NORTHRIM BANK

EMPLOYEE STOCK OPTION AND RESTRICTED STOCK AWARD PLAN

I.
GENERAL PROVISIONS

    1.   Purpose of the Plan.   The purpose of this Plan is to provide additional incentives to selected eligible key officers of Northrim Bank (the "Bank") and future subsidiaries of the Bank, thereby helping to attract and retain the best available personnel for positions of responsibility with such corporations and otherwise promoting the success of the business activities of such corporations. The incentives will be in the form of options to purchase shares of the Bank's common stock and/or restricted stock awards of the Bank's common stock.

    2.   Definitions.   As used in this Plan, the following definitions shall apply:

    (a) "Award" or "Restricted Stock Award" shall mean Common Stock of the Bank granted to an Employee pursuant to and subject to the limitations described in the Restricted Stock Award provisions of this Plan (Part III).

    (b) "Bank" shall mean Northrim Bank, a state-chartered commercial bank located in Anchorage, Alaska.

    (c) "Board shall mean the Board of Directors of the Bank.

    (d) "Common Stock" shall mean the Bank's common stock.

    (e) "Committee" shall mean the Committee appointed by the Board in accordance with Section 4(a) of this Part I.

    (f)  "Continuous Status as an Employee" shall mean the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of sick leave, military leave, or any other leave of absence approved by the Committee.

    (g) "Employee" shall mean any person employed by the Bank or any Parent or Subsidiary of the Bank that now exists or is hereafter organized or acquired by the Bank.

    (h) "Employer" shall mean the Bank or any Parent or Subsidiary of the Bank that now exists or hereafter organized or acquired by the Bank.

    (i)  "Grantee" shall mean any Employee who receives an Award.

    (j)  "Incentive Stock Options" shall mean incentive stock options within the meaning of Section 422A of the Internal Revenue Code, as now in effect or as hereafter amended.

    (k) "Nonqualified Stock Options" shall mean any options granted pursuant to this Plan that are not Incentive Stock Options.

    (l)  "Option" shall mean a right to purchase Common Stock of the Bank pursuant to the Stock Option provisions of this Plan (Part II). Options shall include both Incentive Stock Options and Nonqualified Stock Options.

    (m) "Optioned Stock" shall mean the Common Stock subject to an option.

    (n) "Optionee" shall mean an Employee who receives an Option.

    (o) "Plan" shall mean this Plan, including without limitation both the Stock Option and Restricted Stock Award provisions of this Plan.

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    (p) "Parent" shall mean any corporation having a relationship with the Bank as described in Section 425(e) of the Internal Revenue Code.

    (q) "Shareholder-Employee" shall mean an Employee who owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Employer or of any Parent or Subsidiary. For this purpose, the attribution of stock ownership rules provided in Section 425(d) of the Internal Revenue Code shall apply.

    (r) "Subsidiary" shall mean any corporation having a relationship with the Bank as described in Section 425(f) of the Internal Revenue Code.

    3.   Shares Subject to the Plan.   

    (a)  Total Shares Available. The number of shares that may be issued and sold pursuant to Options granted under the Stock Option provisions of this Plan (Part II) and that may be issued pursuant to the Restricted Stock Award provisions of this Plan (Part III) shall not, in the aggregate, exceed 373,489 shares of the Common Stock of the Bank.

    Common Stock issued under this Plan may be either authorized and unissued shares or shares issued and thereafter acquired by the Bank. If any Options granted under this Plan shall, for any reason, expire without having been exercised in full, or if any Awards shall, for any reason, be forfeited or canceled, the Common Stock not purchased under such options, or so forfeited, shall be available again for the purposes of this Plan.

    (b)  Adjustments to Shares Available. The number of shares of Common Stock covered by each outstanding Option and Award, the number of shares of Common Stock available for grant of additional Options and Awards, and the price per share of Common Stock specified in each outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from any stock split or other subdivision or consolidation of shares, the payment of any stock dividend (but only on the Common Stock), or any other increase or decrease in the number of such shares of Common Stock effected without receipt of consideration by the Bank; provided , however , that conversion of any convertible securities of the Bank shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.

    No Option shall be adjusted by the Committee pursuant to this Section 3 in a manner that causes the Option, if an Incentive Stock Option, to fail to continue to qualify as an Incentive Stock Option.

    4.   Administration of the Plan.   

    (a)  The Committee. This Plan shall be administered by the Compensation Committee of the Board or such other Committee as shall be appointed by the Board. The Committee shall consist of not less than three members of the Board. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members, remove members (with or without cause), appoint new members in substitution for existing members, and fill vacancies (however caused). In appointing members to such Committee, the Board shall consider whether to appoint individuals qualifying as (a) "outside directors," as such term is used in Section 162(m) of the Internal Revenue Code, and (b) "non-employee directors" as such term is used in Rule 16b-3 as issued by the Securities and Exchange Commission. The Committee shall select one of its members as

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chairman, and shall hold meetings at such times and places as the chairman or a majority of the Committee may determine.

    At all times, a majority of the members of the Committee shall consist of members of the Board who are not eligible to receive Options or Awards under the Plan. Members of the Committee who are either eligible for Options or Awards or who have been granted Options or Awards shall be counted for all purposes in determining the existence of a quorum at any meeting of the Committee and shall be eligible to vote on all matters before the Committee respecting the granting of Options or Awards or administration of this Plan, except only that such members shall not vote or otherwise act upon the grant or the modification of the terms of any Option or Award granted or to be granted to himself or herself.

    At least annually, the Committee shall present a written report to the Board indicating the Employees to whom Options and Awards have been granted since the date of the last such report, and, in each case, the date or dates of Options and Awards granted, the number of shares optioned and awarded, and the Option price and Award value per share.

    The Board further shall have the power at any time to remove all members of the Committee and thereafter to directly administer this Plan as a Committee of the whole. In such event, all references in the Plan to the "Committee" shall refer to the Board.

    (b)  Powers of the Committee. Subject to the provisions and limitations of this Plan, the Committee shall have the authority and discretion:

    (1) to determine the Employees to whom Options and Awards are to be granted, the times of grant, and the number of shares to be represented by each Option and Award;

    (2) to determine the Option price for the shares of Common Stock to be issued pursuant to each Option, subject to the provisions of Subparagraph 3(b) of Part II of this Plan in the case of Incentive Stock Options;

    (3) to determine all other terms and conditions of each Option and Award granted under this Plan, which need not be identical;

    (4) to modify or amend the terms of any Option or Award previously granted, or to grant substitute Options or Awards;

    (5) to interpret this Plan;

    (6) to authorize any person or persons to execute and deliver Option and Award agreements or to take any other actions deemed by the Committee to be necessary or appropriate to effectuate the grant of Options and Awards by the Committee;

    (7) to make all other determinations and take all other actions that the Committee deems necessary or appropriate to administer the Plan in accordance with its terms and conditions and applicable law.

    All actions of the Committee shall be either by (i) a majority vote of the members of the full Committee at a meeting of the Committee, or (ii) by unanimous written consent of all members of the full Committee without a meeting of the Committee.

    All decisions, determinations, and interpretations of the Committee shall be final and binding upon all persons, including all Optionees, Grantees and any other holders or persons interested in any Option or Award, unless otherwise expressly determined by a vote of the majority of the entire

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Board. No member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to this Plan, an Option or an Award.

II.
STOCK OPTIONS

    1.   Nonqualified Stock Options and Incentive Stock Options.   Options in the form of Nonqualified Stock Options and Options that qualify as Incentive Stock Options may be granted under the Plan.

    2.   Eligibility.   Options may be granted only to Employees whom the Committee, in its discretion, determines to be key Employees of the Bank, a Parent or Subsidiary. Granting of Options pursuant to this Plan shall be entirely discretionary with the Committee, and the adoption of this Plan shall not confer upon any Employee any right to receive any Option or Options pursuant to this Plan unless and until such Options are granted by the Committee, in its sole discretion. Neither the adoption of this Plan nor the granting of any Options pursuant to this Plan shall confer upon any Employee or Optionee any right with respect to continuation of employment, nor shall the same interfere in any way with his or her right (or with the right of the Bank or a Subsidiary or a Parent) to terminate his or her employment at any time.

    3.   Terms and Conditions of Options.   All Options granted pursuant to this Plan must be authorized by the Committee, and must be documented in written agreements in such form as the Committee shall from time to time approve, which agreements shall comply with and be subject to all of the following terms and conditions:

    (a)  Number of Shares; Annual Limitation. Each Option agreement shall state the number of shares subject to Option. Any number of Options may be granted to a single eligible Employee at any time and from time to time; except in the case of Incentive Stock Options, the aggregate fair market value (determined as of the time each Option is granted) of all shares of Common Stock with respect to which Options are exercisable for the first time by such Employee in any one calendar year (under all Incentive Stock Option plans of the Bank, its Parent and all of its Subsidiaries taken together) shall not exceed $100,000.

    (b)  Option Price and Consideration. The Option price for the shares of Common Stock to be issued pursuant to the Option shall be such price as is determined by the Committee, but, in the case of Incentive Stock Options, shall in no event be less than the fair market value of the Common Stock on the date of grant of the Incentive Stock Option.

    In the case of an Incentive Stock Option granted to an Employee, who, immediately before the grant of such Incentive Stock Option, is a Shareholder-Employee, the Incentive Stock Option price shall be at least 110% of the fair market value of the Common Stock on the date of grant of the Incentive Stock Option. The fair market value shall be determined by the Committee in its discretion; provided , however , that in the event that there is a public market for the Common Stock, the fair market value shall be the mean of the bid and asked prices of the Common Stock as of the date of grant as reported on the National Association of Securities Dealers Automatic Quotation System (NASDAQ), or, in the event the Common Stock is listed on a stock exchange, the closing price on the exchange as of the date of grant of the Option.

    The Option price shall be payable either (i) in United States dollars upon exercise of the Option, or (ii) if so determined by the Committee and specified in the Option agreement, in other property, including, without limitation, Common Stock of the Bank at its fair market value on the date of exercise.

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    (c)  Term of Option. No Stock Option granted pursuant to this Plan shall in any event be exercisable after the expiration of ten (10) years from the date such Option is granted, except that the term of an Incentive Stock Option granted to an Employee who, immediately before such Incentive Stock Option is granted, is a Shareholder-Employee, shall be for not more than five (5) years from the date of grant of the Incentive Stock Option. Subject to the foregoing and other applicable provisions of this Plan, the term of each Option shall be determined by the Committee in its discretion.

    (d)  Manner of Exercise: Cashless Exercise. An Option shall be deemed to be exercised when written notice of exercise has been given to the Bank in accordance with the terms of the Option by the person entitled to exercise the Option, together with full payment for the shares of Common Stock subject to such notice. The Committee may, in its discretion, allow for the cashless exercise of an Option whereby an Optionee, subject to (i) the requirements of Rule 16b-3 as promulgated by the Securities and Exchange Commission, Regulations of the Federal Reserve Board, federal income tax laws, and any other applicable laws, (ii) the terms of any written agreements executed in connection with the grant of any such Option; and (iii) any procedures and policies established from time to time by the Committee, can exercise an Option or a portion thereof without making a direct payment of the Option price to the Employer.

    (e)  Death of Optionee. In the event of the death of an Optionee who at the time of his or her death was an Employee and who had been in Continuous Status as an Employee since the date of grant of the Option, the Option shall, whether or not otherwise exercisable on the date of death, become immediately exercisable and shall thereafter terminate on the earlier of (i) five years after the date of death of the Optionee, or (ii) the expiration date otherwise provided in the Option agreement, except that in no event will any Nonqualified Stock Option expire before the end of the 90-day period immediately following the Optionee's death. The Option rights shall be exercisable at any time prior to such termination by the Optionee's estate, or by such person or persons who have acquired the right to exercise the Option by bequest or by inheritance or by reason of the death of the Optionee.

    (f)   Disability of Optionee. If an Optionee's status as an Employee is terminated at any time during the Option period by reason of a disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code), and if such Optionee had been in Continuous Status as an Employee since the date of grant of the Option, the Option shall, whether or not otherwise exercisable on that date of such termination, become immediately exercisable and shall thereafter terminate on the earlier of (i) five years after the date of termination of the Optionee's status as an Employee or (ii) the expiration date otherwise provided in the Option agreement; except that in no event will an Incentive Stock Option be exercisable more than 12 months from the date of termination of the Optionee's status as an Employee. The Option shall be exercisable by the Optionee at any time prior to such termination date.

    (g)  Termination of Status as an Employee.

    (1) Except as described in (g)(2) and (g)(3) below, if an Optionee's status as an Employee is terminated at any time after the grant of his or her Option for any reason other than death, disability, as provided in (e) or (f) above, his or her Option shall terminate on the earlier of (i) the same day of the third month after the date of termination of his or her status as an Employee, or (ii) the expiration date otherwise provided in his or her Option agreement. The Option shall be exercisable by the Optionee at any time prior to such

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termination date, but only to the extent that it was exercisable by the Optionee on the date of the termination of employment.

    (2) In the case of Nonqualified Stock Options, if an Optionee's status as an Employee is terminated at any time after the grant of his or her Nonqualified Option by reason of retirement, in accordance with the retirement policy of the Employer, his or her Nonqualified Stock Option shall terminate on the earlier of (i) five years after the date of his or her retirement, or (ii) the expiration date otherwise provided in his or her Option agreement.

    (3) If an Optionee's status as an Employee is terminated at any time after the grant of his or her Option by reason of fraud or willful misconduct, then his or her Option shall terminate on the date of termination of his or her status as an Employee.

    (h)  Non-Transferability of Options. An Option granted pursuant to this Plan may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution, and may be exercised, during the lifetime of the Optionee, only by the Optionee.

    (i)   Date of Grant of Option. The date of grant of an Option shall, for all purposes, be the date on which the Committee makes the determination granting such Option. Such date of grant shall be specified in the Option agreement.

    (j)   Conditions Upon Issuance of Shares. Shares of Common Stock shall not be issued with respect to an Option granted under this Plan unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Alaska Securities Act or applicable securities statutes of other states, the rules and regulations promulgated under all such statutes, and the requirements of any stock exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Bank with respect to such compliance.

    As a condition to the exercise of an Option, the Bank may require the person exercising such Option to represent and warrant at the time of exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such Common Stock if, in the opinion of counsel for the Bank, such a representation is required by any applicable law.

    (k)  Merger, Sale of Assets, etc. In the event of a proposed merger of the Bank with or into any other corporation, or in the event of a proposed sale of substantially all of the assets of the Bank, or in the event of a proposed dissolution or liquidation of the Bank, the Committee may, in the exercise of its sole discretion, terminate all outstanding Options as of a date fixed by the Committee. In such event, however, the Committee shall notify each Optionee of such action in writing not less than sixty (60) days prior to the termination date fixed by the Committee, and each Optionee shall have the right to exercise his or her Option prior to such termination date.

    (l)   Substitute Stock Options. In connection with the acquisition or proposed acquisition by the Bank or any Subsidiary, whether by merger, acquisition of stock or assets, or other reorganization transaction, of a business any employees of which have been granted stock options, the Committee is authorized to issue, in substitution of any such unexercised stock option, a new Option under this Plan that confers upon the Optionee substantially the same benefits as the old option;

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provided , however , that the issuance of any new Incentive Stock Option for an old incentive stock option shall satisfy the requirements of Section 425(a) of the Internal Revenue Code.

    (m)  Tax Compliance. The Employer, in its sole discretion, may take any actions reasonably believed by it to be required to comply with any local, state, or federal tax laws relating to the reporting or withholding of taxes attributable to the grant or exercise of any Option or the disposition of any shares of Common Stock issued upon exercise of an Option, including, but not limited to, (i) withholding from any Optionee exercising an Option a number of shares of Common Stock having a fair market value equal to the amount required to be withheld by the Employer under applicable tax laws, and (ii) withholding from any form of compensation or other amount due an Optionee or holder of shares of Common Stock issued upon exercise of an Option any amount required to be withheld by the Employer under applicable tax laws. Withholding or reporting shall be considered required for purposes of this subparagraph if any tax deduction or other favorable tax treatment available to Employer is conditioned upon such reporting or withholding.

    (n)  Other Provisions. Option agreements executed pursuant to this Plan may contain such other provisions as the Committee shall deem advisable, provided, in the case of Incentive Stock Options, that the provisions are not inconsistent with the provisions of Section 422A of the Internal Revenue Code or with any of the other terms and conditions of this Plan.

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III.
RESTRICTED STOCK

    1.   Restricted Stock Awards.   Common Stock of the Bank may be awarded to an eligible Employee in the form of a Restricted Stock Award pursuant to the provisions and subject to the limitations of this Part III.

    2.   Eligibility.   Eligibility for the grant of a Restricted Stock Award under this Part III shall be determined as provided in Section 2 of Part II of the Plan.

    3.   Shares Subject to Award.   The shares of Common Stock subject to Restricted Stock Awards are as stated in Section 3 of Part I.

    4.   Escrow.   Stock certificates evidencing shares of Common Stock granted as a Restricted Stock Award shall be issued in the name of the Grantee and deposited in escrow with      (the "Escrow Agent") to be held by the Escrow Agent subject to the terms hereof and subject to delivery to the Grantee or redelivery to the Escrow Agent in accordance with the terms and provisions of this Part III. By acceptance of the Award, the Grantee grants an irrevocable power of attorney to the Escrow Agent to transfer and deliver such Common Stock and stock certificates evidencing the same in accordance with the terms and provisions hereof and the directions of the Committee given pursuant to this Plan.

    5.   Dividends and Voting Rights.   During the period while the stock certificates evidencing restricted stock are held in escrow as provided in this Plan, all dividends payable with respect to such stock shall be paid by the Escrow Agent directly to the Grantee named therein and such Grantee shall be entitled to exercise all voting rights with respect to such stock, all in the same manner and to the full extent as though such stock were held by the Grantee free of the escrow.

    6.   Escrow Stock Not Transferable.   No transfer or other disposition of Common Stock held in escrow under this Plan may be made by the Grantee so long as such stock is held under and remains subject to the escrow.

    7.   Release of Stock From Escrow.   Common Stock held in escrow pursuant to the provisions of this Part III shall be released from such escrow by the delivery of the stock certificate evidencing such shares to the Grantee (or, in the case of death or disability of the Grantee, to the Grantee's estate or legal guardian) at:

    (a) The completion by the Grantee of such number of years of Continuous Status as an Employee measured from the date of the Award as the Committee shall determine;

    (b) The death of the Grantee;

    (c) The determination by the Committee, acting in its sole discretion, to authorize the release of such stock to the Grantee upon the occurrence of any event that the Committee determines to warrant such release; or

    (d) The occurrence of a change in control of the Bank. The term "control" shall refer to the acquisition of 20 percent or more of the voting securities of the Bank by any person or by persons acting as a group within the meaning of Section 13(d) of the Securities Exchange Act of 1934; provided , however , that for the purposes of this subsection no change in control shall be deemed to have occurred if prior to the acquisition of, or offer to acquire, 20 percent or more of the voting securities of the Bank, the full Board of Directors shall have adopted by not less than a two-thirds vote a resolution specifically approving such acquisition or offer. For purposes of this subsection, the term "person" refers to an individual or a corporation, partnership, trust, association, joint

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venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein.

    8.   Termination of Employment.   In the event of the termination of employment of the Grantee during the period that any Common Stock is held in escrow hereunder for the Grantee's account, other than by reason of death, normal retirement or approved early retirement (and such Common Stock is not then subject to release under items (a), (b) or (c) of Section 7 above), such stock shall be forfeited to the Bank and all rights of the Grantee with respect thereto terminated, unless, in the case of termination by act of the Bank, the Committee, within thirty (30) days following such termination, authorizes the release of such Common Stock to such Grantee under the authority granted to it by item (d) of Section 7. Upon the expiration of such thirty (30) day period without action by the Committee to release such Common Stock to the Grantee, the Common Stock shall be deemed forfeited and the stock certificates evidencing the same shall be redelivered to the Bank, whereupon they shall be canceled and retired.

IV.
ADOPTION, AMENDMENT AND TERMINATION PROVISIONS

    1.   Term of the Plan.   This Plan shall become effective on the earlier of (i) the date of adoption of this Plan by the Board; or (ii) the date of shareholder approval of the Plan as hereinafter set forth in this Part IV. Unless sooner terminated as provided below, the Plan shall terminate on the tenth anniversary of its effective date. Options may be granted at any time after the effective date and prior to the date of termination of the Plan.

    2.   Amendment or Early Termination of the Plan.   

    (a)  Amendment or Early Termination. The Board may terminate this Plan at any time. The Board may amend this Plan at any time and from time to time in such respects as the Board may deem advisable, except that, without approval of the holders of a majority of the outstanding shares of the Common Stock, no such revision or amendment shall:

     (i) increase the number of shares of Common Stock subject to the Plan other than in connection with an adjustment under Section 3 of Part I, or

    (ii) change the designation of the class of Employees eligible to be granted Options or Awards

    (iii) become effective if such approval is required under any applicable law or regulation.

    (b)  Effect of Amendment or Termination. No amendment or termination of the Plan shall affect Options or Awards granted prior to such amendment or termination, and all such Options and Awards shall remain in full force and effect notwithstanding such amendment or termination.

    3.   Shareholder Approval. Continuance of the Plan shall be subject to approval of the Plan by affirmative vote of the holders of a majority of the outstanding shares of Common Stock of the Bank at a duly convened meeting of the shareholders of the Bank, which approval must occur within twelve (12) months before or after the date of adoption of the Plan by the Board.

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CERTIFICATE OF ADOPTION

    I certify that the foregoing Plan was adopted by the Board of Directors of Northrim Bank on  October 8, 1990. One amendment to the Plan was approved and adopted by the Board of Directors of Northrim Bank on February 3, 1994, and the Shareholders of Northrim Bank on May 5, 1994.

    I certify that an amendment to the Plan was approved and adopted by the Board of Directors of Northrim Bank on July 7, 1994.

    I certify that an amendment to the Plan was approved and adopted by the Board of Directors of Northrim Bank on November 2, 1995.

    I certify that an amendment to the Plan was approved and adopted by the Board of Directors of Northrim Bank on January 8, 1998.

    I certify that an amendment to the Plan was approved and adopted by the Board of Directors of Northrim Bank on February 5, 1998, and the Shareholders of Northrim Bank on May 7, 1998.

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AMENDMENT TO
NORTHRIM BANK
EMPLOYEE STOCK AND
RESTRICTED STOCK AWARD PLAN

    This Amendment to the Northrim Bank Employee Stock Option and Restricted Stock Award Plan (the "Plan") is made effective as set forth below. The purpose of the Amendment is to increase the number of Northrim Bank (the "Bank") shares available for issuance under the Plan by 100,000 from 273,489 to 373,489 shares of common stock.

    The Plan is hereby amended as follows:

    Part I, Section 3(a) is amended to read:

    "(a)   Total Shares Available .

    The number of shares that may be issued and sold pursuant to Options granted under the Stock Option provisions of this Plan (Part II) and that may be issued pursuant to the Restricted Stock Award provisions of this Plan (Part III) shall not, in the aggregate, exceed 373,489 shares of the Common Stock of the Bank.

    Common Stock issued under this Plan may be either authorized or unissued shares or shares issued and thereafter acquired by the Bank. If any Options granted under the Plan shall, for any reason, expire without having been exercised in full, or if any Awards shall, for any reason, be forfeited or canceled, the Common Stock not purchased under such options, or so forfeited shall be available again for the purposes of this Plan."

    The foregoing amendment to the Plan shall not affect any Option or Award outstanding at the effective date hereof. The effective date shall be the date approved by the Board of Directors of the Bank, subject to subsequent approval by the shareholders of the Bank.

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NORTHRIM BANK

2000 EMPLOYEE STOCK INCENTIVE PLAN

I.
GENERAL PROVISIONS

    1.   Purpose of the Plan.   The purpose of this Plan is to provide additional incentives to selected eligible key officers of Northrim Bank (the "Bank") and future subsidiaries of the Bank, thereby helping to attract and retain the best available personnel for positions of responsibility with such corporations and otherwise promoting the success of the business activities of such corporations. The incentives will be in the form of options to purchase shares of the Bank's common stock ("Common Stock") and/or other stock awards of the Bank's common stock, as described in Part III of the Plan.

    2.   Definitions.   As used in this Plan, the following definitions shall apply:

    (a) "Bank" shall mean Northrim Bank, a state-chartered commercial bank located in Anchorage, Alaska.

    (b) "Board shall mean the Board of Directors of the Bank.

    (c) "Common Stock" shall mean the Bank's common stock.

    (d) "Committee" shall mean the Committee appointed by the Board in accordance with Section 4(a) of this Part I.

    (e) "Continuous Status as an Employee" shall mean the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of sick leave, military leave, or any other leave of absence approved by the Committee.

    (f)  "Employee" shall mean any person employed by the Bank or any Parent or Subsidiary of the Bank that now exists or is hereafter organized or acquired by the Bank.

    (g) "Employer" shall mean the Bank or any Parent or Subsidiary of the Bank that now exists or hereafter organized or acquired by the Bank.

    (h) "Fair Market Value" means, as of any date, the value of the Common Stock determined as follows:

     (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or the Nasdaq Small Market of the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day on the date of such determination, as reported in The Wall Street Journal or other source as the Committee deems reliable; or

    (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for such stock on the date of such determination, as reported in The Wall Street Journal or other source as the Committee deems reliable; or

    (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined by the Committee.

    (i)  "Incentive Stock Options" shall mean incentive stock options within the meaning of Section 422 of the Internal Revenue Code, as now in effect or as hereafter amended.

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    (j)  "Nonqualified Stock Options" shall mean any options granted pursuant to this Plan that are not Incentive Stock Options.

    (k) "Option" shall mean a right to purchase Common Stock of the Bank pursuant to the Stock option provisions of this Plan (Part II). Options shall include both Incentive Stock Options and Nonqualified Stock Options.

    (l)  "Optioned Stock" shall mean the Common Stock subject to an option.

    (m) "Plan" shall mean this Plan, including without limitation both the Stock Option and Other Stock Awards provisions of this Plan.

    (n) "Parent" shall mean any corporation having a relationship with the Bank as described in Section 424(e) of the Internal Revenue Code.

    (o) "Shareholder-Employee" shall mean an Employee who owns, at the time an Incentive Stock Option is granted, stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Employer or of any Parent or Subsidiary. For this purpose, the attribution of stock ownership rules provided in Section 424(d) of the Internal Revenue Code shall apply.

    (p) "Subsidiary" shall mean any corporation having a relationship with the Bank as described in Section 424(f) of the Internal Revenue Code.

    3.   Shares Subject to the Plan.   

    (a)  Total Shares Available. Subject to adjustments under Section 3(b) below, the number of shares of Common Stock ("Shares") that may be delivered to participants under this Plan shall include the sum of (i) 250,000; (ii) any Shares, as of the date of shareholder approval of this Plan, available for future awards under the Northrim Bank Employee Stock Option and Restricted Stock Award Plan (the "Prior Plan"); and (iii) any Shares that are represented by awards under the Prior Plan, which are forfeited, expire or are cancelled without the delivery of Shares or which result in the forfeiture of Shares back to the Bank. In addition, any Shares delivered under this Plan or the Prior Plan which are forfeited back to the Bank because of the failure to meet an award contingency or condition shall again be available for delivery pursuant to new awards granted under the Plan. Any Shares covered by an award (or portion of an award) granted under the Plan, which is forfeited or cancelled, expires or is settled in cash, including the settlement of tax withholding obligations using Shares, shall be deemed not to have been delivered for purposes of determining the number of Shares available for delivery under the Plan. If any Option is exercised by tendering Shares, either actually or by attestation, to the Bank as full or partial payment for such exercise under this Plan or the Prior Plan, only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan. Similarly, if Shares are used to settle tax withholding obligations arising from awards made under the Prior Plan, only the number of Shares issued net of tax withholding will be deemed delivered for purposes of determining the number of Shares available for delivery under the Plan.

    (b)  Adjustments to Shares Available. The number of shares of Common Stock covered by each outstanding Award, the number of shares of Common Stock available for grant of additional Awards, and the exercise price of outstanding Options, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from any stock split or other subdivision or consolidation of shares, the payment of any stock dividend (but only on the Common Stock), or any other increase or decrease in the number of such shares of Common Stock effected without receipt of consideration by the Bank; provided, however, that conversion of any convertible securities of the Bank shall not be deemed to have been "effected

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without receipt of consideration." Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.

    No Option shall be adjusted by the Committee pursuant to this Section 3 in a manner that causes the Option, if an Incentive Stock Option, to fail to continue to qualify as an Incentive Stock Option.

    (c)  Other Plan Limits. Subject to adjustment under Section 3(b), the following additional maximums are established under the Plan. The maximum number of Shares that may be issued in conjunction with awards granted pursuant to Part III of the Plan shall not exceed 125,000 Shares. The maximum aggregate number of Shares that may be covered by awards granted to any one individual pursuant to Parts II and III of the Plan shall not exceed 100,000 during any consecutive three calendar years.

    (d)  Payment Shares. Subject to the overall limitation on the number of Shares that may be delivered under the Plan, the Committee may, in addition to granting awards under Part III of the Plan, use available Shares as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Bank, including those of any entity acquired by the Bank.

    4.   Administration of the Plan.   

    (a)  The Committee. This Plan shall be administered by the Compensation Committee of the Board or such other Committee as shall be appointed by the Board. The Committee shall consist solely of two or more members of the Board. If the Committee does not exist, or if for any other reason as determined by the Board the Board desires to directly exercise its powers under the Plan, then the Board may take any action under the Plan that would otherwise be the responsibility of the Committee. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members, remove members (with or without cause), appoint new members in substitution for existing members, and fill vacancies (however caused). The Committee shall select one of its members as chairman, and shall hold meetings at such times and places as the chairman or a majority of the Committee may determine.

    At least annually, the Committee shall present a written report to the Board indicating the Employees to whom awards have been granted since the date of the last such report, and, in each case, the date or dates of awards granted, the number of shares awarded, and the price or value per share awarded.

    (b)  Powers of the Committee. Subject to the provisions and limitations of this Plan, the Committee shall have the authority and discretion:

     (i) to determine the Employees to whom awards are to be granted, the times of grant, and the number of shares to be represented by each award;

    (ii) to determine the Option price for the shares of Common Stock to be issued pursuant to each Option, subject to the provisions of Subparagraph 3(b) of Part II of this Plan in the case of Incentive Stock Options;

    (iii) to determine the types and other terms and conditions of each award granted under this Plan (which need not be identical), including performance and/or vesting contingencies;

    (iv) to modify or amend the terms of any award previously granted, or to grant substitute awards, subject to Part IV;

    (v) to interpret this Plan;

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    (vi) to authorize any person or persons to execute and deliver award agreements or to take any other actions deemed by the Committee to be necessary or appropriate to effectuate the grant of awards by the Committee;

   (vii) to make all other determinations and take all other actions that the Committee deems necessary or appropriate to administer the Plan in accordance with its terms and conditions and applicable law.

    All decisions, determinations, and interpretations of the Committee shall be final and binding upon all persons, including all optionees and grantees of awards and any other holders or persons interested in any award, unless otherwise expressly determined by a vote of the majority of the entire Board. No member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to this Plan or an award.

II.
STOCK OPTIONS

    1.   Nonqualified Stock Options and Incentive Stock Options.   Options in the form of Nonqualified Stock Options and options that qualify as Incentive Stock Options may be granted under the Plan.

    2.   Eligibility.   Options may be granted only to Employees whom the Committee, in its discretion, determines to be key Employees of the Bank, a Parent or Subsidiary. Granting of Options or other awards pursuant to this Plan shall be entirely discretionary with the Committee, and the adoption of this Plan shall not confer upon any Employee any right to receive any Option or other award pursuant to this Plan unless and until such Options or other awards are granted by the Committee, in its sole discretion. Neither the adoption of this Plan nor the granting of any Options or other awards pursuant to this Plan shall confer upon any Employee any right with respect to continuation of employment, nor shall the same interfere in any way with his or her right (or with the right of the Bank or a Subsidiary or a Parent) to terminate his or her employment at any time.

    3.   Terms and Conditions of Options.   All Options granted pursuant to this Plan must be authorized by the Committee or its designees and shall be subject to such terms and conditions, not inconsistent with this Plan, as the Committee shall prescribe. The terms and conditions shall be documented in written agreements in such form as the Committee shall from time to time approve. Unless waived or modified by the Committee, all Options shall be subject to the following terms and conditions:

    (a)  Number of Shares; Annual Limitation. Each option agreement shall state the number of shares subject to Option. Any number of Options may be granted to a single eligible Employee at any time and from time to time, subject to Part I, Section 3(c), and, except in the case of Incentive Stock Options, the aggregate fair market value (determined as of the time each Option is granted) of all shares of Common Stock with respect to which Options are exercisable for the first time by such Employee in any one calendar year (under all Incentive Stock Option plans of the Bank, its Parent and all of its Subsidiaries taken together) shall not exceed $100,000.

    (b)  Option Price and Consideration. The Option price for the shares of Common Stock to be issued pursuant to the Option shall be such price as is determined by the Committee, but, in the case of Incentive Stock Options, shall in no event be less than the fair market value of the Common Stock on the date of grant of the Incentive Stock Option.

    In the case of an Incentive Stock Option granted to an Employee, who, immediately before the grant of such Incentive Stock Option, is a Shareholder-Employee, the Incentive Stock Option price shall be at least 110% of the fair market value of the Common Stock on the date of grant of the Incentive Stock Option.

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    The Option price shall be payable either (i) in United States dollars upon exercise of the Option, or (ii) if so determined by the Committee and specified in the Option agreement, in other property, including, without limitation, Common Stock of the Bank at its fair market value on the date of exercise.

    (c)  Term of Option. No Stock Option granted pursuant to this Plan shall in any event be exercisable after the expiration of ten (10) years from the date such Option is granted, except that the term of an Incentive Stock Option granted to an Employee who, immediately before such Incentive Stock Option is granted, is a Shareholder-Employee, shall be for not more than five (5) years from the date of grant of the Incentive Stock Option. Subject to the foregoing and other applicable provisions of this Plan, the term of each Option shall be determined by the Committee in its discretion.

    (d)  Manner of Exercise. An Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee.

    Shares of Common Stock delivered pursuant to the exercise of an Option shall be subject to such conditions, restrictions and contingencies as the Committee may establish. The Committee may impose such conditions, restrictions and contingencies with respect to shares of Common Stock acquired pursuant to the exercise of an Option as the Committee determines to be desirable.

    (e)  Conditions Upon Issuance of Shares. Shares of Common Stock shall not be issued with respect to an Option granted under this Plan unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Alaska Securities Act or applicable securities statutes of other states, the rules and regulations promulgated under all such statutes, and the requirements of any stock exchange upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Bank with respect to such compliance.

    As a condition to the exercise of an Option, the Bank may require the person exercising such Option to represent and warrant at the time of exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such Common Stock if, in the opinion of counsel for the Bank, such a representation is required by any applicable law.

    (f)   Merger, Sale of Assets, etc. Except as otherwise provided in the written agreement that evidences an Option, in the event of a proposed merger or other reorganization of the Bank with and into any other corporation (other than a reorganization where the ownership of the surviving company is substantially the same as that of the Bank), or in the event of a proposed sale of substantially all of the assets of the Bank, or in the event of a proposed dissolution or liquidation of the Bank, (i) all outstanding and unexercised Options shall become immediately exercisable, and (ii) such Options shall either be assumed by a successor corporation, or parent thereof, or be replaced with a comparable award for the purchase of Shares of the common stock of the successor corporation, except that if such Options are not so assumed or replaced, then (iii) the Committee may, in the exercise of its sole discretion, terminate all outstanding Options as of a date fixed by the Committee. In such event, however, the Committee shall notify each Optionee of such action in writing not less than sixty (60) days prior to the termination date fixed by the Committee, and each Optionee shall have the right to exercise his or her Option prior to such termination date.

    (g)  Substitute Stock Options. In connection with the acquisition or proposed acquisition by the Bank or any Subsidiary, whether by merger, acquisition of stock or assets, or other reorganization transaction, of a business any employees of which have been granted stock options, the Committee

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is authorized to issue, in substitution of any such unexercised stock option, a new Option under this Plan that confers upon the Optionee substantially the same benefits as the old option; provided, however, that the issuance of any new Incentive Stock Option for an old incentive stock option shall satisfy the requirements of Section 425(a) of the Internal Revenue Code.

    (h)  Tax Compliance. The Employer, in its sole discretion, may take any actions reasonably believed by it to be required to comply with any local, state, or federal tax laws relating to the reporting or withholding of taxes attributable to the grant or exercise of any option or the disposition of any shares of Common Stock issued upon exercise of an Option, including, but not limited to, (i) withholding from any Optionee exercising an Option a number of shares of Common Stock having a fair market value equal to the amount required to be withheld by the Employer under applicable tax laws, and (ii) withholding from any form of compensation or other amount due an Optionee or holder of shares of Common Stock issued upon exercise of an Option any amount required to be withheld by the Employer under applicable tax laws. Withholding or reporting shall be considered required for purposes of this subparagraph if any tax deduction or other favorable tax treatment available to Employer is conditioned upon such reporting or withholding.

    (i)   Other Provisions. Option agreements executed pursuant to this Plan may contain such other provisions as the Committee shall deem advisable, provided, in the case of Incentive Stock Options, that the provisions are not inconsistent with the provisions of Section 422A of the Internal Revenue Code or with any of the other terms and conditions of this Plan.

III.
OTHER STOCK AWARDS

    1.   Types of Awards.   In addition to Stock Options, the types of awards that may be granted under the Plan include stock awards. A stock award is a grant of Shares or of a right to receive Shares (or their cash equivalent or a combination of both) in the future. Except in case of certain terminations of employment or an extraordinary event, each stock award shall be earned and vest over at least three years and shall be governed by such conditions, restrictions and contingencies as the Committee shall determine. These may include continuous service and/or the achievement of performance goals. The performance goals that may be used by the Committee for such awards shall consist of: net income, total revenue, earnings per share, profit returns and margins, cash flow, shareholder return and/or value, stock price, and working capital. Performance goals may be measured solely on a corporate, subsidiary or division basis, or a combination thereof. Further, performance criteria may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance criteria. Profit, earnings and revenues used for any performance goal measurement shall exclude any extraordinary nonrecurring items.

    2.   Eligibility.   Eligibility for the grant of a stock award under this Part III shall be determined as provided in Section 2 of Part II of the Plan.

    3.   Shares Subject to Award.   The shares of Common Stock subject to stock awards are stated in Section 3 of Part I.

IV.
ADOPTION, AMENDMENT AND TERMINATION PROVISIONS

    1.   Term of the Plan.   This Plan shall become effective on the earlier of (i) the date of adoption of this Plan by the Board; or (ii) the date of shareholder approval of the Plan as hereinafter set forth in this Part IV. The Plan shall be unlimited in duration and, in the event of a Plan termination as provided in Section 2 below, shall remain in effect as long as any awards under it are outstanding;

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provided, however, that, to the extent required by the Internal Revenue Code, no Incentive Stock Option may be granted under the Plan on a date that is more than ten years from the date the Plan is adopted, or if earlier, the date the Plan is approved by Shareholders.

    2.   Amendment or Early Termination of the Plan.   

    (a)  Amendment or Early Termination. The Board may terminate this Plan at any time. The Board may amend this Plan at any time and from time to time in such respects as the Board may deem advisable, except that, without proper approval of shareholders of the Bank, no such revision or amendment shall:

     (i) increase the number of shares of Common Stock subject to the Plan other than in connection with an adjustment under Section 3 of Part I, or

    (ii) make any amendment to the Plan which would require shareholder approval under any applicable law or regulation.

    Any amendment made to this Plan which would constitute a "modification" to Incentive Stock Options outstanding on the date of such amendment, shall not be applicable to such outstanding Incentive Stock Options, but shall have prospective effect only, unless the Optionee agrees otherwise.

    (b)  Modification and Amendment of Option. Subject to the requirements of Internal Revenue Code Section 422 with respect to Incentive Stock Options and to the terms and conditions and within the limitations of this Plan, the Committee may modify or amend outstanding Options granted under this Plan. The modification or amendment of an outstanding Option shall not, without the consent of the Optionee, impair or diminish any of his or her rights or any of the obligations of the Company under such Option. Except as otherwise provided in this Plan, no outstanding Option shall be terminated without the consent of the Optionee. Unless the Optionee agrees otherwise, any changes or adjustments made to outstanding Incentive Stock Options granted under this Plan shall be made in such manner so as not to constitute a "modification" as defined in Code Section 424(h) and so as not to cause any Incentive Stock Option issued hereunder to fail to continue to qualify as an Incentive Stock Option as defined in Code Section 422(b).

    3.   Shareholder Approval.   Continuance of the Plan shall be subject to proper approval of the Plan by the shareholders of the Bank at a duly convened meeting of the shareholders of the Bank, which approval must occur within twelve (12) months before or after the date of adoption of the Plan by the Board.

CERTIFICATE OF ADOPTION

    I certify that the foregoing Plan was adopted by the Board of Directors of Northrim Bank on February 3, 2000, and by the Shareholders of the Bank on June 15, 2000.

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EMPLOYMENT AGREEMENT

    THIS AGREEMENT (the "Agreement") is made and entered into effective the 1st day of January, 2000, by and between NORTHRIM BANK, a state-chartered commercial bank, with its principal office in Anchorage, Alaska (the "Bank"), and R. MARC LANGLAND (the "Executive").

    In consideration of the mutual promises made in this Agreement, the parties agree as follows:

     1.   Employment.

    Bank employs Executive and Executive accepts employment with Bank as its President.

     2.   Term.

    The fixed term of this Agreement shall be a three (3) year period commencing on the date set forth above.

     3.   Duties.

    The Executive will serve as Chairman, President and Chief Executive Officer of the Bank. Executive shall render such executive, management and administrative services and perform such tasks in connection with the affairs and overall operation of the Bank as is customary for his position, subject to the direction of Bank's Board of Directors. Executive shall devote necessary time, attention and effort to Bank's business in order to properly discharge his responsibilities under this Agreement.

     4.   Compensation, Benefits, Reimbursement and Bonus.

     a.   In consideration for all services rendered by Executive during the term of this Agreement, Bank shall pay Executive an annual base salary (before all customary and proper payroll deductions) of $250,000. The Board of Directors of the Bank shall review Executive's salary at the end of each year, in a manner consistent with that used for all management employees of the Bank, and in its sole discretion may adjust such salary commensurate with the Executive's performance under this Agreement.

     b.   Under the Bank's Incentive Compensation Plan, Executive shall be eligible to receive an annual bonus based on performance as defined by the Board of Directors. Executive's annual target bonus will equal 30% of base salary. This is the amount payable for ambitious, but expected, results as determined by the Board of Directors. Executive's bonus may be more or less than this amount at the Board of Directors discretion but may not exceed 40% of base salary.

     c.   Executive shall be eligible for stock option grants under the Bank's Stock Option Plan. The timing and size of awards will be at the discretion of the Board of Directors.

     d.   Executive shall also be entitled to receive an annual contribution equal to 20% of annual base salary in accordance with the Bank's Supplemental Executive Retirement Plan and the Executive may also participate in the Bank's Deferred Compensation Plan.

     e.   Throughout the term of this Agreement, Bank shall provide Executive with reasonable health insurance, disability and other employee benefits. Executive shall participate in all employee benefit plans and programs of Bank on a basis at least as favorable as that accorded to any other officer of Bank. Bank shall reimburse Executive for his reasonable expenses (including, without limitation, travel, entertainment, and similar expenses) incurred in performing and promoting the business of Bank. Executive shall present from time to time itemized accounts of any such expenses, subject to any limits of company policy and the rules and regulations of the Internal Revenue Service.

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     5.   Termination of Agreement.

     a.   This Agreement may be terminated at any time by either the Board of Directors of Bank or by Executive upon sixty (60) days prior written notice.

      (i)  Termination Due to a Change in Control. If Bank is subjected to a Change in Control (as defined in Section 5(b)(i)), and either Bank or its assigns terminates this Agreement without cause or Executive terminates this Agreement for good reason, then Bank shall pay Executive upon the effective date of such termination all salary earned and all reimbursable expenses incurred under this Agreement through such termination date, plus a pro rata portion of the annual target bonus for the year of termination, and in addition, an amount equal to three (3) times Executive's average annual W-2 compensation over the prior three years. Provided, however, that the payment described in this section 5(a)(i) will be less than the amount that would cause it to be a "parachute payment" within the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code.

     (ii)  Termination by Bank Without Cause or by Executive for Good Reason. If Bank terminates this Agreement without cause, or if Executive terminates this Agreement for Good Reason, Bank shall pay Executive upon the effective date of such termination all salary earned and all reimbursable expenses incurred under this Agreement through such termination date, plus a pro rata portion of the annual target bonus for the year of termination, and, in addition, an amount equal to the greater of: (A) two (2) year's salary payable hereunder, or (B) the salary payable under the fixed term of this Agreement for the remainder of the fixed term of this Agreement.

    In addition, the Executive shall be entitled to health and dental insurance benefits for the remaining period covered by this Agreement. These benefits will be provided at Bank's expense, but such period shall count towards the Bank's continuation of coverage obligation under Section 4980B of the Internal Revenue Code ("COBRA"). The Executive shall also be entitled to receive age credit and credit for period of service towards all pension/SERP plans for the remaining period of time covered by this Agreement. If Executive is hired by Bank, its assigns, any company in control of Bank, or any company controlled by Bank during the period covered by this Agreement, then Executive will be entitled to be treated for all purposes relating to future compensation, benefits, and retirement, as if this Agreement had never been terminated and as if Executive had performed his responsibilities as an Executive throughout the period originally covered by this Agreement.

    (iii)  Termination by Bank for Cause or by Executive Without Good Reason. If Bank terminates this Agreement for Cause or if Executive terminates this Agreement without Good Reason, Bank shall pay Executive upon the effective date of such termination only such salary earned and expenses reimbursable under this Agreement incurred through such termination date. In such case, Executive shall have no right to receive compensation or other benefits for any period after termination under this Agreement. If Bank terminates this Agreement on account of any mental or physical disability that prevents Executive from discharging his duties under this Agreement, Executive shall be entitled to: (A) all salary earned, and reimbursement for expenses incurred, under this Agreement through the termination date and, in addition, full salary for the year following the termination date (less the amount of any payments received by Executive during such one (1) year period under any Bank-sponsored disability plan), and (B) health and dental insurance benefits for a period of one (1) year following the termination date, which benefits will be provided at Bank's expense, but such period shall count towards the Bank's continuation of coverage obligation under Section 4980B of Code (commonly referred to as "COBRA").

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     (iv)  Termination Upon Death of Executive. Executive's term of employment under this Agreement shall be terminated upon the death of Executive. In such case, the Bank shall be obligated to pay to the surviving spouse of Executive, of if there is none, to the Executive's estate: (A) that portion of Executive's salary that would otherwise have been paid to him for the month in which his death occurred, and (B) any amounts due him pursuant to the Bank's pension plan, any supplemental deferred compensation plan, and any other death, insurance, employee benefit plan or stock benefit plan provided to Executive by the Bank.

     (b)  Termination Definitions.

      (i) " Change in Control. " For purposes of this Agreement, "Change in Control" means a change "in the ownership or effective control" or "in the ownership of a substantial portion of the assets" of the Bank, within the meaning of Section 280G of the Internal Revenue Code.

     (ii) " Cause. " For purposes of this Agreement, termination for "Cause" shall include termination because Executive (A) continually fails to substantially perform his duties with the Bank, (B) is adjudged guilty of any crime involving a breach of his fiduciary duties to the Bank, (C) is willfully and continually failing to comply with any law, rule, or regulation (other than traffic violations or similar offenses) or final cease and desist order of a regulatory agency having jurisdiction over Bank, or (D) is unable to substantially perform his duties with the Bank due to drug addiction or chronic alcoholism. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters ( ³ / 4 ) of the entire membership of the Bank's Board of Directors at a meeting of the Board called for such purpose (after reasonable notice to Executive and an opportunity for him, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board, he was guilty of conduct that constitutes Cause (as defined above) and specifying the conduct in detail.

    (iii)  "Disability." For purposes of this Agreement, "Disability" shall mean a medically diagnosed physical or mental impairment that may be expected to result in death, or to be of long, continued duration, and that renders Executive incapable of performing the duties required under this Agreement. Bank's Board of Directors, acting in good faith, shall make the final determination of whether Executive is suffering under any Disability (as herein defined) and, for purposes of making such determination, may require Executive to submit himself to a physical examination by a physician mutually agreed upon by the Executive and Bank's Board of Directors at Bank's expense.

     (iv)  "Good Reason." For purposes of this Agreement, termination for "Good Reason" shall mean termination by Executive as a result of any material breach of this Agreement by Bank. Good Reason shall include, but not be limited to: (A) a material reduction in Executive's compensation defined as a reduction equal to or greater than five percent (5%) of Executive's then annual base salary, (B) a material reduction in Executive's duties and responsibilities, but not merely a change in title, or (C) relocation of Executives primary workplace by more than fifty (50) miles.

     6.   Restrictive Covenant.

     a.   Executive agrees that for the term of this Agreement and for a period of two (2) years after Bank's termination of this Agreement for Cause or Executive's termination of this Agreement without Good Reason (with the understanding that the two (2) year period will be shortened to one (1) year upon the completion of a transaction constituting a change of control, as defined in Section 5(b)(i)), he will not directly or indirectly pursue any acquisition or organizational opportunities related to financial institutions in Alaska.

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     b.   The parties agree that if a trial judge with jurisdiction over a dispute related to this Agreement should determine that the restrictive covenant set forth above is unreasonably broad, the parties authorize such trial judge to narrow the covenant so as to make it reasonable, given all relevant circumstances, and to enforce such covenant. The provisions of this paragraph shall survive termination of this Agreement.

     7.    Miscellaneous.

     a.   This Agreement contains the entire agreement between the parties with respect to Executive's employment with Bank, and is subject to modification or amendment only upon agreement in writing signed by both parties.

     b.   This Agreement shall bind and inure to the benefit of the heirs, legal representatives, successors and assigns of the parties, except that Bank's rights and obligations may not be assigned.

     c.   If any provision of this Agreement is invalid or otherwise unenforceable, all other provisions shall remain unaffected and shall be enforceable to the fullest extent permitted by law.

     d.   In the event of any claim or dispute arising out of this Agreement, the party that substantially prevails shall be entitled to reimbursement of all expenses incurred in connection with such claim or dispute, including, without limitation, attorneys' fees and other professional fees. This paragraph shall apply to expenses incurred with or without suit, and in any judicial, arbitration or administrative proceedings, including all appeals therefrom.

     e.   Any notice required to be given under this Agreement to either party shall be given by personal service or by depositing a copy of such notice in the United States registered or certified mail, postage prepaid, addressed to the following address, or such other address as addressee shall designate in writing:

     f.    This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska.

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EMPLOYMENT AGREEMENT

    THIS AGREEMENT (the "Agreement") is made and entered into effective the 1 ^ST day of January, 2000, by and between NORTHRIM BANK, a state-chartered commercial bank, with its principal office in Anchorage, Alaska (the "Bank"), and CHRIS N. KNUDSON (the "Executive").

    In consideration of the mutual promises made in this Agreement, the parties agree as follows:

     1.   Employment.

    Bank employs Executive and Executive accepts employment with Bank as its Chief Operating Officer.

     2.   Term.

    The fixed term of this Agreement shall be a three (3) year period commencing on the date set forth above.

     3.   Duties.

    Executive will serve as Executive Vice President, Chief Financial Officer and Chief Operating Officer. Executive shall render such executive, management and administrative services and perform such tasks in connection with the affairs and overall operation of the Bank as is customary for his position, subject to the direction of Bank's Chairman, President, and Board of Directors. Executive shall devote necessary time, attention and effort to Bank's business in order to properly discharge his responsibilities under this Agreement.

     4.   Compensation, Benefits, Reimbursement and Bonus.

     a.   In consideration for all services rendered by Executive during the term of this Agreement, Bank shall pay Executive an annual base salary (before all customary and proper payroll deductions) of $170,000. The Board of Directors of the Bank shall review Executive's salary at the end of each year, in a manner consistent with that used for all management employees of the Bank, and in its sole discretion may adjust such salary commensurate with the Executive's performance under this Agreement.

     b.   Under the Bank's Incentive Compensation Plan, Executive shall be eligible to receive an annual bonus based on performance as defined by the Board of Directors. Executive's annual target bonus will equal 30% of base salary. This is the amount payable for ambitious, but expected, results as determined by the Board of Directors. Executive's bonus may be more or less than this amount at the Board of Directors discretion but may not exceed 40% of base salary.

     c.   Executive shall be eligible for stock option grants under the Bank's Stock Option Plan. The timing and size of awards will be at the discretion of the Board of Directors.

     d.   Executive shall also be entitled to receive an annual contribution equal to 10% of annual base salary in accordance with the Bank's Supplemental Executive Retirement Plan and the Executive may also participate in the Bank's Deferred Compensation Plan.

     e.   Throughout the term of this Agreement, Bank shall provide Executive with reasonable health insurance, disability and other employee benefits. Executive shall participate in all employee benefit plans and programs of Bank on a basis at least as favorable as that accorded to any other officer of Bank. Bank shall reimburse Executive for his reasonable expenses (including, without limitation, travel, entertainment, and similar expenses) incurred in performing and promoting the business of Bank. Executive shall present from time to time itemized accounts of any such expenses, subject to any limits of company policy and the rules and regulations of the Internal Revenue Service.

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     5.   Termination of Agreement.

     a.   This Agreement may be terminated at any time by either the Board of Directors of Bank or by Executive upon sixty (60) days prior written notice.

      (i)  Termination Due to a Change in Control. If Bank is subjected to a Change in Control (as defined in Section 5(b)(i)), and either Bank or its assigns terminates this Agreement without cause or Executive terminates this Agreement for good reason, then Bank shall pay Executive upon the effective date of such termination all salary earned and all reimbursable expenses incurred under this Agreement through such termination date, plus a pro rata portion of the annual target bonus for the year of termination, and in addition, an amount equal to three (3) times Executive's average annual W-2 compensation over the prior three years. Provided, however, that the payment described in this Section 5(a)(i) will be less than the amount that would cause it to be a "parachute payment" within the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code.

     (ii)  Termination by Bank Without Cause or by Executive for Good Reason. If Bank terminates this Agreement without cause, or if Executive terminates this Agreement for Good Reason, Bank shall pay Executive upon the effective date of such termination all salary earned and all reimbursable expenses incurred under this Agreement through such termination date, plus a pro rata portion of the annual target bonus for the year of termination, and, in addition, an amount equal to the greater of: (A) two (2) year's salary payable hereunder or (B) the salary payable under the fixed term of this Agreement for the remainder of the fixed term of this Agreement.

    In addition, the Executive shall be entitled to health and dental insurance benefits for the remaining period covered by this Agreement. These benefits will be provided at Bank's expense, but such period shall count towards the Bank's continuation of coverage obligation under Section 4980B of the Internal Revenue Code ("COBRA"). The Executive shall also be entitled to receive age credit and credit for period of service towards all pension/SERP plans for the remaining period of time covered by this Agreement. If Executive is hired by Bank, its assigns, any company in control of Bank, or any company controlled by Bank during the period covered by this Agreement, then Executive will be entitled to be treated for all purposes relating to future compensation, benefits, and retirement, as if this Agreement had never been terminated and as if Executive had performed his responsibilities as an Executive throughout the period originally covered by this Agreement.

    (iii)  Termination by Bank for Cause or by Executive Without Good Reason. If Bank terminates this Agreement for Cause or if Executive terminates this Agreement without Good Reason, Bank shall pay Executive upon the effective date of such termination only such salary earned and expenses reimbursable under this Agreement incurred through such termination date. In such case, Executive shall have no right to receive compensation or other benefits for any period after termination under this Agreement. If Bank terminates this Agreement on account of any mental or physical disability that prevents Executive from discharging his duties under this Agreement, Executive shall be entitled to: (A) all salary earned, and reimbursement for expenses incurred, under this Agreement through the termination date and, in addition, full salary for the year following the termination date (less the amount of any payments received by Executive during such one (1) year period under any Bank-sponsored disability plan), and (B) health and dental insurance benefits for a period of one (1) year following the termination date, which benefits will be provided at Bank's expense, but such period shall count towards the Bank's continuation of coverage obligation under Section 4980B of Code (commonly referred to as "COBRA").

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     (iv)  Termination Upon Death of Executive. Executive's term of employment under this Agreement shall be terminated upon the death of Executive. In such case, the Bank shall be obligated to pay to the surviving spouse of Executive, of if there is none, to the Executive's estate: (A) that portion of Executive's salary that would otherwise have been paid to him for the month in which his death occurred, and (B) any amounts due him pursuant to the Bank's pension plan, any supplemental deferred compensation plan, and any other death, insurance, employee benefit plan or stock benefit plan provided to Executive by the Bank.

     (b)  Termination Definitions.

      (i)  "Change in Control." For purposes of this Agreement, "Change in Control" means a change "in the ownership or effective control" or "in the ownership of a substantial portion of the assets" of the Bank, within the meaning of Section 280G of the Internal Revenue Code.

     (ii) " Cause. " For purposes of this Agreement, termination for "Cause" shall include termination because Executive (A) continually fails to substantially perform his duties with the Bank, (B) is adjudged guilty of any crime involving a breach of his fiduciary duties to the Bank, (C) is willfully and continually failing to comply with any law, rule, or regulation (other than traffic violations or similar offenses) or final cease and desist order of a regulatory agency having jurisdiction over Bank, or (D) is unable to substantially perform his duties with the Bank due to drug addiction or chronic alcoholism. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Bank's Board of Directors at a meeting of the Board called for such purpose (after reasonable notice to Executive and an opportunity for him, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board, he was guilty of conduct that constitutes Cause (as defined above) and specifying the conduct in detail.

    (iii)  "Disability." For purposes of this Agreement, "Disability" shall mean a medically diagnosed physical or mental impairment that may be expected to result in death, or to be of long, continued duration, and that renders Executive incapable of performing the duties required under this Agreement. Bank's Board of Directors, acting in good faith, shall make the final determination of whether Executive is suffering under any Disability (as herein defined) and, for purposes of making such determination, may require Executive to submit himself to a physical examination by a physician mutually agreed upon by the Executive and Bank's Board of Directors at Bank's expense.

     (iv)  "Good Reason." For purposes of this Agreement, termination for "Good Reason" shall mean termination by Executive as a result of any material breach of this Agreement by Bank. Good Reason shall include, but not be limited to: (A) a material reduction in Executive's compensation defined as a reduction equal to or greater than five percent (5%) of Executive's then annual base salary, (B) a material reduction in Executive's duties and responsibilities, but not merely a change in title, or (C) relocation of Executives primary workplace by more than fifty (50) miles.

     6.   Restrictive Covenant.

    a.   Executive agrees that for the term of this Agreement and for a period of two (2) years after Bank's termination of this Agreement for Cause or Executive's termination of this Agreement without Good Reason (with the understanding that the two (2) year period will be shortened to one (1) year upon the completion of a transaction constituting a change of control, as defined in Section 5(b)(i)), he will not directly or indirectly pursue any acquisition or organizational opportunities related to financial institutions in Alaska.

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     b.   The parties agree that if a trial judge with jurisdiction over a dispute related to this Agreement should determine that the restrictive covenant set forth above is unreasonably broad, the parties authorize such trial judge to narrow the covenant so as to make it reasonable, given all relevant circumstances, and to enforce such covenant. The provisions of this paragraph shall survive termination of this Agreement.

     7.   Miscellaneous.

     a.   This Agreement contains the entire agreement between the parties with respect to Executive's employment with Bank, and is subject to modification or amendment only upon agreement in writing signed by both parties.

     b.   This Agreement shall bind and inure to the benefit of the heirs, legal representatives, successors and assigns of the parties, except that Bank's rights and obligations may not be assigned.

     c.   If any provision of this Agreement is invalid or otherwise unenforceable, all other provisions shall remain unaffected and shall be enforceable to the fullest extent permitted by law.

     d.   In the event of any claim or dispute arising out of this Agreement, the party that substantially prevails shall be entitled to reimbursement of all expenses incurred in connection with such claim or dispute, including, without limitation, attorneys' fees and other professional fees. This paragraph shall apply to expenses incurred with or without suit, and in any judicial, arbitration or administrative proceedings, including all appeals therefrom.

     e.   Any notice required to be given under this Agreement to either party shall be given by personal service or by depositing a copy of such notice in the United States registered or certified mail, postage prepaid, addressed to the following address, or such other address as addressee shall designate in writing:

     f.    This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska.

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EMPLOYMENT AGREEMENT

    THIS AGREEMENT (the "Agreement") is made and entered into this 1 ^ST day of January, 2000, by and between NORTHRIM BANK, a state-chartered commercial bank, with its principal office in Anchorage, Alaska (the "Bank"), and VICTOR P. MOLLOZZI (the "Executive").

    In consideration of the mutual promises made in this Agreement, the parties agree as follows:

     1.   Employment.

    Bank employs Executive and Executive accepts employment with Bank as its Senior Credit Officer.

     2.   Term.

    The fixed term of this Agreement shall be a three (3) year period commencing on the date set forth above.

     3.   Duties.

    Executive will serve as Senior Vice President and Senior Credit Officer. Executive shall render such executive, management and administrative services and perform such tasks in connection with the affairs and overall operation of the Bank as is customary for his position, subject to the direction of Bank's Chairman, President, and Board of Directors. Executive shall devote necessary time, attention and effort to Bank's business in order to properly discharge his responsibilities under this Agreement.

     4.   Compensation, Benefits, Reimbursement and Bonus.

     a.   In consideration for all services rendered by Executive during the term of this Agreement, Bank shall pay Executive an annual base salary (before all customary and proper payroll deductions) of $135,000. The Board of Directors of the Bank shall review Executive's salary at the end of each year, in a manner consistent with that used for all management employees of the Bank, and in its sole discretion may adjust such salary commensurate with the Executive's performance under this Agreement.

     b.   Under the Bank's Incentive Compensation Plan, Executive shall be eligible to receive an annual bonus based on performance as defined by the Board of Directors. Executive's annual target bonus will equal 25% of base salary. This is the amount payable for ambitious, but expected, results as determined by the Board of Directors. Executive's bonus may be more or less than this amount at the Board of Directors discretion but may not exceed 35% of base salary.

     c.   Executive shall be eligible for stock option grants under the Bank's Stock Option Plan. The timing and size of awards will be at the discretion of the Board of Directors.

     d.   Executive shall also be entitled to receive an annual contribution equal to 5% of annual base salary in accordance with the Bank's Supplemental Executive Retirement Plan and the Executive may also participate in the Bank's Deferred Compensation Plan.

     e.   Throughout the term of this Agreement, Bank shall provide Executive with reasonable health insurance, disability and other employee benefits. Executive shall participate in all employee benefit plans and programs of Bank on a basis at least as favorable as that accorded to any other officer of Bank. Bank shall reimburse Executive for his reasonable expenses (including, without limitation, travel, entertainment, and similar expenses) incurred in performing and promoting the business of Bank. Executive shall present from time to time itemized accounts of any such expenses, subject to any limits of company policy and the rules and regulations of the Internal Revenue Service.

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     5.   Termination of Agreement.

     a.   This Agreement may be terminated at any time by either the Board of Directors of Bank or by Executive upon sixty (60) days prior written notice.

      (i)  Termination Due to a Change in Control. If Bank is subjected to a Change in Control (as defined in Section 5(b)(i)), and either Bank or its assigns terminates this Agreement without cause or Executive terminates this Agreement for good reason, then Bank shall pay Executive upon the effective date of such termination all salary earned and all reimbursable expenses incurred under this Agreement through such termination date, plus a pro rata portion of the annual target bonus for the year of termination, and in addition, an amount equal to two (2) times Executive's average annual W-2 compensation over the prior three years. Provided, however, that the payment described in this Section 5(a)(i) will be less than the amount that would cause it to be a "parachute payment" within the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code.

     (ii)  Termination by Bank Without Cause or by Executive for Good Reason. If Bank terminates this Agreement without cause, or if Executive terminates this Agreement for Good Reason, Bank shall pay Executive upon the effective date of such termination all salary earned and all reimbursable expenses incurred under this Agreement through such termination date, plus a pro rata portion of the annual target bonus for the year of termination, and, in addition, an amount equal to the greater of: (A) two (2) year's salary payable hereunder, or (B) the salary payable under the fixed term of this Agreement for the remainder of the fixed term of this Agreement.

    In addition, the Executive shall be entitled to health and dental insurance benefits for the remaining period covered by this Agreement. These benefits will be provided at Bank's expense, but such period shall count towards the Bank's continuation of coverage obligation under Section 4980B of the Internal Revenue Code ("COBRA"). The Executive shall also be entitled to receive age credit and credit for period of service towards all pension/SERP plans for the remaining period of time covered by this Agreement. If Executive is hired by Bank, its assigns, any company in control of Bank, or any company controlled by Bank during the period covered by this Agreement, then Executive will be entitled to be treated for all purposes relating to future compensation, benefits, and retirement, as if this Agreement had never been terminated and as if Executive had performed his responsibilities as an Executive throughout the period originally covered by this Agreement.

    (iii)  Termination by Bank for Cause or by Executive Without Good Reason. If Bank terminates this Agreement for Cause or if Executive terminates this Agreement without Good Reason, Bank shall pay Executive upon the effective date of such termination only such salary earned and expenses reimbursable under this Agreement incurred through such termination date. In such case, Executive shall have no right to receive compensation or other benefits for any period after termination under this Agreement. If Bank terminates this Agreement on account of any mental or physical disability that prevents Executive from discharging his duties under this Agreement, Executive shall be entitled to: (A) all salary earned, and reimbursement for expenses incurred, under this Agreement through the termination date and, in addition, full salary for the year following the termination date (less the amount of any payments received by Executive during such one (1) year period under any Bank-sponsored disability plan), and (B) health and dental insurance benefits for a period of one (1) year following the termination date, which benefits will be provided at Bank's expense, but such period shall count towards the Bank's continuation of coverage obligation under Section 4980B of Code (commonly referred to as "COBRA").

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     (iv)  Termination Upon Death of Executive. Executive's term of employment under this Agreement shall be terminated upon the death of Executive. In such case, the Bank shall be obligated to pay to the surviving spouse of Executive, of if there is none, to the Executive's estate: (A) that portion of Executive's salary that would otherwise have been paid to him for the month in which his death occurred, and (B) any amounts due him pursuant to the Bank's pension plan, any supplemental deferred compensation plan, and any other death, insurance, employee benefit plan or stock benefit plan provided to Executive by the Bank.

     (b)  Termination Definitions.

      (i) " Change in Control. " For purposes of this Agreement, "Change in Control" means a change "in the ownership or effective control" or "in the ownership of a substantial portion of the assets" of the Bank, within the meaning of Section 280G of the Internal Revenue Code.

     (ii) " Cause. " For purposes of this Agreement, termination for "Cause" shall include termination because Executive (A) continually fails to substantially perform his duties with the Bank, (B) is adjudged guilty of any crime involving a breach of his fiduciary duties to the Bank, (C) is willfully and continually failing to comply with any law, rule, or regulation (other than traffic violations or similar offenses) or final cease and desist order of a regulatory agency having jurisdiction over Bank, or (D) is unable to substantially perform his duties with the Bank due to drug addiction or chronic alcoholism. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Bank's Board of Directors at a meeting of the Board called for such purpose (after reasonable notice to Executive and an opportunity for him, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board, he was guilty of conduct that constitutes Cause (as defined above) and specifying the conduct in detail.

    (iii)  "Disability." For purposes of this Agreement, "Disability" shall mean a medically diagnosed physical or mental impairment that may be expected to result in death, or to be of long, continued duration, and that renders Executive incapable of performing the duties required under this Agreement. Bank's Board of Directors, acting in good faith, shall make the final determination of whether Executive is suffering under any Disability (as herein defined) and, for purposes of making such determination, may require Executive to submit himself to a physical examination by a physician mutually agreed upon by the Executive and Bank's Board of Directors at Bank's expense.

     (iv)  "Good Reason." For purposes of this Agreement, termination for "Good Reason" shall mean termination by Executive as a result of any material breach of this Agreement by Bank. Good Reason shall include, but not be limited to: (A) a material reduction in Executive's compensation defined as a reduction equal to or greater than five percent (5%) of Executive's then annual base salary, (B) a material reduction in Executive's duties and responsibilities, but not merely a change in title, or (C) relocation of Executives primary workplace by more than fifty (50) miles.

     6.   Restrictive Covenant.

     a.   Executive agrees that for the term of this Agreement and for a period of two (2) years after Bank's termination of this Agreement for Cause or Executive's termination of this Agreement without Good Reason (with the understanding that the two (2) year period will be shortened to one (1) year upon the completion of a transaction constituting a change of control, as defined in Section 5(b)(i)), he will not directly or indirectly pursue any acquisition or organizational opportunities related to financial institutions in Alaska.

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     b.   The parties agree that if a trial judge with jurisdiction over a dispute related to this Agreement should determine that the restrictive covenant set forth above is unreasonably broad, the parties authorize such trial judge to narrow the covenant so as to make it reasonable, given all relevant circumstances, and to enforce such covenant. The provisions of this paragraph shall survive termination of this Agreement.

     7.   Miscellaneous.

     a.   This Agreement contains the entire agreement between the parties with respect to Executive's employment with Bank, and is subject to modification or amendment only upon agreement in writing signed by both parties.

     b.   This Agreement shall bind and inure to the benefit of the heirs, legal representatives, successors and assigns of the parties, except that Bank's rights and obligations may not be assigned.

     c.   If any provision of this Agreement is invalid or otherwise unenforceable, all other provisions shall remain unaffected and shall be enforceable to the fullest extent permitted by law.

     d.   In the event of any claim or dispute arising out of this Agreement, the party that substantially prevails shall be entitled to reimbursement of all expenses incurred in connection with such claim or dispute, including, without limitation, attorneys' fees and other professional fees. This paragraph shall apply to expenses incurred with or without suit, and in any judicial, arbitration or administrative proceedings, including all appeals therefrom.

     e.   Any notice required to be given under this Agreement to either party shall be given by personal service or by depositing a copy of such notice in the United States registered or certified mail, postage prepaid, addressed to the following address, or such other address as addressee shall designate in writing:

     f.    This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska.

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PLAN AND AGREEMENT OF REORGANIZATION AND MERGER

This Plan and Agreement of Reorganization and Merger, dated as of March 7, 2001 (the "Plan"), is made by and among Northrim Bank, an Alaska state chartered bank (the "Bank"), Northrim BanCorp, Inc., an Alaska corporation (the "Holding Company"), and Northrim Interim Bank (In Organization), an interim bank being formed under the banking laws of the State of Alaska (the "Interim Bank").

RECITALS

A.

The Bank is a banking corporation organized and existing under the laws of the State of Alaska, with its principal office in Anchorage, Alaska.



B.

The Holding Company is a corporation duly organized under the laws of the State of Alaska, formed for the purpose of becoming a registered bank holding company within the meaning of the Federal Bank Holding Company Act of 1956, as amended. It has its registered office in Anchorage, Alaska.



C.

The Interim Bank is a corporation in the process of being formed as an interim bank under the laws of the State of Alaska. The Interim Bank is being formed by the Holding Company to facilitate the reorganization of Northrim Bank into a wholly-owned subsidiary of the Holding Company. All of the capital stock of the Interim Bank will be subscribed for by the Holding Company.



D.

The Bank currently has options outstanding (the "Options") under an Employee Stock Option and Restricted Stock Award Plan and an Employee Stock Incentive Plan (collectively, the "Plans") and the Boards of Directors of the Bank and the Holding Company intend that the Holding Company will adopt the Plans and Options.



E.

The Board of Directors of the Bank and the Holding Company believe that the reorganization described herein will permit greater flexibility in responding to the changing financial requirements of banking customers and in meeting the competition of other financial institutions.

ARTICLE 1

MERGER

    1.1   Effective Date.   The Effective Date shall follow the satisfaction of all requirements of law and the occurrence of all events required by Article 5 hereof, and shall be such date as is agreed to by the parties.

    1.2   The Merger.   Upon the Effective Date, the Interim Bank shall merge with and into the Bank, with the Bank surviving the merger and continuing to operate under the charter and Articles of Incorporation of the Bank (the "Continuing Bank"). The name of the Continuing Bank shall be Northrim Bank. The business of the Continuing Bank shall be that of a state bank. Its main office and established and authorized branches shall be the same as those of the Bank immediately prior to the Effective Date. Each outstanding share of Bank common stock shall remain outstanding as shares of the Continuing Bank and each outstanding share of Interim Bank common stock will be cancelled.

    1.3   Assets.   All rights, franchises and interests of the Interim Bank in and to every type of property (real, personal and mixed) and choses in action shall be transferred to and vested in the Bank by virtue of such merger without any deed or other transfer.

    1.4   Liabilities.   Upon the Effective Date, the Continuing Bank shall be liable for all liabilities of the Interim Bank and all deposits, debts, liabilities, obligations and contracts of the Interim Bank,

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matured or unmatured, accrued, absolute, contingent or otherwise, whether or not reflected or reserved against on the books of account or records of the Interim Bank, shall be those of the Continuing Bank and shall not be released or impaired by the merger; and all rights of creditors and other obligees and all liens on property of the Interim Bank shall be preserved unimpaired.

ARTICLE 2

TERMS OF EXCHANGE

    2.1   The Exchange.   On the Effective Date, (i) each outstanding share of common stock of the Bank shall be converted into the right to receive one (1) share of the common stock of the Holding Company, and (ii) all options to purchase shares of the Bank common stock which are outstanding immediately prior to the consummation of the reorganization shall be converted into options to purchase shares of common stock of the Holding Company, with the number of shares subject to the option, the exercise price and the duration of the option remaining unchanged. No separate documents of assignment or transfer shall be required to effect such exchange or conversion.

2.1.1 Adoption of Stock Option Plans. As part of the reorganization and as of the Effective Date, the Holding Company will adopt as its own and assume the Plans as each are then in effect for the Bank.

2.1.2 Shareholder Approval. Concurrently with and incorporated within the resolution of the shareholders providing for approval of the Plan shall be deemed to be a resolution of the shareholders of the Holding Company approving adoption of the Plans.

    2.2   Exchange of Certificates.   Each former shareholder of the Bank whose shares are exchanged for the Holding Company shares pursuant to Section 2.1 hereof shall be issued certificates evidencing such Holding Company shares upon delivering to the Holding Company the stock certificate or certificates formerly representing the holder's Bank shares.

2.2.1 Submission of Certificates. To encourage the prompt submission of such certificates by the persons receiving the Holding Company shares in the reorganization, any dividends which become payable with respect to their Holding Company shares will be withheld, without interest, until they submit such Bank shares for exchange.

2.2.2 Evidence of Ownership of Holding Company Stock. Subject to Section 2.2.1, until surrendered, each certificate of Bank stock shall be deemed, without any action by the holder thereof, to evidence the ownership of the number of shares of the Holding Company stock which the holder would be entitled to receive upon surrender.

ARTICLE 3

CAPITAL STOCK

    3.1   Interim Bank, Continuing Bank.   Upon the Effective Date, the capital and surplus of the Interim Bank shall be returned to the Holding Company in cancellation of all of the shares of the Interim Bank issued therefor. The capital and surplus of the Continuing Bank shall consist of the capital and surplus of the Bank immediately prior to the merger.

3.1.1 Continuing Bank Stock. To the Holding Company there shall be allocated a number of shares of common stock of the Continuing Bank which shall be equal to the number of shares of Bank stock outstanding immediately prior to the Effective Date.

    3.2   Holding Company.   Upon the Effective Date, the Holding Company stock outstanding immediately prior to the Effective Date shall be repurchased by the Holding Company at the price paid therefor. The capital paid for such shares shall be repaid to the holder of such shares, and the shares

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shall be cancelled. Pursuant to Section 2.1, upon the Effective Date, each outstanding share of common stock of the Bank shall be converted into the right to receive one share of common stock of the Holding Company.

ARTICLE 4

OPERATIONS

     Board of Directors. Upon the Effective Date, the Board of Directors of the Continuing Bank shall consist of all of the persons who are directors of the Bank immediately before the Effective Date.

ARTICLE 5

EVENTS PRECEDING CONSUMMATION

    5.1   Presentation to Shareholders.   As soon as reasonably possible, the Bank shall cause this Plan to be presented to its shareholders for approval by the holders of at least two-thirds of the outstanding capital stock of the Bank at a meeting of the shareholders, duly called by the directors, upon notice provided in accordance with applicable law. This Agreement shall also be submitted for ratification and confirmation to shareholders of the Interim Bank and to the shareholders of the Holding Company for their consent in accordance with applicable provisions of law and their Articles of Incorporation and Bylaws.

    5.2   Submission to Regulatory Authorities, etc.   Northrim, the Holding Company and the Interim Bank shall proceed expeditiously and cooperate fully in procuring all other consents and approvals and in taking any and all other action and satisfying all other requirements prescribed by law or otherwise as may be necessary to consummate the merger on the terms herein provided, including without limitation, all requisite approvals or non-objection (as the case may be) by the Alaska Department of Commerce and Economic Development, Division of Banking, Securities and Corporations (the "Alaska Division of Banking"), the Federal Deposit Insurance Corporation (the "FDIC") and the Board of Governors of the Federal Reserve System.

    The proper officers of the Holding Company, the Bank and the Interim Bank shall, in the name and on behalf of the Holding Company, the Bank and the Interim Bank, make all such arrangements, do and perform all such acts and things, and prepare, execute and deliver all such certificates, notices, applications and other instruments and documents as may be reasonably necessary or appropriate in order to consummate the transactions herein described.

    5.3   Required Approvals.   The reorganization and merger shall not be consummated until each of the following events has occurred:

(a)  The Board of Directors of the Holding Company and the Interim Bank shall have approved this Plan and the plan of reorganization and merger embodied herein.

(b)  A majority of the entire Board of Directors and the holders of two-thirds of the outstanding stock of the Bank shall have approved this Plan and the plan of reorganization and merger embodied herein.

(c)  The Alaska Division of Banking shall have approved the reorganization and merger contemplated by this Plan and shall have issued all appropriate certificates and permits to the Bank and Holding Company.

(d)  The Board of Governors of the Federal Reserve System shall not have objected to the notice of the proposed reorganization contemplated by this Plan or shall otherwise have approved an application by the Holding Company filed pursuant to the Bank Holding Company Act of 1956, as amended.

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(e)  The FDIC shall have approved or not objected to the merger.

(f)  Davis Wright Tremaine LLP shall have issued an opinion, to the effect that the reorganization will qualify as a tax-free reorganization pursuant to applicable provisions of the Internal Revenue Code.

ARTICLE 6

TERMINATION

    6.1   Right of Termination.   This Plan may be terminated and the plan of reorganization and merger abandoned by any party by resolution of its Board of Directors at any time prior to the Effective Date if for any reason the consummation of the reorganization is considered inadvisable in the opinion of such Board of Directors.

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    WITNESS the signatures of the corporate parties, each hereunto set by its President and attested by its Corporate Secretary.

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    On this 10th day of March, 2001, before me, a Notary Public in and for the State of Alaska, personally appeared R. Marc Langland, as President, and Mary A. Finkle, as Corporate Secretary, of NORTHRIM BANK, personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons who executed this instrument and acknowledged it to be their free and voluntary acts and deeds for the uses and purposes mentioned in the instrument.

    IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

    On this 10th day of March, 2001, before me, a Notary Public in and for the State of Alaska, personally appeared R. Marc Langland, as President, and Mary A. Finkle, as Corporate Secretary, of NORTHRIM BANCORP, INC., personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons who executed this instrument and acknowledged it to be their free and voluntary acts and deeds for the uses and purposes mentioned in the instrument.

    IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

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    On this 10th day of March, 2001, before me, a Notary Public in and for the State of Alaska, personally appeared R. Marc Langland, as President, and Mary A. Finkle, as Corporate Secretary, of NORTHRIM INTERIM BANK (IN ORGANIZATION), personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons who executed this instrument and acknowledged it to be their free and voluntary acts and deeds for the uses and purposes mentioned in the instrument.

    IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

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