ARTICLE IX. INDEMNIFICATION
Section A. Third Party Indemnification. The Association shall have power to indemnify any person who as 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, by reason of the fact that the Director is or was a representative of the Association, or is or was serving at the request of the Association directly or as a representative of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement, actually and reasonably incurred by the Director in
connection with the action, suit or proceeding, if the Director acted in good faith and in a manner the Director reasonably believed to be in, or not opposed to, the best interests of the Association, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Director's conduct was unlawful.
Section B. Derivative Action Indemnification. The Association shall have power to 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 association to which committee the Director reasonably believes to merit confidence.
A Director shall not be considered to be acting in good faith if the Director has knowledge concerning the matter in question that would cause the Director's reliance to be unwarranted.
(1) Consideration of Factors. In discharging the duties of their respective positions, the Board of Directors, committees of the Board and individual Directors may, in considering the best interests of the Association, consider the effects of any action upon employees, upon suppliers and customers of the Association and upon communities in which offices or other establishments of the Association are located, and all other pertinent factors. The consideration of those factors shall not constitute a violation of fiduciary duty.
(2) Presumption. Absent breach of fiduciary duty, lack of good faith or self-dealing, actions taken by a Director or any failure to take any action shall be presumed to be in the best interests of the Association.
Section E: Personal Liability of Directors.
(1) General Rule. The Directors of the Association shall not be personally liable for monetary damages as Directors for any action taken, or any failure to take any action, unless:
(a) The Director has breached or failed to perform the duties the Director's office stated above; and
(b) The breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.
(2) Exception. The provisions of Section D of this article shall not apply to:
(a) The responsibility or liability of a Director pursuant to any criminal statute; or
(b) The liability of a Director for the payment of income and franchise taxes pursuant to Local, State, or Federal law.
Section F. Procedure for Effecting Indemnification. Unless ordered by a court, any indemnification under this Article shall be made by the Association only as authorized in the specific case upon which a determination that indemnification of the representative is proper in the circumstances because the Director has met the applicable standard of conduct set forth above. That determination shall be made:
(1) By the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to the action, suit, or proceeding;
(2) If a quorum is not obtainable, or, even if obtainable, when a majority vote of a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion; or
(3) By the members of this Association.
Section G. Non-exclusivity and Supplementary Coverage.
(1) General Rule. The indemnification and advancement of expenses provided above, or by any other provisions of law providing for indemnification or advancement of expenses applicable to any nonprofit corporation, shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of members or Directors or otherwise, both as to action in the Director's official capacity and as to action in another capacity while holding that office. The Association may create a fund of any nature, which may, but need not be, under the control of a trustee, or otherwise secure or insure in any manner its indemnification obligations, whether arising under or pursuant to this section or otherwise.
(2) When Indemnification is not to be Made. Indemnification shall not be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness.
(3) Grounds. Indemnification under any bylaw, agreement, vote of members or Directors or otherwise, may be granted for any action or any failure to take any action and may be made whether or not the Association would have the power to indemnify the person under any other provision of law except as provided in this section and whether or not the indemnified liability arises or arose from any threatened, pending or completed action by or in the right of the Association.
Section H. Payment of Expenses. Expenses incurred by an officer, Director, employee or agent in defending a civil or criminal action, suit or proceeding may be paid by the Association in advance of the final disposition of the action, suit or proceeding upon the receipt of a written obligation satisfactory to the Board by and on behalf of that person to repay these amounts if it shall ultimately be determined that the Director is not entitled to be indemnified by the Association.
Section I. Rights to Indemnification. The indemnification and advancement of expenses provided by or granted pursuant to this Article shall continue as to a person who has ceased to be a Director, Officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of that person.
Section J. Power to Purchase Insurance. The Association shall have power to purchase and maintain insurance on behalf of any person who is or was a representative of the Association, or is or was serving at the request of the Association directly or as a representative of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against that Director and incurred that capacity, or arising out of that status, whether or not the Association would have the power to indemnify the Director against that liability.