A Massachusetts Indemnification Agreement between a corporation and its current and future directors is a legal document that outlines the terms and conditions under which the corporation agrees to indemnify its directors for any expenses, liabilities, or losses they may incur while performing their duties on behalf of the corporation. This agreement serves as a protection mechanism for directors, ensuring that they will be compensated for any legal costs, settlement amounts, or judgments that arise due to their actions taken in good faith and in the best interest of the corporation. The purpose of the agreement is to alleviate potential financial burdens faced by directors when faced with legal proceedings and to attract qualified individuals to serve as directors by providing them with a sense of security. The Massachusetts Indemnification Agreement typically includes provisions related to the scope of indemnification, the process and limitations of reimbursement, and the procedure for making claims. It outlines the circumstances under which the corporation is required to provide indemnification, such as when directors are defending legal actions brought against them in their capacity as directors. The agreement may also include circumstances where the corporation has the discretion to provide indemnity, such as in cases where a director successfully settles a legal claim or avoids liability. Under Massachusetts law, there are two primary types of Indemnification Agreements: 1. Indemnification Agreement with Advancement of Expenses: This type of agreement ensures that the corporation will advance funds to cover a director's legal expenses upfront before the final resolution of a legal proceeding. The agreement would specify the conditions under which advancement of expenses is available and how the reimbursement will be handled. 2. Indemnification Agreement Without Advancement of Expenses: In this type of agreement, the corporation agrees to indemnify the director but does not advance any funds to cover legal expenses. The directors would be responsible for covering the legal costs themselves, and if they are successful in defending the legal action, they can then seek reimbursement from the corporation. It is important for directors and corporations to carefully review and negotiate the terms of the Massachusetts Indemnification Agreement to ensure that it aligns with the specific needs and requirements of the corporation. In some cases, additional provisions may be included, such as an obligation for the directors to provide notice of any potential claims and potential limitations on indemnification in cases of proven misconduct or bad faith. In summary, a Massachusetts Indemnification Agreement between a corporation and its current and future directors is a critical legal document that offers protection to directors, ensuring they are reimbursed for expenses and liabilities incurred while carrying out their responsibilities on behalf of the corporation. By clarifying the scope of indemnification and outlining the specific circumstances under which it is available, this agreement provides reassurance and security to directors, enabling them to perform their duties with confidence.
Massachusetts Indemnification Agreement between corporation and its current and future directors
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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.
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.
An indemnity agreement is a promise to hold another party harmless when that party suffers some injury, legal harm, or financial harm.
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 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.
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.
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.
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 ...