**Exhibit10.59**

 

**SALARYCONTINUATION AGREEMENT**

 

This Agreement is madeand entered into this 1st day of June, 2002, by and between Western SierraNational Bank, a national banking association (the “Employer”), and Phillip S.Wood, an individual residing in the State of California (hereinafter referredto as the “Executive”).

 

**RECITALS**

 

WHEREAS, the Executive isan employee of the Employer and is serving as its Senior Vice President andChief Administrative Officer;

 

WHEREAS, the Executive’sexperience and knowledge of the affairs of the Employer and the bankingindustry are extensive and valuable;

 

WHEREAS, it is deemed tobe in the best interests of the Employer to provide the Executive with certainsalary continuation benefits, on the terms and conditions set forth herein, inorder to reasonably induce the Executive to remain in the Employer’semployment; and

 

WHEREAS, the Executiveand the Employer wish to specify in writing the terms and conditions upon whichthis additional compensatory incentive will be provided to the Executive, or tothe Executive’s spouse or the Executive’s designated benefi­ciaries, as thecase may be;

 

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

 

**AGREEMENT**

 

**1.**                                      **Terms and Definitions.**

 

**1.1.**                            **Administrator.**  The Employer shall be the “Administrator”and, solely for the purposes of ERISA, the “fiduciary” of this Agreement wherea fiduciary is required by ERISA.

 

**1.2.**                            **Annual Benefit.**  The term “Annual Benefit” shall mean anannual sum of thirty thousand dollars ($30,000) multiplied by the ApplicablePercentage (defined below) and then reduced to the extent required: (i) underthe other provisions of this Agreement; (ii) by reason of the lawful order ofany regulatory agency or body having jurisdiction over the Employer; and (iii)in order for the Employer to properly comply with any and all applicable stateand federal laws, including, but not limited to, income, employment anddisability income tax laws (eg., FICA, FUTA, SDI).

 

**1.3.  ApplicablePercentage.**  The term “Applicable Percentage” shall meanthat percentage 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 Employer 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.

 

**1.4.**                            **Beneficiary.**  The term “beneficiary” or “designated beneficiary” shall mean theperson or persons whom the Executive shall designate in a valid BeneficiaryDesignation, a copy of which is attached hereto as Exhibit “B”, to receive thebenefits provided hereunder.  ABeneficiary Designation shall be valid only if it is in the form attachedhereto and made a part hereof and is received by the Administrator prior to theExecutive’s death.

 

**1.5.**                            **The Code.**  The “Code” shall mean the Internal Revenue Code of 1986, asamended (the “Code”).

 

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**1.6.**                            **Disability/Disabled.**  The term “Disability” or “Disabled” shallhave the same meaning given such term in the principal disability insurancepolicy covering the Executive, which is incorporated herein by reference.  In the event the Executive is not covered bya disability policy containing a definition of “Disability” or “Disabled,”these terms shall mean an illness or incapacity which, having continued for aperiod of one hundred and eighty (180) consecutive days, prevents the Executivefrom adequately performing the Executive’s regular employment duties.  The determination of whether the Executiveis Disabled shall be made by an independent physician selected by mutualagreement of the parties.

 

**1.7.**                            **Effective Date.**  The term “Effective Date” shall mean May 12002.

 

**1.8.**                            **ERISA.** The term “ERISA” shall mean the Employee Retirement Income Security Actof 1974, as amended.

 

**1.9.**                            **Plan Year.**  The term “Plan Year” shall mean the Employer’s calendar year.

 

**1.10.**                     **Retirement.**  The term “Retirement” or “Retires” shall refer to the date onwhich the Executive attains the age of at least sixty-six (66) and acknowledgesin writing to the Employer to be the last day he will provide any significantpersonal services, whether as an employee, director or independent consultantor contractor, to the Employer.  Forpurposes of this Agreement, the phrase “significant personal services” shallmean more than ten (10) hours of personal services rendered to one or moreindividuals or entities in any thirty (30) day period.

 

**1.11**                        **Sale of Business.**  The term “Sale of Business” shall mean any(i) merger, consolidation or reorganization of the Employer’s parent or WesternSierra Bancorp (“Parent”) in which (A) the Parent does not survive or (B) theParent survives with a resulting change in beneficial ownership of the Parentof more than 50% of the voting shares of the Parent, (ii) sale of more than 50%of the beneficial ownership of the voting shares of the Parent to any person orgroup of persons acting in concert, or (iii) transfer or sale of more than 50%of the total market value of the assets of the Parent as reflected in the mostrecent published balance sheet of the Parent to another corporation that is nota wholly-owned subsidiary of the Parent. Notwithstanding anything to the contrary, the merger of Employer withthe Parent or any subsidiary of the Parent shall not be deemed a “Sale ofBusiness.”

 

**1.12.**                     **Surviving Spouse.**  The term “Surviving Spouse” shall mean theperson, if any, who shall be legally married to the Executive on the date ofthe Executive’s death.

 

**1.13.**                     **Termination for Cause.**  The term “Termination for Cause” shall meanthe termination of the Executive by the Employer upon the occurrence of any ofthe following events:

 

(i) the Executiveis convicted of illegal activity by a court of competent jurisdiction or pleadsguilty to or nolo contendere to illegal activity, which activity materiallyadversely affects the  Employer’s reputationin the community or which evidences the lack of the Executive’s fitness orability to perform the Executive’s duty as determined by the Board of Directorsin good faith;

 

(ii) the Executivehas committed any illegal or dishonest act which would cause termination ofcoverage under the Employer’s Bankers’ Blanket Bond as to the Executive, asdistinguished from termination of coverage as to the Employer as a whole;

 

(iii) theExecutive materially fails to perform, or habitually neglects, the Executive’sduties or commits a material act of malfeasance or misfeasance in connectiontherewith;

 

(iv) an action iscommenced by any bank regulatory agency having jurisdiction, to remove orsuspend the Executive from office, or a cease and desist order under 12 U.S.C.1818(b) or any similar Federal or state statute is issued against the Executiveor the Employer which calls for the Executive’s suspension or removal fromoffice;

 

(v) deliberate orrepeated disregard of the policies and rules of the Employer as adopted by theEmployer’s board of directors;

 

(vi) unauthorizeduse or disclosure of any of the trade secrets or confidential information ofthe Employer or Parent;

 

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(vii) competitionwith the Employer or the Parent or any of Parent’s subsidiaries (collectivelyreferred to “WSB Group”), inducement of any customer of any entity in the WSBGroup to breach a contract with any entity in the WSB Group or inducement ofany employee or agent of any entity in the WSB Group to terminate his or heremployment or agency relationship with such entity in the WSB Group;

 

(vii) grossnegligence adversely impacting the Employer or the Parent; or

 

(viii) willfulbreach of this Agreement or any other willful misconduct.

 

**2.**                                      **Scope, Purpose and Effect.**

 

**2.1.**                            **Contract of Employment.**  Although this Agreement is intended toprovide the Executive with an additional incentive to remain in the employ ofthe Employer, this Agreement shall not be deemed to constitute a contract of employmentbetween the Executive and the Employer nor shall any provision of thisAgreement restrict or expand the right of the Employer to terminate theExecutive’s employment.  This Agreementshall have no impact or effect upon any separate written employment agreementwhich the Executive may have with the Employer, it being the parties’ intentionand agreement that unless this Agreement is specifically referenced in saidemployment agreement (or any modification thereto), this Agreement (and theEmployer’s obligations hereunder) shall stand separate and apart and shall haveno effect upon, nor be affected by, the terms and provisions of said employmentagreement.

 

**2.2.**                            **Fringe Benefit.**  The benefits provided by this Agreement aregranted by the Employer as a fringe benefit to the Executive and are not a partof any salary reduction plan or any arrangement deferring a bonus or a salaryincrease.  The Executive has no optionto take any current payments or bonus in lieu of the benefits provided by thisAgreement.

 

**3.**                                      **Payments Upon or After Retirement.**

 

**3.1.**                            **Payments Upon Retirement.**  If the Executive shall remain in thecontinuous employment of the Employer until Retirement, the Executive shall beentitled to be paid the Annual Benefit, with the Applicable Percent equal to100% for a period of fifteen (15) years, in one hundred eighty (180) equalmonthly installments, with each installment to be paid on the first day of eachmonth, beginning with the month following the month in which the ExecutiveRetires or upon such later date as may be mutually agreed upon in writing bythe Executive and the Employer in advance of said Retirement Date.

 

**3.2.**                            **Payments in the Event of Death After Retirement.**  The Employer and Executive  agree that if the Executive Retires, but shalldie before receiving all of the one hundred eighty (180) monthly paymentsdescribed in paragraph 3.1 above, the Employer will make the remaining monthlypayments, undiminished and on the same schedule as if the Executive had notdied, to the Executive’s designated beneficiary.  If a valid Beneficiary Designation is not in effect, then theremaining amounts due to the Executive under the term of this Agreement shallbe paid to the Executive’s Surviving Spouse. If the Executive leaves no Surviving Spouse, the remaining amounts dueto the Executive under the terms of this Agreement shall be paid to the dulyqualified personal representative, executor or administrator of the Executive’sestate.

 

**4.**                                      **Payments in the Event Death or Disability Occurs Priorto Retirement.**

 

**4.1.**                            **Payments in the Event of Death Prior to Retirement.**  In the event the Executive should die whileactively employed by the Employer at any time after the Effective Date of thisAgreement, but prior to Retirement, the Employer agrees to pay the AnnualBenefit with the Applicable Percentage equal to 100% for a period of fifteen(15) years in one hundred eighty (180) equal monthly installments, with eachinstallment to be paid on the first of each month beginning with the monthfollowing the Executive’s death, to the Executive’s designatedbeneficiary.  If a valid BeneficiaryDesignation is not in effect, then the amounts due to the Executive under theterms of this Agreement shall be paid to the Executive’s Surviving Spouse.  If the Executive leaves no Surviving Spouse,the amounts due to the Executive under the terms of this Agreement shall bepaid to the duly qualified personal representative, executor or administratorof the Executive’s estate.

 

**4.2.**                            **Payments in the Event of Disability Prior toRetirement.**  In the eventthe Executive becomes Disabled while actively employed by the Employer at anytime after the Effective Date of this Agreement and

 

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remains Disabled at theearliest applicable commencement date of payments pursuant to this Paragraph4.2, the Executive shall: (i) continue to be treated during such period ofDisability as being gainfully employed but not actively employed by theEmployer and shall not have any applicable years of service added during thetime of disability for the purpose of determining the Annual Benefit; and (ii)be entitled to be paid the Annual Benefit, with the Applicable Percentage asset forth in Schedule A and as determined by the applicable years of service atthe time of disability, for fifteen (15) years in one hundred eighty (180)equal monthly installments, with each installment to be paid on the first dayof each month, beginning with the month following the earlier of (1) the monthin which the Executive attains sixty-six (66) years of age; or (2) the dateupon which the Executive is no longer entitled to receive Disability benefitsunder the Executive’s principal Disability insurance policy and does not, atsuch time, return to and thereafter fulfill the responsibilities associatedwith the employment position held with the Employer prior to becoming Disabledby reason of such Disability continuing.

 

The Employer agrees thatif the Executive shall die before receiving all of the one hundred eighty (180)monthly payments described in this paragraph 4.2, the Employer will make theremaining monthly payments to Executive’s designated beneficiary.  If a valid beneficiary designation is not ineffect, then the remaining payments due to Executive shall be paid toExecutive’s Surviving Spouse.  If theExecutive leaves no Surviving Spouse, the remaining amounts due to Executiveshall be paid to the duly qualified personal representative, executor, oradministrator of the Executive’s estate.

 

If the Executive diesafter becoming Disabled and prior to being paid benefits pursuant to the priorparagraph, the Employer will pay to Executive’s designated beneficiary theAnnual Benefit, with the Applicable Percentage as set forth in Schedule A andas determined by the applicable years of service at the time of the Disability,for a period of (15) years in equal monthly installments, with each installmentto be paid on the first day of each month, beginning with the month followingthe date of Executive’s death.  If a validBeneficiary Designation is not in place, then the payments due to the Executiveunder this paragraph shall be paid to the Executive’s Surviving Spouse.  If Executive leaves no Surviving Spouse, thepayments due to Executive under this paragraph shall be paid to the dulyqualified personal representative, executor, or administrator of theExecutive’s estate.

 

**5.**                                      **Payments in the Event Employment is Terminated Otherthan by Death, Disability, Termination for Cause or Retirement.**

 

As indicated in Paragraph2 above, the Employer reserves the right to terminate the Executive’semployment, with or without cause but subject to any written employmentagreement which may then exist, at any time prior to the Executive’sRetirement.  In the event that theemployment of the Executive shall be terminated for any reason, includingvoluntary termination by the Executive, but other than by reason of (i)Disability except as provided in Paragraph 4.2, (ii) death, (iii) Terminationfor Cause, (iv) Retirement or (v) termination for Sale of Business, theExecutive or his legal representative shall be entitled to be paid the AnnualBenefit, with the Applicable Percentage as set forth in Schedule A and asdetermined by the applicable years of service at the time of termination ofemployment with the Employer, for a period of 15 years in 180 equal monthlyinstallments, with each installment to be paid on the first day of each month,beginning with the month following the month in which the Executive terminatesemployment and attains age 66, provided however in the event the Executive diesbefore receiving all of the 180 payments, the Employer agrees to make thepayments, undiminished and on the same schedule as if the Executive had notdied, to the Executive’s designated beneficiary and if a valid BeneficiaryDesignation is not in place, then the payments shall be paid to the Executive’sSurviving Spouse, and if there is neither a valid Beneficiary Designation norSurviving Spouse, the payments shall be paid to the duly qualified personalrepresentative, executor, or administrator of the Executive’s estate.  In the event Executive is entitled tobenefit payments pursuant to this Paragraph 5 and dies prior to age 66, thensuch benefits, undiminished and on the same schedule as if the Executive hadnot died, are to be paid beginning with the month following the Executive’sdeath to Executive’s designated beneficiary and if a valid BeneficiaryDesignation is not in place, then the payments shall be paid to the Executive’sSurviving Spouse, and if there is neither a valid Beneficiary Designation norSurviving Spouse, the payments shall be paid to the duly qualified personalrepresentative, executor, or administrator of the Executive’s estate.

 

Notwithstanding anythingto the contrary, the Executive shall not be entitled to be paid any benefitpursuant to the prior paragraph if Executive voluntarily terminates employmentwith the Employer prior to the end of the second anniversary of the EffectiveDate.

 

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**5.1**                               **Termination in a Sale of Business.**  In the event there is a Sale of Business andthe Executive does not have a written agreement in place for continuedemployment for a term of at least two years beginning from the time of thecompletion of the Sale of Business, in a position at least equivalent toExecutive’s position and at least at the same then base salary of Executive,then the Executive shall be entitled to be paid in cash in a lump sum on thedate of the consummation of the Sale of Business, the present value of theaggregate amount of the Annual Benefit, with the Applicable Percentage as setforth in Schedule A and as determined by the applicable years of service of theExecutive at the time of the consummation of the Sale of Business plus anadditional three years of service, being paid for a period of fifteen (15)years in one hundred eighty (180) monthly installments beginning on the firstday of the month following the consummation of the Sale of Business.  The present value of the amount shall bedetermined using the long term monthly Applicable Federal Rate at the time ofthe consummation of the Sale of Business.

 

Notwithstanding the priorparagraph, no payment shall be made to Executive pursuant to this Agreement tothe extent that such payment when aggregated with all other payments consideredfor purposes of calculating a parachute payment results in an excess parachutepayment as defined under Section 280G of the Code.

 

If the Internal RevenueService or any other tax authority makes any claim, demand or assessment in anyform based directly or indirectly, in whole or in part, on the allegation thatany payment under this Agreement and/or any other payment by Employer to or forthe benefit of the Executive at any time constitutes a “parachute payment”under Section 280G of the Code or any similar or successor provision of federalor state law, Executive agrees that Employer, its successors and assigns shallhave no obligation, whether for defense, indemnification, reimbursement orotherwise, with respect to such claim, demand or assessment.

 

Notwithstanding anythingto the contrary, no benefit payments provided in this Paragraph 5.1 shall bemade to Executive, Executive’s designated beneficiary, Surviving Spouse orExecutive’s estate if the Executive is entitled to benefits provided by anyother Paragraph of this Agreement.

 

**6.**                                      **Termination for Cause.**

 

Notwithstanding anythingto the contrary, in the event the termination of employment of the Executive isTermination for Cause as defined in Paragraph 1.13, the Executive shall not beentitled to any benefits pursuant to this Agreement.

 

**7.**                                      **No Ownership Rights to the Employer’s Assets.**

 

The Employer reserves theright to determine, in its sole and absolute discretion, whether, to whatextent and by what method, if any, to provide for the payment of the amountswhich may be payable to the Executive, the Executive’s spouse or theExecutive’s beneficiaries under the terms of this Agreement (“Benefits”).  The rights of the Executive or anybeneficiary of the Executive under this Agreement shall be solely those of anunsecured creditor of the Employer.

 

In the event that theEmployer, in its sole and absolute discretion, elects to acquire an insurancepolicy, an annuity or any other asset to recoup the costs or any portionthereof of the Benefits, then such insurance policy, annuity or other assetshall not be deemed to be held under any trust for the benefit of the Executiveor his beneficiaries or to be security for the performance of the obligationsof the Employer under this Agreement, but shall be, and remain, a generalunpledged, unrestricted asset of the Employer. The Executive and his beneficiaries shall have no rights whatsoever withrespect to, or any claim against, any such insurance policy, annuity or otherasset.  In connection with the Employerelecting to acquire any such insurance policy or annuity, the Executive agreesto cooperate to facilitate such acquisition, and pursuant thereto shall executesuch documents and undergo such medical examinations or tests as the Employermay reasonably request.

 

**8.**                                      **Claims Procedure.**

 

The Employer shall, butonly to the extent necessary to comply with ERISA, be designated as the namedfiduciary under this Agreement and shall have authority to control and managethe operation and administration of this Agreement.  Consistent therewith, the Employer shall make all determinationsas to the rights to benefits under this Agreement.  Any decision by the Employer denying a claim by the Executive, theExecutive’s spouse, or the Executive’s bene­ficiary for benefits under thisAgreement shall be stated in writing and delivered or mailed, via registered orcertified mail, to the Executive, the Executive’s spouse or the Execu­tive’sbeneficiary, as the case may

 

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be.  Such decision shall set forth the specificreasons for the denial of a claim.  Inaddition, the Employer shall provide the Executive, the Executive’s spouse orthe Executive’s beneficiary with a reasonable opportunity for a full and fairreview of the decision denying such claim.

 

**9.**                                      **Status of an Unsecured General Creditor.**

 

Notwithstand­ing anythingcontained herein to the contrary: (i) neither the Executive, the Executive’sspouse nor the Executive’s bene­ficiary shall have any legal or equitablerights, interests or claims in or to any specific property or assets of theEmployer; (ii) none of the Employer’s assets shall be held in or under anytrust for the benefit of the Executive, the Executive’s spouse or theExecutive’s beneficiary or held in any way as security for the fulfillment ofthe obligations of the Employer under this Agreement; (iii) all of theEmployer’s assets shall be and remain the general unpledged and unrestrictedassets of the Employer; (iv) the Employer’s obligation under this Agreementshall be that of an unfunded and unsecured promise by the Employer to pay moneyin the future; and (v) the Executive, the Executive’s spouse and theExecutive’s beneficiary shall be unsecured general creditors with respect toany benefits which may be payable under the terms of this Agreement.

 

**10.**                               **Covenant Not to Interfere.**

 

The Executive agrees notto take any action which prevents the Employer from collecting the proceeds ofany life insurance policy which the Employer may happen to own at the time ofthe Executive’s death and of which the Employer is the designated beneficiary.

 

**11.**                               **Miscellaneous.**

 

**11.1.  Opportunity to Consult with IndependentCounsel.**  TheExecutive acknowledges that he has been afforded the opportunity to consultwith independent counsel of his choosing regarding both the benefits granted tohim under the terms of this Agreement and the terms and conditions which mayaffect the Executive’s right to these benefits.  The Executive further acknowledges that he has read, understandsand consents to all of the terms and conditions of this Agreement, and that heenters into this Agreement with a full understanding of its terms andconditions.

 

**11.2.  Arbitration of Disputes.**  All claims, disputes and other matters inquestion arising out of or relating to this Agreement or the breach orinterpretation thereof, other than those matters which are to be determined bythe Employer in its sole and absolute discretion, shall be resolved by bindingarbitration before a representative member, selected by the mutual agreement ofthe parties, of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”),located in the location nearest to Cameron Park.  In the event JAMS is unable or unwilling to conduct thearbitration provided for under the terms of this Paragraph, or has discontinuedits business, the parties agree that a repre­sentative member, selected by themutual agreement of the parties, of the American Arbitration Association(“AAA”), located in or nearest to Cameron Park., shall conduct the bindingarbitration referred to in this Paragraph. Notice of the demand for arbitration shall be filed in writing with theother party to this Agreement and with JAMS (or AAA, if necessary).  In no event shall the demand for arbitrationbe made after the date when institution of legal or equitable proceedings basedon such claim, dispute or other matter in question would be barred by theapplicable statute of limitations.  Thearbitration shall be subject to such rules of procedure used or established byJAMS, or if there are none, the rules of procedure used or established byAAA.  Any award rendered by JAMS or AAAshall be final and binding upon the parties, and as applicable, their respectiveheirs, benefici­aries, legal representatives, agents, successors and assigns,and may be entered in any court having jurisdiction thereof.  The obligation of the parties to arbitratepursuant to this clause shall be specifically enforceable in accordance with,and shall be conducted consistently with, the provisions of Title 9 of Part 3of the California Code of Civil Procedure. Any arbitration hereunder shall be conducted in the Sacramento area,unless otherwise agreed to by the parties.

 

**11.3.  Attorneys’ Fees.**  In the event of any arbitration orlitigation concerning any controversy, claim or dispute between the partieshereto, arising out of or relating to this Agreement or the breach hereof, orthe interpretation hereof, the prevailing party shall be entitled to recoverfrom the losing party reasonable expenses, attorneys’ fees and costs incurredin connection therewith or in the enforcement or collection of any judgment oraward rendered therein.  The “prevailingparty” means the party determined by the arbitra­tor(s) or court, as the case

 

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may be, to have mostnearly prevailed, even if such party did not prevail in all matters, notnecessarily the one in whose favor a judgment is rendered.

 

**11.4.  Notice.**  Any notice required or permitted of eitherthe Executive or the Employer under this Agreement shall be deemed to have beenduly given, if by personal delivery, upon the date received by the party or itsauthorized representative; if by facsimile, upon transmission to a telephonenumber previ­ously provided by the party to whom the facsimile is transmittedas reflected in the records of the party transmitting the facsimile and uponreasonable confirmation of such transmission; and if by mail, on the third dayafter mailing via U.S. first class mail, registered or certified, postageprepaid and return receipt requested, and addressed to the party at the addressgiven below for the receipt of notices, or such changed address as may berequested in writing by a party.

 

**Ifto the Employer:**

 

**WesternSierra National Bank**

**4080Plaza Goldorado Circle**

**CameronPark, California 95682**

**Attention:Charles Bacchi**

**Chairmanof the Board**

 

**Ifto the Executive:**

 

**PhillipS. Wood**

**Homeaddress**

**Folsom,California**

 

**11.5.  Assignment.**  Neither the Executive, the Executive’sspouse, nor any other beneficiary under this Agreement shall have any power orright to transfer, assign, hypothecate, modify or otherwise encumber any partor all of the amounts payable hereunder, nor, prior to payment in accordancewith the terms of this Agreement, shall any portion of such amounts be: (i)subject to seizure by any creditor of any such beneficiary, by a proceeding atlaw or in equity, for the payment of any debts, judgments, alimony or separatemaintenance obligations which may be owed by the Executive, the Executive’sspouse, or any designated beneficiary; or (ii) transferable by operation of lawin the event of bankruptcy, insolvency or otherwise.  Any such attempted assignment or transfer shall be void and shallterminate this Agreement, and the Employer shall thereupon have no furtherliability hereunder.

 

**11.6.  Binding Effect/Merger or Reorganization.**  This Agreement shall be binding upon andinure to the benefit of the Executive and the Employer and, as applicable,their respective heirs, beneficiaries, legal representatives, agents,successors and assigns.  Accordingly,the Employer shall not merge or consolidate into or with another corporation,or reorganize or sell substantially all of its assets to another corporation,firm or person, unless and until such succeeding or continuing corporation,firm or person agrees to assume and discharge the obligations of the Employerunder this Agreement.  Upon theoccurrence of such event, the term “Employer” as used in this Agreement shallbe deemed to refer to such surviving or suc­cessor firm, person, entity orcorporation.

 

**11.7.  Nonwaiver.**  The failure of either party to enforce atany time or for any period of time any one or more of the terms or conditionsof this Agreement shall not be a waiver of such term(s) or condition(s) or ofthat party’s right thereafter to enforce each and every term and condition ofthis Agreement.

 

**11.8.  Partial Invalidity.**  If any term, provision, covenant orcondition of this Agreement is determined by an arbitrator or a court, as thecase may be, to be invalid, void, or unenforceable, such determination shallnot render any other term, provision, covenant or condition invalid, void orunen­forceable, and the Agreement shall remain in full force and effectnotwithstanding such partial invalidity.

 

**11.9.  Entire Agreement.**  This Agreement supersedes any and all otheragreements, either oral or in writing, between the parties with respect to thesubject matter of this Agreement and contains all of the covenants andagreements between the parties with respect thereto.  Each party to this Agreement acknowledges that no otherrepresentations, inducements, promises or agree­ments, oral or otherwise, havebeen made by any party, or anyone acting on behalf of any party, which are notset forth herein, and that no other agreement, statement or promise notcontained in this Agreement shall be valid or binding on either party.

 

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**11.10.  Modifications.**  Any modification of this Agreement shall beeffective only if it is in writing and signed by each party or such party’sauthorized representative.

 

**11.11.  Paragraph Headings.**  The paragraph headings used in this Agreementare included solely for the convenience of the parties and shall not affect orbe used in connection with the interpretation of this Agreement.

 

**11.12.  No Strict Construction.**  The language used in this Agreement shall bedeemed to be the language chosen by the parties hereto to express their mutualintent, and no rule of strict construction will be applied against any person.

 

**11.13.  Governing Law.**  The laws of the State of California, otherthan those laws denominated choice of law rules, and, where applicable, therules and regulations of the Office of the Comptroller of the Currency or anyother regulatory agency or governmental authority having jurisdiction over theEmployer, shall govern the validity, interpretation, construction and effect ofthis Agreement.

 

**12.  Payment of Benefits Subject to ExecutiveNot Competing with Employer**

 

Notwithstanding anythingto the contrary, the benefits payable to Executive pursuant to this Agreementare conditioned upon the Executive not working as an employee, independentcontractor or consultant of or for a financial institution located within a 35mile radius of the head office of Employer for a period of one year afterExecutive terminates employment with Employer. In the event Executive breaches such condition, Employer shallimmediately terminate any and all remaining payments for benefits due Executiveor Executive’s beneficiaries pursuant to this Agreement, and Employer shallhave no liability to Executive or Executive’s beneficiaries for any benefits orpayments pursuant to this Agreement.** **Notwithstanding the foregoing, inthe event of a Sale of Business, this paragraph shall be of no force or effect.

 

**13.  Right of the Employer to Pay a Lump Sum.**

 

Unless expressly providedfor herein, the Employer shall at its sole discretion have the right to pay ina lump sum the then present value using the long term monthly ApplicableFederal Rate at such time of all payments vested and due the Executive or theExecutive’s beneficiary pursuant to this Agreement.

 

IN WITNESS WHEREOF, theEmployer and the Executive have executed this Agreement on the date firstabove-written in the City of Cameron Park, California.

 
| **Western  Sierra National Bank** | **Phillip  S. Wood**      |
|-----------------------------------|---------------------------|
| **“Employer”**          | **“Executive”** |
|                              |                      |
|                              |                      |
| **/s/ Charles Bacchi**            |                      | **/s/ Phillip S. Wood** |   |
| **Charles  Bacchi**               |                      |
| **Chairman  of the Board**        |                      |
|                                   |                           |  |  |

 

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**SCHEDULEA**

 
| **NUMBER OF COMPLETE  YEARS OF SERVICE** |   | **APPLICABLE  PERCENTAGE** |   |
|------------------------------------------|--------|----------------------------|--------|
|                                     |   |                       |   |
| 1                                        |   | 12.5                       | %      |
|                                     |   |                       |   |
| 2                                        |   | 25.0                       | %      |
|                                     |   |                       |   |
| 3                                        |   | 37.5                       | %      |
|                                     |   |                       |   |
| 4                                        |   | 50.0                       | %      |
|                                     |   |                       |   |
| 5                                        |   | 62.5                       | %      |
|                                     |   |                       |   |
| 6                                        |   | 75.0                       | %      |
|                                     |   |                       |   |
| 7                                        |   | 87.5                       | %      |
|                                     |   |                       |   |
| 8 or more                                |   | 100.0                      | %      |

 

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**SCHEDULEB**

 

**BENEFICIARYDESIGNATION**

 
| **TO:** | **The  Administrator of**          |
|---------|------------------------------------|
|    | **Western  Sierra National Bank**  |
|    | **Salary  Continuation Agreement** |

 

Pursuant to theprovisions of my Salary Continuation Agreement with Western Sierra NationalBank permitting the designation of a beneficiary or beneficiaries by aparticipant, I hereby designate the following persons and entities as primaryand secondary beneficiaries of any benefit under said Agreement payable byreason of my death:

 
| **NOTE:** | **To  name a trust as beneficiary, please provide the name of the trustee and the  exact date of the trust agreement.** |
|-----------|-------------------------------------------------------------------------------------------------------------------------|

 

**In theevent the primary beneficiary is not the spouse of the Executive, the spouse ofthe Executive will need to sign the Spousal Consent below and such signaturemust be notarized.**

 

**PrimaryBeneficiary:**

 
| Beneficiary named |   |    |   |         |
|-------------------|--------|---------|--------|--------------|
| Name              |   | Address |   | Relationship |

 

**Secondary(Contingent) Beneficiary:**

 
| Secondary Beneficiary named |   |    |   |         |
|-----------------------------|--------|---------|--------|--------------|
| Name                        |   | Address |   | Relationship |

 

**THERIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION IS HEREBY RESERVED. ANYPRIOR DESIGNATION OF PRIMARY BENEFICIARIES AND SECONDARY BENEFICIARIES ISHEREBY REVOKED.**

 

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, then the Administrator shall pay all amounts in accordance withthe terms of my Salary Continuation Agreement. In the event that a namedbeneficiary survives me and dies prior to receiving the entire benefit payableunder said Agreement then and in that event, the remaining unpaid benefitpayable according to the terms of my Salary Continuation Agreement shall bepayable to the personal representatives of the estate of said beneficiary whosurvived me but died prior to receiving the total benefit provided by my SalaryContinuation Agreement.

 
|   |   | **Phillip  S. Wood**      |                |
|--------|--------|---------------------------|---------------------|
|   |   | **“Executive”** |                |
|   |   |                      |                |
|   |   |                      |                |
| Dated: | 7/2/02 |                      | /s/ Phillip S. Wood |   |
|        |        |                           |                     |  |

 

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