N.Y. Not-for-Profit Corporation Law § 725: Other provisions affecting indemnification of directors and officers

§ 725. Other provisions affecting indemnification of directors and

officers.

(a) All expenses incurred in defending a civil or criminal action or

proceeding which are advanced by the corporation under paragraph (c) of

section 723 (Payment of indemnification other than by court award) or

allowed by a court under paragraph (c) of section 724 (Indemnification

of directors and officers by a court) shall be repaid in case the person

receiving such advancement or allowance is ultimately found, under the

procedure set forth in this article, not to be entitled to

indemnification or, where indemnification is granted, to the extent the

expenses so advanced by the corporation or allowed by the court exceed

the indemnification to which he is entitled.

(b) No indemnification, advancement or allowance shall be made under

this article in any circumstance where it appears:

(1) That the indemnification would be inconsistent with the law of the

jurisdiction of incorporation of a foreign corporation which prohibits

or otherwise limits such indemnification; or

(2) That the indemnification would be inconsistent with a provision of

the certificate of incorporation, a by-law, a resolution of the board or

of the members, an agreement or other proper corporate action, in effect

at the time of the accrual of the alleged cause of action asserted in

the threatened or pending action or proceeding in which the expenses

were incurred or other amounts were paid, which prohibits or otherwise

limits indemnification; or

(3) If there has been a settlement approved by the court, that the

indemnification would be inconsistent with any condition with respect to

indemnification expressly imposed by the court in approving the

settlement.

(c) If any expenses or other amounts are paid by way of

indemnification, otherwise than by court order or action by the members,

the corporation shall prepare a statement specifying the persons paid,

the amounts paid, and the nature and status at the time of such payment

of the litigation or threatened litigation, and

(1) Not later than the next annual meeting of members, unless such

meeting is held within three months from the date of such payment, and,

in any event, within fifteen months of the date of such payment, shall

mail the statement to its members of record entitled at the time to vote

for the election of directors; or

(2) If the corporation has no members, shall include the statement in

the records of the corporation open to public inspection, or

(3) If the corporation is a cemetery corporation, as defined in

paragraph (a) of section 1502 (Definitions), which term, for the

purposes of this section, shall include a religious corporation having

members, (i) by including the statement required by this paragraph or

paragraph (d) of section 726 (Insurance for indemnification of directors

and officers), as the case may be in the records of the corporation open

to public inspection; (ii) by including the information required by the

statement in any notice published pursuant to the provisions of section

605 (Notice of meeting of members), except as otherwise provided by law;

(iii) by enclosing the statement with the notice of annual meeting if

such notice is in fact mailed to the members; and (iv) by raising the

issue for approval at the next annual meeting of the members.

(d) If any action with respect to indemnification of directors and

officers is taken by way of amendment of the by-laws, resolution of

directors, or by agreement, then the corporation shall, not later than

the next annual meeting of members, unless such meeting is held within

three months from the date of such action, and, in any event, within

fifteen months from the date of such action, mail to its members of

record at the time entitled to vote for the election of directors a

statement specifying the action taken. If the corporation has no

members, the statement shall be included in the records of the

corporation open to public inspection.

(e) The provisions of this article relating to indemnification of

directors and officers and insurance therefor shall apply to domestic

corporations and foreign corporations conducting activities in this

state, except as provided in section 1321 (Exemption from certain

provisions).