§ 23-17-238 - Indemnification of directors, officers, employees, or agents -- Insurance.
23-17-238. Indemnification of directors, officers, employees, or agents -- Insurance.
(a) (1) A cooperative shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the cooperative, by reason of the fact that he or she is or was a director, officer, employee, or agent of the cooperative or is or was serving at the request of the cooperative as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against judgments, fines, expenses, including attorney's fees, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such an action, suit, or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the cooperative and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.
(2) The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interest of the cooperative and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
(b) A cooperative shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the cooperative to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee, or agent of the cooperative or is or was serving at the request of the cooperative as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorney's fees, actually and reasonably incurred by him or her in connection with the defense or settlement of such an action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the cooperative, except that no indemnification shall be made in respect of any claim, issue, or matter as to which the person shall have been adjudged to be liable to the cooperative, unless and only to the extent that the circuit court or the court in which the action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the circuit court or such other court shall deem proper.
(c) To the extent that a director, officer, employee, or agent of a cooperative has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue, or matter therein, he or she shall be indemnified against expenses, including attorney's fees, actually and reasonably incurred by him or her in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section, unless ordered by a court, shall be made by the cooperative only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such a determination shall be made:
(1) By the board of directors by a majority vote of a quorum consisting of directors who were not parties to such an action, suit, or proceeding;
(2) If such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or
(3) By the members.
(e) Expenses incurred by an officer or director in defending a civil or criminal action, suit, or proceeding may be paid by the cooperative in advance of final disposition of such an action, suit, or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the cooperative as authorized in this section. The expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by or granted pursuant to the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of members or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such an office.
(g) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall continue, unless otherwise provided when authorized or ratified, as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
(h) A cooperative shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the cooperative, or is or was serving at the request of the cooperative as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the cooperative would have the power to indemnify him or her against such liability under the provisions of this section.
(i) (1) For purposes of this section, references to:
(A) "The cooperative" shall include, in addition to the resulting cooperative, and constituent corporation, including any constituent of a constituent, absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee, or agent of the constituent corporation, or is or was serving at the request of the constituent corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, shall stand in the same position under the provisions of this section with respect to the resulting or surviving cooperative as he or she would have with respect to the constituent corporation if its separate existence had continued;
(B) "Other enterprises" shall include employee benefit plans;
(C) "Fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and
(D) "Serving at the request of the cooperative" shall include any service as a director, officer, employee, or agent of the cooperative which imposes duties on, or involves services by, the director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries.
(2) A person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the cooperative" as referred to in this section.