N.D. Cent. Code § 10-19.1-91

10-19.1-91. Indemnification

1. For purposes of this section:

a. "Corporation" includes a domestic or foreign corporation that was the

predecessor of the corporation referred to in this section in a merger or other

transaction in which the predecessor's existence ceased upon consummation of

the transaction.

b. "Official capacity" means:

(1) With respect to a director, the position of director in a corporation;

(2) With respect to a person other than a director, the elective or appointive

office or position held by an officer, member of a committee of the board, or

the employment relationship undertaken by an employee of the corporation;

and

(3) With respect to a director, officer, or employee of the corporation who, while

a director, officer, or employee of the corporation, is or was serving at the

request of the corporation or whose duties in that position involve or

involved service as a governor, director, officer, manager, partner, trustee,

employee, or agent of another organization or employee benefit plan, the

position of that person as a governor, director, officer, manager, partner,

trustee, employee, or agent, as the case may be, of the other organization

or employee benefit plan.

c. "Proceeding" means a threatened, pending, or completed civil, criminal,

administrative, arbitration, or investigative proceeding, including a proceeding by

or in the right of the corporation.

d. "Special legal counsel" means counsel who has not in the preceding five years:

(1) Represented the corporation or a related organization in any capacity other

than special legal counsel; or

(2) Represented a director, officer, member of a committee of the board, or

employee whose indemnification is in issue.

2. Subject to subsection 5, a corporation shall indemnify a person made or threatened to

be made a party to a proceeding by reason of the former or present official capacity of

the person against judgments, penalties, fines including excise taxes assessed against

the person with respect to an employee benefit plan, settlements, and reasonable

expenses, including attorney's fees and disbursements, incurred by the person in

connection with the proceeding, if, with respect to the acts or omissions of the person

complained of in the proceeding, the person:

a. Has not been indemnified by another organization or employee benefit plan for

the same judgments, penalties, fines including excise taxes assessed against the

person with respect to an employee benefit plan, settlements, and reasonable

expenses, including attorney's fees and disbursements, incurred by the person in

connection with the proceeding with respect to the same acts or omissions;

b. Acted in good faith;

c. Received no improper personal benefit and section 10-19.1-51, if applicable, has

been satisfied;

d. In the case of a criminal proceeding, had no reasonable cause to believe the

conduct was unlawful; and

e. In the case of acts or omissions occurring in the official capacity described in

paragraph 1 or 2 of subdivision b of subsection 1, reasonably believed that the

conduct was in the best interests of the corporation, or in the case of acts or

omissions occurring in the official capacity described in paragraph 3 of

subdivision b of subsection 1, reasonably believed that the conduct was not

opposed to the best interests of the corporation. If the person's acts or omissions

complained of in the proceeding relate to conduct as a director, officer, trustee,

employee, or agent of an employee benefit plan, the conduct is not considered to

be opposed to the best interests of the corporation if the person reasonably

believed that the conduct was in the best interests of the participants or

beneficiaries of the employee benefit plan.

3. The termination of a proceeding by judgment, order, settlement, conviction, or upon a

plea of nolo contendere or an equivalent plea does not, of itself, establish that the
uct is not considered to

be opposed to the best interests of the corporation if the person reasonably

believed that the conduct was in the best interests of the participants or

beneficiaries of the employee benefit plan.

3. The termination of a proceeding by judgment, order, settlement, conviction, or upon a

plea of nolo contendere or an equivalent plea does not, of itself, establish that the

person did not meet the criteria set forth in subsection 2.

4. Subject to subsection 5, if a person is made or threatened to be made a party to a

proceeding, the person is entitled, upon written request to the corporation, to payment

or reimbursement by the corporation of reasonable expenses, including attorney's fees

and disbursements, incurred by the person in advance of the final disposition of the

proceeding:

a. Upon receipt by the corporation of a written affirmation by the person of a

good-faith belief that the criteria for indemnification set forth in subsection 2 have

been satisfied and a written undertaking by the person to repay all amounts so

paid or reimbursed by the corporation, if the ultimate determination is that the

criteria for indemnification have not been satisfied; and

b. After a determination that the facts then known to those making the determination

would not preclude indemnification under this section.

The written undertaking required by subdivision a is an unlimited general obligation of

the person making it, but need not be secured and shall be accepted without reference

to financial ability to make the repayment.

5. The articles or bylaws may prohibit indemnification or advances of expenses otherwise

required under this section or may impose conditions on indemnification or advances

of expenses in addition to the conditions contained in subsections 2, 3, and 4,

including monetary limits on indemnification or advances for expenses, if the

prohibitions or conditions apply equally to all persons or to all persons within a given

class. A prohibition or limit on indemnification or advances may not apply to or affect

the right of a person to indemnification or advances of expenses with respect to any

act or omission of the person occurring before the effective date of a provision in the

articles or the date of adoption of a provision in the bylaws establishing the prohibition

or limit on indemnification or advances.

6. This section does not require, or limit the ability of, a corporation to reimburse

expenses, including attorney's fees and disbursements, incurred by a person in

connection with an appearance as a witness in a proceeding at a time when the

person has not been made or threatened to be made a party to a proceeding.

7. All determinations whether indemnification of a person is required because the criteria

provided in subsection 2 have been satisfied and whether a person is entitled to

payment or reimbursement of expenses in advance of the final disposition of a

proceeding as provided in subsection 4 must be made:

a. By the board by a majority of a quorum, if the directors who are at the time parties

to the proceeding are not counted for determining either a majority or the

presence of a quorum;

b. If a quorum under subdivision a cannot be obtained, by a majority of a committee

of the board, consisting solely of two or more directors not at the time parties to

the proceeding, duly designated to act in the matter by a majority of the full board,

including directors who are parties;

c. If a determination is not made under subdivision a or b, by special legal counsel,

selected either by a majority of the board or a committee by vote pursuant to

subdivision a or b or, if the requisite quorum of the full board cannot be obtained

and the committee cannot be established, by a majority of the full board, including

directors who are parties;

d. If a determination is not made under subdivisions a, b, and c, by the affirmative
ion a or b, by special legal counsel,

selected either by a majority of the board or a committee by vote pursuant to

subdivision a or b or, if the requisite quorum of the full board cannot be obtained

and the committee cannot be established, by a majority of the full board, including

directors who are parties;

d. If a determination is not made under subdivisions a, b, and c, by the affirmative

vote of the shareholders required by section 10-19.1-74, other than the

shareholders who are a party to the proceeding; or

e. If an adverse determination is made under subdivisions a through d, or under

subsection 8, or if no determination is made under subdivisions a through d, or

under subsection 8, within sixty days after:

(1) The later to occur of the termination of a proceeding or a written request for

indemnification to the corporation; or

(2) A request for an advance of expenses, as the case may be, by a court in

this state, which may be the same court in which the proceeding involving

the person's liability took place, upon application of the person and any

notice the court requires.

The person seeking indemnification or payment or reimbursement of expenses

pursuant to this subdivision has the burden of establishing that the person is

entitled to indemnification or payment or reimbursement of expenses.

8. With respect to a person who is not, and who was not at the time of the acts or

omissions complained of in the proceedings, a director, officer, or person possessing,

directly or indirectly, the power to direct or cause the direction of the management or

policies of the corporation, the determination whether indemnification of this person is

required because the criteria set forth in subsection 2 have been satisfied and whether

this person is entitled to payment or reimbursement of expenses in advance of the

final disposition of a proceeding as provided in subsection 4 may be made by an

annually appointed committee of the board, having at least one member who is a

director. The committee shall report at least annually to the board concerning its

actions.

9. A corporation may purchase and maintain insurance on behalf of a person in that

person's official capacity against any liability asserted against and incurred by the

person in or arising from that capacity, whether or not the corporation would have been

required to indemnify the person against the liability under the provisions of this

section.

10. A corporation that indemnifies or advances expenses to a person in accordance with

this section in connection with a proceeding by or on behalf of the corporation shall

report to the shareholders in writing the amount of the indemnification or advance and

to whom and on whose behalf the indemnification or advance was paid not later than

the next meeting of shareholders.

11. This section does not limit the power of the corporation to indemnify persons other

than a director, officer, employee, or member of a committee of the board by contract

or otherwise.