(A) As used in this section:
(1) "action" means a threatened, pending, or completed court suit, proceeding, or action;
(2) "good faith" includes a reasonable belief that an act was in, or not opposed to, the best interest of a electric cooperative or employee benefit plan;
(3) "fine" includes excise taxes assessed on a person with respect to an employee benefit plan;
(4) "serving at the request of the cooperative" includes service by a trustee or director of a cooperative or an affiliated organization and includes service by him with respect to an employee benefit plan, its participants, or beneficiaries when he acted in good faith.
(B) A cooperative may indemnify a person who was or is a party to any action, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the cooperative), because he is or was a trustee, officer, employee, or agent of the cooperative, or is or was serving at the request of the cooperative as a trustee or director of another cooperative or affiliated organization, against expenses (including attorney's fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with the action if he acted in good faith and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of an action by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent does not create a presumption that the person did not act in good faith and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
A cooperative may indemnify a person who was or is a party to an action by or in the right of the cooperative to procure a judgment in its favor because he is or was a trustee or director of the cooperative or affiliated organization, or is or was serving at the request of the cooperative as a trustee or director of another cooperative or affiliated organization, against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of the action if he acted in good faith. Indemnification may be made in respect of any issue for which the person has been adjudged to be liable to the cooperative only to the extent that the officer presiding over the action determines upon application that, despite the adjudication of liability, the person is entitled to indemnity for expenses which the presiding officer considers proper.
(C) To the extent a trustee of a cooperative has been successful in defense of an action or in defense of an issue referred to in (B) and (C) of this section, he must be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith.
(D) An indemnification under (B) and (C) of this section, unless ordered by a court, must be made by the cooperative only as authorized in the specific case upon a determination that indemnification of the trustee is proper. The determination must be made (1) by the board of trustees by a majority vote of a quorum consisting of trustees who were not parties to the action, or (2) if a quorum is not obtainable, or, even if obtainable, a quorum of disinterested trustees so directs, by independent legal counsel in a written opinion, or (3) by the members of the cooperative.
(E) Expenses incurred by a trustee in defending a civil or criminal action may be paid by the cooperative in advance of the final disposition of the action upon receipt of an undertaking by or on behalf of the trustee to repay the amount if it is determined that he is not entitled to be indemnified by the cooperative. The expenses incurred by other officers or employees and agents may be paid upon terms and conditions the board of trustees considers appropriate.
(F) The indemnification and advancement of expenses provided by this section is not exclusive of other rights to which those seeking indemnification and advances of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested trustees, or of other action of the cooperative in his official capacity or in another capacity while holding office.
(G) A cooperative may purchase and maintain insurance on behalf of a person who is or was a trustee or director of the cooperative, or any affiliated organization or who was serving at the request of the cooperative as a trustee of another cooperative, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status, whether or not the cooperative has the power to indemnify him against the liability under this section.
(H) The indemnification and advancement of expenses authorized by this section, unless otherwise provided when authorized or ratified, continues as to a person who has ceased to be a trustee, director, officer or employer, or agent and inures to the benefit of his heirs.
HISTORY: 1988 Act No. 571.
Code Commissioner's Note
Pursuant to the direction to the Code Commissioner in 2004 Act No. 179, Section 9.(A), "rural electric cooperative" was changed to "electric cooperative" in paragraph (A)(2).