The Tennessee Indemnity Agreement is a legal contract established between a corporation and its directors and/or officers, aiming to provide protection and financial security to these individuals in certain legal situations. This agreement serves as a means of indemnifying directors and officers against liabilities, expenses, and losses they may incur while performing their duties on behalf of the corporation. This agreement is crucial as it offers a level of assurance to directors and officers that they will not personally bear the financial burden resulting from claims, lawsuits, or legal proceedings during the course of their service. By entering into this agreement, a corporation demonstrates its commitment to supporting and protecting its directors and officers. Within Tennessee, there are different types of Indemnity Agreements that can be established between a corporation and its directors/officers, depending on the specific circumstances or contractual arrangements. Some notable types include: 1. Indemnification of Directors: This type of agreement mainly focuses on providing indemnification to the directors of the corporation. It safeguards them from liabilities arising out of their role as directors, including legal costs, settlement payments, and damages. 2. Indemnification of Officers: Similar to the agreement for directors, this type specifically focuses on indemnifying the officers of the corporation. Officers, such as the CEO, CFO, or other executive positions, bear a significant level of responsibility and may face similar liabilities as directors, thus requiring similar protection. 3. Indemnification of Directors and Officers: This comprehensive agreement covers both directors and officers of the corporation, ensuring that all individuals holding these positions are shielded from potential financial harm resulting from legal actions. 4. Indemnification for Advancement of Expenses: Apart from indemnification, this agreement type states that the corporation may advance funds to directors and officers to cover legal fees, expenses, or costs incurred during the legal process. This provision acts as immediate financial assistance to aid directors and officers in legal matters. By utilizing these different types of Tennessee Indemnity Agreements, corporations can establish a clear framework for protecting their directors and officers, ensuring their peace of mind while carrying out their duties. It is essential for corporations to carefully consider the specific provisions and terms within the agreements, as they have a direct impact on the level of protection offered to these individuals.
Tennessee Indemnity Agreement between corporation and directors and / or officers
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FAQ
Indemnification clauses are contractual provisions that require one party (the ?Indemnitor?) to indemnify another party (the ?Indemnitee?) for losses that the Indemnitee may suffer. In prime contracts, the owner usually is the Indemnitee and the contractor is the Indemnitor.
A company may, however, lend money to a director to fund the director's defence costs. Frequently, an indemnity will include a provision under which the company agrees to lend the director the amounts necessary to fund the director's defence costs.
Indemnification refers to the right to have a company reimburse current or former directors or officers for all losses, including legal fees, incurred in connection with litigation arising from actions taken in service to the company or at the company's direction.
Section 145(c)(1) provides that to the extent a director has been successful on the merits or otherwise in defense of any action, suit, or proceeding referenced in Section 145(a) or Section 145(b), the director shall be indemnified against expenses actually and reasonably incurred by the director in connection ...
Insurance ? The indemnification agreement typically will require that the company provide D&O liability insurance that protects the indemnitee to the same extent as the most favorably insured of the company's and its affiliates' current directors and officers.
Generally, indemnification (or indemnity) is an undertaking by one party to compensate the other party for certain costs and expenses. Indemnity is imposed either by law or contract in Tennessee.
Indemnification is often very broad, often extending ?to the maximum extent permitted by law?, whereas D&O insurance polices contain numerous exclusions and conditions. In addition, D&O insurance must be renewed each year, with possible changes in terms and conditions.