Exhibit 10.20

                              EMPLOYMENT AGREEMENT


     This Employment Agreement ("Agreement") is entered into and is effective as
of December 1, 2003 (the  "Commencement  Date") by and between  NATIONAL BANK OF
THE  REDWOODS,  a National  Banking  Association  (the  "Bank"),  and STEPHEN A.
FLEMING (the "Executive").

                                    RECITALS

     A. The Bank has agreed to hire the  Executive to be its President and Chief
Executive  Officer and the  Executive has agreed to accept  employment  with the
Bank in such capacity on and subject to the terms of this Agreement.

     B. It is the intent of both parties  that this  Agreement  constitutes  the
entire agreement between the parties and supersedes all prior understandings and
agreements,  previous  negotiations,  and any  memoranda of  understanding  with
respect to the subject  matter  hereof,  including the Bank's offer letter dated
October 29, 2003.

     NOW,  THEREFORE,  in consideration  of the mutual  promises,  covenants and
conditions contained herein, the parties agree as follows:

                                    AGREEMENT

     1.  Employment.  The Bank hereby employs the Executive as its President and
Chief Executive  Officer,  and the Executive hereby agrees to accept  employment
with the Bank in such capacity, on the terms and conditions set forth below.

     2. Services and Duties of Executive.

          (a) The Executive shall well and faithfully perform and discharge the
duties of President and Chief Executive Officer under the direction of the Board
of  Directors of Bank (the "NBR  Board")  including  such other duties as may be
assigned to him in that capacity from time to time by the NBR Board.

          (b) In his capacity as President  and Chief  Executive  Officer of the
Bank, the Executive  acknowledges  that his customary  duties  include,  without
limitation,  (i)  participating in community affairs which are beneficial to the
Bank, (ii) maintaining good  relationships  with regulatory  authorities,  (iii)
providing leadership in planning and implementing the long term interests of the
Bank, and (iv) supervision and control over, and responsibility for, the general
management and operation of the Bank.

          (c) During his employment  hereunder,  the Executive  shall devote his
entire  business  time,  attention and energies to the business of the Bank. For
the avoidance of doubt, the



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Executive shall have no management responsibility for Redwood Merchant Services,
a division of the Bank.

          (d) The  Executive's  services  shall be performed  primarily in Santa
Rosa,  California.  The parties acknowledge,  however, that the Executive may be
required to travel in connection with the performance of his duties hereunder.

          (e) The Executive  shall conduct  himself at all times with due regard
to public  conventions and morals and shall abide by and reflect in his personal
actions  all of the  Bank's  Code of  Ethics  (receipt  of a copy of  which  the
Executive  hereby  acknowledges)  as adopted by the Bank from time to time.  The
Executive  further agrees not to do or commit any act that will  reasonably tend
to degrade him or to bring him into public hatred, contempt or ridicule, or that
will  reasonably  tend to shock or offend any community in which the Bank or any
of its affiliates  engages in business,  or to reflect poorly on the Bank or the
banking industry in general.

     3. Other Interests.  Notwithstanding the foregoing, however, and subject to
the Bank's Code of Ethics,  the  Executive may pursue other  appropriate  civic,
charitable or religious  activities so long as such  activities do not interfere
with the Executive's performance of his duties hereunder.  In addition,  subject
to the  Bank's  Code  of  Ethics,  the  Executive  shall  be  permitted  to make
investments  in other business  ventures  provided such  investments  are not in
businesses  that compete with the Bank and which are fully  disclosed to the NBR
Board  (other  than  investments  representing  less  than  5 per  cent  of  the
securities  of  companies  that are  regularly  traded on a national  securities
exchange  (as that  term is used in the  Securities  Exchange  Act of  1934,  as
amended (the "Exchange Act")). The Executive shall also be permitted to serve on
the  board of  directors  (but not as an  officer)  of any  non-profit  entities
subject to full disclosure to the NBR Board.  The Executive may not serve on the
board of  directors  (or as an officer)  of any  for-profit  entity  without the
express prior approval of the NBR Board.

     4. Board Appointments. For so long as the Executive is employed by the Bank
under this Agreement,  and subject to compliance with applicable federal banking
laws, the Executive shall serve on the NBR Board.  In addition,  and for so long
and subject as aforesaid, and subject to being duly elected (and re-elected,  if
applicable) and not removed in accordance  with  applicable  laws, the Executive
shall also serve on the board of directors of Redwood  Empire  Bancorp  ("REB"),
the  holding  company  of the  Bank.  Whilst  a  member  of each  such  board of
directors,  and subject to being duly elected (and  re-elected if  appropriate),
the Executive shall serve as a member of all committees of each such board other
than the Audit  Committee,  the  Compensation  Committee  and the  Stock  Option
Committee.  The  Executive  shall  fulfill  all such  duties as a member of such
boards  and  committees  thereof  without  any  additional  compensation.   Upon
termination  of this  Agreement for whatever  reason,  the  Executive  agrees to
immediately  resign from each such board and from all  corporate  offices of the
Bank or any of its affiliates held by him at that time.

     5. Compensation and Benefits. The Executive's compensation for all services
rendered to or for Company in any  capacity  during the term of this  Agreement,
subject to deductions for withholding and applicable  employment taxes, shall be
as follows:

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     (a) Base Salary.  The Executive  will receive a base salary of  $225,000.00
per year,  payable in accordance with Company's  regular payroll  schedule.  The
Executive's  performance and salary will be reviewed  annually.  Any increase in
base salary will be effective  as of the January 1  immediately  following  such
review,  provided that the first such increase  shall be effective as of January
1, 2005.

     (b) Performance  Bonus. With respect to the fiscal year commencing  January
1, 2004,  the Executive  acknowledges  that the incentive  program that would be
applicable to the Executive has yet to be finalized and adopted.  However, it is
agreed that the maximum cash bonus to which the Executive will be entitled under
such program,  once adopted,  will be not less than  $125,000.00 with the actual
amount  earned to be paid not later than  January  31,  2005.  Cash  bonuses for
fiscal  years  following  December  31,  2004  will  be  based  on the  programs
subsequently  adopted by the Bank and will be payable not later than the January
31 following the end of each such fiscal year. Without prejudice to the terms of
any  severance pay to which the  Executive  may be entitled  hereunder,  (i) the
Executive must have been continuously  employed for the whole of the fiscal year
to which any such  bonuses  relate,  and (ii) the bonus for any fiscal year will
not  be  prorated  if the  Executive's  employment  terminates  for  any  reason
whatsoever at any time prior to the end of such fiscal year.

     (c) Automobile  Allowance.  The Executive will receive a monthly automobile
allowance  of $900 payable at the same time as the  Executive  receives his base
salary.  Such  allowance  shall  be paid in  addition  to  reimbursement  of any
business mileage in accordance with the Bank's prices and procedures.

     (d) Benefits. The Executive shall be entitled to participate to the maximum
possible  extent in all employee  benefit  plans or programs of the Bank, to the
extent that his position,  tenure, salary, age, health, and other qualifications
make him  eligible  so to  participate,  subject  to the rules  and  regulations
applicable   thereto.   The  Executive   acknowledges   receipt  of  information
customarily  made available to the employees of the Bank as to such benefits and
programs.

     (e)  Vacation.  The Executive  shall be entitled to vacation  leave at full
salary,  at the  discretion  of the  Executive as time allows,  so long as it is
reasonable and does not jeopardize his responsibilities, of twenty (20) days per
year;  provided  that at least once each year the  Executive  shall take part of
such  vacation  leave  comprising  a  period  of at least  ten (10)  consecutive
business days. The length of vacation at any one time should not exceed ten (10)
consecutive  business  days  without  the  approval  of the NBR Board.  Vacation
accrual and other policies and  procedures  applicable to vacations as set forth
in the Bank's Employee Handbook shall apply to the Executive.

     (f) Relocation  and Temporary  Housing  Expenses.  The Bank will pay to the
Executive by way of additional compensation, an amount equal to the aggregate of
all reasonable  costs and expenses  (including,  but not limited to, real estate
commissions, moving expenses and temporary storage) incurred by the Executive in
relocating to Santa Rosa, California from his

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<PAGE>

current residence in Orinda, California plus an amount equal to 45 per cent of
the aggregate of those such costs and expenses the reimbursement of which
constitutes taxable income to the Executive. Such payments shall be made on a
monthly basis subject to production of appropriate vouchers and receipts in
accordance with the Bank's policies and procedures. In addition, the Bank will
pay to the Executive a temporary housing allowance of [$1,800] per month for the
first seven (7) months of his employment, such payments to be included as part
of his regular payroll check.

     (g) Stock Options.  Subject as hereinafter provided, the Executive shall be
eligible to receive  grants of incentive  stock  options  (within the meaning of
Section 422 of the Internal  Revenue Code of 1986,  as amended)  with respect to
shares of common  stock of REB  under the terms of the 2001 REB  Employee  Stock
Option Plan (the "Stock Option Plan") as follows:

          (i) As of the  Commencement  Date,  the  Executive  shall  be  granted
options with respect to 50,000 such shares;

          (ii) If the Executive is still  employed by the Bank as of December 1,
2004,  and provided  that neither the Bank nor the Executive has given notice to
terminate  this  Agreement  prior to that date,  the Executive  shall be granted
options with respect to an additional 50,000 such shares; and

          (iii) Subject to  development  and adoption by the NBR Board of a five
year  business plan for the Bank,  the  Executive  will be eligible to receive a
grant of options of an additional  100,000 such shares, the terms and conditions
of which grant will be reflected in such business plan.

          With respect to each such grant:

               (1) not less  than 25 per cent of the  options  included  in each
grant will vest on each anniversary of the date of grant to the intent that each
grant will be fully vested as of the fourth anniversary of each such grant;

               (2) all such options will be issued with an exercise  price equal
to the market value of the underlying  shares on the effective date of grant and
otherwise  will be subject to the terms and conditions of the Stock Option Plan,
a copy of which has been provided to the Executive;

               (3) the grant of the options referred to in sub-sections (ii) and
(iii) above are subject to the formal approval of amendments to the Stock Option
Plan  necessary  to permit such options to be granted and the Bank shall have no
liability to the Executive if such amendments are not approved;

     (h) Supplementary  Retirement Plan. In addition to the Executive's right to
participate  in the Bank's 401(k) plan, the Bank shall provide for the Executive
a non-qualified


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1034363.1
Redwood Empire Bancorp/Guarantee Agreement


<PAGE>

supplemental  retirement  plan  which  provides  for an  annual  payment  to the
Executive of $155,000  commencing  once the Executive  attains the age of 65 and
continuing  for a period of up to fifteen (15) years.  Benefits  under this plan
will vest as follows:

               (i)    At age 48, 10 percent of the benefits will be vested;
               (ii)   At age 50, 25 percent of the benefits will be vested;
               (iii)  At age 52, 35 percent of the benefits will be vested;
               (iv)   At age 55, 50 percent of the benefits will be vested;
               (v)    At age 57, 60 percent of the benefits will be vested;
               (vi)   At age 60, 75 percent of the benefits will be vested;
               (vii)  At age 62, 85 percent of the benefits will be vested; and,
               (viii) At age 65, 100 percent of the benefits will be vested.

     With respect to such plan:

                    (1) benefits  (including  benefits payable on death) will be
subject  to the  termsand  conditions  of the plan,  details  of which have been
provided to the Executive;

                    (2) each such  vesting  is  conditional  upon the  Executive
still being employed by the Bank as of each such vesting date;

                    (3) upon a Change of Control (as hereinafter defined),  and,
if greater than the vesting  specified  above, 10 per cent of the benefits shall
vest  automatically for every completed year of employment  commencing as of the
Commencement Date and the remainder shall vest according to the vesting schedule
specified above, provided that in such event, the Executive shall be entitled to
elect to receive a lump sum payment equal to the present  value  (using,  as the
discount rate, the then prevailing  yield on ten (10) year U.S.  Treasury Notes)
of  $155,000  over each of the fifteen  years after age 65 times the  applicable
vested percentage as of such Change of Control in lieu of any further obligation
of the Bank with respect to this  Supplementary  Retirement  Plan.  To be valid,
such  election  shall be made in writing by the  Executive  and delivered to the
Bank  within  thirty  (30) days of the date of the Change of  Control  and if so
made, such lump sum shall be paid by the Bank within thirty (30) days of receipt
of such election; and

                    (4) except as  otherwise  provided  vesting of the  benefits
shall not be accelerated without the prior written consent of the NBR Board.

          (i) Expenses. The Executive shall be entitled to be reimbursed for all
reasonable  business  expenses  incurred by him in the performance of his duties
hereunder  subject to  presentment  of  appropriate  vouchers  and  receipts  in
accordance with the Bank's policies and procedures.

          (j) Club Membership.  The Bank will permit the Executive  unrestricted
use of the Bank's membership of the Santa Rosa Country Club at no expense to the
Executive.

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<PAGE>

          (k) D&O Insurance.  The Bank will ensure that the Executive is covered
by REB's and the Bank's Directors & Officers  Insurance  policy,  subject to the
terms and conditions thereof.

     6. Term and Termination.

          (a) Term. The term of the Executive's employment shall commence on the
Commencement Date and shall continue for a period of two (2) years,  expiring on
November 30, 2005 (the "Renewal  Date").  If the employment of the Executive has
not  terminated  prior to the Renewal  Date,  the  employment  of the  Executive
hereunder  shall hereafter  continue on a year to year basis.  The Bank confirms
that if it intends to terminate the Executive's  employment  hereunder otherwise
than for Cause (as  hereinafter  defined) it will give to the Executive not less
than three month's notice. Notwithstanding the foregoing, and in compliance with
the National Bank Act, the Executive  understands  that his employment  with the
Bank may be terminated by the Bank at any time,  with or without notice and with
or without Cause (as hereinafter defined).

          (b)  Termination  by the  Executive.  The  Executive  has the right to
terminate  his  employment  with the Bank at any  time and for any  reason.  The
Executive will, however, provide the Bank with a minimum of three month's notice
and  will  work  with the  Bank in  locating  and  interviewing  a  replacement.
Executive  will  not be  entitled  to any  severance  pay if he  terminates  his
employment with the Bank, unless,  following a Change of Control (as hereinafter
defined),  he  terminates  for  Good  Reason  (as  defined  and as  provided  in
sub-section (f) below).

          (c) Termination Upon Death or Permanent Disability. Except as required
by law, the employment of the Executive and all benefits and any other rights of
the Executive  shall be  terminated by the death or permanent  disability of the
Executive.  For the purposes of this Agreement,  permanent disability is defined
as the Executive  being incapable of performing his duties to the Bank by reason
of any medically determined physical or mental impairment that can reasonably be
expected to last for a period of more than three  consecutive  months;  provided
that the Bank shall not be entitled to terminate the  Executive's  employment by
reason of such disability unless the Executive shall first have been absent from
work by reason  of the same (or a  related)  condition  for a period of at least
three  months or an  aggregate of more than ninety (90) days in an period of 365
consecutive  days.  The  employment of the Executive  shall  terminate  upon the
expiration of not less than thirty (30) days written notice from the Bank to the
Executive  unless,  prior to the expiration of such period,  the Executive shall
have  recommenced his duties  hereunder on a full time basis and has produced to
the Bank a doctor's  release  confirming  his fitness to fulfill such duties for
the  foreseeable  future.  For the purposes of this  Agreement,  termination  by
reason of death or permanent  disability  pursuant to this sub-section (c) shall
be deemed to be for Cause.

          (d)  Termination by the Bank for Cause.  The Bank shall have the right
to  terminate  the  employment  of the  Executive  at any  time  for  Cause  (as
hereinafter  defined).  For the purposes of this  Agreement,  the Bank will have
"Cause" to terminate Executive's employment as the result of:


                                       6
<PAGE>

               (i) willful  material fraud or material  dishonesty in connection
          with Executive's performance hereunder;

               (ii) failure by Executive to  substantially  perform the material
duties of his job as Chief  Executive  Officer,  including  material  failure to
substantially  achieve  performance  goals set by the NBR Board in  consultation
with the Executive prior to any Change of Control (as hereinafter defined);

               (iii) material breach by the Executive of any of the terms of the
Agreement or of any of the  policies of the Bank that the  Executive is required
to observe and perform;

               (iv)  misappropriation of a material business  opportunity of the
Bank;

               (v) misappropriation of any of the Bank's funds or property;

               (vi)  conviction  of, or the entering of a plea of guilty,  or no
contest, with respect to a felony or the equivalent thereof; or

               (vii)  failure by the Executive to observe and perform any of his
material duties and responsibilities as a director of REB and of the Bank.

               If the Board,  in its absolute  discretion,  determines  that the
matter or matters  which,  in the  opinion of the Board,  form the basis of such
Cause,  are capable of being  remedied  without any lasting damage to the mutual
trust and confidence  necessary to sustain the relationship between the Bank and
the Executive,  the Board shall first give the Executive  written notice of such
matters and or matters and shall allow the  Executive a  reasonable  opportunity
(being not less than thirty (30) days from such  notice)  within which to remedy
the same.

          (e)  Termination  by the  Bank  Without  Cause.  If the  Executive  is
terminated  by the Bank without Cause (and except as otherwise set forth in this
Agreement), the Executive shall be entitled to receive severance pay in the form
of  continuation of base salary (i) for twenty four (24) months if the Executive
is so terminated within twelve (12) months of the Commencement Date and (ii) for
twelve  (12)  months if the  Executive  is so  terminated  more than twelve (12)
months after the Commencement  Date plus, if applicable,  an additional  payment
calculated and paid in accordance with  sub-section (k) below. The severance pay
will be paid in  conjunction  with the  Bank's  regular  pay  days,  subject  to
deductions for withholding and applicable  employment taxes.  Except as provided
in sub-sections  (h) and (k) below,  the Executive will not receive any bonuses,
car  allowance,  health  or other  benefits  upon  termination  or  during  this
severance  period and no further vesting with respect to either stock options or
the supplementary retirement plan (or any other benefits) shall accrue.

          (f)  Termination  Following a Change of Control.  If, within two years
after a Change of  Control,  (as  hereinafter  defined)  the  employment  of the
Executive is  terminated

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<PAGE>

without Cause, or if the Executive terminates his employment for Good Reason (as
hereinafter defined) in accordance with this sub-section (f), then the Executive
shall be  entitled  to a  severance  payment  equal to two times his base annual
salary  prevailing as of the date of such termination,  plus, if applicable,  an
additional payment calculated and paid in accordance with sub-section (k) below,
subject to deductions for withholding and applicable  employment  taxes. For the
purposes of this sub-section (f):

          (i) "Change of Control" means:

               (1) the  Bank  is a party  to a  merger,  consolidation,  sale of
assets or other  reorganization,  or a proxy contest,  as a consequence of which
more than 51% of the  outstanding  stock of REB  changes  hands to an  unrelated
entity; or

               (2) a sale of substantially all of the assets of the Bank.

               Notwithstanding  the  foregoing  provisions  of this  sub-section
(f)(i),  a Change of  Control  will not be deemed to have  occurred  either  (A)
solely because of the acquisition of securities of (or any reporting requirement
under the  Exchange  Act  relating  thereto) by an the  Executive  benefit  plan
maintained by REB or any of its  affiliates for its the Executives or (B) if any
shareholder of REB holding more than 25 per cent of the combined voting power of
REB's  outstanding  securities as of the Commencement Date increases its holding
to more than 51 per cent of such combined voting power.

          (ii) Termination by the Executive for "Good Reason" following a Change
of Control means any of the following:

               (1)  a   material   permanent   reduction   in  the   Executive's
compensation or benefits hereunder;

               (2) a material  permanent  reduction in the Executive's  title or
responsibilities; or

               (3) a relocation of the Executive's  principal office so that the
Executive's  one-way commute distance is increased to more than forty (40) miles
from Santa Rosa, California.

               The Executive may only terminate his employment with the Bank for
Good Reason by first  giving the Bank thirty (30) days'  notice of the matter or
matters which, in the Executive's  opinion,  form the basis for such Good Reason
and a statement of his intent to terminate his employment on such basis.  If the
basis for such  Good  Reason is  remedied  within  the  thirty  (30) day  period
following  receipt of such notice,  Executive shall either rescind his notice of
intent to terminate and continue his  employment,  or terminate  his  employment
under Section 6(b) hereof in which case the  Executive  shall not be entitled to
any severance pay hereunder.  If such basis for Good Reason continues to the end
of the thirty (30) day period following receipt of such notice,  the Executive's
employment shall end on the last day of the 30-day period  following  receipt of
such notice.


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<PAGE>

          (g) Release of All Claims.  As a condition for receiving any severance
pay  hereunder,  the  Executive  hereby  agrees to  execute a full and  complete
release  of any and all  claims  against  the  Bank,  REB and  their  respective
officers, agents, directors,  attorneys,  insurers,  employees and successors in
interest  arising from or in any way related to the Executive's  employment with
the Bank or the termination thereof.

          (h) Benefits.  Upon  termination  of the  Executive's  employment  for
whatever  reason  all  benefits   otherwise   enjoyed  by  the  Executive  shall
automatically  cease.  Notwithstanding  the  foregoing,  the Executive  shall be
entitled to receive:

               (i) payment of all unreimbursed  reimbursable  expenses  incurred
prior to the date of termination;

               (ii)  as and  when  due,  any  unpaid  regular  and/or  incentive
compensation earned prior to the date of termination;

               (iii) payment for any accrued but untaken vacation; and

               (iv)  such  health  or other  insured  benefits  that may be made
available  following  termination  but only to the extent  allowed by the Bank's
policies and procedures, provided that if the Executive is entitled to receive a
severance  payment  hereunder,  the Bank will bear the cost to the  Executive of
maintaining  his health  benefits  under  COBRA for the  period  covered by such
severance payment or if shorter,  until such time as the Executive is in gainful
employment the terms of which include health benefits.

          (i)  Stock  Options.  All  vesting  of stock  options  granted  to the
Executive  shall  cease  as of  the  date  of  termination  of  the  Executive's
employment  hereunder  irrespective  of the reason for such  termination and the
Executive  shall only be  entitled to exercise  these  options  that were vested
prior to the date of termination.  Following termination, the vested options may
only be exercised  in  accordance  with the terms of the Stock Option Plan.  The
Executive  shall have no right to make any claim against the Bank (or REB) under
any theory of liability  whatsoever  with  respect to stock  options that do not
vest by reason of such termination.

          (j) Return of Company Property. Upon termination of his employment for
any reason,  the Executive shall  immediately  return to the Bank all documents,
telephones,  pagers, keys, credit cards, other property and records of the Bank,
and all copies thereof, within the Executive's possession, custody or control.

          (k) Bonus  Compensation.  If the  Executive  is  entitled to receive a
severance  payment  pursuant to sub-sections  (e) or (f) above, and provided the
termination is effective (i) more than [13 months] of the Commencement Date and,
if so, (ii) more than [90 days]  after the  commencement  of the Bank's  current
fiscal year,  then the  Executive  shall also be entitled to an  additional  sum
equal to  one-twelfth  of total gross  amount of the  performance  bonus paid or
payable to the  Executive  pursuant  to Section  5(b) above with  respect to the
immediately

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<PAGE>

preceding  fiscal  year  multiplied  by the  number of  completed  months of the
current fiscal year that have elapsed as of the date of the termination.  In the
case of a severance payment payable under sub-section (e) above, this additional
sum shall be payable by equal installments over the same period as the severance
payment is paid (and  subject  to  deductions  for  withholding  and  applicable
employment  taxes). In the case of a severance payment payable under sub-section
(f)  above,  this  additional  sum  shall be  payable  at the  same  time as the
severance  payment  is paid (and  subject  to  deductions  for  withholding  and
applicable employment taxes).

     7. Confidential Information/Trade Secrets. The Executive, in performing his
duties  hereunder  will have access to and become  acquainted  with  information
concerning the Bank, REB, their respective  shareholders,  directors,  officers,
employees and affiliates, and their respective services, operations,  financial,
personnel,  marketing, pricing and other proprietary information (whether or not
in tangible form). All such information will be confidential  and/or  constitute
the trade secrets of Company or REB. The Executive further agrees as follows:

          (a)  Agreement  not to  Disclose.  The  Executive  agrees  he will not
misuse,  misappropriate,   publish,  discuss  or  otherwise  disclose  any  such
confidential information on trade secrets,  directly or indirectly, to any other
person or entity, or use the same in any way, except as required for the benefit
of Company and REB in the course of his employment with the Bank.

          (b) Unfair Competition. The unauthorized use or disclosure of any such
confidential   information   and/or  trade  secrets  shall   constitute   unfair
competition.

          (c)  Injunctive  Relief.  Any violation by the Executive of any of the
provisions of this Section 7 would result in irreparable injury to the Bank, and
the Bank shall be entitled to  injunctive  relief to prevent or  terminate  such
violation in addition to any other rights and remedies which may be available to
the Bank at law or in equity.

     8. Miscellaneous.

          (a) Waivers.  Any waiver of this Agreement  shall be effective only if
in  writing  and  signed by the  parties  hereto.  Any waiver of a breach of any
provision  hereof  shall  not  operate  as or be  construed  as a waiver  of any
subsequent breach of the same provision or any other provision hereof.

          (b)  Amendments.  No  amendments,  modifications  or additions to this
Agreement shall be binding unless in writing and signed by both parties.

          (c) Binding Effect.  Except as may be otherwise provided herein,  this
Agreement  shall be binding  upon and shall  inure to the benefit of the parties
hereto  and  their   respective   successors,   assigns,   heirs  and   personal
representatives.

          (d) Applicable  Law. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of California.

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<PAGE>

          (e) Severability. In the event any provision or portion of a provision
of this Agreement is held to be invalid, void or unenforceable,  the rest of the
Agreement  shall,  nonetheless,  remain in full force and effect and shall in no
way be affected, impaired or invalidated.

          (f)  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

          (g) Entire Agreement. This Agreement together with the Bank's Employee
Handbook and Code of Ethics constitutes the entire agreement between the parties
and supersedes all prior  understandings or agreements,  previous  negotiations,
and any letters,  memos,  and/or memoranda of understanding  with respect to the
subject matter of this  Agreement.  If any conflict  arises between the terms of
this  Agreement and the Bank's  Employee  Handbook,  the terms of this Agreement
shall prevail.

          (h) Notices.  Any notice  required or permitted to be given under this
Agreement  shall be sufficient if in writing and sent by registered  mail to the
Executive at his residence  maintained on the Bank's records,  or to the Bank at
its executive offices,  or such other addresses as either party shall notify the
other in accordance with the above procedure.

          (i) Legal Advice. Before signing this Agreement,  the Executive either
(i) consulted  with and obtained  advice from his  independent  legal counsel in
respect to the legal  nature and  operation  of this  Agreement,  including  its
impact on his rights, privileges and obligations, or (ii) freely and voluntarily
decided  not to have the  benefit of such  consultation  and  advice  with legal
counsel.

          (j) Interpretation.  If any claim is made by any party hereto relating
to any conflict,  omission or ambiguity of this  Agreement,  no  presumption  or
burden of proof or  persuasion  shall be implied by reason of the fact that this
Agreement  was prepared by or at the request of any  particular  party hereto or
such party's counsel.

          (k) Dispute Resolution - Arbitration. The Executive and the Bank agree
that any and all disputes, claims or controversies arising out of or relating to
the Executive's employment with the Bank, including but not limited to claims of
harassment,  discrimination,  retaliation and wrongful termination, that are not
resolved  by their  mutual  agreement  shall be  submitted  to final and binding
arbitration  before  JAMS , or its  successor,  pursuant  to the  United  States
Arbitration  Act, 9 U.S.C.  Sec. 1 et seq.  Either the Bank or the Executive may
commence  the  arbitration  process  called  for in this  Agreement  by filing a
written demand for arbitration  with JAMS,  with a copy to the other party.  The
arbitration  will be  conducted  in  accordance  with  the  provisions  of JAMS'
Employment  Arbitration  Rules  ("Arbitration  Rules")  in effect at the time of
filing of the demand for  arbitration,  and California  Code of Civil  Procedure
Section  1282 et seq.  (the  "Code"),  as amended.  Specifically,  the rights of
discovery shall be governed by Code of Civil Procedure  Section 1283.05.  To the
extent there exists an inconsistency between the Arbitration Rules and the Code,
the Code shall apply.  The Executive and the Bank will

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<PAGE>

cooperate  with JAMS and with one another in selecting an arbitrator  from JAMS'
panel of neutrals, and in scheduling the arbitration proceedings.  The Executive
and the Bank covenant that they shall  participate  in the  arbitration  in good
faith,  and that they shall share equally in its costs,  so long as the costs do
not exceed those required in a court action.  Excess costs shall be borne by the
Bank to the extent  required by law.  Notwithstanding  anything to the  contrary
provided in the Arbitration  Rules,  the arbitrator shall issue written findings
of fact and  conclusions of law, in accordance with California law. All findings
of fact shall be final and non-appealable, except as provided by the Arbitration
Rules. Findings of law shall be appealable.  The provisions of this Section 8(k)
may be enforced by any Court of competent  jurisdiction,  and the party  seeking
enforcement  shall be entitled  to an award of all costs,  fees,  and  expenses,
including  attorneys  fees, to be paid by the party against whom  enforcement is
ordered.  Should any provision of this policy or the procedures  included herein
be  determined  by an  arbitrator  or a court of  competent  jurisdiction  to be
unenforceable,  illegal or invalid,  such term or provision shall be enforced to
the extent  permissible under law and all remaining terms and provisions of this
policy  shall  continue  in full  force  and  effect.  By  agreeing  to have all
disputes,  claims or controversies arising out of or relating to this employment
resolved through arbitration, the Executive understands that he is giving up any
rights he might  possess  to have  those  matters  litigated  in a court or jury
trial,  including the right to appeal except to the extent  provided  herein and
specifically  required by law. The Executive  understands  that if he refuses to
submit  a claim to  arbitration  after  agreeing  to this  provision,  he may be
compelled to arbitrate  under state law. The Executive  hereby  confirms that he
has read and  understand the foregoing and agrees to submission of all disputes,
claims or  controversies  arising out of or relating to this  Agreement  and his
employment to mandatory  arbitration in accordance  with this Agreement and that
his agreement to this arbitration provision is voluntary.

AS WITNESS WHEREOF the parties have entered into this Agreement as of the
Commencement Date.


Bank:                  NATIONAL BANK OF THE REDWOODS,
                       a National Banking Association

                       By: /s/ Patrick W. Kilkenny 12-1-03
                       Name: PATRICK W. KILKENNY
                       Title: Chairman


Executive:  /s/ Stephen A. Fleming
            STEPHEN A. FLEMING




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