Shareholder Indemnification Agreement Template for United States

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Key Requirements PROMPT example:

Shareholder Indemnification Agreement

"Need a Shareholder Indemnification Agreement for our Delaware-incorporated tech startup, covering five major shareholders who are investing $2M each in March 2025, with specific provisions for cybersecurity-related risks and regulatory compliance matters."

Document background
The Shareholder Indemnification Agreement is essential when companies seek to provide protection to their shareholders against potential losses or legal expenses arising from their investment or position. This document becomes particularly important in situations involving corporate transactions, regulatory investigations, or potential litigation. Under U.S. law, it defines the scope and limitations of the company's obligation to indemnify shareholders, ensuring compliance with both federal securities regulations and state corporate laws. The agreement typically includes detailed procedures for making claims, conditions for indemnification, and any exclusions or limitations.
Suggested Sections

1. Parties: Identification of the company and shareholders involved in the agreement

2. Background: Context and purpose of the indemnification agreement

3. Definitions: Key terms used throughout the agreement including 'Indemnified Party', 'Loss', 'Claims', and 'Proceedings'

4. Scope of Indemnification: Details of what actions and circumstances are covered by the indemnification

5. Procedure for Claims: Process for making and handling indemnification claims, including notice requirements and defense procedures

6. Duration: Term of the agreement and survival provisions

7. Governing Law and Jurisdiction: Specification of applicable law and courts having jurisdiction

Optional Sections

1. Insurance Provisions: Details of D&O insurance coverage and its interaction with indemnification obligations

2. Advancement of Expenses: Terms for advancing legal fees and expenses before final disposition of claims

3. Subrogation Rights: Rights of company to recover from third parties and cooperation requirements

4. Non-Exclusivity: Clarification that rights under this agreement are not exclusive of other indemnification rights

Suggested Schedules

1. Schedule A - Covered Claims: Detailed list of specific claims or circumstances covered by the indemnification

2. Schedule B - Excluded Claims: Specific exclusions from indemnification coverage

3. Appendix 1 - Claim Form: Standard form for submitting indemnification claims

4. Appendix 2 - Notice Requirements: Detailed procedures and requirements for providing notice of claims

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

Industries

Securities Act of 1933: Federal law that regulates the offering and sale of securities, requiring registration and disclosure requirements that may impact indemnification provisions

Securities Exchange Act of 1934: Federal law governing secondary market trading and ongoing reporting requirements for public companies, including disclosure of material indemnification arrangements

Sarbanes-Oxley Act 2002: Federal law establishing enhanced corporate governance and financial disclosure standards, affecting indemnification provisions for officers and directors

Dodd-Frank Act: Federal legislation implementing financial reforms that may impact corporate governance and indemnification structures

Delaware General Corporation Law: Key state corporate law framework often used as a model, particularly Section 145 which governs corporate indemnification rights

State Corporate Laws: Specific corporate laws of the state where the company is incorporated, governing permissible indemnification scope

State Securities Regulations: State-specific securities laws ('Blue Sky Laws') that may affect indemnification provisions

Internal Revenue Code: Federal tax law considerations regarding tax treatment of indemnification payments and related deductions

State Tax Laws: State-specific tax implications for indemnification payments and arrangements

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

Mandatory Indemnification Rules: Legal requirements for when a corporation must indemnify its officers and directors

Permissive Indemnification Rules: Legal framework for when a corporation may choose to indemnify its officers and directors

Advancement of Expenses: Legal provisions governing when and how legal expenses can be advanced to officers and directors

Fiduciary Duty Laws: Legal principles governing the duties of care and loyalty owed by corporate officers and directors

Public Policy Restrictions: State-specific public policy limitations on the scope and enforcement of indemnification provisions

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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