SONOMA VALLEY BANK
                              CHIEF LENDING OFFICER
                               SEVERANCE AGREEMENT

     This SEVERANCE AGREEMENT (the "Agreement"),  dated as of March 18, 2004, is
made  and  entered  into  by  and  between  Sonoma  Valley  Bank,  a  California
Corporation (the "Company"), and Sean C. Cutting, (the "Executive").

     WHEREAS,  this  Agreement  is being  entered into in order to set forth the
specific  severance  compensation  that the  Company  agrees  it will pay to the
Executive  if the  Executive's  employment  with the  Company  terminates  under
certain circumstances described herein;

     NOW, THEREFORE,  in consideration of the continued service of the Executive
as the Chief Lending Officer of the Company, the mutual covenants and agreements
contained in this Agreement, and for such other good and valuable consideration,
the  receipt  of which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:

     1. Agreement to Provide Base Salary.  In the event the Executive is, within
24 months  following a Change in Control of the Company (as defined in Section 3
below) and during the Term of this  Agreement  (as  defined in Section 7 below),
actually  terminated  from his  employment  with the  Company or  constructively
terminated  from his employment  with the Company,  he shall receive in one lump
sum cash  payment in an amount  equal to one year of his base salary at the time
of such termination;  provided that no benefit shall be payable hereunder if the
Executive's  employment  is terminated by reason of any act or failure to act by
the Executive which  constitutes (i) gross malfeasance in the performance of his
duties, (ii) fraud, deceit, theft or embezzlement against the Company that could
reasonably  subject the Executive to either civil or criminal  liability,  (iii)
any  act of  personal  dishonesty  that is  injurious  to the  Company,  or (iv)
disloyalty  against the Company including without  limitation aiding competitors
of the Company.  The Company, in its sole and absolute  discretion,  may pay the
amount specified above to the Executive in 12 equal monthly installments.

     2. Base Salary. For purposes of this Agreement, the Executive's base salary
at any time shall be equal to his regular  annual salary  without  regard to any
bonuses,  incentive  payments,  cash or  non-cash  allowances  or  other  fringe
benefits.

     3.  Change in Control  For the  purposes  of this  Agreement,  a "Change in
Control" means (i) the purchase or other  acquisition  by any person,  entity or
group of persons, within the meaning of section 13(d) or 14(d) of the Securities
Exchange  Act of  1934  ("Act"),  or any  comparable  successor  provisions,  of
beneficial  ownership  (within the meaning of Rule 13d-3  promulgated  under the
Act) of 30 percent or more of either the  outstanding  shares of common stock or
the combined voting power of the Company's then  outstanding  voting  securities
entitled to vote generally, (ii) the approval by the shareholders of the Company
of a reorganization,  merger,  or  consolidation,  in each case, with respect to
which persons who were  shareholders  of the Company  immediately  prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50 percent of the combined  voting power  entitled to vote generally in the
election of directors of the reorganized,  merged or consolidated Company's then
outstanding securities,  or (iii) a liquidation or dissolution of the Company or
of the sale of all or substantially all of the Company's assets.

<PAGE>

     4. Constructive Termination.  For purposes of this Agreement, the Executive
shall be deemed to have been constructively  terminated from his employment with
the Company if he voluntarily terminates his employment within 24 months after a
Change in Control and such  termination  occurs  coincident with or after any of
the  following  events  (which event  occurs  within 24 months after a Change in
Control),  unless  the  Executive  expressly  acknowledges  in  writing  that no
constructive termination has taken place;

     (a) Any material diminution in the Executive's  position,  duties,  titles,
offices,   responsibilities   and  status  with  the  Company  as  they  existed
immediately  prior to a Change in Control or the  assignment to the Executive by
the  Company  of any  duties  materially  reduced  therewith,  or in  derogation
thereof;

     (b) A material  diminution in the Executive's  base salary in effect on the
date of the Change in Control;

     (c) Any failure by the  Company to  continue in effect any benefit  plan or
arrangement  or  any  material   fringe  benefit  in  which  the  Executive  was
participating  immediately  prior to a Change in Control,  or to substitute  and
continue  other  plans  providing  the  Executive  with  substantially   similar
benefits,  or any  action  by the  Company  which  would  adversely  affect  the
Executive's  benefits  under such  benefit  plan or  arrangement  or deprive the
Executive of any material fringe benefit enjoyed by the Executive at the time of
the Change in Control;

     (d) The Executive's relocation to a facility or a location more than thirty
(30) miles from the Executive's  then present location at which he performed his
duties prior to a Change in Control; or

     (e) Any material breach by the Company of any provision of this Agreement.

     5. Heirs and Successors.

     (a)  Successors  of the Company.  The Company will require any successor or
assign  (whether  direct or indirect,  by  purchase,  merger,  consolidation  or
otherwise)  to all or  substantially  all of the business  and/or  assets of the
Company,  expressly,  absolutely  and  unconditionally  to  assume  and agree to
perform  this  Agreement  in the same  manner  and to the same  extent  that the
Company would be required to perform if no such  succession  or  assignment  had
taken  place.  Failure of the  Company  to obtain  such  agreement  prior to the
effectiveness  of any  such  succession  transaction  shall  automatically  be a

<PAGE>

material breach of this  Agreement.  "Company" shall mean the Company as defined
above and any  successor  or assign to its business  and/or  assets as aforesaid
which  executes and delivers the  agreement  provided in this Section 5 or which
otherwise  becomes  bound by all  terms  and  provisions  of this  Agreement  by
operation of law.

     (b) Heirs of the Executive.  This  Agreement  shall inure to the benefit of
and be  enforceable  by the  Executive's  personal  and  legal  representatives,
executors,   administrators,   successors,  heirs,  distributees,  devisees  and
legatees.  If the Executive should die after becoming entitled to the payment of
benefits  hereunder  with any amount  still  payable to him,  all such  amounts,
unless otherwise provided herein,  shall be paid in accordance with the terms of
this Agreement to the Executive's beneficiary, successor, devisees, legatees, or
other  designee or, if there be no such  designee,  to the  Executive's  estate.
Until a contrary  designation  is made to the Company in writing,  the Executive
hereby  designates as his beneficiary under this Agreement the person whose name
appears below his signature on this Agreement.  Notwithstanding  the above,  the
Executive's  beneficiary designation shall be deemed automatically revoked as to
a named  beneficiary  if the  beneficiary  predeceases  the  Executive or if the
Executive  names a spouse  as  beneficiary,  and the  marriage  is  subsequently
dissolved.   Beneficiary   designations   received  by  the  Company  after  the
Executive's death shall not be taken into account.

     6. General  Release.  If the  Executive  is entitled to severance  benefits
pursuant to this Agreement,  the Executive  hereby agrees that all of his rights
under  section  1542 of the Civil  Code of the State of  California  are  hereby
waived. Section 1542 provides as follows:

     "A general  release does not extend to claims  which the creditor  does not
     know or suspect to exist in his favor at the time of executing the release,
     which if known by him must have materially affected his settlement with the
     debtor."

     Notwithstanding  the  provisions  of  section  1542,  if the  Executive  is
entitled to severance benefits pursuant to this Agreement,  the Executive hereby
irrevocably and unconditionally  releases and forever discharges the Company and
all of its officers, agents, directors, supervisors, employees,  representatives
and their successors and assigns and all persons acting by, through, under or in
concert  with any of them  from  any and all  charges,  complaints,  grievances,
claims,  actions,  and  liabilities  of any  kind  (including  attorneys'  fees,
interest, expenses and costs actually incurred) of any nature whatsoever,  known
or unknown,  suspected or  unsuspected  (hereinafter  referred to as  "Claims"),
which  the  Executive  has  or  may  have  in  the  future,  arising  out of the
Executive's  employment with the Company.  All such Claims are forever barred by
this  Agreement  and  without  regard to whether  these  Claims are based on any
alleged  breach of duty  arising in  contract or tort,  any  alleged  employment
discrimination  or other unlawful  discriminatory  act, or any claim or cause of
action  regardless  of the forum in which it may be brought,  including  without
limitation,  claims under the National  Labor  Relations  Act,  Title VII of the
Civil  Rights Act of 1964,  as amended,  the Civil  Rights Act of 1991,  the Age
Discrimination  in  Employment  Act of 1964,  as  amended,  the  Americans  With
Disability Act, the California Family Rights Act of 1991, the Federal Family and
Medical Leave Act of 1993, the Vietnam Era Veterans Readjustment  Assistance Act

<PAGE>

of 1974, the California Fair Employment and Housing Act,  California  Labor Code
section 132a, any allegation of wrongful  termination  and any claim arising out
of Article 1, section 8 of the Constitution of the State of California.

     7. Term. The term of this Agreement  shall be the period  commencing  March
18,  2004 and  ending  October  20,  2008;  provided  that the  Company  and the
Executive may mutually agree in writing to extend such term.

     8. Not a Contract of Employment. The terms and conditions of this Agreement
shall not be deemed to constitute a contract of  employment  between the Company
and the Executive.  Nothing in this Agreement  shall be construed to entitle the
Executive to any benefit  hereunder if his  employment is terminated  prior to a
Change in Control, and nothing in this Agreement shall be construed to interfere
with the  Company's  right to discharge or discipline  the Executive  prior to a
Change in Control.

     9. Arbitration.  Any dispute or controversy  arising under or in connection
with this  Agreement  shall be  settled  exclusively  by  arbitration  in Sonoma
County,  California,  in accordance  with the rules of the American  Arbitration
Association then in effect by an arbitrator  selected by both parties within ten
(10) days after either party has notified the other in writing that it desires a
dispute  between  them to be settled by  arbitration.  In the event the  parties
cannot  agree on such  arbitrator  within such ten (10) day  period,  each party
shall  select an  arbitrator  and  inform  the other  party in  writing  of such
arbitrator's  name and  address  within  five (5) days after the end of such ten
(10)  day  period  and the two  arbitrators  so  selected  shall  select a third
arbitrator within fifteen (15) days thereafter;  provided,  however, that in the
event of a failure by either party to select an arbitrator  and notify the other
party of such selection  within the time period provided  above,  the arbitrator
selected by the other party shall be the sole arbitrator of the dispute.

     Each party shall pay its own  expenses  associated  with such  arbitration,
including the expense of any arbitrator  selected by such party, and the Company
will pay the expenses of the jointly  selected  arbitrator.  The decision of the
arbitrator or a majority of the panel of  arbitrators  shall be binding upon the
parties,  and judgment in  accordance  with that  decision may be entered in any
court having jurisdiction thereover.  The Executive and the Company agree not to
initiate  arbitration  on a controversy  or claim more than six (6) months after
the event  underlying  the  controversy  or claim and to waive  any  statute  of
limitation to the contrary. Punitive damages shall not be awarded.

     10.  Notice.  For  purposes  of  this  Agreement,  notices  on  all  of the
communications  provided for in the  Agreement  shall be in writing and shall be
deemed  to have been  duly  given  when  delivered  or  mailed by United  States
registered mail, return receipt  requested,  postage pre-paid as follows.  If to
the Company: Sonoma Valley Bank, 202 West Napa Street, Sonoma, California 95476,
Attention:  Chairman  of the  Board;  and if to the  Executive,  at the  address
specified at the end of this  Agreement.  Notice may also be given at such other
address  as either  party may have  furnished  to the  other in  writing  and in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.


<PAGE>

     11. Validity.  The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

     12.   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.

     13. Miscellaneous.  No provisions of this Agreement may be modified, waived
or discharged  unless such waiver,  modification  or discharge is agreed to in a
writing  signed by the  Executive  and the  Company.  No waiver by either  party
hereto at any time of any breach by the other  party  hereto  of, or  compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at  the  time  or  at  any  prior  or   subsequent   time.   No   agreements  or
representations,  oral or  otherwise,  express or implied,  with  respect to the
subject  matter  hereof  have been made by either  party which are not set forth
expressly in this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above-written.

SONOMA VALLEY BANK:                 EXECUTIVE:

By:


Print Name: __________________

Title:  _______________________


                                    (Address for Notice)












                                    (Designated Beneficiary)



                                    (Address and Social Security number of
                                    Beneficiary)