(1)    Definitions. In this section:

      (a)    “Official capacity” means any of the following:

         1.    A person‘s capacity as an officer, employee, or agent of a cooperative or predecessor cooperative.

         2.    A person’s capacity as a member of a committee of a cooperative under s. 193.445 or 193.451 (1) or of a committee of a predecessor cooperative.

         3.    With respect to a director, chief executive officer, member, or employee of a cooperative who, at the request of the cooperative, serves as a governor, director, manager, officer, member, partner, trustee, employee, or agent of another organization or employee benefit plan, that person’s capacity as a governor, director, manager, officer, member, partner, trustee, employee, or agent, as applicable, of the other organization or employee benefit plan.

         4.    With respect to a person who was a director, chief executive officer, member, or employee of a predecessor cooperative and who, at the request of the predecessor cooperative, served as a governor, director, manager, officer, member, partner, trustee, employee, or agent of another organization or employee benefit plan, that person’s capacity as a governor, director, manager, officer, member, partner, trustee, employee, or agent, as applicable, of the other organization or employee benefit plan.

      (b)    “Potential litigant” means a person made or threatened to be made a party to a proceeding by reason of the person’s former or present official capacity.

      (c)    “Predecessor cooperative” means a domestic or foreign cooperative that was the predecessor of a cooperative in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

      (d)    “Proceeding” means a threatened, pending, or completed civil, criminal, administrative, arbitration, or investigative proceeding, including a proceeding by or in the right of the cooperative.

      (e)    “Special legal counsel” means counsel who has not represented any of the following:

         1.    The cooperative or an affiliate.

         2.    The director, manager, member of a committee under s. 193.445 or 193.451 (1), or employee whose indemnification is in issue.

   (2)   Indemnification.

      (a)    Subject to sub. (4), a cooperative shall indemnify a potential litigant against judgments, penalties, and fines applicable to a proceeding, against excise taxes assessed against the person with respect to an employee benefit plan, and against settlements and reasonable expenses, including attorney fees and disbursements, incurred by the potential litigant in connection with the proceeding, if, with respect to the acts or omissions of the potential litigant complained of in the proceeding, all of the following apply:

         1.    The potential litigant has not been indemnified against the same amounts by another person.

         2.    The potential litigant acted in good faith.

         3.    The potential litigant did not receive an improper personal benefit or commit an act for which liability cannot be eliminated or limited under s. 193.465 (2).

         4.    In the case of a criminal proceeding, the potential litigant had no reasonable cause to believe the acts or omissions were unlawful.

         5.    In the case of acts or omissions committed in an official capacity, as defined in sub. (1) (a) 1. or 2., the potential litigant reasonably believed that the acts or omissions were in the best interests of the cooperative or predecessor cooperative, as applicable, and, in the case of acts or omissions committed in an official capacity, as defined in sub. (1) (a) 3. or 4., the potential litigant reasonably believed that the conduct was not opposed to the best interests of the cooperative or predecessor cooperative, as applicable. If the acts or omissions relate to conduct as a director, officer, trustee, employee, or agent of an employee benefit plan, the conduct is not considered to be opposed to the best interests of the cooperative or predecessor cooperative if the potential litigant reasonably believed that the conduct was in the best interests of the participants or beneficiaries of the employee benefit plan.

      (b)    The termination of a proceeding by judgment, order, settlement, or conviction or upon a plea of no contest or its equivalent does not, of itself, establish that the potential litigant did not meet the applicable criteria under par. (a).

   (3)   Advances. Subject to sub. (4), a potential litigant is entitled, upon written request to the cooperative, to payment or reimbursement by the cooperative of reasonable expenses, including attorney fees and disbursements, incurred by the potential litigant in advance of the final disposition of the proceeding if the potential litigant delivers to the cooperative a written statement that the potential litigant believes in good faith that the applicable criteria for indemnification under sub. (2) (a) have been satisfied and a written undertaking by the potential litigant to repay all amounts so paid or reimbursed by the cooperative if a court determines under sub. (6) (c) that the potential litigant is ineligible for indemnification. The written undertaking is an unlimited general obligation of the potential litigant but need not be secured, and the cooperative shall accept the written undertaking without reference to the potential litigant’s financial ability to make the repayment.

   (4)   Prohibition, conditions, and limitations on indemnification or advances. The articles or bylaws may prohibit indemnification or advances of expenses otherwise required by subs. (2) and (3). The articles or bylaws may impose limitations on indemnification or advances of expenses or conditions on indemnification or advances of expenses in addition to the conditions contained in subs. (2) and (3), if the limitations or conditions apply equally to all persons or to all persons within a given class. A prohibition, limitation, or condition contained in the articles or bylaws under this subsection does not apply to any person seeking indemnification or advancement of expenses under sub. (2) or (3) with respect to any acts or omissions of the person committed before the effective date of the provision in the articles or the date of adoption of the provision in the bylaws, as applicable, establishing the prohibition, limitation, or condition.

   (5)   Reimbursement to witnesses. This section does not require, or limit the ability of, a cooperative to reimburse expenses, including attorney fees and disbursements, incurred by a person in connection with an appearance as a witness in a proceeding at a time when the person is not a potential litigant.

   (6)   Determination of eligibility.

         1.    By the board, except as otherwise provided in this paragraph. The directors who are, at the time, parties to the proceeding may not vote on the question of a determination under this subdivision and may not be counted in determining the presence of a quorum at a meeting at which such a question is voted upon.

         2.    If a quorum under subd. 1. cannot be obtained because of the number of directors that are parties to the proceeding and except as otherwise provided in this paragraph, by a majority of a committee under s. 193.451 (1) that consists of 2 or more directors not at the time parties to the proceeding and that is duly designated to act in the matter by a majority of all directors, including those who are parties.

         3.    If a determination is not made under subd. 1. or 2. and except as otherwise provided in this paragraph, by special legal counsel, selected either by the board or a committee under s. 193.451 (1). If selected by the board, the vote and determination of the presence of a quorum shall be made as described in subd. 1. If selected by a committee, the committee shall be designated to act and shall vote in the manner described in subd. 2.

         4.    Except as otherwise provided under this paragraph, if a determination is not made under subd. 1. or 2. and if a quorum of the board cannot be obtained and a committee cannot be established as required under subd. 3., by special legal counsel, selected by a majority of all directors, including directors who are parties to the proceeding.

         5.    If a determination is not made under subds. 1. to 4., by the affirmative vote of the members. The membership interests held by parties to the proceeding may not be counted in determining the presence of a quorum at a meeting at which the question of a determination under this subdivision is voted upon and parties holding such membership interests may not vote on the determination.

      (b)    Except as provided in par. (c), with respect to a person who is not, and was not at the time of the acts or omissions complained of in the proceedings, a director, chief executive officer, or person possessing, directly or indirectly, the power to direct or cause the direction of the management or policies of the cooperative, the determination whether indemnification of the person is required under sub. (2) and whether the payment or reimbursement of expenses is required under sub. (3) shall be made by an annually appointed committee under s. 193.451 (1), having at least one member who is a director. Any such committee shall report at least annually to the board concerning its actions.

      (c)    Within 60 days after the termination of the applicable proceeding or the receipt of a written request for indemnification by the cooperative, whichever occurs earlier, a person seeking indemnification under sub. (2) or payment or reimbursement of expenses under sub. (3) may petition the circuit court for a determination of the person’s eligibility for indemnification, payment, or reimbursement, if a determination is made under par. (a) or (b) that the person is ineligible, or if no determination is made under par. (a) or (b). The court shall order the cooperative to indemnify the person if indemnification is required under sub. (2) and, if applicable, shall order the cooperative to pay or reimburse the person’s expenses if the payment or reimbursement is required under sub. (3). In addition, if the person is a director or officer of the cooperative, the court shall order the cooperative to indemnify the person if, in view of all the relevant circumstances, the person is fairly and reasonably entitled to indemnification, regardless of whether indemnification is required under sub. (2). In a proceeding under this paragraph, the person seeking indemnification, payment, or reimbursement has the burden of establishing that indemnification is required or that the person is entitled to payment or reimbursement of expenses.

   (7m)   Expenses of obtaining court-ordered indemnification. If the court, in a proceeding under sub. (6) (c), determines that the cooperative unreasonably refused a director’s or officer’s request for indemnification under sub. (2), the court shall order the cooperative to pay the officer’s or director’s reasonable expenses incurred to obtain the court-ordered indemnification.

   (9)   Insurance. A cooperative may purchase and maintain insurance on behalf of a person in that person’s official capacity against any liability asserted against and incurred by the person in or arising from that capacity, whether or not the cooperative would be required to indemnify the person against the liability under sub. (2).

   (10)   Disclosure. A cooperative that indemnifies or advances expenses to a person under sub. (2) or (3) shall report to the members in writing the amount of the indemnification or advance and to whom and on whose behalf it was paid not later than the date of the first members’ meeting occurring after the payment.

   (11)   Indemnification of other persons. This section does not limit the power of a cooperative to indemnify persons who do not act in an official capacity.