The North Dakota Indemnification Agreement is a legally binding document between a corporation and its current and future directors that ensures protection and compensation for directors in case of legal actions or liabilities arising from their roles and responsibilities within the company. This agreement serves to provide a sense of security and encouragement for individuals to take up directorship positions without the fear of personal financial loss. One common type of North Dakota Indemnification Agreement is the "Standard Indemnification Agreement." This agreement outlines the corporation's obligation to indemnify directors against all legal expenses, including attorney fees, court costs, and judgments, incurred while acting in good faith and within the scope of their corporate duties. Another type is the "Advanced Indemnification Agreement," which offers broader protection to directors. In addition to the standard indemnification coverage, it may include provisions for indemnification in situations where directors acted in their own best interest or engaged in corporate transactions that may have posed a conflict of interest. The "Exculpation Agreement" is a variation of the North Dakota Indemnification Agreement that provides a limited level of protection to directors. It indemnifies directors against certain types of liabilities, excluding intentional misconduct, bad faith, or unlawful acts. The "Indemnity and Advancement Agreement" is another type of North Dakota Indemnification Agreement that not only covers indemnification but also grants advances for legal expenses directly to directors. This provision ensures that directors can access necessary funds to mount a legal defense without immediate personal financial burden. The North Dakota Indemnification Agreement, irrespective of its specific type, allows corporations to attract and retain qualified directors who can make informed decisions in the best interest of the company. Directors can serve with confidence, knowing that their personal assets are shielded in the event of legal action. This agreement reinforces the trust between directors and corporations while fostering a conducive environment for effective corporate governance.
North Dakota Indemnification Agreement between corporation and its current and future directors
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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 ...
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.
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.
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.
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 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.
There are three main types of express indemnity clauses: broad form, intermediate form, and limited form. Broad form express indemnity clauses require the indemnitor to hold the indemnitee harmless for all liability, even if the indemnitee is solely at fault.