**Exhibit 10.18****AMENDED AND RESTATED****EMPLOYMENT AGREEMENT**     THIS AGREEMENT (the “Agreement”) is made and entered into effective the 1st day of January,2007 (the “Effective Date”), by and between NORTHRIM BANCORP, INC. and its wholly owned subsidiary,NORTHRIM BANK, a state-chartered commercial bank, with its principal office in Anchorage, Alaska(collectively, the “Employer”), and **Christopher N. Knudson**(the “Executive”).     In consideration of the mutual promises made in this Agreement, the parties agree as follows:     ***1. Employment.***     Employer employs Executive and Executive accepts employment with Employer as its **ExecutiveVice President, Chief Operating Officer**.     ***2. Term.***     The term of this Agreement (the “Term”) shall commence on the Effective Date and shallcontinue through December 31, 2007; *provided, however*, that on January 1, 2008 and each succeedingJanuary 1, the Term shall automatically be extended for one additional year unless, not later thanninety (90) days prior to any such January 1, either party shall have given written notice to theother that it does not wish to extend the Term. In the event the Term is not extended, Executiveshall have no rights to any of the severance payments or benefits continuation described in Section5 except as specifically provided for in Section 5 (a).     ***3. Duties.***     The Executive will serve as **Executive Vice President, Chief Operating Officer**of the Employer.Executive shall render such executive, management and administrative services and perform suchtasks in connection with the affairs and overall operation of the Employer as is customary for hisposition, subject to the direction of Employer’s President and Board of Directors. Executive shalldevote necessary time, attention and effort to Employer’s business in order to properly dischargehis responsibilities under this Agreement.     ***4. Compensation, Benefits, Reimbursement and Bonus.***          ***a. Base Salary.***In consideration for all services rendered by Executive during the term ofthis Agreement, Employer shall pay Executive an annual base salary (before all customary and properpayroll deductions) of **$230,000**, as adjusted from time to time (“Base Salary”). The Board ofDirectors of the Employer shall review Executive’s salary each year, in a manner consistent withthat used for all management employees of the Employer, and in its sole discretion may adjust suchsalary commensurate with the Executive’s performance under this Agreement.          ***b. Incentive Compensation*****.**Under the Employer’s Executive Incentive Compensation Plan,Executive shall be eligible to receive an annual bonus based on performance as
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defined by the Board of Directors. Executive’s annual target bonus will equal **30%**of BaseSalary. This is the amount payable for ambitious, but expected, results as determined by the Boardof Directors. Executive’s bonus may be more or less than this amount at the Board of Directorsdiscretion but may not exceed **40%**of Base Salary.          ***c. Stock Options.***Executive shall be eligible for stock option grants under the Employer’sStock Incentive Plan. The timing and size of awards will be at the discretion of the Board ofDirectors.          ***d. SERP and Deferred Compensation.***Executive shall also be entitled to receive an annualcontribution equal to **15%**of annual Base Salary in accordance with the Employer’s SupplementalExecutive Retirement Plan, as may be adjusted at the discretion of the Board of Directors from timeto time. The Executive may also participate in the Employer’s Deferred Compensation Plan.          ***e. Supplemental Retirement Deferred Compensation***. Executive shall also participate in theCompany’s Supplemental Retirement Deferred Compensation Plan, in accordance with such plan.          ***f. Other Benefits.***Throughout the term of this Agreement, Employer shall provide Executivewith reasonable health insurance, disability and other employee benefits. Executive shallparticipate in all employee benefit plans and programs of Employer on a basis at least as favorableas that accorded to any other officer of Employer.          ***g Expenses.***Employer shall reimburse Executive for his reasonable expenses (including,without limitation, travel, entertainment, and similar expenses) incurred in performing andpromoting the business of Employer. Executive shall present from time to time itemized accounts ofany such expenses as required by Employer, subject to any limits of company policy and the rulesand regulations of the Internal Revenue Service.          ***h. Automobile Allowance.***Executive shall receive a **SEVEN HUNDRED**Dollar ($700.00) monthlyautomobile allowance for his automobile, fuel and maintenance expenses for Bank business. No otherexpense reimbursement will be provided for use of his vehicle.     ***5. Termination of Agreement.***          ***a. Termination Due to a Change in Control.***If (A) Employer (either Northrim BanCorp,Inc. or Northrim Bank) is subjected to a Change of Control (as defined in Section 5(f)(i)), and (B)either Employer or its assigns terminates Executive’s employment without Cause (either during theannual term of this Agreement or by refusing to extend this Agreement when the annual terminationoccurs every December 31) or Executive terminates his employment for Good Reason within 730 days ofsuch Change of Control, then Employer shall pay Executive in a lump sum: (i) all Base Salary earnedand all reimbursable expenses incurred under this Agreement through such termination date; (ii) apro rata portion of any annual target bonus for the year of termination; and (iii) an amount equalto two (2) times Executive’s highest Base Salary over the prior three (3) years, plus an amountequal to two (2) times the target bonus or two (2) times the average bonus paid over the priorthree (3) years, whichever is greater; and (iv) benefits described in Sections 5(b)(I) and (II)below. The amounts described in Section 5(a)(i) and (ii) herein shall be paid no later than 45days after the day on which employment is terminated. The amount described
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in Section5(a)(iii) herein shall be paid on the first day of the month following a period of six (6)months after the termination of employment, provided that the payment may be made sooner if either(i) the amount does not exceed two times the lesser of (a) the Executive’s annual compensation forthe year prior to the year in which employment is terminated; or (b) the maximum amount that may betaken into account under a qualified plan pursuant to Internal Revenue Code Section 401(a)(17) forsuch year (the “IRC Safe Harbor”) or (ii) at the Executive’s election, the amount described inSection 5(a)(iii) is reduced to fit within the IRC Safe Harbor. No payment will be made pursuantto Section 5(a)(iii) until the Executive has signed an agreement, in a form acceptable to Employer,that releases and holds Employer harmless from all known and unknown claims and liabilities arisingout of Executive’s employment with Employer or the performance of this Agreement (“ReleaseAgreement”).          ***b. Termination by Employer Without Cause or by Executive for Good Reason.***If Employerterminates Executive’s employment without Cause, or if Executive terminates his employment for GoodReason, Employer shall pay Executive in a lump sum: (i) all Base Salary earned and allreimbursable expenses incurred under this Agreement through such termination date, plus a pro rataportion of any annual target bonus for the year of termination; and (ii) an amount equal to two (2)times Executive’s highest Base Salary over the prior three (3) years, plus an amount equal to two(2) times the target bonus or two (2) times the average bonus paid over the prior three (3) years,whichever is greater. The amount described in 5(b)(i) herein shall be paid no later than 45 daysafter the day on which employment is terminated. The amount described in 5(b)(ii) herein shall bepaid on the first day of the month following a period of six (6) months after the termination ofemployment, provided that the payment may be made sooner if either (i) the amount does not exceedthe IRC Safe Harbor or (ii) at the Executive’s election, the amount described in Section 5(a)(ii)is reduced to fit within the IRC Safe Harbor. No payment will be made pursuant to Section 5(a)(ii)until the Executive has signed a Release Agreement.               ***(I) Benefits Continuation.***In addition, Executive shall be entitled to health and dentalinsurance benefits for a period of eighteen (18) months following the termination of thisAgreement. These benefits will be provided at Employer’s expense, but such period shall counttowards the Employer’s continuation of coverage obligation under Section 4980B of the InternalRevenue Code (commonly referred to as “COBRA”).               ***(II) Age and Service Credit.***Executive shall also be entitled to receive age credit andcredit for period of service towards all SERP plans for the remaining period of time covered bythis Agreement. If Executive is hired by Employer, its assigns, any company in control ofEmployer, or any company controlled by Employer during the period covered by this Agreement, thenExecutive will be entitled to be treated for all purposes relating to future compensation, andbenefits, as if this Agreement had never been terminated and as if Executive had performed hisresponsibilities as an Executive throughout the period originally covered by this Agreement.          ***c. Termination by Employer for Cause or by Executive Without Good Reason.***If Employerterminates Executive’s employment for Cause or if Executive terminates his employment without GoodReason, Employer shall pay Executive upon the effective date of such termination only such BaseSalary earned and expenses reimbursable under this Agreement incurred through such terminationdate. In such case, Executive shall have no right to receive compensation or other benefits forany period after termination under this Agreement.
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          ***d. Termination Due to Disability.***If Employer terminates Executive’s employment onaccount of any mental or physical Disability that prevents Executive from discharging his dutiesunder this Agreement, even with reasonable accommodation, Executive shall be entitled to: (i) allBase Salary earned and reimbursement for expenses incurred under this Agreement through thetermination date, (ii) a pro rata portion of any annual Target Bonus for the year of termination,(iii) full Base Salary for the year following the termination date (less the amount of any paymentsreceived by Executive during such one (1) year period under any Employer-sponsored disabilityplan), and (iv) health and dental insurance benefits for a period of one (1) year following thetermination date, which benefits will be provided at Employer’s expense, but such period shallcount towards the Employer’s continuation of coverage obligation under Section 4980B of Code(commonly referred to as “COBRA”). All such compensation shall be paid Executive in one lump sumthe first day of the month following a period of six (6) months after Executive’s employment wasterminated, provided that Executive has signed a Release Agreement in a form acceptable toEmployer.          ***e. Termination Upon Death of Executive.***Executive’s employment under this Agreementshall be terminated upon the death of Executive. In such case, the Employer shall be obligated topay to the surviving spouse of Executive, or if there is none, to the Executive’s estate: (i) thatportion of Executive’s Base Salary that would otherwise have been paid to him for the month inwhich his death occurred, and (ii) any amounts due him pursuant to the Employer’s pension plan, anysupplemental deferred compensation plan, and any other death, insurance, employee benefit plan orstock benefit plan provided to Executive by the Employer, according to the terms of the respectiveplans.          ***f. Termination Definitions.***               ***(i) *****“*****Change of Control.*****”**For purposes of this Agreement, the term “Change of Control” shallmean the occurrence of one or more of the following events: (A) One person or entity acquiring orotherwise becoming the owner of twenty-five percent or more of Employer’s outstanding common stock;(B) Replacement of a majority of the incumbent directors of Northrim BanCorp, Inc. or Northrim Bankby directors whose elections have not been supported by a majority of the Board of either company,as appropriate; (C) Dissolution or sale of fifty percent or more in value of the assets, of eitherNorthrim BanCorp, Inc. or Northrim Bank; or (D) A change “in the ownership or effective control” or“in the ownership of a substantial portion of the assets” of Employer, within the meaning ofSection 280G of the Internal Revenue Code.               ***(ii) *****“*****Cause.*****”**For purposes of this Agreement, termination for “Cause” shall includetermination because Executive (A) continually fails to substantially perform his duties with theEmployer, (B) is adjudged guilty of a felony, any crime involving dishonesty or breach of trust orany crime involving a breach of his fiduciary duties to the Employer, (C) is willfully andcontinually failing to comply with any law, rule, or regulation (other than traffic violations orsimilar offenses) or final cease and desist order of a regulatory agency having jurisdiction overEmployer, (D) commits a material act of dishonesty or disloyalty related to the business of theEmployer, or (E) is unable to substantially perform his duties with the Employer due to drugaddiction or chronic alcoholism. Notwithstanding the foregoing, Executive shall not be deemed tohave been terminated for Cause unless and until there shall have been delivered to him a copy of aresolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entiremembership of the Employer’s Board of Directors at a meeting of the Board called for such purpose(after reasonable
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notice to Executive and an opportunity for him, together with his counsel, to be heard beforethe Board), finding that in the good faith opinion of the Board, he was guilty of conduct thatconstitutes Cause (as defined above) and specifying the conduct in detail.               ***(iii) “Disability.”***For purposes of this Agreement, “Disability” shall mean a medicallydiagnosed physical or mental impairment that may be expected to result in death, or to be of long,continued duration, and that renders Executive incapable of performing the essential dutiesrequired under this Agreement even with reasonable accommodation. Employer’s Board of Directors,acting in good faith, shall make the final determination of whether Executive is suffering underany Disability (as herein defined) and, for purposes of making such determination, may requireExecutive to submit himself to a physical examination by a physician mutually agreed upon by theExecutive and Employer’s Board of Directors at Employer’s expense.               ***(iv) “Good Reason.”***For purposes of this Agreement, termination for “Good Reason” shall meantermination by Executive as a result of any material breach of this Agreement by Employer. GoodReason shall include, but not be limited to: (A) a material reduction in Executive’s compensationdefined as a reduction equal to or greater than five percent (5%) of Executive’s then annual basesalary, (B) a material reduction in Executive’s duties and responsibilities, but not merely achange in title, or (C) relocation of Executive’s primary workplace by more than fifty (50) miles.     ***6. Limit on Severance Payment for Change of Control.***          Notwithstanding anything above in Section 5(a), if the severance payment provided for in thatSection, together with any other payments which the Executive has the right to receive from theEmployer, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code),the severance payment shall be reduced. The reduction shall be in an amount so that the presentvalue of the total amount received by the Executive from the Employer or its affiliates andsubsidiaries will be 2.99 times the Executive’s base amount (as defined in Section 280G of theCode) and so that no portion of the amounts received by the Executive shall be subject to theexcise tax imposed by Section 4999 of the Code (excise tax). Insofar as permitted by the Code,Employer shall reduce those elements of the severance pay package specified by the Executive,provided, however, that Employer will not reduce the SERP credits provided for in Section 5(b)(II).The determination as to whether any reduction in the severance payment is necessary shall be madeby the Employer in good faith, and the determination shall be conclusive and binding on Executive.If through error or otherwise Executive should receive payments under this Plan, together withother payments the Executive has the right to receive from the Employer, in excess of 2.99 timeshis base amount Executive shall immediately repay the excess to Employer upon notification that anoverpayment has been made.     ***7. Covenant Not To Compete.***          ***a.***Executive agrees that for the term of this Agreement and for a period of two (2) yearsafter this Agreement is terminated pursuant to Section 5(a) or (b) (with the understanding that thetwo (2) year period will be shortened to one (1) year upon the completion of a transactionconstituting a Change of Control, as defined in Section 5(f)(i)), Executive will not directly orindirectly be employed by, own, manage, operate, support, join, or benefit in any way from anybusiness activity that is competitive with Employer’s business or reasonably anticipated businessof which Executive has knowledge. For purposes of the foregoing, Executive will be deemed to be
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connected with such business if the business is carried on by: (i) a partnership in whichExecutive is a general or limited partner; or (ii) a corporation of which Executive is ashareholder (other than a shareholder owning less than 5% of the total outstanding shares of thecorporation), officer, director, employee or consultant, whether paid or unpaid.          ***b.***The parties agree that if a trial judge with jurisdiction over a dispute related to thisAgreement should determine that the restrictive covenant set forth above is unreasonably broad, theparties authorize such trial judge to narrow the covenant so as to make it reasonable, given allrelevant circumstances, and to enforce such covenant. The provisions of this paragraph shallsurvive termination of this Agreement.     ***8. Nondisclosure of Confidential Information.***          ***a.***During the term of Executive’s employment and thereafter, Executive agrees to holdEmployer’s Confidential Information in strict confidence, and not disclose or use it at any timeexcept as authorized by Employer and for Employer’s benefit. If anyone tries to compel Executiveto disclose any Confidential Information, by subpoena or otherwise, Executive agrees immediately tonotify Employer so that Employer may take any actions it deems necessary to protect its interests.Executive’s agreement to protect Employer’s Confidential Information applies both during the termof this Agreement and after employment ends, regardless of the reason it ends.          ***b.***“Confidential Information” includes, without limitation, any information in whatever formthat Employer considers to be confidential, proprietary, information and that is not publicly orgenerally available relating to Employer’s: trade secrets (as defined by the Uniform Trade SecretsAct); know-how; concepts; methods; research and development; product, content and technologydevelopment plans; marketing plans; databases; inventions; research data and mechanisms; software(including functional specifications, source code and object code); procedures; engineering;purchasing; accounting; marketing; sales; customers; advertisers; joint venture partners;suppliers; financial status; contracts or employees. Confidential Information includes informationdeveloped by Executive, alone or with others, or entrusted to Employer by its customers or others.     ***9. Nonsolicitation.***     During the course of Executive’s employment and for a period of two (2) years from the date oftermination of employment for any reason, Executive shall not directly or indirectly solicit orentice any of the following to cease, terminate or reduce any relationship with Employer or todivert any business from Employer: (a) any person who was an employee of Employer during the one-(1) year period immediately preceding the termination of Executive’s employment; (b) any customeror client of Employer; or (c) any prospective customer or client of Employer from whom Executiveactively solicited business within the last one (1) year of Executive’s employment.     ***10. Non-Disparagement.***     Executive will not, during the Term or after the termination or expiration of this Agreementor Executive’s employment, make disparaging statements, in any form, about Employer’s officers,directors, agents, employees, products or services which Executive knows, or has reason to believe,are false or misleading.
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     ***11. Mutual Agreement to Arbitrate.***          ***a.***In the event of a dispute or claim between Executive and Employer related to Employee’semployment or termination of employment, all such disputes or claims will be resolved exclusivelyby confidential arbitration in accordance with the National Rules for the Resolution of EmploymentDisputes of the American Arbitration Association (“AAA”). This means that the parties agree towaive their rights to have such disputes or claims decided in court by a jury. Instead, suchdisputes or claims will be resolved by an impartial AAA arbitrator whose decision will be final.          ***b.***The only disputes or claims that are not subject to arbitration are any claims by Executivefor workers’ compensation or unemployment benefits, and any claim by Executive for benefits underan employee benefit plan that provides its own arbitration procedure. Also, Executive and Employermay seek injunctive relief in court in appropriate circumstances.          ***c.***The arbitration procedure will afford Executive and Employer the full range of statutoryremedies. Employer will pay all costs that are unique to arbitration, except that the party whoinitiates arbitration will pay the filing fee charged by AAA. Executive and Employer shall beentitled to discovery sufficient to adequately arbitrate their claims, including access toessential documents and witnesses, as determined by the arbitrator and subject to limited judicialreview. In order for any judicial review of the arbitrator’s decision to be successfullyaccomplished, the arbitrator will issue a written decision that will decide all issues submittedand will reveal the essential findings and conclusions on which the award is based.     ***12. Miscellaneous.***          ***a.***This Agreement contains the entire agreement between the parties with respect toExecutive’s employment with Employer, and is subject to modification or amendment only uponagreement in writing signed by both parties.          ***b.***This Agreement shall bind and inure to the benefit of the heirs, legal representatives,successors and assigns of the parties, except that Employer’s rights and obligations may not beassigned.          ***c.***If any provision of this Agreement is invalid or otherwise unenforceable, in whole or inpart, then such provision shall be modified so as to be enforceable to the maximum extent permittedby law. If such provision cannot be modified to be enforceable, the provision shall be severedfrom the Agreement to the extent it is unenforceable. All other provisions and any partiallyenforceable provisions shall remain unaffected and shall remain in full force and effect.          ***d.***In the event of any claim or dispute arising out of this Agreement, the party thatsubstantially prevails shall be entitled to reimbursement of all expenses incurred in connectionwith such claim or dispute, including, without limitation, attorneys’ fees and other professionalfees. This paragraph shall apply to expenses incurred with or without suit, and in any judicial,arbitration or administrative proceedings, including all appeals therefrom.          ***e.***Any notice required to be given under this Agreement to either party shall be given bypersonal service or by depositing a copy of such notice in the United States registered or
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certified mail, postage prepaid, addressed to the following address, or such other address asaddressee shall designate in writing:             ***Employer:*** 3111 “C” Street  Anchorage, AK 99503             ***Executive:*** 3612 Delores  Eagle River, AK 99577          ***f.***This Agreement shall in all respects, including all matters of construction, validity andperformance, be governed by and construed and enforced according to the laws of the State ofAlaska.          ***g.***This Agreement is intended to comply and shall be interpreted and construed in a mannerconsistent with the provisions of Internal Revenue Code Section 409A, including any rule orregulation promulgated thereunder. In the event that any provision of the Agreement would cause abenefit or amount provided hereunder to be subject to tax under the Internal Revenue Code prior tothe time such amount is paid, such provision shall, without the necessity of further action by thesignatories to this Agreement, be null and void as of the Effective Date.       ***EMPLOYER:*** NORTHRIM BANCORP, INC.                By:      /s/ Ronald A. Davis              Ronald A. Davis         Its: Chairman of the Compensation Committee of The Board of Directors                NORTHRIM BANK                  By: /s/ Ronald A. Davis              Ronald A. Davis         Its: Chairman of the Compensation Committee of The Board of Directors              ***EXECUTIVE:***    /s/ Christopher N. Knudson     Christopher N. Knudson
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