**Exhibit10.56**

** **

**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.**

 

**WESTERNSIERRA BANCORP**

# **NONQUALIFIED STOCKOPTION AGREEMENT**

 

This NonqualifiedStock Option Agreement (the “Agreement”) is made and entered into as of the31st day of December, 2002, by and between Western Sierra Bancorp, a Californiacorporation (the “Bancorp”), and Lary Davis, (“Optionee”);

 

WHEREAS, pursuantto the Western Sierra Bancorp 2002 Stock Option Plan (the “Plan”), a copy ofwhich is attached hereto, the Board of Directors of the Bancorp has authorizedgranting to Optionee a nonqualified stock option to purchase all or any part ofFour Hundred  (400) authorized butunissued shares of the Bancorp’s common stock at the price of Twenty-SixDollars and Fifty Cents ($26.50) per share, such option to be for the term and uponthe terms and conditions hereinafter 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 Four Hundred (400) shares of the Bancorp’s common stock (hereinafter called “stock”)at the price of Twenty-Six Dollars and Fifty Cents ($26.50) per share, whichprice is not less than one hundred percent (100%) of the fair market value ofthe stock as of the date of action of the Board of Directors granting thisoption.

 

**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 December 31, 2012 (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 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, thedetermination of the Board of Directors with respect thereto shall be final andconclusive.

 

**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 a director or an employee of theBancorp or a subsidiary corporation, or during the three (3) month periodreferred to in Paragraph 4 hereof, this option shall expire one (1) year afterthe date of Optionee’s death or on the day

 

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specified in Paragraph 2hereof, whichever is earlier.  AfterOptionee’s death but before such expiration, the persons to whom Optionee’srights under this option shall have passed by will or by the laws of descentand distribution or the executor or administrator of Optionee’s estate shallhave the right to exercise this option as to those shares for whichinstallments had accrued under Paragraph 2 hereof as of the date on whichOptionee ceased to be a director or an employee of the Bancorp or a subsidiarycorporation.

 

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 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 reduceOptionee’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 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.

 

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

 
| **OPTIONEE** | **WESTERN  SIERRA BANCORP**      |
|--------------|----------------------------------|
|         |                             |
| By           |    /s/ Lary Davis |   | By |    /s/ Gary Gall |
|         | Lary Davis                       |   |   | Gary Gall, President  & CEO |
|         |                             |
|         | By                               |    /s/ Chuck Bacchi |
|         |                             | Chuck Bacchi, Chairman |
|              |                                  |  |  |  |  |

 

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