Variety Club Tent No. 6 Charities, Inc. - Page 7

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               reason of being or having been such trustee, director,                 
               officer or employee, provided a determination is made by the           
               trustees in the manner set forth in Paragraph (A) of this              
               Section or by a majority of the voting members present at a            
               meeting held for such purpose if a quorum is present (a)               
               that such trustee, director, officer or employee was not,              
               and has not been adjudicated to have been, negligent or                
               guilty of misconduct in the performance of his duty to the             
               corporation of which he is a trustee, director, officer or             
               employee (b) that he acted in good faith in what he                    
               reasonably believed to be the best interest of such                    
               corporation, and (c) that, in any matter, the subject of a             
               criminal action, suit or proceeding, he had no reasonable              
               cause to believe that his conduct was unlawful.                        
                    (C)  Such indemnification shall not be deemed exclusive           
               of any other rights to which such trustee, director, officer           
               or employee may be entitled under the articles, the                    
               regulations, any agreement any insurance purchased by the              
               Corporation, vote of members or otherwise.                             
               By letter dated February 18, 1971, respondent ruled that               
          petitioner was exempt from Federal income tax under section                 
          501(c)(3) and that donors may deduct contributions made to                  
          petitioner.                                                                 
               Petitioner’s articles of incorporation authorize its                   
          trustees to adopt a code of regulations.  The trustees promptly             
          did so.  Petitioner’s code of regulations creates two classes of            
          members:  Charter members and associate members (individuals or             
          organizations chosen by the board of trustees).  The Club is the            
          sole charter member of petitioner.3  The Club elects petitioner’s           

               3    Petitioner’s code of regulations draws careful                    
          distinctions between the Club and petitioner; it provides that              
          the Club “shall be the only member in the Corporation                       
          [petitioner] entitled to vote”, it requires that petitioner’s               
          trustees “must be members in good standing” of the Club, and it             
          requires that “Each officer [of petitioner] must be a member” of            
                                                             (continued...)           




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