-33-
furtherance of Petitioner’s charitable purposes” and thus does
“not constitute any part of its ‘net’ earnings.”
We agree with respondent.
Unlike the situation as to the payment to Climaco, the
subject payment to Zerbini was made during the last of the years
in issue and was made on account of Zerbini’s services in a
criminal proceeding that had gone to indictment, at least against
petitioner, during the last of the years in issue. Thus, the
Zerbini payment differs from the Climaco payment in a critical
respect.
As we have supra noted in the Findings of Fact, petitioner’s
articles of incorporation provide that petitioner “shall”
indemnify a trustee or officer against expenses incurred “in
connection with defense of any pending or threatened action * * *
to which he is or may be made a party by reason of” the person
being a trustee or officer, but only if three listed conditions
have been satisfied, as follows: (1) The person was determined
not to have been negligent or guilty of misconduct toward
petitioner, (2) the person was determined to have acted in good
faith, and (3) in a criminal proceeding, the person was
determined to have had no reasonable cause to believe that the
person’s conduct was unlawful. These articles further provide
that either petitioner or its voting members (see supra note 3)
may so indemnify, or agree to indemnify, “provided a
determination is made by the trustees * * * or by a majority of
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