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BYLAWS OF THE EAST KAUAI WATER USERS' COOPERATIVE

A Hawaii Agricultural Cooperative (HRS Chapter 421)

 

TABLE OF CONTENTS

ARTICLE 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

9.01. Indemnification by Corporation.

A. For the purposes of this Section 9.01, "agent" means any person who is or was a director, officer, employee, or other agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" includes, without limitation, attorneys' fees, any expenses of a completed action or proceeding, and any expenses of establishing a right to indemnification under subsection D or E of this Section 9.01.

B. Subject to any limitations contained in HRS Chapter 421 and in the Hawaii Nonprofit Corporation Act, the Corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was an agent of the Corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation or that the person had reasonable cause to believe that the person's conduct was unlawful.

C. The 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, pending or completed action by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was an agent of the Corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith, in a manner such person believed to be in or not opposed to the best interests of the Corporation. No indemnification shall be made under this subsection C in respect of any claim, issue or matter as to which a Director or Officer shall have been adjudged to be liable for gross negligence or willful misconduct, or as to which any other person acting on behalf of the Corporation shall have been adjudged to be liable for negligence or misconduct, in the performance of the person's duty to the Corporation, unless and only to the extent that the court in which the action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses which the court shall deem proper.

D. To the extent that an agent of the Corporation has been successful on the merits or otherwise in defense of any proceeding referred to in subsection B or C above, or in defense of any claim, issue or matter therein, the agent shall be indemnified by the Corporation against expenses actually and reasonably incurred by the agent in connection therewith.

E. Except as provided in subsection D above, any indemnification under this Section 9.01 shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in subsection B or C. The determination shall be made:

(1) By the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to the proceeding; or

(2) If a quorum is not obtainable, by independent legal counsel in a written opinion; or

(3) By the court in which the proceeding is or was pending upon application made by the Corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney or other person is opposed by the Corporation.


F. No indemnification or advance shall be made under this Section 9.01, except as provided in subsection D or subsection E(2) above, in any circumstance where it appears that:

(1) It would be inconsistent with a provision of the Articles, the Bylaws or an agreement in effect at the time of the occurrence of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

(2) It would be inconsistent with any condition expressly imposed by a court in approving a settlement.


9.02. Advancing Expenses. The Corporation may advance to each agent the expenses actually incurred (and for which invoices or proof of payment have been submitted) in defending any proceeding referred to in Section 9.01 of these Bylaws prior to the final disposition of such proceeding upon receipt of any undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in Section 9.01 of these Bylaws.


9.03. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any agent of the Corporation against any liability asserted against or incurred by the agent in such a capacity or arising out of the agent's status as such, whether or not the corporation would have the power to indemnify the agent against such liability under the provisions of the section.

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