PREMIERWEST BANCORP EMPLOYMENT AGREEMENT FOR MICHAEL FOWLER

Exhibit 10.1

PREMIERWEST BANCORP

EMPLOYMENT AGREEMENT

FOR

MICHAEL FOWLER

Dated as of March 29, 2008

- i -

- ii -

     This Employment Agreement (this “Agreement”) by and among PremierWest Bancorp, an Oregon corporation, PremierWest Bank, an Oregon state chartered bank (the “Bank”) (collectively “PremierWest”) and Michael Fowler, is dated as of March 29, 2008.

          A.      Employment Desired . PremierWest recognizes that Executive possesses unique skills, knowledge, and experience related to PremierWest’s business, and it is anticipated that Executive will make major contributions to the profitability, growth and financial strength of PremierWest and its affiliates. PremierWest desires to employ Executive, and Executive desires to be employed by PremierWest. PremierWest desires to provide incentives for Executive to remain employed until Retirement Age and following a Change in Control.

          B.      No Currently Anticipated Change in Control . As of the date of this Agreement, none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of PremierWest, is contemplated insofar as PremierWest or any affiliates are concerned.

          C.      Code Section 409A . This Agreement is intended to comply with Section 409A of the Internal Revenue Code (the “Code”). Any ambiguity hereunder shall be interpreted in such a way as to comply, to the extent necessary, with Section 409A and the regulations thereunder.

         1.        EMPLOYMENT . PremierWest shall employ Executive according to the terms and conditions of this Agreement, for the period stated in Section 2 below. Initially, Executive shall serve as Executive Vice President / Chief Financial Officer.

         2.        TERM OF AGREEMENT .

                    2.1      Initial Term/Automatic Renewal . The initial term of this Agreement andExecutive’s employment shall commence on April 14, 2008 and expire on December 31, 2008. On the expiration date and each anniversary thereof, this Agreement shall be extended automatically for one (1) additional year unless the Board determines that the term shall not be extended. If the Board determines not to extend the term, it shall promptly notify Executive in writing and this Agreement will remain in full force only until its term expires. While the Board’s election not to extend the term of this Agreement may be exercised at any time, at its sole discretion, the termination of employment that results from such action shall be deemed a termination prior to the expiration of this Agreement pursuant to the provisions of Section 6

- 1 -

below, and as a result thereof, Executive may be entitled to benefits as provided in Sections 8, 9, 10 and/or 11, below.

          2.2       Perpetual Term After Change in Control . Following a Change in Control, this Agreement will be subject to a perpetual term (subject to Section 2.3) and will be terminable only with Executive’s written consent.

          2.3      Termination Upon Retirement . Unless sooner terminated, Executive may terminate his employment by retiring when he reaches age 70.

   3.     NO TERM OF EMPLOYMENT . Notwithstanding the term of this Agreement, PremierWest may terminate Executive’s employment at any time for any lawful reason or for no reason at all, subject to the provisions of this Agreement.

   4.    DUTIES .

          4.1       Duties . As Executive Vice President / Chief Financial Officer, Executive shall serve under the direction of the President (the “Supervisor”) and in accordance with the Articles of Incorporation and Bylaws (as each may be amended or restated from time to time) of PremierWest Bancorp and the Bank, respectively.

          4.2       Obligations .

                      (a) Executive agrees that to the best of Executive’s ability and experience, Executive will at all times loyally and conscientiously perform all of the duties and obligations required of Executive pursuant to the express and implicit terms of this Agreement and as directed by the Board or the Supervisor.

                      (b) Executive shall devote Executive’s entire working time, attention and efforts to PremierWest’s business and affairs, shall faithfully and diligently serve PremierWest’s interests and shall not engage in any business or employment activity that is not on PremierWest’s behalf (whether or not pursued for gain or profit) except for (i) activities approved in writing in advance by the Board and (ii) passive investments that do not involve Executive providing any advice or services to the businesses in which the investments are made.

                      (c) On or before August 12, 2008, Executive shall establish permanent, primary residency for himself and his family in Josephine or Jackson County, Oregon.

   5.     COMPENSATION . For all services performed under this Agreement, PremierWest agrees to pay the following compensation and benefits:

           5.1       Base Salary . Executive’s annual base salary is $165,000 payable in semi-monthly installments (the “Base Salary”). Executive’s base salary shall be subject to annual review by Executives Supervisor. Taking into account the Executives Supervisor’s

- 2 -

recommendation, the Board may increase the Base Salary, but the Base Salary shall not be reduced.

          5.2      Vacation . Executive is entitled to not less than four (4) weeks of paid vacation per calendar year to be used in accordance with the terms and conditions of the Bank’s personnel policies. Paid vacation for a partial year’s employment shall be prorated on a daily basis. Notwithstanding anything in the Bank’s personnel policies to the contrary, up to two weeks of Executive’s four weeks of paid vacation may be carried over from one year to the next if unused by the end of the year, but Executive shall not be entitled, under any circumstance, to payment for unused vacation.

          5.3      Stock Options . Upon commencement of the term of this Agreement, Executive and PremierWest Bancorp will grant Executive an option to purchase 20,000 shares of common stock of PremierWest Bancorp pursuant to the 2002 PremierWest Bancorp Stock Incentive Plan (the “Option”). The Option will be a nonqualified stock option and will be subject to the terms and conditions of the 2002 PremierWest Bancorp Stock Incentive Plan and a nonqualified stock option agreement to evidence such grant, the form of which is attached to this Agreement as Exhibit B . The Option will vest over seven years in accordance with the standard PremierWest vesting schedule. The Stock Option Agreement shall provide an exercise price equal to the closing price on the grant date.

          5.4      [Reserved]

          5.5      Disability Notice . Executive may participate in the group disability income insurance coverage program, offered from time to time by PremierWest to its employees.

          5.6      Automobile . PremierWest shall provide a vehicle of its choosing for use by Executive during the term of his employment. Upon Termination of Employment Without Cause or Termination of Employment for Good Reason, PremierWest shall transfer all right, title, and interest in and to the vehicle to Executive no later than the date on which the Executive has a Termination of Employment.

          5.7      Club Dues . During the term of this Agreement, PremierWest shall pay Executive’s monthly golf and social dues at the Rogue Valley Country Club. Each such monthly dues payment shall be made by PremierWest no later than the date on which it is due

          5.8      Moving Expense Reimbursement . At such time as Executive moves himself and his family to Jackson County, Oregon, PremierWest shall reimburse Executive for his reasonable expenses incurred for moving, including selling and closing costs in selling Executive’s home and purchasing a new home in Josephine or Jackson County, Oregon, and costs of moving household furniture and furnishings. Reimbursement of such expenses shall not exceed $50,000.

          5.9      Other Benefits . Executive is entitled to participate in all officer or employee compensation, bonus, incentive, and benefit plans in effect from time to time throughout the term of this Agreement, which PremierWest generally makes available to its

- 3 -

officers and employees, including, without limitation, plans providing pension, medical, dental, disability, and group life benefits, and 401(k) retirement plans, and to receive any and all other fringe benefits generally made available by PremierWest to its officers and employees, from time to time, provided that Executive satisfies the eligibility requirements for any such plans or benefits.

          5.10       Reimbursements . Executive shall be entitled to reimbursement for all reasonable business expenses incurred in performing his obligations under this Agreement, including, but not limited to, all reasonable business travel and entertainment expenses incurred while acting at the request of or in the service of PremierWest, provided such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by PremierWest. All reimbursements to the Executive by PremierWest shall be paid no later than the last day of the calendar month following the calendar month in which the expense was incurred.

          5.11      Additional Benefit Agreements . Upon commencement of the term of this Agreement, Executive and PremierWest Bancorp will execute the following additional benefit agreements, the benefits under which shall be governed solely by the terms of those agreements:

                      (a)      Voluntary Deferred Compensation Agreement.

          5.12     [ reserved]

    6.    TERMINATION . If Executive has a Termination of Employment before the expiration of this Agreement as described in this Section, Executive’s compensation and benefits shall terminate except as otherwise provided in this Agreement. Any purported Termination of Employment by PremierWest or by Executive shall be communicated by written notice of termination to the other. The notice must state (i) the specific termination provision of this Agreement relied upon, (ii) the date on which termination shall become effective, and (iii) if Termination For Cause or Termination For Good Reason, the notice must state in reasonable detail the facts and circumstances forming the basis for termination. Employment shall terminate:

           6.1       For Cause . Upon delivery to Executive of notice of termination of Executive for Cause (as defined in Section 7.1 below).

           6.2       Without Cause . Upon PremierWest’s termination of Executive without Cause, upon 90 days’ written notice, at any time in PremierWest’s sole discretion, for any reason other than for Cause or for no reason (“Termination of Employment Without Cause”). A Change in Control does not in itself constitute Termination of Employment Without Cause.

           6.3      For Good Reason . Upon Executive’s Termination of Employment for Good Reason (as defined in Section 7.2 below) (“Termination of Employment For Good Reason”).

- 4 -

          6.4      Resignation . Upon Executive’s voluntary resignation without Good Reason (“Resignation”), written notice of which Executive must give to PremierWest at least 90 days in advance of Resignation.

          6.5       Death or Disability . Upon Executive’s death or Disability (as defined in Section 7.3 below).

          6.6      Retirement . Upon Executive reaching the age of 70 (“Retirement Age”) and voluntary terminating his employment provided no event giving rise to a “Cause” termination exists (“Retirement”).

   7.    DEFINITIONS .

          7.1      Cause . “Cause” for Executive’s termination will exist upon the occurrence of one or more of the following events:

                     (a) Fraudulent Conduct . An intentional act of fraud, embezzlement, or theft by Executive in the course of his employment with PremierWest Bancorp or the Bank. No act or failure to act on Executive’s part shall be deemed to have been intentional if it was due primarily to an error in judgment or negligence. An act or failure to act on Executive’s part shall be considered intentional if it is not in good faith and if it is without a reasonable belief that the action or failure to act is in PremierWest’s best interests,

                     (b) Material Breach of Agreement . A material breach by Executive of this Agreement if such breach is not remedied or is not being remedied to the Board or the Bank Board’s satisfaction within 30 days after written notice, including a detailed description of the breach, has been delivered by the respective Board to Executive,

                     (c) Gross Negligence/Insubordination . Gross negligence or insubordination by Executive in the performance of his duties as an officer of PremierWest Bancorp or the Bank if such gross negligence or insubordination is not remedied or is not being remedied to the Board or the Bank Board’s satisfaction within 30 days after written notice, including a detailed description of the gross negligence or insubordination, has been delivered by the respective Board to Executive,

                     (d) Breach of Fiduciary Duties . A breach by Executive of his fiduciary duties to PremierWest Bancorp and its stockholders or misconduct involving dishonesty, in either case whether in his capacity as an officer of PremierWest Bancorp or the Bank,

                     (e) Criminal Conviction . Conviction of Executive for a felony or conviction of a misdemeanor involving moral turpitude,

                     (f) Violation of Law . Intentional violation of any law or significant policy of PremierWest Bancorp or the Bank committed in connection with Executive’s employment, which has a material adverse effect on PremierWest Bancorp or the Bank, or

- 5 -

                    (g) FDIC Removal Order . Removal of Executive from office or prohibition of Executive from participating in the conduct of PremierWest Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1).

          7.2      Good Reason . “Good Reason” for Executive’s Termination of Employment by resignation will exist upon the occurrence, without Executive’s consent, of one or more of the following events, if Executive has informed PremierWest in writing of the circumstances described below in this Section 7.2 that could give rise to Termination of Employment For Good Reason within 90 days of the occurrence of such event and PremierWest has not removed the circumstances within 30 days of the written notice:

                      (a)      Reduction in Base Salary . A material reduction of Executive’s Base Salary;

                     (b)     A Material Reduction in Responsibilities or Status. (other than such changes, made after the Executive has announced his intention to retire or within twelve months of his Retirement Age under Section 2.3, as are consistent with his anticipated retirement) based on one of the following:

                              (1)      Assignment to Executive of duties or responsibilities that are materially inconsistent with Executive’s position as stated in this Agreement or that represent a material reduction of his authority,

                              (2)      Any other action by PremierWest that results in a material reduction or material adverse change in Executive’s position, authority, duties or responsibilities,

                              (3)      Failure to appoint or reappoint Executive to the position stated in this Agreement, or

                              (4)      Following a Change in Control, failure to retain Executive in an executive officer position with authority, duties or responsibilities consistent with that of an executive officer. (Subsections (d)(1), (2) and (3) do not apply following a Change in Control),

                    (c)      Failure to Obtain Assumption Agreement . The failure of a successor or assign of the Bank to assume and agree to perform this Agreement, if assignment and assumption does not occur automatically under operation of law,

                    (d)       Termination without Compliance with this Agreement . Termination by PremierWest of Executive’s employment without the notice required under this Agreement,

                    (e)       Material Breach . A material breach of this Agreement by PremierWest that is not corrected within a reasonable time, or

- 6 -

                    (f)      Relocation of Executive . Requiring Executive to change his principal work location to any location that is more than 35 miles from the location of PremierWest Bancorp’s principal executive offices on the date of this Agreement.

          7.3      Disability . “Disability” shall mean that (i) Executive has been unable to perform Executive’s duties under this Agreement as a result of Executive’s incapacity due to physical or mental illness for at least 90 consecutive calendar days or 150 calendar days during any consecutive 12 month period and (ii) a physician selected by PremierWest and its insurers and acceptable to Executive or Executive’s legal representative (with such Agreement on acceptability of the physician not to be unreasonably withheld), determines the incapacity to be continuing, to the extent that Executive cannot continue to perform essential functions of Executive’s position with or without reasonable accommodation. Executive shall not be deemed to be disabled, however, if he returns to work on a full-time basis, with the ability to perform all essential functions within 30 days after PremierWest gives him notice of termination due to Disability. PremierWest may require Executive to submit to such physical or mental evaluations and tests as the Board of Directors deems appropriate.

          7.4      Change in Control . For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred when any of the following events take place:

                    (a)      Merger . PremierWest Bancorp merges into or consolidates with another corporation, or merges another corporation into PremierWest Bancorp, and as a result, less than 50% of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were the holders of PremierWest Bancorp’s voting securities immediately before the merger or consolidation. The term “person” means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or other entity.

                    (b)      Acquisition of Significant Share Ownership . A report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of PremierWest Bancorp’s voting securities, but this paragraph (b) shall not apply to beneficial ownership of voting shares of PremierWest Bancorp owned by a qualified retirement plan or held in a fiduciary capacity by an entity in which PremierWest Bancorp or the Bank, directly or indirectly beneficially owns, or has the right to vote, 50% or more of the outstanding voting securities.

                    (c)        Change in Board Composition . During any period of two (2) consecutive years, individuals who constitute PremierWest Bancorp’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof; provided, however , that for purposes of this paragraph (c), each director who is first elected by the Board (or first nominated by the Board for election by stockholders) by a vote of at least two-thirds of the directors who were directors at the beginning of the period shall be deemed to have been a director at the beginning of the two-year period.

- 7 -

                    (d)      Sale of Assets . PremierWest Bancorp sells to a third party all or substantially all of PremierWest Bancorp’s assets. For this purpose, sale of all or substantially all of PremierWest Bancorp’s assets includes sale of PremierWest Bank.

          7.5       Termination of Employment . When used in this Agreement, the phrase “Termination of Employment” means a separation from service under Code Section 409A and the regulations thereunder, as such regulations may change from time to time, or any successor provision of the Code and regulations.

   8.    PAYMENT UPON TERMINATION . Upon the Executive’s Termination of Employment for any of the reasons set forth in Section 6 above, Executive or Executive’s estate, as appropriate, will receive payment for all Base Salary earned through the date of termination and, except in the event of Termination of Employment For Cause or Resignation, all unpaid bonus or incentive compensation due to Executive for the previous calendar year (“Earned Compensation”). Earned Compensation, unless deferred under a plan of deferred compensation, shall be paid by the end of the business day following termination, or sooner, if required by applicable law.

   9.    RETIREMENT BENEFITS . Upon Retirement, Executive shall additionally be entitled to the following benefits:

          9.1       Stock Option Vesting . Executive shall also be fully vested in any stock options, restricted stock grants, or other similar equity compensation arrangements regardless of whether the respective plan provides for accelerated vesting.

          9.2       401(k) Contribution . PremierWest shall pay to Executive a lump sum payment in an amount equal to the matching and profit sharing contributions, if any, that would have been made had Executive’s employment not ter