Exhibit 10.21

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) by and between Western Sierra
Bancorp (“Bancorp”) and Patrick J. Rusnak (“Executive”), is dated May 3, 2005.
(the “Effective Date”)

 

1.                                      PURPOSE OF AGREEMENT.  This Agreement
sets forth the terms of Executive’s employment with Bancorp and provides
Executive with a contingent signing bonus and severance benefits in certain
circumstances as set forth in the Agreement.

 

2.                                      TERM OF AGREEMENT.  This Agreement
starts on the Effective Date and expires on the third anniversary of the
Effective Date.

 

3.                                      NO TERM OF EMPLOYMENT.  Notwithstanding
the term of this Agreement, Bancorp may terminate Executive’s employment at any
time for any lawful reason or for no reason at all, subject to the provisions of
this Agreement.  Executive’s employment with Bancorp is “at will.”

 

4.                                      DUTIES AND EXECUTIVE POSITION.  As of
the Effective Date, Executive shall be employed as Executive Vice
President/Chief Operating Officer, and will perform such duties as may be
designated by Bancorp’s board of directors (the “Board”) or the Chief Executive
Officer of Bancorp, to whom Executive will directly report (the “Supervisor”).

 

Executive agrees that to the best of Executive’s ability and experience,
Executive will at all times loyally and conscientiously perform all of the
duties and obligations required of Executive pursuant to the express and
implicit terms of this Agreement and as directed by the Board or the
Supervisor.  Executive shall devote Executive’s entire working time, attention
and efforts to Bancorp’s business and affairs, shall faithfully and diligently
serve Bancorp’s interests and shall not engage in any business or employment
activity that is not on Bancorp’s behalf (whether or not pursued for gain or
profit) except for (i) activities approved in writing in advance by the Board
and (ii) passive investments that do not involve Executive providing any advice
or services to the businesses in which the investments are made.

 

5.                                      COMPENSATION.  For all services
performed under this Agreement, Bancorp agrees to pay the following compensation
and benefits:

 

Base Salary.  Executive’s base salary is $16,666.67 per month ($200,000 on an
annualized basis) (the “Base Salary”) and shall increase to $18,333.34 per month
($220,000 on an annualized basis) beginning November 1, 2005, provided that
Executive is still actively employed by the Bancorp at such time.  Executive’s
base salary shall further increase to $20,000 per month ($240,000 on an
annualized basis) beginning May 1, 2006, provide Executive is still actively
employed by the Bancorp at such time and has met the goals (“Goals”) outlined in
Appendix A to this Agreement.  The Board shall in good faith determine whether
Executive has satisfied such Goals, and its decision shall be final and
definitive.

 

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Contingent Signing Bonus and Participation in the Senior Management Incentive
Compensation Plan.  Executive upon successfully completing 90 days of active
employment with Bancorp shall be paid a $21,000 signing bonus as additional
incentive compensation.  Executive shall be entitled participate in the Senior
Management Incentive Compensation Plan and earn additional incentive
compensation as set forth in such plan.

 

Paid Time Off and Special Sick Time Off.  Executive shall be entitled to 26 days
paid time off per year for vacation, personal time off and short-term illnesses
to be used in accordance with the Bancorp’s Employee Handbook.  Executive shall
receive five days per year of employment with Bancorp, which will accumulate
each year up to a maximum of 45 days, to cover time off due to illnesses of four
or more consecutive days under doctor’s care.

 

Stock Options.  Subject to the successful completion of 90 days of active
employment with Bancorp, Bancorp shall grant to Executive an option to purchase
upon exercise 30,000 shares of Bancorp common stock at a per share option price
equal to the market price of the Bancorp common stock at the date of grant by
the Board and with such vesting conditions as determined by the Board.

 

Automobile Allowance.  Executive shall be paid an additional $400 per month
compensation for Executive’s automobile allowance.

 

Other Benefits.  Executive is entitled to participate, under the terms of the
respective plans, in other benefit plans and perquisites generally available to
Bancorp’s executives and employees.  Executive shall be entitled to medical,
dental, vision, chiropractic, employee assistance plan, life, accidental
disability, disability and long term disability coverage on such terms as such
is provided by Bancorp to its executive officers.  Bancorp shall pay 100% of
Executive’s monthly premiums for Executive and Executive’s dependents upon
Executive becoming eligible for such coverage beginning on the first of the
month, following the completion of 90 days of employment with Bancorp.

 

6.                                      TERMINATION.  Executive’s employment may
be terminated before the expiration of this Agreement as described in this
Section, in which event Executive’s compensation and benefits shall terminate
except as otherwise provided in this Agreement.

 

For Cause.  Upon Bancorp’s termination of Executive for Cause.  For Cause shall
mean

 

(a)                                  Dishonest or fraudulent conduct by
Executive with respect to the performance of Executive’s duties with Bancorp;

 

(b)                                 Conduct by Executive that materially
discredits Bancorp or any of its subsidiaries or is materially detrimental to
the reputation of Bancorp or any of its subsidiaries, including but not limited
to conviction or a plea of nolo contendere of Executive of a felony or crime
involving moral turpitude;

 

(c)                                  Executive’s willful misconduct or gross
negligence in performance of Executive’s duties under this Agreement, including
but not limited to Executive’s refusal to comply in any material respect with
the legal directives of the Board or the Supervisor, if such misconduct or
negligence has not been remedied or is not

 

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being remedied to the Board’s reasonable satisfaction within thirty (30) days
after written notice, including a detailed description of the misconduct or
negligence, has been delivered by the Board to Executive;

 

(d)                                 An order or directive from a state or
federal banking regulatory agency requesting or requiring removal of Executive
or a finding by any such agency that Executive’s performance threatens the
safety or soundness of Bancorp or any of its subsidiaries; or

 

(e)                                  Material breach of Executive’s fiduciary
duties to Bancorp if such breach has not been remedied or is not being remedied
to the Board’s reasonable satisfaction within thirty (30) days after written
notice, including a detailed description of the breach, has been delivered by
the Board to Executive.

 

Without Cause.  Upon Bancorp’s termination of Executive without Cause, with or
without notice, at any time in Bancorp’s sole discretion, for any reason other
than for Cause.  A Change in Control does not in itself constitute Termination
Without Cause.

 

Death or Disability.  For purposes of this Agreement, disability (“Disability”)
shall mean either that the Executive is (i) unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
sponsored by the Bank.

 

Resignation.  Upon Executive’s voluntary resignation, written notice of which
Executive must give Bancorp at least 60 days in advance of his resignation.

 

Change in Control.  For purposes of this Agreement, a “Change in Control” shall
be deemed to have occurred when any of the following events take place:

 

(a)                                  A Change In Ownership Of The Bancorp.  A
change in ownership of the Bancorp occurs on the date that any person (or group
of persons) acquires ownership of stock of the Bancorp that, together with stock
held by such person or group, constitutes more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Bancorp.

 

(b)                                  A Change in Effective Control of the
Bancorp.  A change in effective control of the Bancorp occurs on the date that:

 

1.                                       Any person (or group of persons)
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the Bancorp possessing thirty-five percent (35%) or more of the total voting
power of the stock of the Bancorp; or

 

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2.                                       A majority of members of the Bancorp’s
Board is replaced during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Bancorp’s Board prior to the date of the appointment or election.

 

(c)                                  A Change in Ownership of a Substantial
Portion of the Bancorp’s Assets.  A change in the ownership of a substantial
portion of the Bancorp’s assets occurs on the date that any person (or group of
persons) acquires (or has acquired during the twelve (12) month period ending on
the date of the most recent acquisition by such person or persons) assets from
the Bancorp that have a total gross fair market value equal to, or more than,
forty percent (40%) of the total gross fair market value of all of the assets of
the Bancorp immediately prior to such acquisition or acquisitions.

 

7.                                      PAYMENT UPON TERMINATION.  Upon
termination of Executive’s employment for any of the reasons set forth in
Section 6 above, Executive will receive payment for all Base Salary and paid
time off and other benefits accrued as of the date of Executive’s termination
(“Earned Compensation”), which shall be paid no later than the end of the
business day of such termination unless an earlier time is required by
applicable law, in which case it shall be paid at such earlier time.  In the
event of termination for death or Disability, Executive’s estate or Executive,
respectively shall receive in addition to Earned Compensation, accrued paid time
off and medical, dental, vision, chiropractic insurance coverage for Executive
and/or Executive’s dependents, as applicable for three months following the date
of death or Disability at Bancorp’s expense.  In the event of Executive’s
termination of employment for Cause or resignation without proper notice,
Executive shall receive Earned Compensation and any accrued paid time off to the
date of resignation.

 

8.                                      SEVERANCE BENEFIT.  In the event of
Executive’s termination Without Cause prior to the second anniversary of this
Agreement, in addition to receiving Earned Compensation, Executive will receive
a severance benefit equal to one month of Base Salary, based on Executive’s Base
Salary just prior to termination (the “Severance Benefit”) for each month
Executive is actively employed by the Bancorp up to a maximum Severance Benefit
of six months Base Salary.  In the event of Executive’s termination without
Cause after the second anniversary of this Agreement, in addition to receiving
Earned Compensation, Executive will receive a severance benefit equal to one
month of Base Salary, based on Executive’s Base Salary just prior to termination
(the “Severance Benefit”) for each month Executive is actively employed by the
Bancorp up to a maximum Severance Benefit of 12 months Base Salary.  The
Severance Benefit shall be paid in installments over the number of months of
continued base salary, starting on the next regular payday following
termination. Receipt of the Severance Benefit is conditioned on Executive having
executed the Separation Agreement in substantially the form attached hereto as
Exhibit B and the revocation period having expired without Executive having
revoked the Separation Agreement.  Receipt and continued receipt of the
Severance Benefit is further conditioned on Executive not being in material
violation of any material term of this Agreement or in material violation of any
material term of the Separation Agreement.  Executive shall not be required to
mitigate the amount of any payments under this Section (whether by seeking new
employment or otherwise), and the amount of Severance Benefits shall not be
reduced by any income or funds that Executive may receive from another party. 
In addition to any Severance Benefit paid by the

 

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Bancorp, the Executive shall receive medical, dental, vision, and chiropractic
insurance coverage for Executive and Executive’s dependents for three months
following the date of termination without Cause at Bancorp’s expense.

 

9.                                      CHANGE IN CONTROL BENEFIT.  After a
Change in Control, if either (i) the Executive is not retained by the resulting
corporation for a period of 18 months in a position comparable to that of the
highest level executive vice president of the resulting corporation or a
position with the resulting corporation that is acceptable to Executive, or (ii)
as a condition of accepting or performing the functions of the position under
(i) above, the Executive is required to relocate his residence or increase his
daily commuting distance to greater than 40 miles,  or (iii) the resulting
company reduces Executive’s Base Salary from Executive’s Base Salary immediately
prior to the Change in Control at any time during the 18 month period
immediately following the consummation of the Change in Control (either event
shall constitute a “Triggering Event”), then Executive shall be paid the 18
months of Executive’s Base Salary, based on Executive’s Base Salary just prior
to the Change in Control (“Change in Control Benefit”).  Executive shall also be
entitled to any Earned Compensation in addition to the Change in Control Benefit
upon a Triggering Event.  The Change in Control Benefit and Earned Compensation
shall be paid to Executive in a lump sum within 5 calendar days following the
Triggering Event.

 

10.                               CONFIDENTIAL INFORMATION.  The parties
acknowledge that in the course of Executive’s duties, Executive will have access
to and become knowledgeable with certain proprietary and confidential
information of Bancorp and its subsidiaries not known by its existing or
potential competitors.  Executive acknowledges that such information constitutes
valuable, special, and unique assets of the business of Bancorp.  Executive
agrees to hold in a fiduciary capacity, not use for Executive’s benefit, and not
disclose, communicate, or divulge in any manner during the period of Executive’s
employment with Bancorp or at any time thereafter, any such data and
confidential information of any kind, nature, or description concerning any
matters affecting or relating to Bancorp’s business, its customers, or its
services.  Executive agrees that all memoranda, notes, records, papers, customer
files, other documents, and all copies thereof relating to Bancorp’s operations
or business or matters related to any of Bancorp’s customers, some of which may
be prepared by Executive.  Executive further agrees that all media, electronic
or otherwise associated therewith containing such confidential information held
by or in the control of Executive, shall be Bancorp’s property (“Bancorp
Property”).  Upon termination of employment, Executive shall promptly return all
the Bancorp Property to Bancorp.

 

11.                               DISPUTE RESOLUTION.  Except where such matters
are deemed governed by ERISA, the parties agree to submit any dispute arising
under this Agreement to final, binding, private arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrators may be entered in any court
having jurisdiction in Sacramento, California.  This includes not only disputes
about the meaning or performance of the Agreement, but disputes about its
negotiation, drafting, or execution.  Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction.  There shall be
three arbitrators, one to be chosen directly by each party, and the third
arbitrator to be selected by the two arbitrators so chosen.  If any arbitration
proceeding is brought for the enforcement of this Agreement or because of an
alleged dispute, breach or default in connection with this Agreement, (i) the
nonprevailing party shall pay the fees of the arbitrators and all other

 

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costs of the arbitration, including the cost of any record or transcripts of the
arbitrations and administrative fees; and (ii) the prevailing party shall be
entitled to recover reasonable attorney’s fees and any other costs and expenses
incurred in that action or proceeding, in addition to any other relief to which
it or he may be entitled.

 

12.                               NOTICES.  All notices, requests, demands, and
other communications provided for by this Agreement will be in writing and shall
be deemed sufficient upon receipt, when delivered personally or by a
nationally-recognized delivery service (such as Federal Express), or three (3)
business days after being deposited in the U.S. mail as certified mail, return
receipt requested, with postage prepaid, if such notice is addressed to the
party to be notified at such party’s address as set forth below or as
subsequently modified by written notice.

 

To Bancorp:

Western Sierra Bancorp

 

4080 Plaza Goldroado Circle

 

Cameron Park, California 95682

 

Attention: Gary D. Gall, Chief Executive Officer

 

 

To Executive:

Patrick J. Rusnak

 

111 Heaton Court

 

Granite Bay, California 95746

 

13.                               GENERAL PROVISIONS.

 

Governing Law.  The validity, interpretation, construction and performance of
this Agreement shall be governed by federal ERISA, as applicable, and otherwise
by the laws of the State of California.

 

Saving Provision.  If any part of this Agreement is held to be unenforceable, it
shall not affect any other part. If any part of this Agreement is held to be
unenforceable as written, it shall be enforced to the maximum extent allowed by
applicable law.

 

Survival Provision. The confidential information and dispute resolution
provisions of this Agreement shall survive after termination of this Agreement,
and shall be enforceable regardless of any claim Employee may have against
Bancorp.  Also, if any benefits provided in Section 8 of this Agreement are
still owed, or obligations or claims pursuant to Section 10 or 11 are still
pending, at the time of termination of this Agreement, this Agreement shall
continue in force, with respect to those obligations or claims, until such
benefits are paid in full or claims are resolved in full.  The obligation in
Section 10 shall survive this Agreement for an indefinite period.

 

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

 

Entire Agreement.  This Agreement constitutes the sole agreement of the parties
regarding Executive’s benefits in the event of termination or Change in Control
and together with Bancorp’s employee handbook governs the terms of Executive’s
employment.  Where there is a conflict between the employee handbook and this
Agreement, the terms of this Agreement shall govern.

 

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Previous Agreements.  This Agreement replaces and supersedes all prior oral and
written agreements between the Executive and Bancorp, or any affiliates or
representatives of Bancorp regarding the subject matters set forth herein.

 

Waiver.  No waiver of any provision of this Agreement shall be valid unless in
writing, signed by the party against whom the waiver is sought to be enforced. 
The waiver of any breach of this Agreement or failure to enforce any provision
of this Agreement shall not waive any later breach.

 

Assignment.  Executive shall not assign or transfer any of Executive’s rights
pursuant to this Agreement, wholly or partially, to any other person or to
delegate the performance of its duties under the terms of this Agreement.  The
rights and obligations of Bancorp under this Agreement shall inure to the
benefit of and be binding in each and every respect upon the direct and indirect
successors and assigns of Bancorp, regardless of the manner in which the
successors or assigns succeed to the interests or assets of Bancorp.  This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
Bancorp, by any merger, consolidation or acquisition where Bancorp is not the
surviving corporation, by any transfer of all or substantially all of Bancorp’s
assets, or by any other change in Bancorp’s structure or the manner in which
Bancorp’s business or assets are held.  Executive’s employment shall not be
deemed terminated upon the occurrence of one of the foregoing events.  In the
event of any merger, consolidation or transfer of assets, this Agreement shall
be binding upon and shall inure to the benefit of the surviving corporation or
the corporation to which the assets are transferred.

 

Attorneys’ Fees.  If either party institutes a proceeding to enforce its rights
under, or to recover damages for breach of, this Agreement, the prevailing party
shall be awarded all costs and expenses of the proceeding, including, but not
limited to, attorneys’ fees, filing and service fees, witness fees, and
arbitrator’s fees. If arbitration is commenced, the arbitrator will have full
authority and complete discretion to determine the “prevailing party” and the
amount of costs and expenses to be awarded under this paragraph.

 

14.                               ADVICE OF COUNSEL.  TERMS AND PROVISIONS OF
THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY
REASON OF THE DRAFTING OR PREPARATION HEREOF.

 

WESTERN SIERRA BANCORP

EXECUTIVE

 

 

 

 

By:

/s/ Gary D. Gall

 

/s/ Patrick J. Rusnak

 

 

Gary D. Gall, Chief Executive Officer

 

Patrick J. Rusnak

 

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EXHIBIT B

 

EMPLOYMENT SEPARATION AGREEMENT
AND RELEASE OF CLAIMS

 

This is a confidential agreement between you, Patrick J. Rusnak, and us, Western
Sierra Bancorp.  This agreement is dated for reference purposes
                          , 20      , which is the date we delivered this
agreement to you for your consideration.  For purposes of this Agreement Western
Sierra Bancorp together with each of its subsidiaries or affiliates is referred
to as “Bancorp.”

 

1.                                      TERMINATION OF EMPLOYMENT.  Your
employment terminates [or was terminated] on                               ,
20       (the “Separation Date”).

 

2.                                      PAYMENTS.  In exchange for your agreeing
to the release of claims and other terms in this agreement, we will pay you the
Severance Benefit specified in Section 8 of the Employment Agreement between you
and Western Sierra Bancorp dated                          , 2005 (the
“Employment Agreement”).  You acknowledge that we are not obligated to make
these payments to you unless you agree to comply with the terms of this
agreement.

 

3.                                      COBRA CONTINUATION COVERAGE.  Your
normal employee participation in Bancorp’s group health coverage will terminate
three months following your termination (“Separation Date”).  Continuation of
group health coverage thereafter will be made available to you and your
dependents pursuant to federal law (COBRA).  As long as you timely elect COBRA
continuation coverage, Bancorp will waive the requirement that you pay for the
cost of continuation coverage through the Separation Date.  Continuation of
group health coverage thereafter is entirely at your expense, as provided under
COBRA.

 

4.                                      TERMINATION OF BENEFITS.  Except as
provided in paragraph 3 above, your participation in all employee benefit plans
and programs ended on the Separation Date.  Your rights under any pension
benefit or other plans in which you may have participated will be determined in
accordance with the written plan documents governing those plans.

 

5.                                      FULL PAYMENT.  You acknowledge having
received full payment of all compensation of any kind (including wages, salary,
vacation, sick leave, commissions, bonuses and incentive compensation) that you
earned as a result of your employment by Bancorp.

 

6.                                      NO FURTHER COMPENSATION.  Any and all
agreements to pay you bonuses or other incentive compensation are terminated,
except for any payments earned during active employment as determined in
accordance with the written plan documents governing those plans.  You
understand and agree that you have no right to receive any further payments for
bonuses or other incentive compensation.  Bancorp owes no further compensation
or benefits of any kind, except as described above.

 

7.                                      RELEASE OF CLAIMS.

 

(a)                                  You hereby release (i) Bancorp and its
subsidiaries, affiliates, and benefit plans, (ii) each of Bancorp’s past and
present shareholders, Executives, directors, agents, employees, representatives,
administrators, fiduciaries and attorneys, and (iii) the

 

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predecessors, successors, transferees and assigns of each of the persons and
entities described in this sentence, from any and all claims of any kind, known
or unknown, that arose on or before the date you signed this agreement.

 

(b)                                 The claims you are releasing include,
without limitation, claims of wrongful termination, claims of constructive
discharge, claims arising out of employment agreements, representations or
policies related to your employment, claims arising under federal, state or
local laws or ordinances prohibiting discrimination or harassment or requiring
accommodation on the basis of age, race, color, national origin, religion, sex,
disability, marital status, sexual orientation or any other status, claims of
failure to accommodate a disability or religious practice, claims for violation
of public policy, claims of retaliation, claims of failure to assist you in
applying for future position openings, claims of failure to hire you for future
position openings, claims for wages or compensation of any kind (including
overtime claims), claims of tortious interference with contract or expectancy,
claims of fraud or negligent misrepresentation, claims of breach of privacy,
defamation claims, claims of intentional or negligent infliction of emotional
distress, claims of unfair labor practices, claims arising out of any claimed
right to stock or stock options, claims for attorneys’ fees or costs, and any
other claims that are based on any legal obligations that arise out of or are
related to your employment relationship with us.

 

(c)                                  You specifically waive any rights or claims
that you may have under the California Labor Code, the Civil Rights Act of 1964
(including Title VII of that Act), the Equal Pay Act of 1963, the Age
Discrimination in Employment Act of 1967 (ADEA), the Americans with Disabilities
Act of 1990 (ADA), the Fair Labor Standards Act of 1938 (FLSA), the Family and
Medical Leave Act of 1993 (FMLA), the Worker Adjustment and Retraining
Notification Act (WARN), the Employee Retirement Income Security Act of 1974
(ERISA), the National Labor Relations Act (NLRA), and all similar federal, state
and local laws.

 

(d)                                 You agree not to seek any personal recovery
(of money damages, injunctive relief or otherwise) for the claims you are
releasing in this agreement, either through any complaint to any governmental
agency or otherwise.  You agree not to start any lawsuit or arbitration
asserting any of the claims you are releasing in this agreement.  You represent
and warrant that you have not initiated any complaint, charge, lawsuit or
arbitration involving any of the claims you are releasing in this agreement. 
You agree not to apply for future employment with Bancorp and that Bancorp has
no obligation to consider you for future employment.

 

(e)                                  You represent and warrant that you have all
necessary authority to enter into this agreement (including, if you are married,
on behalf of your marital community) and that you have not transferred any
interest in any claims to your spouse or to any third party.

 

(f)                                    This agreement does not affect your
rights, if any, to receive pension plan benefits, medical plan benefits,
unemployment compensation benefits or workers’ compensation benefits.  This
agreement also does not affect your rights, if any, under agreements, bylaw
provisions, insurance or otherwise, to be indemnified,

 

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defended or held harmless in connection with claims that may be asserted against
you by third parties.

 

(g)                                 You understand that you are releasing
potentially unknown claims, and that you have limited knowledge with respect to
some of the claims being released.  You acknowledge that there is a risk that,
after signing this agreement, you may learn information that might have affected
your decision to enter into this agreement.  You assume this risk and all other
risks of any mistake in entering into this agreement.  You agree that this
release is fairly and knowingly made.

 

(h)                                 You are giving up all rights and claims of
any kind, known or unknown, except for the rights specifically given to you in
this agreement.

 

8.                                      NO ADMISSION OF LIABILITY.  Neither this
agreement nor the payments made under this agreement are an admission of
liability or wrongdoing by Bancorp.

 

9.                                      BANCORP MATERIALS. You represent and
warrant that you have, or no later than the Separation Date will have, returned
all keys, credit cards, documents and other materials that belong to us.

 

10.                               NONDISCLOSURE AGREEMENT.  You will comply with
the covenant regarding confidential information in Section 10 of the Employment
Agreement.

 

11.                               NO DISPARAGEMENT. You may not disparage
Bancorp or Bancorp’s business or products, and may not encourage any third
parties to sue Bancorp.

 

12.                               COOPERATION REGARDING OTHER CLAIMS.  If any
claim is asserted by or against Bancorp as to which you have relevant knowledge,
you will reasonably cooperate with us in the prosecution or defense of that
claim, including by providing truthful information and testimony as reasonably
requested by us.

 

13.                               NO INTERFERENCE. You will not, apart from good
faith competition, interfere with Bancorp’s relationships with customers,
employees, vendors, or others.

 

14.                               INDEPENDENT LEGAL COUNSEL.  You are advised
and encouraged to consult with an attorney before signing this agreement.  You
acknowledge that you have had an adequate opportunity to do so.

 

15.                               CONSIDERATION PERIOD.  You have 21 days from
the date this agreement is given to you to consider this agreement before
signing it. You may use as much or as little of this 21-day period as you wish
before signing. If you do not sign and return this agreement within this 21-day
period, you will not be eligible to receive the benefits described in this
agreement.

 

16.                               REVOCATION PERIOD AND EFFECTIVE DATE.  You
have 7 calendar days after signing this agreement to revoke it. To revoke this
agreement after signing it, you must deliver a written notice of revocation to
Bancorp’s President before the 7-day period expires. This agreement shall not
become effective until the 8th calendar day after you sign it.  If you revoke
this agreement it will not become effective or enforceable and you will not be
entitled to the benefits described in this agreement.

 

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17.                               GOVERNING LAW.  This agreement is governed by
the laws of the State of California that apply to contracts executed and to be
performed entirely within the State of California.

 

18.                               DISPUTE RESOLUTION.  Except where such matters
are deemed governed by ERISA, the parties agree to submit any dispute arising
under this agreement to final, binding, private arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrators may be entered in any court
having jurisdiction in Sacramento, California.  This includes not only disputes
about the meaning or performance of the agreement, but disputes about its
negotiation, drafting, or execution.  Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction.  There shall be
three arbitrators, one to be chosen directly by each party, and the third
arbitrator to be selected by the two arbitrators so chosen.  If any arbitration
proceeding is brought for the enforcement of this agreement or because of an
alleged dispute, breach or default in connection with this agreement, (i) the
nonprevailing party shall pay the fees of the arbitrators and all other costs of
the arbitration, including the cost of any record or transcripts of the
arbitrations and administrative fees; and (ii) the prevailing party shall be
entitled to recover reasonable attorney’s fees and any other costs and expenses
incurred in that action or proceeding, in addition to any other relief to which
it or he may be entitled.

 

19.                               ATTORNEYS’ FEES.  If either party institutes a
proceeding to enforce its rights under, or to recover damages for breach of,
this agreement, the prevailing party shall be awarded all costs and expenses of
the proceeding, including, but not limited to, attorneys’ fees, filing and
service fees, witness fees, and arbitrator’s fees.  If arbitration is commenced,
the arbitrator will have full authority and complete discretion to determine the
“prevailing party” and the amount of costs and expenses to be awarded under this
paragraph.

 

20.                               FINAL AND COMPLETE AGREEMENT.  This agreement
is the final and complete expression of all agreements between us on all
subjects and supersedes and replaces all prior discussions, representations,
agreements, policies and practices. You acknowledge you are not signing this
agreement relying on anything not set out herein.

 

 

WESTERN SIERRA BANCORP

 

 

 

 

 

By:

 

 

 

 

Gary D. Gall, Chief Executive Officer

 

 

I, THE UNDERSIGNED, HAVING BEEN ADVISED TO CONSULT WITH AN ATTORNEY, HEREBY
AGREE TO BE BOUND BY THIS AGREEMENT AND CONFIRM THAT I HAVE READ AND UNDERSTOOD
EACH PART OF IT.

 

 

 

 

 

 

Patrick J. Rusnak

 

 

 

 

Date

 

4-B

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Appendix A

 

Goals/Expectations:

 

The following is a list of goals and expectations for the position of Chief
Operating Officer for Western Sierra Bancorp.  It is understood that to truly
enhance the organization, our COO must understand and embrace our current status
while providing guidance and support to enhance the organization, both
culturally and financially.

 

Defining Success:

 

1.     Get to know the financials forward and backwards as well as the mission
and objective of the WSBA so you can represent the Bank to Investors.

 

2.     Become the resident expert on the financials so that you can represent
the Bank to the board and related committees on all aspects of Bank performance.

 

3.     Gain an understanding of the charters, history and relationships of the
holding company with its banks and develop a working relationship with those
CEO’s.

 

4.     Using the proper metrics, assist in managing the banks implementation of
board stated goals in a way that assures continued profitability and growth.

 

5.     Act as a confidant, buffer and intermediary between the office of CEO and
management.

 

6.     Gain the respect and confidence of the Board and Management in a way that
allows you to influence decisions made regarding goals, key hires, terminations,
and Bank policies.

 

7.     Oversee the search, evaluation and implementation of all Merger and
Acquisition activity.

 

8.     Create5 an atmosphere of confidence and respect with management and the
board in order to step in as interim CEO, if needed

 

9.     Strategically organize and manage the holding company as a true back
office for the subsidiaries including enhancing the management information
systems in the spirit of “best practices”.

 

10.   Insure that WSBA is taking care of its employees in a way that balances
profitability with proper management principles.

 

5-B

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