Maryland Indemnification Agreement between a corporation and its current and future directors is a legally binding contract that outlines the terms and conditions under which the corporation agrees to indemnify and protect its directors from any legal liabilities or expenses incurred during their service on behalf of the company. In Maryland, there are two primary types of Indemnification Agreements applicable to corporate directors: 1. Standard Indemnification Agreements: These agreements provide basic indemnification protection to current directors of the corporation. The agreement outlines the circumstances under which the corporation will assume responsibility for legal expenses, settlements, judgments, and other costs incurred as a result of the director's actions or decisions made in good faith and in the best interest of the corporation. These agreements generally align with the provisions set forth in Maryland General Corporation Law. 2. Enhanced Indemnification Agreements: Some corporations in Maryland may choose to offer enhanced indemnification agreements to their directors, providing more extensive protection than what is mandated by the state law. These agreements often include additional provisions and benefits, such as expanded coverage for legal fees, advancement of expenses, coverage for derivative claims, and protection in certain situations where indemnification might otherwise be limited by state law. The Maryland Indemnification Agreement between a corporation and its directors typically includes the following key provisions: 1. Scope of Indemnification: The agreement defines the types of claims, actions, suits, or proceedings for which the corporation agrees to indemnify the directors. This may include civil, criminal, administrative, or investigative proceedings related to their role as directors. 2. Advancement of Expenses: The agreement specifies whether the corporation will advance funds to the directors to cover legal expenses, including attorney fees, court costs, and other related expenses. It may outline the process and conditions for seeking such advancements. 3. Indemnification Procedures: The agreement outlines the process for directors to seek indemnification, including notice requirements, documentation, and cooperation with the corporation during any legal proceedings. 4. Limitations on Indemnification: The agreement may specify certain circumstances or actions that would limit or exclude the corporation's indemnification obligation. For example, intentional misconduct, fraud, or violations of the duty of loyalty may be excluded from indemnification. 5. Survival of Indemnification: The agreement may include provisions stating that the director's right to indemnification will survive the termination of their service to the corporation, protecting them even after leaving the board. It's important to note that the specific terms and language used in Maryland Indemnification Agreements may vary depending on the individual corporation's bylaws and the negotiations between the directors and the corporation. Directors considering an Indemnification Agreement should consult with legal counsel to ensure that their interests and potential liabilities are adequately protected.
Maryland Indemnification Agreement between corporation and its current and future directors
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FAQ
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.
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.
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.
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.
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.
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.
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.