Document:

EXHIBIT 4(c)

                        JUNIOR SUBORDINATED DEBT SECURITY

               THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH
MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

               THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO

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HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT
AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN
TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON
ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR
ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

               IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.

               THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF
$1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK
HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND
OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT
TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

               THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED
STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"). THIS OBLIGATION IS SUBORDINATED TO THE
CLAIMS OF DEPOSITORS AND THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE
COMPANY, IS INELIGIBLE AS COLLATERAL FOR A LOAN BY THE COMPANY AND IS NOT
SECURED.

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                    10.25% Junior Subordinated Debt Security

                                       of

                              North Valley Bancorp

               North Valley Bancorp, a bank holding company (the "Company"), for
value received promises to pay to The Bank of New York, not in its individual
capacity but solely as Institutional Trustee for North Valley Capital Trust I
(the "Holder") or registered assigns, the principal sum of Ten Million Three
Hundred and Ten Thousand Dollars ($10,310,000) on July 25, 2031, and to pay
interest on said principal sum from July 16, 2001, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, semi-annually (subject to deferral
as set forth herein) in arrears on January 25 and July 25 of each year
commencing January 25, 2002, at a fixed annual rate equal to 10.25% (the
"Interest Rate") until the principal hereof shall have become due and payable,
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at an annual rate equal to 10.25% compounded
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which the principal or interest is payable on this Debt
Security is not a Business Day, then payment payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Debt Security (or one or
more Predecessor Securities, as defined in said Indenture) is registered at the
close of business on the Record Date for such interest installment, which shall
be the close of business on the 15th day next preceding such Interest Payment
Date. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the registered holders on such Record
Date and may be paid to the Person in whose name this Debt Security (or one or
more Predecessor Debt Securities) is registered at the close of business on a
special record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of the Debt
Securities not less than 10 days prior to such special record date, all as more
fully provided in the Indenture. The principal of and interest on this Debt
Security shall be payable at the office or agency of the Trustee (or other
paying agent appointed by the Company) maintained for that purpose in any coin
or currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered holder at such address as shall appear in the Debt Security Register
or by wire transfer to an account appropriately designated by the holder hereof.
Notwithstanding the foregoing, so long as the holder of this Debt Security is
the Institutional Trustee, the payment of the principal of and interest on this
Debt Security will be made in immediately available funds at such place and to
such account as may be designated by the Trustee.

                                      154
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               So long as no Event of Default has occurred and is continuing,
the Company shall have the right, from time to time, to defer payments of
interest on the Debt Securities by extending the interest payment period on the
Debt Securities at any time and from time to time during the term of the Debt
Securities, for up to 10 consecutive semi-annual periods (each such extended
interest payment period, an "Extension Period"), during which Extension Period
no interest shall be due and payable (except any Additional Interest that may be
due and payable). During any Extension Period, interest will continue to accrue
on the Debt Securities and interest on such accrued interest (such accrued
interest and interest thereon referred to herein as "Deferred Interest") will
accrue at the Interest Rate, compounded semi-annually from the date such
Deferred Interest would have been payable were it not for the Extension Period,
both to the extent permitted by law. No Extension Period may end on a date other
than an Interest Payment Date. At the end of any such Extension Period the
Company shall pay all Deferred Interest then accrued and unpaid on the Debt
Securities; provided however, that no Extension Period may extend beyond the
Maturity Date and provided further however, during any such Extension Period,
the Company may not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Company's capital stock or (ii) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Debt Securities (other than (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any Extension Period, the Company may
further extend such period, provided that such period together with all such
previous and further consecutive extensions thereof shall not exceed 10
consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all Deferred
Interest, the Company may commence a new Extension Period, subject to the
foregoing requirements. No interest or Deferred Interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Deferred Interest. The Company must give the
Trustee notice of its election to begin such Extension Period at least one
Business Day prior to the earlier of (i) the date interest on the Debt
Securities would have been payable except for the election to begin

                                      155
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such Extension Period or (ii) the date such interest is payable, but in any
event not less than one Business Day prior to such record date.

               The indebtedness evidenced by this Debt Security is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness, and this Debt Security is
issued subject to the provisions of the Indenture with respect thereto. Each
holder of this Debt Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

               The Company waives demand, presentment for payment, notice of
nonpayment, notice of protest, and all other notices.

               This Debt Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by or on
behalf of the Trustee.

               The provisions of this Debt Security are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.

                                      156
<PAGE>

               IN WITNESS WHEREOF, the Company has duly executed this
certificate.

                                       NORTH VALLEY BANCORP

                                       By:______________________________________
                                          Name:
                                          Title:

Dated: July 16, 2001

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

               This is one of the Debt Securities referred to in the
within-mentioned Indenture.

                                       THE BANK OF NEW YORK, as the Trustee

                                       By:______________________________________
                                                 Authorized Officer

Dated: July 16, 2001

                                      157
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                               REVERSE OF SECURITY

               This Debt Security is one of a duly authorized series of Debt
Securities of the Company, all issued or to be issued pursuant to an Indenture
(the "Indenture") dated as of July 16, 2001, duly executed and delivered between
the Company and The Bank of New York, as Trustee (the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Debt
Securities (referred to herein as the "Debt Securities") of which this Debt
Security is a part. The summary of the terms of this Debt Security contained
herein does not purport to be complete and is qualified by reference to the
Indenture.

               Upon the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, this Debt Security may
become due and payable, in whole but not in part, at any time, within 90 days
following the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event (the "Special Redemption Date"), as the case may be, at the
Special Redemption Price. The Company shall also have the right to redeem this
Debt Security at the option of the Company, in whole or in part, on any January
25 or July 25 on or after July 25, 2006 (a "Redemption Date"), at the Redemption
Price.

               Any redemption pursuant to the preceding paragraph will be made,
subject to the receipt by the Company of prior approval from the Board of
Governors of the Federal Reserve System (the "Federal Reserve") if then required
under applicable capital guidelines or policies of the Federal Reserve, upon not
less than 30 days' nor more than 60 days' notice. If the Debt Securities are
only partially redeemed by the Company, the Debt Securities will be redeemed pro
rata or by lot or by any other method utilized by the Trustee.

               "Redemption Price" means the price set forth in the following
table for any Redemption Date or Special Redemption Date that occurs within the
twelve-month period beginning in the relevant year indicated below, expressed in
percentage of the principal amount of the Debt Securities being redeemed:

                     Year Beginning                     Percentage
                     --------------                     ----------

                     July 25, 2006                       107.6875
                     July 25, 2007                       106.1500
                     July 25, 2008                       104.6125
                     July 25, 2009                       103.0750
                     July 25, 2010                       101.5375
               July 25, 2011 and after                   100.0000

                                      158
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               plus accrued and unpaid interest on such Debentures to the
Redemption Date or Special Redemption Date, as the case may be.

               "Special Redemption Price" means (1) if the Special Redemption
Date is before July 25, 2006, the greater of (a) 100% of the principal amount of
the Debt Securities being redeemed pursuant to Section 10.02 or (b) as
determined by a Quotation Agent, the sum of the present values of the principal
amount and the premium payable as part of the Redemption Price with respect to a
redemption as of July 25, 2006 together with the present value of scheduled
payments of interest over the Remaining Life of such Debt Securities, discounted
to the Special Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 0.50%, plus, in
the case of either (a) or (b), accrued and unpaid interest on such Debt
Securities to the Special Redemption Date and (2) if the Special Redemption Date
is on or after July 25, 2006, the Redemption Price for such Special Redemption
Date.

               "Comparable Treasury Issue" means with respect to any Special
Redemption Date the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before to three months after
July 25, 2006, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.

               "Comparable Treasury Price" means (a) the average of five
Reference Treasury Dealer Quotations for such Special Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(b) if the Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.

               "Primary Treasury Dealer" shall mean a primary United States
Government securities dealer in New York City.

               "Quotation Agent" means Salomon Smith Barney Inc. and its
successors; provided, however, that if the foregoing shall cease to be a Primary
Treasury Dealer, the Company shall substitute therefor another Primary Treasury
Dealer.

               "Reference Treasury Dealer" means (i) the Quotation Agent and
(ii) any other Primary Treasury Dealer selected by the Trustee after
consultation with the Company.

               "Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such Special Redemption Date.

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               "Treasury Rate" means (i) the yield, under the heading which
represents the average for the week immediately prior to the date of
calculation, appearing in the most recently published statistical release
designated H.15 (519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities", for the maturity corresponding to the Remaining
Life (if no maturity is within three months before or after the Remaining Life,
yields for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Special Redemption Date.

               In the event of redemption of this Debt Security in part only, a
new Debt Security or Debt Securities for the unredeemed portion hereof will be
issued in the name of the holder hereof upon the cancellation hereof.

               In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Debt Securities may
be declared due and payable, and upon such declaration of acceleration shall
become due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.

               The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time outstanding
affected thereby, as specified in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the Debt
Securities; provided, however, that no such supplemental indenture shall, among
other things, without the consent of the holders of each Debt Security then
outstanding and affected thereby (i) extend the fixed maturity of the Debt
Securities, or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or interest or premium on, the Debt Securities payable
in any coin or currency other than that provided in the Debt Securities, or
impair or affect the right of any holder of Debt Securities to institute suit
for the payment thereof, or (ii) reduce the aforesaid percentage of Debt
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debt Securities at
the time outstanding affected thereby as provided in the Indenture, on behalf of
all of the holders of the Debt Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any of the Debt
Securities. Any such consent or waiver by the registered holder of this Debt
Security (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this Debt
Security and of any Debt Security

                                      160
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issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Debt Security.

               No reference herein to the Indenture and no provision of this
Debt Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debt Security at the time and place and at
the rate and in the money herein prescribed.

               As provided in the Indenture and subject to certain limitations
herein and therein set forth, this Debt Security is transferable by the
registered holder hereof on the Debt Security Register of the Company, upon
surrender of this Debt Security for registration of transfer at the office or
agency of the Trustee in the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debt Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

               Prior to due presentment for registration of transfer of this
Debt Security, the Company, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and the Debt Security registrar may deem and treat the
registered holder hereof as the absolute owner hereof (whether or not this Debt
Security shall be overdue and notwithstanding any notice of ownership or writing
hereon) for the purpose of receiving payment of or on account of the principal
hereof and interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary.

               No recourse shall be had for the payment of the principal of or
the interest on this Debt Security, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.

               The Debt Securities are issuable only in registered certificated
form without coupons. As provided in the Indenture and subject to certain
limitations herein and therein set forth, Debt Securities are exchangeable for a
like aggregate principal amount of Debt Securities of a different authorized
denomination, as requested by the holder surrendering the same.

               All terms used in this Debt Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

                                      161
<PAGE>

               THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THE DEBT SECURITIES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

                                      162EXHIBIT 4(d)

                               GUARANTEE AGREEMENT

                              NORTH VALLEY BANCORP

                            Dated as of July 16, 2001

                                      163
<PAGE>

                               TABLE OF CONTENTS

                                                                            Page

                                   ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions and Interpretation...................................

                                   ARTICLE II
                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 2.1 Powers and Duties of the Guarantee Trustee ......................
SECTION 2.2 Certain Rights of Guarantee Trustee..............................
SECTION 2.3 Not Responsible for Recitals or Issuance of Guarantee............
SECTION 2.4 Events of Default; Waiver........................................
SECTION 2.5 Events of Default; Notice........................................

                                  ARTICLE III
                               GUARANTEE TRUSTEE

SECTION 3.1 Guarantee Trustee; Eligibility...................................
SECTION 3.2 Appointment, Removal and Resignation of Guarantee Trustee .......

                                   ARTICLE IV
                                   GUARANTEE

SECTION 4.1 Guarantee .......................................................
SECTION 4.2 Waiver of Notice and Demand......................................
SECTION 4.3 Obligations Not Affected.........................................
SECTION 4.4 Rights of Holders ...............................................
SECTION 4.5 Guarantee of Payment.............................................
SECTION 4.6 Subrogation......................................................
SECTION 4.7 Independent Obligations .........................................
SECTION 4.8 Enforcement .....................................................

                                   ARTICLE V
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1 Limitation of Transactions ......................................
SECTION 5.2 Ranking .........................................................

                                      165
<PAGE>

                                   ARTICLE VI
                                   TERMINATION

SECTION 6.1 Termination......................................................

                                  ARTICLE VII
                                INDEMNIFICATION

SECTION 7.1 Exculpation......................................................
SECTION 7.2 Indemnification..................................................
SECTION 7.3 Compensation; Reimbursement of Expenses..........................

                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1 Successors and Assigns...........................................
SECTION 8.2 Amendments ......................................................
SECTION 8.3 Notices .........................................................
SECTION 8.4 Benefit .........................................................
SECTION 8.5 Governing Law ...................................................
SECTION 8.6 Counterparts ....................................................

                                      166
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                               GUARANTEE AGREEMENT
                               -------------------

               This GUARANTEE AGREEMENT (the "Guarantee"), dated as of July 16,
2001, is executed and delivered by North Valley Bancorp, a bank holding company
incorporated in California (the "Guarantor"), and The Bank of New York, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of North
Valley Capital Trust I, a Delaware statutory business trust (the "Issuer").

               WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of July 16, 2001, among the trustees named therein
of the Issuer, North Valley Bancorp, as sponsor, and the Holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof securities, having an aggregate liquidation amount
of up to $10,000,000, designated the 10.25% Fixed Rate MMCapSSM (the "Capital
Securities");

               WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and

               NOW, THEREFORE, in consideration of the purchase by each Holder
of the Capital Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee for
the benefit of the Holders.

                                   ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1    Definitions and Interpretation
               ------------------------------

In this Guarantee, unless the context otherwise requires:

               (a) capitalized terms used in this Guarantee but not defined in
         the preamble above have the respective meanings assigned to them in
         this Section 1.1;

               (b) a term defined anywhere in this Guarantee has the same
         meaning throughout;

               (c) all references to "the Guarantee" or "this Guarantee" are to
         this Guarantee as modified, supplemented or amended from time to time;

               (d) all references in this Guarantee to Articles and Sections are
         to Articles and Sections of this Guarantee, unless otherwise specified;

               (e) terms defined in the Declaration as at the date of execution
         of this Guarantee have the same meanings when used in this Guarantee,
         unless otherwise defined in this Guarantee or unless the context
         otherwise requires; and

               (f) a reference to the singular includes the plural and vice
         versa.

                                      167
<PAGE>

               "Beneficiaries" means any Person to whom the Issuer is or
hereafter becomes indebted or liable.

               "Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Guarantee Agreement is located at 101 Barclay Street, Floor
21W, New York, NY 10286.

               "Covered Person" means any Holder of Capital Securities.

               "Debentures" means the junior subordinated debentures of North
Valley Bancorp, designated the 10.25% Junior Subordinated Deferrable Interest
Debentures due 2031, held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.

               "Event of Default" has the meaning set forth in Section 2.4.

               "Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer shall have funds available in
the Property Account (as defined in the Declaration) therefor at such time, (ii)
the Redemption Price (as defined in the Indenture) to the extent the Issuer has
funds available in the Property Account therefor at such time, with respect to
any Capital Securities called for redemption by the Issuer, (iii) the Special
Redemption Price (as defined in the Indenture) to the extent the Issuer has
funds available in the Property Account therefor at such time, with respect to
Capital Securities called for redemption upon the occurrence of a Special Event
(as defined in the Indenture), and (iv) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available in the Property Account therefor at such
time, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer after satisfaction of
liabilities to creditors of the Issuer as required by applicable law (in either
case, the "Liquidation Distribution").

               "Guarantee Trustee" means The Bank of New York , until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

               "Holder" means any holder, as registered on the books and records
of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

               "Indemnified Person" means the Guarantee Trustee, any Affiliate
of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Guarantee Trustee.

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<PAGE>

               "Indenture" means the Indenture dated as of July 16, 2001,
between the Guarantor and The Bank of New York, not in its individual capacity
but solely as trustee, and any indenture supplemental thereto pursuant to which
the Debentures are to be issued to the Institutional Trustee of the Issuer.

               "Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.

               "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.

               "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

               "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

               (a) a statement that each officer signing the Officer's
         Certificate has read the covenant or condition and the definitions
         relating thereto;

               (b) a brief statement of the nature and scope of the examination
         or investigation undertaken by each officer in rendering the Officer's
         Certificate;

               (c) a statement that each such officer has made such examination
         or investigation as, in such officer's opinion, is necessary to enable
         such officer to express an informed opinion as to whether or not such
         covenant or condition has been complied with; and

               (d) a statement as to whether, in the opinion of each such
         officer, such condition or covenant has been complied with.

               "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

               "Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.

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<PAGE>

               "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

               "Trust Securities" means the Common Securities and the Capital
Securities.

                                   ARTICLE II
                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

               SECTION 2.1 Powers and Duties of the Guarantee Trustee
                           ------------------------------------------

               (a) This Guarantee shall be held by the Guarantee Trustee for the
         benefit of the Holders of the Capital Securities, and the Guarantee
         Trustee shall not transfer this Guarantee to any Person except a Holder
         of Capital Securities exercising his or her rights pursuant to Section
         4.4 (b) or to a Successor Guarantee Trustee on acceptance by such
         Successor Guarantee Trustee of its appointment to act as Successor
         Guarantee Trustee. The right, title and interest of the Guarantee
         Trustee shall automatically vest in any Successor Guarantee Trustee,
         and such vesting and cessation of title shall be effective whether or
         not conveyancing documents have been executed and delivered pursuant to
         the appointment of such Successor Guarantee Trustee.

               (b) If an Event of Default actually known to a Responsible
         Officer of the Guarantee Trustee has occurred and is continuing, the
         Guarantee Trustee shall enforce this Guarantee for the benefit of the
         Holders of the Capital Securities.

               (c) The Guarantee Trustee, before the occurrence of any Event of
         Default and after curing all Events of Default that may have occurred,
         shall undertake to perform only such duties as are specifically set
         forth in this Guarantee, and no implied covenants shall be read into
         this Guarantee against the Guarantee Trustee. In case an Event of
         Default has occurred (that has not been cured or waived pursuant to
         Section 2.4) and is actually known to a Responsible Officer of the
         Guarantee Trustee, the Guarantee Trustee shall exercise such of the
         rights and powers vested in it by this Guarantee, and use the same
         degree of care and skill in its exercise thereof, as a prudent person
         would exercise or use under the circumstances in the conduct of his or
         her own affairs.

               (d) No provision of this Guarantee shall be construed to relieve
         the Guarantee Trustee from liability for its own negligent action, its
         own negligent failure to act, or its own willful misconduct, except
         that:

                      (i) prior to the occurrence of any Event of Default and
               after the curing or waiving of all such Events of Default that
               may have occurred:

                             (A) the duties and obligations of the Guarantee
                      Trustee shall be determined solely by the express
                      provisions of this Guarantee, and the Guarantee Trustee
                      shall not be liable except for the performance of such
                      duties and obligations as are specifically set forth in
                      this Guarantee, and no implied covenants or obligations
                      shall be read into this Guarantee against the Guarantee
                      Trustee; and

                                      170
<PAGE>

                             (B) in the absence of bad faith on the part of the
                      Guarantee Trustee, the Guarantee Trustee may conclusively
                      rely, as to the truth of the statements and the
                      correctness of the opinions expressed therein, upon any
                      certificates or opinions furnished to the Guarantee
                      Trustee and conforming to the requirements of this
                      Guarantee; but in the case of any such certificates or
                      opinions furnished to the Guarantee Trustee, the Guarantee
                      Trustee shall be under a duty to examine the same to
                      determine whether or not they conform to the requirements
                      of this Guarantee;

                      (ii) the Guarantee Trustee shall not be liable for any
               error of judgment made in good faith by a Responsible Officer of
               the Guarantee Trustee, unless it shall be proved that such
               Responsible Officer of the Guarantee Trustee or the Guarantee
               Trustee was negligent in ascertaining the pertinent facts upon
               which such judgment was made;

                      (iii) the Guarantee Trustee shall not be liable with
               respect to any action taken or omitted to be taken by it in good
               faith in accordance with the written direction of the Holders of
               not less than a Majority in liquidation amount of the Capital
               Securities relating to the time, method and place of conducting
               any proceeding for any remedy available to the Guarantee Trustee,
               or exercising any trust or power conferred upon the Guarantee
               Trustee under this Guarantee; and

                      (iv) no provision of this Guarantee shall require the
               Guarantee Trustee to expend or risk its own funds or otherwise
               incur personal financial liability in the performance of any of
               its duties or in the exercise of any of its rights or powers, if
               the Guarantee Trustee shall have reasonable grounds for believing
               that the repayment of such funds is not reasonably assured to it
               under the terms of this Guarantee, or security and indemnity,
               reasonably satisfactory to the Guarantee Trustee, against such
               risk or liability is not reasonably assured to it.

SECTION 2.2    Certain Rights of Guarantee Trustee
               -----------------------------------

               (a) Subject to the provisions of Section 2.1:

                      (i) The Guarantee Trustee may conclusively rely, and shall
               be fully protected in acting or refraining from acting upon, any
               resolution, certificate, statement, instrument, opinion, report,
               notice, request, direction, consent, order, bond, debenture,
               note, other evidence of indebtedness or other paper or document
               believed by it to be genuine and to have been signed, sent or
               presented by the proper party or parties.

                      (ii) Any direction or act of the Guarantor contemplated by
               this Guarantee shall be sufficiently evidenced by an Officer's
               Certificate.

                      (iii) Whenever, in the administration of this Guarantee,
               the Guarantee Trustee shall deem it desirable that a matter be
               proved or established before taking, suffering or omitting any
               action hereunder, the Guarantee Trustee (unless other evidence is
               herein specifically prescribed) may, in the absence of bad faith

                                      171
<PAGE>

               on its part, request and conclusively rely upon an Officer's
               Certificate of the Guarantor which, upon receipt of such request,
               shall be promptly delivered by the Guarantor.

                      (iv) The Guarantee Trustee shall have no duty to see to
               any recording, filing or registration of any instrument (or any
               rerecording, refiling or registration thereof).

                      (v) The Guarantee Trustee may consult with counsel of its
               selection, and the advice or opinion of such counsel with respect
               to legal matters shall be full and complete authorization and
               protection in respect of any action taken, suffered or omitted by
               it hereunder in good faith and in accordance with such advice or
               opinion. Such counsel may be counsel to the Guarantor or any of
               its Affiliates and may include any of its employees. The
               Guarantee Trustee shall have the right at any time to seek
               instructions concerning the administration of this Guarantee from
               any court of competent jurisdiction.

                      (vi) The Guarantee Trustee shall be under no obligation to
               exercise any of the rights or powers vested in it by this
               Guarantee at the request or direction of any Holder, unless such
               Holder shall have provided to the Guarantee Trustee such security
               and indemnity, reasonably satisfactory to the Guarantee Trustee,
               against the costs, expenses (including attorneys' fees and
               expenses and the expenses of the Guarantee Trustee's agents,
               nominees or custodians) and liabilities that might be incurred by
               it in complying with such request or direction, including such
               reasonable advances as may be requested by the Guarantee Trustee;
               provided, however, that nothing contained in this Section
               2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon
               the occurrence of an Event of Default, of its obligation to
               exercise the rights and powers vested in it by this Guarantee.

                      (vii) The Guarantee Trustee shall not be bound to make any
               investigation into the facts or matters stated in any resolution,
               certificate, statement, instrument, opinion, report, notice,
               request, direction, consent, order, bond, debenture, note, other
               evidence of indebtedness or other paper or document, but the
               Guarantee Trustee, in its discretion, may make such further
               inquiry or investigation into such facts or matters as it may see
               fit.

                      (viii) The Guarantee Trustee may execute any of the trusts
               or powers hereunder or perform any duties hereunder either
               directly or by or through agents, nominees, custodians or
               attorneys, and the Guarantee Trustee shall not be responsible for
               any misconduct or negligence on the part of any agent or attorney
               appointed with due care by it hereunder.

                      (ix) Any action taken by the Guarantee Trustee or its
               agents hereunder shall bind the Holders of the Capital
               Securities, and the signature of the Guarantee Trustee or its
               agents alone shall be sufficient and effective to perform any
               such action. No third party shall be required to inquire as to
               the authority of the Guarantee Trustee to so act or as to its
               compliance with any of the terms and

                                      172
<PAGE>

               provisions of this Guarantee, both of which shall be conclusively
               evidenced by the Guarantee Trustee's or its agent's taking such
               action.

                      (x) Whenever in the administration of this Guarantee the
               Guarantee Trustee shall deem it desirable to receive instructions
               with respect to enforcing any remedy or right or taking any other
               action hereunder, the Guarantee Trustee (A) may request
               instructions from the Holders of a Majority in liquidation amount
               of the Capital Securities, (B) may refrain from enforcing such
               remedy or right or taking such other action until such
               instructions are received and (C) shall be protected in
               conclusively relying on or acting in accordance with such
               instructions.

                      (xi) The Guarantee Trustee shall not be liable for any
               action taken, suffered, or omitted to be taken by it in good
               faith and reasonably believed by it to be authorized or within
               the discretion or rights or powers conferred upon it by this
               Guarantee.

               (b) No provision of this Guarantee shall be deemed to impose any
         duty or obligation on the Guarantee Trustee to perform any act or acts
         or exercise any right, power, duty or obligation conferred or imposed
         on it, in any jurisdiction in which it shall be illegal or in which the
         Guarantee Trustee shall be unqualified or incompetent in accordance
         with applicable law to perform any such act or acts or to exercise any
         such right, power, duty or obligation. No permissive power or authority
         available to the Guarantee Trustee shall be construed to be a duty.

SECTION 2.3    Not Responsible for Recitals or Issuance of Guarantee
               -----------------------------------------------------

               The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

SECTION 2.4    Events of Default; Waiver
               -------------------------

               (a) An Event of Default under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations
hereunder.

               (b) The Holders of a Majority in liquidation amount of Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.

SECTION 2.5    Events of Default; Notice
               -------------------------

               (a) The Guarantee Trustee shall, within 90 days after the
         occurrence of an Event of Default, transmit by mail, first class
         postage prepaid, to the Holders of the Capital

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<PAGE>

         Securities, notices of all Events of Default actually known to a
         Responsible Officer of the Guarantee Trustee, unless such defaults have
         been cured before the giving of such notice, provided, however, that
         the Guarantee Trustee shall be protected in withholding such notice if
         and so long as a Responsible Officer of the Guarantee Trustee in good
         faith determines that the withholding of such notice is in the
         interests of the Holders of the Capital Securities.

               (b) The Guarantee Trustee shall not be deemed to have knowledge
         of any Event of Default unless the Guarantee Trustee shall have
         received written notice from the Guarantor or a Holder of the Capital
         Securities (except in the case of a payment default), or a Responsible
         Officer of the Guarantee Trustee charged with the administration of
         this Guarantee shall have obtained actual knowledge, thereof.

                                  ARTICLE III
                               GUARANTEE TRUSTEE

SECTION 3.1    Guarantee Trustee; Eligibility
               ------------------------------

               (a) There shall at all times be a Guarantee Trustee which shall:

                      (i) not be an Affiliate of the Guarantor; and

                      (ii) be a corporation organized and doing business under
               the laws of the United States of America or any State or
               Territory thereof or of the District of Columbia, or Person
               authorized under such laws to exercise corporate trust powers,
               having a combined capital and surplus of at least 50 million U.S.
               dollars ($50,000,000), and subject to supervision or examination
               by Federal, State, Territorial or District of Columbia authority.
               If such corporation publishes reports of condition at least
               annually, pursuant to law or to the requirements of the
               supervising or examining authority referred to above, then, for
               the purposes of this Section 3.1(a) (ii), the combined capital
               and surplus of such corporation shall be deemed to be its
               combined capital and surplus as set forth in its most recent
               report of condition so published.

               (b) If at any time the Guarantee Trustee shall cease to be
         eligible to so act under Section 3.1(a), the Guarantee Trustee shall
         immediately resign in the manner and with the effect set out in Section
         3.2(c).

               (c) If the Guarantee Trustee has or shall acquire any
         "conflicting interest" within the meaning of Section 310(b) of the
         Trust Indenture Act, the Guarantee Trustee shall either eliminate such
         interest or resign to the extent and in the manner provided by, and
         subject to this Guarantee.

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<PAGE>

SECTION 3.2    Appointment, Removal and Resignation of Guarantee Trustee
               ---------------------------------------------------------

               (a) Subject to Section 3.2(b), the Guarantee Trustee may be
         appointed or removed without cause at any time by the Guarantor except
         during an Event of Default.

               (b) The Guarantee Trustee shall not be removed in accordance with
         Section 3.2(a) until a Successor Guarantee Trustee has been appointed
         and has accepted such appointment by written instrument executed by
         such Successor Guarantee Trustee and delivered to the Guarantor.

               (c) The Guarantee Trustee appointed to office shall hold office
         until a Successor Guarantee Trustee shall have been appointed or until
         its removal or resignation. The Guarantee Trustee may resign from
         office (without need for prior or subsequent accounting) by an
         instrument in writing executed by the Guarantee Trustee and delivered
         to the Guarantor, which resignation shall not take effect until a
         Successor Guarantee Trustee has been appointed and has accepted such
         appointment by an instrument in writing executed by such Successor
         Guarantee Trustee and delivered to the Guarantor and the resigning
         Guarantee Trustee.

               (d) If no Successor Guarantee Trustee shall have been appointed
         and accepted appointment as provided in this Section 3.2 within 60 days
         after delivery of an instrument of removal or resignation, the
         Guarantee Trustee resigning or being removed may petition any court of
         competent jurisdiction for appointment of a Successor Guarantee
         Trustee. Such court may thereupon, after prescribing such notice, if
         any, as it may deem proper, appoint a Successor Guarantee Trustee.

               (e) No Guarantee Trustee shall be liable for the acts or
         omissions to act of any Successor Guarantee Trustee.

               (f) Upon termination of this Guarantee or removal or resignation
         of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor
         shall pay to the Guarantee Trustee all amounts owing to the Guarantee
         Trustee under Sections 7.2 and 7.3 accrued to the date of such
         termination, removal or resignation.

                                   ARTICLE IV
                                   GUARANTEE

SECTION 4.1    Guarantee
               ---------

               (a) The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense
(except as defense of payment by the Issuer), right of set-off or counterclaim
that the Issuer may have or assert. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.

               (b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not so
assumed, subject to the terms and conditions

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<PAGE>

hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each
Beneficiary the full payment, when and as due, of any and all obligations to
such Beneficiaries. This Agreement is intended to be for the Beneficiaries who
have received notice hereof.

SECTION 4.2    Waiver of Notice and Demand
               ---------------------------

               The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

SECTION 4.3    Obligations Not Affected
               ------------------------

               The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:

               (a) the release or waiver, by operation of law or otherwise, of
         the performance or observance by the Issuer of any express or implied
         agreement, covenant, term or condition relating to the Capital
         Securities to be performed or observed by the Issuer;

               (b) the extension of time for the payment by the Issuer of all or
         any portion of the Distributions, Redemption Price, Special Redemption
         Price, Liquidation Distribution or any other sums payable under the
         terms of the Capital Securities or the extension of time for the
         performance of any other obligation under, arising out of, or in
         connection with, the Capital Securities (other than an extension of
         time for payment of Distributions, Redemption Price, Special Redemption
         Price, Liquidation Distribution or other sum payable that results from
         the extension of any interest payment period on the Debentures or any
         extension of the maturity date of the Debentures permitted by the
         Indenture);

               (c) any failure, omission, delay or lack of diligence on the part
         of the Holders to enforce, assert or exercise any right, privilege,
         power or remedy conferred on the Holders pursuant to the terms of the
         Capital Securities, or any action on the part of the Issuer granting
         indulgence or extension of any kind;

               (d) the voluntary or involuntary liquidation, dissolution, sale
         of any collateral, receivership, insolvency, bankruptcy, assignment for
         the benefit of creditors, reorganization, arrangement, composition or
         readjustment of debt of, or other similar proceedings affecting, the
         Issuer or any of the assets of the Issuer;

               (e) any invalidity of, or defect or deficiency in, the Capital
         Securities;

               (f) the settlement or compromise of any obligation guaranteed
         hereby or hereby incurred; or

               (g) any other circumstance whatsoever that might otherwise
         constitute a legal or equitable discharge or defense of a guarantor, it
         being the intent of this Section 4.3 that

                                      176
<PAGE>

         the obligations of the Guarantor hereunder shall be absolute and
         unconditional under any and all circumstances.

               There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

SECTION 4.4    Rights of Holders
               -----------------

               (a) The Holders of a Majority in liquidation amount of the
         Capital Securities have the right to direct the time, method and place
         of conducting any proceeding for any remedy available to the Guarantee
         Trustee in respect of this Guarantee or to direct the exercise of any
         trust or power conferred upon the Guarantee Trustee under this
         Guarantee; provided, however, that (subject to Sections 2.1 and 2.2)
         the Guarantee Trustee shall have the right to decline to follow any
         such direction if the Guarantee Trustee shall determine that the
         actions so directed would be unjustly prejudicial to the Holders not
         taking part in such direction or if the Guarantee Trustee being advised
         by counsel determines that the action or proceeding so directed may not
         lawfully be taken or if the Guarantor Trustee in good faith by its
         board of directors or trustees, executive committees or a trust
         committee of directors or trustees and/or Responsible Officers shall
         determine that the action or proceedings so directed would involve the
         Guarantee Trustee in personal liability.

               (b) Any Holder of Capital Securities may institute a legal
         proceeding directly against the Guarantor to enforce the Guarantee
         Trustee's rights under this Guarantee, without first instituting a
         legal proceeding against the Issuer, the Guarantee Trustee or any other
         Person. The Guarantor waives any right or remedy to require that any
         such action be brought first against the Issuer, the Guarantee Trustee
         or any other Person before so proceeding directly against the
         Guarantor.

SECTION 4.5    Guarantee of Payment
               --------------------

               This Guarantee creates a guarantee of payment and not of
collection.

SECTION 4.6    Subrogation
               -----------

               The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by applicable provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.

                                      177
<PAGE>

SECTION 4.7    Independent Obligations
               -----------------------

               The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8    Enforcement.
               -----------

               A Beneficiary may enforce the obligations of the Guarantor
contained in Section 4.1(b) directly against the Guarantor, and the Guarantor
waives any right or remedy to require that any action be brought against the
Issuer or any other person or entity before proceeding against the Guarantor.

               The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this Guarantee.

                                   ARTICLE V
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1    Limitation of Transactions
               --------------------------

               So long as any Capital Securities remain outstanding, if (a)
there shall have occurred and be continuing an Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor may not (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (y) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Guarantor that rank pari passu in all respects with
or junior in interest to the Debentures (other than (i) payments under this
Guarantee, (ii) repurchases, redemptions or other acquisitions of shares of
capital stock of the Guarantor in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees, officers, directors, or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to occurrence of the Event of Default or the
applicable Extension Period, (iii) as a result of any exchange of conversion of
any class or series of the Guarantor's capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor's capital
stock or of any class or series of the Guarantor's indebtedness for any class

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or series of the Guarantor's capital stock, (iv) the purchase of fractional
interests in shares of the Guarantor's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, (v) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (vi) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).

SECTION 5.2    Ranking
               -------

               This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

               The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VI
                                  TERMINATION

SECTION 6.1    Termination
               -----------

               This Guarantee shall terminate as to the Capital Securities (i)
upon full payment of the Redemption Price or the Special Redemption Price, as
the case may be, of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.

                                  ARTICLE VII
                                INDEMNIFICATION

SECTION 7.1    Exculpation
               -----------

               (a) No Indemnified Person shall be liable, responsible or
         accountable in damages or otherwise to the Guarantor or any Covered
         Person for any loss, damage or claim incurred by reason of any act or
         omission performed or omitted by such Indemnified

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<PAGE>

         Person in good faith in accordance with this Guarantee and in a manner
         that such Indemnified Person reasonably believed to be within the scope
         of the authority conferred on such Indemnified Person by this Guarantee
         or by law, except that an Indemnified Person shall be liable for any
         such loss, damage or claim incurred by reason of such Indemnified
         Person's negligence or willful misconduct with respect to such acts or
         omissions.

               (b) An Indemnified Person shall be fully protected in relying in
         good faith upon the records of the Issuer or the Guarantor and upon
         such information, opinions, reports or statements presented to the
         Issuer or the Guarantor by any Person as to matters the Indemnified
         Person reasonably believes are within such other Person's professional
         or expert competence and who, if selected by such Indemnified Person,
         has been selected with reasonable care by such Indemnified Person,
         including information, opinions, reports or statements as to the value
         and amount of the assets, liabilities, profits, losses, or any other
         facts pertinent to the existence and amount of assets from which
         Distributions to Holders of Capital Securities might properly be paid.

SECTION 7.2    Indemnification
               ---------------

               (a) The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or willful
misconduct on the part of the Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including but not limited to the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.

               (b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified Person
will, if a claim in respect thereof is to be made against the Guarantor under
this Section 7.2, notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the
Guarantor did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be satisfactory to the Indemnified
Person. Notwithstanding the Guarantor's election to appoint counsel to represent
the Guarantor in an action, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and the Guarantor shall bear
the reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the Guarantor to

                                      180
<PAGE>

represent the Indemnified Person would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person and the Guarantor and the Indemnified
Person shall have reasonably concluded that there may be legal defenses
available to it and/or other Indemnified Person which are different from or
additional to those available to the Guarantor, (iii) the Guarantor shall not
have employed counsel satisfactory to the Indemnified Person to represent the
Indemnified Person within a reasonable time after notice of the institution of
such action or (iv) the Guarantor shall authorize the Indemnified Person to
employ separate counsel at the expense of the Guarantor. The Guarantor will not,
without the prior written consent of the Indemnified Persons, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Persons are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such claim, action,
suit or proceeding.

SECTION 7.3    Compensation; Reimbursement of Expenses
               ---------------------------------------

               The Guarantor agrees:

               (a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree to from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and

               (b) except as otherwise expressly provided herein, to reimburse
the Guarantee Trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by it in accordance with any provision of this
Guarantee (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or willful misconduct.

               The provisions of this Section 7.3 shall survive the resignation
or removal of the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII
                                 MISCELLANEOUS

SECTION 8.1    Successors and Assigns
               ----------------------

               All guarantees and agreements contained in this Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case, to the
extent permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of at least a Majority in liquidation amount of the Capital Securities.

                                      181
<PAGE>

SECTION 8.2    Amendments
               ----------

               Except with respect to any changes that do not adversely affect
the rights of Holders of the Capital Securities in any material respect (in
which case no consent of Holders will be required), this Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority
in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof shall apply equally with respect
to amendments of the Guarantee.

SECTION 8.3    Notices
               -------

               All notices provided for in this Guarantee shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:

               (a) If given to the Guarantee Trustee, at the Guarantee Trustee's
         mailing address set forth below (or such other address as the Guarantee
         Trustee may give notice of to the Holders of the Capital Securities):

                        The Bank of New York
                        101 Barclay Street, Floor 21W
                        New York, NY 10286
                        Attention: Corporate Trust Administration
                        Telecopy: 212-815-5915

               (b) If given to the Guarantor, at the Guarantor's mailing address
         set forth below (or such other address as the Guarantor may give notice
         of to the Holders of the Capital Securities and to the Guarantee
         Trustee):

                        North Valley Bancorp
                        880 E. Cypress Avenue
                        Redding, California 96002
                        Attention: Edward J. Czajka

               (c) If given to any Holder of the Capital Securities, at the
         address set forth on the books and records of the Issuer.

               All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

SECTION 8.4    Benefit
               -------

               This Guarantee is solely for the benefit of the Holders of the
Capital Securities and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities.

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<PAGE>

SECTION 8.5    Governing Law
               -------------

               THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

SECTION 8.6    Counterparts
               ------------

               This Guarantee may contain more than one counterpart of the
signature page and this Guarantee may be executed by the affixing of the
signature of the Guarantor and the Guarantee Trustee to any of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.

                                      183
<PAGE>

               THIS GUARANTEE is executed as of the day and year first above
written.

                                       NORTH VALLEY BANCORP,
                                          as Guarantor

                                       By:______________________________________
                                          Name:
                                          Title:

                                       THE BANK OF NEW YORK,
                                          as Guarantee Trustee

                                       By:______________________________________
                                          Name:
                                          Title:

                                      184

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