Section 1. General
The Cooperative shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the Cooperative, by reason of the fact that he is or was a trustee, officer, employee, agent, or volunteer as defined in Section 1702.01(N) of the Ohio Revised Code (“volunteer”), of the Cooperative, or is or was serving at the request of the Cooperative as a trustee, director, officer, employee, agent, or volunteer of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys’ fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding unless it is proved by clear and convincing evidence in a court of competent jurisdiction that such person’s actions or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to the Cooperative or undertaken with reckless disregard for the best interests of the Cooperative and that, with respect to any criminal action or proceeding, such person had reasonable cause to believe that such person’s conduct was unlawful; the termination of any such action, suit, or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, constitute such proof.
Section 2. Derivative Action Indemnification
Other than in connection with an action or suit in which the liability of a Trustee under Section 1705.55 of the Ohio Revised Code is the only liability asserted, the Cooperative shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Cooperative to procure a judgment in its favor by reason of the fact that he is or was a trustee, officer, employee, agent, or volunteer of the Cooperative, or is or was serving at the request of the Cooperative as a trustee, director, officer, employee, or agent of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust, or other enterprise against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit unless it is proved by clear and convincing evidence in a court of competent jurisdiction that such person’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Cooperative or undertaken with reckless disregard for the best interests of the Cooperative, except that the Cooperative shall indemnify such person to the extent the court in which the action or suit was brought determines upon application that, despite the proof but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses as the court shall deem proper.
Section 3. Determinations of Indemnification Rights
Any indemnification under Sections 1 and 2 hereof, unless ordered by a court, shall be made by the Cooperative only as authorized in the specific case upon a determination that indemnification of the trustee, director, officer, employee, agent, or volunteer is proper in the circumstances. Such determination shall be made:
- By a majority vote of a quorum consisting of trustees of the indemnifying corporation who were not and are not parties to or threatened with any such action, suit or proceeding, or
- If such a quorum is not obtainable (or even if obtainable) and a majority of disinterested trustees so directs, in a written opinion by independent legal counsel compensated by the Cooperative or
- By the members, or
- By the court in which such action, suit, or proceeding was brought.
Any determination made by the disinterested trustees under a) above in this Section or by independent legal counsel under b) above in this Section shall be promptly communicated to the person who threatened or brought the action or suit, by or in the right of the Cooperative under Section 2 hereof, and with 10 days after receipt of such notification, such person shall have the right to petition the court of common pleas or the court in which such action or suit was brought to review the reasonableness of such determination.
Section 4. Advance of Expenses
Unless the action, suit, or proceeding referred to in Sections 1 or 2 hereof is one in which the liability of a trustee under Section 1702.55 of the Ohio Revised Code is the only liability asserted, expenses, including attorneys’ fees, incurred by the trustee, director, officer, employee or volunteer of the Cooperative in defending any action, suit, or proceeding shall be paid by the Cooperative as they are incurred, in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the trustee, director, officer, employee, agent, or volunteer in which such person agrees both a) to repay such amount if it is proved by clear and convincing evidence in a court of competent jurisdiction that such person’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Cooperative or undertaken with reckless disregard for the best interest of the Cooperative and b) to cooperate with the Cooperative concerning the action, suit or proceeding.
Section 5. Nonexclusivity; Heirs
The indemnification provided by this Article shall not be deemed exclusive of, and shall be in addition to, any other rights granted to a person seeking indemnification as a matter of law or under the Articles of Incorporation, this Code of Regulations, any agreement, vote of the members of the Cooperative or the disinterested members of the Board of Trustees, any insurance purchased by the Cooperative, any action by the Board of Trustees to take into account amendments to the Ohio Nonprofit Corporation Law, that expand the authority of the Cooperative to indemnify a trustee, officer, employee, agent, or volunteer of the Cooperative or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office or position, and shall continue as to a person who has ceased to be a trustee, director, officer, employee, agent, or volunteer and shall inure to the benefit of the heirs, executors, and administrators of such a person.
Section 6. Insurance Against Liability
The Cooperative shall purchase and maintain insurance or furnish similar protection, including, but not limited to, trust funds, letters of credit, and self-insurance, for or on behalf of any person who is or was a trustee, officer, employee, agent, or volunteer of the Cooperative, or is or was serving at the request of the Cooperative as a trustee, director, officer, employee, agent or volunteer of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust or other enterprise against any liability asserted against and incurred by said person in any such capacity, or arising out of the person’s status as such, whether or not the Cooperative would have the power to indemnify the person against such liability under this Article or of the Ohio Nonprofit Corporation Law. Insurance may be purchased from or maintained with a person in whom the Cooperative has a financial interest.
Section 7. Mergers
Unless otherwise provided in the agreement of merger pursuant to which there is a merger into this Cooperative of a constituent corporation that, if its separate existence had continued, would have been required to indemnify board members, directors, officers, employees, or volunteers in specified situations, any person who served as a trustee, officer, employee, or volunteer of the constituent corporation, or served at the request of the constituent corporation as a trustee, director, officer, employee, or volunteer of another domestic or foreign nonprofit corporation, or corporation for profit, or a partnership, joint venture, trust or other enterprise, shall be entitled to indemnification by this Cooperative (as the Surviving Corporation) to the same extent such person would have been entitled to indemnification by the constituent corporation if its separate existence had continued.
Section 8. Liability of a Board Member or Officer
Other than in connection with an action or suit in which the liability of a trustee under Section 1702.55 of the Ohio Revised Code is the only liability asserted, a trustee or officer of the Cooperative shall be liable in damages for any action he takes or fails to take as a trustee or as an officer, as the case may be, only if it is proved, by clear and convincing evidence, in a court with jurisdiction that the act or omission was one undertaken with deliberate intent to cause injury to the Cooperative or was one undertaken with a reckless disregard for the best interests of the Cooperative.
Section 9. Use of Term “Cooperative”
As used in this Article, reference to “Cooperative” includes all constituent corporations in a consolidation or merger and the new or surviving corporation, so that any person who is or was a trustee, officer, employee, or agent of such a constituent corporation, or is or was serving at the request of such constituent corporation as a trustee, director, officer, employee or agent of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture, trust or other enterprise shall stand in the same position under this Article with respect to the new or surviving corporation as he would if he had served the new or surviving corporation in the same capacity.