UMPQUA HOLDINGS CORPORATION

EMPLOYMENT AGREEMENT

FOR

Neal McLaughlin

Dated as of March 1, 2005

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Table of Contents
 
 
Page
1.
PURPOSE AND DURATION OF AGREEMENT
1

2.
EMPLOYMENT
1

3.
NO TERM OF EMPLOYMENT
1

4.
DUTIES; POSITION
1

 
4.1    Position
1

 
4.2    Obligations of Officer
1

5.
BASE COMPENSATION
1

6.
TERMINATION
2

 
6.1    For Cause
2

 
6.2    Without Cause
2

 
6.3    For Good Reason
2

 
6.4    Death or Disability
2

 
6.5    Resignation
2

7.
DEFINITIONS
2

 
7.1    Cause
2

 
7.2    Good Reason
3

 
7.3    Disability
3

 
7.4    Change in Control
3

8.
PAYMENT UPON TERMINATION
4

9.
SEVERANCE BENEFIT
4

10.
CHANGE IN CONTROL BENEFIT
4

11.
CHANGE IN CONTROL RETENTION BONUS
4

12.
IRC 280G ADJUSTMENT.
5

13.
EXECUTIVE SEVERANCE PLAN
5

 
13.1    In General
5

 
13.2    Administration of Executive Severance Plan
5

 
13.3    Claims Procedures
5

14.
NONCOMPETITION
7

 
14.1    Competition Restriction
7

 
14.2    Consequence of Breach
7

 
14.3    Subsequent Employer
7

15.
NON-SOLICITATION.
7

16.
NONRAIDING OF EMPLOYEES
8

17.
CONFIDENTIAL INFORMATION
8

18.
REASONABLENESS OF RESTRICTION PERIOD; EQUITABLE RELIEF.
8

19.
DISPUTE RESOLUTION
9

 
19.1    Arbitration
9

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19.2    Expenses/Attorneys’ Fees
9

 
19.3    Injunctive Relief
9

20.
NOTICES
9

21.
GENERAL PROVISIONS
10

 
21.1    Governing Law
10

 
21.2    Saving Provision
10

 
21.3    Survival Provision
10

 
21.4    Counterparts
10

 
21.5    Entire Agreement
10

 
21.6    Previous Agreements
10

 
21.7    Waiver
10

 
21.8    Assignment
10

22.
ADVICE OF COUNSEL.
11

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EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is by and between Umpqua Holdings
Corporation (“Umpqua”) and Neal McLaughlin (“Officer”), effective as of March 1,
2005.

1.PURPOSE AND DURATION OF AGREEMENT. The purpose of this Agreement is to set
forth the terms of Officer’s employment with Umpqua and to provide Officer
benefits in certain circumstances where Officer’s employment is terminated or a
Change in Control (defined below) occurs. This Agreement, including the
severance provisions governed by ERISA, shall expire five (5) years from the
date first written above.

2.    EMPLOYMENT. Umpqua, either directly or through one of its wholly owned
subsidiaries, employs the Officer and the Officer accepts that employment on the
terms and conditions contained in this Agreement.

3.    NO TERM OF EMPLOYMENT. Notwithstanding the term of this Agreement, Umpqua
may terminate Officer’s employment at any time for any lawful reason or for no
reason at all, subject to the provisions of this Agreement.

4.    DUTIES; POSITION.

4.1    Position. Officer shall be employed as Senior Vice President and
Controller, and will perform such duties as may be designated by Umpqua’s Board
of Directors (the “Board”) or Dan Sullivan, EVP and CFO to whom Officer will
directly report (the “Supervisor”).

4.2    Obligations of Officer    .

(a)    Officer agrees that to the best of Officer’s ability and experience,
Officer will at all times loyally and conscientiously perform all of the duties
and obligations required of Officer pursuant to the express and implicit terms
of this Agreement and as directed by the Board or the Supervisor.

(b)    Officer shall devote Officer’s entire working time, attention and efforts
to Umpqua’s business and affairs, shall faithfully and diligently serve Umpqua’s
interests and shall not engage in any business or employment activity that is
not on Umpqua’s behalf (whether or not pursued for gain or profit) except for
(a) activities approved in writing in advance by the Board and (b) passive
investments that do not involve Officer providing any advice or services to the
businesses in which the investments are made.

5.    BASE COMPENSATION. For services performed under this Agreement, Officer
shall be entitled to $11,250 per month ($ 135,000 on annualized basis) (“Base
Salary”), which Umpqua may increase in its sole discretion, as well as
perquisites provided to Umpqua’s officers. Officer shall be entitled to
participate, under the terms of the respective plans, in the bonus

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compensation plans, group health insurance, long-term disability insurance, as
well as such other compensation or benefits as approved by the Board. Officer is
entitled to four weeks vacation per year.

6.    TERMINATION. Officer’s employment may be terminated before the expiration
of this Agreement as described in this Section, in which event Officer’s
compensation and benefits shall terminate except as otherwise provided in this
Agreement.

6.1    For Cause. Upon Umpqua’s termination of Officer’s employment for Cause
(as defined in Section 7.1 below) (“Termination For Cause”).

6.2    Without Cause    . Upon Umpqua’s termination of Officer’s employment
without Cause, with or without notice, at any time in Umpqua’s sole discretion,
for any reason (other than for Cause, death, or Disability) or for no reason
(“Termination Without Cause”). A Change in Control does not in itself constitute
Termination Without Cause.

6.3    For Good Reason. Upon Officer’s termination of the employment for Good
Reason (as defined in Section 7.2 below) (“Termination For Good Reason”).

6.4    Death or Disability. Upon Officer’s death or Disability (as defined in
Section 7.3 below).

6.5    Resignation. Upon Officer’s voluntary resignation in writing, which shall
be given to Umpqua at least 60 days prior to the effective date of such
resignation (“Resignation”); provided, Resignation shall not be permitted if an
event has occurred that would give rise to Termination for Cause.

7.    DEFINITIONS.

7.1    Cause. For the purposes of this Agreement, “Cause” for Officer’s
termination will exist upon the occurrence of one or more of the following
events:

(a)    Dishonest or fraudulent conduct by Officer with respect to the
performance of Officer’s duties with Umpqua;

(b)    Conduct by Officer that materially discredits Umpqua or any of its
subsidiaries or is materially detrimental to the reputation of Umpqua or any of
its subsidiaries, including but not limited to conviction or a plea of nolo
contendere of Officer of a felony or crime involving moral turpitude;

(c)    Officer’s willful misconduct or gross negligence in performance of
Officer’s duties under this Agreement, including but not limited to Officer’s
refusal to comply in any material respect with the legal directives of the Board
or the Supervisor, if such misconduct or negligence has not been remedied or is
not being remedied to the Board’s reasonable

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satisfaction within thirty (30) days after written notice, including a detailed
description of the misconduct or negligence, has been delivered by the Board to
Officer;

(d)    An order or directive from a state or federal banking regulatory agency
requesting or requiring removal of Officer or a finding by any such agency that
Officer’s performance threatens the safety or soundness of Umpqua or any of its
subsidiaries; or

(e)    A material breach of Officer’s fiduciary duties to Umpqua if such breach
has not been remedied or is not being remedied to the Board’s reasonable
satisfaction within thirty (30) days after written notice, including a detailed
description of the breach, has been delivered by the Board to Officer.

7.2    Good Reason. For purposes of this Agreement, “Good Reason” for Officer’s
resignation of employment will exist upon the occurrence of one or more of the
following events, without Officer’s consent, if Officer has informed Umpqua in
writing of the circumstances described below in this Section that could give
rise to resignation for Good Reason and Umpqua has not removed the circumstances
within thirty (30) days of the written notice:

(a) A material reduction of Officer’s Base Salary, unless the reduction is in
connection with, and commensurate with, reductions in the salaries of all or
substantially all senior officers of Umpqua; or

(b) A requirement for Officer to relocate to a facility or location more than 50
miles from the location where Officer is currently employed.

7.3    Disability. For purposes of this Agreement, “Disability” shall mean that
(i) Officer has been unable to perform Officer’s duties under this Agreement as
a result of Officer’s incapacity due to physical or mental illness for at least
90 consecutive calendar days or 150 calendar days during any consecutive 12
month period and (ii) a physician selected by Umpqua and its insurers and
acceptable to Officer or Officer’s legal representative (with such agreement on
acceptability of the physician not to be unreasonably withheld), determines the
incapacity to be (a) total and permanent and (b) prohibiting of Officer’s
ability to perform the essential functions of Officer’s position with or without
reasonable accommodation.

7.4    Change in Control. For purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred when any of the following events take place:

(a) Any person (including any individual or entity), or persons acting in
concert, become(s) the beneficial owner of voting shares representing fifty
percent (50%) or more of Umpqua;
(b) A majority of the Board is removed from office by a vote of the Umpqua’s
shareholders over the recommendation of the Board then serving; or

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(c) Umpqua is a party to a plan of merger or plan of exchange and upon
consummation of such plan, the shareholders of Umpqua immediately prior to the
transaction do not own or continue to own (i) at least forty percent (40%) of
the shares of the surviving company (if the then current CEO of Umpqua continues
as CEO of the surviving organization), or (ii) at least a majority of the shares
of the surviving organization (if the then current CEO of Umpqua does not
continue as CEO of the surviving organization).

8.    PAYMENT UPON TERMINATION. Upon termination of Officer’s employment for any
of the reasons set forth in Section 6 above, Officer will receive payment for
all Base Salary and benefits accrued as of the date of Officer’s termination
(“Earned Compensation”), which shall be paid by the end of the business day
following termination or sooner if required by applicable law.

9.    SEVERANCE BENEFIT. In the event of Termination Without Cause or
Termination for Good Reason, in addition to receiving Earned Compensation,
Officer will receive a severance benefit equal to the greater of (i) six (6)
months Base Salary, based on Officer’s Base Salary just prior to termination or
(ii) two weeks for every year of employment with Umpqua (the “Severance
Benefit”). The Severance Benefit shall be paid in equal installments over the
number of months of continued Base Salary, starting on the next regular payday
following termination. Receipt of the Severance Benefit is conditioned on
Officer having executed the Separation Agreement in substantially the form
attached hereto as Exhibit A and the revocation period having expired without
Officer having revoked the Separation Agreement. Receipt and continued receipt
of the Severance Benefit is further conditioned on Officer not being in
violation of any material term of this Agreement or in violation of any material
term of the Separation Agreement. Officer shall not be required to mitigate the
amount of any payments under this Section (whether by seeking new employment or
otherwise) and no such payment shall be reduced by earnings that Officer may
receive from any other source.

10.    CHANGE IN CONTROL BENEFIT. After announcement of a proposed Change in
Control and for a period continuing for one year following a Change in Control,
in the event of Termination Without Cause, Termination For Good Reason, or
Resignation within 30 days after reassignment to a position that is not
substantially equivalent, instead of receiving the Severance Benefit set forth
in Section 9 above, Officer shall receive 12 months Base Salary, based on
Officer’s Base Salary just prior to the termination of employment, as well as
100% of the bonus Officer received in the previous year (the aforementioned Base
Salary and bonus are collectively referred to as the “Change in Control
Benefit”). The Change in Control Benefit shall be paid in equal installments
over 12 months, starting on the next regular payday following termination.
Receipt of the Change in Control Benefit is conditioned on Officer having
executed the Separation Agreement in substantially the form attached hereto as
Exhibit A and the revocation period having expired without Officer having
revoked the Separation Agreement. Receipt and continued receipt of the Change in
Control Benefit is further conditioned on Officer not being in violation of any
material term of this Agreement or in violation of any material term of the
Separation Agreement. Officer shall not be required to mitigate the amount of
any payments under this Section (whether by seeking new employment or otherwise)
and no such payment shall be reduced by earnings that Officer may receive from
any other source.

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11.    CHANGE IN CONTROL RETENTION BONUS. If Officer remains employed for 12
months following a Change in Control, Officer will receive six (6) months Base
Salary and 50% of the bonus Officer received in the previous year (the
aforementioned Base Salary and bonus are collectively referred to as the
“Retention Bonus”). The Retention Bonus shall be paid in equal installments over
six (6) months, starting on the next regular payday following the first
anniversary of the Change in Control. Receipt of the Retention Bonus is
conditioned on Officer not being in violation of any material term of this
Agreement. If officer receives a benefit under this Section 11, such benefit
shall cease when Officer begins to receive any benefit under Section 10.
12.    IRC 280G ADJUSTMENT. If the benefit payments under this Agreement, either
alone or together with other payments to which the Officer is entitled to
receive from Umpqua, would constitute an “excess parachute payment” as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
such benefit payments shall be reduced to the largest amount that will result in
no portion of benefit payments under this Agreement being subject to the excise
tax imposed by Section 4999 of the Code. The determination of any reduction in
the benefit payments pursuant to the foregoing provisions, shall be made by
mutual agreement of Umpqua and Officer or if no agreement is possible, by the
Umpqua’s accountants.

13.    EXECUTIVE SEVERANCE PLAN
 
13.1    In General. Those provisions of this Agreement (including this Section)
related to the Severance Benefit set forth in Section 9 and Change in Control
Benefit set forth in Section 10 constitute part of the terms of the Umpqua
Holdings Corporation Executive Severance Plan (the “Executive Severance Plan”)
with respect to the Officer, and such terms and the general terms of the
Executive Severance Plan established by Umpqua shall comprise the entirety of
the Executive Severance Plan as it applies to the Officer. Umpqua intends for
the Plan to be considered a welfare benefit plan within the meaning of
Section 3(1) of the Employee Retirement Income Security Act (“ERISA”), and a
plan which is unfunded and maintained by the Umpqua solely for the purpose of
providing benefits for a select group of management or highly compensated
employees within the meaning of ERISA Regulation Section 2520.104-24. A copy of
the Executive Severance Plan will be furnished to the Officer upon request.

13.2    Administration of Executive Severance Plan. Umpqua’s Chief Executive
Officer and Human Resources Director are each plan administrators (the “Plan
Administrator”) of the Executive Severance Plan and the Plan Administrator shall
have the discretionary authority to administer and construe the terms of the
Executive Severance Plan, including the authority to decide if Officer is
entitled to the Severance Benefit or Change in Control Benefit and the authority
to determine if there is Termination For Cause or Termination For Good Reason.

13.3    Claims Procedures. The Officer may file a claim for a payment under the
Executive Severance Plan by filing a written request for such a payment with the
Plan Administrator. If the Plan Administrator prescribes a form for such a
claim, the claim must be

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filed on such form. The claim should be sent to the attention of the Plan
Administrator of the Executive Severance Plan at the address set forth for
Umpqua in Section 20.

If the Plan Administrator denies the claim, in whole or in part, the Plan
Administrator shall notify the Officer within 90 days of the Plan
Administrator’s receipt of the claim, unless the Plan Administrator determines
that special circumstances require an extension of time for processing the
claim. If the Plan Administrator determines that an extension of time is
required, written notice of the extension shall be furnished to Officer prior to
the termination of the initial 90-day period. Such extension notice shall
indicate the special circumstances and the date by which the Plan Administrator
expects to issue a determination with respect to the claim. The period of the
extension will not exceed 90 days beyond the termination of the original 90-day
period. If the Plan Administrator does not provide written notice, Officer may
deem the claim denied and seek review according to the appeals procedures set
forth below.

The notice of denial of Officer’s claim shall state:

a.    the specific reasons for the denial;

b.    specific references to pertinent provisions of the Executive Severance
Plan on which the denial was based;

c.    a description of any additional material or information needed for Officer
to perfect his or her claim and an explanation of why the material or
information is needed; and

d.    a statement (1) that Officer may request a review upon written application
to the Plan Administrator, review or receive (free of charge) pertinent Plan
documents and records, and submit issues and comments in writing, (2) that any
appeal that Officer wishes to make of the adverse determination must be in
writing to the Plan Administrator within sixty (60) days after the Officer
receives notice of denial of benefits, and (3) that Officer may bring a civil
action under ERISA Section 502(a) following an adverse benefit determination
upon review.

The notice of denial of benefits shall specify that Officer must forward any
appeal to the Plan Administrator at the address provided in such notice. The
notice may state that failure to appeal the action to the Plan Administrator in
writing within the sixty (60) day period will render the determination final,
binding and conclusive.

If Officer appeals to the Plan Administrator, Officer may submit in writing
whatever issues and comments he or she believes to be pertinent. The Plan
Administrator shall reexamine all facts related to the appeal and make a final
determination about whether the denial of benefits is justified under the
circumstances. The Plan Administrator shall advise Officer in writing of:

a.    its decision on appeal;

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b.    the specific reasons for the decision;

c.    the specific provisions of the Plan on which the decision is based; and

d.    Officer’s right to receive, upon request and free of charge, reasonable
access to, and copies of, all relevant documents and records.

Notice of the Plan Administrator’s decision shall be given within sixty (60)
days of Officer’s written request for review, unless additional time is required
due to special circumstances. In no event shall the Plan Administrator render a
decision on an appeal later than one hundred twenty (120) days after receiving a
request for a review. If the Plan Administrator fails to provide a decision with
respect to Officer’s appeal within the 60 (or, if applicable, 120) day period
Officer may deem his or her appeal denied and may pursue the arbitration remedy
set forth below.

In the event that Officer fails to pursue his or her administrative remedies as
set forth above within the specified periods, he shall have no further right to
the benefits subject to his or her claim and agrees by executing this Agreement
that he or she shall have no right to pursue such claim in arbitration or in a
court of law.

For purposes of this Claims Procedure under the Executive Severance Plan,
Officer may act through a representative authorized in writing to act on his
behalf, provided that such authorization is furnished to the Plan Administrator.

In the event that Umpqua denies the Officer’s appeal of the denial of his or her
claim, in whole or in part, Umpqua and Officer’s may agree to submit the Plan
Administrator’s decision to binding arbitration in lieu of Officer’s right to
pursue his claim in any court of law.

14.    NONCOMPETITION.

14.1    Competition Restriction. During Officer’s employment and for the period
of time in which Officer is entitled to payment of a Severance Benefit, Change
in Control Benefit, or Retention Bonus, Officer shall not engage in any activity
as an officer, director, owner (except for an ownership of less than three
percent (3%) of any publicly traded security), employee, consultant, or
otherwise of a financial services company with an office or doing business
within 50 miles of any office or branch of Umpqua or of any of its subsidiaries
in existence at the time of termination of Officer’s employment.

14.2    Consequence of Breach. If Officer breaches this covenant not to compete,
Umpqua’s sole remedy is that Officer shall forfeit the Severance Benefit, Change
in Control Benefit or Retention Bonus, to which Officer is entitled under this
Agreement.

14.3    Subsequent Employer Notification. Officer agrees to give Umpqua, at the
time of termination of employment, a declaration under penalty of perjury of the
name of

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Officer’s new employer, if known, or if not known, that subsequent employer is
not known. Officer further agrees to disclose to Umpqua, during the period of
payment of any benefit under this Agreement, the name of any subsequent
employer, wherever located and regardless of whether such employer is a
competitor of Umpqua.

15.    NON-SOLICITATION. For a period of two (2) years following termination of
employment (the “Restriction Period”), Officer shall not solicit any customer of
Umpqua or of any of its subsidiaries. For purposes of this Section, “customers”
are defined as (a) all customers serviced by Umpqua or any of Umpqua’s
subsidiaries at any time within 12 months before termination of Officer’s
employment, (b) all customers and potential customers whom Umpqua or any of
Umpqua’s subsidiaries actively solicited at any time within 12 months before
termination of Officer’s employment, and (c) all successors, owners, directors,
partners and management personnel of the customers just described in (a) and
(b).

16.     NONRAIDING OF EMPLOYEES.

17.     CONFIDENTIAL INFORMATION.

18.     REASONABLENESS OF RESTRICTION PERIOD; EQUITABLE RELIEF. Officer
acknowledges and agrees that the restrictive covenants in Sections 14, 15, 16,
and 17 are fair and reasonable and are the result of negotiation between Umpqua
and Officer (and Officer’s counsel, if Officer has sought the benefit of
counsel). Officer further acknowledges and agrees that the covenants and
obligations in this Agreement relate to special, unique, and extraordinary
matters and that a violation of any of the terms of the covenants and
obligations will cause irreparable injury to Umpqua, for which adequate remedies
are not available at law. Therefore, Officer agrees that Umpqua shall be
entitled to an injunction, restraining order, or such other equitable relief as
a court of competent jurisdiction may deem necessary or appropriate to restrain
the Officer from committing any violation of the covenants and obligations set
forth in Sections 14.3, 15, 16 and 17 of this Agreement. These injunctive
remedies are cumulative and are in addition to any other rights and remedies
Umpqua may have at law or in equity. If Umpqua institutes an action to enforce
the provisions hereof, Officer hereby waives the claim or defense that an
adequate remedy at law is available, and Officer agrees not to urge in any such
action the claim or defense that an adequate remedy at law exists.

19.     DISPUTE RESOLUTION.

19.1    Arbitration. Except where such matters are deemed governed by ERISA and
are the subject to Section 13 above, the parties agree to submit any dispute
arising under this Agreement to final, binding, private arbitration in Portland,
Oregon. The disputes subject to arbitration include not only disputes involving
the meaning or performance of the Agreement, but disputes about its negotiation,
drafting, or execution. The dispute will be determined by a single arbitrator
and governed by then-existing rules of arbitration procedure in Multnomah County
Circuit Court except as set forth herein. Instead of filing of a civil complaint
in Multnomah County Circuit Court, a party will commence the arbitration process
by noticing the other party. The parties will choose an arbitrator who
specializes in employment conflicts from

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the arbitration list for Multnomah County Circuit Court. If the parties are
unable to agree on an arbitrator within ten (10) days of receipt of the list of
arbitrators, each party will select one attorney from the list, and those two
attorneys shall select the arbitrator from the list (with each of the two
selecting attorneys then concluding their services and each being compensated by
the party selecting each attorney, subject to recovery of such fees under
Section 19.2). The arbitrator may charge his or her standard arbitration fees
rather than the fees prescribed in the Multnomah County Circuit Court
arbitration procedures. The arbitrator will have full authority to determine all
issues, including arbitrability, to award any remedy, including permanent
injunctive relief, and to determine any request for attorneys’ fees, costs and
expenses in accordance with Section 19.2. There shall be no right of review in
court. The arbitrator’s award may be reduced to final judgment or decree in
Multnomah County Circuit Court.

19.2    Expenses/Attorneys’ Fees. The prevailing party shall be awarded all
costs and expenses of the proceeding, including, but not limited to, attorneys’
fees, filing and service fees, witness fees, and arbitrators’ fees. If
arbitration is commenced, the arbitrator will have full authority and complete
discretion to determine the “prevailing party” and the amount of costs and
expenses to be awarded.

19.3    Injunctive Relief. Notwithstanding any other provision of this
Agreement, an aggrieved party may seek a temporary restraining order or
preliminary injunction in Multnomah County Circuit Court to preserve the status
quo during the arbitration proceeding, provided however, that the party seeking
relief agrees that ultimate resolution of the dispute will still be determined
through arbitration and not through court process. The filing of the court
action for injunctive relief shall not hinder or delay the arbitration process.

20.     NOTICES.

21.     GENERAL PROVISIONS.

21.1    Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by federal ERISA, as it relates
to the Severance Benefit and Change in Control Benefit as discussed in Section
13 above, and otherwise by the laws of the State of Oregon.

21.2    Saving Provision. If any part of this Agreement is held to be
unenforceable, it shall not affect any other part. If any part of this Agreement
is held to be unenforceable as written, it shall be enforced to the maximum
extent allowed by applicable law.

21.3    Survival Provision. If any benefits provided in Sections 9, 10, or 11 of
this Agreement are still owed, or claims pursuant to Section 13 are still
pending, at the time of termination of this Agreement, this Agreement shall
continue in force, with respect to those obligations or claims, until such
benefits are paid in full or claims are resolved in full. The noncompetition,
nonsolicitation, non-raiding, confidential information, and dispute resolution
provisions of this Agreement shall survive after termination of this Agreement,
and shall be enforceable regardless of any claim Officer may have against
Umpqua.

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21.4    Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.

21.5    Entire Agreement. This Agreement constitutes the sole agreement of the
parties regarding Officer’s benefits in the event of termination or Change in
Control and together with Umpqua’s employee handbook governs the terms of
Officer’s employment. Where there is a conflict between the employee handbook
and this Agreement, the terms of this Agreement shall govern.

21.6    Previous Agreements. This Agreement supersedes all prior oral and
written agreements between the Officer and Umpqua, or any affiliates or
representatives of Umpqua regarding the subject matters set forth herein.

21.7    Waiver/Amendment. No waiver of any provision of this Agreement shall be
valid unless in writing, signed by the party against whom the waiver is sought
to be enforced. The waiver of any breach of this Agreement or failure to enforce
any provision of this Agreement shall not waive any later breach. This Agreement
may only be amended by a writing signed by the parties.

21.8    Assignment. Officer shall not assign or transfer any of Officer’s rights
pursuant to this Agreement, wholly or partially, to any other person or to
delegate the performance of its duties under the terms of this Agreement. The
rights and obligations of Umpqua under this Agreement shall inure to the benefit
of and be binding in each and every respect upon the direct and indirect
successors and assigns of Umpqua, regardless of the manner in which the
successors or assigns succeed to the interests or assets of Umpqua. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
Umpqua, by any merger, consolidation or acquisition where Umpqua is not the
surviving corporation, by any transfer of all or substantially all of Umpqua’s
assets, or by any other change in Umpqua’s structure or the manner in which
Umpqua’s business or assets are held. Officer’s employment shall not be deemed
terminated upon the occurrence of one of the foregoing events. In the event of
any merger, consolidation or transfer of assets, this Agreement shall be binding
upon and shall inure to the benefit of the surviving corporation or the
corporation to which the assets are transferred.

22.    ADVICE OF COUNSEL. Officer acknowledges that, in executing this
Agreement, Officer has had the opportunity to seek the advice of independent
legal counsel, and has read and understood all of the terms and provisions of
this Agreement. This Agreement shall not be construed against any party by
reason of the drafting or preparation hereof.

                    

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UMPQUA HOLDINGS CORPORATION
 
 
 
 
By:
 
 
 
Raymond P. Davis, Chief Executive Officer
 
 
 
 
 
 
 
OFFICER
 
 
 
 
 
 
 
 
 

            

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Exhibit A

EMPLOYMENT SEPARATION AGREEMENT AND RELEASE OF CLAIMS

This is a confidential agreement (this “Separation Agreement”) between you,
_______________, and us, Umpqua Holdings Corporation. This Separation Agreement
is dated for reference purposes _____________, 20___, which is the date we
delivered this Separation Agreement to you for your consideration. For purposes
of this Separation Agreement Umpqua Holdings Corporation together with each of
its subsidiaries or affiliates is referred to as “Umpqua.”

1. Termination of Employment. Your employment terminates [or was terminated] on
_______________, 20___ (the “Separation Date”).

2. Payments. In exchange for your agreeing to the release of claims and other
terms in this Separation Agreement, we will pay you the Severance Benefit
specified in Section 9 or the Change in Control Benefit in Section 10, as
appropriate, of the Agreement between you and Umpqua dated __________________
(the “Employment Agreement”). Such provisions of the Employment Agreement are
incorporated herein by reference. You acknowledge that we are not obligated to
make these payments to you unless you comply with the noncompetition provision
in Section 14 of the Employment Agreement, which is incorporated herein by
reference and otherwise comply with the material terms of the Employment
Agreement and of this Separation Agreement.

3. COBRA Continuation Coverage. Your normal employee participation in Umpqua’s
group health coverage will terminate on the Separation Date. Continuation of
group health coverage thereafter will be made available to you and your
dependents pursuant to federal law (COBRA). Continuation of group health
coverage after the Separation Date is entirely at your expense, as provided
under COBRA.

4. Termination of Benefits. Except as provided in Section 3 above, your
participation in all employee benefit plans and programs ended on the Separation
Date. Your rights under any pension benefit or other plans in which you may have
participated will be determined in accordance with the written plan documents
governing those plans.

5. Full Payment. You acknowledge having received full payment of all
compensation of any kind (including wages, salary, vacation, sick leave,
commissions, bonuses and incentive compensation) that you earned as a result of
your employment by us.

6. No Further Compensation. Any and all agreements to pay you bonuses or other
incentive compensation are terminated. You understand and agree that you have no
right to receive any further payments for bonuses or other incentive
compensation. We owe no further compensation or benefits of any kind, except as
described in Section 2 above.

7. Release of Claims.

(a)    You hereby release (i) Umpqua and its subsidiaries, affiliates, and
benefit plans, (ii) each of Umpqua’s past and present shareholders, officers,
directors, agents, employees, representatives, administrators, fiduciaries and
attorneys, and (iii) the predecessors, successors, transferees and assigns of
each of the persons and entities described in this sentence, from any and all
claims of any kind, known or unknown, that arose on or before the date you
signed this Separation Agreement.

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(b)    The claims you are releasing include, without limitation, claims of
wrongful termination, claims of constructive discharge, claims arising out of
employment agreements, representations or policies related to your employment,
claims arising under federal, state or local laws or ordinances prohibiting
discrimination or harassment or requiring accommodation on the basis of age,
race, color, national origin, religion, sex, disability, marital status, sexual
orientation or any other status, claims of failure to accommodate a disability
or religious practice, claims for violation of public policy, claims of
retaliation, claims of failure to assist you in applying for future position
openings, claims of failure to hire you for future position openings, claims for
wages or compensation of any kind (including overtime claims), claims of
tortious interference with contract or expectancy, claims of fraud or negligent
misrepresentation, claims of breach of privacy, defamation claims, claims of
intentional or negligent infliction of emotional distress, claims of unfair
labor practices, claims arising out of any claimed right to stock or stock
options, claims for attorneys’ fees or costs, and any other claims that are
based on any legal obligations that arise out of or are related to your
employment relationship with us.

(c)    You specifically waive any rights or claims that you may have under the
Oregon Civil Rights and Unlawful Employment Practices Statutes (ORS Chapter
659), the Oregon Wage and Hour Laws (ORS Chapter 652), the Civil Rights Act of
1964 (including Title VII of that Act), the Equal Pay Act of 1963, the Age
Discrimination in Employment Act of 1967 (ADEA), the Americans with Disabilities
Act of 1990 (ADA), the Fair Labor Standards Act of 1938 (FLSA), the Family and
Medical Leave Act of 1993 (FMLA), the Worker Adjustment and Retraining
Notification Act (WARN), the Employee Retirement Income Security Act of 1974
(ERISA), the National Labor Relations Act (NLRA), and all similar federal, state
and local laws.

(d)    You agree not to seek any personal recovery (of money damages, injunctive
relief or otherwise) for the claims you are releasing in this Separation
Agreement, either through any complaint to any governmental agency or otherwise.
You agree never to start any lawsuit or arbitration asserting any of the claims
you are releasing in this Separation Agreement. You represent and warrant that
you have not initiated any complaint, charge, lawsuit or arbitration involving
any of the claims you are releasing in this Separation Agreement. Should you
apply for future employment with Umqua, Umpqua has no obligation to consider you
for future employment.

(e)    You represent and warrant that you have all necessary authority to enter
into this Separation Agreement (including, if you are married, on behalf of your
marital community) and that you have not transferred any interest in any claims
to your spouse or to any third party.

(f)    This Separation Agreement does not affect your rights, if any, to receive
pension plan benefits, medical plan benefits, unemployment compensation benefits
or workers’ compensation benefits. This Separation Agreement also does not
affect your rights, if any, under agreements, bylaw provisions, insurance or
otherwise, to be indemnified, defended or held harmless in connection with
claims that may be asserted against you by third parties.

(g)    You understand that you are releasing potentially unknown claims, and
that you have limited knowledge with respect to some of the claims being
released. You acknowledge that there is a risk that, after signing this
Separation Agreement, you may learn information that might have affected your
decision to enter into this Separation Agreement. You assume this risk and all
other risks of any mistake in entering into this Separation Agreement. You agree
that this release is fairly and knowingly made.

(h)    You are giving up all rights and claims of any kind, known or unknown,
except for the rights specifically given to you in this Separation Agreement.

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8. No Admission of Liability. Neither this Separation Agreement nor the payments
made under this Separation Agreement are an admission of liability or wrongdoing
by Umpqua.

9. Umpqua Materials. You represent and warrant that you have, or no later than
the Separation Date will have, returned all keys, credit cards, documents and
other materials that belong to us, including but not limited to the Umpqua
Property, as defined in Section 17 of the Employment Agreement, which definition
is incorporated herein by reference.

10. Nondisclosure Agreement. You will comply with the covenant regarding
confidential information in Section 16 of the Employment Agreement, which
covenant is incorporated herein by reference.

11. No Disparagement. You may not disparage Umpqua or Umpqua’s business or
products, and may not encourage any third parties to sue Umpqua.

12. Cooperation Regarding Other Claims. If any claim is asserted by or against
Umpqua as to which you have relevant knowledge, you will reasonably cooperate
with us in the prosecution or defense of that claim, including by providing
truthful information and testimony as reasonably requested by us.

13. Nonsolicitation; No interference. During the Restriction Period, as defined
in Section 15 of the Employment Agreement, you will comply with Sections 15 and
16 of the Employment Agreement, incorporated herein by reference and Umpqua will
have the right to enforce those provisions under the terms of Section 17 of the
Employment Agreement, incorporated herein by reference. During the Restriction
Period and thereafter you will not, apart from good faith competition, interfere
with Umpqua’s relationships with customers, employees, vendors, or others.

14. Independent Legal Counsel. You are advised and encouraged to consult with an
attorney before signing this Separation Agreement. You acknowledge that you have
had an adequate opportunity to do so.

15. Consideration Period. You have 21 days from the date this Separation
Agreement is given to you to consider this Separation Agreement before signing
it. You may use as much or as little of this 21-day period as you wish before
signing. If you do not sign and return this Separation Agreement within this
21-day period, you will not be eligible to receive the benefits described in
this Separation Agreement.

16. Revocation Period and Effective Date. You have 7 calendar days after signing
this Separation Agreement to revoke it. To revoke this Separation Agreement
after signing it, you must deliver a written notice of revocation to Umpqua’s
President before the 7-day period expires. This Separation Agreement shall not
become effective until the 8th calendar day after you sign it. If you revoke
this Separation Agreement it will not become effective or enforceable and you
will not be entitled to the benefits described in this Separation Agreement.
    
17. Governing Law. This Separation Agreement is governed by the laws of the
State of Oregon that apply to contracts executed and to be performed entirely
within the State of Oregon.

18. Dispute Resolution.

(a) Except where such matters are deemed governed by ERISA or are the subject to
Section 7 above, the parties agree to submit any dispute arising under this
Separation Agreement to final, binding, private arbitration in Portland, Oregon.
The disputes subject to arbitration include not only

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disputes involving the meaning or performance of the Separation Agreement, but
disputes about its negotiation, drafting, or execution. The dispute will be
determined by a single arbitrator and governed by the then-existing rules of
arbitration procedure in Multnomah County Circuit Court except as set forth
herein. Instead of filing of a civil complaint in Multnomah County Circuit
Court, a party will commence the arbitration process by noticing the other
party. The parties will choose an arbitrator who specializes in employment
conflicts from the arbitration list for Multnomah County Circuit Court. If the
parties are unable to agree on an arbitrator within ten (10) days of receipt of
the list of arbitrators, each party will select one attorney from the list, and
those two attorneys shall select the arbitrator from the list (with each of the
two selecting attorneys then concluding their services and each being
compensated by the party selecting each attorney, subject to recovery of such
fees under subsection (b) of this Section). The arbitrator may charge his or her
standard arbitration fees rather than the fees prescribed in the Multnomah
County Circuit Court arbitration procedures. The arbitrator will have full
authority to determine all issues, including arbitrability, to award any remedy,
including permanent injunctive relief, and to determine any request for
attorneys’ fees, costs and expenses in accordance with subsection (b) of this
Section. There shall be no right of review in court. The arbitrator’s award may
be reduced to final judgment or decree in Multnomah County Circuit Court.

(b) The prevailing party shall be awarded all costs and expenses of the
proceeding, including, but not limited to, attorneys’ fees, filing and service
fees, witness fees, and arbitrators’ fees. If arbitration is commenced, the
arbitrator will have full authority and complete discretion to determine the
“prevailing party” and the amount of costs and expenses to be awarded.

(c) Notwithstanding any other provision of this Separation Agreement, an
aggrieved party may seek a temporary restraining order or preliminary injunction
in Multnomah County Circuit Court to preserve the status quo during the
arbitration proceeding, provided however, that the party seeking relief agrees
that ultimate resolution of the dispute will still be determined through
arbitration and not through court process. The filing of the court action for
injunctive relief shall not hinder or delay the arbitration process.

19. Saving Provision. If any part of this Separation Agreement is held to be
unenforceable, it shall not affect any other part. If any part of this
Separation Agreement is held to be unenforceable as written, it shall be
enforced to the maximum extent allowed by applicable law.

20. Final and Complete Agreement. Except for the Employment Agreement to the
extent it is expressly incorporated herein by reference, this Separation
Agreement is the final and complete expression of all agreements between us on
all subjects and supersedes and replaces all prior discussions, representations,
agreements, policies and practices. You acknowledge you are not signing this
Separation Agreement relying on anything not set out herein.

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Umpqua Holdings Corporation
 
 
 
 
 
By:
 
 
 
 
 
 
 
Title:
 
 

I, the undersigned, having been advised to consult with an attorney, hereby
agree to be bound by this Separation Agreement and confirm that I have read and
understood each part of it.
 
 
 
 
 
 
Date
 

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