The Illinois Indemnification Agreement between a corporation and its current and future directors is a legally binding contract that aims to protect directors and officers from potential liabilities that may arise during their time of service. This agreement provides assurance to directors that they will be indemnified by the corporation, to the fullest extent permitted by law, against expenses, judgments, fines, and settlements incurred in the course of performing their official duties. Under the Illinois Business Corporation Act (INCA), there are different types of indemnification agreements available to corporations and directors, namely: 1. Standard Indemnification Agreement: This agreement ensures that the corporation will indemnify its directors for any expenses or liabilities incurred in defending any type of legal action, including shareholder lawsuits, regulatory investigations, or claims arising out of board decisions. 2. Advancement Agreement: In addition to standard indemnification, an advancement agreement allows directors to receive advances or reimbursements for their legal expenses as they defend against any covered claims, eliminating the financial burden they might face during the litigation process. 3. Indemnification for Settlement Agreements: This type of agreement covers situations where directors enter into settlements in legal proceedings. It ensures that the corporation will indemnify directors for any amount agreed upon in the settlement, including both monetary obligations and non-monetary terms. 4. Indemnification for Derivative Actions: A derivative action is a lawsuit brought by shareholders on behalf of the company against directors or officers, typically involving corporate governance issues. This agreement assures directors that the corporation will indemnify them for expenses and liabilities incurred in defending such actions. 5. Advancement for Derivative Actions: Similar to advancement agreements, this type of indemnification agreement allows directors to receive advancements for legal expenses while they are defending against derivative actions brought on behalf of the corporation. The Illinois Indemnification Agreement may contain specific provisions, such as specifying the scope of indemnification and the circumstances in which indemnification is applicable, addressing the process for making indemnification claims, establishing the standard of conduct required for indemnification eligibility, and outlining the procedures for determining the reasonableness of expenses. It is crucial for both the corporation and directors to understand the terms and conditions of the Illinois Indemnification Agreement to ensure that directors can fulfill their duties without worrying excessively about potential personal liabilities. Consulting legal counsel is advisable to draft or review this agreement professionally, considering the specific needs of the corporation and the protection required for its directors.
Illinois Indemnification Agreement between corporation and its current and future directors
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A Standard Clause to be inserted into a written executive employment contract detailing the corporate employer's obligation to reimburse the executive for losses incurred in legal proceedings related to service as a corporate director or officer.
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 ...
Indemnification is, generally speaking, a reimbursement by a company of its Ds&Os for expenses or losses they have incurred in connection with litigation or other proceedings relating to their service to the company.
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 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.
In most contracts, an indemnification clause serves to compensate a party for harm or loss arising in connection with the other party's actions or failure to act. The intent is to shift liability away from one party, and on to the indemnifying party.
In the indemnification agreement, the corporation agrees to reimburse the director or officer for losses incurred in legal proceedings related to their service as a corporate director or officer to the maximum extent permitted by law.