(a) The officers and members of the supreme governing body or any subordinate body of a society shall not be personally liable for any benefits provided by a society.
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Terms Used In Tennessee Code 56-25-203

  • Conviction: A judgement of guilt against a criminal defendant.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Person: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
  • Plea: In a criminal case, the defendant's statement pleading "guilty" or "not guilty" in answer to the charges, a declaration made in open court.
  • Quorum: The number of legislators that must be present to do business.
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
  • Society: means fraternal benefit society, unless otherwise indicated. See Tennessee Code 56-25-104
(b)

(1) Any person may be indemnified and reimbursed by any society for expenses reasonably incurred by, and liabilities imposed upon, the person in connection with or arising out of any action, suit or proceeding, whether civil, criminal, administrative or investigative, or threat thereof, in which the person may be involved by reason of the fact that the person is or was a director, officer, employee or agent of the society or of any firm, corporation or organization that the person served in any capacity at the request of the society.
(2) A person shall not be so indemnified or reimbursed:

(A) In relation to any matter in the action, suit or proceeding as to which the person is finally adjudged to be or have been guilty of breach of a duty as a director, officer, employee or agent of the society; or
(B) In relation to any matter in the action, suit or proceeding, or threat thereof, which has been made the subject of a compromise settlement;

unless, in either such case, the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that the conduct was unlawful.

(3) The determination whether the conduct of the person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in subdivision (b)(2)(A) or (b)(2)(B) may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to the action, suit or proceeding or by a court of competent jurisdiction.
(4) The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no contest, as to the person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement.
(5) The foregoing right of indemnification and reimbursement shall not be exclusive of other rights to which the person may be entitled as a matter of law and shall inure to the benefit of the person’s heirs, executors and administrators.
(c) A society has the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the society, or who is or was serving at the request of the society as a director, officer, employee or agent of any other firm, corporation or organization against any liability asserted against the person and incurred by the person in any such capacity or arising out of the person’s status as such, whether or not the society would have the power to indemnify the person against the liability under this section.
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