Form of
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made as of the date set
forth on the signature page by and between ______________, a [Maryland
corporation][Massachusetts business trust] (the "Fund"), and the
[director][trustee] of the Fund whose name is set forth on the signature page
(the "Board Member").
WHEREAS, the Board Member is a [director][trustee] of the Fund, and the
Fund wishes the Board Member to continue to serve in that capacity; and
WHEREAS, the [Articles of Incorporation and By-Laws] [Declaration of Trust
and By-Laws] of the Fund and applicable laws permit the Fund to contractually
obligate itself to indemnify and hold the Board Member harmless to the fullest
extent permitted by law;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements set forth herein, the parties hereby agree as set forth below.
Certain capitalized terms used herein are defined in Section 5.
1. Indemnification. The Fund shall indemnify and hold harmless the Board
Member against any liabilities or Expenses (collectively, "Liability")
actually and reasonably incurred by the Board Member in any Proceeding
arising out of or in connection with the Board Member's service to the
Fund, to the fullest extent permitted by the [Articles of
Incorporation and By-Laws] [Declaration of Trust and By-Laws] of the
Fund and the laws of the [State of Maryland][Commonwealth of
Massachusetts], the Securities Act of 1933, and the Investment Company
Act of 1940, as now or hereafter in force, subject to the provisions
of paragraphs (a), (b) and (c) of this Section 1. The Fund's Board of
[Directors][Trustees] shall take such actions as may be necessary to
carry out the intent of these indemnification provisions and shall not
amend the Fund's By-laws to limit or eliminate the right to
indemnification provided herein with respect to acts or omissions
occurring prior to such amendment or repeal.
(a) Special Condition. With respect to Liability to the Fund or its
shareholders, and subject to applicable state and federal law,
the Board Member shall be indemnified pursuant to this Section 1
against any Liability unless such Liability arises by reason of
the Board Member's willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of his or her office as defined in such Section 17(h) of
the Investment Company Act of 1940, as amended ("Disabling
Conduct").
(b) Special Process Condition. With respect to Liability to the Fund
or its shareholders, no indemnification shall be made unless a
determination has been made by reasonable and fair means that the
Board Member has not engaged in disabling conduct. Such
reasonable and fair means shall be established in conformity with
then applicable law and administrative interpretations. In any
determination with respect to disabling conduct, a [director]
requesting indemnification who is not an "interested person" of
the [Corporation], as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, shall be afforded a
rebuttable presumption that such [director] [trustee]did not
engage in such conduct while acting in his or her capacity as a
[director] [trustee].
(c) State Law Restrictions. In accordance with the [General
Corporation Law of the State of Maryland][General Laws of the
Commonwealth of Massachusetts], the Board Member shall not be
indemnified and held harmless pursuant to this Section 1 if the
substantive and procedural standards for indemnification under
such law have not been met.
2. Advancement of Expenses. The Fund shall promptly advance funds to the
Board Member to cover any and all Expenses the Board Member incurs
with respect to any Proceeding arising out of or in connection with
the Board Member's service to the Fund, to the fullest extent
permitted by the laws of the [State of Maryland] [Commonwealth of
Massachusetts], the Securities Act of 1933, and the Investment Company
Act of 1940, as such statutes are now or hereafter in force, subject
to the provisions of paragraphs (a) and (b) of this Section 2.
(a) Affirmation of Conduct. A request by the Board Member for
advancement of funds pursuant to this Section 2 shall be
accompanied by the Board Member's written affirmation of his or
her good faith belief that he or she met the standard of conduct
necessary for indemnification, and such other statements,
documents or undertakings as may be required under applicable
law.
(b) Special Conditions to Advancement. With respect to Liability to
the Fund or its shareholders, and subject to applicable state and
federal law, the Board Member shall be entitled to advancements
of Expenses pursuant to this Section 2 against any Liability to
the Fund or its shareholders if (1) the Fund has obtained
assurances to the extent required by applicable law, such as by
obtaining insurance or receiving collateral provided by the Board
Member, to the reasonable satisfaction of the Board, that the
advance will be repaid if the Board Member is found to have
engaged in Disabling Conduct, or (2) the Board has a reasonable
belief that the Board Member has not engaged in disabling conduct
and ultimately will be entitled to indemnification. In forming
such a reasonable belief, the Board of [Directors] [Trustees]
shall act in conformity with then applicable law and
administrative interpretations, and shall afford a [director]
[trustee] requesting an advance who is not an "interested person"
of the [Corporation][Trust], as defined in Section 2(a)(19) of
the Investment Company Act of 1940, as amended, a rebuttable
presumption that such [director][trustee] did not engage in
disabling conduct while acting in his or her capacity as a
[director][trustee].
3. Procedure for Determination of Entitlement to Indemnification and
Advancements. A request by the Board Member for indemnification or
advancement of Expenses shall be made in writing, and shall be
accompanied by such relevant documentation and information as is
reasonably available to the Board Member. The Secretary of the Fund
shall promptly advise the Board of such request.
(a) Methods of Determination. Upon the Board Member's request for
indemnification or advancement of Expenses, a determination with
respect to the Board Member's entitlement thereto shall be made
by the Board or Independent Counsel in accordance with applicable
law. The Board Member shall have the right, in his or her sole
discretion, to have Independent Counsel make such a
determination. The Board Member shall cooperate with the person
or persons making such determination, including without
limitation providing to such persons upon reasonable advance
request any documentation or information that is not privileged
or otherwise protected from disclosure and is reasonably
available to the Board Member and reasonably necessary to such
determination. Any Expenses incurred by the Board Member in so
cooperating shall be borne by the Fund, irrespective of the
determination as to the Board Member's entitlement to
indemnification or advancement of Expenses.
(b) Independent Counsel. If the determination of entitlement to
indemnification or advancement of Expenses is to be made by
Independent Counsel, the Board of [Directors][Trustees] shall
select the Independent Counsel, and the Secretary of the Fund
shall give written notice to the Board Member advising the Board
Member of the identity of the Independent Counsel selected. The
Board Member may, within five days after receipt of such written
notice, deliver to the Secretary of the Fund a written objection
to such selection. Such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the
requirement of independence set forth in Section 4, and shall set
forth with particularity the factual basis of such assertion.
Upon such objection, the Board of [Directors][Trustees], acting
in conformity with applicable law, shall select another
Independent Counsel.
If within fourteen days after submission by the Board Member of a
written request for indemnification or advancement of Expenses no
such Independent Counsel shall have been selected without
objection, then either the Board or the Board Member may petition
the Superior Court of the State of California or any other court
of competent jurisdiction for resolution of any objection that
shall have been made to the selection of Independent Counsel
and/or for the appointment as Independent Counsel of a person
selected by the court or by such other person as the court shall
designate, and the person with respect to whom an objection is
favorably resolved or the person so appointed shall act as
Independent Counsel.
The Fund shall pay all reasonable fees and Expenses charged or
incurred by Independent Counsel in connection with his or her
determinations pursuant to this Agreement, and shall pay all
reasonable fees and Expenses incident to the procedures described
in this paragraph, regardless of the manner in which such
Independent Counsel was selected or appointed.
(c) Failure to Make Timely Determination. If the person or persons
empowered or selected to determine whether the Board Member is
entitled to indemnification or advancement of Expenses shall not
have made such determination within thirty days after receipt by
the Secretary of the Fund of the request therefor, the requisite
determination of entitlement to indemnification or advancement of
Expenses shall be deemed to have been made, and the Board Member
shall be entitled to such indemnification or advancement, absent
(i) an intentional misstatement by the Board Member of a material
fact, or an intentional omission of a material fact necessary to
make the Board Member's statement not materially misleading, in
connection with the request for indemnification or advancement of
Expenses, or (ii) a prohibition of such indemnification or
advancements under applicable law; provided, however, that such
period may be extended for a reasonable period of time, not to
exceed an additional thirty days, if the person or persons making
the determination in good faith require such additional time to
obtain or evaluate documentation or information relating thereto.
(d) Payment Upon Determination of Entitlement. If a determination is
made pursuant to Section 1 or Section 2 (or is deemed to be made
pursuant to paragraph (c) of this Section 3) that the Board
Member is entitled to indemnification or advancement of Expenses,
payment of any indemnification amounts or advancements owing to
the Board Member shall be made within ten days after such
determination (and, in the case of advancements of further
Expenses, within ten days after submission of supporting
information). If such payment is not made when due, the Board
Member shall be entitled to an adjudication in a court of
competent jurisdiction, of the Board Member's entitlement to such
indemnification or advancements. The Board Member shall commence
such proceeding seeking an adjudication within one year following
the date on which he or she first has the right to commence such
proceeding pursuant to this paragraph (d). In any such
proceeding, the Fund shall be bound by the determination that the
Board Member is entitled to indemnification or advancements,
absent (i) an intentional misstatement by the Board Member of a
material fact, or an intentional omission of a material fact
necessary to make his or her statement not materially misleading,
in connection with the request for indemnification or
advancements, or (ii) a prohibition of such indemnification or
advancements under applicable law.
(e) Appeal of Adverse Determination. If a determination is made that
the Board Member is not entitled to indemnification or
advancements, the Board Member shall be entitled to an
adjudication of such matter in any court of competent
jurisdiction. Alternatively, the Board Member, at his or her
option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the rules of the American
Arbitration Association. The Board Member shall commence such
proceeding or arbitration within one year following the date on
which the adverse determination is made. Any such judicial
proceeding or arbitration shall be conducted in all respect as a
de novo trial or arbitration on the merits, and the Board Member
shall not be prejudiced by reason of such adverse determination.
(f) Expenses of Appeal. If the Board Member seeks a judicial
adjudication of or an award in arbitration to enforce his or her
rights under, or to recover damages for breach of, the
indemnification or Expense advancement provisions of this
Agreement, the Board Member shall be entitled to recover from the
Fund, and shall be indemnified by the Fund against, any and all
Expenses actually and reasonably incurred by the Board Member in
such judicial adjudication or arbitration, but only if the Board
Member prevails therein. If it shall be determined in such
judicial adjudication or arbitration that the Board Member is
entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Expenses incurred by the
Board Member in connection with such judicial adjudication or
arbitration shall be prorated as the court or arbitrator
determines to be appropriate.
(g) Validity of Agreement. In any judicial proceeding or arbitration
commenced pursuant to this Section 3, the Fund shall be precluded
from asserting that the procedures and presumptions set forth in
this Agreement are not valid, binding and enforceable against the
Fund, and shall stipulate in any such court or before any such
arbitrator that the Fund is bound by all the provisions of this
Agreement.
4. General Provisions.
(a) Non-Exclusive Rights. The provisions for indemnification of, and
advancement of Expenses to, the Board Member set forth in this
Agreement shall not be deemed exclusive of any other rights to
which the Board Member may otherwise be entitled. The Fund shall
not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that the
Board Member has otherwise actually received such payment under
any insurance policy, contract, agreement or otherwise.
(b) Continuation of Provisions. This Agreement shall be binding upon
all successors of the Fund, including without limitation any
transferee of all or substantially all assets of the Fund and any
successor by merger, consolidation, or operation of law, and
shall inure to the benefit of the Board Member's spouse, heirs,
assigns, devisees, executors, administrators and legal
representatives. The provisions of this Agreement shall continue
until the later of (1) ten years after the Board Member has
ceased to provide any service to the Fund, and (2) the final
termination of all Proceedings in respect of which the Board
Member has asserted, is entitled to assert, or has been granted
rights of indemnification or advancement of Expenses hereunder
and of any proceeding commenced by the Board Member pursuant to
Section 3 relating thereto. Unless required by applicable law, no
amendment of the [Articles of Incorporation][Declaration of
Trust] or By-Laws of the Fund shall limit or eliminate the right
of the Board Member to indemnification and advancement of
Expenses set forth in this Agreement. In the event the Fund or
any successor shall discontinue its operations within the term of
this Agreement, adequate provision shall be made to honor the
Fund's obligations under this Agreement.
(c) Selection of Counsel. Counsel selected by the Board shall be
entitled to assume the defense of any Proceeding for which the
Board Member seeks indemnification or advancement of Expenses
under this Agreement. However, counsel selected by the Board
Member shall conduct the defense of the Board Member to the
extent reasonably determined by such counsel to be necessary to
protect the interests of the Board Member, and the Fund shall
indemnify the Board Member therefore to the extent otherwise
permitted under this Agreement, if (1) the Board Member
reasonably determines that there may be a conflict in the
Proceeding between the positions of the Board Member and the
positions of the Fund or the other parties to the Proceeding that
are indemnified by the Fund and not represented by separate
counsel, or the Board Member otherwise reasonably concludes that
representation of both the Board Member, the Fund and such other
parties by the same counsel would not be appropriate, or (2) the
Proceeding involves the Board Member but neither the Fund nor any
such other party and the Board Member reasonably withholds
consent to being represented by counsel selected by the Fund. If
the Board has not selected counsel to assume the defense of any
such Proceeding for the Board Member within thirty days after
receiving written notice thereof from the Board Member, the Fund
shall be deemed to have waived any right it might otherwise have
to assume such defense.
(d) D&O Insurance. For a period of at least six years after the Board
Member has ceased to provide services to the Fund, the Fund shall
purchase and maintain in effect, through "tail" or other
appropriate coverage, one or more policies of insurance on behalf
of the Board Member to the maximum extent of the coverage
provided to the active members of the Board of [Directors]
[Trustees] of the Fund.
(e) Subrogation. In the event of any payment by the Fund pursuant to
this Agreement, the Fund shall be subrogated to the extent of
such payment to all of the rights of recovery of the Board
Member, who shall, upon reasonable written request by the Fund
and at the Fund's expense, execute all such documents and take
all such reasonable actions as are necessary to enable the Fund
to enforce such rights. Nothing in this Agreement shall be deemed
to diminish or otherwise restrict the right of the Fund or the
Board Member to proceed or collect against any insurers and to
give such insurers any rights against the Fund under or with
respect to this Agreement, including without limitation any right
to be subrogated to the Board Member's rights hereunder, unless
otherwise expressly agreed to by the Fund in writing, and the
obligation of such insurers to the Fund and the Board Member
shall not be deemed to be reduced or impaired in any respect by
virtue of the provisions of this Agreement.
(f) Notice of Proceedings. The Board Member shall promptly notify the
Secretary of the Fund in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding which may be subject
to indemnification or advancement of expense pursuant to this
Agreement, but no delay in providing such notice shall in any way
limit or affect the Board Member's rights or the Fund's
obligations under this Agreement.
(g) Notices. All notices, requests, demands and other communications
to a party pursuant to this Agreement shall be in writing,
addressed to such party at the address specified on the signature
page of this Agreement (or such other address as may have been
furnished by such party by notice in accordance with this
paragraph), and shall be deemed to have been duly given when
delivered personally (with a written receipt by the addressee) or
two days after being sent (1) by certified or registered mail,
postage prepaid, return receipt requested, or (2) by nationally
recognized overnight courier service.
(h) Severability. If any provision of this Agreement shall be held to
be invalid, illegal, or unenforceable, in whole or in part, for
any reason whatsoever, (1) the validity, legality and
enforceability of the remaining provisions of this Agreement
(including, without limitation, each portion of any Section of
this Agreement containing any provision that is not itself
invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby, and (2) to the fullest extent
possible, the remaining provisions of this Agreement shall be
construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
(i) Modification and Waiver. This Agreement supersedes any existing
or prior agreement between the Fund and the Board Member
pertaining to the subject matter of indemnification, advancement
of Expenses and insurance. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by both parties or their respective successors or legal
representatives. Any waiver by either party of any breach by the
other party of any provision contained in this Agreement to be
performed by the other party must be in writing and signed by the
waiving party or such party's successor or legal representative,
and no such waiver shall be deemed a waiver of similar or other
provisions at the same or any prior or subsequent time.
(j) Headings. The headings of the Sections of this Agreement are for
convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, and all of
which when taken together shall constitute one document.
(l) Applicable Law. This Agreement shall be governed by and construed
and enforce in accordance with the laws of the state of
organization of the Fund without reference to principles of
conflict of laws.
5. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Board" means the board of [directors] [trustees] of the Fund,
excluding those members of the board of [directosr] {trustees]
who are not eligible under applicable federal or state law to
participate in making a particular determination pursuant to
Section 3 of this Agreement; provided, however, that if no two
members of the Board of [directors] [trustees] are eligible to
participate, Board shall mean Independent Counsel.
(b) "Disabling Conduct" shall be as defined in Section 1.
(c) "Expenses" shall include without limitation all judgments,
penalties, fines, amounts paid or to be paid in settlement, ERISA
excise taxes, liabilities, losses, interest, expenses of
investigation, attorneys' fees, retainers, court costs,
transcript costs, fees of experts and witnesses, expenses of
preparing for and attending depositions and other proceedings,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
costs, disbursements or expenses of the type customarily incurred
in connection with prosecuting, defending, preparing to prosecute
or defend, investigating, or acting as a witness in a Proceeding.
(d) "Final termination of a Proceeding" shall mean a final
adjudication by court order or judgment of the court or other
body before which a matter is pending, from which no further
right of appeal or review exists.
(e) "Independent Counsel" shall mean a law firm, or a member of a law
firm, that is experienced in matters of investment company law
and neither at the time of designation is, nor in the five years
immediately preceding such designation was, retained to represent
(A) the Fund or the Board Member in any matter material to
either, or (B) any other party to the Proceeding giving rise to a
claim for indemnification or advancements hereunder.
Notwithstanding the foregoing, however, the term "Independent
Counsel" shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Fund or the Board
Member in an action to determine the Board Member's rights
pursuant to this Agreement, regardless of when the Board Member's
act or failure to act occurred.
(f) "Independent Board Member" shall mean a [director] [trustee] of
the Fund who is neither an "interested person" of the Fund as
defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, nor a party to the Proceeding with respect to
which indemnification or advances are sought.
(g) "Liability shall be as defined in Section 1.
(h) "Proceeding" shall include without limitation any threatened,
pending or completed claim, demand, threat, discovery request,
request for testimony or information, action, suit, arbitration,
alternative dispute mechanism, investigation, hearing, or other
proceeding, including any appeal from any of the foregoing,
whether civil, criminal, administrative or investigative, and
shall also include any proceeding brought by the Board Member
against the Fund.
(i) The Board Member's "service to the Fund" shall include without
limitation the Board Member's service as a [director] [trustee],
officer, employee, agent or representative of the Fund, and his
or her service at the request of the Fund as a [director]
[trustee], officer, employee, agent or representative of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth below.
Dated: __________________
a [Maryland corporation]
[Massachusetts business trust]
By: ________________________
Name: ___________________
Title: ____________________
Address for notices:
[DIRECTOR] [TRUSTEE]:
Print Name: ____________________
Address for notices:
