casemark/director-indemnification-agreement

Director Indemnification Agreement

Drafts an enforceable director indemnification agreement under the state of incorporation with clear advancement and determination procedures.

Quick Start

Gather before drafting:

1. State of incorporation and governing statute
2. Charter and bylaws (indemnification/advancement provisions)
3. Board authorization status or resolutions
4. Director name, titles, start date, covered capacities (subsidiaries, affiliates, benefit plans)
5. D&O insurance policies and coordination preferences
6. Prior indemnification agreements or house style template

Intake Checklist

• [ ] Governing law matches state of incorporation
• [ ] Coverage scope: director only, or also officer/employee roles
• [ ] Retroactive to prior service or prospective only
• [ ] Advancement timing (default: 30 days from request)
• [ ] Determination method order and deadlines
• [ ] Presumption in favor of indemnification: yes/no
• [ ] Fee shifting on enforcement actions: yes/no
• [ ] Insurance priority: company primary (default) or insurance primary
• [ ] Term and post-service survival period

Required Definitions

| Term | Notes | |---|---| | Proceeding | Threatened, pending, or completed civil, criminal, administrative, investigative, arbitration, or ADR matter | | Expenses | All fees, costs, disbursements: attorneys, experts, witnesses, travel, transcripts, settlements where permitted | | Indemnifiable Event | Made party or participant by reason of service to Company or at Company's request | | Independent Counsel | Disinterested counsel meeting independence criteria |

Agreement Structure

1. Definitions
2. Indemnification
3. Advancement of Expenses
4. Procedure for Advancement Requests
5. Procedure for Indemnification Determinations
6. Presumptions and Burdens
7. Enforcement; Fee Shifting
8. Notice of Proceedings; Defense and Settlement
9. Non-Exclusivity; Subrogation; Survival
10. Insurance
11. Contribution; Partial Indemnification
12. Term; Successors
13. Governing Law; Forum
14. Severability; Amendment; Notices; Counterparts

Core Clauses

| Section | Required Content | |---|---| | Recitals | Authority to indemnify to fullest extent permitted; director reliance to serve | | Indemnification Grant | Maximum extent permitted by law; statutory conduct standard; derivative action settlement limits if required | | Advancement | Prompt advancement on written request; fixed payment deadline; undertaking to repay after final non-appealable denial; not conditioned on initial conduct determination | | Determination | Ordered decision makers; Company pays independent counsel; deadline for decision; presumption favoring indemnification; deemed approval if no timely determination | | Enforcement | Judicial determination right; fee shifting on successful enforcement; Company bears clear-and-convincing burden when contesting | | Notice and Defense | Prompt written notice; no forfeiture absent material prejudice; Company may assume defense with director consent to counsel; separate counsel at Company expense for conflicts; settlement consent with unconditional-release carveout | | Non-Exclusivity/Survival | Additive to charter, bylaws, other agreements; survives for heirs/estates; no retroactive impairment | | Insurance | Company obligation primary, not conditioned on insurance; equal coverage with other directors; notice of material policy changes | | Contribution | Equitable contribution if indemnity unavailable; prioritize Expenses over judgments/settlements | | General | Governing law of incorporation state; forum selection; successors assume obligations; severability; written amendment only; counterparts and e-signatures |

Decision Defaults

| Issue | Default | Range | |---|---|---| | Advancement deadline | 30 days | 15-45 days | | Determination deadline | 60 days | 30-90 days | | Presumption | Director favored | No presumption (higher risk) | | Insurance priority | Company primary | Insurance primary (rare) |

Pitfalls

• Verify state statute terminology for conduct standards and limits; flag uncertain citations with [VERIFY] (e.g., DGCL 145 [VERIFY])
• Never promise indemnification for acts prohibited by law, bad faith, or improper personal benefit
• Align with charter/bylaws — do not conflict with exculpation or indemnification limitations
• Keep advancement independent from ultimate entitlement determination
• Include explicit retroactivity rule if covering past service
• For public or regulated companies, add required board/committee approvals and securities law constraints
• Avoid cooperation clauses that undermine defense strategy or waive privilege