director-indemnification-agreement

name	director-indemnification-agreement
language	en
description	Drafts U.S. director indemnification agreements maximizing protection under state corporate law, with advancement of expenses and determination procedures. Use when drafting or updating a director indemnification agreement, onboarding directors, strengthening governance beyond bylaws, or coordinating with D&O coverage. Triggers: indemnification agreement, director advancement, corporate governance, D&O, DGCL 145.

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