**EXHIBIT10.85**

** **

**NOTWITHSTANDINGANY OTHER PROVISION OF THIS AGREEMENT, NO SHARES OF WESTERN SIERRA BANCORP’SCOMMON STOCK SHALL BE ISSUED PURSUANT HERETO UNLESS THE WESTERN SIERRA BANCORP1999 STOCK OPTION PLAN SHALL HAVE FIRST BEEN APPROVED BY THE SHAREHOLDERS OFWESTERN SIERRA BANCORP.**

 

# **WESTERN SIERRA BANCORP**

**NONQUALIFIEDSTOCK OPTION AGREEMENT**

 

ThisNonqualified Stock Option Agreement (the “Agreement”) is made and entered intoas of the 1st day of January, 2004, by and between Western SierraBancorp, a California corporation (the “Bancorp”), and Harold Prescott(“Optionee”);

 

WHEREAS,pursuant to the Western Sierra Bancorp 1999 Stock Option Plan (the “Plan”), acopy of which is attached hereto, the Board of Directors of the Bancorp hasauthorized granting to Optionee a nonqualified stock option to purchase all orany part of four-hundred(400) authorized but unissued shares ofthe Bancorp’s common stock at the price of fourty-seven Dollars and zeroCents ($47.00) per share, such option to be for the term and upon theterms and conditions hereinafter stated;

 

NOW,THEREFORE, it is hereby agreed:

 

**1.  Grant of Option.**  Pursuant to said action of the Board ofDirectors, the Bancorp hereby grants to Optionee the option to purchase, uponand subject to the terms and conditions of the Plan which is incorporated infull herein by this reference, all or any part of four-hundred (400)shares of the Bancorp’s common stock (hereinafter called “stock”) at the priceof  fourty-seven  Dollars and zero Cents ($47.00)per share, which price is not less than one hundred percent (100%) of the fairmarket value of the stock as of the date of action of the Board of Directorsgranting this option.

 

**2.  Exercisability.**  This option shall be exercisable as to:

 
| **Number of Shares** |   | **Vesting  Date** |   |
|----------------------|--------|-------------------|--------|
| 400                  |   | immediate         |   |

 

This option shall remainexercisable as to all vested shares until January 1,2014 (but not laterthan ten (10) years from the date this option is granted) unless this optionhas expired or terminated earlier in accordance with the provisions hereof orin the Plan.  Subject to paragraphs 4and 5, shares as to which this option becomes exercisable pursuant to theforegoing provision may be purchased at any time prior to expiration of this option.

 

**3.  Exercise of Option.**  This option may be exercised by writtennotice (substantially in the form as that which is attached as Exhibit A)delivered to the Bancorp stating the number of shares with respect to whichthis option is being exercised, together with (a) cash in the amount of thepurchase price of such shares, or (b) subject to applicable law, with theBancorp’s stock previously acquired by Optionee and held by Optionee for aperiod of at least six months. Notwithstanding the foregoing, in the event Optionee does exercise the optionby utilizing (b) above, Optionee should obtain tax advice as to theconsequences of such action.  Not lessthan ten (10) shares may be purchased at any one time unless the numberpurchased is the total number which may be purchased under this option and inno event may the option be exercised with respect to fractional shares.  Upon exercise, Optionee shall makeappropriate arrangements and shall be responsible for the withholding of anyfederal and state taxes then due.

 

**4.  Cessation of Directorship or Employment.**  Except as provided in Paragraphs 2 and 5hereof, if Optionee shall cease to be a director or an employee of the Bancorpor a subsidiary corporation for any reason other than Optionee’s death ordisability [as defined in Section 22(e)(3) of the Internal Revenue Code of1986, as amended from time to time (the “Code”)], this option shall expirethree (3) months thereafter.  During thethree (3) month period this option shall be exercisable only as to thoseinstallments, if any, which had accrued as of the date when Optionee ceased tobe a director or an employee of the Bancorp or a subsidiary corporation.  If Optionee is both a director and anemployee, then such option shall expire three (3) months after the latter ofthe date of termination of Optionee’s directorship or employment.

 

**5.  Termination of Employment for Cause.**  If Optionee’s employment with the Bancorp ora subsidiary corporation is terminated for cause, this option shall expirethirty (30) days from the date of such termination.  Termination for cause shall include, but not be limited to,termination for malfeasance or gross misfeasance in the performance of dutiesor conviction of a crime involving moral turpitude, and, in any event, the determinationof the Board of Directors with respect thereto shall be final and conclusive.

 

**6.  Nontransferability; Death or Disabilityof Optionee.** This option shall not be transferable except by will or by the laws ofdescent and distribution and shall be exercisable during Optionee’s lifetimeonly by Optionee.  If Optionee dieswhile serving as a director or an employee of the Bancorp or a subsidiarycorporation, or during the three

 

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(3) month period referred to inParagraph 4 hereof, this option shall expire one (1) year after the date ofOptionee’s death or on the day specified in Paragraph 2 hereof, whichever isearlier.  After Optionee’s death butbefore such expiration, the persons to whom Optionee’s rights under this optionshall have passed by will or by the laws of descent and distribution or theexecutor or administrator of Optionee’s estate shall have the right to exercisethis option as to those shares for which installments had accrued underParagraph 2 hereof as of the date on which Optionee ceased to be a director oran employee of the Bancorp or a subsidiary corporation.

 

If Optioneeterminates his or her directorship or employment because of disability (asdefined in Section 22(e)(3) of the Code), Optionee may exercise this option tothe extent he or she is entitled to do so at the date of termination, at anytime within one (1) year of the date of termination, or before the expirationdate specified in Paragraph 2 hereof, whichever is earlier.

 

**7.  Employment.**  This Agreement shall not obligate theBancorp or a subsidiary corporation to employ Optionee for any period, norshall it interfere in any way with the right of the Bancorp or a subsidiarycorporation to reduce Optionee’s compensation.

 

**8.  Privileges of Stock Ownership.**  Optionee shall have no rights as ashareholder with respect to the Bancorp’s stock subject to this option untilthe date of issuance of stock certificates to Optionee.  Except as provided in the Plan, noadjustment will be made for dividends or other rights for which the record dateis prior to the date such stock certificates are issued.

 

**9.  Modification and Termination.**  The rights of Optionee are subject tomodification and termination upon the occurrence of certain events as providedin Sections 13 and 14 of the Plan.

 

**10.  Notification of Sale.**  Optionee agrees that Optionee, or any personacquiring shares upon exercise of this option, will notify the Bancorp not morethan five (5) days after any sale or other disposition of such shares.

 

**11.  Representations of Optionee.**  No shares issuable upon the exercise of thisoption shall be issued and delivered unless and until the Bancorp has compliedwith all applicable requirements of California and federal law and of theSecurities and Exchange Commission and the California Department ofCorporations pertaining to the issuance and sale of such shares, and allapplicable listing requirements of the securities exchanges, if any, on whichshares of the Bancorp of the same class are then listed.  Optionee agrees to ascertain that suchrequirements shall have been complied with at the time of any exercise of thisoption.  In addition, if the Optionee isan “affiliate” for purposes of the Securities Act of 1933, there may be additionalrestrictions on the resale of stock, and Optionee therefore agrees to ascertainwhat those restrictions are and to abide by the restrictions and otherapplicable federal and state securities laws.

 

Furthermore,the Bancorp may, if it deems appropriate, issue stop transfer instructions againstany shares of stock purchased upon the exercise of this option and affix to anycertificate representing such shares the legends which the Bancorp deemsappropriate.

 

Optioneerepresents that the Bancorp, its directors, officers, employees and agents havenot and will not provide tax advice with respect to the option, and Optioneeagrees to consult with his or her own tax advisor as to the specific taxconsequences of the option, including the application and effect of federal,state, local and other tax laws.

 

**12.  Notices.**  Any notice to the Bancorp provided for inthis Agreement shall be addressed to it in care of its President or ChiefFinancial Officer at its main office and any notice to Optionee shall beaddressed to Optionee’s address on file with the Bancorp or a subsidiarycorporation, or to such other address as either may designate to the other inwriting.  Any notice shall be deemed tobe duly given if and when enclosed in a properly sealed envelope and addressedas stated above and deposited, postage prepaid, with the United States PostalService.  In lieu of giving notice bymail as aforesaid, any written notice under this Agreement may be given toOptionee in person, and to the Bancorp by personal delivery to its President orChief Financial Officer.

 

IN WITNESS WHEREOF, the partieshereto have executed this Agreement as of the day and year first above written.

 
| **OPTIONEE**              | **WESTERN SIERRA BANCORP** |
|---------------------------|----------------------------|
|                      |                       |   |
|                      |                       |   |
| By                        | / s/ Harold Prescott       |   | By | / s/ Chuck Bacchi |   |
| Harold Prescott, Optionee |                       | Chuck Bacchi, Chairman |   |
|                      |                       |   |   |
|                      | By                         | / s/ Gary Gall |   |
|                      |                       | Gary Gall, Pres/CEO |   |
|                           |                            |  |  |  |  |

 

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