If any claim or action is instituted against any governing board or member thereof, or an officer or employee of the State of South Dakota, or any political subdivision of the state, including the board of supervisors or members of an improvement district, arising out of an act or omission occurring within the scope of the employment of such employee, or when exercising official duties or responsibilities as an officer or member of such governing board, the entity may elect to do any one or more of the following things: (1) Indemnify such officer or employee for the court costs incurred in the defense of such claim or action; (2) Pay or indemnify such officer or employee the reasonable attorney fees incurred by virtue of such claim or action; (3) Pay or indemnify such officer or employee for a judgment based upon such claim or action; or (4) Pay or indemnify such officer or employee for a compromise or settlement of such claim or action.
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