INDEMNIFICATION AGREEMENT
(“Agreement”)
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
(“Fannie Mae”),
and
(“Indemnitee”)
WHEREAS,
the inability to attract and retain qualified persons as directors
and officers is detrimental to the best interests of Fannie
Mae’s stockholders and Fannie Mae should act to assure such
persons that there will be adequate certainty of protection through
insurance and indemnification against risks of claims and actions
against them arising out of their service to and activities on
behalf of Fannie Mae; and
WHEREAS,
Fannie Mae has adopted provisions in its By-laws providing for
indemnification of its officers and directors to the fullest extent
permitted by applicable law, and Fannie Mae wishes to clarify and
enhance the rights and obligations of Fannie Mae and Indemnitee
with respect to indemnification; and
WHEREAS,
Fannie Mae has elected to follow the corporate governance practices
and procedures of the Delaware General Corporation Law, as the same
may be amended from time to time; and
WHEREAS,
in order to induce and encourage highly experienced and capable
persons such as Indemnitee to serve and continue to serve as
directors and officers of Fannie Mae and in any other capacity with
respect to Fannie Mae, and to otherwise promote the desirable end
that such persons will resist what they consider unjustified
lawsuits and claims made against them in connection with the good
faith performance of their duties to Fannie Mae, with the knowledge
that certain costs, judgments, penalties, fines, liabilities and
expenses incurred by them in their defense of such litigation are
to be borne by Fannie Mae and they will receive the maximum
protection against such risks and liabilities as may be afforded by
law; and
WHEREAS,
Fannie Mae desires to have Indemnitee continue to serve as a
director or officer of Fannie Mae and in such other capacity with
respect to Fannie Mae as Fannie Mae may request, as the case may
be, free from undue concern for unpredictable, inappropriate or
unreasonable legal risks and personal liabilities by reason of
Indemnitee acting in good faith in the performance of
Indemnitee’s duty to Fannie Mae; and Indemnitee desires to
continue so to serve Fannie Mae, provided, and on the express
condition, that he or she is furnished with the indemnity set forth
hereinafter;
WHEREAS,
the Federal Housing Finance Agency (“FHFA”) was
appointed conservator of Fannie Mae on September 6,
2008;
Now,
therefore, in consideration of Indemnitee’s continued service
as a director or officer of Fannie Mae, the parties hereto agree as
follows:
1.
Service by Indemnitee . Indemnitee will serve and/or
continue to serve as a director or officer of Fannie Mae faithfully
and to the best of Indemnitee’s ability so long as Indemnitee
is duly elected or appointed and until such time as Indemnitee is
removed as permitted by law or tenders a resignation in
writing.
2.
Indemnification . Fannie Mae shall indemnify Indemnitee to
the fullest extent permitted by the Delaware General Corporation
Law in effect on the date hereof or as such law may from time to
time be amended (but, in the case of any such amendment, only to
the extent that such amendment permits Fannie Mae to provide
broader indemnification rights than said law permitted Fannie Mae
to provide prior to such amendment). Without diminishing the scope
of the indemnification provided by this Section, the rights of
indemnification of Indemnitee provided hereunder shall include but
shall not be limited to those rights hereinafter set forth, except
that no indemnification shall be paid to Indemnitee:
(a) to the
extent expressly prohibited by Delaware law;
(b) for
which payment is actually made to Indemnitee or for
Indemnitee’s benefit under a valid and collectible insurance
policy or under a valid and enforceable indemnity clause, by-law or
agreement of Fannie Mae or any other company or organization on
whose board Indemnitee serves at the request of Fannie Mae, except
in respect of any indemnity exceeding the payment under such
insurance, clause, by-law or agreement;
(c) in
connection with an action, suit or proceeding, or part thereof
(including claims and counterclaims) initiated by Indemnitee,
except a judicial proceeding or arbitration pursuant to
Section 10 to enforce rights under this Agreement, unless the
action, suit or proceeding (or part thereof) was authorized by the
Board of Directors of Fannie Mae or, if there is no functioning
Board of Directors, authorized by the CEO pursuant to a written
opinion provided by Independent Counsel (defined below);
(d) with
respect to any action, suit or proceeding brought by or on behalf
of Fannie Mae against Indemnitee that is authorized by the Board of
Directors of Fannie Mae or, if there is no functioning Board of
Directors, authorized by the CEO pursuant to a written opinion
provided by Independent Counsel (defined below) except as provided
in Sections 4, 5 and 6 below.
3.
Action or Proceedings Other than an Action by or in the Right of
Fannie Mae . Except as limited by Section 2 above,
Indemnitee shall be entitled to the indemnification rights provided
in this Section if Indemnitee is a party or is threatened to be
made a party to any Proceeding (other than an action by or in the
name of Fannie Mae) by reason of the fact that Indemnitee is or was
a director, officer, employee or agent of Fannie Mae, or is or was
serving at the request of Fannie Mae as a director, officer,
employee or agent or fiduciary of any other entity (including, but
not limited to, another corporation, partnership, joint venture or
trust); or by reason of anything done or not done by Indemnitee in
any such capacity. Pursuant to this Section, Indemnitee shall be
indemnified against all costs, judgments, penalties, fines,
liabilities, amounts paid in settlement by or on behalf of
Indemnitee, and Expenses (defined below) actually and reasonably
incurred by Indemnitee in connection with such Proceeding, if
Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of Fannie
Mae, and with respect to any criminal Proceeding, had no reasonable
cause to believe his or her conduct was unlawful.
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4.
Indemnity in Proceedings by or in the Name of Fannie Mae .
Except as limited by Section 2 above, Indemnitee shall be
entitled to the indemnification rights provided in this Section if
Indemnitee was or is a party or is threatened to be made a party to
any Proceeding brought by or in the name of Fannie Mae to procure a
judgment in its favor by reason of the fact that Indemnitee is or
was a director, officer, employee or agent or fiduciary of Fannie
Mae, or by reason of anything done or not done by Indemnitee in any
such capacity. Pursuant to this Section, Indemnitee shall be
indemnified against all costs, judgments, penalties, fines,
liabilities, amounts paid in settlement by or on behalf of
Indemnitee, and Expenses actually and reasonably incurred by
Indemnitee in connection with such Proceeding if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be
in or not opposed to the best interests of Fannie Mae; provided,
however, that no such indemnification shall be made in respect of
any claim, issue, or matter as to which Delaware law expressly
prohibits such indemnification by reason of any adjudication of
liability of Indemnitee to Fannie Mae, unless and only to the
extent that the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, Indemnitee is entitled to
indemnification for such costs, judgments, penalties, fines,
liabilities and Expenses as such court shall deem
proper.
5.
Indemnification for Costs, Charges and Expenses of Successful
Party . Notwithstanding the limitations of Section 2(d), 3
and 4 above, to the extent that Indemnitee has been successful, on
the merits or otherwise, in whole or in part, in defense of any
action, suit or proceeding (including an action, suit or proceeding
brought by or on behalf of Fannie Mae) or in defense of any claim,
issue or matter therein, including, without limitation, the
dismissal of any action without prejudice, or if it is ultimately
determined that Indemnitee is otherwise entitled to be indemnified
against Expenses, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred in connection
therewith.
6.
Partial Indemnification . If Indemnitee is entitled under
any provision of this Agreement to indemnification by Fannie Mae
for some or a portion of the costs, judgments, penalties, fines,
liabilities or Expenses actually and reasonably incurred in
connection with any action, suit or proceeding (including an
action, suit or proceeding brought by or on behalf of Fannie Mae),
but not, however, for all of the total amount thereof, Fannie Mae
shall nevertheless indemnify Indemnitee for the portion of such
costs, judgments, penalties, fines, liabilities and Expenses
actually and reasonably incurred to which Indemnitee is
entitled.
7.
Indemnification for Expenses of a Witness . Notwithstanding
any other provision of this Agreement, to the maximum extent
permitted by applicable law, Indemnitee shall be entitled to
indemnification against all Expenses actually and reasonably
incurred or suffered by Indemnitee or on Indemnitee’s behalf
if Indemnitee appears as a witness or otherwise incurs legal
expenses as a result of or related to Indemnitee’s service as
a director or officer of Fannie Mae, in any threatened, pending or
completed legal, administrative, investigative or other proceeding
or matter to which Indemnitee neither is, nor is threatened to be
made, a party.
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8.
Determination of Entitlement to Indemnification . Upon
written request by Indemnitee for indemnification pursuant to
Sections 3, 4, 5, 6 or 7 the entitlement
of Indemnitee to indemnification, to the extent not provided
pursuant to the terms of this Agreement, shall be determined by the
following person or persons who shall be empowered to make such
determination: (a) the Board of Directors of Fannie Mae by a
majority vote of Disinterested Directors (defined below), whether
or not such majority constitutes a quorum; (b) a committee of
Disinterested Directors designated by a majority vote of such
directors, whether or not such majority constitutes a quorum;
(c) if there are no Disinterested Directors, or if the
Disinterested Directors so direct, by Independent Counsel (defined
below) in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (d) if there is no
functioning Board of Directors, by Independent Counsel (defined
below) pursuant to a written opinion provided to the CEO or, if it
is the CEO that is seeking indemnification, to the Chief Compliance
Officer. Such Independent Counsel shall be selected by the Board of
Directors or, if there is no functioning Board of Directors, by the
CEO or, if it is the CEO that is seeking indemnification, by the
Chief Compliance Officer, and approved by Indemnitee. Upon failure
of the Board, CEO, or Chief Compliance Officer, as applicable, so
to select such Independent Counsel, or upon failure of Indemnitee
so to approve, such Independent Counsel shall be selected upon
application to a court of competent jurisdiction. Such
determination of entitlement to indemnification shall be made not
later than 30 calendar days after receipt by Fannie Mae of a
written request for indemnification. Such request shall include
documentation or information which is necessary for such
determination and which is reasonably available to Indemnitee. Any
Expenses incurred by Indemnitee in connection with a request for
indemnification or payment of Expenses hereunder, under any other
agreement, any provision of Fannie Mae’s By-laws or any
directors’ and officers’ liability insurance, shall be
borne by Fannie Mae. Fannie Mae hereby indemnifies Indemnitee for
any such Expense and agrees to hold Indemnitee harmless therefrom
irrespective of the outcome of the determination of
Indemnitee’s entitlement to indemnification. If the person
making such determination shall determine that Indemnitee is
entitled to indemnification as to part (but not all) of the
application for indemnification, such person shall reasonably
prorate such partial indemnification among the claims, issues or
matters at issue at the time of the determination.
9.
Presumptions and Effect of Certain Proceedings . The
Secretary of Fannie Mae shall, promptly upon receipt of
Indemnitee’s request for indemnification, advise in writing
the Board of Directors or such other person or persons empowered to
make the determination as provided in Section 8 that
Indemnitee has made such request for indemnification. The Secretary
of Fannie Mae shall also promptly notify the Conservator that such
a request has been made. Upon making such request for
indemnification, Indemnitee shall be presumed to be entitled to
indemnification hereunder and Fannie Mae shall have the burden of
proof in making any determination contrary to such presumption. If
the person or persons so empowered to make such determination shall
have failed to make the requested determination with respect to
indemnification within 30 calendar days after receipt by Fannie Mae
of such request, a requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee
shall be absolutely entitled to such indemnification, absent actual
and material fraud in the request for indemnification. The
termination of any Proceeding described in Sections 3
or 4 by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that Indemnitee did not act
in good faith and in a manner which Indemnitee reasonably believed
to be in or not opposed to the best interests of Fannie Mae, or,
with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that Indemnitee’s conduct was
unlawful; or (b) otherwise adversely affect the rights of
Indemnitee to indemnification except as may be provided
herein.
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10.
Remedies of Indemnitee in Cases of Determination not to
Indemnify or to Pay Expenses . In the event that a
determination is made that Indemnitee is not entitled to
indemnification hereunder or if payment has not been timely made
following a determination of entitlement to indemnification
pursuant to Sections 8 and 9, or if Expenses are not paid
pursuant to Section 15, Indemnitee shall be entitled to final
adjudication in a court of competent jurisdiction of entitlement to
such indemnification or payment from Fannie Mae. Alternatively,
Indemnitee at Indemnitee’s option may seek an award in an
arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association, such award to be
made within sixty days following the filing of the demand for
arbitration. Fannie Mae shall not oppose Indemnitee’s right
to seek any such adjudication or award in arbitration or any other
claim. The determination in any such judicial proceeding or
arbitration shall be made de novo and Indemnitee shall not
be prejudiced by reason of a determination (if so made) pursuant to
Sections 8 or 9 that Indemnitee is not entitled to
indemnification. If a determination is made or deemed to have been
made pursuant to the terms of Section 8 or 9 that
Indemnitee is entitled to indemnification, Fannie Mae shall be
bound by such determination and is precluded from asserting that
such determination has not been made or that the procedure by which
such determination was made is not valid, binding and enforceable.
Fannie Mae further agrees to stipulate in any such court or before
any such arbitrator that Fannie Mae is bound by all the provisions
of this Agreement and is p
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