Document:

EXECUTIVE EMPLOYMENT AGREEMENT

     This Executive  Employment Agreement (the "Agreement") is dated effective
as of  June  1,  1999  (the  "Effective  Date"),  by  and  between  Steve  May
("Executive") and Umpqua Holdings Corporation ("Umpqua").

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

     2. TERM.  Umpqua agrees to employ the Executive for a period of two years
commencing  on the  Effective  Date (the  "Term"),  unless that  employment is
terminated earlier in accordance with this Agreement.

     3.  OPTION  TO  EXTEND.  Umpqua  has the  option to  extend,  in its sole
discretion,  the  Executive's  employment for one additional year upon written
notice to the  Executive no less than 60 days prior to the  expiration  of the
Term.

     4. DUTIES; POSITION.

          4.1   Position.   Executive   shall  be   employed  as  Senior  Vice
President/Retail  Operations  of South Umpqua Bank (the  "Bank"),  and as such
will have overall  responsibility  for the Bank's retail  operations  and such
other duties as may be  designated  by the President of Umpqua and will report
to the President of Umpqua.

          4.2   Obligations to Umpqua.

          (a) Executive  agrees that to the best of his ability and experience
     Executive  will at all times loyally and  conscientiously  perform all of
     the duties and obligations required of and from Executive pursuant to the
     express and implicit  terms of this Agreement and at the direction of the
     President of Umpqua.

          (b) Executive  agrees that Executive will devote all of his business
     and  professional  time and attention to the business  affairs of Umpqua.
     Executive  shall not be employed by any person  (including any individual
     or  entity)  other  than  Umpqua in  connection  with any other  business
     activity.

     5. BASE  COMPENSATION.  For  services  performed  under  this  Agreement,
Executive shall be entitled to a salary ("Base Salary") of a minimum of $7,500
per month together with perquisites provided to senior officers of Umpqua.

     6.  TERMINATION.  The  employment of Executive  shall  terminate upon the
occurrence of any one or more of the events in this Section 6.

          6.1 For  Cause.  Umpqua's  termination  of  Executive  for Cause (as
defined in Section 7.1 below) ("Termination For Cause").

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          6.2 Without Cause.  Umpqua's termination of Executive without Cause,
at any time at Umpqua's sole  discretion,  for any or no reason other than for
Cause ("Termination Without Cause").

          6.3 By New President/Chief  Executive Officer.  Umpqua's termination
of Executive within six (6) months following the initial date of employment of
a  President  and  Chief  Executive   Officer  other  than  Raymond  P.  Davis
("Termination by New President/CEO").

          6.4 For Good Reason.  Executive's termination of his employment with
Umpqua for Good  Reason (as  defined in Section  7.2 below)  within the 90-day
period immediately  following one of the events set forth in Section 7.2 below
("Termination For Good Reason").

          6.5 End of Term.  Upon the  expiration of the term of this Agreement
the  employment  of  Executive  shall  revert to  employment-at-will  and this
Agreement shall terminate,  unless this Agreement is renewed in writing by the
parties.

          6.6 Death or Disability.  Upon  Executive's  death or Disability (as
defined in Section 7.3 below).

7.   DEFINITIONS.

          7.1  Cause.  For  the  purposes  of  this  Agreement,   "Cause"  for
Executive's  termination  will exist upon the occurrence of one or more of the
following events:

          (a) Dishonest or fraudulent conduct by Executive with respect to the
     performance of his duties with Umpqua;

          (b) Conduct by Executive  that  materially  discredits  Umpqua or is
     materially detrimental to the reputation of Umpqua,  including conviction
     or a plea of nolo  contendere of Executive of a felony or crime involving
     moral turpitude;

          (c)   Executive's   willful   misconduct  or  gross   negligence  in
     performance of his duties under this Agreement, including but not limited
     to Executive's  refusal to comply in any material  respect with the legal
     directives of the Board of Directors or the President and Chief Executive
     Officer;

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

          (e) Executive's  failure to materially  perform the duties set forth
     in Section 4 of this Agreement; or

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          (f) Breach of Executive's fiduciary duties to Umpqua.

          7.2 Good Reason.  For purposes of this Agreement,  "Good Reason" for
Executive's  termination  will exist upon the occurrence of one or more of the
following events:

          (a) A material  adverse change in Executive's  position causing such
     position to be of materially reduced stature or responsibility;

          (b) A reduction  of  Executive's  Base Salary  unless in  connection
     with,  and to the same degree as,  reductions  in the  salaries of all or
     substantially all similarly situated employees of Umpqua; or

          (c) An  unconsented  requirement  for  Executive  to  relocate  to a
     facility  or  location  more  than  50  miles  from  Executive's  current
     location.

     7.3 Disability.  For purposes of this Agreement,  "Disability" shall mean
that Executive has been unable to perform his duties under this Agreement as a
result  of  his  incapacity  due to  physical  or  mental  illness,  and  such
inability,  which continues for at least 120 consecutive  calendar days or 150
calendar days during any consecutive  12-month period,  if shorter,  after its
commencement,  is determined to be total and permanent by a physician selected
by Umpqua and its insurers and  acceptable to Executive or  Executive's  legal
representative  (with such agreement on  acceptability of the physician not to
be unreasonably withheld).

     8. SEVERANCE  BENEFITS.  Executive shall be entitled to receive severance
benefits upon termination of employment only as set forth in this Section 8.

          8.1 Termination  Without Cause or For Good Reason. In the event of a
Termination  Without  Cause or  Termination  For Good Reason,  Executive  will
receive  payment  for all Base Salary and  benefits  accrued as of the date of
Executive's termination together with a payment of severance benefits equal to
six (6) months Base Salary.

          8.2 Termination by Reason of Death or Disability.  In the event of a
Termination by reason of death or Disability,  Executive will receive  payment
for all  Base  Salary  and  benefits  accrued  as of the  date of  Executive's
termination.

          8.3 Termination by New President/CEO.  In the event of a Termination
by New  President/CEO,  Executive will receive payment for all Base Salary and
benefits  accrued  as of the date of  termination  together  with a payment of
severance benefits equal to six (6) months Base Salary.

          8.4 Termination  Relating to a Change in Control.

          (a) In the event that Executive is terminated in anticipation of, in
     connection  with, or within one hundred  eighty (180) days  following the
     closing date of a Change in Control and without  Cause,  then Umpqua,  or
     its  successor  in  interest,  shall pay  Executive  all Base  Salary and

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     benefits  accrued as of the date of  termination  together with severance
     benefits equal to two (2) years Base Salary.

          (b) In the event that Executive is terminated 180 days or more after
     the closing date of a Change in Control and without  Cause,  then Umpqua,
     or its  successor in interest,  shall pay  Executive  all Base Salary and
     benefits  accrued as of the date of  termination  together with severance
     equal to the greater of (i) an amount  equal to two (2) years Base Salary
     from the closing date of the Change in Control  minus the Base Salary for
     the  number of days  elapsed  since  the  closing  date of the  Change in
     Control or (ii) as otherwise provided in this Agreement.

          8.5 Section 280G.  All severance  payments made under this Agreement
must be within the limits set forth in Section  280G of the  Internal  Revenue
Code; if a payment would otherwise be an "excess parachute payment" as defined
in Section 280G,  the payment shall be reduced to avoid the  applicability  of
Section 280G.

     9. DEFINITION OF CHANGE IN CONTROL. For the purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred when any of the following
events takes place:

          9.1 Acquisition of Fifty Percent or More of Voting Power. Any person
(including any individual or entity) or persons acting in concert  becomes the
beneficial owner of voting shares  representing fifty percent (50%) or more of
the voting power of Umpqua.

          9.2 Removal of  Directors.  A majority of the Board of  Directors of
Umpqua are removed  from office by a vote of the  shareholders  of Umpqua over
the recommendation of the Board of Directors then serving.

          9.3  Merger.  Umpqua  is a  party  to a plan  of  merger  or plan of
exchange and upon consummation of such plan, the shareholders of Umpqua do not
own or  continue  to own at least a majority  of the  shares of the  surviving
company.

     10.  ARBITRATION.  Any dispute or claim  arising out of or in  connection
with  this  Agreement  will be  finally  settled  by  binding  arbitration  in
Roseburg,  Oregon in  accordance  with the rules of the  American  Arbitration
Association by one  arbitrator  appointed in accordance  with said rules.  The
arbitrator shall apply Oregon law, without  reference to rules of conflicts of
law or rules of  statutory  arbitration,  to the  resolution  of any  dispute.
Judgment on the award  rendered by the  arbitrator may be entered in any court
having jurisdiction  thereof.  Notwithstanding the foregoing,  the parties may
apply to any  court of  competent  jurisdiction  for  preliminary  or  interim
equitable relief, or to compel arbitration in accordance with this Section 10,
without breach of this arbitration provision.

     11. CONFIDENTIAL INFORMATION.  The parties acknowledge that in the course
of Executive's  duties he will have access to and become familiar with certain
proprietary and confidential information of Umpqua and other information about
Umpqua  not  known  by  its  actual  or   potential   competitors.   Executive
acknowledges that such information  constitutes valuable,  special, and unique
assets of Umpqua's  business,  even though  such  information  may not be of a

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technical  nature and may not be protected under trade secret or related laws.
Executive  agrees that he will hold in a fiduciary  capacity  and will not use
for himself and will not reveal,  communicate, or divulge during the period of
his  employment  with  Umpqua  or at any time  thereafter,  and in any  manner
whatsoever, any such date and confidential information of any kind, nature, or
description concerning any matters affecting or relating to Umpqua's business,
its customers,  or its services, to any person, firm, entity, or company other
than Umpqua or persons,  firms,  entities,  or companies designated by Umpqua.
Executive agrees that all memoranda,  notes, records,  papers, customer files,
and other documents, and all copies thereof relating to Umpqua's operations or
business,  or matters related to any of Umpqua's customers,  some of which may
be prepared by  Executive,  and all objects  associated  therewith  in any way
obtained by Executive, shall be Umpqua's property.

     12. NOTICES.  All notices,  requests,  demands,  and other communications
provided  for by this  Agreement  will  be in  writing  and  shall  be  deemed
sufficient    upon   receipt,    when    delivered    personally   or   by   a
nationally-recognized  delivery  service (such as Federal  Express),  or three
business days after being deposited in the U.S. mail as certified mail, return
receipt  requested,  with postage prepaid,  if such notice is addressed to the
party  to be  notified  at such  party's  address  as set  forth  below  or as
subsequently modified by written notice.

           To Umpqua:     Umpqua Holdings Corporation
                          445 S.E. Main Street
                          Roseburg, Oregon 97470
                          Attention:President

           To Executive:  Steve May
                          P.O. Box 1820
                          Roseburg, OR  97470

     13. GENERAL PROVISIONS.

          13.1 Governing Law. The validity,  interpretation,  construction and
performance  of this  Agreement  shall be governed by the laws of the State of
Oregon, without giving effect to the principles of conflict of laws.

          13.2  Severability.  If one or more provisions of this Agreement are
held  to  be  unenforceable   under  applicable  law,  the  parties  agree  to
renegotiate  such  provision(s)  in good faith.  In the event that the parties
cannot  reach a  mutually  agreeable  and  enforceable  replacement  for  such
provision, then (i) such provision shall be excluded from this Agreement, (ii)
the balance of the Agreement  shall be interpreted as if such  provisions were
so excluded,  and (iii) the balance of the Agreement  shall be  enforceable in
accordance with its terms.

          13.3  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.

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<PAGE>

          13.4 Entire Agreement. This Agreement constitutes the sole agreement
of the parties and  supersedes all oral  negotiations  and prior writings with
respect to the subject matter hereof.

          13.5 Waiver.  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.

          13.6  Assignment.  Executive shall not assign or transfer any of his
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.

          13.7  Attorneys'  Fees.  In the  event of any  arbitration  or legal
proceeding relating to this Agreement, the prevailing party in such proceeding
shall be entitled to recover reasonable attorneys' fees in such proceeding, or
any appeal  thereof,  to be set by the  arbitrators  or the court  without the
necessity of hearing testimony or receiving evidence, in addition to the costs
and disbursements allowed by law.

          14.  ADVICE OF COUNSEL.  EACH PARTY TO THIS  AGREEMENT  ACKNOWLEDGES
THAT, IN EXECUTING THIS AGREEMENT,  SUCH PARTY 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 BE REASON OF THE DRAFTING OR PREPARATION HEREOF.

                                UMPQUA HOLDINGS CORPORATION

                                By: /s/ Raymond P. Davis
                                    -----------------------------------------
                                    Raymond P. Davis, Director, President and
                                        Chief Executive Officer

                                /s/ Steve May
                                ---------------------------------------------
                                Steve May

                                   10.2 - 6EXECUTIVE EMPLOYMENT AND
                      COMPENSATION AGREEMENT

Date:     Effective as of March 31, 1999

Parties:  South Umpqua Bank, a bank  chartered  under the laws of the State of
          Oregon, its subsidiaries and affiliates (the "Company")

          and

          Daniel A. Sullivan (the "Executive")

Agreement: The Company and the Executive agree as follows:

     1.   Effective Date Of Agreement

     This Agreement is effective as of March 31, 1999.

     2.   Term Of Employment

     The term of this Agreement  shall commence as of March 31, 1999 and shall
continue until the close of the Company's  business on November 2, 2001 ("Term
of Employment").

     3.   Obligation Of The Parties To Negotiate In Good Faith

     Upon the  expiration  of the Term of  Employment,  the  parties  agree to
negotiate  with  one  another  in  good  faith  regarding   another  Executive
Employment  and  Compensation  Agreement.  Upon the  expiration of the Term of
Employment, the Executive shall be deemed to be an "employee at will."

     4.   Employment Position, Duties, And Responsibilities

     The  Company  agrees to continue  the  Executive  in its employ,  and the
Executive  agrees  to  remain in the  employ  of the  Company  for the Term of
Employment  in the  position  and with the  duties and  responsibilities  of a
Senior Vice  President  and Chief  Financial  Officer of the Company and shall
report to the President  and Chief  Executive  Officer of the Company.  At all

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times  during  the Term of  Employment  the  Executive  shall hold a title and
position  of  responsibility  commensurate  with  the  Executive's  title  and
position on March 31, 1999.

     5.   Compensation

     During the Term of Employment, the Executive shall be paid by the Company
as follows:

          a.   Annual Base Salary

          A minimum annual base salary of $104,500("Base Salary"),  payable at
     the rate of not less than  $8,708.34 per month,  for the remainder of the
     calendar  year 1999,  and for the  remainder  of the Term of  Employment,
     together  with such  increases as may be awarded by the Company from time
     to time in  accordance  with the  Company's  regular  practices of salary
     increases for executives; plus

          b.   Annual Executive Performance Bonus

          An annual executive  performance bonus under the Company's Executive
     Bonus  Compensation  Plan or  such  equivalent  successor  plan as may be
     adopted by the Company from time to time ("Performance Bonus").

          c.   Retirement Plans

          The Executive  shall be a full and vested  participant in all of the
     Company's   retirement,   and  deferred   compensation   plans,   if  any
     ("Retirement Plans") to the extent permitted by such plans; plus

          d.   Fringe Benefits

          The Executive  shall be entitled to a monthly car allowance of $500,
     payment or  reimbursement  of: club dues and initiation fees for Roseburg
     Golf and Country Club and the Multnomah Athletic Club; other club dues or
     dues  for  civic  organizations  which  in the  opinion  of the  Board of
     Directors  are  beneficial  to the Company;  and  Executive's  reasonable
     expenses incurred by the Executive in the conduct of his duties.

     6.   Employee Benefit Plans

     In addition  to the  payments  and other  benefits  provided  for in this
Agreement,  the Executive  shall be entitled to  participate  in the Company's
Incentive  Stock  Option  Plan,  Non-Qualified  Stock  Option  Plan,  and  the
Executive  Profit Sharing and Thrift Plan, if any, to the extent  permitted by

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such plans.  If no such plans are in effect as of the date of this  Agreement,
then the Executive  shall become a  participant  as soon as such plan or plans
become operative.

     Nothing in this  Agreement  shall  preclude the Company from  amending or
terminating any employee benefit plan or practice.

     During the Term of Employment, the Executive's benefits set forth in this
Agreement shall not be less than those benefits  available to the Executive as
of the date of this Agreement.  The nature, level, and extent of such benefits
to which  Executive  is  entitled  may be  reduced  only with the  Executive's
written consent.

     7.   Termination Of Executive's Employment During the Term Of Employment

          a.   Termination  Of The  Executive's  Employment By The Company For
               "Cause"

          In the event the Executive's employment is terminated by the Company
     during the Term of Employment  for "cause" (as defined in Section 9), the
     Executive  shall be  entitled  to receive  payment  only for those  sums,
     benefits, and other fringe benefits which have accrued to and are due and
     owing the Executive as of the effective  date of the  termination  of his
     employment  ("Effective  Date").  Executive  shall not be entitled to any
     other sums for the remainder of the Term of Employment.

          b.   Termination Of The Executive's Employment By The Company Within
               One  Year  After  Hiring  A  New  Chief  Executive  Officer  or
               President

          In the event that the Company hires a new Chief Executive Officer or
     President  and the  Executive's  employment  is terminated by the Company
     within one (1) year  following  the date of  employment  of the new Chief
     Executive  Officer or President,  then the Executive shall be entitled to
     receive and the Company shall be obligated to pay the Executive:

               1.  All  compensation,  benefits,  and  other  fringe  benefits
          accrued to the Effective Date;

               2. A minimum  amount  equal to nine (9) months'  Base Salary as
          defined in Section 5.(a);and

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<PAGE>

               3. An  amount  equal  to the  projected  Performance  Bonus  as
          defined in Section  5.b.  for the year in which the  Effective  Date
          occurred, pro-rated based upon the number of months during such year
          in which the  Executive was employed.  For example,  if  Executive's
          employment was terminated  after six months of a bonus year, and the
          projected  bonus for the Executive  for that year was $20,000,  then
          the Executive would be entitled to receive the sum of $10,000 as the
          projected pro-rated bonus for that year.

               4. Health insurance  benefits available to the Executive on the
          Effective  Date  shall  continue  in full  force and  effect for the
          maximum time allowed by law following the Effective Date.

          c.   Payment of Sums Due Executive

               All sums due the Executive  pursuant to this Section 7 shall be
          paid by the  Company  to the  Executive  in full,  in  cash,  or the
          equivalent of cash, within five days from the Effective Date.

     8.   Termination Of Employment In Connection  With A Change In Control Of
          Company

     The   provisions  of  this  Section  8  shall  govern  all  severance  or
termination payments to the Executive in the event that the Company is subject
to a "change in control" (as defined in Section 10).

          a.   Termination  of  Employment  Of The Executive By The Company Or
               The Company's  Successor In Interest,  In  Anticipation  Of, In
               Connection With, Or After A Change In Control

               In the event that the  Company,  its  successor  in interest by
          merger, its transferee,  or the new owner of a controlling  interest
          in the Company's  stock,  terminates the  Executive's  employment or
          causes the termination of the Executive's employment during the Term
          of Employment  in  anticipation  of, in connection  with, or after a
          change in control has occurred,  then the Company,  its successor in
          interest by merger,  its transferee,  or the new owner of its stock,
          as the case may be,  shall pay the  Executive an amount equal to two
          times the average of the total  annual  compensation,  as defined in
          Section 5.a. and b.,  including the Base Salary plus the Performance
          Bonus, paid to the Executive during the last two full calendar years
          of employment  (including  employment  pursuant to a prior agreement
          dated November 3, 1997 between the Company and the Executive).

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          b.   Termination  Of  Employment  By  Executive  After A  Change  In
               Control And Occurrence Of A "Triggering Event"

               In the  event  that the  Executive  terminates  his  employment
          during  the Term of  Employment  after a  change  in  control  and a
          "triggering event" (as defined in Section 10) has occurred, then the
          Company, its successor in interest by merger, its transferee, or the
          new owner of a controlling  interest in the Company's  stock, as the
          case may be, shall pay the Executive the following amount: an amount
          equal to two times the average of the total annual compensation,  as
          defined in Section 5.a. and b.,  including  the Base Salary plus the
          Performance  Bonus,  paid to the Executive  during the last two full
          calendar  years of employment  (including  employment  pursuant to a
          prior  agreement  dated November 3, 1997 between the Company and the
          Executive).

          c.   Payments to Executive

               Executive shall be paid those amounts specified in this Section
          8 in full, in cash or the  equivalent  of cash,  five days after the
          Effective Date.

          d.   Excess Parachute Payment

               If the lump sum payment under this Section 8 of this Agreement,
          either alone or together with other  payments to which the Executive
          is entitled to receive from the Company, would constitute an "excess
          parachute  payment"  as  defined  in  Section  280G of the  Internal
          Revenue  Code of  1986,  as  amended  (the  "Code"),  such  lump sum
          severance  payment shall be reduced to the largest  amount that will
          result in no portion of the lump sum payment under this Section 8 of
          this  Agreement  being  subject to the excise tax imposed by Section
          4999 of the Code. The determination of any reduction in the lump sum
          severance  payment under this Section 8 of this Agreement,  pursuant
          to the foregoing  provisions,  shall be made by mutual  agreement of
          the Company and the Executive.

     9.   Definition Of "Cause"

     "Cause" is defined as personal dishonesty,  willful misconduct, breach of
fiduciary  involving personal profit,  failure to perform his stated duties as
Senior Vice President and Chief Financial  Officer of the Company,  or failure
of the Executive to devote his full time and undivided attention during normal
business  hours to the  business  and  affairs  of the  Company,  (except  for
reasonable vacations,  illness or disability and time devoted by the Executive
to serving as a director or member of any committee or  organization  engaging
in charitable and community activities).

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<PAGE>

     10.  Definition Of "Change In Control" and "Triggering Event"

     A "change  in  control"  is defined as any  transaction,  act,  series of
transactions or series of acts that either:

          (a) would  constitute  a change in control for  purposes of The Bank
     Act (ORS Chapters 706 through 716), the Bank Holding Company Act of 1956,
     as amended,  The Bank Merger Act, as amended,  The Change In Bank Control
     Act, as amended,  or The  Securities  Exchange  Act Of 1934,  as amended,
     (collectively referred to herein as the "Acts"),  assuming the Company is
     subject  to the  foregoing  Acts  regardless  of whether  the  Company is
     actually subject to the provisions of any such Acts;

          (b) would result in any person,  entity or group of persons as those
     terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
     of 1934 (but  excluding  an Employee  Stock  Ownership  Plan)  becoming a
     beneficial owner, directly or indirectly of the securities of the Company
     representing  20% or more of the combined  voting power of the  Company's
     then outstanding shares; or

          (c) would result in individuals who were directors of the Company as
     of the date of this  Agreement  ceasing to constitute at least a majority
     of the Board of Directors of the Company at any time prior to November 3,
     2001.

     A "triggering  event" is defined as any one of the following events which
take place after a change in control has occurred:

          (a) failure to elect or reelect the  Executive to the same or higher
     office or  removal  of the  Executive  from the  office  of  Senior  Vice
     President and Chief Financial Officer;

          (b)  a  significant  diminution  in  the  nature  or  scope  of  the
     authorities,  powers,  functions,  or duties  related to the  position of
     Senior  Vice  President  and  Chief  Financial  Officer  of  the  Company
     (including status, offices, and reporting  requirements),  or a reduction
     in the  compensation  to which  Executive  is  entitled  as set  forth in
     Section 5 which is not  remedied  within  30 days  after  receipt  by the
     Company of written notice from the Executive;

          (c) the Company requiring the Executive to be based at any office or
     location  more  than 100 miles  from 445  Southeast  Main St.,  Roseburg,
     Oregon,  or the  Company  requiring  the  Executive  to travel on Company
     business to a  substantially  greater  extent than  required  immediately
     prior to the date of this Agreement; or

                                   10.3 - 6
<PAGE>

          (d) breach by the Company of any  provision  of this  Agreement  not
     covered  within the foregoing  clauses (a), (b), and (c) of this section,
     which is not  remedied  within 30 days after  receipt  by the  Company of
     written notice from the Executive;

          For the  purposes of this Section 10 and this  Agreement,  "Company"
     shall  include  the  Company's  successor  in  interest  by  merger,  its
     transferee of all or  substantially  all of the  Company's  assets and/or
     liabilities,  or the new owner of a controlling interest of the Company's
     stock.

          (e) The  liquidation,  dissolution,  consolidation  or merger of the
     Company or one or more of the Company's  subsidiaries  or affiliates,  or
     the  transfer  of all or a  significant  portion  of  the  assets  and/or
     liabilities  of the Company,  or one of its  subsidiaries  or affiliates,
     unless a successor or successors (by merger,  consolidation or otherwise)
     to  which  all or a  significant  portion  of the  Company's  assets  and
     liabilities or the assets and liabilities of any of its subsidiaries have
     been  transferred,  shall  have  assumed  and  discharged  all duties and
     obligations of the Company to the Executive under this Agreement.

     An  election by the  Executive  to  terminate  his  employment  after the
occurrence of a change in control and the occurrence of a triggering  event as
defined herein, shall entitle the Executive to payment of those sums specified
in Section 8.b.

     11.  Unexercised Stock Options

     In the event that the Executive  shall hold as of the Effective  Date any
outstanding  and  unexercised  (whether or not  exercisable at the time) stock
options or options previously granted by the Company,  the disposition of such
options shall be made in accordance with the Company's  Incentive Stock Option
Plan (if any).

     12.  Right To Seek Arbitration

     Either  party shall have the right,  in addition to all other  rights and
remedies  provided by law at their  election,  either to seek  arbitration  in
Oregon,  under  the  rules  of  the  American  Arbitration  Association  or to
institute a judicial  proceeding,  in either case within 90 days after  having
received notice of termination of his employment.

     13.  Obligation To Mitigate Damages

     In the event of the Executive's termination of employment,  the Executive
shall not be required to mitigate damages by seeking other employment.

                                   10.3 - 7
<PAGE>

     14.  Confidential Information

     Executive agrees not to disclose at any time any confidential information
obtained by him while in the employ of the Company.  The executive also agrees
that upon leaving the  Company,  he will not take with him any document of the
Company's which is of a confidential or proprietary nature.

     15.  Withholding

     All payments required to be made by the Company to the Executive pursuant
to this Agreement shall be subject to applicable federal and state withholding
requirements.

     16.  Notices

     All notices, requests,  demands, and other communications provided for by
this Agreement will be in writing and shall be sufficiently  given if and when
mailed in the  continental  United States by registered or certified  mail, or
personally delivered to the party entitled thereto at the address stated below
or to such  changed  addresses  as the  addressee  may have  given by  similar
notice:

      To the Company:          South Umpqua Bank
                               445 Southeast Main St.
                               Roseburg, Oregon  97470

      To the Executive:        Daniel A. Sullivan
                               1224 N.E. Walnut Street, Suite 261
                               Roseburg, Oregon  97470

     Any such notice delivered in person shall be deemed to have been received
on the date of delivery.

     17.  General Provisions

          (a) There shall be no right of set-off or counter-claim  against any
     payments  to the  Executive,  his  surviving  spouse,  beneficiaries,  or
     estate.  All sums to which the  Executive  is  entitled  pursuant to this
     Agreement shall, upon his death, be paid to his surviving spouse,  heirs,
     or to his estate, if there is no surviving spouse.

          (b) The Company  and the  Executive  recognize  that each party will
     have no adequate remedy at law for breach of this Agreement;  and that in
     the event of any such  breach,  the Company and the  Executive  agree and
     consent that the other shall be entitled to apply for and obtain a Decree
     of Specific Performance.

                                   10.3 - 8
<PAGE>

          (c) No right or interest to or in any payment shall be assignable by
     the Executive,  provided, however, that this provision shall not preclude
     the Executive from  designating one or more  beneficiaries to receive any
     amount or  amounts  that may be  payable to him after his death and shall
     not preclude the legal  representative  of his estate from  assigning any
     right hereunder to the person or persons  entitled thereto under his Will
     or in the case of  intestacy  to the person or persons  entitled  thereto
     under the laws of intestate succession of the State of Oregon.

     18.  Successors To The Company

     This  Agreement  shall be  binding  upon and inure to the  benefit of the
Company and any successor of the Company,  including  without  limitation  any
corporation  or   corporations   acquiring   directly  or  indirectly  all  or
substantially all of the assets and/or liabilities,  or a controlling interest
in the  stock  of the  Company,  whether  by  merger,  consolidation,  sale or
otherwise (and such successor shall thereafter be deemed "the Company" for the
purposes of this  Agreement),  but shall not  otherwise be  assignable  by the
Company.

     19.  Amendment Or Modification

     This Agreement may not be amended or modified without the written consent
of the parties to this  Agreement.  A waiver by either party to this Agreement
of any  breach  by the other  party  shall not be deemed to be a waiver of any
subsequent or continuing breach.

     20.  Severability

     In  the  event  that  any   portion  of  this   Agreement   is   declared
unenforceable,  the remaining  portions of this Agreement  shall be unaffected
and shall remain in full force and effect.

     21.  Legal Expenses

     If the  Company  fails to comply with any of its  obligations  under this
Agreement,  or in the event  that the  Company or any other  person  takes any
action or declares this Agreement  unenforceable  or institutes any litigation
or other  legal  action  designed  to deny,  diminish  or to recover  from the
Executive the benefits intended to be provided to the Executive hereunder, and
provided  further that the Executive has complied with all of his  obligations
under this  Agreement,  the Company hereby  authorizes the Executive to retain
counsel of his  choice at the sole  expense of the  Company to  represent  the
Executive in connection  with the  initiation or defense of any  litigation or
other  legal  action  whether  by or against  the  Company,  or any  director,
officer,  shareholder,  or other  person  affiliated  with the  Company in any

                                   10.3 - 9
<PAGE>

jurisdiction.  The  reasonable  fees and  expenses of counsel  selected by the
Executive as provided  herein shall be paid or  reimbursed to the Executive by
the Company on a regular  periodic basis upon  presentation  by Executive of a
statement  or  statements  prepared by such  counsel in  accordance  with such
counsel's  customary practices up to a maximum aggregate amount of $60,000 for
legal  fees  and  expenses  which  shall be paid  regardless  of  whether  the
Executive prevails in any legal action.

     22.  Continuation Of Benefits

     During any period of time that the  validity  or  enforceability  of this
Agreement is being  challenged  by any party,  the Company  shall  continue to
cover the Executive and his beneficiaries  under the Company's cafeteria plan,
hospital plan, health care plan, dental plan, life or other insurance or death
benefit  plan, or other  present or future  similar group or employee  benefit
plan or program for which key  executives  of the Company are  eligible to the
same  extent  as if the  Executive  had  continued  to be an  employee  of the
Company.

DATED as of ________________

                                SOUTH UMPQUA BANK

                                By: /s/ Raymond P. Davis
                                    -----------------------------------------
                                    Raymond P. Davis, Director, President and
                                        Chief Executive Officer

                                /s/ Daniel A. Sullivan
                                ---------------------------------------------
                                Daniel A. Sullivan

                                  10.3 - 10

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