1. Definitions. For purposes of this Article, the following definitions shall apply.
a. "Act" means the North Carolina Nonprofit Association Act, effective July 1, 1994, and all amendments and additions thereto.
b. "Association" means the Association as a corporation as such term is defined in Section 55A-8-50(b)(1) of the Act.
c. "Director" means an individual who is or was a director of the Association or an individual who, while a director of the Association, is or was serving at the Association's request as a director, officer, manager, partner, trustee, employee or agent of another foreign or domestic corporation (whether a business or nonprofit corporation) limited liability company, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving as a director, officer, manager, partner, trustee, employee or agent of an employee benefit plan at the Association's request if such director's duties to the Association also impose duties on , or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate and personal representative of a Director.
d. "Expenses" means expenses of every kind incurred in defending a Proceeding, including, but not limited to , legal, accounting, expert and investigatory fees and expenses.
e. "Indemnified Officer" shall mean each officer of the Association who is also a Director of the Association and each other officer of the Association who is designated by the Board of Directors from time to time as an Indemnified Officer. An Indemnified Officer shall be entitled to indemnification hereunder to the same extent as a Director, including, without limitation, indemnification with respect to service by the Indemnified Officer at the Association's request as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation (whether a business or nonprofit corporation) limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise. "Indemnified Officer" includes, unless the context requires otherwise, the estate or personal representative of the Indemnified Officer.
f. "Liabilities" means any obligation to pay any or all of the following: a judgment, a settlement, a penalty, a fine (including an excise tax assessed with respect to an employee benefit plan) and reasonable expenses, including, but not limited to, attorney's fees of opposing parties incurred with respect to a Proceeding.
g. "Proceeding" means any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, whether formal or informal, and any appeal therein ( and any inquiry or investigation that could lead to such a proceeding)
2. Statement of Intent. The Association shall indemnify the Directors and the Indemnified Officers to the maximum extent permitted by the Act.
3. Indemnification. In addition to, and not in any way in limitation of, all indemnification rights and obligations otherwise provided by law, the Association shall indemnify and hold harmless its Directors and Indemnified Officers against all Liabilities and Expenses in any Proceeding ( including, without limitation, a Proceeding brought by or on behalf of the Association itself) arising out of their status as Directors or Officers, or their service at the Association's request as a director, officer, manager, partner, trustee, employee or agent or another foreign or domestic corporation (whether a business or nonprofit corporation) limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, or their activities in any such capacity; provided, however, that the Association shall not indemnify a Director or Indemnified Officer against Liabilities or Expenses that such person may incur on account of activities if such person which at the time taken were known or believed by him or her to be clearly in conflict with the best interest of the Association. The Association shall also indemnify each Director and Indemnified Officer for his or her reasonable costs, expenses and attorneys' fees incurred in connection with the enforcement of the rights to indemnification granted herein, if it is determined in accordance with Section 4 of this Article VII that the Director or Indemnified Officer is entitled to indemnification hereunder.
The Board of Directors shall have the authority to adopt such resolutions pertaining to the implementation of this Section 3 of this Article as it may from time to time determine, and such resolutions shall be given full effect, even though they supplement, amplify or go beyond the provisions of this Section 3 of this Article, provided and to the extent such resolution does not violate any provision of the Act or the Articles of Incorporation. This Section 3 shall be construed in a manner to fully affect the purpose and intent of the resolution of the Board of Directors approving and adopting this provision.
4. Determination. Any indemnification under Section 3 of this Article shall be paid by the Association in a specific case only after a determination that the Director or Indemnified Officer has met the standard of conduct set forth in Section 3 of this Article. Such determination shall be made:
a by the Board of Directors by a majority vote of a quorum consisting of the members thereof not at the time parties to the Proceeding;
b by special legal counsel (i) selected by the Board of Directors or a committee thereof in the manner prescribed in Section 4(a).
The Board of Directors shall take all such action as may be necessary and appropriate to enable the Association to pay the indemnification required by this Article VII.
5. Advances for Expenses. The Expenses incurred by a Director or an Indemnified Officer in defending a Proceeding may be paid by the Association in advance of the final disposition of such Proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the Director or Indemnified Officer to repay such amount, unless it shall ultimately be determined that such person is entitled to be indemnified by the Association against such expenses. Subject to receipt of such undertaking, the Association shall make reasonable periodic advances for Expenses pursuant to this Section 5, unless the Board of Directors shall determine, in the manner provided in Section 4 of this Article and based on the facts then known that indemnification under this Article is or will be precluded.
6. Reliance and Consideration. Any Director or Indemnified Officer who at any time after the adoption of this Article serves or has served in any of the aforesaid capacities for or on behalf of the Association shall be deemed to be doing or to have done so in reliance upon, and as consideration for, the right of indemnification provided herein. Such right, however, shall not be exclusive of any other rights to which such person may be entitled apart from the provisions of this Article. No amendment, modification or repeal of this Article shall adversely affect the right of any Director or Indemnified Officer to indemnification hereunder with respect to any activities occurring prior to the time of such amendment, modification or repeal.
7. Insurance. The Association may purchase and maintain insurance on behalf of its directors, officers, employees and agents and those persons who were or are serving at the request of the Association in any capacity with another corporation ( whether a business or nonprofit corporation) limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against or incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the Association would have the poower to indemnify such person against such liability under the provisions of this Article or otherwise. Any full or partial payment made by an insurance company under any insurance policy covering any director, officer, employee, agent or other person identified above, made to or on behalf of a person entitled to indemnification under this article shall relieve the Association of its liability for indemnification provided for in this Article or otherwise to the extent of such payment, and no insurer shall have the right of subrogation against the Association with respect to such payment.
8. Savings Clause. If this article or any portion hereof shall be invalidated on any ground by any court or agency or competent jurisdiction, then the Association shall nevertheless indemnify each person indemnified hereunder to the fullest extent permitted by the portion of this Article that is not invalidated and also to the fullest extent permitted or required by applicable law.
The foregoing was adopted as the Bylaws of the Linden Ridge Property Owners Association Inc, a nonprofit corporation under the laws of the State of North Carolina at the first meeting of the Board of Directors.
