INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement"), dated as of ________,
____, is made by and between NORTH BAY BANCORP, a California banking corporation
(the "Company"), and _____________________, a director and/or officer of the
Company (the "Indemnitee").
RECITALS
A. Whereas, there is a general awareness that competent and
experienced persons are becoming more reluctant to serve as directors or
officers of a publicly-held corporation unless they are provided with adequate
protection against claims and actions against them for their activities on
behalf of the corporation, generally through insurance and indemnification.
B. WHERAS, the uncertainties in the interpretations of the
statutes and regulations, laws and public policies, relating to indemnification
of corporate directors and officers are such as to make adequate, reliable
assessment of the risks to which directors and officers of publicly-held
corporations may be exposed difficult, particularly in light of the
proliferation of lawsuits against directors and officers;
C. WHEREAS, the Board of Directors of the Company (the "Board"),
based upon its business experience, has concluded that the continuation of
present trends in litigation against corporate directors and officers will
inevitably make it more difficult for the Company to retain directors and
officers of the highest competence committed to the active and effective
direction and supervision of the business and affairs of the Company and its
subsidiaries and affiliates and the operation of their facilities, and the Board
deems such consequences to be so detrimental to the best interests of the
Company's stockholders that it has concluded that the Company should act to
assure its directors and officers of maximum protection against inordinate risks
attendant on their positions in order to ensure that the most capable persons
otherwise available will be attracted to such positions and, therefore, said
directors have further concluded that it is not only reasonable and prudent but
necessary for the Company to contractually obligate itself to indemnify to the
fullest extent permitted by applicable law its directors and officers and the
directors and officers of its affiliates and to assume to the maximum extent
permitted by law liability for expenses and liabilities which might be incurred
by its directors and officers in connection with claims lodged against them for
their decisions and actions as directors or officers.
D. WHEREAS, Section 317 of the General Corporation Law of the
State of California, under which law the Company is organized, empowers
corporations to indemnify an agent, defined as any person who is or was a
director, officer, employee, or other agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, or was a director, officer, employee, or agent of a
foreign or domestic corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of the predecessor
corporation, and further specifies that the indemnification provided by this
section "shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise", and further empowers a
corporation to "purchase and maintain insurance on behalf of any agent of the
corporation against any liability asserted against or incurred by the agent in
that capacity or arising out of the agent's status as such whether or not the
corporation would have the power to indemnify the agent against that liability
under this section".
E. WHEREAS, the Company has investigated the type of insurance
available, to inure the directors and officers of the Company and of its
affiliates against expenses (including attorneys' fees), costs, judgments, fines
and amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding to which they are or are
threatened to be made a party by reason of their status and/or decisions or
actions in such positions, has studied the nature and extent of the coverage
provided by such insurance and the cost thereof the Company, and has purchased
such insurance to the extent reasonably available; however, upon receiving such
information, and notwithstanding the purchase of such insurance when reasonably
available, which insurance is subject to certain significant exclusions and may
cease to be available (even with such exclusions), the directors of the Company
have concluded that it would be in the best interests of the stockholders for
the Company to contract to indemnify such persons as hereinafter provided;
F. WHEREAS, the Company desires to have Indemnities serve or
continue to serve as a director or officer of the Company and/or a director,
officer, partner, trustee, agent or fiduciary of such other corporations,
partnerships, joint ventures, employee benefit plans, trusts or other
enterprises of which Indemnitee has been or is serving, or will serve at the
request of or for the convenience of or to represent the interests of the
Company, free from undue concern for unpredictable, inappropriate or
unreasonable claims for damages by reason of Indemnitee's being a director or
officer of the Company or a director, officer, employee, trustee, partner, agent
or fiduciary of an Affiliate of the Company, or by reason of Indemnitee's
decisions or actions on their behalf; and
G. WHEREAS, Indemnitee is willing to serve, or to continue to
serve, or to take on additional service for,, the Company and/or the Affiliates
in such aforesaid capacities on the condition that Indemnitee be indemnified do
hereby covenant and agree as follows:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows
1. Definitions:
1.1 Agent. For the purpose of this Agreement, "agent" of the
Company means any person who is or was a director or officer of the Company or a
subsidiary of the Company; or is or was serving at the request of, for the
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convenience of, or to represent the interest of the Company or a subsidiary of
the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the
Company; or was a director of officer of a foreign or domestic corporation which
was a predecessor corporation of the Company or was a director or officer of
another enterprise or affiliate of the Company at the request of, for the
convenience of, or to represent the interests of such predecessor corporation.
The term "enterprise" includes any employee benefit plan of the Company, its
subsidiaries, affiliates and predecessor corporations.
1.2 Expenses. For purposes of this Agreement, "expenses"
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements
and other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense or appeal of a
proceeding or establishing or enforcing a right to indemnification or
advancement of expenses under this Agreement, Section 317 or otherwise;
provided, however that expenses shall not include any judgment, fines, ERISA
excise taxes or penalties or amounts paid in settlement of a proceeding.
1.3 Proceeding. For the purposes of this Agreement,
"proceeding" means any threatened, pending or completed action, suit or other
proceeding, whether civil, criminal, administrative, investigative or any other
type whatsoever.
1.4 Subsidiary. For purposes of this Agreement, "subsidiary"
means any corporation of which more than fifty percent (50%) of the outstanding
voting securities is owned directly or indirectly by the Company, by the Company
and one or more of its subsidiaries or by one or more of the Company's
subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or
continue to serve as an agent of the Company, at the will of the Company (or
under separate agreement, if such agreement exists), in the capacity the
Indemnitee currently serves as an agent of the Company, faithfully and to the
best of his ability, so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the charter documents of the
Company or any subsidiary of the Company; provided, however, that the Indemnitee
may at any time and for any reason resign from such position (subject to any
contractual obligation that the Indemnitee may have assumed apart from this
Agreement), and the Company or any subsidiary shall have no obligation under
this Agreement to continue the Indemnitee in any such position.
3. Directors' and Officers' Insurance. The Company shall, to the
extent that the Board determines it to be economically reasonable, maintain a
policy of directors' and officers' liability insurance ("D&O Insurance"), on
such terms and conditions as may be approved by the Board.
4. Mandatory Indemnification. Subject to Section 9 below, the
Company shall indemnify the Indemnitee:
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4.1 Third Party Actions. If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties and amounts paid in settlement) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith in a manner he reasonably believed to be
in, or not opposed to, the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and
4.2 Derivative Actions. If the Indemnitee is a person who was
or is a party or is threatened to be a party to any proceeding by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was an agent of the Company, or by reason of anything done or not
done by him in any such capacity, against any amounts paid in settlement of any
such proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the court in which such proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such amounts which the court
shall deem proper; and
4.3 Exception for Amounts Covered by Insurance.
Notwithstanding the foregoing, the Company shall not be obligated to indemnify
the Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) to the extent such have been paid directly to the
Indemnitee by D&O Insurance.
5. Partial Indemnification and Contribution.
5.1 Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of any expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a proceeding but is not entitled, however, to
indemnification for all of the total amount thereof, then the Company shall
nevertheless indemnify the Indemnitee for such total amount except as to the
portion thereof to which the Indemnitee is not entitled to indemnification.
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5.2 Contribution. If the Indemnitee is not entitled to the
indemnification provided in Section 4 for any reason other than the statutory
limitations set forth in the Law, then in respect of any threatened, pending or
completed proceeding in which the Company is jointly liable with the Indemnitee
(or would be if joined in such proceeding), the Company shall contribute to the
amount of expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Indemnitee on the other
hand from the transaction from which such proceeding arose and (ii) the relative
fault of the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnitee on the other
hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Company agrees that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
6. Mandatory Advancement of Expenses.
6.1 Advancement. Subject to Section 9 below, the Company shall
advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company or by reason of anything
done or not done by him in any such capacity. The Indemnitee hereby undertakes
to promptly repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the Articles
of Incorporation or Bylaws of the Company, the Law or otherwise. The advances to
be made hereunder shall be paid by the Company to the Indemnitee within thirty
(30) days following delivery of a written request therefore by the Indemnitee to
the Company.
6.2 Exception. Notwithstanding the foregoing provisions of
this Section 6, the Company shall not be obliged to advance any expenses to the
Indemnitee arising from a lawsuit filed directly by the Company against the
Indemnitee if an absolute majority of the members of the Board reasonably
determines in good faith, within thirty (30) days of the Indemnitee's request to
be advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the Indemnitee
acted in bad faith. If such a determination is made, the Indemnitee may have
such decision reviewed by another forum, in the manner set forth in Sections
8.3, 8.4 and 8.5 hereof, with all references therein to "indemnification" being
deemed to refer to "advancement of expenses," and the burden of proof shall be
on the Company to demonstrate clearly and convincingly that, based on the facts
known at the time, the Indemnitee acted in bad faith. The Company may not avail
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itself of this Section 6.2 as to a given lawsuit if, at any time after the
occurrence of the activities or omissions that are the primary focus of the
lawsuit, the Company has undergone a change in control. or this purpose, a
change in control shall mean a given person or group of affiliate persons or
groups increasing their beneficial ownership interest in the Company by at least
twenty (20) percentage points without advance Board approval.
7. Notice and Other Indemnification Procedures.
7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnittee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7.1 hereof, the Company has D&O
Insurance in effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in
the respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such D&O Insurance policies.
7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld,
conditioned or delayed), upon the delivery to the Indemnitee of written notice
of its election to do so. After delivery of such notice, approval of such
counsel by the Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to the Indemnitee under this Agreement for any fees
of counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that: (a) the Indemnitee shall have the right to employ his
own counsel in any such proceeding at the Indemnitee's expense; (b) the
Indemnitee shall have the right to employ his own counsel in connection with any
such proceeding, at the expense of the Company, if such counsel serves in a
review, observer, advice and counseling capacity and does not otherwise
materially control or participate in the defense of such proceeding; and (c) if
(i) the employment of counsel by the Indemnitee has been previously authorized
by the Company, (ii) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee in the
conduct of any such defense or (iii) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the fees and
expenses of the Indemnitee's counsel shall be at the expense of the Company.
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8. Determination of Entitlement to Indemnification.
8.1 To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding referred to in Section 4.1 or
4.2 of this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding, or such claim, issue or matter, as the case may be.
8.2 In the event that Section 8.1 is inapplicable, or does not
apply to the entire proceeding, the Company shall nonetheless indemnify the
Indemnitee unless the Company shall prove by clear and convincing evidence to a
forum listed in Section 8.3 below that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to such Indemnification.
8.3 The Indemnitee shall be entitled to select the forum in
which the validity of the Company's claim under Section 8.2 hereof that the
Indemniteee is not entitled to indemnification will be heard from among the
following, except that the Indemnitee can select a forum consisting of the
stockholders of the Company only with the approval of the Company:
(a) A quorum of the Board consisting of Disinterested
Directors of the Company;
(b) The stockholders of the Company;
(c) Independent Legal Counsel mutually agreed upon by the
Indemnitee and the Board, which counsel shall make such
determination in a written opinion; or
(d) A panel of three arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and
the last of whom is selected by the first two arbitrators so
selected.
8.4 As soon as practicable, and in no event later than thirty
(30) days after the forum has been selected pursuant to Section 8.3 above, the
Company shall at its own expense, submit to the selected forum its claim that
the Indemnitee is not entitled to indemnification, and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such a claim.
8.5 If the forum selected in accordance with Section 8.3
hereof is not a court, then after the final decision of such forum is rendered,
the Company or the Indemnitee shall have the right to apply to the court having
jurisdiction of subject matter and the parties, the court in which the
proceeding giving rise to the Indemnitee's claim for indemnification is or was
pending or any other court of competent jurisdiction, for the purpose of
appealing the decision of such forum, provided that such right is executed
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within sixty (60) days after the final decision of such forum is rendered. If
the forum selected in accordance with Section 8.3 hereof is a court, then the
rights of the Company or the Indemnitee to appeal any decision of such court
shall be governed by the applicable laws and rules governing appeals of the
decision of such court.
8.6 Notwithstanding any other provision in this Agreement to
the contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in any such
proceeding was frivolous or not made in good faith.
8.7. For purposes of this Agreement,
(a) "Disinterested Director" with respect to any request by
Indemnitee for indemnification hereunder shall mean a director
of the Company who is or was not a party to or a subject of
the action, suit investigation or proceeding in respect of
which indemnification is being sought by Indemnitee.
(b) "Independent Legal Counsel" shall mean a law firm or a
member of a law firm that neither is nor in the past five
years has been retained to represent in any material matter
the Company or any Securities Act affiliate or Indemnitee or
any other party or action, suit, investigation or proceeding
giving rise to a claim for indemnification hereunder and
which, under applicable standards of professional conduct then
prevailing, would not have a conflict of interest in
representing either the Company or Indemnitee in an action to
determine Indemnitee's right to indemnification under this
Agreement and that is reasonably acceptable to the Company and
Indemnitee.
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of the
Agreement:
9.1 Claims Initiated by Indemnitee. To indemnify or advance
expenses to the Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by the Indemnitee and not by way of defense, except with
respect to proceedings specifically authorized by the Board or brought to
establish or enforce a right to indemnification and/or advancement of expenses
arising under this Agreement, the charter documents of the Company or any
subsidiary or any statue or law or otherwise, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board finds it to be appropriate; or
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9.2 Unauthorized Settlements. To indemnify the Indemnitee
hereunder for any amounts paid in settlement of a proceeding unless the Company
consents in advance in writing to such settlement, which consent shall not be
unreasonably withheld, conditioned or delayed; or
9.3 Securities Law Actions. To indemnify the Indemnitee on
account of any suit in which judgment is rendered against the Indemnittee for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or
9.4 Unlawful Indemnification. To indemnify the Indemnitee if a
final decision by a court having jurisdiction in the matter shall determine that
such indemnification is not lawful. In this respect, the Company and the
Indemnitee have been advised that the Securities and Exchange Commission takes
the position that indemnification for liabilities arising under the federal
securities laws is against public policy and is, therefore, unenforceable and
that claims for indemnification should be submitted to appropriate courts for
adjudication.
10. Non-Exclusivity The provisions for the indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Articles of Incorporation or Bylaws, the vote of the
Company's stockholder or disinterested directors, other agreements or otherwise,
both as to action in the Indemnitee's official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administration of the Indemnitee.
11. General Provisions
11.1 Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification and advancement of expenses to the Indemnitee to the
fullest extent now or hereafter permitted by law, except as expressly limited
herein.
11.2 Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, then: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of the Agreement (including, with
out limitation, all portions of any paragraphs of this Agreement containing any
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such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 11.1 hereof.
11.3 Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver.
11.4 Subrogation. In the event of full payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all documents
required and shall do all acts that may be necessary or desirable to secure such
rights and to enable the Company effectively to bring suit to enforce such
rights.
11.5 Counterparts. This Agreement may be executed in one or
more counterparts, which shall together constitute one agreement.
11.6 Successors and Assigns. The terms of this Agreement shall
bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
11.7 Notice. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given: (a) if delivered by hand and signed for by the party addressee; or (b) if
mailed by certified or registered mail, with postage prepaid, on the third
business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement or as subsequently modified by
written notice.
11.8 Governing Law. This Agreement shall be governed
exclusively by and constructed according to the laws of the State of California,
as applied to contracts between California residents entered into and to be
performed entirely within California.
11.9 Consent to Jurisdiction. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of California for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
11.10 Attorney's Fees In the event Indemnitee is required to
bring any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding, described in Section 3), the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing and
pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made
in good faith.
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IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.
NORTH BAY BANCORP INDEMNITEE:
By:
---------------------------------- -----------------------------------
Name: Name:
------------------------------ -----------------------------------
Title: President & CEO Address:
--------------------------------
Address: X.X. Xxx 0000
----------------------------------------
Xxxx, XX 00000
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