1. Except as provided in subsection 4, a cooperative may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if all of the following apply:
a. The individual acted in good faith.
b. The individual reasonably believed either of the following:
(1) In the case of conduct in the individual's official capacity with the cooperative, that the individual's conduct was in the cooperative's best interests.
(2) In all other cases, that the individual's conduct was at least not opposed to the cooperative's best interests.
c. In the case of any criminal proceeding, the individual had no reasonable cause to believe the individual's conduct was unlawful.
2. A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection 1, paragraph "b", subparagraph (2).
3. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.
4. A cooperative shall not indemnify a director under this section in either of the following circumstances:
a. In connection with a proceeding by or in the right of the cooperative in which the director was adjudged liable to the cooperative.
b. In connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in the director's official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.
5. Indemnification permitted under this section in connection with a proceeding by or in the right of the cooperative is limited to reasonable expenses incurred in connection with the proceeding.
98 Acts, ch 1152, §21, 69
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