Delaware Indemnification Agreement between corporation and its directors regarding method for determining whether standards for indemnification have been met

• Category: Corporations - Public - Indemnification
• State: Multi-State
• Control #: US-CC-17-158
• Format: Word; Rich Text

Description

17-158 17-158 . . . Indemnification Agreement between corporation and its directors and/or officers including future directors and officers containing detailed provisions relating to method for determining whether standards for indemnification or reimbursement have been met and making corporation responsible for all costs of determining whether a person is entitled to indemnification or reimbursement regardless of whether person is ultimately found to be entitled to indemnification Delaware Indemnification Agreement between a corporation and its directors serves as a crucial legal contract outlining the terms and conditions regarding the indemnification of directors and determining whether the indemnification standards have been met. This agreement aims to provide protection and financial security to directors in the event of legal claims, liabilities, or expenses incurred while fulfilling their corporate duties. Here are the essential components included in the Delaware Indemnification Agreement: 1. Scope of Indemnification: This section delineates the scope of indemnification and specifies the types of claims or actions for which the directors are entitled to indemnification. It may include claims resulting from corporate litigation, regulatory investigations, shareholder actions, or any other legal proceedings arising out of the director's service to the corporation. 2. Standard for Indemnification: The agreement usually outlines the specific standard that must be met to qualify for indemnification. In Delaware, this standard can be one of the following: — Permissive Indemnification: Under this standard, a director may be indemnified for expenses and liabilities if they acted in good faith, reasonably believed their actions were in the corporation's best interests, and did not engage in misconduct or intentional wrongdoing. — Mandatory Indemnification: In certain situations, directors may be entitled to mandatory indemnification, which means they are automatically indemnified for expenses and liabilities incurred during the performance of their corporate duties, regardless of meeting the permissive indemnification criteria. 3. Determination of Indemnification: This section describes the process for determining whether the director qualifies for indemnification. It may state that an independent legal counsel will evaluate the circumstances of the claim or proceeding and make a determination regarding the director's eligibility for indemnification. 4. Advancement of Expenses: The agreement may address the advancement of expenses, clarifying that the corporation will cover the director's legal fees, costs, or other expenses incurred during the defense against claims before the final determination of indemnification. 5. Procedure and Notice: This section defines the procedure and notice requirements that directors must follow when requesting indemnification. It typically includes the time limits, documentation, and communication channels to be followed to initiate the indemnification process. 6. Limitations or Exceptions: The agreement may include provisions outlining certain limitations or exceptions to indemnification. For instance, it may exclude indemnification if the director is found liable for gross negligence or misconduct, or if the claims arise from actions outside the scope of their corporate duties. Types of Delaware Indemnification Agreements: a) Standard Delaware Indemnification Agreement: This broadly covers the terms and conditions of indemnification and the determination process. b) Mandatory Delaware Indemnification Agreement: Provides automatic indemnification for directors without the need to meet specific standards, ensuring greater protection. c) Enhanced Delaware Indemnification Agreement: A comprehensive agreement that offers broader coverage and additional protections compared to the standard indemnification agreement. It may expand the scope of covered claims, remove certain limitations, or specify higher indemnification amounts. Keywords: Delaware, Indemnification Agreement, corporation, directors, standards, determination, indemnification, permissive indemnification, mandatory indemnification, advancement of expenses, procedure, notice, limitations, types.

Delaware Indemnification Agreement between a corporation and its directors serves as a crucial legal contract outlining the terms and conditions regarding the indemnification of directors and determining whether the indemnification standards have been met. This agreement aims to provide protection and financial security to directors in the event of legal claims, liabilities, or expenses incurred while fulfilling their corporate duties. Here are the essential components included in the Delaware Indemnification Agreement: 1. Scope of Indemnification: This section delineates the scope of indemnification and specifies the types of claims or actions for which the directors are entitled to indemnification. It may include claims resulting from corporate litigation, regulatory investigations, shareholder actions, or any other legal proceedings arising out of the director's service to the corporation. 2. Standard for Indemnification: The agreement usually outlines the specific standard that must be met to qualify for indemnification. In Delaware, this standard can be one of the following: — Permissive Indemnification: Under this standard, a director may be indemnified for expenses and liabilities if they acted in good faith, reasonably believed their actions were in the corporation's best interests, and did not engage in misconduct or intentional wrongdoing. — Mandatory Indemnification: In certain situations, directors may be entitled to mandatory indemnification, which means they are automatically indemnified for expenses and liabilities incurred during the performance of their corporate duties, regardless of meeting the permissive indemnification criteria. 3. Determination of Indemnification: This section describes the process for determining whether the director qualifies for indemnification. It may state that an independent legal counsel will evaluate the circumstances of the claim or proceeding and make a determination regarding the director's eligibility for indemnification. 4. Advancement of Expenses: The agreement may address the advancement of expenses, clarifying that the corporation will cover the director's legal fees, costs, or other expenses incurred during the defense against claims before the final determination of indemnification. 5. Procedure and Notice: This section defines the procedure and notice requirements that directors must follow when requesting indemnification. It typically includes the time limits, documentation, and communication channels to be followed to initiate the indemnification process. 6. Limitations or Exceptions: The agreement may include provisions outlining certain limitations or exceptions to indemnification. For instance, it may exclude indemnification if the director is found liable for gross negligence or misconduct, or if the claims arise from actions outside the scope of their corporate duties. Types of Delaware Indemnification Agreements: a) Standard Delaware Indemnification Agreement: This broadly covers the terms and conditions of indemnification and the determination process. b) Mandatory Delaware Indemnification Agreement: Provides automatic indemnification for directors without the need to meet specific standards, ensuring greater protection. c) Enhanced Delaware Indemnification Agreement: A comprehensive agreement that offers broader coverage and additional protections compared to the standard indemnification agreement. It may expand the scope of covered claims, remove certain limitations, or specify higher indemnification amounts. Keywords: Delaware, Indemnification Agreement, corporation, directors, standards, determination, indemnification, permissive indemnification, mandatory indemnification, advancement of expenses, procedure, notice, limitations, types.