CENTENNIAL BANCORP

                        INCENTIVE STOCK OPTION AGREEMENT


EFFECTIVE DATE:   ____________, ____

BETWEEN:          Centennial Bancorp, an Oregon corporation      (the "Company")

AND:              _______________________________               (the "Optionee")

                  --------------------------------------------------------------
                  Street Address                  City       State      Zip Code

Number of Option Shares:            ______________________.

Option Price per Share:             $_____________________.

Vesting Schedule:        Percentage of             Number of Years After
                         Shares Vested               Date of Agreement
                         -------------             ---------------------

                         _____________                      1

                         _____________                      2

                         _____________                      3

                         _____________                      4

                         _____________                      5



          The Company has adopted a 1995 Stock Incentive Stock Plan, as amended
and restated (the "Plan") that provides for the grant of options meeting the
requirements of ss.422 of the Internal Revenue Code ("IRC") to purchase shares
of the Company's Common Stock with a par value of $2.00 per share ("Stock").
Optionee is now employed by the Company, and the Company desires to afford
Optionee the opportunity to obtain stock ownership in the Company so that
Optionee may have a proprietary interest in the Company's success. The committee
established pursuant to the Plan (the "Committee") has granted to the Optionee
an option to purchase shares of the Stock, upon and subject to the terms and
conditions of the Plan and of this Agreement.

          NOW, THEREFORE, the parties agree as follows:

          1. GRANT; TERMS OF OPTION. Subject to the terms and conditions of this
Agreement and the Plan, the Company grants to the Optionee the right and option
(the "Option") to purchase any part of an aggregate number of shares of the
Company's authorized but unissued Stock stated in the caption of this Agreement
at the price per share stated in the caption of this Agreement, this price being
the fair market value of the shares as determined pursuant to the Plan on the
date of the grant of the Option. It is the intent of the Committee that the
Option qualify as an "incentive stock option" under the tax laws. The Option is
granted upon the following terms and conditions:

<PAGE>

     (a)  TERM OF OPTION. Subject to reductions in the Option term provided in
          subparagraphs (c) and (e) below, the Option shall continue in effect
          through the tenth anniversary of the date of this Agreement.

     (b)  TIMING OF RIGHT TO EXERCISE. Except as provided in subparagraph (c)
          hereof, the Option may be exercised from time to time over the term of
          the Option in the amounts specified in the vesting schedule set forth
          in the caption of this Agreement. If the Optionee does not purchase in
          any one year the full number of shares that he is then entitled to
          purchase, the Optionee's rights shall be cumulative, and, subject to
          the other provisions of this Agreement, the Optionee may purchase
          those shares thereafter during the term of the Option.

     (c)  TERMINATION OF EMPLOYMENT. Except as provided in this subparagraph
          (c), the Option shall not be exercised unless at the time of such
          exercise the Optionee is in the employ of the Company or a parent or
          subsidiary corporation of the Company and shall have so served
          continuously since the effective date of this Agreement. If the
          employment of the Optionee with the Company or a parent or subsidiary
          corporation of the Company terminates by reason of the Optionee's
          death or disability, the Option may be exercised by the Optionee at
          any time prior to the expiration date of the Option or the expiration
          of one year after the date of such termination, whichever is the
          shorter period, but only if and to the extent the Optionee was
          entitled to exercise the Option at the date of such termination. If
          the employment of the Optionee by the Company or a parent or
          subsidiary corporation of the Company terminates for any other reason,
          the Option may be exercised by the Optionee at any time prior to the
          expiration date of the Option or the expiration of three months after
          the date of such termination, whichever is the shorter period, but
          only if and to the extent the Optionee was entitled to exercise the
          Option at the date of such termination. In such event, to the extent
          that the Option is not exercised within the applicable period, all
          further rights to purchase shares pursuant to the Option shall cease
          and terminate at the expiration of such period.

<PAGE>

     (d)  MANNER OF EXERCISE. Shares may be purchased pursuant to the Option
          only upon receipt by the Company of written notice from the Optionee
          of the Optionee's desire to purchase, specifying the number of shares
          the Optionee desires to purchase and the date on which the Optionee
          desires to complete the purchase. The Option may not be exercised for
          a fraction of a share. If required to comply with any applicable
          federal or state securities laws, the notice also shall contain a
          representation that it is the Optionee's intention to acquire the
          shares for investment and not for resale. On the date specified for
          completion of the purchase of the shares, the Optionee shall pay the
          Company the full purchase price of the shares in cash or by such other
          method of payment as shall be approved by the Committee. No shares
          shall be issued until full payment has been made, and the Optionee
          shall have none of the rights of a shareholder until shares are
          issued. Upon notification of the amount due and prior to or
          concurrently with delivery of the certificate representing the shares,
          the Optionee shall pay to the Company any amounts necessary to satisfy
          applicable federal, state, and local withholding tax requirements. (e)
          Changes in Capital Structure. Except as provided in the final sentence
          of this subparagraph ----------------------------- (e), if the
          outstanding shares of Stock are increased or decreased or changed into
          or exchanged for a different number or kind of shares or other
          securities of the Company or of another corporation by reason of any
          reorganization, merger, consolidation, plan of exchange,
          recapitalization, reclassification, stock split-up, combination of
          shares or dividend payable in shares, the Committee shall make
          appropriate adjustment in the number and kind of shares as to which
          the Option, or portion thereof then unexercised, shall be exercisable,
          in order that the Optionee's proportionate interest shall be
          maintained as before the occurrence of such event. Such adjustment in
          the Option shall be made without change in the total price applicable
          to the unexercised portion of the Option and with a corresponding
          adjustment in the option price per share. Any such adjustment made by
          the Committee shall be conclusive. In the event of the dissolution of
          the Company or a merger, consolidation, plan of exchange or similar
          transaction affecting the Company, in lieu of adjusting the Option as
          described above, the Committee may, in its sole discretion, provide a
          30-day period immediately prior to such event during which the
          Optionee shall have the right to exercise the Option in whole or in
          part without any limitation on exercisability.

<PAGE>

          2. CONDITIONS. The obligations of the Company under this Agreement
shall be subject to the approval of such state or federal authorities or
agencies as may have jurisdiction in the matter. The Company shall use its best
efforts to take such steps as may be required by state or federal law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission, any quotation system on which the Stock may then be traded
and any stock exchange on which the Stock may then be listed, in connection with
the issuance or sale of any shares acquired pursuant to this Agreement or the
trading or listing of such shares on any such system or exchange. The Company
shall not be obligated to issue or deliver shares under this Agreement if, upon
advice of its legal counsel, such issuance or delivery would violate state or
federal securities laws.

          3. NONTRANSFERABILITY.

     (a)  RESTRICTION. The Option is not transferable by Optionee other than by
          testamentary disposition or the laws of descent and distribution and,
          during Optionee's lifetime, may be exercised only by Optionee.

     (b)  EXERCISE BY LEGAL REPRESENTATIVE OR SUCCESSOR. Whenever the word
          "Optionee" is used in any provision of this Agreement under
          circumstances when the provision should logically be construed to
          apply to the Optionee's guardian, legal representative, executor,
          administrator, or the person or persons to whom the Option may be
          transferred by testamentary disposition or by the laws of descent and
          distribution, the word "Optionee" shall be deemed to include such
          person or persons.

          4. LEGENDS. Certificates representing the shares subject to this
Agreement shall bear such legends as the Company shall deem appropriate to
reflect any restrictions on transfer imposed by federal or applicable state
securities laws.

          5. CONTINUING RELATIONSHIP. Nothing in the Plan or in this Agreement
shall confer upon the Optionee any right to continue as an employee of the
Company or any parent or subsidiary corporation of the Company or interfere in
any way with the right of the Company or parent or subsidiary to terminate the
Optionee's employment at any time for any reason.

          6. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of any successor of the Company, but except as provided
above, the Option shall not be assigned or otherwise disposed of by the
Optionee.

<PAGE>

          7. THE PLAN. The Option is subject to the terms and conditions of the
Plan. In the event of a conflict between the Plan and this Agreement, the terms
of the Plan shall control. The Optionee agrees to be bound by the rules and
regulations for the administration of the Plan, as presently prescribed or
hereafter amended, and by any amendment, construction or interpretation of the
Plan properly adopted by the Company's Board of Directors or by the Committee.

          8. NOTICES. Parties to this Agreement shall give all notices to the
other parties concerning this Agreement by personal delivery, by telecopier or
by registered or certified mail, return receipt requested, addressed as follows:

         If to the Company:        Centennial Bancorp
                                   675 Oak Street
                                   Eugene, Oregon 97440
                                   Attention: Chief Financial Officer

         If to Optionee:           at Optionee's address stated in the caption
                                   of this Agreement, or such other address as
                                   Optionee, by notice to the Company, may
                                   designate in writing from time to time.

Any party may, by written notice to the other parties, designate a new address
to which notices shall thereafter be delivered. Notice hereunder shall be deemed
effective upon the earlier of actual receipt or three days after being sent by
registered or certified mail.

          IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date stated above.

                                    CENTENNIAL BANCORP



                                    By:
                                       ----------------------------------------
                                       Richard C. Williams
                                       President and Chief Executive Officer


                                    OPTIONEE



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