North Dakota Indemnification Agreement between corporation and its directors regarding method for determining whether standards for indemnification have been met

• Category: Corporations - Public - Indemnification
• State: Multi-State
• Control #: US-CC-17-158
• Format: Word; Rich Text

Description

17-158 17-158 . . . Indemnification Agreement between corporation and its directors and/or officers including future directors and officers containing detailed provisions relating to method for determining whether standards for indemnification or reimbursement have been met and making corporation responsible for all costs of determining whether a person is entitled to indemnification or reimbursement regardless of whether person is ultimately found to be entitled to indemnification

North Dakota Indemnification Agreement: An indemnification agreement is a legal contract that protects directors of a corporation from personal liability related to their corporate duties. In North Dakota, this agreement offers reassurance to directors, ensuring that they will be indemnified for any losses or expenses incurred during their service as long as certain standards are met. The North Dakota Indemnification Agreement between a corporation and its directors revolves around the method used to ascertain whether the standards for indemnification have been met. This agreement is designed to lay out the process and criteria for determining when directors qualify for indemnification. Key elements of the North Dakota Indemnification Agreement include: 1. Scope of Indemnification: The agreement establishes the extent of indemnification, detailing the protection provided to directors for eligible losses, expenses, judgments, fines, and settlements. It clarifies the types of claims covered, such as those arising from shareholder actions, legal proceedings, or regulatory investigations. 2. Standards for Indemnification: The agreement outlines the standards directors must meet to be eligible for indemnification. These standards generally require that the director acted in good faith, with the reasonable belief that their actions were in the corporation's best interest. It may also specify that the director acted without a conflict of interest, did not engage in reckless or intentional misconduct, and complied with applicable laws and regulations. 3. Review and Determination Process: The agreement explains how the determination of whether the standards for indemnification have been met will occur. It typically includes a review process by the corporation's board of directors, an independent committee, or legal counsel who will assess the facts and circumstances of the director's actions. This ensures a fair and objective evaluation. 4. Advancement of Expenses: The agreement may include provisions for the advancement of expenses to directors to cover legal fees and related costs during the indemnification process. This is to prevent directors from facing financial hardship while awaiting a final determination. Different Types of North Dakota Indemnification Agreements: 1. General Indemnification Agreement: This is the standard agreement that outlines the method for determining whether directors meet the standards for indemnification as discussed above. 2. Advanced Indemnification Agreement: Some corporations opt to provide advanced indemnification agreements to their directors. These agreements go a step further and allow for upfront indemnification, eliminating the need for directors to bear initial costs before reimbursement. 3. Indemnification Agreement with Limits: In certain cases, a corporation may choose to impose limits on the indemnification provided to directors. These limitations can include monetary caps on indemnification, restrictions on certain types of claims, or setting thresholds for the director's liability to be eligible for indemnification. It is essential for corporations and directors in North Dakota to understand the North Dakota Indemnification Agreement, its different types, and the process for determining eligibility for indemnification. Seeking legal counsel in drafting and reviewing such agreements is highly recommended ensuring compliance with North Dakota laws and regulations.