Exhibit 10.31
INDEMNIFICATION AGREEMENT
This Agreement, dated as of September 19, 2005, is between
Citizens
South Banking Corporation ("CSBC"), and Kim
S. Price ("Indemnitee").
WHEREAS, CSBC has made an investment in and owns 5% of the issued
and
outstanding shares of common stock of
Community Trust of the Southeast, Inc.
("Community Trust"), a North Carolina
corporate entity that provides trust,
investment management and fiduciary
services to the public; and
WHEREAS, at the request of CSBC, Indemnitee has agreed to serve
(and
currently serves) as a director of
Community Trust; and
WHEREAS, the Board of Directors has determined that it is in the
best
interests of CSBC and its stockholders that
Indemnitee continue to serve as a
director of Community Trust free from undue
concern for unpredictable,
inappropriate or unreasonable legal risks
and personal liabilities by reason of
such service; and
WHEREAS, as an inducement to Indemnitee to continue to serve as
director of Community Trust, CSBC is
willing to protect him, through this
Agreement, against the risks of claims and
actions against Indemnitee that may
arise out of his service to and activities
on behalf of Community Trust.
NOW, THEREFORE, in consideration of
Indemnitee's continued service as a director
of Community Trust, the parties hereto
agree as follows:
Section 1. Service. Indemnitee will continue to serve as a director
of
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Community Trust faithfully and to the best
of Indemnitee's ability so long as
Indemnitee is duly elected and until such
time as Indemnitee is removed as
permitted by law or tenders a resignation
in writing. Nothing contained in this
Indemnification Agreement shall give rise
to any obligation by Indemnitee to
continue to serve as director of Community
Trust.
Section 2. Indemnification - Generally.
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To the fullest extent permitted by the laws of the State of
Delaware:
(a) CSBC shall indemnify Indemnitee if Indemnitee was or is a party
or
is threatened to be made a party to any
threatened, pending or completed action,
suit or proceeding, whether civil,
criminal, administrative or investigative, by
reason of the fact that Indemnitee is or
was serving as a director of Community
Trust. For the avoidance of doubt, the
foregoing indemnification obligation
includes, without limitation, claims for
monetary damages against Indemnitee in
respect of an alleged breach of fiduciary
duties.
(b) The indemnification provided by this Section 2 shall be from
and
against expenses (including attorneys'
fees), judgments, fines and amounts paid
in settlement actually and reasonably
incurred by Indemnitee or on Indemnitee's
behalf in connection with such action, suit
or proceeding and any appeal
therefrom, but shall only be provided if
Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be
in or not opposed to the best
interests
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of CSBC, and, with respect to any criminal
action, suit or proceeding, had no
reasonable cause to believe Indemnitee's
conduct was unlawful.
(c) The termination of any action, suit or proceeding by
judgment,
order, settlement, conviction, or upon a
plea of nolo contendere or its
equivalent, shall not, of itself, 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
CSBC, and, with respect to any criminal
action or proceeding, had reasonable cause
to believe that Indemnitee's conduct
was unlawful.
Section 3. Successful Defense; Partial Indemnification. To the
extent
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that Indemnitee has been successful on the
merits or otherwise in defense of any
action, suit or proceeding referred to in
Section 2 hereof or in defense of any
claim, issue or matter therein, Indemnitee
shall be indemnified against expenses
(including attorneys' fees) actually and
reasonably incurred in connection
therewith. For purposes of this Agreement
and without limiting the foregoing, if
any action, suit or proceeding is disposed
of, on the merits or otherwise
(including a disposition without
prejudice), without (i) the disposition being
adverse to Indemnitee, (ii) an adjudication
that Indemnitee was liable to CSBC,
(iii) a plea of guilty or nolo contendere
by Indemnitee, (iv) an adjudication
that Indemnitee did not act in good faith
and in a manner Indemnitee reasonably
believed to be in or not opposed to the
best interests of Community Trust, and
(v) with respect to any criminal
proceeding, an adjudication that Indemnitee had
reasonable cause to believe Indemnitee's
conduct was unlawful, Indemnitee shall
be considered for the purposes hereof to
have been wholly successful with
respect thereto.
If Indemnitee is entitled under any provision of this Agreement
to
indemnification by CSBC for some or a
portion of the expenses (including
attorneys' fees), judgments, fines or
amounts paid in settlement actually and
reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with
any action, suit, proceeding or
investigation, or in defense of any claim, issue
or matter therein, and any appeal therefrom
but not, however, for the total
amount thereof, CSBC shall nevertheless
indemnify Indemnitee for the portion of
such expenses (including attorneys' fees),
judgments, fines or amounts paid in
settlement to which Indemnitee is
entitled.
Section 4. Determination That Indemnification Is Proper. Any
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indemnification hereunder shall (unless
otherwise ordered by a court) be made by
CSBC unless a determination is made that
indemnification of such person is not
proper in the circumstances because he or
she has not met the applicable
standard of conduct set forth in Section
2(b) hereof. Any such determination
shall be made (i) by a majority vote of the
directors who are not parties to the
action, suit or proceeding in question
("disinterested directors"), even if less
than a quorum, (ii) by a majority vote of a
committee of disinterested directors
designated by majority vote of
disinterested directors, even if less than a
quorum, (iii) by a majority vote of a
quorum of the outstanding shares of stock
of all classes entitled to vote on the
matter, voting as a single class, which
quorum shall consist of stockholders who
are not at that time parties to the
action, suit or proceeding in question,
(iv) by independent legal counsel, or
(v) by a court of competent
jurisdiction.
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Section 5. Advance Payment of Expenses; Notification and Defense
of
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Claim.
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(a) Expenses (including attorneys' fees) incurred by Indemnitee
in
defending a threatened or pending civil,
criminal, administrative or
investigative action, suit or proceeding,
or in connection with an enforcement
action pursuant to Section 5(b), shall be
paid by CSBC in advance of the final
disposition of such action, suit or
proceeding within thirty (30) days after
receipt by CSBC of (i) a statement or
statements from Indemnitee requesting such
advance or advances from time to time, and
(ii) an undertaking by or on behalf
of Indemnitee to repay such amount or
amounts, only if, and to the extent that,
it shall ultimately be determined that
Indemnitee is not entitled to be
indemnified by CSBC as authorized by this
Agreement or otherwise. Such
undertaking shall be accepted without
reference to the financial ability of
Indemnitee to make such repayment. Advances
shall be unsecured and
interest-free.
(b) Promptly after receipt by Indemnitee of notice of the
commencement
of any action, suit or proceeding,
Indemnitee shall, if a claim thereof is to be
made against CSBC hereunder, notify CSBC of
the commencement thereof. The
failure to promptly notify CSBC of the
commencement of the action, suit or
proceeding, or Indemnitee's request for
indemnification, will not relieve CSBC
from any liability that it may have to
Indemnitee hereunder, except to the
extent CSBC is prejudiced in its defense of
such action, suit or proceeding as a
result of such failure.
(c) Notwithstanding any other provision of this Agreement to
the
contrary, to the extent that Indemnitee is,
by reason of Indemnitee's status as
a director of Community Trust, a witness or
otherwise participates in any
action, suit or proceeding at a time when
Indemnitee is not a party in the
action, suit or proceeding, CSBC shall
indemnify Indemnitee against all expenses
(including attorneys' fees) actually and
reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection
therewith.
Section 6. Procedure for Indemnification
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(a) To obtain indemnification, Indemnitee shall promptly submit to
CSBC
a written request, including therein or
therewith such documentation and
information as is reasonably available to
Indemnitee and is reasonably necessary
to determine whether and to what extent
Indemnitee is entitled to
indemnification. CSBC shall, promptly upon
receipt of such a request for
indemnification, advise the Board of
Directors in writing that Indemnitee has
requested indemnification.
(b) CSBC's
