The board shall require the secretary, treasurer, attorney, conveyancer and every other officer, director, employee, or agent handling or having the custody or charge of money, securities, books or records belonging to the association, before entering upon his duties, to be bonded in adequate amount and with good and sufficient surety, which shall be a surety company authorized to transact business in this State, and such bonds shall be approved by the board. The board shall examine annually all the bonds and pass on their sufficiency, and, if insufficient, immediately require new or additional bonds. The failure of any person to furnish, or qualify for, such bond shall be ground for his summary removal by the board. The commissioner may at any time order the bond of any such person to be increased. In lieu of such individual bonds, the board may procure a blanket bond providing the same protection to the association. The association may pay the premiums on any and all such bonds. No bonds shall be deemed to comply with the requirements of this section unless such bond contains a provision that it shall not be cancelable for any cause unless notice of intention to cancel is filed in the Department of Banking at least 5 days before the day upon which cancellation shall take effect.

B. Indemnification of officers, directors and employees

Any person shall be indemnified or reimbursed by the association for reasonable expenses, including, but not limited to, attorney fees, actually incurred by him in connection with any action, suit or proceeding, instituted or threatened, judicial or administrative, civil or criminal, to which he is made a party by reason of his being or having been a director, officer or employee of an association; provided, however, that no person shall be so indemnified or reimbursed, nor shall he retain any advancement or allowance for indemnification which may have been made by the association in advance of final disposition in relation to such action, suit or proceeding in which, and to the extent that, he finally shall be adjudicated to have been guilty of a breach of good faith, to have been negligent in the performance of his duties or to have committed an action or failed to perform a duty for which there is a common law or statutory liability; and, provided further, that a person may, with the approval of the commissioner, be so indemnified or reimbursed for:

(1) Amounts paid in compromise or settlement of any action, suit or proceeding, including reasonable expenses incurred in connection therewith; or

(2) Reasonable expenses, including fines and penalties, incurred in connection with a criminal or civil action, suit or proceeding in which such person has been adjudicated guilty, negligent or liable, if it shall be determined by the board of directors and by the commissioner that such person was acting in good faith and in what he believed to be the best interests of the association and without knowledge that the action was illegal, and if such indemnification or reimbursement is approved at an annual or special meeting of the members or stockholders by a majority of the votes eligible to be cast. Amounts paid to the association, whether pursuant to judgment or settlement, by any person within the meaning of this section shall not be indemnified or reimbursed in any case.

L.1963, c. 144, s. 73. Amended by L.1970, c. 290, s. 2, eff. Dec. 14, 1970; L.1974, c. 137, s. 11, eff. Oct. 23, 1974.