10-3634

10-3634. Dismissal

A. A derivative proceeding shall be dismissed by the court on motion by the
corporation on any legal grounds, including if one of the groups specified in subsections
B or F has determined in good faith after conducting a reasonable inquiry on which its
conclusions are based that the maintenance of the derivative proceeding is not in the
best interests of the corporation.

B. Unless a panel is appointed pursuant to subsection F, the determination in
subsection A shall be made by either:

1. A majority vote of independent directors present at a meeting of the board of
directors if the independent directors constitute a quorum.

2. A majority vote of a committee consisting of two or more independent directors
appointed by majority vote of independent directors present at a meeting of the board of
directors, whether or not such independent directors constitute a quorum.

C. None of the following shall by itself or collectively cause a director to be
considered not independent for purposes of this section:

1. The nomination or election of the director by persons who are defendants in the
derivative proceeding or against whom action is demanded.

2. The naming of the director as a defendant in the derivative proceeding or as a
person against whom action is demanded.

3. The approval by the director of the act being challenged in the derivative
proceeding or demand if the act resulted in no personal benefit to the director.

D. If a derivative proceeding is commenced after a determination has been made that
rejects a demand by the complainants, the complaint shall allege with particularity facts
that establish either:

1. That a majority of the board of directors did not consist of independent
directors at the time the determination was made.

2. That the requirements of subsection A have not been met.

E. If a majority of the board of directors does not consist of independent
directors at the time the determination is made, the corporation has the burden of
proving that the requirements of subsection A have been met. If a majority of the board
of directors consists of independent directors at the time the determination is made, the
plaintiff has the burden of proving by clear and convincing evidence that the
requirements of subsection A have not been met.

F. The court may appoint a panel of one or more independent persons on motion by
the corporation to determine whether the maintenance of the derivative proceeding is in
the best interests of the corporation. In that case, the plaintiff has the burden of
proving by clear and convincing evidence that the requirements of subsection A have not
been met. A person appointed by the court is not liable for a determination made
pursuant to this section.