Indemnification Agreement (Updated July 2020) (NVCA)
The National Venture Capital Association (NVCA) Model Indemnification Agreement is a template contract that ensures a company will indemnify and advance expenses to its directors and officers—both current and former—for legal claims and liabilities incurred in connection with their service, to the fullest extent permitted by law.
This sample document is the work product of a national coalition of attorneys who specialize in venture capital financings, working under the auspices of the NVCA. This document is intended to serve as a starting point only, and should be tailored to meet your specific requirements. This document should not be construed as legal advice for any particular facts or circumstances. Note that this sample document presents an array of (often mutually exclusive) options with respect to particular deal provisions.
MODEL INDEMNIFICATION AGREEMENT
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About this template
What is this template?
This is a bilateral contract that creates a personal, vested right to indemnification for corporate fiduciaries. It is not a set of bylaws or a certificate of incorporation, but a separate document that protects the individual even if the corporate charter is amended. It specifically contains a 'double-trigger' for expense advancement and priority ranking between corporate and fund-level indemnitors.
When should you use it?
Use this when a high-level executive or board member joins a Delaware corporation and requires protection against personal liability for fiduciary acts. Use a standard Indemnity Clause within a Service Agreement instead if the individual is a junior employee or contractor without significant corporate governance authority.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1(a) | Proceedings Other Than Proceedings by or in the Right of the Company | Makes indemnification mandatory for third-party actions if the Indemnitee acted in good faith and not opposed to the Company's best interests. |
| 1(d) | Indemnification of Appointing Stockholder | Extends indemnification and advancement rights to venture capital funds that have appointed a representative to the Board of Directors. |
| 5 | Advancement of Expenses | Requires the Company to advance legal expenses within 30 days of a request, provided the Indemnitee signs a repayment undertaking. |
| 8(c) | Primacy of Indemnification | Establishes the Company as the indemnitor of first resort over any insurance or indemnification provided by a venture capital fund. |
| 9(b) | Exception to Right of Indemnification | Excludes indemnification for short-swing profit accounting under Section 16(b) of the Exchange Act or clawbacks under the Sarbanes-Oxley Act. |
| 20 | Governing Law and Consent to Jurisdiction | Subjects the agreement to Delaware law and grants the Delaware Court of Chancery exclusive jurisdiction over all disputes. |
Who it's for
- a Delaware corporation appointing a director nominee from a venture capital fund
- an officer or director seeking mandatory expense advancement during litigation
- a venture capital fund requiring primary indemnification from a portfolio company
- directors of a company preparing for an initial public offering
How long it runs and how it's signed
Law it's drafted under
United States note
This version is drafted for US law generally. Contract, employment and consumer rules vary by state — for example on non-competes and at-will employment. Tell GitLaw which state applies and it adjusts the draft.
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