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before the final determination of liability. The director must agree to
repay the corporation if found liable on grounds that do not permit
indemnification.
x Article XII of the Concept Co-op’s Certificate of Incorporation, providing
for indemnification, is attached as Appendix B.
x D&O Liability Insurance
x Director and officer liability insurance provides coverage against losses in
connection with claims made against directors and officers for wrongful acts.
x The terms “losses” and “wrongful acts” are defined in the policy.
x Acts involving dishonesty or intentional acts usually are excluded from
coverage.
x D&O coverage is important to supplement indemnification due to the
possibility that the corporation may not have sufficient assets to cover
obligations to indemnify directors and officers.
x Depending on market conditions, the premiums for D&O insurance may be
expensive and the coverage narrow. In the aftermath of well publicized cases
in the mid-1980s such as Smith v. Van Gorkum, the absence of affordable
D&O coverage was a factor in many states enacting statutes to increase
director protection from liability.
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