What is this Indemnification Provision in my Contract?

Definition

Indemnification is the action of protecting (someone) by promising to pay for the cost of possible future damage, loss, or injury. In a contract setting, it is a provision where one party promises to pay the costs of potential future liabilities incurred by the other party as a result of some defined set of circumstances that might occur because of the contractual arrangement.

Examples

The most common example of an indemnification agreement is an insurance policy. In an insurance policy contract, […]

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Use of Nonqualified Deferred Compensation for Exit or Succession Planning-Part 2

As an owner recognizes these issues, a nonqualified deferred compensation plan provides the owner with a tool he or she can use to advance the goals.

First, the owner can work to put in place a plan which provides certain key employees with significant benefits for growing the business to the size it needs to be to meet the needs. The owner can promise the key employees a portion of the growth of the company over and beyond its existing levels […]

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Use of Nonqualified Deferred Compensation for Exit or Succession Planning-Part 1

One possible use of nonqualified deferred compensation plans comes up in the context of exit or succession planning. As a business owner begins to contemplate his or her retirement from a business, several issues become apparent. One is that they need to make sure the business has sufficient value that it can be transferred for the value the owner needs upon retirement. Another is that the business’s value to a successor is dependent on its ability to operate without the […]

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