Page 35 - Onboarding May 2017

x Dishonest acts – Maine.

x Limits on Liability in Articles of Incorporation - 43 states, including Delaware,
allow the corporation’s articles of incorporation to limit director liability for
breaching the duty of care. Generally, the articles provide that a director will not
be liable for monetary damages unless the director breaches the standard of
conduct and (1) such breach constituted willful misconduct or wanton or reckless
disregard for the best interests of the corporation and its stockholders; (2) the
director's personal financial interest is in conflict with the financial interest of the
corporation or its stockholders; (3) the director derives an improper personal
benefit; (4) the act or omission is known by the director to be illegal; or (5) the act
results in an unlawful distribution to stockholders.

x Article XI of the Concept Co-op’s Certificate of Incorporation, limiting the
liability of its directors, is attached as Appendix A.

x Indemnification

x To attract qualified individuals to serve as directors, it may be necessary for a
corporation to offer financial protection from the cost of defending lawsuits
and liabilities arising from actions taken by the board of directors.
Corporations therefore typically provide for indemnification by the
corporation for expenses and liabilities incurred by its directors in connection
with lawsuits.

x Indemnification is customarily provided through indemnification agreements
or articles of incorporation or bylaw provisions.

x Generally, states have enacted statutes that authorize a corporation to
indemnify its directors, officers, employees and agents against costs and
liabilities incurred in connection with legal proceedings arising from their
services on behalf of the corporation.

x Indemnification is usually mandatory when the indemnified person
prevails in the proceedings.

x Statutes generally do not permit indemnification of liabilities incurred in
suits by or on behalf of the corporation.

x Most state statutes require that the indemnified person must meet a certain
standard of care to be indemnified. Generally, to authorize
indemnification, the independent directors must first determine that the
director acted in good faith and in a manner the director honestly believed
to be in the best interests of the corporation

x Indemnification statutes generally allow the corporation to advance the
costs of legal proceedings as they are incurred by an indemnified party
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