Code of Alabama - Title 10A: Alabama Business and Nonprofit Entities Code - Section 10A-1-6.24 - Advancement of expenses

Section 10A-1-6.24 - Advancement of expenses.

(a) An enterprise may pay or reimburse reasonable expenses incurred by a governing person, former governing person, or delegate that was, is, or is threatened to be made a respondent in a proceeding in advance of the final disposition of the proceeding without making the determinations required under Section 10A-1-6.21(a) after the enterprise receives:

(1) written affirmation by the person of the person's good faith belief that the person has met the standard of conduct necessary for indemnification under this article; and

(2) written undertaking by or on behalf of the person to repay the amount paid or reimbursed if the final determination is that the person has not met that standard or that indemnification is prohibited by Section 10A-1-6.22.

(b) A provision in the governing documents of the enterprise, a resolution of the owners, members, or governing authority, or an agreement that requires the payment or reimbursement permitted under this section authorizes that payment or reimbursement after the enterprise receives an affirmation and undertaking described by subsection (a).

(c) The written undertaking required by subsection (a)(2) must be an unlimited general obligation of the person but need not be secured and may be accepted by the enterprise without regard to the person's ability to make repayment.

(d) An enterprise may not advance expenses to or reimburse expenses of a person if the advancement or reimbursement conflicts with a restriction in the enterprise's governing documents.

(Act 2009-513, p. 967, §52.)

Last modified: May 3, 2021