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The Director Indemnification Agreement is a crucial document used to protect individuals serving as directors on corporate boards in Saudi Arabia. It becomes necessary when companies wish to attract and retain qualified directors by providing them with comprehensive protection against personal liability arising from their duties. The agreement must carefully balance the protection of directors with compliance requirements under Saudi Companies Law, CMA regulations for listed companies, and Sharia principles. This document typically includes detailed provisions on indemnification scope, exclusions, procedural requirements, and advancement of expenses, while ensuring alignment with Saudi Arabia's unique legal framework that combines modern corporate law with Islamic jurisprudence. The agreement is particularly important given the increasing complexity of corporate governance requirements and the growing focus on director liability in the Saudi Arabian business environment.

1. Parties: Identification of the company and the director entering into the agreement

2. Background: Recitals explaining the context of the agreement, director's appointment, and company's desire to provide indemnification

3. Definitions: Key terms used throughout the agreement, including 'Proceedings', 'Losses', 'Indemnifiable Events', etc.

4. Indemnification Obligation: Core provision detailing the company's obligation to indemnify the director

5. Scope of Indemnification: Detailed description of what events, actions, and costs are covered by the indemnification

6. Exclusions and Limitations: Events and circumstances where indemnification will not apply, including willful misconduct, fraud, or violations of Sharia principles

7. Notification and Defense Procedures: Process for director to notify company of claims and procedures for defense of proceedings

8. Advancement of Expenses: Terms for advancement of legal fees and other expenses before final disposition

9. Company's Right to Assume Defense: Conditions under which company may take control of defense in proceedings

10. Director's Obligations: Director's duties regarding cooperation, good faith, and compliance with Saudi law

11. Duration and Survival: Term of the agreement and survival of indemnification rights after directorship ends

12. Governing Law and Jurisdiction: Application of Saudi law and designation of competent courts

13. General Provisions: Standard clauses including amendments, notices, severability, and entire agreement