1---2name: director-indemnification-agreement3description: Drafts U.S. director indemnification agreements maximizing protection under state corporate law, with advancement of expenses and determination procedures. Use when drafting or updating a director indemnification agreement, onboarding directors, strengthening governance beyond bylaws, or coordinating with D&O coverage. Triggers: indemnification agreement, director advancement, corporate governance, D&O, DGCL 145.4---5
6# Director Indemnification Agreement
7
8Drafts an enforceable director indemnification agreement under the state of incorporation with clear advancement and determination procedures.
9
10## Quick Start
11
12Gather before drafting:
13
141. State of incorporation and governing statute
152. Charter and bylaws (indemnification/advancement provisions)
163. Board authorization status or resolutions
174. Director name, titles, start date, covered capacities (subsidiaries, affiliates, benefit plans)
185. D&O insurance policies and coordination preferences
196. Prior indemnification agreements or house style template
20
21## Intake Checklist
22
23- [ ] Governing law matches state of incorporation
24- [ ] Coverage scope: director only, or also officer/employee roles
25- [ ] Retroactive to prior service or prospective only
26- [ ] Advancement timing (default: 30 days from request)
27- [ ] Determination method order and deadlines
28- [ ] Presumption in favor of indemnification: yes/no
29- [ ] Fee shifting on enforcement actions: yes/no
30- [ ] Insurance priority: company primary (default) or insurance primary
31- [ ] Term and post-service survival period
32
33## Required Definitions
34
35| Term | Notes |
36|---|---|
37| Proceeding | Threatened, pending, or completed civil, criminal, administrative, investigative, arbitration, or ADR matter |
38| Expenses | All fees, costs, disbursements: attorneys, experts, witnesses, travel, transcripts, settlements where permitted |
39| Indemnifiable Event | Made party or participant by reason of service to Company or at Company's request |
40| Independent Counsel | Disinterested counsel meeting independence criteria |
41
42## Agreement Structure
43
44```
451. Definitions
462. Indemnification
473. Advancement of Expenses
484. Procedure for Advancement Requests
495. Procedure for Indemnification Determinations
506. Presumptions and Burdens
517. Enforcement; Fee Shifting
528. Notice of Proceedings; Defense and Settlement
539. Non-Exclusivity; Subrogation; Survival
5410. Insurance
5511. Contribution; Partial Indemnification
5612. Term; Successors
5713. Governing Law; Forum
5814. Severability; Amendment; Notices; Counterparts
59```
60
61## Core Clauses
62
63| Section | Required Content |
64|---|---|
65| Recitals | Authority to indemnify to fullest extent permitted; director reliance to serve |
66| Indemnification Grant | Maximum extent permitted by law; statutory conduct standard; derivative action settlement limits if required |
67| Advancement | Prompt advancement on written request; fixed payment deadline; undertaking to repay after final non-appealable denial; not conditioned on initial conduct determination |
68| Determination | Ordered decision makers; Company pays independent counsel; deadline for decision; presumption favoring indemnification; deemed approval if no timely determination |
69| Enforcement | Judicial determination right; fee shifting on successful enforcement; Company bears clear-and-convincing burden when contesting |
70| Notice and Defense | Prompt written notice; no forfeiture absent material prejudice; Company may assume defense with director consent to counsel; separate counsel at Company expense for conflicts; settlement consent with unconditional-release carveout |
71| Non-Exclusivity/Survival | Additive to charter, bylaws, other agreements; survives for heirs/estates; no retroactive impairment |
72| Insurance | Company obligation primary, not conditioned on insurance; equal coverage with other directors; notice of material policy changes |
73| Contribution | Equitable contribution if indemnity unavailable; prioritize Expenses over judgments/settlements |
74| General | Governing law of incorporation state; forum selection; successors assume obligations; severability; written amendment only; counterparts and e-signatures |
75
76## Decision Defaults
77
78| Issue | Default | Range |
79|---|---|---|
80| Advancement deadline | 30 days | 15-45 days |
81| Determination deadline | 60 days | 30-90 days |
82| Presumption | Director favored | No presumption (higher risk) |
83| Insurance priority | Company primary | Insurance primary (rare) |
84
85## Pitfalls
86
87- Verify state statute terminology for conduct standards and limits; flag uncertain citations with `[VERIFY]` (e.g., DGCL 145 `[VERIFY]`)
88- Never promise indemnification for acts prohibited by law, bad faith, or improper personal benefit
89- Align with charter/bylaws — do not conflict with exculpation or indemnification limitations
90- Keep advancement independent from ultimate entitlement determination
91- Include explicit retroactivity rule if covering past service
92- For public or regulated companies, add required board/committee approvals and securities law constraints
93- Avoid cooperation clauses that undermine defense strategy or waive privilege
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