INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the
“ Agreement ”) is made and entered into
effective as of July 29, 2009 between FEDERAL HOME LOAN BANK OF
CINCINNATI, a Federally chartered corporation (the “
Bank ”), and
, a director or senior
officer of the Bank (“ Indemnitee ”).
RECITALS
A. The Bank recognizes
that competent and experienced persons are increasingly reluctant
to serve or to continue to serve as directors and senior officers
(as defined in Section 1) of corporations unless they are
protected by comprehensive liability insurance or indemnification,
or both, due to increased exposure to litigation costs and risks
resulting from their service to such corporations and due to the
fact that the exposure to liability frequently bears no reasonable
relationship to their compensation;
B. The statutes and
judicial decisions regarding the duties of directors and senior
officers are often difficult to apply, ambiguous or conflicting,
and therefore fail to provide such directors and senior officers
with adequate, reliable knowledge of legal risks to which they are
exposed or information regarding the proper course of action to
take;
C. The Bank recognizes
that plaintiffs often seek damages in large amounts and the costs
of litigation may be so enormous (whether or not the case is
meritorious) that the defense and/or settlement of such litigation
is often beyond the personal resources of directors and senior
officers;
D. It is critically
important to the Bank that it be able to attract and retain the
most capable persons reasonably available to serve as directors and
senior officers of the Bank;
E. Indemnitee is a
director or senior officer of the Bank and Indemnitee’s
willingness to continue to serve in such capacity is predicated, in
substantial part, upon the Bank’s willingness to indemnify
Indemnitee in accordance with the principles reflected above, to
the fullest extent permitted by the laws of the state of Ohio, and
upon other undertakings set forth in this Agreement;
F. The Bank, after
reasonable review, believes that the interests of the Bank and its
member-stockholders are best served by a combination of liability
insurance and personal indemnification by the Bank of its directors
and senior officers;
G. The Bank’s
bylaws (the “ Bylaws ”) require the Bank
to indemnify its directors and officers. The Bylaws expressly
provide that the indemnification provisions set forth therein are
not exclusive, and contemplate that contracts such as this
Agreement may be entered into between the Bank and its directors
and senior officers with respect to indemnification;
H. In recognition of the
need to provide Indemnitee with contractual protection against
personal liability, in order to procure Indemnitee’s
continued service as a director or senior officer of the Bank and
to enhance Indemnitee’s ability to serve the Bank in an
effective manner, and in order to provide such protection pursuant
to express contract rights (intended to be enforceable irrespective
of, among other things, any amendment to the Bank’s charter
or Bylaws, any change in the composition of the Bank’s Board
of Directors (the “ Board ”) or any change in
the director’s or senior officer’s status through
retirement or resignation, the Bank wishes to provide in this
Agreement for the indemnification of and the advancement of
Expenses (as defined in Section 1.2) to Indemnitee as set forth in
this Agreement and for the continued coverage of Indemnitee under
the Bank’s directors’ and senior officers’
liability insurance policies;
I. In light of the
considerations referred to in the preceding recitals, it is the
Bank’s intention and desire that the provisions of this
Agreement be construed liberally, subject to their express terms,
to maximize the protections to be provided to Indemnitee hereunder;
and
J. Indemnitee is willing
to continue to serve as a director and/or senior officer on the
condition that he or she is furnished the indemnity provided for
herein.
NOW, THEREFORE, the parties hereto
agree as follows:
1. Definitions . For purposes of this
Agreement:
1.1 “ Claim ”
means (i) any threatened, asserted, pending, or completed
claim, demand, action, suit, or proceeding, whether civil,
criminal, administrative, arbitrative, investigative, or other, and
whether made pursuant to federal, state, or other law; and
(ii) any threatened, pending, or completed inquiry or
investigation, whether made, instituted or conducted by the Bank or
any other person, including without limitation any federal, state,
or other governmental entity, that Indemnitee determines might lead
to the institution of any such claim, demand, action, suit or
proceeding.
1.2 “ Expenses ”
shall include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in
connection with defending, preparing to defend, investigating,
participating, or being or preparing to be a witness in a
proceeding. Expenses also shall include expenses incurred in
connection with any appeal resulting from any proceeding, including
without limitation the premium, security for, and other costs
relating to any cost bond, supersedeas bond, or other appeal bond
or its equivalent. Expenses, however, shall not include amounts
paid in settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.
1.3 “ Indemnifiable
Claim ” means any Claim based upon, arising out of or
resulting from (i) any actual, alleged, or suspected act or
failure to act by Indemnitee in his or her capacity as a director
or senior officer of the Bank, and/or (ii) any actual,
alleged, or suspected act or failure to act by Indemnitee in
respect of any business, transaction, communication, filing,
disclosure or other activity of the Bank, and/or
(iii) Indemnitee’s status as a current or former
director or senior officer of the Bank or any actual, alleged or
suspected act or failure to act by Indemnitee in connection with
any obligation or restriction imposed upon Indemnitee by reason of
such status.
1.4 “ Indemnifiable
Losses ” means any and all Losses relating to, arising
out of, or resulting from any Indemnifiable Claim.
1.5 “ Losses ”
means any and all Expenses, damages, losses, liabilities,
judgments, fines, penalties (whether civil, criminal or other) and
amounts paid in settlement following a final, nonappealable
judgment or conviction, including without limitation all interest,
assessments and other charges paid or payable in connection with or
in respect of any of the foregoing.
1.6 A “ proceeding
” includes any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or
completed proceeding, whether brought by or in the right of the
Bank or otherwise and whether civil, criminal, administrative or
investigative, in which Indemnitee was, is or will be involved as a
party, by reason of the fact that Indemnitee is or was a director
of the Bank, or by reason of any action or inaction on
Indemnitee’s part while acting as a director of the Bank; in
each case whether or not Indemnitee is acting or serving in any
such capacity at the time any liability or expense is incurred for
which indemnification can be provided under this Agreement.
1.7 A “senior
officer” includes the President, Executive Vice
President, and all Senior Vice Presidents of the Bank.
2. Indemnification
2.1 Subject to and except as limited
by Sections 7 and 8 hereof, the Bank shall indemnify, defend,
and hold harmless Indemnitee, to the fullest extent permitted by
the laws of the State of Ohio in effect on the date hereof or as
such laws may from time to time hereafter be amended to increase
the scope of such permitted indemnification, against any and all
Indemnifiable Losses.
2.2 If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Bank for
some or a portion of any Losses, but not for the entire amount
thereof, the Bank shall nevertheless indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled.
3. Advancement of Expenses . Indemnitee will
have the right to advancement by the Bank prior to the final
disposition of any Indemnifiable Claim of any and all Expenses
relating to, arising out of or resulting from any Indemnifiable
Claim paid or incurred by Indemnitee upon receipt of undertakings
by or on behalf of Indemnitee: (i) to repay such amount if it
shall be proved by clear and convincing evidence in a court of
competent jurisdiction that Indemnitee’s action or failure to
act involved an act or omission undertaken with deliberate intent
to cause injury to the Bank or undertaken with reckless disregard
for the best interests of the Bank and (ii) to cooperate
reasonably with the Bank concerning the action, suit or
proceeding.
4. Purchase of Insurance . For the duration
of Indemnitee’s service as a director or officer of the Bank,
and thereafter for so long as Indemnitee shall be subject to any
pending or possible Indemnifiable Claim, the Bank shall use
commercially reasonable efforts (taking into account the scope and
amount of coverage available relative to the cost thereof) to cause
to be maintained in effect policies of directors’ and
officers’ liability insurance providing coverage for
directors and/or officers of the Bank that is at least
substantially comparable in scope and amount to that provided by
the Bank’s current policies of directors’ and
officers’ liability insurance. In all policies of
directors’ and officers’ liability insurance obtained
by the Bank, Indemnitee shall be named as an insured in such a
manner as to provide Indemnitee the same rights and benefits,
subject to the same limitations, as are accorded to the
Bank’s directors and officers most favorably insured by such
policy. Upon written request of an Indemnitee, the Bank shall
provide Indemnitee with a copy of all directors’ and
officers’ liability insurance policies, as they may be
amended and/or supplemented from time to time. Without limiting the
generality or effect of the three immediately preceding sentences,
the Bank shall not discontinue or significantly reduce the scope or
amount of coverage under any such policy without the approval of a
majority of the members of the Board. The Indemnitee’s
expenses (including attorneys’ fees) incurred in connection
with successfully establishing Indemnitee’s right to recovery
under any such policy of directors’ and officers’
liability insurance shall be indemnified by the Bank.
5. Non-Exclusivity
5.1 The indemnification and
advancement of expenses provided by or granted pursuant to this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may be entitled under applicable law, the charter
of the Bank, the Bylaws, any indemnity or other agreement, a
resolution of the directors, in connection with any court
proceedings brought, or otherwise, both as to action in
Indemnitee’s official capacity and as to action in another
capacity while holding such office.
5.2 To the extent that a change in
the law governing the Federal Home Loan Banks, whether by statute,
judicial decision, or regulatory action, permits greater
indemnification than is afforded under this Agreement without
adverse impact on or materially increased cost to the Bank, then
the Bank shall indemnify Indemnitee hereunder to the fullest extent
so permitted.
6. Notification and Defense of Claim .
6.1 Promptly after receipt by
Indemnitee of notice of the commencemen
