Skip To The Main Content

Constitution

For purposes of this Constitution, the following terms shall have the specified definitions:

  1. Commissioner. "Commissioner" means the Insurance Commissioner of the State of California.
  2. Member/Membership. "Member" means a licensed surplus line broker that has satisfied the requirements of Article V, paragraph 1. "Membership" means the collective body of Members of the Association, or the status of being a Member.
  3. Surplus Line Laws. "Surplus Line Laws" means any and all statutes, regulations, or orders of the Commissioner, applicable to surplus line brokers or the placement of insurance with surplus line insurers.
  4. SL-1 Form. "SL-1 Form" means the confidential written report described in California Insurance Code Section 1763(a), or as that Section may be amended from time to time, which "shall include the name and address of the insured, the identity of the insurer or insurers, a description of the subject and location of the risk, the amount of premium charged for the insurance, a copy of the declarations page of the policy or a copy of the surplus line brokers certificate or binder evidencing the placement of insurance, and other pertinent information that the Commissioner may reasonably require," or such other form that contains substantially similar information that is required by the law or regulation to be filed with the Commissioner or his or her delegee.
  5. SL-2 Form. "SL-2 Form" means the "standardized form to be prescribed by the Commissioner setting forth the diligent efforts to place coverage with admitted insurers and the results of these efforts" as described in Insurance Code Section 1763(a), or as that Section may be amended from time to time.
  1. Name. The name of this organization is The Surplus Line Association of California.
  2. Principal Office. The Association shall maintain its principal office in the State of California at 50 California Street, San Francisco, CA 94111, or at such other location as may be determined from time to time by the Executive Committee.

The Association is not organized for profit and no part of its net earnings shall inure to the benefit of any Member or individual.

The Association's purposes and powers shall include but not be limited to the following:

  1. To monitor, facilitate, and encourage compliance by Members, surplus line insurers, and other licensees and persons subject to the Surplus Line Laws, and to discourage and seek to prevent non-compliance with the Surplus Line Laws;
  2. To promote fair dealing between Members and with the public, to help ensure that consumers in the State of California who have insurance needs that cannot adequately be met through the admitted insurance market have access to financially sound and reputable surplus line insurers, and to encourage proper use of the surplus line market, consistent with the public interest;
  3. To serve as a source of professional expertise regarding surplus line brokerage, advisory, and regulatory activity relevant to the surplus line market, to assist Members, the Commissioner, the Legislature, the Judiciary, other lawmaking or regulatory bodies, industry organizations, and the consuming public, and to communicate with state and federal authorities, and organizations of admitted insurers regarding appropriate matters;
  4. To maintain a Stamping Office as provided in Article XV, and to perform such acts and engage in such activities as may be necessary or appropriate to assist the Commissioner and support both sound regulation and effective regulatory oversight of the surplus line market, including without limitation the collection of market data and dissemination of information to Members, governmental or industry organizations, and the consuming public;
  5. To perform such functions, engage in such activities, and maintain such facilities as may be necessary or appropriate to conduct the affairs and further the interests of the Association, provide services to its Members, and to exercise all power and authority incidental thereto;
  6. To employ or retain such persons or organizations as may be necessary or appropriate to conduct the affairs or the activities of the Association; and
  7. To make contracts, expend funds, and own, acquire, or dispose of personal and real property or interests therein, and to otherwise engage in all other activities permitted by law.
  1. Term of Membership. Any individual or organization licensed as a resident or non-resident surplus line broker under the laws of the State of California shall be deemed a Member of the Association. Membership in the Association shall automatically terminate upon a Member's ceasing to be licensed as a surplus line broker by the State of California.
  2. Classes of Members. There shall be four classes of Members: individual resident Members, individual non-resident Members, organization resident Members, and organization non-resident Members, depending on the type of surplus line broker license held.
  3. Authorized Representative. An individual resident or non-resident Member may, and each organization resident or non-resident Member shall, designate an "authorized representative." A Member's authorized representative shall have all the authority of a Member as ascribed to such Member under this Constitution, including but not limited to: authority to be counted towards a quorum and to vote on the Member's behalf if such authority is granted to the relevant Member under this Constitution; provided that to count towards a quorum and vote, a representative of an individual Member must be authorized to vote by proxy in accordance with paragraph 1. of Article IX.
  4. Signing the Constitution. Each individual resident or non-resident Member, or in the case of an organization resident or non-resident Member the Member's authorized representative, shall sign and file with the Association a copy of the Constitution. Such act shall constitute acceptance of and subscription to the Constitution and shall commit the Member to strict observance thereof. Failure to sign or file a copy of the Constitution will not relieve any Member of his, her, or its obligation to comply with the Constitution. The Association may notify the Commissioner of such failure.
  1. Officers. The officers of the Association shall be a Chair, Vice-Chair, and a Secretary-Treasurer, to be elected at the annual meeting and to hold office until the next annual meeting or until their successors are elected.
  2. Chair. The Chair, subject to the oversight and ultimate authority of the Executive Committee, shall supervise the affairs of the Association. He or she shall perform all duties incidental to his or her office and such other duties as may be required by law, by this Constitution, or which may be assigned to the Chair from time to time by the Executive Committee or the voting Members. The Chair shall have the power to form and appoint ad hoc advisory committees as he or she deems necessary or appropriate. The Chair may, in his or her discretion, authorize the Vice-Chair to assist in the performance of one or more of the Chair's duties. The Chair shall be an ex-officio Member with voting power of all committees and shall preside at all meetings of the Association and of the Executive Committee. The Chair's vote shall only be counted to break a tie vote of the other Members present and voting. In the absence of the Chair and the Vice-Chair, the Executive Committee may designate a Chair pro tem.
  3. Vice-Chair. The Vice-Chair shall assist the Chair as the Chair deems necessary or desirable, and in the Chair's absence or inability to serve, shall be Acting Chair and shall perform all the duties and exercise all of the powers of the Chair.
  4. Secretary-Treasurer. The Secretary-Treasurer shall be a member of the Executive Committee with voting power. The Secretary-Treasurer shall be responsible to do, or designate one or more employees of the Association to so do, the following:
    1. certify and keep at the principal office the original or a copy of the Association's Constitution, as amended or otherwise modified to date;
    2. keep a book of minutes of meetings of the Association, the Executive Committee and the Stamping Office Committee, and vote counts, recording therein the time and place of holding thereof, whether regular or special, and if special, how authorized, what notice was given thereof, the names of those present at such meetings and the proceedings thereof, and shall provide copies of the minutes to the Executive Committee;
    3. see that all notices are duly given in accordance with the provisions of this Constitution or as may be required by law;
    4. serve as custodian of records of the Association;
    5. keep the Membership list;
    6. exhibit and provide at all reasonable times to any officer, Executive Committee member or Association Member on request therefore, the Constitution, the Membership list and the minutes of meetings except for minutes of privileged matters or matters determined by the Executive Committee to be confidential;
    7. have charge and custody of, and be responsible for, all funds and securities of the Association, and, as appropriate, maintain all such funds in the name of the Association in any of the following as shall be selected by the Executive Committee or its designee: (1) banks, trust companies, or other depositaries; (2) in United States government bonds, treasury certificates or other obligations for which the full faith and credit of the United States are pledged for payment of principal and interest; (3) in certificates of deposit of any federally or state chartered bank; (4) in repurchase agreements collateralized by securities issued by the United States government; or (5) any other prudent investment that the Executive Committee deems appropriate;
    8. receive, and give receipt for, moneys due and payable to the Association from any source whatsoever;
    9. disburse the funds of the Association as may be directed by the Executive Committee, taking proper vouchers of such disbursements;
    10. keep and maintain adequate and correct accounts of the Association's properties and business transactions, including accounts of its assets, liabilities, receipts, disbursements, gains and losses;
    11. exhibit at all reasonable times the books of account and financial records to any Executive Committee member on request therefor;
    12. render to the Executive Committee, whenever requested, an account of any and all of his or her transactions as Secretary-Treasurer and of the financial condition of the Association;
    13. cause to be prepared, and certify or have certified, the financial statements, and the tax and other statements necessary to maintain the Association's tax exempt status; and
    14. in general perform all duties incidental to the office of Secretary-Treasurer and such other duties as may be required by law or this Constitution, or which may be assigned to him or her from time to time by the Executive Committee.
  5. Vacancies. Any vacancy occurring in any of the offices of the Association may be filled by the Executive Committee for the unexpired term.
  1. Executive Committee.
    1. Composition. The Membership shall elect an Executive Committee which shall be the governing body of the Association. The Executive Committee shall consist of thirteen individual resident Members and/or the authorized representatives of organization resident Members. The retiring Chair, the current Chair, the Vice-Chair, and the Secretary-Treasurer shall be voting Members for the ensuing year and the remaining nine Members shall be elected as hereinafter provided. All Members shall hold office until the next annual meeting or until their successors are elected.
    2. Vacancies. Subject to confirmation by the Executive Committee, the Chair shall have the power to fill, for the unexpired term, vacancies on the Executive Committee caused by death or otherwise.
    3. General Powers. In addition to the powers expressly given to it by the provisions of the Constitution, the Executive Committee is hereby vested with the general powers to carry out and enforce the provisions of this Constitution and to conduct the affairs and activities of the Association.
    4. Delegation. The Executive Committee may delegate such of its powers and authority as it considers necessary or appropriate to the Stamping Office Committee, the Chair and/or other special or ad hoc committees, subject to the ongoing review, oversight and ultimate authority of the Executive Committee.
    5. Financial Powers. The Executive Committee shall authorize such expenditures and actions as in its judgment shall be necessary or appropriate to conduct the affairs and activities of the Association.
  2. Stamping Office Committee. Within 21 days after election of the Executive Committee, the Executive Committee shall appoint a Stamping Office Committee of no more than five individual resident Members and/or the authorized representatives of organization resident Members. Subject to supervision by the Executive Committee, the Stamping Office Committee shall supervise the operation of the Stamping Office and shall exercise any powers expressly delegated to it by this Constitution or by the Executive Committee.
  3. Nominating Committee. Not less than sixty days prior to each annual meeting, the Chair shall appoint a Nominating Committee of five individual resident Members and/or the authorized representatives of organization resident Members, which shall perform the duties specified in Article X and shall do or cause to be done any acts incidental to the performance of those duties.
  4. Admitted Market Liaison Committee. The Executive Committee may appoint an Admitted Market Liaison Committee of six individual resident Members and/or the authorized representatives of organization resident Members, and if appointed, it shall liaise with the admitted market on matters of common interest.
  5. Other Committees.
    1. Subcommittees. The Executive Committee may appoint such additional committees or Subcommittees composed of individual resident Members and/or the authorized representatives of organization resident Members as it may deem necessary or desirable, and may delegate to them, subject to supervision by the Executive Committee, any of the Executive Committee's powers.
    2. Ad Hoc or Advisory Committees. The Chair may appoint ad hoc or advisory committees to study issues or perform special projects as he or she deems necessary or appropriate.
  1. Association Meetings.
    1. Annual Meetings. The annual meeting of the Association shall be held in January, or as soon thereafter as the Executive Committee deems necessary or appropriate, on a date or dates to be fixed by the Executive Committee. A combined statewide meeting, or separate meetings in Northern and Southern California, may be held, as determined by the Executive Committee. Whenever the annual meeting is held in such separate locations and sessions, it shall be known as a single annual meeting and the first session shall be adjourned to the next session of the annual meeting.
    2. Special Meetings. Special meetings of the Association may be called at any time by the Chair and shall be called at the written request of ten (10) percent of the resident Members of the Association.
    3. Notice. Notice of annual meetings of the Association, with an agenda of matters to be considered, shall be sent to the Members at least one week in advance of the meeting. Notice of special meetings must be sent to the Members at least one week in advance, with an agenda of matters to be considered. Any matters not included in the agenda shall not be considered at annual or special meetings, unless a quorum is present and the resident Members eligible to constitute a quorum vote to approve or a vote is taken after the meeting pursuant to any other Voting Method set forth in Article IX.
    4. Quorum. At annual and special meetings of the Association, a quorum shall mean one-third of the resident Members who have filed one or more SL-1 or SL-2 Forms with the Association within the twelve (12) months immediately preceding the month of the annual or special meeting of the Association at which the vote is taken or, if the vote is taken by any other Voting Method set forth in Article IX, a quorum shall mean one-third of the resident Members who have filed one or more SL-1 or SL-2 Forms within the twelve (12) months immediately preceding the month in which the ballots are mailed, sent, or transmitted by the Association.
  2. Committee Meetings.
    1. Attendance. Any Member or a Member's authorized representative shall be permitted to attend meetings of the committees of the Association to discuss before such committee matters in which that Member is interested.
    2. Notice. Notice of regular committee meetings, with an agenda of matters to be considered, shall be sent to the members of that committee, and the Association's Chair, at least one week in advance of the meeting. Notice of special committee meetings shall be given at least forty-eight (48) hours in advance of the meeting unless extenuating circumstances warrant shorter notice. If less than forty-eight (48) hours notice is given, the committee may act only if (1) a quorum is in attendance, (2) the members present unanimously agree to waive notice, and (3) the absent members subsequently agree to waive notice and consent to the holding of the meeting. Any matters not included in the agenda shall not be considered at regular or special meetings, unless a quorum is present and two-thirds of the committee members approve.
    3. Quorum. A majority of a committee's members shall constitute a quorum of that committee for the transaction of business.
    4. Written Consent. Every action required or permitted to be taken by a committee may be taken without a meeting if all committee members consent thereto or a majority ratifies the action in writing via any of the Voting Methods set forth in Article IX.
    5. Remote Meetings. Committee meetings may be held through use of conference telephone or other modern communications technology, so long as all members participating in such meeting can hear or otherwise effectively communicate with one another. Participation in a meeting pursuant to this paragraph constitutes presence in person at such meeting.
  1. Proxy. To vote by proxy, an individual resident Member shall file in writing with the Association the name of a person authorized to vote on that Member's behalf in the proceedings of the Association. Authorized representatives of organization resident Members are not required to obtain a proxy to vote on behalf of the Member.
  2. Required Vote. Except for Amendments to this Constitution pursuant to Article XI and notwithstanding any other provision of this Constitution, all resolutions and motions offered shall be deemed adopted by the Membership when a quorum is met pursuant to Article VIII(1)(d) and the resolution or motion is assented to by a majority of votes cast by resident Members eligible to vote.
  3. Voting Eligibility. Only those resident Members that filed one or more SL-1 or SL-2 Forms during the 12 months immediately preceding the month in which the vote is taken are eligible to vote for election of officers or the conduct of Association business requiring a vote of the Membership.
  4. If separate sessions of the annual meeting are held in the manner set forth in paragraph 1(a) of Article VIII, the resolutions and motions must receive a combined majority assent of both sessions of the annual meeting or in a subsequent vote taken pursuant to any of the other Voting Methods set forth in this Article.
  5. Voting Methods. Any vote of the resident Membership of the Association, including a vote to amend this Constitution pursuant to Article XI, may be taken at a meeting or by mail, electronic mail, facsimile or via other modern communications technology, in the discretion of the Chair. Any vote of a committee of the Association may, in the discretion of the chairman of that committee, be taken in the same way. Votes taken by any one Voting Method shall be combined with votes taken by any other Voting Method.
  1. Annual Election. Elections for the officers of the Association and members of the Executive Committee shall be held annually at the Annual Meeting or as soon thereafter as practicable. Voting in this election shall be conducted in accordance with Article IX.
  2. Nominating Committee Slate. The Nominating Committee shall nominate a slate of candidates for the offices of Chair, Vice-Chair, Secretary-Treasurer, and the Executive Committee. It shall be the policy of the Association to seek to maintain a balance among its representative officers and committee members based on the size, location, and type of operations; provided, however, that all representative officers and committee members shall be individual resident Members or the authorized representatives of organization resident Members.
  3. Alternative Slates. Not less than 14 days prior to the election, the Nominating Committee shall mail its slate of candidates to the Membership and shall solicit nominations from the Membership for alternative slates of qualified candidates which seek to maintain the prescribed balance among representative officers and committee members based on the size, location, and type of operations. The Member submitting an alternative slate shall demonstrate that all such proposed candidates are qualified and have consented to the nomination.
  1. This Constitution may be amended by the affirmative vote of not less than two-thirds of the resident Membership that have filed one or more SL-1 or SL-2 Forms with the Association within the twelve (12) months immediately preceding the month in which the vote is taken at a meeting or, if the vote is taken to adopt an amendment to the Constitution by any other Voting Method set forth in Article IX, by an affirmative vote of not less that two-thirds of the resident Membership that have filed one or more SL-1 or SL-2 Forms with the Association within the twelve (12) months immediately preceding the month in which the ballots are mailed, sent, or transmitted by the Association, provided at least two weeks written notice has been given to the resident Members. If such vote is to be taken at an annual or special meeting of the Association, such notice shall specify that the meeting is called for such general purpose and shall set forth the nature of the proposed amendment; if such vote is to be taken by any other Voting Method set forth in Article IX, such notice shall specify the exact wording of the proposed amendment.
  1. The Association may assess a stamping fee for each policy, declarations page, cover note, or other premium bearing document submitted to the Association. The stamping fee shall be paid by the filing Member and the Member may collect the stamping fee from the insured. The stamping fee shall be established from time to time by the Executive Committee and shall reflect and be sufficient to cover all reasonable capital expenditures, operating costs, and other expenses of the Association. At least sixty (60) days prior to any proposed increase the Membership shall be notified of the increase.
  2. Funds of the Association shall be maintained in the name of the Association in any of the following as shall be selected by the Executive Committee or its designee: (1) banks, trust companies, or other depositories; (2) in United States government bonds, treasury certificates or other obligations for which the full faith and credit of the United States are pledged for payment of principal and interest; (3) in certificates of deposit of any federally or state chartered bank; (4) in repurchase agreements collateralized by securities issued by the United States government; or (5) any other prudent investment that the Executive Committee deems appropriate.
  3. Disbursements from the funds of the Association shall be subject to approval of the Executive Committee. The Secretary-Treasurer shall keep, or cause to be kept, a record of all receipts and disbursements. The Executive Committee shall employ a certified public accountant to audit the accounts of the Association prior to each annual meeting of Members, and in its discretion, at any other time. A summary report of the Association's financial condition shall be presented at the annual meeting. A copy of the Association's audited financial statements will be made available to any member upon written request to the Secretary-Treasurer or Executive Director.
  4. The officers, Executive Committee members, Stamping Office Committee members, and employees of the Association shall be bonded in such sums as the Executive Committee may specify. The premium on such bonds shall be paid by the Association.
  1. The Executive Committee may, subject to the approval of the Association, appoint a Mediator to serve at the pleasure of the Executive Committee for a specified term not to exceed twelve (12) months. The Mediator shall be a person wholly independent of any connection with any Member of the Association. Financial arrangements for the services and expenses of the Mediator shall be made by the Executive Committee.
  2. The Executive Committee may refer to the Mediator such matters as it considers necessary or appropriate for referral, including but not limited to matters relevant to the surplus line laws, proper use of the surplus line market, the regulation thereof, or the interests of the Association or its Members.
  3. Regardless of whether a Mediator is appointed for a term, the Executive Committee may, in its discretion, authorize or refer any potential dispute to alternative dispute resolution and may, but is not required to, make financial arrangements for alternate dispute resolution services.
  4. The Executive Committee shall have authority to establish procedures for matters referred to the Mediator, and may in its discretion consult with the Mediator, the Admitted Market Liaison Committee, and others of its choosing regarding such procedures. The Mediator, in his or her discretion, may consult with the Executive Committee or the Admitted Market Liaison Committee regarding issues or matters, without limitation, considered by the Mediator to be appropriate.
  5. The Executive Committee may delegate to the Admitted Market Liaison Committee such authority as the Executive Committee deems necessary or appropriate regarding any matter referred to the Mediator. Any member of the Admitted Market Liaison Committee who may have a material interest in a matter referred to the Mediator shall recuse himself or herself from any participation relating thereto.
  6. Unless otherwise determined by the Executive Committee, matters referred to the Mediator or alternative dispute resolution and all proceedings relating thereto shall be considered private and held in strict confidence.

The Association may employ an Executive Director and a Director, Stamping Office with such salaries and duties as may be determined and approved by the Executive Committee.

  1. The Association shall maintain a Stamping Office to serve as a facility to receive, review, process, and record documents required by law or regulation to be filed by or on behalf of surplus line brokers or surplus line insurers with the Commissioner or the Commissioner's delegee, and to perform such other Stamping Office functions relevant to surplus line regulation that the Association may choose, or mutually agree with the Commissioner, to perform.
  2. The Executive Committee shall have full power and authority to act in all matters relating to the Stamping Office including, but not limited to, the power to: (a) act for the Association in dealings with the Commissioner relative to the conduct and operation of the Stamping Office, (b) issue Bulletins regarding filings to be made therewith, (c) establish fees and procedures as permitted by law, and (d) perform any other necessary or appropriate acts relevant to Stamping Office operations, functions, procedures, and other matters.
  3. The Association shall provide and maintain through its Officers, Committees, Members, and staff such experience in professional surplus line brokerage, advisory, and regulatory activity in California as may be necessary or appropriate to properly perform all Stamping Office functions and activities including, without limitation: (a) the administrative capability and record-keeping facilities to process surplus line filings in California, (b) the data processing capability and the necessary personnel to perform appropriate security review of surplus line insurers, and (c) the capability to perform the duties that may be delegated to the Association by the Commissioner and exercise the authority necessary, appropriate, or incidental thereto.
  4. Such functions, responsibility, and authority as may be delegated to the Association by the Commissioner shall be reflected in a Plan of Operations approved by the Commissioner and the Executive Committee provided, however, that the Association may also, without limitation, perform such other functions and engage in such other activities as may be permitted by law, delegated or authorized by the Commissioner, or as determined by the Executive Committee, and exercise any authority necessary, appropriate, or incidental thereto.
  1. No insurance shall be placed with surplus line insurers except in compliance with the Surplus Line Laws.
  2. To enable the Association to maintain a complete record of all decisions concerning Member inquiries regarding the Surplus Line Laws or related issues, Members are required to submit through the Stamping Office all questions relating to surplus line business on which a ruling or interpretation is deemed necessary from the Insurance Commissioner. Where the question submitted also involves or warrants an Association determination, it will be referred to the appropriate committee for review before submission to the Commissioner.
  1. For the purpose of this Article, "agent" means any person or firm who is or was a committee member, Member, officer, employee or other agent of the Association, who acted or is acting on behalf of the Association and whose acts are or were authorized or ratified by the Association; "ratified" means the Executive Committee, by resolution, expressly and affirmatively consents to be bound by a previously performed act or omission; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" includes without limitation attorneys' fees and any expenses of establishing a right to indemnification under paragraph 5 or paragraph 6(d).
  2. As provided in the California Insurance Code, there shall be no liability on the part of, and no cause of action of any nature shall arise against, the Association, its Members, officers, committee members, agents, or employees for any action taken or omitted by any of them in the performance of their duties or the exercise of their authority delegated by the Insurance Commissioner, unless such party acted in bad faith.
  3. 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 proceeding (other than an action by or in the right of the Association to procure a judgment in its favor) by reason of the fact that the person is or was an agent of the Association whose acts or omissions on behalf of and authorized or ratified by the Association resulted in, gave rise to or provided a basis for the proceeding, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the Association and, in the case of a criminal proceeding, the person had no reasonable cause to believe the conduct of the person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of the Association or that the person has reasonable cause to believe that the person's conduct was unlawful.
  4. The Association shall have the 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 by or in the right of the Association to procure a judgment in its favor by reason of the fact that the person is or was an agent of the Association whose acts or omissions on behalf of and authorized or ratified by the Association resulted in, gave rise to or provided a basis for the action, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of the action if the person acted in good faith, in a manner the person believed to be in the best interests of the Association and its Members. No indemnification shall be made under this Article for any of the following:
    1. In respect of any claim, issue or matter as to which the person shall have been adjudged to be liable to the Association in the performance of that person's duty to the Association and its Members, unless and only to the extent that the court in which the proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for expenses and then only to the extent that the court shall determine.
    2. Of amounts paid in settling or otherwise disposing of a pending action without court approval.
    3. Of expenses incurred in defending a pending action which is settled or otherwise disposed of without court approval.
  5. To the extent that an agent of the Association has been successful on the merits in defense of any proceeding referred to in paragraphs 3 or 4 of this Article or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.
  6. Except as provided in paragraph 5 of this Article, any indemnification under this Article shall be made by the Association only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in paragraphs 3 and 4 of this Article, by any of the following:
    1. A majority vote of a quorum consisting of Executive Committee members who are not parties to such proceeding.
    2. If such a quorum consisting of Executive Committee members is not obtainable, by legal counsel in a written opinion.
    3. Approval of a majority of the Members, with the Members to be indemnified not being entitled to vote thereon.
    4. The court in which the proceeding is or was pending upon application made by the Association or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney or other person is opposed by the Association.
  7. Expenses incurred in defending any proceeding may be advanced by the Association prior to the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay that amount if it shall be determined ultimately that the agent is not entitled to be indemnified as authorized in this Article.
  8. The indemnification provided by this Article for acts, omissions, or transactions while acting in the capacity of, or while serving as, a committee member, Member, officer, employee or other agent of the Association but not involving breach of duty to the Association and its Members shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any agreement, vote of Members or disinterested Executive Committee members, or otherwise, to the extent the additional rights to indemnification are authorized in the articles of the Constitution. The rights to indemnity thereunder shall continue as to a person who has ceased to be a committee member, Member, officer, employee, or agent and shall inure to the benefit of the heirs, executors and administrators of the person. Nothing contained in this Article shall affect any right to indemnification to which such persons may be entitled by contract or otherwise.
  9. No indemnification or advance shall be made under this Article, except as provided in paragraph 5 of this Article or subparagraph (d) of paragraph 6 of this Article, in any circumstances where it appears:
    1. That it would be inconsistent with a provision of the Constitution, a resolution of the Members, or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification.
    2. That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.
  10. The Association shall have power to purchase and maintain insurance on behalf of the Association and any agent of the Association against any liability asserted against or incurred by the Association or the agent in his, her or its agency capacity or arising out of the agent's status as such whether or not the Association would have the power to indemnify the agent against that liability under this Article.
  11. This Article does not apply to any proceeding against any trustee, investment manager, or other fiduciary of an employee benefit plan in that person's capacity as such, even though the person may also be an agent, as defined in paragraph 1. of this Article, of the employer Association. The Association shall have power to indemnify and purchase and maintain insurance on behalf of any such trustee, investment manager, or other fiduciary.

Printed 1941
Amended 1942
Amended 1954
Amended 1967
Amended 1968
Amended 1969
Amended 1973
Amended 1994
Reprinted 1995
Amended 1997
Amended 2003
Amended 2008