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Major League Baseball offered to drop a lawsuit and "indemnify" an alleged distributor of performance-enhancing drugs, in exchange for his cooperation in identifying the players who were his clients.
Indemnify means "to secure against hurt, loss, or damage."
In this context it means that the alleged distributor would be protected from losses arising from lawsuits based on the same case in the future.
Indemnify comes from the Latin word meaning "unharmed."