Sec. 3. (a) The officers and members of the supreme governing body or any subordinate body of a society are not personally liable for any benefits provided by a society.

(b) 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, limited liability company, corporation, or organization that the person served in any capacity at the request of the society. A person shall not be indemnified or reimbursed:

(1) in relation to any matter in such action, suit, or proceeding as to which the person is adjudged to be or has been guilty of breach of a duty as a director, officer, employee, or agent of the society; or

(2) in relation to any matter in an action, suit, proceeding, or threat that has been made the subject of a compromise settlement;

unless in either 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, had no reasonable cause to believe that this conduct was unlawful.

(c) The determination whether the conduct of such person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in subsection (b)(1) or (b)(2) 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. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest does 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.

(d) The right of indemnification and reimbursement provided in this section is not exclusive of other rights to which the person may be entitled as a matter of law and shall inure to the benefit of that person's heirs, executors, and administrators.

(e) A society may 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, limited liability company, 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, whether or not the society would have the power to indemnify the person against such liability under this section.

As added by P.L.262-1985, SEC.1. Amended by P.L.8-1993, SEC.435.