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EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This
Agreement made this ___ day of _________, 2004, between CITIZENS
&
NORTHERN CORPORATION, a bank holding
company registered under the Bank Holding
Company Act of 1956, as amended, and a
Pennsylvania corporation (the "Company")
and __________________, a director, officer
or representative (as hereinafter
defined) of the Company (the
"Indemnitee");
WHEREAS,
the Company and the Indemnitee are each aware of the exposure
to
litigation of officers, directors and
representatives of the Company as such
persons exercise their duties to the
Company;
WHEREAS,
the Company and the Indemnitee are also aware of conditions in
the insurance industry that have affected
and may continue to affect the
Company's ability to obtain appropriate
directors' and officers' liability
insurance on an economically acceptable
basis;
WHEREAS,
the Company desires to continue to benefit from the services of
highly qualified, experienced and competent
persons such as the Indemnitee;
WHEREAS,
the Indemnitee desires to serve or to continue to serve the
Company as a director, officer or as a
director, officer or trustee of another
corporation, joint venture, trust or other
enterprise in which the Company has a
direct or indirect ownership interest, for
so long as the Company continues to
provide on an acceptable basis adequate and
reliable indemnification against
certain liabilities and expenses which may
be incurred by the Indemnitee.
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual
covenants herein contained, the parties
hereto agree as follows:
1.
Indemnification. Subject to the terms of this Agreement, the
Company
shall indemnify the Indemnitee with respect
to his activities as a director or
officer of the Company and/or as a person
who is serving or has served on behalf
of the Company ("representative") as a
director, officer, or trustee of another
corporation, joint venture, trust or other
enterprise, domestic or foreign, in
which the Company has a direct or indirect
ownership interest (an "affiliated
entity") against expenses (including,
without limitation, attorneys' fees,
judgments, fines, and amounts paid in
settlement) actually and reasonably
incurred by him ("Expenses") in
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connection with any claim against
Indemnitee which is the subject of any
threatened, pending, or completed action,
suit, or 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 which
include Indemnitee's being or having been
such a director, officer 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 Company's Articles of Incorporation in
effect on the date hereof;
(b) The
benefits provided by the Articles of Incorporation or By-Laws
or
their equivalent of the Company in effect
at the time Expenses are incurred by
Indemnitee;
(c) The
benefits allowable under Pennsylvania law in effect at the date
hereof;
(d) The
benefits allowable under the law of the jurisdiction under
which
the Company exists at the time Expenses are
incurred by the Indemnitee;
(e) The
benefits available under liability insurance obtained by the
Company;
(f) The
benefits available under the $5,000,000 D&O Selectplus
Insurance
Policy obtained by the Company from The
Fidelity and Deposit Companies in effect
for 2004; and
(g) Such
other benefits as are or may be otherwise available to
Indemnitee.
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.
Company hereby undertakes to use its best
efforts to assist Indemnitee, in all
proper legal ways, to obtain the benefits
selected by Indemnitee under items (a)
through (g) above.
For
purposes of this Agreement, references to "other enterprises"
shall
include employee benefit plans for
employees of the Company 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;
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references to "serving on behalf of the
company" shall include any services as a
director, officer, employee or agent of the
Company which imposes duties on, or
involves services by, the Indemnitee with
respect to an employee benefits plan,
its participants or beneficiaries;
references to the singular shall include the
plural and vice versa; and if the
Indemnitee acted in good faith and in a manner
he or she reasonably believed to be in the
interest of the participants and
beneficiaries of an employee benefit plan
Indemnitee shall be deemed to have
acted in a manner consistent with the
standards required for indemnification by
the Company under the Applicable
Documents.
2.
Insurance. The Company shall maintain directors' and officers'
liability insurance for so long as
Indemnitee's services are covered hereunder,
provided and only to the extent that such
insurance is available in amounts and
on terms and conditions determined by the
Company to be acceptable. However, the
Company 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 Company; except that any
payments in fact made to Indemnitee
under an insurance policy obtained or
retained by the Company shall reduce the
obligation of the Company to make payments
hereunder by the amount of the
payments made under any such insurance
policy.
3. Payment
of Expenses. At Indemnitee's request, the Company shall pay the
Expenses as and when incurred by
Indemnitee, after receipt of written notice
pursuant to Section 6 hereof and an
undertaking in the form of Exhibit I
attached hereto by or on behalf of
Indemnitee (i) to repay such amounts so paid
on Indemnitee's behalf if it shall
ultimately be determined under the Applicable
Document or applicable law that Indemnitee
is required to repay such amounts and
(ii) to reasonably cooperate with the
Company concerning such Proceeding. That
portion of Expenses which represents
attorneys' fees and other costs incurred in
defending any Proceeding shall be paid by
the Company within thirty (30) days of
its receipt of such request, together with
reasonable documentation (consistent,
in the case of attorneys' fees, with
Company practice in payment of legal fees
for outside counsel generally) evidencing
the amount and nature of such
Expenses, subject to its also having
received such notice and undertaking.
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It is
understood and agreed before the Company pays the Expenses
incurred
in a Proceeding brought by a banking agency
in which a final order has not been
entered, the following conditions must be
met:
(1) The
Board of Directors, in good faith, shall determine in writing
after due investigation and consideration
that the Indemnitee acted in a manner
believed to be in the best interests of the
Company;
(2) The
Board of Directors, in good faith, shall determine after due
investigation and consideration that the
payment of such Expenses will not
materially or adversely affect the
Company's safety and soundness.
(3) The
Indemnitee shall agree in writing to reimburse the Company for
Expenses, which subsequently are deemed
"prohibited indemnification payments",
as defined in 12 C.F.R. Section.
359.1(1).
The
Indemnitee shall not participate in any way in the Board's
discussion
and approval of Expenses, provided however,
that the Indemnitee may present his
or her request to the Board and respond to
any inquiries from the Board
concerning his or her involvement in the
circumstances giving rise to the
banking agency Proceeding or civil
action.
4. Escrow.
The Company may dedicate such amounts as the Board of Directors
of the Company may from time to time
authorize, as collateral security for the
funding of its obligations hereunder (and
under similar agreements with other
directors, officers and representatives) by
depositing assets or bank letters of
credit in escrow or reserving lines of
credit that may be drawn down by an
escrow agent in the dedicated amount (the
"Escrow Reserve"). The Company shall
promptly provide Indemnitee with a true and
complete copy of the agreement
relating to the establishment and operation
of the Escrow Reserve, together with
such additional documentation or
information with respect to the escrow as
Indemnitee may from time to time reasonably
request. The Company shall promptly
deliver an executed copy of the Agreement
to the escrow agent for the Escrow
Reserve to evidence to that agent that
Indemnitee is a beneficiary of that
Escrow Reserve and shall deliver to
Indemnitee the escrow agent's signed receipt
evidencing that delivery.
5.
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 or representative
as described in Paragraph 1 above with
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respect to Proceedings relating to or
arising out of Indemnitee's acts or
omissions during his or her service i
