The Standards Board for Alternative Investments (SBAI), an association of alternative investment managers, occasionally publishes so-called “toolbox” memos on topics of interest to the alternative investment industry. For example, in 2020, it published three memoranda pertaining to conflicts of interest, fund structuring and valuation in private credit strategies. See our two-part series on those memoranda: Part One (Aug. 6, 2020); and Part Two (Aug. 13, 2020). This two-part series explores the key issues raised in the SBAI’s latest toolbox memo on indemnification and exculpation provisions in private fund governing documents and associated market practice, with commentary from SBAI content/research director Maria Long; Christopher J. Dlutowski, partner at Morgan Lewis; James Oussedik, partner at Sidley Austin; and Nick Hoffman and James Smith, partner and counsel, respectively, at Harneys. This second article covers indemnification by investors; the interplay between indemnification and exculpation clauses and between indemnification provisions and insurance; the limited opportunity to negotiate indemnification provisions; and the role of side letters. The first article addressed key concerns with indemnification provisions and associated negotiating points; common indemnification terms and carve-outs; and jurisdictional differences in standards of care. For coverage of a case study by the SBAI, see “Avoiding Parallel Fund Conflicts: New SBAI Standards and Case Study Provide Guidance for Mitigating Conflicts (Part One of Two)” (Jun. 11, 2020).