An Arkansas Indemnification Agreement between a corporation and its current and future directors is a legal document that outlines the corporation's commitment to providing financial protection and legal defense to its directors in the event they face lawsuits or other legal actions related to their duties and responsibilities. This agreement serves as a crucial protection mechanism for directors as it covers expenses incurred during legal proceedings, such as attorney fees, court costs, and settlements or judgments. The agreement aims to attract and retain capable directors by mitigating their personal financial risk and providing them with a sense of security. Under Arkansas law, there are two main types of indemnification agreements typically used between corporations and their directors, namely: 1. Agreement for Permissive Indemnification: This type allows corporations to choose whether they will indemnify their directors. The agreement must state that indemnification may be provided to a director, subject to certain limitations, conditions, and procedures. 2. Agreement for Mandatory Indemnification: This type obligates the corporation to indemnify its directors in specific situations, such as when the director is successful in the defense of a legal action, or when a court determines that the director acted in good faith and in the best interests of the corporation. Arkansas Indemnification Agreements often include the following key information: 1. Parties involved: The agreement identifies the corporation and all current and future directors who are covered by the indemnification provisions. 2. Indemnification scope: It specifies the types of legal actions or proceedings for which indemnification is provided, such as civil, criminal, administrative, or investigatory proceedings brought by a third party, the corporation itself, or any governmental authority. 3. Expenses covered: The agreement outlines the specific expenses that will be covered, including attorney fees, court costs, reasonable settlements, judgments, and any other costs incurred as a result of legal proceedings. 4. Limitations and exclusions: It may include certain limitations on the indemnification, such as excluding indemnification for intentional misconduct, actions not in good faith, or violations of the director's duty of loyalty to the corporation. 5. Procedures for indemnification: The agreement outlines the process for directors to request indemnification, including notice requirements, documentation, and the timeline for the corporation to respond. 6. Severability clause: This clause states that if any provision of the agreement is held invalid or unenforceable, the remaining provisions will still be effective. 7. Governing law: The agreement specifies that it is governed by the laws of the state of Arkansas, ensuring compliance with the state's indemnification statutes and regulations. In conclusion, an Arkansas Indemnification Agreement between a corporation and its current and future directors is a legally binding document that establishes the corporation's commitment to providing financial protection and legal defense to its directors. By offering indemnification, corporations aim to attract and retain qualified individuals to serve on their boards while safeguarding directors' personal assets in the face of potential legal actions.
Arkansas Indemnification Agreement between corporation and its current and future directors
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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.
Each party shall indemnify the other party, its directors, officers, agents, and employees against all loss, damages, expense and liability to third persons for injury to or death of persons or injury to property caused by the indemnifying party's engineering, design, construction, ownership, maintenance, or operations ...
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.
A director and officer indemnification agreement is a contract that allows executives to protect themselves from claims made against them while performing job. Indemnification means that in the event a lawsuit is filed against a company, the indemnified party is "held harmless" from claims.
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 ...
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.
Many company constitutions set out rights of indemnity for directors, and often also include provision for directors and officers (D&O) insurance. Alternatively, they may simply provide that the company may indemnify directors. The deed of indemnity is an agreement between the company and a director.