BANK OF THE SIERRA DIRECTOR RETIREMENT AGREEMENT

1.1

" Accrual Balance " means the liability that should be accrued by the Company, under Generally Accepted Accounting Principles ("GAAP"), for the Company’s obligation to the Director under this Agreement, by applying Accounting Principles Board Opinion Number 12 ("APB 12") as amended by Statement of Financial Accounting Standards Number 106 ("FAS 106") and the Discount Rate. Any one of a variety of amortization methods may be used to determine the Accrual Balance. However, once chosen, the method must be consistently applied.

1.2

" Beneficiary " means each designated person or entity, or the estate of the deceased Director, entitled to any benefits upon the death of the Director pursuant to Article 4.

1.3

" Beneficiary Designation Form " means the form established from time to time by the Plan Administrator that the Director completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

1.4

" Board " means the Board of Directors of the Company as from time to time constituted.

1.5

" Change in Control " means the transfer of shares of the Company’s voting common stock such that one entity or one person acquires (or is deemed to acquire when applying Section 318 of the Code) more than 50% of the Company’s outstanding voting common stock.

1.6

" Code " means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date of this Agreement.

1.7

" Disability " means Director: (i) is 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 covering employees or directors of the Company. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees or directors of the Company provided that the definition of "disability" applied under such insurance program complies with the requirements of the preceding sentence. Upon the request of the Plan Administrator, the Director must submit proof to the Plan Administrator of the Social Security Administration’s or the provider’s determination.

1.8

" Discount Rate " means the rate used by the Plan Administrator for determining the Accrual Balance. The initial Discount Rate is six percent (6%). However, the Plan Administrator, in its discretion, may adjust the Discount Rate to maintain the rate within reasonable standards according to GAAP and/or applicable bank regulatory guidance.

1.9

" Early Termination " means Termination of Service before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or following a Change in Control.

1.10

" Effective Date " means January 1, 2007.

1.11

" Normal Retirement Age " means the Director attaining age seventy-one (71).

1.12

" Normal Retirement Date " means the later of Normal Retirement Age or Termination of Service.

1.13

" Plan Administrator " means the Board or such committee or person as the Board shall appoint.

1.14

" Plan Year " means each twelve (12) month period commencing on January 1 ^st and ending on December 31 ^st of each year.

1.15

" Schedule A " means the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

1.16

" Specified Employee " means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an established securities market or otherwise, as determined by the Plan Administrator based on the twelve (12) month period ending each December 31 (the "identification period") If the Director is determined to be a Specified Employee for an identification period, the Director shall be treated as a Specified Employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of the fourth month following the close of the identification period.

1.17

" Termination for Cause " means Termination of Service for:

(a)

Gross negligence or gross neglect of duties to the Company; or

(b)

Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Director’s service with the Company; or

(c)

Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the Director’s service and resulting in a material adverse effect on the Company.

1.18

" Termination of Service " means the voluntary or involuntary termination of the Director’s service with the Company for reasons other than death or Disability. Whether a Termination of Service takes place is determined in accordance with the requirements of Code Section 409A and related Treasury guidance or Regulations based on the facts and circumstances surrounding the termination of the Director’s service and whether the Company and the Director intended for the Director to provide significant services for the Company following such termination.

2.1

Normal Retirement Benefit . Upon the Normal Retirement Date, the Company shall distribute to the Director the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

2.1.1

Amount of Benefit . The annual benefit under this Section 2.1 is Twenty-Five Thousand Dollars ($25,000).

2.1.2

Distribution of Benefit . The Company shall distribute the annual benefit to the Director in twelve (12) equal monthly installments commencing on the first day of the month following Termination of Service. The annual benefit shall be distributed to the Director for ten (10) years.

2.2

Early Termination Benefit . If Early Termination occurs, the Company shall distribute to the Director the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

2.2.1

Amount of Benefit . The benefit under this Section 2.2 is the Early Termination benefit set forth on Schedule A for the Plan Year ending immediately prior to Termination of Service.

2.2.2

Distribution of Benefit . The Company shall distribute the benefit to the Director in one hundred twenty (120) consecutive equal monthly installments commencing on the first day of the month following Termination of Service.

2.3

Disability Benefit . If a Disability occurs which results in a Termination of Service prior to Normal Retirement Age, the Company shall distribute to the Director the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

2.3.1

Amount of Benefit. The benefit under this Section 2.3 is the Disability benefit set forth on Schedule A for the Plan Year immediately prior to Termination of Service.

2.3.2

Distribution of Benefit . The Company shall distribute the benefit to the Director in one hundred twenty (120) consecutive equal monthly installments commencing on the first day of the month following Termination of Service.

2.4

Change in Control Benefit . If a Change in Control occurs followed within twelve (12) months by a Termination of Service, the Company shall distribute to the Director the benefit described in this Section 2.4 in lieu of any other benefit under this Article.

2.4.1

Amount of Benefit. The benefit under this Section 2.4 is the Change in Control benefit set forth on Schedule A for the Plan Year immediately prior to Termination of Service.

2.4.2

Distribution of Benefit . The Company shall distribute the benefit to the Director in one hundred twenty (120) consecutive equal monthly installments commencing on the first day of the month following Termination of Service.

2.5

Restriction on Commencement of Distribution . Notwithstanding any provision of this Agreement to the contrary, if the Director is considered a Specified Employee at Termination of Service, the provisions of this Section 2.5 shall govern all distributions hereunder. Benefit distributions that are made due to a Termination of Service occurring while the Director is a Specified Employee shall not be made during the first six (6) months following Termination of Service. Rather, any distribution which would otherwise be paid to the Director during such period shall be accumulated and paid to the Director in a lump sum on the first day of the seventh month following the Termination of Service. All subsequent distributions shall be paid in the manner specified.

2.6

Distributions Upon Income Inclusion Under Code Section 409A . Upon any amount is

2.7

Change in Form or Timing of Distributions . For distribution of benefits under this Article 2, the Director and the Company may, subject to the terms of Section 8.1, amend the Agreement to delay the timing or change the form of distributions. Any such amendment:

(a)

may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A and the regulations thereunder;

(b)

must, for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(c)

must take effect not less than twelve (12) months after the amendment is made.

3.1

Death During Active Service . If the Director dies prior to Termination of Service, the Company shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefits under Article 2.

3.1.1

Amount of Benefit . The benefit under this Section 3.1 is the Accrual Balance determined as of the end of the month prior to the Director’s death.

3.1.2

Distribution of Benefit . The Company shall distribute the benefit to the Beneficiary in a lump sum within thirty (30) days following receipt by the Company of the Director’s death certificate.

3.2

Death During Distribution of a Benefit . If the Director dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Company shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Director had the Director survived.

3.3

Death After Termination of Service But Before Benefit Distributions Commence. If the Director is entitled to benefit distributions under this Agreement but dies prior to the commencement of said benefit distributions, the Company shall distribute to the Beneficiary the same benefits to which the Director was entitled prior to death except that the benefit distributions shall commence within thirty (30) days fol