Employee Indemnification Agreement Template for United States

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Key Requirements PROMPT example:

Employee Indemnification Agreement

"I need an Employee Indemnification Agreement for our Delaware-incorporated technology startup to protect our newly appointed CFO and two board members, with specific coverage for cybersecurity-related incidents and regulatory compliance matters, to be effective from March 1, 2025."

Document background
The Employee Indemnification Agreement serves as a critical tool for companies to attract and retain key personnel by providing protection against personal liability. This document becomes particularly important in today's litigious business environment where employees, especially senior executives and board members, face increasing exposure to legal claims. The agreement typically details the scope of protection, procedures for seeking indemnification, and conditions for expense advancement. It must comply with both federal and state corporate laws, particularly in Delaware where many U.S. corporations are registered. This type of agreement is often used in conjunction with D&O insurance policies to provide comprehensive protection.
Suggested Sections

1. Parties: Identifies the company providing indemnification and the employee being indemnified

2. Background: States the purpose of the agreement and the relationship between parties

3. Definitions: Defines key terms including 'Indemnifiable Event', 'Expenses', 'Proceeding', etc.

4. Scope of Indemnification: Details what types of claims and expenses are covered by the indemnification

5. Advancement of Expenses: Procedures for advancing legal fees and other expenses

6. Procedure for Determination of Entitlement: Process for determining whether indemnification is appropriate in specific cases

7. Notice Provisions: Requirements for notifying the company of claims or proceedings

8. Term and Duration: Period of effectiveness and survival provisions

Optional Sections

1. Insurance Provisions: Details about D&O insurance coverage when the company maintains D&O insurance

2. Change in Control Provisions: Special provisions that apply in case of company ownership changes, particularly relevant for public companies or those likely to be acquired

3. Severability: Provisions for maintaining validity if parts are found unenforceable, particularly important when agreement covers multiple jurisdictions

4. Contribution: Rights to contribution from other indemnified parties when multiple parties might share liability

Suggested Schedules

1. Form of Undertaking: Standard form for employee to request advancement of expenses

2. Insurance Schedule: Details of existing D&O insurance coverage

3. Form of Notice: Template for providing notice of claims or proceedings

4. Excluded Claims Schedule: List of specific claims or circumstances excluded from indemnification

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Industries

Securities Exchange Act 1934: Federal law governing publicly traded companies, including provisions for corporate officer and director indemnification requirements

Sarbanes-Oxley Act 2002: Corporate governance legislation affecting indemnification provisions, particularly for public companies and their officers

Dodd-Frank Act: Financial reform legislation that may impact corporate indemnification obligations and limitations

Delaware General Corporation Law ยง145: Key state law provision governing corporate indemnification rights and obligations, particularly relevant for Delaware corporations

State Corporation Laws: Various state-specific laws governing corporate indemnification rights and limitations in respective jurisdictions

Fair Labor Standards Act: Federal employment law that may affect scope of employment considerations in indemnification agreements

Civil Rights Act Title VII: Federal anti-discrimination law affecting employment relationships and potential indemnification exclusions

Americans with Disabilities Act: Federal law protecting disabled employees' rights, relevant for indemnification scope and exclusions

Age Discrimination in Employment Act: Federal law protecting against age discrimination, affecting indemnification provisions and exclusions

Fiduciary Duty Obligations: Common law principles governing duties of loyalty and care, affecting scope of indemnifiable actions

Business Judgment Rule: Legal principle protecting good faith business decisions, relevant for determining indemnification eligibility

Agency Law Principles: Legal framework governing principal-agent relationships and scope of employment considerations

D&O Insurance Regulations: State and federal regulations governing Directors and Officers insurance coverage and its interaction with indemnification

Internal Revenue Code: Federal tax provisions affecting the tax treatment of indemnification payments and reimbursements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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