麻豆官网

Indemnification Agreement

A comprehensive officer and director indemnification agreement ensuring maximum protection under Delaware law, with expense advancement, D&O tail coverage, and change-of-control protections.

1. Scope of Indemnification (Section 2)

The company agrees to indemnify the indemnitee against Expenses (attorneys’ fees, court costs, expert fees, travel costs) and Other Liabilities (judgments, fines, penalties, settlement amounts) arising from any Claim related to the indemnitee’s service. The standard of conduct requires the indemnitee to have acted in good faith and in a manner reasonably believed to be in or not opposed to the company’s best interests鈥攖he broadest standard permitted under Delaware law.

2. Expense Advancement (Section 3)

The company must advance all Expenses within 30 days of a written demand鈥攂efore any determination of whether the indemnitee is ultimately entitled to indemnification. The indemnitee provides a written undertaking to repay if later found not entitled. This is critical: without advancement, the right to indemnification is meaningless if the person can’t afford to mount a defense. The undertaking is unsecured and interest-free, as required by DGCL Section 145(e).

3. Burden of Proof (Sections 2 & 10)

The agreement creates a presumption of entitlement to indemnification. Anyone seeking to deny indemnification bears the burden of proof by clear and convincing evidence. This is a significant protection鈥攎ost disputes about indemnification are won or lost based on who carries the burden.

4. D&O Insurance & Tail Coverage (Section 11)

The company must maintain D&O liability insurance with coverage at least substantially comparable to current policies. Upon a change of control, the company must purchase a “tail” or “run-off” policy covering claims arising from pre-change events for at least six years鈥攅nsuring coverage doesn’t lapse when a startup is acquired.

5. Change of Control Protections (Section 25)

In the event of a Change of Control (merger, asset sale, or shift in board composition), any determination of indemnification rights must be made by Independent Counsel selected by the indemnitee鈥攏ot the surviving company’s board. The successor entity must expressly assume all obligations under the agreement.

6. Exceptions (Section 12)

Indemnification is not available for: (a) conduct adjudicated to be deliberately dishonest or knowingly fraudulent; (b) liability under Section 16(b) of the Exchange Act (short-swing profits); or (c) claims initiated by the indemnitee (unless to enforce rights under this agreement). These carve-outs are standard under Delaware law.

Indemnification agreements are generally considered “market standard” for venture-backed companies, and most provisions are not heavily negotiated. However, certain terms do receive attention:

Standard of Conduct: Companies sometimes push for a higher standard (e.g., requiring the indemnitee to have acted “in the best interests” rather than “not opposed to the best interests”). Indemnitees should resist narrowing the standard below what DGCL Section 145 permits.

Advancement Timeline: The 30-day advancement window is market. Some companies try to extend to 45 or 60 days, but experienced counsel pushes back鈥攄elayed advancement defeats its purpose. Delaware courts have enforced advance payment obligations strictly.

Settlement Authority: Some forms require company consent before the indemnitee can settle a claim. This template requires approval (not to be unreasonably withheld), which is the balanced approach.

Tail Coverage Duration: Six years is market standard for D&O tail policies. Some agreements specify only three years, but sophisticated indemnitees negotiate for six to match the typical statute of limitations for securities claims.

Cybersecurity Incident Coverage

Recent filings increasingly define “Claim” to explicitly include regulatory inquiries and government investigations arising from cybersecurity incidents, data breaches, and AI system failures. As SEC cyber disclosure rules (adopted December 2023) expand officer liability exposure, explicit coverage language provides certainty where prior forms were ambiguous.

ESG / Climate Disclosure Indemnification

With the SEC’s climate disclosure rules and California’s SB 253/SB 261 requirements, officers face new liability for environmental and sustainability reporting. Leading forms now explicitly cover claims arising from ESG disclosures, carbon accounting errors, and greenwashing allegations.

SPAC/De-SPAC Specific Protections

Post-2024 indemnification agreements in SPAC contexts include protections against claims arising from the de-SPAC process, including projections made during the business combination, and liability under the SEC’s 2024 final rules on SPAC transactions.

Expanded Change of Control Definition

2025-2026 filings broaden the Change of Control trigger to include changes in beneficial ownership thresholds (typically 30-50%), proxy contests resulting in board turnover, and dissolution or liquidation events. Several recent filings also include “constructive” change of control provisions triggered by material asset dispositions exceeding 50% of consolidated assets.

Fee-Shifting for Enforcement Actions

An increasing number of agreements include fee-shifting provisions requiring the company to pay the indemnitee’s legal fees incurred in enforcing the indemnification agreement itself鈥攔egardless of outcome. Delaware courts have upheld such provisions.

This template is designed for Delaware corporations granting indemnification to directors, officers, and key employees. To customize:

Step 1: Fill in the bracket fields: [COMPANY NAME], [STATE OF INCORPORATION], [INDEMNITEE NAME], [DATE], and [INDEMNITEE TITLE].

Step 2: Review the definitions in Section 1 to confirm they match your company’s organizational documents and any existing D&O insurance policy terms.

Step 3: Confirm the advancement timeline (30 days is market standard) and tail coverage period (6 years recommended).

Step 4: Review the exceptions in Section 12 and consider whether additional carve-outs are needed for your specific situation.

Step 5: Have the agreement reviewed by qualified legal counsel before execution.