EXHIBIT (h)(4)
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made this 20th day of
March, 1991 between The Specialty Managers Trust (the "Trust"), a
Massachusetts business trust registered with the Securities and
Exchange Commission (the "SEC") as an open-end management
investment company, and Directed Services, Inc. ("DSI") (whose
name is scheduled to be changed to Golden Financial Group, Inc.
on or about May 1, 1991), a New York corporation.
WHEREAS, the Trust issues shares in several different
classes, each class known as a Series; and
WHEREAS, Specialty Advisors Corp. ("SAC"), a California
corporation was the sponsor of the Trust and, pursuant to a
Management Agreement between SAC and the Trust dated as of
November 1, 1988, served as the Manager of Trust from the Trust's
commencement of operations through March 20, 1991; and
WHEREAS, Golden American and Golden American's parent
company, The Mutual Benefit Life Insurance Company ("Mutual
Benefit"), through certain of their separate accounts, invest in
shares of the operating Series of the Trust; and
WHEREAS, Golden American and Mutual Benefit issue variable
annuity contracts and variable life insurance contracts (the
"Variable Contracts") that are funded by the separate accounts
that invest in the operating Series of the Trust; and
WHEREAS, as a result of a routine examination of the Trust
by the staff of the SEC in November of 1990 (the "SEC
Examination"), the SEC staff has advised SAC and the Trust that
the staff believes that there are several potential deficiencies
relating to the Trust or to SAC as investment adviser, and the
SEC staff has advised SAC that it may bring an enforcement action
against SAC relating to the potential deficiencies; and
WHEREAS, SAC is reviewing the potential deficiencies that
have been identified by the SEC staff; and
WHEREAS, by resolution adopted at a meeting on February 25,
1991, the Trust's Board of Trustees formed a Special Committee
("Special Committee") to consider and review issues raised as a
result of the SEC Examination and to conduct such inquires as the
Special Committee deems necessary and appropriate in furtherance
of its consideration and review of such issues; and
WHEREAS, SAC and the Trust entered into a Mutual Consent to
Terminate the Management Agreement, pursuant to which the
Management Agreement between SAC and the Trust will be terminated
as of the close of business on March 20, 1991; and
WHEREAS, pursuant to a new Management Agreement between
Directed Services, Inc. and the Trust dated as of March 20, 1991,
(the "Management Agreement") Directed Services, Inc. ("DSI"), an
indirect subsidiary of Mutual Benefit, has agreed to serve as
Manager for the operating Series of the Trust commencing on March
21, 1991.
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the parties do hereby agree as
follows:
1. GENERAL INDEMNIFICATION.
In partial consideration for the Trust offering shares of
its Series solely to separate accounts of Golden American
and Mutual Benefit, DSI agrees to hold harmless and
indemnify the Trust and the members of the Special Committee
from and against any and all claims, suits, damages, costs,
losses, expenses, liabilities, penalties, obligations of any
kind arising out of or resulting from the SEC Examination,
including, but not limited to, the following expenses:
(i) fees and expenses of legal counsel to the Trust with respect
to services rendered to the Trust;
(ii) fees and expenses of legal counsel to the Special Committee
with respect to services rendered to the Special Committee and
the members thereof;
(iii) fees and expenses of independent auditors of the Trust
with respect to services rendered to the Trust and the Special
Committee;
(iv) costs of any formal or informal proceedings brought by the
SEC with respect to the Trust or the members of the Special
Committee and any settlement thereof;
(v) costs of any formal or informal proceedings brought by any
other persons for claims that arise directly or indirectly as a
result of deficiencies or issues relating to the Trust
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and indemnified by the SEC staff in connection with the SEC
Examinations and any settlement thereof;
(vi) the costs associated with compensating owners of Variable
Contracts or making payments to the separate accounts for losses
suffered as a result of any incorrect calculations identified
as a result of the SEC Examination of the daily net asset value per
share of any of the operating Series of the Trust;
and
(vii) expenses associated with appointment of DSI to replace
SAC as Manager to the Trust's operating Series, including the
expenses associated with a special meeting of the Board of
Trustees to consider the Management Agreement with DSI and a
special meeting of shareholders to seek approval of the
Management Agreement.
DSI agrees that the Trust will not bear any of the above
mentioned expenses. The parties further agree that this
Agreement Trust shall not be construed to render DSI
responsible for expenses of SAC, arising from the SEC
Examination of the Trust.
2. DURATION.
This Agreement shall be effective as of the date indicated
above (although the expenses covered by this Agreement may
have arisen prior to such date) and continue in force for
three calendar years from such date, unless modified by a
written instrument executed by the parties hereto; provided
however, that DSI shall continue to be obligated after such
three-year period under the Agreement with respect to all
matters that have been the subject of a claim made for
indemnification during such period but which have not been
finally determined or resolved by the parties.
3. SUCCESSORS.
This Agreement shall be binding on and inure to the benefit
of the heirs, executors, administrators and assigns of the
respective parties hereto. This Agreement may not be
assigned by DSI without the written consent of the Trust
which may not be unreasonably withheld.
4. MODIFICATION.
This Agreement may be modified only by an instrument in
writing executed by the parties.
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5. GOVERNING LAW.
This Agreement shall be governed by the law of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below on
the date first above written.
THE SPECIALTY MANGERS TRUST
/s/Xxxxxxx X. Peuretz By: X. X. Xxxxxxxx
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Attest
Outside Counsel President
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Title Title
DIRECTED SERVICES, INC.
/s/X. X. Xxxx By: X. X. Xxxxxxxx
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Attest
Exec. Vice Pres. Exec. Vice President
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Title Title
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