CaseMark Director Indemnification Agreement
Drafts a binding indemnification agreement providing maximum permissible protection to a corporate director, including expense advancement, indemnification procedures, and D&O insurance coordination.
Prerequisites
- Corporate documents — certificate of incorporation, bylaws, prior indemnification agreements, board resolutions
- D&O insurance — current coverage terms, limits, carriers
- Party information — corporation legal name (matching articles), state of incorporation, director name and title(s)
- Scope — subsidiary/JV/benefit-plan service, appointment date, retroactive coverage needs
Gather Before Drafting
| Item | Why |
|---|---|
| Corporation legal name + entity type | Must match articles exactly |
| State of incorporation | Governs permissible indemnification scope |
| Director name + all titles | Coverage across all capacities |
| Related-entity service | Subsidiary/JV/benefit-plan board seats |
| Effective date | May predate agreement for retroactive coverage |
| Board authorization | Required for enforceability |
| Existing indemnification provisions | Consistency with bylaws/articles |
Document Structure
INDEMNIFICATION AGREEMENT
Parties / Effective Date
RECITALS
- Governing docs authorize indemnification
- Directors face personal liability exposure
- Contractual assurance needed to attract/retain directors
- Director relies on agreement to serve
- Board determined agreement serves corporate purpose
ARTICLE I — DEFINITIONS
ARTICLE II — INDEMNIFICATION
ARTICLE III — ADVANCEMENT OF EXPENSES
ARTICLE IV — DETERMINATION PROCEDURES
ARTICLE V — NOTICE AND DEFENSE
ARTICLE VI — NON-EXCLUSIVITY AND VESTED RIGHTS
ARTICLE VII — D&O INSURANCE
ARTICLE VIII — CONTRIBUTION
ARTICLE IX — GENERAL PROVISIONS
SIGNATURES
Key Definitions
| Term | Scope |
|---|---|
| Expenses | Attorneys' fees, court costs, transcripts, expert/witness fees, travel, duplicating, postage — plus judgments, fines, penalties, ERISA excise taxes, settlement amounts |
| Proceeding | Any threatened/pending/completed action, suit, arbitration, ADR, investigation, inquiry, admin hearing — derivative, third-party, civil, criminal, administrative, investigative; includes informal regulatory inquiries |
| Official Capacity | Director/officer/employee/agent of company; service at company's request for subsidiaries, JVs, trusts, benefit plans |
Core Articles
Art. II — Indemnification
- Indemnify to maximum extent permitted under state of incorporation
- Trigger: director made/threatened to be made party "by reason of" official capacity
- Conduct standard: good faith + reasonable belief action in/not opposed to company's best interests; criminal matters require no reasonable cause to believe conduct unlawful
- Derivative suits: expenses only (not settlement) unless court-approved
Art. III — Advancement of Expenses
- Mandatory advancement within 30 days of written request + documentation
- Director executes undertaking to repay if ultimately not entitled (unsecured, no financial-ability requirement)
- Advancement independent of indemnification determination
- Cannot deny advancement based on preliminary conduct finding
Art. IV — Determination Procedures
Priority order:
- Majority of disinterested directors (even if less than quorum)
- Committee of disinterested directors
- Independent legal counsel written opinion (no relationship within 5 years)
- Shareholder vote (excluding party-director shares)
Safeguards:
- Determination within 60 days of request
- Presumption director met standard; rebuttal requires clear and convincing evidence
- Failure to determine in 60 days = deemed approved
- Director may seek judicial determination; company bears burden of proof
- Company advances expenses for enforcement proceedings
Art. V — Notice and Defense
- Director notifies company promptly on service; late notice excused unless material adverse effect on defense
- Company may assume defense with director-approved counsel (consent not unreasonably withheld)
- Conflict of interest triggers separate counsel at company expense
- No settlement without company consent unless unconditional release + no liability admission
Art. VI — Non-Exclusivity and Vested Rights
- Non-exclusive — supplements bylaws, articles, other agreements, law
- Survival: continues after director ceases service; inures to heirs/executors
- Anti-diminishment: no amendment adversely affects rights for prior acts
Art. VII — D&O Insurance
- Agreement is primary; insurance is excess
- Rights not contingent on insurance availability
- Company covers director under D&O policies to same extent as any other director/officer
- Director entitled to insurance proceeds before company
Art. VIII — Contribution
- If indemnification unavailable, company contributes in fair proportion (relative benefit and fault)
- Expenses paid before judgments/fines/settlements
- Partial indemnification: indemnify to maximum extent permitted by law
Art. IX — General Provisions
| Provision | Standard |
|---|---|
| Governing law | State of incorporation (no conflicts-of-law) |
| Jurisdiction | Exclusive — state of incorporation or federal courts therein |
| Term | Later of 10 years after cessation of service or final termination of covered proceedings |
| Successor obligation | Survives merger/consolidation/asset transfer; successor must assume |
| Severability | Reform invalid provisions to minimum extent necessary |
| Fee-shifting | Director recovers expenses for successful enforcement |
| Amendment | Written instrument signed by both parties |
| Notices | Written; personal delivery, confirmed email, overnight courier, or certified mail |
| Counterparts | Multiple; electronic signatures valid |
Signatures
- Corporation: authorized officer (CEO/President/Secretary), printed name, title, date, representation of authority
- Director: printed name, signature, date
Drafting Checklist
- Verify state statute — Delaware permits broadest indemnification; other states may limit scope
- Draft to maximum permissible scope; do not self-limit below statutory ceiling
- Confirm consistency with existing bylaws/articles indemnification provisions
- Include undertaking to repay — statutory requirement in most states
- Apply presumption in favor of indemnification with clear-and-convincing-evidence rebuttal standard
- For public companies, add board-authorization representations
- Use defined terms consistently (capitalized) after first definition
- Review uploaded governance documents for company-specific conventions