HUMBOLDT BANCORP
EXHIBIT 10.3
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>f83987exv10w3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.3


[HUMBOLDT BANCORP LOGO]                                 EXECUTIVE VICE PRESIDENT

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

         This Employment Agreement (this "Agreement") is entered into as of June
24, 2002 by and between Humboldt Bank, a California banking corporation
("Employer"), and Mark A. Francis (the "Executive").

                                    RECITAL:

         The parties desire to set forth the terms of Executive's employment
with Employer.

         NOW, THEREFORE, the parties hereto agree as follows:

         1. Definitions. Defined terms used herein are capitalized and, where
not expressly defined in a separate section hereof, the definitions thereof are
set forth in Section 19.

         2. Employment. Employer hereby employs Executive and Executive hereby
accepts employment during the Term of Employment upon the terms and conditions
herein set forth.

         3. Term of Employment. Employer agrees to continue Executive's
employment, and Executive agrees to remain in employment with Employer, from
June 24, 2002 (the "Commencement Date") until the earliest of (i) June 24, 2005
or (ii) the date on which Executive's employment with Employer terminates
pursuant to Section 12(a), (b), (c), (d), (e) or (f), as applicable (the "Term
of Employment"). Unless earlier terminated pursuant to Section 12(a), (b), (c),
(d), (e) or (f), as applicable, this Agreement shall be automatically renewed
for successive one-year terms unless Employer gives Executive written notice of
non-renewal not less than 120 days prior to the end of the term.

         4. Duties. Executive is employed as Executive Vice President and, under
the direction of President and C.E.O., shall perform and discharge well and
faithfully the duties that may be assigned to him from time to time by the
President and C.E.O. in connection with the conduct of Employer's business. In
his capacity as Executive Vice President, Executive shall perform the customary
duties of Executive Vice President of a California commercial bank including but
not limited to:

         (a)      Participating in community affairs which are beneficial to
                  Employer;

         (b)      Maintaining a good relationship with Employer and
                  shareholders;

         (c)      Maintaining a good relationship with regulatory authorities;
                  and

         (d)      Providing leadership in planning and implementing the affairs
                  of Employer.


                                      -1-
<PAGE>
         5. Extent of Service. Executive shall devote his entire business time,
attention, and energies to the business of Employer during the term of
Executive's employment with Employer. The foregoing, however, shall not preclude
Executive from engaging into appropriate civic, charitable, or religious
activities or from devoting a reasonable amount of time to private investments
or from serving on the boards of directors of other entities, as long as such
activities and services do not interfere or conflict with his responsibilities
to Employer.

         6. Compensation.

         (a) Salary. During the Term of Employment, Employer shall pay Executive
a base salary at the annual rate of $160,000 payable in accordance with the
standard payroll procedures of Employer but not less than one time monthly.
Executive's base salary shall be increased annually effective on January 1 of
each year to reflect such changes as Employer determines appropriate, based on
Executive's performance for the most recent performance period.

         (b) Incentive Programs. During the Term of Employment, Executive shall
be entitled to participate in any annual and longer-term incentive programs
adopted by Employer and which cover employees in positions comparable to that of
Executive.

         (c) Stock Options. Executive will be eligible to be considered for
participation in the stock option plan of Employer at the discretion of
Employer.

         (d) Expenses. Executive shall be entitled to prompt reimbursement of
all reasonable business expenses incurred by him in the performance of his
duties during the Term of Employment, subject to the presentment of appropriate
vouchers and receipts in accordance with Employer's policies.

         7. Employee Benefits. During the Term of Employment, Executive shall be
entitled to participate in employee benefit plans or programs of Employer, if
any, to the extent that his position, tenure, salary, age, health, and other
qualifications make him eligible to participate, subject to the rules and
regulations applicable thereto. Employer shall have no duty under this agreement
to give Executive any additional compensation to cover life insurance premiums
or to maintain any life insurance on Executive's life.

         8. Retirement Plan. Executive shall be entitled to participate in any
retirement plans offered to other employees of Employer such as Executive's
participation in Employer's 401(k) plan.

         9. Vacation. During the term of employment Executive shall be entitled
to vacation leave at full salary at the discretion of Executive as time allows,
so long as it is reasonable and does not jeopardize his responsibilities, of
four (4) weeks per year; provided that at least once each year Executive is
required to be absent from his duties with Employer for a period of at least ten
(10) consecutive business days, all or any portion of which may be vacation
leave. The length of


                                      -2-
<PAGE>
vacation at any one time should not exceed two (2) weeks. In the event that
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, he may accrue that time and add it to
vacation time for the following year, provided that no more than two (2) weeks
can be carried over in any given year.

         10. Surety Bond. Executive agrees to furnish all information and take
any other steps necessary to enable Employer to obtain and maintain a fidelity
bond conditioned on the rendering of a true account by Executive of all moneys,
goods, or other property which may come into the custody, charge, or possession
of Executive during the Term of Executive's employment. The surety company
issuing such bond and the amount of the bond must be acceptable to Employer. All
premiums on the bond shall be paid by Employer. If Executive cannot personally
qualify for a surety bond at any time during the Term of this Agreement,
Employer shall have the option to terminate this Agreement immediately and said
termination shall be deemed to be a termination for Cause.

         11. Moral Conduct. Executive agrees to conduct himself at all times
with due regard to public conventions and morals and to abide by and reflect in
his personal actions all of the Code of Ethics as adopted by Employer for
Employer and its subsidiaries and affiliates from time to time. Executive
further agrees not to do or commit any act that will reasonably tend to degrade
him or to bring him into public hatred, contempt or ridicule, or that will
reasonably tend to shock or offend any community in which Employer or any of its
subsidiaries or affiliates engages in business, or to prejudice Employer or the
banking industry in general.

         12. Termination. Notwithstanding the provisions of Section 3 hereof,
the Term of Employment and Executive's employment hereunder may be terminated
without any breach of this Agreement under the following circumstances:

         (a) Death. The Term of Employment shall terminate upon Executive's
death.

         (b) Disability. The Term of Employment shall terminate three (3) months
after Employer gives Executive written notice that it intends to terminate his
employment on account of Disability or on such later date as Employer specifies
in such notice. If Executive resumes the performance of substantially all of his
duties under this Agreement before the termination becomes effective, the notice
of intent to terminate shall be deemed to have been revoked.

         (c) Voluntary Termination. Executive may terminate his employment with
Employer at any time by giving Employer three (3) months' written notice
thereof. The Term of Employment shall end on the earlier of the last day of the
notice period or the last day on which Executive performs services for Employer.


                                      -3-
<PAGE>
         (d) Termination for Good Reason. Executive may terminate his employment
with Employer for Good Reason, as such term is defined in Section 18, by giving
Employer thirty (30) days' notice of the matter or matters which, in Executive's
opinion, form the basis for Good Reason and a statement of his intent to
terminate his employment on such basis. If the basis for Good Reason is an
alleged breach of this Agreement by Employer, such notice shall also include the
basis upon which Executive believes the alleged breach constitutes Good Reason.
If Employer cures its breach or the basis for Good Reason otherwise disappears
within the thirty (30) day period following receipt of such notice, Executive
shall either rescind his notice of intent to terminate and continue his
employment, or terminate his employment under Section 13(c) hereof in which case
his notice of breach hereunder shall be deemed to satisfy the notice requirement
provided for under Section 13(c) hereof. If Employer fails to cure its breach
within, or all other bases for Good Reason continue to the end of, the thirty
(30) day period following receipt of such notice, the Term of Employment shall
end on the last day of the 30-day period following receipt of such notice. If
Executive decides to terminate his employment as provided in Section 13(c)
hereof, the Term of Employment shall end on the earlier of the last day of the
notice period or the last day on which Executive performs services for Employer.

         (e) Involuntary Termination Without Cause. Executive acknowledges and
agrees that his employment is at will. Employer reserves the right to terminate
Executive's employment at any time whatsoever without Cause by giving thirty
(30) days' written notice to Executive thereof. The Term of Employment shall
terminate on the last day of the notice period, but Employer may require
Executive to cease performing services at any time after such notice is given.

         (f) Involuntary Termination for Cause. Employer reserves the right to
terminate Executive's employment for Cause. Employer shall give Executive
written notice of the termination and the reasons therefor. The Term of
Employment shall terminate immediately upon receipt of the notice.

         13. Benefits on Termination of Employment. If Executive's employment is
terminated during the Term of Employment, Executive shall be entitled to receive
payments and benefits as follows:

         (a) Death; Disability; Voluntary Termination; Termination for Cause.

                  If employment is terminated under Section 12(a), (b), (c), or
         (f) hereof, Executive shall receive:

                  (1)      his base salary through the date the Term of
                           Employment ends,

                  (2)      any incentive compensation earned but not yet paid,
                           and

                  (3)      reimbursement of expenses described in Section 6(d)
                           hereof incurred but not yet reimbursed.


                                      -4-
<PAGE>
         (b) Change of Control.

                  (i) If, within one (1) year following a Change of Control, as
         defined in Section 18(c), Executive's employment is terminated under
         the provisions of Section 12(d) or (e) hereof or as a result of
         Employer's election not to extend this Agreement and the Term of
         Employment pursuant to Section 3 hereof, Executive shall receive:

                           (1) An amount equivalent to the greater of (A)
         twenty-four (24) months, or (B) the total number of months remaining
         under the Term of Employment, of Executive's annual base salary under
         Section 7(a) hereof as in effect on the date of the Term of Employment
         ends,

                           (2)      Any incentive compensation earned but not
                                    yet paid;

                           (3)      Reimbursement of expenses described in
                                    Section 6(d) hereof incurred but not yet
                                    reimbursed; and

                           (4)      Immediate acceleration of vesting of all
                                    stock options granted to Executive.


                  (ii) During the 90-day period commencing on the date his Term
         of Employment ends under Section 12(d) or (e) hereof, Executive (and,
         where applicable, his dependents) shall be entitled to continue
         participation in the group insurance plans maintained by Employer,
         including life, disability and health insurance programs, as if he were
         still an employee of Employer. Where applicable, Executive's salary for
         purposes of such plans shall be deemed to be equal to his annual salary
         in effect immediately prior to his termination. To the extent that
         Employer finds it not feasible to obtain coverage for Executive under
         its group insurance policies during such 90-day period, Employer shall
         provide Executive with individual policies which offer at least the
         same level of coverage and which impose not more than the same costs on
         Executive. The foregoing notwithstanding, in the event that Executive
         becomes eligible for comparable group insurance coverage in connection
         with new employment, the coverage provided by Employer under this
         Section 13(b)(ii) shall terminate immediately upon Executive's
         eligibility for coverage. Any group health continuation coverage that
         Employer is required to offer under the Consolidated Omnibus Budget
         Reconciliation Act of 1986 ("COBRA") shall commence when coverage under
         this Section 13(b)(ii) terminates.

                  (iii) Executive shall not be required to mitigate the amount
         of any payment or benefit contemplated by this Section 13(b) (whether
         by seeking new employment or otherwise) and no such payment or benefit
         shall be reduced by earnings that Executive may receive from any other
         source.


                                      -5-
<PAGE>
                  (iv) The payment to which Executive is entitled pursuant to
         Section 13(b)(i)(1) hereof shall be paid in a single installment within
         forty-five (45) days of the last day on which he performs services as
         an employee of Employer, with no percent value or other discount or, at
         Executive's option, on a deferred basis with no premium.

         (c) Involuntary Termination; Termination for Good Reason.

                  (i) If Executive's employment is terminated under the
         provisions of Section 12(d) or (e) hereof, Executive shall receive:

                           (1) An amount equivalent to three (3) months of
         Executive's annual base salary under Section 6(a) hereof plus two (2)
         weeks for each full year of total banking years of service, whether
         with Humboldt or any other banking institution, up to the date of the
         Term of Employment ends with a maximum payout not to exceed two (2)
         years annual base salary;

                           (2) Any incentive compensation earned but not yet
         paid;

                           (3) Reimbursement of expenses described in Section
         6(d) hereof incurred but not yet reimbursed; and

                  (ii) The payment to which Executive is entitled pursuant to
         Section 13(c)(i)(1) hereof shall be paid in a single installment within
         forty-five (45) days of the last day on which he performs services as
         an employee of Employer, with no percent value or other discount or, at
         Executive's option, on a deferred basis with no premium.

                  (iii) During the 90-day period commencing on the date his Term
         of Employment ends under Section 12(d) or (e) hereof, Executive (and,
         where applicable, his dependents) shall be entitled to continue
         participation in the group insurance plans maintained by Employer,
         including life, disability and health insurance programs, as if he were
         still an employee of Employer. Where applicable, Executive's salary for
         purposes of such plans shall be deemed to be equal to his annual salary
         in effect immediately prior to his termination. To the extent that
         Employer finds it not feasible to obtain coverage for Executive under
         its group insurance policies during such 90-day period, Employer shall
         provide Executive with individual policies which offer at least the
         same level of coverage and which impose not more than the same costs on
         Executive. The foregoing notwithstanding, in the event that Executive
         becomes eligible for comparable group insurance coverage in connection
         with new employment, the coverage provided by Employer under this
         Section 13(c)(iii) shall terminate immediately upon Executive's
         eligibility for coverage. Any group health continuation coverage that
         Employer is required to offer under the Consolidated Omnibus Budget
         Reconciliation Act of 1986 ("COBRA") shall commence when coverage under
         this Section 13(c)(iii) terminates.


                                      -6-
<PAGE>
                  (iv) Executive shall not be required to mitigate the amount of
         any payment or benefit contemplated by this Section 13(c) (whether by
         seeking new employment or otherwise) and no such payment or benefit
         shall be reduced by earnings that Executive may receive from any other
         source.

         14. Locations of Performance. Executive's services shall be performed
primarily in Northern California. The parties acknowledge, however, that
Executive may be required to travel in connection with the performance of his
duties hereunder.

         15. Proprietary Information.

         (a) Executive agrees to comply fully with Employer's policies relating
to non-disclosure of Employer's trade secrets and proprietary information and
processes, including information regarding Employer's subsidiaries, affiliates,
customers and prospective customers. Without limiting the generality of the
foregoing, Executive will not, whether during or after the term of his
employment by Employer, disclose any such secrets, information, or processes to
any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, nor shall Executive make use of any such property for his
own purposes or for the benefit of any person, firm, corporation, or other
entity (except Employer) under any circumstances during or after the term of his
employment, provided that after the term of his employment, this provision shall
not apply to secrets, information, and processes that are then in the public
domain (provided that Executive was not responsible, directly or indirectly, for
such secrets, information, or processes entering the public domain without
Employer's consent).

         (b) Executive hereby sells, transfers, and assigns to Employer all of
the entire right, title, and interest of Executive in and to all inventions,
ideas, disclosures, and improvements, whether patented or unpatented, and
copyrightable material, to the extent made or conceived by Executive, solely or
jointly, during the term of this Agreement, except to the extent prohibited by
Section 2870 of the California Labor Code, a copy of which is attached hereto as
Exhibit A. Executive shall communicate promptly and disclose to Employer, in
such form as Employer requests, all information, details, and data pertaining to
the aforementioned inventions, ideas, disclosures, and improvements; and,
whether during the term hereof or thereafter, Executive shall execute and
deliver to Employer such formal transfers and assignments and such other papers
and documents as may be required of Executive to permit Employer to file and
prosecute any patent applications relating to such inventions, ideas,
disclosures, and improvements and, as to copyrightable material, to obtain
copyright thereon.

         (c) Trade secrets, proprietary information, and processes shall not be
deemed to include information which is:

                  (i) publicly known (or becomes publicly known) without the
         fault or negligence of Executive;


                                      -7-
<PAGE>
                  (ii) received from a third party without restriction and
         without breach of this Agreement;

                  (iii) approved for release by written authorization of
         Employer; or

                  (iv) required to be disclosed by law; provided, however, that
         in the event of a proposed disclosure pursuant to this subsection
         15(c)(iv), the recipient shall give Employer prior written notice
         before such disclosure is made.

         (d) Executive agrees that in the event that Executive's employment
terminates for any reason, Executive shall promptly deliver to Employer all
property belonging to Employer, including all documents and materials of any
nature pertaining to Executive's employment with Employer.

         (e) This Section shall survive the expiration or any earlier
termination of this Agreement.

         16. Employment Taxes. All payments made pursuant to this Agreement
shall be subject to withholding of applicable taxes.

         17. Successors.

         (a) Employer's Successors. Employer shall require any successor to all
or substantially all of Employer's business and/or assets and liabilities
(whether by purchase, merger, consolidation, reorganization, liquidation or
otherwise) to assume and expressly agree to perform this Agreement in the same
manner and to the same extent as Employer would be required to perform if there
were no succession. Employer's failure to obtain an assumption agreement in form
and substance reasonably acceptable to Executive by the effective date of such
succession shall constitute a breach of Employer's obligations to Executive
under this Agreement as of the effective date of such succession and shall
entitle Executive to all of the payments and other benefits described in Section
13(b) hereof.

         (b) Executive's Successors. This Agreement and all rights of Executive
hereunder shall inure to the benefit of, and be enforceable by, Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees, it being agreed by Executive that Executive
cannot assign or make subject to an option any of Executive's rights, including
rights to payments and benefits, under this Agreement.

         18. Definition of Terms. The following terms used in this Agreement
when capitalized have the following meanings:

         (b) "Board of Directors" means Employer's board of directors.


                                      -8-
<PAGE>
         (c) "Cause" means that Executive has:

                  (i) willfully breached or habitually neglected the duties
         which he was required to perform under the terms of this Agreement or
         the policies of Employer, or


                  (ii) committed act(s) of dishonesty, theft, embezzlement,
         fraud, misrepresentation, or other act(s) of moral turpitude against
         Employer, its subsidiaries, affiliates, shareholders or employees, or
         which adversely impact the interest of Employer.

         (d) "Change of Control" means:

                  (i) Employer is a party to a merger, consolidation, sale of
         assets or other reorganization, or a proxy contest, as a consequence of
         which members of the Board of Directors in office immediately prior to
         such transaction or event constitute less than a majority of the Board
         of Directors thereafter; or

                  (ii) during any period of twenty-four (24) consecutive months,
         individuals who at the beginning of such period constituted the Board
         of Directors (including for this purpose any new director whose
         election or nomination for election by Employer's stockholders was
         approved by a vote of at least two-thirds of the directors then still
         in office who were directors at the beginning of such period) of
         Employer cease for any reason to constitute at least a majority of the
         Board of Directors; or

                  (iii) a sale of substantially all of the assets of Employer;
         or

                  (iv) any other change of control of Employer of a nature that
         would be required to be reported in response to Item 6(e) of Schedule
         14A of Regulation 14A (or in response to any similar item on any
         similar schedule or form) promulgated under the Securities Exchange Act
         of 1934 (the "Act"), whether or not Employer is then subject to such
         reporting requirement; provided, however, without limitation, that such
         a Change of Control shall be deemed to have occurred if any person or
         group (as such terms are used in connection with Sections 13(d) and
         14(d) of the Act) acquires securities in Employer so as to become the
         "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Act),
         directly or indirectly, of securities thereof representing 25% or more
         of the combined voting power of Employer's then outstanding securities.

         Notwithstanding the foregoing provisions of this Section 19(c), a
         "Change of Control" will not be deemed to have occurred solely because
         of the acquisition of securities of Employer (or any reporting
         requirement under the Act relating thereto) by an employee benefit plan
         maintained by Employer for its employees.


                                      -9-
<PAGE>
         (e) "Disability" means that Executive has been unable to perform the
essential functions of his job under this Agreement, with or without reasonable
accommodation, for a period of three (3) consecutive months as the result of his
incapacity due to physical or mental illness.


         (f)"Good Reason" means any of (i) a material reduction in Executive's
compensation under Section 6 hereof or benefits under Sections 7, 8, or 9
hereof, (ii) a material reduction in Executive's title or responsibilities,
(iii) a relocation of Executive's principal office so that Executive's one-way
commute distance from his residence is increased by more than forty (40) miles,
(iv) failure of Employer's successor to assume and perform this Agreement as
contemplated by Section 17(a) hereof, or (v) any material breach by Employer of
this Agreement.

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

         20. Force Majeure. Neither party shall be liable to the other for any
delay or failure to perform hereunder, which delay or failure is due to causes
beyond the control of said party, including, but not limited to: acts of God;
acts of the public enemy; acts of the United States of America, or any State,
territory, or political subdivision thereof or of the District of Columbia;
fires; floods; epidemics; quarantine restrictions; strikes; or freight
embargoes. Notwithstanding the foregoing provisions of this Section, in every
case the delay or failure to perform must be beyond the control and without the
fault or negligence of the party claiming excusable delay.

         21. Integration. This Agreement and any attachments, schedules, and
exhibits hereto represent the entire agreement and understanding between the
parties as to the subject matter hereof and supersede all prior or
contemporaneous agreements, whether written or oral, regarding Executive's
employment at Employer and all rights, privileges and benefits related thereto.
Without limiting the generality of the foregoing, Executive acknowledges and
agrees that, effective on the Commencement Date, the terms and conditions of
this Agreement will supplant any different terms and conditions that previously
existed or governed his employment with Employer. No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by duly authorized representatives of the parties hereto.

         22. Waiver. Failure or delay on the part of either party hereto to
enforce any right, power, or privilege hereunder shall not be deemed to
constitute a waiver thereof. Additionally, a waiver by either party of a breach
of any promise hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent breach by such other party.


                                      -10-
<PAGE>
         23. Savings Clause. If any term, covenant, or condition of this
Agreement or the application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant, or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant, or condition of this Agreement shall
be valid and enforced to the fullest extent permitted by law.

         24. Authority to Contract. Employer warrants and represents that it has
full authority to enter into this Agreement and to consummate the transactions
contemplated hereby and that this Agreement is not in conflict with any other
agreement to which Employer is a party or by which it may be bound. Employer
further warrants and represents that the individuals executing this Agreement on
behalf of Employer have the full power and authority to bind Employer to the
terms hereof and have been authorized to do so in accordance with Employer's
corporate organization.

         25. Dispute Resolution.

         (a) Any controversy or claim between Employer and Executive arising
from or relating to this Agreement or any agreement or instrument delivered
under or in connection with this Agreement, including any alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, shall, at the option of Executive or Employer, be submitted
to arbitration, using either the American Arbitration Association ("AAA") or
Judicial Arbitration and Mediation Services, Inc. ("JAMS") in accordance with
the rules of either JAMS or AAA (at the option of the party initiating the
arbitration) and Title 9 of the U.S. Code. All statutes of limitations or any
waivers contained herein which would otherwise be applicable shall apply to any
arbitration proceeding under this Section. The parties agree that related
arbitration proceedings may be consolidated. The arbitrator shall prepare
written reasons for the award. Judgment upon the award rendered may be entered
in any court having jurisdiction.

         (b) No provision of, or the exercise of any rights under, Section 25(a)
hereof shall limit the right of any party to exercise self help remedies or to
obtain provisional or ancillary remedies, such as injunctive relief from a court
having jurisdiction before, during or after the pendency of any arbitration. The
institution and maintenance of an action for judicial relief or pursuit of
provisional or ancillary remedies or exercise of self help remedies shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration.

         (c) If any arbitration, legal action or other proceeding is brought for
the enforcement of this Agreement or any agreement or instrument delivered under
or in connection with this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and other costs incurred in that action or


                                      -11-
<PAGE>
proceeding, in addition to any other relief to which it or they may be entitled.

         26. Remedies. In the event of a breach by Executive of Section 15 of
this Agreement, in addition to other remedies provided by applicable law,
Employer will be entitled to issuance of a temporary restraining order or
preliminary injunction enforcing its rights under such Section.

         27. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

         28. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

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

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day herein first above written.




                                           EXECUTIVE


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










                                           HUMBOLDT BANCORP


                                           -------------------------------------
                                           President & Chief Executive Officer


                                      -12-
<PAGE>
                                    EXHIBIT A
                       CALIFORNIA LABOR CODE SECTION 2870


Section 2870. Application of provision providing that employee shall assign or
offer to assign rights in invention to employer.

         (a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using Employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either;

                  (i) Relate at the time of conception or reduction to practice
         of the invention to Employer's business, or actual or demonstrably
         anticipated research or development of Employer.


                  (ii) Result from any work performed by the employee for
         Employer.

         (b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.


                                      -13-


</TEXT>
</DOCUMENT>
