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Society > By-Laws > Title 6

THE CLAN KEITH SOCIETY USA, INC. BYLAWS

TITLE 6: CODE PROVISIONS INCORPORATED

6.1. Indemnification.

A. Authority to Indemnify. Except as otherwise provided in this section, the corporation may indemnify an individual who is a party to a proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal) because he or she is or was a director against liability to pay a judgment, settlement, penalty, fine (including the obligation to pay an excise tax assessed with respect to an employee benefit plan), or reasonable expenses, including counsel fees, incurred with respect to the proceeding if:

1. Such individual conducted himself or herself in good faith; and
2. Such individual reasonable believed:

   (A) In the case of conduct in his or her official capacity as director of the corporation, that such conduct was in the best interests of the corporation;
   (B) In all other cases, that such conduct was at least not opposed to the best interests of the corporation; and
   (C) In the case of any criminal proceeding, that the individual had no reasonable cause to believe such conduct was unlawful.

A director's conduct with respect to an employee benefit plan for a purpose he or she believed in good faith to be in the interests if the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subparagraphs (1) and (2) of this paragraph A. Further, the termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section. The corporation may not indemnify a director under this section in connection with a proceeding by or in the right of the corporation, except for reasonable expenses, including counsel fees, incurred in connection with the proceeding if it is determined that the director has meet the relevant standard of conduct under this section, or in connection with any other proceeding with respect to conduct for which the director was adjudged liable on the basis that a personal benefit was improperly received by him or her, whether or not involving action in his or her official capacity as a director of the corporation.

B. Mandatory Indemnification. The corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal) to which the director was a party because he or she was a director of the corporation against the reasonable expenses, including counsel fees, incurred by the director in connection with the proceeding.

C. Advance for Expenses. Before the final deposition of a proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), the corporation may advance funds to pay for or reimburse the reasonable expenses, including counsel fees, incurred by a director who is a party to that proceeding because he or she is a director if he or she delivers to the corporation:

1. A written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in paragraph A of this Section 6.1 (and in O.C.G.A. § 14-3-851), or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of incorporation (as authorized by O.C.G.A. § 14-3-202(b)(4); and
2. His or her written understanding to repay any funds advanced if it is ultimately determined that the director is not entitled to indemnification under the provisions of Part 5 of Article 8 of the Georgia Business Corporation Code or under these bylaws. This understanding must be an unlimited general obligation of the director but need not be secured and may be accepted by the corporation without reference to the financial ability of the director to make repayment.
   Authorizations under this section shall be made by the board of directors: (a) where there are two or more disinterested directors, by a majority vote of all of the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; or (b) when there are fewer than two disinterested directors, then by the affirmative vote of a majority of directors present, in the presence of a quorum, unless the vote of a greater number of directors is required for action by the board (in accordance with O.C.G.A. § 14-3-824(c)) and in which authorization directors who do not qualify as disinterested directors may participate.

D. Court-Ordered Indemnification or Advance for Expenses. A director who is a party to a proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), because he or she is a director may apply for indemnification or advance for expenses (including counsel fees) to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of the application and after giving any notice it considers necessary, the court shall order indemnification or advance for expenses if it determines:

1. that the director is entitled to indemnification under this Section 6.1, or
2. in view of all of the relevant circumstances, that it is fair and reasonable to indemnify or advance expenses to the director, even if the director has not met the relevant standard of conduct in paragraph A of this Section 6.1, or failed to comply with the procedure in paragraph C of this Section 6.1, or was adjudged liable in a proceeding by or in the right of the corporation, except for reasonable expenses; including counsel fees, incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under this section, or in connection with any other proceeding with respect to conduct for which the director was adjudged liable on the basis that a personal benefit was improperly received by him or her, whether or not involving action in his or her official capacity as a director of the corporation.
   If the court determines that the director is entitled to indemnification or advance for expenses, it may also order the corporation to pay the director's reasonable expenses, including counsel fees, to obtain court ordered indemnification or advance for expenses.

E. Procedure for Determination. The Corporation may not indemnify a director under Paragraph A of this Section 6.1 unless authorized under the terms of Paragraph A of this Section 6.1, and a determination has been made for a specific proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), that indemnification of the director is permissible in the circumstances because the director has met the relevant standard of conduct set forth in Paragraph A of this Section 6.1. The determination shall be made:

1. If there were two or more disinterested directors, by the board of directors by a majority vote of all of the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote);
2. By special legal counsel selected in the manner described in paragraph (1) of this subparagraph or, if there are fewer than two disinterested directors selected by the board of directors (in which selection directors who do not qualify as disinterested directors may participate); or
3. By the members, but a director who at the time does not qualify as a disinterested director may not vote on the determination.
   Authorization of indemnification or of an obligation to indemnify and the evaluation as to the reasonableness of expenses, including counsel fees, shall be made in the same manner as the determination that indemnification is permissible, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, the authorization of indemnification and the evaluation as to the reasonableness of expenses shall be made by those directors who could select special legal counsel (when there are fewer than two disinterested directors) under subparagraph (2) of this section.

F. Authorization of Indemnification Exceeding Statutory Levels. This section authorizes the corporation to indemnify or obligate itself to indemnify a director made a party to a proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), including a proceeding brought by or in the right of the corporation, without regard to the limitations contained in Part 5 of Article 8 of the Georgia Nonprofit corporation Code, or of other provision of this Section 6.1, but the shares owned or voted under the control of a director who at the time does not qualify as a disinterested director with respect to any existing or threatened proceeding that would be covered by the authorization may not be voted with respect to the authorization. The corporation shall not indemnify a director under this section for any liability incurred in a proceeding in which the director is adjudged liable to the corporation or is subjected to injunctive relief in favor of the corporation for:

1. any appropriation, in violation of the director's duties, of any business opportunity of the corporation,
2. acts or omissions which involve intentional misconduct or a knowing violation of law,
3. the types of liability respecting improper corporate distributions under O.C.G.A. § 14-3-831, or
4. any transaction from which the director received an improper personal benefit.

Before the corporation may advance or reimburse expenses of a director prior to the final disposition of a proceeding, as approved or authorized under this section, the director is to furnish to the corporation a written affirmation of his or her good faith belief that his or her conduct does not constitute behavior described in the preceding sentence of the section and furnishes to the corporation a written undertaking, executed personally or on his or her behalf, to repay any funds advanced if it is ultimately determined that the director is not entitled to indemnification under this section.

G. Indemnification or Advance of Expenses for Officer of Corporation; Indemnification or Advance of Expenses for Employees and Agents.

1. The corporation may indemnify and advance expenses under this Section 6.1 to an officer of the corporation who is a party to a proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), because he or she is an officer of the corporation to the same extent as a director, as provided in the Article. If an officer of the corporation is not a director, or although the officer is also a director, because the sole basis on which he or she is made a party to the proceeding is an act or omission solely as an officer, the corporation may indemnify or advance expenses to such further extent permitted by the laws of Georgia, except for liability arising out of conduct that constitutes:

   (a) appropriation, in violation of his or her duties as an officer, of any business opportunity of the corporation,

   (b) acts or omissions which involve intentional misconduct or a knowing violation of law,

   (c) the types of liability for improper corporate distributions (as specified in O.C.G.A. § 14-3-831), or

   (d) the receipt of an improper personal benefit.
   An officer of the corporation who is not a director is entitled to mandatory indemnification under paragraph B of this Section 6.1, may apply to a court for indemnification or advances for expenses under paragraph (D) of this Section 6.1 to the same extent to which a director may be entitled to indemnification for advances for expenses.

2. The corporation shall indemnify and advance expenses to an employee or agent of the corporation who is not a director to the fullest possible extent, consistent with public policy and to the fullest extent permitted by the laws of Georgia. The procedures for such indemnification or advance shall be consistent with those for directors or officers of the corporation.

H. Insurance. The corporation may purchase and maintain insurance on behalf of each individual who is a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, serves at the corporation's request as a director, office, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify or advance expenses to him or her against the same liability under this Article.

I. Prior Obligation to Indemnify or Advance Expenses. Pursuant to the provisions of O.C.G.A. § 14-3-858, the corporation is authorized to obligate itself in advance of the act or omission giving rise to a proceeding (whether threatened, pending or completed action, suit or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), to provide indemnification or advance funds to pay for or reimburse expenses of a director, officer, employee or agent to the fullest extent permitted by the laws of Georgia. The corporation has power to pay or reimburse a director or officer in connection with his or her appearance as a witness in a proceeding (whether threatened, pending or completed action, suit, or proceeding, and whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal), at a time when he or she is not a party. Further, except to the extent limited in Paragraph G of this Section 6.1, this Section 6.1 does not otherwise limit the corporation's power to indemnify, advance expenses to, or provide or maintain insurance on behalf of an employee or agent.

J. Definitions of Section.
As used in this Section 6.1, unless the context clearly requires a different meaning, the term:

1. "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.
2. "Director" or "officer" means an individual who is or who was a director or officer, respectively, of a corporation, or who, while a director or officer of the corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity. A director or officer is consider to be serving an employee benefit plan at the corporation's request if his or her duties to the corporation also impose duties on, or otherwise involve services by the director or officer to the plan or to participants in or beneficiaries of the plan. Further, unless the context otherwise requires, "director" or "officer" includes the estate or personal representative of a director or officer.
3. "Disinterested Director" means a director who at the time of a vote or other action by the board of directors of the corporation is not a party to the proceeding; or is an individual who is a party to a proceeding having a familial, financial, professional, or employment relationship with the director whose indemnification or advance for expenses is the subject of the decision being made with respect to the proceeding, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director's judgment when voting on the decision being made.
4. "Expenses" includes counsel fees.
5. "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.
6. "Official capacity" means when used with respect to a director, the office of director in the corporation, and when used with respect to an officer, as contemplated in paragraph (G) of this Section 6.1, the office in the corporation held by the officer. "Official capacity" does not include service for any other domestic or foreign corporation or any partnership, joint venture, trust, employee benefit plan, or other entity.
7. "Party" means an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding.
8. "Proceeding" means any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal.

6.2. Procedures Where Director has Conflicting Interest in Transaction. The provisions of Part 6 of Article 8 of the Code, relating to rules governing the procedures to be applied where a director has a conflicting interest in transaction involving the Corporation, is adopted by the Corporation by this reference as a bylaw of the Corporation.

6.3 Sales of Assets Outside Regular Course of Business. The provisions of Article 12 of the Code, relating to the sale of all, or substantially all of the assets of the Corporation outside the regular course of business, is adopted by the Corporation by this reference, as a bylaw of the Corporation.

6.4. Records to be Kept; Right of Inspection by Members. The provisions of Article 16 of the Code, relating to the records of the Corporation, and the right of members to inspect, copy or review the Corporation's records, is adopted by the Corporation by this reference, as a bylaw of the Corporation. The board or the membership may adopt any needful rules or regulation necessary to implement these provisions.