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Director Indemnification Agreement

director-indemnification-agreement

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.

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SKILL.md

Full skill instructions

Director Indemnification Agreement

Drafts an enforceable director indemnification agreement under the state of incorporation with clear advancement and determination procedures.

Quick Start

Gather before drafting:

  1. State of incorporation and governing statute
  2. Charter and bylaws (indemnification/​advancement provisions)
  3. Board authorization status or resolutions
  4. Director name, titles, start date, covered capacities (subsidiaries, affiliates, benefit plans)
  5. D&O insurance policies and coordination preferences
  6. Prior indemnification agreements or house style template

Intake Checklist

  • Governing law matches state of incorporation
  • Coverage scope: director only, or also officer/​employee roles
  • Retroactive to prior service or prospective only
  • Advancement timing (default: 30 days from request)
  • Determination method order and deadlines
  • Presumption in favor of indemnification: yes/​no
  • Fee shifting on enforcement actions: yes/​no
  • Insurance priority: company primary (default) or insurance primary
  • Term and post-service survival period

Required Definitions

TermNotes
ProceedingThreatened, pending, or completed civil, criminal, administrative, investigative, arbitration, or ADR matter
ExpensesAll fees, costs, disbursements: attorneys, experts, witnesses, travel, transcripts, settlements where permitted
Indemnifiable EventMade party or participant by reason of service to Company or at Company's request
Independent CounselDisinterested counsel meeting independence criteria

Agreement Structure

1. Definitions
2. Indemnification
3. Advancement of Expenses
4. Procedure for Advancement Requests
5. Procedure for Indemnification Determinations
6. Presumptions and Burdens
7. Enforcement; Fee Shifting
8. Notice of Proceedings; Defense and Settlement
9. Non-Exclusivity; Subrogation; Survival
10. Insurance
11. Contribution; Partial Indemnification
12. Term; Successors
13. Governing Law; Forum
14. Severability; Amendment; Notices; Counterparts

Core Clauses

SectionRequired Content
RecitalsAuthority to indemnify to fullest extent permitted; director reliance to serve
Indemnification GrantMaximum extent permitted by law; statutory conduct standard; derivative action settlement limits if required
AdvancementPrompt advancement on written request; fixed payment deadline; undertaking to repay after final non-appealable denial; not conditioned on initial conduct determination
DeterminationOrdered decision makers; Company pays independent counsel; deadline for decision; presumption favoring indemnification; deemed approval if no timely determination
EnforcementJudicial determination right; fee shifting on successful enforcement; Company bears clear-and-convincing burden when contesting
Notice and DefensePrompt 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
Non-Exclusivity/​SurvivalAdditive to charter, bylaws, other agreements; survives for heirs/​estates; no retroactive impairment
InsuranceCompany obligation primary, not conditioned on insurance; equal coverage with other directors; notice of material policy changes
ContributionEquitable contribution if indemnity unavailable; prioritize Expenses over judgments/​settlements
GeneralGoverning law of incorporation state; forum selection; successors assume obligations; severability; written amendment only; counterparts and e-signatures

Decision Defaults

IssueDefaultRange
Advancement deadline30 days15-45 days
Determination deadline60 days30-90 days
PresumptionDirector favoredNo presumption (higher risk)
Insurance priorityCompany primaryInsurance primary (rare)

Pitfalls

  • Verify state statute terminology for conduct standards and limits; flag uncertain citations with [VERIFY] (e.g., DGCL 145 [VERIFY])
  • Never promise indemnification for acts prohibited by law, bad faith, or improper personal benefit
  • Align with charter/​bylaws — do not conflict with exculpation or indemnification limitations
  • Keep advancement independent from ultimate entitlement determination
  • Include explicit retroactivity rule if covering past service
  • For public or regulated companies, add required board/​committee approvals and securities law constraints
  • Avoid cooperation clauses that undermine defense strategy or waive privilege

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