The Washington Indemnity Agreement is a legal document that establishes a contractual relationship between a corporation and its directors, officers, employees, and agents regarding indemnification. It serves as a means of protecting these individuals from any legal liabilities they may incur while performing their duties on behalf of the corporation. Here is a detailed description of this agreement, exploring its purpose, key provisions, and various types: Purpose: The primary purpose of the Washington Indemnity Agreement is to indemnify and hold harmless the corporation's directors, officers, employees, and agents from legal actions, expenses, judgments, fines, settlements, attorney fees, and any other costs arising from their lawful actions on behalf of the corporation. It aims to encourage qualified individuals to serve in positions of governance and management by relieving them of personal financial burdens resulting from litigation related to their corporate responsibilities. Key Provisions: 1. Scope of Indemnification: The agreement defines the extent of indemnification provided to directors, officers, employees, and agents. It typically covers claims arising from actions taken within the scope of their duties, as long as these actions were performed in good faith and believed to be in the corporation's best interests. However, it may exclude willful misconduct, fraud, or other acts done with malice. 2. Advancement of Expenses: The agreement may include a provision allowing the corporation to advance expenses (such as legal fees) to individuals involved in legal proceedings before a final determination of their right to indemnification. This provision ensures that individuals are not burdened by immediate financial obligations during litigation. 3. Standard of Conduct: The agreement establishes the standard of conduct required for indemnification. In Washington, this standard is typically "good faith" and acting in a manner reasonably believed to be in the corporation's best interests. Types of Washington Indemnity Agreements: There can be several specific types of Indemnity Agreements tailored to different roles within the corporation: 1. Director Indemnity Agreement: This type of agreement is specifically designed to protect directors from legal liabilities arising out of their fiduciary duties. It ensures that directors can make informed decisions and fulfill their obligations without the fear of personal financial consequences. 2. Officer Indemnity Agreement: Similarly, an officer indemnity agreement focuses on protecting officers who may have greater authority and responsibility within the corporation. It aims to ensure their effective functioning without fear of financial repercussions resulting from legal challenges. 3. Employee and Agent Indemnity Agreement: This agreement extends indemnification to employees and agents who act on behalf of the corporation in various capacities. It covers a wide range of personnel, such as executives, managers, agents, and ordinary employees. By utilizing the Washington Indemnity Agreement, corporations can instill confidence in their directors, officers, employees, and agents, ensuring their ability to act in the corporation's best interests without the burden of personal legal expenses.
Washington Indemnity Agreement between corporation and directors officers employees and agents of corporation
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FAQ
Indemnification, also referred to as indemnity, is an undertaking by one party (the indemnifying party) to compensate the other party (the indemnified party) for certain costs and expenses, typically stemming from third-party claims.
Indemnification Agreement to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him. Also to make good; to compensate; to make reimbursement to one of a loss already incurred by him.
(1) A limited liability company may indemnify any member or manager from and against any judgments, settlements, penalties, fines, or expenses incurred in a proceeding or obligate itself to advance or reimburse expenses incurred in a proceeding to which a person is a party because such person is, or was, a member or a ...
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.
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.
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 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.
Section 145(b) empowers a corporation to indemnify its directors against expenses incurred in connection with the defense or settlement of an action brought by or in the right of the corporation, subject to the standard of conduct determination, and except that no indemnification may be made as to any claim to which ...