New Mexico Indemnification Agreement between Corporation and its Directors: Method for Determining Standards for Indemnification An indemnification agreement in New Mexico is a legal contract that provides protection and financial support to directors of a corporation, ensuring they are shielded from personal liability for actions taken in their official capacity. This agreement outlines the method for determining whether the standards for indemnification have been met by the directors. Key Elements of a New Mexico Indemnification Agreement: 1. Directors' Rights and Responsibility: The agreement clearly defines the rights and responsibilities of directors in carrying out their fiduciary duties, ensuring they act in the best interest of the corporation and its shareholders. 2. Scope of Indemnification: The agreement specifies the extent of indemnification provided to directors, including legal fees, damages, judgments, and settlements related to claims made against them during their tenure as directors. 3. Determination of Standards: The agreement outlines the method for determining whether the standards for indemnification have been met. These standards typically include acting in good faith, reasonably believing actions are in the corporation's best interest, and not engaging in willful misconduct or negligence. 4. Advancement of Expenses: The agreement explains the procedure for advancing legal expenses to directors during legal proceedings. This provision ensures that directors can defend themselves promptly without facing personal financial burdens. 5. Board Review and Decision: The agreement establishes a process for the board of directors to review and decide on indemnification requests. Typically, an independent committee is formed to evaluate the director's actions and determine if they meet the required standards for indemnification. Different Types of New Mexico Indemnification Agreements: 1. Standard Indemnification Agreement: This is the most common type of agreement, providing directors with the basic protections and financial support outlined above. 2. Enhanced Indemnification Agreement: Some corporations may choose to offer enhanced protections to directors, expanding the scope of indemnification to include additional actions or increasing the financial coverage provided. 3. Limited Indemnification Agreement: In certain cases, corporations may limit the extent of indemnification available to directors. This could be due to financial constraints, highly risky activities, or specific circumstances specified within the agreement. 4. Indemnification Agreement with Separate Provisions for Officers and Directors: Corporations may choose to separate agreements for officers and directors, each catering to the specific roles and responsibilities of the individual. In conclusion, a New Mexico Indemnification Agreement acts as a safeguard, ensuring directors of a corporation are protected from personal liability for their actions. By establishing clear standards for indemnification and outlining the method for determining their mettle, this agreement provides directors with confidence in carrying out their duties while promoting corporate governance and accountability.
New Mexico Indemnification Agreement between corporation and its directors regarding method for determining whether standards for indemnification have been met
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Level One: Broad Form Indemnification. Broad form indemnification requires the indemnitor to pay not only for losses for which it is responsible but also for losses solely caused by the indemnitee. ... Level Two: Intermediate Form Indemnification. ... Level Three: Limited Form Indemnification.
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 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.
What Are the Types of Indemnity Clauses? Bare Indemnity. Here, the supplier must compensate the affected party to cover losses caused by circumstances predefined in the contract. ... Third-party Indemnity. A third-party indemnity applies to third-party claims made against one of the parties. ... Inter-party Indemnity.
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.
Indemnification Agreement to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him. Also to make good; to compensate; to make reimbursement to one of a loss already incurred by him.
In the indemnity clause, one party commits to compensate another party for any prospective loss or damage. More common is in insurance contracts, in exchange for premiums paid by the insured to the insurer, the insurer offers to compensate the insured for any potential damages or losses.
Methods of Providing Indemnity Cash payment. Replacement. Reinstatement. Repair.