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RANCHO CUCAMONGA COMMCNI7Y FOUNDATION
Lion's Park Community Center
Forum
9161 Base Line Road
Rancho Cucamonga, California 91730
~egu lay ::~2f i:lk - ~'ay „ logn - 7.nn p.m,
A. CALL TO OR138R
1. Rol' Call: -utton,_~ McNay_~ Beyeredorf_~ Gr igeby_~ Bar ton_
B, FOUBDATI08 BDSI888S
1. Approval of Minutes - May 3, 1988.
2. Tres eater's Report - Period ending April 30, 1988.
3. Directors Liab ility Insurance - Update on pro green taxnrd obtaining
Director Liability Insurance.
4. 1988-89 Poundation Goals and Prioritise - Discussion of options for
programs, facrlrt3ee~ ana operations w Le co.,e l~~.~,: L~ L..G ,,,.v_c __- _°o-
f fecal year 1988-99.
C. BOARD M8lIDHH BUSI1188S
This is the time for Poundation Board members to report on additional business
perte fining to the Poundation, No public to etimony and no Board die cueeion or
action ten occur on these items,
D, ID89'fIPIGTI08 OP ITBMB POH I~ZT M88TING
This fie the time for the Poundation members to iden ti Ey the items they wish to
discuss at [he next meeting. These items rill not be discussed et this meatiag~
only identified for the next meeting.
9)34 Bm lint Rob • P. O. am R41 ~ WncM1n fucanung~, CJdomu V~Y10 ~ ~11Q 9891 A11
Community Foundet ion Agenda
May 17, 1988
Page 2
H. COMMUMIGTIOBS PYOM TE6 POBLIC
This ie the time end place for the general public to address [he Bancho
Cucamonga Community Foundation Members. Stale lap prohibits the Poundation
Members from addree sing any issue not previously included on the Agenda. The
Poundation may receive testimony and set the matter For a subsequent meeting.
Comments are to be limited to five minutes per individual.
P. ADJOHi9ffiRf
I, Eva Merritt, Aeais tent Secretary of [he Eanc ho Cucamonga Community
Poundation~ hereby certify [hat a trues eccuta to Copy of the foregoing agenda
pas poa tad on May 12~ 1988, seventy-tvo (72) house prior to the meeting per A. e.
2674 a[ 9320-C 8aee Line Boad~ Honcho Cucamonga, California.
Maq 3, 1988
Bancho Cucamonga Comuni[y Poundation Minutes
A. GLL 20 ORDER
A special meeting of the Bancho Cucamonga Comunity Foundation met on Tuesday,
May 3, 1988 in Che Rancho Cucamonga Neighborhood Center, Greoache Boom, 9791
Arrow uighway, kancho Cucamonga, California. the meeting was ca lied to order ac
7:05 p. m. by Jeanne Berton, Chair.
Present were Board members: Bob Dutton, Betsy HcNey, Cuy Beyeredorf, Paula
Grigsby, Jeanne Barton, Chair.
Also present were: City Manager, Lauren M. Waeaermen~ Foundation Consultant,
John Rowettp Staff repreeentetivee, Mnrk 6. Lorimer, Bueaa Mickey and Aeaie tans
Secretary, five Merritt.
* - e 9 e a
B. PODg0ATI0R BONIBSB
B1. Approval of Minutes - March 15, 1988, March 21, 1988 and April 19, 1988.
Board member Dutton requested [het a change be made on the March 15, 1988
mina tee on Item C6 en follome:
..Their recent fond-reieiag-cfforte wataining copaigv in 8ancho
Cucamonga haee~bted-them Co Einieh at t46S ahead of their goals. ...
MOTION: Moved by Beyeredor f, seconded 6y Gr igeby to approve the amended minutes
of March 15, 1988, and the mina tee of March 21p 1988 and April 19, 1988. Motion
carried unen imouety 5-0.
02. Treasurer's Renor[ - Period ending March 31, 1988.
Board member Beyeredorf tequee [ed that from th ie point £on+ard the dovetion
received by Betty NcNey crenting [he Jack McVey Neaorial Puvd should be
invested in a high yield account. I^ addition, $25,000 of the Poundation'e
balance should be inves tad iv a similar high yield account.
NOTION: Moved by Dutton, seconded by Gr igeby to approve Treasurer's Report.
Mn[i on carried ,man imnua lv S-0.
83. Foundation Adv ieorv Council - Creation of the Pouade[ion Advisory Council
end ee lection of memb ere. Sta fE report presented by Mark Lorimer, Staff
Aee ietavt.
Mr. Lorimer presented [he list of twelve people eelec tad by the Poundation
Board of Dirac tore to nerve on [he Adv ieory Counc ii.
The Board of Dirac tore considered Beso lution No. flCCF 88-003 for approval.
Community Foundation Ninutea
May 3~ 1988
Page 2
$SSOL11fI0N NO, RCCF 88-003
A RESOLUTION OP TNB BOARD OF DIHBCf083 OP THE RANCHO CUCAMONCd~
COlRIUNITY POUNll~aTION~ BANCHO CUCANONCd~ CALIFORNLA~ CReATINO AN
ADVISORF COUNCIL TO ACT IN AN ADFISOBY CAPACITY TO THE RANCHO
CUCANONGA CONMOliITY FOUNDATION
t~TION: Neved by Dut toa~ seconded by Beye rsdorf co approve Aeeo lu [ion No. RCCF
BS-003. Motion carried unanimously 5-0.
B4. Alta Loma Hixh School Auditori Bnetoration - Update on the oro ¢rees nP
the auditor u.m ra tozstion. Scafi report presented by Susan Mickey, Staff
Aeeis tan t.
Mra. Hickey stated [hnt she had met vith Paul Ward, Prim ipal et Alte Lome High
Schools and that Mr. Ward thanked [be Poundation for the doaetion made to the
High School for the reetara [ion of the auditorium. He also assured Nrs. Nickey
[het he you ld have [he auditorium mietained on a regular basis after the
res [oration.
ACTION: Letter to be sent to Mr. Ward stating the[ John Rovett ie available
for consultation assistance.
B5. 1988-89 Poundation Goal• and Priarit ies - Discus sins of options for
progzame~ fec ilitiee~ end operations to be considered by the Poundation for
fiscal year 1988-89. Staff report presented by Mark Lorimer, Staff Aeeis tan[.
ria. Luc imer presences a uratt Mork Progras for 1988-89 Pie cal Year. List vas
received and reviewed by Board members.
ACTION: Nr. Lorimer will update lice from reques to made to be presented at next
meeting.
86. Conaul[ent'e Reo xt - Beport by John Rowett cones rnicg Foundation Business.
•,r,t,tatr
Chair Berton called a recess at 8:15 p. m. The meeting reconvened at 8:25 p. m,
with all Hoard members present.
i**a:Fa*
H7. Ledim House - Statue report oa the diaposi Lion of the Ledig Nouse~ loco eed
at Amethyst Street and Wi lane Avenue. Staff report preannfed by Mazk Lor imez~
Staff Asaia ta:.t.
Mt. Lorimer presented the Appraiser's Beport. Board members felt they seeded
more iafmaatiou iu regards to pone ib le housing site(s) end cone of mintaining
the house.
r
Comunity Poundatio¢ Minutes
May 3, 1988
Page 3
ACTION: Mr. Loricer to present updeced report at nezt meeting.
B8. Discussion of Conflict of Iate rest Guidelines - Sta ft report pro vented by
Lauren M. Wasserman, Crty Mawtger.
Mr. Wasserman presented a let car dated April 28, 1988 from John W. Prenc ie, the
Attorney who helped ee cab lieh the flaocho Cucamonga Comunity Poundation.
. ~ • x ~ + ~
C• EOAED MEMEEE EDEI1688
C1. HeyeredorE requested an update on Steve Bensenbach.
C2. Chair Barton to send "[hank you" letter to Ralph Lewis, Eorcer Board
member.
C3. Chair Barton Co Bend "thank you" letter to 10-year Comit tee for their
donation to the Poundatioo.
• n e * • w ~
D. IDElRIPIGSLOM 0! ITElB !~ ~II M6ElI1G
1. Beyeredorf to present a Seeo lutiw regarding investing Poundation'e present
and future funds in various highyield accounts.
o rt.,a.... __ ~a..:.__.
3. 8evisad list of a Work Program far 1988-89.
4. Update on 8encho Cucamonga'e YMCA.
5. Update oa Dirac tore Liability Insurance.
6. Update on Ledig 8ouee.
r + + • * * w
6. CCMMDLIGTIO/8 PEgf TEE POBLIC
None submitted.
a Mew + e e
Community Foundation Minutes
May 3, 1988
Page 4
F. ADJOIIRt01fNT
Meeting Mas adjourned to the next regularly scheduled meeting of May 17, 1988 at
7:00 p.m., to be held at the Lion's Park Community Center in the Forum, 9161
Base Line Road, Rancho Cucamonga.
MOTION: Moved by Grigsby, seconded by Outton to adjourn at 9:45 p. m. Motion
carried unanimously S-0.
Respectfully submitted,
~.
Eva Merritt ~`~~
Assistant Secretary
Approved: May 17, 1988
RANCHO CUCAMONGA COMMUNITY FOUNDATION
'fHHA30BHH'3 tiHPOQi'
Period Hading - April 3J, 1988
Beginning Cash Balance
DHPOSITS
incerear narnea - unecking
total Deposits
HSPHMSBS
Hed Hill Photo - Mayor Charity Ball
Pred Stoffel - Mayors Charity Bell
- Gifts A Awards
Price-Bowett - Consulting Services
Alta Loma High School - Donation
Sotal Hzpenaea
$ 135.97
$40,427.94
$ 135.97
$ 264.12
1D 728.66
500.00
2.600.00
$ 6,092.78
$35,471.13
DJ1U aM We RDtl ~ P. O, Bac BDI ~ aumM Cucmmp. Caitmml~ 911 Nr ~ 11 N1 9BD~1871
gMDIHG CASH BAtdMCB
TREASURER'S REPORT
Period Ending April 30, 1988
Beginning Cash Balance $40,427.99
DEPOSI T5
1~ y`L Total Deposi ts~c`rv 135.97
E%PENSES
Red Hill Photo 269.12
Fred Sto¢fel 1,728,66
PR Seminars 500.00
Alta Lana Nigh 2,600.00
7bta1 Expenses 5,092.78
Ending Cash Balance $35,471.13
iie spec tfuiiy submi ttc c,
GOY HEYEREDORF, TREASURER-SECRETARY
Kathy James, Account Technician
CITY OF RANCHO CUCAMONGA ::~'v-
MEMORANDUM '~"
~Y/\
V
DATE: May I1, 1988
.... iiancno Cucamonga Community Foundation
Board of Director~`~~~ ~
FROM: Mark L, Lor imex /~"~''^~'~
St. Adminis[rat ive Ass is[anC
SUBJECT: Information -Director Liability Insurance
At it's meeting of Nay 3, the Board of Dirac to re reques tad additional
information regarding Director Liability Insurance. Ae a result, staff has
contacted our ineurence broker who iedicates that a zeasoneb le premium price for
$1,000,000 liability ineurence covering members of the board ie estimated at
$3,500 - $5,000. You will recall chat it ie Hates eery fur the Poundation [o
complete i[9 annual audit (far the period April, 1987 through June, 1988) in
order to he cons:derad far such ineurence. The City's finance department
estimates that i[ would coat the Foundation $1,500 - $2,000 to have a
independent audit completed separate from the City's annual audit. Should the
Board o£ Dirac tor'8 wish to have a sensra Ye uud:« ~ -^~^_ta'_ - .
expect a final document to be preaettted in August. Th ie .would 6a llow the
Foundation to apply for Director Liability Insurance in August rather than wait
for an audit in conjunction with the City audit end submit an application for
ineurence in November.
Staff hea also researched recent legie la [ion which et temp to to protect nonpaid
d irec tore of nonprofit public benefit corporations from monetary liability for
failure to discharge their duties. Section 5231.5 of the State Corporations
Code ate tea that [here aha 11 not be any monetary lieb ility on the pert of any
nonpaid director of a nonprofit pu4lic benefit corporation 6eeed upon any
alleged failure to discharge that pe reon's duties ae director or officer if the
duties are performed in a manner that meets the following three cr its rie: (1)
The duties ere performed in good faith, (2) The duties are performed in a manner
such director believes to be in the best interest o£ the corporation, end (3)
The duties ere oerfnrnud '-!i th each a: E, .-lad i,ig raaannahlo __ _ sa
urd inariiy prudent pare on in a like position would use under similar
c ircuma[an~es.
The full text of Section 5231.5 - 5237 of [he State Corporations Code ie
attached For your reference. Please pay particular et tention [o Sec [ions 5231.5
end 5237. This information ie provided to the Board in hopes that it may reduce
some of the concern Board mamba re have ae to potential exposure to monetary
lieb i.li ty ae a result of ac tipne performed on behalf of the Co®unity
Poundation. A claim can be made that Section 5231.5 of the State Corporations
Director's Liability Ineuranee
Nay 11, i988
Page 2
Code protects members of the board of d;.<,.r°^'° 'moo- - :- cry 1- _i:~
..cam. _ > meue in good xaith and in the beat interest of the'Pn!mdation. It is
assumed .that all dec is ions thus far made by the Hoard of Dirac COr'e, and those
which will be made by [he Board, have been done so in good faith.
This issue has been set far Further consideration on the Foundation Haw 17. 198A
Agenda. At that time, the Hoard o£ Dirac Gore may wish to go ahead with a
separate Fouudation audit and submit an app licetiou for Director Liability
Insurance after a completed audit can 6e submitted with an application sometime
in Augue[. Likewise, the Board of Dirac tore may rieh [a have the Foundation
audit completed at the time of the Ci[y'e annual audit, which should be finished
in November of th is year. Incorporating both audits together could save the
Foundation the coat of having a separate audit completed (appro:imate ly $1,500-
$2,000).
Should you have any qua etione or comaea[e regarding this issue, please feel free
to contact me.
MRI.: eam
Attachment - S[a ro Cnroo.ar;..na c,.de
cc: Lauren N. Haeaerman
City Manager
Mayor and City Council
CORi?ORATION9 CODE § 5231
ARTICLE 3. STANDARDS OF CONDQCC
9eetion
5290. Duties and liabilities rnmpenaation; obligations of Wstees.
5281. Good faith; ahndald of care; reliance on information presented by others; liability.
5231.5. Nonpaid direeton; alleged failure to discharge duties; no monetary liability or cause of
action for damage; criteria.
5232. Election, selection or nomination of directors; duties law governing.
.,_,.,.. °^ ..,. ng ;. .,,,,,.. ,s,.~,~~u.d dir2cu: , ;:ccp::ons; a.;;crs. buzdxn of prof; 4m.,..
[ions; remedies
5234. Mutual directun; voidability of contracts or transactions.
5235. Compensation; liability for unreasonable amount
5736. Loans, guarantees, advancements; life insurance; financing residence of officer.
5237. Diatributiona, loans or guarantees; liability; utlons; damages.
.i23A. Indemnifiratine of rna..p~o =e_ _ e _;_„~ appr.,..l, aaivxncemen[ of expenses; liabili-
ty insurence.
5239. Personal liability of volunteer director or officer for negligence. (New]
d rode 8 uaa added by Stara.1978, c. 567, p. 17;0, § 5, operative tan. 1, 1980.
Crow Refetneea law Renew Cafawuds
Nonprofit mutual bends wryoratima vita assets in char- Diraton' IubiatY ur,dn the new Glifamu Nanp~t
,ubk trvu, application d tha snick, fee 4 7239. Co ntwn law. Paul L. BmR h. 1979 it U.S.F. L.
Removal d dirmor roe brsad d duty uMw thb antck. ~ ( )
fa 4 3227. Rev. 89t.
Vacatroo d ollka ror beach d duty. as 4 3231.
§ 5230. Dulls and Rabillt{ea; trompenwtion; obligations of truatep
ia) Any duties and liablide set forth in this artida shell apply without regard to whether a
direcmr is compensated by the carporetion.
(b) Part 4 Irnmmencing with Section 16000) of ' ' 'Division 9 0[ the Prebate Cade does not apply
t,..neT.o,.tn.a ..f o ..Nnn
(Added by Shfs.1978, c. 567, p. 1760, § 5, opereUve Jan. 1, 1980. Amended by Shts.1987, c. 923,
§ 1.2, opentire Jan. L 1985.)
I.aw RtvWen Commiulon Comment
1887 Amendment
Subdivinon 2) of Sectwn 3230 if reused to mrred a
crauaderrna. 119 Cal L,Rav.Canw. Reports--j1998) j.
1997 Lryklaaba
The 19a7 ammdment chanard • rotatory eitatian.
Section 103 d Suu.i9a7, c. 927 provgw m pan:
"(a) Except n aaenvbe provided in tha act, 9atiana I
to I02, mclu+ive, d tba at faW became opmtive on /uly
I, 1988.
••mt The ml4mng ..mw,. „r tni...-r .a,n tw~r ns+r-
.wry i
anv(U Sauan L2 lamendiry Barron 500 d the Coryon-
cionr Cddei.
"(2) Section I.l (uneodini 9ation 72R1 d the Corpora.
lionf Cade).
"r71 Sation I.1 (ammdieg Suetm 93x1 d the Corpora-
tian Code).
L:kv Reface
Corpontmns 0701.
CJ.S. Coryontiofu 4 761.
9 5231, food filth: standard of care; rcllan<e en intormatlon presented by otken; Iiab11it7
(al A director shall perform Ne duties of a director, including duties ore a member of any
committee of the board upon which the director maq nerve, in good faith, in a manner such director
believes to be in the beat interests of the mrpontion and with seek care, irtcindmg raeonabk
inquiry, ore an ordinarily prudent person in a like position would use under similar circatutaacee.
(bl !n performing the duties of a director, a director shell be entlfkd to rely on information,
opinions reports or shhmente, iuludmg financial ahtetltenh aril other tinaacial doh, in auk cue
preparerj or presented hy:
Ashrlal4 • • • Yg108M tgplatl0lN OY alnarntatlt
168
1
5231
CORPORATIONS
(1) One or more offices or employees of the corpontioo whom the director helievn to
reliable and competent m the mattes presented;
12) Counsel, independent accountants or other penone as to mattes which the director bells
to be within such person's professional or expert compebnce; or
(3) A committee of the board upon which the drector does twt cerve, ore to marten whhm
designated auUlarity, which committee the director believes to merit contldence,
eo long ore, in any such case, the director acts m good faith, otter reareaabk inquiry when the d
therefor is indicated by fhe cireourstancea sad wit}wui knowledge riot would wtue sum reliaon
be unwarranted.
(<) Ezce t an rovided in Section 523s a person who performs Ne dutln of a director
accordance wt su rvisione (a) an ) a a 1 love no liability based upon any ' • • alleged failure
discharge the person's obligatlons as a director, including, without limitlng the genen8ry of i
fore¢oina. env artinrm nr rem . eh~.t. -~^-^a :- a=fit ~'t%a~l;• ~. ~"y.., W~ ~ v~ w wnici
corporation, or aeseb held by it, and dedicated.
(Added by Stam.19r8, c, 567, p. 1750, § 5, operative Jan. 1, 1980. Amended by Sbb.1979, c. 724,
2242, § 24, operative Jan. 1, 1980.)
Qor Rdets[s
Inveammt d rtten applineon d thir lesion, to
a uso.
Inveatmm4 candact d dirmon, tee a SNa.
I~w 14rkw Cawrrrl~
Hontmtraer ruorinkn rtandia{ N Glifania: A ptapoe
,d to ctgod the role d ws colt owner. (198e) 26 9aets
Clue L.Rev. 619.
HofpiW mrponte neaaaatce crow fo Caafotaie: Ptrr
nom N the wrae d FLm v. Cuarye Pork HwpiW. lJrry
F. invendae r,td artaY 5. Itimhaa (I91J) 11 Punk LJ.
sm
IJbrrr Rrfurcr
Carpomkm eJ1Y7,
C.ls. Cntpontiwn f 761.
1. V anwal
Whore ovooa' rtocistioa'r oripul decor, v®ptay
d owtm d developer avd We devebpet'a empbyrr, friY1
m unriw then snp,rvary sad mrarewlal retporebiatiw
m ores euh owWpmWum uet fr m dalurte rrww
fva4 evd ae4ed wah • tarflict d intern. tart aedinud
then ahapew r inirie dfraterf d lee rtw]repn to
etlaHah tuck • M1ud fa the pmpnw d maivtmaoa avd
reps, sod wn inmvidarlly lirble to naoouton ax breach
d uric fdtcivy dvtiea d aeWp m avad fuW tad esccw
iva brak dyer d iwad mrerarmmt Ravm't Cove Tom
homr, Ne. v. ltauppe Development Co., lac. (App.19r11
Ill CaLRpn. 33r.
NWM d Darlakr
-l
§ 5231.5. Nonpatd dtrerton; allegtd faihlre to dkeharge dutlnt no monetary IlsbWty or wore
at action [or damages; criteria
Except e9 provided in Section 5233 or 5237, then is no monetary lability on the part of, and no
reuse of actors for damages shall arise against, any ttoapaid director, including any nonpaid director
who tr also a nonpatd of&er, of a nonprofit publk becefit coryontion bead upon any alleged failure
to discharge the pesos a duties u director or officer if Ne delis are performed in a manner that
mesh all of the fallowing criteria:
(a) The dutlee are performed in good faith.
(bl 7'he dutlee are performed in a manner each director believes m be in the best ietereeb of the
carpontion
Ic) The dutlee are performed with each care, including reeaomble inquiry, m an ordinarily pndent
person in a like position would use under eimiler circumetaocn.
(Added by Sbb.198fi, c. 720, § 1.)
§ 5232. Election, rNea1ion or nomination of dtreeton; dutln; law governing
(a) Section 5231 governs the duties of directors ore m any acb or omisskns in connection with the
election, celedion, or nomination of dnecton.
NI This section shall not be construed to limit the generality of Section 5281.
(Added by 3bb.1918, c. 667, p. 1750, § 5, operative Jan. 1, 19&1,)
§ 5233. Salt-0eallag tnrtaaetlom; inbrnled dlretMOr, nceptlons; actions; burden of prooh
Iimltatlam; remedln
(al Except u provided in subdivision (b), for the purpose of this section, s selfdealing transaction
means a tralteectkn to which the corporation k • party and in which one or coon of ib directors hoe
U11darlNla Mltllaatw Nlarlpaa M aAlNllalla by alllallalllla111
154
Ep[tP0RAT10NS CODE § 5233
•, a material financul interest std which does sot meet the requiremenU of paragraph (1), (~. a (g) of
subdivision (d1. Such a director a an "interested director' for the purpae of this section.
(DI The provieiom of Uia section do not apply to any of the following
(1) An action of the board fuing the rnmpeneation al a dvecWr ae a director or officer of the
•' corporation.
(2) A IransaMion which is paK of a public or charibble program of the rorpontion if it; (~ u
aPProved or authorized by the rnroontion in good faith and wit)!out unju±NFed tzvo:itiam; :w1 iui
resul4 to a benefit to one or more drectors or then families becauce they are in the close o[ pereom
Intended to be benefited by the public or charitable program.
(3) A transaction, of which the interested drector or directors have no fleNCl knowledge, end
which does not exceed the lesser of 1 percent of the grove receipts of the rnrpontion for We
preceding fiscal year or one hundred thousand dollare (3100,000)•
ic) Tne Aiwn!ey Generxi uq a the AiWrney Geneni le joined as an indispensable party, any o4 the
following may bring an action m the superior court of the proper rnunty for the remedies specified in
;ubdivieion Ih):
I1) The corporation, or a member asxaing the right in the name of the corporation pursuant to
$action 5710. 1
(2) .4 dicector of Ne ttrpontbn.
(g) An officer of the corporation
(4) Any person granted relator abtus by the Attorney Crenenl.
(dl In any action hrought under subdivison (c) the remedies specified N subdivision (hl shell not be
granted if:
(11 The ActoroeY General, or the rnurt w as attioa b which the AttoroeY General in an
indispensable party, hoe approved the vansaction before or after it wm tronenmtnsted; or
(21 The following fact are eebbliehed:
(A) The corporation entered into the transaction for its own benefit;
IH) The transaction was fair and reaeonahlr u to the mrn,...H°° ar tF° ^^^'k' "-"-. --^
entered into the transaction;
(C) Prior to conaummadog the tzvmu1ion or any part thereof the board authorized or approved
the transaction in good faith by a vote of a maprity of the directors then m office witlwut conning
the vote oP the interested director or directors, and frith knowledge of the material taN concerning
the tnnsa:don and the directors interoet in the transaction. Except ss Provided in paragraph (g) of
this subdivision, action by • committee of the board shell not satisfy this parxgnph; and
(Dl~il Prior to authorizing or approving the transaction the troard conetdered and '° good faith
determined after reawna6le inveetigatios under Ne ClMumehntte that the corporation could not
have obtained a more advantageous amngement with reasonable effort under the circ»mstaaeea or
ii the rnrporetion in fact could not have obtained a mom advantageous artangement with
reasonable eftoK under the cireumeunces; or
(3) The following facts are esbbliahed:
(AI A committee or person authorized by the board approved the transaction in a manner
consistent with the standards set forth in paragraph (2) of this aubdiviaion;
.6i It wan rani, rea:nna67Y pr?^_~°-sb!e 'a nh'sr. zpprov3l of u,e `w'ard pr`or t0 entering into ilre
tasnsaction; and
(C) The board, after determining in goad faith that the conditions al subparagraphs (A) and (B) of
this pangreph were satisfied, ratified the transaction at its next meeting by a vote of the majority of
the directors then in office without counting the vote of the interested dnecbr or directors.
(e) Except se provided in eubdiviebn Ill, an action under subdivision Id must De filed wihin two
years alter written tmtitt eettin8 forth the material facts of the tnneaQios and the directors
intareat in the tnnaattion is filed with the Attorney General in accordance with such ngulafiom, rt
trasnaaction occurred except for tlrye A~ttoroey (lee nlc who alul~hatv~e 10 y~ean afrer Ne~tnssaetion
occurred within which to file an action,
14br4tn ' • ' YlAoat• t[nNtlOtM by amattalrwtt
155
§ 5233 coeeroanTTOxs coDt
(f) to say action for breach of m obggatioh of the mrpontion owed to an interested director,
where the obligation arises from a mltdmting troneection which hm not been approved m
in subdivision Id), the roar[ may, by way of offmt only, make any order aathoriaed by subdivu~ron~
notwithetatMing the expi»tlon of the applicable period apeeified in subdivision (e).
(g) Inierea[ed director may be counted N determining the presence of s quorum at a [seating of
the board which authorizes, approvm or rstiCee a contract or transaction.
(hl If a selfdealmg tnmaction • • has rpgo., ptz- thn iatr:raicti dvecmr or director shall m
such utinga and pay arch damegm m in the diarretion of the court will provide an equitable and feu
remedy to the mrpontion, taking into account any benefit received by Ne rnrpo»tlon end w~xther
the interested direcor c: director acted in good feiN and with intent to further the best interest of
the mrpontion. Without limiting the generality of the foregoing, the court may order the director to
der any or all of the following:
!!) .".count tn. any pron`ra made from such transaction, and pay tlem to the mrpo»Uon;
(2) Pay fhe corporstlon the value of the uec of any of ifs property used in such tnna&c4an; and
(2) Return or replace any property loot to the mrpontion m a resat[ of such transution, togeNer
with any income or appreciation lost to the mrpo»tion by reamn of such transaction, or account for
any proceeds of sals of such property, and pay the proceeds to the mrpo»tion together with interest 1
at the legal »te. The court may award prejudgment intermt m the extent allowed in Section 3297 or '
3298 of the Civil Code. In addition, the mart may, in its discretion, grant exemplary damages Por a
f»udulent or malicious violation of this section.
(Added by 3tate.1979, c. 721, p. 2242, 426, ope»tlve Jsn. 1, 1990, Ataeadad by Sfata.1980, c, 1155, p.
9894. 4 a; Stats.1s81, c. sgr, p. 2zsz, 4 ~.) -
19» I.uklatle..
Fotaw 4 5311, ddea Dy Sub, I97t a 367, p 1730.4 3,
rhtch ymaally relatM w the ume subject, rra repebd M
Suu 19]9, < 924, p. 2213, 4 23.
1310 A~oaasl. AtWed'•eM which dW not meet the
requircmrau d ptuayapE (I), (2h err U) d autdivbkn fd)..
to wtd. (ak wbtituud "u" fa "of' is euhd. (b)l2k
u11,.M11„IN'~I'~a~. ~"~' ,~I1lIi WO<n[Yfe'd 'Sae
followiN fKp ue nublbhedl~IOr "Ibe pawn abatial
th< validity d the tr.nf.ctioo fwbim the gttdw d ptovka
tlut" m wbd.. (dl(2) wd ()h sad auteatund ".rithm
thrte year eRU tAe traaarnba eKaetN. swop far the
Auomey Gwent ties ehaa here 10 year after the Iree<.
non aceumd within rhkh w file ao rtiw" far "10 yeas
Net the ruse of tmtios hn awed" k aubd fd.
19x1 Aaaa~ee,t In wbd 1~13)(D) inserted aymbok
"(i)" nM '•(ii)"; aM b nbd. (h). m the fkH aeetmn,
folbwinl'aegdWma bama<tio4" dekbd "waieh ~ cot
bean rrypreard v provided k weAvwoa (d)"
p9ae Roheaaar
Am by majority K am d toad, sea 4 7311.
Attomry 1aw>V. mpervieim d truatm fa chaenatk
purpaa em Oovanmeat Cak 4 12310 a aeq
Corponk purer to <ontram, lwrrow or knd, rvbjtet b
thin fenbn, fa ¢ 3110.
Vekntioo d n,ry. !o ~» •::x. :ere a iii3.
Hdth arc eervin pW, eaempion from t6ia tecnon. as
9 10820,
HwpW eetna pko, eaemptkn rem ebb eaaon, ee
4 loses.
Isdemairy, eeeeptkn. tee 47337.
Umtunon d aedmr, foe Cade d Ltivd Pro<eduu 44 312
n feq., 313 a ae4. l13 a w9, JSO m aq.
a3yonty vob K M d bond, o<rytwn ands tnb ,«.
tiaa aw § 3311.
~,..., u,w v y Fitt.
9eg detind tratnacbwq Lwk d pars m commma m
apptma see 4 3212.
AddaleaNlye Code Rehna~
Attgney aenaY tga4tiana,
Mutual bmdt wepaatioru, ere II GI.Adm. Code
499.3.
Put1k baRm mlpntatiaee. fee I i CJ.Adm. 999.2.
law Rarkw l.o~
Anoenry aenaall jarbdietian mar mrparau M,tciuia.
wartm 1. Abbtat and Cook Rita Komblum (1979) Il
V.S.P. L.Rev. 733,
Cmpotanoa IoM aM the Am<riua I~r INtib¢ oorpo-
tae Oavernanae peaiad. (i9p) 31 9raa.L.0. 917.
9tmalude d atsdnm for duectore d outpro0t wtymr
tiotn ladle 1. Fdhmao, 7 Pace L.Rev, !t9 fI917).
LrwarY itwar<ra
Catyontioaa 0311.
C.1.5, Capou[iau 4 7m a a<q.
4 5291. Mulual dlreebn; voldabllity of trontra<b or tranaactlona
(al No contrmt or other trsnmctios 6etweeo a mrpo»tion and any domestic or fo»ign mrpo»•
tion, firm or aaeoeintioa of which one or won of iu director are direemn is either void or voidable
becaum each dieecmr or directors are prvaant at the meeting of the board or a committee therto!
which authority, approvm or ntlfa9a tlu contract or transaction, iC
(1) The material fat'b m to the t»nttRdOn and m to each director's other directorship ors fully
diseloeed or known to the board or mmtniuee, and the bwrd or committee authorlam, apprsrea or
llrldafMila Nrdlawtaa UIIM14Na a 1da1f01M OY alnafldlllatll
lb6
CORPORATIONS CODE § 6236
retifiea Ne contract or transaction in good faith by a vote sufficient without ceunting Ne vote of the
mmmon director or directora; or
(2) As to mntncra or transectlona not approved m provided in paragraph (I) of Nm subdivision,
Ne contract or transaction is just and reasonable as m the rnrporation at the time it ie authorized,
approved ar ratified.
(b) Thie section does not apply to tranaactlom covered by Section 5239.
(Added by Stats.197A, s Bfi7, F +75n, ; 5, operdrs 2aa. 1, 1080.}
Cray Refenaes Lllrvr Refweaeu
Coryonu power to mntnct bornw or lead, fuhiect to Cc:Pc:..:s ~Y3!/(!;,
ihn action, se 4 SI10, C.l.e. Cnrpontbm 44 ]8Q ]88.
aLrmtY vme u act of board, czcepaon under tbn ac-
,wn, tee 4 5211.
4 5225. Compensation; liability for unremoneble amount
(al The board may fu the rnmpenmtion of a director, ae director or officer, and no obligetior.,
otherwise valid, to pay such compensation shall be voidable merely because Lhe persona receiving the
compemadon participated in Ne decision m pay it. unless it wsa rat just and reasomble as to the ~~
corporation at the tlme it was authorized, nt~ed or approved.
(b) In Ne absence o[ fend, any liability order Nis section shall be limited to the amount by which
Ne cempenaation exceeded what was just and reaeomble, plus interest from Ne date of payment ~.
(Added by StaG.1978, c. 587, p. 1750, § 5, operative Jan. 1, 1980.)
paw RsY~eas LIMarY Rdassm
hLjonry rote u acl of acard, e8<ePtian umdr Rds sa- Corponnom U,)De(1).
tion, xe 4 s311. C.J.S. CmPantiaas 4 sal.
§ 8238. Loans, Buanrtten, advanceramfa; Ilfe Imurutcr, flnanclna rotdentt o/ oifker
(al A corporation ahWl not make any loan of money or property W or guarmtce the obligation of
any dlleatar or oIrapr, anle9a approves sy the AR.erney lzeneral; provded, however, dY[ 5
rnrporation may advance money to a director or officer oY Ne mrporadon or of its parent or any
subsidiary for expenses reaeombly antlcipated W be incurred in Ne performance of Ne duties of
such officer or direcor, provided Nat in Ne absence of such advance, such director or officer would
be entitled to be reimbursed for each expenses by each wrpondon, its parent, or any subsidiary.
(bl The provisions of subdivision (s) do not apply to Ne payment of premiums N whole or in part
by a cerpontion on ¢ life irmttrance policy on Ne life of a director or officer eo long u repayment to
Ne corporaion of Ne amount paid by it ie aecurevi by Ne proceeds o[ Ne policy and its weh
surrender value.
(Added by Stata.1978, a 587, p. 1750, § 5, operatve Jan. 1, 1980. Amended by Stata.1979, a T24, p.
2245.6 26.5. operative Jan. 1, 19A(1; Gtst9.19S1, c. 5!17, p. 2284, § 8.4
1911 Asaeeaamt Added subd. (c). law RaAew CsstssaaWlm
Croce Rafenaee Suu wrote penny dvectes d chuiubk Nrpan.
A[tomey sated, ue Government Cade 4 13300 tt aq. tiara. Lirabeth Mandy (I9&) IB U.S,F.L.Rer. 7{9.
CarWrau Poor m mntnaq borrow a lend. mbjtst m
tha action, se 4 31{0. rer.rr Ratwstee
4 ~W service plea eemption tram ttw section. sa caROntwa. ~lle(I).
Power aed duos, su Oovernmmt Code 4 13310 d G.S. Curpotetiws 4 r71 a seq.
seq.
AaWbtttlra C¢h Re/~ass
MWUd beaedl carpaeatiaaa ses 11 CLLAdm. Cade 999.3.
Public Made awpnuiosa se I I GI.Adm. CaM 999.3.
AatNla4n s s s Rlt4fah dR4RtI011a OY arrnlldlMRt
157
5237 COR¢'ORAT¢ON3 CODE
¢ 5437. Dlatrlbation-, loam or ausranlea; 1{abilkT. actloru; damaan
(e) Subject fo the provisions of Section 5231, directors of a corpontion who approve any of the
[o9oaing corporate actions shall be jointly and severally liable to the mrpontion for.
(1) The making of any distribution.
(2) The dietributlon of assets after imtitution of diaaolntion proceedings of the rorpontion,
withnnt paying nr ede,„ ,aroly p.t,viding rnr e!1 I;.;,.w., ti.y;1(~:e_ _! _`.e x-ec _.`.~:.:, exc.uding any
claims not filed by creditors within the tlme limit set by the rnurt in a notlce given m creditore under
Chapters 15 (commencing with Section 6510), 16 (commencing with Section 6610) and 17 (commencing
with Section 8710).
{31 The making of any loan or guaranty rnntrary to Sectors 5236.
rol A drector who is present at a meeting of the board. or snv rnmmittee thereof at whirh srNnn
speciiien in suodrvanon (a) :e taken and who abstains from voting shall be eonaidered to have
approved the action.
(c) Suit may be brought in the name of Lhe corporation W enforce the liab9ity:
(1) Under paragraph (1) of subdivision (al against any or otl directors labia by the persons enntled ,
to sue under subdivision (b) of Section 5120;
(2) L'nder paragraph (2) or (3) of subdivision (a) against any or all directors liable by any one or
more creditors of the mrpontlon whose debts or c4mu arose prior to the time of the corporate
action who have not consented W the mrponte action, whether or not they have reduced then claims
to judgment;
(3) Under paragraph h), (2) or (3) of subdivision (a), by the Attorrsy General. i
fd) The damages recoverable from a director under this eectioa shall be the amount of the illegal )
distribution, or the lose auHered by the corporation u a reeutt of the illegal loan or guaranty,
(e) Any director sued under thin section may implead ell other direcmza liable and m¢y compel
contribution, either is that aMion or in ao iadepeadent action agaimt directgn not joined in that
action.
(D Directors liable under this section shall also be entitled m be suhmwWi rn rho riwh.. ,.r .be
corporaton: -
(II With respect to paragraph (lj uF subdivision (a), against ' ' `the ceraona whe received the
dietn'bution.
(ll With respect [o peregraph (21 of subdivision (a), against Phe ` ` ` cetaom who received the
distribution.
(3) With respect to paragraph 13) o[ suhdivison (al, against the pemn who received the loan or
guaranty.
Any director sued under this section may file a croeeeomplaint -gtinat the person or persona who
are liable to such direcWr u a result o[ the subrogation provided for N this subdivision or may
proceed against them in an independent action.
(Added by Shte.1978, c. 587, p. 1750, ¢ 5, apentive Jan. 1, ;980. Amended by Stste.1979, c. 72A, p.
2245, ¢ Z7, opentlve Jan. 1, 1980.)
Croce aerwvws tdtratf Rfwwt~
Auomey emenl. mpe.w.y.e M !rveue !n caaxilaRe Cal."*mm a333
par,::i:. 'etc w•wnmmr Cade 9 i lion n a[q. C.1,4. } »q,
thi~>m,roar~>~}tt3110, nxt, borrow a InN, wbjst to Corponnpa a37 cl
¢ 5398, Indemnlflcalion of rnrponte sgenta; grouada; approvµ advancement of e:penaea;
liability Ineurenee
(a) For the purposes of this section, "agene" means any person who is or was • d'vector, oNwer,
employee or other agent of the rnrporation, or is or was serving at the request of the corpontbo ae
a drector, officer, employee or agent of another foreign or domestic carpontion, paetaenhip, joint
venture, trust or other enterprise, or was a director, officer, empbyn or agent of a foreign or
domestic rnrpontion which wu a predecessor mrpontlon of the rnrpontioa or of another asteryriae
UttdarlMle MrdkaNa Mrgp a atfdtroria fey rtutrdtttwM
158