1. The definitions in this subsection apply to this section.

2. (1) “Cooperative” includes a domestic or foreign cooperative that was the predecessor of the cooperative referred to in this section in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

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(2) “Official capacity” means:

(a) With respect to a director, the position of director in a cooperative;

(b) With respect to a person other than a director, the elective or appointive office or position held by the person, member of a committee of the board, the employment relationship undertaken by an employee of the cooperative, or the scope of the services provided by members who provide services to the cooperative; and

(c) With respect to a director, chief executive officer, member, or employee of the cooperative who, while a member, director, chief executive officer, or employee of the cooperative, is or was serving at the request of the cooperative or whose duties in that position involve or involved service as a director, manager, officer, member, partner, trustee, employee, or agent of another organization or employee benefit plan, the position of that person as a director, manager, officer, member, partner, trustee, employee, or agent, as the case may be, of the other organization or employee benefit plan.

(3) “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.

3. (1) Subject to the provisions of subsection 5 of this section, a cooperative may indemnify a person made or threatened to be made a party to a proceeding by reason of the former or present official capacity of the person against judgments, penalties, fines, including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorney fees and disbursements incurred by the person in connection with the proceeding, if, with respect to the acts or omissions of the person complained of in the proceeding, the person:

(a) Has not been indemnified, or if indemnified, then not fully indemnified by another organization or employee benefit plan for the same judgments, penalties, fines, including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorney fees and disbursements incurred by the person in connection with the proceeding with respect to the same acts or omissions;

(b) Acted in good faith;

(c) Received no improper personal benefit and the person has not committed an act for which liability cannot be eliminated or limited under subsection 2 of section 351.1078;

(d) In the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and

a. In the case of acts or omissions occurring in the official capacity described in paragraphs (a) and (b) of subdivision (2) of subsection 2^* of this section, reasonably believed that the conduct was in the best interests of the cooperative, or in the case of acts or omissions occurring in the official capacity described in paragraph (c) of subdivision (2) of subsection 2^* of this section, reasonably believed that the conduct was not opposed to the best interests of the cooperative. If the person’s acts or omissions complained of in the proceeding 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 if the person reasonably believed that the conduct was in the best interests of the participants or beneficiaries of the employee benefit plan; or

b. Was not at the time of the acts or omissions complained of in the proceeding 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.

(2) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent does not, of itself, establish that the person did not meet the criteria set forth in this section.

4. Subject to the provisions of subsection 5 of this section, if a person is made or threatened to be made a party to a proceeding, such person shall be entitled, upon written request to the board, to payment or reimbursement by the cooperative of reasonable expenses, including attorney fees and disbursements incurred by the person in advance of the final disposition of the proceeding, provided that:

(1) Upon receipt by the cooperative of a written affirmation by the person of a good faith belief that the criteria for indemnification set forth in subsection 3 of this section has been satisfied, such person makes a written undertaking, in a form acceptable to the cooperative, to repay all amounts paid or reimbursed by the cooperative, if it is ultimately determined that the criteria for indemnification have not been satisfied, which written undertaking is an unlimited general obligation of the person making it, but need not be secured and may be accepted without reference to financial ability to make payment; and

(2) Those making the determination determine that the facts then known would not preclude indemnification under subsection 3 of this section.

5. The articles or bylaws may prohibit indemnification or advances of expenses otherwise required by this section or may impose conditions on indemnification or advances of expenses in addition to the conditions contained in subsections 3 and 4 of this section, including, without limitation, monetary limits on indemnification or advances of expenses if the conditions apply equally to all persons or to all persons within a given class. A prohibition or limit on indemnification or advances of expenses shall not apply to or affect the right of a person to indemnification or advances of expenses with respect to any acts or omissions of the person occurring before the effective date of a provision in the articles or the date of adoption of a provision in the bylaws establishing the prohibition or limit on indemnification or advances of expenses.

6. This section shall 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 has not been made or threatened to be made a party to a proceeding.

7. Unless otherwise set forth in the articles or bylaws, all determinations whether indemnification of a person is required because the criteria set forth in subsection 4 of this section has been satisfied and whether a person is entitled to payment or reimbursement of expenses in advance of the final disposition of a proceeding as provided in subsection 3 of this section shall be made:

(1) By a majority of the board at a meeting where a quorum is present, provided that the directors who are, at the time, parties to the proceeding are not counted for determining either a majority or the presence of a quorum;

(2) If a quorum of the board under subdivision (1) of this subsection cannot be obtained, then by a majority of a committee of the board consisting solely of two or more directors who are not, at the time, parties to the proceeding, but who are duly designated to make such a determination by a majority of the board, which majority includes directors who are, at the time, parties to the proceeding;

(3) If a determination is not made under subdivisions (1) or (2) of this subsection, then by legal counsel selected either by a majority of the board in the manner set forth in subdivision (1) of this subsection, provided a quorum can be obtained, or by a committee by vote in the manner set forth in subdivision (2) of this subsection, provided a committee can be established by a majority of the board, including directors who are parties to the proceeding; or

(4) If a determination is not made under subdivisions (1) to (3) of this subsection inclusive, then by the affirmative vote of the members, but the membership interests held by parties to the proceeding shall not be counted in determining the presence of a quorum, and are not considered to be present and entitled to vote on the determination.

8. 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 person’s official capacity, whether or not the cooperative would have been required to indemnify the person against the liability under the provisions of this section.

9. Nothing in this section shall be construed to limit the power of the cooperative to indemnify persons other than a director, chief executive officer, member, employee, or member of a committee of the board by contract or otherwise.