EMPLOYMENT AGREEMENT

 

 

                              EMPLOYMENT AGREEMENT

 

         This Agreement is made and entered into as of March 1, 2004, by and

between North Valley Bank, a California Banking corporation ("Employer") and H.

Russell Harris ("Employee").

 

         WHEREAS, North Valley Bancorp, a California Corporation, ("NVBancorp")

is the sole shareholder and holding company of North Valley Bank ("NVB"), which

has as a division Six Rivers Bank, ("SRB"); and

 

         WHEREAS, Employee has served as President and Chief Executive Officer

of Six Rivers Bank; and currently and pursuant to this Agreement will hold the

title of President of Six Rivers Bank, a division of North Valley Bank; and

 

         WHEREAS, Employer recognizes that the contributions of Employee to the

growth and success of Employer will be substantial and desires to assure

Employer of the continued service of Employee, and Employee desires to continue

in the employment of Employer;

 

         NOW, THEREFORE, in consideration of the mutual covenants and agreements

contained herein, Employer and Employee agree as follows:

 

         1.       Term of Employment. Employer employs Employee and Employee

hereby accepts employment with Employer, upon the terms and conditions

hereinafter set forth, commencing on March 1, 2004, and ending on February 28,

2005, subject to the early termination provisions of Paragraph 12 hereof. The

term of this agreement shall be automatically extended for additional one (1)

year periods, unless Employee or Employer gives written notice of non-renewal,

not less than sixty (60) days before the end of the term.

 

         2.       Duties and Obligations of Employee. Employee shall serve as an

officer of Employer with the title of President of Six Rivers Bank and Senior

Vice President of North Valley Bank and shall perform the customary duties of

such office and such other duties as may from time to time be reasonably

requested of him by the Senior Management of Employer, including, without

limitation, the following:

 

                  (a)      Managing the day to day operations of SRB in

accordance with policies, procedures and directions of the Senior Management of

Employer and all applicable laws and regulations;

 

                  (b)      Managing SRB to accomplish the annual operational

budget and business plan as adopted by the Senior Management of Employer;

 

                  (c)      Maintaining a professional relationship with

regulatory agencies and governmental authorities having jurisdiction over

Employer and its division Six Rivers Bank;

 

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                  (d)      Providing leadership in the supervision of officers

and employees of Employer who work within the Division of Employer known as Six

Rivers Bank to accomplish the goals and objectives of Employer;

 

                  (e)      Interacting with NVB Executive Management,

Administration and Board of Directors.

 

         Employee shall be entitled to coverage under any director and officer

liability insurance policy obtained by Employer for directors and officers of

Employer. Employee shall also be entitled to indemnification for actions taken

by Employee in good faith and in a manner Employee reasonably believes to be in

the best interests of Employer in accordance with Employer's Articles of

Incorporation and Bylaws, the Indemnification Agreement (incorporated herein by

reference as Exhibit A to this Agreement) and applicable laws and regulations.

 

         3.       Devotion to Employer's Business.

                  -------------------------------

 

                  (a)      Employee shall devote his full time, ability, and

attention to the business of Employer during the term of this Agreement and

shall not during the term of this Agreement engage in any other business

activities, duties, or pursuits whatsoever, or directly or indirectly render any

services of a business, commercial, or professional nature to any other person

or organization, whether for compensation or otherwise, without the prior

approval of Senior Management. However, the expenditure of reasonable amounts of

time, for which Employee shall not be compensated by Employer, for educational,

charitable, or professional activities shall not be deemed a breach of this

Agreement if those activities do not materially interfere with the services

required of Employee under this Agreement.

 

                  (b)      Employee agrees to conduct himself at all times with

due regard to public conventions and morals. Employee further agrees not to do

or commit any act that will reasonably tend to shock or offend a reasonable

person, or to prejudice Employer or the banking industry in general.

 

                  (c)      Employee hereby represents and agrees that the

services to be performed under the terms of this Agreement are of a special,

unique, unusual, extraordinary, and intellectual character that gives them a

peculiar value, the loss of which cannot be reasonably or adequately compensated

in damages in an action at law. Employee therefore expressly agrees that

Employer, in addition to any other rights or remedies that Employer may possess,

shall be entitled to injunctive and other equitable relief to prevent or remedy

a breach of this Agreement by Employee.

 

         4.       Non-Competition by Employee. Subject to Paragraph 3 hereof,

and absent the prior written consent of Employer, Employee shall not, during the

term of this Agreement, directly or indirectly, either as an employee, employer,

consultant, agent, principal, stockholder, officer, director, or in any other

individual or representative capacity, engage or participate in any competitive

banking or financial services business, provided, however, that a passive

 

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portfolio investment in shares of stock of a publicly traded company, in an

amount not exceeding five percent (5%) of the outstanding shares of said

company, would not be prevented by this Paragraph 4.

 

         5.       Indemnification.

                  ---------------

 

                  (a)      To the extent required by law, Employee shall

indemnify and hold Employer harmless from all liability for loss, damage, or

injury to persons or property resulting from the gross negligence or intentional

misconduct of Employee.

 

                  (b)      To the extent permitted by law, Employer shall

indemnify Employee if he was or is a party or is threatened to be made a party

in any action brought by a third party against Employee (whether or not Employer

is joined as a party defendant) against expenses, judgments, fines, settlements

and other amounts actually and reasonably incurred in connection with said

action if Employee acted in good faith and in a manner Employee reasonably

believed to be in the best interests of Employer (and with respect to a criminal

proceeding if Employee had no reasonable cause to believe his conduct was

unlawful), provided that the alleged conduct of Employee arose out of and was

within the course and scope of his employment. This indemnification provision is

subject to the provisions of the Indemnification Agreement attached hereto as

Exhibit A to this Agreement and to the extent this provision is inconsistent

with Exhibit A, the provisions of the Indemnification Agreement marked as

Exhibit A controls.

 

         6.       Disclosure of Information. Employee shall not, either before

or after termination of this Agreement, disclose to anyone any information

relating to Employer or any financial information, trade or business secrets,

customer lists, computer software or other information not otherwise publicly

available concerning the business or operations of Employer. Employee recognizes

and acknowledges that any financial information concerning any of Employer's

customers, as it may exist from time to time, is strictly confidential and is a

valuable, special and unique asset of Employer's business. Employee shall not,

either before or after termination of this Agreement, disclose to anyone said

financial information or any part thereof, for any reason or purpose whatsoever,

except as required by way of legal process, notice of which will be provided to

Employer prior to disclosure. This Paragraph 6 shall survive the expiration or

termination of this Agreement.

 

         7.       Proprietary Information of Employer. All proprietary

information of Employer whether written, printed, or on electronic data medium,

notebooks and records used by Employee in performing duties for Employer, other

than Employee's personal notes, personal files and diaries, are and shall remain

the sole property of Employer. Upon termination of employment, Employee shall

promptly return all such material (including all copies) to Employer. This

Paragraph 7 shall survive expiration or termination of this Agreement.

 

         8.       Surety Bond. Employee agrees that he will furnish all

information and take any other steps necessary from time to time to enable

Employer and Bank to obtain or maintain a fidelity bond conditional on the

rendering of a true account by Employee of all monies, goods, or other property

 

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which may come into the custody, charge, or possession of Employee during the

term of his employment. The surety company issuing the bond and the amount of

the bond must be acceptable to Employer. All premiums on the bond shall be paid

by Employer. If Employee cannot qualify for a surety bond at any time during the

term of this Agreement, Employer shall have the option to terminate this

Agreement immediately without any further obligation to Employee other than to

pay accrued salary, benefits or reimbursements.

 

         9.       Base Salary. In consideration for the services to be performed

hereunder, Employee shall receive an initial salary at the rate of Ninety-Four

Thousand Five Hundred Dollars ($94,500.00) calculated on a yearly basis, payable

in equal installments on the first and fifteenth days of each month through each

pay period until June 30, 2004, subject to applicable adjustments for

withholding taxes and prorations for any partial employment pay period. On or

about June 30, 2004, Employer and Employee will enter into a commission based

pay system that will pay Employee based on his and Six Rivers Bank's performance

on terms and conditions as developed by Employer using as the base draw under

said commission program for this Employee the amount of $94,500.00 per annum, as

adjusted upward or downward under the commission program as presently

contemplated. Until June 30, 2004, Employee shall receive his salary as set

forth above and shall continue to receive the salary on a pay period to pay

period basis until such time as the commission program for this Employee is put

in place and said program shall supercede the provisions of this paragraph.

 

         10.      Other Benefits. Employee shall be entitled to those employee

benefits adopted by Employer or NVBancorp for all employees of Employer, subject

to applicable qualification requirements and regulatory approval requirements,

if any. This includes participation in the North Valley Bancorp Employee Stock

Ownership Plan and the North Valley Bancorp 401(k) Profit Sharing Plan. Employee

shall be further entitled to the following additional benefits which shall

supplement or replace, to the extent duplicative of any part or all of the

general employee benefits, the benefits otherwise provided to Employee:

 

                  (a)      Vacation. Employee shall be entitled to four (4)

weeks annual vacation leave at his then existing rate of full salary each year

during the term of this Agreement consistent with the Company's policy now in

effect, and as modified, updated or revised in the future. Employee may be

absent from his employment for vacation as long as such leave is reasonable and

does not jeopardize his responsibilities and duties specified in this Agreement.

Employee shall take at least two (2) consecutive weeks of vacation annually.

 

                  (b)      Group Insurance. Employer shall provide, during the

term of this Agreement, group life, health (including medical, dental and

hospitalization), accident and disability insurance coverage for Employee and

his dependents through the insurer(s) selected by Employer and provided to all

employees generally. The premium costs for such group insurance shall be shared

and borne by Employer and Employee on the basis of the same percentages

applicable to all other participating employees.

 

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                  (c)      Automobile Allowance. Employee shall receive an

automobile allowance of $500.00 per month. Employee agrees to procure and

maintain liability, collision and comprehensive insurance coverage on any

automobiles that Employee drives in connection with his employment.