Exhibit 99.1

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

Discovery Period (Activation)

Policy Number: 4548319-08

In consideration of the premium paid to exercise the Discovery Period option, and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that the Policy is amended as follows:

1.

Pursuant to Section XIII, entitled “Cancellation/Nonrenewal/Conversion”, this Policy shall terminate at 12:01 a.m. (local time at the address shown in Item 1 of the Declarations) on 07/10/2010.

2.

Subject to all provisions set forth in Section III, this Discovery Period Activation shall only apply to the coverages identified below:

														Discovery				Discovery
		Limit of												Period				Period
Insuring Agreement		Liability				Retention				Premium				Effective Date				Expiration Date
Directors and Officers Liability		$	10,000,000			$	50,000			$	13,413				07/10/2010				07/10/2011
Broad Form Company Liability		$	5,000,000			$	50,000			$	11,498				07/10/2010				07/10/2011
Fiduciary Liability		$	5,000,000			$	5,000			$	655				07/10/2010				07/10/2011
Privacy Liability		$	5,000,000			$	50,000			$	479				07/10/2010				07/10/2011

3.		If the Discovery Period is purchased as a result of the Company being acquired or merged with another entity and the acquiring entity is legally permitted to indemnify the Insured Persons, regardless of whether actual indemnification is granted, the retention applicable to Insuring Agreement (B) shall apply to such Loss, unless by reason of its Financial Impairment the acquiring entity does not make indemnification.
4.		Section IV (E) is deleted and replaced as follows:

E.

Company, means the entity or entities set forth in Item 1 of the Declarations, any Subsidiary created or acquired as of the inception date set forth in Item 2 of the Declarations, and, the acquiring entity, but only for Wrongful Acts involving the entity or entities set forth in Item 1 of the Declarations and only for Wrongful Acts occurring prior to the termination date of this Policy.

5.

Section XII, entitled “Mergers, Acquisitions and Changes in Business Activities”, is deleted in its entirety.

6.

The Discovery Period is noncancellable and the entire premium for this Endorsement shall be deemed to be fully earned at its commencement.

This Endorsement shall be effective as of 12:01 a.m. on 07/10/2010.

Form No. 2254 (12/06)          FDIC No. 27259

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

/s/ Dane A. Shrallow   Dane A. Shrallow				/s/ Glenn Renwick   Glenn Renwick
Secretary				President

Form No. 2254 (12/06)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

DIRECTORS & OFFICERS / COMPANY LIABILITY INSURANCE POLICY
FOR FINANCIAL INSTITUTIONS

DECLARATIONS PAGE

Policy Number: 4548319-08

IMPORTANT NOTICE: This is a claims-made policy written on a no duty to defend basis. Defense Costs are included within the Limit of Liability. Amounts incurred as Defense Costs will reduce the Limit of Liability available to pay judgments or settlements. Please read this Policy carefully.

Item 1.		Named Insured(s):		Sonoma Valley Bancorp Sonoma Valley Bank
		Principal Office:		202 West Napa Street, Sonoma, CA 95476
Item 2.		Policy Period:		From 12:01 a.m. 07/01/2008 To 12:01 a.m. 07/01/2011 (Local time at the address shown in Item 1)
Item 3.		Total Policy Limit: The Total Policy Limit for each Policy Year during the Policy Period for all Insuring Agreements, regardless of whether such Insuring Agreement is provided as a sublimit or separate limit, shall not exceed $20,000,000.
Item 4.		Discovery Period: If the eligibility requirements are met and the Discovery Period is properly exercised, the Insured shall pay 75% of the annual premium set forth in Item 10 (a). The length of the Discovery Period shall be 365 days.
Item 5.		Notices: All notices required to be given to the Insurer under this Policy shall be addressed to Progressive Casualty Insurance Company, Professional Liability Group, 5920 Landerbrook Drive, PLG-L21, Mayfield Heights, Ohio 44124. Telephone: 800-274-5222.

Form No. 5088 (12/06)          FDIC No. 27259

Item 6.		Coverage(s) Provided: It is understood and agreed that coverage will not be provided under any Insuring Agreement unless a Limit of Liability, retention and premium for such Insuring Agreement are set forth below:

Item 7.

Item 8.

Item 9.

Item 10. (a)

Item 10. (b)

“X”

Indicates

Separate

Limit of

Annual

Actual

Insuring Agreements

Limit

Liability

Retention

Premium

Premium

Directors & Officers Liability Coverage

A. Insured Persons Liability

N/A

$

10,000,000

$

0

$

17,571

$

50,077

B. Company Indemnification

$

50,000

Company Liability Coverage

C. Broad Form Company Liability *

X

$

5,000,000

$

50,000

$

15,061

$

42,924

Additional Insuring Agreements

D. Lender Liability (Broad Form)

N/A

N/A

N/A

N/A

N/A

E. Lender Liability

N/A

N/A

N/A

N/A

N/A

F. Depositor Liability

N/A

N/A

N/A

N/A

N/A

G. Securities Liability

N/A

N/A

N/A

N/A

N/A

H. IRA/Keogh Liability

N/A

N/A

N/A

N/A

N/A

I. Fiduciary Liability

X

$

5,000,000

$

5,000

$

1,471

$

4,192

J. Insurance Services Liability

N/A

N/A

N/A

N/A

N/A

K. Brokerage/Advisory Services Liability

N/A

N/A

N/A

N/A

N/A

L. Trust Department Liability

N/A

N/A

N/A

N/A

N/A

M. Employment Practices Liability

N/A

N/A

N/A

N/A

N/A

N. Bankers Professional Liability

N/A

N/A

N/A

N/A

N/A

O. Privacy Liability

N/A

$

5,000,000

$

50,000

$

627

$

1,787

P. Privacy Liability Mitigation

N/A

$

100,000

$

15,000

$

251

$

715

Item 11.		IRA/Keogh Liability Retention: If IRA/Keogh coverage is provided pursuant to Insuring Agreement H, coverage shall be subject to the retention set forth in Item 9 above. If IRA/Keogh coverage is provided pursuant to: 1) Section IV (X)(2) of the Policy; 2) Insuring Agreement C; or 3) Insuring Agreement N, the retention for IRA/Keogh Claims shall be $5,000.

Form No. 5088 (12/06)          FDIC No. 27259

Item 12.		Prior/Pending Litigation Dates: See endorsement #2811 for details.

Item 13.		Endorsements: This Policy is subject to the terms of the following Endorsements attached hereto and incorporated herein by reference at the effective date of this Policy and to all other Endorsements attached hereto after the effective date of this Policy: 2244, 2811, 4074, 5093, 5105, TRIA-01, 8790D (CA), 2844

These Declarations, along with the completed and signed Application, including attachments, the Policy and all Endorsements hereto, shall constitute the contract between the Insured Persons, the Company and Progressive Casualty Insurance Company, 6300 Wilson Mills Road, Mayfield Village, Ohio 44143.

Date: July 8, 2008

Form No. 5088 (12/06)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

DIRECTORS & OFFICERS / COMPANY LIABILITY INSURANCE POLICY
FOR FINANCIAL INSTITUTIONS

Policy Number: 4548319-08

IMPORTANT NOTICE: This is a claims-made policy written on a no duty to defend basis. Defense Costs are included within the Limit of Liability. Amounts incurred as Defense Costs will reduce the Limit of Liability available to pay judgments or settlements. Please read this Policy carefully.

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that coverage will be provided subject to all of the terms, conditions and limitations of this Policy, as follows:

SECTION I — INSURING AGREEMENTS

It is understood and agreed that coverage will not be provided under any Insuring Agreement unless a Limit of Liability, retention and premium for such Insuring Agreement are set forth in the Declarations.

A.

INSURED PERSONS LIABILITY COVERAGE

The Insurer will pay on behalf of the Insured Persons, Loss resulting from Claims first made during the Policy Period or the Discovery Period against the Insured Persons for which the Insured Persons are legally obligated to pay for Wrongful Acts, except for Loss the Company pays as indemnification.

B.

COMPANY INDEMNIFICATION COVERAGE

The Insurer will pay on behalf of the Company, Loss resulting from Claims first made during the Policy Period or the Discovery Period against the Insured Persons for which the Company has agreed to or is legally permitted or required by law to indemnify the Insured Persons for Wrongful Acts.

C.

BROAD FORM COMPANY LIABILITY COVERAGE

The Insurer will pay on behalf of the Company, Loss resulting from Claims first made during the Policy Period or the Discovery Period against the Company for which the Company is legally obligated to pay for Wrongful Acts.

Form No. 5089 (01/05)          FDIC No. 27259

SECTION II — ADDITIONAL COVERAGES

A.

ESTATES, HEIRS AND MARITAL ESTATE LIABILITY

This Policy shall cover Loss resulting from Claims for Wrongful Acts of an Insured Person made against:

(1)

the estates, heirs, legal representatives or assigns of any Insured Persons who are deceased, incompetent, insolvent or bankrupt; provided that such Claims would have been covered by this Policy in the absence of such death, incompetency, insolvency or bankruptcy; and

(2)

the lawful spouse of an Insured Person solely by reason of such person’s status as a spouse such spouse’s ownership interest in property which the claimant seeks as recovery for an alleged Wrongful Act of such Insured Person.

The coverage provided by this Subsection shall not apply with respect to any loss arising from any act or omission by an Insured Person’s estate, heirs, legal representatives, assigns, or spouse.

B.

NOT-FOR-PROFIT DIRECTORSHIPS

This Policy shall cover Loss resulting from Claims for Wrongful Acts committed by Insured Persons while serving on the board of directors, board of trustees, or as officers of any not-for-profit entity at the direction of the Company; provided, however, that this coverage shall be excess over any other insurance or indemnification available to the Insured Persons.

SECTION III — DISCOVERY PERIOD

A.

If the Company or the Insurer cancels or nonrenews this Policy or any Insuring Agreement, or if the Policy converts subject to Section XIII (C)(1)(b), the Insured shall have the right to purchase an optional extended reporting period (herein called the Discovery Period) for the period set forth in Item 4 of the Declarations. It is understood that if the Insurer cancels this Policy due to nonpayment of premium, the Insured shall not be entitled to the Discovery Period.

B.

The Discovery Period is not an extension of coverage, but rather an extended reporting period for Claims first made during the Discovery Period resulting from Wrongful Acts that occurred prior to the effective date of cancellation, nonrenewal or conversion and otherwise covered under this Policy. Notice of facts and circumstances that may give rise to a Claim, pursuant to Section X (B), must be given during the Policy Period and shall not be effective if given during the Discovery Period.

C.

If the Insured elects to purchase the Discovery Period, the premium will be calculated by multiplying the annual premium set forth in Item 10 (a) of the Declarations by the percentage set forth in Item 4 of the Declarations. The Discovery Period is noncancellable and the entire premium shall be deemed fully earned at its commencement.

D.

The Insureds’ right to purchase the Discovery Period shall lapse unless the Insurer receives written notice of the Insureds’ election and full payment of the additional premium due within sixty (60) days after the effective date of such cancellation, nonrenewal or conversion.

E.

The Limit of Liability with respect to Claims made during the Discovery Period shall be part of and not in addition to the Limit of Liability set forth in Item 8 of the Declarations, for each respective Insuring Agreement, for all Claims made during the immediately preceding Policy Year. Any Claim made during the Discovery Period shall be deemed to be made during the Policy Year immediately preceding the Discovery Period.

Form No. 5089 (01/05)          FDIC No. 27259

F.

The offer by the Insurer and acceptance by the Insured of continued coverage under terms, conditions, Limits of Liability, retentions, or premiums different from those applicable to the expiring Policy shall not constitute a refusal to renew and shall not entitle any Insured to exercise the Discovery Period.

SECTION IV — DEFINITIONS

A.

Application means all applications, attachments and materials submitted to the Insurer for this Policy or any Policy of which this Policy is a direct or indirect renewal or replacement. All such applications, attachments and materials are deemed attached to and incorporated into this Policy, as if physically attached.

B.

Brokerage/Advisory Services means the purchase or sale of securities, mutual funds, annuities, variable annuities, life, accident or health insurance which have been approved by the Company to be transacted through a Registered Representative of the Company or a third party service provider pursuant to a contract between the Company and the service provider. In connection with the foregoing activities, Brokerage/Advisory Services also includes the provision of:

(1)

economic advice, financial advice or investment advisory services; and

(2)

financial planning advice including without limitation any of the following activities in conjunction therewith: the preparation of financial plans or personal financial statements, and the giving of advice with regard to insurance, savings, investments, retirement planning or taxes.

Brokerage/Advisory Services shall not include rendering advice with regard to the FDIC-insured component of any deposit account or the sale of credit life or disability insurance incidental to the issuance of a loan.

C.

Claim, either in singular or plural, means any of the following instituted against an Insured Person or against the Company, but only to the extent coverage is granted to the Company:

	(1)		a written or oral demand for monetary damages or non-monetary relief;
	(2)		a civil proceeding commenced by the service of a complaint or similar pleading;
	(3)		a criminal proceeding commenced by a return of an indictment;
	(4)		an arbitration or mediation proceeding in which monetary damages are sought;
	(5)		a formal administrative or regulatory proceeding commenced by the filing of a notice of charges, formal investigative order or similar document; or
	(6)		a written request to toll or waive a statute of limitations, relating to a potential Claim described in Items (1) through (5) above,

for a Wrongful Act including any appeal from such proceeding.

D.

COBRA means the Consolidated Omnibus Budget Reconciliation Act, as amended.

E.

Company means the entity or entities set forth in Item 1 of the Declarations, any Subsidiary created or acquired as of the inception date set forth in Item 2 of the Declarations, and, subject to Section XII (B), any bank Subsidiary created or acquired during the Policy Period.

Form No. 5089 (01/05)          FDIC No. 27259

F.

Defense Costs means reasonable and necessary legal fees and expenses incurred in defending or investigating any Claim and the cost of appeal, attachment or similar bonds. Defense Costs shall not include salaries, wages, overhead, or benefit expenses incurred by the Insured.

G.

ERISA means the Employment Retirement Income Security Act of 1974, as amended.

H.		Employee, either in singular or plural, means any natural person, other than a Leased Employee or Independent Contractor, who is a past, present or future employee of the Company including any part-time, seasonal or temporary employee, acting in their capacity as such.
I.		Financial Impairment means the status of the Company resulting from:

	(1)		the appointment by any state or federal official, regulatory agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take control of, supervise, manage, or liquidate the Company or any Subsidiary; or
	(2)		the Company or any Subsidiary becoming a debtor in possession.

J.

Insured, either in singular or plural, means the Insured Persons or the Company.

K.

Insured Person, either in singular or plural, means any past, present or future director, member of the board of trustees, officer, Employee, honorary or advisory director, or honorary or advisory member of the board of trustees of the Company.

L.

Insurance Services means any of the following services performed by an Insured as insurance agent, insurance broker, insurance consultant or insurance managing general agent:

	(1)		sale and placement of insurance;
	(2)		identification, analysis and evaluation of a client’s insurance needs, including work performed for prospective clients;
	(3)		appraisal of property and inspections for insurance purposes;
	(4)		adjustment of claims on behalf of insurance companies, including loss payments; or
	(5)		arrangement of premium financing for clients.

M.

Interrelated Wrongful Acts means Wrongful Acts which have as a common nexus any fact, circumstance, situation, event, transaction or series of related facts, circumstances, situations, events or transactions.

N.

Loss means Defense Costs and any amount which the Insured Persons or the Company (if applicable) are legally obligated to pay resulting from a Claim, including damages, judgments, settlements, pre- and post-judgment interest, punitive or exemplary damages and the multiple portion of any multiplied damage award where insurable by law. Loss shall not include:

	(1)		taxes;
	(2)		criminal or civil fines or penalties imposed by law;
	(3)		any unpaid, unrecoverable or outstanding loan, lease or extension of credit to any customer or any forgiveness of debt;

Form No. 5089 (01/05)          FDIC No. 27259

(4)

costs to comply with any non-monetary or injunctive relief of any kind or any agreement to provide such relief, including but not limited to any damages, costs or expenses incurred in making an accommodation for any disabled person pursuant to the Americans with Disabilities Act or any similar federal, state or local laws, or in complying with any other federal, state or local laws of any kind;

(5)

other than Defense Costs, that portion of Loss that the Company is obligated to pay pursuant to any express written or oral contract or agreement existing prior to the date the Claim is made; provided, however, if it is established in fact that such Claim involves an intentional breach of contract, the Insured agrees to reimburse the Insurer for such Defense Costs;

(6)

the depreciation (or failure to appreciate) in value of any investment product, including securities, commodities, currencies, options or futures due to market fluctuation unrelated to any Wrongful Act;

	(7)		any restitution, disgorgement, or payment of similar sums including but not limited to the return of fees, commissions or charges for the Company’s services; or
	(8)		any matters which are uninsurable under the law pursuant to which this Policy shall be construed.

O.

Loss Information means information on open, closed and potential Claims, including date, description, and payment amounts, if any.

P.

Named Insured means the first named entity set forth of Item 1 of the Declarations.

Q.

Policy means collectively, the Declarations, the Application, this policy form and any Endorsements attached hereto.

R.

Policy Period means the period from the inception date set forth in Item 2 of the Declarations to the expiration date set forth in Item 2 of the Declarations or any earlier termination date.

S.

Policy Year means the period of one year following the effective date and hour of this Policy or any anniversary thereof, or if the time between the effective date and termination of the Policy Period is less than one year, such lesser period. Any extension of the Policy Period shall not result in an increase or reinstatement of the Limit of Liability. If the Policy Period is extended beyond its original expiration date, the period of the extension shall be a part of the Policy Year, which would have ended on the original expiration date.

T.

Pollutants include but are not limited to any solid, liquid, gaseous or thermal organism, irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, hazardous substances, nuclear materials and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

U.

Registered Representative means an individual who is:

	(1)		registered with the National Association of Securities Dealers; or
	(2)		a life insurance agent or insurance broker who is licensed by the appropriate regulatory authorities.

Form No. 5089 (01/05)          FDIC No. 27259

V.

Subsidiary means:

(1)

any entity in which the Company owns, directly or through one or more subsidiaries, more than fifty percent (50%) of the outstanding securities representing the present right to vote for the election of directors;

(2)

any limited liability company in which the Company, or one or more of its subsidiaries, has the right to appoint or designate fifty percent (50%) or more of such limited liability company’s managers; or

(3)

any joint venture in which the Company, or one or more of its subsidiaries, has the right to elect, appoint or designate more than fifty percent (50%) of such entity’s directors, trustees or other equivalent executives.

W.

Trust Department Services means any of the following services performed by an Insured through a Trust Department or Trust Subsidiary of the Company:

(1)

administrator, custodian or trustee under any individual retirement account (IRA) or H.R. 10 Plan (Keogh Plan);

(2)

executor, administrator, or personal representative of estates, administrator of guardianships, trustee under personal or corporate trust agreements, or conservator of any person;

(3)

trustee under a pension, profit sharing, health and welfare or any other employee benefit plan or trust, other than an employee benefit plan or trust sponsored or established by the Company for its own Employees;

	(4)		custodian, depository or managing agent for securities or real property, manager of any personal property owned by others, attorney-in-fact, interest or dividend disbursing agent, transfer or paying agent, redemption or subscriptions agent, fiscal agent, tax withholding agent, registrar securities, agent for voting securities, sinking fund agent, escrow agent or trustee under a corporate bond indenture; or
	(5)		trustee exercising any other trust or fiduciary powers permitted by law.

X.

Wrongful Act, either in singular or plural, means any actual or alleged act, error, omission, misstatement, misleading statement, neglect or breach of duty by:

(1)

any Insured Person in the discharge of their duties while acting solely in the capacity as such or while acting solely in the capacity as director, officer, or member of the board of trustees of a not- for-profit entity pursuant to Section II (B);

(2)

any Insured Person in the discharge of their duties while acting solely in the capacity as administrator, custodian or trustee under any individual retirement account (IRA) or H.R. 10 Plan (Keogh Plan) outside of the scope of any Trust Department or Trust Subsidiary of the Company; or

(3)

the Company or any person or entity for which the Company is legally responsible, but only to the extent that coverage is granted to the Company by Insuring Agreement made a part of this Policy.

Form No. 5089 (01/05)          FDIC No. 27259

SECTION V — EXCLUSIONS APPLICABLE TO ALL INSURING AGREEMENTS

The following Exclusions are applicable to all Insureds under all Insuring Agreements made a part of this Policy.

A.

Bodily/Personal Injury and Property Damage Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim for actual or alleged bodily injury, sickness, disease, or death of any person, damage to or destruction of any tangible or intangible property including loss of use thereof, wrongful entry, eviction, false arrest, false imprisonment, malicious prosecution, abuse of process, assault, battery, mental anguish, emotional distress, loss of consortium, invasion of privacy, defamation, false light, libel, or slander.

B.

Brokerage/Advisory Services Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the rendering or failing to render Brokerage/Advisory Services.

C.

Collusion Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim by any security holder of the Company, whether directly or derivatively, unless such security holder bringing such Claim is acting independently of, and totally without the solicitation, assistance, participation, or intervention of any Insured or any affiliate of the Company.

D.

Employment Practices Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving:

(1)

wrongful termination, employment-related discrimination or harassment;

(2)

employment-related misrepresentation or retaliation, humiliation, wrongful failure to employ or promote, wrongful deprivation of career opportunity, wrongful demotion, negligent evaluation, negligent hiring, negligent retention, wrongful discipline; or

(3)

any other violation of any statutory or common law relating to employment.

E.

ERISA Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving any pension, profit sharing or employee benefit program established in whole or in part for the benefit of Employees of the Company, including without limitation, any violation of ERISA or similar provisions of any federal, state or local statutory law, common law or administrative law.

F.

Foreclosed Property Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the ownership, operation, management or control of any entity or property acquired by the Company as security or collateral for any loan, lease or extension of credit. This Exclusion shall not apply to Claims resulting from Wrongful Acts in connection with the foreclosure process or the ownership, operation, management or control of any one to four family residential property.

Form No. 5089 (01/05)          FDIC No. 27259

G.

Fraud/Violation of Law Exclusion — The Insurer shall not be liable to make any payment for Loss, other than Defense Costs, in connection with any Claim arising out of or in any way involving any fraudulent, dishonest or criminal act or any willful violation of any civil or criminal statute, regulation or law by the Insured, provided a final judgment or final adjudication establishes such fraudulent, dishone or criminal act or such willful violation of statute, regulation or law.

H.

Illegal Profit/Payment Exclusion — The Insurer shall not be liable to make any payment for Loss, other than Defense Costs, in connection with any Claim arising out of or in any way involving:

(1)

any Insured gaining, in fact, any profit, remuneration or financial advantage to which the Insured was not legally entitled;

	(2)		payment by the Company of inadequate or excessive consideration in connection with its purchase of Company securities; or
	(3)		conflicts of interest, engaging in self-dealing, or acting in bad faith.

I.

Insurance Services Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the rendering or failing to render Insurance Services (other than Insurance Services relating to credit life or disability insurance incidental to the issuance of a loan).

J.

Insured vs. Insured Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim by, on behalf of, or at the behest of the Company, any affiliate of the Company or any Insured Person in any capacity except where such Claim is brought and maintained:

(1)

in the form of a cross-claim or third-party claim for contribution or indemnity which is part of and results directly from a Claim which is not otherwise excluded by the terms of the Policy;

(2)

by an Insured Person solely as a customer of the Company; provided such Claim is brought independently of, and totally without the solicitation, assistance, participation, or intervention of any other Insured; or

(3)

by a security holder of the Company as a derivative action on behalf of the Company or such affiliate; provided such Claim is brought independently of, and totally without the solicitation, assistance, participation, or intervention of any Insured or any affiliate of the Company.

K.

Pollution Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving:

(1)

the actual, alleged or threatened discharge, disposal, migration, dispersal, release or escape of Pollutants; or

(2)

any direction, order or request to test for, monitor, remediate, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or to pay for or contribute to the costs of undertaking such actions,

including Claims alleging damage to the Company or its security holders.

L.

Prior Notice Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving any Wrongful Act or any Wrongful Act which is part of any Interrelated Wrongful Acts, or any fact, circumstance or situation, which has been the subject of any notice given to any carrier other than the Insurer under any similar insurance policy providing protection for any Insured.

Form No. 5089 (01/05)          FDIC No. 27259

M.

Prior and Pending Litigation Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving any litigation against any Insured initiated prior to the respective date set forth in Item 12 of the Declarations, or arising out of or in any way involving the same or substantially the same fact, circumstance or situation underlying or alleged in such prior litigation.

N.

Short-Swing Profit Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving an accounting of profits made from the purchase and sale or sale and purchase of Company securities by the Insured Persons within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any state statutory law or common law.

O.

Subsidiary Wrongful Acts Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim against any Subsidiary or its Insured Persons acting in the capacity of director, member of the board of trustees, officer or Employee of such Subsidiary for any Wrongful Act or Interrelated Wrongful Acts actually or allegedly committed in whole or in part at any time when the entity was not a Subsidiary except as provided in Section XIII (C)(3).

P.

Trust Department Services Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the rendering or failing to render Trust Department Services.

SECTION VI — EXCLUSIONS APPLICABLE TO INSURING AGREEMENT (C)

If coverage is set forth on the Declarations, the following Exclusions are applicable to the Company under Insuring Agreement (C).

A.

Bonding/Insurance Company Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim that is brought directly or indirectly by or for the benefit of any insurance carrier or bond carrier of the Company, or any affiliate of the Company, regardless in whose name such Claim is actually made.

B.

Contract Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the assumption of any liability to defend, indemnify, or hold harmless any person or entity, other than an Insured Person, under any written contract or agreement, unless such liability would be imposed regardless of the existence of such contract or agreement.

C.

Fee Dispute Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving disputes over fees, commissions, or charges for the Company’s services.

D.

Insolvency Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the:

(1)

Financial Impairment of the Company or any Subsidiary;

Form No. 5089 (01/05)          FDIC No. 27259

(2)

insolvency, receivership, liquidation or bankruptcy of any insurance company the Insured represents; or

(3)

bankruptcy of or suspension of payments by any bank, banking firm, broker or dealer in securities or commodities or any other financial institution.

E.

Internet Services Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the Company providing:

	(1)		transactional services through the transmission of data to or from an Internet website or private computer network owned, operated or controlled by the Company;
	(2)		website development, software development or network security services to third parties; or

(3)

hosting services or services as an Internet Service Provider, Internet Access Provider, Application Service Provider or provider of like services.

F.

Investment Banking/Securities Underwriting Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving:

(1)

underwriting, syndicating or promoting any security (except loan syndications or equity or debt securities issued by the Company);

(2)

rendering of advice or recommendations regarding any actual or attempted or threatened merger, acquisition, divestiture, tender offer, proxy contest, leveraged buy-out, going private transaction, bankruptcy, reorganization, restructuring, recapitalization, spin-off, offering of securities, dissolution or sale of all or substantially all of the assets or stock of an entity;

	(3)		rendering of any fairness opinion;
	(4)		proprietary trading;
	(5)		any acquisition or sale of securities of the Company for its own account; or
	(6)		any other investment banking activity;

including any disclosure requirements in connection with any of the foregoing activities.

G.

Legal Lending Limit Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving any extension of credit which was, at the time of its making, in excess of the legal lending limit of the Company.

H.

Notary Services Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the notarization or certification of a signature of a person unless that person or someone claiming to be that person physically appeared before the Insured at the time of notarization or certification.

I.

Receivership Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the Company’s function or activity as receiver, trustee in bankruptcy, or assignee for the benefit of creditors.

J.

Safe Deposit Operations Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the safe deposit box operations of the Company.

Form No. 5089 (01/05)          FDIC No. 27259

SECTION VII — LIMIT OF LIABILITY, RETENTION AND INDEMNIFICATION

A.

LIMIT OF LIABILITY

(1)

The Insurer’s maximum Limit of Liability under this Policy for all Insuring Agreements combined shall not exceed the Total Policy Limit set forth in Item 3 of the Declarations regardless of whether such Insuring Agreement is provided as a sublimit or a separate limit.

(2)

Unless otherwise specified in Item 7 of the Declarations, the Insurer’s maximum Limit of Liability for each Insuring Agreement for all Loss resulting from all Claims first made for each Policy Year during the Policy Period shall be a part of and not in addition to the D&O Limit of Liability set forth in Item 8 of the Declarations.

(3)

If a Claim against the Company is subject to more than one Insuring Agreement, the Insurer’s maximum Limit of Liability for such Claim shall not exceed the highest Limit of Liability provided by any Insuring Agreement providing coverage to the Company; provided, however, that this provision shall not apply where a separate Limit of Liability is set forth in Item 7 of the Declarations.

(4)

The Insurer agrees to provide, without additional charge, a one-time reinstatement of the Limit of Liability under Insuring Agreement (C) to the extent such Limit of Liability is diminished by paid Loss resulting from IRA/Keogh Claims pursuant to Section IV(X)(2). Should an IRA/Keogh Liability Claim exhaust the Limit of Liability under Insuring Agreement (C), the Limit of Liability shall only be reinstated for subsequent Claims. This reinstatement shall not serve to increase the Limit of Liability for any single Claim.

B.

RETENTION AND INDEMNIFICATION

(1)

The Insurer shall only pay for covered Loss, including covered Defense Costs, in excess of the applicable retention for each Claim as set forth in Item 9 of the Declarations. No retention shall apply to Loss incurred by the Insured Persons for which the Company is:

(a)

not permitted or required by law to advance Defense Costs or indemnify the Insured Persons; or

(b)

permitted or required to advance Defense Costs or indemnify the Insured Persons but does not do so by reason of Financial Impairment.

(2)

If the Company is legally permitted or required to advance Defense Costs or indemnify the Insured Persons for Loss, regardless of whether actual indemnification or advancement is granted, the retention applicable to Insuring Agreement (B) shall apply to such Loss, unless the Company, solely by reason of its Financial Impairment, does not make indemnification or advancement.

(3)

One retention shall apply to covered Loss resulting from each Claim. If Loss from a Claim is covered under more than one Insuring Agreement, the applicable retention shall be applied separately to the part of the Loss covered by each Insuring Agreement, and the sum of such retentions shall be the retention applicable to the Claim. If a single retention applies to multiple Insureds, the retention shall be prorated among the applicable Insureds. The total retention shall in no event exceed the largest of such applicable retentions set forth in Item 9 of the Declarations.

Form No. 5089 (01/05)          FDIC No. 27259

(4)

Except for the payment of Defense Costs, the Insurer shall pay or reimburse one hundred percent (100%) of covered Loss, in excess of the applicable retention, upon final disposition of the Claim.

C.

SINGLE CLAIM

Claims based upon or arising out of the same Wrongful Act or Interrelated Wrongful Acts committed by one or more Insureds shall be considered a single Claim, and only one retention and Limit of Liability shall apply to such single Claim. Each such single Claim shall be deemed to be first made on the date the earliest of such Claims was first made, regardless of whether such date is before or during the Policy Period.

SECTION VIII — NON-EROSION OF INSURING AGREEMENT (A) AND ORDER OF PAYMENTS

A.

NON-EROSION OF INSURING AGREEMENT (A)

(1)

If the Limit of Liability for Insuring Agreement (C) or any Insuring Agreement extending coverage to the Company is a sublimit of the D&O Policy, the Limit of Liability applicable to Insuring Agreement (A) shall not be reduced by the payment of Loss resulting from Claims covered by such Insuring Agreement. If a separate Limit of Liability is set forth in Item 7 of the Declarations this provision shall not apply.

(2)

If the retention applicable to Insuring Agreement (B) applies to Loss pursuant to Section VII (B)(2), regardless of whether actual indemnification is granted, such Loss shall be deemed to be paid under Insuring Agreement (B).

B.

ORDER OF PAYMENTS

(1)

In the event one or more Claims result in a potential or actual Loss which, in aggregate, in the Insurer’s judgment could reasonably exceed the Total Policy Limit set forth in Item 3 of the Declarations, then the Insurer shall pay first for such Loss for which coverage is provided under Insuring Agreement (A).

(2)

With respect to whatever remaining amount of the Limit of Liability is available after payment of such Loss, the Insurer shall pay such Loss for which coverage is provided under Insuring Agreement (B), then pay such Loss for which coverage is provided to the Company under Insuring Agreement (C) or any Insuring Agreement extending coverage to the Company.

(3)

The Financial Impairment of the Company or any Insured Person shall not relieve the Insurer of any of its obligations to prioritize payment of covered Loss under this Policy pursuant to this Subsection.

Form No. 5089 (01/05)          FDIC No. 27259

SECTION IX — DEFENSE COSTS

A.

NO DUTY TO DEFEND

(1)

Amounts incurred as Defense Costs will reduce and shall be part of and not in addition to the applicable Limit of Liability. It shall be the duty of the Insured and not the duty of the Insurer to defend Claims. The Insured shall only retain counsel that is mutually agreed upon with the Insurer, consent for which shall not be unreasonably withheld.

(2)

The Insured shall not incur Defense Costs, admit liability for, settle, or offer to settle any Claim without the Insurer’s prior written consent, which shall not be unreasonably withheld. The Insurer shall be entitled to full information and all particulars it may request in order to reach a decision as to such consent.

(3)

The Insurer shall have the right but not the duty to effectively associate with the Insured in the settlement and defense of any Claim that appears reasonably likely to involve the Insurer. Such association shall include, but not be limited to, participation in the formation of litigation strategy, review of pleadings and other pertinent papers prior to filing, and participation in the settlement negotiations.

B.

ADVANCEMENT OF DEFENSE COSTS

(1)

Subject to Section XIV, the Insurer, if requested by the Insured, shall advance covered Defense Costs on a current basis, except when advancement of Defense Costs is prohibited by law or regulation. The Insured shall repay any advanced Defense Costs to the Insurer in the event it is established that the Insurer has no liability under this Policy for such Defense Costs.

(2)

Prior to advancing or indemnifying Defense Costs, the Insurer shall be entitled to sufficient information and documentation as to the amount and purpose of any Defense Costs to enable it to evaluate the reasonableness and necessity of such Defense Costs and to verify that such Defense Costs were actually incurred.

SECTION X — NOTICE OF CLAIMS AND POTENTIAL CLAIMS

A.

The Insured, as a condition precedent to any rights under this Policy, shall give the Insurer written notice, as soon as practicable, of any Claim first made during the Policy Period or the Discovery Period, but in no event later than sixty (60) days after the Claim is first made.

B.

If during the Policy Period, the Insured first becomes aware of circumstances which may give rise to a Claim, and gives written notice to the Insurer of the circumstances and reasons for anticipating a Claim, then any Claim subsequently made shall be deemed to have been first made during the Policy Year in which notice was first given to the Insurer. As a condition precedent to any coverage hereunder for such Claims, such notice must be specific and contain full particulars as to the names, dates, and persons involved in the underlying facts potentially giving rise to the Claim, as well as the identity of the potential plaintiffs and the causes of action to be asserted.

Form No. 5089 (01/05)          FDIC No. 27259

C.

All notices required to be given to the Insurer under this Policy shall be given to the Insurer at the address set forth in Item 5 of the Declarations.

SECTION XI — DUTY TO COOPERATE

The Insured shall promptly furnish the Insurer with all information reasonably requested by the Insurer including, but not limited to, copies of reports, investigations, pleadings and other papers. As a condition precedent to coverage under this Policy, the Insured shall provide the Insurer with such information, assistance and cooperation as the Insurer may reasonably request.

SECTION XII — MERGERS, ACQUISITIONS AND CHANGES IN BUSINESS ACTIVITIES

A.

If during the Policy Period, the Company:

(1)

acquires, merges with or creates any non-bank entity;

(2)

acquires or merges with another entity or creates or acquires a Subsidiary, whose assets equal or exceed twenty-five percent (25%) of the Company’s total assets at the time of the transaction;

	(3)		creates or acquires a financial services holding company or converts from a bank holding company to a financial services holding company;
	(4)		converts from a mutual company to a stock company; or
	(5)		changes or converts its corporate structure from a C corporation to an S corporation;

then no coverage shall be afforded under this Policy for any Loss incurred by the Company, such entity, Subsidiary, or its Insured Persons resulting from any Claim arising out of or in any way involving any transaction or event, prior to:

	(a)		the Company providing written notice and any requested information regarding the transaction to the Insurer as soon as practicable;
	(b)		the Insurer, at its sole discretion, agreeing in writing to provide such coverage; and

(c)

the Company accepting any special terms, conditions and/or Exclusions and paying any additional premium required by the Insurer.

B.

If during the Policy Period, the Company creates or acquires a bank or bank Subsidiary, whose assets are less than twenty-five percent (25%) of the Company’s total assets at the time of the transaction, the Insurer agrees to provide automatic coverage for such bank, bank Subsidiary and its Insured Persons for the remainder of the Policy Period.

C.

Any coverage otherwise afforded under this Policy for a Loss in any way involving the Company, any Subsidiary, or any acquired, merged or created entity or its Insured Persons shall not apply to any Claim arising out of or directly or indirectly resulting from:

(1)

any Wrongful Act or any fact, circumstance or situation committed or allegedly committed prior to the effective date of such acquisition, merger or creation; or

Form No. 5089 (01/05)          FDIC No. 27259

(2)

any other Wrongful Act, which, together with a Wrongful Act committed or allegedly committed prior to effective date of such acquisition, merger or creation constitute Interrelated Wrongful Acts.

SECTION XIII — CANCELLATION / NONRENEWAL / CONVERSION

A.

NAMED INSURED CANCELLATION

The Named Insured may cancel this Policy or any Insuring Agreement by providing written notice to the Insurer. If the Named Insured cancels this Policy, the Insurer shall only return ninety percent (90%) of the unearned premium. For multi-year Policies, the Insurer shall only return ninety percent (90%) of the unearned premium if the cancellation occurs before the first anniversary. If the cancellation occurs after the first anniversary, unearned premium will be returned on a prorata basis as soon as practicable.

B.

INSURER CANCELLATION OR NONRENEWAL

(1)

The Insurer shall not be required to renew this Policy or any Insuring Agreement upon expiration of the Policy Period. This Policy or any Insuring Agreement may be cancelled or nonrenewed by the Insurer by giving to the Named Insured written notice stating when such action shall become effective and the reason(s) therefore. Notice will be mailed to the Named Insured by certified mail at the address set forth in Item 1 of the Declarations. The mailing of such notice as aforesaid shall be sufficient proof of notice, and this Policy shall terminate at the date and hour specified in such notice. The Insurer shall provide not less than:

	(a)		twenty (20) days notice of its intent to cancel for nonpayment of premium; or
	(b)		sixty (60) days notice of its intent to cancel or nonrenew for any other reason.

(2)

If the Insurer cancels this Policy or any Insuring Agreement, the Insurer shall return one hundred percent (100%) of the unearned premium. The return of any unearned premium by the Insurer shall not be a condition precedent to the effectiveness of cancellation, but such payment shall be made as soon as practicable.

C.

CONVERSION

(1)

Upon the occurrence of any of the following events, this Policy shall continue in full force and effect with respect to Claims for Wrongful Acts committed or allegedly committed before such event, but coverage shall cease with respect to Claims for such Wrongful Acts committed or allegedly committed after such event:

(a)

Financial Impairment of the Company or any Subsidiary comprising more than fifty percent (50%) of the Company’s total assets;

	(b)		acquisition of the Company by another entity or the merger or consolidation of the Company into another entity such that the Company is not the surviving entity or acquisition of substantially all of the assets of the Company by another entity; or
	(c)		the Company ceasing to engage actively in its primary business.

Form No. 5089 (01/05)          FDIC No. 27259

(2)

Pursuant to Subsection (C)(1) above, this Policy may not be cancelled and the entire premium shall be deemed fully earned. The occurrence of any of the foregoing events shall not affect the Insured’s right to purchase the Discovery Period pursuant to Section III.

(3)

In the event of Financial Impairment of a Subsidiary comprising less than fifty percent (50%) of the Company’s total assets, this conversion provision shall apply only to the Subsidiary and its Insured Persons and the Policy shall continue in full force with respect to all other Insureds.

SECTION XIV — ALLOCATION AND ARBITRATION

A.

ALLOCATION

(1)

If in any Claim the Insureds are jointly and severally liable with others (including the Company even if no coverage is extended for such Claim against the Company) for Loss, then:

(a)

100% of all Loss, other than Defense Costs, incurred jointly by the Insured Persons and the Company shall be treated as Loss incurred solely by the Insured Persons; and

(b)

all other Loss shall be allocated between the Insured Persons and others based on the relative legal exposures of the parties to such Claims.

(2)

If in any Claim the Insureds incur an amount consisting of both covered and uncovered Loss because the Claim includes both covered and uncovered matters, then the amount shall be allocated between covered Loss and uncovered loss based on the relative legal exposures of the Insureds to the covered and uncovered matters.

B.

ARBITRATION

(1)

The Insurer and the Insured agree to use their best efforts to reach a proper allocation of Defense Costs. If the Insured and the Insurer cannot agree on an allocation:

(a)

no presumption as to allocation shall exist in any arbitration, suit or other proceeding;

(b)

the Insurer shall advance on a current basis Defense Costs which the Insurer believes to be covered under this Policy until a different allocation is negotiated, arbitrated or judicially determined; and

(c)

the Insurer, if requested by the Insured, shall submit the allocation dispute to binding arbitration. The rules of the American Arbitration Association shall apply except with respect to the selection of the arbitration panel. The arbitration panel shall consist of one arbitrator selected by the Insured, one arbitrator selected by the Insurer, and a third independent arbitrator selected by the first two arbitrators. In any such arbitration, each party will bear its own legal fees and expenses.

(2)

Any negotiated, arbitrated or judicially determined allocation of Defense Costs will be applied retroactively to all Defense Costs, notwithstanding any prior advancement to the contrary. Any allocation or advancement of Defense Costs shall not apply to or create any presumption with respect to the allocation of other Loss arising from such Claim or any other Claim.

Form No. 5089 (01/05)          FDIC No. 27259

SECTION XV — REPRESENTATIONS AND SEVERABILITY

A.

REPRESENTATIONS

It is agreed and represented that the particulars and statements contained in the Application are the basis of this Policy and are to be considered as incorporated into and constituting a part of this Policy. By acceptance of this Policy, the Insured agrees that:

(1)

such Application shall be construed as a separate Application for coverage by each Insured Person;

(2)

this Policy shall not be deemed to be a series of individual insurance contracts with the Company and each of the Insured Persons; and

(3)

the statements in the Application are their representations, that they are material to the acceptance of the risk or hazard assumed by the Insurer under this Policy, and that this Policy is issued in reliance upon the truth of such representations.

B.

SEVERABILITY

The Insureds agree that in the event the Application contains misrepresentations made with the actual intent to deceive, no coverage will be provided under this Policy with respect to:

(1)

any Insured Person who knew of any fact, circumstance or situation that was not truthfully disclosed in the Application;

(2)

the Company, to the extent the Company indemnifies the Insured Person reflected in Item (1) above; or

(3)

the Company, to the extent coverage is granted to the Company by any Insuring Agreement made a part of this Policy, if any past, present, or future chief financial officer, in-house counsel, chief executive officer, President or Chairman of the Board of the Company, or any person holding any equivalent position within the Company (regardless of title), knew of any fact, circumstance or situation that was not truthfully disclosed in the Application.

The foregoing conditions shall apply whether or not the Insured Person actually knew if the misrepresentation or untruthful disclosure was made in the Application for coverage.

C.

SEVERABILITY OF EXCLUSIONS

With respect to the Exclusions herein, in order to determine if coverage is available:

(1)

no Wrongful Act, fact pertaining to or knowledge possessed by any Insured Person will be imputed to any other Insured Person; and

(2)

all facts pertaining to and knowledge possessed by any past, present, or future chief financial officer, in-house counsel, chief executive officer, President or Chairman of the Board of the Company, or any person holding any equivalent position within the Company (regardless of title), shall be imputed to the Company with respect to Section V, Exclusions (G) and (H).

Form No. 5089 (01/05)          FDIC No. 27259

SECTION XVI — GENERAL TERMS AND CONDITIONS

A.

SUBROGATION — In the event of any payment under this Policy, the Insurer shall be subrogated to the extent of such payment to all the Insured Persons’ and the Company’s rights to recovery therefore, and the Insured shall execute all papers required and shall do everything that may be necessary to secure the Insurer’s rights, including the execution of such documents as may be necessary to enable the Insurer effectively to bring suit in the name of the Insured Persons or the Company.

B.

ASSIGNMENT AND ACCEPTANCE — By acceptance of this Policy, the Insured and the Insurer agree that this Policy, the Application, and any written Endorsements attached thereto constitute the entire agreement between the parties. Assignment of interest under this Policy shall not bind the Insurer until its consent is endorsed hereon.

C.

CONFORMITY TO STATUTE — Any terms of this Policy, which are in conflict with the terms of any applicable laws governing this Policy, are hereby amended to conform to such laws.

D.

AUTHORIZATION — By acceptance of this Policy, the Insureds agree that the Named Insured will act on behalf of all Insureds for all purposes under this Policy including, but not limited to, giving and receiving of all notices and correspondence, cancellation, nonrenewal or termination of this Policy, payment of premiums, the negotiation and acceptance of Endorsements, and receipt of any return premiums that may be due under this Policy.

E.

CHANGES — Notice to any agent or knowledge possessed by any agent or other person acting on behalf of the Insurer shall not effect a waiver or a change in any part of this Policy or estop the Insurer from asserting any right under the terms of this Policy, nor shall the terms, conditions and limitations of the Policy be waived or changed, except by written Endorsement issued to form a part of this Policy.

F.

ACTION AGAINST THE INSURER

(1)

No action shall be taken against the Insurer unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this Policy, and until the Insured’s obligation to pay is finally determined, either by adjudication or by written agreement of the Insureds, the claimant, and the Insurer.

(2)

No person or organization shall have any right under this Policy to join the Insurer as a party to any Claim against the Insured nor shall the Insurer be impleaded by the Insureds or their legal representatives in any such Claim.

G.

OTHER INSURANCE OR INDEMNIFICATION — This Policy shall not be subject to the terms of any other insurance. All Loss, including Defense Costs, payable under this Policy shall be excess to:

	(1)		any other existing insurance regardless of whether collectable, including but not limited to, any insurance under which there is a duty to defend, unless such other insurance is written only as specific excess insurance over the Limits of Liability provided by this Policy; and
	(2)		indemnification to which an Insured is entitled from any entity other than the Company.

H.

LOSS INFORMATION — The Insurer will provide Loss Information to the Company within ten (10) days of the Company’s request or, if required by statute, at the same time as any notice of cancellation nonrenewal of this Policy.

Form No. 5089 (01/05)          FDIC No. 27259

I.

INSOLVENCY / BANKRUPTCY — The Financial Impairment of the Insured or of the estate of such Insured shall not release the Insurer from its obligations nor deprive the Insurer of its rights under this Policy.

J.

HEADINGS AND SUB-HEADINGS — The descriptions in the headings and sub-headings of this Policy are solely for convenience and form no part of the terms and conditions of coverage.

IN WITNESS WHEREOF, the Insurer has caused this Policy to be signed by its President and Secretary and countersigned, if required, on the Declarations Page by a duly authorized agent of the Insurer.

/s/ Dane A. Shrallow   Dane A. Shrallow				/s/ Glenn Renwick   Glenn Renwick
Company Officer or Authorized Representative				President

Form No. 5089 (01/05)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

Change of Control Notification Requirement

Policy Number: 4548319-08

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that the Policy is amended as follows:

1.

Section XVI, entitled “General Terms and Conditions”, is amended to add the following Subsection:

CHANGE OF CONTROL — It is understood and agreed that the Company will notify the Insurer upon the Company’s obtaining knowledge of any Change of Control after the effective date of this Policy. Written notice shall be provided to the Insurer together with such information as the Insurer may request, at the address set forth in Item 5 of the Declarations. Such notice and underwriting information shall be provided as soon as practicable, but in no event later than thirty (30) days from the effective date of such Change of Control.

The Insurer, at its sole discretion, may make any premium adjustment or coverage revision as it determines appropriate.

2.

Section IV, entitled “Definitions” is amended to add the following:

Change of Control means a change in:

(1)

the power to determine the management or policy of the Company by virtue of voting stock or voting rights ownership (including rights with respect to withdrawal accounts); or

(2)

ownership of voting stock or voting rights which results in direct or indirect ownership by a stockholder or an affiliated group of stockholders of ten percent (10%) or more of the outstanding voting stock or voting rights of the Company.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

Form No. 2244 (01/05)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

Prior/Pending Litigation Date

Policy Number: 4548319-08

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that the Policy and the Declarations are amended as follows:

1.		Item 12 of the Declarations, entitled “Prior/Pending Litigation Dates”, is deleted in its entirety.
2.		Section V(M) of the Policy is deleted and replaced as follows:

M.

Prior and Pending Litigation Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving any litigation against any Insured initiated prior to the respective date set forth below or arising out of or in any way involving the same or substantially the same fact, circumstance or situation underlying or alleged in such prior litigation.

		Prior/Pending
Type of Claim		Litigation Date
D&O Claim		07/01/1994
Company Liability Claim		07/01/2000
Lender Liability Claim		07/01/1994
Depositor Claim		07/01/2000
Securities Claim		07/01/2000
IRA/Keogh Claim		07/01/2000
Fiduciary Claim		07/01/1994
Insurance Services Claim		N/A
Brokerage/Advisory Services Claim		N/A
Trust Department Claim		N/A
Employment Practices Claim		N/A
Bankers Professional Services Claim		N/A
Privacy Liability Claim		07/01/2008

3.

For the purpose of this Endorsement only the following definitions are added:

D&O Claim means any Claim made under Insuring Agreement A or Insuring Agreement B.

Company Liability Claim means Claim made under Insuring Agreement C.

Lender Liability Claim means any Claim for which the Company is legally obligated to pay for Wrongful Acts relating to an extension of credit, an agreement or refusal to extend credit, loan servicing, or the collection, or restructuring of any extension of credit.

Form No. 2811 (12/06)          FDIC No. 27259

Depositor Claim means any Claim for which the Company is legally obligated to pay for Wrongful Acts resulting from establishing, maintaining, administering or servicing any FDIC-insured deposit account or processing any transaction relating thereto.

Securities Claim means any Claim for which the Insured is legally obligated to pay for Wrongful Acts which is based upon, arises from or is in consequence of the purchase or sale of, or offer to purchase or sell, any securities issued by the Company.

IRA/KeoghClaim means any Claim for which the Company is legally obligated to pay for Wrongful Acts while acting solely in the capacity as administrator, custodian, or trustee under any individual retirement account (IRA) or H.R. 10 Plan (Keogh Plan).

Fiduciary Liability Claim means any Claim made under Insuring Agreement I.

Insurance Services Claim means any Claim made under Insuring Agreement J.

Brokerage/Advisory Services Claim means any Claim made under Insuring Agreement K.

Trust Department Claim means any Claim made under Insuring Agreement L.

Employment Practices Liability Claim means any Claim made under Insuring Agreement M.

Bankers Professional Services Claim means any Claim made under Insuring Agreement N.

Privacy Liability Claim means any Claim made under Insuring Agreement O.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

/s/ Dane A. Shrallow   Dane A. Shrallow				/s/ Glenn Renwick   Glenn Renwick
Company Officer or Authorized Representative				President

Form No. 2811 (12/06)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

Modification to Section IV — Definitions

Policy Number: 4548319-08

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that Section IV of the Policy, is amended as follows:

Section IV (A) is deleted and replaced as follows:

A.

Application means:

(1)

the application signed for the procurement of this Policy and any materials submitted to the Insurer in support of the procurement of this Policy or any Policy for which this Policy is a direct or indirect renewal or replacement; and

(2)

any publicly available information published or filed by or with a recognized source, agency or institution regarding the Insured in the 3 years preceding the Policy’s inception, and any amendment thereto, whether or not submitted with any signed application.

The Application is deemed to be attached to and incorporated into this Policy, as if physically attached.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

Form No. 4074 (01/05)          FDIC No. 27259

(1)

medical, surgical, or hospital care or benefits; benefits in the event of sickness, accident, disability, death or unemployment; vacation benefits, apprenticeship or other training programs; day care centers; scholarship funds; prepaid legal services; or

(2)

any benefit described in Section 186(c) of ERISA.

C.

Section IV, entitled “Definitions”, is further amended to delete and replace the Definition of Insured and Loss as follows:

	J.		Insured, either in singular or plural, means the Insured Persons, the Company, any Employee Benefit Plan existing before the Policy Period, any Employee Benefit Plan created during the Policy Period, and any Employee Benefit Plan acquired during the Policy Period pursuant to Section XII.
	N.		Loss means Defense Costs and any amount which the Insured is legally obligated to pay resulting from a Claim, including damages, judgments, settlements, pre- and post-judgment interest, punitive or exemplary damages and the multiple portion of any multiplied damage award where insurable by law. Loss shall not include:

	(1)		taxes;
	(2)		criminal or civil fines or penalties imposed by law;
	(3)		any unpaid, unrecoverable or outstanding loan, lease or extension of credit to any employee or any forgiveness of debt;
	(4)		costs to comply with any non-monetary or injunctive relief of any kind or any agreement to provide such relief, including but not limited to any damages, costs or expenses incurred in complying with any other federal, state or local laws of any kind;
	(5)		any restitution, disgorgement, or payment of similar sums including but not limited to the return of fees, commissions or charges for the Company’s services; or
	(6)		any matters which are uninsurable under the law pursuant to which this Endorsement shall be construed.

Loss shall not exclude the five percent (5%) or less, or the twenty percent (20%) or less, civil penalties imposed under Section 502 (i) or (1), respectively, of ERISA.

D.

All of the Exclusions set forth in Section V shall apply except Subsection (E), entitled “ERISA Exclusion”, which is deleted.

Form No. 5093 (01/05)          FDIC No. 27259

E.

Section V is further amended to delete and replace Subsection (J) as follows:

J.

Insured vs. Insured Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim by, on behalf of, or at the behest of the Company, any affiliate of the Company or any Insured Person in any capacity except where such Claim is brought and maintained:

	(1)		in the form of a cross-claim or third-party claim for contribution or indemnity which is part of and results directly from a Claim which is not otherwise excluded by the terms of the Policy;
	(2)		by an Insured Person solely as a customer of the Company; provided such Claim is brought independently of, and totally without the solicitation, assistance, participation, or intervention of any other Insured;
	(3)		by a security holder of the Company as a derivative action on behalf of the Company or such affiliate; provided such Claim is brought independently of, and totally without the solicitation, assistance, participation, or intervention of any Insured or any affiliate of the Company; or
	(4)		by an Insured Person against one or more Insureds for a Claim resulting from a Wrongful Act involving an Employee Benefit Plan.

F.

Section V, entitled “Exclusions Applicable to all Insuring Agreements”, is further amended to add the following:

Bonding/Insurance Company Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim that is brought directly or indirectly by or for the benefit of any insurance carrier or bond carrier of the Company, or any affiliate of the Company, regardless in whose name such Claim is actually made.

Contract Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the assumption of any liability to defend, indemnify, or hold harmless any person or entity, other than an Insured Person, under any written contract or agreement, unless such liability would be imposed regardless of the existence of such contract or agreement.

Failure to Collect Contribution/Benefits Exclusion — The Insurer shall not be liable to make any payment for Loss, other than Defense Costs, in connection with any Claim for:

	(1)		the failure to collect contributions owed to an Employee Benefit Plan or other Employee Program unless such failure is due to the negligence of the Insured;
	(2)		the return or reversion to an employee of any contribution or asset; or
	(3)		benefits paid or payable to a participant or beneficiary of any Employee Benefit Plan or other Employee Programs, or benefits which would be payable to such a participant or beneficiary if the Employee Benefit Plan or other Employee Program complied with applicable law.

Insolvency Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the bankruptcy of or suspension of payment by any bank, banking firm, broker or dealer in securities or commodities or any other financial institution.

Form No. 5093 (01/05)          FDIC No. 27259

Violation of Employment Law Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving an actual or alleged violation of the responsibilities, obligations or duties imposed by any Worker’s Compensation, Unemployment Insurance, Social Security or disability benefits law, the Fair Labor Standards [ILLEGIBLE] National Labor Relations Act, Worker Adjustment and Retraining Notification Act, Occupation. Safety and Health Act, any rules or regulations promulgated under any of the above statutes, or similar provisions of any federal, state or local statutory, administrative or common law.

G.

Section VII (A), entitled “Limit of Liability”, is amended to add the following Subsection:

(5)

The Insurer agrees to provide, without additional charge, a one-time reinstatement of the Limit of Liability under this Endorsement to the extent such Limit of Liability is diminished by paid Loss resulting from paid Claims under this Endorsement. Should a Claim exhaust the Limit of Liability under this Endorsement, the Limit of Liability will only be reinstated for subsequent Claims. This reinstatement shall not serve to increase the Limit of Liability for any single Claim.

3.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

Form No. 5093 (01/05)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

PRIVACY PROTECTION COVERAGE ENDORSEMENT

Policy Number: 4548319-08

In consideration of the premium paid and in reliance upon all statements made and the information contained in the Declarations and Application, the Insurer and the Insured agree that coverage will be provided subject to all of the terms, conditions and limitations of this Endorsement, as follows:

1.

The attached Policy is amended by adding the following Insuring Agreement(s) to the extent such coverage is set forth on the Declarations:

O.

PRIVACY LIABILITY INSURING AGREEMENT

The Insurer will pay on behalf of the Insured, Loss resulting from Claims first made during the Policy Period or Discovery Period against the Insured for which the Insured is legally obligated to pay as a result of a Wrongful Privacy Act.

P.

PRIVACY LIABILITY MITIGATION INSURING AGREEMENT

The Insurer will indemnify the Company for Liability Mitigation Expense incurred as a direct result of unauthorized access to Confidential Customer Information:

(1)

in the custody or control of the Insured or any Electronic Data Processor; or

(2)

arising from the negligent management, oversight or preservation of such Confidential Customer Information by the Insured.

It shall be a condition precedent to coverage under this Insuring Agreement that the Insured shall notify the Insurer of any unauthorized access to Confidential Customer Information as soon as practicable but no later than sixty (60) days after discovery of such unauthorized access.

2.

For the purpose of the coverage afforded by this Endorsement, all of the terms and conditions set forth in the Policy shall apply except:

A.

Section IV, entitled “Definitions” is amended to add the following:

Confidential Customer Information means any customer name, address, telephone number, social security number, driver’s license number, account number, credit or debit card number, PIN, password, account history or any other nonpublic customer information.

Liability Mitigation Expense means actual, reasonable and necessary expenses in excess of the Company’s normal operating costs, incurred to:

	(1)		notify those persons who may be directly affected by the unauthorized access of the Confidential Customer Information;
	(2)		change account numbers and related information, including the reissuance of debit/credit/ATM cards for those persons who may be directly affected;

Form No. 5105 (12/06)          FDIC No. 27259

(3)

with prior consent of the Insurer, provide basic credit monitoring or other services to prevent fraudulent use of the Confidential Customer Information; and

(4)

protect or restore the professional reputation of the Company through publicity and advertising solely in response to Negative Publicity. Liability Mitigation Expense [ILLEGIBLE] include, but not be limited to, expenses incurred by the Company to hire a public relations consultant; provided, however, that if a public relations consultant is used, such consultant shall be mutually agreed upon by the Insurer and the Company. The Company shall not hire a public relations consultant without the Insurer’s prior written consent, which shall not be unreasonably withheld.

Electronic Data Processor means a natural person, partnership or corporation with the Insured’s written authorization to perform services as data processor of checks or other accounting records of the Insured. A Federal Reserve Bank or clearinghouse shall not be an Electronic Data Processor.

Negative Publicity means information concerning unauthorized access to Confidential Customer Information which is publicized by persons other than the Company through newspapers, radio, television or other similar print, broadcast or electronic media that has caused or is reasonably likely to cause decline or deterioration in the reputation of the Company.

B.

All of the Exclusions set forth in Section V, entitled “Exclusions Applicable to all Insuring Agreements”, shall apply to this Endorsement except the following which is deleted and replaced:

A.

Bodily/Personal Injury and Property Damage Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim for actual or alleged bodily injury, sickness, disease, or death of any person, damage to or destruction or theft of any tangible or intangible property in the custody or control of the Insured including loss of thereof, wrongful entry, eviction, false arrest, false imprisonment, malicious prosecution, abuse of process, assault, battery, mental anguish, emotional distress, loss of consortium, invasion of privacy, defamation, false light, libel, or slander; provided, however, that this Exclusion shall not apply to any actual or alleged mental anguish, emotional distress, libel, slander, defamation, false light, invasion of privacy or loss of property other than property in the custody or control of the Insured resulting from a Wrongful Privacy Act.

C.

Section V, “Exclusions Applicable to all Insuring Agreements”, is further amended to add the following:

Bonding/Insurance Company Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim that is brought directly or indirectly by or for the benefit of any insurance carrier or bond carrier of the Company, or any affiliate of the Company, regardless in whose name such Claim is actually made.

Contract Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the assumption of any liability to defend, indemnify, or hold harmless any person or entity, other than an Insured Person, under any written contract or agreement, unless such liability would be imposed regardless of the existence of such contract or agreement.

Form No. 5105(12/06)          FDIC No. 27259

Insolvency Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the:

	(1)		Financial Impairment of the Company or any Subsidiary;
	(2)		insolvency, receivership, liquidation or bankruptcy of any insurance company the Insured represents; or
	(3)		bankruptcy of or suspension of payment by any bank, banking firm, broker or dealer in securities or commodities or any other financial institution.

Internet Services Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the Company providing:

	(1)		transactional services through the transmission of data to or from an Internet website or private computer network owned, operated or controlled by the Company;
	(2)		website development, software development or network security services to third parties; or
	(3)		hosting services or services as an Internet Service Provider, Internet Access Provider, Application Service Provider or provider of like services.

Receivership Exclusion — The Insurer shall not be liable to make any payment for Loss in connection with any Claim arising out of or in any way involving the Company’s function or activity as receiver, trustee in bankruptcy, or assignee for the benefit of creditors.

3.

In addition to the provisions set forth in Item 2 of this Endorsement, for the purpose of the coverage afforded by the Privacy Liability Insuring Agreement:

	A.		Section II (B) entitled “Not for Profit Directorships” is deleted.
	B.		The Definitions of Interrelated Wrongful Acts and Wrongful Acts and all references thereto used throughout the Policy are deleted and replaced with the terms Interrelated Wrongful Privacy Acts and Wrongful Privacy Acts, respectively, as follows:

Interrelated Wrongful Privacy Acts means Wrongful Privacy Acts which have as a common nexus any fact, circumstance, situation, event, transaction or series of related facts, circumstances, situations, events or transactions.

Wrongful Privacy Act means the management, oversight or preservation of Confidential Customer Information by the Insured, which results in the intentional misuse of such Confidential Customer Information by an Employee or other unauthorized person.

4.

In addition to the provisions set forth in Item 2 of this Endorsement, for the purpose of the coverage afforded by the Privacy Liability Mitigation Insuring Agreement, all of the terms and conditions set forth in the Policy and any amendments thereto shall apply except:

	A.		Section II, entitled “Additional Coverages”, is deleted in its entirety.
	B.		Section IV, Subsection N of the Policy is deleted and replaced below:

N.

Loss means Liability Mitigation Expense.

Form No. 5105 (12/06)          FDIC No. 27259

C.

Section V, “Exclusions Applicable to all Insuring Agreements”, is further amended to add the following:

Customer Disclosure Exclusion — The Insurer shall not be liable to make any payment for Loss arising from the unauthorized access to Confidential Customer Information where such Confidential Customer Information was obtained from the customer, regardless of whether this information was obtained through trick, artifice, fraud or false pretenses.

Plastic Card Exclusion — The Insurer shall not be liable to make any payment for Loss arising from the unauthorized access to Confidential Customer Information where the Confidential Customer Information was obtained through the fraudulent use of debit, credit or ATM cards.

D.

Section VII, entitled “Limit of Liability, Retention and Indemnification”, is deleted and replaced below:

SECTION VII — LIMIT OF LIABILITY AND RETENTION

(1)

The Insurer’s maximum Limit of Liability under this Policy for all Insuring Agreements combined shall not exceed the Total Policy Limit set forth in Item 3 of the Declarations regardless of whether such Insuring Agreement is provided as a sublimit or a separate limit, and regardless of the time of payment by the Insurer.

(2)

The Limit of Liability under this Endorsement constitutes a sublimit which does not increase the Insurer’s maximum liability under the Policy.

(3)

Loss resulting from the same act or series of related acts shall be considered a single Loss, and only one Retention and Limit of Liability shall be applicable. However, each such single Loss shall be deemed to be first discovered on the date the earliest of such Loss was first discovered, regardless of whether such date is before or during the Policy Period.

(4)

The Insurer shall only be liable under this Endorsement for the amount by which any single Loss exceeds the Retention amount for the Insuring Agreement applicable to such Loss. One Retention amount shall apply to the covered portion of each and every single Loss.

E.

Section XVI, Subsection F, is deleted and replaced below:

F.

ACTION AGAINST THE INSURER — Legal proceedings for the recovery of any Loss under this Endorsement shall not be brought prior to the expiration of 60 days after the proof of Loss, with full particulars, is filed with the Insurer or after the expiration of 24 months from the discovery of such Loss.

This Endorsement affords coverage only in favor of the Company. No suit, action or legal proceedings shall be brought hereunder by anyone other than the Company.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

Form No. 5105 (12/06)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY

POLICYHOLDER DISCLOSURE
NOTICE OF TERRORISM INSURANCE COVERAGE

Policy Number: 4548319-08

Coverage for acts of terrorism is already included in your current policy. You should know that, effective November 26, 2002, under your existing coverage, any losses caused by certified acts of terrorism would be partially reimbursed by the United States under a formula established by federal law. Under this formula, the United States pays 90% of covered terrorism losses exceeding the statutorily established deductible paid by the insurance company providing the coverage. The portion of your annual premium that is attributable to coverage for acts of terrorism is: $0.00.

I ACKNOWLEDGE THAT I HAVE BEEN NOTIFIED THAT UNDER THE TERRORISM RISK INSURANCE ACT OF 2002, ANY LOSSES CAUSED BY CERTIFIED ACTS OF TERRORISM UNDER MY POLICY COVERAGE WILL BE PARTIALLY REIMBURSED BY THE UNITED STATES AND I HAVE BEEN NOTIFIED OF THE AMOUNT OF MY PREMIUM ATTRIBUTABLE TO SUCH COVERAGE.

Policyholder/Applicant’s Signature
Print Name
Date

Form No. TRIA-01 (12/02)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

CALIFORNIA AMENDATORY ENDORSEMENT

Policy Number: 4548319-08

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that Section XIII (B)(1) of the Policy is deleted and replaced as follows:

B.

INSURER CANCELLATION OR NONRENEWAL

(1)

The Insurer shall not be required to renew this Policy or any Insuring Agreement upon expiration of the Policy Period. This Policy or any Insuring Agreement may be cancelled or nonrenewed by the Insurer by giving to the Named Insured written notice stating when such action shall become effective and the reason(s) therefore. Notice will be mailed to the Named Insured by certified mail at the address set forth in Item 1 of the Declarations. The mailing of such notice as aforesaid shall be sufficient proof of notice, and this Policy shall terminate at the date and hour specified in such notice. The Insurer shall provide not less than:

	(a)		twenty (20) days notice of its intent to cancel for nonpayment of premium;
	(b)		sixty (60) days notice of its intent to nonrenew; or
	(c)		sixty (60) days notice of its intent to cancel for any of the following reasons:

	i.		discovery of fraud or material misrepresentation by: (1) the Company or an Insured Person in the obtaining of this insurance; or (2) the Company or an Insured Person in pursuing a Claim under this Policy;
	ii.		a judgement by a court or an administrative tribunal that the Company or an Insured Person has violated a California or Federal Law, having as one of its necessary elements an act which materially increases any of the risks insured against;
	iii.		discovery of willful or grossly negligent acts or omissions, or of any violations of state laws or regulations establishing safety standards, by the Company or any Insured Person, which materially increase any of the risks insured against;
	iv.		failure by the Company to implement reasonable loss control requirements, agreed to by the Company as a condition of Policy issuance, or which were conditions precedent to the Insurer’s use of a particular rate or rating plan, if that failure materially increases any of the risks insured against;
	v.		a determination by the Commissioner or Insurance that the loss of, or changes in, reinsurance by the Insurer would threaten financial integrity or solvency, or that continuation of the Policy coverage would place the Insurer in violation of California law or the laws of the state where the Insurer is domiciled; or

Form No. 8790D (01/05) CA          FDIC No. 27259

vi.

a change by the Company in the activities or property of the commercial or industrial enterprise, which results in a materially added, increased or changed risk, unless the added, increased or changed risk is included in the Policy.

All other provisions in Section XIII shall remain unchanged.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

Form No. 8790D (01/05) CA          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

Amend Loss Definition
(Exclude Punitive and Exemplary Damages)

Policy Number 4548319-08

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that the definition of “Loss” as stated in the Policy, Employment Practices Liability, Fiduciary Liability and Bankers Professional Liability Endorsements (as applicable), is amended as follows:

Notwithstanding any other provision, the definition of Loss shall not include punitive or exemplary damages or the multiple portion of any multiplied damage award. The remainder of the definition of Loss shall remain unchanged.

This Endorsement shall be effective as of 12:01 a.m. on 07/01/2008.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

Form No. 2844 (08/07)          FDIC No. 27259

PROGRESSIVE CASUALTY INSURANCE COMPANY
(A Stock Insurance Company, herein called the Insurer)

Amendment to Declarations Page
Change Policy Period

Policy Number: 4548319-08

In consideration of the premium paid and in reliance upon all statements made and information contained in the Declarations and Application, the Insurer and the Insured agree that the Declarations is amended as follows:

Item 2.		Previous Policy Period:		FROM: 12:01 a.m. 07/01/2008		TO: 12:01 a.m. 07/01/2011
		New Policy Period:		FROM: 12:01 a.m. 07/01/2008		TO: 12:01 a.m. 07/10/2010
		(Local time at the address shown in Item 1.)

Item 13.		Endorsements: This Policy is subject to the terms of the following Endorsements attached hereto and incorporated herein by reference at the effective date of this Policy and to all other Endorsements attached hereto after the effective date of this Policy: 5081, 5082, 2244, 2811, 4074, 5093, 5105, TRIA-01, 8790D (CA), 2844

This Endorsement shall be effective as of 12:01 a.m. on 07/10/2010.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements or limitations of the Policy other than as above stated.

/s/ Dane A. Shrallow   Dane A. Shrallow				/s/ Glenn Renwick   Glenn Renwick
Company Officer or Authorized Representative				President

Form No. 5082 (06/05)          FDIC No. 27259

IRONSHORE INDEMNITY, INC.
(A Stock Company)
Mailing Address:
PO Box 3407
New York, NY 10008
(877) IRON411

Policy # 000571100
Expiring Policy # N/A

THIS POLICY IS ISSUED BY THE STOCK INSURANCE COMPANY SELECTED ABOVE

SIDE-A DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY

DECLARATIONS

This is a Claims Made and Reported Policy, please read it carefully. Amounts incurred as Costs of Defense shall reduce the limit of liability available to pay judgments or settlements and shall also be applied against the retention. This Policy does not provide for any duty by the Insurer to defend those Insured under the Policy.

ITEM 1: COMPANY NAME AND PRINCIPAL ADDRESS:		ITEM 2: POLICY PERIOD:
Sonoma Valley Bancorp/Sonoma Valley Bank 202 W Napa Street Sonoma, CA 95476		(a) Inception Date — July 10, 2010 (b) Expiration Date — July 10, 2011
		at 12:01 a.m. both dates at the Principal Address in ITEM 1.

ITEM 3. LIMIT OF LIABILITY (inclusive of Costs of Defense):

$2,000,000 aggregate limit of liability for all Claims made or deemed made during the Policy Period.

ITEM 4. PREMIUM $190,000.00

ITEM 5. TOTAL UNDERLYING INSURANCE PROGRAM POLICY LIMITS: $5,000,000

ITEM 6. SCHEDULE OF UNDERLYING INSURANCE PROGRAM:

Underlying Insurer		Policy No.		Limits				Policy Year
U.S. Specialty Insurance Company		14-MGU-10-A21875		$	5,000,000			July 10, 2010 – July 11, 2011

ITEM 7. FORMS AND ENDORSEMENTS ATTACHED AT ISSUANCE:

	1.		California State Amendatory
	2.		General E&O Exclusion
	3.		Prior Acts Exclusion — 7/1/2010
	4.		Non-Follow Form, Recognize Erosion — EPL, BPL, LL, Fiduciary

ITEM 8. BROKER:

ADDRESS:

Thomas Mulligan
C.L. Frates
5005 N Lincoln Blvd.
Oklahoma City, OK 73105

LICENSE #: Agency: 0353948 Agent: 0C71628

ITEM 9. NOTICE TO INSURER:

A. Notice of Claim, Wrongful Act or Loss:

Send to Company Indicated Above
c/o Ironshore Insurance Services, LLC
One State Street Plaza
8^th Floor
New York, NY 10004

B. All other notices:

Send to Company Indicated Above
c/o Ironshore Insurance Services, LLC
One State Street Plaza
8^th Floor
New York, NY 10004

THESE DECLARATIONS, TOGETHER WITH THE COMPLETED AND SIGNED APPLICATION, FOR THIS POLICY AND THE FOLLOWED POLICY, INCLUDING INFORMATION FURNISHED IN CONNECTION THEREWITH WHETHER DIRECTLY OR THROUGH PUBLIC FILING, AND THE POLICY FORM ATTACHED HERETO, CONSTITUTE THE INSURANCE POLICY.

Date: August 27, 2010		By:		-s- [ILLEGIBLE]
				Authorized Representative

OFFEREE DISCLOSURE NOTICE OF
TERRORISM INSURANCE COVERAGE
(new policies and renewals with no terrorism
exclusion or sublimit and no premium charge)

You are hereby notified that, under the Terrorism Risk Insurance Act of 2002 (the “Act”) effective November 26, 2002, we are making available to you insurance for losses arising out of certain acts of international terrorism. The policy you are purchasing already includes insurance for such acts. Terrorism is defined as any act certified by the Secretary of the Treasury, in concurrence with the Secretary of State and Attorney General of the United States, to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel or the premises of a United States Mission; and to have been committed by an individual or individuals acting on behalf of any foreign person or foreign interest, as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.

You should know that the insurance provided by your policy for losses caused by acts of terrorism is partially reimbursed by the United States under the formula set forth in the Act. Under this formula, the United States pays 90% of covered terrorism losses that exceed the statutorily established deductible to be paid by the insurance company providing the coverage. The portion of the offered policy’s annual premium that is attributable to insurance for acts of terrorism is: $-0-.

If you have any questions about this notice, please contact your agent or broker.

IRONSHORE INDEMNITY, INC.
(A Stock Company)
Mailing Address:
PO Box 3407
New York, NY 10008
(877) IRON411

Policy Number: 000571100

THIS IS A CLAIMS MADE AND REPORTED POLICY
WITH COSTS OF DEFENSE INCLUDED IN THE LIMIT OF LIABILITY
PLEASE READ THE ENTIRE POLICY CAREFULLY

SIDE-A DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY

In consideration of the payment of the premium and in reliance upon all statements made and information furnished to the Insurer shown in the Declarations, including the statements made in the Application, and subject to all terms, conditions and limitations of this Policy, the Insured Person and Insurer agree:

SECTION I. INSURING AGREEMENT

The Insurer shall pay on behalf of an Insured Person all Loss which the Insured Person shall be legally obligated to pay as a result of a Claim first made against the Insured Person during the Policy Period or the Discovery Period for a Wrongful Act, and reported to the Insurer pursuant to Section VI, except to the extent that such Loss is paid as indemnification or advancement by the Company or from any source or by any Insurance Program. In the event that Loss is not paid by such indemnification or advancement or other Insurance Program, this Policy will respond on behalf of the Insured Person as if it were primary, subject to all of its terms, conditions and limitations (including, but not limited to, Section IV D), and without prejudice to the agreed excess position of the Insurer.

SECTION II. DEFINITIONS

	A.		“Application” shall mean each and every signed application submitted to the Insurer for consideration of insurance together with any attachments to such applications and other materials submitted therewith or incorporated therein.
	B.		“Claim” shall mean: a civil, criminal, governmental, regulatory, administrative or arbitration proceeding made against any Insured Person seeking monetary or non-monetary relief and commenced by the service of a complaint or similar pleading, the return of an indictment, or the receipt of filing of notice of charges or similar document; or other written demand for monetary or non-monetary relief made against any Insured Person. However, in no event shall the term “Claim” include any labor or grievance proceeding which is subject to a collective bargaining agreement.
	C.		“Company” shall mean the Corporation and any Subsidiary;
	D.		“Corporation” shall mean the entity named in Item 1 of the Declarations.
	E.		“Costs of Defense” shall mean reasonable and necessary legal fees, costs and expenses incurred in the investigation, defense or appeal of any Claim including the costs of an appeal bond, attachment bond or similar bond (but without obligation on the part of the Insurer to apply for or furnish such bonds); provided, however, Costs of Defense shall not include salaries, wages, overhead or benefit expenses associated with any Insured Person.

	F.		“Directors” and “Officers” shall mean all persons who were, now are, or shall be directors and/or officers (or foreign equivalent) of the Company.
	G.		“Domestic Partners” shall mean any natural person qualifying as a domestic partner under the provisions of any applicable federal, state or local law or under the provisions of any formal program established by the Company.
	H.		“Employment Practices Claim” shall mean any Claim brought by or on behalf of any past, present or future employee of the Company or Outside Entity, or any applicant for employment with the Company or Outside Entity alleging an Employment Practices Wrongful Act.
	I.		“Employment Practices Wrongful Act” shall mean:

	(1)		adverse or unfair reprimand of an Employee;
	(2)		denial of interview or position;
	(3)		denial of training to an Employee;
	(4)		derogatory or disparaging remarks to an Employee;
	(5)		discrimination;
	(6)		employment-related misrepresentations
	(7)		employment-related libel, slander, defamation, or invasion of privacy;
	(8)		failure to grant tenure;
	(9)		failure to provide an adequate workplace, or employment policy or procedure for Employees;
	(10)		imposing mandatory arbitration of an Employment Practices Claim by an employer;
	(11)		improper denial of time off or vacation time to an Employee;
	(12)		improper disciplinary action of an Employee;
	(13)		improper performance review of an Employee;
	(14)		improper transfer, change of position or change of work hours or shift of an Employee;
	(15)		improper treatment of an Employee for their actions as a whistleblower;
	(16)		negligent evaluation of an Employee;
	(17)		negligent release of medical information of an Employee;
	(18)		Retaliation against an Employee;
	(19)		sexual or workplace harassment of any kind;
	(20)		violation of the Equal Pay Act;

	(21)		wrongful deprivation of career opportunity of an Employee, including defamatory statements made in connection with an Employee reference;
	(22)		wrongful dismissal, discharge or termination of employment, whether actual or constructive, of an Employee;
	(23)		wrongful failure to promote, transfer or employ; and
	(24)		violation of the civil rights of an Employee relating to any of the above.

	J.		“Insurance Program” shall mean any existing insurance, other than this Policy, under which coverage may be owed to an Insured Person, including, without limitation, any existing Directors and Officers Liability insurance, Management Liability insurance or similar insurance.
	K.		“Insured Person” shall mean. any past, present, or future Director or Officer, general counsel, or member of the Board of Managers of the Company and any person serving in a functionally equivalent role for the Company;
	L.		“Insurer” shall mean the company stated in Item 8 of the Declarations.
	M.		“Loss” shall mean compensatory damages, punitive or exemplary damages, the multiple portion of any multiplied damage award, judgments, settlements (including pre- and post-judgment interest) and Costs of Defense, provided, however, Loss shall not include criminal or civil fines or penalties, taxes, or any matter which may be deemed uninsurable under the law pursuant to which this Policy shall be construed. It is understood and agreed that the enforceability of the foregoing coverage shall be governed by such applicable law which most favors coverage for punitive or exemplary damages or the multiple portion of any multiplied damage award.
			Loss shall not include any portion of damages, judgments or settlements arising out of any Claim alleging that the Company paid an inadequate price or consideration for the purchase of securities.
	N.		“Outside Entity” shall mean:

	(1)		any not-for-profit entity;
	(2)		any private organization whose securities are not publicly traded; and
	(3)		any public company, but only upon the condition that the Corporation shall have provided the Insurer with full particulars of the public company and agreed to any amendment of the provisions of this Policy required by the Insurer and paid when due any additional premium.

	O.		“Policy Period” shall mean the period from the inception date of this Policy to the expiration date of this Policy as set forth in Item 2 of the Declarations, or its earlier termination if applicable.
	P.		“Pollutants” shall mean any substance located anywhere in the world exhibiting any hazardous characteristics as defined by, or identified on any list of hazardous substances issued by, the United States Environmental Protection Agency or any state, county, municipality or locality counterpart thereof. Such substances shall include, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. Pollutants shall also mean any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products and any noise.
	Q.		“Pollution” shall mean the actual, alleged or threatened discharge, release, escape or disposal of Pollutants into or on real or personal property, water or the atmosphere. Pollution also means any direction or request that the Insured Person test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so.
	R.		“Related Wrongful Acts” shall mean Wrongful Acts which are the same, related or continuous, or Wrongful Acts which arise from a common nucleus of facts. Claims can allege Related Wrongful Acts regardless of whether such Claims involve the same or different claimants, Insured Persons or legal causes of action.

S.

“Securities Claim” shall mean any Claim (including a civil lawsuit or criminal proceeding or administrative or regulatory proceeding brought by the Securities and Exchange Commission, or by any similar state or foreign governmental or securities regulatory entity) made against an Insured Person alleging a violation of any law, regulation or rule, whether statutory or common law, which is:

	(1)		brought by any person or entity alleging, arising out of, based upon or attributable to the: (a) purchase or sale of, or (b) offer or solicitation of an offer to purchase or sell, any securities issued by the Company, or
	(2)		brought by a security holder of the Company, arising solely with respect to such security holder’s interest in such securities of the Company, whether directly, by class action, or derivatively on behalf of the Company.

The Insurer shall not assert that a Loss incurred in a Securities Claim alleging violations of Section 11 or 12 of the Securities Act of 1933, as amended, constitutes uninsurable loss and, subject to all other terms and conditions of the Policy, shall treat that portion of all such settlements, judgments and Costs of Defense as constituting Loss under the Policy.

T.

“Subsidiary” shall mean any entity in which the Company owns, directly or indirectly, more than fifty percent (50%) of the voting stock. This Policy will only apply to the Wrongful Act or Related Wrongful Acts of an Insured Person of a Subsidiary, or of any entity that merges with the Company, that first occur subsequent to the date such entity becomes a Subsidiary or is merged with the Company and prior to the date the Corporation ceased to own, directly or indirectly, more than fifty percent (50%) of the voting stock of such Subsidiary.

U.

“Wrongful Act” shall mean:

	(1)		any actual or alleged act, omission, error, misstatement, misleading statement, neglect or breach of duty, or Employment Practices Wrongful Act, by any Insured Person in their capacity as such with the Company;
	(2)		any matter claimed against any Insured Person solely by reason of their capacity as such with the Company;
	(3)		any matter claimed against any Insured Person arising out of their service as a director, officer, trustee or governor of an Outside Entity, but only if such service is at the request of the Company.

SECTION III. EXCLUSIONS

The Insurer shall not be liable to make any payment for Loss in connection with any Claim made against any Insured Person:

A.

alleging, arising out of, based upon or attributable to:

	(1)		an Insured Person gaining any profit, advantage or remuneration to which they were not legally entitled; provided however, this exclusion shall only apply where it is finally adjudicated that such conduct occurred; or
	(2)		the deliberate fraudulent or criminal acts of an Insured Person; provided, however, this exclusion shall only apply where it is finally adjudicated that such conduct occurred;

Provided, however,

	(a)		Exclusions A(1) and (2) shall not apply to Costs of Defense;
	(b)		Exclusion A(1) shall not apply to any Securities Claim alleging violations of Section 11 or 12 of the Securities Act of 1933, as amended, to the portion of any Loss attributable to such violations.

	B.		alleging, arising out of, based upon or attributable to, any Wrongful Act or Related Wrongful Act or any fact, circumstance or situation which has been the subject of any notice or Claim given under any other policy of which this Policy is a renewal or replacement;
	C.		for any actual or alleged;

(1)

bodily injury, sickness, disease, or death of any person;

	(2)		damage to or destruction of any tangible property, including the loss of use thereof; or
	(3)		mental anguish, emotional distress, invasion of privacy, wrongful entry, eviction, false arrest, false imprisonment, malicious prosecution, libel or slander.

Provided, however,

	(a)		Exclusions C(1) and (2) shall not apply to any Claim for any actual or alleged violation of the Securities Act of 1933, the Securities Exchange Act of 1934 or any state securities statute or to any Claim in the form of a derivative action provided such derivative action is brought and maintained independently of the Company, any Insured Person or any Outside Entity.
	(b)		Exclusion C(3) shall not apply to an Employment Practices Claim.

D.

which is brought by or on behalf of the Company or by any Insured Person; or which is brought by any security holder or member of the Company, whether directly or derivatively, unless such security holder’s or member’s Claim is instigated and continued totally independent of, and totally without solicitation of, or assistance of, or active participation of, or intervention of, the Company or any Director or Officer of the Company or which is brought by or on behalf of an Outside Entity, or by any director, officer, trustee, or governor thereof, for any Wrongful Act of an Insured Person serving as a director, officer, trustee or governor of such Outside Entity;

Provided, however, this exclusion shall not apply to:

	(1)		any Claim brought by an Insured Person in the form of a cross-claim or third-party claim for contribution or indemnity which is part of, and results directly from, a Claim that is covered by this Policy;
	(2)		any Employment Practices Claim brought by an Insured Person, other than an Insured Person who is or was a member of the Board of Directors (or equivalent governing body) of the Company;
	(3)		any Claim brought by the examiner, trustee, receiver, liquidator, rehabilitator or creditors’ committee (or any assignee thereof) of the Company, in any bankruptcy proceeding by or against the Company;
	(4)		any Claim brought by any past Director or Officer of the Company who has not served as a duly elected or appointed director, officer, trustee, governor, management committee member, member of the management board, General Counsel or Risk Manager (or equivalent position) of or consultant for the Company for at least four (4) years prior to such Claim being first made against any person;
	(5)		any Claim brought by a Director or Officer (or equivalent position) of a Company formed and operating in a foreign jurisdiction, provided that such Claim is brought and maintained outside the United States, Canada or any other common law country (including any territories thereof); or
	(6)		any Claim brought against an Insured Person engaging in any protected activity specified in 18 U.S.C. 1514A(a) (“whistleblower” protection pursuant to the Sarbanes-Oxley Act of 2002) or any protected activity specified in any other “whistleblower” protection pursuant to any similar state, local or foreign securities laws.

E.

alleging, arising out of, based upon, or attributable to, directly or indirectly resulting from, or in consequence of, or in any way involving, Pollution. This exclusion shall not apply to a derivative action commenced by a security holder of the Company or its creditors.

The Wrongful Act of an Insured Person shall not be imputed to any other Insured Person for purposes of any of
the above stated exclusions.

SECTION IV. LIMIT OF LIABILITY

	A.		The Insurer shall be liable to pay Loss up to the Limit of Liability stated in Item 3 of the Declarations that is in excess of such indemnification or advancement by the Company or from any other source and excess any other Insurance Program.
	B.		Costs of Defense shall be part of, and not in addition to, the Limit of Liability stated in Item 3 of the Declarations. Such Costs of Defense shall serve to reduce the Limit of Liability.
	C.		The liability of the Insurer for all Loss arising from any and all Claims first made and reported pursuant to Section VI of the Policy shall be the amount shown in Item 3 of the Declarations which shall be the maximum aggregate Limit of Liability of the Insurer for the Policy Period and Discovery Period, if applicable, regardless of the time of payment or the number of Claims.
	D.		Other Insurance and Indemnification

(1)

The Insured Person and the Company understand and agree that all coverage under this Policy shall be specifically excess over, and shall not contribute with:

	(a)		any Insurance Program maintained by the Company or any Outside Entity, whether such other insurance is stated to be primary, contributing, excess or otherwise, and
	(b)		all indemnification and advancement to which an Insured Person may be entitled from any source, including but not limited to the Company or any Outside Entity.

However, if Loss is not paid by such Insurance Program or as indemnification or advancement, this Policy will respond on behalf of the Insured Person as if it were primary, subject to all of its terms, conditions and limitations and without prejudice to the agreed excess position of the Insurer.

(2)

This Policy shall not be subject to the terms or conditions of any other insurance. The Insurer does not waive, compromise or release any of its rights to recover Loss paid under this Policy from the issuers of any other insurance under which coverage may be owed, or from any person or entity from which an Insured Person is entitled to indemnification or advancement, including the Company and any Outside Entity.

SECTION V. COSTS OF DEFENSE AND SETTLEMENT

	A.		The Insured Person shall not incur Costs of Defense, or admit liability, offer to settle, or agree to any settlement in connection with any Claim without the express prior written consent of the Insurer, which consent shall not be unreasonably withheld. The Insured Person shall provide the Insurer with all information and particulars it may reasonably request in order to reach a decision as to such consent. Any Loss resulting from any admission of liability, agreement to settle, or Costs of Defense incurred prior to the consent of the Insurer shall not be covered hereunder.
	B.		The Insured Person, and not the Insurer, has the duty to defend all Claims, provided that the Insured Person shall only retain counsel as is mutually agreed upon with the Insurer.
	C.		The Insurer shall at all times have the right, but not the duty, to associate with the Insured Person in the investigation, defense or settlement of any Claim to which coverage under this Policy may apply. The Insured Person shall cooperate with the Insurer and provide the Insurer such information as it may reasonably require in the investigation, defense or settlement of any Claim.
	D.		The Insurer shall advance Costs of Defense prior to the final disposition of any Claim, provided such Claim is covered by this Policy. Any advancement shall be on the condition that if it is finally established that the Insurer has no liability under the Policy for such Claim, the Insured Person will repay the Insurer all Costs of Defense advanced by virtue of this provision.

SECTION VI. NOTICE OF CLAIM

A.

The Insured Person shall, as a condition precedent to their rights under this Policy, give the Insurer notice in writing of any Claim which is made during the Policy Period. Such notice shall be given as soon as practicable but in no event later than thirty (30) days after the end of the Policy Period or Discovery Period, if applicable. If notice is provided pursuant to this Section, any Claim subsequently made against an Insured Person and reported to the Insurer alleging, arising out of, based upon or attributable to the prior noticed Claim or alleging any Related Wrongful Act, shall be considered related to the prior Claim and made at the time notice of the prior Claim was first provided.

	B.		If during the Policy Period or during the Discovery Period (if applicable) an Insured Person shall become aware of any circumstances which may reasonably be expected to give rise to a Claim being made against an Insured Person and shall give written notice to the Insurer of the circumstances, the Wrongful Act allegations anticipated and the reasons for anticipating such a Claim, with full particulars as to dates, persons and entities involved, then a Claim which is subsequently made against such Insured Person and reported to the Insurer alleging, arising out of, based upon or attributable to such circumstances or alleging any Related Wrongful Act, shall be considered made at the time such notice of such circumstances was given. Notice of any such subsequent Claim shall be given to the Insurer as soon as practicable.
	C.		In addition to furnishing the notice as provided in Section VI, the Insured Person shall, as soon as practicable, furnish the Insurer with copies of reports, investigations, pleadings and other papers in connection therewith.
	D.		Notice to the Insurer as provided in Section VI shall be given to the Insurer identified in and to the address stated in Item 8 of the Declarations.

SECTION VII. DISCOVERY PERIOD

	A.		In the event the Insurer or the Corporation refuses to renew this Policy, the Corporation shall have the right, upon payment of one hundred percent (100%) of the annual premium, (or if the Policy Period is other than annual, one hundred percent (100%) of the annualized premium), to an extension of the coverage provided by this Policy with respect to any Claim first made against any Insured Person during the period of twelve (12) months after the end of the Policy Period and reported to the Insurer pursuant to the provisions of this Policy, but only with respect to any Wrongful Act committed or alleged to have been committed before the end of the Policy Period. This twelve (12) month period shall be referred to in this Policy as the Discovery Period.
	B.		As a condition precedent to the right to purchase the Discovery Period, the total premium for this Policy must have been paid, and a written request together with payment of the appropriate premium for the Discovery Period must be provided to the Insurer no later than thirty (30) days after the end of the Policy Period.
	C.		The fact that the coverage provided by this Policy may be extended by virtue of the purchase of the Discovery Period shall not in any way increase the Limit of Liability stated in Item 3 of the Declarations. For purposes of the Limit of Liability, the Discovery Period is considered to be part of, and not in addition to, the Policy Period.

SECTION VIII. GENERAL CONDITIONS

A.

Cancellation or Non-Renewal

	(1)		This Policy may be cancelled by the Corporation at any time by written notice to the Insurer. Upon cancellation, the Insurer shall retain the customary short rate portion of the premium, unless this Policy is converted to Run-Off pursuant to Section VIII.D. wherein the entire premium for this Policy shall be deemed earned.
	(2)		This Policy may only be cancelled by the Insurer if the Corporation does not pay the premium when due. The Insurer shall mail or deliver notice of cancellation to the Corporation at least ten (10) days before the effective date of cancellation.
	(3)		If the Insurer elects not to renew this Policy, the Insurer shall provide the Corporation with no less than sixty (60) days advance notice thereof.

B.

Application

It is agreed by the Company and the Insured Persons that the Application, and any information provided therewith, shall be on file with the Insurer and be deemed attached hereto as if physically attached hereto. It is further agreed by the Company and the Insured Persons that the statements in the Application and any information provided therewith are material and that this Policy is issued in reliance upon the truth of such representations. The Application shall be construed as a separate Application for coverage for each Insured Person. Each Insured Person represents that, to the best of their knowledge, the statements and particulars contained in the Application are true, accurate and complete. Each Insured Person agrees that this Policy is issued in reliance on the truth of the representation and that such particulars and statements in the Application are the basis of this Policy. It is understood and agreed that if any misrepresentation or misstatements are made in the Application, any Claim arising therefrom is excluded from this insurance. The knowledge or information possessed by any Insured Person will not be imputed to any other Insured Person as respects this provision.

However, it is understood and agreed that this Policy will not be rescinded by the Insurer with respect to any Insured Person for any reason.

C.

Action Against the Insurer

	(1)		No action shall be taken against the Insurer unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this Policy, and until the obligation of the Insured Person to pay shall have been finally determined by an adjudication against the Insured Person or by written agreement of the Insured Person, claimant and the Insurer.
	(2)		No person or organization shall have any right under this Policy to join the Insurer as a party to any Claim against the Insured Person nor shall the Insurer be impleaded by any Insured Person or their legal representative in any such Claim.

	D.		Conversion to Run-Off Coverage
			If, during the Policy Period, a transaction occurs wherein another entity gains control of the Corporation through the ownership of more than fifty percent (50%) of the voting stock of the Corporation, or the Corporation merges into another entity or consolidates with another entity such that the Corporation is not the surviving entity, then:

	(1)		this Policy shall only apply to Wrongful Acts actually or allegedly committed on or before the effective date of such transaction; and
	(2)		the entire premium for this Policy shall be deemed earned as of the date of such transaction.

E.

Coverage Extensions

(1)

Lawful Spouse or Domestic Partner Provision

The coverage provided by this Policy shall also apply to the lawful spouse or Domestic Partner of an Insured Person, but only for Claims arising out of any actual or alleged Wrongful Acts of such Insured Person.

(2)

Worldwide Provision

The coverage provided under this Policy shall apply worldwide. The term Directors and Officers is deemed to include individuals who serve in equivalent positions in foreign Subsidiaries.

(3)

Estates and Legal Representatives

The coverage provided by this Policy shall also apply to the estates, heirs, legal representatives or assigns of any Insured Person in the event of their death, incapacity or bankruptcy, but only for Claims arising out of any actual or alleged Wrongful Acts of any Insured Person.

F.

Subrogation

In the event of any payment under this Policy, the Insurer shall be subrogated to all of the rights of recovery of the Insured Person and the Insured Person shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents as may be necessary to enable the Insurer to effectively bring suit in the name of any Insured Person.

G.

Dispute Resolution

In the event any dispute arises in connection with this Policy that cannot be resolved, the Insurer and the Insured Person shall participate in a non-binding mediation in which the Insurer and the Insured Person shall attempt in good faith to resolve such dispute. Either the Insured Person or the Insurer shall have the right to commence a judicial proceeding or, if the parties agree, a binding arbitration, to resolve such dispute. However, no judicial proceeding or arbitration shall be commenced until termination of the mediation and until at least 90 days has passed from the termination of the mediation. Each party will bear its own legal fees and expenses. The costs and expenses of a mediation, or any arbitration, shall be split equally by the parties.

H.

Assignment

Assignment of interest under this Policy shall not bind the Insurer until its consent is endorsed hereon.

I.

Conformity to Statute

Any terms of this Policy which are in conflict with the terms of any applicable laws are hereby amended to conform to such laws.

J.

Entire Agreement

By acceptance of this Policy, the Insured Persons and the Insurer agree that this Policy (including the Declarations, Application submitted to the Insurer and any information provided therewith) and any written endorsements attached hereto constitute the entire agreement between the parties. The terms, conditions and limitations of this Policy can be waived or changed only by written endorsement.

	K.		Corporation Represents Insured Persons
			By acceptance of this Policy, the Corporation shall be designated to act on behalf of all Insured Persons for all purposes including, but not limited to, the giving and receiving of all notices and correspondence, the cancellation or non-renewal of this Policy, the payment of premiums, and the receipt of any return premiums that may be due under this Policy.
	L.		Representative of the Insurer
			Ironshore Insurance Services, LLC, One State Street Plaza, 7th Floor, New York, NY 10004 shall act on behalf of the Insurer for all purposes including, but not limited to, the giving and receiving of all notices and correspondence, provided, however, notice of Claim shall be given pursuant to Section VI of the Policy.
	M.		Service of Suit
			In the event of the failure of the Insurer to pay any amount claimed to be due hereunder, the Insurer, at the request of the Insured Person, will submit to the jurisdiction of any court of competent jurisdiction within the United States. Nothing in this condition constitutes or shall be understood to constitute a waiver of the right of the Insurer to commence an action in any court of competent jurisdiction within the United States, to remove an action to a United States District Court or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.
			Service of process in any such suit may be made upon Ironshore Insurance Services, LLC, One State Street Plaza, 7th Floor, New York, NY 10004. In any suit instituted against the Insurer upon this Policy the Insurer will abide by the final decision of such court or of any appellate court in the event of any appeal.
			Pursuant to any statute of any state, territory or district of the United States which makes provision therefore, the Insurer hereby designates the Superintendent, Commissioner or Director of Insurance, or other officer specified for that purpose in the statute, or his or her successor or successors in office, as its true and lawful attorney upon whom may be served lawful process in any action, suit or proceeding instituted by or on behalf of the Insured Person or any beneficiary hereunder arising out of this Policy, and hereby designates the above named Ironshore Insurance Services, LLC, One State Street Plaza, 7th Floor, New York, NY 10004 as the entity to whom said officer is authorized to mail such process or a true copy thereof.
	N.		Bankruptcy
			Bankruptcy or insolvency of the Company or any Insured Person shall not relieve the Insurer of any of its obligations under this Policy.
	O.		Headings
			The descriptions in the headings of this Policy form no part of the terms and conditions of the coverage under this Policy.

Ironshore Indemnity Inc. by:
Secretary		President

IRONSHORE INDEMNITY, INC.
(A Stock Company)
Mailing Address:
PO Box 3407
New York, NY 10008
(877) IRON411

Endorsement #1

Policy Number: 000571100		Effective Date of Endorsement: July 10, 2010
Insured Name: Sonoma Valley Bancorp/Sonoma Valley Bank

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

CALIFORNIA AMENDATORY ENDORSEMENT

Endorsement forming a part of and attaching to this Side-A Directors and Officers Liability Insurance Policy as stated above.

It is hereby understood and agreed that:

Subparagraph (3) of Paragraph A. Cancellation or Non-Renewal of Section VIII. General Conditions is hereby deleted in its entirety and replaced by the following:

(3)

Should the Insurer decide to nonrenew this Policy, or condition renewal upon reduction of the Policy’s Limit of Liability, elimination of coverages, increase in deductibles, or increase of more than twenty five percent (25%) in the rate upon which the premium is based, then the Insurer shall mail or deliver to the producer of record, if applicable, and to the Corporation at the address shown in Item 1. of the Declarations written notice of nonrenewal at least sixty (60) days but not more than one hundred twenty (120) days prior to the expiration of the Policy. The notice shall include the specific reason for nonrenewal or conditional renewal.

ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.

-s- [ILLEGIBLE]  Authorized Representative		August 27, 2010   Date

IRONSHORE INDEMNITY, INC.
(A Stock Company)
Mailing Address:
PO Box 3407
New York, NY 10008
(877) IRON411
Endorsement # 2

Policy Number: 000571100		Effective Date of Endorsement: July 10, 2010
Insured Name: Sonoma Valley Bancorp/Sonoma Valley Bank

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

PROFESSIONAL SERVICES EXCLUSION

In consideration of the premium charged, it is hereby understood and agreed that the Insurer shall not be liable to make any payment for Loss in connection with any Claim made against an Insured alleging, arising out of, based upon or attributable to the Company’s or any Insured Person’s performance of or failure to perform professional services for others, or any act, error or omission relating thereto.

ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.

-s- [ILLEGIBLE]		August 27, 2010   Date
Authorized Representative

IRONSHORE INDEMNITY, INC.
(A Stock Company)
Mailing Address:
PO Box 3407
New York, NY 10008
(877) IRON411
Endorsement # 3

Policy Number: 000571100		Effective Date of Endorsement: July 10, 2010
Insured Name: Sonoma Valley Bancorp/Sonoma Valley Bank

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

PRIOR ACTS EXCLUSION

This endorsement modifies insurance provided under the following:

EXCESS LIABILITY INSURANCE POLICY

It is agreed that in addition to any EXCLUSIONS made part of the Followed Policy or any Underlying Insurance, the following exclusion shall apply to this policy:

Underwriters shall not be liable to make any payment for Loss in connection with any Claim made against any Insured (as defined in the Primary Policy) brought by reason of any Wrongful Act(s), including Interrelated Wrongful Acts, actually or allegedly committed or attempted in whole or in part prior to July 01, 2010.

ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.

-s- [ILLEGIBLE]		September 2, 2010   Date
Authorized Representative

IRONSHORE INDEMNITY, INC.
(A Stock Company)
Mailing Address:
PO Box 3407
New York, NY 10008
(877) IRON411
Endorsement # 4

Policy Number: 000571100		Effective Date of Endorsement: July 10, 2010
Insured Name: Sonoma Valley Bancorp/Sonoma Valley Bank

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

FOLLOW FORM ENDORSEMENT

(Recognize Erosion)

In consideration of the premium charged, it is hereby understood and agreed that this policy will follow form solely with respect to the Directors and Officers Liability Coverage Section of the Followed Policy. This Policy shall not apply excess, and shall not provide any coverage, with respect to Employment Practices Liability, Bankers Professional Liability, Lenders Liability, and Employee Benefit Plan Liability.

Notwithstanding the foregoing, payment under the “Employment Practices Liability, Bankers Professional Liability, Lenders Liability, and Employee Benefit Plan Liability Liability Sections” of the Followed Policy by the Followed Policy Insurer shall be recognized under this Policy as an erosion of the Underlying Policy Limits/Attachment Point as shown in Item 6 of the Declarations.

ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.

-s- [ILLEGIBLE]  Authorized Representative		September 2, 2010 Date