Chapter 2.20
INDEMNIFICATION
Sections:
2.20.010 Right to indemnification of directors and officers.
2.20.020 Qualification for indemnification – Standard of conduct.
2.20.030 Determination and authorization of indemnification.
2.20.040 Right of indemnitee to bring suit.
2.20.060 Advancement of expenses.
2.20.070 Indemnification of employees and agents of the corporation.
2.20.080 Deleted by Res. 2012-07.
2.20.090 Nonexclusivity of rights.
2.20.100 Insurance, contracts and funding.
2.20.010 Right to indemnification of directors and officers.
Subject to qualification and limitations of this chapter, each individual who was or is threatened to be made a named party to or is otherwise involved (including, without limitation, as a witness) in a proceeding, by reason of the fact that he or she is or was a director or officer of Cascade, shall be defended, indemnified and held harmless (hereinafter collectively referred to as “indemnification”) by Cascade, to the full extent permitted by applicable law as presently in effect and as hereafter amended, against all expense, liability and loss (including attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) actually and reasonably incurred or suffered by such individual in connection therewith, and such indemnification shall continue as to an individual who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors and administrators. Except as provided in CWAC 2.20.040 with respect to proceedings seeking to enforce rights to indemnification, Cascade shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized or ratified by the Board (“Board”) of Cascade under CWAC 2.20.030. [Res. 2012-07 § 20; Res. 2010-01 § 1].
2.20.020 Qualification for indemnification – Standard of conduct.
The indemnification provided under this chapter shall not apply unless:
A. The individual acted in good faith; and
B. The individual reasonably believed:
1. In the case of conduct in the individual’s official capacity with Cascade, that the individual’s conduct was in its best interests; and
2. In all other cases, that the individual’s conduct was at least not opposed to its best interests; and
C. In the case of any criminal proceeding, the individual had no reasonable cause to believe the individual’s conduct was unlawful.
A director’s or officer’s conduct with respect to an employee benefit plan for a purpose the director or officer reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (B)(2) of this section. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director or officer did not meet the standard of conduct described in this section.
Provided, however, the indemnification provided under this chapter shall not apply in the following circumstances: (1) in connection with a proceeding by or in the right of Cascade in which the director or officer was adjudged liable to Cascade; or (2) in connection with any other proceeding charging improper personal benefit to the director or officer, whether or not involving action in the director’s or officer’s official capacity, in which the director or officer was adjudged liable on the basis that personal benefit was improperly received by the director or officer. [Res. 2012-07 § 21; Res. 2010-01 § 2].
2.20.030 Determination and authorization of indemnification.
Cascade shall not indemnify a director or officer under this chapter unless a determination has been made that the director or officer has met the standard of conduct set forth in CWAC 2.20.020. The determination shall be made as follows:
A. By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding (a vote recorded in the meeting minutes is sufficient);
B. If a quorum cannot be obtained under subsection (A) of this section, by majority vote of a committee duly designated by the board of directors, in which designation directors who are parties may participate, consisting solely of two or more directors not at the time parties to the proceeding; or
C. By special legal counsel: (1) selected by the board of directors or its committee in the manner prescribed in subsection (A) or (B) of this section; or (2) if a quorum of the board of directors cannot be obtained under subsection (A) of this section and a committee cannot be designated under subsection (B) of this section, selected by majority vote of the full board of directors, in which selection directors who are parties may participate. [Res. 2010-01 § 3].
2.20.040 Right of indemnitee to bring suit.
If a claim for which indemnification is required under this chapter is not paid in full by Cascade within 60 days after a written claim has been received by Cascade, except in the case of a claim for expenses incurred in defending a proceeding in advance of its final disposition, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against Cascade to recover the unpaid amount of the claim and, to the extent successful in whole or in part, the indemnitee shall be entitled to be paid also the expense of prosecuting such claim. The indemnitee shall be presumed to be entitled to indemnification under this chapter upon submission of a written claim (and, in an action brought to enforce a claim for an advancement of expenses, where the required undertaking has been tendered to Cascade), and, thereafter, Cascade shall have the burden of proof to overcome the presumption that the indemnitee is not so entitled. [Res. 2010-01 § 4].
2.20.050 Rights reserved.
The board shall have the right to designate the counsel who shall defend any person or entity who may be entitled to indemnification, to approve any settlement, and to approve in advance any expense.
Except as may be provided in any applicable policy of insurance, Cascade’s attorney, or an attorney designated by Cascade’s attorney, shall, at the request and on behalf of any director or officer, investigate and defend a claim which is within the provisions of this chapter and, if such claim is determined a proper claim against such director or officer pursuant to CWAC 2.20.030, then the same shall be paid by Cascade; provided, that the following requirements are complied with:
A. Cascade’s attorney, or an attorney designated by Cascade’s attorney, shall represent such director or officer;
B. In the event of any incident or course of conduct giving rise to a claim for damage and/or litigation, the director or officer involved shall, as soon as practicable, give Cascade’s attorney written notice thereof, identifying the director or officer involved, all information known to the director or officer with respect to the date, time, place, and circumstances surrounding the incident or conduct, as well as the names and addresses of all persons allegedly injured or otherwise damaged thereby, and the names and addresses of all witnesses;
C. Upon receipt thereof, the director or officer shall forthwith deliver any demand, notice, summons or other process relating to any such incident or conduct to Cascade’s attorney, and shall cooperate with Cascade’s attorney or an attorney designated by Cascade’s attorney and, upon request, assist in making settlements of any suits and in enforcing any claim for any right of subrogation against any persons or organization that may be liable to Cascade because of any damage or claim of loss arising from said incident or course of conduct;
D. Such director or officer shall attend interviews, depositions, hearings and trials, and shall assist in securing and giving evidence and obtaining the attendance of witnesses; and
E. Such director or officer shall not accept nor voluntarily make any payment, assume any obligation, or incur any expense other than for first aid to others at the time of any incident or course of conduct giving rise to any such claim, loss, or damage.
In addition, if Cascade’s attorney determines that a claim against a director or officer does not come within the provisions of this chapter and a court of competent jurisdiction finds that such claim does come within the provisions of this chapter, then Cascade shall pay the claim and reasonable attorney’s fees; and if Cascade’s attorney determines that a claim against a director or officer does come within the provisions of this chapter and a court of competent jurisdiction finds that such claim does not come within the provisions of this chapter, then Cascade shall be reimbursed for any costs or expenses incurred in defending such claim. [Res. 2010-01 § 5].
2.20.060 Advancement of expenses.
Reasonable expenses incurred by a director or officer, who is involved in any capacity in a proceeding by reason of the position held in Cascade, shall be advanced by Cascade to the full extent allowed by applicable law, as presently in effect and as hereafter amended; provided, that the director or officer furnishes Cascade (A) a written affirmation of the director’s or officer’s good faith belief that the director or officer has met the standard of conduct described in CWAC 2.20.020 and (B) a written and binding obligation to repay all amounts advanced by Cascade if it shall be ultimately determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses.
Evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible under CWAC 2.20.030. [Res. 2010-01 § 6].
2.20.070 Indemnification of employees and agents of the corporation.
Cascade’s employees and agents may seek indemnification and advancement of expenses under the provisions of this chapter and to the same scope and effect as the directors and officers of Cascade; except that the advancement of expenses under CWAC 2.20.060 is at the discretion of the Board. [Res. 2012-07 § 22; Res. 2010-01 § 7].
2.20.080 Procedures exclusive.
Deleted by Res. 2012-07. [Res. 2010-01 § 8].
2.20.090 Nonexclusivity of rights.
The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this chapter shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Joint Municipal Utility Services Agreement, Bylaws, vote of Members, if any, or disinterested directors or otherwise. [Res. 2012-07 § 24; Res. 2010-01 § 9].
2.20.100 Insurance, contracts and funding.
Cascade may purchase and maintain insurance on behalf of any person who is a director, officer, employee, or agent of Cascade or is serving at the request or consent of Cascade as an officer, employee, or agent of another corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against any liability incurred by such person because of such person’s status, whether or not Cascade would have the power to indemnify such person against such liability under the provisions of this chapter. In addition, Cascade may enter into contracts with any director or officer of Cascade in furtherance of the provisions of this chapter and may create a trust fund, grant a security interest, or use other means (including without limitation a letter of credit) to ensure the payment of such amounts as may be necessary or desirable to effect the indemnification and advances contemplated in this chapter. [Res. 2010-01 § 10].
2.20.110 Opinion of counsel.
Notwithstanding any other provision of this chapter, no indemnification shall be provided to any person if in the opinion of counsel payment of such indemnification would exceed the authority granted by the legislature, would constitute a violation of Washington law or would cause Cascade to lose its tax exempt status, if any, from federal income taxation. [Res. 2012-07 § 25; Res. 2010-01 § 11].
2.20.120 Amendment or repeal.
No amendment to or repeal of this chapter shall adversely affect any right or protection of any director, officer, employee or agent for events occurring after the date of the adoption of the resolution codified in this chapter and prior to such amendment or repeal. [Res. 2010-01 § 12].