EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 15th day of April,  2002 (the  "Effective  Date") by and  between  Solano
Bank,  a  California   corporation  (the  "Bank"),  and  John  A.  Nerland  (the
"Employee").

                                   BACKGROUND

         WHEREAS,  the Employee possesses valuable knowledge and skills that the
Bank expects will contribute to the operation of the Bank;

         WHEREAS,  the Bank  desires  to employ  Employee  and the  Employee  is
willing to be employed by the Bank, upon the terms and subject to the conditions
hereinafter set forth; and

         WHEREAS, the Bank is a wholly-owned  subsidiary of North Bay Bancorp, a
California corporation (the "Company").

         NOW, THEREFORE, in consideration of the premises, agreements and mutual
covenants set forth herein, the parties hereto hereby agree as follows:

              1.  Employment

                  1.1 General.  Subject to and  effective  upon  approval of the
California Department of Financial  Institutions and the Federal Reserve Bank of
San Francisco ("Regulatory  Approval"),  the Bank hereby employs the Employee as
President  and Chief  Executive  Officer of the Bank on the terms and subject to
the conditions contained in this Agreement, and the Employee hereby accepts such
employment  on the  terms  and  subject  to the  conditions  contained  in  this
Agreement.  Until  Regulatory  Approval is received by the Bank,  Employee shall
perform  such  duties  and  responsibilities  as may be  assigned  to him by the
President and Chief Executive Officer of the Bank or Company

                  1.2 Duties of Employee. During the Term of this Agreement, the
Employee shall  diligently  perform all duties and  responsibilities  reasonably
accorded to and expected of the  President  and Chief  Executive  Officer of the
Bank and as may be assigned to him by the Board of Directors of the Bank and the
President and Chief  Executive  Officer of the Company,  and shall exercise such
power and  authority as may from time to time be  delegated to him thereby.  The
Employee  shall devote his full  business time and attention to the business and
affairs  of the Bank as  necessary  to perform  his duties and  responsibilities
hereunder,  render  such  services  to the best of his  ability and use his best
efforts to promote the  interests  of the Bank.  The Employee  shall  faithfully
adhere to, execute and fulfill all policies established by the Bank.

                  1.3 Place of  Performance.  Except for required travel for the
Bank's business, the Employee shall perform his duties and responsibilities from
the offices of the Bank, the Company and its subsidiaries.



<PAGE>

              2.  Term.Subject to the provisions of Section 4 of this Agreement,
the  initial  term of  Employee's  employment  hereunder  shall  commence on the
Effective Date and shall continue  thereafter until the third anniversary of the
Effective Date (the "Initial Term"). Unless the Employee shall have notified the
Bank,  or the Bank shall have  notified the  Employee,  not less than sixty (60)
days prior to the expiration of the Initial Term of such party's election not to
continue the Term of this  Agreement,  upon  expiration of the Initial Term, the
Employee's  employment  hereunder shall continue until the fourth anniversary of
the Effective Date and thereafter shall continue on a year-to-year  basis unless
either  party  notifies  the  other,  not less than  sixty  (60)  days  prior to
expiration of the then current  Renewal  Term,  of such party's  election not to
continue the Term of this Agreement (each such  additional  one-year  period,  a
"Renewal Term"; the Initial Term and any Renewal Term are collectively  referred
to hereinafter as the "Term"). The election by the Bank not to continue the Term
of  Employee's  employment  for a Renewal Term shall not be deemed a termination
without Cause pursuant to Section 4.1(b) hereof except as expressly  provided in
Section 4.1(d) hereof.

              3.  Compensation.

                  3.1  Salary.  During  the  Term of the  Employee's  employment
hereunder,  the Employee  shall receive an annual salary of One Hundred  Fifteen
Thousand Dollars  ($115,000.00)  payable at such times and in such manner as the
Bank's normal payroll schedule may from time to time provide.  Employee's annual
salary shall be subject to annual  adjustment  as may be determined by the Board
of  Directors  of  the  Bank,  or  its  appropriate  committee  (the  "Board  of
Directors"), in its sole and absolute discretion.

                  3.2 Incentive Compensation.  The Employee shall be eligible to
receive as additional compensation each year during his employment hereunder, as
determined  by the Board of Directors or an  applicable  committee  thereof,  in
accordance with the terms of an Incentive  Compensation Plan adopted annually by
the Board of Directors.  Such additional  compensation  (if any) to be paid at a
time or times and in a manner  consistent  with the Bank's normal  practices for
the payment of bonuses, or as the Board of Directors or applicable committee may
otherwise determine.

                  3.3 Benefits.  During his employment  hereunder,  the Employee
shall be entitled to participate in all plans adopted for the general benefit of
the Bank's management employees, including medical plans and 401(k) plan, to the
extent  that the  Employee is and remains  eligible to  participate  therein and
subject to the eligibility provisions of such plans in effect from time to time.
In the event Employee's  employment  hereunder is terminated and the Employee is
entitled to  compensation  pursuant to Section  4.4(d),  the  Employee  shall be
entitled to continue to participate in the Bank's medical plan until the earlier
of (a)  expiration  of the  applicable  payment  period  set  forth  in  Section
4.4(d)(i) or (b) the date Employee obtains new employment.


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<PAGE>

                  3.4  Vacation. During each year of his  employment  hereunder,
the Employee  shall be entitled to twenty (20) days of paid  vacation,  prorated
for any period of employment of less than an entire year, provided that vacation
time will continue to accrue only so long as Employee's  total accrued  vacation
does not exceed twenty five (25) days. Should  Employee's  accrued vacation time
reach  twenty five (25) days,  Employee  will cease to accrue  further  vacation
until Employee's  accrued vacation time falls below that level.  Notwithstanding
anything contained in the foregoing,  Employee shall take not less than five (5)
consecutive days of vacation during each year during the Term of this Agreement.
Employee may be absent from his employment for vacation only at such time as the
President and Chief  Executive  Officer of the Bank shall determine from time to
time.

                  3.5  Withholding.   Notwithstanding   any  provision  in  this
Agreement to the contrary,  all payments  required to be made by the Bank to the
Employee  hereunder or otherwise  arising out of, related or incidental to or in
connection  with  the  Employee's  employment  hereunder  shall  be  subject  to
withholding  of such  amounts  relating  to taxes  as the  Bank  may  reasonably
determine it should withhold pursuant to any applicable law or regulation.

                  3.6  Reimbursement  of Expenses.  The Bank agrees to reimburse
the Employee for all reasonable business travel and other out-of-pocket expenses
incurred by the Employee in the  discharge of his duties  hereunder,  subject to
the Bank's reimbursement  policies in effect from time to time. All reimbursable
expenses shall be appropriately  documented in reasonable detail by the Employee
upon  submission  of any request for  reimbursement,  and in a format and manner
consistent  with the Bank's  expense  reporting  policy,  as well as  applicable
federal and state record keeping requirements.

                  3.7  Automobile.  The Bank will pay to Employee an automobile
allowance in the amount of five hundred  dollars ($500) per month.  The Employee
shall be responsible  for insurance and maintenance  costs  associated with such
automobile's operation.  The Employee shall not be entitled to reimbursement for
mileage.  Employee shall procure and maintain an automobile  liability insurance
policy  on the  automobile,  with  coverage  including  Employee  for at least a
minimum  of  $300,000  for  bodily  injury or death to any one person in any one
accident,  and $100,000 for property  damage in any one  accident.  The Employer
shall be named as an  additional  insured and Employee  shall  provide  Employer
copies  of  policies  evidencing   insurance  and  Employer's  inclusion  as  an
additional insured.

              4.  Termination

                  4.1 Termination by Bank.

                           (a) With Cause. Notwithstanding any provision in this
Agreement to the contrary, the Employee's employment hereunder may be terminated
by the Bank at any time for  "Cause,"  and such  termination  shall be effective
immediately upon written


                                       3
<PAGE>

notice  to the  Employee.  For  purposes  of  this  Agreement,  "Cause"  for the
termination of the Employee's  employment hereunder shall be deemed to exist if,
in the reasonable  judgment of the Board of Directors:  (i) the Employee commits
fraud,  theft or  embezzlement  against the Bank, or any subsidiary or affiliate
thereof;  (ii)  the  Employee  commits  a  felony  or a  crime  involving  moral
turpitude;  (iii) the Employee  compromises  trade secrets or other  proprietary
information  of the Bank,  or any  subsidiary  or  affiliate  thereof;  (iv) the
Employee  breaches  any  non-solicitation   agreement  with  the  Bank,  or  any
subsidiary or affiliate  thereof;  (v) the Employee breaches any of the terms of
this  Agreement  (other than those  referenced in clauses (iii) and (iv) of this
Section  4.1(a))  and fails to cure such  breach  within ten (10) days after the
receipt  of  written  notice of such  breach  from the Bank;  (vi) the  Employee
engages in any grossly negligent act or willful misconduct that causes, or could
be reasonably expected to cause, harm to the business,  operations or reputation
of the Bank, or any subsidiary or affiliate  thereof;  or (vii) the Bank, or any
subsidiary or affiliate  thereof,  is ordered to terminate this Agreement by any
governmental  regulatory agency with supervisory authority over the Bank, or any
subsidiary or affiliate thereof.

                           (b) Without  Cause.  The Bank may at any time, in its
sole and absolute discretion, terminate the employment of the Employee hereunder
without Cause, or otherwise without any cause, reason or justification, provided
that the Bank provides to the Employee written notice (the "Termination Notice")
of such  termination.  In the event of any such  termination  by the  Bank,  the
Employee's  employment  with the Bank  shall  cease  and  terminate  on the date
specified in the Termination Notice.

                           (c) For  Disability of the Employee.  If, as a result
of  incapacity  due to physical  or mental  illness or injury,  the  Employee is
determined to be disabled under any disability policy maintained by the Bank or,
in the event no such policy is maintained by the Bank,  the Employee  shall have
been unable to perform the essential functions of his position,  with or without
reasonable  accommodation,  on a  full-time  basis  for a period  of sixty  (60)
consecutive days, or for a total of ninety (90) days in any twelve-month  period
(a  "Disability"),  then thirty (30) days after  written  notice to the Employee
(which  notice  may be  given  before  or  after  the end of the  aforementioned
periods,  but which  shall  not be  effective  earlier  than the last day of the
applicable period),  the Bank may terminate the Employee's  employment hereunder
if the Employee is unable to resume his  full-time  duties at the  conclusion of
such notice period.

                  4.2 Death of the Employee.  This Agreement  shall  immediately
cease and terminate upon the death of Employee.

                  4.3  Termination  by Employee.  The Employee may terminate his
employment  under  this  Agreement  upon not less than  thirty  (30) days  prior
written notice to the Bank.  Upon learning that the Employee is terminating  his
employment  under  this  Agreement,  the Bank may,  in its sole  discretion  but
subject to its other obligations  under this Agreement,  relieve Employee of his
duties under this Employment  Agreement,  and assign  Employee other  reasonable
duties  and  responsibilities  to be  performed  until the  termination  becomes
effective.


                                       4
<PAGE>

                  4.4 Compensation Upon Early Termination.

                           (a) As a Result of Death,  Cause or  Resignation.  If
the  Employee's  employment  under this  Agreement  is  terminated  prior to the
scheduled expiration of the Term by reason of his death, termination by the Bank
for Cause or resignation  by the Employee,  the Employee shall be entitled to be
paid solely (i) the Employee's  salary then in effect through the effective date
of termination, (ii) any accrued vacation due pursuant to Section 3.4, (iii) any
amounts due  pursuant to Section 3.6,  (iv) those  benefits,  if any,  that have
vested by  operation of state or federal law or under any written term of a plan
("Vested Benefits"),  and (v) health care coverage continuation rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA Rights"), and the
Bank shall have no further  liability or other obligation of any kind whatsoever
to the  Employee.  In the  case of  termination  as a  result  of the  death  of
Employee,  any amounts due pursuant to this Section  4.4(a) shall be paid to the
Employee's  estate,  heirs (at law),  devisees,  legatees  or other  proper  and
legally  entitled  descendants,   or  the  personal  representative,   executor,
administrator   or  other  proper  legal   representative   on  behalf  of  such
descendants.

                           (b) By the Bank  other  than  for  Cause.  Except  as
otherwise  expressly  provided in Section  4.4(d),  if,  prior to the  scheduled
expiration of the Term, the Bank  terminates the Employee's  employment  without
Cause,  the  Employee  shall be  entitled  to receive and be paid solely (i) the
Employee's  salary  then in  effect  until  the  expiration  of six  (6)  months
following the effective date of the termination of Employee's employment payable
over such period at the Bank's  regular and customary  intervals for the payment
of salaries as in effect from time to time ("Severance  Pay"),  (ii) any accrued
vacation due pursuant to Section 3.4,  (iii) any amounts due pursuant to Section
3.6, (iv) any Vested Benefits, and (v) any COBRA Rights, and the Bank shall have
no further liability or other obligation of any kind whatsoever to the Employee.
The payment of Severance Pay shall constitute  liquidated damages in lieu of any
and all claims by the Employee  against the Bank,  shall be in full and complete
satisfaction of any and all rights which the Employee may enjoy  hereunder,  and
shall constitute  consideration for a full and unconditional  release of any and
all liability of the Bank or any of its shareholders,  benefit plans,  affiliate
companies,  subsidiaries,  and the directors,  officers, employees, trustees and
agents of such  entities and their  successors  or assigns,  arising out of this
Agreement  or out of the  employment  relationship  between the Employee and the
Bank (in the  form of  Exhibit  A,  hereafter  the  "Release").  Payment  of the
Severance Pay is expressly  conditioned  upon receipt by the Bank of the Release
executed by the Employee.

                           (c)  Disability.   For  the  sixty  (60)  day  period
following  onset of the  Employee's  Disability,  Employee  shall be entitled to
receive and be paid solely (i) the  Employee's  salary then in effect  until the
expiration of said sixty (60) day period payable over such period of time at the
Bank's regular and customary  intervals for the payment of salaries as in effect
from time to time, (ii) any accrued  vacation due pursuant to Section 3.4, (iii)
any amounts due pursuant to Section 3.6, (iv) any Vested  Benefits,  and (v) any


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<PAGE>

COBRA rights.  Following  expiration of the sixty (60) day period,  the Employee
shall be entitled to receive and be paid solely a salary at a rate  commensurate
with the benefit  Employee is eligible to receive  under any  disability  policy
maintained  by the Bank for a period of one hundred  twenty  (120) days or until
Employee's  benefits under any disability  policy maintained by the Bank for the
Employee  commences,  whichever  period is shorter,  payable over such period of
time at the Bank's  regular and customary  intervals for the payment of salaries
as in effect from time to time, and the Bank shall have no further  liability or
other obligation of any kind whatsoever to the Employee.

                  4.5  Expiration  of  the  Term.  If  not  sooner   terminated,
Employee's employment hereunder shall terminate on the expiration of the Initial
Term or the Renewal Term, as applicable in accordance with Section 2 hereof. Not
less than 45 days prior to the scheduled  expiration  of  Employee's  employment
hereunder,  the  parties  agree to  commence  discussions  with  respect  to the
possible  extension of the Term of this Agreement,  possible  execution of a new
employment agreement or other possible continuation of the Employee's employment
(it being  understood and agreed that no such discussion shall imply any current
or future obligation or commitment to enter into any such agreement or extension
or any other expressed or implied  arrangement  for the continued  employment of
the  Employee  following  the  expiration  of the  Initial  Term  or  any  other
termination of the Employee's employment hereunder).

              5. Agreement Not to Solicit  Customers.  The Employee agrees that,
during  the  Term of his  employment  with the  Bank or any  entity  owned by or
affiliated with the Bank (whether pursuant to this Agreement or otherwise),  and
for two (2) years  following  the  termination  thereof  whether  or not for any
reason whatsoever, he will not, either directly or indirectly, call on, solicit,
or take away as a client, customer or prospective client or customer, or attempt
to call on, solicit, or take away as a client, customer or prospective client or
customer, any person or entity that was a client, customer or prospective client
or customer of the Bank, or any subsidiary or affiliate thereof. For purposes of
this  agreement  "prospective  client or customer"  shall  include any person or
entity with whom the Bank has had contact for the purpose of soliciting business
within the six (6) months prior to the  termination  of  employment  or whom the
Bank intended to contact for the purpose of soliciting  business  within six (6)
months after termination of employment, of which contact or intended contact the
Employee had knowledge while employed by the Bank.

              6. Agreement Not to Solicit or Hire Employees. The Employee agrees
that during the Term of his  employment  with the Bank or any entity owned by or
affiliated with the Bank (whether pursuant to this Agreement or otherwise),  and
for two (2) years  following  the  termination  thereof  whether  or not for any
reason whatsoever, he will not, either directly or indirectly, on his own behalf
or in the service or on behalf of others,  solicit,  divert or hire,  attempt to
solicit, divert or hire or induce or attempt to induce to discontinue employment
with the Bank, or any subsidiary or affiliate  thereof,  any person  employed by
the Bank, or any subsidiary or affiliate  thereof,  whether or not such employee
is a full time employee or a temporary employee of the Bank, or any subsidiary


                                       6
<PAGE>

or  affiliate  thereof and whether or not such  employment  is for a  determined
period or is at will.

              7.  Ownership  and  Non-Disclosure  and  Non-Use  of  Confidential
                  Information.

                  7.1  Confidential  Information.  As used  in  this  Agreement,
"Confidential  Information"  shall mean all customer  deposit,  loan,  sales and
marketing  information,  customer account records,  proprietary  receipts and/or
processing techniques,  information regarding vendors and products, training and
operations  memoranda  and  similar  information,   personnel  records,  pricing
information,  financial  information and trade secrets concerning or relating to
the  business,  accounts,  customers,  employees and affairs of the Bank, or any
subsidiary  or  affiliate  thereof,  obtained  by  or  furnished,  disclosed  or
disseminated to the Employee, or obtained, assembled or compiled by the Employee
or under his  supervision  during the course of his  employment by the Bank, and
all physical embodiments of the foregoing,  all of which are hereby agreed to be
the property of and confidential to the Bank, but Confidential Information shall
not include any of the  foregoing  to the extent that the Employee can show that
the same is or becomes  publicly  known  through no action,  omission,  fault or
breach of this Agreement by the Employee.

                  7.2. Ownership.  The Employee acknowledges and agrees that all
Confidential Information, and all physical embodiments thereof, are confidential
to and shall be and  remain the sole and  exclusive  property  of the Bank.  The
Employee agrees that upon request by the Bank, and in any event upon termination
of the  Employee's  employment  with  the  Bank  whether  or not for any  reason
whatsoever, the Employee shall deliver to the Bank all property belonging to the
Bank, or any of its subsidiaries or affiliates,  including,  without limitation,
all Confidential Information (and all embodiments thereof), then in his custody,
control or possession.

                  7.3  Non-Disclosure  and Non-Use.  The Employee agrees that he
will not,  either  during the Term of his  employment  hereunder  or at any time
thereafter,  use, disclose or make available any Confidential Information to any
person or entity,  nor shall he use,  disclose,  make  available  or cause to be
used, disclosed or made available,  or permit or allow, either on his own behalf
or on behalf of others,  any use or disclosure of such Confidential  Information
other than in the proper performance of the Employee's duties hereunder.

                  7.4  Notification.  The Employee hereby authorizes the Company
to notify my actual or future  employers of the terms of this  Agreement  and my
responsibilities hereunder.

              8. Reasonableness of Restrictions. In the event that any provision
relating to time period set forth in Section 5, 6, or 7 shall be held by a court
of competent jurisdiction to exceed the maximum time period that the court deems
reasonable  and  enforceable,  the  time  period  which  the  court  finds to be
reasonable and enforceable shall


                                       7
<PAGE>

be deemed to become,  and  thereafter  shall be, the maximum time period of such
restriction as to such jurisdiction.

              9.  Enforceability.  Any provision of this Agreement which is held
by a court of  competent  jurisdiction  to be  invalid or  unenforceable  in any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions hereof, but shall be enforced to the maximum extent permitted by law,
and any such holding of invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

              10.  Injunction.  The Employee  represents that his experience and
capabilities  are such  that the  provisions  of  Sections  5, 6, and 7 will not
prevent him from earning his livelihood,  and acknowledges  that a breach by the
Employee of any of the covenants  contained  therein will cause irreparable harm
and damage to the Bank, the monetary amount of which may be virtually impossible
to ascertain.  As a result, the Employee recognizes and hereby acknowledges that
the  Bank  shall be  entitled  to an  injunction  from  any  court of  competent
jurisdiction  enjoining  and  restraining  any  violation  of  any or all of the
covenants  contained in Section 5, 6, and/or 7 of this Agreement by the Employee
or any of his  affiliates,  associates,  partners or agents,  either directly or
indirectly, without any requirement to post bond or other security and that such
right to  injunction  shall be  cumulative  and in addition  to  whatever  other
remedies the Bank may possess.

              11.  Arbitration.  Subject to the  provisions of Section 10 hereof
regarding  the  remedy of  injunctive  relief,  any  dispute  (whether  based on
contract,  tort,  or  statutory  duty  or  prohibition)  arising  out  of  or in
connection  with this Agreement  shall be submitted to binding  arbitration,  in
accordance  with the Commercial  Arbitration  Rules of the American  Arbitration
Association  (as modified by this  Agreement) by one  arbitrator,  designated in
accordance  with those rules.  No one who has ever had any business,  financial,
family,  or social  relationship with any party to this Agreement shall serve as
an  arbitrator  unless  the  related  party  informs  the  other  party  of  the
relationship  and  the  other  party  consents  in  writing  to the  use of that
arbitrator.

         The party  demanding  arbitration  shall submit a written  claim to the
other party, setting out the basis of the claim. A prearbitration  hearing shall
be held within twenty (20) business days after the arbitrator's  selection.  The
arbitration   shall  be  held  within   ninety  (90)  calendar  days  after  the
prearbitration   hearing.  The  arbitrator  shall  establish  any  deadlines  to
accomplish this goal. The arbitration shall take place in Napa, California, at a
time and place selected by the arbitrator.

         Each party shall be entitled to discovery of  essential  documents  and
witnesses,  as determined by the  arbitrator.  No less than thirty (30) calendar
days before the  arbitration,  a party may serve a document  request calling for
any document that would be discoverable in a state civil proceeding.  The served
with this request  shall  deliver the  requested  documents  and any  objections
within ten (10) calendar  days.  The arbitrator may resolve any dispute over the
exchange of documents.  Each party may take no more


                                       8
<PAGE>

than three (3)  depositions,  unless  additional  depositions are allowed by the
arbitrator for good cause.  All depositions must be completed as of fifteen (15)
calendar days before the arbitration hearing unless the parties otherwise agree.
The  arbitrator  may resolve any dispute over the  depositions  as they would be
resolved in a state civil proceeding.  Any motion may be heard by the arbitrator
on three (3) days notice  unless the parties  otherwise  agree.  The  arbitrator
shall apply California law.

         The parties agree that all  information  supplied by any party shall be
deemed to be confidential information, and the arbitrator and other participants
in the dispute shall protect such information from disclosure to the same extent
as confidential information under Section 7 of this Agreement.

         The arbitrator shall have the following powers:

                  (a)   To issue  subpenas for the  attendance  of witnesses and
                        subpenas  duces  tecum  for  the  production  of  books,
                        records, documents, and other evidence;

                  (b)   To order depositions to be used as evidence;

                  (c)   Consistent  with  the  discovery  procedures  enumerated
                        above,  to enforce  the  rights,  remedies,  procedures,
                        duties, liabilities,  and obligations of discovery as if
                        the arbitration  were a civil action before a California
                        superior court;

                  (d)   To  conduct  a hearing  on the  arbitration  issues  and
                        related legal and discovery issues;

                  (e)   To administer oaths to parties and witnesses;

                  (f)   To  award  all  damages  and  remedies  which  would  be
                        available in a civil action before a California superior
                        court.

                  (g)   To  award  expenses  and  fees  of  arbitration  as  the
                        arbitrator deems proper; and

                  (h)   To order  such  other  relief  as the  arbitrator  deems
                        proper.

         Within fifteen (15) calendar days after  completion of the arbitration,
the  arbitrator  shall  submit a tentative  decision in writing  specifying  the
reasoning for the decision and any calculations  necessary to explain the award.
Each party shall have  fifteen  (15)  calendar  days in which to submit  written
comments to the  tentative  decision.  Within ten (10)  calendar  days after the
deadline for written  comments,  the arbitrator  shall announce the final award.
Any party may enter the  final  award as a  judgment  in any court of  competent
jurisdiction.


                                       9
<PAGE>

         The Bank shall pay the arbitrator's expenses and fees, all meeting room
charges,  and any other  expenses  that would not have been incurred if the case
were  litigated  in the  judicial  forum  having  jurisdiction  over it.  Unless
otherwise ordered by the arbitrator, each party shall pay its own attorney fees,
witness  fees  and  other  expenses  incurred  by the  party  for his or its own
benefit.  The arbitrator may award the prevailing  party his or its expenses and
fees of arbitration,  including  reasonable  attorney fees and costs,  including
witness fees, in such proportion as the arbitrator decides.

              12. No Prior Agreements. The Employee represents and warrants that
he is not a party  to or  otherwise  subject  to or  bound  by the  terms of any
contract,  agreement  or  understanding  which  in any  manner  would  limit  or
otherwise  affect his ability to perform his  obligations  hereunder,  including
without limitation any contract, agreement or understanding containing terms and
provisions in any manner  similar to those  contained in Sections 5, 6, and/or 7
hereof.  The Employee  further  represents and warrants that his employment with
the Bank will not require him to  disclose or use any  confidential  information
belonging to prior employers or other persons or entities.

              13.  Assignment.  The Employee  shall not delegate his  employment
obligations  pursuant to this Agreement to any other person. The Bank may assign
its rights and obligations  hereunder to any subsidiary,  affiliate or successor
of the Bank or the Company,  provided that any such  assignee  fully assumes the
Bank's obligations  hereunder.  The rights and protections of the Bank hereunder
shall extend to any  successors or assigns of the Bank and to the Bank's present
or future parents, subsidiaries, divisions and affiliates.

              14.  Employer's  Authority.  The relationship  between the parties
hereto is that of employer  and  employee.  The  Employee  agrees to observe and
comply with the rules and  regulations  of the Bank, as adopted by the Bank from
time to time with respect to the performance of the duties of the Employee.  The
Employee  acknowledges  that he has no authority to enter into any  contracts or
other  obligations  that are  binding  upon the Bank unless  such  contracts  or
obligations  are  authorized by the Board of Directors.  The Bank shall have the
power to  direct,  control  and  supervise  the  duties to be  performed  by the
Employee,  the manner of performing said duties, and the time of performing said
duties.

              15.  Governing Law. This Agreement,  the rights and obligations of
the  parties  hereto,  and any claims or  disputes  relating  thereto,  shall be
governed  by  and  construed  in  accordance  with  the  laws  of the  State  of
California,  without  giving effect to any of the  conflicts of laws  provisions
thereof that would compel the application of the  substantive  laws of any other
jurisdiction.  The Bank and the Employee each hereby  irrevocably  submit to the
jurisdiction  of the state or federal  courts located in the State of California
in  connection  with any suit,  action  or other  proceeding  arising  out of or
relating to this Agreement and hereby agree not to assert,  by way of motion, as
a defense,  or otherwise in any such suit,  action or proceeding  that the suit,
action or proceeding is brought in an inconvenient  forum, that the venue of the
suit,  action or  proceeding  is improper or that this  Agreement or the subject
matter hereof may not be enforced by such courts.


                                       10
<PAGE>

              16.  Entire  Agreement.  This  Agreement  constitutes  the  entire
agreement  between the parties  hereto with respect to the subject matter hereof
and supersedes all prior agreements,  understandings and arrangements, both oral
and written, between the parties hereto with respect to such subject matter.

              17.   Notices.   All   notices,   requests,   demands   and  other
communications  under this  Agreement  will be in writing  and will be deemed to
have been duly given (a) on the date of the service if served  personally on the
party  to  whom  notice  is to be  given,  (b) on the  date of  transmission  if
transmitted  by  facsimile  with  confirmation  of  receipt,  (c) on the date of
receipt  if  mailed to the  party to whom  notice is to be given by first  class
mail,  registered or certified,  postage prepaid or by overnight courier service
(i.e.,  Federal Express or equivalent) and unless either party should notify the
other of a change of address properly addressed as follows,  or (d) otherwise on
the date of receipt when the intended recipient has acknowledged receipt:

                           (i)      If to the Employee:

                           John A. Nerland

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

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

                           (ii)     If to the Bank:

                           North Bay Bancorp
                           1500 Soscol Avenue
                           Napa, California  94558
                           Attention:  Terry L. Robinson
                           President and Chief Executive Officer
                           Facsimile:  (707) 257-8025

              18.  Binding  Effect.  The  obligations of the Employee under this
Agreement  shall  continue  after  the  expiration  of  this  Agreement  and the
termination  of his  employment  with the Bank for any reason,  shall be binding
upon his heirs, executors,  personal representatives,  legal representatives and
assigns and shall inure to the benefit of any successor and assigns of the Bank.

              19. Severability.  The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the  enforceability of the remaining portions of this Agreement
or any part  thereof,  all of which are  inserted  conditionally  on their being
valid in law,  and,  in the event  that any one or more of the  words,  phrases,
sentences,  clauses,  sections or subsections contained in this Agreement or any
part thereof shall be declared invalid,  this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences,  clause or
clauses, section or sections or subsection or subsections had not been inserted.
If such  invalidity  is caused by length of time or size of area,  or both,  the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.


                                       11
<PAGE>

              20.  Section  Headings.  The section  headings  contained  in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

              21. No Third Party  Beneficiary.  Nothing  expressed or implied in
this  Agreement is intended,  or shall be construed,  to confer upon or give any
person  other than the  parties  hereto  and their  respective  heirs,  personal
representative,  legal  representative,  successors  and assigns,  any rights or
remedies under or by reason of this Agreement.

              22. Amendment; Modification; Waiver. No amendment, modification or
waiver of the terms of this Agreement  shall be valid unless made in writing and
duly executed by the Bank and the  Employee.  No delay or failure at any time on
the part of the Bank in  exercising  any right,  power or  privilege  under this
Agreement,  or in enforcing  any provision of this  Agreement,  shall impair any
such right, power or privilege, or be construed as a waiver of any default or as
any  acquiescence  therein,  or shall affect the right of the Bank thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
The  waiver by either  party  hereto  of a breach  or  violation  of any term or
provision of this Agreement  shall neither  operate nor be construed as a waiver
of any subsequent breach or violation.

              23.   Counterparts.   This   Agreement  may  be  executed  in  two
counterparts,  each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement.

THE  EMPLOYEE  ACKNOWLEDGES  THAT HE HAS  READ  AND  UNDERSTANDS  THE  FOREGOING
PROVISIONS AND THAT SUCH PROVISIONS ARE REASONABLE.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the day and year first above written.

                                                 EMPLOYEE

                                                 -------------------------------
                                                 John A. Nerland

                                                 SOLANO BANK

                                                 By:  __________________________
                                                          Thomas N. Gavin
                                                          Chairman of the Board


                                       12
<PAGE>

                                    EXHIBIT A

                                 GENERAL RELEASE


<PAGE>

                                 GENERAL RELEASE

1.       I have been offered by SOLANO BANK the sum of six (6) months  severance
         (less all  customary  federal,  state and local taxes) (the  "Severance
         Payment")  for and in  consideration  of the  execution of this General
         Release (the "Release").

2.       I acknowledge that I am not otherwise entitled to receive the Severance
         Payment referenced in paragraph 1 above.

3.       I understand  that my execution of this Release is voluntary,  and that
         if I do not accept this  Severance  Payment,  I will not lose any other
         rights that I may have under other policies or programs of the Bank.

4.       I accept the Severance Payment.

5.       In consideration for the Severance Payment,  I unconditionally  release
         Solano  Bank  and any of its  shareholders,  benefit  plans,  affiliate
         companies,   subsidiaries,  and  the  directors,  officers,  employees,
         trustees and agents of such  entities and their  successors  or assigns
         (collectively hereinafter,  the "Bank") from any and all claims arising
         out of the  employment  relationship  between  the  Bank  and me or the
         termination  of my employment  with the Bank. I agree that this Release
         is meant to be as  general  as  possible  and  covers all claims of any
         nature  whether or not I know the claims exist at this time,  including
         but not limited to contract claims,  tort claims,  and claims under any
         state,  federal,  or local law.  Without limiting the general nature of
         this Release,  I specifically  release the Bank from any and all claims
         under federal or state civil rights and discrimination  laws, including
         but not limited to Title VII of the Civil  Rights Act of 1964,  the Age
         Discrimination  in Employment  Act, the Americans with  Disabilities in
         Employment Act, and the Equal Pay Act.

6.       However,  nothing in this Release  prohibits me from filing a charge of
         discrimination  or cooperating in any proceeding  before the California
         Department  of Fair  Employment  and  Housing  ("CDFEH")  or the  Equal
         Employment   Opportunity   Commission   ("EEOC").   This  Release  only
         constitutes  a waiver by me of my right to file a suit against the Bank
         on the claims set forth in  paragraph 5 and a waiver by me of any right
         to receive  compensation  based on claims, if any, brought by the CDFEH
         or the EEOC.

7.       In further consideration for the Severance Payment, I agree and warrant
         that  all  Bank  files,  papers  and  property  that  have  been  in my
         possession,  custody or control during my employment have been returned
         to the Bank and will not be  copied or  removed  from the  premises.  I
         further agree that I will not disclose the terms of this Release except
         to my attorney and/or tax consultant, or as required by law. I may also
         disclose  the terms to my spouse  so long as my  spouse  agrees  not to
         disclose the terms of this Release.  I also agree that I am still bound
         by certain  provisions  of the  Employment  Agreement  that I signed on
         April 15, 2002 according to the terms thereof.


<PAGE>

8.       I understand I have a seven  consecutive  calendar day period to revoke
         my assent to this Release  beginning  with today's date. If I choose to
         rescind this Release,  I will notify the President and Chief  Executive
         Officer of the Company,  both verbally and confirmed in writing  within
         seven days.  With the exception of the  provisions of paragraph 7, this
         Release  will not be  effective  or  enforceable  until  the  foregoing
         revocation period has expired.

9.       The amounts  provided  under this Release are not offered in connection
         with any  specific  exit  incentives  or other  employment  termination
         program.

10.      I agree not to disparage the Bank, its officers, employees or agents of
         the Bank either within the Bank or externally in any way.

11.      I warrant that I have not assigned any right or claim  released in this
         Release.

12.      This Release is binding on my heirs and assigns.

13.      In executing this Release, I am not relying on any representations made
         to me by the Bank.

14.      I  expressly  assume  any risk that the facts and law  concerning  this
         Release may be other than as presently known to me.

15.      This Release  constitutes the sole and entire agreement I have with the
         Bank and supersedes  any and all  understandings  and  agreements  made
         prior to the date of this Release.

16.      This Release shall be governed in all respects by the laws of the State
         of California. No action involving this Release or my employment by the
         Bank may be brought  except in state or federal  courts  located in the
         State of California.

I HAVE READ AND UNDERSTAND THIS RELEASE AND AGREE TO ALL ITS TERMS.



                                               ---------------------------------
                                               Signature

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