Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of this __ day of
_____, 200_ by and between Franklin Resources, Inc., a Delaware corporation (the
“Company” or “Indemnitor”), and (the “Indemnitee”).

 

WITNESSETH:

 

WHEREAS, it is essential to the Company to retain and attract as directors and
officers the most capable persons available;

 

WHEREAS, Indemnitee is a director or officer of the Company;

 

WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies in today’s environment;

 

WHEREAS, while basic protection against undue risk of personal liability of
directors and officers heretofore has been provided through insurance coverage,
such insurance may not provide adequate protection against such litigation and
claims;

 

WHEREAS, the Certificate of Incorporation and by-laws of the Company, as
amended, require the Company to indemnify its directors and officers as provided
therein and Indemnitee has been serving and continues to serve as a director or
officer of the Company in part in reliance on such Certificate of Incorporation
and by-laws;

 

WHEREAS, in recognition of Indemnitee’s need for substantial protection against
personal liability in order to enhance Indemnitee’s continued service to the
Company in an effective manner, and Indemnitee’s reliance on the aforesaid
Certificate of Incorporation and by-laws, and in part to provide Indemnitee with
specific contractual assurance that the protection specified in the Certificate
of Incorporation and by-laws, as amended, will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of such
Certificate of Incorporation or by-laws, any change in the composition of the
Company’s Board of Directors or any acquisition transaction relating to the
Company), the Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to the full
extent (whether partial or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company’s directors’ and officers’ liability
insurance policies;

 

 

 

NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to
serve the Company directly or, at its request, with another enterprise, and
intending to be legally bound hereby, the parties hereto agree as follows:

 

1.

Certain Definitions.

 

(a)            Change in Control shall be deemed to have occurred if (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Act”)), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company’s then outstanding Voting
Securities, except (A) a person who as of the date hereof owns 20% or more of
the total voting power represented by the Company’s outstanding Voting
Securities (a “20% Group”) shall not be deemed to have caused a change in
control until such person becomes the beneficial owner, directly or indirectly,
of more than 50% of the then outstanding Voting Securities, or (B) a person who
becomes a beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the Company’s
then outstanding Voting Securities shall not be deemed to have caused a change
in control unless such person also owns more of the total voting power
represented by the Company’s outstanding Voting Securities than is owned by a
20% Group at the time such person becomes owner of such securities, or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.

 

(b)           Claim shall mean any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether conducted by the Company
or any other party, that Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.

 

(c)

Expenses shall mean attorneys’ fees and all other costs, expenses and

 

 

 

obligations paid or incurred in connection with investigating, defending, being
a witness in or participating in (including on appeal), or preparing to defend,
be a witness in or participate in, any Claim relating to any Indemnifiable
Event.

 

(d)           Indemnifiable Event shall mean any event or occurrence related to
the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by Indemnitee in any such
capacity.

 

(e)            Potential Change in Control shall be deemed to have occurred if
(i) the Company enters into an agreement, the consummation of which would result
in the occurrence of a Change in Control, or (ii) any person (including the
Company) publicly announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control, or (iii) any person,
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company’s then outstanding Voting
Securities, increases his beneficial ownership of such securities by 5% or more
over the percentage so owned by such person on the date hereof, except (A) a 20%
Group which increases its beneficial ownership of such securities by 5% or more
over the percentage so owned on the date hereof shall not be deemed to have
caused a potential change in control, unless such increase results in such
person becoming the beneficial owner, directly or indirectly, of more than 50%
of the then outstanding Voting Securities, or (B) a person who is or becomes the
beneficial owner, directly or indirectly, of the voting power representing 9.5%
or more of the Company’s Voting Securities and increases his beneficial
ownership of such securities by 5% or more over the percentage so owned by such
person on the date hereof shall not be deemed to have caused a potential change
in control to have occurred unless, including such increase in ownership, such
person owns more of the voting power represented by the Company’s Voting
Securities than is owned by a 20% Group at the time such person increases his
ownership, or (iv) the Company’s Board of Directors adopts a resolution to the
effect that, for purposes of this Agreement, a Potential Change in Control has
occurred.

 

(f)            Reviewing Party shall mean any appropriate person or body
consisting of a member or members of the Company’s Board of Directors or any
other person or body appointed by the Company’s Board of Directors (including
the special, independent counsel referred to in Section 3 hereof) who is not a
party to the particular Claim for which Indemnitee is seeking indemnification.

 

(g)           Voting Securities shall mean any securities of the Company which
have rights to vote generally in the election of directors.

 

 

 

 

 

2.

Basic Indemnification Agreement.

 

(a)            In the event Indemnitee was, is or becomes a party to or witness
or other participant in, or is threatened to be made a party to or witness or
other participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law, as soon as practicable but in any event no later than
thirty days after written demand is presented to the Company, against any and
all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Claim. Notwithstanding anything in this
Agreement to the contrary, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated by Indemnitee
against the Company or any director or officer of the Company unless the Company
has joined in or consented to the initiation of such Claim. If so requested by
Indemnitee, the Company shall advance (within two business days of such request)
any and all Expenses to Indemnitee (an “Expense Advance”).

 

(b)           Notwithstanding the foregoing, (i) the obligations of the Company
under Section 2(a) shall be subject to the condition that the Reviewing Party
shall not have determined (in a written opinion, in any case in which the
special, independent counsel referred to in Section 3 hereof is involved) that
Indemnitee would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition that, if, when and to the extent
that the Reviewing Party determines that Indemnitee would not be permitted to be
so indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has
commenced legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until the final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). If there has not been a Change
in Control, the Reviewing Party shall be selected by the Board of Directors, and
if there has been such a Change in Control, the Reviewing Party shall be the
special, independent counsel referred to in Section 3 hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation in any court in the state of domicile or Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.

 

 

 

 

 

3.              Change in Control. The Company agrees that, if there is a Change
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company’s Board of Directors who were directors
immediately prior to such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or the Company’s
Certificate of Incorporation or by-laws now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
special, independent counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld), and who has not otherwise
performed services for the Company within the last five years (other than in
connection with such matters) or Indemnitee. Such counsel, among other things,
shall render its written opinion to the Company and Indemnitee as to whether and
to what extent Indemnitee would be permitted to be indemnified under applicable
law. The Company agrees to pay the reasonable fees of the special, independent
counsel referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys’ fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.

 

4.              Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a trust
for the benefit of Indemnitee (the “Trust”) and from time to time upon written
request of Indemnitee shall fund the Trust in an amount sufficient to satisfy
any and all Expenses reasonably anticipated at the time of each such request to
be incurred in connection with investigating, preparing for and defending any
Claim relating to an Indemnifiable Event, and any and all judgments, fines,
penalties and settlement amounts of any and all Claims relating to an
Indemnifiable Event from time to time actually paid or claimed, reasonably
anticipated or proposed to be paid. The amount or amounts to be deposited in the
Trust pursuant to the foregoing funding obligation shall be determined by the
Reviewing Party, in any case in which the special, independent counsel referred
to above is involved. The terms of the Trust shall provide that upon a Change in
Control (i) the trustee to the Trust (the “Trustee”) shall advance, within two
business days of a request by Indemnitee, any and all Expenses to Indemnitee
(and Indemnitee hereby agrees to reimburse the Trust under the circumstances
under which Indemnitee would be required to reimburse the Company under Section
2(b) of this Agreement), (ii) the Trust shall continue to be funded by the
Company in accordance with the funding obligation set forth above, (iii) the
Trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall
be entitled to indemnification pursuant to this Agreement or otherwise, and (iv)
all unexpended funds in such Trust shall revert to the Company upon a final
determination by the Reviewing Party or a court of competent jurisdiction, as
the case may be, that Indemnitee has been fully indemnified under the terms of
the Agreement, or that it is no longer anticipated that expenses will be
incurred or amounts will be paid in connection with the Indemnifiable Event. The
Trustee shall be chosen by Indemnitee. Nothing in this Section 4 shall relieve
the Company of any of its obligations under this Agreement.

 

5.              Indemnification for Additional Expenses. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys’ fees)
and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any claim asserted against or

 

 

 

action brought by Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other agreement or the
Company’s Certificate of Incorporation or by-laws now or hereafter in effect
relating to Claims for Indemnifiable Events and/or (ii) recovery under any
directors’ and officers’ liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, expense payment or insurance recovery, as the case may be.

 

6.              Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith. In connection with any determination
by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.

 

7.              No Presumption. For purposes of this Agreement, the termination
of any claim, action, suit or proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law.

 

8.              Non-Exclusivity, Etc. The rights of Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company’s
Certificate of Incorporation, by-laws or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company’s Certificate of
Incorporation, by-laws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.

 

9.              Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors’ and officers’ liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage provided under
such policy or policies in effect for any other Company director or officer.

 

10.           Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

 

11.

Subrogation. In the event of payment under this Agreement, the Company shall be

 

 

 

subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.

 

12.           No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, by-law or otherwise)
of the amounts otherwise indemnifiable hereunder.

 

13.           Binding Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or in any
capacity of any other enterprise at the Company’s request.

 

14.           Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.

 

15.           Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of law.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.

 

 

 

Indemnitor

 

 

 

 

FRANKLIN RESOURCES, INC.

 

By: 

 

 

 

,

 

 

 

President and Chief Executive Officer

 

 

 

Indemnitee