**Exhibit10.5**

 

**WESTERN SIERRA NATIONAL BANK**

 

**SALARY CONTINUATION AGREEMENT**

 

This Agreement is amendedand restated this 22nd day of August, 2002, by and between WesternSierra National Bank, a national banking association located in Cameron Park,California (the “Company”) and Gary D. Gall (the “Executive”).

 

**RECITALS**

 

WHEREAS, the Executive isin the employ of the Company, serving as its Vice Chairman;

 

WHEREAS, the experience,knowledge of the affairs of the Company, and reputation and contacts in theindustry of the Executive are so valuable that assurance of the Executive’scontinued service is essential for the future growth and profits of theCompany, and it is in the best interest of the Company to arrange terms ofcontinued employment for the Executive so as to reasonably assure theExecutive’s remaining in the Company’s employment during the Executive’slifetime or until the age of retirement;

 

WHEREAS, the Executiveand the Company are currently parties to an Executive Salary ContinuationAgreement dated June 15, 2001; and

 

WHEREAS, the Executiveand the Company desire to enter into this Salary Continuation Agreement, theterms and conditions of which shall supersede those set forth in the ExecutiveSalary Continuation Agreement dated June 15, 2001;

 

NOW, THEREFORE, inconsideration of the services to be performed in the future, as well as themutual promises and covenants herein contained, it is agreed as follows:

 

**ARTICLE1.**

**DEFINITIONS**

 

**1.1**                               **Definitions.**  Whenever used in this Agreement, the following words and phrasesshall have the meaning specified:

 

1.1.1.                     *“Applicable Percentage”* means thatpercentage listed on Schedule “A” attached hereto which is adjacent to thenumber of complete years (with a “year” being the performance of personalservices for or on behalf of the Company as an employee for a period of 365days) which have elapsed starting from the Effective Date of this Agreement andending on the date the Executive’s employment is terminated for purposes ofthis Agreement.  In the event that theExecutive’s employment with the Company is terminated other than by reason ofdeath, disability, retirement or voluntary termination on the part of theExecutive, Executive shall be deemed for purposes of determining the number ofcomplete years to have completed a year of service in its entirety for anypartial year of service after the last anniversary date of the Effective Dateduring which the Executive’s employment is terminated.

 

1.1.2.                     *“Change of Control”* means (i) a tenderoffer made and consummated for the ownership of 50% or more of the outstandingvoting securities of Western Sierra Bancorp, (the “Bancorp”); (ii) a merger orconsolidation of the Bancorp with another corporation and as a result of suchmerger or consolidation less than 50% of the outstanding voting securities ofthe surviving or resulting corporation are owned by shareholders of theBancorp, other than affiliates (within the meaning of the Securities ExchangeAct of 1934) of any party to such merger or consolidation, as such shareholdersshall have existed immediately prior to such merger or consolidation,

 

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(iii) a sale ofsubstantially all of the Bancorp’s assets to another bank or corporation whichis not a wholly owned subsidiary; or (iv) an acquisition of the Bancorp by aperson, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as ineffect on the date hereof) of the Securities Exchange Act of 1934, of 50% ormore of the outstanding voting securities of the Bancorp (whether directly,indirectly, beneficially or of record). For purposes of this agreement, ownership of voting securities shalltake into account and shall include ownership as determined by applying theprovisions of Rule 13d-3(d)(1)(i) (as in effect on the date hereof) pursuant tothe Securities Exchange Act of 1934.

 

1.1.3.                     *“Code”* means the Internal Revenue Code of1986, as amended.

 

1.1.4.                     *“Disability”* means the Executive sufferinga sickness, accident or injury which, in the judgment of a physiciansatisfactory of the Company, prevents the Executive from performingsubstantially all of the Executive’s normal duties for the Company.  As a condition to any benefits, the Companymay require the Executive to submit to such physical or mental evaluations andtests as the Company’s Board of Directors deems appropriate.

 

1.1.5.                     *“Early Termination”* means the Terminationof Employment before Normal Retirement Age for reasons other than death,Disability, Termination for Cause or following a Change of Control.

 

1.1.6.                     *“Effective Date”* means January 1, 1995.

 

1.1.7.                     *“Early Termination Date”* means the month,day and year in which Early Termination occurs.

 

1.1.8.                     *“Normal Retirement Age”* means theExecutive’s 65th birthday.

 

1.1.9.                     *“Normal Retirement Date”* means the laterof the Normal Retirement Age or Termination of Employment.

 

1.1.10.     *“PlanYear”* means a twelve-month period commencing on January 1 and endingon December 31 of each year.

 

1.1.11.     *“Terminationfor Cause”*.  See Section 5.3.

 

1.1.12.     *“Terminationof Employment”* means that the Executive ceases to be employed by theCompany for any reason whatsoever other than by reason of a leave of absencewhich is approved by the Company.

 

**ARTICLE2.**

**LIFETIMEBENEFITS**

 

**2.1.**                            **Normal Retirement Benefit.**  Upon Termination of Employment on or afterthe Normal Retirement Age for reasons other than death, the Company shall payto the Executive the benefit described in this Section 2.1 in lieu of any otherbenefit under this Agreement.

 

2.1.1.                     Amount ofBenefit.  The annual benefit underthis Section 2.1 is $165,000.  The Boardof Directors may in its sole and absolute discretion unilaterally increase theamount of the annual benefit amount at the end of each Plan Year from the dateof this Agreement to the Executive’s Normal Retirement Date.

 

2.1.2.                     Payment ofBenefit.  The Company shall pay theannual benefit to the Executive in 180 equal monthly installments payable onthe first day of each month commencing with the month following the Executive’sNormal Retirement Date and continuing for 179 additional months.

 

2.1.3.                     BenefitIncreases.  Commencing on the firstanniversary of the first benefit payment, and continuing on each subsequentanniversary, the Company’s Board of Directors, in its sole discretion, mayincrease the benefit.

 

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**2.2.**                            **Early Termination Benefit.**  Upon Early Termination, the Company shallpay to the Executive the benefit described in this Section 2.2 in lieu of anyother benefit under this Agreement.

 

2.2.1.                     Amount ofBenefit.  The benefit under thisSection 2.2 is the Annual Benefit set forth in Section 2.1.1. of this Agreementsubject to any increases to said benefit as provided for therein, multiplied bythe applicable percentage as defined in Section 1.1.1. of this Agreement.

 

2.2.2.                     Payment ofBenefit.  The Company shall pay theannual benefit amount to the Executive in 180 equal monthly installmentspayable on the first day of each month commencing with the month following theExecutive’s Normal Retirement Date and continuing for 179 additional months.

 

2.2.3.                     BenefitIncreases.  Benefit payments may beincreased as provided in Section 2.1.3.

 

**2.3.**                            **Disability Benefit.**  If the Executive terminates employment dueto Disability prior to Normal Retirement Age, the Company shall pay to theExecutive the benefit described in this Section 2.3 in lieu of any otherbenefit under this Agreement.

 

2.3.1.                     Amount ofBenefit.  The benefit under thisSection 2.3 is the Annual Benefit set forth in Section 2.1.1 of this Agreementsubject to any increases to said benefit as provided for therein, multiplied bythe applicable percentage as defined in Section 1.1.1. of this Agreement.

 

2.3.2.                     Payment ofBenefit.  The Company shall pay theannual benefit amount to the Executive in 180 equal monthly installmentspayable on the first day of each month commencing with the month following theTermination of Employment and continuing for 179 additional months.

 

2.3.3.                     BenefitIncreases.  Benefit payments may beincreased as provided in Section 2.1.3.

 

**2.4.**                            **Change of Control Benefit.**  Upon a Change of Control, the Company shallpay to the Executive the benefit described in this Section 2.4 in lieu of anyother benefit under this Agreement.

 

In the event there is aChange of Control, the Executive shall be entitled to be paid in cash in a lumpsum on the date of the consummation of the Change of Control, the present valueof the aggregate amount of the Annual Benefit specified in Section 2.1.1, withthe Applicable Percentage being 100%, being paid for a period of fifteen (15) yearsin one hundred eighty (180) monthly installments beginning on the first day ofthe month following the consummation of the Change in Control.  The present value of the amount shall bedetermined using the long term monthly Applicable Federal Rate at the time ofthe consummation of the Change of Control.

 

**ARTICLE3.**

**DEATHBENEFITS**

 

**3.1.**                            **Death During Active Services.**  If the Executive dies while in the activeservice of the Company, the Company and Executive agree that the Company shallnot make any benefit payments pursuant to this Agreement and this Agreementshall terminate.

 

**3.2.**                            **Death During Benefit Period.**  If the Executive dies after the benefitpayments have commenced under this Agreement but before receiving all suchpayments, the Company and Executive agree that following the death of Executivethe Company shall not make any additional benefit payments pursuant to thisAgreement and this Agreement shall terminate.

 

**3.3.**                            **Death Following Termination of Employment But BeforeBenefits Commence.**  Ifthe Executive is entitled to benefits under this Agreement, but dies prior toreceiving said benefits, the Company and Executive agree that the Company shallnot make any benefit payments pursuant to this Agreement and this Agreementshall terminate.

 

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**ARTICLE4.**

**BENEFICIARIES**

 

**4.1.**                            **Beneficiary Designations.**  The Executive shall designate a beneficiaryby filing a written designation with the Company, in the form of Exhibit “C”,attached hereto and incorporated herein by this reference.  The Executive may revoke or modify thedesignation at any time by filing a new designation.  However, designations will only be effective if signed by theExecutive and accepted by the Company during the Executive’s lifetime.  The Executive’s beneficiary designationshall be deemed automatically revoked if the beneficiary predeceases theExecutive, or if the Executive names a spouse as beneficiary and the marriageis subsequently dissolved.  If theExecutive dies without a valid beneficiary designation, all payments shall bemade to the Executive’s estate.

 

**4.2.**                            **Facility of Payment.**  If a benefit is payable to a minor, to aperson declared incapacitated, or to a person incapable of handling thedisposition of his or her property, the Company may pay such benefit to theguardian, legal representative or person having the care or custody of suchminor, incapacitated person or incapable person.  The Company may require proof of incapacity, minority orguardianship as it may deem appropriate prior to distribution of thebenefit.  Such distribution shallcompletely discharge the Company from all liability with respect to suchbenefit.

 

**ARTICLE5.**

**GENERALLIMITATIONS**

 

**5.1.**                            **Covenant Not To Compete.**  Notwithstanding any provision of this Agreement  to the contrary, the benefits payable to theExecutive pursuant to this Agreement are conditioned upon the Executive notworking as an employee, independent contractor, or consultant of or for abranch of a financial institution located within a thirty (30) mile radius ofthe  headquarters of the Company, for aperiod of one (1) year after Executive terminates employment with theCompany.  The parties to this Agreementhereby agree that should such headquarters be relocated this provision may be renegotiated.  In the event the Executive violates thecovenant not to compete provided for herein, the Company shall immediatelyterminate any and all remaining payments for benefits due to Executive orExecutive’s beneficiaries pursuant to this Agreement, and the Company has noliability to Executive or Executive’s beneficiaries for any benefits orpayments pursuant to this Agreement, except in the event of a Change inControl, in which case the covenant not to compete provided for herein shall beof no force and effect.

 

**5.2.**                            **Excess Parachute Payment.**  Notwithstanding any provision of thisAgreement to the contrary, the Company shall not pay any benefit under thisAgreement to the extent the benefit would be an excess parachute payment underSection 280G of the Code.  In complyingwith this provision, the Company hereby agrees to take all steps reasonablynecessary to maximize the benefit available to the Executive.

 

**5.3.**                            **Termination for Cause.**  Notwithstanding any provision of thisAgreement to the contrary, the Company shall not pay any benefit under thisAgreement if the Company terminates the Executive’s employment for:

 

5.3.1.                     any act ofembezzlement, fraud, breach of fiduciary duty or dishonesty;

 

5.3.2.                     anyconviction of a felony involving moral turpitude;

 

5.3.3.                     deliberate orrepeated disregard of the policies and rules of Company as adopted by Company’sBoard of Director’s;

 

5.3.4.                     unauthorizeduse or disclosure of any of the trade secrets or confidential information ofCompany;

 

5.3.5.                     competition withCompany, inducement of any customer of the Company to breach a contract withthe Company, or inducement of any principal for whom the Company acts as agentto terminate such agency relationship;

 

5.3.6.                     grossnegligence adversely impacting the Company; or

 

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5.3.7.                     willfulbreach of this Agreement or any other willful misconduct.

 

**ARTICLE6.**

**CLAIMSAND REVIEW PROCEDURES**

 

**6.1.**                            **Claims Procedure.**  The Company shall notify any person orentity that makes a claim against the Agreement (the “Claimant”) in writing,within thirty (30) days of Claimant’s written application for benefits, of hisor her eligibility or ineligibility for benefits under the Agreement.  If the Company determines that the Claimantis not eligible for benefits or full benefits, the notice shall set forth (1)the specific reasons for such denial; (2) a specific reference to theprovisions of the Agreement on which the denial is based;  (3) a description of any additionalinformation or material necessary for the Claimant to perfect his or her claim,and a description of why it is needed; and (4) an explanation of theAgreement’s claims review procedure and other appropriate information as to thesteps to be taken if the  Claimantwishes to have the claim reviewed.  Ifthe Company determines that there are special circumstances requiringadditional time to make a decision, the Company shall notify the Claimant ofthe special circumstances and the date by which a decision is expected to bemade, and may extend the time for up to an additional thirty-day period.

 

**6.2.**                            **Review Procedure.**  If the Claimant is determined by the Companynot to be eligible for benefits, or if the Claimant believes that he or she isentitled to greater or different benefits, the Claimant shall have theopportunity to have such claim reviewed by the Company by filing a petition forreview with the Company within thirty (30) days after receipt of the noticeissued by the Company.  Said petitionshall state the specific reasons which the Claimant believes entitle him or herto benefits or to greater or different benefits.  Within thirty (30) days after receipt by the Company of thepetition, the Company shall afford the Claimant (and counsel, if any) andopportunity to present his or her position to the Company orally or in writing,and the Claimant (or counsel) shall have the right to view the pertinentdocuments.  The Company shall notify theClaimant of its decision in writing within the thirty-day period, statingspecifically the basis of its decision, written in a manner calculated to beunderstood by the Claimant and the specific provisions of the Agreement onwhich the decision is based.  If,because of the need for a hearing, the thirty-day period  is not sufficient, the decision may bedeferred for up to another thirty-day period at the election of the Company,but notice of this deferral shall be given to the Claimant.

 

**ARTICLE7.**

**GENERALPROVISIONS**

 

**7.1**                               **Binding Effect.**  This Agreement shall bind the Executive andthe Company, and their beneficiaries, survivors, executors, successors,administrators and transferees.

 

**7.2**                               **Termination.**  This Agreement may be amended or terminated only by a writtenagreement signed by the Company and the Executive.

 

**7.3**                               **No Guarantee of Employment.**  This Agreement is not an employment policyor contract.  It does not give theExecutive the right to remain an employee of the Company, nor does it interferewith the Company’s right to discharge the Executive.  It also does not require the Executive to remain an employee norinterfere with the Executive’s right to terminate employment at any time.

 

**7.4**                               **Non-Transferability.**  Benefits under this Agreement cannot besold, transferred, assigned, pledged, attached or encumbered in any manner.

 

**7.5**                               **Tax Withholding.**  The Company shall withhold any taxes thatare required to be withheld from the benefits provided under this Agreement.

 

**7.6**                               **Applicable Law.**  The Agreement and all rights hereunder shallbe governed by the laws of the State of California, except to the extentpreempted by the laws of the United States of America.

 

**7.7**                               **Unfunded Arrangement.**  The Executive and beneficiary are generalunsecured creditors of the Company for the payment of benefits under thisAgreement.  The benefits represent themere promise by the

 

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Company to pay suchbenefits.  The rights to benefits arenot subject in any manner to anticipation, alienation, sale, transfer,assignment, pledge, encumbrance, attachment, or garnishment by creditors.  Any insurance on the Executive’s life is ageneral asset of the Company to which the Executive and beneficiary have nopreferred or secured claim.

 

**7.8**                               **Recovery of Estate Taxes.**  If the Executive’s gross estate for federalestate tax purposes includes any amount determined by reference to and onaccount of this Agreement, and if the beneficiary is other than the Executive’sestate, then the Executive’s estate shall be entitled to recover from thebeneficiary receiving such benefit under the terms of the Agreement, an amountby which the total estate tax due by the Executive’s estate, exceeds the totalestate tax which would have been payable if the value of such benefit had notbeen included in the Executive’s gross estate. If there is more than one person receiving such benefit, the right ofrecovery shall be against each such person. In the event the beneficiary has a liability hereunder, the beneficiarymay petition the Company for a lump sum payment in an amount not to exceed thebeneficiary’s liability hereunder.

 

**7.9**                               **Entire Agreement.**  This Agreement constitutes the entireagreement between the Company and the Executive as to the subject matterhereof.  No rights are granted to theExecutive by virtue of this Agreement other than those specifically set forthherein.

 

**7.10**                        **Administration.**  The Company shall have powers which arenecessary to administer this Agreement, including but not limited to:

 

7.10.1.  Establishing and revising the method ofaccounting for the Agreement;

 

7.10.2.  Maintaining a record of benefit payments;and

 

7.10.3  Establishing rules and prescribing any formsnecessary or desirable to administer the Agreement.

 

**7.11.**                     **Named Fiduciary.**  For purposes of the Employee RetirementIncome Security Act of 1974, if applicable, the Company shall, be the namedfiduciary and plan administrator under the Agreement.  The named fiduciary may delegate to others certain aspects of themanagement and operation responsibilities of the plan including the employmentof advisors and the delegation of ministerial duties to qualified individuals.

 

IN WITNESS WHEREOF, theEmployer and a duly authorized Company officer have signed this Agreement.

 
|   |     | **GARY  D. GALL**                 |
|--------|----------|-----------------------------------|
|   |     |                              |
|   |     |                              |
| Dated: | 11/18/02 |                              |   | /s/ Gary D. Gall |   |
|   |     |                              |
|   |     |                              |
|   |     | **WESTERN  SIERRA NATIONAL BANK** |
|   |     |                              |
|   |     |                              |
| Dated: | 11/18/02 |                              | By | /s/ Charles W. Bacchi |   |
|   |     | Charles W. Bacchi,  Chairman      |
|        |          |                                   |  |  |  |  |  |

 

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**SCHEDULEA**

 

**WESTERNSIERRA NATIONAL BANK**

**SALARYCONTINUATION AGREEMENT**

 

**GaryD. Gall**

 
| **NUMBER OF COMPLETE  YEARS WHICH HAVE ELAPSED** |   | **APPLICABLE  PERCENTAGE** |   |
|--------------------------------------------------|--------|----------------------------|--------|
|                                             |   |                       |   |
| 1                                                |   | 5.00                       | %      |
| 2                                                |   | 10.00                      | %      |
| 3                                                |   | 15.00                      | %      |
| 4                                                |   | 20.00                      | %      |
| 5                                                |   | 25.00                      | %      |
| 6                                                |   | 30.00                      | %      |
| 7                                                |   | 35.00                      | %      |
| 8                                                |   | 41.50                      | %      |
| 9                                                |   | 48.00                      | %      |
| 10                                               |   | 54.50                      | %      |
| 11                                               |   | 61.00                      | %      |
| 12                                               |   | 67.50                      | %      |
| 13                                               |   | 74.00                      | %      |
| 14                                               |   | 80.50                      | %      |
| 15                                               |   | 87.00                      | %      |
| 16                                               |   | 93.50                      | %      |
| 17 or more years                                 |   | 100.00                     | %      |

 

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**BENEFICIARY DESIGNATION**

 

**WESTERNSIERRA NATIONAL BANK**

**SALARYCONTINUATION AGREEMENT**

 

**GaryD. Gall**

 
| **TO:** | **The  Administrator of Gary D. Gall**       |
|---------|----------------------------------------------|
|    | **Executive  Salary Continuation Agreement** |

 

Pursuant to theprovisions of my Executive Salary Continuation Agreement with Gary D. Gallpermitting the designation of a beneficiary or beneficiaries by a participant,I hereby designate the following persons and entities as primary and secondarybeneficiaries of any benefit under said Agreement payable by reason of mydeath:

 

PRIMARY BENEFICIARY:

 

(Beneficiarynamed)

 

SECONDARY BENEFICIARY:

(Secondarybeneficiary named)

 

THE RIGHT TO REVOKE ORCHANGE ANY BENEFICIARY DESIGNATION IS HEREBY RESERVED.

 

The Administrator shallpay all sums payable under the Agreement by reason of my death to the PrimaryBeneficiary, if he or she survives me, and if no Primary Beneficiary shallsurvive me then to the Secondary Beneficiary, and if no named beneficiarysurvives me, the Administrator shall pay all amounts in accordance with theterms of my Executive Salary Continuation Agreement.  In the event that a named beneficiary survives me and dies priorto receiving the entire benefit payable under said Agreement then and in thatevent, the remaining unpaid benefit payable according to the terms of myExecutive Salary Continuation Agreement shall be payable to the personalrepresentatives of the estate of said beneficiary who survived me but diedprior to receiving the total benefit provided by my Executive SalaryContinuation Agreement.

 
|   |     | EXECUTIVE           |                    |
|--------|----------|---------------------|-------------------------|
|   |     |                |                    |
|   |     |                |                    |
| Dated: | 11/18/02 |                |   /s/ Gary D. Gall |   |
|   |     |   Gary D. Gall |                    |
|        |          |                     |                         |  |

 

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