Exhibit 10.42
Plumas Bank
Indemnification Agreement
This Indemnification Agreement (“Agreement”) is made and entered into as of the
                     day of                     , 200_, by and between Plumas
Bank, a California corporation (the “Bank”), and
                                        , (the “Indemnitee”), a director (and/or
officer) of the Bank.
RECITALS
A. The Bank and the Indemnitee recognize that statutes, regulations, court
opinions and the Bank’s Articles of Incorporation and Bylaws are indefinite in
providing ‘s directors and officers with adequate protection from liabilities to
which they may become personally exposed as a result of performing their duties
in good faith for the Bank;
B. The Bank and the Indemnitee are aware of the large number of lawsuits filed
against corporate directors and officers;
C. The Bank and the Indemnitee recognize that the cost of defending against such
lawsuits may be beyond the financial resources of most directors and officers of
the Bank;
D. The Bank and the Indemnitee recognize that the potential risks and
liabilities of being a director and/or officer pose a significant deterrent and
increased reluctance on the part of experienced and capable individuals to serve
as a director and/or officer of the Bank;
E. The Bank has investigated the availability and sufficiency of liability
insurance for its directors and officers with adequate protection against
potential liabilities and has determined that such insurance provides inadequate
protection to its directors and officers, and, thus, it would be in the best
interests of the Bank and its shareholders to contract with the Indemnitee, to
indemnify him/her to the fullest extent permitted by law against personal
liability for actions taken in the good faith performance of his/her duties to
the Bank;
F. Section 317 of the California Corporations Code (“Section 317”) sets forth
certain provisions relating to the mandatory and permissive indemnification of
directors and officers (among others) of a California corporation by such
corporation;
G. Section 359.3 of Title 12 of the Federal Code of Regulations limits certain
indemnification payments to a director, officer or institution affiliated party
of a insured depository institution;
H. As inducement and encouragement for experienced and capable persons such as
the Indemnitee to continue to serve as a director and/or officer of the Bank,
the Board of Directors of the Bank has determined, after due consideration and
investigation, that this Agreement is a reasonable and prudent means to promote
and ensure the best interests of the Bank and its shareholders; and

 

 

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I. The Bank desires to have the Indemnitee continue to serve as a director or
officer of the Bank free from undue concern for unpredictable, inappropriate or
unreasonable legal risks and personal liabilities by reason of his/her acting in
good faith in the performance of his/her duty to the Bank; and the Indemnitee
desires to continue to serve as a director or officer of the Bank; provided, and
on the express condition, that the Indemnitee is furnished with the indemnity
set forth hereinafter.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below and based on the premises set forth above, the Bank and the
Indemnitee do hereby agree as follows:
1. Agreement to Serve. The Indemnitee will serve or continue to serve as a
director or officer of the Bank to the best of his/her abilities at the will of
the Bank for so long as the Indemnitee is duly elected or appointed or until
such time as the Indemnitee tenders his/her resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term “Proceeding” shall include any threatened, pending or completed
action, suit or proceeding, whether brought in the right of the Bank or
otherwise and whether of a civil, criminal, administrative or investigative
nature, including, but not limited to, actions, suits or proceedings brought
under and/or predicated upon the Securities Act of 1933, as amended, and/or the
Securities Exchange Act of 1934, as amended, and/or their respective state
counterparts, and/or any rule or regulation promulgated thereunder, in which the
Indemnitee may be or may have been involved as a party or otherwise, by reason
of the fact that the Indemnitee is or was a director or officer of the Bank, by
reason of any action taken by him/her or of any inaction on his/her part while
acting as such director or officer or by reason of the fact that he/she is or
was serving at the request of the Bank as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
whether or not he/she is serving in such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be provided
under this Agreement.
(b) The term “Expenses” includes, without limitation thereto, expenses of
investigations, of judicial or administrative proceedings or appeals, attorneys’
fees and disbursements and any expenses of establishing a right to
indemnification under Paragraph 7 of this Agreement, but shall not include the
amount of judgments, settlements, fines or penalties actually levied against the
Indemnitee.
3. Indemnity in Third Party Proceedings. Subject to Section 359.1 of Title 12 of
the Federal Code of Regulations, the Bank shall indemnify the Indemnitee in
accordance with the provisions of this section if the Indemnitee is a party to
or threatened to be made a party to or otherwise involved in any Proceeding
(other than a Proceeding by or in the right of the Bank to procure a judgment in
its favor), by reason of the fact that the Indemnitee is or was a director,
officer, employee or agent of the Bank or is or was serving at the request of
the Bank as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all Expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
by the Indemnitee in connection with such Proceeding, provided it is determined
pursuant to Paragraph 7 of this Agreement or by the court before which such
action was brought or by the shareholders of the Bank in the manner prescribed
by Section 317, that the Indemnitee acted in good faith and in a manner which
he/she reasonably believed to be in the best interests of the Bank and, in the
case of a criminal proceeding, in addition, had no reasonable cause to believe
that his/her conduct was unlawful. The termination of any such Proceeding by
judgment, order of court, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the Indemnitee did not act in good faith and in a manner which he/she reasonably
believed to be in the best interests of the Bank, and with respect to any
criminal proceeding, that such person had reasonable cause to believe that
his/her conduct was unlawful.

 

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With respect to any Proceeding involving Indemnitee as to which Section 359.1 of
Title 12 of the Federal Code of Regulations is applicable, the Bank agrees to
use its best efforts to actively and fully comply with the requirements of
Section 359.3 of Title 12 of the Federal Code of Regulations to provide the
Indemnitee with indemnification to the maximum permitted under such section.
4. Indemnity in Proceedings by or in the Right of the Bank. Subject to
Section 359.1 of Title 12 of the Federal Code of Regulations, the Bank shall
indemnify the Indemnitee in accordance with the provisions of this section if
the Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any Proceeding by or in the right of the Bank to procure a judgment
in its favor by reason of the fact that the Indemnitee is or was a director,
officer, employee or agent of the Bank or is or was serving at the request of
the Bank as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against all Expenses
actually and reasonably incurred by the Indemnitee in connection with the
defense or settlement of such Proceeding, provided it is determined pursuant to
Paragraph 7 of this Agreement or by the court before which such action was
brought or by the shareholders of the Bank in the manner prescribed by
Section 317, that the Indemnitee acted in good faith and in a manner which
he/she believed to be in the best interests of the Bank and its shareholders.
Notwithstanding the foregoing, no indemnification shall be made under this
Paragraph 4:
(a) in respect of any claim, issue or matter as to which the Indemnitee shall
have been adjudged to be liable to the Bank, unless and only to the extent that
the court in which such Proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, the Indemnitee
is fairly and reasonably entitled to indemnity for such Expenses as such court
shall determine;
(b) of amounts paid in settling or otherwise disposing of a pending action
without court approval;
(c) of Expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval; or
(d) in respect of any act, omission or transaction set forth in
Section 204(a)(10)(A)(i)-(vii) of the California Corporations Code.

 

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With respect to any Proceeding involving Indemnitee as to which Section 359.1 of
Title 12 of the Federal Code of Regulations is applicable, the Bank agrees to
use its best efforts to actively and fully comply with the requirements of
Section 359.3 of Title 12 of the Federal Code of Regulations to provide the
Indemnitee with indemnification to the maximum permitted under such section.
4A. Additional Indemnity. The Bank further agrees to hold harmless and indemnify
Indemnitee to the fullest extent not prohibited by law and without duplication
of indemnification coverage where indemnification is to be provided by reason of
the fact that Indemnitee is, was, or at any time becomes, a director, officer,
employee or agent of the Bank, or is or was serving, or at any time serves, at
the request of the Bank as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, except
(a) in respect to remuneration paid to Indemnitee if it shall be determined by a
final adjudication (from which there is no right of appeal) that such
remuneration was in violation of law;
(b) on account of any action, claim or proceeding (other than a proceeding for
enforcement of Indemnitee for which Indemnitee is successful) initiated by
Indemnitee unless such action, claim or proceeding was authorized in the
specific case by action of the Board of Directors;
(c) on account of Indemnitee’s conduct if it shall be determined by a final
adjudication (from which there is no right of appeal) that such conduct
constituted the willful misappropriation of corporate assets by Indemnitee,
disclosure of confidential information in willful and deliberate breach in bad
faith of Indemnitee’s fiduciary or contractual obligations to the Bank, or any
other willful and deliberate breach in bad faith of Indemnitee’s duty to the
Bank or its shareholders;
(d) if a final adjudication (from which there is no right of appeal) by a court
having jurisdiction in the matter shall determine that such indemnification is
not lawful (and, in this respect, both the Bank and Indemnitee have been advised
that the Securities and Exchange Commission believes 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);
(e) in respect of any act, omission or transaction set forth in
Section 204(a)(10)(A)(i)-(vii) of the California Corporations Code;
(f) in respect of any claim, issue or matter as to which Indemnitee shall have
been adjudged to be liable to the Bank in the performance of Indemnitee’s duty
to the Bank and its shareholders, unless and only to the extent that the court
in which such proceeding is or was pending shall determine upon application
that, in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for expenses and then only to the extent that
the court shall determine;
(g) any act or omission by the Indemnitee as an officer, as applicable,
notwithstanding that the Indemnitee officer may also be a director or that the
Indemnitee’s action, if negligent or improper, has been ratified by the
directors of the Bank;

 

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(h) any prohibited indemnification as set forth in Section 359.3 of Title 12 of
the Federal Code of Regulations et seq.
(i) of amounts paid in settling or otherwise disposing of a pending action
without court approval; or,
(j) of expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
With respect to any Proceeding involving Indemnitee as to which Section 359.1 of
Title 12 of the Federal Code of Regulations is applicable, the Bank agrees to
use its best efforts to actively and fully comply with the requirements of
Section 359.3 of Title 12 of the Federal Code of Regulations to provide the
Indemnitee with indemnification to the maximum permitted under such section.
5. Indemnification of Expenses of Successful Party. Notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits in defense of any Proceeding or in defense of any
claim, issue or matter therein, the Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred in connection therewith.
6. Advances of Expenses. The Expenses incurred by the Indemnitee pursuant to
Paragraphs 3, 4 and/or 4A, as applicable, in defending any Proceeding shall be
paid by the Bank in advance of the final disposition of such Proceeding at the
written request of the Indemnitee, if the Indemnitee shall provide an
undertaking in the form attached hereto as Exhibit “A” to the Bank to repay such
amount unless it is ultimately determined that the Indemnitee is entitled to the
payment of Expenses. The written request to the Bank shall include a description
of the nature of the Proceeding and be accompanied by copies of any documents
filed with a court relating to the Proceeding.
Notwithstanding the foregoing or any other provision of this Agreement, no
advance shall be made by the Bank if a determination is reasonably and promptly
made by the Board of Directors by a majority vote of a quorum of disinterested
directors, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel,
that, based upon the facts known to the Board of Directors or counsel at the
time such determination is made, (a) the Indemnitee acted in bad faith or
deliberately breached his/her duty to the Bank or its shareholders, and (b) as a
result of such actions by the Indemnitee, it is more likely than not that it
will ultimately be determined that the Indemnitee is not entitled to
indemnification under the terms of this Agreement.
7. Rights of the Indemnitee to Indemnification Upon Application; Procedure Upon
Application. To the extent a quorum of the Board of Directors of the Bank
consisting of directors who were or are not parties to a Proceeding is
obtainable, the Board of Directors shall determine within 45 days after receipt
of the written request of the Indemnitee for indemnification whether the
Indemnitee has met the relevant standards for indemnification set forth in
Paragraphs 3, 4 and/or 4A as applicable, and, if it determines that such
standards have been met, it shall provide indemnification to the Indemnitee.

 

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Notwithstanding the foregoing, the Indemnitee may request independent counsel or
may bring suit in the court in which such Proceeding is or was pending to
determine whether the Indemnitee is entitled to indemnification as provided by
this Agreement. The Indemnitee’s expenses incurred in connection with
successfully establishing his/her right to indemnification, in whole or in part,
shall also be indemnified by the Bank.
8. Partial Indemnification. If the Indemnitee is entitled under any provision of
this Agreement to indemnification by the Bank for some or a portion of the
Expenses, judgments, fines, settlements or other amounts actually and reasonably
incurred by him/her in the investigation, defense, appeal or settlement of any
Proceeding but not, however, for the total amount thereof, the Bank shall
nevertheless indemnify the Indemnitee for the portion of such Expenses,
judgments, fines, settlements or other amounts to which the Indemnitee is
entitled.
9. Directors’ and Officers’ Liability Insurance. The obtaining of directors’ and
officers’ liability insurance (“D&O Coverage”) at the expense of and by the Bank
shall in no way limit or diminish the obligation of the Bank to indemnify the
Indemnitee as provided in this Agreement; provided, however, that any amounts
actually recovered by the Indemnitee from the insurer providing D&O Coverage
shall be applied in reduction of amounts otherwise owing by the Bank by reason
of its indemnification under this Agreement and if the Bank pays any amounts to
the Indemnitee pursuant to this Agreement, the Bank shall be subrogated to the
Indemnitee’s rights and claims against the insurer providing D&O Coverage and
the Indemnitee shall execute such documents as the Bank shall deem necessary to
reflect such subrogation.
10. Settlement of Claims.
(a) If the Bank has not obtained D&O Coverage, the Indemnitee shall not settle
any Proceeding for which he/she intends to seek indemnification hereunder
without first attempting to obtain the approval of the Bank. If the Indemnitee
seeks such approval and such approval is not granted by the Bank, the Indemnitee
shall be free to settle the Proceeding and pursue any procedures to establish
his/her right to indemnification as provided under this Agreement. If the
Indemnitee seeks such approval and such approval is not granted by the Bank, but
the Bank agrees to indemnify the Indemnitee, subject to Paragraph 4 herein,
against any Expenses, judgments, fines, settlements or other amounts actually
and reasonably incurred by the Indemnitee in connection with such Proceeding,
the Indemnitee shall not settle such Proceeding. If, however, under such
circumstances the Indemnitee does settle such Proceeding, the Indemnitee shall
forfeit his/her rights to indemnification under this Agreement.
(b) If the Bank has obtained D&O Coverage, the Indemnitee shall not settle any
Proceeding for which he/she intends to seek indemnification without first
attempting to obtain any approval required with respect to such settlement by
the insurance carrier of any applicable D&O Coverage. If the Indemnitee seeks
such approval and such approval is not granted by the insurance carrier of any
applicable D&O Coverage, the Indemnitee shall not settle such Proceeding without
then attempting to obtain the approval of the Bank. In the event the Indemnitee
seeks such approval from the Bank, the Bank and the Indemnitee shall have the
same rights and obligations as set forth in Paragraph 10(a). If the Indemnitee
seeks such approval from the Bank and such approval is granted, the Bank shall
be subrogated to the Indemnitee’s rights and claims against the insurance
carrier of any applicable D&O Coverage and the Indemnitee shall execute such
documents as the Bank shall deem necessary to effect such subrogation.

 

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11. Mutual Acknowledgment. Both the Bank and the Indemnitee acknowledge that in
certain instances, Federal law or applicable public policy may prohibit the Bank
from indemnifying the Indemnitee under this Agreement or otherwise.
12. Successors and Assigns. This Agreement shall be binding upon the Bank and
its successors and assigns and shall inure to the benefit of the Indemnitee and
the Indemnitee’s spouse, heirs, executors and administrators.
13. Savings Clause. If this Agreement or any portion thereof be invalidated on
any ground by any court of competent jurisdiction, then the Bank shall
nevertheless indemnify the Indemnitee as to Expenses, judgments, fines,
settlements or other amounts with respect to any Proceeding to the fullest
extent permitted by any applicable portion of this Agreement that shall not have
been invalidated or by any other applicable law.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
15. Notices. The Indemnitee shall, as a condition precedent to his/her right to
be indemnified under this Agreement, give to the Bank notice in writing as soon
as practicable of any claim made against him/her for which indemnification will
or could be sought under this Agreement. Notice to the Bank shall be directed to
Plumas Bank, 35 S. Lindan Ave., Quincy, California 95971, Attention: President
(or such other address as the Bank shall designate in writing to the
Indemnitee).
16. Modification and Amendment. No amendment, modification, termination or
cancellation of this Agreement, except as permitted pursuant to Section 11
above, shall be effected unless in writing signed by both parties hereto.
17. Effective Date; Survival of Rights. This Agreement shall apply beginning on
Indemnitee’s first date of being appointed or elected as an officer and/or
director of the Bank or in the case of agents or employees on the date they were
appointed to the position which gave rise to this indemnification. The rights
conferred on Indemnitee by this Agreement shall continue after Indemnitee has
ceased to be a director, officer, employee or other agent of the Bank and shall
inure to the benefit of Indemnitee’s heirs, executors and administrators.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year set forth above.

                      INDEMNITEE     PLUMAS BANK
 
                   
By:
        By:       
 
 
 
      Its:  
 
   
 
             
 
   

 

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EXHIBIT A
Plumas Bank
Undertaking

     
TO:
                                          , President
 
  Plumas Bancshares
 
  35 S. Lindan Avenue
 
  Quincy, California 95971

I,                     , a director or officer of Plumas Bank, a California
corporation, pursuant to Section 317(f) of the California Corporations Code and
the terms of my Indemnification Agreement with Plumas Bank agree to repay Plumas
Bank for all Expenses advanced on my behalf in defense of any Proceeding or in
defense of any claim, issue or matter therein, prior to the disposition of such
Proceeding, unless it shall be ultimately determined that I am entitled to
indemnification under Section 317 of the California Corporations Code or Plumas
Bank’s Articles of Incorporation, Bylaws or my Indemnification Agreement.
Dated:                                        
INDEMNITEE
By: