1. (a) Except as otherwise provided in this section, a nonprofit corporation may indemnify an individual who is a party to a proceeding because the individual is a director against liability incurred in the proceeding if:

   1. (1)

      1. (i) the director conducted himself or herself in good faith; and

      2. (ii) the director reasonably believed:

         1. (A) in the case of conduct in an official capacity, that his or her conduct was in the best interests of the nonprofit corporation; and
         2. (B) in all other cases, that the director’s conduct was at least not opposed to the best interests of the nonprofit corporation; and
      3. (iii) in the case of any criminal proceeding, the director had no reasonable cause to believe his or her conduct was unlawful; or
   2. (2) the director engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the certificate of incorporation (as authorized by Section 10A-3A-2.02).
2. (b) A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement of subsection (a)(1)(ii)(B).
3. (c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section.

4. (d) Unless ordered by a court under Section 10A-3A-8.54(a)(3), a nonprofit corporation may not indemnify a director:

   1. (1) in connection with a proceeding by the nonprofit corporation, except for expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a); or
   2. (2) in connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis of receiving a financial benefit to which the director was not entitled, regardless of whether it involved action in the director’s official capacity.

(Act 2023-503, §1.)