# **Exhibit 10.35**

 

**NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NOSHARES OF WESTERN SIERRA BANCORP’S COMMON STOCK SHALL BE ISSUED PURSUANT HERETOUNLESS THE WESTERN SIERRA BANCORP 1999 STOCK OPTION PLAN SHALL HAVE FIRST BEENAPPROVED BY THE SHAREHOLDERS OF WESTERN SIERRA BANCORP.**

 

**WESTERNSIERRA BANCORP**

**INCENTIVESTOCK OPTION AGREEMENT**

 

This IncentiveStock Option Agreement (the “Agreement”) is made and entered into as of the20th day of March, 2003, by and between Western Sierra Bancorp, a Californiacorporation (the “Bancorp”), and Gary Gall (“Optionee”);

 

WHEREAS, pursuantto the Western Sierra Bancorp 1999 Stock Option Plan (the “Plan”), a copy ofwhich is attached hereto, the Board of Directors of the Bancorp has authorizedgranting to Optionee an incentive stock option to purchase all or any part ofTen Thousand (10,000) authorized but unissued shares of the Bancorp’s commonstock at the price of Twenty-Seven Dollars and Seventy-Three Cents ($27.73) pershare, such option to be for the term and upon the terms and conditionshereinafter stated;

 

NOW, THEREFORE, itis hereby agreed:

 

**1. Grant of Option.**  Pursuant to said action of the Board of Directors, the Bancorphereby grants to Optionee the option to purchase, upon and subject to the termsand conditions of the Plan which is incorporated in full herein by thisreference, all or any part of Ten Thousand (10,000) shares of the Bancorp’scommon stock (hereinafter called “stock”) at the price of Twenty-Seven Dollarsand Seventy-Three Cents ($27.73) per share, which price is not less than onehundred percent (100%) of the fair market value of the stock (or not less than110% of the fair market value of the stock for Optionee-shareholders who ownsecurities possessing more than ten percent (10%) of the total combined votingpower of all classes of securities of the Bancorp) as of the date of action ofthe Board of Directors granting this option.

 

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

 

| **Number of Shares** |   | **Vesting Date** |
|----------------------|--------|------------------|
| 2000                 |   | immediate        |
| 2000                 |   | 03/20/04         |
| 2000                 |   | 03/20/05         |
| 2000                 |   | 03/20/06         |
| 2000                 |   | 03/20/07         |

 

This option shall remainexercisable as to all vested shares until March 20, 2013 (but not later thanten (10) years from the date this option is granted) unless this option hasexpired or terminated earlier in accordance with the provisions hereof or inthe Plan.  Subject to paragraphs 4 and5, shares as to which this option becomes exercisable pursuant to the foregoingprovision may be purchased at any time prior to expiration of this option.

 

**3. Exercise of Option.**  This option may be exercised by written notice (substantially inthe form as that which is attached as Exhibit A) delivered to the Bancorpstating the number of shares with respect to which this option is being exercised,together with (a) cash in the amount of the purchase price of such shares, or(b) subject to applicable law, with the Bancorp’s stock previously acquired byOptionee and held by Optionee for a period of at least six months.  Notwithstanding the foregoing, in the eventOptionee does exercise the option by utilizing (b) above, Optionee shouldobtain tax advice as to the consequences of such action.  Not less than ten (10) shares may bepurchased at any one time unless the number purchased is the total number whichmay be purchased under this option and in no event may the option be exercisedwith respect to fractional shares.  Uponexercise, Optionee shall make appropriate arrangements and shall be responsiblefor the withholding of any federal and state taxes then due.

 

**4. Cessation of Employment.**  Except as provided in Paragraphs 2 and 5hereof, if Optionee shall cease to be an employee of the Bancorp or asubsidiary corporation for any reason other than Optionee’s death or disability[as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, asamended from time to time (the “Code”)], this option shall expire three (3)months thereafter.  During the three (3)month period this option shall be exercisable only as to those installments, ifany, which had accrued as of the date when Optionee ceased to be an employee ofthe Bancorp or a subsidiary corporation.

 

**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, thedetermination of the Board of Directors with respect thereto shall be final andconclusive.

 

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**6. Nontransferability; Death or Disability of Optionee.**  This option shall not be transferable exceptby will or by the laws of descent and distribution and shall be exercisableduring Optionee’s lifetime only by Optionee. If Optionee dies while serving as an employee of the Bancorp or asubsidiary corporation, or during the three (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 an employee ofthe Bancorp or a subsidiary corporation.

 

If Optioneeterminates his or her employment because of disability (as defined in Section22(e)(3) of the Code), Optionee may exercise this option to the extent he orshe is entitled to do so at the date of termination, at any time within one (1)year of the date of termination, or before the expiration date specified inParagraph 2 hereof, whichever is earlier.

 

**7. Employment.** This Agreement shall not obligate the Bancorp or a subsidiarycorporation to employ Optionee for any period, nor shall it interfere in anyway with the right of the Bancorp or a subsidiary corporation to reduce Optionee’scompensation.

 

**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 person acquiring sharesupon exercise of this option, will notify the Bancorp not more than 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 beadditional restrictions on the resale of stock, and Optionee therefore agreesto ascertain what those restrictions are and to abide by the restrictions andother applicable federal and state securities laws.

 

Furthermore, theBancorp 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 in this Agreement shall beaddressed to it in care of its President or Chief Financial Officer at its mainoffice and any notice to Optionee shall be addressed to Optionee’s address onfile with the Bancorp or a subsidiary corporation, or to such other address aseither may designate to the other in writing. Any notice shall be deemed to be duly given if and when enclosed in aproperly sealed envelope and addressed as stated above and deposited, postageprepaid, with the United States Postal Service.  In lieu of giving notice by mail as aforesaid, any written noticeunder this Agreement may be given to Optionee in person, and to the Bancorp bypersonal delivery to its President or Chief Financial Officer.

 

**13. Incentive Stock Option.**  This Agreement is intended to be anincentive stock option agreement as defined in Section 422 of the Code;provided, however, that if the option shall fail to constitute an incentive stockoption for any reason, the option shall thereafter be governed by theprovisions of the Plan regarding nonqualified stock options.

 

IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the day and year first abovewritten.

 
| **OPTIONEE** | **WESTERN  SIERRA BANCORP**     |
|--------------|---------------------------------|
|         |                            |
| By           |    /s/ Gary Gall |   | By |    /s/ Chuck Bacchi |
|         | Gary Gall                       |   |   | Chuck Bacchi,Chairman |

 

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