EMPLOYMENT AGREEMENT

         Employment Agreement ("Agreement") dated as of July 29th, 1997, between
CENTENNIAL BANK, an Oregon  corporation (the "Employer"),  and THADDEUS (Ted) R.
WINNOWSKI (the "Executive").


                                    RECITALS

         The Employer desires to employ the Executive,  and the Executive wishes
to accept  such  employment,  upon the terms  and  conditions  set forth in this
Agreement.


                                    AGREEMENT

         In  consideration of the mutual promises and covenants set forth below,
the parties hereby agree as follows:

1.       DEFINITIONS

         For the  purposes  of this  Agreement,  the  following  terms  have the
meanings specified or referred to in this Section 1.

         "AGREEMENT"--this Employment Agreement.

         "BASE SALARY"--as defined in Section 3.1.1.

         "BENEFITS"--as defined in Section 3.1.2.

         "BOARD OF DIRECTORS"--the board of directors of the Employer.

         "CASH BONUS"--as defined in Section 3.2.

         "CENTENNIAL BANCORP"--the parent corporation of the Employer.

         "CHANGE  OF  CONTROL"--For  purposes  of  this  Agreement,  "Change  of
Control" shall occur if during the Employment Period:

         (a) Any  individual,  entity or group,  within the  meaning of Sections
13(d)  and  14(d) of the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange Act") (other than the Employer or Centennial  Bancorp,  any trustee or
other  fiduciary  holding  securities  under  an  employee  benefit  plan of the
Employer  or  Centennial  Bancorp,   or  any  corporation  owned,   directly  or
indirectly,  by the  stockholders  of the  Employer  or  Centennial  Bancorp  in
substantially  the same  proportions as their ownership of stock of the Employer
or Centennial Bancorp), is or becomes the "beneficial owner" (as defined in Rule
13d-3  under  the  Exchange  Act),   directly  or   indirectly,   of  securities
<PAGE>

representing  thirty  percent (30%) or more of the combined  voting power of the
Employer's or Centennial Bancorp's then outstanding voting securities;

         (b) Employer or  Centennial  Bancorp  effects a merger,  consolidation,
share exchange or other corporate  reorganization  of the Employer or Centennial
Bancorp  with any other  corporation,  other  than (i) a merger,  consolidation,
share  exchange or other  corporate  reorganization  which  would  result in the
voting securities of the Employer or Centennial Bancorp outstanding  immediately
prior thereto  continuing to represent  (either by remaining  outstanding  or by
being  converted  into voting  securities  of the  surviving  entity)  more than
seventy percent (70%) of the combined  voting power of the voting  securities of
the  Employer  or  Centennial  Bancorp  or  such  surviving  entity  outstanding
immediately after such merger, consolidation,  share exchange or other corporate
reorganization,  or  (ii) a  merger,  consolidation,  share  exchange  or  other
corporate  reorganization  effected  to  implement  a  recapitalization  of  the
Employer or Centennial Bancorp (or similar  transaction) in which no individual,
entity or group acquires more than thirty  percent (30%) of the combined  voting
power  of  the  Employer's  or  Centennial  Bancorp's  then  outstanding  voting
securities; or

         (c) Employer or Centennial Bancorp effects complete  liquidation of the
Employer  or  Centennial   Bancorp  or  the  sale  or   disposition  of  all  or
substantially all of the Employer's or Centennial Bancorp's assets.

         "CONFIDENTIAL   INFORMATION"--any  and  all  trade  secrets  and  other
proprietary  information  concerning  the business and affairs of the  Employer,
including  products,  services,  customers,  pricing,  market studies,  business
plans, financial statements, financial projections and budgets, projected sales,
capital spending budgets and plans,  computer  software and programs  (including
object code and source code),  and any other  information,  however  documented,
that is a trade secret  within the meaning of the Oregon  Uniform  Trade Secrets
Act (ORS 646.461 to 646.475).

         "DISABILITY"--as defined in Section 6.2.

     "EMPLOYMENT  PERIOD"--the  term of the  Executive's  employment  under this
Agreement.

         "FISCAL  YEAR"--the  Employer's  fiscal  year,  as it now  exists or as
changed from time to time.

         "FOR CAUSE"--as defined in Section 6.3.

         "FOR GOOD REASON"--as defined in Section 6.4.

         "PERSON"--any   individual,   corporation   (including  any  non-profit
corporation),  general or limited partnership,  limited liability company, joint
venture, estate, trust, association, organization, or governmental body.

         "POST-EMPLOYMENT PERIOD"--as defined in Section 8.2.

         "WITHOUT CAUSE"--not "for Cause."
<PAGE>

         "WITHOUT GOOD REASON"--not "for Good Reason."

2.       EMPLOYMENT TERMS AND DUTIES

         2.1      EMPLOYMENT

         The Employer  hereby  employs the Executive,  and the Executive  hereby
accepts  employment by the Employer,  upon the terms and conditions set forth in
this Agreement.

         2.2      TERM

         The term of the Executive's employment under this Agreement shall begin
on January 20, 1998 (or such other date as may be mutually agreed) and shall end
on December 31, 2002 (or such earlier date as the  employment  may be terminated
in accordance with other provisions of this Agreement).

         2.3      DUTIES

                  2.3.1 During the Employment  Period, the Executive shall serve
as the  President and Chief  Executive  Officer of the Employer and perform such
duties as are  typically  performed by such  officers in a commercial  bank with
operations  similar to those of the Employer and other duties as are assigned or
delegated to him by the Board of Directors.  The Executive  will devote his full
time, attention,  skill, and energy to the business of the Employer.  Nothing in
this  Section  2.3,  however,  will  prevent  the  Executive  from  engaging  in
additional  activities in connection  with  personal  investments  and community
affairs  that  are not  inconsistent  with the  Executive's  duties  under  this
Agreement.  The  Executive  shall,  if  duly  elected,  also  serve  during  the
Employment Period as a director of Centennial Bancorp and the Employer,  and the
Executive  will  fulfill  his  duties  as  such  director   without   additional
compensation.

                  2.3.2 The Executive shall perform his duties with fidelity and
to the best of his ability during the Employment  Period, and shall at all times
during the Employment Period and thereafter  respect the confidential  nature of
the  information  received  by him in the  course of  performing  his  duties as
provided in Section 7.2.

                  2.3.3  Nothing  contained in this  Section 2.3 shall  prohibit
Executive from serving on the board of directors of any other  corporation  that
is not in direct  competition with Centennial Bancorp or any of its subsidiaries
(subject  to  Employer's  approval,  which will not be  unreasonably  withheld).
Executive shall be entitled to keep all compensation received by him for service
as a director of any other  corporation  so approved by Employer.  Executive may
own or  control  shares  of  stock  in any  corporation  that  is not in  direct
competition with Centennial  Bancorp or any of its subsidiaries,  and may own or
control  shares of stock in a  corporation  that is in direct  competition  with
Centennial  Bancorp or any of its  subsidiaries if such stock is publicly traded
and  Executive  does not  beneficially  own more than five  percent  (5%) of the
outstanding shares of such stock.
<PAGE>

3.       COMPENSATION

         3.1      BASIC COMPENSATION

                  3.1.1 BASE SALARY. The Executive will be paid an annual salary
of $225,000 for the period beginning  January 20, 1998 (or other mutually agreed
beginning  date of the  Employment  Period)  and ending on  December  31,  1998,
subject to adjustment as provided below ("Base  Salary"),  which will be payable
in semi-monthly  installments on the first and 15th days of each month. The Base
Salary will be  reviewed  by the Board of  Directors  not less  frequently  than
annually,  and may be adjusted in the sole discretion of the Board of Directors,
but in no event will the Base Salary be less than $225,000 per year.

                  3.1.2  BENEFITS.  The Executive  will,  during the  Employment
Period,  be entitled to  participate  in such  pension,  profit  sharing,  life,
disability,  and medical plans, and other employee benefit plans of the Employer
(excluding  any cash bonus,  incentive  compensation,  and stock option plans or
benefits)  that may be in effect from time to time for other peer  executives of
Employer,  to the  extent the  Executive  is  eligible  under the terms of those
plans,   including   the   following   plans  which  are   currently  in  effect
(collectively, the "Benefits"):

                  (a)      Medical/vision plan;

                  (b)      Dental plan;

                  (c)      Life and accidental death and dismemberment benefits
                           group policy;

                  (d)      Long term disability income insurance group policy;
                           and

                  (e)      Employee Savings & Profit Sharing [401(k)] Plan.

However:  (1) if  Executive  elects not to be covered  by the  Employer's  group
medical plan, then  Executive's Base Salary will be increased by an amount equal
to the  lesser of the  amount of  premiums  that  would  have been  payable  for
covering  Executive under the Employer's plan, or the amount of premiums payable
for coverage of Executive's wife under the KeyCorp Indemnity Health Plan; (2) if
Executive  elects not to be covered by the Employer's  group  disability  income
plan,  then  Employer  will  provide to  Executive a special  disability  income
insurance policy comparable to the one Employer currently provides to Richard C.
Williams;  and (3) if  Executive  elects to be covered by the  Employer's  group
disability  income plan,  then  Employer  will pay or reimburse  Executive up to
$7,500  annually for life insurance  coverage.  If Executive's  employment  with
Employer  terminates  on or after  December 31, 2002,  and if, by reason of such
termination,  Executive's  account under the Employee  Savings & Profit  Sharing
[401(k)]  Plan is not then fully  vested,  Employer  will make a cash payment to
Executive in an amount equal to the nonvested portion of such account.
<PAGE>

         3.2      INCENTIVE COMPENSATION

                  3.2.1  Since  Executive  will  have the  benefits  of the cash
bonuses,  incentive  compensation,  and stock options provided in this Section 3
and  other  provisions  of  this  Agreement,  Executive  shall  be  entitled  to
participate in any cash bonus or other incentive  compensation program and stock
option plans  established by the Employer for its other  executives  only to the
extent  Executive's  participation  is  specifically  approved  by the  Board of
Directors in the exercise of its discretion.

                  3.2.2 In addition to the Base Salary, if the Employer achieves
the  performance  goals  under the bonus  program  for each Fiscal Year that are
established  by the Board of  Directors  prior to the  beginning  of such Fiscal
Year, the Executive  shall be paid an annual cash bonus as provided in the bonus
program for that Fiscal Year (the "Cash Bonus").  Any Cash Bonus earned shall be
paid to the  Executive on the  following  schedule:  20% on the 15th day of each
April, July, and October and 40% on the 15th day of January.  The Cash Bonus, if
any, payable to the Executive hereunder shall be:

                  (a) $100,000 for the Fiscal Year beginning January 1, 1998 and
ending  December 31, 1998. An additional  $25,000 is payable to the Executive if
110% of 1998 after-tax profitability goal is achieved.

                  (b) Amounts  determined  by the Board of Directors for periods
after  December 31, 1998, but not less than $100,000 for each Fiscal Year during
the Employment Period in which the performance goals established for that Fiscal
Year are met, and an additional  amount of not less than $25,000 for each Fiscal
Year during the Employment  Period in which 110% of the after-tax  profitability
goal for that Fiscal Year is achieved.

         3.3      CHANGE OF CONTROL

                  3.3.1 In the event of any Change of Control in the Employer or
Centennial Bancorp,  the Employer and the Executive shall each have the elective
right to  terminate  this  Agreement,  effective  at the  closing  of the  event
resulting in the Change of Control.  If this  Agreement is so terminated  upon a
Change of Control,  the Executive  shall be provided  with Benefits  through the
date of termination and shall be paid a lump-sum cash payment in an amount equal
to two and one-half (2.5) times his "Final  Compensation," being the greater of:
(a)  Executive's  Base Salary and Cash Bonus for the most recently  ended Fiscal
Year,  or (b)  Executive's  Base Salary for the  current  Fiscal  Year;  and the
Employer  shall have no  obligation to make the payments or provide the Benefits
described in Section 6.5.1. If this Agreement is not so terminated upon a Change
of Control,  then the  Agreement  shall  continue  in effect and any  subsequent
termination of Executive's  employment shall be governed by the other provisions
of this  Agreement;  provided,  however,  if this Agreement  continues in effect
following a Change of Control,  and if  Executive's  employment is  subsequently
terminated  other than by reason of  Executive's  death or Disability (by either
the Employer or the  Executive,  with or without Cause or Good Reason) within 36
months  after the  Change of Control  and before  December  31,  2002,  then the
Employer  shall pay to  Executive a lump-sum  cash payment in an amount equal to
two and one-half (2.5) times his Final Compensation.
<PAGE>

                  3.3.2 The Employer and the Executive  agree that because there
can be no exact  measure of damages  which would occur upon the  termination  of
this Agreement as provided in Section 3.3.1,  the payments made thereunder shall
be  deemed  to  constitute  liquidated  damages  and not a  penalty  under  this
Agreement.

         3.4      DEFERRED COMPENSATION

         Executive   shall  have  the  elective  right  to  participate  in  the
Centennial Bank Deferred  Compensation  Plan dated effective January 1, 1996, in
accordance with and subject to the terms and conditions  stated in the Plan, and
subject  to the  Employer's  right to amend or  terminate  the  Plan.  Executive
acknowledges  that  the  Employer  does  not  currently  make  and is  under  no
obligation  to make  matching  contributions  as permitted by the  provisions of
Section 5.05 of the Deferred Compensation Plan.

         3.5      STOCK OPTIONS

         Effective at commencement of Executive's employment,  the Employer will
grant to the  Executive an option to purchase  75,000 shares of the common stock
of Centennial Bancorp pursuant to and subject to the terms and conditions of the
Restated 1995 Stock Incentive Plan (the "Stock Plan"). An additional grant of an
option to  purchase  25,000  shares  under  the  Stock  Plan (or under a similar
subsequent  plan  adopted by the  Employer)  will be made by the Employer to the
Executive by January 20, 1999,  conditioned  upon the  Employer's  achieving the
1998  performance  goals  established  by  the  Board  of  Directors.  Annually,
beginning  effective at January 1, 1999, the Executive will be granted an option
to purchase 10,000 shares conditioned upon Employer's  achieving the performance
goals  established  by the Board of Directors for the prior Fiscal Year,  and an
additional  5,000 shares  option if such 10,000  shares option is earned and the
Employer achieves 110% of the prior Fiscal Year's after-tax  profitability goal.
Executive  understands  and  acknowledges  that  Employer's  grant of all  stock
options other than the initial 75,000 shares option is conditioned upon approval
of a  Stock  Plan  amendment  or  adoption  of a  successor  Stock  Plan  by the
shareholders of Employer and Centennial Bancorp, and that each stock option will
be subject to a stock  option  agreement  to be  executed  pursuant to the Stock
Plan. If the  shareholders  fail to approve an amendment or successor Stock Plan
permitting grant of all stock options due to Executive hereunder, then the Board
of Directors may, instead,  grant to the Executive nonstatutory stock options at
the same  exercise  price and on the same other terms and  conditions  as if the
options had been  granted  pursuant to the Stock  Plan.  Vesting of  Executive's
right to exercise  each stock  option shall accrue as to one-third of the option
shares for each completed year of Executive's employment following the effective
date of the grant of the option,  except that all  unexercised  options shall be
fully vested upon Executive's death or Disability,  or upon a Change of Control,
or upon  termination of this  Agreement by the Employer  without Cause or by the
Executive with Good Reason.  Executive's right to exercise a vested stock option
shall not be forfeited on account of the  termination of Executive's  employment
by Employer with Cause or by Executive without Good Reason.
<PAGE>

4.       FACILITIES AND EXPENSES

         4.1      GENERAL

         The  Employer  will  furnish the  Executive  office  space,  equipment,
supplies, and such other facilities and personnel as is necessary or appropriate
for the performance of the Executive's duties under this Agreement. The Employer
will pay the  membership  fee and dues for a social  membership for Executive at
the Eugene  Country  Club during the time the  Executive  is residing in Eugene,
Oregon. Upon approval of the Executive's application for regular membership, the
Employer will pay the initiation fee and membership dues of the Executive at the
Waverly  Country Club for the  remainder  of the  Employment  Period.  Following
payment of the  initiation  fee for  Executive's  membership in Waverly  Country
Club, the membership  shall belong to the Executive,  and may be retained by him
following expiration or any termination of this Agreement. The Employer will pay
the Executive's dues in such other  professional  societies,  organizations  and
clubs as the Board of Directors deems appropriate, and will pay on behalf of the
Executive (or reimburse the Executive for) reasonable  expenses  incurred by the
Executive  in the  performance  of  the  Executive's  duties  pursuant  to  this
Agreement, and in accordance with the Employer's employment policies,  including
reasonable  expenses  incurred  by  the  Executive  in  attending   conventions,
seminars,  and other business meetings,  in appropriate  business  entertainment
activities,  and for  promotional  expenses.  The  Executive  must file  expense
reports  with  respect  to such  expenses  in  accordance  with  the  Employer's
policies.

         4.2      MOVING EXPENSES AND PLACE OF RESIDENCE

         The  Employer  shall pay the  moving  expenses  of the  Executive  from
Seattle,  Washington to Eugene, Oregon, to the extent such expenses are not paid
by the  Executive's  former  employer,  and shall pay the  Executive  a lump sum
payment of $5,000 upon his move to Eugene to be used to establish his household.
If the Executive moves from Eugene to Portland,  as required for the performance
of his duties hereunder, the Employer will pay his moving expenses in connection
with such move.  The Employer  shall  reimburse  the  Executive for any state or
federal  income taxes  payable by the  Executive as a result of payments made by
the Employer under this Section 4.2. The Employer  shall have the right,  at all
times during the  Employment  Period,  to require the  Executive to maintain his
principal  residence  within  20 miles  of the  Employer's  principal  executive
headquarters (both in Eugene and in the Portland area).

         4.3      ANNUAL EXPENSES

         The Employer shall pay the professional  fees incurred by the Executive
in connection with an annual medical examination to the extent such fees are not
paid by Executive's former employer or pursuant to any medical plan or insurance
contract.  If the Employer pays any such  professional  medical  fees,  then the
Executive  shall,  upon request by the Employer,  authorize the  disclosure  and
release to the Employer of the physician's report on the medical examination.
<PAGE>

         4.4      AUTOMOBILE AND PARKING

         The Employer  shall provide the Executive with the use of an automobile
in accordance with the Employer's  policy with respect to peer  executives,  and
the Executive shall file reports as required by such policy.  The Employer shall
also  provide and pay for parking for the  Executive  convenient  to the offices
where he is performing his duties hereunder.

5.       VACATIONS

         The  Executive  will be entitled to five (5) weeks' paid  vacation each
Fiscal Year in accordance  with the vacation  policies of the Employer in effect
for its  executive  officers  from time to time.  Vacation  must be taken by the
Executive  at such  time or times as  approved  by the Board of  Directors.  The
Executive  will also be entitled to the paid  holidays  and other paid leave set
forth in the Employer's  policies.  Vacation days and holidays during any Fiscal
Year that are not used by the  Executive  during such Fiscal Year may be used in
any subsequent Fiscal Year, except that a maximum of 25 unused vacation days and
holidays may be carried over for use in subsequent Fiscal Years.

6.       TERMINATION

         6.1      EVENTS OF TERMINATION

         The Employment  Period,  the  Executive's  Base Salary,  Cash Bonus and
Benefits,  and any and all other rights of the  Executive  under this  Agreement
will terminate as provided in this Section 6:

                  6.1.1    upon the death of the Executive;

                  6.1.2 upon the  Disability  of the  Executive  (as  defined in
Section 6.2) immediately upon notice from either party to the other;

                  6.1.3 for Cause (as defined in Section 6.3),  immediately upon
notice from the Employer to the Executive,  or at such later time as such notice
may specify;

                  6.1.4    without Cause;

                  6.1.5 for Good  reason (as  defined  in Section  6.4) upon not
less than 30 days' prior notice from the Executive to the Employer; or

                  6.1.6    without Good Reason.

         6.2      DEFINITION OF DISABILITY

         For  purposes of Section 6.1,  the  Executive  will be deemed to have a
"Disability"  if, for  physical or mental  reasons,  the  Executive is unable to
perform the essential  functions of the Executive's  duties under this Agreement
for six months in the aggregate in any 12-months' period, or for any consecutive
three months in circumstances  where  Executive's  medical  prognosis is that he
<PAGE>

will be unable to resume  performance  of his duties within an additional  three
months, as determined in accordance with this Section 6.2. The disability of the
Executive will be determined by a medical doctor  selected by written  agreement
of the Employer and the Executive  upon the request of either party by notice to
the other. If the Employer and the Executive  cannot agree on the selection of a
medical  doctor,  each of them will select a medical  doctor and the two medical
doctors  will  select a third  medical  doctor who will  determine  whether  the
Executive has a disability. The Employer will pay all professional fees incurred
in   connection   with  medical   examinations   under  this  Section  6.2.  The
determination  of the medical  doctor  selected  under this  Section 6.2 will be
binding on both  parties.  The Executive  must submit to a reasonable  number of
examinations by the medical doctor making the  determination of disability under
this Section 6.2, and the Executive hereby authorizes the disclosure and release
to the Employer of such determination and all supporting medical records. If the
Executive  is not legally  competent,  the  Executive's  legal  guardian or duly
authorized  attorney-in-fact  will  act in the  Executive's  stead,  under  this
Section 6.2, for the purposes of submitting  the Executive to the  examinations,
and providing the authorization of disclosure, required under this Section 6.2.

         6.3      DEFINITION OF "FOR CAUSE"

         For  purposes of Section  6.1,  the phrase "for Cause" means any of the
following:

                  6.3.1 Dishonesty,  gross negligence,  or deliberate misconduct
by the  Executive  in  performance  of his duties  under this  Agreement  or the
Executive's  conviction of or entry of a plea of guilty or NOLO  CONTENDERE to a
felony or other  crime  that has or may have a  material  adverse  effect on the
Executive's  ability to carry out his duties  under this  Agreement  or upon the
reputation of the Employer or its affiliates.

                  6.3.2  Willful and  material  breach of this  Agreement by the
Executive,  which breach  continues  uncorrected  for 30 days following  written
notice thereof by the Employer to the Executive.

                  6.3.3 The  Executive's  removal  from  office  because  of the
requirement or recommendation  of a regulatory  agency having  jurisdiction over
the Employer or its affiliates.

                  6.3.4  Uncorrected  failure of the  Executive  to perform  his
duties  in  a  manner  consistent  with  reasonable   standards  respecting  the
Executive's  performance,  established  by the Board of Directors in  discussion
with the  Executive  during  the  course of  regular  review of the  Executive's
performance,  which failure has a material adverse effect on the business of the
Employer or its  affiliates.  Any such  failure of  performance  shall be deemed
uncorrected if it continues substantially unrectified for a period of 90 days or
more after written notice thereof by the Employer to the Executive.

         6.4      DEFINITION OF "FOR GOOD REASON"

         For purposes of Section 6.1, the phrase "for Good Reason"  means any of
the following:
<PAGE>

                  6.4.1 the  Employer's  failure to make any payment,  grant any
stock option,  or provide any benefit to which the  Executive is entitled  under
Section  3 or 4,  which  failure  continues  uncorrected  for 10 days  following
written notice thereof by the Executive to the Employer,  unless there is a good
faith dispute  respecting  the  obligation of the Employer to make such payment,
grant such stock option, or provide such benefit (in which case either party may
require the dispute to be resolved in accordance  with the provisions of Section
10.7 of this Agreement);

                  6.4.2  the  Employer's  willful  and  material  breach of this
Agreement, other than under Sections 3 and 4, which continues uncorrected for 30
days following written notice thereof by the Executive to the Employer;

                  6.4.3 the assignment of the Executive without his consent to a
position,  responsibilities,   or  duties  of  a  lesser  status  or  degree  of
responsibility than his position,  responsibilities,  or duties as President and
Chief  Executive  Officer of the Employer at the  commencement of the Employment
Period;

                  6.4.4 the relocation (without the Executive's  consent) of the
Employer's principal executive  headquarters  outside the metropolitan  Portland
area after the Executive is residing there;

                  6.4.5  the  requirement  by the  Employer  that the  Executive
(without the  Executive's  consent) be based  anywhere other than the Employer's
principal executive headquarters; or

                  6.4.6 the principal executive  headquarters of the Employer is
not relocated to Portland, Oregon, by January 1, 2000.

         6.5      TERMINATION PAY

         Subject  to  Section  3.3,  "Change  of  Control,"  effective  upon the
termination  of  this  Agreement,  the  Employer  will be  obligated  to pay the
Executive  (or, in event of his death,  his  designated  beneficiary  as defined
below) only such  compensation  as is provided in this Section 6.5. For purposes
of this  Section  6.5,  the  Executive's  designated  beneficiary  shall be such
beneficiary or beneficiaries, which beneficiaries may be individuals, trusts, or
other  entities,  as the  Executive may designate by notice to the Employer from
time to time or, if the  Executive  fails to give notice to the Employer of such
beneficiary or beneficiaries, the Executive's estate.

                  6.5.1  TERMINATION  BY THE  EMPLOYER  WITHOUT  CAUSE OR BY THE
EXECUTIVE FOR GOOD REASON.  If the Employer  terminates  this Agreement  without
Cause or the Executive  terminates this Agreement for Good Reason,  the Employer
will pay the  Executive  his Base Salary and Benefits  until  December 31, 2002,
except that only one-half of such Base Salary,  together with all such Benefits,
shall be paid to the Executive if he  terminates  this  Agreement  under Section
6.4.6.

                  6.5.2  TERMINATION  BY  THE  EMPLOYER  FOR  CAUSE  OR  BY  THE
EXECUTIVE  WITHOUT GOOD REASON.  If the Employer  terminates  this Agreement for
Cause or the  Executive  terminates  this  Agreement  without Good  Reason,  the
<PAGE>

Employer  will pay the  Executive  his Base Salary and Benefits only through the
date such termination is effective.

                  6.5.3  TERMINATION  UPON  DISABILITY.  If  this  Agreement  is
terminated  by  either  party  as a result  of the  Executive's  Disability,  as
determined  under  Section  6.2, the Employer  will pay the  Executive  his Base
Salary and Benefits for the period until disability  insurance benefits commence
under  the  disability  insurance  coverage  furnished  by the  Employer  to the
Executive but not beyond December 31, 2002.

                  6.5.4  TERMINATION UPON DEATH. If this Agreement is terminated
because  of the  Executive's  death,  the  Employer  shall  continue  payment of
Executive's Base Salary for a period of six months after the date of his death.

                  6.5.5 CASH BONUS,  BENEFITS  AND DEFERRED  COMPENSATION.  Upon
termination of this Agreement under any circumstances, or upon expiration of the
Employment Period, the Executive's  accrual of rights under, or participation in
plans  providing  for Benefits will cease as provided  above,  and the Executive
will  thereafter be entitled to accrual of Benefits  pursuant to such plans only
as provided in such plans. In addition, the Employer shall pay the Executive the
unpaid amount of any Cash Bonus earned  through the most recently ended calendar
quarter,  and  shall  pay  the  amount,  if  any,  of the  Executive's  Deferred
Compensation  Account under the Plan referenced in Section 3.4 of this Agreement
in accordance with the Plan and Executive's related Participation Agreement.

                  6.5.6  AMENDMENT.  The  provisions  of this  Agreement  may be
amended at the request of the Executive solely for purposes of accommodating the
Executive's tax and estate planning, provided the amendments do not increase the
Employer's  obligations  and do not  result in any other  adverse  effect on the
Employer.

7.       NON-DISCLOSURE COVENANT

         7.1      ACKNOWLEDGMENTS BY THE EXECUTIVE

         The Executive acknowledges that (i) during the Employment Period and as
a part of his employment,  the Executive will be afforded access to Confidential
Information;  (ii) public  disclosure of Confidential  Information could have an
adverse  effect on the Employer and its  business;  and (iii) the  provisions of
this  Section 7 are  reasonable  and  necessary  to prevent the  improper use or
disclosure of Confidential Information.

         7.2      CONFIDENTIALITY

         During and following the Employment  Period, the Executive will hold in
confidence the  Confidential  Information and will not disclose it to any person
except with the  specific  prior  written  consent of the  Employer or except as
otherwise  expressly  permitted by the terms of this  Agreement.  The  foregoing
obligation  and  restriction  does not  apply  to any  part of the  Confidential
Information which is known in the industry, generally available to the public or
which can be obtained by reference to public  sources.  Any trade secrets of the
Employer  will be  entitled to all of the  protections  and  benefits  under the
Oregon Uniform Trade Secrets Act and any other  applicable law. Upon termination
of this  Agreement by either party,  or upon the request of the Employer  during
<PAGE>

the Employment  Period,  the Executive will return to the Employer all documents
and all  information  stored on computer disks or other  electronic  media which
contain Confidential Information in the Executive's possession or subject to the
Executive's control.

8.       COVENANTS OF THE EXECUTIVE

         8.1 In consideration of the compensation to be paid to the Executive by
the Employer, the Executive covenants that he will not, directly or indirectly:

                  8.1.1 during the  Employment  Period,  except in the course of
his  employment  hereunder,  and during the  Post-Employment  Period,  engage or
invest in,  own,  manage,  operate,  finance,  control,  or  participate  in the
ownership,  management,  operation,  financing,  or control of, be employed  by,
associated  with, or in any manner  connected with, or render services or advice
to, any business  whose products or activities  directly  compete in whole or in
part with the products or  activities of the Employer  anywhere  within its then
market  territory;  provided,  however,  that  the  Executive  may  purchase  or
otherwise  acquire up to (but not more than) five  percent  (5%) of any class of
securities  of  any  enterprise  (but  without  otherwise  participating  in the
activities of such  enterprise) if such securities are listed on any national or
regional  securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934; provided that nothing in this Section 8.1 shall
prohibit or restrict the Executive from engaging in investment banking, merchant
banking or capital formation businesses;

                  8.1.2  whether  for the  Executive's  own  account  or for the
account of any other person,  at any time during the  Employment  Period and the
Post-Employment  Period,  solicit  business  of the same or  similar  type being
carried on by the  Employer,  from any  person  known by the  Executive  to be a
customer of the Employer, whether or not the Executive had personal contact with
such  person  during  and by  reason  of the  Executive's  employment  with  the
Employer;

                  8.1.3 whether for the  Executive's  own account or the account
of  any  other  person  at  any  time  during  the  Employment  Period  and  the
Post-Employment  Period,  solicit,  employ,  or otherwise engage as an employee,
independent  contractor,  or otherwise,  any person who is or was an employee of
the Employer at any time during the Employment Period or in any manner induce or
attempt to induce any employee of the Employer to terminate his employment  with
the Employer;

                  8.1.4  at any time  during  or after  the  Employment  Period,
disparage  the  Employer  or  any  of  its  shareholders,  directors,  officers,
employees, or agents.

         8.2 For purposes of this Section 8, the term  "Post-Employment  Period"
means  the six  months'  period  beginning  on the date of  termination  of this
Agreement.

         8.3 If any  covenant  in this  Section  8 is  held to be  unreasonable,
arbitrary,  or against  public  policy,  such  covenant will be considered to be
divisible  with respect to scope,  time,  and  geographic  area, and such lesser
scope,  time,  or  geographic  area,  or all of them,  as a court  of  competent
jurisdiction  may determine to be  reasonable,  not  arbitrary,  and not against
<PAGE>

public  policy,  will  be  effective,   binding,  and  enforceable  against  the
Executive.  The period of time applicable to any covenant in this Section 8 will
be extended by the duration of any violation by the Executive of such covenant.

9.       COVENANTS OF THE EMPLOYER

         9.1 The Board of Directors has expressed its support for the relocation
of the principal executive  headquarters of the Employer from Eugene to Portland
in the  near  future.  The  Employer  confirms  to  the  Executive  that  such a
relocation will occur,  subject to a Strategic  Planning  session to be held for
the purpose of  determining  the most  effective  and efficient way to implement
this change.

         9.2 The Employer  agrees that the Executive  shall be indemnified as an
employee,  officer and director of the Employer, and as a director of Centennial
Bancorp,  to the full extent permitted by the laws of Oregon and as set forth in
any indemnification provisions of the Articles of Incorporation, Bylaws or other
corporate documents of the Employer.

         9.3 The Employer agrees to provide continuous  Directors' and Officers'
liability insurance coverage for the Executive throughout the Employment Period,
with tail  coverage  following  the  Employment  Period,  but only if and to the
extent such insurance coverage is available on a commercially  reasonable basis.
Any failure by the Employer to provide such insurance coverage for the Executive
during the Employment  Period shall  constitute  Good Reason for  termination of
this Agreement by the Executive,  in which event the Employer's  only obligation
shall be to continue  payment of the Executive's Base Salary for a period ending
at the earlier of: (a) the date 12 months after the date of termination,  or (b)
December 31, 2002.

10.      GENERAL PROVISIONS

         10.1     INJUNCTIVE RELIEF

         The  Executive  acknowledges  that the injury that would be suffered by
the  Employer  as a  result  of a breach  of the  provisions  of this  Agreement
(including any provision of Sections 7 and 8) would be  irreparable  and that an
award  of  monetary  damages  to the  Employer  for  such a  breach  would be an
inadequate remedy.  Consequently,  the Employer will have the right, in addition
to any other  rights it may have,  to obtain  injunctive  relief to restrain any
breach or threatened  breach or otherwise to specifically  enforce any provision
of this Agreement.

         10.2     COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT
                  COVENANTS.

         The  covenants  by the  Executive  in  Sections  7 and 8 are  essential
elements of this Agreement, and without the Executive's agreement to comply with
such  covenants,  the Employer  would not have  entered  into this  Agreement or
employed  the  Executive.  The  Employer and the  Executive  have  independently
consulted  their  respective  counsel  and have  been  advised  in all  respects
concerning the  reasonableness  and propriety of such  covenants,  with specific
regard  to the  nature  of  the  business  conducted  by  the  Employer.  If the
<PAGE>

Executive's  employment hereunder expires or is terminated,  this Agreement will
continue in full force and effect as is necessary or  appropriate to enforce the
covenants and agreements of the Executive in Sections 7 and 8.

         10.3     WAIVER

         The rights and remedies of the parties to this Agreement are cumulative
and not  alternative.  Neither  the  failure  nor any delay by  either  party in
exercising any right, power, or privilege under this Agreement will operate as a
waiver of such right, power, or privilege,  and no single or partial exercise of
any such right,  power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege.

         10.4     BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

         This  Agreement  shall  inure to the  benefit  of, and shall be binding
upon, the parties hereto and their respective  successors,  assigns,  heirs, and
legal representatives, including any entity with which the Employer may merge or
consolidate  or to  which  all  or  substantially  all  of  its  assets  may  be
transferred.  The duties and  covenants of the Executive  under this  Agreement,
being personal, may not be delegated.

         10.5     NOTICES

         All notices,  consents,  waivers,  and other  communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt),  (b) sent by facsimile
(with  written  confirmation  of  receipt),  provided  that a copy is  mailed by
registered  mail,  return  receipt  requested,  or  (c)  when  received  by  the
addressee,  if  sent  by a  nationally  recognized  overnight  delivery  service
(receipt  requested),  in each case to the  appropriate  addresses and facsimile
numbers set forth below (or to such other  addresses and facsimile  numbers as a
party may designate by notice to the other parties):
          If to the Employer:                  c/o Centennial Bancorp
                                               Attention:  Richard C. Williams,
                                               President
                                               675 Oak Street
                                               P. O. Box 1560
                                               Eugene, Oregon 97440
                                               Facsimile No.: (541) 342-1425

          With a copy to:                      Centennial Bancorp
                                               Attention:  Secretary
                                               675 Oak Street
                                               P. O. Box 1560
                                               Eugene, Oregon 97440
                                               Facsimile No.:  (541) 342-1425
<PAGE>

          If to the Executive:                 Thaddeus R. Winnowski
                                               11333 S.W. Northgate Avenue
                                               Portland, Oregon 97219


         10.6     ENTIRE AGREEMENT; AMENDMENTS

         This Agreement  contains the entire agreement  between the parties with
respect to the subject  matter hereof and  supersedes  all prior  agreements and
understandings,  oral or written, between the parties hereto with respect to the
subject matter hereof.  This Agreement may not be amended orally, but only by an
agreement in writing  signed by the parties  hereto;  provided that the Employer
and the Executive agree that the terms and conditions of this Agreement shall be
reviewed on an annual basis to determine if any modifications are appropriate.

         10.7     ARBITRATION; APPLICABLE LAW

                  10.7.1  Subject  to and  except as stated  in  Section  10.7.2
below, any controversy or claim arising out of or relating to this Agreement, or
any breach hereof, shall be settled by binding arbitration in Portland,  Oregon.
Within 10 days of a written  request for  arbitration by any party,  the parties
shall select one  qualified,  neutral  arbitrator.  If the parties are unable to
agree on an  arbitrator,  any party may petition the  Multnomah  County  Circuit
Court for the appointment of an arbitrator.  The arbitrator  shall determine the
procedural and  evidentiary  rules governing the  arbitration,  shall schedule a
hearing no later than three months  following the appointment of the arbitrator,
and shall  render an award no later  than 30 days  following  completion  of the
hearing.  The award  shall be final and  binding  upon the  parties,  and may be
confirmed by a petition to the Multnomah County Circuit Court in accordance with
applicable  Oregon law. Judgment upon the award rendered by the arbitrator shall
be final and  binding  on the  parties,  not  subject  to any  appeal and may be
entered  in any  court  having  jurisdiction  thereof.  The laws of the State of
Oregon  (without  regard to choice of law rules) shall govern any controversy or
claim arising out of or relating to this Agreement.  The arbitrator shall decide
on the matter of costs of the  arbitration and may award  reasonable  attorneys'
fees and costs.

                  10.7.2  Notwithstanding  the above,  any party may bring court
proceedings or assert claims against another party in court  proceedings  solely
to obtain an injunction or other equitable  relief (but not damages) in order to
protect or enforce any rights or duties arising from this Agreement.  Each party
irrevocably  submits to the exclusive  jurisdiction of Multnomah  County Circuit
Court or the United States  District  Court in Portland,  Oregon,  over any such
proceeding  and confirms that such court shall have personal  jurisdiction  over
such party. Each party  irrevocably  waives any right to assert, as a defense or
otherwise,  any claim that it is not subject to the jurisdiction or the venue of
any such court. The parties agree that such courts offer  convenient  forums and
proper venues for any such suit.
<PAGE>

         10.8     SECTION HEADINGS; CONSTRUCTION

         The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or  interpretation.  All references to
"Section" or "Sections" refer to the  corresponding  Section or Sections of this
Agreement unless otherwise  specified.  All words used in this Agreement will be
construed to be of such gender or number as the  circumstances  require.  Unless
otherwise expressly provided,  the word "including" does not limit the preceding
words or terms.

         10.9     SURVIVAL

         The  provisions  of Sections 3, 4, 6, 7, 8, 9 and 10 shall  survive the
termination of this Agreement.

         10.10     SEVERABILITY

         If any provision of this Agreement is held invalid or  unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

         10.11     GUARANTY

         By   authority   of  its  board  of   directors,   Centennial   Bancorp
unconditionally  guarantees  full and  timely  payment  and  performance  of all
obligations of the Employer under this Agreement.

         EXECUTED as of the date first above written.



             [THE NEXT PAGE OF THIS AGREEMENT IS THE EXECUTION PAGE]


<PAGE>


EMPLOYER:                                   GUARANTOR:
CENTENNIAL BANK                             CENTENNIAL BANCORP

By  /s/Richard C. Williams                  By  /s/Richard C. Williams
--------------------------------            ------------------------------
Name:  Richard C. Williams                  Name:   Richard C. Williams
Its:   Vice Chairman & C.E.O.               Its:    President & C.E.O.

EXECUTIVE:

/s/Thaddeus R. Winnowski
---------------------------
THADDEUS (Ted) R. WINNOWSKI