EXHIBIT 10.15
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of this
__________ day of ______________, 2005, by and between Cortland Bancorp, an Ohio
corporation (the "Corporation"), and ___________________, a director, officer,
employee, agent, or representative (as hereinafter defined) of the Corporation
(the "Indemnitee").
RECITALS:
A. The Corporation and the Indemnitee are each aware of the exposure to
litigation officers, directors, employees, agents, and representatives of the
Corporation have as they exercise their duties to the Corporation,
B. The Corporation and the Indemnitee are also aware of conditions in the
insurance industry that have affected and may continue to affect the
Corporation's ability to obtain appropriate liability insurance on an
economically acceptable basis,
C. The Corporation desires to continue to benefit from the services of
highly qualified, experienced, and otherwise competent persons such as the
Indemnitee, and
D. The Indemnitee desires to serve or to continue to serve the Corporation
as a director, officer, employee, or agent or as a director, officer, employee,
agent, or trustee of another corporation, joint venture, trust, or other
enterprise in which the Corporation has a direct or indirect ownership interest,
for so long as the Corporation continues to provide, on an acceptable basis,
adequate and reliable indemnification against liabilities and expenses that may
be incurred by the Indemnitee.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
1. INDEMNIFICATION. Subject to the exclusions contained in Section 9 of
this Agreement, the Corporation shall indemnify the Indemnitee with respect to
his activities as a director, officer, employee, or agent of the Corporation or
as a person who is serving or has served at the request of the Corporation
("representative") as a director, officer, employee, agent, or trustee of
another corporation, joint venture, trust, or other enterprise, domestic or
foreign, in which the Corporation has a direct or indirect ownership interest
(an "affiliated entity") against expenses (including, without limitation,
attorneys' and experts' fees, judgments, fines, and amounts paid or payable in
settlement) actually and reasonably incurred by him ("Expenses") in connection
with any claim against Indemnitee that is the subject of any threatened,
pending, or completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, investigative, or otherwise and whether formal or
informal (a "Proceeding"), to which Indemnitee was, is, or is threatened to be
made a party by reason of facts that include Indemnitee's being or having been
such a director, officer, employee, agent, or representative, to the extent of
the highest and most advantageous to the Indemnitee, as determined by the
Indemnitee, of one or any combination of the following -
(a) The benefits provided by the Corporation's Articles of Incorporation
("Articles") or Regulations, or the Articles of Incorporation or
Bylaws or Regulations of an affiliated entity of which the Indemnitee
serves as a representative, in each case as in effect on the date
hereof,
(b) The benefits provided by the Corporation's Articles or Regulations, or
the Articles of Incorporation or Bylaws or Regulations of an
affiliated entity of which the Indemnitee serves as a representative,
in each case as in effect at the time Expenses are incurred by the
Indemnitee,
(c) The benefits allowable under Ohio law in effect at the date hereof or
as amended to increase the scope of indemnification,
(d) The benefits allowable under the law of the jurisdiction under which
the Corporation exists at the time Expenses are incurred by the
Indemnitee,
(e) The benefits available under any liability insurance obtained by the
Corporation in effect when a claim is made against Indemnitee,
(f) The benefits available under any liability insurance obtained by the
Corporation in effect at the time Expenses are incurred by the
Indemnitee, and
(g) Such other benefits as are or may be otherwise available to
Indemnitee.
A combination of two or more of the benefits provided by (a) through (g)
shall be available to the extent that the Applicable Document (as hereafter
defined) does not require that the benefits provided therein be exclusive of
other benefits. The document or law providing for the benefits listed in items
(a) through (g) above is called the "Applicable Document" in this Agreement. The
Corporation hereby undertakes to use its best efforts to assist Indemnitee in
all proper and legal ways to obtain the benefits selected by Indemnitee under
item (a) through (g) above.
For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans for employees of the Corporation or of any
affiliated entity, without regard to ownership of such plans; references to
"fines" shall include any excise taxes assessed on the Indemnitee with respect
to any employee benefit plan; references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee, or
agent of the Corporation that imposes duties on or involves services by the
Indemnitee with respect to an employee benefit plan, its participants, or
beneficiaries; references to the masculine shall include the feminine;
references to the singular shall include the plural and vice versa; and if the
Indemnitee acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an employee benefit
plan, he shall be deemed to have acted in a manner consistent with the standards
required for indemnification by the Corporation under the Applicable Documents.
2. INSURANCE. The Corporation shall maintain liability insurance for so
long as Indemnitee's services are covered hereunder, provided and to the extent
that such insurance is available on a basis acceptable to the Corporation.
However, the Corporation agrees that the provisions hereof shall remain in
effect regardless of whether liability or other insurance coverage is at any
time obtained or retained by the Corporation. But payments made to Indemnitee
under an insurance policy obtained or retained by the Corporation shall reduce
the obligation of the Corporation to make payments hereunder by the amount of
the payments made under any such insurance policy.
3. PAYMENT OF EXPENSES. At Indemnitee's request, after receipt of written
notice under Section 5 hereof and an undertaking in the form of Exhibit A
attached hereto by or on behalf of Indemnitee to repay such amounts so paid on
Indemnitee's behalf if it shall ultimately be determined under the Applicable
Document that Indemnitee is not entitled to be indemnified by the Corporation
for such Expenses, the Corporation shall pay the Expenses as and when incurred
by Indemnitee. That portion of Expenses representing attorneys' fees and other
costs incurred in defending any proceeding shall be paid by the Corporation
within 30 days after the Corporation receives the request and reasonable
documentation evidencing the amount and nature of the Expenses, subject to its
also having received such a notice and undertaking.
4. ADDITIONAL RIGHTS. The indemnification provided in this Agreement shall
not be exclusive of any other indemnification or right to which Indemnitee may
be entitled and shall continue after Indemnitee has ceased to occupy a position
as an officer, director, employee, agent, or representative as described in
Section 1 above with respect to Proceedings relating to or arising out of
Indemnitee's acts or omissions during his service in such position. The benefits
provided to Indemnitee under this Agreement for the Indemnitee's service as a
representative of an affiliated entity shall be payable if and only if and only
to the extent that reimbursement to Indemnitee by the affiliated entity with
which Indemnitee has served as a representative, whether pursuant to agreement,
applicable law, articles of incorporation or association, bylaws or regulations
of the entity, or insurance maintained by such affiliated entity, is
insufficient to compensate Indemnitee for Expenses actually incurred and
otherwise payable by the Corporation under this Agreement. Any payments in fact
made to or on behalf of the Indemnitee directly or indirectly by the affiliated
entity with which Indemnitee served as a representative shall reduce the
obligation of the Corporation hereunder.
5. NOTICE TO CORPORATION. Indemnitee shall provide to the Corporation
prompt written notice of any Proceeding brought, threatened, asserted, or
commenced against Indemnitee with respect to which Indemnitee may assert a right
to indemnification hereunder; provided, however, that failure to provide such
notice shall not in any way limit Indemnitee's rights under this Agreement.
6. COOPERATION IN DEFENSE AND SETTLEMENT. Indemnitee shall not make any
admission or effect any settlement without the Corporation's written consent
unless Indemnitee shall have determined to undertake his own defense in such
matter and has waived the benefits of this Agreement. The Corporation shall not
settle any Proceeding to which Indemnitee is a party in a manner that would
impose any Expense on Indemnitee without his written consent. Neither Indemnitee
nor the Corporation will unreasonably withhold consent to the proposed
settlement. Indemnitee and the Corporation shall cooperate to the extent
reasonably possible with each other and with the Corporation's insurers in
attempts to defend or settle such Proceeding.
7. ASSUMPTION OF DEFENSE. Except as otherwise provided below, the
Corporation jointly with any other indemnifying party similarly notified may
assume Indemnitee's defense in any Proceeding, with counsel mutually
satisfactory to Indemnitee and the Corporation. After notice from the
Corporation to Indemnitee of the Corporation's election to assume such defense,
the Corporation will not be liable to Indemnitee under this Agreement for
Expenses subsequently incurred by Indemnitee in connection with the defense
thereof, other than reasonable costs of investigation or as otherwise provided
below. Indemnitee shall have the right to employ counsel in such Proceeding, but
the fees and expenses of such counsel incurred after notice from the Corporation
of its assumption of the defense thereof shall be at Indemnitee's expense
unless:
(a) The employment of counsel by Indemnitee has been authorized by the
Corporation,
(b) Counsel employed by the Corporation initially is unacceptable or later
becomes unacceptable to Indemnitee and such unacceptability is
reasonable under then existing circumstances,
(c) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between Indemnitee and the Corporation (or
another party being represented jointly with the Corporation) in the
conduct of the defense of such Proceeding, or
(d) The Corporation shall not have employed counsel promptly to assume the
defense of such Proceeding,
in each of which cases the fees and expenses of counsel shall be at the expense
of the Corporation and subject to payment pursuant to this Agreement. The
Corporation shall not be entitled to assume the defense of Indemnitee in any
Proceeding brought by or on behalf of the Corporation or as to which Indemnitee
shall have made either of the conclusions provided for in clauses (b) or (c)
above.
8. ENFORCEMENT. If a dispute or controversy arises under this Agreement
between Indemnitee and the Corporation with respect to whether the Indemnitee is
entitled to indemnification for any Proceeding or for Expenses incurred, then
for each such dispute or controversy the Indemnitee may seek to enforce the
Agreement through legal action or, at Indemnitee's sole option and written
request, through arbitration. If the Indemnitee requests arbitration, the
dispute or controversy shall be submitted by the parties to binding arbitration
in Trumbull County, Ohio before a single arbitrator agreeable to both parties;
provided, however, that indemnification for any claim, issue, or matter in a
Proceeding brought against Indemnitee by or in the right of the Corporation and
as to which Indemnitee is adjudged liable for negligence or misconduct in the
performance of his duty to the Corporation shall be submitted to arbitration
only to the extent permitted under the Applicable Document and applicable law
then in effect. If the parties cannot agree on a designated arbitrator within 15
days after arbitration is requested in writing by the Indemnitee, the
arbitration shall proceed in Trumbull County, Ohio before an arbitrator
appointed by the American Arbitration Association. In either case, the
arbitration proceeding shall commence promptly under the rules then in effect of
that Association. And the arbitrator agreed to by the parties or appointed by
that Association shall be an attorney other than an attorney who has been or is
associated with a firm having associated with it an attorney who has been
retained by or performed services for the Corporation or Indemnitee at any time
during the five years preceding commencement of arbitration. The award shall be
rendered in such form that judgment may be entered thereon in any court having
jurisdiction thereof. The prevailing party shall be entitled to prompt
reimbursement of any costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in connection with such legal action or
arbitration; provided, however, that the Indemnitee shall not be required to
reimburse the Corporation unless the arbitrator or court resolving the dispute
determines that Indemnitee acted in bad faith in bringing the action or
arbitration.
9. EXCLUSIONS. Notwithstanding the scope of indemnification available to
Indemnitees from time to time under any Applicable Document, no indemnification,
reimbursement or payment shall be required of the Corporation hereunder with
respect to -
(a) Any claim or any part thereof as to which Indemnitee shall have been
determined by a court of competent jurisdiction, from which no appeal
is or can be taken, by clear and convincing evidence, to have acted
with deliberate intent to cause injury to the Corporation or with
reckless disregard for the best interests of the Corporation,
(b) Any claim or any part thereof arising out of acts or omissions for
which applicable law prohibits elimination of liability,
(c) Any claim or any part thereof arising under Section 16(b) of the
Securities Exchange Act of 1934 pursuant to which Indemnitee shall be
obligated to pay any penalty, fine, settlement or judgment,
(d) Any obligation of Indemnitee based upon or attributable to the
Indemnitee gaining in fact any improper personal benefit, gain,
profit, or advantage, or
(e) Any proceeding initiated by Indemnitee without the consent or
authorization of the Board of Directors of the Corporation, provided
that this exclusion shall not apply with respect to any claims brought
by Indemnitee (1) to enforce his rights under this Agreement or (2) in
any Proceeding initiated by another person or entity whether or not
such claims were brought by Indemnitee against a person or entity who
was otherwise a party to such proceeding.
Nothing in this Section 9 shall eliminate or diminish the Corporation's
obligations to advance that portion of Indemnitee's Expenses representing
attorneys' fees and other costs incurred in defending any proceeding pursuant to
Section 3 of this Agreement.
Furthermore, anything herein to the contrary notwithstanding, nothing in
this Agreement requires indemnification, reimbursement or payment by the
Corporation, and the Indemnitee shall not be entitled to demand indemnification,
reimbursement or payment under this Agreement, if and to the extent
indemnification, reimbursement, or payment constitutes a "prohibited
indemnification payment" within the meaning of Federal Deposit Insurance
Corporation Rule 359.1(l)(1) [12 CFR 359.1(l)(1)].
10. EXTRAORDINARY TRANSACTIONS. The Corporation covenants and agrees that
in the event of any merger, consolidation, or reorganization in which the
Corporation is not the surviving entity, any sale of all or substantially all of
the assets of the Corporation, or any liquidation of the Corporation (each such
event is hereinafter referred to as an "extraordinary transaction"), the
Corporation shall -
(a) Have the obligations of the Corporation under this Agreement expressly
assumed by the survivor, purchaser, or successor, as the case may be,
in such extraordinary transaction, or
(b) Otherwise adequately provide for the satisfaction of the Corporation's
obligations under this Agreement, in a manner acceptable to
Indemnitee.
11. NO PERSONAL LIABILITY. Indemnitee agrees that neither the directors nor
any officer, employee, representative, or agent of the Corporation shall be
personally liable for the satisfaction of the Corporation's obligations under
this Agreement, and Indemnitee shall look solely to the assets of the
Corporation for satisfaction of any claims hereunder.
12. SEVERABILITY. If any provision, phrase, or other portion of this
Agreement is determined by any court of competent jurisdiction to be invalid,
illegal, or unenforceable, in whole or in part, and such determination becomes
final, such provision, phrase, or other portion shall be deemed to be severed or
limited, but only to the extent required to render the remaining provisions and
portions of the Agreement enforceable, and the Agreement as thus amended shall
be enforced to give effect to the intention of the parties insofar as that is
possible.
13. SUBROGATION. If any payments are made under this Agreement, the
Corporation shall be subrogated to the extent thereof to all rights to
indemnification or reimbursement against any insurer or other entity or person
vested in the Indemnitee, who shall execute all instruments and take all other
actions as shall be reasonably necessary for the Corporation to enforce such
rights.
14. GOVERNING LAW. The parties hereto agree that this Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Ohio.
15. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice. If to the Corporation,
notice shall be given to the board of directors, Cortland Bancorp, 000 X. Xxxx
Xxxxxx, X.X. Xxx 00, Xxxxxxxx, Xxxx 00000-0000, or to such other or additional
person or persons as the Corporation shall have designated to the Indemnitee in
writing. If to the Indemnitee, notice shall be given to the Indemnitee at the
address of the Indemnitee appearing on the Corporation's records, or to such
other or additional person or persons as the Indemnitee shall have designated to
the Corporation in writing.
16. TERMINATION. This Agreement may be terminated by either party upon not
less than 60 days' prior written notice delivered to the other party, but such
termination shall not diminish the obligations of the Corporation hereunder with
respect to Indemnitee's activities before the effective date of termination.
17. AMENDMENTS AND BINDING EFFECT. This Agreement and the rights and duties
of Indemnitee and the Corporation hereunder may not be amended, modified, or
terminated except by written instrument signed and delivered by the parties
hereto. This Agreement is binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
CORTLAND BANCORP
By:
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Its:
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INDEMNITEE
EXHIBIT 1
FORM OF UNDERTAKING
THIS UNDERTAKING has been entered into by _______________ ("Indemnitee")
pursuant to an Indemnification Agreement dated as of _______________________,
2005 (the "Indemnification Agreement"), by and between Cortland Bancorp, an Ohio
corporation (the "Corporation"), and Indemnitee.
RECITALS:
A. Under the Indemnification Agreement, the Corporation has agreed to pay
Expenses (within the meaning of the Indemnification Agreement) as and when
incurred by Indemnitee in connection with any claim against Indemnitee that is
the subject of any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, or investigative, to which Indemnitee was,
is, or is threatened to be made a party by reason of facts that include
Indemnitee's being or having been a director, officer, or representative (within
the meaning of the Indemnification Agreement) of the Corporation,
B. Such a claim has arisen against Indemnitee and Indemnitee has notified
the Corporation thereof in accordance with the terms of Section 5 of the
Indemnification Agreement (hereinafter the "Proceeding"), and
C. Indemnitee believes that Indemnitee should prevail in the Proceeding,
and it is in the interest of both Indemnitee and the Corporation to defend
against the claims against Indemnitee thereunder.
NOW, THEREFORE, Indemnitee hereby agrees that in consideration of the
Corporation's advance payment of Indemnitee's Expenses incurred before final
disposition of the Proceeding, Indemnitee hereby undertakes to reimburse the
Corporation for any and all expenses paid by the Corporation on behalf of
Indemnitee before final disposition of the Proceeding if the Indemnitee is
determined under the Applicable Document (within the meaning of the
Indemnification Agreement) to be required to repay such amounts to the
Corporation under the Indemnification Agreement and applicable law, provided
that if Indemnitee is entitled under the Applicable Document to indemnification
for some or a portion of such Expenses, Indemnitee's obligation to reimburse the
Corporation shall only be for those Expenses for which Indemnitee is determined
to be required to repay such amounts to the Corporation. Such reimbursement or
arrangements for reimbursement by Indemnitee shall be consummated within 90 days
after a determination that Indemnitee is required to repay such amounts to the
Corporation under the Indemnification Agreement and applicable law.
Further, the Indemnitee agrees to reasonably cooperate with the Corporation
concerning such proceeding.
IN WITNESS WHEREOF, the undersigned has set his hand this ______day of
______, 20_.
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Indemnitee
