a director, a director shall be 18 entit7 ed to rely Gn information, opinions, reports Gr statements, 19 incl udinn iinanri al cr~t=cent=_ and n*_her financial data, in oath case ~u prepared or presented by any of the fo33owing: 21 fU One or mare officers or employees of the torpor at--ion whom the ^^ director believes to be reliable and competent in the matters presented. 2~ (2) Counsel, independent accountants or other persona as to matters 24 which the director believes to be within such person's professional or 25 e;.pert competence. Z6 (3) A commiftee of the board' upon which the director does not nerve, 2J as to matt er-s within its designated authority, which committee the 28 director believes to merit confidence, so long asi in any such case, the 29 director acts ire good faith, -after"Yea5ot1a13Ye'-YRi7tTtTy'When the need 30 therefor is indicated by the circumstances and without Y.nowl edge that St would cause such reliance to be unwarranted. 32 (c) A person who performs the duties of a director in accordance with 33 subdivi sl one (a) and (b) shall have no liability based upon any alleged 34 failure to discharge the person's obligations as a director, inclutling, -~-Z`"-ui~tlsacrt-IYmYttFSr~tha-gerterality of-the for~gaf hq ;--any-actions ar 36 omi ssi on5 which er,ceed or defeat a public or charitable purpose to 37 which assets held by a corporation are dedicated[, and in]. IN addition, --':S8-'-th'e'IS-attf Yity-bf 'a director for monetary damages-may be eliminated or 39 limited in a corporation's articles to the er.tent provided in paragraph 4b (5) of subdivision (s) of Section 7122. _-_.Tr__._.~C_4.--SeLtl-ars"7237-of the CarQorat-tatrs-CaCL~-i-samertCad to read: 42 7237. (a) Fnr the purposes of this section, "agent " means any 4 person who is or was a director, officer; Amn, ,.y=~. .- -__..,,.,~.. _ - ~. ...,,m aynui vt Cne -~. r%..~ ~... ~T1; iii l9 Or Yni S~ SarVi7Tg ~at-tRErTEgUESt-Qf-'t}ig-LOrpOrattnn a,~ a 45 dir ectar, officer, employee or agent of another foreign or domestic 46 corporation, partnership, joint venture, trust or other enterprise, or -47-was--a + Empf-°Yee-or-agl'nt-~f~-"far'ai gn~r domestic 4B corporation which was a predecessor corporation of the carpar ati an or' or' 49 another enterprise at the request of such predecessor corporation: ~~ 'Sn "p'raceedirg" -means-arty-threatenert,"pendirrg-ar'=omP-lEt ed action or _..-_ .*~.~## ###iF#*iFi#i###ii##)F#i*iF*####if*iiF#T#iF#*#'iF#inf'iFiF1F-;}F1r{r#1f *##*#*##ik#tfi***# MM## # LEGI-TECH BILL TE%T FEFGFT ir7 /06/87 * ###****#*####M#fi#*#*fi*#*YxMxx*rx**#!!******##**###*#****#k**++r##**fi#**#*#*#**#*# RE 153i~ 1 proceeding, whether civil, r_r-i urinal, administrative or .investigative; and " e::penses " includes without Iimitatlon attorneys' fees and any e:;penses of esta6lishrny a right to indemnification under subdivision (d) or 4 paranraph (3) mf subdivision (e). (63 A corporation shall have power to indemnify any person who was or 6 is a party or ~s threatened to be made a party to any proceeding (other 7 than an action by or in the right of the corporation to procure a 8 judgment in its favor, an action brought under section 5233 of Fart 2 9 (commencing with Secti r_n 5119) made applicable pursuant to Gection 7235, lip cr an action brought by the Attorney General or a person granted relator I1 status by the Attorney General far any breach of duty relating to assets 13 held in charitable tr~_rst) by reason u; the fact that such person is or 13 was an agent of the cornnratSnnr sg_=.inst axpsnses, ji~da0irnts, fines. :, 5rltiements ana other amounts actually and reasonably incurred in 15 connection with such proceeding if such person acted in goad faith and in I6 a manner such person reasonably believed to be in the hest interests of 17 the corporation and, in the case of a criminal proceeding, had no 18 reasonable cause to believe the conduct of such person was unlawful. The 19 termination of any proreeding by Judgment, order, settlement, cony cti on 2U or upon a plea of nolo contendere or its equivalent shall not, of itself, 21 create a presumption that the person did not act in good faith and in a 22 manner which the person reasonably believed to be in the best. 2T interests of the corporation or that f."he person had reasonable cause to ^^<4 believe that the person's conduct was unlawful. 25 (c) A corporation s)1a11 have power to indemnify any person who was or 26 is a party or is threatened to be matle a party to any threatened, pending 27 or completed action by or in the right of the corporation, or brought 28 under Section .°.233 of Part 2 (commencing with Section 5110) made -~~S appl ~icaBTe 'pursGdnt tc Section 7238-, or~6roughf by the Attorney General 3n or a person granted relator status by the Attorney General for breach of 31 duty relating to assets held in charitable trust, to procure a judgment -~~3Z- in~-its favor ~ y reason of the fact that'such person is or was an agent of 33 the corporation, against expenses actually and reasonably incurred by 34 such person in connection with the defense or settlement of such action -,r--Tf~~"such er soh act"ed ih , - '- " it ersdn beIi eyed to -~~ p good faith- i;T"a manner such" 36 he in the best interests of the corporation and its members. No i~~J euu u+icats on shall be made under thi sC subtlivi sn on in] SUHUIVISION .__ .. ~--FOR" AfiP~"OF-fHE~OCLOWI NG"e --_- _ __. . _ 39 (1) IN respect of any claim, issue or matter as to which such person 40 shall have been adjudged to be liable to the corporation in the "-"~ 4T-'perf of mint d-6T~u~h-"pEPS'bn 's dtity'-t~tY,2'CnYparatl on"artU its members, 42 unless and only to the e>;tent that the court in which such pr oceedinq 43 is or was pending shall determine upon appticati on treat, in w ew of ail ~- 44- the-'c1 rCUmatan[~S'~Sf -thE La52, suchr -p'arson Is #alrly antl Yea=_on ably 45 entitled to indemnity for expenses, and then only to the extent that the 46 court shall determine. --~---4T"~--LZJ-IIF"APIWNTS'Ffi1D-IN SETTtTNG--OF-~QTHERWfSE-Di!'iF0,4SNG OF A FENDING 4B ACTION, WITHOUT COURT APPROVAL. 49 (3) OF E%PENSES INCURRED IN DEFENDING A FENDING ACTION WHICH IS "'-S[7~ SETTLED OR OTHERp1I5E DISPOSED OF WITt1OUT COURT APPROVAL UNLESS SUCH wwwwwwwwwwwwwww***www+rwwwwwwwwwwwwwwwwwwaswwwwwxaw+•wcwwsww~wwwwwwww~wwwwww~wwwww + LEGI-TECH PILL 7E%T REPORT 07/Oh/G% wwwwwwwwwwwwwwrwww*~*wwwwwrwwwwwwwwwwwwwwwwwwwwwwwwwMikw wwwwwwwwwwwwwwwwitwwwwwww AH 1S>V F'AGE I ACTION CDNCEkNS fSSETS HELD IN CHARITABLE TRUST AND IS SETTLED WITH THE _ RF'FROVAL OF THE ATTORNEY GENERAL. (d) Ta the extent that an agent of a corparati on has Deen successful 4 an the merits in defense of any proceeding referred to in su6dl vi si an (6> or ic) nr in defense of any claim, issue or matter therein, the agent 6 shall he indemnified against expenses actually and reasonably incurred by 7 the anent in rnnncrtion rherewi±h. e (e) E::cept as provided in subdivision (d), any indemnification under 9 this sec ii on shall 6e made by the corporation only if authorized in the 10 specific case, upon a determination that indemnification of the agent is ]1 proper in the circumstances because the agent has met the applicable 12 standard of conduct set forth in subdivision (b) or (c), by any of the 13 following: 14 (1> A ma)oFity vote of a quorum consisting of directors who are not 15 parties to such prnceeding. 16 (2) If such a quorum of directors is not obtainable, by independent 17' legal"counsel in a written oplnldn. ~ "--'---- 1H f3) Approval of the members {Secti an Sin4), with the per eons to be 19 indemnified not being entitled to vote thereon. 2D f4) The court in which such proceeding is or was pending upon 21 application made by the corporation or the agent or the attorney or other 22 person rendering services in connection with the defense, whether or not suc app i'"-TCa~'by ffi'e agenE;-aE~d~iey or~iflPP~Fer5at5 -YS dppased by the <<^4 corporation. 2v (f) Expenses incurred in defending any proceeding may 6e advanced by ---'~--{~-corporatioh 'p-ri or"to the final-dfspo5l ti orT"of`-suetr'prdceeill ng upon 27 receipt of en undertaking by or on behalf of the agent to repay such 28 amount if it shall 6e determined ultimately that the agent is not - ---:'4 erit-i t2ed to-~be-indemriifi ed a3"aut;i Cr-f Yed-Tn fTii s~~-sect l6n. 'ii (g) The indemnifir.ati on provided 6y this section shall not 6e deemed 33 er.clusive of any other rights to which those seek:i ng indemnification may -"- tie entYti ed•iind~r--ariy 6'y"Taw,'~-agFeemclPt-VdLP'n;--memGPrS-oY dt sl nr er ested 3~ directors or otherwise, both as to action in an official capacity arld as +4 to action in another capacity while holding such office, to the er,tent "-~~~--loch-"aGdl tt~6ti'aYYt'gf7t's--ta'-t'ndEmnYfY-catl~rt-Zre-auttrorizett in the articles '6 of the corporation. The rights to indemnity hereunder shall continue as 37 to a person who has rea=_ed f^ h~ wir^"}^r, _ff.__r v:uyi~yoc, or agent '8- and snail 'l nure-td the'?renef it of-"tisP hEirs'~'-execcrtors -'arnt Z9 administrators of the person. Not hinq contained in this section shall 4u affect any right to indemnification to which persons other than such -._.~_. ~-re~or s-~a~i d-~-fi-tCer"s-"may-~tre-'entl~tteU-ty-COntrari-dr--othPrwi se. 42 (h) No indemnification or advance shall be made under this Section, 43 except as provided in subdivision (d) or paragraph (3) of subdivision 44"-Te7; to any r_ircumstance where it appears: - - 45 (1) That it would be inc on sa st ant with a provision of the articles, 46 hylaws, a resolution of the members or an agr cement in effect at the t-i me 47 of"fhe ~accruaT rif th'e ~~aTl'eged causEr of actidn a55PrteC~Tn the proceeding 4B in which the e;:pen ses were incurred or other amounts were paid, which R9 prnhi6rt=_ or otherwise limits indemoi{icati ong or - 50 (^<) That it would 6e inconsi 5f ant with arry cd71d'i ti do expressly #*xYfifi*****fi**x*Yfi fififi xxR*fixxxxxxxx*xxxxxxxx**fixfixiFRiFxxi#iFfi€xw#xxwwfifi*fifixfififi xxfifi wx x I_F(ii-TECH HILL TF_%T REPORT n7/06/87 *fifix**xfififi*x+xx«~fi xfi xfixfixxxxwxwx*xfifix*fififiwxfififixxxxxxfixx*fifix*fififixfifififififififi*xxxrtfiwxx AH IS'O PAGE 17 1 imposed by a court n approving a. Set t'. amen±, ti) R corporation shall have power to purchase and maintain insurance ._. on behalf of any agent of the corporation against any liability asserted 4 against or- incurred by the agent in such capacity or arising out of the 5 agent's status as such whether or not the corporation would have the 6 power to indemnify the ay ant against such liability under the pr-ovi si ons 7 of this section. The fact that a corporation owns all or a portion of 8 the shares of the company issuing a policy of insurance shall not render 9 this subdivision inapplicable if either of the fallowing conditions are lU satisfied: fl) any policy issued is limited to the extent provided by 11 paragraph (S3-~of-subdi 0i si on-fc7 6f'-~5ecki on 7I:.2; or (21 (A) the company 12 issuing the insurance policy is organized, licensed, and operated 1n a 13 manner that complies with the insurance laws and regulations applicable 14 to its }ur'i sdiction of organization, (B) the company issuing the policy 1S provides procedures for processing claims TNAT DG NOT PERMIT 7HRT COMPANY 16 TO PE SU8,7 ECT TO THE DIRECT CONTROL OF THE CORPORATION THAT PURCHRSED ~T~-TEAT FOC.TC~ "anrr"-(C7- the policy issued pr'o"vies-for-sb"me manner of risk IB sharing between the issuer and purchaser of the policy, on one hand, and 19 some unaffiliated person or persons, on the other, such as by '20 providing for-more than one unaffiliated owner-df tflF eamp any issuing the 21 policy ar by providing that a portion of the coverage furnished will be 22 obtained from some unaffiliated insurer or reinsurer. _.. _ .S°----(jl This "sec Ei bn does no-t apply""to -any'-pr oc -atTaYnst any 24 trustee, investment manager or other fiduciary of an employee benefit 25 plan in such person's capacity as such, even though such person may also <6 ue an agan~ as Jvf aneti in ~ubaivi sa on -r',x'T-6f-tiSE-E'rlfpraper corporation. q 2/ torpor ati an shall have power to indemnify such trustee, investment 28 manager or other fiduciary to the extent permitted by subdivision (f) of ?4'"-Sec{ion '20T. '---- _... 30 SEC. 10. Section 9132 of the Corporations Code is amended to read: 31 9132. (a> The articles of Inc erporati on may set forth any er all of " 32" fhe foI l"owing"prbvis3bns; which sFaI-l--ndC-ti"a ef"fcTCt': VZ+ unless expressly 33 provided in the articles: 34 (1) A provision limiting the duration of the corporation's existence .{d""-a"spec i'fied-dTe~ _-_.-- _.-..___-__._____-______ 36 (2) In the case of a sub ortlinate corporation instituted or created 37 ,antler the authority of a head organization, a provision setting forth "-~38 either or both of the followings 39 (i) That the subordinate corporation shall dissolve whenever its 40 charter i5 surrendered to, taken away by, or revoked by the head 4i drgani~a{-ion "granting" it. -'- - - ------'- 42 (ii) That in the event of its dissolution pursuant to an article 4.4 prow: si on allowed by subdi vi sign (a), paragraph (2), claU6e (i), of this 4~ -sec{ion, or, i'n ~tfie~aventi of its di ssb""1titi Bn-~d~~a7ry--reason, any assets 45 of the corporation after compliance with the applicable provisions of 46 Chapters ]6 (commencing with Section 6630) and 17 (rnmmenr: ,,~ ~~:tn 47 Section 6710) (made appIicabl e-pLrsuarit to Section 9680) shall he 48 distributed to the heatl organization. 49 (3) F'r nvi si ons eliminating or limiting the personal liability of a 50 director for monetary damages to the corporatl oh for breach of a #Y#iFYi###i# yx##IF iF Y 1F#Mil+t###iF iF%Y1FM##•iF iF RdFY YiF###jF iF^#iF iFi^iiifi#^#i•YFf •#####iF IF####R• + CFGI-TECH EIL( TF_%T REPORT 07/06/8? x M4 V YiFY#iF#iF VF i4Y#iF#iMMiMMM YiF iF IF M•M#iFiF##t##YYYiYYYY#x,t.yyaarxk!!#3#$##l`####### # # h R1F Yri iiiiW A8 153i, PAGE IB 1 director's duties to thef. corporation. However, (A) the pr-uvision may l Cnot eliminae or limit the liability of tlire[t ore (1) for omissions or 1 3 Cacts committed in bad faith or that involve intentional misconduct qr a 7 4 [knowing viola*.i on of law, (iii for any omission or act] C that a ] 5 Cdzrector believes to tie "coat rary 't8-Br'Iri2'bf~sT~t@7St with the best ] b [interests of the corporation, (!ii> far any transaction from which a ] 7 [director derived an improper personal economic benefit, or (i v) under I 8 [Sec icon 9245, and (B) the provision shall not eliminate or] 9 CORPORATION, PROVIDED, HOWEVER, THAT (A) SUCH A PROVISION MAV NOT 10 ELIMINRTE OR LIMIT THE LIAEILt7Y Or' DIRECTORS (3) FOR RCTS OR OMISSIONS TOMRt MISCONDCiCT 9Ft A-t<NObIING'RMII-tU[PRHLE VIOLHTION 12 OF LAW, (II> FOR RCTS OR OMISSIONS THAT A DIRECTOR RELIEVES TO HE 13 CONTRRRV TO THE EES7 INTERESTS OF THE CORFORRTION OR THAT LNVOLVE THE .--74-FSHSENCE OF~-GOOD~~F'RTTH ON THE PRRT'OF-THE"IIIRECI'OR-~'-CrI'Iy- pDR~~RNY 15 TRANSACTION FP.OM WHICH q DIRECTOR DERIVED RN IMPROPER PERSONRL ECONOMIC 16 BENEFIT, (IV) UNDER SECTION 9244, OR (V) UNDER SECTION 9245, AND fH) NO _."I7""'STJCIT"PROVISTON-5HRL2" EL].141lVRTE 'OR"_-_.__-ri mTt_Z17-e I_S a6Ti3 ty di" a tllrector 38 for any act or omission occurring prior to the date when the provision 19 becomes effective. ___-mm.___.,~_~r~i_~?t+!+p?'rTxT-"~'~.nac~TaFR-AY-'FYCRIY~'RI.'+RFFMFNT; nR 21 uIHERWISE, THE INDEMNIFICATION OF RGENTS (AS DEFINED IN SECTION 924E3 IN 22 EXCESS CF THAT E%PRESSLY PERMITTED BY S~CTTON 9246, OR THE PROVISION OF -«+,- SEC'1"IOf~Y THE CORPORRTIOM 24 FOR ERERCH OF DUTY TO THE CDRPORATION AND ITS MEMEERS, PROVIDED, HOWEVER, 25 THAT THE PROVISION MRY NOT PROVIDE FOR INDEMNIFICATION OF OR RNV .. __..~_.INSORRIVCE_~FpR._.RNV^RGEMT-FDR'-gIVY-RCTSDR~ CTIONS FF'OM 27 WHICH A DIRECTOR MRY NOT BE RELIEVED OF LIRBILITY RS SET FORTH IN THE 2B EXCEPTION TO PARRSRAPH t3). -~9•- -T6~T--NdEFiTng 2"di1't)af"n~Erd~TR-5UEdTV-i-sl-Or1'--tSTT~-1T~TI'i'~ffeCt'YiSe 30 enforceability, as between the parties thereto, of any lawful agreement '1 not otherwise contrary to public policy. ""~""--"3"£ "--~~~CC7 Tlie'"art f~cles of lncoY por atfoM may set "f brth any or all of the .33 Fallowing provisions: 34 (1) The names and addresses of the persons appointed to act as ____. F. _LnitiaT-3iTt4-CF3rs: .. 36 (2) The classes of members, if any, and if there are two or more '7 classes, the rights, pri viLOges, praf er ences, restrictions and conditions 'B attacfi'ing-to-ea~h'C2 as5:' _._ ._ ....,_.. _..-._._ :.9 (3) R provision which would allow any member to have more or less 40 than one vote in any election ar r,t her math e. .. aae..t..,. •., ati_ _ 41 for a 'sot eL L ~ ._... _. __._. _. _'. __ .__ __ _.._ ...c.a.. c: ,7 42 C (4) Frovi signs (1) authorizing, whether 6y bylaw, agreement, or .7 43 [otherwise, the indemnification of or provision of insurance (pursuant to7 44 [subdivision (i) of Section 9246) f~tlr 'agents ta5 defined 1n Section 317) 7 4~ Cof the corporation for breach of duty to the corporation and its menibers7 46 [provided, however, that (A) the provision may not provide for 7 4? Cindertmificati on df or insurance f-or any""agefit' CiT far omissions or acts 7 48 [committed in had faith or which involve intentional misconduct or a 7 49 C4~,nowing violation of law, (ii) far any omission or act that an agen{ ] 50 (believes to be contrary to or inr_nnsi stent with the best Interests of 3 x###x}###x#}x#x}xxxxxx###xx##}x##kx##xx###x}}}}}{-}'}}}}}}x}}}}]r.}}}}}}}#}}#}}}}}1 x L.EGI-TF_CH FILL TEXT REPORT 07/06/87 #x}#xxxxx##x######xx}}}}##xxx##x###x#x#}}##xx}########}#}}x}}}}}}###}}##xxx##}~ AH 1530 ...._.- ._ _._ _ .. _..... .. FADE 1 Cihe corporation and its members, ti ii) for any transaction from which anI 2 Cagant derived an improper perconal economic benefit, and (2) any other 7 ; ' 3 (provision,] q <4) RNV OTHER PROVISION not in conflict with law, for the managen~er~t --ri9{' a ac ivi ^es~ahd Fof 'the-c dnduct 6F-'fFe-affairs""6f'the cor'porati on, b including any provision which is required or permitted by this part to 6e ____ 7 stated in the bylaws. -6-~--" ~-SEC:-il:-Sec E'I on 924f of the Corporations Code is-amer~deU to read: 9 9<241. (a) R director shall perform the duties of a director, 1G including duties as a memh er of any committee of the board upon which i-i--{~3irect or-may ~'ser've~ 3n gold Taiffi ,'"1 ri'a ma`ririe~ ~sucF director believes 12 to be in the best interests of the corporation and with such care, 13 including reasonable inquiry, as is appropriate under the circumstances. 14'-~'~"-Z6T"Tri perTor mirig {h~e-"dilfTes-o~a~dir•ecYor ,-a'cfirecf or shall be i~ entir3ed to rely on in4nrma!': ten, gpinions, reports, ur statements, 16 including finan[i a] statements and other. financial data, in each case -T'7-prep areT Or f3~Se si{ad-byr_.___-_________. _____._. iS (1) One or more officers or employees of the corporation wh oni the 19 director believes to be reliable and competent :r. the matt e'r=_ p'r'es~r.t ed; --~"----T?T~-Cu`tiin~sr=rte irsUn)ser,6~flt-areauntant's; -or other persons as to matters 21 which the director believes to be within such person's professional ar 22 expert comp et encel -"`----(37--fi commi-fLe~-bid"-i~'$'rya'P-d-"O~67f-'WI5'YCtf-'th'B"-df rg~ctpr does not serve, 24 as to matters within its designated authority, which committee the 25 director believes to merit confidence; or "-' ZS L4)'~" ReIigi ous authorities and ministers, priests, rabbis, or other 27 peraons whose position or duties in the religious organization tiie 28 director believes justify reliance and confidence and whom the 29 -~-di rec t'br `b eTievee""to b'e reliable ariH-'c oinp etER4t' in'tls~ matters presented, 30 so long as, in any such case, the director acts in good faith, after 1 reasnnable inquiry when the need therefor is indicated by the 32 'circumstanc e's ~"and-without"kricwTe3ge"that would caUSe such reliance to be -~ unwarranted. '4 (c) The provisions of this section, and not Fart(nn vva+, ten„ ~ %' govern any action or omission of a"director in regard to the compensation 36 of directors, as directors or officers, or any loan of money nr property 7 to or yuaranty of the oblige*_i on of any director or officer. No 38 obligati on, otherwise valid, shall be voidable merely because directors 39 who benefited by a board resolution to pay such compensation or to make 40 such loan or guaranty participated in making such board resolution. 41 id) Er.cept as provided in Section 9243, a-person who performs the 42 duties o{ a director in accortlance with subdivisions (a) and (b> shall 43 have no liability based upon any alleged failure to discharge his or her 44 obligations as a director, including, without limiting the generality of 45 the fere9oi ng, any actions or omissions which exceed or defeat a 46 public nr charitable purpose to which the corporation, or assets held by 47 it, may 6e dedicat edC, and inl. TN addition, the liability of a director 9D 4or monetary damages may he eliminated or limited in a corporation's 49 articles to the extent orovi ded in n_ air aph (3? pf ~ubdi vision ta) of ,+- Sew{ion 9i3<. :fTi%%*%%%*%%%*1F%%%**%%%***%%%%%*%%%%**%***%**********%*******%%*******%*******% % LEBI-TECH BILL TEXT REPDRT G7/46/87 *%%%M%*%%*%*%*%****%%%MM%%***%%M**%%%******N%*%%*******%********%***%M***%****% Tl., ___________________________._______________________________-------____________-_ A8 1539 FAGE 20 ] SEC. 12. Section 9246 04 the Ccrp nr-ations Cade is amended to read: --"---~~TI4b. ia7 'For the purposes of Phis secti8ri, "agent"' means any 3 person who is or was a director, officer, employee or other agent. of the 4 corporation, or is or was serving at the request of the corporation as a --~i~or ,~-bf~iicer,-empIoyee~~Hr ~agenE-"dT"eno2T r'foF eigri or domestic 6 corporation, partnership, joint venture, trust, or other enterprise, or 7 was a director, officer, employee. or ano,.t ~s a for e~~r, or domestic 'e corp or atacn which was ~a predecessor corpora aT'tTi~'.-nrpnratinn ,,. of 9 another enterprise at the request of such prec edessor torpor ati on, 10 " proceeding " means any threatened, pending, or completed ar_ti on or ~- -tI'--~r~ae~ECtrtq~ whether-CivYl; -crimiZTa'~admirri~strattva ~nr-investigative; and 1^^. " expenses " includes without limitation attorneys' fees and any exoensac '.? r4 r^,'-F.1 -`,i„q d rigi;t i~ lnGBmnlfacation antler subtli vi Slon (d) or ... 18' paragraph (3J of-subdY Vi'sYOn~ (eY-_______ _____._._....___, .._ 15 (h) A corporation shall have power to indemnify any person who was or _ 16 is a parley or is threatened to be made a party to any proce=ding (other -"1T-~tTian an aciTm-by-~di^ Tn tfiE-rY-ght-6i-th~~-corporattorr to~ procure a 18 judgment in its favor, an action brought under Section 9^c 43, or an action 1? brought by the Attorney General pursuant to Section 9220) by reason of 2O"""f he -facE that such persgh is or was 'an agent of the corpprati on, against 21 expenses, judgments, fines, settlements and other amounts actually and 22 reasonably incurred in connection with such proceeding if such person - 2± alt ed"i"n good faith and in a manrie-r~~sucls~persm+ believed to be in the ~- 24 best interests of the corporation and, in the case of a criminal 2` prec ceding, had no reasonable cause: to L+elieve the conduct of such person 26 was unI awf ul ." Tfie terminatl oh~eSf-'atsy-pYOCe2dlrtg Dy Judgment, prtler, - 27 settlement, conviction or upon a plea of nolo contendere or its 28 equivalent shall not, of itaeli. rreafc ~ va „~„t: ,,.. •r. ~• ~:.,, .. _ 29 not act In good faith and in a'manner which Ythe"'person belleved~to be my - 30 the best interests of the torpor ation or- that the person had 31 reasonable cause to believe that the person's conduct was unlawful. (c7 A corporation shall have power to indemnify any person who was or - _~' is a party or is threatened to be made a party to any threatened, gentling '4 or completed action by or in the right of the corporation, or brought 3v under Serti on 9243, or brought by the Attorney General pi.ir scant to '6 Section 9230, to procure a judgment in its favor by reason of the fact 37 that such person is or was an agent o4 the corporation, against expenses 38 actuaily and reasonably incurred by such person in connectipn with the - 39 defense or settlement o4 such action if the person actetl in good faith, 49 in a manner in which such person believed to be in the best interests q4 r 41 the corporation No idemnificati on shall '"[ie made under this[ T'J 42 Csubdivi si on in] SUEDIVISI(1N FOR ANV OF THE FOL~DWING: 4~'` rlr 1N r__ B^t of any Claimr Sssue, or iTiattef d5 'ri whi cFi Ouch her 5G0 44 shall Have been adjudged to he Iiab7e to the corporation in the 4,`, performance of such person's duty to the corporation, unless and only to 46 the extent that the court in which such proceeding is or was pending 47 shall determine upon application that, in View "df all the ri rcumstances 48 of the case, si.ich person is fairly and reasonably entitl ad to indemnity 49 for expenses and then only to the extent that the court shall ;~ 50 determine. - - . .__. ___.. .. _.. __ _ --ti wwww*w<:"at+iFiF~iFil.i(. iFiFttiFwwwwwwwwtttwwwwwwarwwwwwtwttwtwwtwwwwtttwwwtwwwwwttwwwwwwtwww * LEGI-TECH EI LL_ TEXT REPORT 07/06/87 w twwtwwtwtwwwtwwwtwwwwtwtwwwwwwitw wwtwwwtwwwwtwtw titttwwwwwttwtwwwwwwwwwwt ~:wwwttwww AE 1530 F'AGE 21 1 2 ~ i~1 OF AT10gF7IS PAID 7N~SET9'LING-'OR""OTHERWISE IIiSPOS7NG OF R FFND7N5 ACTION, WITHOUT COURT APPROVAL. 4 (v) OF EXPENSES INCURRED IN DEFENUING,A PENDING ACTION WHICH IS "SETTGED~OR OTHERWT9E'D~T SFOSEff~DF~WITFtOf7'r tOtlRT-"APPROVAL UiVLESS I7 IS 6 SETTLED WITH THE APFROVAL OF THE ATTnRNEY GENERAL. 7 (d) Ta the extent that an agent of a corporation has been successful 8 -on tFe merits in defense of" any p"rBctFedYfig referred to in subdi visi on (b) 9 or (c) or in defense of any claim, issue or matter therein, the agent 10 shall be indemnified against expenses actually and reasonably incurred by 'II- th"e ag en't"in -connection tfierewi'LFS: -""--"--""'"- 1.^, ie> E:cept as provided in subdivision (d), any indemnification under 13 this section shall be made by the corporation only if authorized in the 74 specific case, upon a determination that fndemnificati nn of the agent is 15 proper .Sn the circumstances because the ayent has met the applicable 16 st andartl of conduct set forth in either subdi vi si en fb) or (c) by any of 17 the fallowing: - - ~' 18 11> R majority vote of a quorum consisting of directors who are not I9 par tie=_ to such proceeding. 2i,~ (2) If such a quorum of directors is not obtainable, by independent 21 legal counsel in a written opinion. 22 (3) Rporoval 04 the members (Fort: ~n ~n~ai ~•~+!~ tp^_ p=, ^or.~ .,, ~~ _ indemnified not being entitled to vote thereon, 24 (4) The court in which such proceeding is or was gentling upon - appl:cati on made by the corporation or the ayent cr the attorney or other 26 person rendering services in connection with the defense, whether or riot 27 such application by the agent, attorney or other person is opposed by the 2S rnrporati an. ?9 (f> E;:penses incurred in defending any proceeding may be advanced by .T..O the rorporation prior to the final disposi ti an of Such proceeding upon 'I receipt of an undertaking by or on behalf of the agent to repay such amounC i4 it shall be determined ultimately that the agent is not R3 entitled to be indemnified as authorized in this section. 34 fg) The idemnif ication provided by this section shall not be deemed °~ evcl usive of any other rights to which those seeking indemnSficati on may ~~ he enti t.l ed under any bylaw, agreement, vote of members ar disinterested S7 directors or other wises; both es to action in ~- c({iiial ,_apacity and ac ^o to action to another capacity while hnl ding such office, to the extent ,9 such additional rights to idemni4ication are authorized in the articles 4i~ of the corporation. The rights to indemnity hereunder shall r_ontlnue 41 as to a person who has ceased to be a director, officer, employee, or 42 agent and shall inure to the benefit of the heirs, executors, and 4.. administrators of the person. Nothing contained in this section shall 44 affect any right to indemnifleatinn to which persons other than such 45 directors and officers may be entitled by contract or other wS se. 46 lh) No indemnification or advance shall be made under this section, 47 except as provided in subdivision "tdT"bT-paragrlipis"Ca)'of subdivision 48 (e), in any circumstance where it appears that: 49 (1) It would be inconsistent with a provision of the articles, 60 bylaws, a resolution of the members or an agreement in effect at the time ._-_*-*iF*iF*iFiF£iFiF**iF£*£££***********fi*££iF££iF££iiF1Fi£iF£*'£{~{{~£iFi***£* ********************* * LEGI-TECH FILL TEXT REPORT n7/n6/87 * ***£******!x*,taexxxxaaaxyK%.#%1fkXXk##x#Y*w~x f,kk+axb kiFM*k*~*Y.***Mif*******!*********** RR 153G F'gGE 22 1 of the accrual of the alleged cause of action asserted in the pros eedin^_ <-~ in WhICh"tile eupenses were fncurred-or-ottrer'amounts Pere paid, which ~~ prohibits or otherwise limits indemnification: or 4 (2) It would be inconsistent with any condition er.pressly imposed by . ~ -a-coi~r'~n`ipproving a-scRt'I emertC_-,____.__-___-.__.. 6 (i) A corporation shall have power to purchase and main?gin insurance 7 on behalf of any agent of the corparati on against any li ability S assertZd against or incurred by the agent in such ~apaclty or arising out 9 of the agent's status as such whether or not the corporation would have ir? the power to indemnify the agent against such liability under the II' -prbvi si ens of Phis section. The fact that a'"e orp>3ratl on owns all or a 12 portion of the shares of the company issuing a policy of insurance shall 13 not render this s''"ibdivi si on inapplicable if either of the foliow:ng 14 c"on~ti oh g"are~satisf ied: II) ally pdIicy-YSS[red~"Y6~Iiml tad to the er.tent 1~ provided by paragraph (4) of subdivision (c) of Section 9132; or (^<>(R) 16 the company issuing the insurance policy is oraanivad. );~o~~o.~ _ 1/ operated in' a manner that complies with"-tTjCs"'f'Fis?gMEp IaWS and 18 r'egul atl ons applicable to its jurisdiction of organi.ation, (B) the 19 r_ompany lssuing the policy provides procedures for processing claims THAT 20 UO NOT PERMIT THAT COMPANY TO EE SUBJECT~Tff'THE DIRECT CONTROL OF THE 21 CORP'OR'ATION THR7 F'URCHRSED THAT POLICY, and (CJ the policy issued 2^< provides for some manner of risk sharing betweer~ the issuer and purchaser <^' of the policy, on one hand, and some unaffii-i ateB person or persons, on 24 the other, such as by providing for more than one unaffiliated owner of 2v the company issuing the polity or 6y providing that a portion of the 26 coveraye furnished will be obtained from some unaffiliated insi.ir er or 27 reinsur er. <<^H (j) This section does not apply to any proceeding against any 29 trustee, ir~vesl:ment manayer or other fiduciary of an employee benefit ~G plan ir'i such perann 's capacity as such, even through such person may also 31 he an ay en t. as defined in aihd;v_eio~ re) oc ?.;~ emFl cvEr cerporati are. r ._ torpor scion shall have power to indemnify Such trustee, investment manager or ot:h er fiduciary to the er.tent permitted by subdivision (f) of '4 Section 207. -° SEC. 13. SECTION 12313 DF THE CORFORATII)NS-CODE IS AMENDED TO READ: '3h 1231'. (ai The articles of incorporat3 on may set forth any or all of 37 the followiny prowl signs, which shall not be effective unless er.pressly 38 provided in the articles: 39 (1) q provision li ml tang the duration of the corporation's existence 4fr to a specified date. 41 ~~ C2T~~-~A pFovi si an providing for the-di eEri'fiutf-r37,-df tM2 remaining 42 assets of the corporation, after payment or adequate provisi an for all of 43 its debts and liabilities, to a charitable trust. 44 (b) Nothing contained in subdivision (a) shall affect the 43 rnf orceabillty, as between the parties thereto, of any lawful agreement 46 nat otherwise con t.r ary to pu6l is policy. ""-4T--Tc3`T'~-"articI es of incorporation may set for tfi any or -ell of the 48 following provisions: 49 (17 The names and addresses of the persons appointed to act as sn ~-initial - directors. "RiFaF7FIFfFiFiFAlFa.F'xaF'1Fx'iFSiFiFii aiFitit iFiF iF iFr rifcif iF~F~F iFiF~lFix'~'iFitiF:'r'iF'3f'a~F: riFF::#r. ~1t iF.F iF iF iF iFiF #ic iF'k+irR ~+t.~+t• + LEGI-TECH HILL TE%T REPGRT ^'!OG: S7 iFY•••1F k iF Y••••iFf ••iF it *it VFY RiF41FRf VF 1FM•••4YiF 4AR4••wRiF•••%ifiF iFM kiFiFRkkY IFY#• •iF4h K IFRf+• wiFl+ AH 1;,~~i FACE ~_ 1 (2) F'r ovi sions concerning the transfer of memberships, in accordance 2 with Secti do 12410. 3 (~) The classes o4 members, if any, and if there are two or more 4 classes, the rights, privileges, preferences, restrictions and conditions attadfiing ~to each-class. - "' '" b (4> Any other provision, not in conflict with law, for the management 7 of the e.cti vi ti es and for the conduct of the affairs c{ the corporation, e inc7 siding any provision which is regiii red ar-p ermi~t ted by this part to be 9 stated in the bylaws. SU (v) A provision conf err in4 upon members the right to Ho+or mi no tr.o 11 consider ati on for which memberships sh aII 6e Issued. 12 (6) F'F'OVISIONS ELIMINATING OR LIMITING THE PERSONAL LIABILITV OF R 13 DIftEC'fOR FOP' MONETRF'V DAMAGES 70 THE CORPORATION OR ITS MEMBERS FOR 14 PREACH OF A DIRECTOR'S DUTIES TO THE CORPORRTION RND ITS SHAREHOLDERS, SS PROVIDED, HOWEVER, THRT (A) SUL'H R PROVISION MAV NOT ELIMINATE OR LIMIT I!, THE LIABILITY OF DIRECTORS (I) FOk ACTS OR OMISSIONS THAT INVOLVE 17 In1TENTIONAL. MISCONDUCT OR A KNOWING AND CU1'.FRBLE VIOLATION OF LAW, (II) 16 FOP' ACTS OR OMISSIONS THAT A DIRECTOR BELIEVES TO PE CONTRRRY 70 THE PEST t9 INTERESTS OF THE COftFOftRTION OR ITS MEMBERS OR THAT IPIVGWE THE ABSENCE ^O OF GOOD FAITH ON THE DAFT OF THE DIRECTOR, 2t (III) FOR RNY TRANSACTION FROM WHICH A DIRECTOR DERIVED RN IMPROPER 22 F'E F'SONRL ECONOMIC BENEFIT, SIV) UNDER SECTION 12:73, OF' (V) UNDER SECTION .. 12'76, AND fB) NO SUCH PROVI5I OD1 SHALL Et IMINRTE IJR LIMIT THE LIABILITY 24 OF A P.IRECTOR FOR RNV ACT OR OMISSION OCCURRING F'RIOR TO THE DATE WHEN _, THE F'FOVI810N EECUMeS EFFECT NF: 2n i7i A rhuviStON AUTHORIZING, WHETHER HY BVLAW, AGREEMENT, OR 27 OTHF.RWISF., THE INDEMNIFICATION OF AGENTS (AS DEFINED IN SECTION 1<<^377> IN 2A EXCESS OF THAT EXF'RESSLV PERMITTED BV SECTION 12377, OF' THE PROVISION OF 29 INSURANCE A5 PROVTDFD HV SECTION 1237"7 FOR THOSE RGENTS OF THE 30 CORPORATION FOR PREACH OF DUTY "f0 THE CORPORATION AND ITS MEMBERS, '1 PROVIDED, HOWEVER, THRT THE PROVISION MAV NOT PROVIDE FOR INDEMNIFICATION 32 OF OR ANV INSURANCE FOR ANV AGENT FOR ANV RCTS OR OMISSIONS OR 33 TRRNSACTIOPIS FRf]M WHICH A DIRECTOR MAV NOT BE RELIEVED OF LIABILITY AS 34 SET FORTH IN THE EXCEPTION TO F'RFAGRAPH (b). 35 ~ _.. _.__._._.__..... 36 SEC. 14. SECTION 12371 OF THE CORF(?ftRTI0N5 CODE IB AMENDED TO READe 37 12371. Sa) A director shall perform the duties of a director, 38 includin4 duties as a member of any committee o4 the board upon which the 39 director may serve, !n good faith, in a manner such director believes to 40 be in the best interests of the corporation AND ITS MEMPER'S and with such -~-~T care, idTdi~rig~reason able inquiry, as an 6rdinarily prudent person in a 42 like posi tiOn would use under similar circumstar~c es. 43 Ib) In performing the duties of a director, a director shall to `~' en{itIdd 'to reI"y on information, opinions, rep orf"s or statemenLS. 4v including financial statements and other financial data, in S6 each case prepared or presented by: A7 "~II7 One or~more officers or"empl-byees -of"-tFie'corpdratian whom the 48 director believes to 6e reliable and competent in the matters presented; 49 (2) Counsel, independent a-muntants or other persons as to matt"ers vO which"-Elie erector beIi eves to~be "wiETiTri'SUC?i--persari's prof atsionsl o, )FiFS'x'if"+iF'1F,F~F'irlFilFR'si iFiF.Y~'+F1F3FriF:iF iFiFifif+"x'arar+raiFiftFiF iF3f"iF+r`*iFrr,FaFirrarar:+f asxsiFn,~FMif irxxw+xxMiF+itx x+r x LEGI-TECH PILL TEXT REPORT 07/p6/S7 x xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx AP 15.3p FRGE 24 1 e::peYt competence: or 2 '[~T -A-cBmmittee of the DOartl upon wn-1'ch'-ttsc>• direct or does not serve, ' as to matters within its designated authority, which committee the 4 director believes to merit cor.f idence, sa lono aa; ;r, _ _;,_- ~„~ ' `- d."i7 ur goop earth, offer' rea3ana$I"e""~i ngGiry'wh en~,the need 6 therefor is indicated by the circumstances and without knowledge that 7 would cause sur_h r-aliance to be unwarranted. P (c? A person who performs the duti e5 of a df l-eet nr in accordance with 9 subdivv sions (a) and S6) shall have no liability based upon any alleged 1(~ ;ailur'e to discharge the persdns'5 obligations as a director. IN 11 ADDITION, THE LIAPILITY OF A DIRECTOR FDR~MONETARY'bAMAGES MAY PE 1<^ ELIMINATED OF' LIMITED IN A CORF'OkATION'S ARTICLES AS PROVIDED IN 13 PARAGRAPH (6i OF SIIPDf VISION (G OF SECTION 12313. f4 SEC. SS. SECTION 12377 OF THE CORFORg7IONP CODE IS AMENDED TO RERD: 1.`. 12377. (a> For the purposes of this section, "agent " means any 16 person wtio is or was a director, officer, employee or other agent of the 17 corporation, or is pr was serving at the request"af the corporation as 18 a drrector, officer, employee nr agent of another fgreiyn or domestic 19 corporatr nn, partnership. ]Dint venfi~r=, tr _ast or diher er~t er ori~e, nr -~ w?=_ a direct o;^ - i~mr, employee or agent of a foreign or domestic <<^1 corporation whichjwas a predecessor corporation of the corporation or" of another enterprise at the request of such pred ec essgr torpor ati on, " pr oceedinq " means any threatened, pending or completed action or '14 proceedi nq, 'whether civil, criminal, administrative or investigati veg ahd ^` " expenses " includes without .limitation attorneys' fees and ar.y expenses 26 of establishing a right to indemnification under subdl vi si on <d) or 27 paragraph (3) of subdivision (e). 28 (b) A corporation shall have power td indemnify any person who was or 29 is a paFEy br~is threatened to tie made a -party fo"'any proceeding (other 3L~ than an action by or in the right of the corporation to procure a 31 judgment in its favor) by reason o4 the fact that such person is ar was 32 an agent of the corporation, against expenses, judgments, fines, 33 settlemm is and other amounts actually and reasonably tnuirred in 34 connection with such proceeding if such person acted in good faith and in ~S s mann e'r -siicF person reasonably believed to 6e in~ttte best interests of 36 the corporation and, in the case of a criminal proceeding, had no 37 reasonable cause to believe the conduct of such person was unlawful. The ~Y9 termination of any proceeding by judgmen{, order, se{tlement, conviction 39 or upon a plea of nolo cont endere or its equivalent shall not, of itself, 4tr create a presumption that the person did not act in good faith antl in a 41 manner which the person reasonably 6ehleverT~t b'-be i:n the best interests 42 of the corporation or that the person had reasonable cause +n H=~: ~.._ 43 that the persgn's conduct was unlawful. 44 -{c5 A~-c drpdration shall have p3weT-Eo indemni3y~-any persor. :rhq was cr 4.; is a party or is threatened to 6e made a party to any threatened, pending 46 or completed actign by or in the right of.the corporation, to procure a 47 jraGg ment-in its favdp -Tiy reasdn af'tfie"saza that"stlcti~~p arson is or was an 48 agent of the corDOratibn, aoains+ o =nsns actu=:I'y a,u reasonably 49 incurred by such person in connection with the tlef ense or settlement of v9 such"-action-if such j5ersoh acted in~-g>Sbd-'f aY tfi, irt-a'manner such person ************ **iiF*iF****************#****iilniiFiF*irkif *#irxi*iFiF*ifiFk*********kkk******* * LESI-TECH HILL TE%T kEFORT 07/U6/87 * **kx***xxx*xxxxxxxxrxrxrkkxxxxx***+F********iF**M***********xxti*~x*+F**#*iF***f *k*M* A9 153ir t believed tc he in the best interests of the corporation and[ with such 7 [care, including reasonable inquiry, as an ordinarily prudent person in a] '• Clike position would use under similar circumstancesl i7S MEMBEkS. No 4 indemnif icataon shall 6e made under this subdivision FOk fiNV OF THE F[ILLOWING: 6 fl) In respect of any claim, issue or matter as to which such person 7 shall have been adjudged to be liable to the cor-p orati on in the B parf or manta of such person's duty to the corporation RND ITS MEMEERS, 9 unless antl only to the e>;tent that the court in which such prgceedi ng is Iir or was pending shall determine upon application that, in view of all the li r_irci.rm st antes of the rase, such person is fairly and reasonably entitled 1: to indemnity for the expenses which such court shall deter mine[; 7. 1% !> G4 amounts paid in se++t;ng or other:ise disposing of a 7 '" [Lin eatened or7 pending acti on,C with bY] without Court approval C, or 7. IS (3) Of e>penses incurred in defending a threatened or pending action ]6 which is settled or otherwise disposed of without court approval. 17 (d) To the e:;tent that an agent of a corpnratlbn has been successful 16 on the merits in defense of any proceeding referred to in subdivision (b) 19 or (c) or in defense of any claim, issue, or matter therein, the agent 20 shall be intlemniSled against expenses actually and reasonably incurretl by 21 the agent in connection therewith. 22 (e) Except as provided in su6di vi Sion (d), any indemnification under 23 this section sh aII tie made by the corpbY'atl-ah~olSIy-TT-duthowlE&d in the 24 specific case, upon a determ,i nation that indemnification of the agent is 25 proper in the circumstances because the agent has met the applicable 26 stendartl bf conduct set forth in subdivision (b) or (c), by ANV OF THE 27 FOLLOWINOe 28 (1) A majority vote of a quorum consisting of directors who are not --'2Y par Eies-f'o ~~siacfi pr pc zeding[; 7. -- ~U (2) IF SUCH A QUORUM OF DIRECTORS IS NUT UBTAINAPLE, BY TNDEF'ENDENT '1 LEGRL COUNSEL IN R WRITTEN OPINION.[ "- -~ ~ T (2J 7 - " 33 (~) Approval of th'~e members (Section 12224), with the persons to 6e '4 indemnified not being entitled to vote thereon[? orl. C I •-r7 _ ._.. . _.. ~6 (4) The Court in which such nrnrood:„n :, _- way pending upon _, ~ypiicati on made by the corporation or the agent or the attorney or other ?S- pEr ion 'v'ei7deYTng services in tonnect-tan-WYCIrttSe-">tef"L+ISSe, w^.=ih er cr not .S9 such application by the agent, attorney or other person is opposed by the 4u corporation. ---41--~~~--<#i-€vpenses-i rtrurred in aef endsn4""an9"~Pr~ediTt9~-m:ay be advancetl by 42 the corporation prior to the final di spnsitinn of such pracecdi~~y upon 43 receipt of an and ertaVino by nr on Dehali of the agent to repay such - 44" ama(.Intt'urtiess?-IF i~t shall be determi rred--uitimateiy -that the agent 4;~ is NOT entitled to be indemnified as authorized in this section. 46 C .-_.4.t_ _.~-(.q)--7VS~t+rJVY'sYOn'-Rlad~ by a corpDT"at'ian-to--TTV2mhi'fy"tt5- or its 48 Csub sidi ary's directors or- officers far the defense of any proceeding, 49 [Whether Contained in the articles, bylaws, a resolution of members or 5R- CCLreZtors, an agreement or otherwise, sh ai i--be-vatic ^nless consistent x=+„xx xxxxxxfififiJF%iF RiF 1FiF/aik#MFMiF 3 iF•ifiifiiFliF iFiFfiiF"aR'aFiFfiiFi iii iFlfiFfix••tic iFfi {ifaaw tlFfi fifi Rltw fi LEGI*TECH FILL. TE%T REF'UF'T 07/06/87 +F fii~x##akQ AlF iF if iF iFI MIF iF i!i!iF YiF'r'iF{YiFxll.'i YRkif Y'MiY'iff Yfififi#iF iF 1F#iFAMkif YVF Y.iF RiF R iF M 1F'IF VF iF,F iFN •NiiFM #M. AFiF qH z.=.-o F'F;GE 26 1 Cwith this secti nn. Nothing contained in this section shall affect any [right to indemnification to which persons other than such directors and [officers may be entitled by contract ar otherwise.] 4 (G> THE INDEMNIFICATIUN PROVIDED BY THIS SECTION SHALL NOT BE DEEMED EXCLUSIVE OF ANY OTHER RIGHTS TO WHICH THOSE SEEKING INDEMNIFICATIDN MRV 6 EE ENTI TI,F.D l1NDER AMV EYLAW, AGREEMENT, VDTE OF MEMBERS OR DISINTERESTED 7 DIRECTURS OR UTHEF'WISE. BOTN AA Tn ArTI n-N IM nN DFFIC7AL CAFACiT'i AiJD Ap "i UiJ itJ AiVUIHEFi cHRACITV WHILE HOLDING SUCH OFFICE, TO THE EXTENT 9 SUCHyADDITIOfJRL RIGHTS TO INDEMNIFICATION ARE AUTHORIZED IN THE ARTICLES lCl OF" THE CURF'ORATION. THF. RIGHTS TO INDEMNITY HEREUNDER SHALL CUNTINUE AS f1 TO A PERSON WHO HRS CEASED To RE A BIRECTCIR,-'OFFICER, EMPLOYEE, DR AGENT 1 AMD SHALL INURE TO THE BENEFIT OF THE HEIRS, EXECUTORS, ANO 13 RDMINI5TRRTORS OF THE P'ER'SON. NOTHING CONTRINED IN THIS SECTION AFFECTS 14 ANY RIGHT TO INDEMNIFICATION TO WHICH PERSONS OTHER THAN SUCH DIRECTORS SS AND OFFICERS MRY BE ENTITLED BV CONTRACT OR OTHERWISE. 16 <h) rlo indemnification pr advance shall be made under this section, 17 except as provided in subdivision Cd) or paFagrapfi (5) pf Subdivision 18 (e>, xn any circumstance where it appears: 19 (U That it would be inconsistent with a provision o4 the articles, 2Cr bylaws, a resolution of the members or an agreement in effect at the time 21 of the accrual of Me alleged cause of action asserted in the proceeding ^<2 in which the expenses were incurred or other amounts were paid, which -~~ pr-ofiibi ~s ~~dr ~oTh erwi se limits indemnificaf ions; or 1. 29 (^<) That it would be inconsistent with any condition expressly 25 imposed by a court in approving a settlement. ----Z'b ~- (i7 R corporation shall have power to purchase and maintain insurance 27 on behalf of any agent of the corporation against any liability asserted 2b ag a>.nst or incurred by the agent in such capacity or arising out of the ~~ 24 agent's status as'such whether or not-the cdrpor'aEi dii would have the 3U power to indemnify the agent against such liability under the provisions 3i yr in.s tir~ii cn. iME FALI iHAT A CUHF'URRTSUN OWNS ALL OR R PORTION OF v2 THE SgAgES-OF'THE""COPIPANP ISSUING R F'OCICP-~~OF-INSURANCE SHALL NOT RENDER THIS SUBDIVISION INAPPLICABLE IF EITHER OF THE FOLLOWING CONDITIONS ARE 34 SATISFIED: (1) RNY POLICY ISSUED IS LIMITED TO THE EXTENT PROVIDED PY ~~- "`SUBffIVI", IIIIP TDT'"UF"SECTTON"12°I31 'LRt-t27'tRT"-TFIE LOMMPRNy ISSUING THE 36 INSURANCE POLICY IS ORGANIZED, I,ICENSEP, AND ~PFRgTF.D IN q MANNER THgT 37 COMPLIES WITH THE INSURANCE LAWS AND REGULATIONS RFPLICABLE TO I75 --38 JURISffICTION-OF-URCANIZATIUNj~(81 THE-COMpANV-ISGVING"THE-POLICY PROVIDES 39 PROCEDURES FOR PRDCESSING CLAIMS, AND (C) THE POLICY ISSUED PROVIDES FOR 4U SOME MANNER OF RISK SHARING BETWEEN THE ISSUER RND PURCHASER OF THE -~I-~FTJC7C~, ~ON~NE"AANIf-'RN6 SOME"TINAFFIC'TATED~-P£TiSON-"p4 pERSONS~, ON THE 42 OTHER, SUCH AS BV PROVIDING FOR MORE THRN ONE UNAFFILIRTED OWNER OF THE 43 COMPgNV ISSUING THE POLICY OR BV PROVIDING THAT A PORTION OF THE COVERAGE -~~"44" FURNISHED"WILL SE OBTR IIVEO FROM SOME i1NRFFYtIATED-INSURER OR REINSURER. 45 (j) This section does not apply to any proceeding against any 46 trustee, investment manager or other fiduciary of an employee benefit -~-~--47-'~pI an-i"ri suLF per son's cap~ci t"y""as'sGCfi',"even-!R'6LTt]tf-~5UC15 person may also 48 be an agent as defined in subdivision (a) of the employer corporation. A 99 corporation shall have power to indemnify such trustee, invest r~er~t "~"' S0' manager or="-otfter fid-uciary tb -th"e""exCerif. '{ieYmitt~d-t~~sUb"di v151on (f) of ******w************•************M******1F*iFAY3iFiYY********M************14********* * I_F_"GI-TECH HILL 7E%7 REPORT U7/Ub/07 * **i4*****kM***Y********************%***********************************k********* R6 IS'U F'AGE---27 t Section 267. tltC. )6. This act is an urgency statute necessary for the immediate 3 preservation of the public peace, health, or safety within the meaning of 4 Article IV of the Constitution and shall go into immediate effect. The S facts constituting the necessity are: " 6 In order to permit corporations to immediately deal with the crises 7 created by the virL.tal unavailability of director's and officer's S 3iability insurance it is necessary for this act to fake effect 9 immediately. ~;;' i1S. •. , xrtrtxxxrtrt~x.taws-wx~*iF7i7Fxxxxxxa*xxxxxxxx*xxxc:xa~rlFxacxxzxar~ax.rrwrtx•xxxxxxxxxxrtxx~ rt LEGI-TECH FILL TEXT RERGRT _..~_. xxxxxxxxxxrtrtxxxxxrtxrtrtwrtrtxxxxxrtxxxxrtxxxxxrtx*xrtrtrxrtrtxxrtxxrtxrtxxxxxxxrtrtrt*xxxxxxx8* _________________________________________________________________ SE 1025 _____________ .. .._____ .___.__. _.... ___ .. ... F'RGE 1 ... ,T __ .__._ .. ' Introduceu vy Srr~ator Campbell 4 March 4, 1987 6 qn act to amen tl~Secti ons 5234, 7230, and 924n of, to'add Sections 504'1.5 . ~ ""' ^11"" '- '-.'- repeat Deco on 5231.5 of, the Corporations Cade, 8- -reI3Ti~ng-t 6yrtDrtprbfit organizatiurts. ~- ~ -~ 9 ___ 30 LEGISLATIVE COUN5eL'S DIGEST __1~__ ___._ ______._--.... _ 1<^ 5E 1025, as introduced, Campbell. Nonprofit organizations: director and 13 officer immunity. -I4~ Existing"I'aw""provides that, except as to cent aln self-tlealing 15 transactions, a person who performs the duties of a director of a 16 nonprofit cor poratinn in accordance with statutory requirements, as -TT specified,"has no Ii ability based"upon aiiy aYl dc4Et1 fallure to discharge 1B the person's obligations as a director. 19 This bill would pravi de immunity for a director ur officer of 26" "specified nonprbfit organizations -frdm 7i'a63 City ;~- any allegetl failure 21 to perform the duties of a director or officer, except as specified. ^<2 Vot et majority. Appropriation: no. Fi sc ai rnmm;tt°°. _ oiaie-manoaced local proyram: no. 24 ` The people of the State of California do enact as follows: 26 <<^7 SECTION 1. Section 5047.5 is added to the Corporations Code, to read: 28 Sii47. 5. (a) Tne Legislature finds and declares that the servtces of 29 direckors and officers of nonprofit core or atf ons, who serve without 30 compensate on, are critical to the efficient conduct and management of the 31 public and charitable affairs of the people of California. It is the public policy of this state to prowl de incentive and protection to the _.~ individuals who perform this important function. 34 (b) Notwithstanding any other provision of law, there is no liability 05 on the part of, and no cause of action for damages shall arise against, 36 any nonpaid direct or ar offecer of a nonprofit corporation based on any _7 alleged failure to perform the person's d!~tie, a, a director Or officer `=' °°cepk as prov;ued in this section. 39 (c> The payment of actual er,penses incurred by a director or officer 40 in the e>;ecution of the duties of that position does not effect the 41 director's or officer's status as nonpaid within the meaning of this 42 section. 43 (d) q dereetor or officer of a nonprofit corporation shall be 1Sa63e 44 for all of the following: 45 fi) For omt ssions or acts that Snvol ve gross negligence, intentional 46 misconduct, or a knowing violation of law. 47 I27 Rs provided in Section 5233, 5237, 7233", 7235, 9243, or 9245. 4B (3) In any action or proceeding brought by the Rttorney General. 49 SEC. 2. Section ;x230 of the Corporations Cade is amended to read: 50 5230• (a) qny duties and liabilities set forth in this article shell DELETED MATERIAL IS IN BRRCk:ETS []. ADDED MATERIAL IS CAPITALIZED. -.iirlrlrlFTirfririiFirir iFlFiFiriririFifif RiiFiFY~F'iF iF#'#ikiF3F##lF~iF9riFiri iFlYi-Rafi if ifiiiil iiFViVF iFYwiF N~ i LEGI-TECH FILL TEXT REPORT 07/06/8' YYYYYYYYYYY Y4i iFMMMYkYYYYYYiiiYYYYYYYYYYYYYYYYxYxxxxxxxxYYxYLYiaiYYYYYYYY Mir irMiF{f' 5B 102s FRGE 1 apply without reyard to whether a director is compensated by the corForatiorr... _ ... ._ __ _.. _ _ -_._-.___ __._"___ ___ - 3 (bi Article 2 (commencing with Section 2228) of Chapter 1 and Article 4 2 (commencing with Section 2258) of Chapter 2 04 Title a of Fart 4 of -.-- ., IISVS~sY~ort-'raf-the'Ci'vtY-CaCe~tiai2-not-ap)riy-to-tMe-Virectors of any b corparati on. 7 (CJ AN'/ LIABILITY IMPOSED PY THIS ARTICLE SHALL BE SUBJECT TG THE . _._B--iMMNMYTY--PftOVi9ED ~fM'SECTION 3047.3.. .. ,. ... 9 SEC. 3. Section 5231.5 of the Corporations Cade is repeal ed.C 10 C 5231.5. Ev.cept as provided in Section 3233 or 8237: there :s no "' '2'Y-YmanEtary-'I TatriYiYy art the part of '~ antt'Tfa-CaaSe 'o# action for damages 12 Csh all arise against any nonpaid director: including any nonpaid _. [director who is also a nonpaid officer. of a nanpr ofit public benefit. 14"'2 car7rorat'Y On trasetl upon any ~aTIeged''fatlvre~ta'visoh arge the person's 15 [duties as director or officer if the duties are performed in a manner th Cthat meets all of the fnl)nwi nn rritaria: 17" t 'Ca) 'The duties ar e'perf ormetl i'n goad faY th'. 18 C f6) The duties are performed in a manner such director believes to be 19 Cin the best interests of the corporation 2n [ (c) The duties are perf ormetl wl th such carer inciudf ng reasonable 21 Cingi.ii ryr as an ordinarily prudent person in a like position would use Cur~der similar circumstances.] SEC. 4. Section 723D of the Corporati orbs Cade is amended to read: .,a 7'230. (a) Any duties and liabilities set forth in this article shall apply without regard to whether a director is compensated by the 26 corporation. 27 (b) Rrticle 2 (commencing with Section 2^<28) of Chapter 1 and Article 2G 2 (commencing with Section 22.`;8) of Chapter 2 of Title 8 of Part 4 of 29 Division 3 of the Civil Code shall not ~ap pIy tb the directors of any 'O car'por anon. _ (C) aHY L:aD:L:TV IMF'CSEC B'i TH1S aRTICLE SHALL DE SUBJECT TC THE 32 IMMUNITY PROVIDED IN SECTION 3047.5. 3' SEC. 5. Section 924Cr of the Corporations Code is amended to read: 34 9246. (a> Any duties and liabilities set forth in this article shall . 35 apply without regard'to whether a directd"r-is compensated by the 36 corporation. 37 (b) Article '2 (commencing with Section 2228) of Chapter it and 3B-~Rr'Ei cle 2"Idemmehcing" with Sectioh-2238)"'df'CMdpter 2 of Title 8 04 Part 39 4 of Division 3 of the Civil Code shall not apply to the directors of 40 any torpor atien. _.._.. _. 47__-~c3--'A' director"r""in "~ma~i"ng z "good-~f rl"tfi-d3i Cr+~fii'fsit lGrt~ may consider 42 what the director oelieves to be: 43 (1) 7ha religious purposes of the corporation, and 44 t2) Applicable religious tenets, canons, laws: policiear and 43 authority. 46 (D) ANY LIABILITY IMPOSED BY THI5 ARTICLE SHALL BE SUBJECT 70 THE ~ROVIDE~-TN' SECTION 5047:5:... .--..~-__.______________. =i 48 SEC. 6. Section 21104 is added to the Corporations Cotle, to read: ;' 49 21104. (a) The Legislature finds and declares that the services of .---'~ -~ H"i reef ors- a~-~~~c er s' of nonprofit associations wYStr~3erp~~wrthgut _ - rwri:*lt)elnr+vrrr+~nrsafarara~r+rilrxartfanrairre~.~r+ts~xwrwxMw+sMwwr + LEGI-TECH BILL TEXT REPORT 07/06/8 it+t^ir ww it+w++r+tr** * )tx• a+wNiir raft+x r w • aF..a r • • ~ r a• r • * •r • • iF•x•iF wrii# Ra1iF•««r aF.. •MS#-«- 56 102 PAGE i compensation are critical to the efficient conduct and management of the --~~- ~T-~pmtTtc~ andTl2arYtatrTe ~aff airs of the people af' California. It is the 3 public policy of this state to provide incentive and protection to the 4 intlivitluals who perform this important function. """~~"" ~--5-'-`-`T6T"-N01<wTLT1-s[aT~d~irtg- any otTier~pTevistart-of-faf~rthere is no liability 6 on the part of, and no cause of action for damages shall ar>,se agai nst~ 7 any nonpaid director or officer of a nonprofit assoclatl on based on any - ~'~~~-"~"~- all ~g's3' f-a3"pure 'tS "p'sFf orm the person's 'tl[(ti@S-3S a"i7l Tector or officer 9 except as provided in this section. 10 fr) The navmon4 nF ornf al n o .n.-nrr o,i by a .iir~r~n. n ..<s :_~__ SI "in {he er. ecutToh ~of-the duties of ethat post t'tori~tlees~rsoC effectrthe 12 director's or officer's status as nonpaid within the meaning of this 1' section. 14 (d) A director or officer of a nonprnf it assocfatY Oh shall be liable IS for all of the following: 16 fl> Omissions or acts that involve gross negligencel intentional 17 misconduct, or~a 4.nowing vi olatiori of law. "- "--"~ IS (2) Rny transaction from which an improper personal ec onomle benefit 19 was derived. 20 ~.. iFwiF' iFF~i'a~{lTi iF7i 7FiiiFN7FiiF~FiF ltil%Y%i{%%%%M%%%ii%%if%iFiFiFiF iF%%R%%%%iF#i RiF%RtRRiFi4%R%iF%iF%>li:iF • LEGI-TECH HILL TEXT REPDRT 07 /i~6!^_ aaaaxaaFalt%*FitaaaaaaaatFFFxFFFFFFFitFFxFFatFFF%F«FF•+Fxx+F+FSar%~it:eF•Fw%F%itxit%%a R8 1784 F'RGE 1 RMENDED IN RSSEMPLV JUNE 23, 1987 7 3 RMENDED IN RSSEMBLV MRY 28, 1987 4 _ .5 ___R1°IENDED-"1F"-ASSEMBCV-- MRY_ _... .. ._l.~_7987.___-__. ._.. _ 6 7 RMENDED IN ASSEMBLY RF'RIL .20, 1987 8 ____-_._._.... _. ._._ 9 Introduced by Rssembly Members[ Vasc oncellos and Killea Killea anC 10 CVasconcellos ._.. ..-TS-"LMar~-----.5";7907-_.__ - .__.__.__ 12 C la [Rn act to add and repeal Section 52~~1.7 of the Corporations Code, and -1~"Ltd add-and Yepeal Section 1857.15 of the In5uran ce Cade, relating to IS [corporations. ib C I7.-C-~.... _. - LEGI5CRTTVE "C[)UNSEC'S -DIGEST 38 C 19 CRB 1784, as amentled,C Vasc oncellosl Y;I LLEA. Nonprofit public benefit ^^<0 'c oFporationse -'nonpaid"officer"and"dlrec[or-immunity. 21 Existing law provides that, except as to certain self-dealing _ __ _ ..~hn rLnr m.- •_hn .b .ti ea nt a iiireni nr nt a ...~ nonprofit pubIicrbenef it corporation in accordance with statute, as 24 specified, has no liability based upon any alleged failure to discharye -~ the person's obligati one as a director. 26 This bill would provide immunity to a nonpaid director or nonpaid 27 officer of a nonprofit public Gene{it corporation from liability for any 28 injury to a third party caused 6y the director's or officer's negligent 29 failure to perform the duties of"a-dir"ector or officer. except as '_•0 specified, if the board of tlirectors of the corporation makes a good 31 faith effort to provide director and officer liability insurance, and ._ declares, by hoard resolution, that the cost of that insurance .~o significantly damages the pu63ic benefit purposes for which the 34 corporation was established, and that the corporation is adequately :, insured far third-party claims. 36 i'his bill would direct the Commissioner of Insur ar~ce to develop a fvru ~ e(.eClfiad, that ---accts er~aaued -- writir,G rector ar.d '8 officer ylla6ility insurance coverage far nohpr ofit publ icuhenef it 39 corporations in this state would be required to submit to the 4ri commissioner each Decemher 31. The bill would also require the 41 cpmmi ssioner to develop a comprehensive summary o4 the information 42 submitted an^ transmit the summary to the Legislature within 120 days of 43 the last day of the preceding reporting period. 44 This bill would remain in effect only until ,January 1, 1991, unless 45 extentletl, as specified. 46 Vote: majority. Appropriation: no. Fiscal committeer yes. 47 State-mandated Ioc al programr no.-- - """"" --"' "- - 48 49 The pepple of the Btate of California do enact as follows: 50 DELETED MATERIAL IS IN ERACKETS C]. ADDED MATERIAL IS CAPITALIZED. ___-_ %-i~4ir7t7F-NaFiFA7Fi{~iFIF'IFiF7F%YNN%1FN NaF'%1FiF%7F7Fi dFiF3FNNi~iiFiF iFiFiFi"R'iYiFlF#-N 1!'.FaiF%ilF%%%iiifN N%%%%1Fi% % LEGI-TECH HILL TEXT REPORT i~7 /16/8 N%%N%NNN%%%%*%%NNN**NNNN***%%%N%%NNNNNNNNN%N*%%NN*%NNM%N%%N%%%%%%N%%N%%%%%NNN AE 1784 PAGE 1 SECTION 1. Section 5233.7 is added to the Corporations Code, to read: __ .__,~.__.__~~_7-~)__N6nFaI ?'MPECtaTS"an7-17'cer~-arp'nGt ii aGle in 3 tort far any injury or harm to a third party causetl by the director's or 4 officer's negligent failure to perform the duties of a director or - - o :cer 1 0 "of 'tfie -£dT awin7" .---- 6 (1) The board of directors has made a good faith effort to provide 7 director antl officer insurance and has declared, by resolution, that the ---~--8---cos{~ of Tn surance significantly damages 'the pLTK71"c'p4rposes ;or which the 9 corporation was established. SO (2) The corporation itself is adequately insured For third-party "'Th c arms. ' 12 (b) The payment of actual er.penses incurred by a director or officer i3 in the e:;ecuti on of the duties of that posi lion does not affect the 14~`"iTiY ecEor "s'or officer's st 3tus as non{ia tTt'AS t11fTT"tM'e-"me"aning of this IS section. to !rl Thia cor#i nn rincc nn# oli Hato nr limit #ho li ~hili#., rat 17 'di Pec{or"s or officers for any di--tfie ~fnl-1 dW7R-cJ: ~~'~~' 18 (1) For omissions or acts that involve gross negligence, intentional 19 misconduct, or a knowing violation of law. 20 iZ) Under Section 5_..3 or ~. 23 (') In any action or proceeding brought by the Attorney General. (4) Far any transaction from which an improper personal economic .~ benefit was derived. -' "' '-""- ^4 SEC. ~. Sect:on 1857.15 is added to the Insurance Cade, to read: 1857.15. (a> Each insurer engaged in writing director and officer 26 liability insurance coverage for nonprofit pubIi[ benefit corporations in 27 this state shall submit to the commissioner a report of it.s operations 28 regarding director and officer liability claims experience for the ^<9 precedino calendar year ending on December 'T on a form furnished 6y the 30 coin~T~i 7si on er'. Eas.h report shall separately state the following .nfpr rt,a`:p1 -- npnprp(it public tan[-Eit earGOrat; or. ~: (1) Direc t1 premi ums earned. __ (2) Direct premiums written. 34 (.') EarneU exposures per year for nonprofit public benefit ~. corporations. 36 (4) Nurn6 er of new claims MADE during the reporting period. 37 (5) Number of cl aimaC closed] PAID during the reporting periotl. 38 ~ (6) Numher of claims outstanding at the end of the rep or'ting period. 39 !7) Total losses incurred AND TOTAL LOSSES UNPAID by calendar year 4O and either occurrence year or reporting year. 4Y ~~~~~~"-(95~~~~~TotaI losses incurred AND~~REPORTED, INCLUDSNO IASS ADJUSTMENT 42 EXPENSE, as a percentage of premiuma earned. 43 (9) Total number of policies[ in farce on the last day of] WRITTEN 44 DURING the reporting period.[ ~~~ 43 C (10) A distribution by size of payment for those claims closed during. 1~ 46 [the reporting period showing the number of claims and total amount paid --AT--for eac~mcrie~fary category as de{erminedtiy-the commissioner. 48 C fil) Net investment gain or loss and other income or gain or loss 49 [allocated as prescribed by the Department of Insurance to director and -- ~~-- ~'O--i-tii'fS~td~T1 aB11I iy insurance for nohpruf tt pob2'tr-trcsnefYt corpar ations.] . _ . _..~F719FR'PR7FiiiFiFiF7FiFiriFiFiFiGaiFriFiriciF iflF.TifiFiFAlrIF~9riFinFiFiFif'~xif'1t iF3FSx+ra #awwiF lriFrHFiruiF * LEGS-TECH BILL TEXT REPORT 07/06/8 Rt~t*i%iFi Y*%i1rM iF RiF•YiFk Y#iFif tilif kk4#iiYYAAiFirY •MM#iF•iLYi1k iY1FirM^ •M•*l1Y iF iFY Y%iF1F iVMYi4k•YiF RB 1784 FAGE 1 /10) THE AVERAGE AND MEDIAN AMOUNT OF CLAIMS PAID DURING THE __ Z _... REPORTIflG f'ERICJD. C .... _ .... . _ _ _._ 3 [ (12)7 4 (11) Net underwriting gain ar loss.[ "' -S'--'C-'Ti3T-"SepePFtt all 8ca'tion 6f"'eKpi°155es~'~fIIr--calrtmY~ssl~ns, other 6 Cacqui sition costs, general office expenses, taxes, licenses and fees, 7 Cand other axpansas. Thal C allocations required Gy this paragraph B---CSRaTl-tie-Inatfe-~by dfvl di ng tlte~ Zbmpartp'rt~otal ~-pram]'ums°earned for 9 [director and officer liability insurance for nonprofit public benefit 10 frnrnnrafinns by ita total nremi umt yarned and annl vino tha ratio TI--"C deFer mT rie3 CO the expenses ye~or4~fiYn-t R'e'-tdillQa7Ty'S dnnUal statement 12 [filed with the commissioner pursuant to Section 900.] 1C~ tb) The commissioner shall develop and issue reporting forms to 14 insurers in accordance with the departmerst'S current insurance reporting 15 procedures. 16 The commissioner shall make available upon request, but in any event 17 no~"I aEer tfi an~ I20 days after tTSe Z"asF""dafy3f"-th-e-precedi ng reporting 18 period, a report summarizing the information required in this section. 19 The commissioner shall make findings and recommendations, as appropriate, 20 relative to the availability and affordability of public benefit '21 corporation director and officer liability insurance antl the rates _ thereof. . SEC. ~. This act shall remain in eff ec{"ohly until January 1, 1991, ^24 and as of that date is repealed, unless a later enacted statute, which is _.. €nactad bef cre Jan:;ary i, 1491, deletes or e;a end3 that dot€. 26 5 ~ .YY ii. ,~ '44, xxxxlxw~irtlM it iF+iikrtwwrtrtrtrtwxrtxrtwrtxxwwrtxxxxwxxiFwaFr~Fx-.w-wiF-rxsr x'w,~xxiFif.x xxsxwxxxxxxxk w LEGI-TECH BILL TEXT REPORT 07/06/6 wwwwwwxxrtwxwwxrtwrtxxxxxxxxrtrtrtrtwrtrtrtrtrtrtrtrtrtrtrtrtrtxrtrtrtwwwrtwrtxwwxwxxxFFwwxxxxrtrtrtrtwxxrtx AB 1916 F•AGE 1 AMENDED IN P.SSEMBLV MAY 38, 1987 Z ..._ _ __... _.__ _ ._ .._.___ _._____ .. _. . ~• 7nired,~.c'd by A-sanbiy Member Harris 4 March 5, 1987 6 nn act to add Sectron 11598 to the Government Code, rel ata ng to 7 charitable trusts. S.. ._~.. ... _.. ,.. ._._._._-___. 9 LEGISLATIVE COUNSEL'S DIGEST 10 -"' -" IT AF-I9-IFi",-~a~3a4ertdEri, Harr15. ~~CharYtatrlE" tT[:st~-erc{orcement actions: 12 recovery of costs. IC+ Under the Uniform Supervision of Trustees for Charitable Purposes Act, 14' aG min i~st aped by the gttorney General, a }Wgment~in favor of the state in IS an action by the Attorney General to enforce specific provisions of the 16 act, is required to provide that a person having the responsibility or -~-" I7- ditfy'~d cdmpTy with provisions on Deh aIf "ai".Tny-ch'2rYYabke trust or 18 charitable corporation shall pay the reasonable expense necessarily 19 incurred by thr states in the investigation and prosecution of Those ZO- ac ~8ns~- _ __ - . ._. ~__,___...____. ____ 21 This 6i11 would state the legislative intent to require the fiscal ^? hnrHan nF cimar vi ainn rhari+ahlc +rnc+c he =har oil by n .=.+n= .,. __' or'ganizatiun s-'whose conduct requires enf brtement "a'cY1'dn by the Attorney 24 General. [5 The bill would provide that the Attorney General has broad powers to :26 carry out the enforcement responsibilities far tM1e trusts Secluding 27 specified statutory trust provisions. 28 Tha bill would authorize the Attorney General to recover all costs of 29 an action incurred 6y the state to enforce"trust"provisions, pursuant to 30 a court order i.rpon a finding that the action has resul tetl 1n pec unlary 31 benefiks or corrected a breach of trust for any charitable organization or purpose, to 6e paid 6y the charitable organization and the individuals 3~ named as defendants in the action, in a manner that the court finds to be '4 equitable and fair. THE SILL WOULD PROHIBIT R COURT FROM AWARDING CO5T5 .~ EX CcEDING OF THAT PECUNIARY PENEFIT. ~! 1'he bill would require that all costs recovered be deposited onto the 6cr.cr a. ..,r.d and ;,sad _c offset she cost of Future charitable trust '_.e enforcement actions hyLthe Attorney General. S9 THE BILL WOULD AUTHORIZE A COURT TU AWARD A DEFENDANT CHARITY THE 40 COSTS OF AN ACTION, UPON A FINDING BV THE COURT THRT THE ATTORNEY GENERAL 41 FILED A FRIVOLOUS OR BAD FAITH LAWSUIT. 42 Vute: majority. Appropriation: no. Fiscal committee: yes. 43 State-mandated local program: no. 44 45 46 The people of the State of California do enact as foil owsi 47 ~ _. _. ______-____... _ 48 SECTION 1. It is the intent of the Legislature to require that the 49 fiscal burden of supervising charities within the State of California be 50 shared by the charitable organizations and individuals whose contluct DELETED MATERIAL IS IN ERACk:ETS C7. BODED MATERIAL IS CAF'I TRLIZED. .. _~fIF1FlFiV%li###iF####iF############iF#######iiF)F##iFiFiF'#'iF'iFii#fir'##~#~###iF##############iF##f ~ LEGI-TECH EI LI_ TEXT REF'QRT 47/Ob/G- __________________ __ _____________________________________ _________ AE 1916 .. .. _.._ __ ________--________~_____- _.______~~- F'AGE 1 mab:es necessary charitab3e trust enforcement actions by the Attorney . ". General. _. _ ._. _ .. _...___.. _._. ___. .______.__.. It is the purpose of this statute to allow the Rttorney General to 4 recover, by court order, a!1 04 the actual costs incurred by his or her ---~---- --6if-1-cB-iTr-IIOndL(Ctln9-anY--charT'tatrY~~CrcTSt-en'farcemsr'rt acti an that results 6 in pecuniary ben of its far charity. These recoverable costs shall include 7 costs of audits performed by the Attorney General in preparing the 8--~ cnar32 abIa trust enforcement action. ~ - 9 It is the purpose of this statute to require a court, at the time of 10 entering judgment or approving settlement in a pending charitable trust --"-- TT" eiiiBY'c ement'"case, to dward rr,Cavery'nf 'cII5t5`tII-ih'~'gttorney General 12 which shall be paid by the charitable organixati on and the individuals 1' that aro n.a mpd as nc+f endants in the action, p~_;r =_!~,ant to direction of ~ha 14 cdur t' ... .. - - - - .__.____-_.. SEC. ~. Section 12598 is added to the Government Cotle, to read: 12598. (a) The primary responsibility for supervising charitable trusts in Califar nia, for insuring comp lia"n Ce--wi tY"trusts and articles of incorporation, and for proter.tion of assets held by chartable trusts and public benefit corporati cos, resides in the Attorney General. The Attorney General has broad powers under cdmmon law and California statutory law to carry out these charitable trust enforcement responsibilities. These powers include, but are oat limited to, charitable trust enforcement actions' under SII of the following: (1) This article. l2) Chapter 1 (commencing with Section 2215) and Chapter 2 (r_ommencing with Section 2250) of Title F3 of Fart 4 of Division .~ of the Civil Code. (3) Division 2 (commencing with Section 5094) of Title 1 of the Carp orations Code. (4? Sections 328, 1480, 1120, 1122, and 1138.1 of the Probate Code. .5) Chaoter 5 (commencina with Ser.tinn 17^OC?) of Fart 2 of Divi si nn 7 of the Easiness and Professions Code, and Sections 37500 and 37636 of the Easiness and Fru4essions Code. (6) Sections 319, 326.5, and 532d of the F'enal Cotle. (b) The Attorney General shall be entitled to recover from defendants named in a charitable trust enforcement acti an all actual casts inc;_;rred in conducting that action, including the costs of auditors, r.onsultants, and e;;perts employed or retained to assist with the investigation, preparation, and presentation in court of the charitable trust enforcement action. -7c) Costs sfi all be recovered by the Attorney General pursuant to court order. At the time of entering judgment or approving settl e;nent of a charitable trust enforcement action, as defined in subdivision Sa>, the court shall make Findings on whether the Attorney General's action has resulted in pecuniary benefits or corrected a breach o4 trust for any -• ' -- - . _ 46 charitable organization, or ch arita6le purpose, 1f the court finds in .-~{7--f Fe a i~rma 3ve ,-~EFe coot-t-~sAaII--award"P ec ~~ery o~osTS-i'n the "' 48 charitable trust enforcement action to the Attorney General and shall 49 order that costs be paid by the charitable organization antl the --'---T~~--inwiiiU a-Is-name0 as defendants in or ot15~f-Gtt-sB-giltryE~r-tQ-tfte acts one in .. ___._. -{q{'~..FiFiFafiF7FlF7f'RIF IFIFiF~~i~iiE•*FxiFiinFiF~#iRiFlFiFiFiFiF~e#'iir#'~iF1nFiFlFi iii*Rfi*****iF Ri * LEGI-TECH BILL TE%T REPORT 07/06/8: ***************wAMifM**********ii**firtrtrt*k*M**fifi*ikR**XK.`.**N**%X*iF%*i4************i AB 1916 FRGE 1 a manner that the court finds to be equitable and flair. .. ._ _._.Z __ ..._... _..._ ._. _ _. _..__. .. - ~ THE" COURT SHALL NQT' RWARD-COSTS PURSUANT TO 3 THIB SUBDIVISION WHICH E%CEED ONE-THIRD OF THE PECUNIARY BENEFIT TO ANV 4 CHARITABLE ORGANIZATION OR CHARITABLE PURPOSE REALIZED BY THE ATTORNEY _. __.-_3 __~EFERiiL~`ACTZOR. _.. ... " 6 !d> All moneys received by the Department of Justice pursuant to this 7 section shall be deposited into the General Fund ahd shall he used to 'H'"-'of"f seE--Elie cost-s of "fiituPe c ia~ifa6It-"t~USt-eTff'6i~[SilfeTf~actions by the 9 Attorney General. in IFi IIPnN A ETNnTNG RV THE CfiIIRT THAT A 1 AWGIiTT PTI FD AV TIJP ATTnPNPV Si' GENERA["-WAS "FRIVOLOUS OR-BROOGHT 'IN BAD"F'AI TTfi~-THE~COURT MAV AWARD THE '" 1^< DEFENDANT CHRRITY THE COSTS OF THAT ACTION. 13 J.. w a. Idt of Lc, d a -, c fined why the county, ua c. e , vie cutting puma ~n~-rr- RJbert Lorge mid pecp~e u'erc a „p;e; their neighborhood fire station may 7e ar that they gathered more 'han 3.300 mr days to persuade the counctl Chant is e to be made, let them come from -ge said. "If rt's pushing a broom down ad of a street sweeper we'll do [hat We anon to remain open.' ;V Mark sentauon may have been the most :day. members and Hankla said they would - a::e: raa ~ e w shutting the Palo Yerde tion. [hough Hankla had hoped tc save as~ng LL. they chorees tha: the manager and the aka on the budget Doer the next few 'Ieot the bargammg antl r~~+~ -m,=... as the nine counal members decide rthebudget. ' leas for changes ,r. Hankla's proposal melt members said after the meeting. Wade, and [hey have to wine from yexplarned. should pretty much stay the same" as y the coy manager, Mayor Ernie Kell ter this month. the new budget will m the electncny users' tax (about f7 a Please see BUDGET, Pa{e9 da Educator ed CSULB's und-Raiser ,LDANE. Times Sra/(Writer f-Robert Bern has a vision. wanted to spend ]0 years at a place s would be lust startling:' he says. "I Cahfornla State L'niversrty, Lang ersi assumed duties last week as the vice president of developmen6 a post loot fCf lvie than a year. pen wnh or wnhoul me;' said the it pf the University of Nevada who pay cut to 582,000 a year to come to hen 1 look at CSULB and this part of t giant. Th{s msnwtion is;Ding to be gnificant economic and social force in Wore than 100 candidates considered r, Betel, 5/, replaces Noward L. SLiII, ~dain March, l9gg, :. mid Cal State Long Beach Presi- n of his new hire. "He ties outatend- n univerolty community relations. aen. he has been deeply involved in ippment from the coryorate eund• krrowledge, experience and the type al can meet and persuade and give ^_.•gnge of . '~ . ~a si<n c'oeaetrs ~, xseua *:,~.. Susan Meyers, left, and Paula Radisich, Whittier College art professors who propo ed tha double-degree program. L ~/ 9'/d 7 $8-Million Theater ~ Plans May Have to ise 8caied mown By MARY LOU FL'LTON, Times SIC)J Writer W'HITTIER-Plats for Whittier College's Se-mtl- hon performing ass center may be scaled down bec•usc schuui ofhmals untleresnmated the cost of the structure. The protect, the most ambilious in the school's 100-year history, was ongmaily to be finished this year. But construction has yet to begin, andcollege officials now indicate that the first pertormancea a[ the arts center may not take place untt11990. A sgn at the arts center sue annoumm~g a complel;'on date of December, 1987, has been repainted to delete any reference to when the facility will open. A Morc Redlatie Dale College otficials lest year said a more reabsuc completion date would be m:d .;999, Last week, college President Eugene S. MJIs said his goal is to break ground before the end of this year. Con- struction is expeded totake 18 to 24 months. "It lust takes a Innv 1 im• en em , ~..,:., .4:..ec d __ . •• Mills said. "I don't see it as a delay. ]t's extremely complicated to bong these things together." Of the fg million. 55.5 million was to pay for the bwiding, 51.5 mdhon for design and survey costs and SI miihon for the college's endowment to maintain [he fam!ity. But school officials recently discovered that f5.5 miihon Is not enough to pay for the 30,000-square- fwt arts complex they wanted. and they are now Plnse foe 7NEATER, Paae Y Sti//Whee/inq to Wokmat 93 :: :.art de a ar:^~ert -~ .+ 0 i Parsons c ~ of h \ew }br = . of ueslgn admlm: lose a numher of mudem want to pursue art career. cur: teulum there is tw oar "This makes excellent A ~ ~ - Roger Workman, dean of Otis Parsons, st galleries. He said one o/ the aims of lit Age, Driver's Test Can't Outclass E1 °mL W ~'°^Wmi mdum'4 - <m ~: ji 36 ~~ ~p 5i L C ~3 ~ ^~ `° ~~ B S.~aE a~°i: riru m;m w= _3 Y °, p y 3i ~{ ° O ,~VI ia~a _`o p9 ~fL= oo E S~S ~W Or ~3 ~e ~~Qa I~m$~I ~ I' W_~ m i "'~ 3 E a ; 8 1333 n a_ ~~~lll 1~'1 LO .. 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