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Indemnification and Hold Harmless Agreement Template

This indemnification and hold harmless agreement protects directors and officers of a company from liabilities and expenses arising from their corporate service. It sets out what losses are covered, when the company must pay, how notice and defense are handled, and how the agreement interacts with bylaws and insurance.

Use this template to define covered proceedings, monthly payment or advancement mechanics, notice requirements and defense control, carve-outs for non-indemnifiable losses, coordination with D&O insurance, survival after service ends, dispute venue, and fee-shifting for successful enforcement.

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Indemnification and Hold Harmless Agreement

Cumberland Pharmaceuticals Inc.

Indemnification and Hold Harmless Agreement

THIS INDEMNIFICATION AND HOLD HARMLESS AGREEMENT (this “Agreement”) is made as of , by and between , a corporation (the “Company”), and (“Indemnitee”).

WHEREAS, in order to incentivize Indemnitee to serve, or to continue to serve, as a director of the Company (in any such case, the “Service”), the Company has agreed to indemnify Indemnitee as set forth below;

NOW, THEREFORE, in consideration of the foregoing and certain other good and valuable consideration, the receipt of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

Indemnification

Effective as of the original date of Indemnitee’s beginning Service, the Company shall indemnify Indemnitee and hold Indemnitee harmless if Indemnitee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, and in any appeal in such action, suit or proceeding, and in any inquiry or investigation that could lead to such an action, suit or proceeding, against any and all liabilities, obligations (whether known or unknown, or due or to become due or otherwise), judgments, fines, fees, penalties, interest obligations, deficiencies, other actual losses (for example, verifiable lost income related to time spent defending such claim or action) and reasonable expenses (including, without limitation amounts paid in settlement, interest, court costs, costs of investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts) incurred or suffered by Indemnitee in connection with such action, suit or proceeding arising out of or pertaining to any actual or alleged action or omission which arises out of or relates to the fact that Indemnitee is or was serving as a director or officer of the Company or at the request of the Company as a director, officer, trustee, employee, or agent of or in any other capacity for another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent permitted by then applicable law and the Company’s Charter and Bylaws, each as amended (but in the case of any such amendment, only to the extent that such amendment permits the Company to provide the same or broader indemnification rights than permitted prior thereto) (each such liability, obligation, judgment, fine, fee, penalty, interest obligation, deficiency, other actual losses, and reasonable expenses being referred to herein as a “Loss,” and collectively, as “Losses”).

Payment

Any Loss incurred by Indemnitee shall be paid in full by the Company on a regular, monthly basis. This indemnity applies even if Indemnitee caused the Loss through his or her negligence, strict liability or other fault; however, if any Losses for which Indemnitee received payment from the Company under this Agreement are determined by final judicial decision from which there is no further right to appeal, to have been caused by Indemnitee under circumstances with respect to which indemnification is not permitted by applicable law or this Agreement (any such Loss, a “Non-Indemnification Loss”), Indemnitee shall repay to the Company such Losses paid on behalf of Indemnitee hereunder.

Term

The indemnification rights provided hereby to Indemnitee shall continue even though he may have ceased to be a director, officer, trustee, employee, or agent of or in any other capacity for the applicable entity.

Notice and Coverage Prior to Notice

Indemnitee shall give notice (the “Notice”) to the Company within 0 days after actual receipt of service or summons related to any action begun in respect of which indemnity may be sought hereunder or actual notice of assertion of a claim with respect to which he seeks indemnification; provided, however, that Indemnitee’s failure to give such notice to the Company within such time shall not relieve the Company from any of its obligations under Section 1 of this Agreement except to the extent the Company has been materially prejudiced by Indemnitee’s failure to give such notice within such time period. Upon receipt of the Notice, the Company shall assume the defense of such action, whereupon Indemnitee shall not be liable for any reasonable fees or expenses of counsel for Indemnitee or any other Losses incurred thereafter with respect to the matters set forth in the Notice and the Company shall reimburse Indemnitee for all reasonable expenses related to the action or claim incurred by Indemnitee prior to Indemnitee’s giving of the Notice.

Non-Exclusivity

The rights of Indemnitee hereunder shall be in addition to any rights that Indemnitee may have under the Company’s governance documents (e.g. Charter, Bylaws, etc.) (the “Governance Documents”), applicable law or otherwise and shall survive any termination, resignation, death or other dismissal of Indemnitee. No amendment or alteration of the Company’s Governance Documents shall adversely affect Indemnitee’s rights under the Governance Documents or this Agreement.

Insurance

To the extent the Company maintains, at its expense, an insurance policy or policies providing liability insurance with respect to the acts or omissions covered by this Agreement, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available thereunder.

Payment

The Company shall not be liable to Indemnitee under this Agreement to make any payment in connection with any claim against Indemnitee to the extent Indemnitee has otherwise actually received, and is entitled to retain, payment (under any insurance policy or otherwise) of the amounts otherwise indemnifiable hereunder.

Enforceability

The indemnification contained in this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including any direct or indirect successor by purchase, merger, consolidation, liquidation or otherwise to all or substantially all of the business and/or assets of the Company), spouses, heirs and personal and legal representatives.

Binding Obligation

If this Agreement or any portion hereof shall be found to be invalid on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless Indemnitee, as to costs, charges and expenses (including court costs and attorneys’ fees), judgments, fines, penalties and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, and in any appeal in such action, suit or proceeding, and in any inquiry or investigation that could lead to such an action, suit or proceeding, to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated and to the fullest extent permitted by applicable law.

Governing Law; Venue

This Agreement shall be construed in accordance with and governed by the laws of , without regard to the principles of conflicts of laws. The parties agree that any litigation directly or indirectly relating to this Agreement must be brought before and determined by a court of competent jurisdiction within , , and the parties hereby agree to waive any rights to object to, and hereby agree to submit to, the jurisdiction of such courts.

Right to Sue; Attorneys’ Fees and Costs

If a claim by Indemnitee for payment of Losses hereunder is not paid in full by the Company within 0 days after a written claim has been delivered to the Company, Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, Indemnitee shall be entitled to be paid also the reasonable costs and expenses of prosecuting such suit. In any suit brought by Indemnitee to enforce any right hereunder (including, without limitation, the right to indemnification), the burden of proving that Indemnitee is not entitled to such right shall be borne by the Company. If a claim by the Company for repayment of any Non-Indemnification Losses previously paid on behalf of Indemnitee hereunder is not repaid in full to the Company within 0 days after such ruling has been delivered to Indemnitee, the Company may at any time thereafter bring suit against Indemnitee to recover the unpaid amount.

Amendment

This Agreement may be amended, modified or supplemented only by a written instrument executed by each of the parties hereto.

Facsimile and Counterpart Signature

This Agreement may be executed by facsimile signature and in one or more counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

[ No signatories assigned ]
Pending
[ No signatories assigned ]
Pending

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Disclaimer: The original creator, the author of this template, and fynk GmbH are not responsible for any damages or liabilities that may result from using this template. This template should not be considered a substitute for legal advice, and consulting with a legal professional is recommended before use. fynk GmbH, the original creator, and the author do not provide legal advice and will not be held accountable for any legal consequences arising from its use.

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Background Information

Learn how to create and use a D&O indemnification agreement in pharma

Understand when to use board and executive indemnification, what to include for regulated industries, and how to align with bylaws and D&O insurance to reduce personal risk for directors and officers.

This template is notable because it gives directors and officers a broad layer of personal protection against lawsuits and claims that may arise from serving the company. Unlike relying only on bylaws or insurance, it creates a direct contractual right to indemnification, ensuring the individual can recover legal fees, settlements, and other losses even after leaving their role. It also shifts the burden of proof onto the company in disputes, making it a powerful safeguard for attracting and retaining top leadership.

Why you need a hold harmless agreement

If your business sells, distributes, or sources products, you’re already carrying risk. A single defective shipment, mislabeled ingredient, or regulatory non-compliance can spark lawsuits, government investigations, or costly recalls. The problem? Even if the issue comes from your supplier, the claims often land on your desk first as the buyer or distributor.

Using a hold harmless agreement template ensures you don’t miss critical protections. Rather than starting from scratch or relying on vague “boilerplate” language, you get a ready-made structure that guarantees coverage in the areas that matter most: product safety, compliance with laws, indemnification and hold harmless, and supplier insurance obligations.

What is a hold harmless and indemnification agreement?

At its core, a hold harmless and indemnification agreement is a promise:

  • The seller or supplier guarantees that their products meet safety and legal standards.
  • If their products cause harm, get recalled, or trigger lawsuits, the supplier (not you) is responsible for covering the costs.

The phrase hold harmless means the buyer is protected from liability, the supplier “holds you harmless” from lawsuits or damages. Indemnification goes a step further: it requires the supplier to actively defend you in claims, pay settlements, and reimburse expenses like attorney fees, court costs, and regulatory fines.

Think of it this way: hold harmless shields you from being blamed, while indemnification makes sure the supplier actually pays for the fallout.

Who uses these agreements?

These contracts are especially common in industries where liability exposure is high, including:

  • Food and beverage distributors (where contamination or labeling errors can spark FDA action)
  • Retail supply chains (where defective goods quickly multiply into thousands of customer claims)
  • Pharmaceuticals and medical devices (where compliance requirements are strict and risks are high)
  • Consumer packaged goods (where warranties and product safety laws are heavily enforced)

Key elements of the hold harmless agreement template

A strong template is more than just legal language. It is a framework that ensures you are protected in every critical area of risk. Here are the most important elements you will find in the template:

Product compliance and warranty obligations

The seller must guarantee that all products meet legal and safety standards. This usually includes federal, state, and local laws such as the Federal Food, Drug, and Cosmetic Act. The warranty assures you that products are not adulterated, misbranded, or prohibited in any way. If a supplier delivers non-compliant goods, the agreement ensures that they are responsible for the consequences.

Indemnification and defense responsibilities

Suppliers commit to defending you against third-party claims, lawsuits, or government actions connected to their products. This includes covering attorney fees, settlements, and damages so you do not have to face legal battles alone or bear the costs that should rightfully be carried by the supplier.

Insurance requirements

To back up their promise, suppliers must carry comprehensive insurance. This typically covers product liability, workers’ compensation, auto, and umbrella policies. The agreement requires suppliers to name you as an additional insured, so you are directly protected under their coverage.

Duration and continuing effect

The agreement is not limited to one shipment. It applies to all current and future deliveries until it is revoked in writing. That means even if a product issue arises months later, the supplier remains responsible under the same contract terms.

How this template protects your business

Legal protection can feel abstract until you imagine real-world scenarios. Here is how this template creates a shield around your operations:

Product recalls and compliance failures

If a batch of food products is recalled due to contamination, or if a cosmetic line fails safety testing, regulators will often approach the distributor first. With a hold harmless agreement in place, the supplier must step in, cover recall costs, and defend your company from claims.

Third-party lawsuits

Customer injury claims, employee health complaints, or lawsuits from downstream partners can quickly spiral into significant costs. By requiring the supplier to indemnify and defend you, the agreement ensures that you do not have to spend time or money battling claims that are not your fault.

The advantage of supplier insurance

Even a strong indemnity clause is only as good as the supplier’s ability to pay. That is why the insurance requirement is essential. By obligating the supplier to maintain sufficient insurance coverage, you are not left relying only on their financial stability. Insurance provides an extra safety net and ensures claims can be handled promptly.

When to use this agreement

You might be wondering if every supplier relationship requires a hold harmless and indemnification agreement. The short answer is yes, if you want to minimize risk. But here are the most common situations where this template is especially valuable:

  • Supplier and vendor contracts: Any time you are buying products from a supplier, this agreement helps you transfer liability back to the seller. Without it, you may end up shouldering the cost of defects or compliance failures.

  • Retail distribution deals: If you are supplying goods to large retailers or national chains, these companies will often demand strict liability protections. Having a strong template on hand positions you as a prepared and trustworthy partner who takes compliance seriously.

  • Manufacturing partnerships: When you contract with manufacturers for private label products or co-branded goods, a hold harmless agreement ensures they are responsible for product quality and compliance. This is critical in cases where your brand is on the line but you are not the one controlling production.

Mutual vs. one-way hold harmless agreements

Not all agreements are structured the same. The template can be customized as either mutual or one-way depending on the business relationship.

Mutual indemnification

A mutual indemnification clause means both parties agree to protect each other from liability. This type of structure can make sense when two companies are entering a joint venture or where both sides are equally exposed to risk.

One-way indemnification

In most supplier-buyer relationships, the buyer requires protection and the seller takes responsibility. This is because liability most often arises from the seller’s products, not the buyer’s actions. One-way agreements are standard in food distribution, retail supply, and other high-liability industries.

Which one do you need?

If you are a buyer or distributor, you will almost always want a one-way agreement. If you are a supplier negotiating with a larger buyer, you may be asked to accept one-way indemnification as a condition of doing business. Mutual indemnity may only be appropriate in rare cases where risks are truly shared.

🧠 Did you Know?

Because many D&O indemnification obligations are retroactive and reimbursive, directors and officers may still need to pay legal costs upfront and later seek indemnification from the company. That’s why a well-drafted agreement often includes advancement of expenses, compelling the company to fund defense costs as they arise.

How fynk helps streamline supplier agreements

With fynk, you can manage this agreement alongside all your other supplier contracts in one place.

  • Use tags to track high-liability vendors.

  • Set up notifications to remind you before insurance certificates expire.

Reminders in fynk
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Reminders in fynk

  • Keep everything in a centralized document list so you never lose track of obligations.

  • Rely on the audit trail to prove compliance and track every change made to the contract.

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FAQs

Is a hold harmless agreement legally enforceable in every state?
Not always. While most states uphold indemnification and hold harmless clauses, some restrict their scope, especially in construction, real estate, or highly regulated industries. It is important to check state-specific laws to make sure your agreement is enforceable where you operate.
Do I still need product liability insurance if I use this agreement?
Yes. While a hold harmless agreement shifts liability to your supplier, your business should still carry its own product liability insurance. Contracts provide legal protection, but insurance provides financial backing when disputes arise. The two work best together.
Can small businesses ask large suppliers to sign a hold harmless agreement?
Absolutely. Large suppliers are familiar with these agreements and often expect them as part of vendor onboarding. If a supplier refuses, that is a red flag that they may not have adequate insurance or are unwilling to take responsibility for compliance.
What happens if a supplier goes out of business?
If a supplier shuts down, you may lose the ability to enforce indemnification directly. This is why requiring proof of insurance is so important. Even if the company dissolves, the insurance policy can still provide coverage for claims that arise.
How often should I review or update a hold harmless agreement?
You should review these agreements at least once a year or whenever laws, regulations, or business circumstances change. For example, if your supplier introduces a new product line, or if liability laws are updated, you may need to adjust the terms of your agreement.

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Clause Library: learn more about the clauses in this template

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