§ 26. Payment of indemnification other than by court award. (a) A
person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character
described in section twenty-five shall be entitled to indemnification as
authorized in such section.

(b) Except as provided in subdivision (a) of this section, any
indemnification under section twenty-five of this article or otherwise
permitted by section twenty-four of this article, unless ordered by a
court under section twenty-seven of this article, shall be made by the
cooperative only if authorized in the specific case:

(1) by the board acting by a quorum consisting of directors who are
not parties to such action or proceeding upon a finding that the
director or officer has met the standard of conduct set forth in section
twenty-five of this article or established pursuant to section
twenty-four of this article, as the case may be, or,

(2) if a quorum under paragraph one of this subdivision is not
obtainable or, even if obtainable, a quorum of disinterested directors
so directs:

(i) By the board upon the opinion in writing of independent legal
counsel that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in such sections has been met
by such director or officer, or

(ii) By the members upon a finding that the director or officer has
met the applicable standard of conduct set forth in such sections.

(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by the cooperative in advance of the final
disposition of such action or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount as, and
to the extent, required by subdivision (a) of section twenty-eight of
this article.