(a) An enterprise may indemnify a governing person, former governing person, or delegate who was, is, or is threatened to be made a respondent in a proceeding to the extent permitted by Section 10A-1-6.22 if it is determined in accordance with Section 10A-1-6.23 that:

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Terms Used In Alabama Code 10A-1-6.21

  • Conviction: A judgement of guilt against a criminal defendant.
  • Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
  • Nolo contendere: No contest-has the same effect as a plea of guilty, as far as the criminal sentence is concerned, but may not be considered as an admission of guilt for any other purpose.
  • person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
  • Plea: In a criminal case, the defendant's statement pleading "guilty" or "not guilty" in answer to the charges, a declaration made in open court.
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(1) the person:

(A) acted in good faith; and
(B) reasonably believed:

(i) in the case of conduct in the person’s official capacity that the person’s conduct was in the enterprise’s best interests; and
(ii) in all other cases, that the person’s conduct was not opposed to the enterprise’s best interests; and
(C) in the case of a criminal proceeding, did not have a reasonable cause to believe the person’s conduct was unlawful;
(2) with respect to expenses, the amount of expenses is reasonable; and
(3) indemnification should be paid.
(b) Action taken or omitted by a governing person or delegate with respect to an employee benefit plan in the performance of the person’s duties for a purpose reasonably believed by the person to be in the interests of the participants in and beneficiaries of the plan is for a purpose that is not opposed to the best interests of the enterprise.
(c) Action taken or omitted by a delegate to another enterprise for a purpose reasonably believed by the delegate to be in the interest of the other enterprise or its owners or members is for a purpose that is not opposed to the best interests of the enterprise.
(d) A person does not fail to meet the standard under subsection (a)(1) solely because of the termination of a proceeding by:

(1) judgment;
(2) order;
(3) settlement;
(4) conviction; or
(5) a plea of nolo contendere or its equivalent.
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